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Results for "Trademark appeal"
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Missed Shot: Lawsuit Against Related Company Doesn’t Toll Prescriptive Period

by | Oct 12, 2023 |

The US Court of Appeals for the Fifth Circuit affirmed a district court’s decision to dismiss claims under the Louisiana Unfair Trade Practices Act (LUTPA), finding that a dispute against a related company did not toll the statute of limitations. Carbon Six Barrels, LLC v. Proof Research, Inc., Case No. 22-30772 (5th Cir. Sept. 29, 2023) (Clement, Elrod, Willett, JJ.)

Proof Research and Carbon Six Barrels both manufacture gun barrels made of carbon fiber. Proof was the first of the parties to enter the market and in 2013 trademarked the unique mottled appearance of its barrels. In 2016, Proof discovered that Carbon Six intended to manufacture and sell similar-looking carbon-fiber barrels and sent a cease-and-desist letter. Carbon Six began production in 2017, sourcing barrel blanks from its sister company McGowen Precision Barrels. Proof filed a trademark infringement suit against McGowen, instead of Carbon Six, in the District of Montana. McGowen initiated a separate proceeding in the Trademark Trial & Appeal Board to cancel Proof’s trademark and was successful in doing so.

After the Board cancelled Proof’s trademark, Carbon Six sued Proof in the Middle District of Louisiana alleging that Proof fraudulently registered its trademark, violated LUTPA, and defamed Carbon Six during the initial litigation and Board proceeding. McGowen brought a similar suit in the District of Montana. Proof asserted several defenses in the lawsuit filed by Carbon Six, including a Rule 12(b)(6) motion to dismiss for failure to state a claim, arguing that Carbon Six’s claims were both untimely and legally insufficient. The district court denied Proof’s other defenses but granted the Rule 12(b)(6) motion, finding that Carbon Six’s claims were time-barred by Louisiana’s one-year prescriptive period and that Carbon Six’s LUTPA claim was also legally insufficient. Carbon Six appealed.

The Fifth Circuit affirmed, explaining that LUTPA has a one-year prescriptive period and that there was no doubt that the violations alleged by Carbon Six occurred more than a year before Carbon Six filed suit in early 2022. The Court reviewed all actions that could potentially give rise to liability under LUTPA and stated that even if any of these acts could give rise to liability, all actions occurred more than a year before Carbon Six’s suit.

Carbon Six attempted to rely on the continuing tort doctrine, alleging that the acts continuously violated LUTPA up until the Board cancelled Proof’s trademark in May 2021. Reviewing Louisiana law, the Fifth Circuit determined that the general principle of a continuing tort is a conduct-based question “asking whether the tortfeasor perpetuates the injury through overt, persistent, and ongoing acts.” The Court agreed with the district court that LUTPA’s prescriptive period is not suspended if a perpetuator of fraud fails to correct false statements, as that proposition would transform almost every business dispute into a continuing tort. The Fifth Circuit also determined that the district court’s conclusion that Carbon Six could not recover for Proof’s lawsuit against McGowan was correct, because the law supported the position that a sister corporation cannot sue on behalf [...]

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Just How Similar Must Competing Marks Be to Survive Dismissal?

by | Oct 5, 2023 |

After a de novo review, the US Court of Appeals for the Sixth Circuit affirmed in part and reversed in part a district court’s motion to dismiss, finding the competing marks sufficiently similar to avoid dismissal, and the attorneys’ fee award. Bliss Collection, LLC v. Latham Companies, LLC, Case Nos. 21-5723; -5361 (6th Cir. Sept 21, 2023) (Mathis, Bush, JJ.) (Larsen, J., dissenting).

This case between Bliss and Latham was the latest installment in a series of cases between the children’s clothing companies after a Bliss founder left to start Latham as a competitor company. Here, Bliss sued Latham for infringement of three trademarks for Bliss’s stylized lowercase “b” logo, appearing as if stitched out in thread. Bliss sued for federal copyright infringement, federal trademark infringement, federal trade dress infringement, federal false designation of origin and misappropriation of source, federal unfair competition, trademark under Kentucky law and unfair competition under Kentucky law.

