FINDINGS OF FACT AND CONCLUSIONS OF LAW
RUDOLPH CONTRERAS, United States District Judge.
This long-running dispute between Plaintiffs/Counter-Defendants Paleteria La
The Court conducted a bench trial over the course of thirteen days between September 14, 2015 and October 1, 2015. Following the trial, the parties submitted proposed findings of fact and conclusions of law, as well as subsequent briefs in opposition. The Court now makes its Findings of Fact and Conclusions of Law, as required by Rule 52(a)(1) of the Federal Rules of Civil Procedure. For the reasons discussed below, the Court will enter judgment in favor of PROLACTO as to Count I of PLM's Second Amended Complaint, enter judgment in favor of PLM as to Counts II and III of the Second Amended Complaint and as to PROLACTO's Counterclaim Count II. The Court will also dismiss Count IV of the Second Amended Complaint as moot.
For clarity in following the Court's specific findings of fact and conclusions of law, the Court first provides a brief overview of the facts underlying this case and a summary of the case's procedural history and current posture.
A. Factual Overview
PLM and PROLACTO are in the business of manufacturing and selling "paletas," a style of ice cream bars and popsicles that originated in Mexico and are traditionally made from fruit, spices and nuts and sold to the public in trucks and retail stores, as well as other frozen treats.
PROLACTO is a Mexican company founded in 1992. The Andrade Malfavon family, which founded and owns the company, traces its history in the paleta business to the purported origin of the paleta and the ice cream stores that make and sell them, called "paleterias," in Tocumbo, a city in the Mexican state of Michoacán, in the 1940s. PROLACTO primarily does business in the United States through licensing agreements with various members of the Andrade Malfavon family who own and operate individual paleterias in certain markets, namely, Florida, Texas, Northern California, and North Carolina. Until relatively recently, PROLACTO did not directly
PLM traces its history to at least as early as 1991, when two brothers, Mexican immigrants Ignacio Gutierrez and Ruben Gutierrez, began selling paletas out of pushcarts in Northern California using the name "La Michoacana," which literally means, in Spanish, "the woman from the state of Michoacán." The partnership dissolved in 1999, and Ignacio Gutierrez operated the business as a sole proprietorship for several years before incorporating in California. PLM's business has grown significantly since its beginnings as a pushcart operation in Northern California. PLM currently manufactures its products in a factory in Modesto, California and distributes its products throughout various parts of the United States where they are sold at large-scale retailers such as Costco, Wal-Mart, and Walgreens, as well as Hispanic grocery stores such as El Super and Vallarta and a variety of other retail out-lets.
Both PLM and PROLACTO use a variety of trademarks when selling their products in the United States. A graphic displaying some of the marks the parties have used appears below:
The battle between the PLM and PROLACTO over the right to use these marks has been fierce and protracted. The parties sharply dispute, among many other things, which of them first used these marks in the United States, and each party accuses the other of engaging in bad faith in a variety of different ways.
B. Procedural History
The procedural history of this case stretches back nearly a decade. An understanding of this history is necessary to resolve the issues before the Court.
1. TTAB Proceedings
After unsuccessfully attempting to register certain marks with the United States Patent and Trademark Office (the "USPTO"),
On May 20, 2011 the TTAB granted PROLACTO's petition for cancellation of PLM's LA INDITA MICHOACANA mark. See generally Productos Lacteos Tocumbo S.A. De C.V. v. Paleteria La Michoacana, Inc., 98 U.S.P.Q.2d 1921, 2011 WL 2161071 (T.T.A.B. May 20, 2011) ("TTAB Decision"). The TTAB concluded that the mark should be cancelled because PROLACTO had established priority of use and likelihood of confusion with respect to several of its asserted, unregistered marks, including its own Indian Girl design, as well as its LA MICHOACANA (words only), LA MICHOACANA NATURAL (words only), and LA MICHOACANA NATURAL marks. See id. at **9-16.
Following the TTAB's decision, PLM moved for reconsideration, arguing that PROLACTO failed to establish priority of use and that the TTAB erred in concluding that PROLACTO established common law rights in its "Michoacana" marks. See Mot. Recons., TTAB Dkt. 109. The TTAB issued a decision denying reconsideration on July 13, 2011. See TTAB Dkt. 115.
2. The Present Action
PLM commenced this action pursuant to 15 U.S.C. § 1071(b) on September 8, 2011. See Compl., ECF No. 1.
a. PLM's Second Amended Complaint and PROLACTO's Counterclaims
PLM's Second Amended Complaint alleges four causes of action: Count I seeks reversal of the TTAB's decision to cancel the registration of PLM's LA INDITA MICHOACANA mark and denial of PROLACTO's cancellation petition; Count II seeks a declaration that there is no likelihood of confusion between PLM's LA INDITA MICHOACANA mark and various marks asserted by PROLACTO on the basis of their common usage of the word "MICHOACANA"; Count III alleges that PROLACTO's use of its Indian Girl mark infringes three of PLM's registered marks under 15 U.S.C. § 1114, including its LA INDITA MICHOACANA mark; and Count IV seeks to cancel PROLACTO's registration of certain marks containing the name LA FLOR DE MICHOACAN if a likelihood of confusion is found between those marks and PLM's marks. See Second Am. Compl. at 13-16.
PROLACTO, in turn, filed seven counterclaims: Counterclaim Count I alleges that PLM infringed its registered LA FLOR DE MICHOACAN and design mark under 15 U.S.C. § 1114(1); Counterclaim Count II alleges trademark infringement, unfair competition, passing off, false advertising, false association, and false designation in violation of 15 U.S.C. § 1125(a); Counterclaim Count III alleges trademark infringement of the District of Columbia's common law; Counterclaim Count IV alleges trademark dilution under 15 U.S.C. § 1125(c); and Counterclaim Counts V, VI, and VII seek cancellation of two of PLM's registered marks due to
b. Summary Judgment
After the close of discovery in this case, the parties filed cross-motions for partial summary judgment, each of which the Court granted in part and denied in part. See generally Paleteria La Michoacana, Inc. v. Productos Lacteos Tocumbo S.A. De C.V., 69 F.Supp.3d 175 (D.D.C.2014) ("PLM I"). The Court subsequently granted in part and denied in part a motion by PLM to revise the Court's Memorandum Opinion and Order at summary judgment and denied a motion for consideration by PROLACTO, issuing a First Revised Order on February 3, 2015. See First Revised Order, ECF No. 175; Paleteria La Michoacana, Inc. v. Productos Lacteos Tocumbo S.A. De C.V., 79 F.Supp.3d 60 (D.D.C.2015) ("PLM II") (denying PROLACTO's motion for reconsideration); Mem. & Order, ECF No. 174 ("PLM III") (granting in part and denying in part PLM's motion to revise the Court's summary judgment Memorandum Opinion and Order).
A brief summary of the disposition of each count of PLM's Second Amended Complaint and PROLACTO's Counterclaims is necessary to understanding the issues presented at trial for the Court's determination:
In addition, the Court entered judgment in favor of PLM as to the issue of whether PROLACTO is entitled to any form of monetary relief on any of its counterclaims after finding that PROLACTO conceded the issue. See First Revised Order ¶ 9; PLM I, 69 F.Supp.3d at 227-28; PLM II, 79 F.Supp.3d at 71-82.
c. Bench Trial
The Court conducted a bench trial over the course of thirteen days between September 14, 2015 and October 1, 2015. See Trial Tr. Day 1 A.M. Session (Sept. 14, 2015) ("Day 1 A.M."), ECF No. 256; Trial Tr. Day 1 P.M. Session (Sept. 14, 2015) ("Day 1 P.M."), ECF No. 321; Trial Tr. Day 2 A.M. Session (Sept. 15, 2015) ("Day 2 A.M."), ECF No. 257; Trial Tr. Day 2 P.M. Session (Sept. 15, 2015) ("Day 2 P.M."), ECF No. 322; Trial Tr. Day 3 A.M. Session (Sept. 16, 2015) ("Day 3 A.M."),
PLM presented six witnesses over the course of seven days: Ignacio Gutierrez, the co-founder of PLM's business; Patricia Gutierrez, the Chief Operating Officer of Paleteria La Michoacana (Sub), Inc.; two private investigators, Zachary Fechheimer and Patti James; George Reis, an expert in the field of image forensics; and Samuel Quinones, a journalist who has written on the subject of paleterias. PLM introduced a substantial volume of exhibits and designated significant deposition testimony for consideration.
PROLACTO presented eleven witnesses over the course of five days: Ruben Gutierrez, who co-founded PLM's business with his brother, Ignacio Gutierrez, and left PLM in 1999; Marco Antonio Andrade Malfavon, a partner of PROLACTO; four U.S. licensees or employees of U.S. licensees, Mary Fernandez, Teresita Fernandez, Miguel Chavez Bermudez, and Cesar Gonzales Perez; Jorge Leon Baz, PROLACTO's outside Mexican counsel; Dr. Jacob Jacoby, an expert who conducted a market research study; and three individuals who claimed to have either purchased or consumed PLM's products, Felipe de Jesus Martinez, Lorena Salazar, and Ramon Salazar. PROLACTO introduced a substantial volume of exhibits and designated significant deposition testimony for consideration. During trial, the Court also took under advisement issues relating to the admissibility of numerous exhibits proffered by both parties.
d. Other Pending Motions
In addition to the factual and legal issues presented to the Court during trial, several other motions filed during the course of trial or post-trial remain pending.
PROLACTO filed a motion for involuntary dismissal of PLM's claims under Rule 52(c) of the Federal Rules of Civil Procedure at the close of PLM's case-in-chief. See Def.'s Mot. & Mem. Involuntary Dismissal & Recons. Interlocutory Order, ECF No. 283. Pursuant to Rule 52(c), the Court declined to render any judgment until the close of all the evidence. See Day 9 A.M. at 4:13-5:3. Because the Court now finds for PLM on some of its claims after the close of all the evidence, PROLACTO's motion for involuntary dismissal will be denied as moot.
PLM, for its part, filed four motions asking the Court to take judicial notice of certain facts. See Pls.' Request Judicial Notice, ECF No. 248; Pls.' Request Judicial Notice No. 2, ECF No. 263; Pls.' Request Judicial Notice No. 3, ECF No. 277; Pls.' Request Judicial Notice No. 4, ECF No. 282. The Court addresses these pending motions, as well as admissibility issues relating to certain evidence taken under advisement during the trial, throughout its findings of fact to the extent that the Court has found the issues relevant. To the extent those issues are not relevant to the Court's analysis, they will be denied as moot.
II. LEGAL STANDARDS
The Court first sets forth the requirements of the Federal Rules of Civil Procedure governing the Court's findings of fact and conclusions of law and then addresses the standard that the Court uses in reviewing the TTAB's decision in this case.
A. Rule 52(a) of the Federal Rules of Civil Procedure
Pursuant to Rule 52(a) of the Federal Rules of Civil Procedure, in an action tried without a jury, the Court "must find the facts specially and state its conclusions of law separately." Fed. R. Civ. P. 52(a)(1). The Court's "[f]indings and conclusions may be incorporated in any opinion or memorandum of decision the court may file." Defs. of Wildlife, Inc. v. Endangered Species Sci. Auth., 659 F.2d 168, 176 (D.C.Cir.1981); see also Fed. R. Civ. P. 52(a)(1) ("The findings and conclusions ... may appear in an opinion or memorandum of decision filed by the court.").
The Court's findings must be "sufficient to indicate the factual basis for the ultimate conclusion." Kelley v. Everglades Drainage Dist., 319 U.S. 415, 422, 63 S.Ct. 1141, 87 L.Ed. 1485 (1943); see also Lyles v. United States, 759 F.2d 941, 943-44 (D.C.Cir.1985) ("One of [the rule's] chief purposes is to aid the appellate court by affording it a clear understanding of the ground or basis of the decision of the trial court." (internal quotation omitted)). "But the judge need only make brief, definite, pertinent findings and conclusions upon the contested matters; there is no necessity for over-elaboration of detail or particularization of facts." Fed. R. Civ. P. 52(a) advisory committee note to 1946 amendment; accord Caffey v. Togo, No. 97-5092, 1998 WL 230269, at *2 (D.C.Cir. Feb. 9, 1998); Wise v. United States, 145F.Supp.3d 53, 57, 2015 WL 7274026, at *2 (D.D.C. Nov. 17, 2015); Moore v. Hartman, 102 F.Supp.3d 35, 65 (D.D.C.2015).
The Court is neither "require[d]" nor "encourage[d]" "to assert the negative of each rejected contention as well as the affirmative of those which they find to be correct." Schilling v. Schwitzer-Cummins Co., 142 F.2d 82, 84 (D.C.Cir.1944); see also Huff v. City of Burbank, 632 F.3d 539, 543 (9th Cir.2011) ("It is ... not `necessary that the trial court make findings asserting the negative of each issue of fact raised.'" (quoting Carr v. Yokohama Specie Bank, Ltd., of S.F., 200 F.2d 251, 255 (9th Cir.1952), rev'd on other
In accordance with these standards, the Court has cited portions of the record, including trial testimony, trial exhibits, designated deposition testimony, and the TTAB record, to support its findings of fact. The Court has not, however, exhaustively identified every portion of the record upon which it has relied to make its findings of fact, and the omission of a citation to a particular portion of the record does not necessarily mean that the Court did not rely on that portion to make its findings of fact. Rather, the Court has considered the record in its entirety, including the Court's own determination of witnesses' credibility, and its citations to portions of the record are simply intended to provide a helpful reference for the basis of its findings.
Finally, the Court notes that Rule 52 provides that the Court's "[f]indings of fact, whether based on oral or other evidence, must not be set aside unless clearly erroneous, and the reviewing court must give due regard to the trial court's opportunity to judge the witnesses' credibility." Fed. R. Civ. P. 52(a)(6); see also Anderson v. City of Bessemer City, N.C., 470 U.S. 564, 573-76, 105 S.Ct. 1504, 84 L.Ed.2d 518 (1985) (discussing the "clearly erroneous" standard).
B. Standard for Reviewing the TTAB's Decision
PLM seeks reversal of the TTAB's decision to cancel the registration of its trademark in Complaint Count I. The other pending claims and counterclaims in this action were not presented to the TTAB. Nevertheless, because there is some overlap in the factual issues underlying Complaint Count I and the other claims and counterclaims in this action, and given recent developments in the legal landscape, it is helpful for the Court to clarify upfront that the standard by which it reviews the TTAB's factual findings and makes its own findings of fact in this case is de novo.
First, an understanding of the statutory framework for this action is necessary. The Lanham Act offers a party to a cancellation proceeding before the TTAB who is "dissatisfied" with the TTAB's decision two options. See 15 U.S.C. § 1071. The party may either: (1) appeal the TTAB's decision directly to the United States Court of Appeals for the Federal Circuit pursuant to § 1071(a); or (2) commence a civil action in a United States District Court pursuant to § 1071(b). See id. Here, PLM chose the latter option, filing this action against PROLACTO pursuant to § 1071(b). In a § 1071(b) action, the district court is empowered to "adjudge that an applicant is entitled to a registration upon the application involved, that a registration involved should be cancelled, or such other matter as the issues in the
Proceedings under § 1071(a) and § 1071(b) "differ in important ways." Aktieselskabet AF 21. Nov. 2001 v. Fame Jeans, Inc., 525 F.3d 8, 13 (D.C.Cir.2008). For example, unlike a § 1071(a) proceeding, in a § 1071(b) proceeding, the court is not always required to review the TTAB's record. Rather, the statute only requires that the record "be admitted on motion of any party, upon such terms and conditions as to costs, expenses, and the further cross-examination of the witnesses as the court imposes, without prejudice to the right of any party to take further testimony." 15 U.S.C. § 1071(b)(3); see also Aktieselskabet, 525 F.3d at 13. Once admitted, the record "shall have the same effect as if originally taken and produced in the suit." 15 U.S.C. § 1071(b)(3); see also Aktieselskabet, 525 F.3d at 13. And, importantly, the parties in § 1071(b) action may raise new claims, present new evidence, and seek additional relief beyond that which was before the TTAB. See Aktieselskabet, 525 F.3d at 13 (holding that the district court "may consider both new issues and new evidence that were not before the TTAB"). Here, both parties have asserted a variety of new claims and introduced substantial evidence, in the form of both witness testimony and documentary evidence, that was not before the TTAB.
In determining the proper standard of review in this case, the Court looks to recent Supreme Court precedent. In 2012, the Supreme Court held in Kappos v. Hyatt, ___ U.S. ___, 132 S.Ct. 1690, 182 L.Ed.2d 704 (2012), that when an applicant for a patent seeks review of a decision of the USPTO in a district court pursuant to 35 U.S.C. § 145 and "new evidence is presented on a disputed question of fact, the district court must make de novo factual findings that take account of both the new evidence and the administrative record before the PTO." Kappos, 132 S.Ct. at 1701. The Court explained:
Id. at 1700. The Court agreed with the Federal Circuit's decision below that "the district court may, in its discretion, `consider the proceedings before and findings of the Patent Office in deciding what weight to afford an applicant's newly-admitted evidence'" but also cautioned that "[t]hough the PTO has special expertise in evaluating patent applications, the district court cannot meaningfully defer to the PTO's factual findings if the PTO considered a different set of facts." Id. (quoting Hyatt v. Kappos, 625 F.3d 1320, 1335 (Fed.Cir.2010)). Thus, the Court concluded: "the proper means for the district court to accord respect to decisions of the PTO is through the court's broad discretion over the weight to be given to evidence newly adduced in the § 145 proceedings." Id.
Although Kappos specifically concerned a federal district court's review of a USPTO patent decision under 35 U.S.C. § 145, its holding applies with equal force to actions challenging a TTAB trademark decision under 15 U.S.C. § 1071(b) that involve the introduction of new evidence. The Supreme Court subsequently clarified in B & B Hardware, Inc. v. Hargis Indus., Inc., ___ U.S. ___, 135 S.Ct. 1293, 191 L.Ed.2d 222 (2015), that Kappos concerned an "analogous scheme in patent law" and that when a party challenges a
Therefore, in line with the Supreme Court's decisions in Kappos and B & B Hardware, the Court makes its findings of fact and conclusions of law de novo. As permitted by Kappos, the Court has reviewed the entirety of the TTAB record in this case and, in its discretion, takes into account both the new evidence submitted over the course of the lengthy bench trial and the TTAB record. See Kappos, 132 S.Ct. at 1701. But because the TTAB, in many respects, considered a "different set of facts" than has been presented here, the Court finds itself largely unable to "meaningfully defer" to the TTAB's factual findings, despite the TTAB's expertise on trademark issues. Id. The Court recognizes that this standard of review may represent a departure from the pre-Kappos approach in this Circuit, as well as the Court's own approach at the summary judgment stage of this litigation,
III. FINDINGS OF FACT
1. In General
1. The plaintiffs and counter-defendants in this action, Paleteria La Michoacana, Inc. ("PLM, Inc.") and Paleteria La Michoacana (Sub) Inc. ("PLM (Sub) Inc."), are California corporations.
2. PLM produces and sells Mexicanstyle ice cream, paletas, and bolis out of its current headquarters in Modesto, California. See Day 3 A.M. at 90:4-92:2. A paleta is a Mexican-style popsicle that can be either water-based or cream-based. See id. at 92:7-13. A bolis is an ice milk or water-based product similar to an American push pop that is sealed on both sides and cylindrical in shape. See id. at 90:15-18.
3. PLM's target consumers are of Mexican origin, typically first-, second-, or third-generation immigrants to the United States from Mexico. The flavor profile of PLM's products is designed to appeal to these target consumers, but PLM also sells its products to consumers that fall outside this target demographic. See Day 5 A.M. at 91:5-15.
4. Today, PLM sells its products to Wal-Mart, large supermarkets such as Safeway, HEB, Albertsons, and Super Value, and regional chain stores, such as Save Mart, FoodMaxx, and Lucky Stores in the Northern California area, and Vallarta Supermarkets, Northgates, and El Super in the Southern California area. See Day 5 A.M. at 92:16-93:3. PLM also sells some of its product to distributors that distribute to street vendors. See id. at 93:7-16. PLM does not generally sell its products directly to consumers, and it does not own or operate any retail location where consumers can purchase its products. PLM currently sells its products in, approximately, 30 states or more. See Day 6 A.M. at 102:21-23.
2. History and Growth of PLM
5. The history of PLM can be traced to Ignacio and Ruben Gutierrez, two brothers who immigrated to California from Jalisco, Mexico and began selling shaved ice part-time out of pushcarts in the area of Turlock, California in 1988 or 1989. See Day 3 A.M. at 76:6-80:25; Day 8 A.M. at 37:24-40:15. The Gutierrez brothers sold shaved ice under the name "Acapulco" from approximately 1988 to 1991. See Day 3 A.M. at 80:12-25; Day 8 A.M. at 37:24-50:19.
6. In or about October 1990, the Gutierrez brothers decided to sell paletas instead of shaved ice. In preparation, the brothers visited Guadalajara, in the state of Jalisco, Mexico to purchase paleta-making equipment, including molds, flavorings, sticks, a brine tank, and push carts, and to learn how to make, package, and store paletas. As part of their research in Mexico, the brothers also visited numerous paleterias in order to understand the business of making and selling paletas. See Day 3 A.M. at 82:10-86:21; Day 8 A.M. at 45:17-52:14.
7. In 1991, using money they had saved from their shaved ice business, the Gutierrez brothers opened a paleta factory at 351 North Walnut Road in Turlock, California and sold the paletas that they made in this factory out of their pushcarts in the Northern California area. See Day 3 A.M. at 81:11-82:5; id. at 94:6-16; Day 8 A.M. at 48:17-50:10.
8. From 1991 to 1999, the Gutierrez brothers conducted their paleta business as a general partnership based on an oral agreement. The Gutierrez brothers executed a written partnership agreement effective January 1, 1999, a few months before the partnership dissolved. See Day 3 P.M. at 34:17-35:15; Day 8 A.M. at 62:17-63:4; R. Gutierrez Dep. Tr. (Mar. 15, 2010) at 9:22-11:11, 35:15-24, TTAB Dkt. 81.
