Opinion
NO. CIV. S-01-1771 LKK/PAN
March 19, 2002
ORDER
Plaintiff, Phat Fashions, L.L.C., brings this action against defendants, Phat Game Athletic Apparel, Inc. and Phat Game, Inc. for trademark infringement, false designation of origin, unfair competition and dilution under the Lanham Act. See 15 U.S.C. § 1114 (1), 1125 (a), 1125(c). Plaintiff also brings state law claims for trademark dilution pursuant to Section 14330 of the Cal. Bus. Prof. Code and a common law claim for unfair competition. This matter is before the court on plaintiff's motion for summary judgment. I decide this motion based on the papers and pleadings filed herein and after oral argument.
I. FACTS
In 1992, Russell Simmons ("Simmons") established Phat Fashions, L.L.C., the plaintiff corporation which manufactures and distributes urban and athletic apparel. Simmons, who is also the co-founder of "Def Jam Records," started the plaintiff corporation in order to sell apparel worn by popular rap and hip-hop artists whose music is produced by the record label. Plaintiff's products consist of T-shirts, jerseys, sweatshirts, slacks, jeans, jackets, shorts, caps, hats, backpacks, and sunglasses.
Plaintiff's most prominent label and design is the registered mark PHAT FARM, which was first used in March 1993 and was registered for use on apparel with the United States Patent and Trademark Office ("USPTO") on August 24, 1993. Since 1993, plaintiff has obtained registrations for the use of other marks as sub-brands of PHAT FARM, including PHAT THREADS, BABY PHAT, and PHAT, and an athletic clothes line bearing the marks ALL CITY and ALL CITY ATHLETIQUES.
Plaintiff's apparel prominently displays one of the PHAT marks, such as PHAT FARM, in a bold athletic style or script font. Alternatively, plaintiff's logo features the mark PHAT FARM together with the initials P or PF, a PHAT mark in combination with a design logo, or the letters P or F surrounded by a heraldic crest or bold circle. All of the products in the PHAT FARM clothing line, except for BABY PHAT, also have a decorative cotton label sewn into the back of each garment bearing the name PHAT FARM which includes its custom design.
Plaintiff sells its apparel through its flagship store in Manhattan, through department stores such as Macy's and Bloomingdales, and via its website phatfarm.com. Plaintiff's primary consumers are males between the ages of thirteen and thirty.
By 1997, plaintiff's annual revenue exceeded $8.6 million. In 1999, plaintiff's annual revenue had grown to $36.7 million, and in 2000 it increased to $111.5 million. Also in 2000, sales by third parties pursuant to licenses granted by plaintiff amounted to $110.3 million, and plaintiff spent approximately $3.7 million to advertise its PHAT clothing lines in fashion and music magazines and on radio, television, and billboards. Plaintiff has been promoting its products on its website since 1998. Plaintiff's marks have been featured in unsolicited articles in national newspapers and magazines such as The New York Times, People, and Harpar's Bazaar.
In 1998, Shawn Williams and Cloyce Dickerson formed the defendant corporations in California. Defendants' business is operated primarily out of William's home in Sacramento, California. Defendants sell athletic apparel and accessories bearing the mark PHAT or PHAT GAME, in bold athletic print or script font. Alternatively, defendants' logo features the mark PHAT GAME appearing in a circle and surrounding the interlocking initials PG. Defendants' website phatgame.com describes the goods as urban wear and athletic apparel, and defendants currently sell basketball uniforms, football jerseys, hats, shorts, T-shirts, and warm-up suits. Defendants' target audience are males in their teens and early twenties.
Defendants sell their goods through their website and sporadically in retail stores in the Sacramento area. Defendants have also sold their products at several basketball competitions and festivals in local parks, and have filled a few custom orders for local sports teams. Defendants' market is primarily California, but it has distributed its clothes in Oregon and Ontario, Canada, and targets markets in North Carolina and Michigan due to large number of college basketball fans in those areas. Defendants have used manufacturers and suppliers in Minnesota and in the Phillippines, and Dickerson has traveled to the Philippines and Hong Kong for business purposes. Defendants retail their products at prices just below those of plaintiff.
On October 5, 1997, defendants filed an intent-to-use application in the USPTO to register the PHAT GAME mark for use on athletic apparel and urban wear. On November 18, 1998, plaintiff filed an opposition to defendant's PTO application. In January 2000, plaintiff brought this action for trademark infringement. The USPTO proceedings are stayed during the pendency of this suit.
II. SUMMARY JUDGMENT STANDARDS
Summary judgment is appropriate when it is demonstrated that there exists no genuine issue as to any material fact, and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c);See also Adickes v. S.H. Kress Co., 398 U.S. 144, 157 (1970); Secor Limited v. Cetus Corp., 51 F.3d 848, 853 (9th Cir. 1995).
Under summary judgment practice, the moving party [a]lways bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any," which it believes demonstrate the absence of a genuine issue of material fact.Celotex Corp. v. Catrett, 477 U.s. 317, 323 (1986). "[W]here the nonmoving party will bear the burden of proof at trial on a dispositive issue, a summary judgment motion may properly be made in reliance solely on the `pleadings, depositions, answers to interrogatories, and admissions on file.'" Id. Indeed, summary judgment should be entered, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial. Id. at 322. "[A] complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial." Id. In such a circumstance, summary judgment should be granted, "so long as whatever is before the district court demonstrates that the standard for entry of summary judgment, as set forth in Rule 56(c), is satisfied." Id. at 323.
If the moving party meets its initial responsibility, the burden then shifts to the opposing party to establish that a genuine issue as to any material fact actually does exist. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986); See also First Nat'l Bank of Ariz. v. Cities Serv. Co., 391 U.S. 253, 288-89 (1968); Secor Limited v. Cetus Corp., 51 F.3d 848, 853 (9th Cir. 1995).
