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Guccei America, Inc. v. Guess?

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK


February 14, 2012

GUCCI AMERICA, INC., PLAINTIFF,
v.
GUESS?, INC., MARC FISHER FOOTWEAR LLC, THE MAX LEATHER GROUP/CIPRIANI ACCESSORIES, INC., SEQUEL AG, J&M ASSOCIATES L.P., VIVA OPTIQUE, INC., SIGNAL PRODUCTS, INC., AND SWANK, INC., DEFENDANTS

The opinion of the court was delivered by: Shira A. Scheindlin, U.S.D.J.

OPINION AND ORDER

I. INTRODUCTION

Gucci America, Inc. ("Gucci") brings this action against Guess?, Inc., Marc Fisher Footwear LLC ("MGG"), the Max Leather Group/Cipriani Accessories, Inc., Sequel AG, K&M Associates L.P., Viva Optique, Inc., Signal Products, Inc, and Swank, Inc. (collectively, "Guess"), alleging various violations of the Lanham Act and New York state law.*fn1 Guess now moves for summary judgment. MFF has filed a similar motion with respect to Gucci's claims against it. For the reasons stated below, the motions are denied in part and granted in part.

II. BACKGROUND*fn2

This dispute began in 2009, when Gucci sued Guess, stating that it

engaged in "a sophisticated and elaborate scheme . . . to target Gucci, to create products that are similar in appearance to the most popular and best-known Gucci products, and trade upon the goodwill and reputation associated with Gucci and its high-quality, distinctive product lines." Proceeding under both federal and state law, Gucci seeks a permanent injunction preventing Guess from using the allegedly infringing marks, monetary relief (including actual damages, statutory damages, and an accounting of profits) and destruction of all allegedly infringing products on the basis of the following claims: 1) a trademark counterfeiting claim based on Guess's use of Gucci's Green-Red-Green Stripe ("GRG Stripe") design; 2) a trademark infringement claim based on Guess's use of the GRG Stripe, Script Guess, and Square G designs, as well as a related trade dress infringement claim based on Guess's use of the Quattro G design;*fn3 and 4) claims for dilution, false designation of origin, and unfair competition based on Guess's use of all four designs. Gucci also seeks cancellation of Guess's "4G Square Repeating Logo" trademark on the basis of abandonment.*fn4 Guess timely denied all of Gucci's claims, and approximately six months after the Complaint was filed, suggested that this dispute was amenable to summary disposition.*fn5 Nonetheless, the parties conducted full-scale discovery and engaged in settlement negotiations.

At a hearing on June 6, 2011, Guess persisted in its view that it was entitled to summary judgment. Nonetheless, I directed the parties to separate the Daubert expert-exclusion process from the summary judgment process, hoping that the decision on these motions would eliminate the need for summary judgment motions, or at least significantly reduce the scope of such motions.*fn6

Thereafter, this Court excluded all of Guess's confusion surveys as irrelevant to the issue of post-sale confusion. One of these -- the Scott Survey -- was nonetheless admitted on the issue of laches.*fn7 Gucci's confusion survey was ultimately admitted for certain limited purposes,*fn8 while its dilution survey was admitted in its entirety.*fn9

Although Guess previously stated that its summary judgment motion would "rely largely on [the confusion] surveys,"*fn10 it was not deterred by their exclusion or by this Court's frequent warnings that many of the issues in this case were inherently fact intensive and not amenable to summary judgment. Accordingly, Guess's counsel has now brought the motion that it could not waive "in good conscience."*fn11 A careful consideration of the voluminous submissions with which the parties have inundated this Court confirms that large portions of these motions were -- as predicted -- not amenable to summary disposition.*fn12 With few exceptions, the motions are denied.

