Sack, Circuit Judge:
This appeal arises from a dispute between software companies over several trademarks containing the word "collective." Appellant Collective, Inc. ("CI"), defendant and counter-claimant in the district court, owns the registered marks "Collective Network," "Collective Video," and "C Collective The Audience Engine," a stylized mark in which the word "Collective" appears most prominently (together, the "registered marks"). CI also asserts common-law rights in the unregistered mark "collective," standing alone. Appellee Cross Commerce Media, Inc. ("CCM"), plaintiff and counter-defendant in the district court, operates under the name "Collective[i]."
In a series of three orders, the district court (Katherine B. Forrest, Judge) granted summary judgment to CCM on virtually all points in dispute and awarded attorney's fees under the Lanham Act. We reverse those decisions in part, vacate them in part, and remand for further proceedings.
CI provides data-driven analytic software that helps businesses select effective marketing opportunities on multiple electronic platforms, including "computers, smart phones, tablets and connected television." Declaration of Joseph T. Apprendi, CEO and Co-Founder of CI, dated July 10, 2014, at 4-6 (App'x 559-61). It was incorporated as Collective Media, Inc. in 2007, and its name was changed to Collective, Inc. in 2012. From 2008 to 2011, the company registered the trademarks "Collective Network," "Collective Video," and "C Collective The Audience Engine." During the same period, CI acquired the domain name www.collective.com for its principal website and referred to itself in at least several instances as "Collective."
CCM provides its own brand of data-driven analytic software. According to one of the company's trademark registrations, the software aids companies in "deploying and analyzing marketing campaigns." See CCM's Statement of Undisputed Material Facts dated June 11, 2014, at 6 (App'x 588). The company was founded as Cross Commerce Media, Inc. in 2007, but it began to do business under the mark "Collective[i]" (and the related marks "Collective Intelligence" and Collectivei) in 2011.
In late 2011, CI contacted CCM to express its concern that use of the mark
The district court resolved the parties' claims and counterclaims in a series of three orders. First, before the parties had completed discovery, CCM moved for partial summary judgment as to the inherent distinctiveness of the unregistered mark "collective." Trademarks, whether registered or unregistered, are grouped for purposes of analysis into four categories of increasing inherent distinctiveness: generic, descriptive, suggestive, and arbitrary or fanciful. Bernard v. Commerce Drug Co., 964 F.2d 1338, 1340 (2d Cir. 1992). CCM sought a decision by the district court that the unregistered mark "collective," as used by CI, is descriptive as a matter of law. CI countered that the mark is suggestive — or, alternatively, that a jury should decide the issue. In a March 24, 2014 order, the court, agreeing with CCM, classified the mark as descriptive. Cross Commerce Media, Inc. v. Collective, Inc., No. 13 Civ. 2754 (KBF), 2014 WL 1202939, at *5, 2014 U.S. Dist. LEXIS 38606, at *14-15 (S.D.N.Y. Mar. 24, 2014) (the "March Order").
The March Order did not reject CI's counterclaim for infringement of the unregistered mark "collective" outright. By classifying the mark as descriptive, however, the order imposed a heightened evidentiary standard for establishing its entitlement to protection under federal trademark law. The Lanham Act affords protection to a descriptive mark only if the trademark holder can demonstrate that it has acquired secondary meaning in the marketplace — in other words, that the mark's "primary significance" to relevant consumers "is to identify [the trademark holder as] the source of the product." Bristol-Myers Squibb Co. v. McNeil-P.P.C., Inc., 973 F.2d 1033, 1041 (2d Cir. 1992) (internal quotation marks omitted). That showing "entails rigorous evidentiary requirements." 20th Century Wear, Inc. v. Sanmark-Stardust, Inc., 815 F.2d 8, 10 (2d Cir. 1987) (internal quotation marks omitted). Had the mark instead been classified as suggestive, it would have received some degree of trademark protection even "without proof of secondary meaning." McGregor-Doniger Inc. v. Drizzle Inc., 599 F.2d 1126, 1132 (2d Cir. 1979), superseded on other grounds by Fed. R. Civ. P. 52(a).
