LYLE E. STROM, Senior District Judge.
This matter is before the Court on the motions for summary judgment of defendant Ishtar Skin Products, LLC ("Ishtar") (Filing No.
Lovely Skin and Ishtar both engage in the business of selling skin care products via an internet website. Lovely Skin is a Nebraska corporation with its principal place of business in Omaha, Nebraska. Lovely Skin has marketed and sold its products through its internet website, "LovelySkin.com," since 2003, the year of its incorporation (Filing No.
Dr. Schlessinger's medical practice, Skin Specialists, P.C. ("Skin Specialists"), first attempted to register the terms LOVELYSKIN (STYLIZED) and LOVELYSKIN.COM (STYLIZED) with the United States Patent and Trademark Office (the "PTO") in late 1999-early 2000 (Ex. 3, Filing No.
Since that time, Lovely Skin applied for and was awarded registration of two marks on the PTO Principal Register that are at issue in this action: registered trademark number 2,998,098 for "LovelySkin" (stylized), dated September 20, 2005 (Ex. 1, Filing No.
Ishtar is a California limited liability company with its principal place of business in Porter Ranch, California. Ishtar's sole member and business manager is Sharokin Vardeh ("Ms. Vardeh"). Ishtar has marketed and sold its products through its internet website, "livelyskin.com," since 2005 (Filing No.
In March 2010, Lovely Skin brought this action against Ishtar pursuant to 15 U.S.C. § 1114(1), trademark infringement; Lovely Skin also alleged common law unfair competition, false designation of origin under 15 U.S.C. § 1125(a), and injury to business reputation (Filing No.
On September 7, 2010, Ishtar filed a petition for cancellation of the Lovely Skin Marks with the PTO. Ishtar informs the Court that the cancellation proceeding has been stayed, pending the outcome of this litigation.
On November 24, 2010, Ishtar filed its answer, where it asserted seven affirmative defenses along with two counterclaims that request cancellation of the registration of the Lovely Skin Marks (Filing No.
Precision Instrument Mfg. Co. v. Auto. Maint. Mach. Co., 324 U.S. 806, 814 (1945). "A court of equity has a duty to consider not only the nature of the asserted right, but also the conduct of the plaintiff in seeking to enforce that right. ... It is still, even in this modern day of merged practice, a court of conscience. ..." U.S. Jaycees v. Cedar Rapids Jaycees, 794 F.2d 379, 382 (8th Cir. 1986).
The Third Circuit has described the application of the unclean hands defense in the context of a trademark case:
Citizens Fin. Grp., Inc. v. Citizens Nat. Bank of Evans City, 383 F.3d 110, 129 (3rd Cir. 2004) (citations omitted). "To sustain an unclean hands defense in a Lanham Act case, a defendant must show that the plaintiff has engaged in inequitable conduct or bad faith and the misconduct must have a material relation to the equitable relief that the plaintiff seeks." Rainbow Play Sys., Inc. v. Backyard Adventure, Inc., No. CIV. 06-4166, 2009 WL 3150984, at *6 (D.S.D. Sep. 28, 2009).
Ishtar claims that Lovely Skin purchased "adwords" from various internet search engines, such as Google, so that a person who searched for the term "livelyskin" using the Google search engine would be directed to a web page where the first entry, an advertisement, was for Lovely Skin. Ishtar also claims, "Lovely Skin purchased the following keywords from Google: `lively skin el granada ca;' `lively skin granada hills;' `lively skin granada hills ca;' `livelyskin rancho cucamonga ca;' [and] `livelyskin san fernando'" (Filing No.
Consequently, Ishtar claims that "it was Lovely Skin, and not Ishtar, who was the party that intentionally sought to strengthen the connection between the term "livelyskin" and the Lovely Skin Site in the minds of consumers" (Filing No.
In its opposing brief, Lovely Skin explains that it purchased the adword "livelyskin" because it typically "purchases misspellings of Lovely Skin to maximize its adword search results" (Filing No.
