F OR P UBLICATION



### UNIT E D ST AT E S CO URT O F APPE AL S FO R T H E NINT H CIRCUIT

J L B E V E R

A G E C O MP A

N Y , L L C, P laintiff-Counter-DefendantAppellant
,

v

.

J I M B E AM B R

A ND S C O .; B E A

M S U N T O R Y I N C .,Defendants-Counter-PlaintiffsA ppellees. N o. 13-17382

D.C. No. 2:11-cv-00417- MMD-CW H

OPI NI ON

Appeal from the United States District Court for the District of Nevada Miranda M. Du, District J udg e , Presiding

Argued and Submitted J anuary 8, 2016 San F rancisco, California

F iled J uly 14, 2016

B efore: J . Clifford W allace, J ohn T. Noonan, and Marsha S. B erz on, Circuit J udg es.
Opinion by

J udg e W allaceJ L B E V E R A G E V

. J I M B E AM B R

A ND S 2

SUMMARY *

Tradem ark

The panel reversed the district court’s summary judg ment in favor of J im B eam B ra n d s C o

. on c laims of trademark infring ement, f

a l s e desig n ation of orig in, and unfair competition broug ht under the L a nham Act and Nevada state law b y J L Be verag e Co., which sells a competing line o f flavored vodkas.

The p anel held that the district court erred in f ail i ng to place the burden of proof on J im B eam B rands, the moving party ; f ailing to view the evidence in the lig ht most favorable
to J L B e verag e; and n ever a naly z in g w h e t her a g enuine dispute of material fact ex isted.

The panel held that g enuine is s u e s of material fact remained as to the likelihood of consumer confusion b etween plaintiff’s reg istered “J ohnny L ove Vodka” and “J L L i p s ” marks and d efendant’s “Pucker Vodka” log o. A reasonable fact-finder could conclude that plaintiffs’ m a r ks h ad conceptual streng th and either did or did not have commercial streng th, that the parties’ pro d u cts were related flavoredliquor products sol d t o t he same customers and distributors, that the products were similar, that consumers purchasing the
p r o d u c ts were not likely to ex ercise a hig h d eg ree of c are i n disting uishing between the two, a nd that J im B eam w as a

ware of J L B everag e’s t rademarks prior to rolling out its Pucker

* T h is su m m ary co n stitu

tes n o part o f th e o p in io n o f th e co u rt. It h as b eenp rep ared b y

co urt staf

f f o r th e co nv en i en ce o f

th e read er.J L B E V E R A G E V

. J I M B E AM B R

A ND S 3

V o d k a line. T he panel therefore reversed and remanded fo r further proceeding s consistent with its opinion.

COUNSEL

Colin Christopher Holley (arg u ed), J eremy T

. Katz
, a nd Georg e L

. H ampton, Hampton Ho l l ey , Corona Del Mar, California; Ryan R. Gile, W eide & Miller, L a s Veg as, Nevada; for Plaintiff-Counter-Defendant-Appellant.

M a rk J

. L iss (arg

ued), Claudia Stang le, and Ang ela B a y l i n , L eydig
, Voit & May er, Chicag o, I llinois; J onathan F o untain and Michael McC u e, L ewis Roca Rothg erber, L as Veg as, Nevada; for Defendant-Counter-Plaintiff-Appellee.

OP INION

W A L L ACE, Senior Circuit J udg e:

J L B everag e Company
, L L C (J L B everag e) appeals from the district court’s summary judg ment in favor of J im B eam B rands Company (J im B e am) on J L B everag e’s trademark infring ement, fal s e desig n ation of orig in, and unfair

c o m p etition claims. W e have jurisdiction p ursuant t o 28 U

. S

. C

. § 1291. B ecause g enuine issues of material fact remain, we reverse and r emand for further pr o c e e d ing s consistent with this opinion.

I

.

This dispute centers on two alcoholi c b e verag e manufacturers, J L B everag e an d J im B eam, which sellJ L B E V E R A G E V

. J I M B E AM B R

A ND S 4

competing lines of f lavored v odkas. J L B e verag e manufactures, sells, and p romotes a line of f l a v o red a nd unflavored vodka called “J ohnny L ove V odka.” R estaurant

owner a nd bartender J ohnn y Metheny created the J o hnny L ove line of vodkas around 2003–2004. To promote the new line, Metheny enlisted a friend to desig n a unique log o , a nd Metheny quickly adop t e d the proposed lips imag e. He believed the lips w ere “definitely sex y ” and could “ impart the flavor” of th e v o d k a if colored to denote the flavor in the bottle o f vodka. The lips were colored red for u n fl avored, purple f or passionfruit, y ellow for a loha, orang e for tang erine, and g reen f

or apple. In 2005, Metheny sold the J ohnny L o ve Vodka line to J LB everag e.

