Lifeguard Licensing Corp. et al v. kozak et al
Filing
229
OPINION AND ORDER re: 201 CROSS MOTION for Summary Judgment . filed by Popularity Products, LLC, Lifeguard Licensing Corp., 192 MOTION for Summary Judgment . filed by Jerry Kozak, Ann Arbor T-Shirt Company, LLC, Rich ard Winowiecki. For the foregoing reasons, Defendants' motion for summary judgment is GRANTED as to Defendant Winowiecki who is dismissed from the case, but Defendants' motion is otherwise DENIED. Plaintiffs' cross-motion for summa ry judgment is DENIED except is GRANTED as to the following affirmative defenses herein, which are stricken. The Clerk of Court is respectfully directed to close the motions at Dkt. Nos. 192 and 201, and terminate Defendant Winowiecki from the docket. Richard Winowiecki and Richard Winowiecki terminated. (Signed by Judge Lorna G. Schofield on 7/9/2018) (kgo)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
------------------------------------------------------------ X
:
LIFEGUARD LICENSING CORP., et al.,
:
Plaintiffs, :
-against:
:
ANN ARBOR T-SHIRT COMPANY, LLC, et :
al.,
:
Defendants. :
:
X
-----------------------------------------------------------LORNA G. SCHOFIELD, District Judge:
7/09/2018
15 Civ. 8459 (LGS)
OPINION AND ORDER
This action arises from alleged trademark infringement under the Lanham Trademark
Act, 15 U.S.C. § 1051 et seq. (the “Lanham Act”) and New York state law, regarding the use of
the word “LIFEGUARD” on T-shirts. Plaintiffs are Lifeguard Licensing Corporation
(“Lifeguard”) and Popularity Product, LLC (“Popularity”).
Plaintiff Lifeguard owns four “LIFEGUARD” trademarks in the apparel category (the
“Trademark”), all of which have been in continuous use for more than five years since their
registration, and are thus deemed “incontestable.” See 15 U.S.C. § 1065. Plaintiff Popularity is
the exclusive U.S. licensee of the Trademarks. Popularity produces T-shirts bearing the word
“LIFEGUARD.” Defendant Ann Arbor T-Shirt Company, LLC (“Ann Arbor”), a Michigan
limited liability company is co-owned by Defendants Richard Winowiecki and Jerry Kozak.
Ann Arbor also sold T-shirts bearing the word “LIFEGUARD.” Lifeguard never authorized Ann
Arbor to use its trademarks.
Defendants move for summary judgment on all claims based on the affirmative defenses
of fair use, functional use and abandonment. Plaintiffs oppose Defendants’ motion and crossmove for summary judgment on all of Defendants’ affirmative defenses and counterclaims,
except the Second Affirmative Defense and First Counterclaim, which allege that the Trademark
is generic. The Court previously instructed the parties to exclude from their motions the issue of
whether the Trademark is generic as it is the subject of a material factual dispute.
STANDARD OF REVIEW
Summary judgment is appropriate where the record before the court establishes that
“there is no genuine dispute as to any material fact and the movant is entitled to judgment as a
matter of law.” Fed. R. Civ. P. 56(a). A genuine dispute as to a material fact exists “if the
evidence is such that a reasonable jury could return a verdict for the nonmoving party.”
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The court must construe the
evidence in the light most favorable to the nonmoving party and must draw all reasonable
inferences in favor of the nonmoving party. See id. at 255. When the movant has properly
supported its motion with evidentiary materials, the opposing party must establish a genuine
issue of fact by “citing to particular parts of materials in the record.” Fed. R. Civ. P. 56(c)(1)(A).
“[A] party may not rely on mere speculation or conjecture as to the true nature of the facts to
overcome a motion for summary judgment.” Hicks v. Baines, 593 F.3d 159, 166 (2d Cir. 2010)
(alteration in original) (internal quotation marks omitted).
An affirmative defense can be dismissed on a summary judgment motion when that
defense is unsupported by any evidence in the record. “Where a plaintiff uses a summary
judgment motion . . . to challenge the legal sufficiency of an affirmative defense -- on which the
defendant bears the burden of proof at trial -- a plaintiff may satisfy its Rule 56 burden by
showing that there is an absence of evidence to support an essential element of the non-moving
party’s case.” F.D.I.C. v. Giammettei, 34 F.3d 51, 54–55 (2d Cir. 1994) (citing Celotex v.
Catrett, 477 U.S. 317, 325 (1986)); accord Washington v. Kellwood Co., No. 05 Civ. 10034,
2
2015 WL 6437456, at *9 (S.D.N.Y. Oct. 14, 2015). “[I]n cases where there is an absence of
evidence to support an essential element of a defense, with respect to that defense, there can be
no genuine issue as to any material fact since a complete failure of proof concerning an essential
element of the defendant’s affirmative defense necessarily renders all other facts immaterial.”
F.D.I.C., 34 F.3d at 54-55. There is “no express or implied requirement in Rule 56 that the
moving party support its motion with affidavits or other similar materials negating the
opponent's claim.” Celotex, 477 U.S. at 323 (emphasis in original). Conversely, if an
affirmative defense is supported by evidence from which a reasonable jury could find the defense
applicable, then summary judgment must be denied. See id.
