Dorpan, S.L. v. Hotel Melia, Inc., 1st Cir. (2013)

7/26/2019 Dorpan, S.L. v. Hotel Melia, Inc., 1st Cir. (2013)

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United States Court of AppealsFor the First Circuit

No. 12- 1679

DORPAN, S. L. ,

Pl ai nt i f f , Appel l ee,

v.

HOTEL MELI , I NC. ,

Def endant , Appel l ant ,

SOL MELI , S. A. ; DESARROLLADORA DEL NORTE, S. EN C. , S. E. ,d/ b/ a GRAN MELI PUERTO RI CO RESORT & VI LLAS,

Def endant s, Appel l ees.

APPEAL FROM THE UNI TED STATES DI STRI CT COURTFOR THE DI STRI CT OF PUERTO RI CO

[ Hon. Gust avo A. Gel p , U. S. Di st r i ct J udge]

Bef or e

Tor r uel l a, Sel ya and Li pez,Ci r cui t J udges.

J ai r o A. Mel l ado- Vi l l ar r eal , wi t h whomRoxana Aqui no- Segar r a,Li za M. Del gado- Gonzl ez, and Mel l ado & Mel l ado- Vi l l ar r eal wer e onbr i ef , f or appel l ant .

Feder i co Cal af Legr and, wi t h whomCar l a Cal af Gar c a, Rei char d

& Cal af , P. S. C. , Angel R. Rotger Sabat , and Maym & Ri ver a-Four quet , P. S. C. wer e on br i ef , f or appel l ees.

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LIPEZ, Circuit Judge. Thi s t r ademar k i nf r i ngement case i s a

di sput e bet ween t wo hotel s over t he r i ght t o use t he mark "Mel i "

i n Puer t o Ri co. Def endant - appel l ant Hot el Mel i , I nc. ( "HMI ") has

oper at ed the Hot el Mel i i n Ponce, Puer t o Ri co f or mor e t han a

cent ur y, but has never r egi st er ed t hat mar k wi t h t he Uni t ed St at es

Pat ent and Tr ademar k Of f i ce ( "USPTO") . Pl ai nt i f f - appel l ee Dor pan

has hel d sever al r egi st er ed marks usi ng t he name "Mel i " si nce t he

l ate 1990s. 1 I n 2007, Dor pan' s par ent company opened a hot el

cal l ed "Gr an Mel i " i n Coco Beach, Puer t o Ri co, appr oxi mat el y

ei ght y mi l es f r om Ponce. At t he cl ose of di scover y, t he di st r i ct

cour t ent ered summar y j udgment i n f avor of Dorpan, concl udi ng t hat ,

wi t h t he except i on of t he ci t y of Ponce, Dor pan was ent i t l ed t o

excl usi ve use of t he Mel i mark t hr oughout Puer t o Ri co.

Af t er r evi ewi ng t he r ecor d, we concl ude t hat a reasonabl e

f act f i nder coul d concl ude t hat t he Hot el Mel i and Gr an Mel i mar ks

cannot co- exi st i n Puer t o Ri co wi t hout cr eat i ng an i mper mi ssi bl e

l i kel i hood of conf usi on among r easonabl e consumer s. The di st r i ct

cour t ' s deci si on t o gr ant summary j udgment i n Dorpan' s f avor was

1 Appel l ee Sol Mel i , S. A. i s a publ i c Spani sh company thatoper ates numer ous hot el s and vacat i on r ent al s ar ound t he wor l d.Appel l ees Dor pan, S. L. and Desar r ol l ador a Del Nor t e, S. EN. C. ,

S. E. ar e whol l y owned subsi di ar i es of Sol Mel i . I n i t s own wor ds,"Dor pan' s pr i nci pal busi ness i s t o own, keep and l i cense to SolMel i , or t o Sol Mel i ' s subsi di ar i es and af f i l i at es, t he t r ademar kpor t f ol i o the Sol Mel i hot el congl omer at e uses wor l dwi de. "Desar r ol l adora del Nor t e owns and oper ates t he Gr an Mel i Puer t oRi co on behal f of Sol Mel i . For ease of r ef er ence, we r ef er t ot he appel l ees col l ect i vel y as " Dor pan. "

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er r oneous. Thus, we vacat e t he di st r i ct cour t ' s ent r y of summar y

j udgment and r emand f or f ur t her pr oceedi ngs consi st ent wi t h t hi s

opi ni on.I.

A. Facts

I n r evi ewi ng t he f act s we dr aw al l r easonabl e i nf er ences i n

f avor of t he non- movi ng par t y, HMI . Cabn Her nndez v. Phi l l i p

Mor r i s USA, I nc. , 486 F. 3d 1, 8 ( 1st Ci r . 2007) . HMI i s a f ami l y-

owned cor por at i on oper at i ng a si ngl e hot el cal l ed Hot el Mel i i n

Ponce, Puer t o Ri co.

2

HMI has operat ed t he Hot el Mel i at t he samel ocat i on at 75 Cr i st i na St r eet i n Ponce wi t hout i nt er r upt i on si nce

at l east t he 1890s. Al l par t i es agr ee t hat Hot el Mel i has a l ong

and st or i ed hi st or y i n Ponce, havi ng at t r act ed over t he year s many

f amous guest s, i ncl udi ng Uni t ed St at es Pr esi dent Theodor e

Roosevel t . HMI has never expanded beyond t hi s si ngl e hotel i n

Ponce, nor does i t pl an t o. Though HMI has used t he Mel i mark i nPonce cont i nuousl y f or more than a cent ur y, HMI has never

r egi st er ed t he Mel i mark wi t h ei t her t he Puer t o Ri co Depar t ment of

Stat e or t he USPTO.

Si nce t he l at e 1990s, Dor pan, S. L. has hel d sever al r egi st er ed

t r ademarks usi ng t he mark "Mel i " i n connect i on wi t h t he hotel

2 "Mel i " i s a Spani sh wor d. I t i s used as a sur name andt r ansl at es as "a t ype of pl ant , shr ub or t r ee t hat has l eaves,f l ower s and dr upe f r ui t . "

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i ndust r y i n t he Uni t ed St at es. 3 These mar ks have al l become

i ncont est i bl e wi t hi n t he meani ng of t he Lanham Act . See Par t

I I . B. 1, i nf r a. Dor pan' s pr i nci pal busi ness i s t o hol d t hese mar ks

on behal f of Sol Mel i , a publ i c Spani sh company. Sol Mel i owns

and oper at es t he l ar gest hot el chai n i n Spai n and t he t hi r d l ar gest

i n Eur ope. I t al so oper at es sever al hot el s i n Nor t h Amer i ca usi ng

t he Mel i mar k, i ncl udi ng at l east one i n Fl or i da. Unt i l 2007,

however , Dor pan had never used t he Mel i mar k i n Puer t o Ri co.

I n 2004, Sol Mel i opened an al l - i ncl usi ve r esor t on Coco

Beach i n Coco Beach, Puer t o Ri co cal l ed Par adi sus, appr oxi mat el y

ei ght y mi l es f r om t he Hot el Mel i i n Ponce. Thi s al l - i ncl usi ve

busi ness model was not successf ul , however . I n 2007, Sol Mel i

cl osed t he Par adi sus, r enovat ed i t , and r e- opened i t as a l uxur y

beach r esor t cal l ed "Gr an Mel i . "

B. Proceedings Below

I n ear l y 2007, Dor pan f i l ed a pet i t i on wi t h t he Puer t o Ri co

Depar t ment of St ate seeki ng t o r egi st er t he mark "Gr an Mel i . " HMI

was i mmedi atel y concerned t hat havi ng a hotel cal l ed Gr an Mel i i n

Puer t o Ri co woul d i nevi t abl y l ead t o consumer conf usi on and harm

i t s commer ci al i nt er est s i n Hot el Mel i . HMI f i l ed a l et t er wi t h

t he Puer t o Ri co Depar t ment of St at e opposi ng Dor pan' s r egi st r at i on

pet i t i on and expr essi ng concer ns t hat Dor pan' s i nt ent t o use t he

3 Dor pan owns r egi st er ed mar ks f or "Sol Mel i , " "Mel i Vacat i on Cl ub, " "Me By Mel i , " "Gr an Mel i , " "Mel i Hot el es, " and"Mel i Bout i que Hot el s, " among ot her s.

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Gr an Mel i mar k i n Coco Beach woul d i nf r i nge on HMI ' s common l aw

r i ght s t o excl usi ve use of t he Mel i mar k thr oughout Puer t o Ri co.

