Court Opinion

ID: 4571986
Source: CourtListenerOpinion
Date Created: 2020-10-01 17:00:54.212603+00
Date Added: 2024-06-11T13:30:22.822745
License: Public Domain

FOR PUBLICATION

   UNITED STATES COURT OF APPEALS
        FOR THE NINTH CIRCUIT

 ARCONA, INC., a California                      No. 19-55586
 corporation,
                  Plaintiff-Appellant,             D.C. No.
                                                2:17-cv-07058-
                     v.                           ODW-JPR

 FARMACY BEAUTY, LLC, a New
 Jersey limited liability company;                 OPINION
 DAVID C. CHUNG, an individual;
 MARK VEEDER, an individual,
                 Defendants-Appellees.

        Appeal from the United States District Court
           for the Central District of California
        Otis D. Wright II, District Judge, Presiding

             Argued and Submitted June 5, 2020
                   Pasadena, California

                     Filed October 1, 2020

 Before: Kenneth K. Lee and Patrick J. Bumatay, Circuit
     Judges, and Donald W. Molloy, * District Judge.

                     Opinion by Judge Lee

     *
       The Honorable Donald W. Molloy, United States District Judge
for the District of Montana, sitting by designation.
2                ARCONA V. FARMACY BEAUTY

                          SUMMARY **

                            Trademark

   The panel affirmed the district court’s grant of summary
judgment in favor of Farmacy Beauty, LLC, in a trademark
counterfeiting action brought by Arcona, Inc.

    Arcona alleged counterfeiting based on Farmacy’s use of
the trademarked term “EYE DEW” on its skincare products.
The district court granted summary judgment on the ground
that a reasonable consumer would not confuse Farmacy’s
skincare product with Arcona’s because their respective
packaging featured different shapes, design schemes, text,
and colors.

    Agreeing with other circuits, the panel held that the plain
language of the Lanham Act, 15 U.S.C. § 1114, requires a
likelihood of confusion for a trademark counterfeiting claim.
The panel declined to presume confusion because the
products were not identical. The panel held that summary
judgment was proper because there was no genuine dispute
of material fact about the likelihood of consumer confusion,
and the district court properly compared the products as a
whole, rather than limiting analysis to the identical EYE
DEW marks.

    **
       This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
               ARCONA V. FARMACY BEAUTY                       3

                         COUNSEL

R. Joseph Trojan (argued), Dylan C. Dang, and Francis Z.
Wong, Trojan Law Offices, Beverly Hills, California, for
Plaintiff-Appellant.

Colin Fraser (argued), Greenberg Traurig LLP, Irvine,
California; Jeffrey K. Joyner, Greenberg Traurig LLP, Los
Angeles, California; for Defendants-Appellees.

                          OPINION

LEE, Circuit Judge:

     Arcona, Inc. sued Farmacy Beauty for counterfeiting
based on the use of the trademarked term “EYE DEW” on
its skincare products. But apart from that term, these two
companies’ beauty products look nothing like each other, as
their respective packaging features different shapes, design
schemes, text, and colors. The district court granted
summary judgment for Farmacy, ruling that a reasonable
consumer would not confuse Farmacy’s skincare product
with Arcona’s. The key question presented is whether a
trademark counterfeiting claim requires a likelihood of
confusion. We hold that the plain language of the statute
requires a likelihood of confusion for a counterfeit claim.
We thus affirm the grant of summary judgment.

                      BACKGROUND

    In March 2015, Plaintiff-Appellant Arcona, Inc.
registered the trademark “EYE DEW” for its skincare
products. The trademarked phrase “consists of standard
characters without claim to any particular font, style, size, or
color.” Arcona’s EYE DEW product is an eye cream in a
4             ARCONA V. FARMACY BEAUTY

tall, cylindrical, silver bottle encased in a slim, cardboard
outer box. The product features the phrase “EYE DEW” and
the Arcona housemark on both its bottle and outer box.
Arcona sells the product mainly at Nordstrom in the United
States and at Sephora in Australia and Asia.

