Using Identical Marks Does Not Necessarily Equal Counterfeiting, Says Ninth Circuit

October 7, 2020

On October 1, 2020, the Ninth Circuit joined several other circuits in holding that the Lanham Act requires a specific finding of a likelihood of confusion to support a trademark counterfeiting claim.  The panel affirmed the district court’s summary judgment of no likelihood of confusion despite the use of an identical mark on a competing product.  The case is Arcona, Inc. v. Farmacy Beauty, LLC.

The plaintiff, Arcona, Inc. (“Arcona”) registered the trademark “Eye Dew” for an eye cream product in 2015.  Around the same time, the defendant Farmacy Beauty, LLC (“Farmacy”) also started selling an eye cream product featuring “Eye Dew” with the understanding that this phrase had not been registered as a trademark.  The two products compete in the same space and the same geographic area.  But they have very different appearances:

• the Arcona product is packaged in a tall, cylindrical, silver bottle encased in a slim, cardboard outer box featuring both “Eye Dew” and the Arcona house mark; and
• the Farmacy product is in a short, wide, white jar encased in a squarish outer box featuring both “Eye Dew” and the Famarcy house mark.

Arcona filed a suit against Farmacy raising a few trademark related claims, including a counterfeiting claim.  The district court granted partial summary judgment for Farmacy on the counterfeiting claim after finding that no customer could have been confused about the origin of the Farmacy product given the dissimilar product packaging and the inclusion of the Farmacy house mark on the product.

On appeal, the Ninth Circuit panel first rejected Arcona’s argument that the Lanham Act did not require it to show a likelihood of confusion.  The panel held that the plain language of the statute that establishes the cause of action for counterfeiting, 15 U.S.C. § 1114, shows that “likely to cause confusion” is a requirement for a counterfeiting claim.  Arcona also pointed to two statutory provisions establishing remedies for counterfeiting, 15 U.S.C. §§ 1116(d) and 1117(b), to support its contention.  These two provisions do not mention likelihood of confusion.  The panel pointed out, however, that these remedy provisions both refer back to section 1114(1)(a), which does include a likelihood of confusion requirement.

The panel also rejected Arcona’s alternative argument that there should be a presumption of consumer confusion because of Farmacy’s use of the identical “Eye Dew” mark.  The panel stated that a court must review the product “as a whole” in determining whether there could be consumer confusion, not just the marks at issue.  The panel held that because the two products’ overall appearances were very different, there should not be a presumption of consumer confusion. 

The final piece of the Ninth Circuit’s analysis focused on whether there was any genuine dispute of material fact about the likelihood of confusion in this case.  On this issue, Arcona argued that the district court should have confined its analysis to the identical marks when assessing consumer confusion.  The panel disagreed and held that the two marks must be considered in their entirety and as they appear to customers.  In a footnote, the panel commented that although in circumstances where a mark was very strong, the use of an identical mark by itself might cause consumer confusion, that was not the case here as the mark was not so strong.

Turning to the facts, the panel agreed with the district court that because the packaging, size, color, shape and all other attributes of the two products – other than the use of “Eye Dew” – were so different, no reasonable consumer would be confused by the two products.  The court also noted that the use of the respective house marks (Arcona vs. Farmacy) on the two products further reduced any likelihood of confusion.  In addition, there was evidence that third parties in the industry were also using the phrase “Eye Dew” on their products, which further supported no likelihood of confusion.  Finally, the court found that Famarcy did not intentionally copy the mark but instead only used the phrase to “describe” its product – not to create confusion about the product’s origin. 

This appears to be the first Ninth Circuit decision explicitly holding that a counterfeiting claim under the Lanham Act requires a showing of likelihood of confusion.  It is a helpful decision to defendants facing a counterfeiting claim in the Ninth Circuit.            

Author: Hui Liu