Before summary judgment may be entered, the district court must ensure that each
statement of material fact is supported by record evidence sufficient to satisfy the movant’s
burden of production even if the statement is unopposed. Fed. R. Civ. P. 56(c); see Jackson v.
Federal Exp., 766 F.3d 189, 195 (2d Cir. 2014). However, a partial response arguing that
summary judgment should be denied as to some claims while not mentioning others may be
deemed an abandonment of the unmentioned claims. Id.
“Only admissible evidence need be considered by the trial court in ruling on a motion for
summary judgment, and a district court deciding a summary judgment motion has broad
discretion in choosing whether to admit evidence.” Porter v. Quarantillo, 722 F.3d 94, 97 (2d
Cir. 2013). Evidence is admissible for summary judgment purposes if it would later be
admissible at trial. Raskin v. Wyatt Co., 125 F.3d 55, 66 (2d Cir. 1997). Material relied upon at
summary judgment need not be admissible in the form presented on the motion; as long as the
evidence “will be presented in admissible form at trial,” it may be considered on summary
judgment. Smith v. City of New York, 697 F. App’x 88, 89 (2d Cir. 2017) (summary order)
3
(citing Santos v. Murdock, 243 F.3d 681, 683 (2d Cir. 2001)). “‘At the summary judgment stage,
we do not focus on the admissibility of the evidence’s form. We instead focus on the
admissibility of its contents.’” Smith, 697 F. App’x at 89 (quoting Fraser v. Goodale, 342, F.3d
1032, 1036 (9th Cir. 2003)).
DISCUSSION
A.
Claims against the Individual Defendants
Defendants move for summary judgment as to Defendants Winowiecki and Kozak,
asserting that they are not vicariously liable for any trademark violation of Defendant Ann
Arbor. The motion as to Defendant Winowiecki is granted as unopposed. The motion as to
Defendant Kozak is denied.
“[U]nder the Lanham Act, a corporate officer may be held personally liable for
trademark infringement and unfair competition if the officer is a moving, active, conscious force
behind the defendant corporation’s infringement.”1 Int’l Diamond Imps., Inc. v. Oriental Gemco
(N.Y.), Inc., 64 F. Supp. 3d 494, 515 (S.D.N.Y. 2014); accord Mayes v. Summit Ent. Corp., 287
F. Supp. 3d 200, 2011 (E.D.N.Y. 2018); see Victorinox AG v. B&F Sys., Inc., 709 F. App’x 44,
50 n.6 (2d Cir. 2017) (agreeing with district court’s finding that an individual defendant was an
“‘active conscious force’ behind Defendants’ infringement.”). “A showing that an officer
authorized and approved the acts of unfair competition which are the basis of the . . .
corporation’s liability . . . is sufficient participation in the wrongful acts to make the officer
individually liable.” Int’l Diamond Imps., 64 F. Supp. 3d at 515 (internal quotation marks
1
Corporate officers also may be liable for contributory or vicarious infringement. “One
infringes contributorily by intentionally inducing or encouraging direct infringement . . . and
infringes vicariously by profiting from direct infringement while declining to exercise a right to
stop or limit it.” Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., 545 U.S. 913, 930-31
(2005) (citations omitted).
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omitted). “[I]n determining whether the officer’s acts render him individually liable, it is
immaterial whether . . . he knows that his acts will result in an infringement.” Id. (internal
quotation marks omitted).
Defendant Kozak is the founding member and the co-owner of Ann Arbor, designed Ann
Arbor’s LIFEGUARD branded apparel, directed Ann Arbor’s art department to copy Plaintiffs’
design in an email and asked his attorney whether he could “bury” the email during discovery. A
reasonable juror could find that Defendant Kozak “authorized and approved the acts of unfair
competition which are the basis of the . . . corporation’s liability.” Int’l Diamonds Imps., 64 F.
Supp. 3d at 515. Summary judgment is therefore denied as to his personal liability. See, e.g.,
Innovation Ventures, LLC v. Ultimate One Distrib. Corp., 176 F. Supp. 3d 137, 155, 168, 171
(E.D.N.Y. 2016); Flat Rate Movers, Ltd. v. FlatRate Moving & Storage., Inc., 104 F. Supp. 3d
371, 383 (S.D.N.Y. 2015).
Defendants argue that Defendant Kozak cannot be held individually liable because there
is no basis to pierce the corporate veil. This argument is rejected because it misunderstands the
applicable law as to Counts I through III, claims based on the Lanham Act. The Lanham Act
governs the issue of individual liability of a corporate officer as to these counts.
Defendants’ argument is also rejected as to Counts IV and V, the state law claims, as
Plaintiffs adduced sufficient evidence from which a reasonable jury could pierce the corporate
veil to hold Defendant Kozak liable. “New York’s choice of law rules provides that the law of
the state of incorporation determines when the corporate form will be disregarded and liability
will be imposed on shareholders.” A.V.E.L.A., Inc. v. Estate of Marilyn Monroe, L.L.C., 241 F.