    In 2014, Defendant-Appellee Farmacy Beauty began
developing a line of skincare products, including an eye
cream. Farmacy named the eye cream “EYE DEW” after a
copywriter said that the name was likely available based on
“an initial online search and uspto.gov trademark lookup.”
Farmacy’s EYE DEW product (pictured below) comes in a
short, wide, white jar, along with a squarish outer box. The
product features the phrase “EYE DEW” and the Farmacy
house mark on both its jar and outer box. In 2015, Farmacy
began selling EYE DEW in the United States at Sephora.
               ARCONA V. FARMACY BEAUTY                     5

    In August 2016, Arcona sent Farmacy a cease-and-desist
letter informing Farmacy of its “EYE DEW” trademark and
demanding that Farmacy stop selling its product. The record
suggests that Farmacy had never heard of Arcona and was
surprised to receive the letter. The parties unsuccessfully
tried to resolve the matter.

    In September 2017, Arcona sued Farmacy asserting
claims of (1) trademark counterfeiting, (2) trademark
infringement, (3) unfair competition under Section 43(a) of
the Lanham Act, (4) unfair competition under California
state law, and (5) unfair competition under California
common law. At Arcona’s request, the district court
dismissed with prejudice the trademark infringement and
unfair competition claims.

    The district court granted partial summary judgment for
Farmacy on the counterfeiting claim. The court reasoned
that the only similarity between the two products was the
phrase “EYE DEW.” The court also found that Arcona
“present[ed] no evidence that the Farmacy house mark on
the product, the dissimilar packaging, and the product itself
[did] not nullify [Arcona]’s counterfeiting claim.” It further
held that it was “implausible that a consumer viewing
[Farmacy’s] EYE DEW product would be tricked into
believing that product is actually one of [Arcona’s] EYE
DEW products.”
6              ARCONA V. FARMACY BEAUTY

   Arcona timely appealed. We have jurisdiction under
28 U.S.C. § 1291.

                STANDARD OF REVIEW

    We review a district court’s grant of summary judgment
de novo. Devereaux v. Abbey, 263 F.3d 1070, 1074 (9th Cir.
2001) (en banc). The moving party is entitled to summary
judgment upon a showing that no genuine issue of material
fact exists and that the moving party is entitled to judgment
as a matter of law. See Fed. R. Civ. P. 56(a). We view the
facts and inferences drawn from the facts in the nonmovant’s
favor. T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors Ass’n,
809 F.2d 626, 631–32 (9th Cir. 1987). We may affirm
summary judgment on any grounds supported by the record.
Gemtel Corp. v. Cmty. Redevelopment Agency, 23 F.3d
1542, 1546 (9th Cir.1994).

                         ANALYSIS

I. Under the Lanham Act, Farmacy is liable for
   counterfeiting only if Farmacy’s use of Arcona’s
   mark is likely to confuse consumers.

    Arcona’s complaint against Farmacy lists “Violation of
Trademark Counterfeiting Act of 1984” as its first cause-of-
action. The Trademark Counterfeiting Act of 1984
criminalizes the trafficking of counterfeit trademark goods.
18 U.S.C. § 2320. The Act also amended the Lanham Act,
15 U.S.C. §§ 1501 et seq., to create stronger remedies for
civil cases involving a counterfeit trademark. See 15 U.S.C.
§ 1117 (allowing for treble damages and attorneys’ fees).

    Arcona argues that it need not show a likelihood of
confusion to pursue its trademark counterfeiting claim. The
“starting point for interpreting a statute is the language of the
                    ARCONA V. FARMACY BEAUTY                            7

statute itself.” Consumer Prod. Safety Comm’n v. GTE
Sylvania, Inc., 447 U.S. 102, 108 (1980). “It is a
fundamental canon of statutory construction that the words
of a statute must be read in their context and with a view to
their place in the overall statutory scheme.” Sturgeon v.
Frost, 136 S. Ct. 1061, 1070 (2016).

      Here, 15 U.S.C. § 1114 establishes the cause of action
for, among other things, counterfeiting and states that “[a]ny
person who . . . use[s] in commerce any reproduction,
counterfeit, copy, or colorable imitation of a registered mark
. . . which such use is likely to cause confusion, or to cause
mistake, or to deceive . . . shall be liable in a civil action by
the registrant for the remedies hereinafter provided.”
15 U.S.C. § 1114(1)(a) (emphasis added). The plain
language of the statute thus shows that “likely to cause
confusion” is a requirement for a counterfeiting claim.

