Galvotec Alloys, Inc. v. Gaus Anodes International, LLC

Filing 76

FINDINGS OF FACT AND CONCLUSIONS OF LAW ON LIABILITY (Signed by Judge Randy Crane) Parties notified.(bgarces, 7)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
MCALLEN DIVISION
GALVOTEC ALLOYS, INC.,
Plaintiff,
VS.
GAUS ANODES INTERNATIONAL,
LLC,
Defendant.

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§ CIVIL ACTION NO. 7:13-CV-664
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FINDINGS OF FACT AND CONCLUSIONS OF LAW ON LIABILITY
I.

Factual and Procedural Background
On December 19, 2013, Plaintiff Galvotec Alloys, Inc. filed its Original Complaint

against its competitor in the sacrificial anode business, Defendant GaUS Anodes International,
LLC, alleging that Defendant’s use of two of Plaintiff’s federally registered trademarks,
“Galvotec” and “GA,” constitutes trademark infringement under § 1114(1) of the federal
Lanham Act and Texas common law, unfair competition under § 1125(a)(1)(A) of the Act and
Texas common law, and false advertising under § 1125(a)(1)(B) of the Act. (Dkt. No. 1).
Simultaneously, Plaintiff moved for a preliminary injunction against Defendant’s use of
Plaintiff’s trademarks. (Dkt. No. 2). After holding an evidentiary hearing on the motion on June
20, 2014, the Court set the case for an expedited trial on issues of liability only, and in the
interim enjoined Defendant “from advertising or promoting its products by claiming that
Defendant [ ] and/or Juan Antonio Galvan founded, sold, and/or owned ‘Galvotec.’” (Dkt. Nos.
36, 37).

The Court did not enjoin Defendant’s use of the “GA” trademark, finding that

Plaintiff’s delay in requesting this relief counseled against a finding of irreparable injury to
Plaintiff in the absence of an injunction. (Dkt. No. 37). On July 10, 2014, the Court granted
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Plaintiff’s unopposed motion to amend its complaint to add federal and state-law causes of action
for trademark dilution and state-law claims for unjust enrichment, business disparagement,
product disparagement, and defamation. (Dkt. Nos. 40-42). On July 30, 2014, the Court granted
Defendant’s unopposed motion to file an answer to the amended complaint. (Dkt. Nos. 45-47).1
On September 11, 2014, the case proceeded to a two-day bench trial on issues of liability.
Pursuant to Federal Rule of Civil Procedure 52(a), after hearing testimony and reviewing all of
the evidence of record, the Court makes the following findings of fact and conclusions of law.
II.

Findings of Fact

A.

Company Formation and History

1.

Mexican Companies

a.

“Grupo Falmex Galvotec” is a trade name once used for a group of Mexican companies
owned by the Galvan family, including brothers Ramon Galvan, Luis Miguel Galvan,
and Juan Antonio Galvan.

b.

One of the companies in that group, Tecnologia Galvanica, S.A. de C.V. (“Tecnologia
Galvanica”), was founded in Mexico in or around 1983 for the purpose of developing
sacrificial anodes.

2.

Plaintiff Galvotec Alloys, Inc.

a.

Plaintiff is a corporation organized and existing under the laws of the State of Texas with
its principal place of business at 6712 South 36th Street, McAllen, Texas 78503.

b.

Plaintiff is a worldwide leader in the design, manufacture, and sale of sacrificial anodes
used for corrosion protection, and is the leading company in the U.S.-based sacrificial
anode market.

1

The Court denied Defendant’s later-filed motions to amend its answer to assert counterclaims against
Plaintiff. (Dkt. Nos. 64, 72, 74; 09/11/2014 Minute Entry).

2 / 26

c.

Plaintiff manufactures aluminum, zinc, and magnesium sacrificial anodes.

d.

Plaintiff was founded in Texas in April 1984.

e.

Rogelio Garza and brothers Ramon Galvan and Luis Miguel Galvan were Plaintiff’s
founding shareholders.

f.

In September 1986, Ramon Galvan and Luis Miguel Galvan sold their shares in Plaintiff
to Nonferrous Metal Enterprises, Ltd.

g.

In November 1987, Nonferrous Metal Enterprises, Ltd. transferred all of its shares in
Plaintiff to Rogelio Garza, who became Plaintiff’s sole shareholder.

h.

Rogelio Garza is Plaintiff’s President and has served in this capacity since 1984.

i.

Juan Antonio Galvan has not been a shareholder, officer, or director of Plaintiff at any
time.

j.

Plaintiff was not founded, sold, or owned by non-entity Grupo Falmex Galvotec, by
Tecnologia Galvanica, or by Juan Antonio Galvan.

3.

Defendant GaUS Anodes International, LLC

a.

Defendant is a limited liability company organized and existing under the laws of the
State of Texas with its principal place of business at 6425 Cunningham Road, Houston,
Texas 77041.

b.

Defendant designs, manufactures, and sells sacrificial anodes for corrosion protection,
and is Plaintiff’s main competitor in the U.S.-based sacrificial anode market.

c.

Defendant manufactures aluminum and zinc anodes, but not magnesium anodes.

d.

Defendant was founded in Texas in June 2005 as “A G Anodes LLC.”

e.

Defendant was founded by Juan Antonio Galvan, who serves as its Chief Executive
Officer (“CEO”).

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f.

In August 2005, Defendant changed its name to “GAUS ANODES INTERNATIONAL
LLC.”

g.

Defendant began operations in 2006.

B.

“Galvotec” Trademark

1.

Use and Registration by Plaintiff

a.

Since its founding in 1984, Plaintiff has used “Galvotec” to identify and advertise its
company and products.

b.