Since J uly 2005, J L B everag e has u sed the following two trademarks in connection with its s a l e of the J ohnny L o ve Vodka products:

The first mark, called “J ohnny L ove Vodka” or the “J L V

m ark,” w as r eg istered on August 16, 2005, with the U n i t e d States Patent a

nd Trademark Office (USPTO) as Reg istration No. 2, 986,519 in International Class 33-Vodka. J L B e verag e reg istered the second mark, called the “J L L ips Mark,” w i t hJ L B E V E R A G E V

. J I M B E AM B R

A ND S 5

USPTO on O ctober 2 5
, 2 011 under Reg istration No. 4,044,182 in International Class 3 3

- D istilled Spirits. B oth imag es appear o n th e J ohnny L ove line of vodkas a nd flavored vodkas:

The J L L ips Mark is imprinted on the top of the bottle and on the back label, and is incorporated into the J L V Mark as the “o” in “L ov e

. ” T h e mark c olor on the back label also corresponds to the flavor in the bottle:

The J o hnny L o ve Vodka bottles come in four different siz es.J L B E V E R A G E V

. J I M B E AM B R

A ND S 6

Af t er acquiring J ohnny L ove V odka and the two trademarks, J L B everag e ex pended sub s tantial resources developing
, a dvertising
, a nd marketing J ohnny L ove Vodkas throug hout the United States. J L B everag e at one p oint h a d distributors in twenty st ates, a n d it holds a F ederal B asic Alcohol Permit f

or nation a l use. J L B everag e’s n ationwide marketing c ampaig n included p rint-med i a advertisements, third- p arty publications, and the development o f its o wn website. Althoug h i n recent y e ars its sales have been substantially reduced, its overall marketing efforts resulted in millions of dollars in sale s o f J ohnny L ove products throug hout the country

.

In 2010, J im B eam entered the flavored vodka market with a new line of flavored v odkas called “Pucker Vodka.” J im B eam purchased the Pucker brand from Koninklijke De Kuy per, B .V. (KDK). KDK had mark e ted a line of liqueurs and cordials under the “Pucker” brand, and, i n i t s orig inal desig n, used lips imag es in connection with its l ab el i n g a nd log os. A fter J im B eam purchased KDK’s flavored vodka line, it decided to r edesig n and rebrand P ucker to “ ex pand on the equity of the Pucker brand and lips” into flavored v odka.” T o that e nd, J im B eam hired the d e s ig n firm of L ibby
, Persz y k, Kathman, Inc

. (L PK) to independently “develop a new a nd unique look and feel” for its Pucker vodka product that would communicate “ [ i ] ntense flavor and [ i] ntense fun” in connection with the brand.

The r edesig ned Pucker V odka b ottle contains a p rominent lips image o n the center of its label. L ike the J o hnny L o ve Vodka labels, the lips imag e varies in c o lor depending on the vodka flavor in the bottle:J L B E V E R A G E V

. J I M B E AM B R

A ND S 7

J im B eam instructed L P K to use both the Pucker name a nd lips as part of any desig n it developed for Pucker’s new label. After L PK provided J im B eam with s e v e r al possible desig n options, J im B eam’s project team made f inal selections o f the proposed Pucker Vodka products and sent their choices to the

co m p any ’ s leg al department for clearance. J im B eam instructed its leg al counsel to perform a clearance search for lips desig ns. The leg a l department found 40 references to lips for alcohol-related products. J L B everag e’s J L V Mark was in the search r eport. Althoug h J L B everag e’s L ips Mark is incorporated into the J L VMark, it did not separately appear in the search r eport because J L B everag e had not y et filed its
reg istration application for the standalone lips m ark. B ased on its research, J im B e am’s leg al department approved the Pucker brand’s bottle shape and label.

Emily J ohnson, a former J im B e am employ ee, worked for J i m B eam as a financial and b usiness analy st during t h e development of the Pu c ker Vodka p roduct. Prior to her employ ment at J i m B e am, J ohnson met J L B everag e’sJ L B E V E R A G E V

. J I M B E AM B R

A ND S 8

president, T.J

. Diab, and learned a b out J L B everag e ’s product s

. In March 2010, during her employ ment at J im B eam, she sent an email to Diab from her ho m e account, which stated “I was reading throug h some reporting on vodka flavors and saw Aloha on the list!”

J im B eam attempted to reg ister the Pucker lips d esign around March 2011, filing applications for trademarks in the bottle and cap, the sty liz e d Pucker w ording
, and the lips desig n. After the reg istration process beg an, an official in J im B eam’s leg al department d iscovered that the lip s mark that L PK h a d s elected to be featured in the center of the Pucker Vodka label was “stock art” from iStockphoto L P. B ecause J im B eam could not claim o w n ership in the lips imag e, it withdrew its USPTO application for the lips design.

Prior to withdrawal, J im B eam also received notice from the USPTO that it had r ejected J im B eam’s reg istration application. In the rejection letter, t h e USPTO cites J L B everag e’s L ips Mark a s a basis for refusing the reg istration.

Ji m B e a m o f f i cially relaunched its newly -desig ne d P u c k e r Vod k a p r oducts in March and April 2011. J im B eam advertises Pucker Vodka products nati o nally throug h television and cable commercials, dig ital advertising
, print advertisements in national mag az i n e s , a nd in-store and onpremise promotions at restaurants and bars.

Shortly after the Pucker Vodka launch, Shaun Robertson,

a J L B everag e broker for J ohnny L ove Vodka, b eg an receiving ph o n e calls a n d messag es concerning the similarities between the two vodkas. Robertson provided, in

a declaration to the court, a summary of in-per s on

c o n versations, tex t messag es, and phone calls he had w i t hJ L B E V E R A G E V

. J I M B E AM B R

A ND S 9

friends and acquaintan c es in which those individuals confused a different flavored vodka product for J ohnny L ove.

