13-1038-cv L U.S. Polo Ass’n, Inc v. PRL USA Holdings, Inc. UNITED STATES COURT OF APPEALS 1 FOR THE SECOND CIRCUIT 2…

13-1038-cv(L)
U.S. Polo Ass’n, Inc. v. PRL USA Holdings, Inc.
UNITED STATES COURT OF APPEALS 1
FOR THE SECOND CIRCUIT 2
August Term, 2013 3
4
(Argued: February 19, 2014 Decided: May 13, 2015) 5
6
Docket Nos. 13-1038-cv(L), 13-1130-cv(CON) 7
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UNITED STATES POLO ASSOCIATION, INC., USPA PROPERTIES, INC., 9
10
Plaintiffs-Counter-Defendants-Appellants, 11
12
JRA TRADEMARK COMPANY, LTD., 13
Intervenor-Plaintiff-Appellant, 14
15
v. 16
17
PRL USA HOLDINGS, INC., L’OREAL USA, INC., 18
19
Defendants-Counter-Claimants-Appellees. 20
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B e f o r e: KEARSE, WINTER, and WESLEY, Circuit Judges. 23
24
Appeal from a contempt judgment entered in the United States 25
District Court for the Southern District of New York (Robert W. 26
Sweet, Judge). We vacate and remand. 27
28
KYLE C. BISCEGLIE (Matteo J. 29
Rosselli, on the brief), Olshan 30
Frome Wolosky LLP, New York, NY, 31
for Plaintiffs-Counter-Defendants- 32
Appellants. 33
34
MICHAEL S. SOMMER (Jessica L. 35
Margolis & Scott D. Tenley, on the 36
brief), Wilson Sonsini Goodrich & 37
Rosati, P.C., New York, NY, for 38
Intervenor-Plaintiff-Appellant. 39
40
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JOHN M. CALLAGY (William R. Golden, 1
Jr., Andrea L. Calvaruso, Taraneh 2
J. Marciano, on the brief), Kelley 3
Drye & Warren LLP, New York, NY, 4
for Defendants-Counter-Claimants- 5
Appellees. 6
7
WINTER, Circuit Judge: 8
9
This appeal is the latest chapter in a now over-30-year 10
dispute involving trademarks relating to the sport of polo used 11
on consumer goods. United States Polo Association, Inc. and USPA 12
Properties, Inc. (together, “USPA”) and USPA’s licensee, JRA 13
Trademark Co., appeal from Judge Sweet’s order of contempt 14
finding USPA in violation of a permanent injunction. The court 15
held that appellants’ logo on eyewear products was confusingly 16
similar to the logo used by appellees PRL USA Holdings, Inc. and 17
L’Oreal USA, Inc. (together, “PRL”) on PRL’s eyewear products. 18
USPA argues that the underlying injunction did not enjoin all 19
uses of the mark. We agree and vacate the contempt order and 20
remand for further proceedings. 21
BACKGROUND 22
USPA is the governing body of the sport of polo but also 23
markets certain consumer goods, often in competition with PRL. 24
PRL owns the trademark rights and exclusive licenses for the Polo 25
Ralph Lauren brand, which includes the “Polo Player Logo” –- an 26
image depicting a mounted polo player with a raised mallet -- and 27
the “POLO” word mark. 28
29
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a) The 1984 Injunction 1
The conclusion of the opening litigation occurred in 1984, 2
when, after a bench trial, Judge Sand issued an injunction 3
against USPA. U.S. Polo Ass’n v. Polo Fashions, Inc., No. 84 4
Civ. 1142 (LBS), 1984 WL 1309 (S.D.N.Y. Dec. 6, 1984) (“1984 5
Injunction”). The 1984 Injunction prohibited USPA, inter alia, 6
from “using any of the [PRL marks] or any name or mark or symbol 7
which is confusingly similar thereto, in connection with the sale 8
. . . of any goods or the rendering of any services[.]” U.S. 9
Polo Ass’n v. PRL USA Holdings, Inc., No. 09 Civ. 9476, 2013 WL 10
837565, at *1 (S.D.N.Y. Mar. 6, 2013). While the 1984 Injunction 11
applied to all markets, the term “confusingly similar” was not a 12
bright line. Rather, as amplified in subsequent litigation, 13
discussed infra, its meaning turned on a comparison of competing 14
logos and the words associated with them, see PRL USA Holdings, 15
Inc. v. U.S. Polo Ass’n, 520 F.3d 109 (2d Cir. 2008), and varied 16
with the nature of the various markets in which the logos and 17
words are used, see U.S. Polo Ass’n v. PRL USA Holdings, Inc., 18
511 F. App’x 81 (2d Cir. 2013) (summary order). 19
b) The Apparel Litigation 20
The mark at issue in this appeal is styled the “Double 21
Horsemen Mark.” It depicts two mounted polo players vying for a 22