9. In 1991, the Gutierrez brothers' paleta business generated between $50,000 and $60,000 in sales revenue. By 1998, their business generated close to $1 million in sales. See Day 3 A.M. at 94:17-19 (sealed testimony); Day 3 P.M at 76:24-77:14; Day 5 A.M. at 85:8-13.
10. The Gutierrez brothers' partnership operated under various fictitious names over time, including "Paleteria Michoacana," "Paleteria La Michoacana," and "La Michoacana," but all variations used the word "Michoacana." See, e.g., R. Gutierrez Dep. Tr. (June 10, 2013) at 13:1-5 (stating that the partnership conducted business under the name "Paleteria Michoacana"); id. at 15:10-16 (stating that business "probably" operated under names other than "Paleteria Michoacana" between 1991 and 1996 but that he was not sure); I. Gutierrez Dep. Tr. (Dec. 30, 2009), Reg. Ex. 30, TTAB Dkt. 69; (Affidavit of Publication for fictitious business name of "PALETERIA MICHOACANA" dated May 22, 1991); id. Reg. Ex. 37 (telephone bill dated February 17, 1993 addressed to "RUEBEN [sic] GUTIERREZ DBA LA MICHOACANA"); I. Gutierrez Dep. Tr. (Dec. 30, 2009), Reg. Ex. 36, TTAB Dkt. 71 (Purchase and Sale Agreement dated April 8, 1999 terminating the partnership known as "PALETERIA LA MICHOACANA").
11. On May 5, 1993, the Gutierrez brothers sold their product wholesale to a Las Vegas, Nevada distributor. Ignacio Gutierrez recorded the sale by hand on an invoice with the name "PALETERIA MICHOACANA" written on the top. See Pls.' Ex. 142 at 1; Day 3 A.M. at 111:11-114:10.
12. In or about 1997, the Gutierrez brothers began to have disagreements with each other, which sometimes resulted in physical violence. In early 1997, as a result of these disagreements, Ruben temporarily left the business. Ignacio persuaded Ruben to return a week or two later,
13. In 1998, Ignacio married Patricia Gutierrez, who then immigrated to the United States in approximately February 1999. In March or April 1999, she began visiting the PLM offices to informally assist Ignacio with his work. The marriage and Patricia's involvement in the business exacerbated problems between the Gutierrez brothers, and Ruben Gutierrez ultimately determined that it was necessary to dissolve the partnership. See Day 6 A.M. at 50:17-51:2; Day 6 P.M. at 5:10-6:3; Day 7 A.M. at 96:13-24; id. at 106:16-107:20; Day 8 A.M. at 77:17-83:12; see also Day 4 A.M. at 9:17-10:2.
14. The Gutierrez brothers terminated their partnership through a Purchase and Sale Agreement dated April 8, 1999 pursuant to which Ignacio Gutierrez agreed to pay Ruben for his 50% share of the business. See Day 3 P.M. at 35:10-23; Day 8 A.M. at 83:13-84:7; I. Gutierrez Dep. Tr. (Dec. 30, 2009), Reg. Ex. 36, TTAB Dkt. 71 (Purchase and Sale Agreement dated April 8, 1999 terminating the partnership known as "PALETERIA LA MICHOACANA").
15. After the termination of the Gutierrez brothers' partnership, Ruben Gutierrez formed his own paleta and ice cream business called Tropicale Foods, Inc. ("Tropicale Foods"). Tropicale Foods primarily sells its products using the trademark name "Helados Mexico." See Day 8 P.M. at 38:13-40:3. Tropicale Foods and PLM are competitors. See Day 4 A.M. at 13:1-9.
16. Following the dissolution of the Gutierrez brothers' partnership, Ignacio Gutierrez continued to operate the business without interruption as a sole proprietorship. See Day 3 P.M. at 35:16-36:9. At the time, the sole proprietorship primarily sold its products to independently-owned Mexican stores in the United States and the "C-store channel," which includes gas stations with mini-marts and neighborhood convenience stores and liquor stores. See Day 5 A.M. at 91:16-92:15.
17. In approximately May or June 1999, Patricia Gutierrez began formally working for the sole proprietorship in an administrative or secretarial role, which included, among other things, filing documents related to sales and distribution and ordering and distributing office supplies. See Day 5 A.M. at 82:11-17; id. at 108:6-9; id. at 112:3-6; Day 6 A.M. at 50:17-51:2; Day 6 P.M. at 5:21-6:3; Day 7 A.M. at 109:11-21.
18. At the time that Patricia Gutierrez joined the business in 1999, PLM sold its products to, among others, a distributor that sold PLM's products in the Sacramento and northern Nevada areas. See Day 5 A.M. at 93:17-94:11.
The issue of when PLM began selling its products in interstate commerce was disputed between the parties. PROLACTO argues, without providing any citation to the record, that PLM made its "first-ever interstate sale of product ... when Ignacio Gutierrez personally delivered a relatively small shipment of paletas to a customer in the State of Arizona" on February 21, 2005. Def.'s Br. at 11 ¶ 39. PROLACTO appears to be referencing PLM's sale of product bearing the registered LA INDITA MICHOACANA mark to a customer in Arizona named Cruz Ramirez. See Day 4 P.M. at 88:7-14. That sale is discussed below. The Court is not persuaded, based
PROLACTO also offered testimony by Ruben Gutierrez that throughout his time as a partner in the business from 1991 to April 1999, PLM sold its products exclusively within the state of California. See Day 8 A.M. at 75:25-77:18. To the extent that his testimony conflicts with Patricia Gutierrez's testimony, the Court found Ms. Gutierrez's testimony to be more credible and convincing. As explained in detail below with respect to the dispute over PLM's first use of the Indian Girl mark, the Court found Ms. Gutierrez to be more credible in her testimony than Ruben Gutierrez for a number of reasons, including the Court's observation of the witnesses' live testimony. With respect to this issue specifically, the Court found Ms. Gutierrez's testimony to be particularly credible given her specific recollection of personally processing the paperwork to obtain a license to sell PLM's dairy products across state lines and into Nevada. See Day 5 A.M. at 94:3-11.
19. In 2002, Ignacio Gutierrez incorporated the business in California as Paleteria La Michoacana, Inc. See Day 3 P.M. at 54:19-25.
20. Also in 2002, the business moved from 351 North Walnut in Turlock, California to its current location at 2068 Lapham Drive in Modesto, California, 95354. PLM makes all of its products at the Modesto, California location. See Day 3 A.M. at 90:19-92:2; Day 5 A.M. at 84:23-85:2.
21. From 1999 and through 2006, PLM expanded its geographic distribution to other states, and, by 2005, PLM was selling its products in, at a minimum, California, Nevada, Texas, Oregon, Utah, and Colorado. See Day 6 A.M. at 101:13-23.
22. At some point in 2005, PLM began selling its products to supermarket and grocery store chains in Texas, including in the areas of Houston and Dallas, that in turn offered PLM's products for sale to consumers. See generally Day 6 A.M. at 101:24-102:1. For example, PLM began selling its product to and running advertisements in HEB, a chain operating stores in Houston and Dallas, and a Hispanic-format store operated by HEB called Mi Tienda. See Day 4 A.M. at 25:8-26:18; Day 6 A.M. at 64:4-66:16; Pls.' Ex. 121 at 2. PLM also began selling to Sellers Bros., a chain operating in the city of Houston and areas to the south of the city, as well as running advertisements in the chain's weekly circular. See Day 6 A.M. at 58:16-63:12; Pls.' Ex. 121 at 1.
23. In 2011, Ignacio Gutierrez sold 22% of his ownership interest in PLM, Inc. to the Central Valley Fund ("CVF"). As part of this transaction, Paleteria La Michoacana, LLC ("PLM, LLC") was formed. See Day 3 P.M. at 81:6-16.
24. Between 2006 and 2012, PLM expanded its geographic distribution even further through large-scale retailers such as Wal-Mart, entering states including Washington, New Mexico, and Illinois. See Day 6 A.M. at 102:2-19.
25. In 2013, PLM, LLC was converted to Paleteria La Michoacana (Sub), Inc. ("PLM (Sub) Inc."), which has continued to operate the business to the present day. See Day 3 P.M. at 80:24-82:4. CVF subsequently converted its equity in the company to debt. See Day 7 P.M. at 60:16-25.
26. PLM's business grew over time, particularly following the dissolution of the Gutierrez brothers' partnership in April 1999, in terms of its payroll, geographic distribution, revenue, and variety of products. See, e.g., Day 5 A.M. at 82:25-84:1; Pls.' Ex. 147; Pls.' Ex. 269.
3. PLM's Use of "Michoacana"
27. Since 1991, PLM has continuously and consistently used "Michoacana" or "La Michoacana" as a trademark in connection with making and selling paletas, bolis, and ice cream. See Day 3 A.M. at 94:20-95:3; Day 8 P.M. at 30:21-31:6; R. Gutierrez Dep. Tr. (Mar. 15, 2010) at 35:25-37:2, 38:5-19, 53:6-9, TTAB Dkt. 81.
28. The Gutierrez brothers used "Michoacana" as a trademark from the beginning of their paleta business in 1991. See Day 3 A.M. at 94:22-95:2.
29. The Gutierrez brothers adopted the marks "La Michoacana" and "Michoacana" for their business in 1991 because they had seen that name used in paleterias in Mexico. At the time that they adopted the marks, however, they did not believe that, in Mexico, the terms "La Michoacana" or "Michoacana" denoted a single source of product. The brothers adopted the marks because, at least in part, they believed that their target consumers would recognize the name.
The Court's finding is well grounded in Ignacio and Ruben Gutierrez's live testimony at trial. The Gutierrez brothers both testified that during their time in Mexico, including during their trip to Guadalajara in preparation for opening their business in California in 1991, they observed innumerous paleterias that used the name "La Michoacana" or a variation on that name containing the word "Michoacana," including "Paleteria Michoacana." See Day 3 A.M. at 85:4-16; Day 8 A.M. at 50:24-51:4; Day 8 P.M. at 63:7-21; see also R. Gutierrez Dep. Tr. (Mar. 15, 2010) at 7:21-8:1, TTAB Dkt. 81. Ruben Gutierrez was confident that there were, in his words, "over a thousand" paleterias named "La Michoacana" in Mexico, Day 8 P.M. at 63:21, and Ignacio Gutierrez similarly stated that in Guadalajara, "they're almost on every corner," Day 3 A.M. at 85:8-9; see also Day 4 P.M. at 50:13-14 (stating that there is one "just in every town in Mexico"). These paleterias were distinct from each other in terms of appearance. See Day 3 A.M. at 88:9-10; Day 8 P.M. at 51:7-52:9. Ignacio testified that his understanding was not that the phrase "La Michoacana" referred to a single source of product, but, rather, "everybody used it." Day 3 A.M. 85:8-17; see also Day 4 P.M. at 50:17. Similarly, Ruben Gutierrez testified on cross-examination that he did not know whether all of the "La Michoacana" paleterias that he observed in Mexico were owned or operated by the same company. See Day 8 P.M. at 63:22-64:3. He also testified that he did not know whether PROLACTO licensed the phrase "La Michoacana" to every paleteria that uses the name in Mexico. See id. at 64:4-65:6. Finally, the Court notes that PROLACTO itself was not even formed in Mexico until 1992, the year after the Gutierrez brothers began doing business in California using "La Michoacana," and no evidence has been presented to the Court suggesting that the Gutierrez brothers recognized some other entity as being the exclusive owner or user of the phrase "La Michoacana" in Mexico in 1991.
30. There is no indication that the Gutierrez brothers adopted the name in an effort to associate themselves with a prior user of the name in the United States.
31. The Gutierrez brothers used "LA MICHOACANA" on pushcarts, as shown on the design in Plaintiffs' Exhibit 91.
32. For a period of time beginning in 1991, the Gutierrez brothers packaged each paleta in a plastic wrapper printed with "La Michoacana," as shown on the design in Plaintiffs' Exhibit 59, which is a printer's proof of the packaging containing handwritten changes made by Ignacio Gutierrez in February 1991. This was the first wrapper design that the Gutierrez brothers used. Pls.' Ex. 59; Day 3 A.M. at 99:25-105:14; R. Gutierrez Dep. Tr. (June 10, 2013), Pls.' Ex. 256, at 16:21-17:7, 18:10-19.
33. For a short period in the early 1990s, the Gutierrez brothers decided to intentionally copy a local competitor's paleta wrapper design of a clown for use on their paleta wrappers. After the local competitor took action against the Gutierrez brothers, the Gutierrez brothers ceased using the clown design. See Day 4 P.M. at 92:10-93:23; id. at 96:5-96:14; Day 8 A.M. at 55:12-57:20.
34. At some point either shortly before or after the Gutierrez brothers briefly adopted a competitor's clown design for their paleta wrappers in the early 1990s, the brothers created and adopted a new design for their paleta wrappers as shown in the wrapper film contained in Plaintiffs' Exhibit 79. This design used "MICHOACANA" with an array of cartoon fruit and paletas wearing sunglasses in black and white. Pls.' Ex. 79; Day 3 A.M. at 105:16-109:10.
35. In 1993, the Gutierrez brothers began providing freezers to retail establishments in order to hold and sell their products to consumers. A photograph of the first freezer, which had a decal and the name "PALETERIA MICHOACANA," is located in Plaintiffs' Exhibit 89. See Pls.' Ex. 89; Day 3 A.M. at 115:22-118:4; see also R. Gutierrez Dep. Tr. (June 10, 2013) at 19:1-24.
36. In approximately 1994, the Gutierrez brothers modified the design of their paleta wrappers again, adopting the wrapper contained in Plaintiffs' Exhibit 101 and Defendant's Exhibit 73. This design, unlike the previous design, was in color. It used the same array of fruit and paletas with sunglasses and contained the name "PALETERIA LA MICHOACANA," with "LA MICHOACANA" being the focus of the design. The Gutierrez brothers continued to use this wrapper design until the dissolution of their partnership in 1999. Pls.' Ex. 101; Def.'s Ex. 73; Day 3 A.M. at 118:21-119:20; Day 8 A.M. at 58:18-59:7.
37. Since the dissolution of the Gutierrez brothers' partnership, PLM has continued to use "Michoacana" in various forms on its products, including in connection with the Indian Girl and LA INDITA MICHOACANA marks that are also at issue in this case.
4. PLM's Use of the Indian Girl and LA INDITA MICHOACANA
a. In General
38. PLM has used various marks containing an Indian Girl, appearing in different designs, in commerce over time.
39. PLM (Sub), Inc. is currently the owner of the three registered trademarks appearing in the chart below.
40. PLM has also used various marks over time that incorporate the Indian Girls that appear in each of its three registered marks (or an Indian Girl that is similar in appearance) along with the words "LA MICHOACANA ES NATURAL" in different variations. A sample of these marks is provided below.
b. "Indian Girl with Paleta" and "Indian Girl with Cone"
41. PLM, while it operated as a sole proprietorship owned by Ignacio Gutierrez, used the Indian Girl with Paleta and Indian Girl with Cone marks, pictured below, on the outside of its corrugated shipping boxes in which it shipped products from its factory in California to distributors and retail stores in California and Nevada at least as early as June 1999, when, at the latest, Patricia Gutierrez began working for the business.
The fact issue of when PLM first used the Indian Girl with Paleta and the Indian Girl with Cone marks on its shipping boxes was sharply disputed by the parties at trial through conflicting witness testimony.
Ignacio Gutierrez testified that the Gutierrez brothers' partnership began using the Indian Girl with Paleta on the outside of the corrugated shipping boxes used for shipping and selling their fruit bars to customers in 1994. See Day 3 P.M. at 44:17-45:24; id. at 50:11-25. He stated that, beginning in 1995, the brothers began also using the Indian Girl with Cone mark on their shipping boxes for ice cream bars. See id. at 49:22-50:10. Ignacio explained that he and his brother disagreed over whether to use the Indian Girl, with Ignacio wanting to use it because it represented the name "Michoacana" and Ruben not wanting to use it because he did not want a change. See id. at 47:16-49:6. As a compromise, according to Ignacio's testimony, they agreed to use the Indian Girl, which Ignacio said that he drew, on shipping boxes. See Day 4 P.M. at 94:3-95:10.
Ruben Gutierrez, in stark contrast, testified that the partnership never used any Indian Girl marks, including the Indian Girl with Paleta and Indian Girl with Cone marks, on its shipping boxes and that the first time that he saw a shipping box with those marks was when he saw them in the marketplace in approximately late 2004, long after he left PLM's business in April 1999. See Day 8 A.M. at 91:7-93:5. He did not believe that the brothers had ever discussed the idea of using an Indian Girl at any time during their partnership. See Day 8 P.M. at 5:12-22.
Finally, Patricia Gutierrez testified several times over the course of three separate days that, at the time she joined Ignacio's sole proprietorship in 1999, the business used both the Indian Girl with Paleta and the Indian Girl with Cone on its shipping boxes. She identified the same photographs as Ignacio and testified that those boxes were shipped to customers in California and Nevada. Because she was not a part of the business at the time that it operated as the Gutierrez brothers' partnership, she had no personal knowledge of its prior use. See Day 5 A.M. at 95:3-97:19; Day 6 A.M. at 51:3-19; Day 7 A.M. at 110:2-6; Day 7 P.M. at 58:15-59:19.
Ultimately, without any documentary evidence supporting either side's position, the Court must resolve this factual dispute by making credibility determinations. The Court found Patricia Gutierrez to be the most credible witness of the three. Based on the Court's observation of her entire live testimony over the course of more than two-and-a-half days of trial, as well as her testimony on this particular issue, the Court found her to be clear, consistent, and sufficiently and reasonably precise in her recollections. She even returned after one break to clarify, unprompted by counsel, that one particular Indian Girl design along with the words LA MICHOACANA ES NATURAL, discussed below, was not used on PLM's shipping boxes in 1999 but that it was added years later. See Day 5 P.M. at 4:15-5:20. Moreover, PROLACTO did not present any evidence to counter her testimony as to the 1999 time frame, as Ruben Gutierrez left the business in April 1999, before Patricia joined.
The Court did not find Ruben Gutierrez's testimony on this issue, or on any of the other issues that PLM's witnesses disputed at trial, to be particularly credible or persuasive. The Court found, based on its observation of his live testimony in court, including his demeanor, that Ruben Gutierrez was extremely emotional and, frankly, hateful towards his brother and he exhibited a high degree of bias that undercut the reliability of his testimony. It is helpful for the Court to explain just some of its observations supporting its reasoning here.
First and foremost, the Gutierrez brothers have had a very long and extremely
It is also important to note that, beyond emotional issues, the Court found that Ruben Gutierrez appeared biased based on his business stake in the outcome of this trial. His business, Tropicale Foods, is a direct competitor of PLM, and Ruben stated that from 1999 through 2008, PLM was his biggest competitor. See Day 8 P.M. at 60:14-61:5. Ignacio and Ruben engaged in litigation that concerned unfair competition, and Ignacio was successful, almost putting Ruben out of business. See Day 8 A.M. at 102:18-24; Day 8 P.M. at 21:5-23. It was, in fact, Ruben who first took issue with some of PLM's advertisements and marks that are at issue in this case, retaining a lawyer in March 2006 to send a cease-and-desist letter to PLM and to alert PROLACTO and the USPTO. See Day 8 P.M. at 12:12-19:22; Def.'s Ex. 83 (letter dated March 22, 2006). That letter referred to Tropicale Foods as being PLM's "biggest competitor." Def.'s Ex. 83.
Perhaps most significantly, Ruben testified that he had been in discussions with PROLACTO about licensing the very marks at issue in this case and distributing product for PROLACTO in the United States. He testified that this discussion began around 2007, see Day 8 P.M. at 70:5-71:25, the same year that PROLACTO commenced the cancellation proceedings before the TTAB in this case. Later, in August 2011, a month after the TTAB denied PLM's motion for reconsideration of its decision to cancel its LA INDITA MICHOACANA mark, PROLACTO's lead counsel in this case and Jorge Leon, PROLACTO's Mexican counsel who was also present at trial, arranged a meeting between Ruben and PROLACTO to discuss a potential licensing arrangement in Mexico City. See Pls.' Ex 316 (August 10, 2011 email exchange); see also Day 8 P.M. at 72:1-75:1. According to Ruben, that meeting took place in September 2011, the same month that PLM filed its initial complaint in this action. See Day 8 P.M. at 75:2-76:17. For all of these reasons, and many more not described here, the Court found Ruben Gutierrez to be an unreliable witness.
Finally, the Court also notes that its finding of fact does not place great weight on Ignacio Gutierrez's testimony, either. Based on the Court's observation of his live testimony at trial and its consideration of his prior conduct, not to mention his own personal and business stake in the
42. PLM began using its Indian Girl marks because, at least in part, Ignacio Gutierrez had seen the Indian Girl mark used in paleterias in Mexico and believed that PLM's target consumers would also recognize the mark. He did not, however, believe that, in Mexico, the mark denoted a single source of product, and there is no indication that he was aware of any prior use of the Indian Girl in the United States.
When Ignacio Gutierrez was asked on direct examination why he wanted to use an Indian Girl in connection with PLM's product packaging, he responded by stating that, because "La Michoacana" means "the woman from Michoacán," he "wanted to add a girl that would basically translate to the name itself." Day 3 P.M. at 48:23-49:6. The Court does not find this to be credible as a complete explanation, however. On cross-examination, he acknowledged that he had seen a version of an Indian Girl in Mexico before adopting it in the United States and that he "redid [his] own version of it" from his memory of its use in Mexico. Day 4 P.M. at 46:7-16. For the same reasons stated above with respect to the term "La Michoacana," the Court does not find, however, that Ignacio Gutierrez believed that the Indian Girl was associated with one particular source in Mexico. No evidence was presented at trial suggesting that he was aware of any usage of the Indian Girl in the United States before PLM adopted the marks at least as early as June 1999. The Court notes its finding below that PROLACTO did not begin using an Indian Girl mark until March 2000 and that there has been no evidence that any third party was using an Indian Girl mark in the United States before June 1999.