Surprisingly, we think, the August Order also dismissed CI's distinct counterclaim for infringement of the registered marks. CCM's memorandum of law in support of its summary judgment motion had advanced no argument regarding that counterclaim. The memorandum mentioned the registered marks only to argue that their validity (which CCM assumed for the sake of argument) would not buttress CI's claim that the distinct, unregistered mark "collective" was protectable. In keeping with the cabined nature of CCM's memorandum, CI's opposition papers focused exclusively on the counterclaim for infringement of the unregistered mark "collective," mentioning the registered marks only to contend that their validity would, in fact, buttress that counterclaim. The district court did not analyze the counterclaim for infringement of the registered marks but nonetheless ruled that the counterclaim failed as a matter of law.
Having prevailed on CI's counterclaims for infringement, CCM moved for several remedies: (1) an order compelling the PTO to cancel the registered marks "Collective Network" and "Collective Video," either because they were descriptive and lacked secondary meaning or because CI had abandoned them; (2) an order compelling the PTO to disclaim the term "collective" within the registered mark "C Collective The Audience Engine" because it is not independently entitled to trademark protection; (3) attorney's fees under the Lanham Act; and (4) sanctions under various federal rules for abuse of the discovery process. In a December 16, 2014 order, the district court granted summary judgment for CCM on the issue of abandonment and awarded all of its requested remedies except for sanctions, which the court deemed duplicative of attorney's fees under the Lanham Act. See Cross Commerce Media, Inc. v. Collective, Inc., No. 13-cv-2754 (KBF), 2014 WL 7323419, at *1, 2014 U.S. Dist. LEXIS 177176, at *2 (S.D.N.Y. Dec. 16, 2014) (the "December Order").
CI timely appealed the portions of the district court's three orders that dismissed its counterclaims and granted CCM's requested remedies.
"We review a district court's grant of summary judgment de novo, construing the evidence in the light most favorable to the non-moving party and drawing all reasonable inferences in its favor." SCR Joint Venture L.P. v. Warshawsky, 559 F.3d 133, 137 (2d Cir. 2009) (internal quotation marks omitted). We will affirm only if "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). An issue of fact is genuine and material if the evidence is such that a reasonable jury could return a verdict for the nonmoving party. See SCR, 559 F.3d at 137.
After applying that standard of review to the voluminous record in this case, we reverse or vacate all contested portions of the March Order, August Order, and December Order. We do so on four grounds. First, in our view the unregistered mark "collective" is suggestive, not descriptive. Second, there is a genuine dispute of material fact as to whether CI used the unregistered mark "collective" in commerce before CCM introduced its allegedly infringing marks. Third, the district court prematurely granted summary judgment as to CI's counterclaim for infringement of the registered marks, an action that neither party requested and the district court did not explain. Finally, there is a genuine dispute of material fact as to whether CI abandoned its registered marks "Collective Network" and "Collective Video." We therefore remand the case for a new round of summary judgment proceedings should either party choose to pursue them.
I. Inherent Distinctiveness
A trademark's inherent distinctiveness is a fact-intensive issue. It must be evaluated "in relation to the particular goods [to which the mark is attached], the context in which it is being used, and the possible significance that the term would have to the average purchaser of the goods because of the manner of its use or intended use." Coach Servs., Inc. v. Triumph Learning LLC, 668 F.3d 1356, 1378 (Fed. Cir. 2012) (internal quotation marks omitted). Applying that contextual approach, we conclude that CI's use of the mark "collective" is suggestive as a matter of law, and that the district court committed clear error in concluding otherwise. See Bristol-Myers Squibb, 973 F.2d at 1040 ("We will substitute our own judgment [as to inherent distinctiveness] ... if the district court's determination is clearly erroneous.").
Both descriptive and suggestive marks convey information about, and thus are associated with, the product to which they are attached. The difference between them lies in the immediacy of association — how quickly and easily consumers grasp the nature of the product from the information conveyed. A descriptive mark communicates "`an immediate idea of the ingredients, qualities or characteristics of the goods,'" Bernard, 964 F.2d at 1341 (quoting Abercrombie & Fitch Co. v. Hunting World, Inc., 537 F.2d 4, 11 (2d Cir. 1976) (Friendly, J.)), while a suggestive mark requires consumers to employ "imagination, thought and perception to reach a conclusion as to the nature of goods," Time, Inc. v. Petersen Publ'g Co. L.L.C., 173 F.3d 113, 118 (2d Cir. 1999) (internal quotation marks omitted). Thus, "[i]f the mental leap between the word and the product's attributes is not almost instantaneous, this strongly indicates suggestiveness, not direct descriptiveness." 2 J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition § 11:67 (4th ed.).
