LAWRENCE P. ZATKOFF, District Judge.
This matter is before the Court on Plaintiff's motion for partial summary judgment of Defendant's ninth counterclaim [dkt. 131]; Plaintiff's motion for
Plaintiff markets and sells a two-ounce energy beverage using the "5-hour ENERGY" trademark. Defendant markets and distributes a two-ounce energy drink featuring a "6 Hour POWER" mark. Plaintiff has alleged a common law trademark infringement claim against Defendant under the Lanham Act, 15 U.S.C. § 1125(a).
Defendant has asserted counterclaims for: (1) violation of the Federal Anti-Cybersquating Consumer Protection Act, 15 U.S.C. § 1125(d); (2) false advertising under the Lanham Act, 15 U.S.C. § 1125(a); (3) business and product disparagement; (4) tortious interference with contractual relations; (5) tortious interference with business relationships; (6) monopolization in violation of the Sherman Act, 15 U.S.C. § 2; (7) attempted monopolization in violation of the Sherman Act, 15 U.S.C. § 2; (8) violation of the Michigan Consumer Protection Act, Mich. Comp. Laws § 445.903; and (9) cancellation of trademark, 15 U.S.C. § 1119.
Summary judgment is proper where "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law." Fed. R.Civ.P. 56(c); Thompson v. Ashe, 250 F.3d 399, 405 (6th Cir.2001). The moving party bears the initial burden of demonstrating the absence of any genuine issue of material fact, and all inferences should be made in favor of the nonmoving party. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The moving party discharges its burden by "`showing'—that is, pointing out to the district court—that there is an absence of evidence to support the nonmoving party's case." Horton v. Potter, 369 F.3d 906, 909 (6th Cir.2004) (citing Celotex, 477 U.S. at 325, 106 S.Ct. 2548).
In its ninth counterclaim, Defendant argues that Plaintiff fraudulently procured its trademark registration of the 5-hour ENERGY mark. Defendant avers that when Plaintiff registered its 5-hour ENERGY trademark with the Supplemental Register of the United States Patent and Trademark Office (the "'077 registration"), Plaintiff swore under oath that it used the 5-hour ENERGY trademark in commerce on Homeopathic Supplements and Pharmaceutical Preparations. Defendant maintains that this representation is not—and never has been—true. Because Defendant believes Plaintiff obtained its registration fraudulently, Defendant requests that the Court cancel the '077 registration of the 5-hour ENERGY trademark.
Pursuant to 15 U.S.C. § 1119, "[i]n any action involving a registered mark, the court may determine the right to registration [and] order the cancellation of registrations, in whole or in part. ..." In the Court's August 4, 2009, order granting Defendant's motion to amend its pleadings, the Court stated that even though Plaintiff voluntarily dismissed its claim based on the '077 registration, leaving only its claims brought under common law, this action involves a registered mark because Defendant's counterclaims specifically mention Plaintiff's "wrongful attempts to enforce its trademark."
However, in order for Defendant to have standing to assert its claim against Plaintiff based on the '077 registration, the Court finds that Defendant must first demonstrate that it has suffered an injury due to the registration. See Cleveland Branch, NAACP v. City of Parma, Ohio, 263 F.3d 513, 523-24 (6th Cir.2001) ("To satisfy Article III's standing requirements, a plaintiff must show: `(1) it has suffered an `injury in fact' that is (a) concrete and particularized and (b) actual or imminent, not conjectural or hypothetical; (2) the injury is fairly traceable to the challenged action of the defendant; and (3) it is likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision.'") (quoting Friends of the Earth, Inc. v. Laidlaw Envtl. Servs., 528 U.S. 167, 180-81, 120 S.Ct. 693, 145 L.Ed.2d 610 (2000)).
In support of its motion, Plaintiff argues that there is no evidence showing that Defendant suffered an injury due to the '077 registration. Specifically, Plaintiff points out that Defendant's damages expert failed to identify any damages based on the '077 registration, and that a supplemental registration cannot cause damages
It its response, Defendant explains at great length why Plaintiff's '077 registration should be cancelled, including that the registration was obtained by fraud and that Plaintiff lacks ownership of the registration, but Defendant does not rebut Plaintiff's assertion that Defendant lacks standing to assert this counterclaim. Instead, Defendant attempts to explain why its expert did not calculate damages caused by the '077 registration, and it then states that "[Defendant's] Counterclaim sets forth that [Defendant] has been damaged by the registration." Defendant, however, cannot defeat Plaintiff's motion for summary judgment by resting on its pleadings. See Copeland v. Machulis, 57 F.3d 476, 479 (6th Cir.1995) ("[T]he nonmoving party cannot rest on its pleadings, but must present significant probative evidence in support of the complaint to defeat the motion for summary judgment.") (citing Anderson, 477 U.S. at 248-49, 106 S.Ct. 2505).