Plaintiff is the owner of the trademark “GALVOTEC” for “anodes,” registered on July
11, 2006 with the U.S. Patent and Trademark Office (registration number 3,114,292).

c.

The trademark “consists of standard characters without claim to any particular font, style,
size, or color.”

d.

The trademark is featured on Plaintiff’s website and in its advertising materials and other
company documents, and is displayed on products sold to customers.

2.

Use by Defendant

a.

As late as December 18, 2013, a page on Defendant’s website labeled “Our History”
(“history page”) placed the following events on a timeline: 1985—“Founded Galvotec”;
1993—“Sold Galvotec to focus on development of new alloy”; and 2008—“Open[ed]
new facility in the United States energy corridor to focus on the Americas.”

b.

Defendant’s presentations to potential customers have included the statement that
Defendant and/or Juan Antonio Galvan founded, sold, and/or owned “Galvotec.”

c.

Defendant, through Juan Antonio Galvan and its employees, has stated in correspondence
and conversations with potential customers that Defendant and/or Juan Antonio Galvan
founded, sold, and/or owned “Galvotec.”

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C.

“GA” Trademark

1.

Use and Registration by Plaintiff

a.

In or around 1996, Plaintiff developed the following company logo:

b.

The “GA” in the logo is an abbreviation for “Galvotec Alloys.”

c.

At least since 1996, Plaintiff has used the stylized logo (sometimes using only the
stylized “GA”) and the non-stylized letters “GA” to identify and advertise its company
and products.2

d.

Plaintiff is the owner of the trademark “GA” for “sacrificial anodes used for the cathodic
protection of on-shore and off-shore structures,” registered on November 17, 2009 with
the U.S. Patent and Trademark Office (registration number 3,710,948).

e.

The trademark “consists of standard characters without claim to any particular font, style,
size, or color.”

f.

The trademark is featured on Plaintiff’s website and in its advertising materials and other
company documents, and is displayed on products sold to customers.

g.

Plaintiff identifies its anodes with the letters “GA” followed by a number or numberletter combination.

2.

Use by Defendant

a.

Around the time of the founding of Defendant, Juan Antonio Galvan and his son, Luis
Antonio Galvan Luna (“Tony Galvan”), agreed upon Defendant’s name and Tony Galvan
developed a company logo with the assistance of his architect friend and with the

2

Juan Antonio Galvan testified that he helped his brothers create a version of the “GA” logo for Plaintiff
as early as 1984.

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approval of his father. Since that time, Defendant has used the following variations of
the logo, as well as the non-stylized letters “GaUS,” to identify and advertise its company
and products:

b.

Tony Galvan testified that he intended the design of the logo to imitate the periodic table
of the elements (“Ga,” although not “GA,” is the abbreviation for the element gallium in
the periodic table),3 and also to reflect that the letters signify “Galvan in the United
States” and/or “Galvanic Anodes in the United States.”4

c.

As late as December 18, 2013, a page on Defendant’s website used the letters “GA” (both
letters are capitalized but the “A” is smaller) to mark the locations of clients of
Defendant, and of the Grupo Falmex Galvotec group of Mexican companies, on a map
(“client map page”).

D.

Website Metatags and Internet Search Engine Results

1.

The metatags for Defendant’s website, which are used by Internet search engines to
generate search results, are virtually identical to and in the same order as Plaintiff’s, and
include “magnesium anodes,” “water heater anodes,” and “extruded anodes” that
Defendant does not manufacture.

3

The Court notes that “Ag,” the original first two letters of Defendant’s name, is also an abbreviation for
an element (silver) in the periodic table.

4

Tony Galvan also testified that the scientific term for sacrificial anodes is galvanic anodes, but
the Court notes that the parties use the term sacrificial anodes to advertise their products.

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2.

Tony Galvan assisted in deciding which terms would be used for Defendant’s metatags.

3.

The first result for the search term “GA anodes” in the Google, bing, and Yahoo! search
engines is Defendant’s website.

E.

“Cease and Desist” Letters and Response

1.

In a letter dated January 18, 2010 and sent to Defendant, Plaintiff through Rogelio
Garza objected to Defendant’s use of the “Galvotec” trademark on the history page of its
website and asked Defendant to “remove or clarify the name Galvotec as soon as
possible.”

2.

In a letter dated March 8, 2010 and sent to Defendant, Plaintiff through counsel objected
to: (i) Defendant’s use of the “Galvotec” trademark on the history page of its website, in
that such use “unfairly implies a connection between your company and [Plaintiff]”; (ii)
Defendant’s “prominent” use of the “GA” trademark “on every page of your website”;
and (iii) Defendant’s statements to “persons in this industry that you founded Galvotec,”
since “[w]hether or not you actually founded another company whose name begins with
Galvotec…, your statements are unfairly implying a connection between your current
company and [Plaintiff].” Plaintiff asked Defendant to “remove all instances” of the
trademarks from its website, catalog, and other advertising material, and to stop making
statements that Defendant founded Galvotec. Plaintiff did not object to Defendant “using
Gaus in your company name as long as the GA or Ga do not stand out in some way from
the US or us (as they currently do on your website).”

3.

Sometime after December 18, 2013, Defendant changed the history page of its website as
requested.

4.
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After receipt of the letters, Defendant through its employees has stated to potential

customers that Defendant and/or Juan Antonio Galvan founded, sold, and/or owned
“Galvotec.”5
5.

Sometime after December 18, 2013, Defendant removed the letters “GA” from the client
map page of its website.

6.

After receipt of the letters, Defendant has continued to separate “Ga” and “US” in its
logo, and to use the logo and “GaUS” to identify and advertise its company and
products.

7.

