Opinion
NO. 5:18-CV-1056-DAE
08-05-2020
Melissa A. WILSON, Plaintiff, v. TESSMER LAW FIRM, PLLC, and Heather C. Tessmer, Defendants.
Brandon Taylor Cook, John C. Cave, Gunn Lee & Cave, P.C., San Antonio, TX, for Plaintiff. Jack Daniel Harkins, Ryan D. Borelo, Dykema Gossett PLLC, San Antonio, TX, Sherri A. Wilson, Denko & Bustamante LLP, Austin, TX, for Defendants.
Brandon Taylor Cook, John C. Cave, Gunn Lee & Cave, P.C., San Antonio, TX, for Plaintiff.
Jack Daniel Harkins, Ryan D. Borelo, Dykema Gossett PLLC, San Antonio, TX, Sherri A. Wilson, Denko & Bustamante LLP, Austin, TX, for Defendants.
ORDER GRANTING PLAINTIFF'S MOTIONS FOR SUMMARY JUDGMENT IN PART, DENYING PLAINTIFF'S MOTIONS FOR SUMMARY JUDGMENT IN PART, AND DENYING DEFENDANTS’ CROSS MOTIONS FOR SUMMARY JUDGMENT
David Alan Ezra, Senior United States District Judge The matters before this Court are Melissa A. Wilson's ("Plaintiff") multiple Motions for Summary Judgment as well as Tessmer Law Firm and Heather Tessmer's (collectively "Defendants") cross motions for summary judgment. (Dkts. # 38, 39, 40, 42, 43, 52.) The Court held a hearing on this matter on July 7, 2020. At the hearing, Brandon Taylor Cook, Esq. represented Plaintiff and Jack Daniel Harkins, Esq. represented Defendants. After careful consideration of the memoranda in support of and in opposition to the motions, the Court—for the reasons that follow—GRANTS IN PART AND DENIES IN PART Plaintiff's and Defendants’ various motions for summary judgment.
BACKGROUND
This case concerns the use of two almost identical sayings that two different law firms use to advertise legal services. Plaintiff is an attorney and founder of Advocate Law Firm, P.A., based in Bartow, Florida. (Dkt. # 1 at 2.) She alleges that she has continuously used the federal trademark EVER ARGUED WITH A WOMAN? ("Mark") in conjunction with providing and advertising legal services since at least as early as September 12, 2007. (Dkt. # 39 at 1.)
The phrases EVER ARGUE WITH A WOMAN? and EVER ARGUED WITH A WOMAN? are virtually indistinguishable and both phrases will be referred to as "Mark" unless otherwise noted by the Court.
Plaintiff's application serial no. 85/496797 was initially rejected by the United States Patent and Trademark Office on the basis EVER ARGUED WITH A WOMAN? was confusingly similar to an existing trademark registration no. 3,567,019 for EVER ARGUE WITH A WOMAN? (the " ‘019 Registration"), then owned by Schroder Joseph & Associates ("SJA") and in use since January 2008. (Id. at 2.) On or around April 17, 2013, Plaintiff reached an agreement with SJA wherein SJA assigned the ‘019 Registration and all corresponding goodwill and rights it had in the Mark to Plaintiff. (Id. ) Plaintiff, in return, licensed SJA to use the Mark in New York. (Id. ) On April 17, 2013, Plaintiff filed a notice of the assignment with the USPTO indicating the ‘019 Registration had been assigned to Plaintiff. (Id. ) Additionally, Plaintiff's application Serial No. 85/496797 registered on the USPTO Principal Register as U.S. Trademark Registration No. 4,570,573 on July 22, 2014 ("the ‘573 Registration"). (Id. ) The ‘573 Registration is currently live on the USPTO principal register. (Id. ) The ‘019 Registration inadvertently cancelled on August 28, 2015, due to failure to submit necessary paperwork and fees to maintain the registration. (Id. )
Plaintiff uses the Mark on her website, social media accounts, in billboard advertisements, business cards, and various promotional items such as water bottles, koozies, key chains, pens, and tote bags. (Id. ) Plaintiff also licensees the Mark to licensees in various other states, including SJA, who use the Mark in conjunction with the offering of legal services. (Id. )
Heather Tessmer started the Tessmer Law Firm in San Antonio, Texas in 2005 and is its sole owner. (Dkt. # 42 at 1.) In or around the middle of November 2011, Defendants selected the Mark to be posted on a billboard. (Id. at 3.) When Defendants first adopted and started using the Mark, Defendants claim they were not aware of anybody else using that tagline or slogan or a similar tagline or slogan in connection with legal services in Texas or anywhere else in the United States. (Id. ) On December 5, 2011, the first billboards with the Mark were posted by Clear Channel Outdoor in and around San Antonio, Texas. (Id. ) Defendants state that the Mark has been used to advertise and provide Defendants’ legal services throughout the State of Texas. (Id. at 4.) They state they have continuously used the mark on billboards and other online advertising platforms and in connection with their commercial activities since its initial use in 2011. (Id. ) On or around April 2, 2018, the Defendants filed for and obtained a Certificate of Registration for the Mark for legal services with the Texas Secretary of State on May 23, 2018, Texas Registration No. 802981081. (Id. )
Plaintiff alleges she sent Defendants an email on or around July 8, 2014, notifying Defendants of Plaintiff's trademark rights in the Mark and objecting to Defendants’ use of the Mark. (Dkt. # 1 at 4.) Plaintiff filed a Complaint with this Court on October 9, 2018, alleging trademark infringement and unfair competition. (Dkt. # 1.) Plaintiff then filed several motions for summary judgment on December 20, 2019. (Dkts. ## 38, 39, 40.) Defendants responded and cross moved for summary judgment on January 3, 2020. (Dkts. ## 42, 43, 44.) Plaintiff also filed an additional motion for summary judgment on January 17, 2020. (Dkt. # 52.) There are also two motions to strike summary judgment evidence before the Court. (Dkts. ## 41, 56.)
