THIRD TRIAL TO FOLLOW THE SUCCESSFUL APPEAL BY THE SOVEREIGN MILITARY ORDER OF MALTA IN THE CASE AGAINST THE SELF-STYLED "ECUMENICAL ORDER" - THE GREAT FABRICATOR'S HISTORICAL TESTIMONY DISMISSED
Case: 14-14251 Date Filed: 10/15/2015
IN THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT
No. 14-14251
D.C. Docket No. 9:09-cv-81008-KLR
SOVEREIGN
MILITARY HOSPITALLER ORDER OF SAINT JOHN OF
JERUSALEM OF RHODES AND OF MALTA,
Plaintiff–Counter Defendant–Appellant, versus
THE FLORIDA
PRIORY OF THE KNIGHTS HOSPITALLERS OF THE SOVEREIGN
ORDER OF SAINT JOHN OF JERUSALEM, KNIGHTS OF
MALTA, THE ECUMENICAL ORDER,
Defendant–Counter Claimant–Appellee.
Appeal from the United States District Court for the Southern
District of Florida
(October 15, 2015)
Before
MARCUS, WILLIAM PRYOR, and JILL PRYOR, Circuit Judges. WILLIAM PRYOR, Circuit Judge:
This appeal is the second in a long-running intellectual
property dispute between two religious organizations. The Sovereign Military
Hospitaller Order of Saint John of Jerusalem of Rhodes and of Malta alleges
that the Florida Priory of the Knights Hospitallers of the Sovereign Order of
Saint John of Jerusalem, Knights of Malta, the Ecumenical Order is infringing
its registered service marks in violation of the Lanham Act, 15 U.S.C. § 1114,
and Florida law. After a bench trial, the district court entered judgment for
the Florida Priory. See Sovereign
Military Hospitaller Order of Saint John of Jerusalem of Rhodes & of Malta v.
Fla. Priory of the Knights Hospitallers of the Sovereign
Order of Saint John of Jerusalem, Knights of Malta, the Ecumenical Order (SMOM
I), 816 F. Supp. 2d 1290, 1307–08 (S.D. Fla. 2011). In the first appeal, we
reversed in part and remanded for the district court to reconsider whether the
parties’ marks are likely to be confused. See
Sovereign Military Hospitaller Order of Saint John of Jerusalem of Rhodes &
of Malta v. Fla. Priory of the Knights Hospitallers of the Sovereign Order of
Saint John of Jerusalem, Knights of Malta, the Ecumenical Order (SMOM II), 702 F.3d 1279, 1297–98 (11th
Cir. 2012). We were also critical of disparaging comments that the district
judge made about the parties. On remand,
the district court misapplied several factors in its analysis of likely
confusion, incorrectly assessed the Florida Priory’s defense of prior use,
relied on historical testimony that we previously deemed inadmissible, and misinterpreted
2
our
instructions about consulting facts outside the record. Because the district court erred again, we
reverse again. But we deny the Sovereign Order’s request to reassign the case
to a different district judge.
I.
BACKGROUND
For purposes of background, we
identify the parties to this litigation and the marks in dispute. We also review the relevant procedural
history. For an even fuller
account, see our previous opinion, SMOM II, 702 F.3d at 1283–89.
The plaintiff is the Sovereign Military Hospitaller
Order of Saint John of Jerusalem of Rhodes and of Malta. It is a religious
order of the Roman Catholic Church. The Sovereign Order is headquartered in
Rome, Italy, and it performs charitable works across the globe. For example,
the Sovereign Order supports the operation of the Holy Family Hospital in
Bethlehem and several medical clinics in Haiti.
The defendant is the Florida Priory of the Knights
Hospitallers of the Sovereign Order of Saint John of Jerusalem, Knights of
Malta, the Ecumenical Order. It too is a religious charitable
organization. The Florida Priory is
associated with a parent organization, the Knights Hospitallers of the
Sovereign Order of Saint John of Jerusalem, Knights of Malta, the Ecumenical
Order. The Ecumenical Order is not associated with any one church or branch of Christianity.
3
This
litigation involves five of the Sovereign Order’s registered service marks: one
design mark and four word marks. The Sovereign Order’s design mark is an
eight-pointed Maltese cross on a shield:
The Sovereign
Order’s word marks are:
Sovereign
Military Hospitaller Order of St. John of Jerusalem of Rhodes and of Malta
Knights of Malta Hospitallers of St. John of Jerusalem
Order of St. John of Jerusalem
The
Sovereign Order’s design mark and its first two word marks became
“incontestable” in 2008 and 2009. That is, the Sovereign Order filed an
affidavit with the United States Patent and Trademark Office attesting that it
used the marks continuously for five years and satisfied the other statutory
criteria for incontestability. See 15 U.S.C. § 1065.
4
The Sovereign Order alleges that the Florida Priory’s
name and symbol infringe its five registered service marks. The Florida
Priory’s name—“Knights Hospitallers of the Sovereign Order of Saint John of
Jerusalem, Knights of Malta, the Ecumenical Order”—is unregistered. The Florida
Priory’s symbol is a white cross on a red shield, centered on a white Maltese
cross with a red crown above it:
Its registration
is pending.
This litigation spans six years and consists of a
bench-trial judgment, an appeal, a remand decision, and now a second appeal. We
review the relevant procedural history below.
The Sovereign Order initiated this suit in 2009. It sued the Florida
Priory for infringement and false advertising under the Lanham Act, unfair
competition under Florida common law, and violations of the Florida Deceptive
and Unfair Trade Practices Act. The
Florida Priory disputed those claims. It
also filed several
5
counterclaims, seeking cancellation of the Sovereign Order’s four
word marks. The Florida Priory alleged that the Sovereign Order defrauded the
Patent and Trademark Office by applying for registration without disclosing
that a Delaware organization was already using similar marks.
After a bench trial in 2011, the district court ruled
against the Sovereign Order and for the Florida Priory on their respective
claims and counterclaims. The district court rejected the Sovereign Order’s
claim of false advertising. It found
that the Florida Priory did not misrepresent the “nature, characteristics,
qualities, or geographic origin” of its services, 15 U.S.C. § 1125(a)(1)(B),
because the Sovereign Order and the Florida Priory “shared a history prior to
1798” and because the Florida Priory “expressly associates itself with the
Ecumenical Order, a non-Catholic organization.” SMOM I, 816 F. Supp. 2d at 1302. In reaching its historical finding, the
district court relied on the testimony of Nicholas F.S. Papanicolaou, the
Prince Grand Master of the Ecumenical Order. With respect to the Florida
Priory’s counterclaims, the district court cancelled the Sovereign Order’s word
marks. It found that the Sovereign Order defrauded the Patent and Trademark
Office because, at the time of registration, the Sovereign Order was “willfully
blind” to the fact that the Delaware organization was already using similar
marks. Id. at
1300. Because the Sovereign Order’s word marks were cancelled, the district
court concluded that its infringement claims for those marks
6
failed
as well. As for the design mark, the district court rejected the Sovereign
Order’s claim of infringement because it found the parties’ marks visually
distinguishable, “thus removing any possibility for consumer confusion.” Id. at
1301. Finally, the district court rejected the
Sovereign Order’s claims under state law for the same reasons it rejected the
Sovereign Order’s claims of infringement. It added that the parties’ word marks
are not likely to be confused because “[t]he Court’s own [Internet] research
indicates that there are numerous Orders that use this type of terminology in
their names.” Id. at 1303 & n.14.
In the first appeal, we affirmed in part and reversed in
part. We affirmed the judgment for the Florida Priory on the Sovereign Order’s
claim of false advertising. We ruled that “the district court erred when it
permitted Papanicolaou, a lay witness, to testify about historical
matters.” SMOM II, 702 F.3d at 1295.
Papanicolaou
was never “qualified as an expert witness” and could only testify about matters
within his “‘personal knowledge,’” id. (quoting Fed. R. Evid. 602), which meant that the finding of the
district court that the Sovereign Order and the Florida Priory “shared a
history prior to 1798” was unsupported. Id. But we concluded that this error was harmless because the district
court gave an “alternative ground” to support its decision—namely, that the
Florida Priory is non-Catholic. Id.