Supp. 3d 461, 474 (S.D.N.Y. 2017); accord Fletcher v. Atex, Inc., 68 F.3d 1451, 1456 (2d Cir.
1995). Because Ann Arbor is a Michigan limited liability company, Michigan law applies.
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The doctrine of piercing the corporate veil is applicable to limited liability companies.
Florence Cement Co. v. Vettraino, 807 N.W.2d 917, 922 (Mich. Ct. App. 2011). Under
Michigan law, a court “should pierce an entity’s corporate veil when ‘the corporate entity [is] a
mere instrumentality of another entity or individual’; ‘the corporate entity [was] used to commit
a fraud or wrong’; and ‘there [was] an unjust loss or injury to the plaintiff.’” Grand Rapids
Assocs., Ltd. v. Coop Properties, L.L.C., 495 F. App’x 598, 600–601 (6th Cir. 2012) (quoting
Foodland Distrib. v. Al-Naimi, 559 N.W.2d 379, 381 (Mich. Ct. App. 1996)). “Michigan law
does not require a showing of fraud or illegality before the corporate form will be disregarded.
Rather, the corporate veil may be pierced as long as the injustice sought to be prevented [is] in
some manner relate[d] to a misuse of the corporate form short of fraud or illegality.” Id. at 601.
Ultimately, “[t]here is no single rule delineating when the corporate entity may be disregarded”
and instead, “[t]he entire spectrum of relevant fact forms the background for such an inquiry, and
the facts are to be assessed in light of the corporation’s economic justification to determine if the
corporate form has been abused.” Foodland Distrib., 559 N.W.2d at 381.
Here, Plaintiffs adduced sufficient evidence from which a reasonable jury could conclude
that the three-part test for piercing the corporate veil was satisfied. First, the evidence could
support a finding that Ann Arbor was a mere instrumentality of Defendant Kozak; he was one of
the two owners of Ann Arbor, knew that LIFEGUARD was a trademark for apparel prior to
selling his products, directed the art department of Ann Arbor to copy Plaintiffs’ design
specifically and then sought to “bury” this evidence during discovery. The same evidence could
be sufficient to show that Ann Arbor was used to commit a wrong that caused injury to Plaintiff.
See Dept. of Agric. v. Appletree Mktg., L.L.C., 779 N.W.2d 237, 247 (Mich. 2010) (“Michigan
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courts have recognized, officers of a corporation may be held individually liable when they
personally cause their corporation to act unlawfully.”).
B.
Statutory Defenses
Under the Lanham Act, even “incontestable” marks are subject to enumerated statutory
defenses. See 15 U.S.C. § 1115(b). Of these, Defendants move for summary judgment on the
affirmative defenses and counterclaims of (i) fair use (Third and Fourth Affirmative Defenses
and Fourth Counterclaim), (ii) functional use (Fifth and Sixth Affirmative Defenses and Fifth
Counterclaim) and (iii) abandonment (Seventh and Eighth Affirmative Defenses and Second and
Third Counterclaims). Plaintiffs cross-move on these claims and defenses as well as the
statutory affirmative defenses of (iv) fraud (Sixteenth Affirmative Defense) and (v) prior use
(Fifteenth Affirmative Defense).
1. Fair Use
The parties cross-move for summary judgment on the fair use defense, which is
incorporated in the Third and Fourth Affirmative Defenses and the Fourth Counterclaim. Where
a use is a descriptive fair use, the use is unlikely to cause confusion. Kelly-Brown v. Winfrey,
717 F.3d 295, 320 (2d Cir. 2013). The fair use defense is available for a “use . . . otherwise than
as a mark, of . . . a term or device which is descriptive of and used fairly and in good faith only
to describe the goods . . . .” 15 U.S.C. § 1115(b)(4) (emphasis added); Guggenheim Capital,
LLC v. Birnbaum, 722 F.3d 444, 455-56 (2d Cir. 2013). “‘Resolution of a fair-use defense
requires the court to focus on the defendant’s (actual or proposed) use.’” Id. (quoting JA Apparel
Corp. v. Abboud, 568 F.3d 390, 403 (2d Cir. 2009)).
The fair use defense is available when a defendant’s particular use was “‘(1) other than as
a mark, (2) in a descriptive sense, and (3) in good faith.’” Guggenheim Capital, 722 F.3d at 456
7
(quoting EMI Catalogue P’ship v. Hill, Holliday, Connors, Cosmopulos, Inc., 228 F.3d 56, 64
(2d Cir. 2000)).2 Defendants’ motion for summary judgment based on the fair use defense is
denied because a genuine dispute of fact exists as to each of these three elements.
a. Use Other than as a Mark
A genuine factual dispute exists as to whether Defendants used the term “LIFEGUARD”
as a mark. A particular use is as a mark when the use of a term is “a symbol to attract public
attention.” Kelly-Brown, 717 F.3d at 306 (quoting JA Apparel, Cop., 568 F.3d at 400). “When
use of the challenged words or phrase is accompanied by a defendant’s own, conspicuously
visible mark, this generally does not constitute trade mark use.” JA Apparel Corp. v. Abboud,
682 F. Supp. 2d 294, 310 (S.D.N.Y. 2010) (citing Cosmetically Sealed Indus., Inc. v.
Chesebrough–Pond's USA Co., 125 F.3d 28, 30–31 (2d Cir. 1997).