LEGAL STANDARD
"Summary judgment is appropriate only if ‘there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.’ " Vann v. City of Southaven, 884 F.3d 307, 309 (5th Cir. 2018) (citations omitted); see also Fed. R. Civ. P. 56(a). "A genuine dispute of material fact exists when the ‘evidence is such that a reasonable jury could return a verdict for the nonmoving party.’ " Bennett v. Hartford Ins. Co. of Midwest, 890 F.3d 597, 604 (5th Cir. 2018) (quoting Anderson v. Liberty Lobby, 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) ). "The moving party ‘bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of [the record] which it believes demonstrate the absence of a genuine issue of material fact.’ " Nola Spice Designs, L.L.C. v. Haydel Enter., Inc., 783 F.3d 527, 536 (5th Cir. 2015) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) ).
"Where the non-movant bears the burden of proof at trial, ‘the movant may merely point to the absence of evidence and thereby shift to the non-movant the burden of demonstrating ... that there is an issue of material fact warranting trial.’ " Kim v. Hospira, Inc., 709 F. App'x 287, 288 (5th Cir. 2018) (quoting Nola Spice Designs, 783 F.3d at 536 ). While the movant must demonstrate the absence of a genuine issue of material fact, it does not need to negate the elements of the nonmovant's case. Austin v. Kroger Tex., L.P., 864 F.3d 326, 335 (5th Cir. 2017) (quoting Little v. Liquid Air Corp., 37 F.3d 1069, 1076 n.16 (5th Cir. 1994) ). A fact is material if it "might affect the outcome of the suit." Thomas v. Tregre, 913 F.3d 458, 462 (5th Cir. 2019) (citing Anderson, 477 U.S. at 248, 106 S.Ct. 2505 ).
"When the moving party has met its Rule 56(c) burden, the nonmoving party cannot survive a summary judgment motion by resting on the mere allegations of its pleadings." Jones v. Anderson, 721 F. App'x 333, 335 (5th Cir. 2018) (quoting Duffie v. United States, 600 F.3d 362, 371 (5th Cir. 2010) ). The nonmovant must identify specific evidence in the record and articulate how that evidence supports that party's claim. Infante v. Law Office of Joseph Onwuteaka, P.C., 735 F. App'x 839, 843 (5th Cir. 2018) (quoting Willis v. Cleco Corp., 749 F.3d 314, 317 (5th Cir. 2014) ). "This burden will not be satisfied by ‘some metaphysical doubt as to the material facts, by conclusory allegations, by unsubstantiated assertions, or by only a scintilla of evidence.’ " McCarty v. Hillstone Rest. Grp., Inc., 864 F.3d 354, 357 (5th Cir. 2017) (quoting Boudreaux v. Swift Transp. Co., 402 F.3d 536, 540 (5th Cir. 2005) ). In deciding a summary judgment motion, the court draws all reasonable inferences in the light most favorable to the nonmoving party. Wease v. Ocwen Loan Servicing, L.L.C., 915 F.3d 987, 992 (5th Cir. 2019).
On cross-motions for summary judgment, the court examines each party's motion independently, viewing the evidence and inferences in the light most favorable to the nonmoving party. White Buffalo Ventures, LLC v. Univ. of Tex. at Austin, 420 F.3d 366, 370 (5th Cir. 2005). "Cross-motions for summary judgment will not, in and of themselves, warrant the granting of summary judgment unless one of the parties is entitled to judgment as a matter of law ...." Joplin v. Bias, 631 F.2d 1235, 1237 (5th Cir. 1980). Each party may move for summary judgment using different legal theories that rely on different sets of material facts. Bricklayers, Masons & Plasterers Int'l Union of Am. v. Stuart Plastering Co., 512 F.2d 1017, 1023 (5th Cir. 1975). Nonetheless, cross-motions for summary judgment may be probative of the absence of a factual dispute when they reveal a basic agreement concerning what legal theories and material facts are dispositive. See id.
Additionally, at the summary judgment stage, evidence need not be authenticated or otherwise presented in an admissible form. See Fed. R. Civ. P. 56(c) ; Lee v. Offshore Logistical & Transp., L.L.C., 859 F.3d 353, 355 (5th Cir. 2017). However, "[u]nsubstantiated assertions, improbable inferences, and unsupported speculation are not sufficient to defeat a motion for summary judgment." United States v. Renda Marine, Inc., 667 F.3d 651, 655 (5th Cir. 2012) (quoting Brown v. City of Hous., 337 F.3d 539, 541 (5th Cir. 2003) ).
DISCUSSION
Plaintiff moves for summary judgment on Defendants’ laches, estoppel, acquiescence, and waiver affirmative defenses (Dkt. # 38); on her trademark infringement claim (Dkt. # 39); on Defendants’ junior user defenses (Dkt. # 40); and on Defendants’ abandonment affirmative defense (Dkt. # 52). Defendants cross move for summary judgment on Plaintiff's trademark infringement claim (Dkt. # 42) and on their junior user defenses (Dkt. # 43). The Court address each motion below.
i. Trademark Infringement
Plaintiff moves for summary judgment on her trademark infringement claim. (Dkts. # 39.) Defendants cross move for summary judgment with a no-evidence motion for summary judgment. (Dkt. # 42.) A no-evidence motion for summary judgment is inappropriate here as that type of pleading may be filed in state not federal court. See Bank of Am., N.A. v. Fulcrum Enterprises, LLC, 20 F. Supp. 3d 594, 602 (S.D. Tex. 2014). Under federal law, the party moving for summary judgment must inform the court of the basis for the summary judgment motion and must point to relevant excerpts from pleadings, depositions, answers to interrogatories, admissions, or affidavits that demonstrate the absence of genuine factual issues. Topalian v. Ehrman, 954 F.2d 1125, 1131 (5th Cir. 1992). As such, the Court will consider Defendants’ motion as a standard cross motion for summary judgment.
In her motion, Plaintiff argues she is the lawful registered owner of the Mark and that there is a likelihood of confusion between her use of the Mark and Defendants’ use of it. (Dkt. # 39.)
