Health & Sun Research, Inc. et al v. Designer Skin LLC

Filing 56

ORDER denying Australian Gold, LLC's Motion for Summary Judgment. See Order for details. Signed by Judge Virginia M. Hernandez Covington on 11/14/2013. (KAK)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
HEALTH & SUN RESEARCH, INC.
d/b/a Kava Kava Intl. and
Vegas Tan,
Plaintiff,
v.

Case No. 8:12-cv-2319-T-33MAP

AUSTRALIAN GOLD, LLC,
Defendant,
________________________________/
AUSTRALIAN GOLD, LLC,
Counter-Plaintiff,
v.
HEALTH & SUN RESEARCH, INC.
d/b/a Kava Kava Intl. and
Vegas Tan,
Counter-Defendant.
______________________________/
ORDER
This matter comes before the Court pursuant to Australian
Gold, LLC’s Sealed Motion for Summary Judgment (Doc. # 43)
filed on August 16, 2013.

Health & Sun Research, Inc. filed

a Sealed Response in Opposition to the Motion for Summary
Judgment

(Doc.

#

48)

on

September

16,

2013,

to

which

Australian Gold filed a Sealed Reply (Doc. # 53) on September
27, 2013.

For the reasons that follow, the Court denies the

Motion for Summary Judgment.1
I.

Background
Health and Sun develops and sells indoor tanning lotions

for use in tanning beds. Health and Sun is comprised of
different brands, such as Kava Kava International and Vegas
Tan, among others.

(Carollo Dep. Doc. # 48-1 at 17:5-22).

According to its President, Santo Carollo, Health and Sun
offers approximately 300 different products. (Id. at 34:4-5).
Carollo testified that Health and Sun sells its tanning
lotions to thousands of tanning salons in the United States
and Canada via direct sales to salons and as well as through
distributors. (Id. at 35:4-8; 76:2-7).
Health and Sun’s indoor tanning lotions at issue are
known as Royal Flush and Purple Rain. Health and Sun does not
have a formal trademark registration for Royal Flush or Purple
Rain.

Rather, it relies on use for the basis of its common

law trademark rights in Royal Flush and Purple Rain. (Id. at

1

Although the parties’ submissions before the Court were
filed under seal, the Court declines to file the present Order
under seal. “The operations of the courts and the judicial
conduct of judges are matters of utmost public concern and the
common-law right of access to judicial proceedings, an
essential component of our system of justice, is instrumental
in securing the integrity of the process.” Romero v. Drummond
Co., 480 F.3d 1234, 1245 (11th Cir. 2007)(internal citations
omitted).
2

63:3-10).

Carollo testified that Health and Sun has sold a

tanning lotion under the trademark Purple Rain since 2001.
(Id. at 22:9-10).

Carollo also testified that Health and Sun

has sold a tanning lotion under the trademark Royal Flush
since 2005. (Id.).
According to Carollo, Health and Sun’s “products have a
years-long shelf life prior to the time the bottles of lotion
are opened.” (Carollo Decl. Doc. # 48-3 at ¶ 4).

During his

deposition, Carollo indicated that he had a bottle “made in
1996 . . . that’s still good” and that, once opened, the
product remained viable for up to 2 years. (Carollo Dep. Doc.
# 48-2 at 33:7-23).

Carollo explains that Health and Sun’s

distributors “will therefore purchase a large quantity of
product in a single transaction, which they can sell to
tanning salons over a period of months or even years.

As a

result, a sporadic pattern of sales is not atypical for
[Health and Sun].” (Carollo Decl. Doc. # 48-3 at ¶ 4).
Australian

Gold

also

sells

indoor

tanning

lotions,

including two products known as Royal Flush and Purple Reign.
Specifically, Australian Gold owns Reg. No. 4,081,252, filed
on January 27, 2011, and registered on January 3, 2012, for
the trademark Royal Flush®. (Doc. # 43-2).

Australian Gold

began selling Royal Flush in August of 2011.