J L B everag e delivered a cease and desist letter to J i m B eam o n March 18, 2011. J im B eam responded that it did not believe its Pucker Vodka log o infring ed J L B everag e’s mark. J L B everag e filed a complaint in the United States District Court for the District of Nevada in J uly 2011, alleg ing trademark infring e ment, false desig n ation of orig in, a nd unfair competition. J L B ev e r a g e moved for preliminary injunction, which the distr i c t court d enied. J L B everag e a nd J im B ea m then filed cross-motions for summary judg ment. The district c ourt denied J L B everag e’s motio n and g ranted J im B eam’s m o tion. The district court subsequently denied J L B everag e’s motion for reconsideration.

I I

.

W e review the district court’s summar y judg ment de
novo, including its decision on c r oss-motions for summary judg ment. Szajer v. City of L.A.
, 632 F .3d 607, 610 (9th Cir. 2011); G uatay Christian Fellowship v. Cty. of Sa n Diego
, 670 F .3d 957, 970 (9th Cir. 2011). V i e wi ng the evidence in the lig h t most favorable to the nonmo v i n g party , we determine whether there are any ge n u i n e issues of material fact. Olsen v. Idaho State Bd. of Med.
, 363 F

. 3d 916, 922 (9th Cir. 2 004). W e review the district court’s conclusions of law de novo, and its factual finding s for clear error. Id .; Lahoti v

. VeriCheck, In c

. , 586 F .3d 1190, 1195–96 ( 9th Cir. 2009). “[ W ] here i t is unclear w hether the district court relied on proper law, we may vaca t e t h e judg ment and remand with instructions to apply the correct leg al standard.” Lahoti
, 5 86 F .3d at 1196 (citing United States v. Pintado-Isiordia
, 448 F .3d 1155, 1158 (9th Cir. 2009)).J L B E V E R A G E V

. J I M B E AM B R

A ND S 10

This appeal turns in larg e p art on whether the district
court correctly applied the standard f or deciding a motion for
summary judg ment. The success o f each of J L B everag e’s claims turns on the same issue: whether there was a g enuine dispute o f material f

act a s to the likelihood of consumer confusion. J L B everag e a s s e r ts the following claims: (1) federal trademark infring ement under the L anham Act, 15 U.S.C. § 1114; (2) false desig nation of o r i g in and unfair competition under the L anham Act, 1 5 U.S.C. § 1125(a); a nd (3) N evada common law trademark infring ement a nd unf ai r competition. T he likelihood o f consumer confusion is c entral
to e a c h claim. See 1 5 U .S.C. § 1114(1)(a) (providing that a p e r s o n is liable for trademark infring ement where he or she “use[ s] in commerce any reproduction, counterfeit, copy , o r colorable imitation of a reg istered mark in connection with the sale, offering for sale, d istribution, or advertising of a n y g oods or services on or in connection with which such u se is likely to cause confusion
, or to cause mistake, or to deceive”) (emphasis added); A.L.M.N. v. R osoff
, 104 Nev. 2 7 4, 277, 281 (1988) (holding that N evada’s common law trademark infring ement and unfair competition claims mirror th e ir federal counterparts, a

n d plaintiffs n eed o n ly prove that (1) they own a protectable rig ht in t h e m a r k s, and (2) the d e f e n d ant’s u se of the mark is likely to “confuse, c au s e mistake, or deceive an ‘appreciable number’ o f r e asonable customers” with respect to the marks).

In its summary judg ment ruling
, the district court used the standard applicable to preliminary injunctions instead of the standard for summary judg men t ruling s. The district court, having already ruled on J L B e verag e’s motion f or preliminary inj u n c t i on, c ontinued to apply the standard it used at that stag e when it ruled on the parties’ cross-motions for summary j udg ment. In its summary judg ment order, the district co u r tJ L B E V E R A G E V

. J I M B E AM B R

A ND S 11

concluded: “[ f] or reasons articulated in the Order denying the Preliminary In

junction, the Court determines that no issues o f material fact remain which could provide Plaintiff a basis for

su c cess on any o f its claims. Defendant’s Motion for Summary J udg ment is according ly

g ranted.”

The district court’s failure to apply the correct standard is sig nificant: on motion f o r p r eliminary injunction, the plaintiff–as the moving party

– b e a r s t he burden of establishing the merits of its claims. See W inter v. Nat. Res. D ef. Council, Inc.
, 5 55 U.S. 7, 20 (2008). In contrast, on a d ef e n d ant’s motion for summary judg ment, not only does t h e movant

c a rry the b urden of e stablishing that no g enuine dispute o f material fact ex ists, but the court also views t h e e vidence in the ligh t m o s t favorable to the non-moving party

. See, e.g. , Ol s e n , 363 F .3d at 922. The defendant-movant must demonstrate that, even viewing the evidence in the lig ht most favorable to the plaintiff, the plaintiff cannot sat i s f y its burden to prove its claims. See Celote x Co r p

. v

. Catrett
, 477 U.S. 317, 322–23 (1986).

B ut in its summary judg ment o r der, the district court ig nored the important distinctions between the two standards, and, when ruling on the defe ndant’s motion for summary judg ment, ultimately placed the burden on J L B e verag e, the plaintiff, to prove the merits of its claims. Moreover, it failed
to view the evidence in the lig h t most f avorable to J L B everag e, and never analy z e d whether a g enuine dispute o f material fact ex isted.