43. PLM, Inc., which owned the marks as the successor to Ignacio Gutierrez's sole proprietorship, filed applications to register both the Indian Girl with Paleta and Indian Girl with Cone marks on November 19, 2003. The USPTO issued Registration No. 2,905,172 for the Indian Girl with Paleta on November 23, 2004 and issued Registration No. 2,968,652 for the Indian Girl with Cone on July 12, 2005. See Pls.' Exs. 35 and 36. Both registrations became "incontestable" pursuant to 15 U.S.C. § 1065 on December 12, 2014 upon PLM's filing of Section 15 affidavits with the USPTO.
44. PLM has continually and consistently used the Indian Girl with Paleta and the Indian Girl with Cone marks on its shipping boxes for paletas and bolis since at least June 1999 and uses them on its shipping boxes today. See, e.g., Day 3 P.M. at 58:3-19.
c. PLM's Use of an Indian Girl with "LA MICHOACANA ES NATURAL"
45. PLM has used a design, pictured below, containing an image of an Indian Girl similar, if not identical, to its Indian Girl with Paleta inside of a slanted oval with the words "La MICHOACANA es ... natural" on its product packaging, business cards, and company checks.
46. Beginning in or around the summer of 2001, while it was operating as a sole proprietorship owned by Ignacio Gutierrez, and continuing until late 2002 or early 2003, PLM used this "slanted oval" design
The Court's finding as to the first use of this design on product packaging is grounded not only in the Court's review of the documentary exhibits but also the live witness testimony of Ignacio and Patricia Gutierrez. See Day 3 P.M. at 67:20-71:10; Day 6 A.M. at 51:22-54:24. PROLACTO disputes this fact, arguing that PLM did not use this design until years later. See Def.'s Opp'n at 15-16 ¶ 44. The Court finds that, based on its review of the evidence and its observation of the witnesses' testimony at trial, none of the grounds argued by PROLACTO has merit. First, PROLACTO argues that the Court cannot consider these exhibits because they are illegible. See id. The Court previously addressed this argument at trial, when PROLACTO objected to the admission of Plaintiff's Exhibit 69 on this same ground. See Day 3 P.M. at 71:17-19 ("I think they're sufficiently legible. I see this logo in my sleep. I think I can identify it here."). PROLACTO also argues that a printer's proof is insufficient to show actual use and that Ignacio Gutierrez's testimony was not credible. Def.'s Opp'n at 15-16 ¶ 44. PROLACTO also argues that the existence of a prior version of this packaging, which is nearly identical, except for the mark at issue, somehow defeats PLM's factual claim. See id. The Court disagrees. Its finding is based on more than simply a printer's proof; it is based on an exhibit of the actual film that was used, which itself was accepted by the USPTO as a specimen as part of the registration application for the Indian Girl with Paleta mark, as well as testimony from two witnesses. The Court found, based on its observations of their live testimony, including their demeanor, that both Ignacio and Patricia Gutierrez were credible on this issue. The fact that PLM acknowledges previously using a different version of this package without the Indian Girl does nothing to belie the proposition that PLM later elected to change the packaging. See Pls.' Ex. 107 at 1; Day 3 P.M. at 39:10-40:18.
Like the issue with the shipping boxes, the issue of when PLM began using the "slanted oval" LA MICHOACANA ES NATURAL with Indian Girl design on its business cards was also sharply disputed by the parties.
PLM argues that it used the design on its business cards at least as early as 1997, while the Gutierrez brothers operated the business as a partnership. As support, PLM introduced into evidence a printer's proof dated July 28, 1997 for a set of business cards with the names of Ignacio Gutierrez, Ruben Gutierrez, and their employees at the time, together with an invoice for business cards dated November 27, 1997. See Pls.' Ex. 200; see also Pls.' Ex. 106. Ignacio Gutierrez testified that he and his brother ordered 10,000 of these business cards. Ruben Gutierrez testified that the partnership never used these cards or any other cards containing an Indian Girl mark and instead produced on the stand, from his wallet, a hard copy of a business card that he claimed was the one that the partnership used. See Day 8 A.M. at 85:12-90:25; see also Def.'s Ex. 182. This card has what appears to be an identical front side but a very different backside, without any Indian Girl present. See Def.'s Ex. 182. Oddly, unlike the proof with the Indian Girl, his surname is misspelled. Compare Def.'s Ex. 182 ("Gutierez") with Pls.' Ex. 200 at 3 ("Gutierrez"). Patricia Gutierrez testified that when she joined Ignacio Gutierrez's sole proprietorship in May or June 1999, the business was using the cards with an Indian Girl and the words "La Michoacana Es Natural" and that they continued to use these cards through approximately the mid-2000s. See Day 5 A.M. at 110:8-111:23; see also Day 7 A.M. at 96:3-17.
As with the issue of the shipping boxes, the Court found Patricia Gutierrez's testimony to be the most credible of the three and found Ruben Gutierrez's testimony to be colored by bias. In addition to the reasons provided above with respect to the shipping boxes, on this specific issue, the Court found Patricia Gutierrez's testimony to be particularly reliable. Among other reasons, she testified that, as part of her duties in the office, she was responsible for handing business cards out to the drivers. See Day 5 A.M. at 112:3-6. She also recalled seeing cards for Ignacio and other employees, but not Ruben. See id. at 111:24-112:2; see also Day 7 A.M. at 95:14-96:13. The existence of a printer's proof from 1997 may suggest that the cards were made and used before 1999, and Ruben's possession of a business card without the Indian Girl mark on it does not disprove the notion that the partnership at some point adopted a different design. The Court is most confident, however, that the business cards with the Indian Girl mark and the words "LA MICHOACANA ES NATURAL" were in use at least as early as June 1999.
48. Beginning in at least June 2000, PLM, at that time a sole proprietorship owned by Ignacio Gutierrez, used the "slanted oval" Indian Girl mark on the company's invoices. See Pls.' Ex. 148 at 2 (invoice dated June 14, 2000); see also id. at 3 (invoice dated October 25, 2000); Day 5 A.M. at 114:16-116:6 (testimony by Ignacio Gutierrez authenticating the invoices and describing the company's practice with regard to invoices).
51. In approximately 2002 or 2003, PLM began using a design containing its Indian Girl with Cone mark surrounded by the words "LA MICHOACANA ES NATURAL" on its shipping boxes, as pictured below in a cropped image of Plaintiffs' Exhibit 124. See Day 5 P.M. at 14:9-15:5; Day 6 P.M. at 62:8-10, 64:15-25.
52. Beginning at least as early as January 2004, PLM, Inc. used a colorized design of its Indian Girl with Cone mark surrounded by the words "LA MICHOACANA ES NATURAL" on tab lids for its 5 oz. single-serve ice cream cups, as pictured in a printer's proof dated January 8, 2004. See Pls.' Ex. 125; Day 5 P.M. at 10:20-12:15.
53. Beginning at least as early as 2004, PLM, Inc. also used a design of a "modernized" Indian Girl surrounded by the words "LA MICHOACANA ES NATURAL" on its products, including film to package its ice cream sandwiches, bolis, and ice cream cups. Some examples of its usage of the mark on product packaging and shipping boxes are shown in the exhibits below, along with corresponding witness testimony concerning the use over time.
PROLACTO disputes PLM's claims regarding its use of these designs. See, e.g., Def.'s Opp'n at 17-18 ¶ 50 (disputing Plaintiffs' Exhibit 138); id. at 17 ¶ 49 (disputing Plaintiffs' Exhibit 140); id. at 19-20 ¶ 53 (disputing Plaintiffs' Exhibit 73). PROLACTO's argument rests on essentially two grounds: first, that a printer's proof or photograph of a roll of film does not prove actual usage; and second, that PLM claimed before the TTAB that the first use of any mark "analogous," in PROLACTO's words, to its LA INDITA MICHOACANA mark was on February 21, 2005. The Court finds that neither is persuasive. First, in making its finding of fact, the Court relies not only on documentary evidence, although the Court does find dated photographs of actual film and dated printer's proofs to be highly persuasive, but also on live witness testimony, particularly that of Patricia Gutierrez, who the Court found to be highly credible on this issue. Second, whether this design is "analogous," in PROLACTO's words, to the LA INDITA MICHAOCANA mark is better considered in the Court's tacking analysis and is not helpful in determining whether this design was actually used.
d. PLM's Use of LA INDITA MICHOACANA
54. PLM, Inc. started using LA INDITA MICHOACANA (Reg. No. 3,210,304) pictured
55. PLM applied to register its LA INDITA MICHOACANA mark on June 28, 2005. The USPTO published the mark for opposition on December 5, 2006 and issued the registration on February 20, 2007. See Pls.' Ex. 37.
56. PLM created and adopted this mark on its product packaging pursuant to an agreement with a third party based in Arizona who had threatened to challenge its use of "La Michoacana" on its products. To settle this dispute and avoid litigation, PLM agreed to use the LA INDITA MICHOACANA mark on all of the products that it distributes in Arizona and Nevada. See Day 5 P.M. at 60:4-66:18.
57. In March 2005, PLM obtained, from its attorneys, a trademark search report concerning uses of the mark LA INDITA MICHOACANA. Based upon its review of the report, and the advice of its counsel, PLM determined to use the registered LA INDITA MICHOACANA mark in Arizona and Nevada. See Day 6 A.M. at 31:3-48:3.
58. Since 2005, PLM has also used its registered LA INDITA MICHOACANA mark in other markets in which it operates. Outside of Arizona and Nevada, it has used the mark on certain products, such as its single serve products and value packs. On other products, even within the same market at the same time, it has chosen to use LA MICHOACANA marks instead. See Day 5 P.M. at 62:22-63:3; id. at 67:8-74:1.
59. PLM tracks sales of products bearing the LA INDITA MICHOACANA mark separately from products bearing the LA MICHOACANA marks using different SKU numbers. See Day 6 A.M. at 99:7-17.
60. From February 2005 to the present, PLM has continually used its registered LA INDITA MICHOACANA mark on a wide variety of its product packaging, as well as on its shipping boxes, in all geographic areas in which it distributes product. Some examples of its usage of the mark on product packaging and shipping boxes are shown in the exhibits below, along with corresponding witness testimony concerning the use over time.
61. Since 2007 or 2008, PLM has also used a design similar to its registered LA INDITA MICHOACANA mark on product packaging using the same words "La Indita Michoacana." In this design, however, "La Indita" appears to the side and in small, upper and lowercase letters, "MICHOACANA" appears in large, all capital letters at the top, and an Indian Girl appears to the side. An example of this design is seen in Plaintiffs' Ex. 133, which shows product packaging for PLM, Inc.'s half-gallon tubs of ice cream.
61. In yet another variation of the same theme, since at least as early as 2012, PLM has essentially combined its LA INDITA mark with a LA MICHOACANA ES NATURAL mark, creating a hybrid of sorts that appears on some product packaging and shipping boxes. In this design, "La Indita" is used in small, upper and lowercase letters to the side of the Indian Girl and "MICHOCANA" appears on top, with "ES NATURAL" on bottom. Some examples of this design in use on product packaging and shipping boxes are shown in the exhibits below, along with corresponding witness testimony concerning the use over time.
62. The "tacking" doctrine does not advance PLM's priority date for its LA INDITA MICHAOCANA mark, because the mark does not create the same continuing commercial impression as its earlier Indian Girl marks.
PLM argues that although it did not begin using its LA INDITA MICHAOCANA mark prior to February 21, 2005, the priority date for that mark should be advanced to the date it first used any Indian Girl mark pursuant to the "tacking" doctrine. See Pls.' Br. at 85-91. After considering the evidence presented to the Court
The tacking doctrine permits the use of an earlier mark to be "tacked" onto the later use of a different mark, in effect "cloth[ing] a new mark with the priority position of an older mark." Hana Fin., Inc. v. Hana Bank, ___ U.S. ___, 135 S.Ct. 907, 909, 190 L.Ed.2d 800 (2015). "The standard for `tacking,' however, is exceedingly strict: `The marks must create the same, continuing commercial impression, and the later mark should not materially differ from or alter the character of the mark attempted to be tacked.'" Brookfield Commc'ns, Inc. v. W. Coast Entm't Corp., 174 F.3d 1036, 1048 (9th Cir.1999) (quoting Van Dyne-Crotty, Inc. v. Wear-Guard Corp., 926 F.2d 1156, 1159 (Fed.Cir. 1991)) (emphasis in original). Tacking is permitted "only in rare instances." Van Dyne-Crotty, 926 F.2d at 1160 (citation and quotation marks omitted); see also Brookfield Commc'ns, 174 F.3d at 1047 (stating that it is permitted only in "exceptionally narrow instance[s]"). In order to meet this high bar, the previously used mark must be "the legal equivalent of the mark in question or indistinguishable therefrom" such that consumers "consider both as the same mark." Van Dyne-Crotty, 926 F.2d at 1159; see also PLM I, 69 F.Supp.3d at 195 ("The critical inquiry under a tacking analysis is whether a consumer would consider the prior and subsequent designs to be the `same mark.'" (citations omitted)); One Indus., LLC v. Jim O'Neal Distrib., Inc., 578 F.3d 1154, 1161 (9th Cir.2009) ("[T]acking will be allowed only if the marks are virtually identical."); Quiksilver, Inc. v. Kymsta Corp., 466 F.3d 749, 758 (9th Cir.2006) ("The later mark must be indistinguishable from the original mark at the time that the later mark is introduced.").
The Supreme Court has recognized that "in making rulings in bench trials, judges may look to past cases holding that trademark owners either were or were not entitled to tacking as a matter of law." Hana Fin., 135 S.Ct. at 912. At the same time, however, the tacking analysis is "fact-intensive" and "necessarily requires [a] judgment call[.]" Id. PLM concedes that it has the burden of establishing tacking. See Pls.' Br. at 86 ¶ 94 (citing Navistar Int'l Transp. Corp. v. Freightliner Corp., No. 96 C 6922, 1998 WL 911776, at *3 (N.D.Ill. Dec. 28, 1998)).
Although the Court stated in its summary judgment opinion that it was "less than ideal for a court, sitting in relative isolation, to speculate about what consumers may think regarding the similarity of two marks," PLM I, 69 F.Supp.3d at 196, PLM elected not to present any evidence during trial as to how exactly consumers view its LA INDITA MICHOACANA mark in comparison with its other Indian Girl marks. Instead, PLM essentially asks the Court to rely on three forms of evidence to find that the marks all create the same continuing commercial impression: first, the visual similarity of the marks to each other in comparison to precedent; second, the testimony of a PROLACTO witness who once purchased a PLM product; and third, a comment made by PROLACTO's counsel during trial. This evidence is far from sufficient to meet the tacking doctrine's high bar. The Court addresses each in turn.
First, PLM points to the visual similarity between its various Indian Girl marks over time, providing a chart showing the changes over time that appears at Plaintiffs' Exhibit 327, which the Court has reproduced, in part, below for reference. See Pls.' Br. at 89; Pls.' Ex. 327.
PLM argues that all of these marks create the same continuing commercial impression, because they all feature a similar-looking Indian Girl. See Pls. Br. at 90-91 ¶¶ 105-10. PLM further argues that the addition of the words "LA MICHOACANA ES NATURAL" and the subsequent change to the words "LA INDITA MICHOACANA" do not alter the commercial impression of the marks, because, in Spanish, the phrases only refer to or describe the Indian Girl that is displayed in the mark. See id. PLM also asks the Court to compare this set of marks with other sets of marks that courts have deemed to be legal equivalents for tacking purposes.
The Court does not find the visual similarity of PLM's various Indian Girl marks over time to be sufficient evidence to establish that the marks create the same continuing commercial impression in the minds of consumers. As the Ninth Circuit has stated: "In determining whether the marks have the same continuing commercial impression, the visual or aural appearance may be instructive. Commercial impression, however, should be resolved by considering a range of evidence, ideally including consumer survey evidence." Hana Fin., Inc. v. Hana Bank, 735 F.3d 1158, 1164 (9th Cir.2013), aff'd Hana Fin., 135 S.Ct. 907. Other courts, including those cited by PLM, have recognized that visual similarity is insufficient. See, e.g., Louangel, Inc. v. Darden Rests., Inc., Civ. No. 12-147, 2013 WL 1223653, at *4 (S.D.Tex. Mar. 22, 2013) (stating that "an `eyeball' comparison, alone, does not end the inquiry"); Navistar, 1998 WL 911776, at *3 n. 5 ("[T]he fundamental inquiry is whether the two marks make the same commercial impression, not whether the two marks are similar in appearance. Of course, two marks that are similar in appearance may make the same commercial impression, but that will not necessarily be true."); id. at *4 ("Defendants argue that we can apply a tacking test without resort to evidence of consumers' perceptions, but we disagree. Because the inquiry is how consumers perceive the marks, there must be some evidence demonstrating those perceptions."). The Court's consideration of these marks, side-by-side and without any evidence concerning how consumers in the marketplace perceive them, does not compel the conclusion that they present the same continuing commercial impression.
The Court's review of the relevant precedent is similarly inconclusive. As PLM observes, some courts have permitted tacking in cases involving marks that appear substantially different. See, e.g., Miyano Mach. USA, Inc. v. MiyanoHitec Mach., Inc., 576 F.Supp.2d 868, 889 (N.D.Ill.2008); Beech-Nut Packing Co. v. P. Lorillard Co., 299 F. 834 (D.N.J.1924), aff'd 7 F.2d 967 (3d Cir.1925), aff'd 273 U.S. 629, 47 S.Ct. 481, 71 L.Ed. 810 (1927).
PLM's limited attempt to provide additional evidence to support its tacking argument falls flat. PLM first cites testimony given by a PROLACTO witness at trial, Lorena Salazar, who once purchased PLM's products. See Pls.' Br. at 87-89 ¶¶ 97-03. Specifically, counsel for PLM showed Ms. Salazar the chart presented above and asked her whether "those designs give the same continuing commercial impression," without giving any explanation as to the meaning of that legal phrase. Day 9 P.M. at 51:16-18. Ms. Salazar only responded, "Similar." Id. at 51:19. PLM's counsel asked no follow up questions. Similarity is not the standard for tacking. Ms. Salazar's one word answer does not persuade the court that consumers view the marks as identical. Nor does the Court find offhanded comments made by Stephen Anderson, PROLACTO's counsel, that PLM's LA MICHOACANA ES NATURAL mark is "as close as it can possibly be" to its LA INDITA MICHOACANA mark and "seems to be the same visual representation" of the LA INDITA MICHAOCANA mark to be persuasive. Day 5 P.M. at 20:22-24. The key issue is whether PLM can tack its first use of the Indian Girl with Paleta and Indian Girl with Cone marks in 1999 onto its LA INDITA MICHOACANA mark, not whether it can tack its LA MICHOACANA ES NATURAL mark, which PLM did not start using until after PROLACTO began using its Indian Girl mark in Florida, as discussed below. And, of course, Mr. Anderson was not a witness at trial, and his comments, though perhaps unwise, are not evidence.
The Court also notes that, although the focus of the tacking analysis is on the perception of the consumer, PLM's intentions in creating the LA INDITA MICHOACANA mark and its own treatment of the mark are telling. See Louangel, Inc., 2013 WL 1223653, at **4-6 (considering intentions of the owner of the mark at issue). As the Court has found, PLM did not create the mark in order to "modernize" or "update" its prior mark. Cf. Brookfield Commc'ns, 174 F.3d at 1048 (explaining that the purpose of the tacking doctrine is to permit a mark owner to "alter[ ] the mark in response to changing
PLM's treatment of its LA INDITA MICHOACANA mark since adopting it appears to confirm the intended differentiation. As the Court has found, PLM has chosen to use the LA INDITA MICHOACANA mark on certain types of products and use the LA MICHOACANA ES NATURAL mark on other types of products, even where these products are sold in the same market. Throughout Patricia Gutierrez's testimony, she repeatedly referred to LA INDITA MICHAOCANA as a separate "brand" or "brand name" of PLM products. See, e.g., Day 5 P.M. at 61:21-25 ("So we compromised that, you know, the company would be able to continue to do business in the state of Arizona under the brand La Indita Michoacana. And so we made a change and this product was — this brand name was introduced in 2005."); id. at 88:23-24; id. at 92:10-11; id. at 94:9-10; id. at 101:10-11; id. at 103:15-17; id. at 109:19-20. Indeed, Ms. Gutierrez explained that PLM separately tracks sales of products that use the LA INDITA MICHOACANA mark using a unique SKU number, and the financial information that PLM presented to the Court treats LA INDITA MICHOACANA products separately. See Day 6 A.M. at 99:4-17; Pls.' Ex. 269. Finally, PLM's decisions to separately register its LA INDITA MICHOACANA mark and to not raise the tacking issue before the TTAB are also indicative of its own view of the mark. See Louangel, 2013 WL 1223653, at *6 ("[S]eparate registration of the marks is some evidence that the owner does not regard them as a continuum or mere modification or modernization.").
Thus, for these reasons, and particularly without any evidence of consumers' perceptions, the Court cannot find that PLM's LA INDITA MICHOACANA mark meets the "exceedingly strict" standard for tacking. Brookfield Commc'ns, 174 F.3d at 1048.
5. PLM's Advertisements
a. The "Tocumbo Statement"
63. During various periods of time beginning in approximately 2004 or 2005 and concluding prior to trial,
64. PLM was neither founded in the 1940s nor founded in Tocumbo, Michoacán. See Day 3 P.M. at 88:7-19.
65. At least during the time that PLM used the above statements in its packaging and advertising, PLM did not produce drinks. See Day 3 P.M. at 89:2-3.
66. Ignacio Gutierrez made the decision to use these statements on PLM's packaging and advertisements because he had seen similar, if not identical, language printed on containers in various paleterias in Mexico named "La Michoacana." He purchased one of these containers in Mexico in approximately 2002 from a commercial supplier under the belief that various, separately-owned paleterias in Mexico used the language on their product packaging even though it was not literally true as applied to each of them.