7
We reversed with respect to the remaining claims and
counterclaims. We reversed the cancellation of the Sovereign Order’s word marks
because the district court applied the wrong legal standard and because the
Florida Priory failed to prove that the Sovereign Order had the requisite
mental state for fraud. We also explained that the Patent and Trademark Office
was not misled because, at the time of registration, the Sovereign Order
successfully distinguished its marks by explaining they were service marks, unlike the
Delaware organization’s collective membership
mark. We then reversed the judgment for the Florida
Priory on the Sovereign Order’s claims of infringement. The district court
failed to apply the seven-factor balancing test required by our precedent. We remanded “so the district court [could]
conduct the proper, multi-factor infringement analysis for the design marks . .
. [and] word marks.” Id. at 1294 (footnote omitted). Because the Sovereign Order’s state-law
claims were tied to its infringement claims, we remanded those claims as
well. We instructed the district court
“to limit its analysis to facts in the record and to refrain from consulting
outside sources on the Internet that have not been cited, submitted, or
recognized by the parties.” Id. at 1296.
The Sovereign Order requested that we reassign the case
to a different district judge on remand. The Sovereign Order complained about
several comments that the district judge made about the parties and their
motives. For
8
example, in his published opinion, the district judge
wrote the following disparaging comment:
The parties
present themselves as Christian charities. The Court struggles with the
parties’ characterizing themselves in that manner, however. The amounts of
money each party has raised for charitable purposes are unimpressive, which
leads the Court to believe that the members of both [the Sovereign Order] and
the [Florida Priory] are more interested in dressing up in costumes, conferring
titles on each other and playing in a “weird world of princes and knights” than
in performing charitable acts.
816
F. Supp. 2d at 1294 n.2 (quoting his own comments from trial). The district
judge also stated, “It just baffles me that
two charitable groups are spending their charitable money suing one another and
wasting all . . . these funds on litigation.” Trial Tr. 34. On appeal, we
deemed these comments “offensive,” “unnecessar[ily] belittling,” and “wholly
inappropriate.” SMOM II, 702 F.3d at 1297.
Nevertheless,
we found that the district judge exhibited no “actual bias in favor of, or
against, one party over the other” and explained that reassignment would
require “duplication of resources” in this “fact-intensive” case. Id. We denied the Sovereign Order’s
request for reassignment and expressed our expectation that “on remand, both
parties will be treated with the respect they deserve and that the district
court will be able to freshly consider the remanded claims.” Id.
On remand, the district court again entered judgment for
the Florida Priory on all of the Sovereign Order’s claims. With respect to the claims of infringement,
9
the district court identified and applied the
seven-factor balancing test for confusion: “(1) the type of mark; (2) the
similarity of the marks; (3) the similarity of the services the marks
represent; (4) the similarity of the parties’ service outlets and customers;
(5) the nature and similarity of the parties’ advertising media;
(6) the
defendant’s intent; and (7) any actual confusion.” Sovereign Military Hospitaller Order of Saint John of Jerusalem of
Rhodes & of Malta v. Fla. Priory of the Knights Hospitallers of the
Sovereign Order of Saint John of Jerusalem, Knights of Malta, the Ecumenical
Order (SMOM III), No.
09-81008-CIV, slip op. at 3 (S.D. Fla. Aug. 19, 2014) (citing SMOM II, 702 F.3d at 1293). It also
considered the Florida Priory’s defenses of prior use with respect to the
Sovereign Order’s incontestable marks. Ultimately, the district court entered
judgment for the Florida Priory on the Sovereign Order’s claims of infringement
and its claims under state law.
The district court found that a few factors in the
balancing test weigh in favor of the Sovereign Order. The first factor favors
the Sovereign Order, the district court found, with respect to its
incontestable marks—i.e., the design mark, “Sovereign Military Hospitaller Order of St. John
of Jerusalem of Rhodes and of Malta,” and “Knights of Malta.” The district
court recognized that, under Dieter v. B&H Industries of Southwest Florida,
Inc., 880 F.2d 322, 329 (11th Cir. 1989), an incontestable mark is presumptively
strong. The district court also found
that the
10
similarity of the marks favors the Sovereign Order with
respect to its word marks. The district court found “unmistakable” similarities
between the parties’ word marks, explaining that the Florida Priory’s name
includes nearly all of the Sovereign Order’s marks. SMOM
III, No. 09-81008-CIV, slip op. at 8. The addition
of “Florida Priory” and “Ecumenical Order,” according to the district court,
“is insufficient to render the [Priory’s name] dissimilar.” Id. The district court also
found that the similarity of services favors the Sovereign Order with respect
to all of its marks. It recognized that both parties “are engaged in charitable
activities.” Id. at
9. But it attributed little weight to this factor because “[t]here is nothing
unique in charitable services” and “[c]ountless charitable organizations exist
throughout the world.” Id.
The district court found that the remaining factors—and
the overall balance—favor the Florida Priory. With respect to the first factor,
the district court found that the Sovereign Order’s contestable word
marks—“Hospitallers of St.
John of Jerusalem” and “Order of St. John of
Jerusalem”—are weak. It found that the contestable word marks employ “commonly
used generic words” like “Saint John” and “hospitaller.” Id. at 7. It also found that the
marks are used extensively by third parties. The district court cited testimony
that “[a]t least 20 charitable organizations can be found on the Internet that
use the terms ‘Saint John,’ ‘Knights,’ ‘Hospitallers,’ and ‘Knights of Malta’
in the names.” Id. And many
11
“Orders of St. John” and “Orders of the Knights of Malta,” foreign
and domestic, are featured in tourism publications for the island of Malta. Id. Moreover, several groups
“share the non-exclusive license to use [the Sovereign Order’s] name.” Id.
As for the similarity of the marks, the district court
found that it favors the Florida Priory with respect to the Sovereign Order’s
design mark. Citing its earlier decision, the district court reiterated that
the parties’ “two symbols are easily distinguishable.” Id. at 8. The Florida Priory’s
design “contains two crosses” to the Sovereign Order’s one. SMOM I, 816 F. Supp. 2d at 1301.
And the Florida Priory’s shield has an ordinary cross on it, but the Sovereign
Order’s has a Maltese cross. Moreover,
only the Florida Priory’s mark features a crown.
The district court found that the fourth and fifth
factors favor the Florida Priory. The district court found “both similarities
and differences between the parties’ methods for fundraising.” SMOM III, No. 09-81008-CIV, slip
op. at 9–10. Both parties use newsletters, the Internet, and email to reach
Christian donors of all denominations. But, unlike the Florida Priory, the
Sovereign Order also obtains funds from the federal government and some
Catholic organizations. Moreover, only the Ecumenical Order has advertised on
television. Based on these “minor differences” in fundraising and the Sovereign
Order’s failure to prove that “the parties’ advertising reached the same
individuals,” id. at
11–12, the district court found that the fourth and fifth factors favor the
Florida Priory.
12
The district court also found that the defendant’s
intent favors the Florida Priory. It
found that the Florida Priory’s parent, the Ecumenical Order, has used the
marks at issue since 1911, well before the Sovereign Order began using them. To
trace this history, the district court relied on Papanicolaou’s testimony about
several documents: minutes from a 1908 meeting of the “Knights of Malta”;
incorporation documents from 1911 for a New Jersey organization, “Knights of
Malta”; incorporation documents from 1956 for a Delaware organization,
“Sovereign Order of Saint John of Jerusalem, Inc.”; and registration documents
filed by the Delaware organization in 1958 for the collective membership mark
“Sovereign Order of Saint John of Jerusalem, Knights of Malta,” dating the
mark’s first use in commerce as 1911.
The district court credited Papanicolaou’s testimony that the Ecumenical
Order shares an unbroken lineage with the Delaware and New Jersey
organizations. Furthermore, the district court credited Papanicolaou’s
testimony that his organization added “Ecumenical Order” to its name in 2002 to
distinguish itself from the Sovereign Order. It ultimately found no evidence of
bad faith, “especially considering that [the Florida Priory’s] parent’s use of
the mark in commerce predated [the Sovereign Order’s] use.” Id. at 12.