Defendants’ expert Dr. Maronick states in his declaration that 90% of consumers think
“LIFEGUARD” is a generic term. Defendant Kozak’s declaration states that Ann Arbor sold its
T-shirts on Amazon.com and its own virtual store, both of which clearly stated that the T-shirts
were produced by “Ann Arbor T-Shirt Co.” However, the LIFEGUARD T-shirts themselves do
not contain Ann Arbor’s logo or any other reference to Ann Arbor. A reasonable juror could
conclude that the word “LIFEGUARD” on the T-shirts overshadowed any indication that the Tshirts were produced by Ann Arbor. See, e.g., Born to Rock Design, Inc. v. CafePress.com, Inc.,
No. 10 Civ. 8588, 2012 WL 3954518, at *8–9 (S.D.N.Y. Sept. 7, 2012) (finding that because the
2
Defendants failed to address in their moving brief two of the three elements of the fair use
defense -- whether the use of the mark was “other than as a mark” and made “in good faith.”
Only in their reply, after Plaintiffs pointed out the deficiency, did Defendants argue these two
elements.
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T-shirt only bore the phrase “Born to Rock” without any other design, a reasonable juror could
conclude that the phrase was used as a mark to reference the source of the T-shirt”).
b. Descriptive Use
A genuine factual disputes exists as to whether Defendants used the term “LIFEGUARD”
on their T-shirts in its descriptive sense. “Though the terms of the Act recognize the fair use
defense where the name or term is used ‘to describe the goods,’ that phrase has not been
narrowly confined to words that describe a characteristic of the goods, such as size or quality.
Instead, we have recognized that the phrase permits use of words or images that are used, . . . in
their ‘descriptive sense.’” Cosmetically Sealed Indus., 125 F.3d at 30 (quoting 15 U.S.C. §
1115(b)(4)); accord JBCHoldings N.Y., L.L.C. v. Pakter, 931 F. Supp. 2d 514, 531 (S.D.N.Y.
2013). “[T]he common law of unfair competition also tolerate[s] some degree of confusion from
a descriptive use of words contained in another person’s trademark.” KP Permanent Make-Up,
Inc. v. Lasting Impression I, Inc., 543 U.S. 111, 119 (2004). The parties dispute whether
Defendants used the term “LIFEGUARD” on their T-shirts in the descriptive sense -- i.e., that
Defendants’ shirts were made or intended for lifeguards.
Defendants adduced evidence showing that 90% of consumers think “LIFEGUARD” is a
generic term, that a T-shirt bearing the word “LIFEGUARD” on its front is standard lifeguard
apparel to designate lifeguards and its widespread use, that a T-shirt with the term
“LIFEGUARD” is the best way to identify lifeguards and that Defendants’ LIFEGUARD Tshirts were sold to lifeguards or organizations employing lifeguards. See Kelly-Brown, 717 F.3d
at 311 (“Courts more readily find a phrase descriptive when it is in common usage.”). In
contrast, Plaintiffs adduced evidence showing that Defendants’ LIFEGUARD T-shirts were not
marketed to lifeguards.
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c. Good Faith
A material dispute of fact exists as to whether Defendants’ use of the term
“LIFEGUARD” was in good faith. Courts “equate a lack of good faith with the subsequent
user’s intent to trade on the good will of the trademark holder by creating confusion as to source
or sponsorship.” Id. at 312. “Even where there is no direct evidence of intent, if there is
additional evidence that supports the inference that the defendant sought to confuse consumers as
to the source of the product, . . . the inference of bad faith may fairly be drawn.” Id. “Evidence
of intending to compete by imitating the successful features of another’s product does not
necessarily indicate bad faith. Rather, good faith turns on a showing of intent to deceive
purchasers as to the source of a product.” Tiffany & Co. v. Costco Wholesale Corp., 127 F.
Supp. 3d 241, 251 (S.D.N.Y. 2015) (citing Nora Beverages, Inc. v. Perrier Grp. of Am., Inc., 269
F.3d 114, 124–25 (2d Cir. 2001)).
Defendants adduced evidence, based on Dr. Maronick’s expert opinion, that there is no
risk of consumer confusion, that Defendants were unaware that the mark was protected at the
time they sold the LIFEGUARD T-Shirts due to the widespread and long-term use by others of
shirts bearing the word “LIFEGUARD” and that Defendants sought to negotiate a license from
Plaintiffs upon learning of the alleged infringement.
In contrast, Plaintiffs adduced evidence showing that Defendant Kozak, in his deposition,
stated that he knew that LIFEGUARD was a trademark for apparel prior to selling his products,
that he directed the art department of Ann Arbor to copy Plaintiffs’ design specifically and that
he sought to “bury” this evidence during discovery.
