Opinion ID: 3040316
Heading Depth: 3
Heading Rank: 1

Heading: The District Court Properly Granted Horphag’s

Text: Motion for Summary Judgment on Its Trademark Dilution Claim [1] The Federal Trademark Dilution Act (“FTDA”) provides in relevant part: The owner of a famous mark shall be entitled, sub- ject to the principles of equity and upon such terms as the court deems reasonable, to an injunction against another person’s commercial use in com- merce of a mark or trade name, if such use begins after the mark has become famous and causes dilu- tion of the distinctive quality of the mark, and to obtain such other relief as is provided in this subsection. 138 HORPHAG RESEARCH v. GARCIA 15 U.S.C. § 1125(c)(1). Dilution, as defined under 15 U.S.C. § 1127, is “the lessening of the capacity of a famous mark to identify and distinguish goods or services” of the owner of the famous mark such that the strong identification value of the owner’s trademark whittles away or is gradually attenuated as a result of its use by another. See 4 J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition § 24:71 (4th ed. 2006) [hereinafter “McCarthy”] (discussing the underlying rationale of the dilution cause of action, which is to protect “the senior user’s property right and good will in his mark” from the “gradual diminution or whittling away of the value of [his] trademark, resulting from use by another”). [2] The test for trademark dilution, as modified by Moseley, requires the trademark owner to show (a) that its mark is famous; (b) that the junior user has made commercial use of the famous mark; (c) that the junior user began using the mark after it had became famous; and (d) that such use caused actual dilution. See Avery Dennison Corp. v. Sumpton, 189 F.3d 868, 873-74 (9th Cir. 1999) (citing Panavision Int’l, L.P. v. Toeppen, 141 F.3d 1316, 1324 (9th Cir. 1998)); Moseley, 537 U.S. at 433. Garcia, the junior user, does not challenge the district court’s finding as to the first three requirements. Therefore, we consider his challenges regarding actual dilution, and we also consider his various defenses.
trademark Garcia argues that the district court erred when it found that Horphag proved actual dilution. We disagree. [3] The Supreme Court, in Moseley, altered the last element of our Avery Dennison test to require a showing of “actual dilution.” 537 U.S. at 433. As to the evidence required to prove actual dilution, the Court distinguished between identical marks and non-identical marks. In cases where the conflicting marks are identical, the Court observed that “[i]t may HORPHAG RESEARCH v. GARCIA 139 well be . . . that direct evidence of dilution such as consumer surveys will not be necessary if actual dilution can reliably be proved through circumstantial evidence—the obvious case is one where the junior and senior marks are identical.” Id. On the other hand, in cases where the conflicting marks are nonidentical, “the mere fact that consumers mentally associate the junior user’s mark with a famous mark is not sufficient to establish actionable dilution.” Id. at 433. [4] To apply this standard from Moseley, we first examine whether the junior and senior marks are identical. Assessing whether marks are identical is a fact-based determination. As the Second Circuit has explained, determination of whether the marks are identical tends to be “context-and/or mediaspecific and factually intensive in nature.” Savin Corp. v. The Savin Group, 391 F.3d 439, 453 (2d Cir. 2004). We review the district court’s factual findings for clear error. See Husain v. Olympic Airways, 316 F.3d 829, 835 (9th Cir. 2002), aff’d, 540 U.S. 644 (2004). Here, the district court examined the marks and their use, and concluded that the marks were identical. The district court noted that Garcia’s use of the word Pycnogenol was “identical to Horphag’s registered trademark Pycnogenol.” The district court did not clearly err in determining that the marks were identical. [5] Under Moseley, Horphag need only provide circumstantial evidence that Garcia’s use of Pycnogenol diluted its famous trademark. See 537 U.S. at 433. Moseley explains, however, that use of an identical mark is itself circumstantial evidence. Id.; see also Savin, 391 F.3d at 452 (noting that “where a plaintiff who owns a famous senior mark can show the commercial use of an identical junior mark, such a showing constitutes circumstantial evidence of the actual-dilution element of an FTDA claim”). [6] Even if the conflicting marks were not identical, Garcia (the junior user) would still not prevail because Horphag presented additional evidence of dilution. Specifically, Horphag 140 HORPHAG RESEARCH v. GARCIA presented circumstantial evidence that Garcia’s use of the Pycnogenol mark constituted blurring. “Blurring occurs when a defendant uses a plaintiff’s trademark to identify the defendant’s goods or services, creating the possibility that the mark will lose its ability to serve as a unique identifier of the plaintiff’s product.” Panavision Int’l, 141 F.3d at 1326 n.7. The theory of dilution by blurring thus protects the benefits that flow from a sharp and distinct connection between one mark and one product. See McCarthy § 24:70. [7] Garcia has blurred the sharp connection between Horphag’s product and the mark Pycnogenol. Horphag’s employee Victor Ferrari testified that numerous consumers who contacted Horphag learned, after purchasing Garcia’s product, that the product they purchased was not Horphag’s Pycnogenol. He also received calls asking whether Garcia “was selling a real Pycnogenol product.” This testimony represents evidence that Garcia’s actions have lessened the ability of the mark Pycnogenol to uniquely identify Horphag’s product. Not only does the infringing use create a “mental association” in the consumer’s mind between Horphag’s product and the product Garcia sells, but indeed, the evidence shows that some consumers believed they