Thus, in Playtex, we affirmed the district court's conclusion that the mark "Wet Ones," used for moist towelettes, was suggestive rather than descriptive. We reasoned that the mark evoked qualities (dampness and one-by-one usage) that towelettes shared with a wide range of goods, which made it relatively difficult for consumers to divine the nature of the particular product at issue from the mark alone. See id. Similarly, we decided in Hasbro, Inc. v. Lanard Toys, Ltd., 858 F.2d 70 (2d Cir. 1988), that the mark "GUNG-HO," used for a marine action figure, was suggestive because it described "elements of the personality attributed to the [action figure], as well as other toys, without describing the particular [action figure] itself or its differentiating qualities," id. at 75 (emphases added). By contrast, we have classified the mark "Sportscreme," used for an analgesic rub designed for athletes, as descriptive because it specifically conjured "a cream useful in connection with sports." Thompson Med. Co. v. Pfizer Inc., 753 F.2d 208, 216 (2d Cir. 1985).
Applying the same analytic framework here, we conclude that the mark "collective" is only suggestive of CI's products. As the district court noted, Merriam-Webster's online dictionary defines the adjective "collective" as: "denoting a number of persons or things considered as one group or whole"; "formed by collecting: aggregated"; and "of, relating to, or being a group of individuals." Collective, Merriam-Webster Online Dictionary, http://www.merriam-webster.com/ dictionary/collective (last visited Aug. 9, 2016), [https://perma.cc/YU2F-Q3JT]; see March Order, 2014 WL 1202939, at *5, 2014 U.S. Dist. LEXIS 38606, at *14.
After reviewing the record, we find three plausible associations between those definitions and CI's products. First, CI asserts that it is able to analyze vast amounts of data in order to help clients
These associations lack the specificity that would enable an average consumer to intuit the nature of CI's business from the "collective" mark, at least absent considerable imaginative effort (or luck). As in Playtex and Hasbro, the mark has comparably strong associations with a range of distinct enterprises that offer unrelated goods, including software, to consumers: Search engines and investment advisers seek to aid their clients by analyzing "collectives" of data; health insurers and banks serve clients across a "collective" of platforms; and real estate brokers and online ticket exchanges could be said to offer a "collective" of options for their clients to consider. Indeed, the word "collective" might even bring to mind businesses that could themselves be called "collectives," such as collective farms or collective grocery stores. When encountering CI's use of the term "collective" for the first time, therefore, the average consumer does not, in our view, have a compelling reason to conclude that the company provides data-driven marketing tools. Conjuring the image of CI's software in particular, rather than other goods or services that the word "collective" might be used to describe, demands a substantial mental leap. For that reason, we conclude that "collective" is a suggestive mark in this context.
In reaching a contrary conclusion, the district court did not adequately evaluate the mental leap between the mark "collective" and CI's products. After reciting several of the dictionary definitions set forth above, the court observed: "This is precisely the manner in which [CI] uses the word; it is an advertising network that offers a collection or collective of advertising opportunities." March Order, 2014 WL 1202939, at *5, 2014 U.S. Dist. LEXIS 38606, at *14. Based on that observation alone, the court then concluded that "[t]he word `collective' thus literally describes `an immediate idea of the ingredients, qualities or characteristics' of [CI]'s product." Id. (quoting Bristol-Myers Squibb, 973 F.2d at 1040). In doing so, the court mistakenly equated the fact of association (which does not distinguish between descriptive and suggestive marks) with immediacy of association (which does). The word "collective" in CI's marks provides a clue as to the nature of CI's products. But the critical inquiry, which the court did not reach, is how easily consumers would deduce the nature of CI's products from "collective" alone.