III. APPLICABLE LAW

A. Summary Judgment

1. General Standards

Summary judgment is appropriate "if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law."*fn13 "'An issue of fact is genuine if the evidence is such that a reasonable jury could return a verdict for the nonmoving party. A fact is material if it might affect the outcome of the suit under the governing law.'"*fn14 "[T]he burden of demonstrating that no material fact exists lies with the moving party . . . ."*fn15

"When the burden of proof at trial would fall on the nonmoving party, it ordinarily is sufficient for the movant to point to a lack of evidence to go to the trier of fact on an essential element of the non[-]movant's claim."*fn16

To defeat a motion for summary judgment, the non-moving party must raise a genuine issue of material fact.*fn17 The non-moving party must do more than show that there is "'some metaphysical doubt as to the material facts,'"*fn18 and it "'may not rely on conclusory allegations or unsubstantiated speculation.'"*fn19

However, "'all that is required [from a non-moving party] is that sufficient evidence supporting the claimed factual dispute be shown to require a jury or judge to resolve the parties' differing versions of the truth at trial.'"*fn20

In determining whether a genuine issue of material fact exists, the court must "constru[e] the evidence in the light most favorable to the non-moving party and draw all reasonable inferences" in that party's favor.*fn21 However, "'only admissible evidence need be considered by the trial court in ruling on a motion for summary judgment.'"*fn22 "'Credibility assessments, choices between conflicting versions of the events, and the weighing of evidence are matters for the jury, not for the court on a motion for summary judgment.'"*fn23 Summary judgment is therefore "appropriate only if there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law."*fn24

2. Expert Reports

"Entirely conclusory" expert reports are not sufficient to ward off summary judgment.*fn25 Indeed, even a non-conclusory expert report may not be "a talisman against summary judgment."*fn26 It does not follow, however, that an expert report is never sufficient to defeat summary judgment. Instead, deciding whether an expert report raises a genuine issue of material fact is a task left to the sound discretion of the court.*fn27 In cases where credible expert reports conflict the case for summary judgment on the disputed issue is very weak.*fn28

B. Post-Sale Confusion*fn29

The Second Circuit has recognized a claim for post-sale confusion for more than fifty years.*fn30 This type of confusion harms the owner of a trademark in 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.*fn31

While courts have long recognized that the Lanham Act only protects against confusion that affects purchasing decisions,*fn32 the Second Circuit has never required a trademark owner proceeding under a post-sale theory of confusion to show that sales were actually lost to the allegedly infringing user, as such evidence is not easily obtained. Instead, the Second Circuit has held that post-sale confusion is actionable when members of the public are confused as to the origin of the products,*fn33 as the existence of such confusion is precisely what would lead a potential purchaser to choose the cheaper infringing product over the more expensive genuine article.

Accordingly, instead of focusing on whether any sales were actually diverted, courts in the Second Circuit look at all of the traditional Polaroid factors in analyzing claims of post-sale confusion.*fn34 Such factors include (1) the strength of plaintiff's mark; (2) the similarity of plaintiff's and defendant's marks; (3) the proximity of the products; (4) the likelihood that plaintiff will "bridge the gap"; (5) actual confusion between products; (6) defendant's good or bad faith in adopting the mark; (7) the quality of defendant's product; and (8) the sophistication of the buyers.*fn35 "No single factor is dispositive, nor is a court limited to consideration of only these factors."*fn36 "Further, 'each factor must be evaluated in the context of how it bears on the ultimate question of likelihood of confusion as to the source of the product.'"*fn37

C. Monetary Relief

In order to obtain monetary relief for damages stemming from trademark infringement, the owner of a trademark normally must prove "actual consumer confusion or deception resulting from the violation [of the Lanham Act]."*fn38 Damages may include lost sales,*fn39 a reasonable royalty*fn40 , and harm to brand value.*fn41 In the absence of such a showing, the owner may nonetheless obtain monetary relief by proving that the alleged infringer acted with an intent to deceive, because such an intent gives rise to a rebuttable presumption of actual confusion.*fn42 While an intent to copy is distinct from an intent to deceive, it nonetheless creates a presumption of an intent to deceive, unless there is evidence to the contrary.*fn43

Monetary relief may also be granted in the form of an accounting of a defendant's profits arising from the sale of allegedly infringing products.*fn44 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.'"*fn45 If a court does order an accounting, it should be limited to those profits attributable to the use of the allegedly infringing marks.*fn46

D. Laches

Because the Lanham Act expressly incorporates the principles of equity, the equitable defense of laches is available in a trademark infringement action brought under the Lanham Act.*fn47 As an equitable defense, however, it is also highly fact intensive and not typically amenable to summary judgment.*fn48

In the context of a suit brought under the Lanham Act, the Second Circuit has stated that the likelihood that the defense of laches will apply increases as the plaintiff tolerates "the [defendant's] competition in the same market with a name similar to that of the [plaintiff]" over an extended period of time.*fn49 Generally speaking, the court considers three factors in a laches analysis: (1) whether the senior user knew that the junior user was using its mark; (2) whether the senior user inexcusably delayed taking action; and (3) whether the junior user is harmed as a result.*fn50

