December 2011 / January 2012 Issue
Marketquest Group, Inc. v. BIC Corp.,
2011 WL 5360899 (S.D. Cal. Nov. 7, 2011)
The Southern District of California denied a preliminary injunction based on descriptive fair use where the defendant used a descriptive phrase identical to plaintiff’s incontestable trademark in connection with nearly identical products. The court held that the context in which defendant used the phrase and the inclusion of its housemark with the phrase demonstrated that defendant used the phrase “otherwise than as a mark” and solely in its descriptive sense.
Plaintiff Marketquest Group, Inc. (“Marketquest”) sells customizable promotional products, including pens, using the registered trademarks ALL-IN-ONE and THE WRITE CHOICE. Defendants BIC Corporation, BIC USA, Inc., and Norwood Promotional Products (collectively “BIC”) also sell pens and customizable promotional products. BIC began using the phrases “The Write Pen Choice” and “All in ONE” in its advertising for its pens and other products.
Marketquest sued BIC in the Southern District of California for trademark infringement and unfair competition, and later moved for a preliminary injunction. Marketquest’s preliminary injunction motion focused almost exclusively on the ALL-IN-ONE mark and, thus, the court held that Marketquest waived its request for a preliminary injunction regarding the mark THE WRITE CHOICE.
The court applied the Ninth Circuit’s four-part test for determining whether the moving party is entitled to a preliminary injunction. In particular, to succeed on a motion for a preliminary injunction, the movant must show (1) a likelihood of success on the merits; (2) a likelihood of irreparable harm in the absence of a preliminary injunction; (3) that the balance of equities tips in his favor; and (4) that an injunction is in the public interest.
Turning to Marketquest’s likelihood of success on the merits, the court first examined whether Marketquest owned a valid, protectable interest in the ALL-IN-ONE mark. BIC claimed that Marketquest’s ALL-IN-ONE registrations were procured fraudulently or the mark was abandoned. Regarding BIC’s fraud claim, the court rejected BIC’s theory that Marketquest’s registrations were invalid because it never intended to use the ALL-IN-ONE mark on the products themselves, and it only used the mark in advertising for Marketquest’s products and services. The court held that Marketquest’s extensive use of the mark on its website and in its catalogs to identify its customizable product lines, combined with evidence showing that it did in fact use the ALL-IN-ONE mark on some of its products, was sufficient to defeat BIC’s fraud claim. The court likewise rejected BIC’s related claim of abandonment, holding that BIC failed to provide support for the proposition that Marketquest’s use of the ALL-IN-ONE mark in advertising for its products did not constitute use in commerce for purposes of the Lanham Act.
The court then analyzed the Ninth Circuit’s eight-factor Sleekcraft test for weighing the likelihood of confusion in trademark-infringement cases. The court focused much of its analysis on two factors: (1) the strength of Marketquest’s ALL-IN-ONE mark; and (2) the similarity of the parties’ marks.
The court first held that Marketquest’s ALL-IN-ONE mark was “conceptually strong.” The court noted that two of Marketquest’s four federal registrations for the mark had become incontestable and were thus presumed to have acquired distinctiveness. Further, the court held that the ALL-IN-ONE mark was at least “suggestive” and thus inherently distinctive because the mark did not immediately convey that Marketquest offered customized imprinting services. Finally, the court found that there was insufficient evidence to decide whether Marketquest’s mark enjoyed “marketplace strength.” On balance, the strength-of-the-mark factor weighed in Marketquest’s favor.
Turning to the similarity of the parties’ marks, the court initially noted that the marks are identical when standing alone. The court recognized, however, that BIC’s “All in ONE” phrase was always used together with its NORWOOD housemark. The court acknowledged that the presence of a housemark can either reduce or increase the likelihood of confusion in a given case, depending on the circumstances. In particular, the presence of a housemark can increase the likelihood of confusion where reverse confusion is alleged. The court agreed with Marketquest that such reverse confusion was possible here because BIC’s use of the ALL IN ONE mark below its prominent display of the NORWOOD housemark on its catalog covers may lead consumers to believe that BIC, not Marketquest, is the source of Marketquest’s ALL-IN-ONE products. The court weighed the possibility of reverse confusion against the fact that BIC’s use of the “All in ONE” phrase was typically accompanied by explanatory text that demonstrated BIC’s descriptive use of the “All in ONE” phrase. For example, the catalog included the text, “Our primary product resource, featuring all product lines in ONE catalogue.” On balance, the court decided that the similarity-of-the-marks factor slightly favored Marketquest.
The court briefly analyzed the remaining Sleekcraft factors and found that the majority of the factors favored Marketquest. Accordingly, the court concluded that there was at least “some” likelihood of confusion.The court’s analysis did not end there, however, as BIC had raised the affirmative defense of fair use. Specifically, BIC argued that it used the “All in ONE” phrase solely in its descriptive, nontrademark sense to indicate that one particular catalog was a catch-all catalog containing all of BIC’s customizable products. The court agreed with BIC for several reasons. First, the court held that although Marketquest’s ALL-IN-ONE mark is inherently distinctive, it is nonetheless a phrase commonly used by companies in general to describe the comprehensive nature of their services. Further, the court found that the context in which BIC used the “All in ONE” phrase demonstrated that it was used “otherwise than as a mark” and solely in its descriptive sense. In particular, the court pointed to the inclusion of the NORWOOD housemark and the explanatory text indicating the omnibus nature of the catalogs. Finally, the court held that there was no evidence of bad faith on the part of BIC in its use of the “All in ONE” phrase. Because the court found that BIC was likely to prevail on its fair-use defense, Marketquest did not make the required showing that it was likely to succeed on the merits. Accordingly, the court denied Marketquest’s request for preliminary injunctive relief without reaching the remaining preliminary injunction factors.
This case demonstrates the potency of the fair-use defense as well as the potential pitfalls of selecting a common phrase as a trademark. Even where a third party uses wording identical to a plaintiff’s inherently distinctive mark for nearly identical products, the fair-use defense might still trump a finding of a likelihood of confusion.