67. For a period of time prior to trial, PLM also used the following statements on its promotional materials and/or on its website in English and/or Spanish:
68. There is no credible evidence that any of the statements above have influenced, or are likely to influence, an average potential consumer of PLM's products
PROLACTO offered little, if any, evidence that any consumers even saw one of the above statements, let alone that any consumers factored the statement into their decision whether to purchase or not purchase PLM's products. In its post-trial briefing on this issue, PROLACTO addresses the impact of all of PLM's advertisements on consumer decision-making generally, without addressing the specific impact of the Tocumbo Statement — in any of its variations — or any other advertisement. None of the cited evidence supports PROLACTO's claim as to the materiality of these statements.
First, PROLACTO points to the testimony of PLM's purported expert on the history of paletas and paleterias in Mexico, Samuel Quinones. Mr. Quinones testified that when he first encountered PLM's products in the marketplace in the United States, he "spent a good 15 minutes looking them all over because I had never seen these mass produced before." Day 2 P.M. at 21:8-10. He believed that he read the "small print" on the side of the package but could not recall whether it made any claim to a connection to paleterias in Mexico. See id. at 21:2-10. He believed, however, that it was similar to products he had purchased in Mexico and long assumed that PLM had some connection to Mexico. See id. at 21:11-22:23. Thus, it is not even clear whether Mr. Quinones read the Tocumbo Statement, in any of its variations. Even to the extent he did read it and it influenced his purchasing decision, Mr. Quinones is far from the typical consumer of PLM's products. Mr. Quinones demonstrated a particularly keen interest in paletas and paleterias in Mexico. He has, for example, devoted an entire chapter of a book he authored to the topic. It is understandable that he would spend "a good 15 minutes" looking over a box of PLM's products. Even PROLACTO agrees that "[t]he parties' ice cream products are relatively inexpensive treats typically purchased on impulse." Def.'s Br. at 12 ¶ 47. Mr. Quinones's experience is highly atypical and not a good indication of how normal consumers in the marketplace would view and understand PLM's advertisements.
The second cited set of evidence is even less helpful. PROLACTO points to the testimony of one witness who claimed to have purchased PLM's products and two witnesses who tasted the products that the witness purchased. The Court found that none of these witnesses had any real credibility, for the simple and obvious reason that they were all close family members of PROLACTO's lead trial counsel, Stephen Anderson. See Day 9 A.M. at 37:10 ("brother-in-law"); Day 9 P.M. at 7:1 ("my uncle Steve Anderson"); id. at 53:8-11 (Mr. Anderson's nephew). Moreover, none of them testified that they even saw the Tocumbo Statement at all, and the only witness who actually encountered the product in the marketplace and purchased it testified that she "didn't really study it all that much because [she] was in a hurry, so [she] just threw some into the cart." Day 9 A.M. at 55:23-1. When counsel pressed her to identify marks that she saw on the package, she recalled the "ice cream pictured on the cover." Id. at 56:2-7. None of the other witnesses recalled reading the Tocumbo Statement or any other statements indicating a connection to Mexico.
Finally, the Court notes that although PROLACTO's expert witness, Dr. Jacob Jacoby, performed a consumer survey using a version of the Tocumbo Statement, he did not test the materiality of the statement on consumers' decision-making process. He only tested for the "likelihood of deception." Def.'s Ex. 130 at 45-48. His
69. PROLACTO produced no credible evidence indicating that any of the variations of the Tocumbo Statement have caused it or are likely to cause it any economic or reputational injury.
The Court's finding here is largely grounded in the same reasoning underlying its materiality determination above. Because there is no credible evidence that consumers actually read or are or were likely to read the Tocumbo Statement, there is no credible evidence that the statement itself could cause PROLACTO any harm. PROLACTO did not offer any evidence showing that consumers withheld their business from PROLACTO or are likely to withhold their business from PROLACTO as a direct result of these statements or that the statements negatively affected their perception of PROLACTO's reputation or the quality of its products. Nor did PROLACTO even offer evidence that consumers would associate the Tocumbo Statement with PROLACTO, as opposed to any other paleteria in Mexico, apart from its unsubstantiated historical claims. Simply put, there was no credible evidence that the Tocumbo Statement has had, or would have, any real impact on PROLACTO in any way.
b. Other Advertising Statements and Images
70. Some of PLM's product packaging contains images of paletas and ice cream bars that have been digitally enhanced to indicate that the paletas and bars contain chunks of fruit. See, e.g., Def.'s Ex. 160; Day 4 P.M. at 5:6-20; id. at 72:22-75:22.
71. PLM's ice cream bars contain chunks of fruit.
During trial, counsel for PROLACTO went to unusual lengths, albeit with the permission of the Court, in an attempt to demonstrate that PLM's products, unlike PROLACTO's products, do not contain chunks of fruit. During trial, counsel placed PLM's product in a strainer, allowed it to melt over the course of part of a day, and asked the Court to observe the results. See Day 4 A.M. at 40:14-41:15 (explaining the procedure). This theatrical pseudoscience experiment hardly conformed to scientific methods that ensure reliability. In any event, the Court observed that fruit chunks were present. See Day 4 P.M. at 30:7-12; id. at 64:25-65:18.
72. PLM's product packaging has also included, at some point in time potentially continuing to the present, the following:
73. PROLACTO did not introduce any credible evidence that the images of white sand beaches or text quoted in the preceding finding of fact placed on PLM's product packaging have influenced, or are likely to influence, an average potential
74. PROLACTO produced no credible evidence indicating that the images of white sand beaches or text quoted in the previous finding of fact placed on PLM's product packaging have caused it or are likely to cause it any economic or reputational injury.
75. PLM has also, at some point in time, included the following on its website:
76. PROLACTO did not introduce any credible evidence showing that any consumers visited PLM's website or were likely to visit PLM's website at any time before deciding whether to purchase PLM's products.
77. PROLACTO did not introduce any credible evidence showing that the images and statements on PLM's website have caused it or are likely to cause it any economic or reputational injury.
1. In General
78. The defendant and counter-claimant in this action, Productos Lacteos Tocumbo S.A. De C.V., is a Mexican corporation.
79. Members of the Andrade Malfavon family own PROLACTO and serve as its directors. See Day 9 P.M. at 82:17-21; Day 10 A.M. at 32:17-35:4; Day 10 P.M. at 36:1-5.
80. PROLACTO operates primarily through licensees in both Mexico and the United States. Many of these licensees, including all of the U.S. licensees, according to PROLACTO, are members of the Andrade Malfavon family, and they separately own and operate storefront paleterias using trademarks and equipment from PROLACTO. See Day 10 A.M. at 40:15-47:13; Day 10 P.M. at 78:3-81:9.
81. In the United States, PROLACTO conducts business primarily through licensees who are members of the Andrade Malfavon family and own and operate paleterias. Until relatively recently, PROLACTO has not directly owned any paleterias in the United States or directly sold its products to consumers in the United States. See G. Andrade Malfavon Dep. Tr. (July 31, 2012), Pls.' Ex. 259, at 62:23-63:1; Day 11 P.M. at 46:5-12 (explaining that PROLACTO formed a company called Prolacto Mich Florida, LLC that took over some stores in Florida).
82. In the United States, PROLACTO, primarily through its licensees that separately own paleterias, currently operates in — and has only operated in — the following states, in chronological order: Florida, Texas, California, and North Carolina. See, e.g., Def.'s Ex. 19 and 19A (licensing agreement in Florida); Def.'s Ex. 53 at 1-5 (licensing agreement in Texas); Def.'s Ex. 56 (licensing agreement in California); C. Gonzalez Dep. Tr. (Aug. 20, 2015), Pls.' Ex. 308, at 26:15-17 (testimony concerning arrangement in North Carolina).
2. History and Business in Mexico
83. Although PROLACTO was not founded until 1992, its founders, members
84. PROLACTO, either directly or through licensees, owns and operates paleterias in various cities and states in Mexico. See Day 10 A.M. at 46:20-47:13.
85. At some point roughly between 1992 and 1995, PROLACTO began displaying an Indian Girl design, similar to the design shown below in Defendant's Exhibit 4, in some of its stores and licensees' stores in Mexico. PROLACTO made some changes to its Indian Girl design over time. See Day 11 P.M. at 65:14-67:10.
86. The paleterias in Mexico owned or operated by PROLACTO and/or the family members that own, direct, manage, and operate the company do not use and have not used all the same trademarks. Some have used the words "La Michoacana" alone, others "La Michoacana Natural" or "La Flor de Michoacan." Some have used designs containing an Indian Girl, others a design of a butterfly or no design at all. The differences in uses between paleterias may be so great that it is difficult to recognize the stores as being affiliated with each other. See Day 11 P.M. at 60:3-64:11; see also Def.'s Ex. 64 (photographs of various locations in Mexico appearing different from each other and displaying different marks).
87. There are innumerable paleterias throughout Mexico named "La Michoacana" or that have a name that incorporates the term "Michoacana," and at least a significant portion of them are not affiliated with PROLACTO. For example, Marco Antonio Andrade Malfavon, a member of the Andrade Malfavon family and part-owner of PROLACTO, testified that he has "no idea how many" paleterias in Mexico are named "La Michoacana," but that there could be more than 2,000 and that the family does not own or control all of them. See Day 10 P.M. at 86:8-88:19. Similarly, Jorge Leon, PROLACTO's Mexican counsel, testified as to his belief that there is a paleteria named "La Michoacana" in nearly every town in Mexico and that there could be thousands. See Day 10 A.M. at 62:16-73:23. He estimated that 30% of paleterias in Mexico named "La Michoacana" are not within PROLACTO's control, though the basis for his estimation was far from clear. See id. at 72:2-3.
88. PROLACTO is not the exclusive user of an Indian Girl in Mexico. Some paleterias in Mexico that are not affiliated with PROLACTO use an Indian Girl in their stores without permission from PROLACTO. See Day 10 A.M. at 75:11-16.
89. PROLACTO asserts the right to use its Indian Girl mark, as well as various other marks, in Mexico through Mexican trademark registrations in the name of Marco Antonio Andrade Malfavon, a part-owner of PROLACTO and member of the Andrade Malfavon family. PROLACTO has pursued infringement actions in Mexico
3. Trademark Registrations and Applications in the United States
90. PROLACTO is the owner of the two registered trademarks that appear below.
91. PROLACTO filed its application for the first LA FLOR DE MICHOACAN mark shown above (Reg. No. 2,830,401) with the USPTO on April 18, 2001, and the mark was registered on April 6, 2004. See Def.'s Ex. 184. The mark became "incontestable" pursuant to 15 U.S.C. § 1065 on July 30, 2009 upon PROLACTO's filing of a Section 15 affidavit with the USPTO.
92. PROLACTO filed its application for the second LA FLOR DE MICHOACAN mark shown above (Reg. No. 3,249,113), which contains a swirl design, paleta, and butterfly, on December 8, 2005, and the mark was registered on June 5, 2007. See Def.'s Ex. 185; Pls.' Ex. 45.
93. As part of its application for its LA FLOR DE MICHOACAN mark (Reg. No. 2,830,401), PROLACTO submitted the images of cups that appear below, among others, as specimens. Unchallenged expert testimony at trial showed that the images of the LA FLOR DE MICHOACAN mark that appear on the cups were not actually present on the cups when the photographs were taken; the marks were electronically added after the photographs were taken. The underlying photographs are the same photographs that PROLACTO later used in specimens submitted as part of its application to register the Indian Girl mark, as discussed below. There is no evidence that PROLACTO or its licensees ever used these cups, as they appear in the specimens, in the United States or Mexico. See Day 1 P.M. at 34:25-44:20.
94. PROLACTO has also filed applications to register the four marks that appear below.
95. PROLACTO filed its application for the first LA MICHOACANA NATURAL
96. PROLACTO filed its application for the Indian Girl mark shown above (Serial No. 78,771,243) on December 12, 2005. The application has been suspended in light of this action. See Pls.' Ex. 41.
97. As part of its application for the Indian Girl mark (Serial No. 78,771,243), PROLACTO submitted the images of cups that appear below, among others, as specimens. Unchallenged expert testimony at trial showed that the images of the Indian Girl marks that appear on the cups were not actually present on the cups when the photographs were taken; the marks were electronically added after the photographs were taken. The underlying photographs are the same photographs that PROLACTO previously used as specimens submitted as part of its application to register its LA FLOR DE MICHOACAN mark, as discussed above. PROLACTO also submitted an image of a wrapper that also appears below. Unchallenged expert testimony at trial showed that the Indian Girl mark did not appear on the wrapper when the photograph was taken; the mark was electronically added after the photograph was taken. There is no evidence that PROLACTO or its licensees ever used these cups or the wrapper, as they appear in the specimens, in the United States or Mexico. See Day 1 P.M. at 34:25-48:10.
98. PROLACTO filed its application for the second LA MICHOCANA NATURAL mark shown above (Serial No. 78,954,490), which contains a swirl, butterfly, and paleta,
99. PROLACTO filed its application for the LA MICHOACANA (words only) mark shown above (Serial No. 85,405,347) on August 23, 2011. PLM opposed registration of the mark, and the application has been suspended in light of this action. See Pls.' Ex. 43.
100. As part of its application for the LA MICHOACANA (words only) mark (Serial No. 85,405,347), PROLACTO submitted the image of a truck that appears below, among others, as a specimen. See Pls.' Ex. 43. Unchallenged expert testimony at trial showed that the image of the LA MICHOACANA (words only) mark that appears on the truck was not actually present on the truck when the photograph was taken; the mark was electronically added after the photograph was taken. There is no evidence that PROLACTO or its licensees ever used the truck, as it appears in the specimen, in the United States or Mexico. See Day 1 P.M. at 48:11-50:21.
4. Business and Trademark Use in Florida
a. The Homestead Location
101. As early as March 2000, a PROLACTO licensee named Rigoberto Fernandez began operating a paleteria in Homestead, Florida located at 334 Washington Avenue. This was the first PROLACTO licensee to operate in the United States. As early as March 2000, the PROLACTO licensee displayed PROLACTO's Indian Girl mark previously used in Mexico surrounded by the words "LA MICHOACANA es ... natural" throughout the store, as shown below in a cropped photo admitted as part of Defendant's Exhibit 5.
The question of when PROLACTO's first licensee began operating in the United States was a matter of great dispute between the parties. The resolution of this dispute is frustrated by significant evidence presented to the TTAB that conflicts with live testimony at trial.
The TTAB found that PROLACTO, through its licensees Rigoberto Fernandez and Jorge Malfavon, began using its Indian Girl in Florida in April 2001. See TTAB Decision at **9-10. The TTAB reached this conclusion after considering two written trademark license agreements dated March 3, 2001, one between PROLACTO and Jorge Malfavon on behalf of El Michoacana Natural, Inc. and one between PROLACTO and Rigoberto Fernandez, and deposition testimony given by both men.
This was in accordance with PROLACTO's consistent position throughout the TTAB proceeding that its first use in the United States of the marks at issue was in 2001 or at least as early as 2001. See, e.g., Pet. Cancellation ¶¶ 3-4, TTAB Dkt. 1 (asserting first use dates at least as early as April 20, 2001 and February 10, 2002); M. Antonio Andrade Malfavon Dep. at 34 ¶ 95, 36 ¶ 102, TTAB Dkt. 43 (providing March 2001 as date of license agreement with Rigoberto Fernandez). PROLACTO took a similar position in its Answer to PLM's Second Amendment Complaint in this action. See Ans. 2d Am. Compl. & Countercls. at 7 ¶ 20, 17 ¶ 3.
Beginning during discovery and at summary judgment, PROLACTO now takes the position that Rigoberto Fernandez opened his first paleteria in the United States in Homestead, Florida in December 1999 with a verbal license from PROLACTO and that he sold his interest in the
PLM strenuously disputes PROLACTO's factual assertion. PLM argues, among other things, that Rigoberto Fernandez never operated any store in Homestead and first became involved in the business in the United States in 2001, when he opened a store in West Palm Beach, Florida, and that PROLACTO's licensees did not use an Indian Girl in Florida until 2012. See Pls.' Br. at 58-85. PLM observes that PROLACTO first identified the Homestead store as having used the Indian Girl in 1999 during discovery in this action. See id. at 69 ¶ 44. PLM also cites portions of Mr. Fernandez's deposition during discovery in this action in which he did not initially identify the Homestead store in response to direct questions about which stores he had been involved with in the United States. See R. Fernandez Dep. Tr. (July 23, 2013) at 175:22-24, Pls.' Ex. 257.
The fact that neither PROLACTO nor Rigoberto Fernandez mentioned the existence
102. Rigoberto Fernandez is the brother of Mary Fernandez and Teresita Fernandez, both of whom are also currently PROLACTO licensees in the United States, and the cousin of Guillermo Andrade Malfavon. See Day 10 A.M. at 40:15-41:13; Day 10 P.M. at 104:2-6.
103. On March 3, 2001, PROLACTO entered into written trademark licensing agreements, including one with Rigoberto Fernandez to use PROLACTO's trademarks in Florida. The written agreement with Mr. Fernandez provided that, among other things, Mr. Fernandez was required to produce and sell products bearing the marks with the same quality as those produced by PROLACTO in accordance with PROLACTO's instructions. The agreement also required Mr. Fernandez to pay royalties to PROLACTO as a percentage of net sales. See Def.'s Ex. 19 and 19A (translation); see also Day 10 A.M. at 79:21-86:23.
104. At some point around 2007 or 2008, the Homestead store moved from its original location at 334 Washington Avenue to its current location, on the same block, at 344 Washington Avenue. See Day 12 P.M. at 109:20-115:3.
105. On November 7, 2012, David Andrade signed a written licensing agreement with PROLACTO on behalf of La Supreme Michoacana, Inc., located at 344 Washington Avenue in Homestead, that referenced a prior agreement effective since at least the year 2001. This agreement required La Supreme Michoacana, Inc. to, among other things, "observe the Quality Control regulations according to the guidelines established by" PROLACTO and permitted PROLACTO to "verify quality of the products and services provided by [La Supreme Michoacana, Inc.] anytime without prior notice." The agreement stated that it was "fully-paid and royalty-free." Def.'s Ex. 35; Pls.' Ex. 159; see also Day 10 P.M. at 9:16-10:5.
b. Other Locations in Florida
107. Beginning in approximately April 2001, and after the opening of the Homestead location, various PROLACTO licensees, including Rigoberto and Mary Fernandez, opened a number of other paleterias in Florida, including locations in West Palm Beach, Fort Myers, Lake Worth, Naples, and Bradenton.
108. From the time that PROLACTO licensees began opening other Florida locations in April 2001 until the present, PROLACTO has used, through its licensees, its LA FLOR DE MICHOACAN (Reg. No. 3,249,113) and its two LA MICHOACANA NATURAL marks (Serial Nos. 78,954,490 and 76,244,918) as shown below in connection with selling paletas. See Def.'s Ex. 11; Pls.' Ex. 162 at 2; Day 2 P.M. at 84:7-87:7; Pls.' Ex. 238 at 18-24; Day 2 P.M. at 97:16-101:22; Pls.' Ex. 238 at 25-34; Day 2 P.M. at 106:20-110:12; Pls.' Ex. 238 at 35-36.
109. In addition to the Homestead location, PROLACTO's licensees in other Florida locations have used and continue to use an Indian Girl design in connection with selling paletas, including on their signage, product packaging, and employee uniforms. There is no credible evidence, however, that these other locations used an Indian Girl prior to July 2012.
The Court makes this finding of fact primarily on the basis of photographs taken by Zachary Fechheimer, a private investigator retained by PLM, of various Florida locations and his live testimony at trial concerning those photographs and his observations, which the Court found to be extremely credible.
The Court finds the limited evidence presented regarding use of the Indian Girl in locations other than Homestead prior to July 2012 to be unpersuasive and not credible. For example, Mary Fernandez testified that the Indian Girl was used in several Florida locations between 2000 and 2002 after viewing a variety of undated photographs of unknown origin. See, e.g., Day 11 A.M. at 62:1-5; id. at 68:7-9; Def.'s Ex. 28 at 5. As explained below with respect to her Houston locations, generally speaking, the Court did not find Mary Fernandez's testimony to be very credible for a variety of reasons. The Court did not find her credible on this specific issue in particular. Among other reasons, her repeated and unequivocal testimony as to the appearance of the stores between 2000 and 2002 runs counter to PROLACTO's own position in this case that the stores did not open until 2001. See Def.'s Br. at 4 ¶ 12; see also Day 11 P.M. at 36:14 ("I really am bad with dates.").
110. On February 9, 2012, Rigoberto Fernandez entered into another written licensing agreement with PROLACTO that referenced their previous agreement in 2001. This agreement required Mr. Fernandez to, among other things, "observe the Quality Control regulations according to the guidelines established by" PROLACTO and permitted PROLACTO to "verify quality of the products and services provided by [Mr. Fernandez] anytime without prior notice." The agreement stated that it was "fully-paid and royalty-free." Pls.' Ex. 156. Jorge Malfavon signed a separate, but identical, agreement with PROLACTO the same day on behalf of El Michoacano Natural, Inc. Pls.' Ex. 155.
111. In August or September 2013, PROLACTO formed an affiliated entity, purchased Rigoberto Fernandez's Florida stores from him, and began operating those stores. As of the time of trial, PROLACTO owned and operated seven stores in Florida. See Day 11 P.M. at 81:11-82:8; id. at 122:8-25.
112. PROLACTO's Florida licensees purchase a variety of inventory from PROLACTO, including cups, containers, uniforms, and equipment used to make their products. See Day 11 A.M. at 82:17-86:13; Def.'s Ex. 40 (invoices).
5. Business and Trademark Use in Texas
113. Mary Fernandez is the only PROLACTO licensee that has ever operated in Texas. She currently owns and operates at least three paleterias in the Houston area: a store located at 3802 Avenue H in Rosenberg; a store located at 8230 Long Point Road in Houston; and a store located
114. Mary Fernandez opened her first paleteria, the Rosenberg store, in October 2002. See Day 11 A.M. at 89:13-16; Day 11 P.M. at 4:12-20.
