Goat Fashion Ltd. v. 1661, Inc.
| Decision Date | 28 September 2020 |
| Docket Number | 19 Civ. 11045 (PAE) |
| Parties | GOAT FASHION LTD., Plaintiff, v. 1661, INC., Defendant. |
| Court | U.S. District Court — Southern District of New York |
Plaintiff Goat Fashion Ltd. ("Goat Fashion") brings this action against defendant 1661, Inc. ("1661"). Goat Fashion brings claims of trademark infringement and unfair competition under both federal law and common law; claims a breach of contract and a violation of New York General Business Law § 349; and requests the amendment or cancellation of 1661's Class 42 Trademark Registration. Goat Fashion alleges that 1661 improperly used its trademark (the "GOAT" mark) on its website and mobile application in connection with apparel. Goat Fashion now moves for a preliminary injunction enjoining 1661 from selling apparel and apparel accessories using the GOAT mark. For the reasons that follow, the Court grants Goat Fashion's motion.
Plaintiff Goat Fashion is a corporation incorporated in the United Kingdom with its principal place of business in London. Dkt. 1 ("Compl.") ¶ 8. Goat Fashion is a fashiondesigner and clothing retailer that sells clothes all over the world through retail outlets, its website, and the websites of others, all under the GOAT mark. Id. ¶¶ 12-13. Goat Fashion has three trademark registrations: a 2008 registration in international class 25 for "clothing," U.S. Reg. No. 3506834; a 2012 registration in international class 35 for "retail store services and online retail store services featuring clothing and clothing accessories," U.S. Reg. No. 4103419; and a 2016 registration in international class 25 for "children's clothing and knitwear," U.S. Reg. No. 5066855. Id. ¶¶ 14-15.
Goat Fashion first started continuously using the GOAT mark in the United States in 2003, and since then, Goat Fashion's GOAT mark has allegedly become distinctive both within the industry and the public realm. Id. ¶¶ 16-18. Goat Fashion has spent a substantial amount of time, money, and resources advertising its apparel under the GOAT mark by launching a global e-commerce website in 2012 and a U.S. website in 2016; retaining a public relations firm; investing in sales and public relations trips to the United States; and attending trade shows. Id. ¶ 19. Between September 2015 and November 2019, Goat Fashion spent approximately $300,000 on its advertising efforts in the United States. Id. Such efforts appear to have borne fruit as Goat Fashion has received unsolicited media coverage and has been featured in major fashion magazines including Vogue. See id. ¶ 20.
Defendant 1661 is a corporation incorporated under the laws of Delaware with its principal places of business in California. Id. ¶ 9. 1661 provides an online retail marketplace for sneakers, including brands such as Nike, Adidas, Gucci, and Yeezy. Id. ¶ 23; Sugano Decl. ¶ 3. 1661 maintains both an e-commerce website and a mobile platform that it uses in connection with its GOAT mark. Compl. ¶ 23; Sugano Decl. ¶ 6. 1661 has four trademark registrations of its own GOAT mark: a 2016 registration in international class 9 for "computer applicationsoftware to buy and sell goods," U.S. Reg. No. 4908313; a 2017 registration in international class 35 for "online marketplace for athletic and sporting footwear," U.S. Reg. No. 5357448; a 2016 registration in international class 38 for "telecommunication services for App," U.S. Reg. No. 5020477; and a 2016 registration in international class 42 for "online marketplace; and authentication services for collectible goods, including 'athletic and sporting footwear, apparel, and works of art,'" U.S. Reg. No. 5020478. Compl. ¶ 24; Sugano ¶ 11. Initially, the United States Patent and Trademark Office ("USPTO") refused to register 1661's GOAT mark for its class 35 registration because of the likelihood of confusion with Goat Fashion's class 35 registration. See Compl. ¶ 25.
To obtain its class 35 registration, 1661 requested that Goat Fashion and 1661 enter into a consent agreement. Id. ¶ 26. On or around April 18, 2017, Goat Fashion and 1661 entered into a Mutual Consent and Coexistence Agreement. Id. ¶ 27; see also Lewis Decl., Ex. 38 ("Consent Agreement"). The Consent Agreement permitted 1661 to use the GOAT mark providing goods and services, including in an online marketplace or retail service, "provided however that such goods and services may not be provided in connection with the sale and purchase of fashion clothing or fashion accessories." Consent Agreement § 4.3 (emphasis in original); see also Compl. ¶ 28. Goat Fashion agreed not to use its own mark for "athletic and sporting footwear." Consent Agreement § 4.3; see also Compl. ¶ 28. The Consent Agreement also permits 1661 to use the mark for certain authentication, inspection, and verification services. See Consent Agreement § 2.