To prevail on her claim of trademark infringement under the Lanham Act, Plaintiff must establish: (1) she possesses a legally protectable trademark and (2) Defendant's use of this trademark " ‘creates a likelihood of confusion as to source, affiliation, or sponsorship.’ " Nola Spice Designs, 783 F.3d at 536. The elements of common law trademark infringement under Texas law are the same as those under the Lanham Act. Id. (citing Hot–Hed, Inc. v. Safehouse Habitats (Scotland), Ltd., 333 S.W.3d 719, 730 (Tex. App.—Houston [1st Dist.] 2010, pet. denied) ).
a. Possession of Legally Protected Mark
To be legally protectable, a mark must be "distinctive" in one of two ways. Nola Spice Designs, 783 F.3d at 537. A protectable mark is distinctive either inherently or through secondary meaning. American Rice, Inc. v. Producers Rice Mill, Inc., 518 F.3d 321,329 (5th Cir. 2008). Under the Lanham Act, a certificate of registration for its federal trademark is prima facie evidence of a trademark's validity and of the register's exclusive right to use it in connection with the designated commercial services. 15 U.S.C. §§ 1057(b), 1115(a) ; Amazing Spaces, Inc. v. Metro Mini Storage, 608 F.3d 225, 237 (5th Cir. 2010).
Plaintiff states that as she is the owner of the ‘573 Registration, she has demonstrated prima facie evidence of ownership of the Mark. (Dkt. # 39 at 5.) Defendant responds, and cross moves for summary judgment, that the federal registration for the Mark was cancelled by the Trademark Office and is no longer valid or in effect. (Dkt. # 42 at 9; Dkt. # 42-2 at 6.) Plaintiff replies that although the ‘019 Registration may have been cancelled in 2015, she has used the Mark in commerce continuously since at least as early as July 2014 and the ‘573 Registration remains live. (Dkt. # 48 at 2.) Plaintiff argues that this continuous use establishes enforceable trademark rights in the Mark.
While registration of a mark is "prima facie evidence of ... the registrant's ownership of the mark," ownership "is established by use, not by registration." Viacom Int'l v. IJR Capital Investments, L.L.C., 891 F.3d 178, 186 (5th Cir. 2018) (quoting Union Nat. Bank of Texas, Laredo, Tex. v. Union Nat. Bank of Texas, Austin, Tex., 909 F.2d 839, 842 (5th Cir. 1990) ). The first one to use a mark is generally held to be the "senior" user and is entitled to enjoin other "junior" users from using the mark, or one that is deceptively similar to it, subject to limits imposed by the senior user's market and natural area of expansion. Union Nat. Bank of Texas, 909 F.2d at 842. An ownership right accrues when goods bearing the mark are placed on the market. Viacom Int'l, 891 F.3d at 186 (internal quotations omitted).
The Court finds that Plaintiff has demonstrated the Mark's distinctiveness and ownership in the Mark. First, she had a federally registered trademark of the Mark that established prima facie evidence of the Mark's validity and of her ownership. Even if the ‘019 Registration was later cancelled, the registration is prima facie evidence of the Mark's distinctiveness. Second, although the registration was cancelled in 2015, online posts show that Plaintiff has continuously used the Mark in commercial activity linked to her legal services since as early as July 2014. (Dkt. # 39-1, Tab 7 at 128). The online posts show a variety of advertisements and advertising materials prominently displaying the Mark in connection with Plaintiff's legal services. (Dkt. # 39-1, Tab 7.) As ownership is established through use, Plaintiff has demonstrated continuous use of the distinctive Mark as attached to her provision of legal services.
The Court notes that the USPTO cancelled the trademark due to a failure to file appropriate paperwork. (Dkt. # 39 at 2.) Furthermore, the ‘573 Registration for the nearly identical Mark remains live. (Id. )
Accordingly, Plaintiff has demonstrated prima facie evidence of the Mark's distinctiveness and her continuous use of it connected to her commercial services, which establishes her ownership of it. The question now turns to whether there is a likelihood of confusion between Plaintiff's use of the Mark and Defendants’ use of it.
b. Likelihood of Confusion
The Fifth Circuit assesses likelihood of confusion based on the following "digits of confusion": "(1) strength of the plaintiff's mark; (2) similarity of design between the marks; (3) similarity of the products; (4) identity of retail outlets and purchasers; (5) similarity of advertising media used; (6) the defendants’ intent; (7) actual confusion; and (8) degree of care exercised by potential purchasers." Am. Rice, 518 F.3d at 329 (citing Oreck Corp. v. U.S. Floor Systems, Inc., 803 F.2d 166, 170 (5th Cir. 1986) ). The court must assess and weigh each digit to determine whether there is a likelihood of confusion. "No one factor is dispositive, and a finding of a likelihood of confusion does not even require a positive finding on a majority of these ‘digits of confusion.’ " Elvis Presley Enters., Inc. v. Capece, 141 F.3d 188, 194 (5th Cir. 1998) (quoting Conan Properties, Inc. v. Conans Pizza, Inc., 752 F.2d 145, 150 (5th Cir. 1985) ).
Although likelihood of confusion is generally a fact question, Elvis Presley Enters., 141 F.3d at 196, summary judgment may be proper if the undisputed facts in the "summary judgment record compel [ ] the conclusion that the movant is entitled to judgment as a matter of law." Bd. of Supervisors for La. State Univ. Agric. & Mech. Coll. v. Smack Apparel Co., 550 F.3d 465, 474 (5th Cir. 2008) (citing Beef/Eater Rests., Inc. v. James Burrough Ltd., 398 F.2d 637, 639 (5th Cir. 1968) ).
A brief review of the factors indicates that the likelihood of confusion here is high. Both parties are seeking to provide commercial legal services and advertise those services using practically identical marks. Both parties have shown they use similar advertising platforms, including online posts and merchandise. However, the key question in the matter at hand is whether the parties are using the Mark in separate geographic and economic areas; if so, the likelihood of confusion would be low, regardless of the other factors.
The Second Circuit held in a foundational case on this point, "As long as plaintiff and defendant confine their use of the mark ‘Dawn’ in connection with the retail sale of baked goods to their present separate trading areas it is clear that no public confusion is likely." Dawn Donut Co. v. Hart's Food Stores, Inc., 267 F.2d 358, 364 (2d Cir. 1959). The Fifth Circuit applied Dawn Donut shortly thereafter and referenced it as recently as 2008. See John R. Thompson Co. v. Holloway, 366 F.2d 108, 116 (5th Cir. 1966) ; American Rice, 518 F.3d at 329 n. 20 ("This Court has previously refused to grant a remedy to a plaintiff where that plaintiff was not using the allegedly infringed mark in the same trading area as a defendant.").