I n r esponse, Dor pan wi t hdr ew i t s r equest t o regi st er , but cont i nued

t o use t he mar k Gr an Mel i i n connect i on wi t h i t s r esor t i n Coco

Beach.

When f ur t her di scussi ons bet ween HMI and Dorpan f ai l ed t o

r esol ve t hei r di sput e, HMI f i l ed a compl ai nt i n l at e 2008 agai nst

Sol Mel i i n t he Super i or Cour t of Puer t o Ri co, asser t i ng t hat i t

was t he seni or user of t he Mel i mark, 4 and t hat i t had t he sol e

r i ght t o use t he Mel i mar k i n connect i on wi t h hot el and r est aur ant

servi ces t hr oughout Puer t o Ri co. 5 Shor t l y t her eaf t er , Dor pan f i l ed

a compl ai nt agai nst HMI i n t he Uni t ed St at es Di st r i ct Cour t f or t he

Di st r i ct of Puer t o Ri co, seeki ng a decl ar at i on t hat under t he

Lanham Act , Dorpan had t he r i ght t o use t he mark Mel i thr oughout

4

The f i r st par t y t o use a mar k i s r ef er r ed t o as t he "seni oruser " and par t i es who begi n t o use t he mark subsequent l y ar er ef er r ed t o as "j uni or user s. " See Al l ar d Ent er s. , I nc. v.Advanced Progr ammi ng Res. , 249 F. 3d 564, 572 ( 6t h Ci r . 2001) .

5 HMI al so ar gued t hat t he doct r i nes of col l at er al est oppelor r es j udi cat a pr ecl uded Dor pan f r om ar gui ng t hat i t had t heexcl usi ve r i ght t o use t he Mel i mar k i n Puer t o Ri co. To t hi s end,HMI of f ered evi dence t hat HMI had won a t r ademar k i nf r i ngementl awsui t i n t he 1970s agai nst a company cal l ed I nmobi l i ar i a Mel i ofP. R. HMI argued t hat Dorpan was a successor i n i nt er est t oI nmobi l i ar i a Mel i of P. R. i n such a way t hat t hey wer e i n pr i vi t y

wi t h one anot her f or pr ecl usi on pur poses. Thi s connect i on was t hesubj ect of heat ed and pr ot r act ed di sput e t hr oughout t he di st r i ctcour t pr oceedi ngs. The di st r i ct cour t ul t i mat el y concl uded t hatt her e was i nsuf f i ci ent evi dence t o concl ude t hat I nmobi l i ar i a Mel i of P. R. was i n pr i vi t y wi t h t he Sol Mel i compani es, and r ej ect edHMI ' s pr ecl usi on cl ai ms. HMI does not chal l enge t hi s det er mi nat i onon appeal .

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Puer t o Ri co, and t hat t o t he extent t hat HMI had t he r i ght t o use

t he Mel i mar k, such r i ght exi st ed onl y i n t he ci t y of Ponce.

Al most si mul t aneousl y, Dor pan r emoved HMI ' s commonweal t h cour t

compl ai nt t o f eder al cour t , and t he di st r i ct cour t consol i dat ed t he

t wo cases. At t he cl ose of di scovery, Dorpan moved f or summary

j udgment on i t s decl ar at or y j udgment cl ai m. 6 The di st r i ct cour t

gr ant ed t hat mot i on, concl udi ng t hat no reasonabl e j ur y coul d f i nd

a l i kel i hood of consumer conf usi on bet ween Hotel Mel i and Gr an

Mel i .

I n i t s opi ni on, t he cour t not ed t hat sever al f act s i n t he

r ecor d suppor t ed an i nf er ence of a l i kel i hood of conf usi on, such as

t he subst ant i al si mi l ar i t y of t he mar ks, t he si mi l ar i t y of t he

servi ces of f er ed by the t wo hot el s, and t he si mi l ar cust omer s each

hot el sought t o at t r act . The cour t al so not ed t hat HMI had put

f orward some evi dence of actual conf usi on by vendors and pat r ons.

Never t hel ess, t he cour t deci ded to gi ve mor e wei ght t o t he f act

"t hat nei t her par t y accuse[ d] t he ot her of "subj ect i vel y at t empt i ng

t o pr of i t f r om t he goodwi l l ear ned by t he ot her " and t hat t he

mar ks wer e bot h st r ong i n di f f er ent geogr aphi c ar eas, Hot el Mel i ' s

i n Ponce and Gr an Mel i ' s i nt er nat i onal l y. Dor pan, S. L. v. Hot el

Mel i , I nc. , 851 F. Supp. 2d 398, 410- 11 ( D. P. R. 2012) . Wi t hout

6 HMI opposed Dor pan' s mot i on f or summar y j udgment and f i l edi t s own mot i on f or par t i al summar y j udgment . HMI moved f or summar yj udgment onl y on i t s col l at er al est oppel cl ai ms, however , and di dnot seek summary j udgment on i t s i nf r i ngement cl ai ms.

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f ur t her expl anat i on, t he di st r i ct cour t concl uded: "[ w] i t h t he

f act or s spl i t , t he cour t f i nds t hese t wo mar ks can co- exi st wi t hi n

Puer t o Ri co wi t hout causi ng subst ant i al conf usi on t o the r easonabl e

consumer . " I d at 411. 7

The cour t t hen t ur ned t o "def i n[ i ng] t he l i mi t s wi t hi n whi ch

each mar k may be used. " I d. The cour t concl uded t hat HMI was

" f r ozen" i nt o i t s l ocat i on at t he t i me t hat Dor pan' s t r ademar k was

r egi st er ed. Because at t hat t i me HMI oper ated onl y i n Ponce and

had no pl ans t o expand, t he cour t concl uded t hat HMI coul d cont i nue

t o use t he Mel i mark, but onl y wi t hi n Ponce. Dorpan was l i kewi se

bar r ed f r omusi ng t he Mel i mar k i n Ponce, but was f r ee to use t he

mar k t hr oughout t he r est of Puer t o Ri co and t he Uni t ed St at es. I d.

HMI appeal s, ar gui ng t hat t he di st r i ct cour t er r ed i n

concl udi ng t hat no r easonabl e j ur y coul d concl ude that t he pr esence

of t wo hot el s usi ng t he Mel i mark i n Puer t o Ri co cr eat ed a

l i kel i hood of consumer conf usi on. I n par t i cul ar , HMI ar gues t hat

t he di st r i ct cour t was l ed ast r ay when i t i ncor r ect l y t r eat ed HMI

as t he j uni or user of t he Mel i mar k r at her t han t he seni or user .

HMI al so ar gues t hat t hi s mi st ake l ed t he cour t t o consi der onl y

7 Tr ademark i nf r i ngement sui t s of t en i nvol ve a mot i on f or a

pr el i mi nar y i nj uncti on. I n t hat post ur e, i t i s appr opr i at e f or t hedi st r i ct cour t t o engage i n f act f i ndi ng based on evi dence pr esent edat t he pr el i mi nar y i nj unct i on hear i ng. We do not have such asi t uat i on her e. As we di scuss, i nf r a, t hi s case was bef or e t hedi st r i ct cour t on a mot i on f or summary j udgment , and t he rel evanti nqui r y was whet her t her e was a genui ne i ssue of mater i al f actr egar di ng t he l i kel i hood of conf usi on.

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evi dence of " f or ward conf usi on, " and t o over l ook the compel l i ng

evi dence submi t t ed of "r ever se conf usi on. " See Par t I I . C, i nf r a.

Accor di ng t o HMI , t hese er r or s caused t he di st r i ct cour t

i ncor r ect l y t o i nf er f r omt he evi dence t hat HMI was not ent i t l ed t o

excl usi ve use of t he Mel i mark t hr oughout Puer t o Ri co.

II.

I n r esol vi ng t hi s appeal , we r evi ew t he di st r i ct cour t ' s gr ant

of summary j udgment de novo, dr awi ng al l r easonabl e f act ual

i nf er ences i n t he l i ght most f avor abl e t o t he non- movi ng par t y,

HMI . Col t Def . LLC v. Bushmast er Fi r ear ms, I nc. , 486 F. 3d 701, 705

( 1st Ci r . 2007) .

Bef ore we begi n our anal ysi s of t hi s case, we must pr ovi de a

br i ef over vi ew of t he r el evant l aw on t r ademar k i nf r i ngement . We

t hen consi der t he cont our s of t he t r ademar k r i ght s hel d by each

par t y - Dor pan' s r i ght s under f eder al l aw and HMI ' s r i ght s under

Commonweal t h l aw. Fi nal l y, we eval uat e t he di st r i ct cour t ' s

l i kel i hood of conf usi on anal ysi s.

