Levi Strauss & Co. v. Abercrombie & Fitch Trading Co.

• Decision Date: 08 February 2011
• Docket Number: No. 09–16322.,09–16322.
• Citation: 633 F.3d 1158
• Court: U.S. Court of Appeals — Ninth Circuit
• Parties: LEVI STRAUSS & COMPANY, Plaintiff–Appellantv.ABERCROMBIE & FITCH TRADING COMPANY, Defendant–Appellee.

633 F.3d 1158

97 U.S.P.Q.2d 1947

11 Cal. Daily Op. Serv. 1779

2011 Daily Journal D.A.R. 2205

LEVI STRAUSS & COMPANY, Plaintiff–Appellant

v.ABERCROMBIE & FITCH TRADING COMPANY, Defendant–Appellee.

No. 09–16322.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted June 16, 2010.Filed Feb. 8, 2011.

Gregory S. Gilchrist, Townsend & Townsend & Crew, San Francisco, CA, for the plaintiff-appellant.J. Michael Keyes, K & L Gates, Spokane, WA, for the defendant-appellee.David H. Bernstein, Debevoise & Plimpton, New York, NY, for amicus curiae International Trademark Association.Appeal from the United States District Court for the Northern District of California, Jeffrey S. White, District Judge, Presiding. D.C. No. 3:07–cv–03752–JSW.Before: KENNETH F. RIPPLE, Senior Circuit Judge,^* PAMELA ANN RYMER and RAYMOND C. FISHER, Circuit Judges.

OPINION

RIPPLE, Senior Circuit Judge:

Levi Strauss & Co. (“Levi Strauss”) seeks review of a district court judgment that Abercrombie & Fitch Trading Co. (“Abercrombie”) did not dilute Levi Strauss's trademarked “Arcuate” design in violation of the Trademark Dilution Revision Act of 2006 (“TDRA”), 15 U.S.C. § 1125(c). Levi Strauss maintains that the district court applied an incorrect legal standard in evaluating its dilution claim, namely that the junior mark be “identical or nearly identical” to the senior one. We agree with Levi Strauss that the “identical or nearly identical” standard did not survive Congress's enactment of the TDRA and that the district court's use of the incorrect standard was not harmless error. Accordingly, we reverse the judgment of the district court and remand the case for further proceedings consistent with this opinion.

BACKGROUND

A. The Stitched Designs

Levi Strauss created, and began selling, blue jeans in the 1870s. Since 1873, the company has stitched the back pocket of its jeans with two connecting arches that meet in the center of the pocket; Levi Strauss holds a federally registered trademark on this “Arcuate” design. Sales of garments bearing the Arcuate mark have accounted for more than ninety-five percent of Levi Strauss's revenue over the past thirty years, totaling roughly fifty billion dollars. Levi Strauss actively monitors use of competing stitching designs and enforces its trademark rights against perceived infringers.

In 2006, Abercrombie began using a stitching design on the back pockets of its jeans that, according to Levi Strauss, “incorporates the distinctive arcing elements of the Arcuate trademark.” Appellant's Br. 4. Abercrombie's “Ruehl” design consists of two less-pronounced arches that are connected by a “dipsy doodle,” which resembles the mathematical sign for infinity. The design on the Abercrombie jeans sits lower on the pocket than Levi Strauss's Arcuate design. ^**

B. District Court Proceedings

In 2007, Levi Strauss brought an action against Abercrombie for trademark infringement, unfair competition and trademark dilution under both federal and California state law. Before trial, Levi Strauss dropped its state-law trademark dilution claim, and it withdrew its claim for monetary relief on its federal dilution claim. Consequently, Levi Strauss's federal trademark dilution claim, for which it sought only injunctive relief, was tried before the court with advisory rulings from the jury.

During trial, Levi Strauss presented the testimony of Dr. Sanjay Sood. Dr. Sood conducted a survey to evaluate whether women associated Abercrombie's Ruehl design with Levi Strauss. Dr. Sood's “Confusion Survey” revealed that “[a]pproximately 30% of all respondents identified the Ruehl jeans as made, sponsored or endorsed by the same company that made the LEVI'S® jeans, as compared to lower percentages for the ‘control’ jeans.” Levi Strauss & Co. v. Abercrombie & Fitch Trading Co., No. C 07–03752 JSW, 2009 WL 1082175, at *4 (N.D.Cal. Apr.22, 2009). Dr. Sood testified that “the Ruehl design would erode the distinctiveness of the Arcuate mark, in light of what he opined was a significant level of confusion between the Ruehl jeans and the [Levi Strauss] jeans.” Id. Dr. Sood also testified concerning a “Recognition Survey” that he had conducted. According to Dr. Sood, the survey revealed that “approximately 32% to 35% of the respondents actually associated the Arcuate mark with [Levi Strauss].” Id. at *5.