In attempting to establish the existence of this factual dispute, the opposing party may not rely upon the denials of its pleadings, but is required to tender evidence of specific facts in the form of affidavits, and/or admissible discovery material, in support of its contention that the dispute exists. Rule 56(e); Matsushita, 475 U.S. at 586 n. 11; See also First Nat'l Bank, 391 U.S. at 289; Rand v. Rowland, 154 F.3d 952, 954 (9th Cir. 1998). The opposing party must demonstrate that the fact in contention is material, i.e., a fact that might affect the outcome of the suit under the governing law, Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); Owens v. Local No. 169, Assoc. of Western Pulp and Paper Workers, 971 F.2d 347, 355 (9th Cir. 1992) (quoting T.W. Elec. Serv., Inc. v. Pacific Elec. Contractors Ass'n, 809 F.2d 626, 630 (9th Cir. 1987), and that the dispute is genuine, i.e., the evidence is such that a reasonable jury could return a verdict for the nonmoving party,Anderson, 477 U.S. 248-49; See also Cline v. Industrial Maintenance Engineering Contracting Co., 200 F.3d 1223, 1228 (9th Cir. 1999).
In the endeavor to establish the existence of a factual dispute, the opposing party need not establish a material issue of fact conclusively in its favor. It is sufficient that "the claimed factual dispute be shown to require a jury or judge to resolve the parties' differing versions of the truth at trial." First Nat'l Bank, 391 U.S. at 290; See also T.W. Elec. Serv., 809 F.2d at 631. Thus, the "purpose of summary judgment is to "pierce the pleadings and to assess the proof in order to see whether there is a genuine need for trial.'" Matsushita, 475 U.S. at 587 (quoting Fed.R.Civ.P. 56(e) advisory committee's note on 1963 amendments); See also International Union of Bricklayers Allied Craftsman Local Union No. 20 v. Martin Jaska, Inc., 752 F.2d 1401, 1405 (9th Cir. 1985).
In resolving the summary judgment motion, the court examines the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any. Rule 56(c); See also In re Citric Acid Litigation, 191 F.3d 1090, 1093 (9th Cir. 1999). The evidence of the opposing party is to be believed, Anderson, 477 U.S. at 255, and all reasonable inferences that may be drawn from the facts placed before the court must be drawn in favor of the opposing party, Matsushita, 475 U.S. at 587 (citing United States v. Diebold, Inc., 369 U.S. 654, 655 (1962) (per curiam)); See also Headwaters Forest Defense v. County of Humboldt, 2000 WL 431004, *8 (9th Cir. Cal). Nevertheless, inferences are not drawn out of the air, and it is the opposing party's obligation to produce a factual predicate from which the inference may be drawn. See Richards v. Nielsen Freight Lines, 602 F. Supp. 1224, 1244-45 (E.D. Cal. 1985), aff'd, 810 F.2d 898, 902 (9th Cir. 1987).
Finally, to demonstrate a genuine issue, the opposing party "must do more than simply show that there is some metaphysical doubt as to the material facts. . . . Where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no `genuine issue for trial.'" Matsushita, 475 U.S. at 587 (citation omitted).
III. CHOICE OF LAW
Because the matter was submitted on the original briefs which considered only New York and Second Circuit law, the court granted the parties the opportunity to file briefs to contemplate the effect of California law and the law of the Ninth Circuit.
Pursuant to 28 U.S.C. § 1406 (a), this matter was transferred to the Eastern District of California from the Southern District of New York because the court lacked personal jurisdiction over the defendants. When a case is transferred pursuant to 28 U.S.C. § 1406 (a), the court should apply the choice of law rules of the transferee district. See Muldoon v. Tropitone Furniture Co., 1 F.3d 964, 967 (9th Cir. 1993); 17Moore's Federal Practice § l1l.38[2] (2001). California determines choice of law questions using a "governmental interest analysis." Offshore Rental Co. v. Continental Oil Co., 22 Cal.3d 157, 161 (1978).
Under this analysis, the court must apply a three-pronged test, examining (1) whether the laws of the states in question are different; (2) if so, whether each state has any interest in having its law apply; and (3) if so, which state's interest would be most impaired if the other state's law were applied. See Clothesrigger, Inc. v. GTE Corp., 191 Cal.App.3d 605, 614 (1987). "A separate choice-of-law inquiry must be made with respect to each issue in a case." Application Group, Inc. v. Hunter Group, Inc., 61 Cal.App.4th 881, 895-96 (1998). If the laws of the two states are "reasonably identical" there is no conflict to be resolved, and the court should apply the substantive law of the state in which it sits. Isuzu Motors Ltd. v. Consumers Union of United States, 12 F. Supp.2d 1035, 1043-44 (C.D. Cal. 1998). I turn first to plaintiff's federal claims.