A. The Relevant Law of Trademark Protection

A " ' t r ademark' i ncl udes any word, name, symbol , or devi ce

. . . used by a per son . . . t o i dent i f y and di st i ngui sh hi s or her

goods . . . f r om t hose manuf act ur ed or sol d by ot her s and t o

i ndi cat e t he sour ce of t he goods. " 15 U. S. C. 1127. 8 A t r ademar k

8 I n t hi s opi ni on, we use t he t er ms "t r ademark" and "mark" t oi ncl ude bot h t r ademarks and ser vi ce marks. "Trademarks ser ve t oi dent i f y and di st i ngui sh goods; ser vi ce mar ks per f or m t he same

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pr ot ect s t he r i ght t o di st i ngui sh t he hol der ' s goods or ser vi ces

f r om ot her goods or ser vi ces t hat mi ght be conf used wi t h t he

hol der ' s. See I . P. Lund Tr adi ng ApS v. Kohl er Co. , 163 F. 3d 27, 35

( 1st Ci r . 1998) ( not i ng t hat "[ a] pr i mar y pur pose of . . .

t r ademar k pr ot ect i on i s t o pr ot ect t hat whi ch i dent i f i es a

pr oduct ' s sour ce" ) . Pr event i on of conf usi on i s t hus t he t ouchst one

of t r ademar k pr ot ect i on. Wher e t her e i s no l i kel i hood of conf usi on

by t he al l eged i nf r i nger " t her e i s no i mpai r ment of t he i nt er est

t hat t he t r ademar k st at ut e pr ot ect s. " Li bman Co. v. Vi ni ng I ndus. ,

I nc. , 69 F. 3d 1360, 1361 ( 7t h Ci r . 1995) .

The r i ght t o use a mar k i n commer ce may ar i se under ei t her

f ederal l aw or st at e common l aw. 9 Gen. Heal t hcar e Lt d. v. Qashat ,

364 F. 3d 332, 335 ( 1st Ci r . 2004) . I n t he ni net eent h and ear l y

t went i et h cent ur i es, t r ademar k l aw was gover ned pr i mar i l y by st at e

common l aw. See Thr i f t y Rent - a- Car Sys. , I nc. v. Thr i f t Car s,

I nc. , 831 F. 2d 1177, 1180 ( 1st Ci r . 1987) . I n an at t empt t o

f unct i on f or ser vi ces. " Bost . Duck Tour s, LP v. Super Duck Tour s,LLC, 531 F. 3d 1, 12 n. 8 ( 1st Ci r . 2008) ; see al so 15 U. S. C. 1127.I n t he i nf r i ngement cont ext , t he anal ysi s i s i dent i cal f or bot ht ypes of mar ks and t he t erms may t hus be used i nterchangeabl y. SeeTana v. Dant anna' s, 611 F. 3d 767, 772 n. 3 ( 11t h Ci r . 2010) ;see al so St ar Fi n. Ser vs. , I nc. v. AASTAR Mor t g. Cor p. , 89 F. 3d 5,9 ( 1st Ci r . 1996) ( not i ng t hat t he same t est appl i es f ori nf r i ngement i n both t he t r ademark and ser vi ce mark cont ext s) .

9 Unl i ke t he r el at ed f i el ds of pat ent and copyr i ght l aw, t heConst i t ut i on does not gr ant Congr ess t he expr ess aut hor i t y t oest abl i sh l aws gover ni ng t r ademar ks. See U. S. Const . ar t . I , 8.Thus t o r egul at e t r ademar ks, Congr ess must r el y on i t s power t or egul ate i nt er st ate and f orei gn commer ce. See Bos. Duck Tour s, 531F. 3d at 11 n. 7.

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pr ovi de uni f ormi t y i n an age wher e i nt er st ate commer ce was r api dl y

becomi ng t he nor m, Congress passed t he Lanham Act i n 1946, whi ch

cr eat ed a f eder al st at ut or y f r amewor k t o pr ot ect t r ademar ks

t hr oughout t he Uni t ed St ates. See 15 U. S. C. 1051- 1129. Under

t he Act , user s of t r ademarks may appl y to r egi st er t hose marks wi t h

t he USPTO. See i d. 1051. Such f eder al r egi st r at i on "serves as

const r uct i ve not i ce t o t he publ i c of t he r egi st r ant ' s owner shi p of

t he mar k. " I n r e I nt ' l Fl avor s & Fragr ances I nc. , 183 F. 3d 1361,

1367 ( Fed. Ci r . 1999) ; see al so Peaches Ent m' t Cor p. v. Ent m' t

Reper t oi r e Assocs. , I nc. , 62 F. 3d 690, 692 ( 5t h Ci r . 1995) ( "The

basi c scheme t hat cr eat es r i ght s under t he LanhamAct i s a nat i onal

r egi st r at i on syst em. ") .

The Lanham Act di d not suppl ant t he st at e common l aw of

t r ademar ks, however . Cf . I n r e Spi r i t s I nt ' l , N. V. , 563 F. 3d 1347,

1354 ( Fed. Ci r . 2009) ( not i ng t hat " [ t ] he Lanham Act was desi gned

t o codi f y, not change, t he common l aw i n t hi s ar ea" ) . Trademark

user s may st i l l gai n st at e l aw r i ght s t o use a t r ademar k ei t her

t hr ough r egi st r at i on wi t h a st at e gover nment or t hr ough use i n t hat

st at e. I n f act , Sect i on 15 of t he Lanham Act gr ant s f eder al l y

r egi st er ed mar ks t he r i ght t o excl usi ve use of t he mark onl y

i nsof ar as t hey do not conf l i ct wi t h any pr e- exi st i ng r i ght s

acqui r ed under st ate l aw. See 15 U. S. C. 1065.

B. The Trademark Rights Held by the Parties

The cr ux of t he di sput e i n t hi s case i s t hat bot h par t i es

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cl ai m t o hol d t he excl usi ve r i ght t o use t he Mel i mar k i n Puer t o

Ri co. Dor pan cl ai ms t hat i t has t he excl usi ve r i ght t o use t he

Mel i mar k i n Puer t o Ri co under f eder al l aw. HMI cl ai ms t hat i t

has t he excl usi ve r i ght t o use t he Mel i mar k i n Puer t o Ri co under

Puer t o Ri co l aw. We di scuss t he cont our s of t he r i ght s hel d by

each par t y i n t ur n.

1. Dorpan's Rights Under the Lanham Act

Dorpan argues t hat HMI can have no cl ai m t o excl usi ve use of

t he Mel i mar k i n Puer t o Ri co because Dor pan hol ds t he f ederal

r egi st r at i on f or t he Mel i mar k and t hat r egi st r at i on has become

"i ncont est i bl e" wi t hi n t he meani ng of t he Lanham Act .

I ncont est i bi l i t y i s a stat us cr eat ed by Sect i on 15 of t he Lanham

Act , whi ch pr ovi des t hat once a mark has been regi st er ed and i n

cont i nuous use f or f i ve consecut i ve year s wi t hout an adver se rul i ng

agai nst t he hol der , t he r egi st r ant may f i l e an af f i davi t of

i nconst est i bi l i t y wi t h t he USPTO. See 15 U. S. C. 1065; see al so

Bor i nquen Bi scui t Cor p. v. M. V. Tr adi ng Cor p. 443 F. 3d 112, 117 n. 3

( 1st Ci r . 2006) .

Dor pan i s cor r ect t hat i ncont est i bi l i t y cr eat es a pr esumpt i on

t hat t he hol der of t he mar k i s ent i t l ed t o excl usi ve use of t he

mar k t hr oughout t he Uni t ed St at es. See Thr i f t y Rent - A- Car Sys. ,

831 F. 2d at 1180 ( ci t i ng Gi ant Foods, I nc. v. Nat i on' s Foodser vi ce,

I nc. , 710 F. 2d 1565, 1568 ( Fed. Ci r . 1983) ) ; see al so 15 U. S. C.

1065. I ndeed, a pl ai nt i f f who hol ds an i ncont est i bl e r egi st er ed

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mar k i s gener al l y ent i t l ed t o a pr el i mi nar y i nj unct i on enj oi ni ng an

al l egedl y i nf r i ngi ng par t y. See Pyr odyne Cor p. v. Pyr ot r oni cs

Cor p. , 847 F. 2d 1398, 1402 ( 9t h Ci r . 1988) ( ci t ed i n Wi l l i ams v.

J ones, 11 F. 3d 247, 256 n. 13 ( 1st Ci r . 1993) ) .

