2009 WL 959775 (S.D.N.Y. Apr. 8, 2009)
Plaintiff filed an appeal with the Southern District of New York seeking to overturn defendant’s successful opposition before the Trademark Trial and Appeal Board (“TTAB”). In a de novo appeal of a TTAB decision, the district court sits in a dual capacity, both giving deference to the TTAB’s findings of fact and acting as its own fact–finder with respect to new evidence submitted by the parties. In this case, one of the key issues was whether defendant owned a “family” of marks, thus entitling it to a broader scope of protection under the likelihood–of–confusion test. Plaintiff attacked the TTAB’s analysis of the record and further submitted new evidence to show that (1) defendant did not have a protectable “family of marks,” and (2) there was no likelihood of confusion between plaintiff’s and defendant’s marks. Defendant moved for summary judgment affirming the TTAB’s decision, arguing that the new evidence should be precluded as flawed, unreliable, or irrelevant, and that there were no other material issues of fact. However, the court determined that the new evidence, as well as some possible ambiguity in the TTAB record, created sufficient material issues of fact to preclude summary judgment.
Sexy Hair Concepts LLC (“SHC”) had been using the mark SEXY HAIR for hair–care products since 1958. SHC developed a successful line of hair care products, each packaged and promoted under a SEXY–formative mark. SHC secured U.S. trademark registrations for hair–care products for a number of its marks, including SEXY HAIR, SEXY HAIR & Design, SEXY HAIR CONCEPTS, WILD SEXY HAIR, HOT SEXY HIGHLIGHTS, SHORT SEXY, HEALTHY SEXY, and STRONG SEXY HAIR.
Victoria’s Secret Stores Brand Management, Inc. (“Victoria’s Secret”), a leading retailer of lingerie products, uses and has registered multiple SEXY-formative trademarks for its lingerie and apparel.
In 2001, Victoria’s Secret filed an intent–to–use application to register the mark SO SEXY for hair–care products. SHC opposed the application, alleging that the mark SO SEXY was likely to cause confusion with its family of SEXY–formative marks. In 2007, the TTAB issued an opinion finding that (1) SHC and Victoria’s Secret used their marks on identical or related goods, (2) the channels of trade were not specified in the registrations and application and thus were the same as a matter of law, (3) SHC had established a family of SEXY–formative marks, and (4) consumers were likely to be confused as they would believe Victoria’s Secret’s mark to be part of SHC’s family.
Victoria’s Secret appealed to the Southern District of New York, arguing that the TTAB erred in finding (1) that the word “sexy” was suggestive rather than descriptive, (2) that SHC had established a family of SEXY-formative marks, and (3) that there was a likelihood of confusion. To support its position, Victoria’s Secret attacked the TTAB’s analysis of the record and offered new evidence in the form of expert reports and affidavits. SHC moved for summary judgment, arguing that the TTAB was correct in its ruling and that none of the new evidence submitted by Victoria’s Secret created a material issue of fact.
SHC argued that summary judgment was appropriate because the TTAB’s findings of fact were entitled to deference under the “substantial evidence” standard and because the new evidence submitted by Victoria’s Secret during the appeal should be excluded and thus could not create a material issue of fact to preclude summary judgment.
The linchpin of the dispute was whether SHC had established a “family of marks.” To establish a family of marks, SHC needed to show (1) that its individual marks share a nondescriptive, common characteristic or “surname”; and (2) that the public associates this “surname” with SHC. SHC claimed that the term “SEXY” functions as a “surname” for its family of marks. As such, confusion would be likely based solely on Victoria’s Secret’s use of the SEXY “surname” in its mark, even though Victoria’s Secret’s mark as a whole (SO SEXY) is not particularly close to any one of SHC’s individual
The TTAB found that SHC had established a family of SEXY-formative marks because (1) SHC advertises its SEXY–formative marks together, showing different SEXY brands in the same promotional pieces and events; (2) the term SEXY is emphasized in each mark through different typefaces and colors from the other wording; and (3) press coverage referred to SHC’s products as the “SEXY HAIR line of products.” In reviewing the TTAB record, however, the court noted some ambiguity in the evidence as to how often SHC advertised multiple products in its “family” together and whether SHC’s marketing expenditures were directed to specifically promoting the “family” of products rather than its individual products. Construing the evidence in the light most favorable to the nonmoving party, the court suggested that the TTAB record’s ambiguity alone might weigh against summary judgment.