The competing marks are depicted below:

Latham moved to dismiss, and the district court dismissed the federal copyright and trade dress claims. The district court did not initially dismiss the remaining claims, but later did so after a motion for reconsideration. The district court determined that Latham was not entitled to attorneys’ fees because the case was not exceptional, and Bliss had brought the suit in good faith. Bliss appealed the federal trademark infringement, federal trade dress infringement and trademark infringement under Kentucky common law only.

The Sixth Circuit focused its analysis on whether the amended complaint properly alleged that Latham’s logo was a use of Bliss’s trademark. The Court noted that dismissal was not warranted for anything but the most extreme cases, concluded that this was not such a case and reversed.

The Sixth Circuit found that Latham used the accused mark “in a trademark way” (i.e., to identify goods). Then, weighing the Frisch factors to determine likelihood of confusion between the marks, the Court found that the similarity between the marks and their “impression” favored Bliss despite the fact “that the logos share no words or homophones.” Overall, the Court found that five of the eight factors favored Bliss and that two were neutral. Only the likelihood of purchaser care factor was found to favor Latham. The Court thus found that Bliss had plausibly alleged a likelihood of confusion and that its complaint stated a federal trademark infringement claim. Applying the same logic to the state trademark claims, the Court also reversed the dismissal of those claims.

The Sixth Circuit affirmed the dismissal of the trade dress claim, however, because Bliss failed in its affirmative duty to plead facts in support of nonfunctional trade dress.

Turning to the attorneys’ fee award, the Sixth Circuit found that the mere fact that Bliss sued Latham was not sufficient to warrant an “exceptional” case finding in terms of an award for fees. The Court was also unpersuaded that the trade dress claim was worthy of a fee award [...]

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What’s Kühler Than Kühl? No Likelihood of Confusion

by | Sep 28, 2023 |

Addressing unfair competition claims under the Lanham Act, the US Court of Appeals for the Tenth Circuit concluded that no reasonable juror would confuse an alcohol distributer’s use of the word “kühl” with use of a similar mark by a clothing company. Alfwear, Inc. v. Mast-Jägermeister US, Inc., Case No. 21-4029 (Fed. Cir. Sept. 7, 2023) (Holmes, Kelly, Carson, JJ.)

Alfwear has used the mark KÜHL on its outdoor apparel line since 1993 and has registered the mark in connection with apparel, wine and beer. Mast-Jägermeister US (MJUS), a German herbal liqueur distributor, began incorporating “kühl” into its advertisements on billboards, commercials and digital advertising in phrases such as “kühl as ice” and “drink it ice kühl.” In response, Alfwear filed suit against MJUS, asserting trademark infringement and unfair competition. The district court granted MJUS’s motion for summary judgment, finding that there was no likelihood of confusion because all but one factor for assessing likelihood of confusion supported MJUS. Alfwear appealed.

Alfwear argued that the district court erred by not concluding that MJUS’s use of the word “kühl” was likely to cause confusion with Alfwear’s use of the essentially the same word. To determine whether a likelihood of confusion exists, the following factors must be considered:

  • The degree of similarity between the marks
  • The intent of the alleged infringer in adopting its mark
  • Evidence of actual confusion
  • Similarity of products and manner of marketing
  • The degree of care likely to be exercised by purchasers
  • The strength or weakness of the marks.

The Tenth Circuit found that the two marks were not similar in sound, meaning or appearance, and that MJUS only used “kühl” in association with other MJUS marks. The Court explained that Alfwear often depicts the KÜHL mark alongside a logo of a shield-type shape containing a stylized, snow-covered mountain peak in the colors brown, black and white against a bright blue sky. In contrast, MJUS uses the word “kühl” in phrases such as “kühl shots” or “kühl as ice,” on top of a black or green background and accompanied by a combination of either the mark JÄGERMEISTER, the Jägermeister logo or images of a Jägermeister bottle.