The district court found that the seventh and final
factor—actual confusion—favors the Florida Priory. The district court first
found that the Sovereign Order itself has admitted that the parties’ marks are not likely to be
13
confused.
When applying for registration in 2002, the Sovereign Order attested that its
word marks were not likely to cause confusion with any preexisting marks. Yet,
the district court found that the Ecumenical Order was already using the mark “Sovereign Order of Saint John of
Jerusalem, Knights of Malta.” Id. at 13.
Accordingly, the Sovereign Order was either “aware that [the Florida
Priory’s] parent existed but did not believe that the marks were confusingly
similar, or [the Sovereign Order] was unaware that [the Florida Priory’s]
parent existed.” Id. at
14. “Either scenario,” the district
court reasoned, “leads to a finding of absence of actual confusion.” Id. The district court also found
lacking the evidence of actual confusion that the Sovereign Order presented at
trial. For example, the Sovereign Order introduced an email from Gail Quigley,
the cousin of the president of the Sovereign Order’s American Association.
Quigley had received an email from the Florida Priory soliciting donations and
forwarded it to her cousin, adding, “I don’t
know how I got on this distribution list. I’m confused about this group and
your Order of Malta. I think you have your origins with them. They seem much
more military.” The district court did
not find this email exchange useful because Quigley was not a donor and because
her emails suggest she understood the difference between the Sovereign Order
and the Florida Priory. Finally, the district court denied the Sovereign
Order’s motion to supplement the record with evidence of actual confusion since
the bench trial in 2011. The proposed
evidence included
14
an
article in the New York Times discussing the prevalence of copycat orders, a press release about
the Florida Priory that mistakenly directs readers to the Sovereign Order’s
website, and evidence that the Florida Priory falsely claims to be recognized
by the Vatican. The district court denied the motion in a footnote, reasoning
that it “was instructed [by the Court of Appeals] to evaluate the likelihood of
confusion with regard to the marks at issue based on the evidence presented at
trial.” Id. at 14 n.1.
After considering the seven factors, the district court
ruled in favor of the Florida Priory. It found that the balance of factors
weighed in favor of the Florida Priory with respect to the Sovereign Order’s
contestable marks. As for the incontestable marks, the district court found
that the Sovereign Order’s claims failed “on account of the prior use defense.”
Id. at 17. Specifically, the
Florida Priory challenged the Sovereign Order’s incontestable marks under
sections 1115(b)(5) and (b)(6) of the Lanham Act, 15 U.S.C. § 1115(b)(5)–(6).
The district court considered those provisions and, without specifying which
one it was applying, found that the Florida Priory had proved prior use. Again
relying on Papanicolaou’s testimony about the early–twentieth century
documents, the district court found
that the Ecumenical Order had used the marks before the Sovereign Order used them.
SMOM III, No. 09-81008-CIV, slip op. at 15–16.
15
In this second appeal, the Sovereign Order complains
about several comments that the district judge made on remand. For instance,
the Sovereign Order complains that the district judge again impugned its
motives, speculating that “it’s obvious what’s going on here, that [the
Sovereign Order] waited five years until [its marks] became [i]ncontestable
where [it] knew all along [that] the defendant was using this name.” Tr. 3.
Additionally, the district judge told the parties, “[A]s I looked over what the
other senior judges are doing, a number of them say we don’t want any trademark
cases, and I thought, you know, that’s probably a good idea.” Id. at 4.
II.
STANDARDS OF REVIEW
“After a bench trial, we review the
district court’s conclusions of law de
novo and the district court’s factual findings for clear error,” Tartell v. S. Fla. Sinus & Allergy Ctr.,
Inc., 790 F.3d 1253, 1257 (11th Cir. 2015) (quoting Proudfoot
Consulting Co. v. Gordon, 576
F.3d 1223, 1230 (11th Cir. 2009)), including its finding that “two marks are
not likely to be confused,” SMOM II, 702 F.3d at 1289. “A finding is ‘clearly erroneous’ when although
there is evidence to support it, the reviewing court on the entire evidence is
left with the definite and firm conviction that a mistake has been committed.” United States v. U.S.
Gypsum Co., 333
U.S.
364,
395, 68 S. Ct. 525, 542 (1948). We review the denial of a motion to supplement
the record for abuse of discretion. Elston v. Talladega Cty. Bd. of
16
Educ., 997 F.2d 1394, 1405 (11th
Cir. 1993). Finally, we can reassign a case to a different district judge on
remand, but it is an “extraordinary” measure that “we do not order . . . lightly.”
United States v. Shaygan, 652 F.3d 1297, 1318 (11th Cir.
2011) (internal
quotation marks omitted).
III. DISCUSSION
In this second appeal, the Sovereign Order challenges
the judgment for the Florida Priory on its claims of infringement under the
Lanham Act and its related claims under state law. In the event of a remand,
the Sovereign Order renews its request to reassign the case to a different
district judge. The Florida Priory, for its part, largely defends the district
court and its various findings and rulings.
The district court committed reversible errors. With
respect to infringement, the district court erred in considering several of the
factors for likely confusion, incorrectly assessed the Florida Priory’s
defenses of prior use, and misinterpreted our decision in the first appeal when
it denied the Sovereign Order’s motion to supplement the record. For the same
reasons, the district court erred in considering the Sovereign Order’s claims
under state law. Although we are
concerned about the district judge’s inappropriate comments throughout this
litigation and his failures to adhere to our previous decision, we conclude
that reassignment on remand is not warranted.
17
The Sovereign Order’s primary claims against the Florida
Priory are for infringement under the Lanham Act. A person is liable for infringement if he
uses a mark in commerce that is confusingly similar to a registered mark. See 15 U.S.C.
§ 1114(1)(a). A plaintiff bringing an infringement action must prove
“first, that its mark is valid and, second, that the defendant’s use of the
contested mark is likely to cause confusion.” Dieter, 880 F.2d at 326. The second element—confusion— requires the
district court to balance seven factors:
(1) strength of the mark alleged
to have been infringed; (2) similarity of the infringed and infringing marks;
(3) similarity between the goods and services offered under the two marks; (4)
similarity of the actual sales methods used by the holders of the marks, such
as their sales outlets and customer base; (5) similarity of advertising methods;
(6) intent of the alleged infringer to
misappropriate the proprietor’s good will; and (7) the existence and extent of
actual confusion in the consuming public.
Tana v. Dantanna’s, 611 F.3d 767, 774–75 (11th Cir. 2010). The district court “does not have to consider all of these factors
in every case and in some cases, ‘new’ factors may merit consideration.” Swatch Watch, S.A. v. Taxor, Inc., 785 F.2d 956, 958 (11th Cir. 1986). “The real question is whether
the court’s ultimate determination about the ‘likelihood of confusion’ was
correct.” Univ.
of Ga.
Athletic Ass’n v. Laite, 756 F.2d 1535, 1543 (11th Cir. 1985).
The Sovereign Order challenges the judgment for the
Florida Priory on its claims of infringement.
With respect to all of its marks, the Sovereign Order
18
contests the application of several factors in the balancing test
for likelihood of confusion. With respect to its incontestable marks, the
Sovereign Order contends that the district court erred when it considered the
Florida Priory’s defenses of prior use.
The district court misapplied several factors when it
assessed the likelihood of
confusion, and it erred by treating the defenses of prior use in sections
1115(b)(5) and (b)(6) of the Lanham Act as defenses on the merits. We first
discuss the application of the balancing test for confusion and then discuss
the defenses of prior use.
The Sovereign Order challenges all of the factors that
the district court found in favor of the Florida Priory. That is, the Sovereign
Order challenges the findings about the first factor with respect to its
contestable marks, the second factor with respect to its design mark, and the
fourth through seventh factors with respect to all of its marks. With regard to the seventh factor, the
Sovereign Order also challenges the denial of its motion to supplement the record.
The district court erred with respect to the first,
second, fourth, fifth, sixth, and seventh factors. It also erred by denying the
Sovereign Order’s motion to supplement the record. We address the seven factors, in turn, below.