On June 19, 2014, Defendant filed a “Petition to Cancel” with the U.S. Patent and
Trademark Office, seeking to cancel Plaintiff’s “GA” trademark. The petition alleges
that Defendant “is damaged by [Plaintiff’s] registration because the registration creates a
likelihood of confusion with [Defendant’s] own common law marks and exposes
[Defendant] to allegations of trademark infringement.”

F.

Customer Confusion and Plaintiff’s Response

1.

Plaintiff’s and Defendant’s customers consist mostly of companies in the oil and gas
industries who use sacrificial anodes for corrosion protection of onshore and offshore
structures. The parties’ customer contacts generally are project engineers and purchasing
agents of these companies.

2.

Prior to purchasing sacrificial anodes from either party, a customer typically submits a
request for quotation (“RFQ”), the party submits a bid, and the party receiving the bid
manufactures the anodes according to the customer’s specifications.

3.

The parties directly compete for customers by advertising in the same trade publications
and at the same trade shows, in print materials, on the Internet, and in person. The parties

5

On June 26, 2014, the Court enjoined Defendant from continuing to make such statements. (Dkt. No.
37). No evidence exists that Defendant has violated the Court’s order.

8 / 26

also directly compete in the bidding process.
4.

Although the parties have many repeat customers, customer personnel and contacts
change and not all contacts are experts in purchasing sacrificial anodes.

5.

Defendant has received emails from potential customer contacts and from individuals
seeking help and information on anodes, including magnesium anodes that Defendant
does not manufacture.

6.

Some of the parties’ customers/customer contacts have attempted to pick up anodes
ordered from Defendant from Plaintiff’s facility, requested “Galvotec” anodes from
Defendant, or believed (or at least wondered whether) Plaintiff and Defendant are or were
affiliated entities.

7.

In a letter dated April 15, 2011 and sent to customers and potential customers, Plaintiff
through Rogelio Garza informed the recipients that “one of our competitors is claiming
that they are a spin-off or are otherwise related to [Plaintiff],” and that this claim was
false.

III.

Count 1: Trademark Infringement under the Lanham Act (15 U.S.C. § 1114(1));
Count 2: Unfair Competition under the Lanham Act (15 U.S.C. § 1125(a)(1)(A));
Count 4: Common Law Unfair Competition; and Count 5: Common Law
Trademark Infringement

A.

Overview of Applicable Law
Section 1114(1) of the Lanham Act prohibits the “use in commerce [of] any reproduction,

counterfeit, copy, or colorable imitation” of a registered trademark “in connection with the sale,
offering for sale, distribution, or advertising of any goods or services on or in connection with
which such use is likely to cause confusion, or to cause mistake, or to deceive.” 15 U.S.C. §
1114(1)(a).

Section 1125(a)(1)(A) similarly prohibits unfair competition with respect to

registered and unregistered trademarks. See id. § 1125(a)(1)(A); Amazing Spaces, Inc. v. Metro
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Mini Storage, 608 F.3d 225, 235 n.8 (5th Cir. 2010).6 To prevail on either claim, a plaintiff must
(1) establish that it has a legally protectable mark and (2) show infringement by demonstrating a
likelihood of confusion. Amazing Spaces, 608 F.3d at 235-36; Amstar Corp. v. Domino’s Pizza,
Inc., 615 F.2d 252, 258 (5th Cir. 1980) (claims under §§ 1114(1) and 1125(a)(1)(A) both require
showing of likelihood of confusion). “A trademark infringement and unfair competition action
under Texas common law presents essentially no difference in issues than those under federal
trademark infringement actions.” Amazing Spaces, 608 F.3d at 235 n.7 (quoting Horseshoe Bay
Resort Sales Co. v. Lake Lyndon B. Johnson Improvement Corp., 53 S.W.3d 799, 806 n.3
(Tex.App.-Austin 2001, pet. denied)) (internal quotations omitted). Thus, the analysis with
respect to the federal claims is dispositive of the claims brought under Texas law. Id.
1.

Legally Protectable Mark
Federal registration of a mark constitutes prima facie evidence of the mark’s validity. 15

U.S.C. § 1115(a); id. at 237. A defendant may rebut this presumption by showing that the mark
is not inherently distinctive.

Amazing Spaces, 608 F.3d at 237.

“[A] mark is inherently

distinctive if its intrinsic nature serves to identify a particular source.” Id. at 240 (quoting WalMart Stores, Inc. v. Samara Bros., Inc., 529 U.S. 205, 210 (2000)). Marks are often classified in
the following categories of generally increasing distinctiveness:
Generic: refers to an entire class of products and does not distinguish a product at all,
6

Section 1125(a)(1)(A) provides in full:

(1) Any person who, on or in connection with any goods or services, or any container for goods, uses in
commerce any word, term, name, symbol, or device, or any combination thereof, or any false designation
of origin, false or misleading description of fact, or false or misleading representation of fact, which—
(A) is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation,
connection, or association of such person with another person, or as to the origin, sponsorship, or
approval of his or her goods, services, or commercial activities by another person….
15 U.S.C. § 1125(a)(1)(A).

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such as “airplane” or “computer.”
Descriptive: describes features or characteristics of a product, such as “All Bran” or
“Holiday Inn.”
Suggestive: suggests, rather than describes, features or characteristics of a product,
requiring the purchaser to use imagination, thought, and perception to reach a conclusion
as to the nature of the product, such as “Business Week” for a business periodical or
“Coppertone” for sun tanning products.
Arbitrary: uses a common word in an unfamiliar way, such as “Apple” for computers or
“Ivory” for soap.7
Fanciful: is not a word at all, but is invented solely for the purpose of identifying a
particular product, such as “Kodak” for film or “Exxon” for fuel.
Sport Supply Grp., Inc. v. Columbia Cas. Co., 335 F.3d 453, 460 n.7 (5th Cir. 2003); id. at 240
(quoting Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 768 (2000)), 241 (quoting
Zatarains, Inc. v. Oak Grove Smokehouse, Inc., 698 F.2d 786 (5th Cir. 1983)). “Marks that are
suggestive, arbitrary, or fanciful, ‘because their intrinsic nature serves to identify a particular
source of a product, are deemed inherently distinctive and are entitled to protection.’” Amazing
Spaces, 608 F.3d at 241 (quoting Two Pesos, 505 U.S. at 768). “In contrast, descriptive marks
may be protected only upon a showing of acquired or secondary meaning, while generic marks
may never acquire secondary meaning and are categorically excluded from protection.” Id.
(citing Two Pesos, 505 U.S. at 768-69).
2.