To the extent that the purchase of such adwords is found to be inequitable, Lovely Skin claims that it has "purged" itself of such conduct because "Lovely Skin no longer purchases the adword `livelyskin'" (Id. at 10). However, at oral argument, Ishtar claimed that the Lovely Skin advertisement still appeared as recently as January 13, 2012.
The Court has carefully considered Ishtar's "unclean hands" argument. Nevertheless, the Court finds that there are "genuine factual issues" in this case that must be more fully developed at trial. Accordingly, Ishtar's motion for summary judgment will be denied as to the issue of unclean hands.
In its second major argument for summary judgment, Ishtar claims that all four causes of action in Lovely Skin's complaint require Lovely Skin to establish that Ishtar has infringed on the Lovely Skin Marks, and since Lovely Skin has failed to establish infringement, then summary judgment should be granted.
Trademark infringement requires the likelihood of confusion on the part of the public. See 15 U.S.C. § 1114(1). The Eighth Circuit set forth the requirements for the likelihood of confusion in what have become known as the "SquirtCo factors":
Cmty. of Christ Copyright Corp. v. Devon Park Restoration Branch of Jesus Christ's Church, 634 F.3d 1005, 1009 (8th Cir. 2011) (citing SquirtCo. v. Seven-Up Co., 628 F.2d 1086, 1091 (8th Cir. 1980)). "[R]esolution of this issue does not hinge on a single factor but requires a consideration of numerous factors to determine whether under all the circumstances there is a likelihood of confusion." SquirtCo., 628 F.2d at 1091.
The strength of a trademark is closely associated with its classification. "[Trademark] cases, and in some instances the Lanham Act, identify four different categories of terms with respect to trademark protection. Arrayed in an ascending order which roughly reflects their eligibility to trademark status and the degree of protection accorded, these classes are (1) generic, (2) descriptive, (3) suggestive, and (4) arbitrary or fanciful." Abercrombie & Fitch Co. v. Hunting World, Inc., 537 F.2d 4, 9 (2nd Cir. 1976) (the "Abercrombie Spectrum"). Marks in the first two classes of the Abercrombie Spectrum are non-distinctive and are not capable of being registered.
"The general rule regarding distinctiveness is clear: An identifying mark is distinctive and capable of being protected if it either (1) is inherently distinctive or (2) has acquired distinctiveness through secondary meaning." Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 769 (1992). Thus, there are two paths that lead to the designation of "distinctiveness." The first path is for marks that are either suggestive, arbitrary, or fanciful; those marks are inherently distinctive. "A term is suggestive if it requires imagination, thought and perception to reach a conclusion as to the nature of goods." Abercrombie, 537 F.2d at 11.
The Lanham Act generally prohibits the registration of a mark that is "merely descriptive." 15 U.S.C. § 1052(e). "A term is descriptive if it forthwith conveys an immediate idea of the ingredients, qualities or characteristics of the goods." Abercrombie, 537 F.2d at 11. However, as delineated in 15 U.S.C. § 1052(f), a second path to distinctiveness exists for a descriptive mark that, by virtue of acquiring secondary meaning, becomes distinctive, while still retaining its status as "descriptive" on the Abercrombie Spectrum. "Marks which are merely descriptive of a product are not inherently distinctive. When used to describe a product, they do not inherently identify a particular source, and hence cannot be protected. However, descriptive marks may acquire the distinctiveness which will allow them to be protected under the Act." Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 769 (1992).
Specifically, 15 U.S.C. § 1052(f) allows for "the registration of a mark used by the applicant which has become distinctive of the applicant's goods in commerce," established by "proof of substantially exclusive and continuous use thereof as a mark by the applicant in commerce for the five years before the date on which the claim of distinctiveness is made." 15 U.S.C. § 1052(f). Therefore, it follows that a mark registered under § 1052(f) "cannot be inherently distinctive as a matter of law." Aromatique, 28 F.3d at 869. However, registration under § 1052(f) also means that a mark is entitled to the "presumption... that the mark [has] acquired distinctiveness." Aromatique, 28 F.3d at 870.
Both of the Lovely Skin Marks were originally declared "merely descriptive" by the PTO. In addition, both marks were subsequently registered under 15 U.S.C. § 1052(f). Based on the foregoing discussion, the Court concludes that the Lovely Skin Marks are merely descriptive, not suggestive.
