Opinion ID: 3066602
Heading Depth: 5
Heading Rank: 1

Heading: The Incontestable Marks

Text: The Florida Priory challenges the finding that the Sovereign Order’s incontestable marks are presumptively strong. The Florida Priory disagrees with our decision in Dieter, which recognized this presumption, but concedes that Circuit law required the district court to apply it. The Florida Priory nevertheless contends that its defenses of prior use should defeat this presumption. The district court treated the Florida Priory’s defenses as complete defenses on the merits—an error we discuss later in the opinion. But, setting that issue aside, the Florida Priory contends that its defenses of prior use at least rebut the incontestable status of the Sovereign Order’s marks and the presumption that they are strong. Although we largely agree with the Florida Priory’s criticisms of Dieter, we conclude that the district court correctly treated the Sovereign Order’s incontestable marks as presumptively strong. We also conclude that the Florida Priory’s defenses of prior use do not rebut this presumption. Under the plain 21 Case: 14-14251 Date Filed: 10/15/2015 Page: 22 of 49 language of the Lanham Act, those defenses are not relevant to the likelihood of confusion. They defeat only the conclusive presumption that incontestable marks are valid, not the presumption that incontestable marks are strong for purposes of confusion. Other statutory defenses may defeat the latter presumption, see, e.g., 15 U.S.C. § 1065, but the Florida Priory did not raise them. To put the Florida Priory’s arguments in context, we must first explore the role that incontestability plays under the Lanham Act. Incontestability offers two key benefits for plaintiffs complaining about an infringement. With respect to the first element of infringement—validity— incontestability provides “conclusive evidence of the validity of the registered mark and of the registration of the mark, of the registrant’s ownership of the mark, and of the registrant’s exclusive right to use the registered mark in commerce.” Id. § 1115(b) (emphasis added). Registration alone, by contrast, provides only “prima facie evidence of . . . validity.” Id. § 1115(a) (emphasis added). In this Circuit, incontestability also benefits plaintiffs with respect to the second element of infringement—confusion. We held in Dieter that incontestability gives plaintiffs an advantage with respect to the first factor in the seven-factor balancing test for likelihood of confusion. See 880 F.2d at 328–29; see also Caliber Auto. Liquidators, 605 F.3d at 939; Frehling Enters., 192 F.3d at 1336. An incontestable mark is “presumed to be at least descriptive with 22 Case: 14-14251 Date Filed: 10/15/2015 Page: 23 of 49 secondary meaning, and therefore a relatively strong mark.” Dieter, 880 F.2d at 329. On this point, our precedent in Dieter is an outlier. The majority of circuits to consider the question have held that incontestability does not affect the strength of a mark for purposes of confusion. See Lone Star Steakhouse & Saloon, Inc. v. Alpha of Va., Inc., 43 F.3d 922, 935 (4th Cir. 1995); Oreck Corp. v. U.S. Floor Sys., Inc., 803 F.2d 166, 171 (5th Cir. 1986); Munters Corp. v. Matsui Am., Inc., 909 F.2d 250, 252 (7th Cir. 1990); Miss World (UK) Ltd. v. Mrs. Am. Pageants, Inc., 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); Hornady Mfg. Co. v. Doubletap, Inc., 746 F.3d 995, 1008 n.13 (10th Cir. 2014). But see Wynn Oil Co. v. Am. Way Serv. Corp., 943 F.2d 595, 600 (6th Cir. 1991) (agreeing with our Circuit). The Trademark Trial and Appeal Board agrees with the majority view. See Safer, Inc. v. OMS Invs., Inc., 94 U.S.P.Q.2d 1031, 1036 (T.T.A.B. 2010). As do the leading treatises. See, e.g., 6 J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition § 32:155 (4th ed.); Restatement (Third) of Unfair Competition § 21, reporter’s note (1995). The law in this Circuit is almost certainly incorrect. The incontestability of a mark, by itself, says nothing about its strength. A mark becomes incontestable when the owner uses it in commerce for five consecutive years and files an 23 Case: 14-14251 Date Filed: 10/15/2015 Page: 24 of 49 affidavit with the Patent and Trademark Office attesting that the mark is not generic, not subject to a prior adverse judgment, and not currently subject to litigation. See 15 U.S.C. § 1065. Yet, “the test for likelihood of confusion is based on the perceptions of consumers in the marketplace, which are ordinarily unaffected by the status of a mark’s registration.” Restatement § 21, reporter’s note. Furthermore, “trademark rights are not static and . . . the strength of a mark may change over time.” Safer, 94 U.S.P.Q.2d at 1036. That a mark enjoyed incontestable status in the past says very little about its current strength in the marketplace. See 6 McCarthy § 32:155 (criticizing Dieter because “it focuses solely on the inherent distinctiveness of a mark and ignores the acquired distinctiveness and strength of the mark in the real world marketplace”). Moreover, the Lanham Act was amended after Dieter addressed the relationship between incontestability and confusion. The Trademark Law Revision Act of 1988 added the following proviso to section 1115 of the Lanham Act: “[The] conclusive evidence of the right to use [a] registered [incontestable] mark shall be subject to proof of infringement as defined in section [1114].” Pub. L. No. 100-667, § 128(b)(1), 102 Stat. 3935, 3945 (emphasis added). With this amendment, Congress decoupled the questions of incontestability and validity from the questions of infringement and confusion. See Petro Shopping Ctrs. L.P. v. James River Petrol., Inc., 130 F.3d 88, 92 (4th Cir. 1997); cf. KP Permanent 24 Case: 14-14251 Date Filed: 10/15/2015 