The Tenth Circuit also found that MJUS did not intend to copy Alfwear’s mark, explaining that MJUS was not aware of Alfwear’s trademark when designing the new advertising campaign, and noting that when MJUS became aware of the trademark, MJUS intended to avoid infringement by not placing the mark on its apparel or liquor products. The Court also determined that there was insufficient evidence of actual confusion. Alfwear presented anecdotal evidence from Alfwear executives who had heard about confusion from individuals and survey evidence that demonstrated consumers experienced an approximately 30% chance of confusion. The Court found that the anecdotal evidence was de minimis and found that the survey was not designed properly because the products were not shown to survey participants as they would appear in the marketplace and used leading questions. The Court also found that the two [...]

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Pre-Enforcement Commercialization Isn’t “Impossible” Basis for Personal Jurisdiction of Nonresident Defendant

by | Sep 28, 2023 |

The US Court of Appeals for the Ninth Circuit reversed a district court’s dismissal of trademark declaratory judgment claims, finding that pre-enforcement commercialization activities can be used to establish personal jurisdiction. Impossible Foods Inc. v. Impossible X LLC, Case No. 21-16977 (9th Cir. Sept. 12, 2023) (Lucero, Bress, JJ.) (VanDyke, J., dissenting).

Impossible Foods is a Delaware corporation manufacturing plant-based meat substitutes, including the “Impossible Burger.” Impossible X, a Texas LLC, is Joel Runyon’s one-person company selling apparel and nutritional supplements using a website and social media. San Diego, California, was Impossible X’s “base point” for two years, serving as Runyon’s apartment and workspace. A LinkedIn profile listed San Diego as the headquarters, and social media frequently tagged San Diego as Impossible X’s location. When vacating his lease, Runyon signed the document as “Joel Runyon, Impossible X LLC.” Even after leaving, Runyon took at least eight trips to California between 2017 and 2019 for the purpose of performing Impossible X work and promoting the Impossible brand.

In 2020, Impossible X filed a notice of opposition at the Trademark Trial & Appeal Board for Impossible Food’s trademark application. Impossible Foods responded with a declaratory judgment action in 2021 in California, seeking a finding of noninfringement and that its rights to the IMPOSSIBLE mark were superior. Impossible X sought dismissal, arguing that the district court lacked personal jurisdiction.

The criteria to establish specific personal jurisdiction over a nonresident defendant are as follows:

  • The defendant must purposefully direct its activities toward the forum or purposefully avail itself of the privileges of conducting activities in the forum.
  • The claim must arise out of or relate to the defendant’s forum-related activities.
  • Exercise of jurisdiction must be reasonable.

The district court acknowledged that the personal jurisdiction question here was a “close one” and concluded that while Impossible Foods satisfied the purposeful direction or availment requirement, the declaratory judgment action did not arise out of or relate to Impossible X’s contact with California. Impossible Foods did not begin use of its mark in commerce until June 2016, at which point Runyon had already left California. The district court found that the parties did not have a live dispute until June 2016, and Impossible X’s contacts with California prior to that time were irrelevant to personal jurisdiction. Impossible Foods appealed.

The Ninth Circuit analyzed each prong of the jurisdiction test and reversed the dismissal. First, the Court agreed with the district court that Impossible X purposefully directed activities toward California and availed itself of privileges of conducting activities by building its brand and establishing trademark rights there. A court typically treats trademark infringement as tort-like for personal jurisdiction purposes and applies the purposeful direction framework. The Ninth Circuit explained that there is no need to adhere to an “iron-clad doctrinal dichotomy” between purposeful availment and direction, however. The Court leaned on “purposefulness” vis-à-vis the forum state and “easily” concluded that Impossible X purposefully directed its activities toward California and/or availed itself of the benefits and privileges [...]

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Watermelon Sugar: Candy Shape and Color Deemed Functional

by | Sep 21, 2023 |

The US Court of Appeals for the Third Circuit upheld a district court’s decision that a candymaker cannot trademark the shape and colors of watermelon candy, finding that the combined colors and shape of the candy are functional because they help signal to consumers that the candies have a watermelon flavor. PIM Brands Inc. v. Haribo of America, Inc., Case No. 22-2821 (3rd Cir. Sept. 7, 2023) (Chagares, Bibas and Matey, JJ)

PIM is a leading confectionary company that introduced its Sour Jacks Wedges, a chewy gummy candy, in the early 2000s.