115. Mary Fernandez opened her Texas stores pursuant to a verbal license from PROLACTO. See Day 11 A.M. at 128:6-11.
116. Mary Fernandez entered into her first written licensing agreement with PROLACTO on March 11, 2012. The agreement was retroactively effective from 2001 and contained, among other things, a provision requiring Ms. Fernandez to "observe the Quality Control regulations according to the guidelines established by [PROLACTO]" and permitted PROLACTO to "verify quality of the products and services provided by [Ms. Fernandez] anytime without prior notice." The agreement stated that it was "fully-paid and royalty-free." Guillermo Andrade Malfavon, PROLACTO's general manager and Ms. Fernandez's cousin, signed the agreement on behalf of PROLACTO. Def.'s Ex. 53 at 1-5; see also Day 11 A.M. at 127:13-128:21.
117. Mary Fernandez entered into a second written licensing agreement with PROLACTO on December 5, 2012 after she had incorporated her business as Michoacana Natural, Inc. This agreement was substantially similar to the March 11, 2012 agreement, except that this agreement stated that a royalties fee was "to be determined." It also contained a quality control provision. Def.'s Ex. 53 at 6-10; see also Day 11 A.M. at 128:22-129:23.
118. At least as early as July 2003, the awning on the exterior of Mary Fernandez's store in Rosenberg, Texas displayed the words "LA MICHOACANA," as displayed below in a photograph of the exterior of the store that appeared in a newspaper article in July 2003 and was admitted as Defendant's Exhibit 44. See Def.'s Ex. 44; Day 11 A.M. at 90:24-91:8; id. at 92:5-7.
119. Mary Fernandez currently uses an Indian Girl mark in connection with her Houston area businesses, but she did not
The parties strongly dispute the factual issue of when Mary Fernandez began using an Indian Girl mark in connection with her business in the Houston area. PROLACTO, and Ms. Fernandez herself, claim that she has always used the mark, beginning with her Rosenberg store in October 2002.
For a variety of reasons, the Court did not find Ms. Fernandez to be a credible witness. These reasons include the Court's observation of her demeanor during her testimony, the nature of the questions posed to her by PROLACTO's counsel, which the Court found to be leading and suggestive, and her answers to those questions, which the Court did not feel to be genuine. In addition, throughout her testimony, Ms. Fernandez displayed poor memory, even by her own admission, as her testimony was internally inconsistent and, in some instances, in conflict with established facts. See, e.g., Day 11 A.M. at 104:21-23 (stating that she opened the Long Point store "between 2004 or before that. I am not absolutely 100 percent. I don't remember."); id. at 120:6-9 (difficulty remembering when her store inside HEB opened); Day 11 P.M. at 5:18-20 (stating that the Long Point store opened after Hurricane Katrina, which occurred in August 2005); id. at 8:23-9:19 (initially stating that she changed the awning to her Rosenberg store before May 2011 and then conceding, "I don't know the exact date to be honest with you"); id. at 36:14 ("I really am bad with dates.").
Ms. Fernandez testified that she has used the Indian Girl in a variety of ways, including on employee uniforms and on stickers placed throughout the stores. See, e.g., Day 11 A.M. at 71:25-77:5; id. at 105:13-107:23. But most of this testimony was not date-specific, and, to the extent it was, either did not establish any use before 2005 or was not credible. She testified as to the accuracy of representations in certain photographs but PROLACTO did not provide the Court with any context for many of these photographs, such as who took them, when, where, or for what purpose. See, e.g., Day 11 A.M. at 71:25-77:5; Def.'s Ex. 32 at 1-6, 8-11.
One major point of contention at trial concerned the awning at Ms. Fernandez's Rosenberg store and when an Indian Girl first appeared on it. Specifically, Ms. Fernandez and PROLACTO maintain that an Indian Girl appeared on the store's first awning, which appears above, and on its second awning, which she installed after the original awning was damaged during Hurricane Katrina in August 2005. See Day 11 A.M. at 89:17-91:16. An image of the second awning, admitted as an exhibit for both PLM and PROLACTO, appears below.
Specifically, Ms. Fernandez contended that the Indian Girl appeared in the far right corner of the awning and is therefore not visible in this photograph. See Day 11 A.M. at 90:15-91:13. She claimed that the Indian Girl appeared in the same location on the first awning as well. See Day 11 A.M. at 91:9-91:16. The Court does not find this contention to be credible. First, Ms. Fernandez's recollection at trial of her various awnings over time was demonstrably poor. See, e.g., Day 11 A.M. at 99:18-20; Day 11 P.M. at 7:9-9:21. Second, Ms. Fernandez used a nearly identical version of the second awning at her Long Point store, and that awning indisputably did not have an Indian Girl, as pictured below in Defendant's Exhibit 48.
Both parties rely on the deposition testimony of Juana Morales, an employee of Ms. Fernandez at her Rosenberg store, to support opposite conclusions. PLM claims that Ms. Morales "testified that the Rosenberg store did not use an Indian Girl design before 2012." Pls.' Br. at 69 ¶ 48. This is plainly incorrect, as Ms. Morales testified at various points as to her recollection that the Indian Girl was in use on employee uniforms and on the awning prior to 2012.
The Court also notes that Teresita Fernandez, Mary Fernandez's sister, also testified that she saw an Indian Girl during her first visit to the Rosenberg store on the employees' uniforms. See Day 10 P.M. at 117:9-119:14. For a variety of reasons, including the Court's observation of her demeanor during her testimony, the Court did not find this testimony to be credible evidence that could alter the Court's finding of fact. Among other reasons, Ms. Fernandez was unable to recall when she first visited the store, stating that it was "early in 2000." Id. at 117:19. The Rosenberg store did not open until October 2002.
120. Mary Fernandez currently uses PROLACTO's LA MICHOACANA NATURAL marks (Serial Nos. 78,954,490 and 76,244,918) in connection with her Houston area businesses, but she did not start doing so until after PLM entered the Houston market in 2005.
For the same reasons explained on the question of Ms. Fernandez's first use of the Indian Girl, the Court finds her testimony on this issue to be not credible.
Photographs taken by PLM's private investigators at two separate points in time bolster the Court's credibility determination. As explained above, Patti James visited the Rosenberg store in August 2012. Though she documented and testified to limited usage of the Indian Girl mark, her photographs do not show that the LA MICHOACANA NATURAL marks were used at the time. See Pls.' Ex. 212; Pls.' Ex. 241. When Zachary Fechheimer visited in February 2013, however, the marks appeared prominently, on a large sticker on the counter and on employee uniforms. See, e.g., Pls.' Ex. 242 at 16; id. at 23. As with the Indian Girl, the difference in appearance casts further doubt on Ms. Fernandez's testimony.
The Court's factual finding and credibility determination is also supported by Juana Morales's deposition testimony in March 2013. When initially shown an image of PROLACTO's LA MICHOACANA NATURAL mark (Serial No. 78,954,490), Ms. Morales, who had worked at the store for over four years at that point, either did not recognize it at all or was, at the very least, confused about it. See J. Morales Dep. Tr. (Mar. 26, 2013), Pls.' Ex. 253, at 35:15-36:16. When counsel for PROLACTO later showed Ms. Morales various photographs of the store that showed the mark on uniforms and on a large sticker on the interior of the store, she acknowledged the accuracy of the photos as representing the appearance of the store at the time of her deposition but said that it appeared on "new uniforms." See, e.g., id. at 78:19-86:6; id. at 93:4-95:10.
Finally, the Court also notes that although PROLACTO denies PLM's factual claim that "PROLACTO has not proven that it currently uses any of these asserted marks in any geographic market area in which PLM does business" (and thus, implicitly, that Ms. Fernandez did not use these marks before 2005), Pl.'s Br. at 128 ¶ 203, PROLACTO fails to provide any citation or explanation for its denial, see Def.'s Opp'n at 79 (disputing the conclusion and stating, without citation, that PROLACTO has proven it currently uses the asserted marks in Texas and California).
6. Business and Trademark Use in California
122. Teresita Fernandez is the only PROLACTO licensee that has ever operated in California. She currently owns and operates two paleterias in northern California: one located in Sonoma, California and another located in Novato, California. See Day 10 P.M. at 93:19-20.
123. Teresita Fernandez is the sister of Rigoberto Fernandez and Mary Fernandez. Like her brother and sister, she frequently visited their father's paleteria in Mexico as a child and worked in his paleteria while growing up. See Day 10 P.M. at 95:5-96:9.
124. On July 29, 2009, Teresita Fernandez opened her first paleteria in California, located in Sonoma. It remains open today. When she opened her store, her store used a sign that featured an Indian Girl mark and the words "MICHOACANA NATURAL ICE CREAM." A photograph of the sign, which was admitted as part of Defendant's Exhibit 55, appears below. See Day 10 P.M. at 93:24-95:4; Def.'s Ex. 55.
125. At some point before the fall of 2012, Teresita Fernandez changed the sign that appears outside her Sonoma store to one that features an Indian Girl mark in front of a paleta and the words "La Michoacana Natural Fruit Bars & Ice Cream," as shown below in a photograph admitted as part of Defendant's Exhibit 55A. This is the way that the store currently appears. See Day 10 P.M. at 102:12-103:2; Def.'s Ex. 55A.
126. On November 7, 2012, Teresita Fernandez and Guillermo Andrade Malfavon on behalf of PROLACTO signed a licensing agreement. The agreement stated that Ms. Fernandez had previously operated the business "since July 2009 under an informal license agreement." The agreement provided, among other things, that Ms. Fernandez "must observe the Quality Control regulations according to the guidelines established by [PROLACTO]" and permitted PROLACTO to "verify quality of the products and services provided by [Ms. Fernandez] anytime without prior notice." See Def.'s Ex. 56; Day 10 P.M. at 112:21-114:2.
127. In the fall of 2012, likely around the same time that Teresita Fernandez entered into her written licensing agreement with PROLACTO, Guillermo Andrade Malfavon, Cesar Gonzalez, and Stephen Anderson, PROLACTO's lead counsel at trial, visited Ms. Fernandez's Sonoma store. During this visit, they inspected Ms. Fernandez's products for quality, gave recommendations to Ms. Fernandez and one of her employees on making the products, and inspected documents. They also documented their visit with several photos. This was the first such visit to the store, although her sister, Mary Fernandez, helped her to open the store in 2009. See Day 10 P.M. at 104:7-109:22; Day 11 P.M. at 104:2-105:22; Def.'s Ex. 55A.
128. Teresita Fernandez has received two letters from PLM's counsel demanding that she cease and desist her use of the Indian Girl mark and the words LA MICHOACANA at her Sonoma store: one in October 2009 and another in 2014. Ms. Fernandez did not respond to the letters and continues to use an Indian Girl mark and LA MICHOACANA today. See Day 11 A.M. at 20:20-22:23.
129. On February 14, 2014, Teresita Fernandez opened her second paleteria, located in Novato, California. From its opening until the present, the store displays an Indian Girl mark and the words LA MICHOACANA, similar to the current version of the sign outside her Sonoma store, as shown below in a photograph taken on the day of the store's opening and admitted as part of Defendant's Exhibit 57A. See Day 10 P.M. at 110:2-8; id. at 114:24-115:2.
130. Teresita Fernandez purchases a variety of inventory for her stores from PROLACTO, including cups, bags, aprons, sticks, and uniforms for her employees. See Day 11 A.M. at 39:5-17.
131. At the time that she opened her first store in Sonoma in 2009, Teresita Fernandez was aware that PLM sold its products using an Indian Girl mark and the words LA MICHAOCANA, as well as its LA INDITA MICHOACANA mark. See Day 11 A.M. at 12:24-13:20.
132. Teresita Fernandez testified that, since opening her first store in Sonoma in 2009, she has received numerous calls from people apparently attempting to reach PLM about shipments and deliveries. She also testified that she sees PLM's delivery trucks passing by her store on a monthly basis. See Day 10 P.M. at 110:9-112:17.
7. Business and Trademark Use in North Carolina
133. Shortly after PROLACTO bought out Rigoberto Fernandez's stores in Florida, Mr. Fernandez moved to North Carolina and, by August 2014, opened a paleteria in Charlotte. See C. Gonzalez Dep. Tr. (Aug. 20, 2015), Pls.' Ex. 308, at 26:15-17; id. at 164:10-19.
134. PROLACTO permitted Rigoberto Fernandez to take freezers and other equipment from his former Florida stores to use in his North Carolina store. See Day 11 P.M. at 102:11-19.
135. Rigoberto Fernandez hired contractors to design, create, and install an exterior sign for his Charlotte store with the words "Michoacana Natural Ice Cream" and an Indian Girl surrounded by the words "La Michoacana es Natural." See C. Larach Dep. Tr. (Aug. 20, 2015), Pls.' Ex. 307, at 16:4-18:22; Pls.' Ex. 273; Pls.' Ex. 275; Def.'s Ex. 157.
C. Meaning of "LA MICHOACANA"
136. There is no material difference between the terms "MICHOACANA," "LA MICHOACANA," and "LA MICHOACANA NATURAL" when used in connection with selling ice cream and other frozen treats.
137. In connection with selling ice cream and other frozen treats in the United States, the terms "MICHOACANA" and "LA MICHOACANA" are descriptive of a type of product that is understood in the minds of consumers to have originated in the Mexican state of Michoacán, and it is not primarily associated with PROLACTO or any other single source.
Courts have identified four general, somewhat amorphous categories for classifying marks: (1) generic; (2) descriptive; (3) suggestive; and (4) arbitrary or fanciful. See Blinded Veterans Ass'n v. Blinded
Donchez, 392 F.3d at 1216 (quoting Lane Capital Mgmt., Inc. v. Lane Capital Mgmt., Inc., 192 F.3d 337, 344 (2d Cir. 1999)). These categories "reflect both the eligibility for protection and the degree of protection accorded" to a particular mark. Id. (quoting Lane Capital, 192 F.3d at 344). But as this Circuit has recognized, "[t]hese categories, like tones in a spectrum, tend to blur at the edges and merge together. The labels are more advisory than definitional, more like guidelines than pigeonholes. Not surprisingly, they are somewhat difficult to articulate and to apply." Blinded Veterans Ass'n, 872 F.2d at 1039 (citation and quotation omitted).
"The fact-finder is not the designated representative of the purchasing public, and the fact-finder's own perception of the mark is not the object of the inquiry. Rather, the fact-finder's function is to determine, based on the evidence before it, what the perception of the purchasing public is." Lane Capital, 192 F.3d at 344; see also Bayer Co. v. United Drug Co., 272 F. 505, 509 (S.D.N.Y.1921) (L. Hand, J.) ("The single question, as I view it, in all these cases, is merely one of fact: What do the buyers understand by the word for whose use the parties are contending?").
At the summary judgment stage, it was unclear which category the parties believed was applicable to the marks at issue, and the Court interpreted their focus on the issue of secondary meaning to mean that "they both agree that the marks are not inherently distinctive and instead are better defined as geographically descriptive." PLM I, 69 F.Supp.3d at 210. The Court then turned to the issue of secondary meaning and held that substantial questions of material fact existed. See id. at 211-12.
PROLACTO now makes clear its position that, other than representing the place where the Andrade Malfavon family started in business, the term "Michoacana," along with other variations of the term including "La Michoacana," is "in no way descriptive" of the goods at issue in this case and is, therefore, "arbitrary and protectable." Def.'s Br. at 23. PROLACTO likens the name to other "well-known marks that are arbitrary yet still contain some geographical significance," including Amazon. Id. PLM, by contrast, argues that the phrase "La Michoacana" "standing alone may be descriptive in the United States" and that "`Michoacana' in the U.S. may signify a Mexican style of product"
If the marks are descriptive, then PROLACTO must establish secondary meaning. Here, the same evidence that would be required to establish secondary meaning would also resolve whether "Michoacana" is arbitrary or descriptive. Establishing secondary meaning requires "proof that the public recognizes only one source of the product or service." Blinded Veterans, 872 F.2d at 1040. "[A] term has acquired secondary meaning when `the primary significance of the term in the minds of the consuming public is not the product but the producer.'" Id. (quoting Kellogg Co. v. Nat'l Biscuit Co., 305 U.S. 111, 118, 59 S.Ct. 109, 83 L.Ed. 73 (1938)); see also Fernandez v. Jones, 653 F.Supp.2d 22, 29-30 (D.D.C.2009) ("`The prime element of secondary meaning is a mental association in buyers' minds between the alleged mark and a single source of the product.'" (quoting 2 McCarthy on Trademarks § (4th ed. 2009)). "To acquire a secondary meaning in the minds of the buying public, a labelled product, when shown to a prospective customer, must prompt the reaction, `That is the product I want because I know that all products with that label come from a single source and have the same level of quality.'" Id. at 30 (citation omitted); see also 2 McCarthy on Trademarks § 15:11 (4th ed. 2009). In this Circuit, commonly considered evidence for ascertaining whether secondary meaning has attached to a mark includes survey evidence, the length and manner of use of the name, the nature and extent of advertising and promotion of the name, the volume of sales, and instances of actual confusion. See Libya v. Miski, 889 F.Supp.2d 144, 155 (D.D.C.2012).
The Court's consideration of the evidence submitted at trial and the live testimony presented leads it to find that these factors compel against a finding of arbitrariness or secondary meaning. PROLACTO offered little evidence on this issue at trial, and the limited evidence that it did offer was unconvincing. For example, PROLACTO offered some evidence of advertising on the part of its licensees, but the scale of that advertising, particularly in Houston, appears to have been minimal at best. See, e.g., Day 11 P.M. at 24:2-26:17 (testimony by Mary Fernandez that she had not engaged in any television, radio, or newspaper advertising, though she had engaged in some advertising through her children's sports teams, schools, and a church calendar). And although PROLACTO's licensees have been selling their products for over a decade using the name "La Michoacana," PROLACTO offered no evidence that consumers in any market identify the licensees or PROLACTO as the sole source of products bearing that name.
Upon consideration of the entire record, and the Court's observation of the witnesses' live testimony, the Court finds that the term "Michoacana," when used in connection with ice cream, is merely descriptive of the type of product sold and has not achieved secondary meaning in the minds of the relevant consumers. The Andrade Malfavon family may, in fact, be responsible for the popularization of the term through their decades of use in Mexico and their family origins in the state of Michoacán, assuming their historical claims are accurate. But this does not mean that consumers in the United States identify the term with any one manufacturer of the product, any more than they do not primarily identify a "Waldorf salad" with The Waldorf-Astoria Hotel in New York or a "Philly cheesesteak" with Pat's King of Steaks in Philadelphia.
IV. CONCLUSIONS OF LAW
Having established and explained its findings of fact, the Court now provides its conclusions of law. Before turning to its conclusions as to each pending claim and counterclaim, the Court first provides its legal conclusions on two overarching issues in this case: first, PROLACTO's argument that PLM has no rights in any of the marks at issue in this case because it adopted them in "bad faith"; and second, PLM's argument that PROLACTO has no rights in any of the marks at issue in this case because it engaged in "naked licensing."
A. PLM's Good Faith Adoption of the Marks at Issue
The Court begins by addressing an important issue that PROLACTO has raised in connection with nearly every facet of
Throughout this litigation, PROLACTO has consistently taken the position that PLM adopted its marks, including the name "La Michoacana" and the Indian Girl, with not only knowledge of PROLACTO's prior use of those marks in Mexico but also with the specific "intent to capitalize on the fame and reputation that PROLACTO and its founders and predecessor have achieved in Mexico and in the United States among consumers for the parties' goods, by drawing an association with a product under a brand that [Ignacio and Patricia Gutierrez] knew were previously well-known and indeed famous in Mexico." Def.'s Br. at 29. PROLACTO argues that PLM's bad faith is clear from a range of evidence introduced at trial such as certain advertising statements, including, most importantly, the Tocumbo Statement. See id. at 30-34. PROLACTO argues that, in light of this extraordinary bad faith, PLM has no rights in any of the marks at issue in this case. See id. at 34-35.
At the summary judgment stage, the Court left open the issue of PLM's good faith or bad faith adoption of the marks. See PLM I, 69 F.Supp.3d at 208 n. 10. Following the Pretrial Conference, the Court asked the parties to submit briefing on the legal question of whether a party who adopts a mark in the United States with the knowledge of another party's foreign use and attempts to falsely associate itself with that party's foreign use can be found to have acted in "good faith." See Order, ECF No. 221. The parties submitted extensive briefing on the issue in response. See Pls.' Supp. Mem., ECF No. 222; Def.'s Supp. Mem., ECF No. 223. The parties have also addressed this issue on factual and legal grounds in their post-trial briefing. See, e.g., Def.'s Br. at 38-47; Pls.' Opp'n at 12-41. A review of the relevant case law on this topic, including the precedent upon which PROLACTO relies, is helpful to framing the issue.
As background, it is important to establish the territorial nature of American trademark law. In its summary judgment opinion, the Court explained: "It is axiomatic that under United States trademark law, a party establishes valid ownership of a mark by being the first to use that mark in commerce" and it is "a basic tenet of American trademark law that foreign use of a mark creates no cognizable right to use that mark within the United States." PLM I, 69 F.Supp.3d at 201 (citations omitted). This "territoriality principle" means that "[p]riority of trademark rights in the United States depends solely upon priority of use in the United States, not on priority of use anywhere in the world." 5 McCarthy on Trademarks § 29:2. The Court explained that the so-called "famous mark" doctrine, which the Ninth Circuit has adopted and the Second Circuit has rejected, may function as a narrow exception to the territoriality principle, but that, even if the Court chose to recognize the doctrine, it would be inapplicable to PROLACTO, because PROLACTO had not "come close" to establishing the requisite level of fame in the United States in any market.
The Court also explained that, with respect to unregistered trademarks, the party that first uses a mark in commerce in the United States does not automatically obtain a nationwide right to use the mark. Rather, the first party to use the mark in the United States, referred to as the "senior user," acquires rights only
Here, the Court has made a factual determination that PLM is the national senior user of "La Michoacana" and an Indian Girl and that it is PROLACTO who is the junior user. It would seem, then, that the Tea Rose-Rectanus doctrine, along with its "good faith" qualification, is entirely inapplicable to PLM's adoption of its marks. But PROLACTO presents a different argument. It argues that PLM engaged in the hallmark of bad faith: it adopted its marks with the intention of benefitting from PROLACTO's goodwill and reputation in Mexico by deceiving consumers as to the true origin of their products and that it did this not only through its use of PROLACTO's foreign marks but through its adoption of advertising statements meant to deceive consumers. PROLACTO argues that courts have unanimously held that a party cannot acquire rights in a mark that it adopts with the intention of benefitting from a prior user's goodwill and reputation and whether the prior use was in the United States or not is immaterial. See, e.g., Def.'s Supp. Mem. at 2.