Furthermore, the Court notes that the relief Defendant seeks lies in the discretion of the Court; thus, even were the Court to accept Defendant's allegations as true, § 1119 imposes no duty upon the Court to act. 15 U.S.C. § 1119 (stating that "the court may ... order the cancellation of registrations") (emphasis added). Considering that (1) Plaintiff is not directly asserting the '077 registration against Defendant in this action, (2) Defendant has failed to demonstrate how the '077 registration has caused it to suffer an injury, and (3) Defendant has not sought cancellation of the '077 registration with the United States Patent and Trademark Office, the Court declines to take action pursuant to § 1119. Therefore, the Court grants Plaintiff's motion for summary judgment with respect to Defendant's ninth counterclaim, brought under 15 U.S.C. § 1119.
In Count I of Defendant's amended countercomplaint, Defendant alleges that Plaintiff violated the Anti-Cybersquating Consumer Protection Act, 15 U.S.C. § 1125(d)(1), when Plaintiff registered the following internet domain names: "6hourpower.com" and "sixhourpower.com".
Under 15 U.S.C. § 1125(d)(1),
Plaintiff avers that there is an absence of evidence to prove that (1) Defendant is entitled to protection under the Anti-Cybersquating Consumer Protection Act and (2) Defendant registered its domain names in bad faith. Defendant's response brief does not address Plaintiff's arguments with respect to this counterclaim. Therefore, the Court can only assume that Defendant concedes this issue and agrees that it cannot make a prima facie case under the Anti-Cybersquating Consumer Protection Act. See Ctr. For Biological Diversity v. Rural Utils. Serv., No. 5:08-292-JMH, 2009 WL 3241607, at *3 (E.D.Ky. Oct. 2, 2009) ("When a party fails to respond to a motion or argument therein, the Sixth Circuit has held that the lack of response is grounds for the district court to assume opposition to the motion is waived, and grant the motion.") (citing Humphrey v. U.S. Attorney General's Office, 279 Fed.Appx. 328, 331 (6th Cir. 2008)). Accordingly, Plaintiff's motion for summary judgment is granted with respect to Defendant's counterclaim under the Anti-Cybersquating Consumer Protection Act.
In Count II of its amended countercomplaint, Defendant alleges that Plaintiff's distribution of a letter entitled, "Legal Notice" ("the legal notice"), violated Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), which prohibits false advertising.
In April 2008, Plaintiff also brought suit against BDI Marketing, Inc., which sold a product with "6 Hour ENERGY!" on the label. In July 2008, BDI Marketing, Inc. moved for a preliminary injunction related to the legal notice, alleging false advertising under Section 43 of the Lanham Act. In his Report and Recommendation, United States Magistrate Judge Steven Pepe recommended that the injunction be granted, concluding that BDI Marketing, Inc. demonstrated a likelihood of success on the merits of its claims that the legal notice was misleading and had a tendency to deceive its intended audience. Living Essentials v. BDI Marketing, Inc., No. 2:08-cv-12711, 2008 U.S. Dist. LEXIS 116678, at *7-13 (E.D.Mich. Oct. 28, 2008). United States District Judge Gerald E. Rosen adopted Magistrate Pepe's Report and Recommendation and granted the requested preliminary injunction. Living Essentials v. BDI Marketing, Inc., No. 2:08-cv-12711, 2009 WL 877640, at *4, 2009 U.S. Dist. LEXIS 26535, at *12-13, 2009 WL 877640 (E.D.Mich. Mar. 30, 2009). Defendant claims that as a result of the legal notice, it suffered approximately $3.4 million in damages.
The Sixth Circuit uses a five-element test to analyze liability for false advertising under Section 43(a) of the Lanham Act:
Herman Miller, Inc. v. Palazzetti Imps. & Exps., Inc., 270 F.3d 298, 323 (6th Cir. 2001) (citing Am. Council of Certified Podiatric Physicians and Surgeons v. Am. Bd. of Podiatric Surgery, Inc., 185 F.3d 606, 613 (6th Cir.1999)). In an action for damages based on misleading statements, the claim "can only be established by proof of actual deception (i.e., evidence that individual consumers perceived the advertising in a way that misled them about the plaintiff's product)." Am. Council of Certified Podiatric Physicians and Surgeons, 185 F.3d at 614. "Successful plaintiffs usually present evidence of actual deception through consumer surveys." Id. at 616 (citation omitted). In an action for injunctive relief based on misleading statements, the claim can be established by showing that the statements have a tendency to deceive the intended audience. Id. at 618. Where the statements at issue are literally false, as opposed to true but misleading, actual deception is presumed. Id. at 613.