PIM obtained a federal trademark registration in “the shape of a wedge for candy, with an upper green section with white speckles, followed by a narrow middle white section and followed by a lower red section with white speckles.”

Haribo, a well-known German confectionery company, introduced its own watermelon-flavored sweet treat in 2019. Like the Sour Jacks Wedges, Haribo’s candy is red, white and green, with an elongated watermelon wedge shape. PIM sued Haribo for trademark and trade dress infringement under the Lanham Act and for unfair competition under New Jersey common law, alleging that Haribo copied PIM’s Sour Jacks Wedges design.

Haribo countered that PIM’s trade dress was functional and requested that the district court cancel PIM’s trademark. Haribo claimed that it designed its chewy candy’s shape and colors to match its flavor (watermelon) and that PIM’s trademark should not have been granted since it closely resembled an actual slice of watermelon. The district court agreed, finding that PIM’s trademark design was functional and not protectable since PIM’s combination of colors and shape helps identify the candy’s watermelon flavor. PIM appealed.

PIM acknowledged that the coloring of its watermelon candy was functional since it identified the candy’s flavor. However, PIM argued that the candy’s wedge shape identified the brand and challenged the district court’s decision because it did not consider the wedge shape in isolation from the colors when assessing functionality.

The Third Circuit rejected PIM’s argument, concluding that each feature of the candy’s trade dress serves a single function, which is to identify its flavor, and therefore is ineligible for trademark protection. The Court explained that a design is functional if it is useful for anything beyond branding. The Court cited to its 2021 decision in Ezaki Glico v. Lotte International America, explaining that “[e]ven if the design chosen both promotes a brand and also ‘makes a product work better,’ it is functional and unprotectable.” The Court went on to explain that if design choices (e.g., shape and color) serve the same function (e.g., identifying the flavor), they should be considered together.

PIM further argued that its Sour Jacks Wedges do not match exactly with watermelon, noting that the bottom could be more curved and have a thinner band of darker green, the wedge could be wider, the point could be sharper and a deeper red, and there could be black seeds. The [...]

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Whisk-y Business: Notice Alone Is Sufficient for Preliminary Injunction

by | Sep 7, 2023 |

The US Court of Appeals for the Fifth Circuit concluded that only notice of a preliminary injunction (PI) motion, and not perfected formal service, is needed to assert jurisdiction to issue an injunction. Whirlpool Corp. v. Shenzhen Sanlida Elec. Tech. Co., Ltd., Case No. 22-40376 (5th Cir. Aug. 25, 2023) (Barksdale, Southwick, Higginson, JJ.)

Shenzhen Sanlida sells stand mixers within the United States, primarily through online sales. Whirlpool filed a complaint for trademark infringement and dilution against Sanlida, arguing that Sanlida’s mixers were too close in appearance to Whirlpool’s iconic KitchenAid stand mixer. Shortly after filing its complaint, Whirlpool requested a PI hearing. In its request, Whirlpool provided evidence that Sanlida had actual notice of the pending hearing. The district court granted the request and scheduled a hearing.

Counsel for Whirlpool and Sanlida attended the hearing. At the hearing, Sanlida argued it had never been properly served under the Hague Convention and that without service, the district court could not assert personal jurisdiction over it. The district court disagreed and granted the PI. Sanlida filed an emergency motion to stay the order, but the district court rejected Sanlida’s request. Sanlida appealed.

Sanlida argued that the district court did not have the power to issue a PI and that it abused its discretion in awarding the injunction. The Fifth Circuit found no error or abuse and affirmed.