In the Ninth and Second Circuits to prove trademark infringement or false designation under the Lanham Act, a plaintiff must demonstrate that it owns a valid trademark registration and that the defendant's use of the allegedly infringing mark is likely to cause confusion by the consuming public as to the source or sponsorship of the defendant's goods. See Brookfield Communications, Inc. v. West Coast Entm't Corp., 174 F.3d 1036, 1046 (9th Cir. 1999); Clinique Labs., Inc. v. Dep Corp., 945 F. Supp. 547, 550-58 (S.D.N.Y 1996). The standard for evaluating the likelihood of confusion in both circuits is also substantially the same.See AME Inc. v. Sleekcraft Boats, 599 F.2d 341, 348-49 (9th Cir. 1979);Polaroid Corp. v. Polarad Elecs. Corp., 287 F.2d 492, 495 (2d Cir. 1961). Where a plaintiff has demonstrated trademark infringement under Section 32(1) of the Lanham Act, the Circuits also agree that the plaintiff is entitled to prevail on its claim of unfair competition under Section 43(a). See Brookfield Communications, Inc., 174 F.3d at 1046;Cartier, Inc. v. Deziner Wholesale, L.L.C., 2000 WL 347171 (S.D.N.Y. 2000). Finally, in order to demonstrate a claim for dilution pursuant to Section 43(a) of the Lanham Act, plaintiff must make an identical showing under both Ninth and Second Circuit precedent. See Panavision Int'l v. Toeppen, 141 F.3d 1316, 1324 (9th Cir. 1998); Nabisco, Inc. v. PF Brands. Inc., 191 F.3d 208, 215 (2d Cir. 1999).
With respect to plaintiff's state law claims, California and New York have enacted virtually identical statutes to provide remedies for dilution. See Cal. Bus. Prof. Code § 14330; N.Y. GBL § 368-1. Under both California and New York law, unfair competition is generally synonymous with the act of "passing off" one's goods as those of another. See Cel-Tech Communications Inc. v. Los Angeles Cellular Telephone Co., 20 Cal.4th 163, 193 (1999); Attorney's Process Research Inc. v. American Process Research Corp., 676 N.Y.S.2d 419 (N.Y.Sup.Ct. 1998). Where plaintiff establishes a claim of unfair competition under the Lanham Act, he has also deemed to have established common law claims under both California and New York law. See Grupo Gigante S.A. de C.V. v. Dallo Co., Inc., 119 F. Supp.2d 1083, 1088 (C.D. Cal. 2000);Kraft General Goods Inc. v. Allied Old English, Inc., 831 F. Supp.2d 123, 135-36 (S.D.N.Y. 1993).
For the foregoing reasons, the court concludes that the Ninth Circuit law interpreting the Lanham Act is "reasonably identical" to that of the Second Circuit, as is the applicable common law of California and New York. Accordingly, the court will apply Ninth Circuit law to plaintiff's claims under the Lanham Act and California substantive law as to its state claims.
IV. TRADEMARK INFRINGEMENT
To prove trademark infringement or false designation under the Lanham Act, a plaintiff must show that he has a valid, projectile trademark interest in its trade and service marks, and the defendants similar mark creates a likelihood of confusion as to the source or sponsorship of its products. See Brookfield Communications, Inc. v. West Coast Entertainment, 174 F.3d 1036, 1046 (9th Cir. 1999); E. J. Gallo Winery v. Gallo Cattle Co., 96 F.2d 1280, 1290 (9th Cir. 1992). Below, I conclude that plaintiff has made such a showing.
Section 32(1) of the Lanham Act applies to federally registered marks and provides in pertinent part:
Any person who shall, without the consent of the registrant —
(a) use in commerce any reproduction, counterfeit, copy, or colorable imitation of a registered mark in connection with the sale, offering for sale, distribution, or advertising of any goods or services on or in connection with 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.
See 15 U.S.C. § 1114 (1).
Section 43(a)(1) of the Lanham Act applies the same standard to both registered and unregistered trademarks, and provides in pertinent part:
Any person who, on or in connection with any goods or services, . . . uses in commerce any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which —
(A) is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person, . . .
shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act.
See 15 U.S.C. § 1125 (a)(1).
A. VALID INTEREST IN TRADEMARKS
A trademark registered with the United States Patent and Trademark Office is "presumed to be distinctive and should be afforded the utmost protection." E.J. Gallo Winery v. Consorzio Del Gallo Nero, 782 F. Supp. 457, 462 (N.D. Cal. 1992); 15 U.S.C. § 115 (a). Where a registered mark becomes incontestable, registration is "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." 15 U.S.C. § 1115 (b).
U.S.C. § 115(a) provides in part:
Any registration issued under the Act . . . of a mark registered on the principal register provided by this chapter and owned by a party to an action shall be admissible in evidence and shall be prima facie 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. . . .
U.S.C. § 1115(b) provides in part:
To the extent that the right to use the registered mark has become incontestable under section 1065 of this title, the registration shall be 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. . . .
In the matter at bar, plaintiff tenders evidence that the service mark PHAT FARM, and all of the its sub brands are registered with the United States Patent and Trademark Office. See Russell Simmons Affidavit, at ¶¶ 10-11, Exh. B. Moreover, plaintiff's registration for PHAT FARM is incontestable. See Plaintiff's Brief, at 11, fn. 4. Plaintiff also owns registrations for various PHAT marks in over thirty countries around the world and has applications as well as registrations for several internet domains. See Simmons Aff. at ¶ 21, Exh. J. While defendants challenge the validity of plaintiff's incontestable marks by citing to the existence of registered marks with the term PHAT, the record avers that the companies to which defendants cite, either no longer have goods in commerce, are engaged in the sale of goods unrelated to clothes or fashion accessories, or have been abandoned by its owner.See Plaintiff's Reply at 8, n. 3; Aff. Brad Rose at ¶¶ 5-7, Exh. C.
The Phat Fashions registered marks include, PHAT, PHAT FARM, PHAT FARM and design, PHAT THREADS, BABY PHAT, BABY PHAT stylized, BABY PHAT and design, ALL CITY, ALL CITY ATHLETIQUES, PF 129 and design, Bulls Head Design, and Bull's Head Shaded Design.
Accordingly, the court concludes that plaintiff has a valid interest in its trade and service marks. The court must now determine whether defendants' mark results in a likelihood of confusion with plaintiff's trade and service marks, all linked with the word PHAT. I turn to that task.