Australian Gold

3

also owns Reg. No. 4,085,143 filed on March 2, 2011, and
registered on January 10, 2012, for the trademark Purple
Reign®. (Id.). Australian Gold began selling Purple Reign in
August of 2011.
Health and Sun contacted Australian Gold after Australian
Gold began selling these products in 2011. (Golay Dep. Doc. #
48-2 at 81:11-25).

Health and Sun asserted that Australian

Gold’s products infringed Health and Sun’s trademarks. (Id.).
On October 11, 2012, Health and Sun filed a three count
Complaint against Australian Gold asserting violation of the
Lanham

Act,

15

infringement

U.S.C.

under

Complaint

and

1125(a),

Florida

competition. (Doc. # 1).
the

§

Law,

common

and

law

common

trademark

law

unfair

Australian Gold filed an Answer to

asserted

the

affirmative

defenses

of

abandonment, laches, and trademark misuse. (Doc. # 27).

In

addition, Australian Gold lodged counterclaims against Health
and

Sun

for

trademark

infringement

and

abuse

of

process/trademark misuse. (Id.).
At this juncture, Australian Gold seeks summary judgment
as to Health and Sun’s Lanham Act and state law claims and
also seeks a finding that Health and Sun has infringed
Australian Gold’s marks.

The basis for Australian Gold’s

arguments is that Health and Sun has abandoned its Royal Flush
4

and Purple Rain marks.
II.

Summary Judgment Standard
Summary judgment is appropriate “if the movant shows that

there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.”
Civ. P. 56(a).

Fed. R.

A factual dispute alone is not enough to

defeat a properly pled motion for summary judgment; only the
existence of a genuine issue of material fact will preclude a
grant of summary judgment.

Anderson v. Liberty Lobby, Inc.,

477 U.S. 242, 247-48 (1986).
An issue is genuine if the evidence is such that a
reasonable jury could return a verdict for the nonmoving
party.

Mize v. Jefferson City Bd. of Educ., 93 F.3d 739, 742

(11th Cir. 1996) (citing Hairston v. Gainesville Sun Publ’g
Co., 9 F.3d 913, 918 (11th Cir. 1993)).

A fact is material if

it may affect the outcome of the suit under the governing law.
Allen v. Tyson Foods, Inc., 121 F.3d 642, 646 (11th Cir.
1997).

The moving party bears the initial burden of showing

the court, by reference to materials on file, that there are
no genuine issues of material fact that should be decided at
trial. Hickson Corp. v. N. Crossarm Co., Inc., 357 F.3d 1256,
1260 (11th Cir. 2004) (citing Celotex Corp. v. Catrett, 477
U.S. 317, 323 (1986)).

“When a moving party has discharged
5

its burden, the non-moving party must then ‘go beyond the
pleadings,’ and by its own affidavits, or by ‘depositions,
answers to interrogatories, and admissions on file,’ designate
specific facts showing that there is a genuine issue for
trial.”

Jeffery v. Sarasota White Sox, Inc., 64 F.3d 590,

593-94 (11th Cir. 1995) (citing Celotex, 477 U.S. at 324).
If there is a conflict between the parties’ allegations
or evidence, the non-moving party’s evidence is presumed to be
true and all reasonable inferences must be drawn in the nonmoving party’s favor.

Shotz v. City of Plantation, Fla., 344

F.3d 1161, 1164 (11th Cir. 2003). If a reasonable fact finder
evaluating the evidence could draw more than one inference
from the facts, and if that inference introduces a genuine
issue of material fact, the court should not grant summary
judgment.

Samples ex rel. Samples v. City of Atlanta, 846

F.2d 1328, 1330 (11th Cir. 1988) (citing Augusta Iron & Steel
Works, Inc. v. Emp’rs Ins. of Wausau, 835 F.2d 855, 856 (11th
Cir. 1988)).
of

nothing

However, if the non-movant’s response consists
“more

allegations,”
required.

than

summary

a

repetition

judgment

is

of

not

his
only

conclusional
proper,

but

Morris v. Ross, 663 F.2d 1032, 1034 (11th Cir.

1981), cert. denied, 456 U.S. 1010 (1982).

6

III. Trademark Abandonment
A.

Legal Standard

“To bring a trademark infringement claim under the Lanham
Act,

a

plaintiff

must

hold

a

valid

trademark.”