W h ile the district court must apply the correct standard in
any case, the n ecessity to do so is heig htened in cases turning

on the li k elihood of c onsumer confusion. B e cause the d etermination is based on a non-ex haustive, multi-fac t o r,J L B E V E R A G E V

. J I M B E AM B R

A ND S 12

fact-intensive inquiry
, we h av e cautioned ag ainst g rantin g summary judgm en t in these cases. Rearden LLC v. Rearden Commerce, Inc
., 683 F .3d 1190, 1 210 (9th Cir. 2012) (“Given the open-ended n ature of this multi-prong inquiry
, it is not surprising that summary jud gm ent on ‘likelihood o f confusion’ g rounds is g e n erally disfavored”); Au-Tomotive G old, Inc. v. Volkswagen of Am., I nc ., 4 57 F .3d 106 2
, 1 0 7 5 (9th Cir. 2006) (“B ecause the likelihood of confusion is often

a fact-intensive inquiry
, courts are g e nerally reluctant to decide this issue at the summary judg ment stag e”); Thane Int’l, Inc. v. Trek Bicycle Co rp ., 305 F .3d 894, 901–02 (9th Cir.2002) (“W e have cautioned t h a t district courts should
g rant summary judg ment motions reg arding the likelihood o f

c o n fusion sparing ly
, as c areful assessment o f the pertine n t factors that g o into determ i ning likelihood of confusion usually requires a full record”), superseded by statute on other grounds
, 15 U .S.C. § 1125. W here, as here, conflicting facts render it unclear whether there w a s a likelihood o f consumer confusion, summary judg ment is inappropriate.

I I I

.

To dete r mine whether a likelihood of consumer confusion

ex ists, our court r e l i e s o n the eig ht-factor Sleekcraft test, which reviews: (1) the streng th of the mark; (2) prox imity o r relatedness of the g o ods; (3) similarity of the marks; (4) evi d e nce o f actual confusion; (5) marketing channels used; ( 6) ty

p e of g oods and the deg ree of care likely to be

ex e r cised by the purchaser; (7) the defendant’s i n t e nt in selecting the mark; and (8) the likelihood of ex pansion of the product lines. AMF Inc. v. Sleekcraft Boats
, 5 99 F .2d 341, 348–49 ( 9th Cir. 1979), abrogated in part on other grounds b y Mattel, Inc. v. W

a lking Mountain Prods
., 353 F

. 3d 7 9 2
, 810 (9th Cir. 2003). The factors are non-ex haustive a ndJ L B E V E R A G E V

. J I M B E AM B R

A ND S 13

applied flex ibly ; the Sleekcraft factors are not intended to be

a “rote c h ecklist.” Rearden
, 683 F .3d at 1209. “A determination may rest on only those factors that are m o s t pe rt i nent to the particular case before the court, and other variables b esides the e numerated factors should also be taken into account based on the particular circumstances.” I d

.

Utiliz ing the ei gh t-factor test, plaintiffs may establish a likelihood of consumer c onfusio n a s a result of either (1) forward confusion, or (2) reverse confusion. Surfvivor Media, I n c. v

. Survivor Prods.
, 406 F .3d 625, 630 (9th Cir. 2005). J L B e verag e alleg es both forward and reverse trademark confusion. “F orward confusion occurs when

consumers b elieve that g oods bear i n g t h e junior mark came from, or were sponsored by
, t h e senior mark holder.” Id

. Reverse confusion, on the other hand, “occ u r s when

consumers dealing with the senior mark ho l d e r believe that they are doing business with the junior one.” Id

.

In its order denying a preliminary injunction, the district

c o u r t determined that factors two, five, and six of t h e Sleekcraft test favor J L B everag e and a finding of a likelihood of confusion. J im B eam does not dis p u t e that these f actors favor J L B everag e. Rather, J im B e am contends that there is

no g enuine dispute of ma t e r i a l f act concerning factors one, three, four, and seven, and, according ly
, no g e nuine dispute of material fact concerning a likelihood of confusion. So the issue before us is whether, viewing the evidence in t h e lig ht
most favorable to J LB everag e, there is a g enuine dispute o f material fact c oncerning w hether factors one, three, four, a nd

seven favor J L B everag e, and, a ccording ly
, a g enuine dispute of material fact as to the likelihood of consumer confusion.J L B E V E R A G E V

. J I M B E AM B R

A ND S 14

A.

J L B e verag e contends that there is a factual dispute as to the streng th of its standalone lips log o (L ips Mark ) and composite mark consisting of the lips log o and the words “J ohnny L ove Vodka” (J L V Mark). W e ex amine the streng th of J L B e verag e’s mark to d etermine the scope of trademark protection to which the mark is entitled. Surfvivor , 406 F .3d
at 631 (citing Entrepreneur Media, Inc. v. Smith
, 2 7 9 F. 3d 1135, 1 141 (9th Cir. 2002)). As the uniqueness of the mark increases, so too does the deg ree o f p rotection. Id

. A mark’s streng th is “evaluated in terms of its conceptual streng th a nd commercial streng th.” G o T o.com, Inc. v. W

alt Disney Co
., 202 F .3d 1199, 1207 (9th Cir. 2000).