* * *
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Because a reasonable jury could find for either Plaintiffs or Defendants on each of the
elements of fair use, the parties’ cross-motions for summary judgment based on that defense are
denied.
2. Functional Use
“[I]f a markholder has successfully demonstrated that its mark is valid and that the
competitor’s mark is likely to cause confusion, the competitor can nevertheless prevail . . . by
showing that the mark is functional.” Christian Louboutin S.A. v. Yves St. Laurent Am.
Holdings, Inc., 696 F.3d 206, 217 (2d Cir. 2012); 15 U.S.C. 1115(b)(8)); accord Victorinox AG,
709 F. App’x at 48. “Registration of the mark creates a presumption that the mark is not
functional.” Victorinox AG, 709 F. App’x at 48. There are two forms of functional use: (1)
traditional or utilitarian; and (2) aesthetic. Christian Louboutin S.A., 696 F.3d at 219. As
relevant here, a feature of a product is traditionally functional when it is “essential to the use or
purpose of the article.” Id. (citing Inwood Labs., Inc. v. Ives Labs., Inc., 456 U.S. 844, 850 n. 10
(1982)). An essential feature is one that is “dictated by the functions to be performed by the
article.” Id. (internal quotation marks omitted).
Summary judgment based on the functional use doctrine (Fifth and Sixth Affirmative
Defenses and Fifth Counterclaim) is denied because a reasonable jury could find for either party
on this issue. Defendants adduced evidence showing that wearing a T-shirt with the word
“LIFEGUARD” is the best way to identify lifeguards because those T-shirts were in widespread
use to identify lifeguards. Plaintiffs adduced evidence that that the T-shirts were not exclusively
or even predominantly used by lifeguards, but rather were worn as fashion apparel. For example,
the word “LIFEGUARD” is used on various other products, such as towels, canvas bags, hats,
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bottle cooler, keychain and shot glasses. Based on this evidence, a jury could find that the use of
the word “LIFEGUARD” on the T-shirts was not essential to their function.
Defendants’ reliance on America Online, Inc. v. AT&T Corp., 243 F.3d 812, 822–23 (4th
Cir. 2001), to support the argument that the word “LIFEGUARD” is functional is unpersuasive
for two reasons. First, America Online, Inc. is not binding precedent in the present case.
Second, in America Online, Inc., the Fourth Circuit concluded that the phrase, “you have mail,”
was functional because it had no other function except to notify that an email has arrived. Id. at
822. In contrast, the word “LIFEGUARD” has functions beyond identifying the wearer as a
lifeguard, since the word has been used by non-lifeguards and on products for fashion or
decorative purposes.
3. Abandonment
Summary judgment is denied on the issue of Plaintiffs’ abandonment of the mark
(Seventh and Eighth Affirmative Defenses and Second and Third Counterclaims). If a trademark
owner, through action or inaction, “causes the mark to become the generic name for the goods or
services on or in connection with which it is used or otherwise lose its significance as a mark,”
15 U.S.C. § 1127, the trademark is deemed abandoned and may be cancelled. See 15 U.S.C. §§
1115(b)(2), 1119. Once abandoned, a mark returns to the public domain and may be appropriate
for others to use. ITC, Ltd. v. Punchigini, Inc., 482 F.3d 135, 147 (2d Cir. 2007). “Where a
licensor retains no control over the nature or quality of goods or services provided in connection
with the mark, . . . such naked licensing will result in abandonment.” Patsy’s Italian Restaurant,
Inc. v. Banas, 508 F. Supp. 2d 194, 212 (S.D.N.Y. 2007) (citing Dawn Donut Co. v. Hart’s Food
Stores, Inc., 267 F.2d 358, 367 (2d Cir. 1959)); accord LPD N.Y., LLC v. Adidas Am., Inc., No.
15 Civ. 6360, 2017 WL 1162181, at *13 (E.D.N.Y. Mar. 27, 2017); see also Patsy’s Italian
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Rest., 658 F.3d at 265 (“[N]aked licensing will lead to an abandonment of a mark [but] only
where the mark loses its significance.”). “The critical question in determining whether a
licensing program is controlled sufficiently by the licensor to protect his mark is whether the
licensees’ operations are policed adequately to guarantee the quality of products sold under the
mark.” Can’t Stop Prods., Inc. v. Sixuvus, Ltd., 295 F. Supp. 3d 381, 393 (S.D.N.Y. 2018).
“Because it constitutes a forfeiture of a property right, abandonment of a mark must be proven
by clear and convincing evidence.” Alzheimer’s Disease and Related Disorders Assn., Inc. v.
Alzheimer’s Found. of Am., Inc., No. 10 Civ. 3314, 2018 WL 2122829, at *32 (S.D.N.Y. Apr.
20, 2018) (internal quotation marks omitted).