ball. When USPA began using four variations of this mark in 23
1996, PRL brought an action seeking to enjoin its use on a 24
variety of products (“Apparel Litigation”). 25
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In 2003, the parties resolved most of the issues in a 1
settlement agreement involving a number of USPA logos and word 2
marks. However, the parties went to trial on whether four 3
varieties of the Double Horsemen Mark infringed PRL’s marks. 4
After a three-week trial, the jury concluded that three of four 5
Double Horsemen Marks, see Note 1 infra, did not infringe PRL’s 6
marks in the markets for apparel, leather goods, and watches. 7
PRL USA Holdings, Inc. v. U.S. Polo Ass’n, No. 99-cv-10199(GDB), 8
2006 WL 1881744, at *3 (S.D.N.Y. July 7, 2006). We affirmed. 9
PRL USA Holdings, Inc., 520 F.3d at 119. 10
c) The Fragrance Litigation and Injunction 11
After conclusion of the Apparel Litigation, USPA continued 12
using the Double Horsemen Mark 1 on a variety of products. In 13
2009, USPA expanded its marketing into fragrance products. After 14
failed negotiations with PRL, USPA sought a declaratory judgment 15
that, inter alia, the Double Horsemen Mark did not violate 16
Sections 43(a) and (c) of the Lanham Act, 15 U.S.C. §§ 1125(a), 17
(c), when used in connection with its fragrance products 18
(“Fragrance Litigation”). PRL and its licensee, L’Oreal USA, 19
Inc., brought trademark counterclaims for infringement and sought 20
an injunction against the use of the Double Horsemen Mark, the 21
1 The “Double Horsemen Mark” hereinafter refers only to the three of
four Double Horsemen Marks that the Apparel Litigation jury found did not
infringe on PRL’s marks. See PRL USA Holdings, Inc., 2006 WL 1881744, at *1.
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word mark, “U.S. POLO ASSN,” and “1890" (the year USPA was 1
founded) on “fragrance or cosmetics products.” 2
After a bench trial, Judge Sweet rejected USPA’s claims, 3
holding that using the Double Horsemen Mark on fragrance products 4
violated PRL’s trademark rights. U.S. Polo Ass’n v. PRL USA 5
Holdings, Inc., 800 F. Supp. 2d 515, 542 (S.D.N.Y. 2011). The 6
court held that USPA’s favorable verdict in the Apparel 7
Litigation did not dictate the outcome in the Fragrance 8
Litigation because the apparel decision did not “address[] the 9
marks at issue here in the fragrance market.” Id. at 529. 10
In March 2012, the district court entered a permanent 11
injunction enjoining USPA from using the Double Horsemen Mark on 12
fragrances and related products (“Fragrance Injunction”). 13
Paragraph 3, the basis of the district court’s contempt finding 14
in the present matter, enjoined USPA from: 15
a. Using the Double Horsemen Mark . . . alone 16
or in combination with any name, symbol, 17
device, or other word(s) in connection with 18
the advertising, promotion, offering for sale 19
or sale of fragrances or related products 20
such as cosmetics, personal care products and 21
beauty products; 22
23
b. Using the word “POLO” alone or in 24
combination with any name, symbol, device or 25
other word(s) in connection with the 26
advertising, promotion, offering for sale or 27
sale of fragrances or related products such 28
as cosmetics, personal care products and 29
beauty products; 30
31
32
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c. Using the PRL marks or any other name or 1
mark, including the image of one or more 2
mounted polo players, that constitutes a 3
colorable imitation of or is confusingly 4
similar to PRL’s Polo Player Logo . . . or 5
“POLO” word mark in connection with the sale 6
or offering for sale of any goods or 7
rendering of any services; 8
9
d. Using for any commercial purpose 10
whatsoever any symbol, logo, trade name, 11
trademark, or trade dress that which is 12
calculated to or has the effect of 13
representing that the products or services of 14
or licensed by the USPA Parties are 15
associated with, sponsored, endorsed, or 16
authorized by, or are in any way connected or 17
associated with the PRL Parties or any entity 18
affiliated with them. 19
20
U.S. Polo Ass’n, 2013 WL 837565, at *4; see also U.S. Polo Ass’n 21