Natural

Answers, Inc. v. SmithKline Beecham, 529 F.3d 1325, 1329 (11th
Cir. 2008). Under the Lanham Act, a trademark is deemed
abandoned, and thus no longer valid, “when its use has been
discontinued with intent not to resume such use.” 15 U.S.C.
§

1127;

see

also

Cumulus

Media,

Inc.

v.

Clear

Channel

Commc’ns, Inc., 304 F.3d 1167, 1173 (11th Cir. 2002)(“a
defendant who successfully shows that a trademark plaintiff
has abandoned a mark is free to use the mark without liability
to the plaintiff.”); Tally-Ho, Inc. v. Coast Cmty. Coll.
Dist., 889 F.2d 1018, 1022-23 (11th Cir. 1989)(“Trademark
ownership is always appurtenant to commercial activity. Thus,
actual and continuous use is required to acquire and retain a
protectible interest in a mark.”).
As

stated

in

Cumulus

Media,

Inc.,

“Abandonment

is

trademark law’s way of recognizing that trademark rights flow
from use.” 304 F.3d at 1173.

That is, “if a trademark holder

ceases using a mark with an intent not to resume its use, the
mark is deemed abandoned and falls into the public domain and

7

is free for all to use.

Abandonment paves the way for future

possession and property in any other person.” Natural Answers,
Inc., 529 F.3d at 1329.
In this case, Australian Gold seeks a finding that Health
and Sun has abandoned its trademarks and therefore, must
establish two elements: “(1) that [Health and Sun] ceased
using the mark[s] in dispute and (2) that [Health and Sun] has
done so with an intent not to resume [their] use.” Cumulus
Media, Inc., 304 F.3d at 1174. For the purpose of determining
when abandonment has occurred, the Lanham Act defines “use” as
“the bona fide use of such mark made in the ordinary course of
trade, and not made merely to reserve a right in a mark.” 15
U.S.C. § 1127.

The Lanham Act directs that “intent not to

resume [use] may be inferred from the circumstances.” Id.

As

discussed in Natural Answers, Inc., the intent to resume use
of a trademark “cannot be far-flung or indefinite; rather,
there must be an intent to resume use within the reasonably
foreseeable future.” 529 F.3d at 1329.

Under the Lanham Act,

“Nonuse for 3 consecutive years shall be prima facie evidence
of abandonment, 15 U.S.C. § 1127, which creates a rebuttable
presumption of intent not to resume use.” Id. at 1329-1330.

8

Ultimately, Australian Gold faces a strict burden on its
abandonment theory.

“Because a finding of abandonment works

an involuntary forfeiture of rights, federal courts uniformly
agree that defendants asserting abandonment face a stringent,
heavy, or strict burden of proof.” Cumulus Media, Inc., 304
F.3d at 1175. “[B]oth non-use and intent not to resume must be
strictly proved.” Id.
B.

Sales Information

Although evidence of sales made is not dispositive of
trademark abandonment issues, Health and Sun’s sales of its
Royal Flush and Purple Rain products are highly relevant to
the dual inquiries of whether Health and Sun made bona fide
use of its marks and whether Health and Sun intended to
forever relinquish its rights to its marks.
The

record

shows

that

Health

and

Sun,

through

distributors or otherwise, has disseminated thousands of
bottles of its Royal Flush product in commerce as follows:
2005:
2006:
2007:
2008:
2009:
2010:
2011:
2012:
2013:

7,389
4,619
4,314
1,413
0
0
801
666
0

9

(Doc. # 43-3).
Health and Sun has likewise sold thousands of bottles of
its Purple Rain product.

The record demonstrates that Health

and Sun made the following sales of Purple Rain:
2003:
2004:
2005:
2006:
2007:
2008:
2009:
2010:
2011:
2012:

1,300
2,121
409
409
0
0
1,468
540
1,970
0

(Doc. # 43-7).2
C.

Abandonment Analysis
1.

Royal Flush

Health and Sun does not dispute that it did not make any
sales of its Royal Flush product for more than three years
before Australian Gold’s use began in August of 2011.

