Quiksilver, Inc. v. Kymsta Corp.
| Decision Date | 06 October 2006 |
| Docket Number | No. 04-55529.,04-55529. |
| Citation | 466 F.3d 749 |
| Parties | QUIKSILVER, INC., a Delaware corporation, Plaintiff-counter-claim-defendant-Appellee, v. KYMSTA CORP., a California corporation, Defendant-counter-claimant-Appellant. |
| Court | U.S. Court of Appeals — Ninth Circuit |
William Robinson and James D. Nguyen (argued) of Foley & Lardner LLP, Los Angeles, California, and Arthur Freilich of Freilich, Hornbaker & Rosen, Northridge, California, for appellant Kymsta Corp.
Michael G. Yoder (argued), Amy J. Longo, and Christine E. Cwiertny of O'Melveny & Myers LLP, Newport Beach, California, for appellee Quiksilver, Inc.
Appeal from the United States District Court for the Central District of California; Dickran M. Tevrizian, District Judge, Presiding. D.C. No. CV-02-05497-DT.
Before STEPHEN REINHARDT and JOHNNIE B. RAWLINSON, Circuit Judges, and CLAUDIA WILKEN,* District Judge.
Kymsta appeals from the district court's decision granting Quiksilver's motion for judgment as a matter of law and denying Kymsta's competing cross-motion. The court concluded that Quiksilver's trademarks, "QUIKSILVER ROXY" and "ROXY," are valid; that Kymsta was unable to rebut the presumption of validity; and that Kymsta could not benefit from the innocent-use defense.
We affirm the district court's granting of Quiksilver's motion for judgment as a matter of law as to Kymsta's fraud defense. We also affirm the denial of Kymsta's cross-motion as to innocent use. However, reasonable minds could differ on the import of the evidence regarding first use of the contested mark, tacking related marks for first-use analysis, the inherent distinctiveness of the contested mark, and Kymsta's innocent-use defense. Therefore, we reverse the judgment as a matter of law in favor of Quiksilver as to those issues.
Quiksilver is a global company that manufactures sports-wear for young men and women. In 1989, Quiksilver decided to launch a juniors' clothing line for teenage girls. As the name for its juniors' line, Quiksilver chose either "QUIKSILVER ROXY" or "ROXY."1 Quiksilver intended to begin its juniors' line with swimwear and beach cover-ups, and expand into sportswear.
To design its juniors' line, Quiksilver hired Jill Williams (now Jill Williams Dodd), who began designing the first juniors' line in January or February of 1990, for the 1991 season. Quiksilver used Dodd's designs to create its first promotional poster, featuring a logo displaying "QUIKSILVER" in corporate script on the left, a "Bali-ohm" woman's figure in the middle, and "ROXY" on the right. See Figure 1.
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In September, 1990, Quiksilver debuted its juniors' line for the 1991 season at a trade show. Quiksilver decorated its showroom with the poster and distributed the poster to its retail customers for display. Quiksilver also took orders for its 1991 juniors' line, shipping its first orders in January, 1991. A hangtag displaying the Bali-ohm logo was attached to each garment shipped.2
From January to September, 1991, Dodd designed the juniors' line for the 1992 season. This line included two denim items: a vest displaying a patch with "ROXY" in large letters above "QUIKSILVER" in corporate script, see Figure 2, and a "graffiti short" displaying "ROXY" on the right back pocket and "QUIKSILVER" wrapping around from the left front pocket to the left back pocket. See Figures 3 and 4.
These denim items were featured in a second promotional poster that was displayed at various trade shows and distributed in 1991. This poster also featured a logo with "ROXY" above "QUIKSILVER." See Figure 5.
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Quiksilver sold the denim items beginning in September, 1991. A hangtag was affixed to these and all other juniors' apparel Quiksilver sold from the fall of 1991 through 1992. The hangtag for the 1992 line displayed "QUIKSILVER" in corporate script above "ROXY" in a different font. See Figure 6.
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In 1996, Quiksilver applied for trademark registration for the "QUIKSILVER ROXY" mark. In its application, Quiksilver cited a first-use date of "at least as early as January, 1992." The U.S. Patent and Trademark Office (PTO) issued the registration in July, 1997.
In 1998, Quiksilver applied for a trademark registration for the "ROXY" mark. In that application, Quiksilver also cited a first-use date of "at least as early as January 1, 1992." The PTO issued this registration in February, 2001 over Kymsta's objection.
Kymsta is a clothing manufacturer and wholesaler. Kymsta produces four lines, only one of which is pertinent here: "ROXYWEAR," a junior contemporary and juniors' line consisting mostly of "hip" and "trendy" knit tops.