I n t hi s case, however , Dor pan' s r el i ance on t he undi sput ed

i ncont est i bi l i t y of i t s mar ks i s mi spl aced. HMI does not seek t o

cancel , cont est , or ot her wi se chal l enge Dor pan' s r egi st r at i on.

Rat her , HMI cl ai ms t hat , as t he undi sput ed seni or user i n Puer t o

Ri co, t he r i ght s gr ant ed t o Dor pan under f eder al l aw ar e l i mi t ed by

t he r i ght s HMI acqui r ed under Puer t o Ri co l aw bef ore Dorpan' s mark

became i ncont est i bl e.

HMI ' s ar gument i s of t en cal l ed a "Sect i on 15 def ense. " At t he

same t i me that Sect i on 15 of t he Lanham Act cr eat es

i ncont est i bi l i t y, i t expl i ci t l y l i mi t s the i ncont est i bl e r i ght of

a f eder al t r ademark hol der

t o t he extent , i f any, t o whi ch t he use of a mar kr egi st er ed on t he pr i nci pal r egi st er i nf r i nges a val i dr i ght acqui r ed under t he l aw of any St at e or Ter r i t or y byuse of a mark or t r ade name cont i nui ng f r oma date pr i ort o t he dat e of r egi st r at i on under t hi s chapt er of suchr egi st er ed mark.

15 U. S. C. 1065; see al so Qashat , 364 F. 3d at 334 n. 4 ( not i ng t hat

t he i ncont est i bi l i t y of a f eder al l y r egi st er ed mar k i s l i mi t ed i n

"si t uat i ons i n whi ch a val i d common l aw owner has est abl i shed adat e of use pr i or t o t hat of t he r egi st er ed mar k") . I n ot her

wor ds, "[ t ] he t er r i t or i al r i ght s of a hol der of a f eder al l y

r egi st er ed t r ademark are al ways subj ect t o any super i or common l aw

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r i ght s acqui r ed by anot her par t y t hr ough act ual use pr i or t o t he

r egi st r ant ' s const r uct i ve use. " Al l ar d Ent er . , I nc. v. Advanced

Pr ogr ammi ng Res. , I nc. , 249 F. 3d 564, 572 ( 6t h Ci r . 2001) .

Because t he par t i es agr ee t hat HMI i s t he seni or user of t he

Mel i mark i n Puer t o Ri co, t he r i ght s conveyed t o Dorpan under t he

Lanham Act ar e l i mi t ed by the ext ent of any r i ght s HMI acqui r ed

under Puer t o Ri co l aw bef or e Dor pan' s f eder al r egi st r at i on became

i ncont est i bl e. Hence, bef ore we can det er mi ne t he cont our s of

Dor pan' s r i ght s under f eder al l aw, we must det er mi ne t he r i ght s

hel d by HMI under Puer t o Ri co l aw. See Advance St ores Co. v.

Ref i ni shi ng Speci al i t i es, I nc. , 188 F. 3d 408, 411- 12 ( 6t h Ci r .

1999) ( ext ent of pr e- exi st i ng common l aw t r ademark i s det ermi ned by

r ef er ence t o stat e l aw) . 10

2. HMI's Rights Under Puerto Rico Law

HMI has never r egi st er ed i t s mar k wi t h the Puer t o Ri co

10 Ther e i s some aut hor i t y suggest i ng t hat t he extent t o whi cha pr e- exi st i ng unr egi st er ed st at e l aw t r ademar k l i mi t s r i ght sconf er r ed under t he Lanham Act i s a quest i on t hat shoul d bedet er mi ned by f eder al common l aw r ather t han st ate l aw. See, e. g. ,Natur al Footwear Lt d. v. Har t , Schaf f ner & Marx, 760 F. 2d 1383,1397- 1400 ( 3d Ci r . 1985) ( det er mi ni ng t he r i ght s of an unr egi st er edseni or user agai nst r egi st er ed j uni or user wi t hout r ef er ence t ost at e l aw) . We t hi nk t hat t hi s appr oach cannot be r econci l ed wi t ht he pl ai n l anguage of Sect i on 15 of t he Lanham Act , whi ch l i mi t s

t he r i ght s conf er r ed on a f eder al r egi st r ant i nsof ar as t her egi st r ant ' s use i nt er f er es wi t h "a val i d r i ght acqui r ed under t hel aw of any St at e or Ter r i t or y. " 15 U. S. C. 1065 ( emphasi s added) .At t he same t i me, t he common l aw of most j ur i sdi ct i ons, i ncl udi ngPuer t o Ri co, seems t o be essent i al l y i dent i cal t o f eder al commonl aw. Thus, i n pr act i ce, t he choi ce of l aw i n t hi s cont ext seems t obe a di st i nct i on wi t hout a di f f er ence.

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Depar t ment of St at e. Li ke most U. S. j ur i sdi ct i ons, however , Puer t o

Ri co l aw pr ot ect s bot h r egi st er ed and unr egi st er ed mar ks. See P. R.

Laws Ann. t i t . 10, 223a ( st at i ng t hat " [ T] he r i ght t o use a mar k"

can be acqui r ed t hr ough ei t her "use of t he mark i n commerce" or

r egi st r at i on) ; Ar r i bas & Assocs. v. Am. Home Pr ods. Cor p. , P. R.

Of f i c. Trans. , 2005 WL 2290286 ( P. R. 2005) ( "Our Marks Act [ ]

combi nes t he r i ght s bor n of use wi t h t he r i ght s t hat ar i se f r omt he

r egi st r at i on. " ( ci t at i on omi t t ed) ( i nt er nal quot at i on mar ks

omi t t ed) ) . The seni or unr egi st er ed user of a mar k i n Puer t o Ri co

does not aut omat i cal l y acqui r e a Commonweal t h- wi de r i ght t o use t he

mar k. Rat her , t he seni or unr egi st er ed user i s ent i t l ed t o

excl usi ve use of t he mark i n t he area wher e "he cur r ent l y do[es]

busi ness. " Posadas de P. R. Assocs. v. Sands Hot el & Casi no, I nc. ,

P. R. Of f i c. Tr ans. , 1992 WL 754912 ( P. R. 1992) ; see al so Col gat e-

Pal mol i ve Co. v. Mi st ol i n de P. R. , I nc. , 17 P. R. Of f i c. Tr ans 376,

391- 92 ( P. R. 1986) ( "The t er r i t or i al ext ent of t r ademar k r i ght s i s

coext ensi ve wi t h t he t er r i t or i al ext ent of i t s use. ") .

Thus, i n t hi s case, HMI i s ent i t l ed, under Commonweal t h l aw,

t o the excl usi ve use of t he Mel i mark i n t he area where HMI "does

busi ness" usi ng t he Mel i mark. 11 I n t hi s cont ext , t he geogr aphi c

11 Because Dor pan' s f eder al r egi st r at i on of t he Mel i mar k i nt he l at e 1990s " put s al l woul d- be user s of t he mar k ( or aconf usi ngl y si mi l ar mar k) on const r uct i ve not i ce of t he mar k, "Thr i f t y Rent - a- Car Sys. , I nc. v. Thr i f t Car s, I nc. , 831 F. 2d 1177,1180 ( 1st Ci r . 1987) ( ci t i ng 15 U. S. C. 1072) , HMI ' s t r adet er r i t or y i s t echni cal l y f r ozen at t he ext ent i t had r eached at t het i me of Dor pan' s regi st r at i on. Nei t her par t y, however , ar gues that

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ar ea i n whi ch an unr egi st er ed t r ademar k i s " i n use" i s def i ned as

t he ar ea i n whi ch t he use of si mi l ar mar k woul d cr eat e a l i kel i hood

of conf usi on. See 5 J . McCar t hy, McCar t hy on Trademarks & Unf ai r

Compet i t i on 26: 27 ( 4t h ed. 2011) ( "The t ouchst one of t he

det er mi nat i on of a t r ade ar ea i s l i kel i hood of conf usi on. ")

( i nt er nal quot at i on mar ks omi t t ed) ; Wi l l i amJ ay Gr oss, Comment , The

Ter r i t or i al Scope of Tr ademar k Ri ght s, 44 U. Mi ami L. Rev. 1075,

1078 ( 1990) ( "Th[ e] i nqui r y i nt o t he t er r i t or i al scope of t r ademar k

r i ght s i s pr i mar i l y a det er mi nat i on of t he geogr aphi cal ar ea i n

whi ch t her e exi st s a l i kel i hood of conf usi on bet ween t he t r ademar ks

of t he l egi t i mat e user and t he i nf r i ngi ng user . " ( ci t at i on omi t t ed)

( quot at i on mar ks omi t t ed) ) . Thus, i n t hi s case, t he i nqui r y i nt o

t he geogr aphi c scope of HMI ' s pr e- exi st i ng common l aw t r ademark

r i ght s and t he l i kel i hood of conf usi on anal ysi s ar e one and t he

same. I n ot her wor ds, i f Dor pan' s use of a si mi l ar mar k i n Coco

Beach cr eat es a l i kel i hood of conf usi on wi t h HMI ' s mar k, t hen HMI ' s

t r ade ar ea ext ends at l east as f ar as Coco Beach and Dorpan' s use

i nf r i nges on t hat r i ght . Li kewi se, i f Dor pan' s mar k does not

cr eat e a l i kel i hood of conf usi on wi t h HMI ' s, t hen HMI ' s t r ade ar ea

i s consi der abl y smal l er and Dor pan i s ent i t l ed t o a decl ar at or y

j udgment of non- i nf r i ngement . See 5 McCar t hy, 26: 27 ( "A t r ade

area i s t he area i n whi ch peopl e have associ ated a ser vi ce mark

HMI has changed i t s t r ade area si nce Dorpan r egi st er ed t he Mel i mar ks, so i n t hi s case t hi s pr i nci pl e i s i r r el evant .