The district court suggested that its decision was reinforced by two additional considerations: the frequency with which third parties have used the word "collective" in their names, and the PTO's prior treatment of various trademark applications containing that word. See id., 2014 WL 1202939, at *5, 2014 U.S. Dist. LEXIS 38606, at *14-15. To be sure, such considerations may, in some circumstances, inform a court's evaluation of inherent distinctiveness. In this case, however, the available evidence regarding third-party usage is indeterminate, while the PTO's prior practice indicates that "collective" is a suggestive mark.
As a general matter, information about how third parties have used a mark in commerce may shed light on its inherent distinctiveness in several ways. First, we
Here, the district court cited three statistics regarding third-party usage of the "collective" mark: (1) "[t]he word `collective' is used in the name of over 7,000 businesses in 45 states"; (2) "[t]here are over 25,000 Internet domain names that contain the word `collective'"; and (3) "more than a dozen companies in the digital advertising and marketing field ... also use the word `collective.'" March Order, 2014 WL 1202939, at *5, 2014 U.S. Dist. LEXIS 38606, at *14-15. These statistics do not, in our view, provide enough information to be probative of the mark's inherent distinctiveness. It is unclear to what extent the first two numbers pertain to CI's competitors (in which case widespread use might indicate that "collective" is descriptive) or third parties in unrelated industries (in which case widespread use might indicate that "collective" is suggestive). The third statistic is somewhat more narrowly drawn, inasmuch as it relates only to companies involved with digital marketing. Even so, however, it is not limited to companies that produce software similar to CI's. And in any event, the fact that a dozen digital-marketing companies have used the word "collective" is a numerator without a denominator: A dozen companies could be a significant portion of the digital-marketing field (which might indicate that "collective" is a vital descriptive tool in the industry) or a tiny sliver (which might indicate that competitors need not rely on "collective" to describe their products). Overall, therefore, the cited evidence of third-party usage carries little weight regarding the inherent distinctiveness of "collective" in this case.
The PTO's prior treatment of trademark applications may inform a court's analysis of inherent descriptiveness in a different way. Before deciding whether to grant an application, the agency determines the inherent distinctiveness of the mark at issue — and, in many instances, its constituent parts. Because the agency has developed expertise in trademarks, courts accord "great weight" to its conclusions. Murphy Door Bed Co. v. Interior Sleep Sys., Inc., 874 F.2d 95, 101 (2d Cir. 1989). Thus, if the PTO has previously classified the particular mark before the court as either descriptive or suggestive, the court will generally follow suit absent compelling grounds for disagreement. See, e.g., PaperCutter, 900 F.2d at 563 ("`[T]he decision of the [PTO] to register a mark without requiring proof of secondary meaning affords a rebuttable presumption that the mark is more than merely descriptive.'"
The district court cited one statistic about the PTO's prior practice: The agency "has either required disclaimer of the use of the word `collective' as being descriptive or rejected the application entirely on the same basis in 186 instances." March Order, 2014 WL 1202939, at *5, 2014 U.S. Dist. LEXIS 38606, at *15. Again, we are not convinced that this statistic is probative of inherent distinctiveness. It pertains to all uses of the word "collective" — not solely those analogous to CI's use of the word, where the PTO's analysis would be of import. And in any event, the figure is another numerator without a denominator. As we understand the record, the PTO has required disclaimer of the word "collective" because it is descriptive, or rejected applications for the same reason, 186 times out of 534 — approximately thirty-five percent of the time. App'x 81. It is therefore far from clear that the PTO routinely classifies "collective" as a descriptive mark in any context, let alone the context relevant to this case.
In our view, the district court seems to have overlooked a more probative fact about the PTO's prior practice: Although each of CI's registered marks contains the word "collective," the PTO did not disclaim that word as descriptive — or, as far as we can tell from the record, require a showing of secondary meaning — in any instance. That fact bolsters CI's argument that the mark should be classified as "more than merely descriptive." PaperCutter, 900 F.2d at 563 (internal quotation marks omitted).
