or sponsorship by Lauder of the "100% BODY CARE" line.
Bridging the Gap
"This factor takes into account the likelihood of the plaintiff expanding its product into the defendant's market." Giorgio Beverly Hills v. Revlon Consumer Products, 869 F. Supp. 176, 184 (S.D.N.Y. 1994); accord, W.W.W. Pharmaceutical, 984 F.2d at 574. Here, of course, the parties already are in the same market in the sense that they sell, or will sell, closely related products to largely overlapping groups of consumers, although their products will not be sold through the same types of retail outlets.
Lauder has no plans to enter the retail mass middle market or to lower its prices substantially. Indeed, doing so would be inconsistent with its fundamental business strategy. (See Osborne Dep. 247-48, 253-54) Similarly, there is no evidence that Gap intends to distribute the "100% BODY CARE" line through retail outlets comparable to those used by Lauder. In consequence, this factor weighs in favor of Gap, although the significance of that fact is limited in view of the extent to which the parties already are in the same market.
There is no evidence of actual confusion, which is not surprising. In view of the fact that Gap has not yet introduced its products, which means that there has been no opportunity to date on which actual confusion might have occurred, this factor is neutral.
Gap's Good Faith or Bad Faith
"This factor concerns 'whether the defendant adopted his mark with the intention of capitalizing on [the] plaintiff's reputation and goodwill and any confusion between his and the senior user's product.'" Cadbury Beverages, Inc., 73 F.3d at 482-83 (citations omitted) (alteration in original); see also Bear U.S.A., 909 F. Supp. at 906-07. Indeed, a defendant's bad faith may be extremely important in assessing likelihood of confusion because one who sets out to trade on the goodwill of another ordinarily will be presumed to have accomplished that goal. See Mobil Oil Corp., 818 F.2d at 258.
Lauder faces great difficulty in satisfying the established meaning of bad faith for purposes of this Polaroid factor. Lauder's product, new on the market as it is, concededly lacks secondary meaning. Hence, Gap cannot possibly have exploited Lauder's goodwill in the mark. Moreover, Lauder concedes that the Gap originally developed its 100% mark independently and in good faith. Nevertheless, Lauder maintains that Gap became a bad faith infringer once it learned from Dana that there was "a high end cosmetics company" on the "road to production" with a "100%" mark and, after learning of Lauder's ITU application, pressed forward with its own plans in the face of Lauder's protest and, indeed, this lawsuit. (Pl. Trial Br. 32-33) The Court does not accept this refashioning of the good faith - bad faith distinction.
As Professor McCarthy has written, "The only kind of intent that is relevant to the issue of likelihood of confusion is the intent to confuse." 3 MCCARTHY § 23.32, at 201. There simply is no basis for Lauder's assertion that Gap acted in bad faith simply because it did not fold its tent when it found Lauder's ITU application or, for that matter, when Lauder brought this action. As the Court has found, Ms. Kanberg, an experienced trademark lawyer, thought that Lauder's mark, as Lauder intended to use it, was not protectible. She advised her client accordingly. And while the Court ultimately disagreed with her, it is far from willing to say that her view and advice were so lacking in merit that they evidence bad faith in the legally relevant sense. See id. § 23.33, at 214 (need "very clear and legally unambiguous infringement" for a defendant's continued use to be construed as intent to deceive); cf. Sweats Fashions, Inc. v. Pannill Knitting Co., 833 F.2d 1560, 1565 (Fed. Cir. 1987) (bad faith requires "more than mere knowledge of prior similar mark"); Parenting Unlimited, Inc. v. Columbia Pictures Television, Inc., 743 F. Supp. 221, 230 (S.D.N.Y. 1990) (proceeding with knowledge of potential problem with mark does not necessarily establish bad faith); Mushroom Makers, Inc. v. R.G. Barry Corp., 441 F. Supp. 1220 (S.D.N.Y. 1977), aff'd, 580 F.2d 44, 48 (2d Cir. 1978), cert. denied, 439 U.S. 1116, 59 L. Ed. 2d 75, 99 S. Ct. 1022 (1979) (not bad faith to proceed in the belief that no conflict exists, even after PTO refused registration in view of plaintiff's mark). While Ms. Kanberg and her client were quite aggressive, they were aggressive in circumstances in which they had a colorable position and, moreover, in which Lauder through most of the relevant period had not begun using its mark in commerce.
Lauder places heavy reliance on International Star Class Yacht Racing Association v. Tommy Hilfiger, U.S.A., Inc., 80 F.3d 749 (2d Cir. 1996), in support of its bad faith argument. The Court of Appeals there held that the district court had relied upon two erroneous findings of fact and had failed to consider evidence of defendant's conduct after the initiation of the suit in determining that the defendant acted in good faith. To the extent the case holds that conduct after the adoption of the allegedly infringing mark is relevant in determining the defendant's bona fides, this Court applies it. Beyond that, the case is quite different from this one. The decision turned, first, on the fact that the defendant ignored the advice of its counsel to conduct a more thorough trademark search despite the fact that it knew it was copying "authentic details ... from the sport of competitive sailing." Id. at 753 (internal quotation marks omitted). Its actions reminded the Court of Appeals "two of the famous trio of monkeys who, by covering their eyes and ears, neither saw nor heard any evil." Id. at 754. The second pivotal point was the fact that the defendant in Hilfiger continued to infringe even after being sued and confirming the existence of the plaintiff's senior position.