Likelihood of Confusion
In determining whether a likelihood of confusion exists, courts consider the non-

7

A combination of letters also has been held to constitute an arbitrary mark. In W-K-M Div. of
Joy Mfg. Co. v. WK Industries, 1987 WL 15500 (S.D.Tex. Mar. 13, 1987), cited by Plaintiff and
analogous to the present case in multiple respects, the plaintiff owned a federal trademark
registration on the mark “WKM” “as used on gate valves and other products.” Id. at *1. The
district court determined that the WKM mark was arbitrary “since it has no apparent relation to
gate valves,” and rejected the defendant’s suggestion that the mark was not strong simply
because it consisted of a combination of letters. Id.
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exhaustive list of these “digits of confusion”: (1) the type of mark allegedly infringed; (2) the
similarity between the two marks; (3) the similarity of the products or services; (4) the identity of
the retail outlets and purchasers; (5) the identity of the advertising media used; (6) the
defendant’s intent; (7) any evidence of actual confusion; and (8) the degree of care exercised by
potential purchasers. Bd. of Supervisors for La. State Univ. Agric. & Mech. Coll. v. Smack
Apparel Co., 550 F.3d 465, 478 (5th Cir. 2008)). “No single factor is dispositive, and a finding of
a likelihood of confusion need not be supported by a majority of the factors.” Id. “Actual
confusion that is later dissipated by further inspection of the goods, services, or premises, as well
as post-sale confusion, is relevant to a determination of a likelihood of confusion.” Elvis Presley
Enters., Inc. v. Capece, 141 F.3d 188, 204 (5th Cir. 1998). “Infringement can be based upon
confusion that creates initial consumer interest, even though no actual sale is finally completed
as a result of the confusion.”

Id. (quoting 3 J. THOMAS MCCARTHY, MCCARTHY

ON

TRADEMARKS AND UNFAIR COMPETITION 23:6 (4th ed. 1997)).
In the largely analogous case of W-K-M Div. of Joy Mfg. Co. v. WK Industries, supra, a
trademark infringement action between two manufacturers of gate valves commonly used in the
oilfield and pipeline industries, the plaintiff W-K-M Division of Joy Manufacturing Company
owned a federal trademark registration on the mark “WKM” “as used on gate valves and other
products.” W-K-M Div. of Joy Mfg., 1987 WL 15500 at *1. After eight years as the plaintiff’s
general manager, Willard Kemp resigned and formed WK Industries to manufacture, sell, and
service gate valves in direct competition with the plaintiff. Id. The defendant company used
“WK” and two logos based on those initials in its advertising. Id. In determining that the
requisite likelihood of confusion existed, the district court made the following findings with
respect to the digits of confusion:
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(1)

The WKM trademark was arbitrary since it was a combination of letters with
“no apparent relation to gate valves”;

(2)

WK’s distinguishing logo design did not eliminate the likelihood of confusion, as
the initials in the logo were still the first two letters found in the WKM
trademark and “any customer who remembered the company’s initials, but failed
to attach legal significance to the design, would be misled”;

(3)

Both companies sold gate valves;

(4), (5), & (8) Both companies advertised in the same journals and sold their valves in
direct competition, and the alleged sophistication of customers did not negate the
likelihood of confusion since “[a] confusing trademark would still be likely to
create confusion in both the original and secondary market, even if the confusion
could be overcome easily by a thorough customer”;
(6)

Willard Kemp could have marked the company with his own name without using
the initials WK, and in fact he selected those initials “with full knowledge that the
initials might be confused with WKM”; and

(7)

The statement of one customer contact indicated the potential for confusion, as
the contact was “interested and curious as to any connection” between WK and
WKM.

Id. at *1-2.
B.

Conclusions of Law

1.

“Galvotec” Trademark

a.

Legally Protectable Mark
Plaintiff’s federal registration of “Galvotec” for “anodes” constitutes prima facie

evidence of the validity of the mark in this context.

Defendant has failed to rebut the

presumption that “Galvotec” is a valid mark because: (i) it was incorporated into the name of
U.S. corporation Plaintiff in 1984, and since that time has been used to identify the source of
Plaintiff’s products rather than the features or characteristics of those products; and (ii) at most,
“Galvotec” is suggestive of “galvanic” technology/anodes. Therefore, “Galvotec” for “anodes”
is an inherently distinctive mark entitled to protection.
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b.