We therefore reverse the portion of the March Order that concluded, as a matter of law, that "collective" is a descriptive mark. Although CI bore the burden of proving "collective" was suggestive, see Nola Spice Designs, L.L.C. v. Haydel Enters., Inc., 783 F.3d 527, 536 (5th Cir. 2015) (noting that where the moving party has pointed to the absence of evidence to prove a fact material to an issue on which the opposing party has the burden of proof at trial, the opposing party has "the burden of demonstrating by competent summary judgment proof that there is an issue of material fact warranting trial" (internal quotation marks omitted)); Reese Publ'g Co. v. Hampton Int'l Commc'ns, Inc., 620 F.2d 7, 11 (2d Cir. 1980) (concluding that where "the mark is not registered," the burden is on the proponent to "prove that its mark is a valid trademark"), we think that the relevant evidence already in the record when CCM moved for partial summary judgment — including the dictionary definitions of "collective," the nature of CI's business, and the PTO's prior decisions regarding the registered marks — uniformly supports the classification of "collective" as a suggestive mark. CI was not obligated to submit still more evidence to prevail on the issue.
Finally, we note that when CCM moved for summary judgment as to CI's counterclaim for infringement of the unregistered mark "collective," it presumably chose its arguments in light of the district court's classification of the mark "collective" as descriptive. We direct the district court, on remand, to give CCM a reasonable opportunity to re-file for summary judgment as to this counterclaim in light of our decision that the mark is suggestive. And, of course, the district court may reopen discovery to the extent it deems necessary or advisable.
II. CI's Use of "Collective" In Commerce
In addition to its rulings regarding inherent distinctiveness and secondary meaning, the district court concluded that CI's counterclaim for infringement of the unregistered mark "collective" failed as a matter of law for an independent reason: CI had not used the mark in commerce until after CCM introduced its own marks. If that were so, CI would have possessed no rights that CCM could infringe, thus dooming its counterclaim. See Hana Fin., Inc. v. Hana Bank, ___ U.S. ___, 135 S.Ct. 907, 909, 190 L.Ed.2d 800 (2015) ("Rights in a trademark are determined by the date of the mark's first use in commerce."). But the record contains colorable evidence that CI began using "collective" continually in commerce well before CCM employed its allegedly infringing marks in 2011. This evidence precludes summary judgment on the issue.
A mark is used in commerce when it is employed "to identify ... goods or services" sold to consumers "in a given market." ITC Ltd. v. Punchgini, Inc., 482 F.3d 135, 147 (2d Cir.), cert. denied, 552 U.S. 827, 128 S.Ct. 288, 169 L.Ed.2d 38 (2007). CI introduced the domain name www. collective.com for its principal website in late 2008. That website appears to have been commercial in nature: The record indicates that it described CI's products and sought to explain what "set[ ] [the company] apart" from its competitors. App'x 1095-96. And soon after the site went live, CI purchased several stand-alone advertisements that directed consumers to "collective.com" for more information about the company. See App'x 1125-27. Taken together, this evidence tends to establish that CI put its domain name, which features the stand-alone mark "collective," to continuous commercial use beginning sometime before 2011. Although
III. CI's Counterclaim for Infringement of the Registered Marks
As we have noted, the district court dismissed CI's distinct counterclaim for infringement of the registered marks without a thorough explanation. In this Circuit, claims for infringement must be analyzed under a two-prong test that looks first to whether the allegedly infringed mark "is entitled to protection," and second to whether use of the allegedly infringing mark "is likely to cause consumers confusion as to the origin or sponsorship" of the products to which it is attached. Virgin Enters. Ltd. v. Nawab, 335 F.3d 141, 146 (2d Cir. 2003). The likelihood of confusion must be analyzed with reference to the eight factors first articulated in Polaroid Corp. v. Polarad Elecs. Corp., 287 F.2d 492, 495 (2d Cir. 1961), one of which is "the degree of similarity between the two marks," id. This framework has not been applied to CI's counterclaim for infringement of the registered marks. CCM never moved for summary judgment as to protectability or likelihood of confusion.
The district court may instead have concluded that CCM did not infringe the registered marks solely because it did not use them verbatim. In the March Order, the court observed: "There is no allegation in this case that CCM has used any of the [registered marks]. Rather, the issue before this Court is whether [CI] has a right to exclude CCM from use of the word `collective' in its mark." March Order, 2014 WL 1202939, at *2, 2014 U.S. Dist. LEXIS 38606, at *5. Later, in the August Order, the court reiterated: "The key merits question in this litigation is whether CI has a protectable mark in the single word `collective.'" August Order, 2014 WL 11343849, at *11, 2014 U.S. Dist. LEXIS 117244, at *31. These passages suggest that, in the district court's view, the differences between CI's registered marks and CCM's allegedly infringing mark were fatal to CI's counterclaim for infringement of the registered marks. We are unable to square any such conclusion with our case law. Although differences among the marks are relevant to one of the eight Polaroid factors — the degree of similarity between the marks — they are not independently dispositive of CI's counterclaim. Because the district court has not yet performed the more comprehensive legal analysis outlined above, we vacate the grant of summary judgment as to the registered marks.