Plaintiff argues that there is insufficient evidence to support a finding that the legal notice actually deceived a substantial portion of its intended audience. In response, Defendant argues that the legal notice was literally false, and that actual deception is therefore presumed. Alternatively, Defendant contends that the following evidence demonstrates that a substantial portion of the intended audience was actually deceived: (1) distributors and brokers contacted Defendant about returning 6 Hour POWER; (2) distributors and brokers called and wrote to Defendant with inquires about the legal notice; (3) distributors reported confusion among retailers about whether 6 Hour POWER had been recalled; (4) a distributor complained that he lost accounts and sales for 6 Hour POWER because of the legal notice; and (5) a trade journal article reported that the
While Defendant argues that deception is presumed because the legal notice is literally false, the Court disagrees. In support of its argument that the legal notice is false, Defendant relies on the opinions of Magistrate Pepe and Judge Rosen discussed supra. The Court first notes, however, that the decisions of Magistrate Pepe and Judge Rosen are not binding upon this Court, especially considering that they involved different parties and circumstances, and took place at the preliminary injunction stage. See William G. Wilcox, D.O., P.C. Employees Defined Benefit Pension Trust v. United States, 888 F.2d 1111, 1114 (6th Cir.1989) ("[A] trial court's disposition of the substantive issues joined on a motion for extraordinary relief is not dispositive of those substantive issues on the merits."). Second, the Court notes that Judge Rosen's opinion and order adopting the Report and Recommendation did not state that the legal notice was false; rather, Judge Rosen concluded only that the legal notice was misleading. See BDI Marketing, Inc., 2009 WL 877640, at *1-2, 2009 U.S. Dist. LEXIS 26535, at *4-6. Third, the Court disagrees with Magistrate Pepe's conclusion that the legal notice falsely stated that Plaintiff won a decision against "a `6 Hour' shot." According to Magistrate Pepe, "Living Essentials did not win a decision against a "`6 Hour' energy shot" as stated in the press release, but rather won a decision against N2G's use of a [sic] overall product image (i.e.—the label and bottle) that was confusingly similar to Living Essentials' overall product image." BDI Marketing, Inc., 2008 U.S. Dist. LEXIS 116678, at *7-13. However, it is undisputed that Plaintiff was awarded injunctive relief against the producer of an energy shot bearing the name "6-Hour", as stated in the notice. Stating that the decision was based on the use of an overall product image would have, perhaps, provided more clarity, but the absence of the explanation for the injunctive relief does not render the statement literally false. Thus, Defendant must demonstrate actual deception of a substantial portion of the legal notice's intended audience in order to recover damages.
Defendant does not dispute Plaintiff's assertion that the intended audience for the legal notice was retailers, i.e., convenience store and truck stop entities. Therefore, the Court need only consider the effect that the legal notice had on retailers. While Defendant presents numerous statements from its employees, distributors, and brokers, who reported being confused by the legal notice, such evidence fails to reflect how the intended audience of retailers reacted. Defendant attempts to show that retailers were confused by the legal notice through statements from its employees, distributors, and brokers, who state that various unidentified retailers contacted them because they were confused by the legal notice. However, the Court finds that these out of court statements constitute inadmissible hearsay, which cannot raise a genuine issue of material fact as to confusion. See Interactive Prods. Corp. v. a2z Mobile Office Solutions, Inc., 195 F.Supp.2d 1024, 1033 (S.D.Ohio 2001) ("[T]he only evidence of deception are the hearsay statements of a customer ... who told Comeaux that two of his customers were confused by the Announcement. Defendants argue correctly that the hearsay statements of [the] customer are inadmissible and, therefore, do not create a genuine issue of fact on deception."). Defendant does offer the direct testimony of Allen Cipinko, a distributor who complained that he lost accounts
Moreover, the Sixth Circuit has equated deception with being "tricked into believing an untruth" about a product; mere confusion and inquiry are insufficient. See id. at 617 ("While this letter may demonstrate some confusion by Coles, it does not show that he was tricked into believing an untruth about plaintiff."). Here, Defendant has not provided the Court with admissible evidence showing that a substantial portion of the 100,000 plus retailers who received the legal notice were tricked into believing that 6 Hour POWER had been recalled. Instead, Defendant has merely provided evidence of confusion and inquiry among retailers, as noted in the trade journal publication cited by Defendant, and that Defendant spent an "inordinate amount of time responding to such confusion." Thus, the Court finds that Defendant has failed to establish, with admissible evidence, sufficient facts demonstrating that the legal notice actually deceived a substantial portion of the intended audience.