E. Standards of Proof For Trademark Dilution Claims

The standard by which a claim for trademark dilution is assessed depends on when the allegedly diluting mark was first used in commerce. Where such use occurs before October 6, 2006, the dilution claim is governed by the Federal Trademark Dilution Act of 1995, under which the plaintiff must prove actual dilution.*fn51 If, however, the alleged diluting mark is first used in commerce after October 6, 2006, the Trademark Dilution Revision Act of 2005 applies, which allows the plaintiff to succeed upon a lesser showing of a "likelihood of dilution."*fn52

IV. DISCUSSION

A. Gucci's Post-Sale Infringement Claims Do Not Fail as a Matter of Law Guess argues that Gucci's post-sale trademark and trade dress infringement claims fail as a matter of law unless Gucci can produce evidence that a potential purchaser actually bought an allegedly-infringing Guess product instead of an authentic Gucci product in order to take advantage of confusion in the post-sale environment.*fn53 As Guess points out, when discussing the "actual confusion" Polaroid factor in Lang v. Retirement Living, the Second Circuit noted that "there [was] no reason to believe that confusion represented by the phone calls could inflict commercial injury in the form of either a diversion of sales, damage to goodwill, or loss of control over reputation."*fn54

Based on Lang, Guess posits a three-step approach to analyzing actual confusion. First, it argues that the absence of diverted sales is sufficient to establish no actual confusion in the post-sale context. Second, it argues that this absence of evidence regarding actual confusion is sufficient to establish that there is no likelihood of confusion in the post-sale context. Third, if there is no likelihood of confusion in the post-sale context, a defendant is entitled to judgment as a matter of law on a plaintiff's trademark infringement claims.*fn55

A careful reading of Lang and subsequent cases makes clear that the Second Circuit never adopted the second step delineated above. Instead, even in post-sale confusion cases, the Second Circuit requires a court to weigh all of the relevant Polaroid factors in determining if there is a likelihood of confusion sufficient to support a cause of action under the Lanham Act. Indeed, if the absence of evidence of actual post-sale confusion were sufficient to establish the absence of a likelihood of post-sale confusion, then the converse should also be true -- that a positive finding of a likelihood of post-sale confusion could establish actual post-sale confusion. This would eliminate the Polaroid inquiry and make actual confusion the sine qua non of the likelihood of confusion analysis instead of one of many factors that must be weighed. That is simply not the rule enunciated in MasterCrafters, Hermes, Lois Sportswear, or any other post-sale confusion case of which this Court is aware. Instead, Gucci need only show that post-sale observers are likely to confuse the allegedly infringing Guess products with Gucci products in order to avoid summary judgment on its infringement claims.

Guess also argues that because Gucci admits that there is no evidence of lost sales or "passing off," Gucci must show that consumers are likely to believe that Gucci and Guess are "related entities." Guess cites Lois Sportswear in support of the claim that Gucci cannot make such a showing because it "concedes 'Guess's prominence in the fashion industry.'"*fn56 In Lois Sportswear, as in Lang, the Second Circuitconducted a full review of the district court's weighing of the Polaroid factors and found it to be correct.*fn57 Moreover, while Gucci acknowledges that Guess is a famous brand, it strongly denies that Guess is a "fashion" brand.*fn58

In sum, Guess's argument that the absence of evidence of actual confusion is necessarily dispositive on post-sale confusion claims is incorrect. Instead, a likelihood of confusion analysis in the post-sale context requires the court to balance all relevant Polaroid factors. Except for Gucci's failure to demonstrate "actual confusion," Guess makes no argument that any of the other Polaroid factors weigh in its favor. Furthermore, the facts that Guess raises in support of its argument for summary judgment on Gucci's post-sale infringement claims are either irrelevant to post-sale confusion or disputed. Accordingly, Guess's motion for summary judgment on Gucci's post-sale infringement claims is denied.

