Do you have to prove consumer confusion in a trademark counterfeiting case? ARCONA v. FARMACY

Trademark law is intended to protect consumers from being tricked into buying products from someone other than the trademark owner. A trademark is something that a seller uses to brand its products. Traditionally a trademark is considered a word phrase or symbol, but anything that signals to consumers the identity of the product manufacturer can qualify for trademark protection. Trademark law grants the senior user of a trademark the exclusive right to brand its products with the trademark. If someone other than the senior user of a trademark starts branding products in a way that is likely to cause consumer confusion, that can be considered trademark infringement.

The likelihood that consumer confusion will occur is the key issue in trademark infringement. Determining when a likelihood of confusion exists can be difficult to objectively define. Courts review several factors, referred to as Polaroid factors, to determine whether there is a likelihood of confusion. Polaroid Corp. v. Polarad Elecs. Corp., 287 F.2d 492 (2d Cir. 1961). Each circuit in the United States federal court system has a slightly different set of factors but the principles of the test are similar. Those factors are: (1) Strength of the senior user’s mark, (2) Similarity of the marks, (3) Similarity of the products or services, (4) Likelihood that the senior user will expand their product line into the junior user’s product line, (5) The junior user’s intent in adopting the mark, (6) Evidence of actual confusion, (7) Sophistication of the buyers, and (8) Quality of the junior user’s products or services.

The method by which a trademark owner can combat trademark infringement is codified in the Lanham Act. The important part of the code is 15 U.S. Code § 1114 – Remedies which states: (1)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.

The question then is whether if trademark counterfeiting has a lower standard of proof than trademark infringement or if both remedies require a Plaintiff to show a likelihood of confusion.

ARCONA, INC., v. FARMACY BEAUTY, LLC, 19-55586 (9th Cir. 2020) is a case which deals with this question of whether counterfeiting under 15 U.S. Code § 1114 requires Plaintiff to prove likelihood of confusion.

Plaintiff and Defendant are both manufacturers of luxury cosmetics. In March 2015, Plaintiff registered the trademark “EYE DEW” for its skincare products and began selling an eye cream using that trademark. Plaintiff’s product packaging consists of a long silver box that holds cylinder. An example of Plaintiff’s product is reproduced above on the left. In 2014, Defendant began developing a line of skincare products, including an eye cream. Defendant’s EYE DEW product, pictured above on the right, comes in a short, wide, white jar, along with a squarish outer box.

In September 2017, Plaintiff sued Defendant 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.

The district court granted summary judgment in favor of the Defendant on the ground that a reasonable consumer would not confuse Defendant’s skincare product with Plaintiff’s because their respective packaging featured different shapes, design schemes, text, and colors. Plaintiff appealed to the Court of Appeals for the Ninth Circuit.

The Ninth Circuit noted that the starting point for interpreting a statute is the language of the statute itself. A counterfeit claim is merely the first degree of trademark infringement, and there is nothing in the statutory language of Section 1114 to suggest that a counterfeit claim should be construed differently from an infringement claim. The Court held that 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. Based on this finding the Ninth Circuit affirmed the district court’s decision granting summary judgment.

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