The court next turned to the new evidence that Victoria’s Secret introduced on appeal. This included new survey evidence, a linguistics report, and an affidavit from a salon owner regarding the meaning of the term “SEXY” in the hair–care industry. SHC argued that all of the new evidence should be excluded from consideration as unreliable and irrelevant. In each case, however, the court determined that the new evidence was admissible.
Victoria’s Secret’s first survey purported to show that hair–care consumers did not associate the word SEXY with SHC’s products. The survey showed only 1.6% of respondents associated SEXY with SHC, while nearly 66% of respondents did not associate SEXY with any particular hair–care company. SHC argued that this survey should be excluded because SHC’s marks were the subject of incontestable registrations and cannot be challenged as a matter of law on descriptiveness grounds. The court determined that incontestability was irrelevant because the survey did not challenge the validity of SHC’s registrations, but only challenged whether the individual term “SEXY” could function as a “surname” to create a family of marks. The court also determined that any methodological errors in the survey bear exclusively on the weight given the survey rather than its admissibility.
Victoria’s Secret also argued that the term “SEXY” cannot be a family “surname” for SHC’s product line because the term is descriptive for hair–care products, and is not suggestive as the TTAB had held. To support this argument, Victoria’s Secret submitted a report from a linguistics professor regarding public usage/perception of the term “SEXY,” and an affidavit from a salon owner testifying that “SEXY” is commonly used in the industry to describe hair styles, hair care, and hair products. SHC moved to exclude both the linguistics expert’s report and the salon owner’s affidavit on the ground that they used an “improper standard” for descriptiveness, and were not based on reliable data or methodology. The court refused to exclude the evidence because there is no possibility of prejudice in a bench trial and the evidence met the helpfulness standard of Fed. R. Evid. 701.
SHC argued that, even considering Victoria’s Secret’s new evidence, SEXY is not descriptive as a matter of law. First, SHC argued that what each individual finds to be “sexy” is subjective. As such, consumers will need to use their imaginations to understand the term, thus placing SEXY in the suggestive rather than descriptive category of marks. The court disagreed with this analysis, finding that a mark is not rendered nondescriptive simply because different consumers might conjure different mental images of the trait being described. Although different consumers may disagree about what constitutes “sexiness,” the term still reflects an aesthetically positive or appealing characteristic in the minds of all consumers. Second, SHC argued that Victoria’s Secret was estopped from arguing that SEXY is descriptive because it registered several SEXY–formative marks for lingerie without including a disclaimer of the word SEXY. The court pointed out, however, that the PTO rules do not impose an affirmative duty to include a disclaimer of a descriptive term absent a requirement to do so by the Examining Attorney. Thus, in light of the new evidence, the court determined that there was a material issue of fact as to whether SEXY was descriptive and thus incapable of functioning as a “surname” in a family of marks.
Finally, Victoria’s Secret introduced two additional surveys to show that confusion between its mark and the SHC marks was unlikely: one based solely on the elements of the registrations and application at issue, and another based on actual marketplace conditions. Only 2% of consumers in the “application/registration” survey and less than 1% of consumers in the market condition survey believed that Victoria’s Secret’s mark was affiliated with SHC. SHC moved to exclude these surveys, claiming that the surveys drew from the wrong universe, employed improper stimuli, failed to use a control group, and used leading questions. As with the consumer–recognition survey, the court determined that these criticisms of the surveys only affected the weight the court would give them and not whether they were admissible. Therefore, Victoria’s Secret had established material issues of fact regarding the issue of likelihood of confusion.
Accordingly, the court denied SHC’s motion for summary judgment.
This decision combines a number of infrequently seen issues including de novo appeals of TTAB decisions, family–of–marks analysis, and file–wrapper estoppel. The court’s denial of the summary judgment motion is not particularly surprising given the large volume of new factual evidence presented during the appeal. Any other outcome would have undermined the purpose of appeals under Section 21(b)(1) of the Lanham Act, which is to allow unsuccessful TTAB litigants a chance to not only review the TTAB record, but also to introduce additional evidence specifically tailored to counter the TTAB’s conclusions. The case also shows that establishing a family of marks can be difficult where the “surname” element straddles the suggestive/descriptive line. It also illustrates that the incontestability of registrations for marks within the alleged family has no bearing on whether the common “surname” is nondescriptive.