Recently, a court in this district held, " Dawn Donut must still be applied regardless of the increasing irrelevance of geographic borders in commerce until the Fifth Circuit rules otherwise." Cross Trailers, Inc. v. Cross Trailer Mfg. & Sales, LLC, 363 F. Supp. 3d 774, 782 (W.D. Tex. 2018) ; see also Gorgeous Gals, LLC v. Hey Gorgeous! Spa & Wellness, LLC, No. 1:16-CV-903-RP, 2017 WL 5016036, at *8 (W.D. Tex. Nov. 2, 2017). As such, it is axiomatic that a district court cannot ignore circuit court precedent on the theory that the circuit court may change its view. That is the role of the circuit court. As such, the Court finds that Dawn Donut should be applied here as a factor among the other eight listed above, in accordance with other courts within this district.
Both parties addressed Dawn Donut in their briefings. Plaintiff argues that, assuming arguendo the parties’ current trading area does not overlap, there is no genuine issue of fact that Plaintiff is likely to expand into Defendants’ trading area in the future. (Dkt. # 39 at 12.) She points to the fact that Dawn Donut specifically includes expansion by a licensee as an example of expanding into a trading area. (Id. (citing Dawn Donut, 267 F.2d at 364 ).) Plaintiff urges that she has specific plans to license the Mark to a Texas attorney and has already communicated with the attorney about the licensing. (Id. ) Defendants respond that this argument fails as a matter of law as the mere hope or desire to license a mark is insufficient to establish an intent to enter a market. (Dkt. # 42 at 18) (citing in part 5 J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition, § 26:33 (5th Ed. 2019.) ).
Plaintiff's primary support for her assertion that she will enter the Texas market as a licensor is a statement of her intention to do so, seen in her email to Ms. May, and evidence that she has a history of licensing the Mark to licensees in different states. (Dkt. # 48 at 7.) She strongly rebuts Defendants’ characterization of this suit as a "licensing shakedown" and states that she discovered Defendants’ Texas registration of the Mark during talks to license the Mark to another attorney in Texas. (Id. at 8.) Plaintiff says the discovery of that registration prompted this suit. (Id. )
Following the hearing, Defendants filed a motion for leave to file supplemental briefing in support of their motion for summary judgment on trademark infringement. (Dkt. # 78.) They argue that the USPTO examiner's initial refusal to issue the ‘019 Registration because of the similarities of EVER ARGUE WITH A WOMAN? and EVER ARGUED WITH A WOMAN? should not be considered in the Court's analysis on likelihood of confusion. (Id. at 3.) They urge that the presumptions applied in the examination context do not apply here. (Id. ) The Court grants the motion for leave (Dkt. # 78) and further finds it does not need to consider the examiner's finding in its likelihood of confusion analysis. As stated above, the similarities between EVER ARGUE WITH A WOMAN? and EVER ARGUED WITH A WOMAN? are obvious, with only one letter change that changes the verb's tense. They are the same words. Regardless of the examiner's finding, the linguistic similarities certainly point to a likelihood of confusion, yet the Court is aware that is one of several factors in consideration.
The Court is mindful that the likelihood of confusion analysis is fact-intensive, and that summary judgment is only appropriate if the record compels the conclusion that the movant is entitled to judgment as a matter of law. See Bd. of Supervisors for La. State Univ. Agric. & Mech. Coll., 550 F.3d at 474. The Court finds that the record does not compel such a conclusion. Even if the Court were to find that the Plaintiff's licensing of the Mark in Texas and Defendants’ use of the Mark created a likelihood of confusion, there remains a genuine dispute as to whether or not Plaintiff truly plans to enter the Texas market. Plaintiff has only provided her statement of intent to do so and history of doing so in other states. That is not enough to rebut Defendants’ argument that this lawsuit amounts to a licensing shakedown, and, more importantly at this stage in the proceedings, it certainly does not compel a finding as a matter of law.
As to Defendants’ two motions to strike, the Court has not relied on the objected-to evidence in its analysis. Regarding the objected-to evidence of current Texas residents contacting Plaintiff for legal services, the Court has already determined that summary judgment is not appropriate for the likelihood of confusion prong, due to its fact-intensive nature and the need to develop further evidence regarding Plaintiff's intent to enter the Texas market. Therefore, the Court does not need to consider in its analysis whether current Texas residents have reached out to Plaintiff for legal services. That evidence will be part of the fact-specific inquiry that will occur in arguing likelihood of confusion. Defendants also move to strike Tab 11 of Brandon Cook's declaration, specifically the portion of the email where Plaintiff states to Mr. Cook that Ms. May would like to license the Mark. However, the Court solely considered Plaintiff's email to Ms. May informing Ms. May of Plaintiff's trademark and asking her whether she would like to license the Mark and not Plaintiff's subsequent email to Mr. Cook, which is the email Defendants object to. Plaintiff has indicated she does not rely on the objected-to evidence and instructed the Court to disregard it. (Dkt. # 61 at 6.) As such, Defendants’ motions to strike (Dkts. ## 41, 56) are denied as moot.
