Incontestable
Finnegan's monthly review of essential decisions, key developments, evolving trends in trademark law, and more.

October 2009 Issue

Civil Cases


Mary Kay, Inc. v. Weber,
2009 WL 3147888 (N.D. Tex. Sept. 29, 2009)


ABSTRACT
A jury found that a reseller of expired MARY KAY cosmetic products infringed Mary Kay’s trademark rights and awarded Mary Kay an accounting of the reseller’s profits.  The Northern District of Texas then awarded Mary Kay over $1.1 million in the seller’s pretax profits and permanently enjoined many uses of Mary Kay’s trademarks.  However, the court refused to enjoin defendant from uses of the marks that did not imply sponsorship by or affiliation with plaintiff, including the sales of genuine, nonexpired Mary Kay products, provided the reseller explained that it was not affiliated with Mary Kay.  Moreover, the court refused to enjoin the reseller from purchasing MARY KAY as a search-engine keyword or from non-misleading use of the mark in advertising.

CASE SUMMARY

FACTS
Plaintiff Mary Kay, Inc. (“Mary Kay”) sells cosmetics, toiletries, and skin-care products under the trademark MARY KAY and is known for its use of the color pink.  Mary Kay distributes and sells its products through Independent Beauty Consultants (“IBCs”), who purchase the products at wholesale rates from Mary Kay and resell them to consumers.  Defendant Amy Weber was an IBC for more than four years, during which time she accumulated a large inventory of unsold products, many of which were “expired.”  Weber began selling her inventory on eBay via an online store named “marykay1stop.”  Mary Kay demanded that Weber cease using its MARY KAY trademark in her store name, and terminated Weber as an IBC.  Weber changed the name of her eBay store to “Touch of Pink.”  She also created a website at www.touchofpinkcosmetics.com through which she sold her inventory of Mary Kay products as well as products acquired from other IBCs.  Weber also used the MARY KAY mark on her eBay store and website to identify the products she sold and as search-engine keywords she purchased that triggered sponsored ads promoting her store.  Mary Kay sued for trademark infringement, among other claims.

ANALYSIS
In an earlier decision, the court denied Weber’s motion for summary judgment on her affirmative defenses of the first-sale doctrine, nominative fair use, and laches due to genuine issues of material fact.  Regarding the first-sale doctrine, the court held that the products sold by Weber were materially different from genuine MARY KAY products because approximately 75% were expired.  The court also held that there was a genuine issue of material fact as to whether Weber’s expired products were prevalent enough to affect or diminish the MARY KAY mark and concerning Weber’s use of the MARY KAY mark on her website and in her keyword-triggered ads.  The court rejected Mary Kay’s claim that Weber’s purchase of its marks as keywords precluded a nominative fair-use defense as a matter of law.  It stated that the fair-use doctrine “allows second hand sellers to inform customers that it sells a mark holder’s product so long as it conveys the information ‘fairly,’ i.e., in a way that uses no more of the mark than necessary to identify the product, and does not suggest affiliation or sponsorship,” and that this principle should also apply to resellers on the Internet.  However, there was a genuine issue of material fact regarding Weber’s use of the MARY KAY mark in the text of her keyword-triggered ad, which read: “Mary Kay Sale 50% Off: Free Shipping on Orders over $100 Get up to 50% Off-Fast Shipping www.touchofpinkcosmetics.com.”  The court believed that this ad could cause consumers to believe that Weber’s site either was Mary Kay or had Mary Kay’s approval. 

The case was later tried to a jury, and the jury found for Mary Kay on its trademark-infringement and unfair-competition claims and rejected all of Weber’s defenses.  The jury also awarded Mary Kay an accounting of Weber’s profits.  Mary Kay then moved the court to enter a judgment of $1,139,962 in Weber’s pretax profits and to issue a permanent injunction against Weber.  The court granted both of Mary Kay’s requests.

Regarding the jury’s award of profits, the court found that Mary Kay was entitled to the full pretax amount of Weber’s profits due to the jury’s finding that Weber willfully infringed Mary Kay’s rights.  As a result, Weber could not deduct the federal income taxes she paid on the profits.

Turning to Mary Kay’s requested permanent injunction, Weber did not contest the propriety of an injunction, but argued that it should be narrow in scope.  The court disagreed, granting almost all of Mary Kay’s fourteen requested terms.  Weber was enjoined from, among other things, using the names “Touch of Pink” and “MaryKay1Stop”; selling expired or past-shelf life Mary Kay products; using Mary Kay’s product descriptions to describe her products for sale; telling customers to contact their local Mary Kay representatives if they want nonexpired products; representing to customers that Touch of Pink is a “one stop shop” for their Mary Kay needs; referring to any previous relationship Weber had with Mary Kay; and selling Mary Kay catalogs. 

But the court refused to enjoin Weber from selling Mary Kay consultant stickers, sales aids, and other genuine Mary Kay products.  It also denied Mary Kay’s requests to enjoin Weber from using the MARY KAY mark in any “advertising, newsletters, or coupons” except to identify the name of the products for sale, and from purchasing keywords containing the MARY KAY mark unless those keywords identified the specific products for sale by name.  According to the court, these requests were “slightly too broad” because it is lawful to use another’s trademark “to the extent it is necessary to identify a product as having been manufactured by the mark owner.” 

Consistent with the requirements of nominative fair use, the court clarified that Weber could only use so much of the MARY KAY mark as was necessary to identify the genuine, nonexpired products she was selling.  However, this did not mean that the words “Mary Kay” could only appear immediately before the name of a specific Mary Kay product, or that Weber could not purchase the MARY KAY mark as a keyword from search engines.  But the court did state that Weber’s use of the MARY KAY mark must “exist for the sole purpose of informing customers that [Weber], as an entity entirely separate and distinct from Mary Kay, offered Mary Kay products for sale.”  It also stated that any uses implying an affiliation with, sponsorship by, or endorsement by Mary Kay would be unlawful, but that it could not be more specific given the many possible uses of a mark.  The court reminded Weber to “use caution every time [she uses] the MARY KAY mark—even if that use directly precedes the name of a specific Mary Kay product.”  And the court characterized as “suspect” any use of the words Mary Kay “without an explanation that [Weber] was not Mary Kay and [has] no affiliation with Mary Kay.”

Finally, the court refused to prohibit Weber from purchasing Mary Kay’s marks as search-engine keywords because of the value of search engines to “present users with the information they seek as well as related information the user may also find helpful or interesting.”  Although, the court did not specifically comment on Weber’s use of the MARY KAY mark in her keyword-triggered sponsored ads, the court’s comments in this decision about Weber’s “advertising” generally and in its earlier summary judgment decision about Weber’s sponsored ads specifically suggest that Weber could do so if not used in a way to suggest affiliation with Mary Kay.

CONCLUSION
This decision provides guidance on the trademark implications of purchasing trademarks as search-engine keywords and the paid advertisements they trigger.  The court ruled here that, at least in the context of a reseller of trademarked goods, resellers can purchase the trademark as a keyword, and use the trademark in the resulting ad if not done in a misleading way.