In addition, the very definition of "suggestive" cannot apply to "Lovely Skin" as a moniker for skin care products. Like the PTO, the Court finds that no "imagination, thought, or perception" is needed to "reach a conclusion as to the nature of goods" sold under the name "Lovely Skin." Abercrombie, 537 F.2d at 11. The goods sold by Lovely Skin under the Lovely Skin Marks are designed to produce lovely skin; that is, the goods are designed to produce exactly what the name describes.
However, there still exists the presumption that the Lovely Skin Marks, descriptive though they may be, have nonetheless acquired secondary meaning and, thereby, have acquired distinctiveness. Whether this presumption holds will be better determined by the Court after a more expansive airing of the evidence at trial.
With respect to the remaining SquirtCo factors, The Court has reviewed the briefs and evidentiary submissions, and has considered the parties' oral arguments. Viewing the facts and inferences in the light most favorable to the nonmoving party, Lovely Skin, the Court finds that the remaining SquirtCo factors (with the exception of "the alleged infringer's intent to confuse the public," see below) present numerous unresolved, material issues of fact that are not amenable to summary judgment. Ishtar's motion for summary judgment will be denied.
"In any action involving a registered mark the court may determine the right to registration, order the cancellation of registrations, in whole or in part, restore canceled registrations, and otherwise rectify the register with respect to the registrations of any party to the action." 15 U.S.C. § 1119. "This provision has been held to be concurrent with the authority of the Patent Office to conduct cancellation proceedings. ..." D. M. & Antique Import Corp. v. Royal Saxe Corp., 311 F.Supp. 1261, 1268 (D.C.N.Y. 1969). "Cancellation is a discretionary matter for the district court." Gilbert/Robinson, Inc. v. Carrie Beverage-Missouri, Inc., 989 F.2d 985, 993 (8th Cir. 1993).
In addition to the power of the district court to order the cancellation of a trademark, an aggrieved party may initiate a cancellation proceeding itself with the PTO:
15 U.S.C. § 1064(1) (emphasis added).
The Lovely Skin Marks were registered on September 20, 2005, and June 19, 2007. Ishtar filed a petition to cancel the registration of the Lovely Skin Marks with the PTO on September 7, 2010, within five years of their registration (Ex. 3, Filing No.
Lovely Skin's first argument in favor of summary judgment is that Ishtar neglected to plead fraud. Unlike 15 U.S.C. § 1064(3), neither 15 U.S.C. §§ 1119 nor 1064(1) requires that Ishtar plead fraud under these circumstances. Therefore, this argument must be rejected.
Lovely Skin's second argument is that Ishtar has not been damaged by the registration of the Lovely Skin Marks, as required by 15 U.S.C. § 1064(1). Ishtar states that it has been damaged inasmuch as it is defending itself in this lawsuit, and that the likelihood of damage exists in the future because Ishtar may be precluded from registering its own marks due to the registration of the Lovely Skin Marks (Filing 120 at 15-16). The Court finds that Ishtar has presented evidence that it has been or will be damaged by the Lovely Skin Marks in the context of 15 U.S.C. § 1064(1).
Viewing the facts and inferences in the light most favorable to the nonmoving party, Ishtar, the Court finds that there remains a genuine dispute as to the material facts surrounding Ishtar's request for cancellation of the Lovely Skin Marks. In particular, the Court finds that whether Lovely Skin had "substantially exclusive and continuous use" of the Lovely Skin Marks "in commerce for the five years before the date on which the claim of distinctiveness [was] made" is an unresolved, genuine factual issue that must be further developed. 15 U.S.C. § 1052(f). Lovely Skin's motion for summary judgment as to Ishtar's counterclaims will be denied.
"Determining which actions belong to law and which to equity for the purpose of delimiting the jury trial right continues to be one of the most perplexing questions of trial administration." 9 Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 2302 (3d ed. 2008). The Supreme Court has described the process as a two-step historical test. In resolving the issue,
Markman v. Westview Instruments, Inc., 517 U.S. 370, 376 (1996) (citation omitted). So, from a practical point of view,
9 Wright & Miller, supra, § 2302.1. Consequently, the Court will evaluate each of the five remedies requested by Lovely Skin.
