Opinion ID: 58381
Heading Depth: 1
Heading Rank: 2

Heading: PRMI's Cross-Appeal

Text: In its cross-appeal, PRMI argues first that the district court improperly exercised extraterritorial jurisdiction because the allegedly infringing conduct took place in Saudi Arabia. This Court reviews a district court's assumption of subject matter jurisdiction de novo. [3] This Court's decision in American Rice, Inc. v. Arkansas Rice Growers Cooperative Ass'n [4] controls this issue. In that case, ARI, the plaintiff in this case, sued Arkansas Rice Growers Cooperative Association (Riceland) for trademark infringement of its Girl Design which took place in Saudi Arabia. [5] In determining whether the district court's exercise of extraterritorial jurisdiction was proper, we explained that the appropriate factors to consider were the sufficiency of the contacts in this country and the interests of the United States, including the citizenship of the defendant, the effect on United States commerce, and the existence of a conflict with foreign law. [6] We made it clear that the absence of any of these factors is not dispositive, nor are these factors the exclusive factors to be considered. [7] In American Rice, we focused on the fact that Riceland was an Arkansas corporation engaged in both interstate and foreign commerce and that the defendant's processing, packaging, transportation, and distribution activities took place in the United States, notwithstanding the fact that the consummation of the unlawful activity occurred on foreign soil. [8] Where steps were taken in the United States which were essential steps in the course of business consummated abroad, we concluded that the illegality of the business in Saudi Arabia tainted the acts that took place on American soil. [9] Applying the first two American Rice factors, PRMI is an American corporation based in Stuttgart, Arkansas, and PRMI's sales in Saudi Arabia have an effect on interstate commerce based on the processing, packaging, transportation, and distribution activities which take place in the United States before the rice reaches Saudi Arabia. These facts are nearly identical to the ones found sufficient for exercise of extraterritorial jurisdiction over rice sales in Saudi Arabia in American Rice. [10] In addition to the contacts PRMI has with the United States mentioned above, PRMI also makes payments to its member farmers in the United States both before and after shipment of the rice to Saudi Arabia. In American Rice, we left open the possibility, however, that where it would be an affront to Saudi sovereignty to exercise jurisdiction, such jurisdiction should not be exercised. [11] However, [a]bsent a determination by a Saudi court that [defendant] has a legal right to use its marks, and that those marks do not infringe ARI's Abu Bint mark, we are unable to conclude that it would be an affront to Saudi sovereignty or law if we affirm the district court. . . . [12] In this case, the record does not reflect a finding by a Saudi court that PRMI had a legal right of use of the Girl with a Hat Design, nor do we have a finding by a Saudi court that the Girl with a Hat Design does not infringe ARI's Girl Design. [13] Therefore, we conclude that the district court properly exercised jurisdiction in this case.
PRMI asserts next that ARI did not have a protectable right in the Girl Design mark asserted and that the likelihood of confusion finding by the district court was clearly erroneous. Our task is to determine from the record whether the district court's findings were clearly erroneous. Likelihood of confusion is a question of fact reviewed for clear error. [14] To recover on a claim of trademark infringement, a plaintiff must first show that the mark is legally protectable and must then establish infringement by showing a likelihood of confusion. [15] To be protectable, a mark must be distinctive, either inherently or by achieving secondary meaning in the mind of the public. [16] The Lanham Act provides a cause of action for infringement where one uses (1) any reproduction, counterfeit, copy[,] or colorable imitation of a mark; (2) without the registrant's consent; (3) in commerce; (4) in connection with the sale, offering for sale, distribution[,] or advertising of any goods; (5) where such use is likely to cause confusion, or to cause mistake or to deceive. [17] The factors used by this Circuit in determining whether a likelihood of confusion exists are: (1) strength of the plaintiff's mark; (2) similarity of design between the marks; (3) similarity of the products; (4) identity of retail outlets and purchasers; (5) similarity of advertising media used; (6) the defendant's intent; (7) actual confusion; and (8) degree of care exercised by potential purchasers. [18] The absence or presence of any one factor ordinarily is not dispositive; indeed, a finding of likelihood of confusion need not be supported even by a majority of the . . . factors. [19] PRMI first argues that ARI cannot recover under the Lanham Act because ARI does not use the specific mark ARI asserts has been infringed with trademark registration number 882,997 in Saudi Arabia. PRMI contends that ARI only uses its mark with the registration number 1,233,824 in Saudi Arabia. This Court has previously refused to grant a remedy to a plaintiff where that plaintiff was not using the allegedly