B. LIKELIHOOD OF CONFUSION
Plaintiff asserts that defendant' products which bear the mark PHAT GAME are likely to be confused by consumers as goods emanating from the Phat Fashions' family of PHAT marks. Defendants respond that its logo and product are distinct and factual issues remain as to whether its mark is likely to cause confusion with plaintiff's PHAT marks. Defendants' argument lacks merit.
In the Ninth Circuit, the test for likelihood of confusion is whether a "reasonably prudent consumer" in the marketplace is likely to be confused as to the origin of the good or service bearing one of the marks. See Dreamwerks Prod. Group, Inc., v. SKG Studio, 142 F.3d 1127, 1129 (9th Cir. 1998). The Circuit enumerates eight factors to facilitate this inquiry: (1) strength of the mark; (2) proximity or relatedness of the goods; (3) similarity of sight, sound and meaning; (4) evidence of actual confusion; (5) marketing channels; (6) type of goods and purchaser care; (7) intent; and (8) likelihood of expansion. AMF, Inc. v. Sleekcraft Boats, 599 F.2d 341, 348-49 (9th Cir. 1979). The factors, however, should not be rigidly weighed, id., and are intended to guide the court in assessing the basic question of likelihood of confusion. Gallo Winery v. Gallo Cattle Co., 967 F.2d 1280, 1290 (1992). Thus, "the presence or absence of a particular factor does not necessarily drive the determination of confusion." Id.
i. Strength of the Mark
A strong mark is inherently distinctive, and therefore should be afforded the widest ambit of protection from infringing uses. See Sleekcraft Boats, 599 F.2d at 349. Marks are often classified in one of five categories increasing in distinctiveness: (1) generic, (2) descriptive, (3) suggestive, (4) arbitrary, or (5) fanciful. See Kendall-Jackson Winery. Ltd. v. E. J. Gallo Winery, 150 F.3d 1042, 1046 (9th Cir. 1998). "The latter three categories of marks, because their intrinsic nature serves to identify a particular source of a product, are deemed inherently distinctive." Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 768 (1992). Thus, marks that are suggestive, arbitrary or fanciful meet the distinctiveness element automatically. See Kendall-Jackson, 150 F.3d at 1046. On the other hand, generic marks "can never meet the distinctiveness element." Id. The decision of the United States Patent and Trademark Office to register a mark without requiring proof of secondary meaning affords a rebuttable presumption that the mark is suggestive or arbitrary or fanciful rather than merely descriptive.See Abercrombie Fitch Co. v. Hunting World Inc., 537 F.2d 4, 11 (2d Cir. 1976).
Defendants assert that the term BRAT has its origins in the African American community, and stands literally for "Pretty Hot And Tempting."See Decl. Shawn Williams, at 2 ¶ 7. Defendants contend that the acronym "phat" is synonymous with "cool," "hip," or "attractive" and used in common vernacular. See id. Defendants therefore submit that the term PHAT is only descriptive and not projectile for plaintiff's exclusive use. cannot agree.
Even assuming that PHAT idiomatically describes the quality of plaintiff's urban clothes and accessories, the court concludes that it does not describe the apparel's features or its actual qualities. Put plainly, the mark PHAT requires some thought by the consumer to connect the term with plaintiff's product line of clothing and fashion accessories because it has no intrinsic connection to the product for which the mark is used. Moreover, plaintiff tenders evidence that when Phat Fashions applied for the mark BRAT, the United States Patent and Trademark Office did not require proof of a secondary meaning on the ground that the term "phat" was only descriptive. See Aff. Brad Rose, at ¶ 2. Thus, the mark BRAT was registered as an inherently distinctive mark. See id. For these reasons, the court concludes that BRAT is an arbitrary mark. To determine the strength of the mark, the court may also examine whether the mark has acquired a secondary meaning. See Kendall Jackson, 150 F.3d at 1047. Secondary meaning is achieved "by an association between a name and a source . . . when this mental recognition occurs among purchasers, the name becomes legally protectible as an identification symbol." Transgro, Inc. v. Ajac Transmission Parts Corp., 768 F.2d 1001, 1014 (9th Cir. 1985) (citation omitted). The indicia which are commonly recognized as tending to show secondary meaning are (1) advertising expenditures; (2) consumer studies linking the name to a source; (3) sales success; (4) unsolicited media coverage; (5) attempts to plagiarize the mark; and (6) the length and exclusivity of the mark's use. See Thompson Medical Co., Inc. v. Pfizer, Inc., 753 F.2d 208, 217 (2d. Cir. 1985).
Given the conclusion in the text, the court need not consider whether a term having a descriptive meaning in a distinctive cultural groups but without such meaning in the greater society may be considered as merely descriptive.
In 2000, Phat Fashions spent approximately $3.7 million in advertising, and the company's annual revenue exceeded more than $111.5 million with evidence of continued growth and expansion. See Aff. Simmons, at ¶ 17 Exh. H. Moreover, Phat Fashions has begun to separately license the BRAT marks to third parties for use on an exclusive line of urban fashions and athletic wear. See Aff. Simmons, at ¶ 18. Exh. I. Sales under these licenses grossed more than $110.3 million in 2000. See id. The Phat Fashions family of marks have come to be recognized by the purchasing public as a source of high quality urban apparel, and have been featured in unsolicited articles and profiles in the New York Times, the New York Post, People Magazine, Elle Magazine, and other publications from 1993 to the present. See Aff. Simmons, at 6 ¶ 14, Exh F. Clothing and accessories bearing the BRAT family marks have been worn publicly by sports and entertainment celebrities such as Kobe Bryant, Patrick Ewing, Michael Jackson, Derek Jeter, Rosie O'Donnell, Chris Rock, and Adam Sandler. Id. In sum, plaintiff demonstrates the mark BRAT has a secondary meaning because consumers likely identify the term with Phat Fashion's clothing lines.