19
The first
factor assesses the strength of the plaintiff’s marks. See John H. Harland Co. v. Clarke Checks, Inc., 711 F.2d 966, 973
(11th Cir. 1983). “The stronger the mark, the greater the scope of protection
accorded it, the weaker the mark, the less trademark protection it
receives.” Frehling Enters., Inc. v. Int’l Select Grp., Inc., 192 F.3d 1330,
1335 (11th Cir. 1999). We have described this factor as the “second most
important factor” in the seven-factor balancing test for confusion. Caliber Auto. Liquidators, Inc. v. Premier
Chrysler, Jeep, Dodge, LLC, 605 F.3d 931, 938 (11th Cir. 2010).
A factfinder assesses the strength of a mark in two
ways. It first classifies the mark as
“generic, descriptive, suggestive, or arbitrary.” Custom
Mfg. & Eng’g, Inc. v. Midway Servs., Inc., 508
F.3d 641, 648 (11th Cir. 2007).
Arbitrary marks are the strongest, and generic marks are the weakest. See Aronowitz v. Health- Chem Corp., 513 F.3d 1229, 1239 (11th Cir. 2008). It then considers “the degree to which third
parties make use of the mark.” Frehling Enters., 192 F.3d at 1336. “The less that third parties use the mark, the stronger
it is, and the more protection it deserves.”
Id.
The district court found that the strength of the mark
favors the Sovereign Order with respect to the incontestable marks—the design
mark, “Sovereign Military Hospitaller Order of St. John of Jerusalem of Rhodes
and of Malta,” and
20
“Knights of Malta”—but favors the Florida Priory with respect to the
contestable marks—“Hospitallers of St. John of Jerusalem” and “Order of St.
John of Jerusalem.” The Florida Priory challenges the former finding, and the
Sovereign Order challenges the latter. We review both findings and conclude
that the district court did not err in assessing the strength of the
incontestable marks but erred in assessing the strength of the contestable marks.
The Florida Priory challenges the finding that the
Sovereign Order’s incontestable marks are presumptively strong. The Florida
Priory disagrees with our decision in Dieter, which recognized this presumption, but concedes that Circuit law
required the district court to apply it. The Florida Priory nevertheless
contends that its defenses of prior use should defeat this presumption. The
district court treated the Florida Priory’s defenses as complete defenses on the
merits—an error we discuss later in the opinion. But, setting that issue aside,
the Florida Priory contends that its defenses of prior use at least rebut the incontestable status of the
Sovereign Order’s marks and the presumption that they are strong.
Although we largely agree with the Florida Priory’s
criticisms of Dieter, we conclude that the district court correctly treated the
Sovereign Order’s incontestable marks as presumptively strong. We also conclude
that the Florida Priory’s defenses of prior use do not rebut this
presumption. Under the plain
21
language of the Lanham Act, those defenses are not relevant to the
likelihood of confusion. They defeat only the conclusive presumption that
incontestable marks are valid, not
the presumption that incontestable marks are strong for purposes of
confusion. Other statutory defenses may
defeat the latter presumption, see, e.g., 15
U.S.C. § 1065, but the Florida Priory did not raise
them. To put the Florida Priory’s arguments in context, we must first explore
the role that incontestability plays under the Lanham Act.
Incontestability offers two key benefits for plaintiffs
complaining about an infringement.
With respect to the first element of infringement—validity— incontestability
provides “conclusive evidence of the validity of the registered mark and of the registration
of the mark, of the registrant’s ownership of the mark, and of the registrant’s
exclusive right to use the registered mark in
commerce.”
Id. § 1115(b) (emphasis added).
Registration alone, by contrast, provides only “prima
facie evidence of . . . validity.” Id. § 1115(a) (emphasis added).
In this Circuit, incontestability also benefits
plaintiffs with respect to the second element of infringement—confusion. We
held in Dieter that incontestability gives plaintiffs an advantage with respect to
the first factor in the seven-factor balancing test for likelihood of
confusion. See 880
F.2d at 328–29; see also Caliber Auto.
Liquidators, 605 F.3d at 939; Frehling Enters., 192 F.3d at
1336. An incontestable mark is “presumed
to be at least descriptive with
22
secondary
meaning, and therefore a relatively strong mark.” Dieter, 880 F.2d at 329.
On this point, our precedent in Dieter is an outlier. The majority of
circuits to consider the question have held that incontestability does not
affect the strength of a mark for
purposes of confusion. See Lone Star
Steakhouse & Saloon, Inc. v. Alpha of Va., Inc., 43 F.3d 922, 935 (4th
Cir. 1995); Oreck Corp. v. U.S. Floor
Sys., Inc., 803 F.2d 166, 171 (5th Cir. 1986); Munters Corp. v. Matsui Am., Inc., 909 F.2d 250, 252 (7th Cir.
1990); Miss World (UK) Ltd. v. Mrs. Am.
Pageants, Inc., 856 F.2d 1445, 1449 (9th Cir. 1988), abrogated in part on other grounds by Eclipse Assocs. Ltd. v. Data Gen.
Corp., 894 F.2d 1114, 1116 n.1 (9th Cir. 1990); Hornady Mfg. Co. v. Doubletap, Inc., 746 F.3d 995, 1008 n.13 (10th
Cir. 2014).
But see Wynn Oil Co. v. Am. Way Serv. Corp., 943 F.2d 595, 600 (6th Cir. 1991) (agreeing with our Circuit). The
Trademark Trial and Appeal Board agrees with the majority view. See Safer, Inc. v. OMS Invs., Inc., 94 U.S.P.Q.2d 1031, 1036 (T.T.A.B. 2010). As do the leading
treatises. See, e.g., 6 J. Thomas McCarthy, McCarthy on Trademarks and Unfair
Competition § 32:155 (4th ed.); Restatement (Third) of Unfair Competition § 21,
reporter’s note (1995).
The law in this Circuit is almost certainly incorrect.
The incontestability of a mark, by itself, says nothing about its strength. A
mark becomes incontestable when the owner uses it in commerce for five
consecutive years and files an
23
affidavit with the Patent and Trademark Office attesting that the
mark is not generic, not subject to a prior adverse judgment, and not currently
subject to litigation. See 15 U.S.C. § 1065. Yet, “the test for likelihood of confusion is
based on the perceptions of consumers in the marketplace, which are ordinarily
unaffected by the status of a mark’s registration.” Restatement § 21, reporter’s note.
Furthermore, “trademark rights are not static and . . . the strength of a mark
may change over time.” Safer, 94 U.S.P.Q.2d at 1036. That a mark enjoyed incontestable status in
the past says very little about its current strength in the marketplace. See 6 McCarthy § 32:155 (criticizing Dieter because “it focuses solely on the inherent
distinctiveness of a mark and ignores the acquired distinctiveness and
strength of the mark in the real world marketplace”).
Moreover, the Lanham Act was amended after Dieter addressed the
relationship between incontestability and confusion. The Trademark Law Revision
Act of 1988 added the following proviso to section 1115 of the Lanham Act:
“[The] conclusive evidence of the right to use [a] registered [incontestable]
mark shall be subject to proof of infringement
as defined in section [1114].” Pub. L. No. 100-667,
§ 128(b)(1), 102 Stat. 3935, 3945 (emphasis added). With this amendment,
Congress decoupled the questions of incontestability and validity from the
questions of infringement and confusion.
See Petro Shopping Ctrs. L.P.
v.
James River Petrol., Inc., 130 F.3d 88, 92 (4th Cir. 1997); cf. KP Permanent
24
Make-Up, Inc. v. Lasting Impression I, Inc., 543 U.S. 111, 118, 125 S. Ct. 542, 548 (2004) (“Section 1115(b)
places a burden of proving likelihood of confusion (that is, infringement) on
the party charging infringement even when relying on an incontestable
registration.”). The Dieter Court had no occasion to consider this statutory change because the
amendment became effective in November 1989, three months after Dieter was decided. See Pub. L. No. 100-667, § 136, 102 Stat. at 3948. But our later decisions followed Dieter without questioning its reasoning
or acknowledging the change in statutory language. See
Caliber Auto. Liquidators, 605 F.3d at 939; Frehling Enters., 192 F.3d at 1336.