B. Guess Is Not Entitled to Summary Judgment on Gucci's Claims for Monetary Relief Based on Trademark Infringement Gucci seeks two forms of monetary relief related to its trademark

infringement claims: damages and an accounting of profits stemming from the sale of allegedly infringing products. On this record, Gucci asserts that it is entitled to damages of approximately twenty-six million dollars. This amount represents a "reasonable royalty" as calculated by Gucci's damages expert, Basil A. Imburgia.*fn59

Gucci also asserts that it is entitled to an accounting of profits from all of the defendants, which Imburgia calculated to be in excess of ninety-eight million dollars.*fn60 For the reasons given below, summary judgment on both forms of monetary relief is denied.

1. The Quattro G Design*fn61

Gucci has evidence of actual confusion stemming from Guess's use of the Quattro G design on bags in the form of the Mantis Survey. Although originally excluded, that survey was admitted for two limited purposes on reconsideration: first, as evidence of the confusion associated with the actual Mantis Test Bag, and second, as evidence of the confusion in those post-sale situations where permanent Guess-identifying hardware is not visible.*fn62 While Guess challenges the weight that should be given to this survey on various grounds,*fn63 that argument simply raises a genuine dispute of material fact, rather than dispelling one. Accordingly, Guess is not entitled to summary judgment on Gucci's claims for damages stemming from Guess's use of this design.

Gucci has also produced substantial evidence from which a reasonable inference could be drawn that Guess acted in bad faith by meticulously copying Gucci's Diamond Motif trade dress in developing the Quattro G design, despite recognizing that consumers might confuse the two patterns.*fn64 Guess attempts to rebut this evidence in two ways. First, it points out that it places permanent Guess identifiers on its Quattro G products. Second, it points out that the channels through which Quattro G products are sold clearly identify the products as coming from Guess, not Gucci.*fn65

These arguments are plainly relevant to the issue of Guess's intent to confuse at the point of sale. However, as I noted in the Exclusion Opinion, in those post-sale situations where a Guess identifier will not be seen, the use of that identifier will not dispel post-sale confusion, and therefore says nothing one way or the other about Guess's bad faith vis-a-vis post-sale confusion.*fn66 The fact that Guess retail channels identify Quattro G products as coming from Guess is likewise plainly irrelevant to the issue whether Guess acted with an intent to cause post-sale confusion.*fn67

In the face of a clear issue of fact as to whether it acted with a bad faith intent to cause post-sale confusion, Guess argues that it is still entitled to summary judgment with respect to an accounting of profits because none of the three rationales for such an award -- to remedy unjust enrichment, to serve as a "rough proxy" for damages, and to deter further willful infringement*fn68 -- apply in this case. Guess is only partially correct.

Because there is no evidence that Gucci has actually lost any sales, Guess is correct that the unjust enrichment rationale does not apply.*fn69 As discussed above, however, Gucci has evidence of actual post-sale confusion with respect to the Quattro G design, thereby raising a genuine issue as to whether it is entitled to damages. Because the damages Gucci claims on this record -- compensation for a reasonable royalty -- are inherently speculative, using Guess's profits as a "rough proxy" for Gucci's damages may be appropriate.*fn70

Finally, there is a question as to whether the deterrence rationale applies in this case. In George Basch Co, Inc., the Second Circuit held that this rationale, even standing alone, is sufficient to merit an accounting of profits. The point of such an accounting is to "protect the public [by deterring] fraud regarding the source and quality of consumer goods and services."*fn71 The concern that casual observers will attribute an infringing product's low quality to the owner of the mark is reduced in post-sale confusion cases, as such persons are not in a position to examine a product's construction and materials. However, the concern that casual observers will be confused as to the source of the infringing products is at the heart of post-sale confusion. As noted above, the likelihood that casual observers will be confused cannot be resolved on summary judgment. Accordingly, the deterrence rationale remains viable. For these reasons, summary judgment with respect to an accounting of profits stemming from Guess's allegedly infringing use of the Quattro G design is denied.*fn72

2. Marks as to Which There Is No Evidence of Actual Confusion

Guess argues that it is entitled to summary judgment on monetary relief -- both damages and an accounting of profits -- with respect to its allegedly infringing use of the Square G, Script Guess, and GRG Stripe designs because "Gucci has no evidence of actual confusion or bad faith."*fn73 Because Gucci had registered all three marks, Guess is charged with constructive knowledge of each mark as of the date of registration and may not rely on lack of actual knowledge as a defense.*fn74 Although Gucci admits that it has no evidence of actual confusion stemming from Guess's use of these three marks, it strenuously argues that there are genuine issues of material fact that preclude summary judgment on monetary relief.