Accordingly, the court concludes that plaintiff's family of marks are distinctive and therefore the first factor weighs heavily in plaintiff's favor that a likelihood of confusion exists between the parties' marks.
ii. Degree of Similarity Between the Marks
The degree of the similarity of the marks is always considered a critical question in the likelihood of confusion analysis. See Goto.com, Inc. v. The Walt Disney Co., 202 F.3d 1199, 1205 (9th Cir. 2000). Marks must be considered in their entirety as they appear in the marketplace, adjudged in terms of appearance, sound and meaning. Id.; Dreamwerks, 142 F.3d at 1131. Put plainly, "the `combination of features as a whole rather than a difference in some of the details . . . must determine whether the competing product is likely to cause confusion in the minds of the public.'" Perfect Fit Industries, Inc. v. Acme Ouilting Co., 618 F.2d 950, 954 (2d Cir. 1980) (citations omitted). However, in making this assessment, similarities shall be weighed more heavily than differences. See Goto.com, 142 F.3d at 1206.
Plaintiff's apparel prominently displays one of the BRAT marks, such as BRAT FARM, in a bold athletic style or script font. Alternatively, plaintiff's logo features the mark BRAT FARM together with the initials B or PF, a BRAT mark in combination with a design logo, or the letters B or F surrounded by a heraldic crest or bold circle. Defendants' athletic apparel and accessories bear the mark BRAT or BRAT GAME, in bold athletic print or script font or feature the mark BRAT GAME appearing in a circle and surrounding the interlocking initials PG. The record before the court also demonstrates that the style and placement of the defendants' mark BRAT GAME on athletic wear is strikingly similar to the style and placement of the BRAT FARM mark used on plaintiff's goods. See Aff. Simmon, at Exh. L. Because the court must consider the marks relative to the clothes and accessories on which they lie, and weigh heavier the marks similarities, the marks, while not identical, have a high degree of similarity likely to cause confusion among consumers.
The court also finds that the first word BRAT is the dominant feature in each mark, and both marks are subsequently followed by one-four letter single-syllabled word. The word BRAT is displayed on both defendants' athletic apparel and on plaintiff's competing clothing lines BRAT FARM, ALL CITY and ALL CITY ATHLETIQUES. See Aff. Simmons, at ¶ 8, Exh. A L. Because the word BRAT is the most dominant feature of the parties' marks, it is likely that a person familiar with defendants' products would conclude that the word "BRAT" in its mark refers to plaintiff as the sponsor, source and origin of that product. See Giant Food, Inc. v. Nation's Foodservice Inc., 710 F.2d 1565, 1571 (Fed. Cir. 1983).
In sum, the marks similarities in appearance, sound and overall commercial impression outweigh the dissimilarities. Id. Accordingly, the court concludes that this factor weighs in plaintiff's favor that a likelihood of confusion exists between the parties' marks.
iii. Proximity or Relatedness of the Goods Marketing Channels Used
The Ninth Circuit has explained that "[t]he use of similar marks to offer similar products weighs heavily in favor of likelihood of confusion." Brookfield Communications, 174 F.3d at 1056. When goods are related, "the danger present is that the public will mistakenly assume there is an association between the producers of the related goods, though no such association exists." Sleekcraft, 599 F.2d at 350. Moreover, where "convergent marking channels," exist the likelihood of confusion increases. Id. at 353. Similarity of trade channels, however, does not require sales of both parties' goods by identical vendors, but only by "the same type of distribution channels." E. J. Gallo Winery v. Pasatiempos Gallo, S.A., 905 F. Supp. 1403, 1413 (E.D. Cal. 1994). Thus, I must determine the relatedness of the goods and how they are marketed.
Plaintiff uses its PHAT marks on clothing and athletic apparel, including but not limited to T-shirts, sweatshirts, shirts, jerseys, pants, shorts, jackets, hats, and caps, and is described as "urban fashions." See Aff. Simmons ¶¶ 6, 8, Exh. D. Plaintiff's target market is broad, ranging from infants to twelve year old boys and girls for its children's line, through males aged 18-34 for its BRAT FARM brand, and ALL CITY and ALL CITY ATHLETIQUE sub-brands. See Aff. Simmons ¶ 15. Defendants use its PHAT GAME mark on the identical types of goods, broadly described as "urban wear" and "athletic apparel," encompassing shorts, jerseys, t-shirts, and baseball caps. See Aff. Simmons, at Exh. P (citing Williams Depo. at 84-85) ("Williams Depo.") When defendants' principal officer was asked to identify other manufacturers of "urban wear" he referred to BRAT FARM. Id. at Williams Depo. 86. Moreover, defendants market these goods to the same potential consumers, "young people active in sports between the ages of 14 to 25."Id. at Williams Depo. 92.
With respect to marketing, plaintiff advertises in various publications, on its website, in its retail store in New York City, and at high end department stores. See Aff. Simmons ¶ 19. Defendants retail its products through some the same channels of trade, including through its own internet site and at retail stores and shopping malls. See Williams Depo. at 34-36. Moreover, defendants set their clothing prices slightly below its urban wear competitors, including Phat Farm. See Williams Depo. at 91. Thus, while plaintiff's PHAT FARM t-shirts sell for $26, defendants' PHAT GAME t-shirts sell for $20; while plaintiff's BRAT FARM baseball hats sell for $27, defendants' PHAT GAME baseball hats sell for $20. See Aff. Simmons ¶ 31. In sum, there is substantial similarity in the products the parties sell, how they are priced and the marketing channels used for distribution. Accordingly, the court finds that this factor supports the conclusion that defendants' mark causes a likelihood of confusion.