Health

and Sun specifically acknowledges that it experienced a three
year lapse in sales from July of 2008, to September of 2011.

2

In
Flush and
data from
testimony

summarizing Health and Sun’s sales of its Royal
Purple Rain products, the Court has relied upon raw
Health and Sun’s spreadsheets as well as upon the
of Carollo.
10

(Doc. # 48 at 11).3

As such, Australian Gold enjoys the

rebuttable presumption that Health and Sun does not intend to
resume use of the Royal Flush mark.

Thus, “the burden of

production, although not the ultimate burden of persuasion,
shifts to [Health and Sun]” to show intent to resume use as to
the Royal Flush mark.

Natural Answers, Inc., 529 F.3d at

1330; E. Remy Martin & Co., S.A. v. Shaw-Ross Int’l Imports,
Inc., 756 F.2d 1525, 1532 (11th Cir. 1985).
At this juncture, the issue before the Court is whether
Health and Sun “intended to resume meaningful commercial use
of the mark [Royal Flush].” AmBrit, Inc. v. Kraft, Inc., 812
F.2d 1531, 1550 (11th Cir. 1986).

Such an intent “may be

inferred from the circumstances,” Cumulus Media, Inc., 304
F.3d at 1174, but in the Eleventh Circuit, “such an intent
cannot be far-flung or indefinite.” Natural Answers, Inc., 529
F.3d at 1329.
Here, Health and Sun has come forward with evidence to
create a genuine issue of material fact for trial regarding

3

The three year gap in sales occurred between July of
2008, and August of 2011. (Doc. # 43-3). The 1,413 sales of
Royal Flush in 2008 occurred prior to July, and the 801 sales
of Royal Flush in 2011 occurred after August. (Id.).
11

whether it intended to resume use of the Royal Flush mark.
Health and Sun’s President has filed a declaration indicating:
[Health and Sun] has always intended to continue
producing and offering its Royal Flush and Purple
Rain tanning lotions to distributors and indoor
tanning salons. Because the lotions were not new
to the market, [Health and Sun] recognized that the
sales of these lotions would be sporadic as tanning
salons and distributors sought to replenish
dwindling inventories of the lotions over time.
Regardless, [Health and Sun] continued to see an
interest in these lotions and view these lotions as
two long-term staples of its product offering.
(Carollo Decl. Doc. # 48-3 at ¶ 6).
Australian Gold compares Carollo’s declaration to the
unavailing declaration filed in Natural Answers, Inc.

There,

the Eleventh Circuit upheld a finding of abandonment when the
plaintiff Natural Answers tendered only the affidavit of its
CEO to bolster its intent to utilize marks that it had not
used in over three years:
Natural Answers has provided no evidence of actual
and concrete plans to resume use in the reasonably
foreseeable future.
All it presented to the
district court was the bare assertion by its CEO
that it intended to resume use if it could find
ample funding and the unsupported assertion that
Philip Morris had requested more information from
Natural Answers after it sent Philip Morris a
letter soliciting a joint venture in 2003. Such
putative negotiations amount to nothing more than
an unsolicited proposal by Natural Answers that led
nowhere.
Quite simply, that is not enough.
Indeed, if all a party had to do to avoid a finding
of abandonment was to aver that it never intended

12

to abandon the trademark, then no trademark would
ever be abandoned, no matter how long its use had
been withdrawn from the market, or how inchoate and
speculative any intention to resume its use.
Natural Answers, Inc., at 1330.
In Natural Answers, Inc., the plaintiff developed and
manufactured a non-nicotine herbal lozenge, “HerbaQuit,” to
aid in smoking cessation. Id. at 1327.

The plaintiff filed a

federal trademark application for HerbaQuit on two occasions,
but both were rejected. Id.

The HerbaQuit product was on the

market from January of 2000, to March of 2002. Id. During that
time, the plaintiff sold approximately 50,000 packages of
HerbaQuit. Id.
after

the

sale

“On November 6, 2002, more than seven months
of

HerbaQuit

Lozenges

was

discontinued,

[defendant] launched the Commit Lozenges product,” an FDA
approved smoking cessation nicotine product. Id. The record
showed that the defendant began developing the Commit Lozenges
in 1998, applied for FDA approval in 2000, and received FDA
approval for clinical testing in 2002.