In light of the above-quoted passage from the August Order, we think that CCM may have understood the district court to suggest that CI's counterclaim for infringement of the registered marks had effectively been dismissed. Indeed, after
IV. Cancellation of Registered Marks
After granting summary judgment for CCM on CI's counterclaims, the district court found that CI had abandoned the marks "Collective Network" and "Collective Video" and, based on that abandonment, ordered the PTO to cancel the corresponding registrations. See 15 U.S.C. § 1064(3) (authorizing petitions for cancellation on ground of abandonment); id. § 1119 (empowering district courts to compel cancellation). "To determine that a trademark or trade name is abandoned, two elements must be satisfied: non-use of the name by the legal owner and no intent by that person or entity to resume use in the reasonably foreseeable future." Stetson v. Howard D. Wolf & Assocs., 955 F.2d 847, 850 (2d Cir. 1992) (citing Silverman v. CBS Inc., 870 F.2d 40, 45 (2d Cir. 1989)). The district court concluded that CCM had satisfied both elements, as a matter of law,
In our view, a reasonable factfinder could conclude that CI has made extensive commercial use of both "Collective Network" and "Collective Video." CI's vice president and creative director, Britta Hoskins, stated in a declaration that the company had "continuously and extensively used, advertised, and promoted its services using the ... trademarks COLLECTIVE NETWORK and COLLECTIVE VIDEO" from February 2011 to October 2014. Declaration of Britta Hoskins dated October 6, 2014, at 1-2 (App'x 1428-29). To support that assertion, Hoskins attached several exhibits to her declaration: (1) a 2014 screenshot of a page on CI's website with the heading "Collective Network" and text describing the company's services, including a paragraph titled "Why You Should Work With Us," see id. at 2 & Ex. A (App'x 1429, 1433) (capitalization removed); (2) a 2013 screenshot of a page on CI's website that describes the advantages of the "Collective Video experience," see id. at 3 & Ex. C (App'x 1430, 1438); (3) an excerpt from CI's "standard slide deck that it uses to respond to prospective client[s]," which lists the features of "Collective
In concluding otherwise, the district court noted that another CI employee, Aman Verjee, gave markedly different testimony about the company's use of "Collective Network" and "Collective Video." Speaking as CI's corporate representative under Federal Rule of Civil Procedure 30(b)(6), Verjee stated that he was not aware of any commercial use of either mark. See May 29, 2014 Deposition of Aman Verjee, at 103:17-104:15, 105:13-18 (App'x 1402:17-1403:15, 1404:13-18). In the district court's view, this testimony was decisive because it was the only relevant evidence in the record: "As CI has offered no evidence supporting a specific use of the marks in commerce," the court reasoned, "there is no evidence counter to that of its own corporate designee on this topic, Aman Verjee, who testified of no known use." December Order, 2014 WL 7323419, at *2 n.1, 2014 U.S. Dist. LEXIS 177176, at *5-6 n.1. As we have noted, we find Hoskins' affidavit and corresponding exhibits to constitute such evidence, thereby creating a genuine issue of material fact on the issue of commercial use sufficient to defeat CCM's motion to cancel CI's trademark registrations. Accordingly, we vacate the district court's December Order finding that CI had abandoned the marks "Collective Network" and "Collective Video," and vacate the district court's subsequent cancellation order to the PTO.
V. Attorney's Fees
In light of the foregoing, we also vacate the December Order's award of attorney's fees. The Lanham Act authorizes such fees for the prevailing party in "exceptional" cases. 15 U.S.C. § 1117(a). Because neither party has yet prevailed, the district court's award was at best premature.
For the foregoing reasons, we REVERSE the district court's orders in part, VACATE them in part, and REMAND for further proceedings.