v. PRL USA Holdings, Inc., No. 09 Civ. 9476, 2012 WL 697137, at 22
4-5 (S.D.N.Y. Mar. 5, 2012). USPA appealed the injunction, and 23
we affirmed by summary order. U.S. Polo Ass’n, 511 F. App’x at 24
82. On its appeal, USPA argued that the Apparel Litigation 25
precluded the injunction. However, we rejected that argument on 26
the ground that the issue of confusing similarity regarding 27
USPA’s use of the Double Horsemen Mark was market-specific. Id. 28
at 83-84. We also rejected USPA’s argument that the Fragrance 29
Injunction’s terms were overbroad, in part because of the 30
district court’s finding of bad faith which we declined to 31
overturn, but also because Paragraph 3(c), which applies to all 32
markets, merely tracked the 1984 Injunction, to which USPA was 33
already subject. Id. at 86. 34
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d) The Contempt Order 1
Between 2009 and 2012, USPA sold nearly one million pairs of 2
sunglasses bearing the Double Horsemen Mark. In August 2012, PRL 3
moved for an order of contempt, claiming that USPA violated both 4
the 1984 Injunction and the Fragrance Injunction by its use of 5
the Double Horsemen Mark on eyewear. The district court issued a 6
contempt order based on its finding that there was clear and 7
convincing evidence that USPA violated Paragraphs 3(c) and (d) of 8
the Fragrance Injunction. U.S. Polo Ass’n, 2013 WL 837565, at 9
*9-14. 2
10
The district court held that: (i) Paragraph 3(c) of the 11
Fragrance Injunction clearly and unambiguously applied to all 12
markets, id. at *9-12; (ii) PRL proved by clear and convincing 13
evidence that “the Double Horsemen Mark is a ‘colorable 14
imitation’ or is ‘confusingly similar’ to PRL’s Polo Player 15
Logo,” id. at *12; and (iii) USPA did not diligently comply with 16
the Fragrance Injunction, id. at *13. In reaching these 17
conclusions, the court declined to engage in a market-specific 18
analysis of whether use of the Double Horsemen Mark in eyewear 19
was confusingly similar to PRL’s use of its marks in that market. 20
In relying on Paragraph 3(c) of the Fragrance Injunction, the 21
court held that a market-by-market analysis was inappropriate in 22
2 The district court also granted JRA Trademark’s motion to intervene,
2013 WL 837565, at *7-8, and declined to decide whether USPA was in contempt
of the 1984 Injunction, id. at *14.
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the context of a motion for contempt. This ruling was based on 1
our decision in Wella Corp. v. Wella Graphics, Inc., 37 F.3d 46, 2
48 (2d Cir. 1994) (holding that the district court erred in 3
considering the Polaroid factors, Polaroid Corp. v. Polarad 4
Elecs. Corp., 287 F.2d 492, 495 (2d Cir. 1961), in making its 5
contempt determination). 3
6
Finally, because PRL had been on notice of USPA’s use of the 7
Double Horsemen Mark in eyewear for at least two years prior to 8
its motion for a contempt judgment, the court awarded PRL only 9
prospective relief -- that is, “future profits of any sales of 10
sunglasses containing the Double Horsemen Mark sixty days 11
following the [court’s] order.” U.S. Polo Ass’n, 2013 WL 837565, 12
at *15. 13
DISCUSSION 14
We review a contempt order with a “more exacting” version of 15
the abuse-of-discretion standard. Perez v. Danbury Hosp., 347 16
F.3d 419, 423 (2d Cir. 2003). Before issuing a contempt order, a 17
district court must find that the alleged contemnor had notice of 18
the underlying order, that the terms of the order were clear and 19
unambiguous, and that proof of noncompliance was clear and 20
3 We note that the Polaroid test is not strictly in issue here because
Polaroid involved a plaintiff alleging trademark infringement within a market
the plaintiff had not yet entered. Rather, USPA and PRL appear to have been
competing head-to-head in the same markets, similar to the parties in
Brennan’s Inc. v. Brennan’s Rest., L.L.C., 360 F.3d 125, 133 (2d Cir. 2004)
(“Because the ultimate issue is the likelihood of confusion, analysis focuses
on the particular industry where the marks compete.”) (emphasis added).