    Perhaps recognizing that the two products look little like
each other, Arcona argues that a counterfeiting claim does
not require a likelihood of confusion. It points to two
statutory provisions establishing various remedies for
counterfeiting that do not mention “likelihood of confusion.”
First, 15 U.S.C. § 1116(d) allows ex parte relief to seize
counterfeit goods. 15 U.S.C. § 1116. 1 Although the text of

    1
        15 U.S.C. § 1116(d) states in part:

           “Civil Actions Arising Out of Use of Counterfeit
           Marks

           (1)(A) In the case of a civil action arising under section
           1114(1)(a) of this title . . . with respect to a violation
           that consists of using a counterfeit mark in connection
           with the sale, offering for sale, or distribution of goods
           or services, the court may, upon ex parte application,
8                   ARCONA V. FARMACY BEAUTY

that subsection does not reference “confusion” in defining
“counterfeit mark,” it refers to a civil action under “section
1114(1)(a),” which (as noted above) establishes the cause of
action for counterfeiting and includes a likelihood of
confusion requirement.          15 U.S.C. § 1116(d)(1)(A).
Second, 15 U.S.C. § 1117 authorizes statutory and treble
damages for counterfeiting, and again refers to Section
1114(1)(a), which includes a likelihood of confusion
requirement. 15 U.S.C. § 1117(b). 2 In short, even the two
counterfeiting remedies provisions cited by Arcona
underscore that a defendant is liable only if use of a
counterfeit is “likely to cause confusion.” 15 U.S.C.
§ 1114(1)(a). 3

           grant an order under subsection (a) of this section
           pursuant to this subsection providing for the seizure of
           goods and counterfeit marks . . . .” (emphasis added).

    2
        15 U.S.C. § 1117(b) states in part:

           “Treble Damages for Use of Counterfeit Mark.

           In assessing damages under subsection (a) for any
           violation of section 1114(1)(a) of this title . . . in a case
           involving use of a counterfeit mark or designation (as
           defined in section 1116(d) of this title), the court shall
           . . . enter judgment for three times such profits or
           damages, whichever amount is greater, together with a
           reasonable attorney’s fee, if the violation consists of
           (1) intentionally using a mark or designation, knowing
           such mark or designation is a counterfeit mark (as
           defined in section 1116(d) of this title), in connection
           with the sale, offering for sale, or distribution of goods
           or services . . . .” (emphasis added).
    3
      The district court appeared to base its ruling in part on the ground
that the “EYE DEW” mark is not even a counterfeit. Section 1127
                  ARCONA V. FARMACY BEAUTY                                9

    It appears that our court has not yet expressly held that a
counterfeiting claim requires a likelihood of confusion. That
said, Section 1114 addresses both trademark infringement
and counterfeit claims, and we have repeatedly held that the
plain language of Section 1114 requires a likelihood of
confusion for a trademark infringement claim. See, e.g.,
Stone Creek, Inc. v. Omnia Italian Design, Inc., 875 F.3d
426, 431 (9th Cir. 2017). But we have not directly addressed
it in the context of a counterfeit claim, perhaps because
consumer confusion is generally not in dispute in most
counterfeit cases. See, e.g., Gibson Brands, Inc. v. John
Hornby Skewes & Co., 14-CV-00609 (DDP), 2016 WL
7479317, at *6 (C.D. Cal. Dec. 29, 2016) (noting case law
on counterfeit claims is “understandably thin”). For
example, the use of a counterfeit Louis Vuitton trademark on
a handbag is obviously intended to confuse consumers. Put
another way, a counterfeit claim is merely “the ‘hard core’
or first degree’ of trademark infringement,” and there is
nothing in the statutory language of Section 1114 that
suggests that a counterfeit claim should be construed
differently from an infringement claim. Id. at *5 (internal
citation omitted).