Courts have differed in their interpretations and application of the "good faith" requirement. When applying the Tea Rose-Rectanus doctrine to the usual circumstance of a national junior user, "[t]he majority of case law and commentary adopt the view that proof of the junior user's knowledge of the senior user's mark at the critical date is sufficient to destroy the `good faith' element of the territorial defense." 5 McCarthy on Trademarks § 26:9; see also Pike v. Ruby Foo's Den, Inc., 232 F.2d 683, 686 (D.C.Cir.1956) ("The Federal cases are virtually unanimous against a knowing junior user."). More recently, however, that view "appears to be losing ground to a growing body of cases adopting the view that the junior user's knowledge is not determinative, but is merely the first step in an enquiry into `bad faith.'" 5 McCarthy on Trademarks § 26:10. For example, the Tenth Circuit, which has followed this emerging minority view and which PROLACTO relies upon in its briefing, has held that "[w]hile a subsequent user's adoption of a mark with knowledge of another's use can certainly support an inference of bad faith, ... mere knowledge should not foreclose further inquiry. The ultimate focus is on whether the second user had the intent to benefit from the reputation or goodwill of the first user." GTE Corp. v. Williams, 904 F.2d 536, 541 (10th Cir.), cert. denied, 498 U.S. 998, 111 S.Ct. 557, 112 L.Ed.2d 564 (1990) (citations omitted). Under either the broad majority view or the narrower minority view, it is clear that adopting a mark with intention of benefitting from the reputation and goodwill of the prior user is quintessential bad faith. See also Pike, 232 F.2d at 686 n. 2 ("It is also worthy of note concerning the rights of the junior user that if he imitates the other's trade-mark or trade name knowingly and acts in other ways to convey the impression that his business is associated with the other, the inference may reasonably be drawn that there are prospective purchasers to be misled.") (internal quotation omitted); De Beers LV
While this remains the definition of "bad faith," PROLACTO has not been able to provide, nor can the Court locate, any case in which a court has denied a national senior user rights in a mark because the mark was previously used outside of the United States and the national senior user adopted the mark in bad faith. Indeed, one leading treatise states: "In general, United States law grants United States mark-rights to a mark's first United States user even when such user is intentionally imitating a mark used by another in a foreign country." 3 Louis Altman & Malla Pollack, Callman on Unfair Competition, Trademarks and Monopolies § 20:13 (4th ed. 2014). Nevertheless, a very small number of courts appear to have at least considered the possibility that a national senior user could not obtain rights in a mark that the user adopted in bad faith based upon another party's foreign use of the mark.
Most notably, in Person's Co. v. Christman, 900 F.2d 1565 (Fed.Cir.1990), the Federal Circuit addressed a case in which an American visited a retail outlet in Japan, purchased several clothing items bearing the Japanese retailer's logo and, on his return to the United States, began his own clothing line that directly copied the Japanese retailer's designs and used the Japanese retailer's logo. The American was the first to use the mark in the United States but, shortly after he started selling his products, the Japanese retailer began plans to expand into the United States. See Person's, 900 F.2d at 1567. In that case, as here, the prior foreign user "vigorously assert[ed] that [the national senior user's] adoption and use of the mark in the United States subsequent to [its] adoption in Japan [was] tainted with `bad faith' and that priority in the United States obtained thereby [was] insufficient to establish rights superior to those arising from [the foreign user's] prior adoption in a foreign country." Id. at 1569. The court stated, however, that "an inference of bad faith requires something more than mere knowledge of prior user of a similar mark in a foreign country." Id. (emphasis added). The court also acknowledged that "there is some case law supporting a finding of bad faith where (1) the foreign mark is famous here or (2) the use is a nominal one made solely to block the prior foreign user's planned expansion into the United States" but stated that neither of those circumstances were present in the case. Id. at 1570. On this basis, the Court concluded that the national senior user's "conduct in appropriating and using [the foreign user's] mark in a market where he believed the Japanese manufacturer did not compete can hardly be considered unscrupulous commercial conduct." Id. The court added: "`[t]he law pertaining to registration of trademarks does not regulate all aspects of business morality.'" Id. (quoting Selfway, Inc. v. Travelers Petroleum, Inc., 579 F.2d 75, 79 (C.C.P.A.1978)) (alteration in original).
The two cases cited by the Federal Circuit were Vaudable v. Montmartre, Inc., 20 Misc.2d 757, 193 N.Y.S.2d 332 (N.Y.Sup.Ct.1959), and Mother's Restaurants Inc. v. Mother's Other Kitchen, Inc., 218 U.S.P.Q. 1046, 1983 WL 51992 (T.T.A.B.1983). See Person's, 900 F.2d at 1570 n. 23. In Vaudable, a New York court decided that, under New York's common law, the defendants' "wrongful attempt to suggest an association or connection of some sort" with an internationally-famous
Id. (emphasis added).
Two other cases are worth mentioning. First, in West Indian Sea Island Cotton Ass'n Inc. v. Threadtex, Inc., the district court addressed a defendant's affirmative defense of laches on a motion for summary judgment by considering whether the defendant had engaged in good faith or bad faith. See 761 F.Supp. 1041, 1051 (S.D.N.Y. 1991). The court found that the record "permit[ted] a reasonable inference that defendants purposefully have acted to deceive the public as to the quality and origin of their products" by adopting a foreign mark along with words telling consumers that they should "[b]eware of impostors!" Id. In a footnote, the court also distinguished Person's on the basis that that case would only apply to trademark infringement and not to "allegations of deceptive and false description of defendants' products." Id. at 1051 n. 6. The court stated that Person's reasoning "does not apply to allegations of patently false statements concerning defendants' products." Id. Finally, in Buti v. Impressa Perosa, S.R.L., the district court found — prior to the New York Court of Appeals' clarification of Vaudable, that a national first user who adopted the name of an Italian restaurant in New York did not fall within the so-called "Vaudable exception" to Mother's and Person's, because the foreign restaurant was not a "famous" mark in the United States. 935 F.Supp. 458, 473 (S.D.N.Y. 1996).
The upshot of the Court's review of these cases (and others cited by PROLACTO and not mentioned here)
On the Court's findings of fact, this legal theory is inapplicable. The Court has found that although the Gutierrez brothers adopted the name "La Michoacana" because they had seen the name in Mexico, they did not believe that the term denoted a single source of product in Mexico. The Court has also found that, in the United States, the name does not, in fact, denote a single source of product. The Court has found that although Ignacio Gutierrez copied PLM's Indian Girl mark from similar marks that he had seen in Mexico and adopted it because he thought PLM's target consumers would recognize the mark, he did not believe that, in Mexico, the mark denoted a single source of product, but, rather, believed that the mark was used indiscriminately by a variety of paleterias in Mexico. The Court has also found that although Ignacio Gutierrez adopted the Tocumbo Statement because he had seen similar, if not identical, language on packaging in Mexico, he believed that various, separately-owned paleterias in Mexico used the language on their product packaging even though it was not literally true as applied to each of them. Finally, the Court also found the absence of any credible evidence that any of PLM's advertising statements at issue influenced consumers' decisions to purchase or not purchase PLM's products or caused consumers to falsely believe that PLM's products were actually PROLACTO's products.
On these facts, the Court cannot find any legal basis to hold, without precedent, that PLM, as the national senior user, has no rights in its marks. No matter how unethical PLM's actions may seem to an outside observer, as the Federal Circuit recognized in Person's, the Lanham Act
B. PROLACTO's Licensing and Control
PLM argues, in turn, that it is PROLACTO that does not have any rights in any of its purported marks in the United States, because it abandoned any rights by engaging in so-called "naked licensing." See Pls.' Br. at 123-26. The Court briefly addressed this argument in its summary judgment opinion, holding that there was a genuine dispute of fact to be resolved at trial as to whether PROLACTO engaged in naked licensing. See PLM I, 69 F.Supp.3d at 207 n. 9.
An owner of a trademark may lose its rights in the mark through abandonment. See 15 U.S.C. §§ 1115(b)(2), 1127. An owner can abandon a mark "by engaging in naked licensing — that is, by allowing others to use the mark without exercising `reasonable control over the nature and quality of the goods, services, or business on which the [mark] is used by the licensee.'" Eva's Bridal Ltd. v. Halanick Enters., Inc., 639 F.3d 788, 789 (7th Cir.2011) (quoting Restatement (Third) of Unfair Competition § 33 (Am. Law Inst. 1995)) (alteration in original); see also Doeblers' Pa. Hybrids, Inc. v. Doebler, 442 F.3d 812, 823 (3d Cir.2006) ("[L]icensing arrangements are permissible so long as the license agreement provides for adequate control by the licensor of the nature and quality of the goods or services."); see generally John C. Flood of Va., Inc. v. John C. Flood, Inc., 642 F.3d 1105, 1107-08 (D.C.Cir.2011) (acknowledging the naked licensing doctrine); Pike v. Ruby Foo's Den, Inc., of Md., 232 F.2d 683, 685 (D.C.Cir.1956).
"It is difficult, if not impossible to define in the abstract exactly how much control and inspection is needed to satisfy the requirement of quality control over trademark licensees." 3 McCarthy on Trademarks § 18:55. As the Seventh Circuit has aptly explained:
Eva's Bridal, 639 F.3d at 790-91 (quoting Restatement (Third) of Unfair Competition § 33 cmt. a). The Restatement recognizes that "[a]s a general matter, courts are reluctant to interfere with the marketing arrangements adopted by trademark owners, and minimal control over the quality of a licensee's goods or services is often sufficient" to avoid abandonment through naked licensing. Restatement (Third) of Unfair Competition § 33 cmt. c. Courts will generally find abandonment through naked licensing only in extreme cases in which the trademark owner exercises no control whatsoever. See Ky. Fried Chicken Corp. v. Diversified Packaging Corp., 549 F.2d 368, 387 (5th Cir.1977) ("Retention of a trademark requires only minimal quality control, for in this context we do not sit to assess the quality of products sold on the open market. We must determine whether [the owner] has abandoned quality control; the consuming public must be the judge of whether the quality control efforts have been ineffectual."); Slep-Tone Entm't Corp. v. Coyne, 141 F.Supp.3d 813, 825-26, 2015 WL 5821695, at *8 (N.D.Ill. Sept. 30, 2015) (quoting Eva's Bridal, 639 F.3d at 791).
PROLACTO's quality control efforts certainly leave much to be desired. For example, some of its U.S. licensees opened and initially operated with only either a verbal or implied license from PROLACTO, though they entered into written agreements later. Currently, the licensees are not required to pay PROLACTO any royalties for using the marks. See G. Andrade Malfavon Dep. Tr. (July 31, 2013), Pls.' Ex. 259, at 143:7-144:2; see also Day 11 A.M. at 29:5-20. PROLACTO's quality control inspections are infrequent and irregular, and it seems to provide its licensees fairly wide latitude in determining the visual appearance of their stores. PROLACTO also appears to have made a concerted effort to increase its level of control during the pendency of this litigation by entering into written licensing agreements and conducting inspections, including at least one documenting the visit with photographs seemingly for the purpose of this litigation with its trial counsel present. See Day 10 P.M. at 104:7-109:22; Def.'s Ex. 55A. These flaws, however, are not fatal.
The Court concludes that PROLACTO has satisfied the minimal level of control necessary to avoid abandonment through naked licensing. The Court has found facts that demonstrate that PROLACTO has the authority to control the quality of its licensees' products and that it has exercised that authority in various ways. For example, PROLACTO has entered into written licensing agreements requiring its licensees to meet PROLACTO's standards for quality and permitting PROLACTO to conduct inspections at any time, and PROLACTO has conducted some formal inspections. PROLACTO's licensees also purchase their inventory, including employee uniforms displaying the marks at issue in this case and equipment for making and serving paletas to customers, directly from PROLACTO.
Perhaps most importantly, PROLACTO's licensees are closely related to PROLACTO's directors and owners. They are all members of the Andrade Malfavon family, and they regard their businesses as being part of a family tradition that stretches back generations. The licensees testified that they had grown up visiting
Taco Cabana, 932 F.2d at 1121. PLM has offered the Court little, if any, evidence of a differentiation in quality between the products offered by the various PROLACTO licensees or consumer deception.
This is not the "extreme case" presented to the Seventh Circuit in Eva's Bridal. Eva's Bridal, 639 F.3d at 791. In that case, which also involved licensing arrangements with family members, the licensors "did not retain any control — not via the license agreement, not via course of performance" and "had, and exercised, no authority over the appearance and operations of [the licensees'] business, or even over what inventory to carry or avoid." Id. at 790-91. As the Court has explained, PROLACTO has retained and exercised authority over its licensees, even if it has done so with less rigor than might be expected in a typical licensing arrangement or considered ideal. It has not abandoned any rights through naked licensing.
C. Complaint Count I
As discussed above, the TTAB granted PROLACTO's petition to cancel PLM's LA INDITA MICHOACANA mark after concluding that PROLACTO had established priority of use and likelihood of confusion with respect to four of its marks. See TTAB Decision at **9-16. Count I of PLM's Second Amended Complaint seeks reversal of the TTAB's decision and denial of PROLACTO's cancellation petition pursuant to 15 U.S.C. § 1071(b).
PLM argues that the Court should find in its favor on Count I for multiple reasons. See Pls.' Br. at 52-104. In addition to challenging the merits of the TTAB's decision and PROLACTO's cancellation petition, PLM raises two affirmative defenses, arguing that PROLACTO is estopped from challenging PLM's registration and that PROLACTO is barred by the doctrine of unclean hands. See Pls.' Br. at 91-104. The Court addresses these two arguments as a preliminary matter, as well as the proper allocation of burdens, before turning to the merits of cancellation.
1. Judicial Estoppel
PLM argues that PROLACTO is estopped from challenging PLM's registration of its LA INDITA MICHOCANA mark based on likelihood of confusion (and from arguing likelihood of confusion at all in this litigation) due to a statement that it made to the USPTO in connection with its
Judicial estoppel is a well-established rule that "generally prevents a party from prevailing in one phase of a case on an argument and then relying on a contradictory argument to prevail in another phase." New Hampshire v. Maine, 532 U.S. 742, 749, 121 S.Ct. 1808, 149 L.Ed.2d 968 (2001) (internal quotation omitted). "Because the rule is intended to prevent improper use of judicial machinery, judicial estoppel is an equitable doctrine invoked by a court at its discretion." Id. at 750, 121 S.Ct. 1808 (internal quotations omitted). The Supreme Court has enumerated three non-exhaustive factors that inform the Court's decision of whether to invoke the rule: (1) "a party's later position must be clearly inconsistent with its earlier position"; (2) "whether the party has succeeded in persuading a court to accept that party's earlier position, so that judicial acceptance of an inconsistent position in a later proceeding would create the perception that either the first or the second court was misled"; and (3) "whether the party seeking to assert an inconsistent position would derive an unfair advantage or impose an unfair detriment on the opposing party if not estopped." Id. at 750-51, 121 S.Ct. 1808 (internal quotations omitted).
As discussed in the Court's findings of fact above, on December 12, 2005, PROLACTO filed an application with the USPTO to register its asserted Indian Girl mark (Serial No. 78,771,243). See Pls.' Ex. 41. On June 14, 2006, the USPTO issued an Office Action refusing registration of PROLACTO's Indian Girl mark based on a likelihood of confusion with PLM's two registered Indian Girl Design marks (i.e., Indian Girl with Paleta and Indian Girl with Cone) and PLM's earlier-filed, then-pending application for its LA INDITA MICHOACANA mark. See id. On December 13, 2006, PROLACTO filed with the USPTO a response to the Office Action, in which PROLACTO's attorney identified claimed differences between PROLACTO's mark and PLM's marks, contending that there is no likelihood of confusion and that the parties' claimed marks were "totally different from each other."
In determining whether to exercise its discretion to invoke judicial estoppel, the Court considers the three New Hampshire factors. The first factor is clearly in PLM's favor, because PROLACTO has, in fact, taken the opposite position here than the one that it asserted to the USPTO as part of the application process. As for the second factor, whether PROLACTO succeeded in persuading a tribunal of its prior position, PLM concedes that "the USPTO Examining Attorney did not act on PROLACTO's representations one way or another before PROLACTO asserted its contradictory position," but argues that, on this basis, "the second factor is irrelevant." Pls.' Br. at 94-95. On the contrary, this factor is determinative. The Supreme Court explained in New Hampshire that
Judicial estoppel in this case is neither applicable nor appropriate.
2. Unclean Hands
PLM next argues that PROLACTO's cancellation petition, as well as all of its counterclaims, are barred under the doctrine of "unclean hands." See Pls.' Br. at 97-104.
The unclean hands defense "is a self-imposed ordinance that closes the doors of a court of equity to one tainted with inequitableness or bad faith relative to the matter in which he seeks relief" and originates from "the equitable maxim that `he who comes into equity must come with clean hands.'" Precision Instrument Mfg. Co. v. Auto. Maint. Mach. Co., 324 U.S. 806, 814, 65 S.Ct. 993, 89 L.Ed. 1381 (1945). It is not, however, "a rigid formula which `trammels the free and just exercise of discretion.'" Johnson v. Yellow Cab Transit Co., 321 U.S. 383, 387, 64 S.Ct. 622, 88 L.Ed. 814 (1944) (quoting Keystone Driller Co. v. Gen. Excavator Co., 290 U.S. 240, 245, 54 S.Ct. 146, 78 L.Ed. 293 (1933)). Essentially, the doctrine "really just means that in equity as in law the plaintiff's fault, like the defendant's, may be relevant to the question of what if any remedy the plaintiff is entitled to." Shondel v. McDermott, 775 F.2d 859, 868 (7th Cir.1985). "[T]he doctrine does not exclude all wrongdoers from a court of equity nor should it be applied in every case where the conduct of a party may be considered unconscionable or inequitable." Houston Oilers, Inc. v. Neely, 361 F.2d 36, 42 (10th Cir.1966).
PLM argues three grounds for the Court to find that PROLACTO acted with unclean hands. The Court will briefly address them.
First, PLM points to the digitally-altered photographs of cups and a truck that PROLACTO submitted to the USPTO as specimens as part of its applications to register its LA FLOR DE MICHOACAN, Indian Girl, and LA MICHOACANA (words only) marks. Though PLM acknowledges that, in order to establish a defense of unclean hands, it must demonstrate that PROLACTO acted knowingly and intentionally, see Pls.' Br. at 97 ¶ 128 (citing Abraham v. Alpha Chi Omega, 708 F.3d 614 (5th Cir.2013)), PLM did not present any evidence to the Court indicating who was responsible for these images or their intentions in submitting them to the USPTO. Moreover, the Court notes that PLM challenged the TTAB's use of these photographs in its motion for reconsideration before the TTAB (though it did not raise the digital alteration issue), and the TTAB explained that it considered the photographs to be "representative" and "illustr[ative]" and that it did not make its finding of fact "based solely on the undated photographs." TTAB Dkt. 115 at 10. The Court takes no position on whether the USPTO can or should consider the
The Court addresses the second and third grounds together. PLM points to the fact that Teresita Fernandez opened her Sonoma and Novato, California stores while this dispute was pending before the TTAB and this Court with knowledge of PLM's use of the Indian Girl mark and PROLACTO's permission.
3. Burdens of Production and Persuasion
Before the Court can turn to the merits of the TTAB's decision cancelling the registration of PLM's LA INDITA MICHOACANA mark, it must first resolve a dispute between the parties concerning the proper allocation of burdens in a claim challenging a TTAB's registration or cancellation decision in district court pursuant to § 1071(b).
A party seeking to cancel a registered mark must prove the grounds for cancellation and overcome the statutory presumption of validity that attaches to a registered mark by a preponderance of the evidence. See Cold War Museum, Inc. v. Cold War Air Museum, Inc., 586 F.3d 1352, 1358 (Fed.Cir.2009); 3 McCarthy on Trademarks § 20:64; see also Material Supply Int'l, Inc. v. Sunmatch Indus. Co., 146 F.3d 983, 990 (D.C.Cir.1998). PLM argues that PROLACTO bears the same burden here that it did during the cancellation proceeding before the TTAB.
PLM is correct. As the Court has explained, under the Supreme Court's decisions in Kappos and B & B Hardware, this § 1071(b) action challenging the TTAB's decision is a de novo action. The D.C. Circuit has recognized that when a district court reviews a TTAB decision de novo, the party seeking review of the decision "ha[s] the burden of going forward, that is, of submitting to the court evidence or argument to counter the decision of the TTAB," but the party that had the burden of proof before the TTAB "must bear the burden of persuasion in district court."
4. Grounds for Cancellation
The Court now finally turns to the merits of Count I. The TTAB concluded that the registration for PLM's LA INDITA MICHOACANA mark should be cancelled pursuant to § 2(d) of the Lanham Act because PROLACTO had established priority of use and likelihood of confusion with respect to its own Indian Girl design, as well as its LA MICHOACANA (words only), LA MICHOACANA NATURAL (words only), and LA MICHOACANA NATURAL and design marks.
For the reasons that follow, the Court affirms the TTAB's decision to cancel the registration for PLM's LA INDITA MICHAOCANA mark on modified grounds.
a. Legal Standard
A cancellation petition, just like an opposition petition, must be founded on a statutory ground that negates the registrant's right to registration. See Young v. AGB Corp., 152 F.3d 1377, 1380 (Fed.Cir. 1998); see also 3 McCarthy on Trademarks § 20:52. The most common ground for cancelling a mark's registration is § 2(d) of the Lanham Act, which provides that a mark cannot be registered if another owner has prior use of a mark or trade name that is likely to cause confusion with the asserted mark. 15 U.S.C. § 1052(d); see also 3 McCarthy on Trademarks § 20:53.
b. Cancellation on the Basis of Unregistered Marks
A petitioner may seek cancellation of a registration under § 2(d) on the basis of the petitioner's prior use of an unregistered mark, but only if the petitioner can demonstrate that its mark has distinctiveness, either through inherent distinctiveness or descriptiveness with secondary meaning. See Towers, 913 F.2d at 946 ("Section 2(d) bars registration, or serves as a basis for cancellation, if there is a likelihood of confusion as to source. As to an unregistered term, such a likelihood of confusion results when there are trade identity rights in the prior user's term. Those trade identity rights arise when the term is distinctive, either inherently or through the acquisition of secondary meaning."); 3 McCarthy on Trademarks § 20:53 ("In an opposition or cancellation proceeding, the plaintiff relying on an unregistered designation and raising the ground of likelihood of confusion under § 2(d) must prove distinctiveness, either by inherent distinctiveness or acquired distinctiveness through secondary meaning.").