The Fifth Circuit explained that service is not a prerequisite to issuing a PI. Citing Fed. R. Civ. P. 65, the Court explained that the only requirement for issuing a PI is notice to the adverse party. Since it was undisputed that Sanlida had notice of the PI hearing, the Court found that the district court had the power to issue the PI. In doing so, the Court distinguished this case—where there was no dispute that the district court would have personal jurisdiction over Sanlida after the process was perfected—from cases where personal jurisdiction was a live question at the PI hearing.

Turning to the merits of the PI, the Fifth Circuit addressed the four factors the district court had to consider before issuing the injunction: likelihood of success on the merits, threat of irreparable injury, balance of harms and public interest.

On the first factor—likelihood of success—the Fifth Circuit found that the district court made no clear error. The two components of the likelihood of success analysis are validity and likelihood of confusion. On both points, the Fifth Circuit upheld the district court’s finding. While Sanlida argued that Whirlpool’s trademark was invalid because it covered “functional” elements, the Court found insufficient factual support for that argument. Nothing in the record showed that Whirlpool’s mixer head shape had any effect on the “cost or quality” of the mixer. Nor did Sanlida point to any evidence showing that the housing shape would put competitors at a “significant non-reputation-related disadvantage.” Without a showing on either element, Sanlida failed to rebut the presumption of validity. Sanlida also failed to show [...]

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Sins of the Fathers? Grandparent IPR Factors into Current Institution Decision

by | Sep 7, 2023 | ,

US Patent & Trademark Office (PTO) Director Kathi Vidal vacated and remanded a Patent Trial & Appeal Board decision denying institution of an inter partes review (IPR) because the Board improperly applied the precedential Advanced Bionics framework in rendering its decision. Keysight Tech., Inc. v. Centripetal Networks, Inc., IPR2022-01421 (PTAB Decision Review Aug. 24, 2023) (Vidal, Dir.)

Keysight Tech. petitioned for an IPR proceeding against a patent owned by Centripetal Networks, challenging the validity of all claims. After the Board denied institution, Director Vidal issued a sua sponte director review decision, vacating and remanding the Board’s decision.

The Centripetal patent is the great-grandchild of, and shares the same disclosure as, an earlier Centripetal patent that was subject to an IPR proceeding during the pendency of the presently challenged patent. The Final Written Decision (FWD) in the earlier IPR found all claims of the patent unpatentable. The patent owner included that FWD in an Information Disclosure Statement (IDS) submitted during the prosecution of the presently challenged patent, and the examiner initialed it as having been considered.

In its decision denying institution, the Board cited the guidance of Advanced Bionics, which articulates a framework that requires that the Board determine the following:

  • Whether the same or substantially the same prior art or arguments made in the petition were previously presented to the PTO during prosecution of the challenged patent
  • Whether the PTO erred in a manner material to the patentability of the challenged claims when it allowed the claims of the patent.

If both factors are met in the affirmative, the Board should not exercise its discretion to deny institution.

Here, the Board found that the first factor of the Advanced Bionics framework was met because the petitioner’s arguments in its petition were the same or substantially the same as those in the FWD in the IPR of the grandparent patent. However, the Board found that the second part of the framework was not satisfied and therefore denied institution.

Although Director Vidal agreed with the Board’s findings under the first factor, she vacated the Board’s findings pursuant to the second factor after determining that this factor was also met. Director Vidal found that the PTO erred in a manner material to the patentability of the challenged claims for the following reasons:

  • The challenged patent and the grandparent were directed to the same subject matter.
  • The prior art references submitted to the PTO during the prosecution of the challenged patent were the same as those asserted in earlier IPR and were considered by the examiner through the patent owner’s IDS.
  • In the grandparent IPR, the Board held all of the claims of the patent unpatentable due to these same prior art references.
  • The examiner’s statement of reasons for allowing the challenged patent was that the claims were directed to limitations that appeared in both the currently challenged claims and the claims found unpatentable in the grandparent patent.

As the director noted, the overlap between the claim limitations in the [...]