Nevertheless, “one panel of this Court cannot disregard
the precedent set by a prior panel, even though it conceives error in the
precedent.” United
States v.
Romeo, 122 F.3d 941, 942 n.1
(11th Cir. 1997) (quoting Davis v. Estelle, 529 F.2d 437, 441 (5th Cir. 1976)). Although this principle gives
way when “the prior panel’s decision was based on legislation that ha[s] been
changed,” United States
v. Woodard, 938 F.2d 1255, 1258
n.4 (11th Cir. 1991), our Court has followed Dieter even after the 1988 amendments to the Lanham Act, see, e.g., Caliber Auto. Liquidators, 605
F.3d at 939. And it does not matter, for purposes of law of the Circuit, that
our later decisions failed to consider the change in statutory language. See DeYoung v. Owens, 646 F.3d
1319, 1325 (11th Cir. 2011) (“[T]he mere act of proffering additional reasons
not expressly considered previously will not open the
25
door
to reconsideration of the question by a second panel.” (quoting Smith v. GTE Corp., 236 F.3d
1292, 1302 (11th Cir. 2001)). Dieter remains the law of the
Circuit, and we must continue to follow it. Accordingly, the district court
correctly determined that the Sovereign Order’s incontestable marks are
presumptively strong.
Accepting that incontestable marks are presumptively
strong in this Circuit, the Florida Priory contends that its defenses of prior
use should nevertheless defeat the presumption we recognized in Dieter. In the district court,
the Florida Priory argued that it satisfied the criteria for the defenses in
sections 1115(b)(5) and (b)(6) of the Lanham Act. Under section 1115(b)(5), a
defendant must prove that “[its] mark . . . was adopted without knowledge of
the [plaintiff’s] prior use and has been continuously used by [the defendant]
or those in privity with him from a date prior to [the plaintiff’s
registration].” 15 U.S.C. §
1115(b)(5). Under section 1115(b)(6), a
defendant must prove that “[its] mark . . . was registered and used prior to
the registration . . . or publication . . . of the registered mark of the
[plaintiff], and not abandoned.” Id. § 1115(b)(6). The Florida Priory’s argument presents a question of
first impression: do the statutory defenses in section 1115(b) of the Lanham
Act defeat the presumption of strength we identified in Dieter?
Based on the
text of the statute, we reject the Florida Priory’s argument.
According to the
Lanham Act, the “defenses or defects” in section 1115(b) rebut
26
“[s]uch conclusive evidence of the right to use the registered
mark.” Id. §
1115(b). In other words, they go to the first factor of infringement—validity.
The presumption we recognized in Dieter, by contrast, goes to second element of infringement—confusion. We
cannot treat the defenses in section 1115(b) as defenses to the presumption we
recognized in Dieter without overriding the plain language of the Lanham Act. Although Dieter itself is in conflict
with the statute, we decline to extend its error any further than necessary.
Of course, defendants can invoke other statutory
defenses that would potentially defeat the presumption from Dieter. For example, section
1065 of the Lanham Act—the provision that defines incontestability—also
contains a defense of prior use. Under that defense, a defendant can challenge
incontestability “to the extent” that the plaintiff’s registered mark
“infringes a valid right acquired [by the defendant] under the law of any State
or Territory by use of a mark or trade name continuing from a date prior to the
date of registration . . . of such registered mark.” Id. § 1065. This defense could
be relevant to the Dieter presumption because—unlike section 1115(b)—it defeats the
“incontestable” status of a mark, not the conclusive presumption of validity
that comes with incontestability.
Compare id., with id. § 1115(b).
But the Florida Priory never invoked any such defense.
The defense of prior use in section 1065 turns on state law. See id. § 1065; accord Dorpan, S.L. v.
27
Hotel Melia, Inc., 728 F.3d 55, 63 & n.10 (1st
Cir. 2013); Watec Co. v. Liu, 403
F.3d 645, 652 (9th Cir. 2005); Advance
Stores Co. v. Refinishing Specialties, Inc., 188 F.3d 408, 412–13 (6th Cir.
1999). The Florida Priory has never explained how it obtained rights to the Sovereign
Order’s marks under state law and satisfied the other conditions in section
1065. Any such defense is, therefore, forfeited. See Maradiaga v. United States, 679 F.3d 1286, 1294 (11th Cir. 2012).
In sum, the district court correctly determined that the
Sovereign Order’s incontestable marks are presumptively strong. Although this presumption is legally dubious,
it remains the binding law of the Circuit. The Florida Priory’s defenses of
prior use under sections 1115(b)(5) and (b)(6) do not defeat this presumption
because the Lanham Act expressly limits the effect of those defenses. The
Florida Priory failed to raise any other defense that could defeat the
presumption we recognized in Dieter.
The Sovereign Order challenges the finding that its
contestable marks are weak. The district court stated that the marks are
“generic” because they employ “commonly used” words. SMOM III, No. 09-81008-CIV, slip
op. at 7. It also found that the marks are used extensively by third parties.
The Sovereign Order contends that the district court erred by underestimating
the uniqueness of its marks.
28
We agree with the Sovereign Order that the district
court erred in two respects. First, the strength of a mark does not turn on its
component words in a vacuum, but instead “the relationship
between the name and the service or good it
describes.” Frehling Enters., 192 F.3d at 1335 (emphasis added). For example, “apple” is a
common word, but it is a strong mark when used in connection with personal
computers. See 2 McCarthy § 11:11. And “sun”
is a common word, but it is a strong mark when used in connection with
banking. See
Frehling Enters., 192 F.3d at 1335. The correct
standard is whether the Sovereign Order’s marks are strong when used in
connection with the Sovereign Order’s services. The district court erred by
evaluating the uniqueness of the individual words that comprise the Sovereign
Order’s marks—e.g.,
“hospitaller” and “Saint John”—instead of evaluating the relationship between
the marks and the services that the Sovereign Order provides. Second, the
district court misunderstood what matters when considering third-party use. With respect to licensees, their use does not
weaken the Sovereign Order’s marks. See Univ. of Ga.
Athletic Ass’n, 756 F.2d at 1545 (“[W]idespread use
of a mark by licensees would tend to support, rather than rebut, the
proposition that [the] mark is a strong one.”). And, with respect to foreign
groups using the Sovereign Order’s marks in other countries, their use is
irrelevant to the strength of the marks in the United States. See E. Remy Martin
& Co. v.
Shaw-Ross Int’l Imports, Inc., 756 F.2d 1525, 1531, 1533 (11th
Cir. 1985). As for
29
the remaining examples, “the significance of third-party use”
depends on “the entire name a third party uses.” Safeway Stores, Inc. v. Safeway Discount Drugs,
Inc., 675 F.2d 1160, 1165 (11th Cir. 1982)
(emphasis added). That other organizations use parts of the Sovereign Order’s word marks is not persuasive evidence of
third-party use. See id. Moreover, the district court identified only twenty examples of
third-party use—a number “substantially less than in other cases in which we
have found significant third-party use.” Id.
The second factor for confusion—the similarity of
marks—requires the factfinder to compare the plaintiff’s marks with the
defendant’s marks and measure their similarity. “[T]he greater the similarity .
. . , the greater the likelihood of confusion.”
Exxon Corp. v. Tex. Motor Exch.
of Hous., Inc., 628 F.2d 500, 505 (5th Cir. 1980).
Similarity must be determined “by considering the overall impression created by
the mark as a whole rather than simply comparing individual features of the marks.” Id. Relevant points
of comparison include “the appearance, sound and meaning of the marks, as well
as the manner in which the marks are used.”
John H. Harland, 711 F.2d at 975.
Neither party challenges the finding
of the district court that the similarity of the word marks favors the
Sovereign Order, but the Sovereign Order challenges the finding that the design
marks are dissimilar. It argues that the
parties’ design
30
marks
are strikingly similar. It highlights the common design elements—a shield and a
Maltese cross—that are featured in both marks and the overall impression that
the marks convey.