In accordance with the above, the Court finds that there is a genuine dispute of material fact regarding the likelihood of confusion prong. As such, neither party is entitled to summary judgment on Plaintiff's trademark infringement claim. Both Plaintiff's motion for summary judgment and Defendant's cross motion for summary judgment on Plaintiff's trademark infringement claim are denied. (Dkts. ## 39, 42.)
ii. Defendants’ Laches, Estoppel, Acquiescence, and Waiver Affirmative Defenses
Plaintiff focuses her motion for summary judgment on Defendants’ laches defense. (Dkt. # 38.) As such, the Court will address that defense first and then the others in turn.
a. Laches
Laches is an "inexcusable delay that results in prejudice to the defendant." Abraham v. Alpha Chi Omega, 796 F. Supp. 2d 837, 845 (N.D. Tex. 2011). To establish a laches defense, Defendants must show: "(1) delay in asserting a right or claim; that the delay was inexcusable; [and] (3) that undue prejudice resulted from the delay." Elvis Presley Enters. v. Capece, 141 F.3d 188, 205 (5th Cir. 1998). "The period for laches begins when the plaintiff knew or should have known of the infringement." ( Id. )
Here, the parties disagree as to when the "period of delay" ends. Plaintiff argues, "It is well established in this Circuit that the period of delay for determining laches ends when the Plaintiff sends a cease and desist letter to the Defendants objecting to their infringing use of the mark with a cease and desist letter." (Dkt. # 45 at 2.) Plaintiff claims the start of the period of delay was on or around April 2014, when she learned of Defendants’ use of the marks in dispute, and that the period of delay ended when Defendants received the cease and desist letter on or around July 2014, totaling four months of delay. (Dkt. # 38 at 5.)
Plaintiff claims that "four months is not an inexcusable delay." (Id. at 6) (citing RE/MAX Int'l, Inc. v. Trendsetter Realty, LLC, 655 F. Supp. 2d 679, 711 (S.D. Tex. 2009) ("A delay of under two years is not unreasonable as a matter of law.")). Concerning the "undue prejudice" requirement for laches, Plaintiff urges that Defendants "cannot be prejudiced because their acts committed after receipt of Plaintiff's cease and desist were done at their own risk." (Id. at 5–6.)
Plaintiff further argues that Defendants not only "had no evidence," but "do not even address the undue prejudice element of their affirmative defense." (Dkt. # 45 at 5.) Plaintiff points to Source, Inc. v. SourceOne, Inc. to argue that granting summary judgment against the laches defense is appropriate here due to the relatively short four-month delay and the lack of evidence that the delay caused Defendants undue prejudice. (Dkt. # 38 at 6).
In response, Defendants argue that sending "cease and desist letters does not, as a matter of law, void a laches defense." (Dkt. # 44 at 9.) Defendants further claim that because the July 2014 cease and desist letter did not end the "period of delay," the "period of delay" ended when Plaintiff filed suit in October 2018, making the "period of delay" more than four years. (Id. ) Defendants argue that "federal courts have referred to analogous state statutes of limitations to determine whether a presumption of laches should apply," and that under Texas law there is a "four year statute of limitations for violations under the Lanham Act." (Id. at 8–9.) Thus, Defendants claim the "period of delay" for the laches analysis is four and a half years and "the trademark infringement lawsuit was filed after the expiration of the four-year statute of limitations." (Id. at 10.)
The Fifth Circuit in Elvis Presley held that the "period of delay" for the defendants’ laches defense ended when they received a cease and desist letter, totaling the "period of delay" to eight months. 141 F.3d at 205. The Fifth Circuit stated, "Any acts after receiving a cease and desist letter are at the defendant's own risk because it is on notice of the plaintiff's objection to such acts." Id. Additionally, the Fifth Circuit did "not find that eight months was an inexcusable delay." Id. The Fifth Circuit further reasoned, "even if we assume eight months to be an inexcusable delay ..., no undue prejudice has been shown as a result of this case." Id. at 205–06.
In accordance with the above, the Court finds that "the period of delay" for Defendants’ laches defense would end with the receipt of the July 2014 cease and desist letter, totaling about four months of delay. See id. Because the Fifth Circuit did "not find that eight months was an inexcusable delay," four months under these circumstances is not an inexcusable delay. See id. Furthermore, as in Elvis Presley, Defendants have not provided evidence showing that any "undue prejudice" resulted from the four-month delay. (Dkt. # 44 at 8–10.)
The Court acknowledges that in Abraham v. Alpha Chi Omega, the parties similarly differed on the proper end point of the period of delay and the district court there came out differently. 816 F. Supp. 2d 357, 362 (N.D. Tex. 2011). There, the defendants argued the "period of delay" for purposes of a laches defense should be cut off upon receipt of cease and desist letters in 1990 and Plaintiff argued the period should end when the suit was filed against him in 2007. Id. The court held that the facts differed from Elvis Presley because "between the time of the cease and desist letters, beginning in 1990, and suit, filed in 2007, the Greek Organizations delayed not a few years, as in ... Elvis Presley ..., but almost twenty years." Id. at 362–63. Because of this unusually long period of time between the letters and the suit, the court held "that the period of delay should not be cut off upon Mr. Abraham's receipt of the ... cease and desist demands." Abraham, 816 F. Supp. 2d at 363.
The Court finds that the current matter is distinguishable from Abraham because Plaintiff did not delay seventeen years after sending the cease and desist letter to file suit, but rather waiting just over four years, from July 2014 to October 2018. See id. Furthermore, the court in Abraham acknowledges that almost twenty years is such a significantly long time that it warrants going against the traditional approach of cutting off the period of delay upon the receipt of a cease and desist letter. Abraham, 816 F. Supp. 2d at 362–363. That acknowledgement of an exception reinforces that the traditional approach in the Fifth Circuit is to cut off the period of delay upon the receipt of a cease and desist letter, unless an exception is warranted due to an unusually long period of delay before filing suit.
As such, the Court finds that the cut-off for the period of delay was the receipt of the July 2014 letter and that four months is not an inexcusable delay. Furthermore, Defendants have not met their burden to show an undue prejudice from the delay. Therefore, summary judgment is appropriate for Plaintiff as to Defendants’ laches defense.
b. Estoppel, Acquiescence, and Waiver
While Plaintiff's motion focuses on the laches defense, she further argues that she has presented evidence in the laches argument that negates the elements of the defenses of estoppel, acquiescence, and waiver "revealing that Defendants had no evidence to support these defenses." (Dkt. # 45 at 5.) Plaintiff points out that "Defendants broadly assert that the arguments made with regard to laches preclude summary judgment on their estoppel, acquiescence, and waiver defenses" and they "do not satisfy their requirement in response to summary judgment to establish evidence in support of each element of these defenses." (Id. at 5–6.) Defendants claim that the evidence provided for the defense of laches "also provides specific facts showing a genuine dispute for trial as to the affirmative defenses of acquiescence, estoppel, and waiver." (Id. ) Defendants conclude that Plaintiff's motion should be denied for these reasons. (Id. at 10–11.)