In Defendant's reply brief, Defendant asserts that it also seeks injunctive relief in the form of corrective advertising, which would only require it to prove that the legal notice had a tendency to deceive the intended audience. As discussed supra, although Magistrate Pepe and Judge Rosen concluded in a different case that the legal notice had a tendency to deceive its intended audience, their opinions are not binding upon this Court. This Court finds that a plain reading of the legal notice would not trick a reasonable viewer into believing that 6 Hour POWER had been recalled. The letter truthfully stated that Plaintiff won "a" decision against "a" 6 Hour energy product, and that "a" 6 Hour product had been recalled. Nowhere did the letter state or imply, as Defendant contends, that "all" products bearing the name "6 Hour" had been recalled. At worst, the legal notice should have caused the intended audience to inquire as to which product bearing the name "6 Hour" had been recalled; there was no language that could have tricked a reasonable viewer into believing that it applied specifically to 6 Hour POWER. The Court acknowledges that the legal notice was ambiguous in that it did not state which product had been recalled. However, the Court is unwilling to hold that a statement tends to deceive merely because it is ambiguous. Defendant has not provided the Court with any legal authority standing for such a proposition. Thus, the Court finds that Defendant has failed to demonstrate that the legal notice had a tendency to deceive the intended audience.
Accordingly, for the reasons stated above, Plaintiff's motion for summary judgment on Defendant's counterclaim for false advertising is granted, and Defendant's motion for summary judgment is denied.
In Count III of its amended countercomplaint, Defendant alleges the state-law
In Count IV of Defendant's amended countercomplaint, Defendant claims that Plaintiff's distribution of the legal notice tortiously interfered with Defendant's contractual relations. To succeed on this claim, Defendant must prove: (1) the existence of a contract; (2) breach of the contract; and (3) an unjustified instigation of the breach by Plaintiff. Badiee v. Brighton Area Sch., 265 Mich.App. 343, 366, 695 N.W.2d 521 (2005). "`One who alleges tortious interference with a contractual or business relationship must allege the intentional doing of a per se wrongful act or the doing of a lawful act with malice and unjustified in law for the purpose of invading the contractual rights or business relationship of another.'" CMI Int'l, Inc. v. Intermet Int'l Corp., 251 Mich.App. 125, 131, 649 N.W.2d 808 (2002) (quoting Feldman v. Green, 138 Mich.App. 360, 378, 360 N.W.2d 881 (1984)). "A wrongful act per se is an act that is inherently wrongful or an act that can never be justified under any circumstances." Prysak v. R L Polk Co., 193 Mich.App. 1, 12-13, 483 N.W.2d 629 (1992). "If the defendant's conduct was not wrongful per se, the plaintiff must demonstrate specific, affirmative acts that corroborate the unlawful purpose of the interference." CMI Int'l, 251 Mich.App. at 131, 649 N.W.2d 808 (citations omitted).
Here, Plaintiff has not denied the existence of a contract between Defendant and Meijer for the sale of Defendant's product, nor has Plaintiff denied that a breach occurred. Rather, Plaintiff contends that its legal notice did not instigate a breach of contract and that its conduct in distributing the legal notice was not per se wrongful or done with malice. In its response, Defendant does not argue that Plaintiff's conduct in distributing the legal notice was wrongful per se. Instead, Defendant contends that "actual malice is substantiated by Mr. Bhargava's own admissions." However, Defendant does not provide the Court with any citations to Mr. Bhargava's alleged admissions or any other evidence or argument with respect to this issue. Therefore, the Court finds that Defendant has failed to designate specific facts showing that there is a genuine issue for trial. Accordingly, Plaintiff's motion for summary judgment is granted with respect to Defendant's counterclaim for tortious interference with contractual relations.
To establish tortious interference with business relationships, Defendant must prove: (1) the existence of a valid business relationship or expectancy; (2) knowledge of the relationship or expectancy on the part of Plaintiff; (3) an intentional interference by Plaintiff inducing or
Plaintiff argues that there is an absence of evidence to support Defendant's claim that, by distributing its legal notice, Plaintiff knowingly interfered with a valid business relationship or expectancy and that Defendant suffered damages as a result. In its response, Defendant identifies business relationships with "Meijer," "Casey's De Moines stores", and "Love's in Marshall, Michigan." With respect to Defendant's relationship with Meijer, Defendant does not rebut Plaintiff's assertion that there is no evidence to support a conclusion that Plaintiff knew of this relationship when it distributed the legal notice. With respect to Defendant's relationships with Casey's De Moines stores and Love's in Marshall, Michigan, Defendant does not rebut Plaintiff's assertion that there is an absence of evidence to support a conclusion that the alleged interference resulted in damage to Defendant. Accordingly, the Court grants Plaintiff's motion for summary judgment as it relates to Defendant's counterclaim for tortious interference with business relationships.
