In a decision highlighting the fact-intensive nature of trademark disputes, the U.S. Court of Appeals for the Ninth Circuit Court reversed a grant of summary judgment but acknowledged that it was “far from certain that consumers were likely to be confused” by defendant’s use of the word DELICIOUS. The decision was largely based on the “well-established principle” that summary judgment is generally disfavored in trademark cases. Fortune Dynamic, Inc. v. Victoria’s Secret Stores Brand Management, Inc., Case No. 08-56291 (9th Cir., Aug. 19, 2010) (Bybee, J.)
In 2007, Victoria’s Secret Stores Brand Management (VS) ran a one-month promotional campaign for its new line of “Beauty Rush” beauty products. As part of that promotion, VS gave away and sold pink tank tops with the word “Delicious” displayed across the chest in silver script to customers who purchased a “Beauty Rush” cosmetic product. The word “Yum” was written in much smaller lettering on the back of the tank top and the word “beauty rush” was printed on the inside of the back of the tank top.
Fortune Dynamic, owner of an incontestable trademark registration for the mark DELICIOUS for footwear, sued VS for trademark infringement. The plaintiff, who had sold 12 million pairs of young women’s shoes under the DELICIOUS mark since 1997, also moved for a preliminary injunction. The district court denied the plaintiff’s motion for preliminary injunction and granted VS’s motion for summary judgment, concluding that the likelihood of confusion factors weighed in VS’s favor. The court also determined that Fortune Dynamic’s claims were “entirely barred” by VS’s fair use defense. Through the proceedings, the district court excluded all of the plaintiff’s proffered expert evidence—including the results of a confusion survey and testimony from Fortune Dynamic’s marketing and advertising expert. Fortune Dynamic appealed.
In reversing and remanding the case, the Ninth Circuit analyzed the relevant likelihood of confusion factors and determined that a majority of the factors “could tip in either direction” such that the district court erred in granting VS summary judgment. For example, considering similarity of the marks, the court gave weight to VS’s argument that the similarity of the parties’ DELICIOUS marks was undercut by the differences in the parties’ retail channels. Because VS only sells VICTORIA’S SECRET brand merchandise in its VS stores, whereas the plaintiff sells its shoes in a variety of stores, the court agreed that it was unlikely that a knowledgeable customer would believe that Fortune Dynamic would be selling a tank top in a VS store. Nonetheless, the court determined that a jury could find that the similarity of marks factor weighed in the plaintiff’s favor because the evidence indicated the possibility of post-sale confusion. Notably, pop star Britney Spears had been photographed wearing the VS tank top in public, which indicated to the court that it was “at least plausible” that knowledgeable consumers could be confused as to the source of the tank top when it was viewed outside of a VS store.
On the issue of actual confusion, Fortune Dynamic’s survey expert had conducted an online survey among 300 young women who were asked to compare pictures of the plaintiff’s DELICIOUS shoes and VS’s “Delicious” tank top and provide answers about the companies that produced them. The district court had refused to admit the survey results on the grounds that it improperly compared the products side-by-side, failed to replicate real world conditions and was “highly suggestive.” The appellate court held that the district court abused its discretion in excluding the plaintiff’s survey by failing to apply Ninth Circuit precedent permitting the introduction of survey evidence so long as it is conducted according to accepted principles and is relevant and that the district court had incorrectly applied the principle of Levi Strauss & Co. v. Blue Bell. Acknowledging the alleged shortcomings of the plaintiff’s survey, including the fact that an internet survey fails to replicate real world conditions, the Court concluded that such critiques went to the weight of the survey, not its admissibility. The survey should have been admitted because it was conducted in accordance with accepted principles and its results were relevant as to whether consumers were likely to be confused.
The Ninth Circuit also found that VS’s fair use defense should be decided by a jury. To qualify for the classic fair use defense, one must use another’s mark “otherwise than as a mark,” “only to describe [its] goods or services” and “in good faith.” The district court found that fair use applied because it determined that VS did not use “Delicious” as a mark. The Ninth Circuit acknowledged that VS’s fair use defense had some merit, but found that genuine issues of material fact remained as to whether VS used “Delicious” as a trademark and only to describe its goods, as well as whether VS acted in bad faith. The court noted that a reasonable jury could find that DELICIOUS as applied to VS’s cosmetics was not descriptive and that VS did not use sufficient precautionary measures to indicate VS as the source, as the word “Delicious” was displayed prominently by itself on the front of the tank top.