Here, the Court has found that, as a factual matter, when used in connection with selling ice cream and other frozen treats in the United States, the terms "LA MICHOACANA" and "LA MICHOACANA NATURAL" are descriptive of a type of product that is understood in the minds of consumers to have originated in the Mexican state of Michoacán, and it is not primarily associated with PROLACTO or any other single source. This factual finding forecloses PROLACTO from petitioning for cancellation of any mark solely on the basis of its use of those terms. Thus, PROLACTO may only use its asserted Indian Girl mark and LA MICHOACANA NATURAL design mark to support its petition for cancellation.
"To establish priority, the petition must show proprietary rights in the mark that produce a likelihood of confusion." Herbko Int'l, Inc. v. Kappa Books, Inc., 308 F.3d 1156, 1162 (Fed.Cir.2002) (citing Otto Roth & Co. v. Universal Foods Corp., 640 F.2d 1317, 1320 (C.C.P.A.1981)). "These proprietary rights may arise from a prior registration, prior trademark or service mark use, prior use as a trade name, prior use analogous to trademark or service mark use, or any other use sufficient to establish proprietary rights." Id. (citations omitted).
The TTAB found that PROLACTO began using all of the relevant marks in 2001 and specifically found that PROLACTO began using its Indian Girl mark in April 2001. See TTAB Decision at **9-11. It did not specify a particular month in 2001 for the other marks. See id. In its findings of fact, the Court has found, after considering new evidence introduced at trial, that by March 2000, a PROLACTO licensee was using the Indian Girl mark surrounded by the words "LA MICHOACANA es ... natural" in his paleteria in Homestead, Florida. The Court also found that PROLACTO's other Florida licensees
As for PLM, the TTAB used February 21, 2005 as the operative first use date, because it was the first use date provided by PLM for its LA INDITA MICHOACANA mark in its application for registration. See TTAB Decision at *9. In this action, PLM has maintained February 21, 2005 as its first use of the mark but argues that the priority date should be advanced from February 2005 to the first use of its Indian Girl with Paleta mark and its first use of its Indian Girl with Cone mark, both of which occurred prior to March 2000 based on the tacking doctrine. See Pls.' Br. at 85-91. The Court has found that PLM has not met the high standard for tacking the first use of those marks to its first use of the LA INIDTA MICHAOCANA mark. Therefore, PLM's relevant priority date remains February 21, 2005.
Because, in the absence of tacking, PROLACTO has established priority over PLM's LA INDITA MICHOACANA mark with respect to its Indian Girl and LA MICHOACANA NATURAL marks, the Court moves to the likelihood of confusion analysis.
d. Likelihood of Confusion
The likelihood of confusion inquiry under a cancellation petition brought under § 2(d) of the Lanham Act requires the same type of analysis in the trademark infringement context. See 3 McCarthy on Trademarks § 20:53 ("[T]he test under § 2(d) is one of likelihood of confusion. This test is, of course, the same as that employed in trademark infringement litigation."). As the Court previously explained in its summary judgment opinion, courts in this Circuit consider approximately seven factors to evaluate the likelihood of consumer confusion.
Globalaw, 452 F.Supp.2d at 48 (citations omitted). None of these factors are individually determinative, and the Court need not give each of them each equal weight or even consider all of them. See id. Moreover, the Court's ultimate inquiry is to compare the marks from the perspective of consumers in light of what happens in the marketplace. See id. at 49 (quoting Packman v. Chi. Tribune Co., 267 F.3d 628, 643 (7th Cir.2001)). "Courts must take into account all the factors that potential purchasers are likely to perceive and remember." Id. (citing Lang v. Ret. Living Publ'g Co., 949 F.2d 576, 581 (2d Cir.1991)).
The Court begins with PROLACTO's LA MICHOACANA NATURAL mark and finds no basis to cancel PLM's registration on likelihood of confusion grounds. As the Court has found, the terms "MICHOACANA" and "LA MICHOACANA NATURAL" are descriptive and, alone, not entitled to protection. The marks' common usage of the term "MICHOACANA" is the only similarity between the two marks, which strongly counsels against a finding of likelihood of confusion. The importance of that factor is heightened in the absence of any evidence of actual confusion between the marks or any consumer survey studies indicating a likelihood of confusion between the marks. The Court thus finds that PLM's registration for its LA INDITA MICHOACANA mark is not subject to cancellation due to PROLACTO's LA MICHOACANA NATURAL mark.
PROLACTO's Indian Girl mark is a very different story. The likelihood of confusion between these two marks is patently obvious, as the TTAB correctly recognized. See TTAB Decision at *13 ("The Indian girl designs are virtually identical."). The TTAB was also correct in its reasoning that "[i]n view of the identity of the products and the impulse nature of ice cream purchases, the word portion of [PLM's] mark is not sufficient to distinguish the marks." Id. That finding is supported by the expert testimony of Dr. Jacob Jacoby and his consumer survey using a variation of the LA INDITA MICHOACANA mark. See Def.'s Ex. 130; Day 12 A.M. at 12:23-13:4 (testifying that there was "a considerable amount of confusion" and that "it was at high level"). Most importantly, this is not an issue of dispute between the parties. Both sides agree that these marks are highly confusing and have each accused the other of infringement.
PROLACTO has demonstrated that it used its Indian Girl mark before PLM used its LA INDITA MICHOACANA mark, and PLM has failed in its efforts to achieve an earlier priority date for its LA INDITA MICHOACANA mark under the tacking doctrine. The parties' marks are nearly identical. For these reasons, under § 2(d) of the Lanham Act and on the legal grounds argued to the Court, cancellation of the registration of PLM's mark is warranted. The Court will therefore enter judgment in favor of PROLACTO on Count I.
D. Complaint Count II
Count II of PLM's Second Amended Complaint seeks a declaration from the Court that there is no likelihood of confusion between its LA INDITA MICHOACANA mark and three of PROLACTO's marks containing the term "MICHOACANA" due to the overlap of the term: LA MICHOACANA (words only), LA MICHOACANA
1. Burden of Proof
Before the Court can turn to the merits of the issue, the Court must first address a dispute between the parties concerning the burden of proof. In its proposed findings of fact and conclusions of law, PROLACTO argues that PLM's claim should be "dismiss[ed] with prejudice" because PLM "failed to produce any evidence during trial... to suggest that there is no likelihood of confusion between the respective parties' marks" and thus, "failed to meet its burden to show no likelihood of confusion." Def.'s Br. at 28. PLM counters that, because it is the party seeking a declaratory judgment, the burden of proof lies with PROLACTO as the "would-be-plaintiff." Pls.' Opp'n at 54-55.
PLM is correct. PROLACTO fails in its argument to acknowledge the procedural uniqueness of a declaratory judgment in the trademark infringement context. "The usual orientation of the rights holder as plaintiff and the accused infringer as defendant is reversed in a declaratory judgment. But this does not change the normal rule that the party claiming intellectual property rights has the burden to prove infringement." 6 McCarthy on Trademarks § 32:50; see also 3 Anne Gilson LaLonde, Gilson on Trademarks § 11.04 (2016) ("In general, this role reversal will not shift the burdens of proof from what
Thus, PROLACTO has the burden to prove a likelihood of confusion between PLM's mark and its marks due to the common use of the term "MICHOACANA."
PLM does not seek a declaration of complete non-infringement. Rather, PLM's claim is narrowly focused: PLM asks this Court only to declare that the common use of the term "MICHOACANA" in its LA INDITA MICHOACANA mark and PROLACTO's three marks does not create a likelihood of confusion. See Second Am. Compl. at 14 ¶¶ 49-51.
The Court has found that in connection with selling ice cream and other frozen treats in the United States, the terms "MICHOACANA" and "LA MICHOACANA" are descriptive of a type of product that is understood in the minds of consumers to have originated in the Mexican state of Michoacán, and it is not primarily associated with PROLACTO or any other single source. In light of this finding, PROLACTO would be unable to pursue an infringement claim solely on the basis of the parties' common usage of the term, because the term itself is not a protectable trademark.
E. Complaint Count III
Count III of PLM's Second Amended Complaint is brought under 15 U.S.C. § 1114 and alleges that PROLACTO's use of its Indian Girl mark (Serial No. 78,771,243) infringes PLM's three registered marks containing an Indian Girl: Indian Girl with Paleta (Reg. No. 2,905,172), Indian Girl with Cone (Reg. No. 2,968,652), and LA INDITA MICHOACANA (Reg. No. 3,210,304). See Second Am. Compl. at 14-15 ¶¶ 52-56. These marks appear below.
"The Lanham Act provides national protection of trademarks in order to secure to the owner of the mark the goodwill of his business and to protect the ability of consumers to distinguish among competing producers." Park 'N Fly, Inc. v. Dollar Park and Fly, Inc., 469 U.S. 189, 198, 105 S.Ct. 658, 83 L.Ed.2d 582 (1985). Infringement of a registered mark is addressed in 15 U.S.C. § 1114(1), which provides, in relevant part:
15 U.S.C. § 1114(1). Thus, to prevail in an infringement claim under § 1114, a party must prove "(1) that it has a protectable ownership interest in a mark, and (2) that the alleged infringer's use of the mark is likely to cause consumer confusion." PLM I, 69 F.Supp.3d at 197 (citations omitted).
1. PLM's Ownership of the Registered Marks
As the Court has previously recognized, and as PROLACTO does not dispute, Paleteria La Michoacana (Sub), Inc. is the registered owner of the Indian Girl with Paleta, Indian Girl with Cone, and LA INDITA MICHAOCANA marks at issue in Count III.
Registration of a trademark entitles the mark's owner to certain advantages in an infringement suit. The Lanham Act provides that registration of a mark "shall be prima facie evidence of the validity of the
PLM's registrations for its Indian Girl with Paleta and Indian Girl with Cone have become incontestable pursuant to § 1065. The validity of the marks and PLM's exclusive right to use them cannot be challenged here. PROLACTO's various arguments contesting the validity of the marks and PLM's ownership of them are largely irrelevant. Nevertheless, for the sake of the parties' clarity, the Court will briefly address them.
PROLACTO's primary arguments are that PLM did not use the Indian Girl marks until years after PROLACTO first used its Indian Girl mark and that PLM has no rights in any of its marks because it adopted them in bad faith. The Court has already rejected these arguments on factual and legal grounds. PROLACTO also argues that PLM's use of the marks on shipping boxes was insufficient to establish priority, because "no evidence was ever offered that would suggest that any consumer of any of the PLM entities['] goods would ever come into contact with or otherwise observe its outer corrugated cardboard boxes used for packaging and shipping their products." Def.'s Opp'n at 10 ¶ 21. On the contrary, Ruben Gutierrez, PROLACTO's own witness, testified that he saw the Indian Girl mark on a PLM shipping box in the marketplace.
The ownership and validity of PLM's registered Indian Girl with Paleta and Indian Girl with Cone marks having been established, the Court turns to likelihood of confusion.
2. Likelihood of Confusion
As the Court explained above, courts in this Circuit consider approximately seven factors to evaluate the likelihood of consumer confusion.
Globalaw, 452 F.Supp.2d at 48 (citations omitted). None of these factors are individually determinative, and the Court need not give each of them each equal weight or even consider all of them. See id. Moreover, the Court's ultimate inquiry is to compare the marks from the perspective of consumers in light of what happens in the marketplace. See id. at 49 (quoting Packman v. Chi. Tribune Co., 267 F.3d 628, 643 (7th Cir.2001)). "Courts must take into account all the factors that potential purchasers are likely to perceive and remember." Id. (citing Lang v. Ret. Living Publ'g Co., 949 F.2d 576, 581 (2d Cir.1991)).
Many of these factors strongly counsel in favor of finding a likelihood of confusion. For example, the Court has found, based on testimony by PROLACTO's licensees, that PLM's products and PROLACTO's products are available in close proximity to each other in the Northern California and Houston markets and even at one point were being sold inside the same store in the Houston area. Both
Indeed, the visual similarity between the parties' marks, particularly PLM's Indian Girl with Cone, as they appear in the marketplace is striking. Representative comparisons appear below.
Most importantly, this is one of the few issues in this case in which the parties do not disagree. PROLACTO does not defend itself on the ground that its use of the Indian Girl mark is unlikely to cause confusion with PLM's Indian Girl with Paleta and Indian Girl with Cone. PROLACTO itself brings a counterclaim alleging that PLM's marks at issue here infringe its Indian Girl, referring to the marks as "iterations" of "an identical reproduction of PROLACTO's Indian Girl design." Def.'s Br. at 10-11 ¶ 37. PROLACTO instead focuses its defense to Count III on the issues of priority and bad faith, which the Court has addressed and found in PLM's favor.
For these reasons, the Court concludes that PROLACTO's use of PLM's registered, incontestable trademarks constitutes infringement under 15 U.S.C. § 1114(1)(a) and will enter judgment on Count III for PLM accordingly.
F. Complaint Count IV
Count IV of PLM's Second Amended Complaint seeks to cancel the registrations of PROLACTO's LA FLOR DE MICHOACAN marks (Registration Nos. 3,249,113 and 2,830,401). See Second Am. Compl. at 15-16 ¶¶ 57-61. The Complaint states that the claim is brought solely in response to PROLACTO's Counterclaim I, which alleged that PLM had infringed
G. Counterclaim Count II: Trademark Infringement
In Count II of its Counterclaim, PROLACTO asserts that PLM violated § 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), through its use of its registered Indian Girl with Paleta, Indian Girl with Cone, and LA INDITA MICHOACANA marks because those marks, PROLACTO alleges, infringe on PROLACTO's use of various unregistered marks containing an Indian Girl and "LA MICHOACANA." See Ans. 2d Am. Compl. & Countercls. at 30-32 ¶¶ 43-52. The marks at issue in Counterclaim Count II are shown below.
As the Court explained in its summary judgment opinion, to prevail on a trademark infringement claim brought under 15 U.S.C. § 1125(a), PROLACTO must show that: (1) it owns a valid trademark; (2) its trademark is distinctive or has acquired secondary meaning; and (3) there is a substantial likelihood of confusion between its mark and PLM's mark. See PLM I, 69 F.Supp.3d at 201 (citing Globalaw, 452 F.Supp.2d at 26). The Court further explained that "it is firmly established that the adoption and use of an unregistered trademark in a limited market within the United States does not create exclusive ownership of that mark in all geographic markets." Id. at 206 (citing Proriver, Inc. v. Red River Grill, LLC, 27 F.Supp.2d 1, 4 (D.D.C.1998)). Under the Tea Rose-Rectanus doctrine, "[g]ood faith junior users who later use the same or similar mark on alike products or services also may establish rights to the mark provided there is no competitive overlap with the senior user." Id. (citing Tally-Ho, Inc. v. Coast Cmty. Coll. Dist., 889 F.2d 1018, 1023 (11th Cir. 1989)). Thus, "a market-by-market analysis is required to determine priority in the potential markets on which PLM could have infringed." Id. (citation omitted).
The issues now properly framed, the Court turns to the merits of PROLACTO's infringement claim.
1. Validity: Prior Use in Houston
In order to be successful on its trademark infringement claim, PROLACTO must first prove that it used its asserted marks in commerce in the Houston area before PLM used its marks in the area. See John C. Flood, 642 F.3d at 1109 ("[A] party establishes ownership of a mark by being the first to use the mark in commerce." (citation omitted)); see also 5 McCarthy on Trademarks § 26:52 (explaining that when a claim is brought under § 43(a), "territorial rights should be determined by reference to federal common law").
At summary judgment, the Court found that while it was clear that a PROLACTO licensee opened a store in Rosenberg, Texas (a suburb of Houston) in October 2002 and later opened additional stores, there were open questions of fact as to when the licensee first used the marks at issue in Counterclaim Count II. See PLM I, 69 F.Supp.3d at 208. The Court has now resolved that factual dispute in its findings of fact. Of its four asserted marks, the Court found that PROLACTO's licensee in the Houston area, Mary Fernandez, had only used one, the LA MICHOACANA (words only) mark, prior to PLM's entrance to the Houston area market in 2005. Thus, only this mark survives to the next element of PROLACTO's claim.
2. Distinctiveness and Secondary Meaning
The Court explained in its summary judgment opinion that priority of use "alone does not entitle the mark to protection under the Lanham Act." PLM I, 69 F.Supp.3d at 209 (citing Fernandez v. Jones, 653 F.Supp.2d 22, 29 (D.D.C.2009); Globalaw, 452 F.Supp.2d at 26-28 (D.D.C. 2006)). The party asserting the mark must also demonstrate that "the mark is either inherently distinctive, in which its intrinsic nature serves to identify its particular source, or has acquired a secondary meaning in the minds of consumers." Id. (citations omitted). As the Supreme Court has
A descriptive mark "may be eligible for protection, but only if it has acquired a `secondary meaning' in the minds of the public." U.S. Search, LLC v. U.S. Search.com Inc., 300 F.3d 517, 523 (4th Cir.2002); see also Conversive, Inc. v. Conversagent, Inc., 433 F.Supp.2d 1079, 1087-88 (C.D.Cal.2006) ("Descriptive marks, because of their particular placement — one step above `generic' — on the spectrum of distinctiveness, require proof of secondary meaning in order to be protectable." (internal quotation omitted)).
At the summary judgment stage, the Court found that "substantial questions of material fact exist regarding the secondary meaning issue." PLM I, 69 F.Supp.3d at 212. The Court has now answered those questions as to PROLACTO's asserted LA MICHOACANA (words only) mark, the only mark for which it has priority in the Houston area. The Court has found that in connection with selling ice cream and other frozen treats in the United States, the terms "MICHOACANA" and "LA MICHOACANA" are descriptive of a type of product that is understood in the minds of consumers to have originated in the Mexican state of Michoacán, and it is not primarily associated with PROLACTO or any other single source.
Lacking distinctiveness and secondary meaning, PROLACTO's use of "LA MICHOACANA" (words only) is not entitled to trademark protection, and PROLACTO cannot, therefore, maintain a claim of infringement. The Court will enter judgment for PLM on PROLACTO's Counterclaim Count II for trademark infringement.
H. Counterclaim Count II: False Designation, Passing Off, False Association, and Unfair Competition
In its Counterclaim Count II, PROLACTO also asserts a theory of false designation, passing off, false association, and unfair competition. See Ans. 2d Am. Compl. & Countercls. at 30-31 ¶ 45. This Court has explained that although these claims "may appear to internally allege many different grievances — i.e., trademark infringement, false designation of origin, passing off, and unfair competition — courts have announced that the elements for each of the aforementioned causes-of-action mirror those for a claim of trademark infringement." Globalaw, 452 F.Supp.2d 1, 26 (D.D.C.2006) (citations omitted). For this reason, the Court entered summary judgment on this theory in the identical manner in which it entered summary judgment on PROLACTO's infringement claim. See PLM I, 69 F.Supp.3d at 212; PLM III at 5-8.
Accordingly, in light of the Court's holding that PROLACTO was unable to prove its infringement claim, the Court will enter judgment for PLM on this claim as well.
I. Counterclaim Count II: False Advertising
PROLACTO also charges PLM with false advertising in Count II of its counterclaim pursuant to 15 U.S.C. § 1125(a)(1)(B).
1. Advertisements at Issue
Over the course of this litigation, PROLACTO has alleged that a number of PLM's advertisements and advertising statements constitute false advertising. Unfortunately, PROLACTO does not provide a complete, well-defined list of the alleged advertisements in its post-trial briefing or many citations in the record in support of its claims. See Def.'s Br. at 11-15 ¶¶ 38-54 (referencing various advertisements). In its post-trial briefing, PLM provides a list of the advertisements at issue culled from PROLACTO's pleading, summary judgment briefing, and motions in limine.
2. Legal Standard
Under § 43(a) of the Lanham Act:
15 U.S.C. § 1125(a)(1)(B). In order to prevail on a Lanham Act false advertising theory, a party must show that the advertising at issue was: "(1) false or misleading; (2) actually or likely deceptive; (3) material in its effect on buying decisions; (4) connected with interstate commerce; and (5) actually or likely injurious." See Aristotle Int'l, Inc. v. NGP Software, Inc., 714 F.Supp.2d 1, 6 (D.D.C.2010) (citations omitted).
As a threshold matter, however, the party alleging false advertising must demonstrate that it has so-called "statutory standing" to bring a claim by demonstrating, first, that the party falls within the "zone of interests" the statute was designed to protect, and, second, that the party has suffered injuries that were proximately caused by a violation of the statute. See Lexmark Int'l, Inc. v. Static Control Components, Inc., ___ U.S. ___, 134 S.Ct. 1377, 1388-91, 188 L.Ed.2d 392 (2014).
3. Summary Judgment Ruling
At summary judgment, the Court addressed the issues of statutory standing under Lexmark and all of the elements of PROLACTO's false advertising claim.
The Court found that, at least at the summary judgment stage, PROLACTO had provided "sufficient evidence to demonstrate commercial injury ... at least insofar as it has offered evidence that i[t] possesses a business reputation and goodwill within the United States that PLM allegedly attempts to usurp for its own benefit, as well as the possibility of lost sales and customers." PLM I, 69 F.Supp.3d at 216. The Court also found
Turning to the elements of PROLACTO's claim, the Court held that because PLM did not make any argument or provide any evidence on the elements of falsity, deceptiveness, and interstate commerce, PLM had conceded the issues.