In Counts VI and VII of Defendant's amended countercomplaint, Defendant alleges that Plaintiff violated Section 2 of the Sherman Act, 15 U.S.C. § 2, both in fact and by attempt. Section 2 of the Sherman Act provides:
15 U.S.C. § 2. "Section 4 of the Clayton Act permits a private suit for violations of § 2 and the recovery of treble damages to those who succeed on their claims under the Sherman Act." J.B.D.L. Corp. v. Wyeth-Ayerst Labs., Inc., 485 F.3d 880, 887 (6th Cir.2007) (citing 15 U.S.C. § 15). A successful claim under Section 2 of the Sherman Act requires a two-pronged showing: "(1) the possession of monopoly power in a relevant market; and (2) the willful acquisition, maintenance, or use of that power by anti-competitive or exclusionary means as opposed to `growth or development resulting from a superior product, business acumen, or historic accident.'" Conwood Co., L.P. v. U.S. Tobacco Co., 290 F.3d 768, 782 (6th Cir.2002) (quoting Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585, 595-96, 105 S.Ct. 2847, 86 L.Ed.2d 467 (1985)). "In addition, in this circuit, an antitrust [claimant] must show that (1) the alleged violation tended to reduce competition overall and (2) the [claimant]'s injury was a consequence of the resulting diminished competition." J.B.D.L. Corp., 485 F.3d at 887 (citing Conwood, 290 F.3d at 788-89). Moreover, the claimant "bears the burden of showing that the alleged violation was a material cause of its injury, a substantial factor in the occurrence of damages or that the violation was the proximate cause of the damage." Conwood, 290 F.3d at 788. "The [alleged perpetrator]'s actions need not be the sole proximate cause of any alleged injuries, but `must be proved as a matter of fact and with a fair degree of certainty.'" J.B.D.L. Corp., 485 F.3d at 887 (quoting Ezzo's Invs., Inc. v. Royal
Here, Defendant contends that Plaintiff violated Section 2 of the Sherman Act based on the following allegedly anti-competitive conduct: (1) asserting a fraudulently obtained supplemental trademark registration; (2) false advertising in connection with the legal notice; (3) offering incentives to retailers for superior product placement; (4) requesting that its retailers sell its product at the exclusion of other energy shot products; and (5) registering the "6hourpower.com" and "sixhourpower.com" internet domain names. In its present motion, Plaintiff argues that summary judgment is appropriate because Defendant's requested damages derive solely from Plaintiff's distribution of the legal notice, and that its conduct in distributing the legal notice cannot provide the basis for a claim under Section 2 as a matter of law. For the following reasons, the Court agrees with Plaintiff.
Plaintiff has presented evidence showing that Defendant's antitrust counterclaims seek damages, exclusive of treble damages, in the amount of $3.4 million. According to the deposition testimony of Defendant's damages expert, Carl Degen, the $3.4 million damages figure is solely related to the effect of Plaintiff's distribution of the legal notice: "[I]t's my opinion that the result of the letter was a loss of 3.4 million dollars... My damages calculation of 3.4 million is all of the losses suffered by [Defendant] as a result of the letter." See Degen Dep. at 20-23. In its response, Defendant states that Plaintiff "misrepresents that [Defendant]'s damages `are based solely on the false advertising/Letter.'" In support of this assertion, Defendant argues that in pages 3-4 of Degen's expert report, Degen "specifically states that the 3.4 million calculation of damages is the aggregate damage caused by all conduct of which [Defendant] has complained and the result of the anticompetitive conduct as a whole." Defendant offers no other argument or evidence in support of this assertion. After reviewing pages 3-4 of Degen's report, the Court was unable to find any statements supporting Defendant's assertion. Thus, while Defendant has alleged five anti-competitive acts, it has only demonstrated that one of those acts—distribution of the legal notice—is a material cause of its alleged antitrust injury.
"To survive summary judgment... a [claimant] must allege facts sufficient for a jury to find that the defendant acquired, maintained, or attempted to acquire a monopoly through actions harmful to competition." See Am. Council of Certified Podiatric Physicians and Surgeons, 323 F.3d at 370 (emphasis added). According to the Sixth Circuit, "[a]n antitrust claim premised primarily on advertising or speech must overcome a presumption that such advertising or speech had a de minimis effect on competition." Id. To rebut the de minimus presumption, a claimant must demonstrate that "(1) the advertising was clearly false, and (2) it would be difficult or costly for the [alleged perpetrator] to counter the false advertising." Id. at 371 (emphasis added).
For the reasons discussed in Part IV(B)(2)(a), supra, Defendant has failed to demonstrate that the legal notice was clearly false. Thus, the Court finds that Defendant has failed to rebut the presumption that the legal notice had a de minimus effect on competition. Accordingly, the Court grants Plaintiff's motion for summary judgment with respect to Defendant's antitrust counterclaims.
