Guess Again

In the midst of New York Fashion Week, Judge Shira Sheindlein delivered a stylish valentine to the fashion law community in the case of Gucci v. Guess?, Inc., 2012 US.Dist.LEXIS 18497 (February 14, 2012) [enhanced version available to lexis.com subscribers], in which Gucci has asserted trademark infringement and counterfeiting, trade dress infringement, dilution, false designation of origin and unfair competition claims against Guess?, Inc. and the other defendants based on four allegedly infringing designs.

The decision denied Guess?'s motion for summary judgment, except for Gucci's dilution claims based on two of the designs. The decision is of particular interest to non-parties because of its elegant summation of the Post-Sale Confusion doctrine in the Second Circuit. (On February 21, the Court issued a clarifying opinion, 2012 U.S. Dist. LEXIS 21598, 2-3 (S.D.N.Y. Feb. 21, 2012) [enhanced version], ruling that grant of summary judgment applied only to Gucci's claims for monetary relief, and that its claims for injunctive relief remained viable. The Court also clarified two factual matters, correcting a typographical error regarding the date when Gucci first used its Stylized G design on watches and clocks and specifying that Gucci received trademark registrations for the Stylized G design in 1997, 1999, and 2006 in various classes of goods.)

While the Lanham Act only protects against "confusion that affects purchasing decisions," the Second Circuit, has, for more than half a century, protected trademark owners against the harm that "a potential purchaser, knowing that the public is likely to be confused or deceived by the allegedly infringing product, will choose to purchase that product instead of a genuine one in order to gain the same prestige at a lower price."1 To establish such a claim, the trademark owner need not prove lost sales, but rather that "members of the public are confused as to the origin of the [infringing] products," Id. at *11, applying the Polaroid factors:

• the strength of plaintiff's mark;
• the similarity of the marks at issue;
• the proximity of the products;
• the likelihood that the plaintiff will "bridge the gap";
• actual confusion;
• defendant's good or bad faith;
• the quality of the allegedly infringing product; and
• the sophistication of consumers of the product.[1]

Contrary to the argument of Guess? that actual confusion was required, "No single factor is dispositive, nor is a court limited to consideration of only those factors." Id. at *12.

And how to monetize a post-sale confusion claim?

While a trademark owner must normally prove actual confusion or deception to recover money damages for trademark infringement, "[i]n the absence of such a showing, the owner may nonetheless obtain monetary relief by that the alleged infringer acted with an intent to deceive, because such an intent gives rise to a rebuttable presumption of an intent to deceive....Monetary relief may also be granted in the form of an accounting of a defendant's profit arising from the sale of allegedly infringing products. To obtain an accounting, the plaintiff must show that the infringer acted with 'willful deceptiveness.' Nonetheless, because an accounting of profits is an equitable remedy, willful deceptiveness, while a necessary factor, must be considered along with many others, including '(1) the degree of certainty that the defendant benefited [sic] from the unlawful conduct, (2) [the] availability and adequacy of other remedies, (3) the role of a particular defendant in effectuating the infringement, (4) plaintiff's laches, and (5) plaintiff's unclean hands." Id. at *13-14.2

Drawing no inferences as to the merits of the case--the evidence supports "competing inferences," and there are genuine issues of material fact yet to be resolved--the decision should be as welcome to owners of luxury brands and their counsel, as well, perhaps, as trademark litigators in the Second Circuit generally, as it is to certain producers of inexpensive fashion articles who frequently find themselves defending infringement claims, and some law professors who believe that facilitating cheap knock-offs promotes creativity.3

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[1] At  *10. See also Malletier v. Burlington Coat Factory Warehouse Corp., 426 F.3d 532 (2d Cir. 2005) [enhanced version]; Hermes Intern. v. Lederer de Paris Fifth Ave., Inc.. 219 F.3d 104 (2d Cir. 2000) [enhanced version], Mastercrafters Clock & Radio Co, v. Vacheron & Constantin-le-Coultre Watches, Inc., 221 F.2d 464 (2d Cir., 1955) [enhanced version].

[2]  Citing Gucci America, Inc. v. Daffy's, Inc., 354 F.3d 228 (3d Cir. 2003) [enhanced version] and Malletier v. Dooney & Bourke, Inc., 525 F. Supp. 2d 558 (S.D. N.Y. 2007) [enhanced version].

[3]  See, e.g., Kal Raustiala and Christopher Jon Sprigman, The Piracy Paradox: Innovation and Intellectual Property in Fashion Design, Virginia Law Review, Vol. 92, p. 1687, 2006.