    Several of our decisions have followed the plain meaning
of Section 1114 and have required a likelihood of confusion
for claims under that section. For example, in Westinghouse

defines “counterfeit” as a “a spurious mark which is identical with, or
substantially indistinguishable from, a registered mark.” 15 U.S.C.
§ 1127. The district court appeared to construe Section 1127 to allow a
court to look beyond the mark and examine the product as a whole in
determining whether the “spurious mark” is “identical with, or
substantially indistinguishable” from the registered mark. We need not
resolve this issue because, even if the mark is a counterfeit, no reasonable
juror would find a likelihood of consumer confusion under Section 1114.
See infra pp. 12–14.
10             ARCONA V. FARMACY BEAUTY

Elec. Corp. v. Gen. Circuit Breaker & Elec. Supply, Inc., we
held that Section 1114 was “intended to protect consumers
against deceptive designations of the origin of goods, not just
to prevent the duplication of trademark.” 106 F.3d 894, 899
(9th Cir. 1997) (cleaned up). “Thus, the important test is
whether the practice of the defendant is likely to cause
confusion, not whether the defendant duplicated the
plaintiff’s mark.” Id.; see also Levi Strauss & Co. v. Shilon,
121 F.3d 1309, 1312 (9th Cir. 1997) (noting that a
counterfeit product is likely to “cause confusion, or to cause
mistake or to deceive”).

    More recently, we held that “to invoke § 1117’s special
civil monetary remedies against counterfeiting,” a plaintiff
must establish, among other things, that the counterfeit mark
“was likely to confuse or deceive.” Idaho Potato Comm’n
v. G & T Terminal Packaging, Inc., 425 F.3d 708, 721 (9th
Cir. 2005) (finding defendant’s unlicensed use of plaintiff’s
certification mark constituted counterfeiting because it was
likely to cause confusion). We required a likelihood of
confusion, even though Section 1117’s civil monetary
remedies provision does not itself explicitly mention it and
instead refers to Section 1114, which does.

    Other circuits also read the statutory provisions to
require a likelihood of confusion for a counterfeiting claim.
See Springboards to Educ., Inc. v. Houston Indep. Sch. Dist.,
912 F.3d 805, 818 (5th Cir. 2019) (“Likelihood of confusion
is also an element of counterfeiting.”); Kelly-Brown v.
Winfrey, 717 F.3d 295, 315 (2d Cir. 2013) (dismissing
counterfeiting claim after describing the marks and
concluding that consumers would not be confused).

     We thus hold that a counterfeit claim requires a showing
of likelihood of confusion under Section 1114.
              ARCONA V. FARMACY BEAUTY                    11

II. The court will not presume consumer confusion here
    because the products are not identical.

    Arcona makes the alternative argument that the court
should presume a likelihood of confusion because
Farmacy’s “EYE DEW” statement is allegedly identical to
Arcona’s mark. But even assuming the marks are identical,
there may be no presumption of consumer confusion if the
products themselves are not identical. Put another way, a
court must review the product as a whole in determining
whether an allegedly counterfeit product will likely cause
confusion.

    Arcona relies heavily on a trademark infringement case,
Brookfield Communications, Inc. v. West Coast
Entertainment Corp., which in dicta stated in “light of the
virtual identity of marks, if they were used with identical
products or services, likelihood of confusion would follow
as a matter of course.” 174 F.3d 1036, 1056 (9th Cir. 1999)
(emphasis added) (ruling that there was no presumption of
confusion because MovieBuff software was not the same
product service as moviebuff.com website); see also Stone
Creek Inc., 875 F.3d at 432 (indicating “identical marks
paired with identical goods can be case-dispositive” in a
case involving an “exact replica” of a competitor’s logo on
the same sofa (emphasis added)).

    Here, the products at issue are not identical, as evident
by a comparison of the Arcona and Farmacy products. So
Brookfield’s dicta has no bearing on this case. The question
then becomes: Is there a factual dispute about the likelihood
of confusion so that Arcona’s counterfeiting claim can
survive summary judgment?
12                ARCONA V. FARMACY BEAUTY

III.       Summary judgment was proper because there is
           no genuine dispute of material fact about the
           likelihood of consumer confusion.

    Finally, Arcona argues that the district court erred in
comparing the products as a whole in ruling that there is no
likelihood of consumer confusion. The district court,
according to Arcona, should have limited its analysis to the
identical marks (“EYE DEW”) only — without looking at
the entire product — in assessing consumer confusion.