In Count VIII of Defendant's amended countercomplaint, Defendant claims that Plaintiff violated the Michigan Consumer Protection Act ("MCPA"), Mich. Comp. Laws § 445.903, which prohibits "unfair, unconscionable, or deceptive methods, acts or practices in the conduct of trade or commerce," when it distributed the legal notice to retailers. Plaintiff avers that summary judgment is appropriate with respect to this claim because (1) the MCPA is intended to protect consumers in their purchase of goods, while Plaintiff distributed the legal notice only to retailers, and (2) Defendant's counterclaim is improperly pleaded, inasmuch as Defendant has failed to "indicate which of the MCPA's 37 provisions its claim is asserted under." See Fed.R.Civ.P. 8(a)(2) ("A pleading that states a claim for relief must contain ... a short and plain statement of the claim showing that the pleader is entitled to relief.").
In its response, Defendant argues that the legal notice affected consumers even though it was distributed solely to retailers, but Defendant does not respond to Plaintiff's assertion that its counterclaim is improperly pleaded. Defendant has yet to identify which of the MCPA's provisions its counterclaim is asserted under, and Defendant has not provided the Court with an explanation for this decision. Therefore, the Court can only assume that Defendant concedes this issue and agrees that it has not properly pleaded its claim. See Center For Biological Diversity, 2009 WL 3241607, at *3. Accordingly, the Court hereby grant's Plaintiff's motion for summary judgment with respect to Defendant's counterclaim under the MCPA.
The parties have filed cross-motions for summary judgment with respect to whether Defendant's use of the 6 Hour POWER mark infringes Plaintiff's common law trademark rights in the 5-hour ENERGY mark.
The Lanham Act prohibits the use of any word, term, or name which "is likely to cause confusion ... as to the origin, sponsorship, or approval of his or her goods." 15 U.S.C. § 1125(a). To prevail on its trademark infringement claim, Plaintiff must show that Defendant's mark creates a likelihood of confusion regarding the origin of the goods offered by Plaintiff and Defendant. See Therma-Scan, Inc. v. Thermoscan, Inc., 295 F.3d 623, 629 (6th Cir.2002). In determining whether a likelihood of confusion exists, the Sixth Circuit considers the following factors relevant:
Therma-Scan, Inc., 295 F.3d at 630. While not all of the factors are relevant in every case, "[t]he ultimate question remains whether relevant consumers are likely to believe that the products or services offered by the parties are affiliated in some way." Id. (citation omitted). Whether confusion exists "is a mixed question of fact and law," but the ultimate determination of whether a given set of foundational facts establishes a likelihood of confusion is a legal conclusion. Id. at 630-31.
In considering the above factors, the Court finds that factors two, five and six
As to the first factor, the strength of Plaintiff's mark, the Court finds that it weighs in favor of Defendant:
Little Caesar Enters., Inc. v. Pizza Caesar, Inc., 834 F.2d 568, 571 (6th Cir.1987). Given the descriptive nature of Plaintiff's mark, i.e., that it provides users with five hours of energy, the mark itself has little strength. Plaintiff relies on Leelanau Wine Cellars, Ltd. v. Black & Red, Inc., 502 F.3d 504 (6th Cir.2007), for the proposition that "[e]ven a descriptive mark can be a strong mark with a showing of acquired distinctiveness" and secondary meaning. Id. at 513 ("A descriptive mark achieves secondary meaning when `in the minds of the public, the primary significance of a product feature or term is to identify the source of the product rather than the product.'") (quoting Inwood Labs., Inc. v. Ives Labs., Inc., 456 U.S. 844, 851 n. 11, 102 S.Ct. 2182, 72 L.Ed.2d 606 (1982)). However, Leelanau Wine Cellars discusses acquired distinctiveness and secondary meaning only in connection with the initial question of whether a mark is entitled to trademark protection in the first place. Id. at 513. ("Marks that are descriptive are not inherently distinctive but may enjoy the benefit of protection if they develop a `secondary meaning.'") (quoting Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 768, 112 S.Ct. 2753, 120 L.Ed.2d 615 (1992)). Significantly, Leelanau Wine Cellars specifically rejects the argument that a descriptive mark is strong because it has secondary meaning. Id. at 516 ("LWC misreads Wynn II to state that `[a] trademark that is descriptive and has secondary meaning is a `relatively strong' mark.'") (quoting Wynn Oil Co. v. Am. Way Serv. Corp., 943 F.2d 595 (6th Cir.1991) (internal quotations omitted)).