We
conclude that the truth is somewhere in the middle: the district court did not
clearly err by finding this factor favors the Florida Priory, but it clearly
erred to the extent it attributed significant weight to this factor. See Frehling Enters., 192 F.3d
at 1338. The parties’ design marks are similar:
Both
marks feature a shield and a Maltese cross.
Both marks invoke impressions of Malta, Christianity, and the military,
and they are used in the same way—as the symbol for a religious charitable
organization. See AmBrit, Inc. v. Kraft, Inc., 812 F.2d 1531, 1541 (11th Cir. 1986) (finding confusing similarity
in trade dress when, “[a]lthough a close examination of the two wrappers
reveals significant differences,” “each is the same size, each has a textured
silver foil background, each is printed primarily with blue and white inks,
each includes the product name in large block letters and the company name in
smaller script, and each features a
31
polar bear”); Exxon Corp., 628 F.2d at 505 (finding confusing similarity between two marks
that were used similarly and were both “printed in red with all block letters
on a white background” with blue underneath); John H.
Harland, 711 F.2d at 976 (“Although the similarities
in appearance, sound and meaning between the marks . . . are far from
overwhelming, these similarities are accentuated by the manner in which the
marks are used.”). The overall designs of the marks are different, however, and
they are visually distinguishable. Because there are “both similarities and
differences,” we “cannot say flatly that either the marks are or are not
visually similar.” 4 McCarthy § 23:25. Instead, we conclude that this factor
does not meaningfully tip the scales one way or the other. See John H. Harland, 711 F.2d at
976; see also In re Coors Brewing Co., 343 F.3d 1340, 1344 (Fed. Cir. 2003) (“Although we uphold the . .
. finding that the two marks are generally similar, . . . we note that
similarity is not a binary factor but is a matter of degree. Because there are
significant differences in the design of the two marks, the finding of
similarity is a less important factor . . .
.”).
Neither party challenges the finding of the district
court that this factor favors the Sovereign Order.
32
The fourth factor—similarity of the
parties’ sales methods—and the fifth factor—similarity of the parties’
advertising methods—merge in this case. The former focuses on “where, how, and
[with] whom” the parties do business.
Frehling Enters., 192 F.3d at
1339. “Dissimilarities between the retail outlets for and the predominant consumers
of plaintiff’s and defendants’ goods lessen the possibility of confusion . . .
.” Amstar Corp. v. Domino’s Pizza,
Inc., 615 F.2d 252, 262 (5th Cir. 1980). The latter
compares the parties’ advertisements and the audiences they reach. See AmBrit, 812 F.2d at 1542; Amstar Corp., 615 F.2d at
262. “The greater the similarity . . . , the greater the likelihood
of confusion.” Exxon Corp., 628 F.2d at 506. The
Sovereign Order and the Florida Priory identify their “customers” as their
donors, not the recipients of their charitable services. Accordingly, both
their “sales” and their “advertising” methods are their fundraising methods.
The Sovereign Order contests the finding that these two
factors favor the Florida Priory. The district court found that, unlike the
Florida Priory, the Sovereign Order obtains funding from Catholic organizations
and the federal government. The Sovereign Order does not disagree with this
finding, but it argues that the district court applied an overly stringent
standard in assessing the similarity of the parties’ potential donors.
33
We again agree that the district court erred. By its own
findings, the fundraising methods and target donors of the Sovereign Order and
the Florida Priory overlap significantly. The district court found that both
parties use “print publications, the Internet and email to reach donors.” SMOM III, No. 09-81008- CIV,
slip op. at 11. More importantly, it found that the parties accept donations
from individuals “notwithstanding [their] relationship, if any, with the
Catholic Church.” Id. Although the district court found differences between the parties’
fundraising methods, it labeled those differences as “minor.” Id. Our cases do not require an
“[i]dentity” of sales or advertising methods; “the standard is whether there is
likely to be significant enough overlap . . . that a possibility of confusion
could result.” Frehling Enters., 192 F.3d at 1340; see also Freedom Sav.
& Loan Ass’n v. Way, 757 F.2d 1176, 1185 n.7
(11th Cir. 1985) (“It would overburden a plaintiff to ask that he or she prove
through direct evidence that a large number of customers actually use the services
of both parties: hence, it should be enough to show that the same customers are
likely to use both services.”). The parties here use many of the same
fundraising methods and “cater to the same general kinds of individuals,” “even
if the particular individuals [sending donations] differ.” Safeway Stores, 675 F.2d at 1166.
34
The sixth factor asks whether the defendant adopted its
mark “with the intent of deriving benefit from the reputation of the
plaintiff.” Exxon
Corp., 628 F.2d
at
506.
“Bad faith in the adoption and use of a trademark normally involves . . .
efforts by a party to ‘pass off’ its product as that of another.” Amstar Corp., 615 F.2d at 263. Intent can be proven with
direct or circumstantial evidence. See Jellibeans, Inc.
v. Skating Clubs of Ga., Inc., 716 F.2d 833, 843
(11th Cir. 1983). When intent is present, it can “justify the inference that
there is confusing similarity.” Frehling Enters., 192 F.3d at 1340. But “it is neither a necessary nor sufficient
condition for determining the ultimate legal fact of the ‘likelihood of
confusion.’” Jellibeans, 716 F.2d at 843 n.23.
The Sovereign Order challenges the finding that the
Florida Priory did not adopt its marks with the intent to benefit from the
Sovereign Order’s reputation. It contends that the district court impermissibly
relied on Papanicolaou’s testimony when it found that the Ecumenical Order used
the marks prior to the Sovereign Order.
We agree.
The district court erred. In our earlier decision, we held that the
district court erroneously “permitted Papanicolaou, a lay witness, to testify
about historical matters.” SMOM II, 702 F.3d at 1295. Papanicolaou was never qualified as an expert
witness and could not testify about matters beyond his personal knowledge.
35
On remand, the district court relied on Papanicolaou’s testimony to
explain the relationship between several documents from the early twentieth
century, including minutes from a meeting in 1908, incorporation documents from
1911 and 1956, and registration documents from 1958. Papanicolaou was not
present when these documents were created, and he has no more personal
knowledge about the events they describe than he had about
“late-eighteenth-to-early-nineteenth century history.” Id. at 1294. Moreover, the
documents, on their face, do not prove that the Florida Priory has used the
marks in question since 1911. The documents say nothing about the relationship
between the Ecumenical Order and the Delaware or New Jersey organizations. Indeed, the district court cited
Papanicolaou’s testimony, not the documents, because only his testimony
described a relationship between the Ecumenical Order and the Delaware and New
Jersey organizations.
Granted, the district court also relied on testimony
about matters within Papanicolaou’s personal knowledge, but that testimony does
not render its other error harmless. Specifically, the district court credited
Papanicolaou’s testimony that, in 2002, he added “Ecumenical Order” to the name
of his organization to avoid the accusation that his organization was taking
advantage of the Sovereign Order’s reputation. The primary
basis for its finding of no intent, however, was
its finding of prior use—a finding that was based on Papanicolaou’s inadmissible testimony. See SMOM III, No. 09-81008-CIV, slip op. at 12.
Accordingly, we
36
cannot
say that the district court “was not ‘substantially swayed’ by Papanicolaou’s
inadmissible testimony” when it found that this factor favors the Florida Priory.
SMOM II,
702 F.3d at 1295 (quoting Aetna Cas.
& Sur. Co. v. Gosdin, 803 F.2d 1153, 1160 (11th Cir. 1986)).
The “best evidence” that the parties’ marks are likely
to be confused is evidence that the marks actually have been confused. Amstar Corp., 615 F.2d at
263.
Evidence of actual confusion is “not necessary” for the
plaintiff to prevail on a claim of infringement, id., but even a “very little” amount of it is highly probative, World Carpets, Inc. v. Dick Littrell’s New
World Carpets, 438 F.2d 482, 489 (5th Cir. 1971). The strength of such
evidence depends on “the number of instances of confusion,” “the kinds of
persons confused,” and the “degree of confusion.” Safeway
Stores, 675 F.2d at 1167.