Likelihood of Confusion
The Court makes the following findings with respect to the “digits of confusion”:
(1)

At most, the “Galvotec” trademark is suggestive of “galvanic” technology/anodes
and is an inherently distinctive mark entitled to protection;

(2)

The mark used by Defendant is the same;

(3)

Both parties design, manufacture, and sell aluminum and zinc sacrificial anodes;

(4) & (5) The parties directly compete for customers by advertising in the same trade
publications and at the same trade shows, in print materials, on the Internet, and in
person;
(6)

By stating on the history page of its website, in presentations to potential
customers, and in correspondence and conversations with potential customers,
that Defendant and/or Juan Antonio Galvan founded, sold, and/or owned
“Galvotec,” Defendant intended that customers infer an affiliation between
Defendant and Plaintiff (rather than, or at least in addition to, the Grupo Falmex
Galvotec group of Mexican companies);8

(7)

Some of the parties’ customers/customer contacts have attempted to pick up
anodes ordered from Defendant from Plaintiff’s facility, requested “Galvotec”
anodes from Defendant, or believed (or at least wondered whether) Plaintiff and
Defendant are or were affiliated entities; and

(8)

Although the bidding process requires the exercise of a significant degree of care
in order to complete a purchase of anodes from either party, this degree of care
does not negate the potential for confusion among customers (whose personnel
and contacts change) and potential customers at some point during the initial
inquiry or purchasing process.

The Court finds that all of the digits of confusion are met, and that Defendant has
infringed on the “Galvotec” trademark by creating a likelihood of confusion among customers
and potential customers.9

8

The Court derives its finding of intent from the nature of Defendant’s use of the “Galvotec” mark, the
Court’s assessment of the testimony of Juan Antonio Galvan and Tony Galvan, and evidence (such as
Defendant’s use of the website metatags) that Defendant intended to directly compete with Plaintiff.
9
The Court recognizes that by letter dated April 15, 2011, Rogelio Garza informed customers and
potential customers that “one of our competitors is claiming that they are a spin-off or are otherwise
related to [Plaintiff],” and that this claim was false. This letter did not dispel the potential for confusion

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2.

“GA” Trademark

a.

Legally Protectable Mark
Plaintiff’s’ federal registration of “GA” for “sacrificial anodes used for the cathodic

protection of on-shore and off-shore structures” constitutes prima facie evidence of the validity
of the mark in this context. Defendant has failed to rebut the presumption that “GA” is a valid
mark because: (i) “GA” is an abbreviation for Plaintiff’s company name, Galvotec Alloys, and at
least since 1996 has been used to identify the source of Plaintiff’s products rather than the
features or characteristics of those products; and (ii) the “GA” combination of letters is an
arbitrary mark that does not suggest a feature or characteristic of Plaintiff’s anode products.10
Therefore, “GA” for “sacrificial anodes used for the cathodic protection of on-shore and offshore structures” is an inherently distinctive mark entitled to protection.
b.

Likelihood of Confusion
The Court makes the following findings with respect to the “digits of confusion”:
(1)

The “GA” trademark is arbitrary, and therefore an inherently distinctive mark
entitled to protection, since it is a combination of letters that does not suggest a
feature or characteristic of Plaintiff’s anode products;

(2)

Defendant’s use of “GA” and “Ga” followed by “US” in its logo design and
company name does not eliminate the likelihood of confusion with Plaintiff’s
“GA” trademark, as the logo design separates “GA”/“Ga” (and encapsulates
it in a square, much like Plaintiff’s logo design encapsulates “GA” in a
trapezoidal figure) from “US,” and Plaintiff’s use of the non-stylized letters
“GaUS” also creates a visual separation. Further, in the single instance of the
client map page of Defendant’s website, Defendant used
Plaintiff’s
“GA”
trademark without the addition of the letters “US”;

(3)

Both parties design, manufacture, and sell aluminum and zinc sacrificial anodes;

(4) & (5) The parties directly compete for customers by advertising in the same trade
as to whether the parties were affiliated, given that customer personnel and contacts change and the letter
could not have reached all potential customers of both parties.
10
Even assuming, as Defendant argues, that “GA” also could stand for “galvanic anodes,” the Court
finds that “GA” is merely suggestive of this meaning.

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publications and at the same trade shows, in print materials, on the Internet, and in
person;
(6)

Juan Antonio Galvan could have marked the company with his own name without
using “GA,” and in fact agreed upon a name for his company and approved the
logo with full knowledge that Defendant’s use of “GA” might create confusion
with Plaintiff’s trademark;11

(7)

Some of the parties’ customers/customer contacts have attempted to pick up
anodes ordered from Defendant from Plaintiff’s facility, requested “Galvotec”
anodes from Defendant, or believed (or at least wondered whether) Plaintiff and
Defendant are or were affiliated entities; and

(8)

Although the bidding process requires the exercise of a significant degree of care
in order to complete a purchase of anodes from either party, this degree of care
does not negate the potential for confusion among customers (whose personnel
and contacts change) and potential customers at some point during the initial
inquiry or purchasing process.

The Court finds that all of the digits of confusion are met, and that Defendant has
infringed on the “GA” trademark by creating a likelihood of confusion among customers and
potential customers.12
IV.

Count 3: Trademark Dilution under the Trademark Dilution Revision Act (15
U.S.C. § 1125(c)) and Count 11: Trademark Dilution under TEX. BUS. & COM. CODE
16.10313

A.

Overview of Applicable Law
In relevant part, § 1125(c) of the Trademark Dilution Revision Act (“TDRA”) provides

that “[s]ubject to the principles of equity, the owner of a famous mark that is distinctive…shall
be entitled to an injunction against…[the] use of a mark…in commerce that is likely to cause
dilution by blurring or dilution by tarnishment of the famous mark, regardless of the presence or

11

The Court derives its finding of intent from the nature of Defendant’s use of the “GA” mark, the
Court’s assessment of the testimony of Juan Antonio Galvan and Tony Galvan, and evidence (such as
Defendant’s use of the website metatags) that Defendant intended to directly compete with Plaintiff.
12
In fact, Defendant’s petition to cancel Plaintiff’s “GA” trademark essentially admitted to a likelihood
of confusion between Plaintiff’s registered trademark and Defendant’s “common law marks.”
13
Plaintiff brings its state-law cause of action under Texas Business & Commerce Code § 16.29, which
has been recodified as § 16.103.