"[D]eclaratory judgments were utterly unknown in 1791 and thus the present right to a jury in an action for a declaratory judgment cannot be resolved by a glance at history." 10B Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure § 2769 (3d ed. 1998). Nor can a request for declaratory judgment "be decided on the supposition that there is something inherently `legal' or `equitable' about this kind of action." Id.
Id. "[A] plaintiff who is seeking equitable relief and not damages cannot wrest an entitlement to a jury trial by the facile expedient of attaching a claim for declaratory judgment. Otherwise anyone seeking an injunction could obtain a jury trial." Marseilles Hydro Power, LLC v. Marseilles Land and Water Co., 299 F.3d 643, 648 (7th Cir. 2002). Thus Lovely Skin's pleas for declaratory judgment do not carry with them the right to a jury trial unless Lovely Skin is otherwise afforded the right to a jury trial as to damages.
An injunction is a classic form of equitable relief.
9 Wright & Miller, supra, § 2308. The Lanham Act does not include an express provision for a jury trial for a party who is seeking an injunction. Absent such an express provision, Lovely Skin's requests for injunction lie in equity and do not support a demand for a jury trial.
The Lanham Act provides the district court with considerable latitude in awarding damages or profits in a trademark action.
15 U.S.C. § 1117(a) (emphasis added).
In Dairy Queen v. Wood, 369 U.S. 469 (1962), the United States Supreme Court established that a request for damages on a trademark infringement claim was a legal claim that must be afforded a trial by jury. "After Dairy Queen it is clear that there is a right to jury trial whenever damages are claimed in a trademark action, even though the damage claim may be considered incidental to an equitable suit for an injunction." Oxford Indus., Inc. v. Hartmarx Corp., No. 88 C 0322, 1990 WL 65792, at *5 (N.D. Ill. May 2, 1990).
Although the discovery period in this case ended on October 31, 2011, Lovely Skin has not submitted any evidence to the Court as to actual, monetary damages that it has suffered due to the alleged infringement by Ishtar. On the contrary, during Dr. Schlessinger's deposition, in response to the question "So as you sit here today, you are not aware of any revenue that flowed to my client that should have flowed to you?" Dr. Schlessinger replied, "Actually, I would restate the question in a different manner. I'm not aware of any revenue that went to [Ishtar] that shouldn't have come to Lovely Skin" (Ex. 2, Filing No.
A significant difference exists between requesting relief in the form of damages and in the form of profits: "To obtain an accounting of profits, the courts almost always require that defendant's infringement imply some connotation of `intent,' or a knowing act denoting an intent, to infringe or reap the harvest of another's mark and advertising." 5 J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition § 30:62 (4th ed. 2011) (collecting cases).
The Eighth Circuit recently discussed the requirement of willfulness for an infraction of 15 U.S.C. § 1125(a), the third allegation in Lovely Skin's complaint, in Masters v. UHS of Delaware, Inc. 631 F.3d 464 (8th Cir. 2011). In Masters, the Eighth Circuit was primarily addressing the issue of whether proof of actual confusion was required for an award of money damages. In its discussion, the Eighth Circuit stated, "For purposes of adjudicating this appeal, we assume, without deciding, that willful infringement is a prerequisite of monetary relief." Masters, 631 F.3d at 471 n.2. In addition, the Eighth Circuit approvingly cited the Ninth Circuit: "See Gracie v. Gracie, 217 F.3d 1060, 1068 (9th Cir. 2000) (holding that eligibility for monetary relief under 15 U.S.C. § 1114 of the Lanham Act `requires only a likelihood of confusion combined with willful infringement') (emphasis in original). ..." Masters, 631 F.3d at 474.