The Consent Agreement mandated that if 1661 wanted to apply for an additional registration for its GOAT mark or materially amend its already existing registrations, 1661should contact Goat Fashion to determine if another consent agreement was required. Consent Agreement § 5.2; Compl. ¶ 29. Before the execution of the Consent Agreement, 1661 purportedly asked Goat Fashion if it could use its GOAT mark on athletic apparel in certain circumstances. Compl. ¶ 30. Goat Fashion refused, and the Consent Agreement was executed without the new provision. Id. In July 2019, 1661 once again sought Goat Fashion's permission to apply for a GOAT registration in class 25 for "casual, athletic and sporting footwear, clothing/apparel, and related accessories." Id. ¶ 31. Goat Fashion again refused but offered to enter into a license agreement with 1661. Id. ¶ 33; Lewis Decl. ¶ 100. Goat Fashion and 1661 did not enter into any such license agreement. See Compl. ¶ 34; Lewis Decl. ¶ 101.
On October 21, 2019, 1661 began selling clothing through its smartphone mobile application. See Sugano Decl. ¶ 14. On February 14, 2020, 1661 began selling clothing on its e-commerce website. Id. As to each, 1661 sold clothing while using its GOAT mark. See id.
In response to 1661's initiation of clothing sales using the GOAT mark, Goat Fashions brings various claims of trademark infringement, common law unfair competition, and breach of contract.
The Complaint first alleges trademark infringement in violation of § 32(1) of the Lanham Act and federal unfair competition in violation of § 43(a) of the Lanham Act. Compl. ¶¶ 45, 54. Goat Fashion contends that 1661's use of its GOAT mark is likely to deceive consumers into thinking that 1661's goods are affiliated with Goat Fashion, and that 1661 has used its Goat mark improperly and willfully, causing irreparable harm to Goat Fashion and its reputation. Id. ¶¶ 44-55.
The Complaint also alleges common law trademark infringement and unfair competition, resulting in 1661's unjust enrichment. Id. ¶¶ 61-63. The Complaint also brings a claim under N.Y. Gen. Bus. Law § 349, alleging that 1661's actions are "(i) consumer oriented; (ii) constitute deceptive acts or practices in the conduct of a business, trade, and commerce in New York in a material way; and (iii) cause Goat Fashion injury as a result of such deceptive and misleading activities . . . ." Id. ¶ 65.
The Complaint further alleges a breach of contract for 1661's violation of the terms of the Consent Agreement. See id. ¶ 71. In this claim, Goat Fashion alleges that it performed under the agreement by not using its GOAT mark in relation to "athletic and sporting footwear," but that 1661's use of its GOAT mark in connection with clothing breached the contract. Id. ¶¶ 70-71.
Finally, the Complaint seeks the cancellation or amendment of 1661's registration in class 42 because of the likelihood of confusion that will result now that 1661 sells apparel. See id. ¶ 59. If 1661's registration under this class is not cancelled, the Complaint requests the registration be amended to exclude "apparel." Id. ¶ 60.
As previously stated, in July 2019, 1661 sought Goat Fashion's consent under § 5.2 of the Consent Agreement to begin selling apparel on its platforms under the GOAT mark. Lewis Decl. ¶ 97. Goat Fashion refused and offered to license the mark to 1661 for use in selling apparel. Id. ¶¶ 99-100.
Nevertheless, on October 21, 2019, 1661 began selling clothing through its smartphone mobile application. See id. ¶ 101-102. Approximately six weeks later, on or around December 2, 2019, Goat Fashion sent 1661 a cease and desist letter regarding the sale of apparel on 1661's mobile application, and filed the Complaint in this action. See id. ¶ 103. OnJanuary 23, 2020, 1661 answered the Complaint and offered a settlement proposal, which was rejected on February 6, 2020. See id. ¶ 107; Dkt. 14. On February 14, 2020, 1661 began selling clothing and accessories on its e-commerce website. Sugano Decl. ¶ 14. On February 27, 2020, Goat Fashion discovered that 1661 had begun selling clothing and accessories on its website. Lewis Decl. ¶ 110.
On March 17, 2020, Goat Fashion contacted the Court about the procedure for seeking a temporary restraining order (TRO) in connection with Goat Fashion's motion for a preliminary injunction. Dkt. 24 ("Joint Ltr.") at 1. On March 18, 2020, during a conference call with all parties, Goat Fashion agreed to forgo the TRO in light of the public health crisis, and instead to move for a preliminary injunction, and 1661 agreed that Goat Fashion's forbearance from seeking emergency relief given the pandemic would not be held against Goat Fashion. See id. at 2. The Court directed the parties to undertake, after the filing of Goat Fashion's motion for a preliminary injunction, if necessary, prompt discovery on issues relevant to the motion. Id. at 1.
On March 23, 2020, Goat Fashion filed its motion for a preliminary injunction and...
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