Roxanne Heptner co-owns Kymsta with her husband and designs the "ROXYWEAR" line. Heptner initially selected the "Roxy" name, but her trademark search in January, 1992 revealed different variations of Roxy registered to other companies (but not to Quiksilver). Because Heptner and her husband believed that they acquired trademark rights simply by using the "ROXYWEAR" name, they never registered "ROXYWEAR."
The first sale of "ROXYWEAR" product occurred in mid-January, 1992. Before January 1, 1992, Kymsta never affixed "ROXYWEAR" to any product, never offered for sale or sold any product bearing "ROXYWEAR," never had product packaging including the "ROXYWEAR" mark, and never participated in any advertisement that included the "ROXYWEAR" mark.
When Kymsta displays "ROXYWEAR" on its products, it is on the interior clothing label. Originally, Kymsta displayed "ROXYWEAR BY ROXANNE HEPTNER." In 1997, Kymsta changed its label to display "ROXYWEAR BY ROXX." In 1999, Kymsta again changed its interior label to display Asian script (meaning "think happy") on the front and "ROXYWEAR BY ROXX" on the back. Kymsta has never used "ROXYWEAR" on the fabric of its garments or on hangtags, and, in recent years, Kymsta has largely distributed its merchandise as private-label apparel.3
In 2002, Quiksilver filed suit against Kymsta for trademark infringement, false designation of origin, trademark dilution, and unfair competition. In response, Kymsta raised several defenses—including fraud, first use, inherent distinctiveness, and innocent use—and filed a counterclaim asserting unfair competition and false designation of origin claims.
On the eighth day of trial, each party moved for judgment as a matter of law. The district court granted Quiksilver's motion as to Kymsta's counterclaim and as to Kymsta's fraud, first-use, inherent distinctiveness, and innocent-use defenses. Concluding that the first use of "ROXY" was on the 1991 graffiti short and that tacking applies, the court ruled that the "QUIKSILVER ROXY" and "ROXY" marks are valid and that Quiksilver is the senior user.
The court granted Kymsta's cross-motion only as to Quiksilver's trademark dilution claims. The remainder of Kymsta's cross-motion was denied. The court ruled that laches barred Quiksilver from enjoining Kymsta's present use of "ROXYWEAR," and barred Kymsta from enjoining Quiksilver's use of "QUIKSILVER ROXY" and "ROXY." The court entered an injunction reflecting its ruling.4
"We review de novo an order granting or denying judgment as a matter of law." Lawson v. Umatilla County, 139 F.3d 690, 692 (9th Cir.1998) (citation omitted). "Judgment as a matter of law is proper when the evidence permits a reasonable jury to reach only one conclusion." Id. (citations omitted). "If reasonable minds could differ as to the import of the evidence," however, judgment as a matter of law should not be granted. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250-51, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) (citation omitted). "In making this determination, we must consider all the evidence and all reasonable inferences which may be drawn from the evidence in a light most favorable to [Kymsta], the party against whom the motion for [judgment as a matter of law] was made." Janich Bros., Inc. v. American Distilling Co., 570 F.2d 848, 853 (9th Cir.1977) (citations omitted).
Federal registration of a trademark "constitutes prima facie evidence of the validity of the registered mark and of [the registrant's] exclusive right to use the mark" in commerce. Brookfield Commc'ns, Inc. v. West Coast Entm't Corp., 174 F.3d 1036, 1047 (9th Cir.1999) (citations omitted); Dep't of Parks & Recreation v. Bazaar del Mundo Inc., 448 F.3d 1118, 1124 (9th Cir.2006). Quiksilver federally registered its "QUIKSILVER ROXY" and "ROXY" marks; therefore, the marks enjoy the presumption of validity.
Kymsta contends that the "ROXY" mark should not be presumed valid because Quiksilver committed fraud on the PTO during the "ROXY" registration process by failing to disclose its knowledge of the "ROXYWEAR" mark.5
"Fraud in procuring a mark occurs when an applicant knowingly makes false, material representations of fact in connection with an application." L.D. Kichler Co. v. Davoil, Inc., 192 F.3d 1349, 1351 (Fed. Cir.1999) (citations and alteration omitted).
In the application process, Robert McKnight, Quiksilver's Chief Executive Officer, signed an oath on behalf of Quiksilver attesting that he believed Quiksilver to be the owner of the "ROXY" mark and that, "to the best of his knowledge and belief, no other person, firm, corporation or association has the right to use [the "ROXY"] mark in commerce ..." In the face of McKnight's attestation, mere knowledge of the existence of the "ROXYWEAR" mark does not...
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