With respect to the third factor, the similarity of the marks, the Court finds that this weighs heavily in favor of Defendant, as the marks are decidedly dissimilar. The only word shared by both marks is the word "hour," which is the least prominent word on each mark. See Little Caesar Enters., Inc., 834 F.2d at 572 (finding "Little Caesar" and "Pizza Caesar USA" to be dissimilar in sound and appearance despite sharing the word "Caesar"). The fonts are also very different when viewed as they appear in the marketplace; 5-hour ENERGY is italicized, written in black, and outlined with a yellow shadow line, while 6 Hour POWER is not
With respect to the fourth factor, actual confusion in the marketplace, the Court finds that this weighs in favor of Defendant. While evidence of actual confusion is certainly probative of a likelihood of confusion, "it does not follow that any type or quantum of such evidence is entitled to significant weight in the determination." Homeowners Group, Inc. v. Home Marketing Specialists, Inc., 931 F.2d 1100, 1110 (6th Cir.1991). "Where the parties have been doing business in the same area for some time and where they have advertised extensively, isolated instances of actual confusion are not conclusive or entitled to great weight in the determination." Id. (citations omitted). "Indeed, the existence of only a handful of instances of actual confusion after a significant time or a significant degree of concurrent sales under the respective marks may even lead to an inference that no likelihood of confusion exists." Id. "Perhaps as important as the number of instances of confusion are the kinds of persons confused and degree of confusion. `Short-lived confusion or confusion of individuals casually acquainted with a business is worthy of little weight,' while chronic mistakes and serious confusion of actual customers are worthy of greater weight." Id. (quoting Safeway Stores, Inc. v. Safeway Discount Drugs, Inc., 675 F.2d 1160, 1167 (11th Cir.1982)) (internal citation omitted).
Plaintiff first argues that a survey conducted by one of its experts found a 38.5% likelihood of confusion. Defendant responds that the survey should be given little, if any, weight due to flaws in the survey's methodology. Specifically, Defendant claims that the survey was based on questions that were highly leading. Plaintiff does not rebut Defendant's asserted flaws, arguing only that alleged flaws go to the weight of the evidence, rather than its admissibility, and that Defendant lacks empirical evidence to support its claim.
"Where a survey presented on the issue of actual confusion reflects methodological errors, a court may choose to limit the importance it accords the study in its likelihood of confusion analysis." Leelanau Wine Cellars, 502 F.3d at 518 (district court did not err in refusing to give significant weight to a survey that (1) failed to include potential purchasers, (2) did not replicate market conditions, and (3) used suggestive and misleading questions). Since Plaintiff has not rebutted Defendant's assertion that the survey is flawed for having utilized "highly leading" questions, the Court does not give significant weight to the survey.
Plaintiff also attempts to show actual confusion through evidence that Defendant's employees received inquiries from customers questioning whether 6 Hour POWER is made by the same company as 5-hour ENERGY. However, the Court finds that mere inquiries such as these are insufficient to demonstrate actual confusion. First, the inquires do not support a finding that the customers believed that 6 Hour POWER was made by Plaintiff, and second, the inquiries suggest that the customers may have been aware of different product sources. See Duluth News-Tribune v. Mesabi Publ. Co., 84 F.3d 1093,
Plaintiff also attempts to show actual confusion through the accounts of three, as Plaintiff refers to them, "third party witnesses." One such witness, Alvin Schwapp, who had never purchased either product but had seen 5-hour ENERGY on commercials and in stores, sent an e-mail to Plaintiff complaining about a 6 Hour POWER television commercial. Another witness, Kyle Litz, e-mailed Plaintiff to complain when he felt nauseous after consuming 6 Hour POWER. The third witness, Jacqueline Debruler, a buyer at Meijer, stated during her deposition that it was her belief that Meijer sold a product known as "5 hour power," and later stated, "I guess I thought they were interchangeable terms," when referring to 5-hour ENERGY, 5 hour power, and 6 Hour POWER. However, the Court finds that this evidence of confusion is entitled to little weight. As to Schwapp and Debruler, it is apparent that both individuals were only casually acquainted with the products at the time they were confused. As to Litz, he stated in his deposition that he mistakenly contacted Plaintiff, and that he did not actually believe 6 Hour POWER was made by Plaintiff at that time.
Lastly, Plaintiff seeks to demonstrate actual confusion through an "admission log" containing reports of forty alleged instances of consumer confusion. Defendant contends that the confusion log should be given little weight, as many of the instances are based on inadmissible hearsay, i.e., reports from individuals that various other unnamed individuals reported confusion, and because the alleged incidents are de minimus in light of the millions of products sold over the years. The Court agrees. Plaintiff does not rebut Defendant's claim that many of the instances of reported confusion are hearsay, nor does Plaintiff explain how the remaining instances are anything more than isolated, short-lived accounts reported by people only casually acquainted with the products. Thus, the Court finds that the few actual instances of confusion reported by Plaintiff are insignificant in light of the duration of concurrent sales, such that this factor weighs in favor of Defendant.