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convincing. Perfect Fit Indus. v. Acme Quilting Co., Inc., 646 1
F.2d 800, 808 (2d Cir. 1981). The district court’s underlying 2
factual determinations are reviewed for clear error, but 3
questions of law, including interpretation of the order, are 4
reviewed de novo. Latino Officers Ass’n of N.Y., Inc. v. City of 5
New York, 558 F.3d 159, 164 (2d Cir. 2009). 6
Central to this appeal is whether the district court’s 7
finding of a violation of the Fragrance Injunction by USPA’s use 8
of the Double Horsemen Mark on eyewear required application of 9
market-specific standards. 10
Our resolution of what conduct is barred by the Fragrance 11
Injunction and of whether USPA engaged in such conduct requires 12
scrutiny of the history of the parties’ litigation. A critical 13
fact in this history is that, after entry of the 1984 Injunction, 14
a jury in the Apparel Litigation found the Double Horsemen Mark 15
to be non-infringing -- not “confusingly similar” to, or a 16
“colorable imitation” of, PRL’s marks -- when used as a logo in 17
marketing apparel, leather goods, and watches. This verdict 18
clearly indicated at the very least that use of the Double 19
Horsemen Mark is non-infringing in some markets. In the 20
Fragrance Litigation, the district court viewed the verdict in 21
the Apparel Litigation as not binding because of the differences 22
between the apparel and fragrance/cosmetic markets. We agreed 23
and affirmed the Fragrance Injunction. U.S. Polo Ass’n, 511 F. 24
App’x at 82. 25
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However, in the present matter -- the contempt proceeding 1
based on the Fragrance Injunction -- the district court concluded 2
that the Fragrance Injunction barred use of the Double Horsemen 3
Mark in every market but that for apparel. U.S. Polo Ass’n, 2013 4
WL 837565, at *10, 12. We disagree with that ruling. The fact 5
that the Apparel Litigation does not shield USPA’s use of a 6
Double Horsemen Mark on eyeglasses from an infringement finding 7
does not, without more, render it liable for infringement in that 8
and all other markets save for apparel. Indeed, our affirmance 9
of the Fragrance Injunction, in holding that infringement in one 10
industry does not “as a matter of law, preclude a finding of 11
similarity in another,” U.S. Polo Ass’n, 511 F. App’x at 83, 12
stated that a market-by-market analysis is needed. Id. 13
To be sure, Paragraph 3(c) of the Fragrance Injunction 14
applies to all markets, but the language in question merely 15
repeats that of the 1984 Injunction. That Injunction, as our 16
holding in affirming the Fragrance Injunction states, requires a 17
market-by-market analysis regarding confusing similarity. Id. at 18
86 (noting that the Fragrance Injunction pertains to the 19
fragrance market and closely related fields; “[t]o the extent it 20
reaches any further, it merely tracks the language of the 1984" 21
Injunction). 22
Given the present record, it is not apparent that the 23
differences between the fragrance/cosmetic and eyeglass 24
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industries are not as great as the differences between the 1
apparel and fragrance/cosmetic industries. Indeed, at least 2
without an evidentiary record demonstrating otherwise, the 3
eyeglass and apparel industries seem closer to each other than 4
either is to the fragrance/cosmetic market. But, in holding USPA 5
in contempt, the district court declined to apply a market- 6
specific test. 7
In holding that the Fragrance Injunction was violated, the 8
district court explicitly rejected USPA’s argument that the order 9
“is limited to fragrance[/cosmetic] products . . . and proof of 10
confusion.” U.S. Polo Ass’n, 2013 WL 837565, at *9. That 11
rejection is not consistent with our decision affirming the 12
Fragrance Injunction or with the arguments that PRL made on that 13
appeal. To be sure, Paragraph 3(c) bars use of “the image of one 14
or more mounted polo players, that constitute a colorable 15
imitation of or is confusingly similar to PRL’s Polo Player logo 16
. . . in connection with the sale . . . of any goods, . . . .” 17
However, as noted, that language merely tracks the 1984 18
Injunction which, as explained earlier, does not bar use of the 19
Double Horsemen Mark in all markets. When entry of the Fragrance 20
Injunction was challenged by USPA on its appeal, PRL’s brief 21
emphasized over and over again that the Fragrance Injunction was 22
limited to the fragrance market, Brief for Defendant-Counter- 23
Claimant-Appellee at 15, 19, 20, 23, 24, U.S. Polo Ass’n, 511 F. 24
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App’x 81 (No. 12-1346), and to the prohibitions of the 1984 1
Injunction, id. at 29, 31-32. Most importantly, in affirming the 2
Fragrance Injunction against an overbreadth claim, we clearly 3
read the order to apply only to the fragrance/cosmetics market 4
and to be limited to the scope of the 1984 Injunction. We 5
stated: 6
This case presents no concerns akin to those 7
raised in Starter Corp. v. Converse, Inc., 8
170 F.3d 286 (2d Cir. 1999), where an 9
injunction covered an entire market that was 10
not the one in which the infringing mark was 11
used, and prohibited use of the mark for a 12