iv. Evidence of Actual Confusion
While evidence of actual confusion provides strong support for a finding of a likelihood of confusion, actual confusion is not necessary.American Int'l Group, Inc., v. American Int'l Bank, 926 F.2d 829, 832 (9th Cir. 1991) ; Sleekcraft, 599 F.2d at 353. But another way, the absence of actual confusion will not defeat an otherwise successful claim of trademark infringement under the Lanham Act because this court "must only find a likelihood of confusion." E.J. Gallo Winery v. Consorzio del Gallo Nero, 782 F. Supp. 457, 465 (N.D. Cal. 1991). Moreover, the lack of evidence of actual confusion "neither helps nor hurts" where the alleged infringers product has been on the market for a relatively short time.Hasbro Inc. v. Lanard Toys, Inc., 858 F.2d 70, 78 (2d Cir. 1988).
In the matter at bar, plaintiff concedes that it is not aware of any specific instances of actual consumer confusion. Because defendants' products have been on the market for only three years, the court concludes that this factor weighs only slightly in defendants' favor, if it all.
v. Type of Goods and Purchaser Care
The degree of care likely to be exercised by purchasers of the products at issue is based on the standard of a "reasonably prudent consumer."Brookfield Communications, Inc., 174 F.3d at 1059 (citing Dreamwerks Production Group, 142 F.3d at 1129). Confusion between marks is generally more likely when the goods at issue involve relatively inexpensive products to which the consumer does not devote a great deal of care and consideration in purchasing. E.J. Gallo Winery, 782 F. Supp. 465. Moreover, less sophisticated consumers are more likely to be confused by similarities among products. See Consolidated Cigar Corp. v. Monte Christi de Tabacos, 58 F. Supp.2d 199, 199 (S.D.N.Y. 1999). On the other hand, consumers are expected to be more discerning when purchasing expensive items, see Official Airline Guides, Inc. v. Goss, 142 F.3d 1385, 1393 (9th Cir. 1993), or when the products sold are marketed to expert buyers. See Accuride Int'l Inc. v. Accuride Corp., 871 F.2d 1531, 1537 (9th Cir. 1989).
Defendants market their urban fashion ware to young people between the ages of 14 to 25. See Williams Depo. at 92. Indeed, all of the advertising in its photographs depict young male models in urban contexts. See Aff. Simmons, at Exh. M. Moreover, the prices of many of defendants' products are under thirty dollars. See Aff. Simmons, at ¶ 31. Because of the youth of defendants' market and relatively low prices, this factor weighs in plaintiff's favor.
vi. Intent
When the senior user's trademark is famous in the marketplace and when the junior user was aware of the trademark and its fame, a presumption of bad faith arises from the choice of the same name. See E. J. Gallo Winery v. Pasatiempos Gallo, S.A., 905 F. Supp. 1403, 1413 (E.D. Cal. 1994). This presumption is rebuttable by evidence of other purposes to adopt the mark. Id. Thus, the party "claiming trademark infringement need not demonstrate that the alleged infringer intended to deceive customers." E. J. Gallo Winery v. Gallo Cattle Co., 967 F.2d 1280, 1293 (9th Cir. 1992).
In the matter at bar, defendants conducted one or more searches of the USBTO's trademark database in preparation for filing its application to register PHAT GAME, which would have revealed Phat Fashion's prior registrations. See Dickerson Depo. at 46. Indeed, Phat Fashions' registrations establish nationwide, constructive knowledge of Phat Fashions' ownership. See 15 U.S.C. § 1072; Mobil Oil Corp. v. Pegasus Petroleum Corp., 818 F.2d 254, 259 (2d Cir. 1987) (constructive knowledge of plaintiff' s mark may indicate bad faith).
Moreover, defendants' principals admitted to being aware of at least some of Phat Fashion's clothing lines, including the PHAT FARM and ALL CITY brands. See Williams Depo. at 86; Dickerson Depo. at 100. Defendants' principals testified that they conducted research into the urban fashion market, and attended a trade show in Las Vegas at which principals from Phat Fashions were present. See Williams Depo. at 61-64, 171; Dickerson Depo. at 98. At that trade show, Dickerson spoke with Russell Simmons, at which time Simmons informed Dickerson that Phat Fashions was "very protective of [its] family of BRAT marks," and that he got the impression that Phat Fashions did not want defendant to continue to use the mark BRAT on its clothing. See Dickerson Depo. 98-101.
Given its familiarity with Phat Fashions' marks and the research it conducted of the urban apparel market before launching its products, it seems apparent that defendants were aware of plaintiff's products establishing a presumption of bad faith. See Academy of Motion Picture Arts and Sciences v. Creative House Promotions, Inc., 944 F.2d 1446, 1456 (9th Cir. 1991). Defendants tender no evidence to rebut this presumption. Because the evidence in the record demonstrates that defendants deliberately adopted their mark to obtain a business advantage from the success of plaintiff's mark, this factor weighs heavily in plaintiff's favor.
vii. Likelihood of Expansion of Products
The parties do not dispute that the products they sell directly compete. Thus, the likelihood of expansion in product lines factor is a relatively unimportant factor in this inquiry. See Brookfield, 174 F.3d at 1060. Accordingly, the court concludes that this factor is neutral.
C. CONCLUSION
In the matter at bar, plaintiff has demonstrated that it has a valid interest in its trade and service marks. Moreover, the Sleekcraft factors weigh heavily in plaintiff's favor that a likelihood of confusion exists with respect to the parties' competing marks. For the foregoing reasons, the court concludes that plaintiff, as a matter of law, is entitled to summary judgment on its trademark infringement and false designation claims under the Lanham Act.