In this case, a material dispute of fact exists as to whether Plaintiffs’ policing of the
Trademark was adequate. Defendants adduced evidence showing that Plaintiff Azrak rarely
policed the use of the Trademark himself because he had many other business concerns, that
Plaintiff Azrak did not have any design standard and that he used solely his discretion in policing
the Trademark. Defendants also adduced evidence of a map showing the regions where
infringements were found and/or searched, and this map revealed that the search conducted by
Plaintiffs’ private detective was not comprehensive. In contrast, Plaintiffs adduced evidence
showing that they paid approximately $36,000 in fees to a private investigator to search of
counterfeit Lifeguard apparel, and spent approximately $1 million in legal fees to police the
Trademark through litigation or cease and desist letters. Plaintiffs also adduced evidence
showing that every piece of LIFEGUARD apparel contained a hand tag with a warning that the
product is trademarked and that the trademark will be enforced.
That the court in Lifeguard Licensing Corp. v. Gogo Sports, Inc., No. 10 Civ. 9075, 2013
WL 4400520, at *4 (S.D.N.Y. Aug. 15, 2013), concluded that Plaintiffs adequately supervised
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their mark is irrelevant. The court in Gogo Sports had before it a different evidentiary record. In
that case, unlike this one, the defendants failed to “present any evidence of Lifeguard’s
inadequate license supervision.” Id. (emphasis added). Whether Defendants’ evidence is
sufficient to show Plaintiffs’ abandonment of the mark by clear and convincing evidence is a
question for the jury.
4. Fraud
Summary judgment is granted on the Sixteenth Affirmative Defense alleging fraud on the
United States Patent Trademark Office (“USPTO”), see 15 U.S.C. § 1115(b)(1), because
Defendants have adduced no evidence to support it, either by reference in their memorandum of
law or their Rule 56.1 counterstatement. Defendants’ vague and tentative allegation that “[t]o
the extent that [Plaintiff] is a sham business entity, or is an entity whose corporate form can be
pierced . . . , its filings with the USPTO are potentially fraudulent” is insufficient to sustain this
affirmative defense.
5. Prior Use
The “prior use” defense is available under certain circumstances to defeat a trademark
holder’s claim that a mark has become incontestable. 15 U.S.C. § 1115(b)(5). To establish a
prior use defense, “the defendants must show that [they were] a prior user of the mark in the
United States, and that [their] use of the mark was ‘continuous and uninterrupted’ from a date
prior to plaintiff’s registration to the present.” Haggar Intern. Corp. v. United Co. for Food
Indus. Corp., 906 F. Supp. 2d 96, 130 (E.D.N.Y. 2012) (citation omitted).
Here, summary judgment is granted on Defendants’ prior use defense, the Fifteenth
Affirmative Defense, because they have adduced no evidence to suggest that they used the
LIFEGUARD mark before the registration of Plaintiffs’ marks, either by reference in their
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memorandum of law or their Rule 56.1 counterstatement. See, e.g., Architemps, Inc. v.
Architemps, Ltd., 704 F. Supp. 39, 40 (S.D.N.Y. 1988) (finding that no prior use defense because
the defendant failed to show that it actually used the mark in California prior to the plaintiff’s
registration of the mark).
C.
Other Affirmative Defenses
1. Lack of Personal Jurisdiction
Plaintiffs’ motion for summary judgment as to the affirmative defense of lack of personal
jurisdiction (First Affirmative Defense) is granted because the record contains no evidence to
support it.
“To determine personal jurisdiction over a non-domiciliary in a case involving a federal
question,” the Court engages in a two-step inquiry to determine whether it has personal
jurisdiction over a defendant. Eades v. Kennedy, PC Law Offices, 799 F.3d 161, 168 (2d Cir.
2015). First, the Court determines whether there is personal jurisdiction over the defendant
under the laws of the forum state. Id. If the forum state’s laws allow for personal jurisdiction,
the Court determines whether personal jurisdiction comports with the protections established by
the Due Process Clause of the Constitution. Id.
The New York long-arm statute provides for the exercise of jurisdiction over an out-ofstate defendant who “transacts any business within the state or contracts anywhere to supply
goods or services in the state.” N.Y. C.P.L.R. § 302(a)(1). New York courts define transacting
business as “purposeful activity--some act by which the defendant purposefully avails itself of
the privilege of conducting activities within the forum state, thus invoking the benefits and
protection of its laws.” Best Van Lines, Inc. v. Walker, 490 F.3d 239, 246 (2d Cir. 2007)
(quoting McKee Elec. Co. v. Rauland-Borg Corp., 299 N.E.2d 604, 607 (N.Y. 1967)). Because §
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302(a)(1) provides for specific rather than general jurisdiction, Plaintiffs also must show a nexus
between their claims and the defendants’ conduct that constitutes transacting business in New
York. See N.Y. C.P.L.R. § 302(a)(1) (“As to a cause of action arising from any of the acts
enumerated in this section . . .”). “Proof of one transaction in New York is sufficient to invoke
jurisdiction, even though the defendant never enters New York, so long as the defendant’s
activities here were purposeful and there is a substantial relationship between the transaction and
the claim asserted.” Eades, 799 F.3d at 168 (quoting Chloé v. Queen Bee of Beverly Hills, LLC,
616 F.3d 158, 170 (2d Cir. 2010)). A website that does more than provide information about a
product and allows customers to purchase goods online is a “highly interactive website,” which
may provide a basis for personal jurisdiction under § 302(a). See Chloe 616 F.3d at 170 (holding
that operation of highly interactive website plus over 50 shipments of counterfeit goods into New
York was sufficient for personal jurisdiction); accord Lifeguard Licensing Corp. v. Ann Arbor TShirt Co., No. 15 Civ. 8459, 2016 WL 3748480, at *3 (S.D.N.Y. Jul. 8, 2016).