Page: 25 of 49 Make-Up, Inc. v. Lasting Impression I, Inc., 543 U.S. 111, 118, 125 S. Ct. 542, 548 (2004) (“Section 1115(b) places a burden of proving likelihood of confusion (that is, infringement) on the party charging infringement even when relying on an incontestable registration.”). The Dieter Court had no occasion to consider this statutory change because the amendment became effective in November 1989, three months after Dieter was decided. See Pub. L. No. 100-667, § 136, 102 Stat. at 3948. But our later decisions followed Dieter without questioning its reasoning or acknowledging the change in statutory language. See Caliber Auto. Liquidators, 605 F.3d at 939; Frehling Enters., 192 F.3d at 1336. Nevertheless, “one panel of this Court cannot disregard the precedent set by a prior panel, even though it conceives error in the precedent.” United States v. Romeo, 122 F.3d 941, 942 n.1 (11th Cir. 1997) (quoting Davis v. Estelle, 529 F.2d 437, 441 (5th Cir. 1976)). Although this principle gives way when “the prior panel’s decision was based on legislation that ha[s] been changed,” United States v. Woodard, 938 F.2d 1255, 1258 n.4 (11th Cir. 1991), our Court has followed Dieter even after the 1988 amendments to the Lanham Act, see, e.g., Caliber Auto. Liquidators, 605 F.3d at 939. And it does not matter, for purposes of law of the Circuit, that our later decisions failed to consider the change in statutory language. See DeYoung v. Owens, 646 F.3d 1319, 1325 (11th Cir. 2011) (“[T]he mere act of proffering additional reasons not expressly considered previously will not open the 25 Case: 14-14251 Date Filed: 10/15/2015 Page: 26 of 49 door to reconsideration of the question by a second panel.” (quoting Smith v. GTE Corp., 236 F.3d 1292, 1302 (11th Cir. 2001)). Dieter remains the law of the Circuit, and we must continue to follow it. Accordingly, the district court correctly determined that the Sovereign Order’s incontestable marks are presumptively strong. Accepting that incontestable marks are presumptively strong in this Circuit, the Florida Priory contends that its defenses of prior use should nevertheless defeat the presumption we recognized in Dieter. In the district court, the Florida Priory argued that it satisfied the criteria for the defenses in sections 1115(b)(5) and (b)(6) of the Lanham Act. Under section 1115(b)(5), a defendant must prove that “[its] mark . . . was adopted without knowledge of the [plaintiff’s] prior use and has been continuously used by [the defendant] or those in privity with him from a date prior to [the plaintiff’s registration].” 15 U.S.C. § 1115(b)(5). Under section 1115(b)(6), a defendant must prove that “[its] mark . . . was registered and used prior to the registration . . . or publication . . . of the registered mark of the [plaintiff], and not abandoned.” Id. § 1115(b)(6). The Florida Priory’s argument presents a question of first impression: do the statutory defenses in section 1115(b) of the Lanham Act defeat the presumption of strength we identified in Dieter? Based on the text of the statute, we reject the Florida Priory’s argument. According to the Lanham Act, the “defenses or defects” in section 1115(b) rebut 26 Case: 14-14251 Date Filed: 10/15/2015 Page: 27 of 49 “[s]uch conclusive evidence of the right to use the registered mark.” Id. § 1115(b). In other words, they go to the first factor of infringement—validity. The presumption we recognized in Dieter, by contrast, goes to second element of infringement—confusion. We cannot treat the defenses in section 1115(b) as defenses to the presumption we recognized in Dieter without overriding the plain language of the Lanham Act. Although Dieter itself is in conflict with the statute, we decline to extend its error any further than necessary. Of course, defendants can invoke other statutory defenses that would potentially defeat the presumption from Dieter. For example, section 1065 of the Lanham Act—the provision that defines incontestability—also contains a defense of prior use. Under that defense, a defendant can challenge incontestability “to the extent” that the plaintiff’s registered mark “infringes a valid right acquired [by the defendant] under the law of any State or Territory by use of a mark or trade name continuing from a date prior to the date of registration . . . of such registered mark.” Id. § 1065. This defense could be relevant to the Dieter presumption because—unlike section 1115(b)—it defeats the “incontestable” status of a mark, not the conclusive presumption of validity that comes with incontestability. Compare id., with id. § 1115(b). But the Florida Priory never invoked any such defense. The defense of prior use in section 1065 turns on state law. See id. § 1065; accord Dorpan, S.L. v. 27 Case: 14-14251 Date Filed: 10/15/2015 Page: 28 of 49 Hotel Melia, Inc., 728 F.3d 55, 63 & n.10 (1st Cir. 2013); Watec Co. v. Liu, 403 F.3d 645, 652 (9th Cir. 2005); Advance Stores Co. v. Refinishing Specialties, Inc., 188 F.3d 408, 412–13 (6th Cir. 1999). The Florida Priory has never explained how it obtained rights to the Sovereign Order’s marks under state law and satisfied the other conditions in section 1065. Any such defense is, therefore, forfeited. See Maradiaga v. United States, 679 F.3d 1286, 1294 (11th Cir. 2012). In sum, the district court correctly determined that the Sovereign Order’s incontestable marks are presumptively strong. Although this presumption is legally dubious, it remains the binding law of the Circuit. The Florida Priory’s defenses of prior use under sections 1115(b)(5) and (b)(6) do not defeat this presumption because the Lanham Act expressly limits the effect of those defenses. The Florida Priory failed to raise any other defense that could defeat the presumption we recognized in Dieter.