First, to successfully establish an estoppel defense, "defendants would have to demonstrate at least intentional deception through concealment or inaction, or gross negligence amounting to constructive fraud." In re Henderson v. Century Finance Co., 577 F.2d 997, 1001 (5th Cir. 1978). Estoppel "requires a greater showing than mere unreasonable delay and prejudice." Houston Sports Ass'n v. Astro-Card Co., 520 F. Supp. 1178, 1181 (S.D. Tex. 1981). Plaintiff argues Defendants cannot show "evidence supporting either intentional deception or constructive fraud," and thus, "summary judgment on Defendants’ estoppel defense is appropriate." (Dkt. # 38 at 8.) As estoppel requires a greater showing than unreasonable delay or prejudice, and the Court found no unreasonable delay or prejudice above in its laches analysis, the Court finds that summary judgment on Defendants’ estoppel defense is appropriate.
Second, to successfully establish an acquiescence defense, a defendant must show three elements: "(1) assurances by the plaintiff that the defendant could use the mark, (2) reliance by the defendant upon those representations, and (3) undue prejudice." Pennzoil-Quaker State Co. v. Miller Oil & Gas Operations, 779 F.3d 290, 294 (5th Cir. 2015). Plaintiff argues the evidence shows "that Plaintiff demanded Defendants stop using the EVER ARGUE(D) Marks," when Plaintiff sent the July 2014 cease and desist letter. (Dkt. # 38 at 7.) Plaintiff also claims, "because Plaintiff never assured Defendants they could use the EVER ARGUE(D) Marks, there can be no reliance or prejudice." (Id. ) The Court finds that there was no assurance by Plaintiff that Defendants could use the Mark. As such, none of the three elements are met. Thus, summary judgment is appropriate on Defendants’ acquiescence defense.
Finally, "Waiver is the intentional relinquishment of a right actually known, or intentional conduct inconsistent with claiming that right." To establish waiver, "a defendant must show: (1) that the plaintiff held an existing right, benefit, or advantage; (2) the plaintiff's actual knowledge of the existence of that right, benefit, or advantage; and (3) the plaintiff's ‘actual intent to relinquish that right, or intentional conduct inconsistent with that right.’ " Reservoir, Inc. v. Truesdell, 1 F. Supp. 3d 598, 611 (S.D. Tex. 2014). In RE/MAX, the court explained "waiver is more difficult to prove than either laches or acquiescence ... [and] the absence of any disputed fact issues on the laches and acquiescence defenses supports granting summary judgment." 655 F. Supp. 2d at 711. Plaintiff argues that Defendants cannot prove the third element of waiver because "Plaintiff expressly objected to Defendants’ use of EVER ARGUE(D) Marks" and has not demonstrated "an intention to relinquish those rights." (Dkt. # 38 at 8.) As the Court conducted a thorough analysis on Defendants’ laches defense, and found summary judgment appropriate there, as a higher showing is typically required for waiver the Court further finds summary judgment appropriate on Defendants’ waiver defense. See RE/ MAX, 655 F. Supp. 2d at 711.
In accordance with the above, the Court grants Plaintiff's motion for summary judgment on Defendants’ laches, estoppel, acquiescence, and waiver defenses. (Dkt. # 38.)
iii. Junior User Affirmative Defenses
Plaintiff and Defendants also cross move for summary judgment on Defendants’ junior user defenses. (Dkts. ## 40, 43.) The Court will consider both motions below.
a. Innocent Local User Defense Under the Lanham Act
Under 15 U.S.C. § 1057(c), nationwide constructive notice is created by a trademark registration on the day the application was filed. Iancu v. Brunetti, ––– U.S. ––––, 139 S. Ct. 2294, 2297–98, 204 L.Ed.2d 714 (2019) ("And registration serves as ‘constructive notice of the registrant's claim of ownership,’ which forecloses some defenses in infringement actions.") (quoting 15 U.S.C. § 1051(a)(1) ). A registration provides constructive notice for all use during the existence of the registration. 15 U.S.C. § 1072 (1982). In addition, the constructive notice provided by a mark extends to use of the same or similar marks. See In re Int'l Flavors & Fragrances, Inc., 183 F.3d 1361, 1367–68 (Fed. Cir. 1999).
After a valid assignment of a trademark and its good will, "the assignee steps into the shoes of the assignor" and thus acquires all the rights and priorities as well as any burdens and limitations on use that were incumbent on the assignor. ICEE Distributors, Inc. v. J&J Snack Foods Corp., 325 F.3d 586, 593 (5th Cir. 2003) (internal quotations omitted); see also McCarthy, supra § 18:15. Through a valid assignment and continued use of the mark by the assignee, the continuity of the mark and its good will is preserved. McCarthy, supra § 18:15. Further, it is well established that after a valid assignment one such legal advantage that the assignee acquires is the assignor's priority of use. Ludden v. Metro Weekly, 8 F. Supp. 2d 7, 15 (D.D.C. 1998).
In her motion, Plaintiff argues that Defendants are precluded from asserting any good faith junior user defense because they have been on constructive notice of Plaintiff's trademark rights in the Mark. (Dkt. # 40 at 5-6.) Plaintiff urges that the ‘019 Registration, which was assigned to Plaintiff, provided constructive notice when Defendants first adopted use of the Mark on December 5, 2011. (Id. ) Plaintiff asserts that when she acquired the ‘019 Registration by assignment, she acquired all rights and constructive notice associated with the ‘019 Registration dating back to June 2, 2008, when it was filed. (Id. at 6 n.21.) Further, Plaintiff argues, Defendants have been on constructive notice of Plaintiff's rights in the Mark through either the ‘019 Registration or the ‘573 Registration ever since their date of first use. (Id. at 6.)