a. The Square G Design*fn75

Guess states "[t]here is no record evidence that . . . Gucci's Stylized G mark enjoyed an extensive reputation or goodwill that Guess could have sought to capitalize on when it introduced its own Square G Mark."*fn76 The evidence shows, however, that Gucci's Stylized G was featured in an advertising campaign in 1995, well before Guess's first use of the Square G in 1996.*fn77 The evidence also shows that Gucci has used the Stylized G mark on watches and clocks since 1966.*fn78

Guess also notes it places permanent Guess identifiers "prominently or in close proximity to its Square G mark."*fn79 As discussed above, the use of such identifiers is not relevant in many post-sale confusion cases. Even if it were, however, Gucci provides more than a half dozen examples where Guess failed to do so, including a product that was sold as recently as January 5, 2012.*fn80

Finally, Guess asserts that the report of Dr. Carol Scott shows that consumers are more likely to believe that Square G belts are produced by Guess, rather than Gucci.*fn81 Beyond the fact that an expert opinion is almost never sufficient to justify granting summary judgment, Gucci presents its own expert in rebuttal to Dr. Scott, putting her conclusions directly in dispute.*fn82

Based on the evidence discussed above, it is reasonable to infer that Guess knew about Gucci's Square G mark before introducing its own. Because the marks are nearly identical in their overall appearance, it is also a reasonable inference that Guess had a bad faith intent to deceive consumers by using the mark. Because bad faith is a critical element in the determination of whether an accounting of profits is merited, Guess is not entitled to summary judgment as to damages from Guess's use of the Square G design.

Bad faith also gives rise to a rebuttable presumption of actual confusion, which is necessary to obtain damages. As noted above, this presumption is rebutted by showing that there is no likelihood of confusion based on the relevant Polaroid factors. Such a showing cannot be made on this record. Accordingly, summary judgment with respect to damages stemming from the use of the Square G design is denied.*fn83

b. The Script Guess Design*fn84

The undisputed evidence shows that the Script Gucci mark was first used in 1967; it also shows that Guess has been using the word "Guess" rendered in a cursive font as a logo since the 1980s. Furthermore, there is no dispute that, in 2006, Paul Marciano, the head of Guess, purchased a book entitled "Gucci by Gucci," which prominently featured the Script Gucci logo on its cover.*fn85 As noted above, Gucci asserts that the Script Guess design of which it complains was first used two years later -- in 2008. Additionally, one of the licensees to whom Guess provided the complained-of Script Guess design explained to a footwear buyer at Guess that it was "the same logo font which is being used by Gucci, who is having great success with it."*fn86

Based on the forgoing, and other materials in the record, there are two competing inferences that could be drawn. First, one could reasonably infer that Paul Marciano was reminded of the distinctiveness and sales potential of the Script Gucci mark after seeing it on the cover of the "Gucci by Gucci" book, and therefore directed the creative team at Guess and its licensees to copy it -- thereby acting in bad faith. Second, one might reach the equally reasonable inference that the nearly thirty-year gap between Guess's founding and its first use of the complained-of Script Guess mark implies that it acted in good faith; that is, if Guess had any ill intent in adopting the complained-of Script Guess mark, it would have done so far earlier. A motion for summary judgment, however, cannot resolve competing reasonable inferences.*fn87 Accordingly, because there is a triable issue of fact as to whether Guess used the Script Guess design in bad faith, summary judgment with respect to an accounting of profits stemming from Guess's use of that design is denied.

As noted above, pointing to the absence of evidence on the issue of actual confusion does not rebut the presumption of actual confusion that arises from a finding of bad faith. Instead, a party seeking to rebut the presumption must show that there is no likelihood of confusion, based on all the relevant Polaroid factors. Guess makes no argument on the Polaroid factors beyond noting the absence of actual confusion. For all these reasons, summary judgment with respect to damages stemming from Guess's use of the Script Guess design is denied.

c. The GRG Stripe Design*fn88

Guess argues that it was not involved in the selection of the GRG Stripe design for use on its licensed footwear, and that it did not discover such use until November 2008. Once it made that discovery, Guess directed its footwear buyer to cancel future orders and recall current stock for all products bearing the design, and directed its footwear licensee, MFF, not to use the design in the future.*fn89

