Horphag Research v. Garcia

Citation
Horphag Research Ltd. v. Garcia, Civ. A. No. 8:99-cv-00816 (C.D. Cal. Aug. 29, 2001) (trial), aff'd in part and vacated and remanded in part, Horphag Research Ltd. v. Pellegrini, 337 F.3d 1036 (9th Cir. 2003) (full-text); Civ. A. No. 5:00-cv-00372 (C.D. Cal. Dec. 29, 2003) (plaintiff's motion for summary judgment), aff'd, 475 F.3d 1029 (9th Cir. 2007) (full-text) (upholding district court's reconsideration of dilution claim in light of Moseley decision).

Trial Court Proceedings
Plaintiff, owner of the federally registered trademark PYCNOGENOL for nutritional supplements, sued defendant for trademark infringement and dilution because of defendant's use of the PYCNOGENOL mark on his websites offering competing products and in the metatags for the site. Following a jury trial, the court granted plaintiff’s motion for judgment as a matter of law that defendant infringed and diluted the PYCNOGENOL mark by its "ubiquitous and pervasive" uses of the PYCNOGENOL mark on its website and in its metatags.

On plaintiff's trademark infringement claim, the court held that defendant's use of the PYCNOGENOL mark created initial-interest confusion by diverting Internet users searching the term PYCNOGENOL to defendant's website by using metatags identical to or similar to PYCNOGENOL. The district court permanently enjoined defendant from, among other things, (a) "further diluting" the mark PYCNOGENOL, (b) "making ubiquitous and pervasive use" of the mark PYCNOGENOL, in particular not using PYCNOGENOL more than twice on any one web page and not more than eight times on any website, and (c) using PYCNOGENOL in any domain name or "for any purposes other than to identify [plaintiff's] product solely for comparative commercial advertising."

The court further ordered that defendant's use of PYCNOGENOL "shall be strictly limited for the purposes of identifying [plaintiff's] PYCNOGENOL product" and that each such use shall be accompanied by a disclaimer or "acknowledgement" stating that "PYCNOGENOL® is a registered U.S. trademark of Horphag Research Limited. This website is not authorized to sell, market or distribute Horphag's PYCNOGENOL® product. If the reader desires to obtain Horphag's PYCNOGENOL® product, the reader should go to Horphag's website at www.pycnogenol.com." Defendant was required to post this acknowledgement on each page of any website or printed material bearing the mark.

The court also ordered defendant to conduct corrective advertising by “prominently displaying, in a distinctive color, in large print, the following LEGEND on the first page of defendant’s websites” for six months following entry of the judgment: “Horphag is the owner of all right, title and interest in the U.S. registration for the trademark PYCNOGENOL®. Horphag’s PYCNOGENOL® product is not affiliated with Masquelier’s and we are not authorized to sell or distribute Horphag’s PYCNOGENOL® product. All representations made to date, that suggest Horphag was creating confusion in the market place for PYCNOGENOL® product were incorrect and are hereby rescinded.” The court also ordered defendant to notify all persons who had adopted a portion of defendant’s website, or had websites incorporating parts of defendant’s website, of this injunction. Finally, the court awarded plaintiff its attorney’s fees.

Appellate Court Proceedings
On appeal, the Ninth Circuit affirmed the district court’s judgment regarding trademark infringement and attorney’s fees related to that claim but vacated and remanded the district court’s grant of summary judgment for trademark dilution and attorney’s fees related to dilution. Regarding infringement, the appeals court held that defendant’s use of the mark PYCNOGENOL did not constitute either a descriptive or nominative fair use. As to nominative fair use, although the court found that defendant satisfied the first requirement because defendant could not identify plaintiff’s product without using the PYCNOGENOL mark, he did not satisfy the second or third prongs of the nominative fair-use test because his use of the mark on the website as well as in metatags was unreasonably pervasive and because his excessive use of the mark suggested that plaintiff sponsored or was associated with defendant’s websites and products. The Ninth Circuit upheld the award of attorney’s fees on the infringement claim because the district court properly found that defendant’s infringement was willful and deliberate. In particular, defendant had admitted that he used the PYCNOGENOL mark on his website to gain priority in an Internet search for the term PYCNOGENOL. Finally, the appeals court vacated and remanded the dilution claim for reconsideration in light of the Supreme Court’s recent decision in Moseley v. V Secret Catalogue, Inc.

Remand Proceedings
On remand, the district court applied the Moseley test and granted plaintiff’s motion for summary judgment on dilution, and reinstated the award of attorney’s fees. The Ninth Circuit affirmed. Moseley required trademark owners to show (a) that their mark was famous, (b) that the junior user made commercial use of the mark, (c) that the use began after the mark became famous, and (d) that such use caused actual dilution. Defendant did not challenge the first three elements, arguing only that plaintiff did not show actual dilution based on its failure to submit customer surveys.

The Ninth Circuit rejected that argument because the Supreme Court in Moseley stated that direct evidence of dilution was not necessary in cases like this one where the marks were identical. Further, even if the marks were not identical, plaintiff presented circumstantial evidence that dilution by blurring actually occurred in the form of confused customers contacting plaintiff about defendant’s products. Specifically, this confusion established that defendant’s use of plaintiff’s mark “clearly weakened the unique connection between [plaintiff’s] mark and [plaintiff’s] product.” The Ninth Circuit also agreed that defendant’s use of the mark was not fair use in terms of “comparative commercial advertising,” because defendant did more than “merely identify the trademark holder’s products.” Defendant instead intentionally created confusion through its use of plaintiff’s mark in metatags and studies that it falsely claimed were describing its products. Finally, the appeals court upheld the award of attorney’s fees, because defendant “made deliberate and calculated attempts” to confuse its product with plaintiff’s product.

Source
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