Here, in contrast, Gap did not set out to copy anything and it proceeded on the advice of experienced counsel, advice that was not patently unreasonable, once the potential conflict emerged. The Court therefore finds that Gap acted in good faith. This factor therefore weighs in favor of Gap.
Quality of Defendant's Product
No one here disputes that Gap's products will be of good quality, just as no one disputes that Lauder's product is formulated quite differently from Gap's body lotion, the product bearing closest competitive relationship to Lauder's. Lauder is careful to distinguish all simple oil-water based emulsion moisturizers such as Gap's Old Navy product from its own patented formulation. (DX GGGG
P 16; DX BB) The claims it makes of continuous, long-term benefits go well beyond Old Navy's claim that its product "leave[s] skin feeling soft and smooth" (DX GGGG, P 17), which suggests that one using a Gap Old Navy product might well be disappointed if the user believed that it was made, sponsored by, or produced under license from Lauder.
The quality factor of the Polaroid test "considers whether the senior user's reputation could be 'tarnished by [the] inferior merchandise of the junior user.'" Cadbury Beverages, Inc., 73 F.3d at 483 (citation omitted and alteration in original). Accord, Mejia and Associates, Inc., 920 F. Supp. at 549. In these circumstances, the Court finds that there is a genuine risk that consumers who purchase the Gap product in the belief that it is associated in some way with Lauder will be disappointed and that the disappointment will rub off on Lauder. Accordingly, the factor cuts in Lauder's direction, although the Court believes that the extent to which it does so is limited.
Having evaluated the Polaroid factors, the Court is left with the task of determining whether the evidence supports a finding that an appreciable number of ordinarily prudent purchasers are likely to be confused. It is appropriate, therefore, to pause on two questions: (1) confused about what, and (2) what is an "appreciable number."
The Lanham Act makes clear that types of confusion which may give rise to infringement liability include confusion as to "affiliation, connection, or association" or "sponsorship." 15 U.S.C. § 1125(a)(1)(A) (West Supp.1996). Accord, e.g., Sterling Drug, Inc. v. Bayer AG, 14 F.3d 733, 740-41 (2d Cir. 1994); Home Box Office, Inc. v. Showtime/The Movie Channel, Inc., 832 F.2d 1311, 1314 (2d Cir. 1987). Thus, in order to prevail in this case, Lauder need not prove that consumers are likely to purchase Gap's products in the belief that they are buying Lauder's "100%" product or vice versa. It need only prove a likelihood that consumers will believe that Gap's "100% BODY CARE" line is somehow connected with the source of Lauder's "100%" product. For example, a likelihood that consumers will believe that the "100% BODY CARE" line is an off-price, mass market product of the same entity that produces Lauder's "100%" product would suffice.
The law is clear also that plaintiff need not establish that all or even most consumers are likely thus to be confused. Plaintiff need prove only a likelihood that an appreciable number of ordinarily prudent consumers will be confused. E.g., Mobil Oil Co., 818 F.2d at 256; 4 MCCARTHY §§ 32.54[b][i], 32.54[c].
Here, Lauder has adopted a mark of middling strength (which is likely to become stronger). The prominence given "100%" by both companies, although in ways that are graphically somewhat different, renders the marks sufficiently similar to cause significant concern. The products stand in close proximity to one another.
Lauder is at risk that consumers encountering Gap's products will associate their quite different properties with the source of Lauder's products to Lauder's detriment. While the other Polaroid factors either are neutral or cut in Gap's favor, the Court finds in all the circumstances that an appreciable number of ordinarily prudent consumers are likely to be confused as to the sponsorship, affiliation or connection of the source of Lauder's "100%" product with Gap's "100% BODY CARE." The likelihood of confusion is pronounced in, but not limited to, the post-sale context, in which a consumer may see the Gap product outside the retail setting, wrongly associate the product with Lauder's, and be influenced by the association in a later purchasing decision. See note 31 supra; see generally Lois Sportswear, U.S.A., Inc. v. Levi Strauss & Co., 799 F.2d 867, 872-73 (2d Cir. 1986) (describing post sale confusion). Moreover, the Court takes note of the long established principle that cases closely balanced as to likelihood of confusion should be resolved in favor of the senior user,
although this Court would reach the same result without regard to that rule.
The Court is mindful of the fact that Gap will be forced, as a result of this decision, to destroy or change packaging materials already produced, chnage its mark and, perhaps, delay somewhat its new product introduction. The fact that the case is a close one perhaps makes that difficult to accept. Nevertheless, Gap knew that Lauder was on the "road to production" of a new product called "100%" as early as February 1996. At that time, it could have changed its plans with little or no disruption. It nevertheless decided to proceed. While it acted on the advice of counsel and had a colorable position, it nonetheless decided to take precisely the gamble that it now has lost. It must bear the consequences of its decision.
1. Defendant, GPS (Delaware), Inc., the officers, agents, servants, employees, and attorneys of each of them, and all persons in active participation with any of them who receive actual notice of this order, be and they hereby are permanently enjoined and restrained from:
(a) Using the term "100%" as a trademark -- whether alone or in combination with other terms or designations (including, without limitation, as part of the mark "100% BODY CARE" or any other of their "100%" marks) -- on or in connection with the manufacture, advertisement, promotion, distribution or sale of any skin care, fragrance, cosmetic, hair care, toiletry and/or other personal care product; and
(b) Committing any other acts calculated or likely to cause confusion or mistake in the minds of the trade or public or to deceive prospective purchasers about the source or sponsorship of the parties' goods.