infringed mark in the same trading area as a defendant. [20] However, because we find that ARI did use the mark with the registration number 882,997 containing the contested Girl Design in Saudi Arabia, these cases are inapplicable. The only difference between the 882,997 mark, which ARI asserts has been infringed, and the 1,233,824 mark, which PRMI argues is the only one in use by ARI in Saudi Arabia, is the inclusion of the words Golden Parboiled within the black space at the bottom of the Girl Design in the latter mark. Otherwise, both marks are identical images of the Girl Design icon. ARI explains that the mark that includes the text Golden Parboiled is materially the same as the one it asserts has been infringed and that the addition or omission of Golden Parboiled is immaterial. According to the Trademark Office's Trademark Manual of Examination Procedures, a mark with differences from the original may still be considered by the Office as a use specimen for proof of use of the mark. [21] ARI points out, based on this Trademark Office policy, that it has used the 882,997 mark in Saudi Arabia as evidenced by its submission of use specimens which look like the 1,233,824 mark (meaning that they differ from the 882,997 registration only in that it also includes the words Golden Parboiled), which have been accepted by the Trademark Office for over thirty-five years as use specimens for the 882,997 registration and renewals thereof. As such, we therefore find that ARI has used the 882,997 mark with the Girl Design in Saudi Arabia, and thus ARI may recover under the Lanham Act so long as there is a likelihood of confusion according to the factors set forth in our case law. [22] Based on those factors, which are detailed below, we find that the district court did not clearly err in finding that PRMI's Girl with a Hat Design presents a likelihood of confusion with ARI's Girl Design. (1) Strength of the Mark The district court found that ARI's Girl Design was strong, fanciful, and famous in Saudi Arabia. Strength of a trademark is determined by two factors. The first factor considers where the mark falls on a spectrum: Marks may be classified as generic, descriptive, suggestive, or arbitrary and fanciful. . . . [W]ithin this spectrum the strength of a mark, and of its protection, increases as one moves away from generic and descriptive marks toward arbitrary marks. [23] The second factor is the standing of the mark in the marketplace. [24] The district court did not clearly err in finding ARI's mark to be fanciful, and thus strong, because the image of a girl icon being used to sell rice is not intrinsic to rice as a product. Moreover, ARI's mark is incontestable, [25] which means that ARI's mark is protected from challenge by a presumption of validity. [26] PRMI argues that the girl icon incorporates a bowl of rice in its imagery, and thus the mark is descriptive and deserving of less protection. [27] However, even a descriptive mark can be strong if it has obtained secondary meaning in the marketplace. A descriptive mark can become distinctive [and thus strong] if over time it has developed secondary meaning, which occurs when, in the minds of the public, the primary significance of a [mark] is to identify the source of the product rather than the product itself. [28] The record shows that ARI's mark is incontestable and that ARI was the first to market rice with a girl icon on its rice bags. ARI has promoted this Girl Design in its advertising, and its Abu Bint brand is widely associated with American parboiled rice in Saudi Arabia, such that consumers ask for girl brand rice and distributors ask for a girl icon to be used on rice. Thus, even if ARI's Girl Design is considered to be descriptive instead of fanciful, we agree with the district court that it is still a strong mark because of its strong established secondary meaning in the market. Furthermore, even if the mark is descriptive with an acquired secondary meaning, its incontestable status provides ARI protection. [29] Therefore, the district court did not clearly err in finding ARI's mark to be strong. (2) Similarity of Design The district court found ARI's and PRMI's designs to be very similar. The marks both depict young women with similar hair, dress, and features, posed behind a rectangular shape, holding a bowl of rice, and utilizing the same color scheme of red, yellow, and black. PRMI points out the differences in the icons. ARI's Girl Design depicts a visibly Asian girl, while PRMI's Girl with a Hat Design incorporates a scarf or hat on the head of the girl. The district court considered these differences and concluded that the similarities were sufficient to persuade it that the designs are very similar. This finding is not clearly erroneous. Further, the record reflects that rice is not always sold in bags in Saudi Arabia. Often, customers will buy rice from sellers who have put the rice in bins and sell girl rice to customers who ask for it. When customers request girl rice, they are seeking ARI's Abu Bint brand, but because PRMI's brand also uses a girl design, this similarity of that design often leads to confusion in the market. PRMI also argues, however, that simply because ARI and PRMI both employ girl icons on their rice bags does not mean the icons are so similar that ARI should be granted a monopoly over the use of girl