Here, the record shows that Defendants received approximately $12,500 from their sale
of their Lifeguard products to New York customers, and that Defendants systematically targeted
the New York market by deliberately tagging 10,000 of their products with New York related
keywords in Amazon’s mega-tag field so that these products would appear in a search result on
Amazon.com if the customer searched for a New York themed product. Defendants on their
own Ann Arbor T-shirt website also listed New York themed products for sale, and stated that
they would directly ship any orders placed on their website. Defendants have not adduced any
evidence to the contrary. See, e.g., Grand v. Schwarz, No. 15 Civ. 8779, 2016 WL 2733133, at
*3 (S.D.N.Y. May 10, 2016) (holding that interactive and commercial website provides support
for jurisdiction under § 302(a)(1)); EnviroCare Techs., LLC v. Simanovsky, No. 11 Civ. 3458,
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2012 WL 2001443, at *3 (E.D.N.Y. June 4, 2012) (articulating “sliding scale” of website
interactivity and relationship of interactivity to personal jurisdiction analysis).
As personal jurisdiction in this case is based on specific rather than general jurisdiction,
the cases cited by Defendants are inapplicable. See Bristol-Myers Squibb Co. v. Superior Court
of California, 137 S. Ct. 1773 (2017) (finding that there is no general personal jurisdiction over a
defendant who is incorporated or headquartered out-of-state and there is no specific personal
jurisdiction over a non-resident defendant, where the defendant’s activity is unrelated to the
claim); BNSF Ry. Co. v. Tyrrell, 137 S. Ct. 1549 (2017) (finding that the general jurisdiction
inquiry does not focus solely on the magnitude of a defendant corporation’s in-state contacts).
Accordingly, summary judgment is granted, striking Defendants’ First Affirmative Defense
asserting lack of personal jurisdiction.
2. Unclean Hands
Summary judgment is granted on Defendants’ unclean hands affirmative defense, the
Tenth Affirmative Defense, because they have adduced no evidence to support it, either by
reference in their memorandum of law or their Rule 56.1 counterstatement.
3. First Amendment
Plaintiffs’ motion for summary judgment as to the First Amendment defense and the
Eighteenth Affirmative Defense is granted as abandoned. Defendants do not respond on this
issue except to assert generally that a motion to strike a defense at the summary judgment stage
is “untimely,” which, as discussed in the “Standard of Review” section above, is patently
incorrect.
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4. Estoppel – Expert Survey in a Prior Lawsuit
The Answer asserts an affirmative defense of estoppel because “Plaintiffs’ efforts to rebut
and overcome the Maronick Survey [in a prior lawsuit] were inadequate.” Summary judgment
on this defense is granted as the defense lacks any factual basis. The Maronick Survey addressed
whether the term “LIFEGUARD” is generic. That issue was not decided in the prior proceeding
as is necessary for collateral estoppel. See Abdelal v. Kelly, 726 F. App’x 8, 11 (2d Cir. 2018)
(summary order) (citing Colon v. Coughlin, 58 F.3d 865, 869 (2d Cir. 1995)). Instead, the court
in the prior case found a triable issue of fact and denied both sides’ cross-motions for summary
judgment on the question of whether the LIFEGUARD marks are entitled to protection. Gogo
Sports, 2013 WL 4400520, at *7. Summary judgment is granted striking the Fourteenth
Affirmative Defense.
5. Unconstitutionality of Statutory Damages
Summary judgment is granted striking the Thirteenth Affirmative Defense, which asserts
that statutory damages under some unspecified statute (presumably the Lanham Act) are
unconstitutional because they are excessive and disproportionate. Defendants cite no legal
authority supporting this defense, and the two cases they cite for the proposition that “the
Supreme Court has tightened Congress’ ability to legislate . . . .” are completely irrelevant. See
Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016) (addressing the injury-in-fact requirement for
Article III standing); Coll. Sav. Bank v Florida Prepaid Postsecondary Educ. Expense Bd., 527
U.S. 666, 691 (1999) (holding that state entity had sovereign immunity for alleged trademark
violation because its immunity had not been abrogated by statute or voluntarily waived).
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6. Lack of Defendants’ Willful Conduct
Summary judgment is denied on the Seventeenth Affirmative Defense, which alleges that
Defendants did not act intentionally or willfully. To the extent intent is relevant to liability or
damages as to any of Plaintiffs’ claims, there are disputed issues of material fact. See, e.g., 15
U.S.C. § 1117(c)(2) (“[I]f the court finds that the use of the counterfeit mark was willful, not
more than $2,000,000 per counterfeit mark per type of goods or services sold, offered for sale, or
distributed, as the court considers just” is available as damages).