A mark’s conceptual streng th “ d e p ends larg e ly on the obviousness of its connection to the g ood or service to which i t r e fers.” Fortune Dynamic, Inc. v. Victoria’s Secret Stores Brand Mgmt., Inc
., 618 F .3d 1025, 1032–33 (9th Cir. 2010). To determine a mark’s conceptual streng th, we c lassify a mark along a spectr

u m of five categ ories rang ing from strong est to w e a kest: arbitrary
, fanciful, sug g estive, descriptive, and g eneric. Network Aut o m a tion, Inc. v

. Advanced Sys. Concepts, Inc.
, 638 F .3d 1137, 1149 (9th Cir. 2011). Arbitrary and fanciful marks, which employ words a nd phrases wit h no commonly understood connection to the product, are the t w o strong est categ ories, and “trig g er the hig hest deg r ee of trademark protection.” Surfvivor
, 406 F .3d
at 6 31. In t he middle of the spectrum are sug g estive marks, which sug g est a product’s features and require consumers to

ex e r cise some imag ination t o associate the sug g estive mark with the product. Fortune Dynamic
, 618 F .3d at 1033, (citing Zobmondo E

ntm’t, LLC v

. F

a lls Media, LLC
, 602 F .3d 1108, 1114 (9th Cir. 2010)). Descripti v e and g eneric marks, at theJ L B E V E R A G E V

. J I M B E AM B R

A ND S 15

o t h e r e nd of the spectrum, a r e the two weakest categ o ries

. Descriptive marks define a particu l a r characteristic of the product in a way that does not require any imag ination, while
g eneric marks describe the product in its entirety and are not entitled to trademark protection. Surfvivor , 406 F .3d at 632.

After identifying whether a m ar k is g eneric, descriptive,
sug g estive, arbitrary
, or fanciful, the co u r t determines the mark’s co m m e rcial streng th. Miss W orld ( UK) Ltd. v. M

rs. Am. P ageants
, I

n c

. , 856 F .2d 1445, 1449 ( 9th Cir. 1988), abrogated in part on other grounds by Eclipse Assocs. Ltd. v

. Data Gen. Corp
., 894 F .2d 1114, 1116 n.1 ( 9th Cir. 1990). Commercial streng th “is based o n actual marketp l ace recognition.” Network A utomation
, 638 F .3d at 1149 (citation omitted). As a resu l t , advertising e x penditures, which increase marketplace recognition, o f f er e vidence o f commercial streng th and “ can tran sform a sug g estive mark into a strong mark.” Id . (citation omitted).

J L B everag e has alleg ed both forward and r e v e r s e confusion c laims. The J L V and L ips Marks’ con c eptual a nd commercial streng th play s a d ifferen t r ole in each ty pe o f claim. “In the usual [ forwar d ] i nfring ement case,” the court

“ d e termine[ s] whether the junior user is palming off i t s products as those o f t h e senior u ser.” Dreamwerks Prod. Grp., Inc. v. SKG Studio
, 142 F

. 3 d 1 1 2 7
, 1129–30 (9th Cir. 1998). Consequently
, for J L B everag e’s claim of forward confus i o n , we e valuate the conceptual and commercial streng th of the J L V a

nd L ips Marks to determine w h e t h er a customer interested in purchasing vodka would be confused into thinking that J L B everag e produces J im B eam’s Pucker V o d k a , or that J ohnny L ove V odka is the same product a s Pucker Vodka. In contrast, in claims of reverse confusion, the question is “whether c o nsumers d o ing business with theJ L B E V E R A G E V

. J I M B E AM B R

A ND S 16

s e n ior user mig ht mistakenly believe that they are d ealin g

w i t h t he junior user.” Id. at 1130. As a result, the cou r t evaluates the conceptual streng th of J L B everag e’s marks a nd
compares it to the commercial streng th of J im B eam’s mark. Id. at 1130 n.5.

1.

W e turn first to a n a l yz ing the J L V and J L L ips Marks’ conceptual streng th. J im B e am contends the J L V Mark is descriptive because it contains the word “vodka,” a nd therefore describes the product. J im B eam, however, ig nores the color-coordinated feature of the J L V Mark. Instead of just labeling t h e bottle “vodka,” the J L V Mark has colorcoordinated lips that match a particular flavor. Reaso n able jurors, viewin g t h e M ark in its entirety
, could conclude that the Mark i s sug g estive because they must use their imag inations to connect the color of the l i p s to the vodka flavor.

J im B eam also con t e n d s that the L ips Mark has weak conceptual streng th. J im B eam overlooks that the salient f e a ture of the L ips Mark–the lips–have no commo n l y understood connection with the a lcohol product it represents. As a result, a f

a c t -finder could reasonably conclude that the L ips Mark is arbitrary
, ga rn ering the hig hest deg ree o f trademark protection.

J im B e am counters that the L ips Mark is part of a “crowded field” of similar lips log o s, and thus there is less likelihood of consumer confusion. J im B eam argues t hat J L B everag e waived its rig ht to contest this issue on appeal because it f

ailed to raise it b efore the district court. However, b ecause the district court c onsidered this issue, it is n o tJ L B E V E R A G E V

. J I M B E AM B R

A ND S 17

w aived on appeal. Cmty. House, I nc. v. City of Bois e , 490 F

. 3d 1041, 1054 (9th Cir. 2007) (“[ E] ven if a party fails
to raise a n issue in t h e district c o urt, we g enerally will not deem the issue waived if the district c ourt actually considered it”). Returning to the issue, when “the marketplace is r eplete

w i t h products using a particular trademarked” sy mbol, it “indicates not only the difficulty in avoiding its use but a lso, and directly
, the likelihood that consumer s w i l l not be confused b y its use.” Entrepreneur Media, Inc. v. Smith
, 279 F .3d 1135, 1144 (9th Cir. 2002). J im B eam has provided several ex amples of lips marks u s e d on product labels for different ty

pes of alcohol. The lips log o s J im B eam presents, however, lack the crucial feature of the L ips Mark: unlike the L ips Mark, they are not color-coordinated by f l a v or for an entire line of flavored vodkas.