Lovely Skin did not address the issue of intent in its brief in opposition to Ishtar's motion to strike the jury demand. However, in its brief in opposition to Ishtar's motion for summary judgment, Lovely Skin addressed the issue in the context of the SquirtCo factors. In support of its allegation of intent, Lovely Skin described the actions of Ms. Vardeh's husband in an apparently unrelated case, but did not indicate how his actions might be attributed to Ishtar (Filing No.
Ishtar claims that it "did not have knowledge of Lovely Skin's name or website when it adopted the url www.livelyskin.com" (Filing No.
The Court finds that Lovely Skin has not submitted evidence that would establish that Ishtar intentionally infringed on the Lovely Skin Marks. Therefore, absent intent, the "principles of equity" require that Lovely Skin not be allowed to seek disgorgement of profits and that Lovely Skin be limited to non-legal remedies only.
"Under the [Lanham Act], the decision to award fees is committed to the district court, not the jury." Tamko Roofing Products, Inc. v. Ideal Roofing Co., Ltd., 282 F.3d 23, 31 (1st Cir. 2002) (citing 5 J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition § 30:99 (4th ed. 2001)). Since Lovely Skin's requests for damages, disgorgement of profits, and attorney fees do not meet the given requirements to establish the right to a trial by jury, Lovely Skin's jury demand will be denied, and Ishtar's motion to strike jury demand will be granted.
Ishtar seeks to exclude both the testimony of James T. Berger and the report that he has prepared, as well as the testimony of Megan Driscoll and the report she has prepared, under Federal Rule of Evidence 702 and Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993). After review of the reports and the parties' briefs, and in light of the fact that the jury demand is denied, the Court finds it more appropriate to evaluate the admissibility and the weight to be given to the reports in the context of the bench trial. Accordingly, the Court will reserve ruling on whether the reports will be received into evidence and whether the witnesses will testify as experts until the issues present themselves at trial, and Ishtar's motion to exclude will be denied.
On December 6, 2011, this Court granted Ishtar's motion to compel Lovely Skin's responses to Ishtar's Requests for Production of Documents 32 and 37 (Filing No.
As explained in the previous order, the Court finds that Ishtar's discovery requests are directly relevant, at a minimum, to Ishtar's affirmative defenses. To the extent that clarification is needed, the Court affirms its previous order (albeit with a new compliance date, February 17, 2012) and directs Lovely Skin to comply with Ishtar's discovery requests as previously ordered, including the breakdown of keyword purchases by year. In addition, this Court will enter a Protective Order to protect any confidential information that may be included in Lovely Skin's responses to Ishtar's Requests for Production of Documents 32 and 37. Accordingly,
IT IS ORDERED:
1) Ishtar's motion for summary judgment (Filing No.
2) Lovely Skin's motion for summary judgment (Filing No.
3) Ishtar's motion to strike jury demand (Filing No.
4) Ishtar's motion to exclude the expert report and testimony of James T. Berger (Filing No.
5) Ishtar's motion to exclude the expert report and testimony of Megan Driscoll (Filing No.
6) Lovely Skin's motion to clarify (Filing No.
7) A second amended progression order setting the date for trial will be issued by the Court forthwith; and
8) Lovely Skin's responses to Ishtar's Requests for Production of Documents 32 and 37 are subject to a Protective Order and shall be disclosed only in designated ways:
a) As used in this Protective Order, these terms have the following meanings:
b) All Confidential Documents, along with the information contained in the documents, shall be used solely for the purpose of this action, and no person receiving such documents shall, directly or indirectly, use, transfer, disclose, or communicate in any way the documents or their contents to any person other than those specified in paragraph c). Any other use is prohibited.
c) Access to any Confidential Document shall be limited to:
d) Within 60 days of the termination of this action, including any appeals, Ishtar shall either destroy or return to Lovely Skin all Confidential Documents, including any copies thereof.
e) Any party may apply to the Court for a modification of this Protective Order, and nothing in this Protective Order shall be construed to prevent a party from seeking such further provisions enhancing or limiting confidentiality as may be appropriate.
f) No action taken in accordance with the Protective Order shall be construed as a waiver of any claim or defense in the action or of any position to discoverability or admissibility of evidence.
g) The obligations imposed by this Protective Order shall survive the termination of this action.