Regarding the seventh factor, Defendant's intent in selecting its mark, the Court finds that this weighs in favor of Defendant. In considering this factor, the Court must determine whether "the mark was adopted with the intent of deriving benefit from the reputation of the plaintiff." Frisch's Restaurants Inc., 670 F.2d at 648. Defendant asserts that it included the word "POWER" in its mark due to success it had with a previous line of energy products sold under the rhyming name "TOWER OF POWER". Defendant also asserts that it included the words "6 Hour" in its mark based on research indicating that one of the product's ingredients, caffeine, has effects in the human body lasting approximately six hours, and because it desired another rhyming name similar to TOWER OF POWER. Given Defendant's previous use of the word POWER in connection with the sale of energy products, as well as Defendant's previous use of a term that rhymes with POWER, the Court finds that Defendant has presented credible evidence that it did not choose the 6 Hour POWER mark to intentionally copy Plaintiff's mark. Plaintiff contends that the Court may infer intent from Defendant's knowledge of Plaintiff's mark and the similarity of the mark chosen by Defendant. However, as discussed supra, the Court does not find that the marks are sufficiently similar to draw such an inference.
The Court is unwilling to hold that there is a likelihood of confusion merely because Defendant's mark, like Plaintiff's mark, describes the number of hours of energy that it will provide, especially where one focuses on "ENERGY" and the other focuses on "POWER." To hold otherwise would, in essence, give Plaintiff a monopoly on the use of all marks in connection with energy products that describe the amount of hours or other denomination of time for which the products function. The Court finds the marks at issue in this case similar to the abundance of marks utilized in connection with "dollar" stores, wherein all products are sold for $1.00. Marks that include the word "dollar" describe what kind of store exists, yet the mark for each dollar store is not confusingly similar to the next merely because each contains the word "dollar."
Accordingly, the Court denies Plaintiff's motion for summary judgment on its trademark infringement claim, and the Court grant's Defendant's motion for summary judgment.
Defendant has filed a motion to strike exhibits relied upon by Plaintiff in its briefs in support of its motions (dkts. 131-133) for summary judgment [dkt. 169] based on Plaintiff's alleged discovery abuses. Since the challenged exhibits were not relevant to the Court's disposition of Plaintiff's motions for summary judgment, Defendant's motion to strike [dkt. 169] is denied as moot.
Defendant filed a motion to strike the testimony of Dr. Dan Sarel [dkt. 202] and a motion to strike the testimony of Drs. Michael Rappeport and Howard Marylander [dkt. 203]. Since all claims have been dismissed, Defendant's motions to strike [dkts. 202 and 203] are denied as moot.
For the reasons set forth above, Plaintiff's motion for partial summary judgment
IT IS FURTHER ORDERED that Plaintiff's motion for summary judgment on Counts I-VIII of Defendant's Amended Countercomplaint [dkt. 132] is GRANTED.
IT IS FURTHER ORDERED that Defendant's motion to strike exhibits relied upon by Plaintiff in Dkts. 131-133 [dkt. 169] is DENIED AS MOOT.
IT IS FURTHER ORDERED that Defendant's motion for summary judgment for false advertising [dkt. 135] is DENIED.
IT IS FURTHER ORDERED that Plaintiff's motion for summary judgment for trademark infringement [dkt. 133] is DENIED.
IT IS FURTHER ORDERED that Defendant's motion for summary judgment on Plaintiff's trademark infringement claim [dkt. 137] is GRANTED.
IT IS FURTHER ORDERED that Defendant's motion for sanctions [dkt. 192] is DENIED AS MOOT.
IT IS FURTHER ORDERED that Defendant's motion to strike [dkt. 202] is DENIED AS MOOT.
IT IS FURTHER ORDERED that Defendant's motion to exclude testimony [dkt. 203] is DENIED AS MOOT.
IT IS FURTHER ORDERED that Defendant's motion to strike exhibits relied on by Plaintiff in dkt. 158 [dkt. 208] is DENIED AS MOOT.
IT IS FURTHER ORDERED that Defendant's motions for leave to file briefs in excess of the page limits set forth in the Local Rules [dkts. 136, 188 and 213] are GRANTED.
IT IS FURTHER ORDERED that Plaintiff's motions for leave to file briefs in excess of the page limits set forth in the Local Rules [dkts. 156, 199 and 226] are GRANTED.
IT IS FURTHER ORDERED that since this opinion and order dismisses each of Plaintiff's claims and each of Defendant's counterclaims, this case is now closed.
IT IS SO ORDERED.