In a ddition, the vast majority o f t h e products on which lips are used are not liquor products, but rather beer, wine, o r non-alcoholic beverag es. In that reg ard, the pa r t i es dispute how broadly the relevant market should be characteriz ed for the purposes o f evaluating whether the field is crowded with lips u ses. In other w ords, there are g enuine dis p u t es o f material fact as to what constitute s the relevant “field,” whether the field is “crowded,” and the effect o f the foreg oing on the likelih o o d of confusion analy sis. See also Maker’s Mark Distillery, I nc. v. Diageo N. A m ., Inc
., 679 F .3d 410, 420–21 ( 6th C i r

. 2012) (agreeing with the district court that, in a trademark dispute between a bourbon maker and a tequila maker, the relevant market was not “ all distilled spirits,” but rather a narro w er field); Fleischmann Distilling Corp. v. Maier Brewing Co
., 314 F .2d 149, 159–60 (9th Cir. 1963) (calling
, in a pre- Sleekcraft case, scotch whiskey and beer “related” for purposes of the likelihood of confusion). Perhaps most importantly
, the impact of aJ L B E V E R A G E V

. J I M B E AM B R

A ND S 18

“crowded field” of lips log os is not dispositive in d etermining

a mark’s c onceptual streng th; rather, it is but o n e factor a court considers in evaluating the overall streng th of the mark. See Entrepreneur Media , 279 F .3d at 1143–44.

H er e, the district court f ailed to construe the evidence concerning the J L V a

nd L ip s Marks’ conceptual streng th in the lig ht most favorable to J L B everag e to determine whether

a g enuine dispute of material fact ex ists. Had the district court applied the correct standard, it may well have c oncluded that the Marks’ conceptual stren gt h p laced the Marks in a categ ory that warranted a hig her degree of protection.

2.

W e now turn to the second step of o ur inquiry : the Marks’ commercial streng th. J im B eam argues that J L B everag e has

a “relatively weak” market presence, w h ile it maintains a “relatively

strong ” market presence.

J L B everag e concedes that J im B eam has a strong market
presence. J L B everag e correctly points out, however, that this finding supports its reverse c o n f u sion c laim: evidence that J im B eam’s j u n i o r mark, the Pucker V odka lips, is wellknown sug g ests a gr e ater likelihood that consumers will confuse J L B everag e’s senior mark for the P u cker Vodka line. S e e W alter v. M attel, Inc.
, 210 F .3d 1108, 1111 n. 2 (9th Cir. 2000) (“In a reverse c onf u s i on case

. . . the inquiry focuses o n the streng th of the junior mark because the is s ue is whether the junior mark i s s o s t rong as to overtake the senior mark”). The national recognition of the J i m Be am mark increases the likelihood that consumers will b elieve th e y are doing business with J im B eam, not J L B everag e , when they purchase J ohnny L ove Vodka. See Cohn v

.J L B E V E R A G E V

. J I M B E AM B R

A ND S 19

Petsmart, Inc
., 281 F

. 3d 837, 842 (9th Cir. 2002) (ex plaining that, in reverse confusion c ases, the junior mark holder ’s commercial streng th “creates a potential that consumers will

a s s ume that” the senior holder’s mark refers to the ju n i o r holder’s mark, “and thus perceive that the businesses a re somehow associated”).

To support its forward confusion c laim, J L B e verag e argues in the alternative th a t it too has a strong market
presence. J L B everag e submitt ed evidence that it sold its products nationally
, and that it spent c onsiderab l e resources

on m a r k eting throug h print media, third-party publications, and internet advertising

. Viewing the evidenc e in the lig ht most favorable to J L B everag e, there is a g enuine dispute of material fact as to the commercial streng th o f J L B everag e’s J ohnny L ove Vodka in the marketplace. Moreover, the determination as to whether
t h e e v idence demonstrates that J L B everag e has robust commercial streng th wi l l lend support to J L B e verag e whatever the fact-finder decides, a s J L B everag e has raised both forward and reverse confusion claims.

B

.

W e now address f

actor t h r ee of the Sleekcraft test, the similarity of the marks. J L B everag e contends tha t t h e similarity o f s h ap e a nd color in the competing lips desig ns renders the marks similar.

Similarity of the marks “has alway s been considered a cri t ical question in the likelihood-of-confusion analy sis.” GoTo.com
, 2 02 F .3d at 1205. T hree principles g uide a court in d etermining whether marks are similar. Fortune Dynamic
,J L B E V E R A G E V

. J I M B E AM B R

A ND S 20

618 F .3d at 1032. F irst, “similarity is best adjudg ed b y appearance, sound, and meaning .” Id. (citation and alteration omitted). “Second, the marks must be considered i n their entirety and a s t hey appear in the marketplace.” Id. (citation omitted). “Third, similarities are weig hed more heavily than differences.” Id . (quoting G oTo.com , 202 F .3d at 1206).

In viewing th e c o m peting J L B everag e and J im B eam marks in their entirety
, there a re numerous similarities in their
appearance: both have puckered, human lips a s the f ocal point of their desig n; the lips have a similar ang le an d shape; a nd the lips are color-coordinated with the flavor of the vodka. In addition to the p h o t o s of the marks, which sug g est a similar
appearance, J L B everag e offered evidence from officials w ho concluded that the marks are similar. F irst, J L B everag e relies
up on the Chief Administrator of the North Carolina Alcoholic B everag e Control Commission’s (NCAB C C) statement that the J im B eam mark “ looks a lot like” J L B everag e’s desig n. Second, it provided e vidence that a USPTO Ex aminer stated, in his initial review of J im B eam’s application to reg ister its lips, that the J im B eam and J L B e verag e “ marks are hig hly similar lip desig n s oriented at a similar ang le. Consequently
, the marks create an overall similar commercial impression.” The entirety o f the marks’ appearances, coupled with documented statements stating that the marks appear similar, establishes a g enuine dispute of material fact concerning their similarity

.