The Sovereign Order makes three arguments to challenge
the finding of the district court that no actual confusion exists. First, it challenges the treatment of the
email from Gail Quigley that it introduced at trial. Second, it contends that
the district court erred by relying on representations that the Sovereign Order
made to the Patent and Trademark Office in 2002. Third, it challenges the
denial of its motion to supplement the record with evidence of actual confusion
that surfaced after the bench trial in 2011.
37
We agree with
the Sovereign Order with respect to its last two arguments.
We
disagree that the district court clearly erred by discounting the email from
Quigley. But the district court erred by considering the representations that
the Sovereign Order made in 2002 and by denying the Sovereign Order’s motion to
supplement based on its misreading of our previous decision on appeal.
The district court did not clearly err when it
considered Quigley’s email. The district court discounted Quigley’s supposed
confusion because she is not a donor to either the Sovereign Order or the
Florida Priory. We have held that “confusion of individuals casually acquainted
with a business is worthy of little weight.” Id. The district court was entitled to discount Quigley’s confusion. See Sun Banks of Fla., Inc. v. Sun Fed. Sav. & Loan
Ass’n, 651 F.2d 311, 319 (5th Cir. July 1981)
(discounting an inquiry about whether Sun Banks and Sun Federal were related
because “there is no indication that the inquiry was made by a potential
customer concerning the transaction of business”). Moreover, although Quigley
wrote, “I’m confused about [the Florida Priory] and your Order of Malta,” the
district court found that the remainder of her email suggests she understood
the difference between the Sovereign Order and the Florida Priory. Because the district court articulated one of
“two permissible views of the evidence,” we defer to its reading. Anderson v. City of
Bessemer City, 470 U.S. 564, 574, 105 S. Ct.
38
1504,
1511 (1985). At most, Quigley’s email raises “an inference of actual confusion
. . . [that] is not sufficiently dispositive so as to favor either side in an
appreciable fashion.” Frehling Enters., 192 F.3d at 1341.
ii.
The District Court Erred by Considering the
Representations that the Sovereign Order Made to the Patent and Trademark
Office in 2002.
The district court erred when it treated the
representations that the Sovereign Order made to the Patent and Trademark
Office in 2002 as relevant evidence.
According to the district court, the Sovereign Order conceded that
its marks are not likely to be confused with the Florida Priory’s marks by
registering its marks despite the Delaware organization’s prior use. Its
reasoning largely rehashes its earlier finding that the Sovereign Order
defrauded the Patent and Trademark Office—a finding we reversed in the first
appeal. As we explained, the Patent and Trademark Office notified the Sovereign
Order about the preexisting mark at the time of registration. But the Sovereign
Order successfully distinguished its marks by explaining that they are service marks, as opposed to the
Delaware organization’s collective membership
marks. See SMOM II, 702 F.3d at 1292 n.14. In this litigation, the Sovereign Order
sues the Florida Priory for its use of allegedly infringing service marks. The Sovereign
Order’s attestations in 2002 about the Delaware organization’s collective
membership marks are irrelevant.
39
Supplement the
Record.
Finally, the district court erred when it denied the
Sovereign Order’s motion to supplement the record. The district court denied
the motion for one reason: it thought we had “instructed” it to evaluate
confusion “based on the evidence presented at
trial.” SMOM III, No. 09-81008-CIV, slip op. at 14 n.1 (emphasis added). We gave no
such instruction. In our earlier decision, we held that the district court
should “limit its analysis to facts in the record and . . . refrain from
consulting outside sources on the Internet that have not been cited, submitted,
or recognized by the parties.” SMOM II, 702 F.3d at 1296. But this instruction to rely on the record
created by the parties and to refrain from conducting self- directed Internet
research did not address whether the district court should permit the parties
to supplement the record with post-trial evidence.
Although we review the denial of a motion to supplement
the record for abuse of discretion, Elston,
997 F.2d at 1405, the district court never actually exercised its discretion because it misinterpreted our earlier
decision. Accordingly, we cannot defer to its decision. See
Renico v. Lett, 559 U.S. 766, 775, 130 S.
Ct.
1855, 1863 (2010) (“[I]f the record reveals that the trial judge has
failed to exercise the ‘sound discretion’ entrusted to him, the reason for such
deference by an appellate court disappears.” (quoting Arizona v. Washington, 434 U.S.
497, 510 n.28, 98 S. Ct. 824, 832 (1978))); Lykins
v. Pointer, Inc., 725 F.2d 645, 649 (11th
40
Cir. 1984) (“The court . . . must in fact exercise its
discretion.”). On remand, the district court should determine in the first
instance whether and how the parties can supplement the record with post-trial
evidence. See
generally Chudasama v.
Mazda Motor Corp., 123 F.3d
1353, 1366 (11th Cir. 1997) (“[D]istrict courts enjoy broad discretion in
deciding how best to manage the cases before
them.”).
The Sovereign Order challenges the holding that its
incontestable marks were not infringed on account of the Florida Priory’s prior
use. The Sovereign Order contends that the district court erroneously treated
the defenses of prior use in sections 1115(b)(5) and (b)(6) as complete
defenses on the merits. It also argues that prior use was outside the scope of
our appellate mandate and that the district court erred by relying on
Papanicolaou’s testimony to support its finding of prior use.
The district court misinterpreted sections 1115(b)(5)
and (b)(6) as providing complete defenses on the merits. The defenses in
section 1115(b) rebut the conclusive presumption of validity that comes with
incontestability. See 15 U.S.C.
§ 1115(b). When that presumption is rebutted, however, the defendant
does not automatically prevail. Rebuttal reduces the conclusive presumption of
validity to a prima facie presumption of validity. See
Park ‘N Fly, Inc. v. Dollar Park & Fly, Inc.,
469 U.S. 189, 199 n.6, 105 S. Ct. 658, 664 (1985) (“If one of the defenses [in
41
section
1115(b)] is established, registration constitutes only prima facie and not
conclusive evidence of the owner’s right to exclusive use of the mark.”). The
defendant must still identify some additional reason why the plaintiff’s marks
are invalid. See 15
U.S.C. § 1115(a). Here, whether or not sections 1115(b)(5) and (b)(6) apply,
the Sovereign Order’s marks are presumptively valid because they are
registered. See
id. The
district court erred by treating sections 1115(b)(5) and (b)(6) as complete
defenses to infringement. See 6 McCarthy § 32:153; see also id. at § 32:157
(treating the defenses in section 1115(b) as defenses on the merits leads to
the “absurdity of a challenger finding it easier to prove a defense to an
incontestable registration than to an unregistered, common-law mark”).
Of course, prior use can be a defense on the merits, but we agree with the Sovereign Order
that any such defense would go beyond our mandate. Under the common law, prior
use can defeat the validity of a plaintiff’s mark. See
generally United Drug Co. v. Theodore Rectanus Co.,
248 U.S. 90, 39 S. Ct. 48 (1918); Hanover Star Milling
Co. v. Metcalf (Tea
Rose), 240 U.S. 403, 36 S. Ct. 357 (1916). In the
first appeal, however, we remanded for the district court “to consider, under
the correct legal standard, confusion with respect to all of [the Sovereign] Order’s marks.” SMOM II, 702 F.3d at 1298
(emphasis added). Under the “mandate rule,” a district court can only “settle
so much as has been remanded.” Litman v. Mass. Mut. Life Ins. Co., 825 F.2d 1506, 1511 (11th Cir.
42
1987) (en banc) (quoting In re Sanford Fork & Tool Co., 160
U.S. 247, 255, 16
S. Ct. 291, 293 (1895) (internal
quotation mark omitted)). Because our earlier decision remanded for the
district court to consider the second element of infringement—confusion—it
could not consider challenges to the first element— validity. See Barber v. Int’l Bhd. of Boilermakers,
841 F.2d 1067, 1070–71 (11th Cir. 1988). Prior use was relevant only insofar as
it informed the likelihood of confusion. As explained earlier, the defenses of
prior use in sections 1115(b)(5) and (b)(6) do not do so.
