Am. Rice, Inc. v. Producers Rice Mill, Inc. - 518 F.3d 321 (5th Cir. 2008)

Rule:

To recover on a claim of trademark infringement, a plaintiff must first show that the mark is legally protectable and must then establish infringement by showing a likelihood of confusion. To be protectable, a mark must be distinctive, either inherently or by achieving secondary meaning in the mind of the public. The Lanham Act, 15 U.S.C.S. § 1051 et seq., provides a cause of action for infringement where one uses: (1) any reproduction, counterfeit, copy, or colorable imitation of a mark; (2) without the registrant's consent; (3) in commerce; (4) in connection with the sale, offering for sale, distribution, or advertising of any goods; (5) where such use is likely to cause confusion, or to cause mistake or to deceive. The factors used in determining whether a likelihood of confusion exists are: (1) strength of the plaintiff's mark; (2) similarity of design between the marks; (3) similarity of the products; (4) identity of retail outlets and purchasers; (5) similarity of advertising media used; (6) the defendant's intent; (7) actual confusion; and (8) degree of care exercised by potential purchasers. The absence or presence of any one factor ordinarily is not dispositive; indeed, a finding of likelihood of confusion need not be supported even by a majority of the factors.

Facts:

For thirty-five years, appellant American Rice, Inc. (“ARI”), a Delaware corporation, has continuously sold parboiled, American long-grain rice in Saudi Arabia under ARI's "Abu Bint" brand name. During this time, ARI has spent $ 25 million to $ 30 million to advertise and promote this brand with a design of a girl on the label ("Girl Design"). In early 2005, appellee Producers Rice Mill, Inc. (“PRMI”) made plans to sell rice under a private label brand as requested by its Saudi wholesale customers and, at the recommendation of these customers, it incorporated a design with a girl on it ("Private Label Girl Design"). Before PRMI shipped any of the rice bearing the Private Label Girl Design, ARI sued PRMI, alleging that this design was too similar to ARI's Girl Design. ARI and PRMI settled the lawsuit in April 2005, wherein PRMI agreed not to use the proposed Private Label Girl Design or any design confusingly similar to ARI’s Girl Design. PRMI then proceeded to use its Girl with a Hat Design on its private label rice. ARI then brought the present lawsuit in September 2005 for both infringement under the Lanham Act of its Registered Trademark No. 882,997 and for breach of the April 2005 Settlement Agreement, alleging that the Girl with a Hat Design both created a likelihood of confusion under the Lanham Act and was confusingly similar to its Girl Design in violation of the Settlement Agreement. The district court found trademark infringement under the Lanham Act as well as a breach of the Settlement Agreement, and awarded ARI a permanent injunction in the amount of $ 1,256,635.00 for violation of the Lanham Act, reasonable attorney's fees under Texas law for breach of the Settlement Agreement, as well as interest and costs. Subsequently, the district court issued Amended Findings of Fact and Conclusions of Law and an Order, awarding only a permanent injunction, reasonable attorney's fees of $ 383,986.10 for breach of the settlement agreement, and interest. The court further determined that under an “election of remedies” theory, ARI was only entitled to recover under one of the alleged theories – the Lanham Act or breach of the settlement agreement – and, as such, the court awarded only the attorney’s fees and injunction available under Texas law for breach of the Settlement Agreement since it was the greater recovery of the two. ARI timely appealed. PRMI timely cross-appealed, contending that there was no showing of a likelihood of confusion between its marks and that of the ARI. PRMI also argued that the minimal profit award was proper because it was a cooperative which passed profits through to its farmers.

Issue:

1. Was there a showing of a likelihood of confusion between ARI’s mark and PRMI’s mark?
2. Did the district court err in awarding ARI only minimal profits from PRMI?

Answer:

1) Yes. 2) Yes.

Conclusion:

The appellate court first held that ARI’s mark was fanciful and thus strong since using a girl icon was not intrinsic to rice and the mark had an established secondary meaning in the foreign market. Further, the court held that likelihood of confusion was shown since the marks of ARI and PRMI both depicted young women with similar hair, dress, and features, posed behind a rectangular shape, holding a bowl of rice, and utilized the same color scheme of red, yellow, and black, and it could be inferred that PRMI intentionally chose its mark to take advantage of ARI’s good reputation. Also, ARI properly established PRMI’s profits based on its sales, PRMI failed to produce evidence of costs or other deductions from sales, and PRMI’s status as a flow-through entity for tax purposes was irrelevant in determining PRMI’s profits from infringement. Accordingly, the judgment was affirmed in part with regard to infringement, but the judgment was vacated in part with regard to the amount of the profits award and such amount was increased.