Id.

The defendant

received a federal trademark for COMMIT in 2003. Id. When the
plaintiff brought a trademark action against the defendant,
defendant

utilized

the

defense

of

abandonment.

Id.

In

response, the plaintiff’s CEO tendered an affidavit indicating
that plaintiff never intended to abandon its common law
trademark.

Under the facts of that case, the CEO’s affidavit
13

was not sufficient to withstand the defendant’s motion for
summary judgment.
The facts of the present can be distinguished from those
presented in the Natural Answers, Inc. case.

There, the

plaintiff stopped selling its product in 2002 and never
reentered the market. It further admitted that it had neither
the funds nor ability to reenter the market.

In the present

case, Health and Sun resumed the sale of its Royal Flush
product after the three year lapse and has continued to do so
during the time in which Australian Gold has offered a
competing product under the same name. The Court recognizes
that “the bare assertion by [a company’s] CEO that it intended
to

resume

use”

is

unavailing.

However,

in

this

case,

Carollo’s declaration is supported by circumstances showing
Health and Sun’s intent to use the Royal Flush mark. The long
shelf-life of the product combined with the fact that tanning
salons purchased many bottles of the Royal Flush product at
one time demonstrate how Health and Sun could sustain a three
year period of sales inactivity while still maintaining a
market presence and use of the Royal Flush mark.
Australian Gold also argues that Health and Sun has shown
that it lacks the intent to use the Royal Flush mark by making
only “token sales” of the Royal Flush product.
14

The Court

determines that a triable issue of fact exists concerning
whether

Health

and

Sun’s

sales

were

“token

sales”

as

Australian Gold contends, or rather, whether such sales were
bona fide, as maintained by Health and Sun.
As stated in Person’s Co., Ltd. v. Christman, 900 F.2d
1565, 1571 (Fed. Cir. 1990), a case in which summary judgment
on the abandonment defense was denied where the sales of the
marked goods were intermittent, “[t]here is . . . no rule of
law that the owner of a trademark must reach a particular
level of success, measured by the size of the market or by its
own level of sales, to avoid abandoning a mark.” Rather, as
stated in Cumulus Media, Inc., “‘Use’ as contemplated by the
definition of abandonment in 15 U.S.C. § 1127 . . . means the
bona fide use of such mark made in the ordinary course of
trade, and not made merely to reserve a right in a mark.” 304
F.3d at 1174, n.7. In addition, there must be enough use of
the mark to create goodwill in the trademark; the mark must be
sufficiently

promoted

to

identify

the

registrant

as

the

product’s source in the mind of the public. See Blue Bell,
Inc. v. Farah Mfg. Co., Inc., 508 F.2d 1260, 1266 (5th Cir.
1975).
Australian Gold characterizes Health and Sun’s sales of
both Royal Flush and Purple Rain as “de minimis” and compares
15

Health and Sun’s sales to the “sporadic, casual, and nominal”
sales made by Jean Patou, Inc. in La Societe Anonyme des
Parfums le Galion v. Jean Patou, Inc., 495 F.2d 1265, 1274 (2d
Cir. 1974).

There, the plaintiff LeGalion, a French perfume

manufacturer, sold its perfume under the trademark SNOB in
foreign countries, with substantial sales in excess of $2
million. Id. at 1268. LeGalion was unable to sell its perfume
in the United States because, in 1951, Patou, an American
perfume maker, obtained a trademark registration for SNOB. Id.
In spite of the registration, Patou sold only 89 bottles of
perfume between 1950 and 1971. Id. at 1269.

When Patou’s

trademark

court

was

challenged

by

LeGalion,

the

found

abandonment and noted that “the twenty-year period of inaction
by defendant persuades us that any use it made of the SNOB
mark

was

purely

defensive,

and

insufficient

to

obtain

enforceable rights in the mark.” Id. at 1274. Here, the lapse
in sales was for three years, as compared to twenty, and
Health and Sun sold thousands of bottles of lotion, as
compared with 89 bottles of perfume.