4. "Statutory Standing" under
PLM argues that PROLACTO lacks "statutory standing" to assert a false advertising claim under the Supreme Court's Lexmark test. See Pls.' Opp'n at 58.
As discussed, the Lexmark test has two parts. First, the plaintiff must claim to have suffered an injury within the "zone of interests" protected by the statute. The Supreme Court held in Lexmark that "to come within the zone of interests in a suit for false advertising under § 1125(a), a plaintiff must allege an injury to a commercial interest in reputation or sales." Lexmark, 134 S.Ct. at 1390. Next, the plaintiff must prove that the injury was proximately caused by the defendant's unlawful conduct. See id. at 1390. The Supreme
The D.C. Circuit has explained that "statutory standing `is itself a merits issue'" and "is not really about standing at all." United States v. Emor, 785 F.3d 671, 677 (D.C.Cir.2015) (quoting United States v. Oregon, 671 F.3d 484, 490 n. 6 (4th Cir.2012)). Indeed, here, the Court's resolution of the Lexmark standing question turns on its findings of fact regarding whether PROLACTO has suffered or will likely suffer an injury and the causal connection between that injury, if any, and PLM's false advertising. See PLM I, 69 F.Supp.3d at 215 n. 14 (stating that "the merits of PROLACTO's false advertising claim ... overlap significantly with resolving the standing question").
The Court previously held that PROLACTO had provided sufficient evidence of potential injuries in the form of a damaged reputation and loss of sales and customers and that those injuries, "if proven at trial to exist, were proximately caused by PLM's advertisements." Id. at 216. While PROLACTO may have been able to survive summary judgment, it did not meet its burden at trial. The Court has found that PROLACTO failed to show that it had suffered or would likely suffer any injury — either in the form of loss of reputation or loss of sales — and that it had even failed to show that PLM's advertisements had any impact on consumers' decisions whether to buy PLM's products at all.
In light of these findings, the Court must conclude that PROLACTO has failed to meet Lexmark's test for maintaining a false advertising claim under the Lanham Act.
Having determined the outcome of PLM's claims and PROLACTO's counterclaims, the Court must now determine the appropriate remedies.
A. Cancellation of PLM's LA INDITA MICHOACANA Mark
For the reasons provided in the Court's conclusions of law, the Court will enter judgment for PROLACTO on Count I of PLM's Second Amended Complaint and affirm the TTAB's decision to cancel the registration for PLM's LA INDITA MICHOACANA mark (Reg. No. 3,210,304) pursuant to 15 U.S.C. § 1052(b).
B. Declaratory Judgment of Non-Infringement
For the reasons provided in the Court's conclusions of law, the Court will enter judgment for PLM on Count II of PLM's Second Amended Complaint and declare that there is no likelihood of confusion between PLM's LA INDITA MICHOACANA mark and PROLACTO's LA MICHOACANA (words only), LA MICHOACANA NATURAL (words only), and LA MICHOACANA NATURAL marks solely on the basis that the marks commonly use
C. Permanent Injunction
As the remedy for its infringement claim, Count III, PLM requests that the Court order a permanent injunction. For the reasons provided below, the Court will grant permanent injunctive relief with a narrower scope than PLM requests.
Rule 65 of the Federal Rules of Civil Procedure provides that "[e]very order granting an injunction ... must: (A) state the reasons why it issued; (B) state its terms specifically; and (C) describe in reasonable detail ... the act or acts restrained or required." Fed. R. Civ. P. 65(d)(1). In accordance with the Rule, the Court first addresses the appropriateness of an injunction and then turns to issues concerning its scope.
1. Appropriateness of a Permanent Injunction
The Lanham Act provides that the Court "shall have [the] power to grant injunctions, according to the principles of equity and upon such terms as the court may deem reasonable." 15 U.S.C. § 1116(a). In eBay Inc. v. MercExchange, L.L.C., the Supreme Court stated:
547 U.S. 388, 391, 126 S.Ct. 1837, 164 L.Ed.2d 641 (2006).
PLM has suffered an irreparable injury due to PROLACTO's infringement of its marks and will continue to suffer one absent a permanent injunction. The Court has found above that there is a high degree of likelihood of confusion between PLM's marks and PROLACTO's infringing marks. That conclusion was based, in part, on evidence demonstrating instances of actual confusion between the parties' products in Northern California and in Houston, as well as consumer survey evidence. Monetary relief, which PLM does not seek, would be inadequate to cure the harm that PLM has suffered and will suffer absent an injunction. See 5 McCarthy on Trademarks § 30:1 ("Like trying to unring a bell, trying to `compensate' after the fact for damage to business goodwill and reputation cannot constitute a just or full compensation. This distinguishes trademark cases from the neighboring areas of patent and copyright law."). Indeed, the injury here is not primarily monetary; it is reputational, and given PLM's natural growth, as evidenced by it expanding its range from just one state in 1991 to now over 30 states, will only grow accordingly over time absent an injunction. The hardships here also weigh in PLM's favor. As the Court has found, PROLACTO has, for many years, operated and grown its business even without use of the Indian Girl mark using other trademarks not at issue in PLM's infringement claim. PLM, on the other hand, has used its Indian Girl marks on all of its products and appears to have made the mark a central part of its identity. Finally, the public interest weighs heavily in favor of granting a permanent injunction. As McCarthy has aptly explained, "[i]f a court were to permit the infringer to continue its infringing activities, the result would be a judicially imposed compulsory license given to an infringer. This would permit the likelihood of confusion to continue and deprive the consuming public of a truthful marketplace." 5 McCarthy on Trademarks § 30:1.
The Court is also mindful that "a permanent injunction is the standard remedy in trademark infringement cases." 5 McCarthy on Trademarks § 30:1; see also SunAmerica Corp. v. Sun Life Assur. Co. of Canada, 77 F.3d 1325, 1336 (11th Cir.1996) (stating that in "ordinary trademark infringement actions ... complete injunctions against the infringing party are the order of the day."); cf. eBay, 547 U.S. at 395, 126 S.Ct. 1837 (Roberts, C.J. concurring) ("[T]here is a difference between exercising equitable discretion pursuant to the established four-factor test and writing on an entirely clean slate.... When it comes to discerning and applying [the] standards, in this area as others, `a page of history is worth a volume of logic.'" (quoting N.Y. Trust Co. v. Eisner, 256 U.S. 345, 349, 41 S.Ct. 506, 65 L.Ed. 963 (1921) (Holmes, J.))).
Accordingly, the Court finds it appropriate to enter a permanent injunction as a remedy for PROLACTO's infringement. The scope of that injunction requires further explanation.
2. Scope of the Injunction
"The law requires that courts closely tailor injunctions to the harm that they address." ALPO Petfoods, Inc. v. Ralston Purina Co., 913 F.2d 958, 972 (D.C.Cir.1990). PLM seeks an extremely broad injunction in its post-trial briefing:
Pls.' Opp'n at 62-63.
a. Marks at Issue
PLM seeks an injunction barring PROLACTO from using an Indian Girl and also, in certain locations, from using "Michoacana." See Pls.' Opp'n at 65-67.
The permanent injunction should certainly bar PROLACTO from using an Indian Girl, which the Court found to be an infringement of two of PLM's registered marks in Count III of PLM's Complaint. There is absolutely no basis, however, for barring PROLACTO from using the term "Michoacana." The request itself is puzzling, to say the least. PLM did not bring an infringement claim against PROLACTO on the basis of its use of "Michoacana." On the contrary, PLM sought a declaration of non-infringement based on their common use of that term, which the Court has determined to grant. PLM's infringement claim was limited to PROLACTO's use of an Indian Girl, and the remedy will be limited accordingly.
b. Geographic Scope
PLM also seeks an injunction that is nationwide in scope. See Pls.' Br. at 136; Pls.' Opp'n at 64-67. It is clear that PLM is entitled to enjoin PROLACTO's infringing use of the Indian Girl in Northern California and the Houston area, because PLM sells its products in those markets. The Court must determine, however, whether PLM can enjoin PROLACTO's infringing use in Florida and North Carolina, markets where PLM does not currently operate, and whether PLM can obtain an injunction for other markets in which neither party currently operates.
In a landmark ruling in 1959, which the D.C. Circuit has adopted, the Second Circuit explained that "[u]nder the Lanham Act, a federal registrant is entitled to enjoin a remote junior user of the mark if there is a likelihood of the registrant's entry into the disputed area." Foxtrap, Inc. v. Foxtrap, Inc., 671 F.2d 636, 640 (D.C.Cir.1982) (citing Dawn Donut Co. v. Hart's Food Stores, Inc., 267 F.2d 358, 362 (2d Cir.1959)); see also 5 McCarthy on Trademarks § 26:33 ("Under the Dawn Donut rule, while a senior federal registrant has superior priority, there is no confusion for a court to enjoin unless and until the senior user shows a likelihood of
PLM cannot simply make a naked assertion that it is "ready to begin sales" in new markets and thereby obtain an injunction against a junior user under the Dawn Donut rule. For this proposition, PLM cites Russell Road Food & Beverage, LLC v. Spencer, No. 12-cv-01514, 2013 WL 321666 (D.Nev. Jan. 28, 2013). See Pls.' Opp'n at 66. But here yet again, PLM conveniently omits key portions of a court's opinion. The Russell court did not state that simply asserting that one is ready to begin sales is sufficient; rather, the court stated, in full: "`Likelihood of entry denotes an immediate, impending entry of the federal registrant into the junior user's territory.' For instance, a federal registrant may prove that it has leased premises and is ready to begin sales, or that it has licensed the mark for the disputed territory." Russell Rd., 2013 WL 321666, at *3 (quoting 5 McCarthy on Trademarks § 26:34). And in that case, the court held that although the senior user asserted that it had traveled to the junior user's territory, consulted with real estate agents, organized investor meetings, and attempted to establish local relationships, the senior user still had not sufficiently demonstrated a likelihood of entry. See id. at **3-4. Indeed, McCarthy recognizes that "[t]he federal registrant must, in the absence of proof of mark reputation in the disputed area, show some concrete, impending plans for entry." 5 McCarthy on Trademarks § 26:34.
PLM has shown no concrete plans or any other indication that it will sell its products in Florida or North Carolina anytime soon. PLM only argues: "PLM currently distributes and sells its products in more than 30 states in the U.S., including Hawaii. PLM sells to national retailers and distributors who have distribution centers throughout the U.S., and thus, is ready to begin sales in additional states in the U.S., including Florida." Pls.' Opp'n at 66. Even if this were sufficient — and it is not — the cited evidence does not support PLM's assertion. PLM cites only Patricia Gutierrez's testimony about the states in which PLM distributes its products. See Day 6 P.M. at 84:3-87:15. But Ms. Gutierrez only testified that PLM currently distributes its products in "30-plus states," including Hawaii and Illinois, and she was unable to recall whether PLM distributed in states such as Ohio and Kentucky. See id. at 84:3-85:15. While she also explained Wal-Mart's distribution system, she gave no testimony that PLM had made any plans to distribute its products to Florida or North Carolina or even to expand its distribution at any time soon. See id. at 85:16-86:7. It is not even clear from the record exactly in which states PLM currently distributes product.
In light of the limitations of PLM's claims and injuries, and in light of the D.C. Circuit's command that the Court must "closely tailor injunctions to the harm that they address," ALPO Petfoods, 913 F.2d at 972, the Court will limit the geographic scope of its injunction to the specific markets in which it has found infringement: Northern California (which includes Sonoma and Novato) and the Houston, Texas area (which includes Rosenberg and the city of Houston).
Finally, PLM also asks the Court to enjoin PROLACTO's U.S. licensees, in addition to PROLACTO, arguing that the Court has the authority to enjoin the licensees pursuant to Rules 65 and 71 of the Federal Rules of Civil Procedure.
Rule 65 of the Federal Rules of Civil Procedure provides that an injunction "binds only the following who receive actual notice of it by personal service or otherwise: (A) the parties; (B) the parties' officers, agents, servants, employees, and attorneys; and (C) other persons who are in active concert or participation with anyone described in Rule 65(d)(2)(A) or (B)." Fed. R. Civ. P. 65(d)(2). Rule 71 simply provides that the procedure for enforcing an order of relief against a non-party is the same procedure as enforcing an order of relief for a party, and it adds nothing to the Court's analysis here. See Fed. R. Civ. P. 71.
By asking the Court, at this juncture, to determine that PROLACTO's licensees fall within the ambit of Rule 65(d) and to specifically name them in the injunction, PLM plainly misunderstands the Rule and the limitations of the Court's jurisdiction.
"It is elementary that one is not bound by a judgment in personam resulting from litigation in which he is not designated as a party or to which he has not been made a party by service of process." Zenith Radio Corp. v. Hazeltine Research, Inc., 395 U.S. 100, 110, 89 S.Ct. 1562, 23 L.Ed.2d 129 (1969). "In Zenith Radio the Supreme Court reiterated the general rule that a court may not issue an injunction against a person over which the court ha[s] not acquired jurisdiction by service of process." Nat'l Spiritual Assembly of the Baha'is of the U.S. under Hereditary Guardianship, Inc. v. Nat'l Spiritual Assembly of the Bahai's of the U.S., Inc., 628 F.3d 837, 853 (7th Cir.2010). While it is true that individuals and entities that are "agents" of PROLACTO or are "in active concert or participation" with PROLACTO will be bound by an injunction directed towards PROLACTO, whether a particular individual or entity falls within the ambit of Rule 65(d) "is a decision that may be made only after
PLM recognizes, quoting National Spiritual Assembly, that part of the underlying consideration in applying Rule 65(d) to a non-party is whether "it is fair to conclude that he had his day in court when the injunction was issued." Nat'l Spiritual Assembly, 628 F.3d at 854. But, oddly enough, PLM skips over the Seventh Circuit's explanation on the previous page of its opinion that "the `day in court' at issue... refers to the nonparty's opportunity to contest whether he acted in concert with a party contemnor or was in privity and therefore bound by the injunction." Id. at 853. The proper procedure under Zenith Radio is to serve any non-parties with process and for the Court to subsequently hold, if necessary, "an evidentiary hearing offering them ample and complete opportunity to contest whether they c[o]me within Rule 65(d)." Id. at 853 n. 5.
The Court will address PROLACTO, the only named defendant in this case, in its permanent injunction. The injunction will apply to others, to the extent that they fall within the ambit of Rule 65(d), and those individuals or entities "act at their peril if they disregard the commands of the injunction, for, if the [Court] ultimately determines that they are in concert with [PROLACTO], then they will be [held] in contempt of court. But that is an issue for another day...." Lake Shore, 511 F.3d at 767.
D. PROLACTO's Trademark Registration Applications
In addition to a permanent injunction, PLM also asks the Court to refuse PROLACTO's currently pending applications to register LA MICHOACANA (words only) (Serial No. 85,405,347) and its Indian Girl mark (Serial No. 78,771,243) pursuant to the Court's authority 15 U.S.C. § 1071(b)(1). See Pls.' Opp'n at 71-73.
This is the first time that PLM has made such a request. It was not included in its Second Amended Complaint. See Second Am. Compl. at 17. Nor was it included in the parties' Joint Pretrial Statement. See Joint Pretrial Stmt. at 41-42, ECF No. 182. PLM, in fact, raised this issue for the first time in its opposition to PROLACTO's proposed findings of fact and conclusions of law, denying PROLACTO the opportunity to even address it. See Pls.' Opp'n at 71-73. It is far too late for PLM to make a request for relief such as this one, and the Court will not entertain it here. The Court takes no position on whether the USPTO can or should take the Court's findings of fact and conclusions of law in this case into consideration when determining the outcome of PROLACTO's applications for registration.
For the foregoing reasons, the Court will: enter
For a variety of reasons, the Court will deny PROLACTO's motion. First, it is clear that although PROLACTO's discovery requests for the production of documents encompassed all of the invoices, PLM served timely objections and responded that it would produce documents "sufficient to show" the requested items. PLM then produced, in PROLACTO's own estimation, hundreds of invoices over a wide span of time. PROLACTO never raised any issues concerning PLM's responses until trial and has therefore waived any objections. Second, the Court finds PROLACTO's characterization of "spoliation" as misplaced. Spoliation is "the destruction or material alteration of evidence or the failure to preserve property for another's use as evidence in pending or reasonably foreseeable litigation." True the Vote, Inc. v. I.R.S., No. CV 13-734, 2014 WL 4347197, at *4 (D.D.C. Aug. 7, 2014) (quotation omitted). Courts also require a finding of bad faith. See, e.g., Valentino v. U.S. Postal Serv., 674 F.2d 56, 73 & n. 31 (D.C.Cir.1982) (denying request for spoliation where "the circumstances of the destruction... provide no basis for attributing bad faith"). On the contrary, here, PLM not only preserved the evidence, it brought it into the courtroom during trial. The Court has also reviewed the invoices and has seen nothing that suggests that any evidence was tampered with or destroyed, and the Court notes that in the six months since the conclusion of trial, PROLACTO elected not to do so itself despite the Court's offer.
Finally, even to the extent that PROLACTO did not waive any challenges to PLM's discovery responses, it has not suffered any prejudice. PLM did not seek to introduce the invoices into evidence. The Court did not consider them in making its findings of fact and conclusions of law, and the produced and admitted invoices played little, if any role at all, in the Court's findings and conclusions. PROLACTO argues that "[h]ad PLM produced these invoices during discovery, PROLACTO would likely had been able to [sic] identify additional damages, used the additional information to check the summaries PLM produced during discovery, and been able to use the information to support a jury trial in this matter." Def.'s Mot. & Mem. Exclusion & Spoliation Sanctions at 7. But PROLACTO fails to offer any explanation as to how a review of the entire set of original invoices, rather than more comprehensive sales or accounting information, could have informed its argument. PROLACTO's argument is completely disconnected from the procedural history of this case. The Court granted summary judgment for PLM on the monetary relief issue because PROLACTO entirely failed to oppose various arguments raised by PLM. See PLM II, 79 F.Supp.3d at 71-82. Specifically, on the issue of actual damages, PROLACTO did not oppose PLM's argument that it had failed to present evidence of actual loss. See id. at 75. At the summary judgment stage, PROLACTO had in its possession hundreds of PLM invoices covering a wide span of time, as well as more detailed and comprehensive financial information. PROLACTO did not utilize any of this evidence in opposing summary judgment on the monetary relief issue; it simply failed to respond to PLM's arguments at all. PROLACTO has not offered any explanation as to how exactly having possession of the entire set of original, hard copy, and handwritten invoices would have made any difference.
In its post-trial briefing, PLM also argues that its use of "Michoacana" is not "geographically deceptively misdescriptive" and that its registration is not subject to cancellation pursuant to 15 U.S.C. § 1052(e)(3). Pls.' Opp'n at 52-54. PLM makes this argument in response to a statement in PROLACTO's proposed findings of fact and conclusions of law that related to PROLACTO's false advertising claim and did not mention § 1052(e)(3), an entirely separate basis for cancellation that the TTAB did not find. See Def.'s Br. at 24 ¶ 73. The Court notes, however, that its finding of fact regarding the meaning of the term "Michoacana" would appear to foreclose this alternate ground for cancellation.
Belmora appears to be the first case to hold that a foreign plaintiff with no trademark rights in the United States could maintain a false association claim under § 43(a) of the Lanham Act based on a trademark holder's use of marks in the United States. It remains to be seen whether other courts will follow the Fourth Circuit's approach, and the Court need not make that determination here. Even if this Court were to follow Belmora, that analysis would not produce a contrary outcome in this case for two reasons.
First, to the extent that PROLACTO relies on Belmora to show that it can succeed on its false association claim based on its use of the Indian Girl or LA MICHOACANA marks in the United States, it is important to note that the Mexican company at issue in Belmora, unlike PROLACTO here, had never used its mark to market or sell products in the U.S and did not bring a claim for trademark infringement. The Fourth Circuit therefore did not consider circumstances, like those at issue in this case, where two parties use similar marks in some of the same markets and contest the ownership of the marks at issue. The Court does not read the Fourth Circuit's analysis to suggest that an infringing junior user of a mark in the United States can pursue a false association claim against a mark's senior user based on consumer confusion resulting from the infringing use. Having already found that PROLACTO's Indian Girl mark infringes on PLM's senior use of similar marks, the Court does not read Belmora to suggest that PROLACTO can nevertheless pursue a false association claim in the Houston market or any other market. And, because the Court has also concluded that PLM's other marks create no likelihood of confusion with PROLACTO's LA MICHOACANA marks, PROLACTO cannot succeed on a false association claim on the basis of any use of its marks in the United States.
Second, even if the Court were to accept Belmora's apparent holding that an owner of a foreign mark can maintain a false association claim based solely on the party's wholly-foreign use of the mark, PROLACTO would be unsuccessful on the merits. The Fourth Circuit explained in Belmora that to come within § 43(a)'s zone of interests a plaintiff must show a commercial injury to its reputation or sales. 819 F.3d at 706-07, 2016 WL 1135518, at *5 (quoting Lexmark Int'l, Inc. v. Static Control Components, Inc., ___ U.S. ___, 134 S.Ct. 1377, 1390, 188 L.Ed.2d 392 (2014); see also id. at 711-12, 2016 WL 1135518 at *9 (discussing BCC's alleged injury). At trial, PROLACTO failed to establish any injury to its business in Mexico and failed to establish that any injury suffered was proximately caused by PLM's use of confusingly similar marks in the United States. PROLACTO offered no evidence, for example, concerning any loss of sales from customers who bought PLM's products in the United States in lieu of PROLACTO's products in Mexico. Nor did it offer any evidence of consumer confusion in Mexico concerning its products, any credible evidence showing a crossover of the parties' customers between the United States and Mexico, or any other evidence suggesting that PROLACTO suffered any injury in the Mexican market. Cf. Belmora, 819 F.3d at 710-12, 2016 WL 1135518, at **8-9 (explaining that BCC had alleged that its customers had erroneously purchased Belmora FLANAX in the U.S. instead of BCC's product in Mexico, causing the company to suffer lost sales, and that Belmora targeted Mexican-Americans already familiar with the FLANAX mark in Mexico). Accordingly, Belmora has no impact on the outcome of this case.