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absence of actual or likely confusion, of competition, or of actual economic injury.” 15 U.S.C. §
1125(c). To show trademark dilution under the TDRA, a plaintiff must establish that: (1) it owns
a famous and distinctive mark; (2) the defendant has commenced using the famous mark in a
manner that dilutes the mark; (3) the similarity between the plaintiff’s mark and the defendant’s
mark gives rise to an association between the marks; and (4) the association is likely to impair
the distinctiveness (blurring), or harm the reputation of (tarnishment), the famous mark. Nat’l
Bus. Forms & Printing, Inc. v. Ford Motor Co., 671 F.3d 526, 536 (5th Cir. 2012); see id. §
1125(c)(2)(B), (C). For a mark to be famous, it must be “widely recognized by the general
consuming public of the United States as a designation of source of the goods or services of the
mark’s owner,” 15 U.S.C. § 1125(c)(2)(A), although it need only be famous within its specific
industry or market, Advantage Rent-A-Car, Inc. v. Enter. Rent-A-Car, Co., 238 F.3d 378, 380
(5th Cir. 2001).
Texas’s anti-dilution statute similarly entitles the owner of a famous and distinctive mark
to an injunction against the commercial use of a mark if such use is likely to cause dilution of the
famous mark through blurring or tarnishment. TEX. BUS. & COM. CODE § 16.103(a). Section
16.03 was “intended to make the Texas dilution standard ‘substantially consistent’ with federal
law,” and therefore the same analysis applies to both claims. US Risk Ins. Grp., Inc. v. U.S. Risk
Mgmt., LLC, 2013 WL 4504754, at *20 n.3 (N.D. Tex. Aug. 20, 2013) (quoting Notes to TEX.
BUS. & COM. CODE § 16.103).
B.

Conclusions of Law
Plaintiff’s “Galvotec” and “GA” trademarks are famous within the U.S.-based sacrificial

anode market, and for the reasons explained in § III, are inherently distinctive marks entitled to
protection. By stating on the history page of its website, in presentations to potential customers,
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and in correspondence and conversations with potential customers, that Defendant and/or Juan
Antonio Galvan founded, sold, and/or owned “Galvotec,” Defendant has used Plaintiff’s
“Galvotec” mark in a manner that gives rise to an association with Plaintiff’s mark, and that is
likely to impair the distinctiveness of or harm the reputation of Plaintiff’s mark. Further, by
creating visual separation between “GA”/Ga” and “US” in its logo design and name, and by
using “GA” without the addition of the letters “US” on the client map page of its website,
Defendant has used Plaintiff’s “GA” mark in a manner that gives rise to an association with
Plaintiff’s mark, and that is likely to impair the distinctiveness of or harm the reputation of
Plaintiff’s mark.
V.

Count 6: Unjust Enrichment

A.

Overview of Applicable Law
“Despite the lack of unanimity among Texas courts, one thing remains clear: even in the

cases [suggesting unjust enrichment is not an independent cause of action], the courts have still
allowed plaintiffs to recover based on the theory of unjust enrichment so long as a ‘person has
obtained a benefit from another by fraud, duress, or the taking of undue advantage.’” Amy’s Ice
Creams, Inc. v. Amy’s Kitchen, Inc., 2014 WL 5040055, at *6 (W.D. Tex. Oct. 8, 2014) (quoting
Newington Ltd. v. Forrester, 2008 WL 4908200, at *4 (N.D.Tex. Nov. 13, 2008)) (emphasis in
original); see also Heldenfels Bros., Inc. v. City of Corpus Christi, 832 S.W.2d 39, 41 (Tex.
1992). Unjust enrichment is an implied-contract basis for requiring restitution when it would be
unjust to retain benefits received. Perales v. Bank of Am., 2014 WL 3907793, at *3 (S.D.Tex.
Aug. 11, 2014) (citing Walker v. Cotter Props., Inc., 181 S.W.3d 895, 900 (Tex.App.-Dallas
2006, no pet.)). The Fifth Circuit “has held it appropriate to award profits of an infringer
pursuant to [15 U.S.C. § 1117(a)] for various purposes,” among them “to remedy unjust
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enrichment of the infringer.” Am. Rice, Inc. v. Producers Rice Mill, Inc., 518 F.3d 321, 340 (5th
Cir. 2008).
B.

Conclusions of Law
Plaintiff has not identified or presented evidence of a benefit obtained by Defendant

through fraud or duress. To the extent that Plaintiff’s recovery on its trademark claims does not
account for a benefit received by Defendant through its advantageous use of Plaintiff’s
trademarks in violation of the law, Plaintiff may pursue restitution under the theory of unjust
enrichment during the damages phase of this case.
VI.

Count 7: False Advertising under the Lanham Act (15 U.S.C. § 1125(a)(1)(B))

A.

Overview of Applicable Law
Section 1125(a)(1)(B) of the Lanham Act, which has been interpreted by the Fifth Circuit