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Nothing Lost in Translation: Book’s Spanish Version Isn’t Different Creative Work

by | Aug 31, 2023 |

In a precedential opinion, the Trademark Trial & Appeal Board of the US Patent & Trademark Office upheld an examiner’s refusal to register a trademark on the ground that the proposed mark was the title of a single creative work and therefore did not function as a trademark. In re Douglas Wood, Serial No. 88388841 (TTAB, Aug. 15, 2023) (Adlin, Larkin, English, ATJs).

Douglas Wood sought to register the standard-character mark CHURCH BOY TO MILLIONAIRE for goods ultimately identified as “Books in the field of faith-based coaching, personal development, motivational and inspirational topics; books in the nature of memoirs; books about personal development; printed matter in the field of personal development, namely, books, booklets, curricula, newsletters, magazines, printed periodicals.” Since the title of a single book cannot be registered as a trademark, in support of the application Wood stated that the proposed mark was used on two separate books, an English-language book titled Church Boy to Millionaire and a Spanish-language book titled De Chico de Iglesia a Millonario. According to Wood, he published two books of different titles that had been marketed under the same mark as evidenced by use on his website.

The examining attorney refused registration, finding that the mark was the title of a single creative work and thus did not function as a trademark. Wood appealed.

The Board determined that Church Boy to Millionaire was the title of a single work, and that the book’s Spanish translation did not qualify as a separate work that might create a “series” entitled to trademark protection. The Board explained that “[t]he title of a single creative work, such as a book, is not considered to be a trademark, and is therefore unregistrable.” The Board further differentiated trademarks from copyrights, explaining that “[u]nlike a copyright that has a limited term, a trademark can endure for as long as the trademark is used. Therefore, once copyright protection ends, and the work falls in the public domain, others must have the right to call the work by its name.”

Wood argued that Church Boy to Millionaire and its Spanish translation, De Chico de Iglesia a Millonario, were different works since the choice of the translator had a large impact on the version created. The Board explained that the issue was whether the content “has change[d] significantly” in translation. The Board acknowledged that translators can employ their unique skills and cultural understandings to produce different content for a book in another language. However, the examining attorney showed that Wood did not provide any evidence that the Spanish version had content that significantly differed from the English version. On the contrary, the evidence of use contradicted Wood’s position that the Spanish translation featured different content because his website’s links directed customers to “get the book today” and “get the book in Spanish,” which effectively confirmed [...]

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Tune to the Right Channel: Disclosure Lacking Fraud Information Isn’t an FCA Qui Tam Bar

by | Aug 17, 2023 |

The US Court of Appeals for the Ninth Circuit reversed a district court’s decision to dismiss a qui tam action brought under the False Claims Act (FCA) after analyzing the public disclosure bar channels. The case required the Ninth Circuit to examine Congress’s 2010 amendments to the FCA public disclosure bar to determine whether the claims were substantially the same as information publicly disclosed in any one of three enumerated channels. Silbersher v. Valeant Pharm. Int’l, Inc., No. 20-16176 (9th Cir. Aug. 3, 2023) (Schroeder, Sanchez, Antoon, JJ.)

The FCA imposes civil liability on anyone who knowingly presents a fraudulent claim for payment to the federal government. The FCA includes a qui tam provision that allows private citizens (or “relators”) to bring fraud claims on behalf of the government. In 2010, Congress’s public disclosure bar precluded qui tam actions if substantially the same allegations or transactions were publicly disclosed in one of three channels:

  1. In a federal criminal, civil or administrative hearing in which the government or its agent is a party
  2. In a congressional, Government Accountability Office (GAO) or other Federal Report hearing, audit or investigation
  3. From the news media, unless the action is brought by the Attorney General or the person bringing the action is an original source of the information.

Valeant owns the “Otterbeck patents” for its drug Apriso’s delayed-release formula. Valeant initiated an infringement action against Lupin, a generic drug manufacturer that attested in an abbreviated new drug application (ANDA) that the Otterbeck patents were invalid because of prior art that described a similar delayed-release formula. Thereafter, Valeant extended its monopoly by applying for and being granted a new patent that claimed a recent discovery that Apriso was effective when taken without food. GeneriCo then challenged the new patent in an inter partes review (IPR) proceeding, arguing that it was obvious that Apriso would be effective without food. GeneriCo presented two medical studies as support. The Patent Trial & Appeal Board agreed and invalidated the claims in the new patent.