V. UNFAIR COMPETITION
To prevail on a claim of unfair competition under Section 32(1) or 43 (a) of the Lanham Act, a plaintiff must show (1) that it owns a valid trademark entitled to protection, and (2) that defendant's use is likely to cause confusion as to affiliation, connection or sponsorship. See 15 U.S.C. § 1125 (a); Brookfield Communications, Inc., 174 F.3d at 1046. When trademark and unfair competition claims are based on the same infringing conduct, however, courts apply the same analysis to both claims. E. J. Gallo Winery v. Gallo Cattle Co., 967 F.2d 1280, 1288 n. 2 (9th Cir. 1992); Toho Co., Ltd. v. William Morrow and Co., 33 F. Supp.2d 1206, 1210 (C.D. Cal. 1998).
Because the court has found that Phat Fashions has demonstrated that defendants' use of the BRAT GAME mark infringes Phat Fashions valid trademarks, it follows that plaintiff has equally established that defendants' use constitutes unfair competition. Brookfield Communications, Inc., 33 F. Supp.2d 1206; Toho Co., Ltd., 33 F. Supp.2d at 1215; E. J. Gallo Winery, 967 F.2d at 1288 fn. 2. Accordingly, plaintiff is also entitled to summary judgment on its unfair competition claim under Section 43(a) of the Lanham Act. See 15 U.S.C. § 1124 (a).
Unfair competition under both California common law and Cal. Bus. Prof. Code § 17200 is established where a plaintiff demonstrates that it has a valid, projectile trademark and that the use of the defendant's mark creates a likelihood of confusion with plaintiff's mark. See Grupo Gigante S.A. de C.V. v. Dallo Co., Inc., 119 F. Supp.2d 1083, 1088 (C.D. Cal. 2000). The Ninth Circuit has explained that such claims "substantially congruent" to claims made under the Lanham Act. Academy of Motion Picture Arts Sciences v. Creative House Promotions, Inc., 944 F.2d 1446, 1457 (9th Cir. 1991). Because the court has granted summary judgment as to plaintiff' s unfair competition claim under the Lanham Act it follows that plaintiff is also entitled to summary judgment as to its unfair competition claim under both California common law and §§ 17200 et seq. of the Cal. Bus. Prof. Code. See E. J. Gallo Winery v. Gallo Cattle Co., 967 F.2d 1280 (9th Cir. 1992); Grupo Gigante S.A. de C.V. v. Dallo Co., Inc., 119 F. Supp.2d 1083, 1088 (C.D. Cal. 2000).
VI. DILUTION
Under Section 43(c) of the Lanham Act, a plaintiff must show that: "(1) [its] mark is famous; (2) the defendant is making a commercial use of [its] mark in commerce; (3) the defendant's use began after the [plaintiff's] mark became famous; (4) the defendant's use of [its] mark dilutes the quality of the [plaintiff's] mark by diminishing the capacity of the [plaintiff's] mark to identify and distinguish [the plaintiff's] goods and services." Panavision Int'l, L.B. v. Toepren, 141 F.3d 1316, 1324 (9th Cir. 1998); 15 U.S.C. § 1125 (c). See also Nabisco, Inc. v. PF Brands, Inc., 191 F.3d 208, 215 (2d Cir. 1999). Below, I examine each of these elements seriatim.i. Famous Nature of the Marks
In determining whether a mark is distinctive and famous for purposes of this claim, a court should consider the following non-exclusive factors: (1) the degree of inherent or acquired distinctiveness of the mark; (2) the duration and extent of use of the mark in connection with the goods or services with which the mark is used; (3) the duration and extent of advertising and publicity of the mark; (4) the geographical extent of the trading area in which the mark is used; (5) the channels of trade for the goods or services with which the mark is used; (6) the degree of recognition of the mark in trading areas and channels of trade of the mark's owner and the person against whom the injunction is sought; the nature and extent of use of the same or similar marks by third parties; and (7) whether the mark was registered under the Act of March 3, 1881, or the Act of February 20, 1905, or on the principal register. See 15 U.S.C. § 1125 (c)(1).
Most of the relevant factors have been considered above in its analysis of plaintiff's trademark infringement claim. As the court explained, plaintiff's marks are distinctive and highly recognizable as demonstrated by evidence that Phat Fashions has received widespread publicity through unsolicited articles in the national press and through the many celebrities who wear its clothing line. Moreover, Phat Fashions advertises extensively, owns a number of internet domain registrations to market its goods, distributes its brands nationwide and internationally, and has begun to license its marks to third parties. In sum, the court finds that plaintiff's PHAT marks are distinctive and famous.
ii. Commerce Use and the Timing of that Use
Defendants do not tender evidence to dispute that the second and third elements of dilution under the Lanham Act are satisfied. The record reflects that defendants use their mark in commerce by selling their products over the internet, and making retail sales in California, Oregon, and Ontario, Canada. See Dickerson Depo. at 163-65. Moreover, defendants' principal Williams concedes that they began to manufacture and sell their products in 1998 after plaintiff's mark had saturated the urban fashion market. See Williams Depo, at 55. Indeed, by this time Phat Fashions had already appeared in widely circulated publications such as Elle, Essence, the Daily News, the New York Times, and Vibe, and had owned a registration on the principal register for PHAT FARM for five years. See Aff. Simmons, at Exhs. B, E, I. Thus, the court concludes that defendants made commercial use of their mark in commerce after plaintiff's mark became famous.
iii. Likelihood of Dilution
To satisfy the element of likelihood of dilution, plaintiff relies on the theory of "blurring." Panavision Int'l, L.P v. Toeppen, 141 F.3d 1316, 1326 (9th Cir. 1998); E. J. Gallo Winery v. Pasatiempos Gallo, S.A., 905 F. Supp. 1403, 1416 (E.D. Cal. 1994). "Blurring occurs when a defendant uses a plaintiff's trademark to identify the defendant's goods or services, creating the possibility that the mark will lose its ability to serve as a unique identifier of the plaintiff's product." Panavision Int'l, L.P., 141 F.3d at 1326, n. 7. Five factors are ordinarily relevant to assessing dilution by blurring under Section 43(c): (1) similarity of the trademarks and trade dress; (2) similarity of the products; (3) sophistication of consumers; (4) renown of the senior mark and trade dress; and (5) renown of the junior mark and trade dress. See Clinique Laboratories, Inc. v. Dep Corp., 945 F. Supp. 547, 562 (S.D.N.Y. 1996).