category of goods that had been judicially 13
admitted not to be at issue, see id. at 300. 14
Here, the injunction pertains to use of the 15
Double Horsemen logo and the word “polo” in 16
the fragrance market, the focus of this 17
litigation, as well as closely related fields 18
such as cosmetics. To the extent it reaches 19
any further, it merely tracks the language of 20
the 1984 Order, to which USPA was already 21
subject. Moreover, the injunction does not 22
impede USPA’s use of its outlined Double 23
Horsemen mark on apparel, which was found 24
non-infringing in the 2006 litigation, a 25
determination that has issue-preclusive 26
effect here. 27
28
U.S. Polo Ass’n, 511 F. App’x at 86. 29
Therefore, the fact that the Apparel Litigation does not 30
preclude the Fragrance Litigation does not imply that the Double 31
Horsemen Mark infringes PRL’s marks in every market except 32
apparel. It simply means that a finding of confusing similarity 33
must be made on a market-by-market analysis. 34
35
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We acknowledge that confusion may exist as to whether there 1
is an automatic bar to application of a market-by-market test in 2
contempt proceedings. In declining to apply such a test, the 3
district court relied upon our decision in Wella, in which we 4
held that undertaking a market-by-market Polaroid analysis was 5
error in that particular contempt proceeding. In Wella, a hair- 6
products manufacturer named “Wella Corporation” sought an 7
injunction against a graphics company named “Wella Graphics” from 8
using the name “Wella.” Wella Corp., 37 F.3d at 47. Because 9
Wella Graphics never answered the complaint, the district court 10
entered a default judgment, enjoining Wella Graphics from 11
“[u]sing Wella or any mark confusing[ly] similar to [Wella 12
Corporation’s] mark Wella.” Id. Wella Graphics then slightly 13
altered its name to Wello Graphics. The district court held that 14
this change did not warrant a contempt order because the two 15
companies were not in direct competition with one another. Id. 16
On appeal, we held that the district court’s use of a market-by- 17
market analysis was error. Id. at 48. However, in Wella, the 18
genuinely contested issue was not whether the name “Wello” was 19
“confusingly similar” to the name “Wella” -- it was an obvious 20
attempt at evading the injunction -- but whether the lack of 21
direct competition between the parties rendered the injunction 22
inapplicable. Id. Of course, it did not. 23
Unlike Wella, the present matter is not a case of a minor 24
and immaterial alteration of an unquestionably infringing mark. 25
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Rather, it is a dispute over the use of marks that have been held 1
not to be confusingly similar to PRL’s marks in another major 2
market. By contrast, Wella is limited to cases where a clearly 3
confusingly similar mark is governed by an injunction that 4
applies to all markets. 5
However, we add a word of caution about the use of market- 6
specific standards in contempt proceedings. The parties bound by 7
an injunction are entitled to clear notice of what specifically 8
they may or may not do, and any test involving a non-exhaustive 9
list of multiple factors, see Brennan’s Inc., 360 F.3d at 130, 10
may not yield easily predictable results or fair notice. Use of 11
market-specific standards in contempt proceedings will, 12
therefore, lead to an order of contempt only when reasonably 13
obvious infringement is shown by clear and convincing evidence. 14
There is no record before us as to the application of 15
market-specific factors to the eyeglass and fragrance/cosmetic 16
markets, and we do not preclude a resumption of the contempt 17
proceedings on remand. However, because of the often 18
unpredictable results of market-by-market analysis, a finding 19
that the Double Horsemen Mark is, when used on eyewear, 20
confusingly similar to PRL’s marks, while sufficient to find 21
liability in an infringement proceeding, is not sufficient to 22
support a contempt finding. To hold USPA in contempt, two 23
additional findings must be made: (i) a reasonable firm in 24
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USPA’s position, knowing the context of the Fragrance Injunction 1
-- in particular, the verdict in the Apparel Litigation and our 2
order affirming the Fragrance Injunction that adopted PRL’s 3
arguments described above -- would have been on clear notice that 4
use of the Double Horsemen Mark on eyewear violated the 5
injunction; and (ii) the finding of confusing similarity is 6
supported by clear and convincing evidence. The present record 7
does not support either such finding. 8
CONCLUSION 9
We therefore vacate and remand for further proceedings in 10
accordance with this opinion. Given the efforts this panel has 11
expended on this matter and its resultant familiarity with it, we 12
order that the clerk refer any appeal from an order of contempt 13
based on the Fragrance Injunction involving eyewear to this 14
panel. This directive does not apply to an appeal from a finding 15
of infringement or non-infringement in a new infringement 16
proceeding involving eyewear or one not involving eyewear. 17
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