Marketquest Grp., Inc. v. BIC Corp.

• Citation: 862 F.3d 927
• Decision Date: 07 July 2017
• Docket Number: No. 15-55755,15-55755
• Parties: MARKETQUEST GROUP, INC., dba All–In–One, a California Corporation, Plaintiff–Appellant, v. BIC CORP., a Connecticut Corporation; BIC USA, Inc., a Delaware Corporation; Norwood Promotional Products, LLC, aka Norwood Operating Company, LLC, dba Norwood Promotional Products, a Delaware Limited Liability Company, Defendants–Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

862 F.3d 927

MARKETQUEST GROUP, INC., dba All–In–One, a California Corporation, Plaintiff–Appellant,

v.BIC CORP., a Connecticut Corporation; BIC USA, Inc., a Delaware Corporation; Norwood Promotional Products, LLC, aka Norwood Operating Company, LLC, dba Norwood Promotional Products, a Delaware Limited Liability Company, Defendants–Appellees.

No. 15-55755

United States Court of Appeals, Ninth Circuit.

Argued and Submitted May 9, 2017, Pasadena, California

Filed July 7, 2017

Gregory Guillot (argued), Gregory H. Guillot P.C., Dallas, Texas; Michael T. Lane and Kent M. Walker, Lewis Kohn & Walker L.L.P., San Diego, California; for Plaintiff-Appellant.

Richard Sybert (argued), Joni B. Flaherty, and Yuo-Fong C. Amato, Gordon & Rees LLP, San Diego, California, for Defendants-Appellees.

Before: MILAN D. SMITH, JR. and JOHN B. OWENS, Circuit Judges, and EDWARD R. KORMAN,^* District Judge.

OPINION

M. SMITH, Circuit Judge:

Marketquest Group, Inc. (Marketquest) appeals the district court's grant of summary judgment in favor of Norwood Promotional Products, LLC (Norwood), BIC Corp., and BIC USA, Inc. (collectively, Defendants) on Marketquest's trademark infringement claims. The district court held that Defendants' uses of Marketquest's trademarks "All-in-One" and "The Write Choice" were completely protected by the fair use defense. We reverse and remand.

FACTS AND PRIOR PROCEEDINGS

Marketquest produces and sells promotional products, and has used its United States Patent and Trademark Office registered trademarks "All-in-One" and "The Write Choice" since 1999 and 2000, respectively. In 2009, BIC Corp. and BIC USA, Inc. (collectively, BIC) acquired Norwood, a promotional products company, and in 2010 Norwood published a promotional products catalogue for 2011 that featured the phrase "All-in-One" on the cover of and in the catalogue. The 2011 catalogue consolidated all of Norwood's eight "hard goods" catalogues "in one" catalogue, whereas they were previously published in separate catalogues. In 2010, BIC also used the phrase "The WRITE Pen Choice for 30 Years" in advertising and packaging for its pens, in connection with its thirtieth anniversary promotion.

Marketquest filed the operative First Amended Complaint (FAC) against Defendants on May 5, 2011, alleging infringement of Marketquest's "All-in-One" and "The Write Choice" trademarks. On August 26, 2011, Marketquest moved for a preliminary injunction. The arguments and evidence submitted by Marketquest in support of its motion pertained only to Defendants' use of "All-in-One," and not "The Write Choice," so the district court deemed Marketquest's request for a preliminary injunction as to Defendants' use of "The Write Choice" waived. The district court denied the requested injunction regarding Defendants' use of "All-in-One" after concluding that Marketquest was unlikely to succeed on the merits because Defendants were likely to succeed in asserting a fair use defense.

Discovery proceeded and the parties filed cross-motions for summary judgment. The district court granted summary judgment for Defendants, holding that there was "some likelihood of confusion and therefore the potential for trademark infringement liability," but that further analysis of likelihood of confusion was unnecessary because fair use provided Defendants a complete defense to allegations of infringement of both the "All-in-One" and "The Write Choice" trademarks. Marketquest timely appealed.

STANDARD OF REVIEW

We review the district court's grant of summary judgment de novo. KP Permanent Make–Up, Inc. v. Lasting Impression I, Inc. , 408 F.3d 596, 602 (9th Cir. 2005) (KP Permanent II ). We view the evidence in the light most favorable to Marketquest and determine "whether there are any genuine issues of material fact and whether the district court correctly applied the relevant substantive law." Id . We are mindful that "summary judgment is generally disfavored in the trademark arena" due to "the intensely factual nature of trademark disputes." Id. (quoting Entrepreneur Media, Inc. v. Smith , 279 F.3d 1135, 1140 (9th Cir. 2002) ).

ANALYSIS

I. Marketquest's pleading was adequate to support a cause of action for trademark infringement under a reverse confusion theory of likely confusion.