as protecting against false advertising, provides in relevant part:
Any person who, on or in connection with any goods or services…, uses in commerce
any word, term, name, symbol, or device, or any combination thereof, or any false
designation of origin, false or misleading description of fact, or false or misleading
representation of fact, which….in commercial advertising or promotion, misrepresents
the nature, characteristics, quality, or geographic origin of his or another person’s goods,
services, or commercial activities, shall be liable in a civil action by any person who
believes that he or she is likely to be damaged by such act.
15 U.S.C. § 1125(a)(1)(B); Pizza Hut, Inc. v. Papa John’s Int’l, Inc., 227 F.3d 489, 495 (5th Cir.
2000). To establish a prima facie case of false advertising, a plaintiff must show: (1) a false or
misleading statement about a product; (2) such statement either deceived or had the capacity to
deceive a substantial segment of potential customers; (3) the deception is material, in that it is
likely to influence the consumer’s purchasing decision; (4) the product is in interstate commerce;
and (5) the plaintiff has been or is likely to be injured as a result of the statement at issue. Pizza
Hut, 227 F.3d at 495. To obtain monetary damages or injunctive relief for false advertising, the
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plaintiff must demonstrate that the advertisement is literally false or likely to mislead and
confuse customers. Pizza Hut, 227 F.3d at 495. If the statement is literally false, customer
deception is presumed, but if the statement is misleading, the plaintiff must also introduce
evidence of the statement’s impact on customers. Id. at 495, 497. A plaintiff seeking monetary
damages for a misleading statement must prove actual deception by producing evidence of
“actual consumer reaction to the challenged advertising or surveys showing that a substantial
number of consumers were actually misled....” Id. at 497. A plaintiff seeking injunctive relief
must show that the misleading statement “tends to deceive customers,” i.e., that at least “some”
consumers were confused. Id.
B.

Conclusions of Law
By stating on the history page of its website, in presentations to potential customers, and

in correspondence and conversations with potential customers, that Defendant and/or Juan
Antonio Galvan founded, sold, and/or owned “Galvotec,” Defendant used “in commerce” and
for the purpose of commercial advertising and promotion, a misleading statement about the
nature, characteristics, qualities, or geographic origin of Defendant’s goods or services—that is,
Defendant suggested that such goods or services originated with Plaintiff (rather than, or at least
in addition to, the Grupo Falmex Galvotec group of Mexican companies). Further, evidence was
presented that some of the parties’ customers/customer contacts have attempted to pick up
anodes ordered from Defendant from Plaintiff’s facility, requested “Galvotec” anodes from
Defendant, or believed (or at least wondered whether) Plaintiff and Defendant are or were
affiliated entities. The Court finds that this evidence shows a tendency to deceive customers, and
that such deception is material because a suggested affiliation with the leading company in the
U.S.-based sacrificial anode market is likely to influence consumers’ purchasing decisions and to
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injure Plaintiff. Since Plaintiff did not produce evidence that a substantial number of consumers
were actually misled, Plaintiff is entitled to injunctive relief, but not monetary damages, on its
false advertising claim.
VII.

Count 8: Business Disparagement; Count 9: Product Disparagement; and Count 10:
Defamation

A.

Overview of Applicable Law
To recover for business disparagement under Texas law, a plaintiff must show that the

defendant published a false and disparaging statement about the plaintiff, with malice and
without privilege. Waste Mgmt. of Tex., Inc. v. Tex. Disposal Sys. Landfill, Inc., 434 S.W.3d
142, 155 (Tex. 2014). To maintain a defamation cause of action, a private plaintiff must prove
that the defendant published a statement that was defamatory concerning the plaintiff, with
negligence regarding the truth of the statement. WFAA-TV, Inc. v. McLemore, 978 S.W.2d 568,
571 (Tex. 1998). “For a statement to be actionable in defamation, it must expressly or impliedly
assert facts that are objectively verifiable.” Miranda v. Byles, 390 S.W.3d 543, 550 (Tex.App.Houston [1st Dist.] 2010, pet. denied) (quoting Palestine Herald-Press Co. v. Zimmer, 257
S.W.3d 504, 509 (Tex.App.-Tyler 2008, pet. denied)). “[S]tatements that are not verifiable as
false cannot form the basis of a defamation claim.” Neely v. Wilson, 418 S.W.3d 52, 62 (Tex.
2013).
Claims for business disparagement and defamation are similar in that they “[b]oth
involve the imposition of liability for injury sustained through publications to third parties of a
false statement affecting the plaintiff.” Hurlbut v. Gulf Atl. Life Ins. Co., 749 S.W.2d 762, 766
(5th Cir. 1987); see also Waste Mgmt. of Tex., 434 S.W.3d at 155. The two torts differ in that
business disparagement seeks to protect economic interests against pecuniary loss, whereas
defamation seeks to protect reputation interests. Id.
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B.

Conclusions of Law
Through its statements that that Defendant and/or Juan Antonio Galvan founded, sold,

and/or owned “Galvotec,” Defendant sought to capitalize on Plaintiff’s reputation (rather than
maliciously disparage Plaintiff) by suggesting a connection between the parties. Therefore, these
statements are not actionable as business disparagement. Plaintiff also alleges that Defendant is
liable for business and product disparagement and defamation because it has informed customers
and potential customers that its product is superior to that of Plaintiff, but this statement is not
objectively verifiable as false and cannot form the basis for Defendant’s liability under any of
these causes of action. Finally, Plaintiff alleges that Defendant is liable for defamation because
it has informed customers and potential customers that Defendant’s manufacturing process and
equipment lead to a better product, but these statements also are not objectively verifiable as
false and cannot form the basis for Defendant’s liability for defamation.
VIII. Affirmative Defenses
A.

Fair Use

1.