Gucci disputes the evidentiary basis of all these claims. Although Paul Vando, a footwear designer at MFF, testified in his deposition that Guess was not involved in the decision to use the GRG Stripe design, MFF stated that three high ranking officials at Guess -- the Chief Executive Officer, the Senior Licensing Design Manager, and the Product Licensing Manager -- approved the products bearing it.*fn90 Gucci has also produced overwhelming evidence to support the inference that MFF intended to copy Gucci shoes, including at least one bearing the GRG Stripe design.*fn91 Furthermore, the evidence shows that products bearing the GRG Stripe design remained on Guess's e--commerce website for more than six months after the recall was ordered.*fn92 This is more than sufficient to raise a disputed issue of material fact as to whether Guess used the GRG Stripe design with a bad faith intent to deceive. Accordingly, Guess's motion for summary judgment with respect to an accounting of profits stemming from the allegedly infringing use of this design is denied.*fn93

C. Guess Is Not Entitled to Summary

Judgment on Gucci's Square G Claims Based on Laches Guess asserts that it is entitled to summary judgment on Gucci's claims relating to the Square G mark on the grounds of laches because "[t]here is no genuine issue of material fact that senior Gucci attorneys with directoversight of and involvement in Gucci America's trademark enforcement matters in the U.S. had actual knowledge of Guess's Square G mark over seven years before Gucci commenced this lawsuit."*fn94 The record, however, supports the inference that the attorneys to whom Guess refers -- Alan Tuttle, Lorenza Bencini, and Iolanda Tursi -- were in fact employees of Gucci's European affiliates that were not involved with trademark enforcement matters for Gucci in America.*fn95 While Milton Springut, Gucci's outside counsel for trademark enforcement in America from 1984 to 2007, stated that Tuttle was his main contact at Gucci, he also stated that he never providedGucci with "any representation or advice" relating to Guess's allegedly infringing activities.*fn96 Furthermore, Karen Lombardo, Gucci America's legal co-ordinator during the relevant period, testified that she never spoke with Tuttle about trademark matters, and that Tuttle had nothing to do with Gucci's American operations.*fn97

Drawing all reasonable inferences in Gucci's favor, I conclude that there is a genuine issue of material fact as to when Gucci itself was or reasonably should have been aware of Guess's allegedly infringing use of the Square G mark.*fn98 As the laches inquiry is critically dependent on the issue of what the senior user knew of the junior user's allegedly infringing activity, and when it gained such knowledge, summary judgment based on laches is denied.

D. Guess Is Entitled to Summary Judgment on Gucci's Dilution Claims with Respect to the Square G and Quattro G Designs, But Not with Respect to the Script Guess Logo and the GRG Stripe

1. Dr. Pham's Expert Report

The core of Guess's argument for summary judgment on Gucci's claims of trademark dilution is its repeated assertion that there is "no evidence" that its use of the marks at issue -- the Square G design, the Quattro G pattern, the Script Guess design, and the GRG Stripe design -- tarnished or impaired the distinctiveness of the relevant Gucci marks.*fn99 Gucci argues that the report of Dr. Michel Tuan Pham provides precisely such evidence, under either the actual dilution standard or the likelihood of dilution standard.*fn100 According to Gucci, Dr. Pham -- who has a Ph.D. in marketing and has taught at Columbia University's business school since 1994 -- concluded that Guess's use of the allegedly infringing marks negatively impacted consumer perceptions of the quality of Gucci products bearing the relevant Gucci marks, as well as the ability of the Gucci marks to uniquely identify Gucci products.*fn101

While Dr. Pham's report is highly relevant, Gucci overstates the degree to which it supports its dilution claims. This is because Dr. Pham consistently couches his conclusions in conditional terms. For example, he writes that "[a] perceived ubiquity of Gucci-like designs . . . is clearly likely to reduce the perceived value of the original Gucci designs," that there is a "significant risk than [sic] some of consumers' existing associations to the Guess brand [may] also become linked to the Gucci brand [in such a way that] would weaken the latter's brand identity," and finally, that "among consumers who are fully aware that the accused products are from Guess rather than from Gucci, the availability of Gucci-like Guess imitations is likely to create negative consumer responses toward the Gucci brand."*fn102 Although Dr. Pham also reaches more concrete conclusions,*fn103 he does not show that any of these risks have materialized. Accordingly, while Dr. Pham's report is sufficient to raise a genuine issue of material fact as to the existence of a likelihood of dilution, it does not do so on the issue of actual dilution.*fn104

2. The Applicable Standard of Dilution

Because there is no dispute that the Square G and Quattro G designs were first used in commerce before October 6, 2006,*fn105 the actual dilution standard applies to Gucci's claims regarding those marks. Gucci has provided no credible evidence sufficient to raise a genuine issue of material fact that any actual dilution has occurred. Accordingly, because Gucci bears the burden of proof at trial on this issue, summary judgment on its claims for dilution regarding these marks is granted.