In response, Defendants argue that their use of the Mark, on December 5, 2011, predates Plaintiff's filing of a federal application for the Mark on December 15, 2011. (Dkt # 43 at 13-14.) Defendants also state that the ‘797 Wilson App, the federal trademark application for the ‘573 Wilson Reg, is the sole federal trademark registration at issue in Plaintiff's claim of trademark infringement and that Plaintiff's reliance on the ‘019 Registration is improper because once a registration is cancelled, subsequent use by a junior user is " ‘free from any disability caused by constructive notice" of that cancelled registration. (Id. at 14.) Additionally, Defendants argue that the issue of whether the Marks are distinguishable is immaterial because of the cancelled registration and prior use by Defendants of the mark in a remote area. (Id. )
In Action Temporary Services, Inc., cited by both Plaintiff and Defendants, the Federal Circuit held that federal registration of a mark in force at the time of an applicant's adoption of the same or similar mark, which federal registration subsequently is canceled, does not prevent, as a matter of law, the applicant from being a "lawful use[r]" of its mark, within the meaning of section 2(d) of the Lanham act, subsequent to that cancellation. Action Temp. Servs., Inc. v. Labor Force, Inc., 870 F.2d 1563, 1566 (Fed. Cir. 1989). There, defendant's registration was cancelled in 1981 and defendant did not file another application for the service mark LABOR FORCE until July 21, 1982. Id. at 1564. During the interim, plaintiff and junior user had continued using the mark for its own services. Id. The Federal Circuit reasoned that while actual notice exists independent of the event giving rise to that notice, "constructive notice, pursuant to section 22 of the Lanham Act, exists, and lasts, only as long as the federal registration giving rise to that constructive notice remains in effect." Id. at 1566. Therefore, the cancellation of the registration allowed plaintiff to establish concurrent user rights because they were not subject to any actual or constructive notice during this period of time. Id.
Here, there is evidence of a valid assignment of the ‘019 Registration and its good will to Plaintiff on April 17, 2013 and a notice of the assignment filed with the USPTO. (Dkt. # 40-1 at ¶¶ 9, 12.) Because the assignment was valid, Plaintiff effectively stepped into the shoes of the assignor to preserve continuity of the mark and good will. See ICEE Distributors, Inc., 325 F.3d at 593. Plaintiff acquired the assignor's priority of use, including constructive notice of trademark rights when the ‘019 Registration was live on the Principle Register of the USPTO beginning on the filing date on June 2, 2008 and lasting until August 28, 2015. (Dkt. # 50 at 3.)
To establish innocent use under the Lanham Act, Defendants must prove that the Mark was adopted by Defendants without actual of constructive knowledge of Plaintiff's prior use of the Mark. 15 U.S.C.A. § 1115(b) (2002). Thus, the constructive notice provided by the ‘019 Registration precludes the Defendants’ innocent user defenses during this period.
Based on the Federal Circuit's ruling in Action Temporary Services, the only time Defendants could have established rights in the Mark is after the cancellation date on August 28, 2015. This was not possible for Defendants because, unlike Action Temporary Services, there was no gap in time in which Defendants’ use was unencumbered by constructive notice from one of Plaintiff's two registrations. Plaintiff's ‘573 Registration created constructive notice beginning December 15, 2011 to the present of the same or similar marks. It is incorrect for Defendant to read Action Temporary Services to mean that cancellation of a registration acts to undo past constructive notice rather than merely ending its existence to cover subsequent use moving forward.
Defendants’ argument that the marks may be distinguishable is of no effect because Plaintiff's constructive notice covers the same or similar marks, which certainly includes two phrases that are virtually identical except one letter that merely changes the tense of one word.
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As such, the Court finds that summary judgment is appropriate for Plaintiff on Defendants’ statutory innocent user defense.
b. Common Law Innocent User Defense
Defendants also cross move for summary judgment on the common law defense of innocent adoption in a remote area. (Dkt. # 43.) As in their response to Plaintiff's motion (CITE), and as discussed above, Defendants assert that they began using the Mark on billboards throughout San Antonio on December 5, 2011, which is prior to when Plaintiff filed a federal trademark application for the Mark on December 15, 2011. (Id. at 9.) Defendants assert that they had no actual notice or constructive knowledge of Plaintiff's use of the Mark at this time. (Id. ) In addition, Defendants argue that they continuously used the Mark after Plaintiff filed her trademark application on billboards, the firm's website, its social media accounts, and other marketing materials. (Id. at 10.)
Defendants argue that they should prevail on the common law defense of innocent adoption in a remote area because the evidence establishes the following: (1) Defendant was acting in good faith; and (2) Defendant's first use was in a remote area. (Id. at 11.) To support the first element, Defendants point to their absence of actual or constructive knowledge of Plaintiff's use of the Mark at the time Defendants adopted and used of the Mark to promote the Tessmer Law Firm prior to the filing date of Plaintiff's federal trademark application. (Id. at 11–12.) To support the second element, Defendants argue that their first use of the Mark in the state of Texas is a remote area to the Plaintiff's actual use of the Mark for legal services in the state of Florida. (Id. at 12). In addition, Defendants address the Dawn Donut doctrine, arguing that Plaintiff's "mere hope or desire to license the mark is insufficient to establish an intent ‘to enter the market’ " and thus does not present bona fide likelihood of expansion evidence. (Id. at 12–13.)
As previously discussed, it is well-established that Plaintiff's constructive notice of use of the Mark covered the entire period of Defendants’ use. However, in regard to common law innocent adoption by a junior user in a remote area, Fifth Circuit law holds that knowledge of the senior user's mark is just one factor to consider in determining good faith. The Fifth Circuit has held, "The Fifth Circuit, however, has not expressly joined this majority view, and our past precedent implies a test to the contrary—specifically, that knowledge of use is but one factor in a good faith inquiry." C.P. Interests, Inc. v. California Pools, Inc., 238 F.3d 690, 700 (5th Cir. 2001) (discussing the majority view that a junior user's knowledge of a senior appropriator's use of a mark is itself sufficient to defeat a claim of good faith).
As such, the Court finds that summary judgment is not appropriate based solely on Defendants’ constructive notice of Plaintiff's ownership in the Mark. As such, an inquiry is required into whether Defendants acted in good faith when adopting use of the Mark and then whether Defendants operate as a remote user. In their motion, Defendants instead focus on the constructive or actual notice arguments before going into why Dawn Donut means their remote use is permissible. (CITE.) The Court must first determine whether Defendants acted in good faith when taking up use of the Mark and then whether Plaintiff truly intends to enter the Texas market. That is a necessarily fact-intensive inquiry that the Court does not find appropriate for summary judgment.