Overview of Applicable Law
Section 1115(b)(4) of the Lanham Act provides for an affirmative defense of “fair use,”

defined in relevant part as the defendant’s use, “otherwise than as a mark,” of a term which is
“descriptive of and used fairly and in good faith only to describe the goods or services of such
party, or their geographic origin.” 15 U.S.C. § 1115(b)(4). Thus, the defense “allows [the
defendant] to use a term in good faith to describe its goods or services, but only in actions
involving descriptive terms and only when the term is used in its descriptive sense rather than in
its trademark sense.” Sugar Busters LLC v. Brennan, 177 F.3d 258, 270-71 (5th Cir. 1999). The
doctrine of nominative fair use also allows a defendant to use a mark to describe the
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markholder’s goods or services for purposes of comparison. See Smack Apparel, 550 F.3d at 488
(quoting Pebble Beach Co. v. Tour 18 I Ltd., 155 F.3d 526, 546 (5th Cir. 1998)). In order to avail
itself of this doctrine, “the defendant (1) may only use so much of the mark as necessary to
identify the product or service and (2) may not do anything that suggests affiliation, sponsorship,
or endorsement by the markholder.” Id. at 489 (quoting same). The federal and Texas antidilution statutes also establish a fair use defense where a defendant uses a mark for comparative
advertising or promotion and “other than as a designation of source for the [defendant’s] own
goods or services.” See 15 U.S.C. § 1125(c)(3); TEX. BUS. & COM. CODE § 16.103(d).
2.

Conclusions of Law
Defendant cannot appeal to the fair use defense under § 1115(b)(4) because “Galvotec” is

not a descriptive term. Although Defendant alleges that it used the term “Galvotec” to identify
“the company Galvotec” and distinguish it from Defendant, such use has falsely suggested an
affiliation with Plaintiff, and therefore was not done fairly and in good faith to describe
Defendant’s goods or services or their geographic origin, nor was it done for the purpose of
comparing the parties’ goods or services. Therefore, Defendant is not entitled to the affirmative
defense of fair use as to Plaintiff’s claims against it under the Lanham Act and under the federal
and Texas anti-dilution statutes.
B.

Laches

1.

Overview of Applicable Law
The Lanham Act establishes no limitations period, but provides that the equitable

principle of laches may be considered and applied. See Jaso v. The Coca Cola Co., 435 F.App’x
346, 356 (5th Cir. 2011); 15 U.S.C. § 1609. The affirmative defense of laches has three elements:
(1) delay by the plaintiff in asserting its trademark rights; (2) lack of excuse for the delay; and (3)
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undue prejudice to the defendant caused by the delay. Bd. of Supervisors for La. State Univ.
Agric. & Mech. Coll. v. Smack Apparel Co., 550 F.3d 465, 489-90 (5th Cir. 2008) (quoting
Westchester Media v. PRL USA Holdings, Inc., 214 F.3d 658, 668 (5th Cir. 2000)). “A defendant
who intentionally infringes a trademark with the bad faith intent to capitalize on the
markholder’s good will lacks the clean hands necessary to assert the equitable defense.” Id.
(citing Conan Props., Inc. v. Conans Pizza, Inc., 752 F.2d 145, 150-51 & n.2 (5th Cir. 1985).
2.

Conclusions of Law
Defendant intentionally used Plaintiff’s “Galvotec” and “GA” trademarks with the bad

faith intent to capitalize on Plaintiff’s good will.14 Therefore, Defendant lacks the clean hands
necessary to assert the equitable affirmative defense of laches.
IX.

Attorney’s Fees

1.

Overview of Applicable Law
Section 1117(a) of the Lanham Act provides that “[t]he court in exceptional cases may

award reasonable attorney fees to the prevailing party.” 15 U.S.C. ¶ 1117(a). “The prevailing
party bears the burden of demonstrating the exceptional nature of the case by clear and
convincing evidence.” Smack Apparel, 550 F.3d at 491. “An exceptional case is one where the
violative acts can be characterized as malicious, fraudulent, deliberate, or willful.” Id. (quoting
Pebble Beach, 155 F.3d at 555). “The necessary showing demands a ‘high degree of culpability
on the part of the infringer, for example bad faith or fraud.’” Id. (quoting Pebble Beach, 155
F.3d at 556). The Fifth Circuit has cautioned that deliberate copying and even bad faith in
violating the Lanham Act do not render a case per se exceptional; rather, courts must consider all

14

Again, the Court derives its finding of intent from the nature of Defendant’s use of Plaintiff’s
“Galvotec” and “GA” marks, the Court’s assessment of the testimony of Juan Antonio Galvan and Tony
Galvan, and evidence (such as Defendant’s use of the website metatags) that Defendant intended to
directly compete with Plaintiff.

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the facts and circumstances in making this assessment. Id. (finding that district court did not
abuse its discretion in denying attorney’s fees where it credited testimony of witness that offset
other evidence of deliberate copying and bad faith, and where liability determination involved
novel trademark issues).
2.

Conclusions of Law
Clear and convincing evidence exists that Defendant’s infringing use of the “Galvotec”

and “GA” trademarks was deliberate and willful, and that Defendant acted with bad faith intent
to capitalize on Plaintiff’s good will.15 Further, this case presents no extenuating facts or
circumstances that would offset such evidence. Therefore, the Court finds that Plaintiff is
entitled to an award of attorney’s fees for Defendant’s violations of the Lanham Act.
X.

Summary of Conclusions of Law
For the foregoing reasons, the Court concludes:
Defendant is liable to Plaintiff on Counts 1, 2, 3, 4, 5, and 7 of Plaintiff’s First Amended

Original Complaint;
Defendant is not entitled to the affirmative defenses raised in its First Amended Answer;
Plaintiff is entitled to an award of attorney’s fees for Defendant’s violations of the
Lanham Act;
Plaintiff has not established Defendant’s liability on Count 6 of Plaintiff’s First Amended
Complaint, but to the extent that Plaintiff’s recovery on its trademark claims does not account for
a benefit received by Defendant through its advantageous use of Plaintiff’s trademarks in
violation of the law, Plaintiff may pursue restitution under the theory of unjust enrichment during
the damages phase of this case; and
Defendant is not liable to Plaintiff on Counts 8, 9, or 10 of Plaintiff’s First Amended
15

Id.

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Complaint.

SO ORDERED this 2nd day of December, 2014, at McAllen, Texas.

___________________________________
Randy Crane
United States District Judge

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