were purchasing Pycnogenol—with its good will and reputation—when they purchase Garcia’s product. See Moseley, 537 U.S. at 435 (Kennedy, J., concurring) (“If a mark will erode or lessen the power of the famous mark to give customers the assurance of quality and the full satisfaction they have in knowing they have purchased goods bearing the famous mark, the elements of dilution may be established.”). [8] Contrary to Garcia’s arguments, consumer surveys and the like are not necessary in cases like this, where the junior and senior mark were identical and where there is circumstantial evidence that blurring actually resulted. See id. at 434. Garcia’s use of the mark Pycnogenol has clearly weakened the unique connection between Horphag’s mark and Horphag’s product. HORPHAG RESEARCH v. GARCIA 141 [9] Nor can Garcia avoid summary judgment simply by calling Horphag’s evidence a “bald assertion.” See Gasaway v. Nw. Mut. Life Ins. Co., 26 F.3d 957, 960 (9th Cir. 1994) (holding that where the moving party has provided competent evidence, the non-moving party cannot avoid summary judgment simply by arguing that the evidence is “self-serving speculation that should be disregarded”). Accordingly, we conclude that Horphag has provided circumstantial and uncontroverted evidence that actual blurring has occurred, such that the district court properly granted summary judgment on Horphag’s trademark dilution claims.7
[10] Garcia argues that his use of Horphag’s trademark is protected by the fair use doctrine. We disagree. Eligibility for a fair use defense based on “comparative commercial advertising” is conditioned on the challenged use being fair. See McCarthy § 24.97.10. To qualify for a fair use defense, the use must not “create an improper association between a mark and a new product” but must, instead, “merely identify the trademark holder’s products.” See Playboy Enters., Inc. v. Welles, 279 F.3d 796, 806 (9th Cir. 2002). [11] Garcia did more than merely identify Horphag’s product as part of an attempt to educate the public on the Pycnogenol debate. Rather, as we found in the previous appeal, Garcia intentionally “spawn[ed] confusion as to sponsorship and attempt[ed] to appropriate the cachet of the trademark Pycnogenol to his product.” Horphag, 337 F.3d at 1041. Garcia’s attempt to capitalize on the popularity of Horphag’s product was not “fair.” We thus agree with the district court that Garcia has not adequately shown a genuine issue of material fact as to his fair use defense. 7 Because we find that dilution by blurring occurred, we do not reach Horphag’s alternative theory of dilution by tarnishment. 142 HORPHAG RESEARCH v. GARCIA
Garcia also argues that this court should, for reasons of comity, follow the decision of the French court in Bordeaux (“the Bordeaux Decision”), which he alleges found that Horphag was not the rightful owner of its trademark in the United States. We agree with the district court that the Bordeaux Decision is inadmissible. The Bordeaux Decision explicitly states that “although the . . . agreement confers on C.E.P. [(one of Masquelier’s companies)] an interest to take action to protect the two . . . French trademarks [(one of which is Pycnogenol)], it cannot give [C.E.P.] the right under French law to prevent the Horphag company from using, outside France, the verbal trademark ‘Pycnogenol’ filed in another country.”
Garcia also challenges Horphag’s dilution cause of action by claiming that he should not be liable for trademark dilution when the Pycnogenol trademark had already been diluted prior to his use. In Garcia’s opposition to summary judgment, he argued that the “famousness of [Horphag’s] ‘Pycnogenol’ is derived from . . . [and] rel[ies] upon the famousness of the Masquelier ‘Pycnogenol.’ ” He appears to raise the same issue on appeal by arguing that Horphag is capitalizing on Masquelier’s good will and popularity, rather than the other way around. We disagree. Garcia has not presented any evidence showing that the Masquelier’s product enjoys any fame in the United States that is independent of Horphag’s Pycnogenol mark. It is Horphag’s product that is a “buzz item” in the United States, not Masquelier’s. It is Horphag that has invested in research and marketing to increase the “famousness” of its product in this country, not Masquelier. Horphag’s Pycnogenol trademark is famous not because of a HORPHAG RESEARCH v. GARCIA 143 French product, but because of Horphag’s own investment in advertising, research, and quality control. B. The District Court Did Not Abuse Its Discretion in Reinstating the Award of Attorneys’ Fees to Horphag On remand, this court directed the district court to reconsider the portion of the attorneys’ fees analysis related to the dilution claim. See Horphag Research, 337 F.3d at 1042. On February 5, 2004, the district court ordered the reinstatement of the award of attorneys’ fees to Horphag. [12] Garcia waived any argument relating to the award of attorneys’ fees by failing to raise it in his opening brief. See Arpin v. Santa Clara Valley Transp. Agency, 261 F.3d 912, 919 (9th Cir. 2001). But even if we were to overlook this technical failure, the district court’s award of attorneys’ fees was not an abuse of discretion. See Cairns v. Franklin Mint Co., 292 F.3d 1139, 1156 (9th Cir. 2002) (reviewing award of attorneys fees for abuse of discretion). Under 15 U.S.C. § 1117(a), a court may award reasonable attorneys’ fees to the prevailing party in exceptional circumstances, which includes cases in which the act is fraudulent, deliberate, or willful. See Gracie v. Gracie, 217 F.3d 1060, 1068 (9th Cir. 2000). Garcia made deliberate and calculated attempts to confuse Masquelier’s product with Horphag’s Pycnogenol by altering quotations from research publications that refer exclusively to Horphag’s product. Accordingly, the district court did not abuse its discretion when it reinstated the award of attorneys’ fees to Horphag.