The Lanham Act provides a cause of action for the owner of a registered trademark against any person who, without consent of the owner, uses the trademark in commerce in connection with the sale or advertising of goods or services, when such use is likely to cause confusion. 15 U.S.C. § 1114(1). The validity of Marketquest's trademarks is not disputed in this appeal. Thus, the question is whether there is a likelihood of confusion; that is, whether Defendants' "actual practice[s were] likely to produce confusion in the minds of consumers about the origin of the goods ... in question." KP Permanent Make–Up, Inc. v. Lasting Impression I, Inc ., 543 U.S. 111, 117, 125 S.Ct. 542, 160 L.Ed.2d 440 (2004) (KP Permanent I ).

We have recognized two theories of consumer confusion that support a claim of trademark infringement: forward confusion and reverse confusion. Surfvivor Media, Inc. v. Survivor Prods. , 406 F.3d 625, 630 (9th Cir. 2005). "Forward confusion occurs when consumers believe that goods bearing the junior mark came from, or were sponsored by, the senior mark holder." Id. For example, consumers would experience forward confusion if they believed that Defendants' 2011 catalogue came from Marketquest because it featured the phrase "All-in-One." "By contrast, reverse confusion occurs when consumers dealing with the senior mark holder believe that they are doing business with the junior one." Id. For example, consumers would experience reverse confusion if they did business with Marketquest, but believed that they were doing business with Defendants, because they had come to associate the words "All-in-One" with Defendants.

Marketquest argues that this is a "reverse confusion case," while Defendants counter that Marketquest did not adequately plead reverse confusion. Our circuit has not previously addressed the pleading standard required to state a cause of action for trademark infringement under a reverse confusion theory. We now hold that reverse confusion is not a separate claim that must be specifically pleaded, but instead is a theory of likely confusion that may be alleged by itself or in addition to forward confusion. Accord Dorpan, S.L. v. Hotel Melia, Inc ., 728 F.3d 55, 65 n.12 (1st Cir. 2013) (" ‘Reverse confusion’ is not a separate legal claim requiring separate pleading. Rather, it is a descriptive term referring to certain circumstances that can give rise to a likelihood of confusion."). Thus, when reverse confusion is compatible with the theory of infringement alleged in the complaint, a plaintiff need not specifically plead it.

Defendants cite Surfvivor , 406 F.3d at 631–34, and Murray v. Cable National Broadcasting Co. , 86 F.3d 858, 861 (9th Cir. 1996), to support their contention that strict pleading is required when someone sues for reverse confusion, but these cases are distinguishable. In Surfvivor we held that the plaintiff raised no cognizable forward confusion claim because it failed to reference forward confusion in its complaint. 406 F.3d at 631. Instead, the plaintiff only raised a cognizable trademark infringement claim under a reverse confusion theory. Id. Only reverse confusion was plausible in that case; Surfvivor, a maker of beach-themed products sold only in Hawaii, alleged that consumers thought that its products were sponsored by the well-known, national reality show Survivor. Id. at 629. Facts indicating forward confusion (i.e., that consumers would think the well-known, national show Survivor came from the small, Hawaiian Surfvivor brand) were not alleged and would be highly unlikely. Surfvivor therefore stands for the proposition that when (1) a plaintiff's trademark infringement claim is based on a reverse confusion theory, (2) the plaintiff did not plead examples of forward confusion, and (3) only reverse confusion is plausible based on the allegations in the complaint, a plaintiff does not allege a cognizable trademark infringement claim based on forward confusion.

Defendants cite Murray for the proposition that to plead reverse confusion, a plaintiff must allege that the defendant "saturated the market with advertising," or allege actual reverse confusion from customers. See 86 F.3d at 861. However, Murray was decided before we recognized reverse confusion as a theory of trademark infringement, and we concluded that such recognition was unnecessary because Murray did not allege any cognizable trademark infringement claim, whether under what we now refer to as reverse or forward confusion theories. Id. Thus, Murray did not set out a specific pleading standard for reverse confusion; there was no likelihood of any type of confusion, and we merely listed shortcomings in Murray's allegations. To advance a reverse confusion theory, a plaintiff may allege that the defendant flooded the market with advertising, or that actual instances of reverse confusion occurred. However, the allegations will vary in individual cases.

Applying these principles to Marketquest's FAC, we first note that Marketquest did not use the words "reverse confusion," allege that Defendants saturated the market, or allege instances of actual reverse confusion. The FAC generally alleged that customers were confused "as to whether some affiliation, connection, or association exist[ed]" among Defendants and Marketquest, and specifically alleged that there were actual instances of forward confusion (i.e., that consumers thought that Defendants' goods came from Marketquest). Marketquest did not allege instances of actual reverse confusion until its motion for a preliminary injunction. The district court's orders denying the preliminary injunction and granting summary judgment recognized Marketquest's reverse confusion theory.

We...