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wi t h a par t i cul ar busi ness such t hat t hey woul d l i kel y be conf used

by someone el se' s unaut hor i zed use of t he mark. " ( i nt er nal

quot at i on mar ks omi t t ed) ) .

Consequent l y, bot h t he extent of HMI ' s r i ght s under Puer t o

Ri co l aw and Dorpan' s r i ght s under f eder al l aw t ur n on t he same

quest i on: Does Dorpan' s use of t he Mel i mark i n Puer t o Ri co

cr eat e an i mper mi ssi bl e l i kel i hood of consumer conf usi on?

C. Likelihood of Confusion and the Pignons Factors

Li kel i hood of conf usi on i s a quest i on of f act . I n t hi s appeal

f r om a gr ant of summar y j udgment , we r evi ew de novo whet her t he

r ecor d pr esent s a genui ne i ssue of mat er i al f act as t o l i kel i hood

of conf usi on. See Spor t s Aut h. , I nc. v. Pr i me Hospi t al i t y Cor p. ,

89 F. 3d 955, 960 ( 2d Ci r . 1996) ( not i ng t hat i n t he i nf r i ngement

cont ext summary j udgment i s appr opr i at e onl y where no r easonabl e

t r i er of f act coul d concl ude t hat conf usi on i s l i kel y) .

Not al l concei vabl e f or ms of conf usi on ar e r el evant t o

t r ademar k i nf r i ngement . "Conf usi on i s r el evant when i t exi st s i n

t he mi nds of per sons i n a posi t i on t o i nf l uence t he pur chasi ng

deci si on or per sons whose conf usi on pr esent s a si gni f i cant r i sk t o

t he sal es, goodwi l l , or r eput at i on of t he t r ademar k owner . " Beacon

Mut . I ns. Co. v. OneBeacon I ns. Gr p. , 376 F. 3d 8, 10 ( 1st Ci r .

2004) ; see al so Lang v. Ret . Li vi ng Publ ' g Co. , 949 F. 2d 576, 583

( 2d Ci r . 1991) ( not i ng t hat conf usi on i n t he r el evant sense means

conf usi on t hat "coul d i nf l i ct commer ci al i nj ur y i n t he f or m of

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ei t her a di ver si on of sal es, damage t o goodwi l l , or l oss of cont r ol

over r eput at i on" ) . Tr ademar k conf usi on i s occasi onal l y di scussed

i n t er ms of t wo di f f er ent " t ypes" of conf usi on. See DeCost a v.

Vi acom I nt ' l , I nc. , 981 F. 2d 602, 607- 08 ( 1st Ci r . 1992) . The

f i r st , and most common, i s " or di nar y" or " f or war d" conf usi on, whi ch

occur s, f or exampl e, when a weaker j uni or user at t empt s t o

i mper mi ssi bl y boot st r ap i t s pr oduct by f r ee- r i di ng on t he seni or

user ' s goodwi l l and br and l oyal t y. I n a f or war d conf usi on

si t uat i on, r easonabl e consumer s may mi st akenl y pur chase t he j uni or

user ' s pr oduct bel i evi ng t hey have pur chased t he seni or user ' s.

See i d. at 607- 08; see al so At t r ezzi , 436 F. 3d at 38 ( not i ng t hat

"or di nar y" or " f or war d" conf usi on occur s wher e " t he cl ai mant

asser t s t hat t he i nf r i nger i s di ver t i ng t he cl ai mant ' s cust omer s

and f r ee- r i di ng on t he cl ai mant ' s r eput at i on and goodwi l l ") .

The second i s " r everse conf usi on, " whi ch occur s, f or exampl e,

when a seni or unr egi st ered user i s overwhel med by a mor e

commer ci al l y power f ul j uni or user , causi ng t he seni or user t o l ose

cont r ol over i t s br and and i t s goodwi l l . I d. at 38- 39. I n a

r everse conf usi on scenar i o, a reasonabl e consumer mi ght assume that

t he j uni or user and t he seni or user ' s pr oduct shar ed the same

sour ce, t her eby i mput i ng any negat i ve exper i ences wi t h the j uni or

user ' s pr oduct or ser vi ces t o t he seni or user . See DeCost a, 981

F. 2d at 608; see al so Vi si bl e Sys. Cor p. v. Uni sys Cor p. , 551 F. 3d

65, 74 ( 1st Ci r . 2008) ( "I n a r ever se conf usi on case, t he f ocus i s

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19/31

We r evi ew t he evi dence per t i nent t o t he Pi gnons f actors de

novo, consi der i ng t he evi dence of f er ed t o suppor t each f act or

i ndi vi dual l y bef or e consi der i ng whet her , t aki ng t he f act or s

t oget her , no r easonabl e f act f i nder coul d concl ude t hat Dor pan' s use

of t he Mel i mar k i n Coco Beach cr eat es a l i kel i hood of conf usi on.

See Ast r a Phar m. Prods. , I nc. v. Beckman I nst r ument s, I nc. , 718

F. 2d 1201, 1205 ( 1st Ci r . 1983) ( "No one f act or i s necessar i l y

det er mi nat i ve, but each must be consi der ed. " ) . Gi ven t hi s de novo

st andar d of r evi ew, we do our own assessment of t he summar y

j udgment r ecor d bef or e t ur ni ng t o t he di st r i ct cour t ' s assessment

of t hat r ecor d.

Because t he l i kel i hood of conf usi on anal ysi s i s a par t i cul ar l y

f act - i nt ensi ve one, r esol vi ng t hi s i ssue on summar y j udgment i s

di sf avor ed. See Bos. At hl et i c Ass' n v. Sul l i van, 867 F. 2d 22, 24

( 1st Ci r . 1989) ( not i ng t hat "' i nf r i ngement and unf ai r compet i t i on

cases of t en pr esent f act ual i ssues t hat r ender summar y j udgment

P. R. Assocs. I nc. v. Sands Hot el & Casi no, I nc. , P. R. Of f i c.Tr ans. , 1992 WL 754912 ( P. R. 1992) :

[ T] her e i s no speci f i c r ul e f or det er mi ni ng t heexi st ence of a l i kel i hood of conf usi on bet ween twopr oduct s or ser vi ces. Thi s i s a r el at i ve concept ,deter mi ned accordi ng t o t he ci r cumst ances of each

par t i cul ar case, based upon the bal anci ng of casel awf act or s or t est s, some of whi ch ar e: t he si mi l ar i t y oft he t wo mar ks; si mi l ar i t y of t he goods or ser vi ces;st r engt h or di st i nct i veness of t he mar k; t he i nt ent oft he j uni or user i n adopt i ng t he ser vi ce mar k; andevi dence of act ual conf usi on.

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i nappr opr i at e' " ( quot i ng Kazmai er v. Woot en, 761 F. 2d 46, 48- 49

( 1st Ci r . 1985) ) ; see al so Rearden LLC v. Rearden Commer ce, I nc. ,

683 F. 3d 1190, 1219 ( 9t h Ci r . 2012) ( " [ D] i st r i ct cour t s shoul d

gr ant summary j udgment mot i ons r egardi ng t he l i kel i hood of

conf usi on spar i ngl y, as car ef ul assessment of t he per t i nent f act or s

t hat go i nt o det er mi ni ng l i kel i hood of conf usi on usual l y r equi r es

a f ul l r ecor d. " ( ci t at i on omi t t ed) ( i nt er nal quot at i on mar ks

omi t t ed) ) ; AHP Subsi di ar y Hol di ng Co. v. St uar t Hal e Co. , 1 F. 3d

611, 616 (7t h Ci r . 1993) ( " [ A] mot i on f or summary j udgment i n

t r ademar k i nf r i ngement cases must be approached wi t h great

caut i on. " ) ; Count r y Fl oor s, I nc. v. P' shi p Composed of Gepner &

For d, 930 F. 2d 1056, 1063 ( 3d Ci r . 1991) ( not i ng t hat i n t he

l i kel i hood of conf usi on cont ext "summary j udgment s ar e t he

except i on" ) . The Pi gnons f act ors ar e meant t o be a gui de, not a

mechani st i c f ormul a. See Wi nshi p Gr een, 103 F. 3d at 201.