Defendants adduced evidence that there was no willful conduct; Defendant Kozak stated
in his declaration that Defendants were unaware of the trademark registration at the time they
sold the LIFEGUARD T-shirts due to the widespread and long term use of the mark on similar
shirts sold by others, and that Defendants sought to negotiate a licensing agreement with
Plaintiffs upon learning of the alleged infringement. In contrast, Plaintiffs adduced evidence
showing that Defendant Kozak directed Ann Arbor’s art department to copy Plaintiffs’ design,
that as of the end of 2014, Defendants were aware of Plaintiffs’ trademark and that despite this
knowledge, Defendants continued to sell their products. This issue presents a triable issue of
fact.
D.
Non-Affirmative Defenses
Plaintiffs move to strike three affirmative defenses relating to consumer confusion.
Consumer confusion is an element of all three of Plaintiffs’ Lanham Act claims. See 15 U.S.C. §
1114(1) (trademark infringement); 15 U.S.C. § 1114(1)(b) (counterfeiting); 15 U.S.C. §
1125(a)(1)(A) (false designation of origin). Accordingly, these “defenses” are not actually
affirmative defenses. “‘An affirmative defense is defined as “[a] defendant’s assertion raising
new facts and arguments that, if true, will defeat the plaintiff’s or prosecution’s claim, even if all
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allegations in the complaint are true.’” Saks v. Franklin Covey Co., 316 F.3d 337, 350 (2d Cir.
2003) (quoting Black’s Law Dictionary 430 (7th ed.1999)). Nevertheless, Rule 56(a) allows for
a summary judgment motion on a claim or defense or a part of a claim or defense. Fed. R. Civ.
P. 56(a). Accordingly, Plaintiffs’ motion for summary judgment is considered and denied, for
the reasons explained below.
1. Consumer Confusion
Lack of consumer confusion is the basis for two of Defendants’ affirmative defenses, the
Ninth and Nineteenth. Plaintiffs move to strike these affirmative defenses on the ground that
consumer confusion is assumed as a matter of law because Defendants produced an identical
counterfeit of Plaintiffs’ mark.
“[L]ikelihood-of-confusion . . . turns on whether ordinary consumers are likely to be
misled or confused as to the source of the product in question because of the entrance in the
marketplace of [the junior user’s] mark. . . . [S]atisfaction of the likelihood-of-confusion
standard requires a probability of confusion, not a mere possibility.” Guthrie Healthcare Sys. v.
ContextMedia, Inc., 826 F.3d 27, 37 (2d Cir. 2016) (internal quotation marks and citations
omitted). This determination typically is based on the application of the so-called Polaroid
factors: “the strength of the senior user’s mark; the similarity of the parties’ marks; the proximity
of the parties’ areas of commerce; the likelihood that the senior user will bridge the gap
separating their areas of activity; the existence of actual consumer confusion; whether the junior
user acted in bad faith or was otherwise reprehensible in adopting the mark; the quality of the
junior user’s product; and the sophistication of the relevant consumer group.” Id. (citing
Polaroid Corp. v. Polarad Elecs. Corp., 287 F.2d 492, 495 (2d Cir. 1961)).
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Defendants have adduced evidence, based on Dr. Maronick’s declaration, that there is no
risk of consumer confusion, in part because the word “lifeguard” is not associated with any
company. In contrast, Plaintiffs adduced evidence showing that two of Defendants’ T-shirts
appear to be identical to two of Plaintiffs’ T-shirts and that Defendants’ T-shirts contained no
other mark other than the term “LIFEGUARD,” which could lead to consumer confusion about
the source of the product. Based on this evidence, a material dispute exists as to the issue of
consumer confusion about the source of the allegedly infringing product.
2. Fame
Plaintiffs’ motion to strike the Twentieth Affirmative Defense -- that the Trademark has
not reached the level of fame or distinctiveness “to be considered a famous mark” -- is granted.
“The theory is that a mark similar to a famous mark is more likely to cause confusion, or at least
more likely to cause a more widespread confusion, than a mark similar to a relatively unknown
one. The concept of acquired strength has no application in this case, as [Plaintiff] does not
claim that its mark is famous.” Guthrie, 826 F.3d at 41 n.4. However, as discussed above, the
broader issue of consumer confusions is preserved for trial.
CONCLUSION
For the foregoing reasons, Defendants’ motion for summary judgment is GRANTED as
to Defendant Winowiecki who is dismissed from the case, but Defendants’ motion is otherwise
DENIED. Plaintiffs’ cross-motion for summary judgment is DENIED except is GRANTED as
to the following affirmative defenses, which are stricken:
First – lack of personal jurisdiction
Tenth – unclean hands
Thirteenth – unconstitutional statutory damages
Fourteenth – estoppel
Fifteenth – prior use
Sixteenth – fraud
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Eighteenth – First Amendment violation.
The Clerk of Court is respectfully directed to close the motions at Dkt. Nos. 192 and 201,
and terminate Defendant Winowiecki from the docket.
Dated: July 9, 2018
New York, New York
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