icons on rice in Saudi Arabia. In Squirrel Brand, we found no likelihood of confusion where plaintiff and defendant both employed squirrel images on bags of nuts and the dominant feature of the labels at issue was not the squirrel images, but rather the brand names. [30] Further, we found that because squirrels are so universally associated in the public mind with nuts, there was no likelihood of confusion. [31] Squirrel Brand is distinguishable from the instant case because any universal association between a girl icon on a rice bag and rice itself is the result of ARI's presence and promotion of its product in the Saudi market, as opposed to Squirrel Brand, where the association of squirrels with nuts is independent of the commercial nut market. Therefore, the district court did not clearly err in finding the girl designs to be similar. (3) Similarity of Products No serious challenge is made to the district court finding that ARI's and PRMI's American parboiled rice are identical products. This finding is not clearly erroneous. (4) Identity of Retail Outlets and Purchasers The district court found that rice sold by ARI and PRMI is sold in the same channels of trade and is available to Saudi consumers in the same retail locations. It is uncontested that many of the same Saudi distributors have bought both brands of rice for years. Therefore, the district court's finding that this factor supports a likelihood of confusion is not clearly erroneous. (5) Similarity of Advertising Media Used Here, a court looks for advertising in similar media as an indication that consumers might be confused as to the source of similar products. [32] Because ARI has spent millions in advertising and promoting its brand and PRMI has not advertised at all, this factor is rendered irrelevant. However, these facts are relevant to the next factor: intent. (6) Intent of Defendant Proof of the defendant's intent to benefit from the good reputation of the plaintiff's products is not required in order to establish infringement. If such intent can be shown, however, it may provide compelling evidence of a likelihood of confusion. [33] Further, the intent of defendants in adopting (their mark) is a critical factor, since if the mark was adopted with the intent of deriving benefit from the reputation of (the plaintiff,) that fact alone may be sufficient to justify the inference that there is confusing similarity. [34] The district court found that [a]t all times material to this action, PRMI knew of the Abu Bint brand, the related ARI Girl Design, and ARI's registration rights. By selling its PRMI Girl with Hat Design brand . . . into Saudi Arabia, PRMI intended to trade on the goodwill of Abu Bint brand and its related Girl Design in disregard of ARI's rights. These findings that PRMI intended to benefit from the goodwill associated with ARI's brand are supported by the record. ARI has a registered, incontestable trademark, ARI was the first in Saudi Arabia to market its parboiled rice with a girl design, ARI spent millions in advertising and promotion of its brand with the Girl Design, and ARI's brand name Abu Bint translated means girl brand. The record evidence strongly supports an inference that PRMI decided to use a girl icon because of the goodwill ARI had already established in the market. PRMI did no advertising of its own mark. PRMI admitted to using a girl design on its private label rice in 2005 because rice distributors in Saudi Arabia wanted such a design. PRMI admitted repeatedly that a girl icon is what the market and the customers ask for. Indeed, a rice distributor in Saudi Arabia (named Shanshal), specifically supplied PRMI with variations on a girl icon from which PRMI was to choose for use on the private label brand. Shanshal was the same person who was associated with Riceland in the 1983 American Rice case, in which ARI sued Riceland for infringement of its girl design in Saudi Arabia. PRMI knew of Shanshal's association with Riceland and the attendant litigation and nevertheless elected to use a girl design suggested by Shanshal. When the district judge asked PRMI's Senior Vice President of Sales and Marketing and Secretary-Treasurer, Marvin Baden, why the market in Saudi Arabia wanted a girl on rice labels, Mr. Baden responded: Well, I guess the same thing when people started parboiled rice in the United States with Uncle Ben's, they wanted a brand similar to Uncle Ben's because that's just what the market calls for. PRMI also admitted that with regard to its Par Excellence rice, which it ships worldwide under that name, it adds a girl icon to rice bags with this brand name only in Saudi Arabia and other nearby countries in that region. Additionally, Lee Adams, President of ARI, testified that he has read reports of and has witnessed sellers of rice in Saudi Arabia pointing customers to bins of bint (girl) rice, which were not ARI's Abu Bint, when customers requested Abu Bint rice. This practice provided PRMI with a powerful incentive to supply a girl brand to substitute for customer requests for Abu Bint. It is also significant that the critical 2005 negotiations by PRMI with buyers to sell rice under a private label with its Girl with a Hat Design occurred just after ARI altered its marketing model in Saudi Arabia. In 2005, ARI, for the first time, designated an agent in Saudi Arabia (Alesayi) as