1. Similarity of the Marks

The mar ks "Hot el Mel i " and "Gr an Mel i " ar e essent i al l y

i dent i cal f or t r ademark pur poses because bot h mar ks have t he word

"Mel i " as t hei r most sal i ent wor d. See Bos. Duck Tour s, LP v.

Super Duck Tour s, LLC, 531 F. 3d 1, 34 ( 1st Ci r . 2008) ( Di Cl er i co,

J . , concur r i ng) ( " [ I ] f t he most domi nant f eat ur e of bot h mar ks i s

t he same or si mi l ar , t hen t hat si mi l ar i t y may cause conf usi on. " ) ;

Beacon Mut . , 376 F. 3d at 18 ( concl udi ng t hat a reasonabl e

f act f i nder coul d concl ude t hat t he mark "Beacon Mut ual I nsurance

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Company" was subst ant i al l y si mi l ar t o "OneBeacon I nsur ance Gr oup"

because t hey shar ed "Beacon" as t hei r " most sal i ent " word) . No

r easonabl e f act f i nder coul d concl ude ot her wi se.

2. Similarity of Services and Customers

Undi sput ed evi dence i ndi cat es t hat Hot el Mel i and Gr an Mel i

ar e l ar ge, f ul l - ser vi ce hot el s oper at i ng i n Puer t o Ri co. Dor pan

at t empt s t o di st i ngui sh t he ser vi ces of f er ed by Gr an Mel i f r om

t hose of f er ed by Hot el Mel i by emphasi zi ng t hat Gr an Mel i i s a

"beach r esor t " whi l e Hot el Mel i i s a "hi st or i c, ur ban hot el . " The

evi dence Dorpan of f er s t o suppor t t hi s ar gument - f or exampl e,

t hat Hot el Mel i ' s pool i s smal l er t han Gr an Mel i ' s - i s weak.

Each hotel may of f er some auxi l i ary ser vi ces and ameni t i es not

of f er ed by t he ot her , but t her e i s subst ant i al over l ap i n t he cor e

ser vi ces of f er ed by each hot el . Thus, a r easonabl e f act f i nder

woul d be compel l ed t o i nf er f r om t he undi sput ed f act s t hat t he

hot el s of f er subst ant i al l y si mi l ar ser vi ces t o subst ant i al l y

si mi l ar cust omer s - over ni ght , upscal e l odgi ngs t o t our i st s and

shor t - t er m vi si t or s t o Puer t o Ri co.

3. Similarity of Advertising and Channels of Trade

The t wo hot el s adver t i se and sol i ci t cust omer s i n

subst ant i al l y si mi l ar manner s. Bot h par t i es at t end t r ade shows,

devel op r el at i onshi ps wi t h t r avel agent s, adver t i se di r ect l y t o

consumer s, and accept r eservat i ons t hr ough I nt er net booki ng si t es

l i ke Or bi t z. Because Dor pan has not di r ect ed us t o any f act s i n

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t he recor d suggest i ng the cont r ar y, we concl ude t hat a r easonabl e

f act f i nder woul d be compel l ed t o concl ude t hat t he hot el s use

si mi l ar adver t i si ng met hods and conduct busi ness t hr ough si mi l ar

channel s of t r ade.

4. Actual Confusion

HMI argues t hat Dorpan' s use of t he Gr an Mel i mar k i n Puer t o

Ri co has l ed t o act ual conf usi on. I n suppor t of t hi s ar gument , HMI

poi nt s t o sever al pi eces of evi dence i n t he r ecor d. 14 Fi r s t , HMI ' s

manager Ral Al bor s Mel i t est i f i ed i n hi s deposi t i on t hat a

whol esal er at a t r ade show had not i ced t hat he r epr esent ed Hotel

Mel i and appr oached hi m t o di scuss t he beach at Gr an Mel i . 15

14 Dor pan makes hearsay obj ect i ons t o much of t he evi dence HMIci t es i n suppor t of i t s ar gument . Dorpan f ai l ed t o make t heseobj ect i ons bef or e t he di st r i ct cour t , however . They ar e t huswai ved. See Uni t ed St at es v. DeSi mone, 488 F. 3d 561, 580 n. 11 ( 1stCi r . 2007) ( not i ng t hat f ai l i ng t o r ai se a hear say obj ect i on bef or et he di st r i ct cour t const i t ut es wai ver ) . Mor eover , much ( i f not

al l ) of t he obj ect ed- t o evi dence was not admi t t ed f or t he t r ut h oft he mat t er asser t ed, and accor di ngl y i s not hear say. See Fed. R.Evi d. 801( c) .

15 Ther e i s a di sput e bet ween t he par t i es as t o whet her t hi spor t i on of Al bor s Mel i ' s t est i mony was pr oper l y par t of t he r ecor dbef or e t he di st r i ct cour t . At t hi s remove, t he pr eci se t r avel oft hi s evi dence i s di f f i cul t t o di scer n. Thi s par t i cul ar por t i on ofAl bor s Mel i ' s deposi t i on was or i gi nal l y submi t t ed as an at t achmentt o HMI ' s Suppl ement al Mot i on i n Opposi t i on t o Gr an Mel i ' s Mot i onf or Summar y J udgment , whi ch t he or i gi nal di st r i ct cour t j udgest r uck f r om t he r ecor d wi t hout expl anat i on. Af t er t he case was

t r ansf er r ed t o a new di st r i ct j udge, t hat j udge di r ect ed t hepar t i es t o "submi t i n har d copy t hei r r espect i ve di sposi t i vemot i ons" t o hi m. HMI cl ai ms t hat i t submi t t ed t he deposi t i onevi dence and i t was accept ed. I ndeed, f r om t he di st r i ct cour t ' sdi scussi on of t he evi dence i n i t s opi ni on, i t appear s t hat t hedi st r i ct cour t deemed t he evi dence pr oper l y submi t t ed.Speci f i cal l y, t he di st r i ct cour t not ed t hat HMI "put f or t h some

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Second, Al bor s Mel i t est i f i ed t hat guest s had occasi onal l y thought

t hat Hot el Mel i was associ at ed wi t h Gr an Mel i . Thi r d, Al bor s

Mel i t est i f i ed t hat Domi no' s Pi zza mi st akenl y at t empt ed t o del i ver

a pi zza t o HMI t hat was i nt ended f or Gr an Mel i . Four t h, HMI

i nt r oduced a not i ce of cl ai ml et t er f r omt he Faj ar do of f i ce of t he

Puer t o Ri co Depar t ment of Labor not i f yi ng HMI t hat a l ai d- of f

empl oyee had sought benef i t s, and HMI ' s subsequent r epl y st at i ng

t hat t he empl oyee had never been empl oyed at Hot el Mel i . HMI

suggest s t hat because t he l et t er came f r om t he Faj ar do of f i ce,

whi ch i s cl ose t o Gr an Mel i , r at her t han t he Ponce of f i ce, i t was

pr obabl y i nt ended f or Gr an Mel i .

Though HMI ' s evi dence suppor t i ng an i nf er ence of act ual

conf usi on i s not over whel mi ng, evi dence of act ual conf usi on i n t hi s

cont ext does not need t o be over whel mi ng to gi ve r i se t o a

r easonabl e i nf er ence of conf usi on. I ndeed, "even a f ew i nci dent s"

of act ual conf usi on ar e "hi ghl y pr obat i ve of t he l i kel i hood of

conf usi on. " Kos Phar ms. , I nc. v. Andr x Cor p. , 369 F. 3d 700, 720

( 3d Ci r . 2004) ( ci t at i on omi t t ed) ( i nt er nal quot at i on mar ks

omi t t ed) ; see al so Spor t s Aut h. , 89 F. 3d at 964 ( concl udi ng t hat on

evi dence of conf usi on by vendor s. " Ot her t han t hi s por t i on of

Al bor s Mel i ' s t est i mony, t her e seems t o be no evi dence i n t her ecord of conf usi on by vendors. I n any event , Dorpan di d notobj ect t o t he r e- submi ssi on bel ow. Any obj ect i on i t may have hadi s wai ved. See Di Marco- Zappa v. Cabani l l as, 238 F. 3d 25, 34 ( 1stCi r . 2001) ( "Thi s Cour t has r epeat edl y war ned l i t i gant s t hat' ar gument s not made i ni t i al l y to t he di st r i ct cour t cannot ber ai sed on appeal . ' " ( ci t at i on omi t t ed) ) .