In response, J im B eam first a rgues that the marks a

re “dramati c a l ly d ifferent” because the bottle shapes are distinct, the product labeling is not similar, and b oth products prominently feature their h o u s e marks. W h ile a f a ct-finder

m a y u ltimately conclude that these factors render the marks dissimilar, J im B eam’s competing f actual analy sis doesJ L B E V E R A G E V

. J I M B E AM B R

A ND S 21

nothing to alleviate the ex istence of a d ispute of material fact concerning the marks’ similarity

.

J im B eam nex t contends that the USPTO Ex aminer’s
sta t e m e nt is unpersuasive as it was only a preliminary
assessment for determining w hether its lips desig n would be
tra d emarked. Reg a

r dless o f whether the statement was the result o f a prel i m i n ary assessment, it sug g ests that others found the marks similar.

C.

The fourth factor of the Sleekcraft test looks to evidence of actual c onsumer confusion. Surfvivor
, 406 F .3d at 633. J L B everag e contends that there is evidence of actual consumer confusion throug h Shaun Robertson, a manag er of o ne of J L B e v e r a g e ’ s product brokers, who submitted a declaration w i t h

an attached email in which he lists inst a n c e s of confusion about which individuals informed h im. T h e d istrict court, althoug h it did not ultimately rule on the admissibility of the
statements in Robertson’s declaration, concluded in its preliminary injunction order that factor four favored neither party because the evidence was h e a rsay , and unreliable, a nd because many of the cited instances actually showed a lack o f consumer confusion.

Robertson’s declaration present s a smattering o f
statements t h a t J L B everag e alleg es serve as evidence o f actual consumer confusion. F or instance, Robertson r eported that a woman n a m ed Missy Giblin c ontacted Robertson
sta t i n g that she saw J L B everag e’s new commercial for J ohnny L ove Vodka, when in fact J L B eve r a ge was not

ru nning commercials at that time; a man named Sam Mills told Robertson that he mistakenly purchased Pucker Vodka,J L B E V E R A G E V

. J I M B E AM B R

A ND S 22

having t h o u g ht it was J ohnny L o ve Vodka; and Micheal C. Herring
, the Chief Administrator of the NCAB CC, sent Robertson an email tha t stated “see attached. This is J im B eam’s new line of vodka. L ooks a lot like J ohnny L o ve.”

J im B eam argues, and the dis t r i c t court correctly concluded, that the statements contai n e d in Robertson’s declaration a

nd e m a i l a

r e h earsay

. See Japan Telecom., Inc.

v. J a p an Tele c o m, A m

. Inc
., 287 F .3d 866, 874 n.1 (9th Cir. 2002) (concluding that statements made by the declarant that the declarant knows of others who were confused by similar trademarks are inadmissible hearsay ). Almost a ll of the instances that Robert s o n recounts are statements that he
g athered from o thers via e m a il, telephone calls, or tex t messag es. At times, Robertson even fails to specify where o r how some of the alleg ed conversations took place.

W e note, however, that at summary judg ment a district
court may consider hear s a y evidence submitted in an inadmissible form, so long a s the underly ing evidence could be provided in an admissible form at trial, such as by live testimony

. See Fraser v. Goodale
, 342 F .3d 1032, 1036–37 (9th Cir. 2003). B ut here, J L B e verag e has not argued that the hearsay declarants would be available to testify at trial, or that its hearsay evidence would be admissible at t r i a l in some other form. W e a ddress, therefore, only the district court’s conclusion that the stateme n t s discussed in Robertson’s declaration are hearsay

, not subject to an ex ception.

In ad dition to being hearsay
, some of the r eported
statements w ere provided to Robertson b y friends a nd acquaintances. F or ex a m p le, Diab testified that while he personally did not know M issy Giblin, he believed that she

was a friend of Robertson and his co-worker. In addition, tex tJ L B E V E R A G E V

. J I M B E AM B R

A ND S 23

messag es Robertson received on his personal c ell phone, which sug g ested consumer confusion, showed that Robertson and the sender had a h ig h level of familiarity
, as the messag e s contained phrases such as “hey b abes,” “dude,” and “call me back hun.” Evidence from such “partial source[ s] p ossesses very limited probative value.” Filipino Y ellow Pages v. Asian Journal Publ’ns, Inc. , 198 F .3d 1143, 1152 (9th Cir. 1999).

J L B everag e acknowledg es that the statements submitted in Roberts o n ’s declaration are hearsay
, but alleg es that at least some of the statement s are admissible under the “state of mind” ex ception t o t h e hearsay r u le. F ederal Rule o f Evidence 803(3) allows admission o f “ [ a] statement of the d e c l ar ant’s then-ex isting state of mind

. . . or emotiona l
, sensory , or phy sical condition.”