Australian Gold has

demonstrated a lapse in sales and has also offered some
evidence indicating that Health and Sun has not actively
marketed its Royal Flush products.

16

However, the Court cannot

say, as a matter of law, that Health and Sun abandoned its
mark.
In addition to Health and Sun’s sales of the Royal Flush
product and the declaration of its President affirming that
Health and Sun intends to continue to use the marks (and
likewise never intended to stop using its challenged marks),
Health and Sun has engaged in business as well as litigation
conduct that evinces its intent to protect and use its marks.
When Health and Sun learned that Australian Gold was producing
competing products under the names Royal Flush and Purple
Reign, it demanded that Australian Gold cease and desist.
Thereafter, Health and Sun filed the instant trademark action
in an effort to safeguard its marks.
“It is difficult for a defendant to prove a plaintiff’s
subjective intent to abandon a mark.”

Int’l Stamp Art, Inc.

v. USPS, No. 1:02-cv-2459, 2005 U.S. Dist. LEXIS 42073, at *21
(M.D. Ga. May 27, 2005).

In this case, the evidence Health

and Sun has presented is sufficient to establish a genuine
dispute of material fact as to whether it abandoned the Royal
Flush mark.

The determination of whether Health and Sun

intended to relinquish its rights cannot be made at the
summary judgment stage in light of conflicting evidence on

17

file.

The Motion for Summary Judgment is accordingly denied

as to Royal Flush.
2.

Purple Rain

Australian Gold likewise contends that Health and Sun
abandoned its Purple Rain mark.

As previously noted, to

prevail on this defense, Australian Gold must demonstrate that
Health and Sun (1) ceased using the Purple Rain mark (2) with
an intent not to resume use of the mark.
Australian

Gold

does

not

enjoy

a

presumption

of

abandonment with respect to Purple Rain because, unlike the
Royal Flush product, at no time was there a three year lapse
in sales of the Purple Rain product.

The record shows that

Health and Sun has sold thousands of bottles of its Purple
Rain product, and Australian Gold has not demonstrated that
Health and Sun has stopped using its Purple Rain mark for a
period of time sufficient to show abandonment at the summary
judgment stage. In fact, the record shows that Health and Sun
recently ordered 1,500 bottles of Purple Rain lotion from its
supplier

on

conflicting

June

7,

evidence

2013.

(Doc.

presented

by

#

43-11

the

at

parties

1).

The

creates

a

genuine issue of material fact regarding the issue of whether
Health and Sun has made bona fide use of its mark.

18

Even if Australian Gold could show that Health and Sun
ceased using its Purple Rain mark, it has not shown that any
such cessation in use by Health and Sun was done with the
intent not to resume use of the mark as a matter of law.

The

Court adopts its above analysis of Health and Sun’s intent as
to the Royal Flush mark and finds its analysis applicable to
Health and Sun’s intent to use the Purple Rain mark.

The

Motion for Summary Judgment is also denied as to Purple Rain.
To summarize, Health and Sun has continuously used the
mark in commerce and has sold thousands of bottles of Purple
Rain. Australian Gold has not shown, as a matter of law, that
Health and Sun’s Purple Rain sales are mere “token sales” made
only to retain its mark.

Rather Health and Sun has come

forward with evidence sufficient to create a genuine issue of
fact concerning whether such sales were a bona fide use of its
Purple Rain mark.

Furthermore, Health and Sun has expressed

its intention not to relinquish its mark in a declaration made
by its President, and has diligently prosecuted this action
against Australian Gold in an effort to safeguard its right to
utilize its Purple Rain mark.

The Court accordingly denies

Australian Gold’s Motion for Summary Judgment.
Accordingly, it is
ORDERED, ADJUDGED, and DECREED:
19

Australian Gold, LLC’s Sealed Motion for Summary Judgment
(Doc. # 43) is DENIED.
DONE and ORDERED in Chambers in Tampa, Florida, this 14th
day of November, 2013.

Copies:

All Counsel of Record

20