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t he act ual conf usi on pr ong "evi dence of mi sdi r ect ed phone cal l s

bet ween [ pl ai nt i f f ' s] st or es and [ def endant ' s] r est aur ant s, and

especi al l y t he evi dence that cust omer s have bel i eved t her e t o be a

connect i on bet ween t he r est aur ant s and st or es, i s suf f i ci ent t o

cr eat e a genui ne i ssue of f act on t hi s f act or ") . As such, we t hi nk

a r easonabl e j ur y coul d concl ude t hat HMI has demonst r ated at l east

some l evel of act ual conf usi on.

5. Dorpan's Intent

There i s no evi dence f r omwhi ch a r easonabl e f act f i nder coul d

i nf er t hat Dorpan deci ded t o use the mark Mel i i n order t o cause

mar ket conf usi on or wi t h an i nt ent t o expl oi t Hot el Mel i ' s

r eput at i on and goodwi l l .

6. Strength of the Marks

I n eval uat i ng t he st r engt h of a mar k, we consi der " i t s

t endency t o i dent i f y t he goods sol d under t he mark as emanat i ng

f r om a par t i cul ar [ ] sour ce. " El i Li l l y & Co. v. Nat ur al Answer s,

I nc. , 233 F. 3d 456, 464 ( 7t h Ci r . 2000) ( ci t at i on omi t t ed)

( i nt er nal quot at i on mar ks omi t t ed) . "[ W] e t ypi cal l y eval uat e a

mar k' s st r engt h pr i mar i l y on t he basi s of i t s commer ci al st r engt h,

anal yzi ng such f actors as ' t he l engt h of t i me a mark has been used

and t he r el at i ve r enown i n i t s f i el d; t he st r engt h of t he mar k i n

pl ai nt i f f ' s f i el d of busi ness; and t he pl ai nt i f f ' s act i on i n

pr omot i ng t he mark. ' " Bos. Duck Tour s, 531 F. 3d at 16 n. 14

( quot i ng Equi ne Techs. , I nc. v. Equi t echnol ogy, I nc. , 68 F. 3d 542,

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547 ( 1st Ci r . 1995) ) .

Her e, t he par t i es have devel oped r el at i vel y l i t t l e evi dence

f r om whi ch a f act f i nder coul d dr aw i nf er ences about t he r el at i ve

st r engt h of t he mar ks and t hei r t endency t o cr eat e conf usi on. I t

i s undi sput ed t hat HMI has oper at ed Hot el Mel i i n t he cent er of

t he second l ar gest ci t y i n Puer t o Ri co f or mor e t han one hundr ed

year s. I ndeed, t he Hot el Mel i name was suf f i ci ent l y wel l - known

even a cent ur y ago t o at t r act f amous guest s l i ke Pr esi dent

Roosevel t . Li kewi se, nei t her par t y di sput es t hat Dor pan and t he

Sol Mel i f ami l y of hot el s has si gni f i cant i nt er nat i onal br and

r ecogni t i on and f ar gr eat er f i nanci al r esour ces t han HMI .

I n our vi ew, t her e ar e genui ne i ssues of mat er i al f act on t he

r espect i ve st r engt h of t he compet i ng mar ks. That i s, evi dence i n

t he r ecor d suggest s t hat bot h mar ks have cer t ai n st r engt hs, and the

r el evant quest i on at t r i al wi l l be whet her t hei r r el at i ve st r engt hs

cont r i but e t o consumer conf usi on. For exampl e, a r easonabl e j ur y

coul d concl ude t hat Dor pan wi l l be abl e t o use i t s gr eat er

f i nanci al st r engt h t o f l ood t he mar ket wi t h adver t i si ng, t her eby

causi ng HMI t o l ose cont r ol over i t s br and and r eput at i on. At t he

same t i me, a reasonabl e j ur y coul d concl ude that Hot el Mel i was so

st r ongl y associ ated wi t h hi st or i c downt own Ponce t hat consumer s

wer e unl i kel y to associ at e i t wi t h a hot el i n Coco Beach.

7. Balancing the Factors

Wi t h one except i on, t he di st r i ct cour t ' s concl usi ons about t he

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i ndi vi dual Pi gnons f act or s wer e i dent i cal t o our own. Li ke us, t he

di st r i ct cour t concl uded t hat a r easonabl e j ur y woul d be compel l ed

t o concl ude t hat at l east si x Pi gnons f act or s suppor t ed HMI ' s

cl ai ms of conf usi on: 1) t he mar ks wer e si mi l ar ; 2) t he cust omer s

wer e si mi l ar ; 3) t he ser vi ces of f er ed wer e si mi l ar ; 4) t he

adver t i si ng met hods wer e si mi l ar ; 5) t he channel s of t r ade wer e

si mi l ar ; and 6) t her e was at l east some evi dence of act ual

conf usi on. The di st r i ct cour t al so concl uded t hat t her e was no

evi dence f r om whi ch a r easonabl e j ur y coul d f i nd t hat Dor pan had

act ed i n bad f ai t h. The onl y f act or on whi ch t he di st r i ct cour t

r eached a di f f er ent concl usi on t han we do i s t he st r engt h of t he

mar ks. The di st r i ct cour t concl uded t hat a r easonabl e j ur y woul d

be compel l ed t o i nf er t hat HMI ' s mark was onl y st r ong wi t hi n Ponce,

whi l e Dorpan had a st r ong i nt er nat i onal mark.

The cour t t hen of f er ed t hi s di sposi t i ve bal anci ng anal ysi s:

Wi t h t he f act or s spl i t , t he cour t f i nds t hese t womarks can co- exi st wi t hi n Puer t o Ri co wi t hout causi ngsubst ant i al conf usi on t o t he r easonabl e consumer .However , t he cour t must def i ne t he l i mi t s wi t hi n whi cheach mar k may be used. HMI ' s use was f r ozen at t he t i me[ Dor pan] acqui r ed t he t r ademar k on December 30, 1997. Ont hi s dat e, HMI ' s use of t he Mel i mar k i s f r ozen. As oft hi s dat e, HMI oper at ed one hot el i n Ponce, Puer t o Ri co.HMI had no pl ans t o expand i t s busi ness at t hat t i me andhad been oper at i ng i n t hat l ocat i on f or t he pr evi ousei ght y t o one hundr ed year s. These f act s demonst r at e HMI

was i n cont i nuous oper at i on wi t hi n Ponce, l ong bef or e t her egi st r at i on of Gr an Mel i by Dor pan. Ther ef or e, t hecour t f i nds HMI may cont i nue to use t he Mel i name wi t hi nPonce, Puer t o Ri co, but must r ef r ai n f r omusi ng t he Mel i name i n any f ut ur e busi ness vent ur es out si de of Ponce.Conver sel y, [ Dor pan] i s bar r ed f r om ext endi ng i t sser vi ces i nt o Ponce, but may use i t s t r ademarks

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t hr oughout t he r est of t he i sl and and t he U. S.

Dor pan, S. L. , 851 F. Supp. 2d at 411 ( ci t at i ons omi t t ed) .

There ar e a number of er r or s i n t he di st r i ct cour t ' s anal ysi s.

Fi r st , t he di st r i ct cour t gave t oo l i t t l e wei ght t o evi dence of

act ual conf usi on. I n t he past , we have not ed t hat once t he par t y

al l egi ng i nf r i ngement has put f or war d evi dence of act ual conf usi on,

t he al l eged i nf r i nger i s l ef t " f i ght i ng an uphi l l bat t l e i n ar gui ng

t hat no r easonabl e f act f i nder coul d f i nd a subst ant i al l i kel i hood

of conf usi on. Evi dence of act ual conf usi on i s of t en consi der ed t he

most per suasi ve evi dence of l i kel i hood of conf usi on because past

conf usi on i s f r equent l y a st r ong i ndi cat or of f ut ur e conf usi on. "

Beacon Mut . , 376 F. 3d at 18; see al so Count r y Fl oor s, 930 F. 2d at

1064 ( not i ng t hat "act ual conf usi on usual l y i mpl i es a l i kel i hood of

conf usi on") .