Furthermore, the district court erred by grounding its
finding of prior use in the inadmissible testimony of Papanicolaou. The
district court based its finding of prior use on the same evidence that it
cited for its finding of no intent—i.e., Papanicolaou’s testimony about the twentieth century documents. As
we have explained, that finding was unsupported because Papanicolaou was not
qualified to testify about matters
beyond his personal knowledge. Accordingly, even if prior use had been within
the scope of our mandate, the district court could not have relied on
Papanicolaou’s testimony to find that the Florida Priory has continuously used
the marks in question “since 1911.” SMOM III, No. 09-81008-CIV, slip
op. at 15.
In short, the district court erred when it held that the
Florida Priory’s defenses of prior use defeat the Sovereign Order’s claims of
infringement for its
43
incontestable
marks. The defenses in sections 1115(b)(5) and (b)(6) of the Lanham Act are not
complete defenses on the merits. Those
defenses, when they apply, only lower the presumption of validity afforded to
incontestable marks. The Florida Priory
no longer challenges the validity of the Sovereign Order’s marks, and any such
challenge would be outside the scope of our appellate mandate. Even if it were
relevant at this stage, the finding of prior use by the district court was
unsupported because it was based on Papanicolaou’s inadmissible testimony.
We conclude that the district court erred when it
entered judgment for the Florida Priory on the Sovereign Order’s claims of
infringement. The district court erred with respect to every factor challenged
by the Sovereign Order. Specifically, the district court clearly erred in
attributing significant weight to its finding that the similarity of the design
marks favors the Florida Priory. And it committed legal errors when it assessed
the strength of the Sovereign Order’s contestable word marks, the similarity of
sales and advertising methods, the presence of intent, and the evidence of
actual confusion. It also erred with respect to prior use because sections
1115(b)(5) and (b)(6) are neither defenses on the merits nor defenses to the
presumption that the Sovereign Order’s incontestable marks are strong.
Due to these errors, we reverse the judgment against the
Sovereign Order on its claims of
infringement under the Lanham Act. On
remand, the district court
44
should reconsider the strength of the Sovereign Order’s
contestable marks, the similarity of the parties’ sales methods and advertising
methods, the Florida Priory’s intent, and the evidence of actual confusion. It
should also decide whether or how to supplement the record. Then, the district
court should reweigh the balance of factors and make a finding as to whether
the Florida Priory’s marks are likely to be confused with the Sovereign Order’s marks.
The parties agree that the Sovereign Order’s claims
under Florida law rise and fall with its claims of infringement under the
Lanham Act. See SMOM II, 702 F.3d at 1296 (citing Nat.
Answers, Inc. v. Smithkline Beecham Corp., 529 F.3d
1325, 1333 (11th Cir. 2008)). Because we vacate the judgment on the claims of
infringement, we must also vacate the judgment on the claims under state law
and remand for further proceedings.
Renewing its request from the first appeal, the
Sovereign Order again asks us to reassign the case on remand to a different
district judge. The Sovereign Order
cites the district judge’s continued reliance on Papanicolaou’s inadmissible
testimony, his continued reliance on the rejected finding of fraud, and his
negative comments about the parties and their motives. The Florida Priory, for
its part, downplays the district judge’s rulings and comments and relies on our earlier
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refusal to reassign the case. Although we acknowledge the force of
the Sovereign Order’s arguments, we agree with the Florida Priory that
reassignment is not warranted.
We can order reassignment “as part of our supervisory
authority over the district courts in this Circuit.” United States v. Torkington, 874
F.2d 1441, 1446 (11th Cir. 1989); see 28 U.S.C. § 2106 (“[A] court of appellate jurisdiction . . . may
remand the cause and . . . require such further proceedings to be had as may be
just under the circumstances.”). In the absence of actual bias, we consider at
least three factors in determining whether to reassign a case: “(1) whether the
original judge would have difficulty putting his previous views and findings
aside; (2) whether reassignment is appropriate to preserve the appearance of
justice; (3) whether reassignment would entail waste and duplication out of
proportion to gains realized from reassignment.” Torkington, 874 F.2d at 1447. Reassignment can become warranted on the second
or third appeal, even though it was not warranted on the first or second
appeal. See
Shaygan, 652 F.3d at 1318–19 (citing United States v.
Martin, 455 F.3d 1227, 1242 (11th
Cir.2006); United States v. Gupta,
572 F.3d
878, 892 (11th
Cir. 2009)).
The balance of the three factors identified in Torkington counsels against
reassignment, although the balance is closer than it was on the first appeal.
First, we agree with the Sovereign Order that the district judge’s adherence to his
46
previous finding of fraud and his continued reliance on
Papanicolaou’s historical testimony suggest he may have “difficulty putting his
previous views and findings aside.” Torkington, 874 F.2d at
1447. Nevertheless, his most recent
missteps seem more akin to garden-variety errors of law than the kind of direct
defiance or “stalemated posture” that requires reassignment. Brooks v. Cent. Bank of Birmingham, 717 F.2d 1340, 1343 (11th Cir. 1983); cf.,
e.g., United States v.
Remillong, 55 F.3d 572, 577
(11th Cir. 1995) (reassigning a case when the district judge “stubbornly
persisted in his questioned decision without reasonable explanation or
justification”); United States v. White, 846 F.2d 678, 696 (11th Cir. 1988) (reassigning the case because
the district judge “entered a holding that had been explicitly reversed by this
Court previously”). The district court could have read our earlier
decision—mistakenly, but reasonably—as not totally foreclosing his reliance on
Papanicolaou’s testimony or his previous finding of fraud because we addressed
those issues in the context of different legal claims. Second, we also agree
with the Sovereign Order that the district judge’s repeated impugning of the
parties’ motives in written opinions and public hearings is cause for concern.
The same is true for his expressed disinterest in trademark disputes in general
and this case in particular. Cf. Torkington, 874 F.2d at 1447 (reassigning a case in which “the judge stated at
various times that he felt the taxpayer had little interest in this type of
suit, that this prosecution was ‘silly,’ and that it was a waste of the
47
taxpayers’
money” and “questioned the wisdom of the substantive law he had to apply”). But
the district judge’s latest remarks, like his earlier ones, “do not rise to the
level of conduct that warrants assignment to a different judge on remand.” SMOM II, 702 F.3d at 1297. And
we see no evidence that his remarks played any role in his ultimate decision.
Third, we are still convinced that reassignment will “entail waste and
duplication out of proportion to [the] gains.” Id. (quoting Torkington, 874 F.2d at 1447). This
district judge has a unique familiarity with this complex, “fact-intensive”
case. Id. He conducted the
trial, heard the witnesses, and is familiar with the record and the parties.
Reassignment would “require duplication of resources expended by the parties
and the court” and would offset any corresponding gains. Id.; see,
e.g., CSX Transp., Inc. v.
State Bd. of Equalization, 521 F.3d 1300, 1301
(11th Cir. 2008) (denying reassignment when “[t]he judge presided over an
eight-day trial that concerned a complicated subject and drafted a thorough
27-page opinion”); Stargel v. SunTrust
Banks, Inc., 791 F.3d 1309, 1312 (11th Cir. 2015)
(denying reassignment when “the district judge ha[d] been assigned to [the]
case for over four years and . . . expended significant effort on the
not-so-simple issues”). Accordingly, we
conclude that reassignment is not warranted at this time.
“Reassignment
is an extraordinary order, and we ‘do not order [it] lightly.’”
Gupta, 572 F.3d at 891
(alteration in original) (quoting Torkington,
874 F.2d at
48
1447); see also Shaygan, 652 F.3d at 1318. We again express our expectation that, “on
remand, both parties will be treated with the respect they deserve and that the
district court will be able to freshly consider the remanded claims
notwithstanding its previously expressed views.” SMOM II, 702 F.3d at 1297.
IV.
CONCLUSION
We VACATE the judgment against the
Sovereign Order’s claims of infringement under the Lanham Act, VACATE the judgment against the Sovereign Order’s claims under Florida law,
and REMAND
for proceedings consistent with this opinion.
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