its sole distributor of rice. Other rice distributors could still purchase ARI's Abu Bint rice but only through this exclusive agent at a higher price. The district court was entitled to infer that this change created a marketing opportunity for PRMI to fill this demand from previous ARI customers for American parboiled rice and to trade on ARI's goodwill. In light of this record support of the district judge's finding of intent, we conclude that the district court did not clearly err in finding that PRMI intended to trade on ARI's goodwill by using the Girl with a Hat Design. (7) Actual Confusion The district court found no evidence of actual confusion in the market between the ARI Girl Design and the PRMI Girl with a Hat Design, and ARI does not argue to the contrary. Although actual confusion is the best evidence of confusion, it is not necessary to a finding of likelihood of confusion. [35] (8) Degree of Care of Potential Purchasers The district court found that Saudi Arabian consumers often identify rice by the images or icons associated with those brands. The record support for intent proves this point as well: the market wants girl brand rice. Such a market desire hinges upon iconography used on the rice. The evidence makes clear that the use of images on rice brands is important in Saudi Arabia. The district court's findings are not clearly erroneous. In conclusion, because nearly all of the likelihood of confusion factors weigh in ARI's favor, and particularly in light of the evidence of PRMI's intent to trade on ARI's goodwill, we conclude that the district court did not clearly err in finding a likelihood of confusion between PRMI's Girl with a Hat Design and ARI's Girl Design.
PRMI argues next that the district court erred in finding that ARI's claim was not barred by laches. The district court found that ARI had an excuse for its delay in bringing suit because it did not know or have reason to know until 2005 that PRMI had used the Girl with a Hat design since 1985. Our review of this laches finding is for an abuse of discretion. [36] A defendant urging a laches defense for inexcusable delay that causes prejudice must establish: (1) delay in asserting one's trademark rights, (2) lack of excuse for the delay, and (3) undue prejudice to the alleged infringer caused by the delay. [37] This Court has held that the time period for laches begins when an owner of a mark first has knowledge of the accused use. [38] We conclude that the district court did not abuse its discretion in finding ARI's delay was excusable. The record does not support the argument that ARI knew of PRMI's use of the infringing design before 2005. The only evidence of ARI having any prior knowledge of potential infringement by PRMI is a vague Saudi Ministry report which does not mention the girl image at issue. Additionally, the only registration of trademarks by PRMI were word marks, not the Girl with a Hat Design, so ARI had no reason to know of PRMI's infringing mark by virtue of PRMI's registration of its word trademarks. The district court also reasonably concluded that because PRMI's brand was distributed in such small quantities in Saudi Arabia, ARI's failure to discover PRMI's use of the girl label was not due to lack of diligence. The district court did not abuse its discretion in determining that ARI had an excuse for its delay in bringing suit because it did not know of PRMI's infringement until 2005.
PRMI next argues that the injunction granted by district court, on both the Lanham Act claim and for the breach of the Settlement Agreement, was overbroad for two reasons: (1) the injunction should not have extended to labels with girl images generally and (2) the injunction should have applied only in Saudi Arabia and should not have been extended to Djibouti. A grant of injunctive relief is reviewed for an abuse of discretion. [39] Our discussion in part B, above, of the district court's finding that PRMI intended to trade on ARI's goodwill is also relevant here. In that analysis, we concluded that the record supported a finding that PRMI's use of a girl design on rice bags in the Saudi market was likely to cause confusion, and thus it infringed ARI's trademark. Relatedly, we conclude that the district court did not abuse its discretion in extending the scope of the injunction to a design with a girl image for use on rice. We also conclude that extending the injunction to Djibouti was not an abuse of discretion. The record reflects that PRMI made sales of rice bearing the Girl with a Hat Design in both Saudi Arabia and Djibouti and that ARI also sold its Abu Bint rice in both of those countries. Furthermore, PRMI did not object to the pretrial order in which ARI initially requested a geographically unlimited injunction. If a claim or issue is omitted from the [pretrial] order, it is waived. . . . [40] The district court's original Findings of Fact and Conclusions of Law and Order awarded a geographically unlimited injunction, but after hearing supplemental testimony, the court limited the injunction to those two countries. ARI does not contest the reduction in scope of the injunction, and in light of the record reflecting sales by both ARI and PRMI of their parboiled rice brands in both countries, we conclude that the district court did not abuse its discretion regarding the geographic scope of the injunction.