As the court explained in assessing the Sleekcraft factors, the first four factors weigh heavily in plaintiff's favor. With respect to the fifth factor, I note that defendants' mark has not been widely advertised and its sales are relatively modest to date. See Dickerson Depo. 58-64, 180-81; Williams Depo. at 26-27, 121, 131. Given that defendants' marks are relatively new, this factor should not be considered in the blurring analysis. See Clinique Laboratories, Inc., 945 F. Supp. at 562. Thus, the record demonstrates that defendants' use of the mark PHAT GAME dilutes the quality of plaintiff's mark by diminishing the capacity of its marks to identify and distinguish Phat Fashion's clothing apparel and accessories.
Balancing all of these factors, the court concludes that Phat Fashions has demonstrated a likelihood of dilution by blurring. Accordingly, Phat Fashions is entitled to summary judgment on its claims of dilution under the Lanham Act.
Under California's "anti-dilution" statute, Cal. Bus. Prof. Code § 14300, a plaintiff must establish two elements: (1) that its mark possesses a distinctive quality capable of dilution; and (2) that there is a likelihood of dilution of its mark or of injury to its business reputation. See Cal. Bus. Brof. Code § 14330; Academy of Motion Picture Arts Sciences v. Creative House Promotions, Inc., 944 F.2d 1446, 1457 (9th Cir. 1991). Since courts in the Ninth Circuit apply the same analysis to dilution claims under both § 43(c) of the Lanham Act and Cal. Bus. Prof. Code § 14330, a plaintiff who prevails under § 43(c) of the Lanham Act concurrently prevails under Cal. Bus. Prof. Code § 14330. See Panavision Int'l, L.P., 141 F.3d at 1324. Thus, plaintiff is also entitled to summary judgment on its state law dilution claim.
VII. PERMANENT INJUNCTION
To obtain a permanent injunction in trademark infringement and unfair competition cases, a plaintiff must demonstrate actual success on the merits and irreparable harm. See Hard Rock Cafeé Int'l (USA) Inc. v. Morton, 1999 WL 701388, at *4 (S.D.N.Y. 1999) Accord Panavision Int'l. L.P., 945 F. Supp. at 1304.Because the court holds that Phat Fashions is entitled to summary judgment on each of its claims, it follows that it has demonstrated actual success on the merits. Plaintiff is also able to demonstrate irreparable injury as it has shown that defendants' mark creates a likelihood of consumer confusion. Vision Sports, Inc. v. Melville Corp., 888 F.2d 609, 612 n. 3 (9th Cir. 1989) (a showing of likelihood of confusion establishes irreparable harm). Undoubtedly, without a permanent injunction, plaintiff will likely suffer a loss of substantial profits and business opportunities. Thus, "injunctive relief is the remedy of choice for trademark and unfair competition cases, since there is no adequate remedy at law for the injury caused by a defendant's continuing infringement." Century 21 Real Estate Corp. v. Sandlin, 846 F.2d 1175, 1180 (9th Cir. 1988). Indeed, in cases where the infringing use is for a similar service, broad injunctions are especially appropriate. Id.
Accordingly, the court finds that only a permanent injunction will bar further infringement and dilution by defendants' mark.
See E. J. Gallo Winery v. Pasatiempos Gallo, S.A., 905 F. Supp. at 1416 (granting plaintiff summary judgment and permanent injunctive relief on its infringement claims under § 32(1) of the Lanham Act and Cal. Bus. Prof. Code § 14200, its dilution claims under § 43(c) of the Lanham Act and Cal. Bus. Code § 14330 and its unfair competition claim under Cal. Bus. Prof. Code § 17200); E. J. Gallo Winery v. Consorzio Del Gallo Nero, 782 F. Supp. at 469-70 (N.D. Cal. 1991) (granting plaintiff summary judgment and permanent injunctive relief on its infringement claim under § 32(1) of the Lanham Act and its dilution claim under Cal. Bus. Code § 14330); Panavision Int'l, L.P., 945 F. Supp. at 1306, aff'd, 141 F.3d 1316 (granting plaintiff summary judgment and permanent injunctive relief on its dilution claims under § 43(c) of the Lanham Act and Cal. Bus. Prof. Code § 14330).
VIII. ORDERS
For the foregoing reasons, the court hereby makes the following ORDERS:1. Plaintiff's motion for summary judgment is GRANTED in its entirety;
2. Defendants are permanently ENJOINED from using or permitting the use of the trademark PHAT GAME in connection with the advertising, promotion, marketing, manufacturing, licensing, sub-licensing, sale, and/or distribution of any of defendants' apparel and/or products;
3. Defendants shall DISABLE their internet web site located at www.PHATGAME.com within thirty (30) days from the effective date of this order; and
4. Defendants shall TRANSMIT to plaintiff's counsel within forty-five (45) days all transfer documentation required by the relevant domain name registrar to cause the transfer of ownership of the registration for the internet domain name www.PHATGAME.com to plaintiff.
IT IS SO ORDERED.