Second, even wi t hout evi dence of actual conf usi on, evi dence of

t he subst ant i al si mi l ar i t y bet ween t he mar ks, ser vi ces, cust omer s,

and adver t i si ng mi ght be suf f i ci ent i n i t sel f t o creat e at l east a

r easonabl e i nf er ence of a subst ant i al l i kel i hood of conf usi on

bet ween t he t wo hotel s. Many cour t s have f ound t hat a t r i abl e

i ssue of conf usi on exi st s wher e t wo compani es use marks t hat are

somewhat si mi l ar but not i dent i cal . See, e. g. , AHP Subsi di ar y

Hol di ng Co. , 1 F. 3d at 617 ( f i ndi ng conf usi on was t r i abl e i ssue i n

di sput e between t wo cooki ng spr ays, one cal l ed "PAM" and one cal l ed

"Pan- Li t e") . Ot her s have f ound t hat a l i kel i hood of conf usi on

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exi st s when compani es use i dent i cal mar ks i n di f f er ent i ndust r i es.

See, e. g. , Spor t s Aut h. , 89 F. 3d at 962 ( f i ndi ng l i kel i hood of

conf usi on was a t r i abl e i ssue i n di sput e bet ween a spor t i ng goods

st or e and a r est aur ant t hat bot h used t he mar k "Spor t s Aut hor i t y") .

The si t uat i on i n t hi s case i nvol ves an even gr eat er l i kel i hood of

conf usi on. Two hot el s ar e usi ng a near l y i dent i cal mar k t o sel l

near l y i dent i cal ser vi ces i n a r el at i vel y smal l geogr aphi c ar ea.

Thi r d, t he di st r i ct cour t gave f ar t oo much wei ght t o i t s

concl usi on t hat Dorpan had not acted i n bad f ai t h. We have noted

t hat t he l ack of i nt ent on t he al l eged i nf r i nger ' s par t t o creat e

conf usi on i s not par t i cul ar l y usef ul i n t he ul t i mat e det er mi nat i on

of l i kel i hood of conf usi on and "may not out wei gh ot her f act or s t hat

suggest a l i kel i hood of conf usi on. " I . P. Lund Tr adi ng ApS, 163

F. 3d at 44 ( not i ng t hat "l i t t l e wei ght shoul d be gi ven" t o a

f i ndi ng t hat t he al l eged i nf r i nger had not act ed wi t h bad f ai t h) ;

see al so St ar Fi n. Ser vs. , I nc. v. AASTAR Mor t g. Cor p. , 89 F. 3d 5,

11 ( 1st Ci r . 1996) ( not i ng t hat "[ e] vi dence of bad i nt ent . . .

[ i s] pot ent i al l y pr obat i ve of l i kel i hood of conf usi on . . . [ but ]

' a f i ndi ng of good f ai t h i s no answer i f l i kel i hood of conf usi on i s

ot her wi se est abl i shed' " ( quot i ng Pr esi dent & Tr s. of Col by Col l . v.

Col by Col l . - N. H. , 508 F. 2d 804, 811- 12 ( 1st Ci r . 1975) ) ) .

Four t h, t he di st r i ct cour t ' s emphasi s on t he physi cal l ocal e

of t he mar ks i s l ar gel y besi de t he poi nt . Whi l e t he di st r i ct cour t

i s cor r ect t hat "HMI ' s use of t he Mel i mar k i s f r ozen" at i t s 1997

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ext ent , see supr a not e 11, t he di st r i ct cour t was i ncor r ect t o

equate t he use of t he mar k wi t h t he l ocat i on of t he hot el . The

r el evant i nqui r y her e i s t he ar ea i n whi ch t he mar k i s i n use i n

commer ce. For hot el s, t hat ar ea i s usual l y a much l ar ger ar ea t han

t he ci t y i n whi ch t he hotel oper ates. Unl i ke many compani es, such

as r et ai l out l et s and pr of essi onal ser vi ces, t hat r el y on ser vi ce

marks and have a l ocal cust omer base, hotel s seek t o at t r act

cust omer s physi cal l y di st ant f r om t he poi nt of ser vi ce. See 5

McCar t hy, 26: 30 ( "The t r ade ar ea f or servi ces such as hot el s,

motel s, and r est aur ant s may be ver y l arge si nce pur chaser s ar e

ambul at or y and on t he move. They may car r y t he r eputat i on of t he

mar k t housands of mi l es away f r om t he act ual out l et . " ) . Cust omer s

of upscal e hot el s t ypi cal l y do not l i ve i n t he ar ea wher e t he hot el

i s l ocat ed. The r eput at i on of an upscal e hot el t hat has been

at t r act i ng guest s f or mor e t han a cent ur y i s unl i kel y t o be l i mi t ed

onl y t o t he ci t y wher e i t i s l ocat ed.

Fi nal l y, t he di st r i ct cour t t ook an i mper mi ssi bl y nar r ow vi ew

of conf usi on when consi der i ng t he evi dence of f er ed about mark

st r engt h. I ndeed, i n hol di ng t hat HMI "must r ef r ai n f r omusi ng t he

Mel i name i n any f ut ur e busi ness vent ur es out si de of Ponce" whi l e

Dor pan "i s bar r ed f r om ext endi ng i t s ser vi ces i nt o Ponce, " t he

di st r i ct cour t appear s t o have i nappr opr i at el y equat ed conf usi on

wi t h di ver si on of sal es, over l ooki ng t he f act t hat t r ademar k l aw

al so seeks t o pr ot ect mar k hol der s f r omcommer ci al i nj ur y i nvol vi ng

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damage t o t he hol der ' s goodwi l l and cont r ol over i t s r eput at i on.

Beacon Mut . , 376 F. 3d at 10. I n ot her wor ds, t he i ssue her e i s not

si mpl y whet her t he l i kel i hood of conf usi on mi ght l ead cust omer s t o

book a r oom i n one hotel when i nt endi ng t o book a r oom at t he

ot her . I t i s al so r el evant t hat a r easonabl e consumer ' s mi st aken

bel i ef s about t he r el at i onshi p bet ween t he t wo hotel s coul d cause

an i nj ur y t o HMI ' s goodwi l l and r eput at i on. For exampl e, a

r easonabl e f act f i nder coul d concl ude t hat HMI has a val i d concer n

t hat cust omers t r avel i ng t o Puer t o Ri co who have had a bad

exper i ence at Gr an Mel i , mi ght i mput e t hat bad exper i ence t o Hot el

Mel i when booki ng a subsequent t r i p or i nf l uenci ng ot her s

t r avel i ng t o Puer t o Ri co. See I . P. Lund Tr adi ng ApS, 163 F. 3d at

35 ( not i ng t hat t r ademar k pr ot ect i on pr ot ect s " t hat whi ch

i dent i f i es a pr oduct' s sour ce") .

Gi ven t hese er r or s i n t he di st r i ct cour t ' s anal ysi s of t he

l i kel i hood of conf usi on, we must vacat e i t s summar y j udgment r ul i ng

and r emand f or f ur t her proceedi ngs. On t hi s r ecor d, t her e ar e

genui ne i ssues of mat er i al f act on t he l i kel i hood of conf usi on.

Though we concl ude t hat t here i s suf f i ci ent evi dence t o cr eat e

such i ssues of f act , we not e t hat t he r ecor d i n t hi s case i s

spar se, par t i cul ar l y gi ven t he f act - i nt ensi ve nat ur e of t he

i nqui r y. The evi dence i s especi al l y spar se on t he quest i on of how

t he t wo hot el s mar ket t hei r servi ces and how t he respect i ve

st r engt h of t hei r mar ks i n t he compet i t i ve hot el mar ket pl ace

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af f ect s t he per cept i on of pot ent i al consumer s about t he hot el s and

t hei r deci si on t o use t hei r ser vi ces. On r emand, whet her di scover y

shoul d be r eopened as t he par t i es pr epar e f or t r i al i s a quest i on

we l eave t o t he di scret i on of t he di st r i ct cour t .

III.

For t he r easons set f or t h, we vacate t he di s t r i ct cour t ' s

ent r y of summary j udgment f or Dorpan on i t s decl arat ory j udgment

act i on seeki ng a decl ar at i on of non- i nf r i ngement and remand f or

f ur t her pr oceedi ngs consi st ent wi t h t hi s opi ni on. The di st r i ct

cour t ' s j udgment on HMI ' s col l at er al est oppel cl ai mi s not af f ect ed

by t hi s deci si on. Cost s t o appel l ant .

So ordered.

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Documents

Dorpan, S.L. v. Hotel Melia, Inc., 1st Cir. (2013)