    This court has never adopted the rigid approach
advanced by Arcona. To the contrary, this court noted that
even “where there is precise identity of a complainant’s and
an alleged infringer’s mark, there may be no consumer
confusion” if, for example, “the alleged infringer is in a
different geographic area or in a wholly different industry.”
Brookfield, 174 F.3d at 1055 (addressing trademark
infringement claims and discussing cases in which
companies or products had the same names, but there was no
confusion because they competed in different geographic
areas or industries). A court should not myopically focus on
only the alleged counterfeit marks to the exclusion of the
entire product or even common sense. 4 Here, while the
products do compete in the same space and same geographic
area, there are significant differences between the two
products, and the marks should be “considered in their
entirety and as they appear in the marketplace.” Id. at 1054
(internal quotation marks omitted).

       4
       There may be times the mark itself is so strong in the marketplace
that the use of an identical mark by itself may cause consumer confusion,
even if other aspects of the products are different. This is not such a case.
As noted below, the mark here — “EYE DEW” — is not so strong.
               ARCONA V. FARMACY BEAUTY                     13

    As the district court explained, no reasonable consumer
would be confused by these two products because the
packaging, size, color, shape, and all other attributes — other
than the term “EYE DEW” — are not remotely similar. For
example, Farmacy’s packaging looks distinct from Arcona’s
because it features (i) multiple pictures of the Echinacea
green envy plant used in the product, (ii) a picture of the
farmers, and (iii) a description of the company.

    Further, it is implausible that a consumer would be
deceived because the products had their respective
housemarks (“Farmacy” vs. “Arcona”) prominently on the
packaging. Arcona does not present evidence to dispute this,
but states in a conclusory fashion that “[c]onsumers would
have no way of knowing” that Arcona did not sponsor
Farmacy’s product. In trademark infringement cases, the
“use of a housemark can reduce the likelihood of confusion.”
AMF Inc. v. Sleekcraft Boats, 599 F.2d 341, 351 (9th Cir.
1979), abrogated in part on other grounds by Mattel, Inc. v.
Walking Mtn. Prods., 353 F.3d 792, 810 (9th Cir. 2003); see
also Pignons S.A. de Mecanique de Precision v. Polaroid
Corp., 657 F.2d 482, 487 (1st Cir. 1981) (“[O]therwise
similar marks are not likely to be confused where used in
conjunction with the clearly displayed name and/or logo of
the manufacturer”).

    Courts — at least in the trademark infringement context
— have also considered a third party’s use of the mark in
assessing likelihood of confusion. See Springboards,
912 F.3d at 815, 817 (recognizing that third parties used
similar and identical marks, and finding no reasonable jury
could find a likelihood of confusion); cf. M2 Software, Inc.,
v. Madacy Entm’t, 421 F.3d 1073, 1088 (9th Cir. 2005)
(affirming summary judgment on trademark infringement
claim and reasoning that “[u]se of similar marks by third-
14            ARCONA V. FARMACY BEAUTY

party companies in the relevant industry weakens the mark
at issue”). Farmacy presented evidence that other companies
use the phrase “EYE DEW” in the beauty industry. This
underscores that the “EYE DEW” mark is not so unique or
strong.

    Finally, there is no evidence that Farmacy’s use of the
mark “EYE DEW” was intentional. It submitted evidence
that the term “EYE DEW” was meant to describe its product
and was not an intentional copying of Arcona’s trademark.
Arcona does not dispute this evidence, but instead states
without citation that Farmacy “cannot feign ignorance” of
the mark because Arcona has been selling EYE DEW for
over 18 years. Despite Arcona’s “general, conclusory
allegations of ‘willfulness,’” it has produced no evidence
that Farmacy intentionally copied its mark. See Pignons,
657 F.2d at 491 (finding no evidence of intent in a trademark
infringement case). In addition, Farmacy’s dissimilar
packaging and rampant use of its housemark “flatly belie[s]
any such notion.” See id.

   In sum, the district court properly found that there is no
genuine issue of material fact that Farmacy’s use of the
“EYE DEW” mark would not likely cause consumer
confusion.

                     CONCLUSION

    To sustain a trademark counterfeiting claim, a plaintiff
must show a likelihood of confusion. The two products,
when viewed in their entirety, do not remotely resemble each
other. The district court’s decision granting summary
judgment for Farmacy is AFFIRMED.