In accordance with the above, the Court finds that summary judgment is not appropriate on Defendants’ common law defense for innocent use in a remote area. (Dkt. # 40.)
iv. Abandonment Affirmative Defense
Finally, Plaintiff moves for summary judgment on Defendants’ abandonment affirmative defense. (Dkt. # 52.) Specifically, the parties disagree as to whether Plaintiff's alleged "naked licensing" of the Mark constitutes an abandonment of the Mark. (Dkts. ## 52, 57.)
The Lanham Act defines "abandonment" as follows:
A mark shall be deemed to be "abandoned" if either of the following occurs:
(1) When its use has been discontinued with intent not to resume such use. Intent not to resume may be inferred from circumstances. Nonuse for 3 consecutive years shall be prima facie evidence of abandonment. "Use" of a mark means the bona fide use of such mark made in the ordinary course of trade, and not made merely to reserve a right in the mark.
(2) When any course of conduct of the owner, including acts of omission as well as commission, causes the mark to become the generic name for the goods or services on or in connection with which it is used or otherwise to lose its significance as a mark. Purchaser motivation shall not be a test for determining abandonment under this paragraph.
15 U.S.C. § 1127. The definition of "abandonment" set forth in subpart (2) (formerly subpart (b)) is the specific statutory explication of unintentional abandonment, including abandonment due to naked licensing. Exxon Corp. v. Oxxford Clothes, Inc., 109 F.3d 1070, 1079 (5th Cir. 1997). The language of subpart (2) requires that to prove "abandonment" the alleged infringer must show that, due to acts or omissions of the trademark owner, the incontestable mark has lost "its significance as a mark." Id. This statutory directive reflects the policy considerations which underlie the naked licensing defense: if a trademark owner allows licensees to depart from his quality standards, the public will be misled, and the trademark will cease to have utility as an informational device ... a trademark owner who allows this to occur loses his right to use the mark. Id. (internal quotations omitted). Conversely, if a trademark has not ceased to function as an indicator of origin there is no reason to believe that the public will be misled. Id.
As a preliminary matter, the Court finds that Defendants have appropriately raised the abandonment defense. Plaintiff argued that Defendants waived naked licensing by failing to plead it as a defense. (Dkt. # 60 at 2.) Defendants raised the abandonment defense in their Amended Answer filed on June 10, 2019. (Dkt. # 25 at 9.) Naked licensing is part of the abandonment defense. See Exxon Corp., 109 F.3d at 1079. As such, Defendants have properly raised the defense and the Court will consider it.
On the merits, Plaintiff argues that this Court should enter summary judgment dismissing Defendants’ abandonment defense because she never discontinued use of the Mark and maintains a quality control over how the Mark is used in conjunction with the advertisement of legal services. (Dkt. # 52 at 3; Dkt. # 60 at 6.) Defendants respond that the Court should deny Plaintiff's motion because "Plaintiff failed to adequately control the nature and quality of services by her licenses, i.e. naked licensing, and, therefore, abandoned the Mark." (Dkt. # 57 at 5.) Defendants state that although Plaintiff's licensing agreements contain a quality and control provision, it is clear that Plaintiff does not control the nature and quality of legal services provided by the licensee law firms. (Id. at 6.)
The Fifth Circuit has held that a defendant looking to use the abandonment defense by way of naked licensing carries a "heavy burden." Kentucky Fried Chicken Corp. v. Diversified Packaging Corp., 549 F.2d 368, 387 (5th Cir. 1977). "Retention of a trademark requires only minimal quality control, for in this context we do not sit to assess the quality of products sold on the open market." Id. The purpose of the quality-control requirement is to prevent the public deception that would ensue from variant quality standards under the same mark or dress. Taco Cabana Int'l, Inc. v. Two Pesos, Inc., 932 F.2d 1113, 1121 (5th Cir. 1991), aff'd sub nom. Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 112 S. Ct. 2753, 120 L.Ed.2d 615 (1992).
Here, Plaintiff is licensing the Mark to two other law firms in connection with the advertising of legal services. (Dkt. # 60 at 6.) Her quality control consists of express quality control provisions requiring the licensee to conform to Plaintiff's quality standards and comply with all applicable laws and regulations. (Id. ) Furthermore, Plaintiff states she monitors her licensee's websites to ensure compliance with these quality control standards and retains the right to terminate the license if the licensee breaches the quality control agreement. (Id. ) Plaintiff considers her licensees being recognized in Best Lawyer Lists and receiving industry awards as indicative of maintaining quality legal services, which the Mark advertises. (Id. )
The Court notes that Defendants must meet a heavy burden in showing that they are entitled to the abandonment defense. However, the Court finds that Plaintiff has not demonstrated that Defendant has not met this burden sufficiently to warrant summary judgment on that matter. Plaintiff's level of quality control over her licensees and their use of the Mark, and specifically acts she takes to quality control the use of the Mark, is a question of fact.
Thus, the Court finds that summary judgment is not appropriate against Defendants’ abandonment affirmative defense.
CONCLUSION
For the foregoing reasons, the Court GRANTS summary judgment to Plaintiff on Defendants’ laches, estoppel, acquiescence, waiver, and statutory innocent user affirmative defenses. (Dkts. ## 38, 40.) The Court DENIES both motions for summary judgment on Defendants’ common law innocent user defense. (Dkts. ## 40, 43.) Furthermore, the Court finds that there is a genuine dispute of material fact as to Plaintiff's trademark infringement claim; as such, it DENIES Plaintiff's and Defendants’ cross motions for summary judgment on that claim. (Dkts. ## 39, 42.) Finally, the Court DENIES summary judgment to Plaintiff on Defendants’ abandonment affirmative defense. (Dkt. # 52.) Defendants’ motions to strike (Dkts. ## 41, 56) are DENIED AS MOOT . Defendants motion for leave to file supplemental briefing (Dkt. # 78) is GRANTED but has already been incorporated and addressed above.
As the dispositive motion deadline has passed, this matter will now be set for trial by separate order.
IT IS SO ORDERED .