For its part, Abercrombie presented the testimony of Dr. Gerald Ford, who had been engaged in commercial marketing research for more than three decades and had offered expert testimony in over 50 trademark cases. Dr. Ford testified that Dr. Sood's confusion survey was not conducted according to generally accepted and standard practices; as a result, the survey was “ ‘so flawed that it render[ed] the survey results' and Dr. Sood's conclusions ‘meaningless.’ ” Id. (internal citations omitted). Nevertheless, Dr. Ford acknowledged that, “[i]f a likelihood of confusion survey is conducted in a valid and reliable manner, a finding that ten percent or more of the population is confused is problematic to a trademark owner.” Id. Dr. Ford opined that Dr. Sood's recognition survey was problematic; specifically, it “was flawed [ ] because it did not control for spurious recognition, used ambiguous questions, lacked an appropriate control cell, and suffered from order bias.” Id.

As part of its deliberations, the district court requested that the jury provide advisory rulings on factual issues related to Levi Strauss's federal dilution claims. With respect to the elements of the dilution claim, the court asked the jury to answer the following question: “Is Abercrombie's Ruehl design identical or nearly identical to the Arcuate trademark?” ER 67. Although the jury later determined that the Arcuate trademark was famous and distinctive, it found that the marks were not identical or nearly identical and also determined that the Arcuate trademark was not likely to be diluted by the Ruehl design.

C. Findings of Fact and Conclusions of Law

On April 22, 2009, the district court entered judgment in favor of Abercrombie on Levi Strauss's federal dilution claim. In its findings of fact, the district court noted that, “[w]ith the exception of visual depictions of the two designs, Dr. Sood's testimony regarding the results of the Confusion Survey was [Levi Strauss]'s only evidence that the Ruehl design was identical or nearly identical to the Arcuate mark.” Levi Strauss & Co., 2009 WL 1082175, at *5 (emphasis added). Although the district court acknowledged that Dr. Sood's survey suggested confusion among thirty percent of the participants, the court determined that Dr. Ford's critique of Dr. Sood's methodology was persuasive and that his testimony was more reliable than that offered by Dr. Sood.

Turning to its conclusions of law, the court first reviewed the elements of a claim under the TDRA, 15 U.S.C. § 1125(c). The court stated:

To prevail on its dilution claim, [Levi Strauss] has the burden of proving by a preponderance of evidence the following elements: (a) that [Levi Strauss] is the owner of a trademark that is famous; (b) that the famous mark is distinctive, either inherently or through acquired distinctiveness; (c) that [Abercrombie] is making or has made use in commerce of an identical or nearly identical trademark, in this case the Ruehl design; (d) that [Abercrombie]'s use of its Ruehl design began after [Levi Strauss]'s Arcuate mark became famous; and (e) that [Abercrombie]'s use of its Ruehl design is likely to cause dilution by blurring of [Levi Strauss]'s Arcuate mark. 15 U.S.C. § 1125(c); Jada Toys, Inc. v. Mattel, Inc., 518 F.3d 628, 634 (9th Cir.200[8] ).

Levi Strauss & Co., 2009 WL 1082175, at *7 (emphasis added). The district court noted that the advisory jury had not found that the Ruehl design and the Arcuate mark were “ identical or nearly identical,” a standard that required that “the two marks ... be similar enough that a significant segment of the target group of customers sees the two marks as essentially the same.” Id. (emphasis added).

After setting forth this standard for similarity, a standard which “ ‘is more stringent than in the infringement context,’ ” id. at *8 (quoting adidas-America, Inc. v. Payless Shoesource, Inc., 546 F.Supp.2d. 1029, 1060 (D.Ore.2008)), the court observed that, although the evidence showed that Levi Strauss had “expended significant amounts of money advertising the Arcuate mark,” this was not “a case where the two marks at issue involve only minor differences,” id. The district court then reviewed aspects of the Arcuate mark and the Ruehl design and observed that “[t]his evidence demonstrates that a significant segment of the target group of customers would not view the marks as essentially the same.” Id. (emphasis added). It concluded that, consistent with the advisory jury's finding, Levi Strauss “has not established that [Abercrombie] is making commercial use of a mark that is identical or nearly identical to the Arcuate mark.” Id. at *9 (emphasis added). The court then concluded:

As noted, the test for similarity of the marks is more stringent in the dilution context than for likelihood of confusion purposes, and the two marks must be “ essentially the same mark.” For the reasons set forth above, the Court finds that the Ruehl design and the Arcuate mark are not visually similar. Furthermore, as set forth above, the Court does not find the results of Dr. Sood's survey to be entitled to any great weight. Thus, [Levi Strauss] has not put forth persuasive evidence of actual association between the Arcuate mark and the Ruehl design. Therefore, these factors weigh in [Abercrombie]'s favor and against a finding of likelihood of dilution.

....

Having considered all of the evidence, even if the degree of inherent or acquired distinctiveness of the Arcuate mark and the degree of recognition of the mark weigh in [Levi Strauss]'s favor, the Court finds that those factors do not outweigh the...