Zachary Silbersher, GeneriCo’s IPR lawyer and a relator in another FCA suit in the same court, discovered that Valeant failed to disclose certain information to the US Patent &Trademark Office (PTO) during the IPR proceeding. Specifically, he discovered that three years before applying for the new patent, Valeant applied for another patent where it claimed it made an unexpected finding that taking Apriso’s active ingredient with food made the drug more effective. This claim was the opposite of the claim made in the new application that had been invalidated in the IPR proceeding.

Silbersher brought an FCA case seeking damages from Valeant, alleging that Valeant fraudulently obtained the Otterbeck and new patent to prolong its monopoly and charge an artificially high price for Apriso. The district court dismissed Silbersher’s qui tam action as precluded by the public disclosure bar because the IPR qualified as an “other Federal hearing” under channel two of the bar, as described above. Silbersher appealed.

The Ninth Circuit analyzed whether [...]

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Remedies as Big as Your Bamba

by | Aug 10, 2023 |

Following the district court’s finding of trademark infringement on summary judgment, the US Court of Appeals for the Sixth Circuit affirmed the district court’s subsequent award of profits, costs and attorneys’ fees in favor of the trademark holder. La Bamba Licensing, LLC v. La Bamba Authentic Mexican Cuisine, Inc., nka La Villa Rica Mexican Cuisine, Inc., Case No. 22-5853 (Gilman, Larsen, Nalbandian, JJ.)

La Bamba Licensing operates a series of Mexican restaurants in the Midwest under the name “La Bamba.” It obtained various federal trademark registrations in 1998. Almost 20 years later, La Bamba Authentic Mexican Cuisine (now known as La Villa Rica) opened a Mexican restaurant under the name “La Bamba Authentic Mexican Cuisine” with a single location in Lebanon, Kentucky. Shortly after learning of the La Villa Rica restaurant, La Bamba Licensing sent a cease-and-desist letter to La Villa Rica demanding that La Villa Rica cease use of the LA BAMBA mark. La Villa Rica responded but refused to alter its conduct because it did “not see any basis for [La Bamba Licensing’s] demands.” Three months after sending the cease-and-desist letter, La Bamba Licensing filed suit in the Western District of Kentucky alleging trademark infringement and unfair competition. More than one year later, La Villa Rica changed the name of its restaurant to “La Villa Rica Authentic Mexican Cuisine, Inc.”

The district court ultimately granted summary judgment in favor of La Bamba Licensing on all pending claims and permanently enjoined La Villa Rica from using the LA BAMBA mark. La Bamba Licensing subsequently filed a motion seeking profits, costs associated with bringing the action and attorneys’ fees. Following an evidentiary hearing, the district court granted La Bamba Licensing’s motion and awarded all three forms of relief. La Villa Rica appealed the district court’s decision to award profits and attorneys’ fees but did not appeal the award of costs or the district court’s calculation of either profits or attorneys’ fees.

The Sixth Circuit started its analysis of the profits award by identifying the factors courts should consider, including the defendant’s intent to deceive, whether sales were diverted, the adequacy of other remedies, any unreasonable delay by the plaintiff in asserting its rights, public interest in making the misconduct unprofitable and “palming off” (i.e., whether the defendant used its infringement of the plaintiff’s mark to sell its own products to the public through misrepresentation). The Sixth Circuit noted that the district court relied on two factors—the defendant’s intent and public interest in making the misconduct unprofitable—plus the defendant’s “willfulness” in determining that an award of profits was appropriate. The Sixth Circuit credited the district court’s reasoning, noting that “[e]ven after La Villa Rica received a cease-and-desist letter containing notice of La Bamba’s registered mark, and ‘in the face of [its] attorney’s advice that [it] might have a problem,’ La Villa Rica continued to use the LA BAMBA mark for a year and a half and ‘offered no legally sufficient explanation or support for its actions.’”

La Villa Rica argued that [...]

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