There is also no dispute that Guess first used the GRG Stripe design in commerce after October 6, 2006. Accordingly, the "likelihood of dilution" standard applies to Gucci's claim for dilution with respect to this design. Because Dr. Pham's report raises a genuine issue of material fact as to whether Guess's use of this design is likely to dilute Gucci's mark, Guess's motion for summary judgment on Gucci's dilution claim with respect to this mark is denied.

The parties disagree about the date on which the Script Guess design was first used in commerce. Guess asserts that is has used "a stylized script-font 'Guess' design on apparel and accessories dating back to the mid-1980s."*fn106 While the examples attached to Guess's Rule 56.1 statement show that Guess has indeed used the word "Guess" rendered in cursive font as a logo for decades, none of those examples depict the specific configuration of which Gucci complains. Indeed, the only evidence that Guess presents in support of its claim that it used the complained-of configuration before October 6, 2006 is the deposition of its in-house intellectual property counsel Theresa McManus.*fn107 Nonetheless, several of Guess's licensees reported being unaware of the complained-of configuration until 2007 or 2008.*fn108

Drawing all reasonable inferences in Gucci's favor, I find that there is a genuine dispute as to when Guess first used the complained-of cursive font "Guess" logo in commerce. Accordingly, I cannot conclude at this point that actual dilution is the appropriate standard to apply. Because the Pham Report raised a material dispute of fact regarding the likelihood of dilution, Guess's motion for summary judgment with respect to this mark is denied.

E. MFF's Claims

1. MFF Is Not Entitled to Summary Judgment on the Issue of Monetary Damages Generally

MFF argues that Gucci's evidence establishes "only that MFF takes inspiration from and emulates features of designer fashion footwear, including Gucci . . . ."*fn109 While this inference may be reasonable, Gucci's opposing inference -- that MFF had a bad faith intent to deceive -- is equally supported by the evidence. In a situation where the evidence supports competing inferences, summary judgment is not appropriate.*fn110

MFF also argues that the use of Guess logos demonstrates that it did not act with an intent to deceive.*fn111 However, the substantial overall similarity of the shoes that Gucci complains of,*fn112 together with the fact that shoes are seen from a distance in the post-sale environment, defeats the argument that the use of Guess logos demonstrates that MFF acted without a post-sale intent to deceive.*fn113

A bad faith intent to deceive gives rise to a presumption of actual confusion. It is also a critical factor in determining whether an accounting of profits is warranted. Accordingly, because there is a disputed issue of fact regarding the existence of bad faith, MFF is not entitled to summary judgment with respect to monetary relief, whether in the form of damages or an accounting of profits.

2. MFF Is Not Entitled to Summary Judgment on the Issue of Monetary Relief for Shoes Bearing the GRG Stripe Design

MFF argues that its good faith in using the GRG Stripe design is demonstrated by the fact that it ceased producing shoes with that design months before Gucci filed this suit.*fn114 After it ceased production, however, the undisputed evidence shows that MFF distributed shoes bearing the design that it had previously manufactured.*fn115 Accordingly, it would be reasonable to infer that MFF acted in bad faith by trying to maximize its profits from the design that it realized it could not continue to manufacture. Summary judgment as to monetary relief stemming from MFF's use of the GRG Stripe design is therefore denied, as competing inferences can only be resolved by the trier of fact on a full evidentiary record.*fn116

V. CONCLUSION

For the reasons discussed, Guess is entitled to summary judgment on Gucci's dilution claims relating to the Square G and Quattro G designs. With respect to all other claims, the motions are denied. The Clerk of the Court is directed to close these motions (Docket Nos. 182 and 188). A final pre-trial conference is scheduled for March 13, 2012 at 5:30 p.m.

SO ORDERED.

[Editor's Note: Exhibits A through E are unavailable]


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