To support its argument, J L B ever a ge r e lies heavily on Lahoti v. Vericheck, Inc

. , 636 F .3d 501, 509 (9th Ci r

. 2 0 1 1 ) ( Lahoti II ), which admitted h earsay sta t ements reg arding

consumer confusion under the state of mind e x c e ption. In Lahoti I I
, the court a dmitted testimony from Vericheck
company representatives w ho received tele p h one calls from confuse d c u s tomers who c ould not find information about Vericheck on the website www.Vericheck.com, w h i c h the d e f e ndant had created. Id

. T h e statements in Robertson’s declaration differ from the testimony in Laho t i II in two importa nt way s. F irst, many of the alleg ed conversations Robertson had were not w ith customers calling b ecause they

were currentl y c onfused and seeking information about J L B everag e; rather, the individuals w ere reporting
, a fter the fact, that they had mistaken two products. Second, unlike the spontaneous c alls o f confusion that company representatives received in Lahoti II

, Robertson received some of the reports of confusion from possib le b iased sources: his friends a ndJ L B E V E R A G E V

. J I M B E AM B R

A ND S 24

acquaintances. Ac c o r d i n g l y , JL B e v erag e’s r eliance on Lahoti II is of little help.

F inally
, so m e of the statements included in the declaration, including Herring ’s, state only that the J oh nny L ove Vodka and Pucker V odka products “look alike.” Statements that the products look alike do n o t nece ssarily demonstrate consumer confusion: consumers who identify products as “looking alike” r ecogniz e the produ c ts’ similarities, but the q

uestion i s whether they have mistaken one product for another.

W hether J L B everag e may be able to supplement its evidence o f actual consumer confusion throug h f urther discovery is not known

. H o w ever, as it now stands, this evidence of actual consumer confusion does not weig h in J L B everag e’s favor. Nevertheless, as we have previously held,

“ [ b ] e cause of the difficulty in g arnering ” evidence of actual confusion, “the failure to prove instances of actual confusion is not dispositive.” Sleekcraft , 599 F .2d at 353.

D.

W e turn last to factor seven of th e Sleekcraft test, which

assesses the defendant’s intent in selecting t h e m ark. J L B everag e contends that J im B eam knew of the reg istered J L V and L ips Marks, y e t p ro c e e d ed to use a colored lips log o on its Pucker Vodka bottles.

F actor seven favors the plai n tiff “where the alleg ed infring er adopted his mark with k nowled g e , actual o r constructive, that it was a nother’s trademark.” Brookfield Co m nc’ns, Inc. v. W

. Coast Entm’t Corp
., 174 F .3d 1036, 1059 (9th Cir. 1999). W hen “an alleg ed infring er knowing lyJ L B E V E R A G E V

. J I M B E AM B R

A ND S 25

adopts a mark similar to another’s, courts will presume an intent to deceive the public.” Official A irline Guides, I nc. v

. Goss , 6 F .3d 1385, 1394 (9th Cir. 1993).

J L Be v erag e has set forth evidence to create a g enuine d i spute of material fact as to whether J im B eam knew o f J L B everag e’s reg istered trademarks, y et proceeded to use its colored-lips log o any

w a y

. J L B everag e provided the following : (1) as a result o f a t r a demark search that J im B eam’s leg al team performe d
, J im B eam was aware of J L B everag e’s J L V trademark; (2) J im Be am e mploy ee Emily J ohnson, who worked with a Pucker flavored-vodka tea m , was a ware of J ohnny L ove Vodka prior to joining J im B eam; and (3) J im B eam c ontinued its nationwide rollout o f Pucker Vodka even after the USPTO denied its trademark application; a s a basis f

or that denial, the USPTO identified the similarity of J im B eam’s proposed marks to J L B everag e’s.

J im B eam contends that we should n onetheless conclude that factor seven weig hs in its favor be c a u s e there is no evidence that J im B eam intended to infrin ge J L B everag e’s trademarks. Unfortunately for J im B ea m , “[ a] b sence o f malice is no defense t o trademark infring ement.” Dreamwerks
, 142 F .3d at 1132 n.12. The relevant inquiry is
not J i m Be am’s intent, but rather whether it adopted the colored lips log o with the know l e d g e that the mark already belong ed to J L B everag e. V iewi n g t he evidence in the lig ht
most favorable to J L B everag e, there is a dispute o f material fact concerning what J im B eam knew when it l a u n ched the Pucker Vodka line.J L B E V E R A G E V

. J I M B E AM B R

A ND S 26

I V.

In ruling on the parties’ cross-motions for summary judg ment, the district c ourt does not a ppear to have viewed the evidence in the lig h t m o s t favorable to J L B everag e a nd
to determine whether a g enuine d i s pute of material fact

ex isted. B alancing the S leekcraft factors as a whole, we conclude there is a g enuine dispute of material fact as to the likelihood of c onsumer confusion. A reasonable f a ct-finder could conclude that: the J L V M a rk has conceptual streng th because the Mark’s salient feature, the color-coordinated lips, requires consumers to use their imag ination to c o n n e ct the color to the vodka flavor; the L ips Mark has conceptual streng th b e c ause the lips have no commonly understood connection to the vodka product; J ohnny L ove V odka does o r does not have commercial st r eng th ( because a finding o f either would support one of J L B ever a ge ’ s theories o f confusion–reverse or forward); J ohnny L ove an d P u cker Vodka are related flavored-liquor products sold to the same
customers and distributors; the p r oduc ts are similar g iven their use of color-coordinated, puckered human lips as the focal p oint of their bottle desig ns; consumers purchasing the vodka products are not likely to ex ercise a hig h deg ree of care in d isting u ishing between the two; and J im B eam was a ware of J L B everag e’s trademark s prior to rolling out its Pucker Vodka line. According ly , we reverse and remand for f urther proceeding s consistent with this opin ion.

REVERSED and REMANDED

.