738 F.3d 1085
9th Cir.2013Background
- Hokuto Co., Ltd. (Hokuto Japan) is a Japanese mushroom producer that owns trademarks used on mushroom packaging; Hokto Kinoko Co. (Hokto USA) is its wholly owned U.S. subsidiary that produces certified-organic mushrooms in California and markets mushrooms in the U.S. under those marks.
- Hokto USA imported specially produced, English‑labeled organic mushrooms from Hokuto Japan before its California facility opened; after 2009 Hokto USA produced organic mushrooms domestically and in 2010 imported two labeled shipments from Japan to cover shortfalls.
- Concord Farms imported nonorganic Hokuto Japan mushrooms (Japanese packaging, Japanese labeling, measured in grams, product-of-Japan) into the U.S. and sold them in grocery channels where Hokto USA’s organic mushrooms were sold.
- Hokto USA sued Concord Farms for trademark infringement; Concord Farms counterclaimed seeking cancellation of the registrations for fraud and asserting abandonment via naked licensing. The district court granted summary judgment for Hokto USA and Hokuto Japan and issued a permanent injunction; Concord Farms appealed.
- The Ninth Circuit reviewed whether (1) Concord’s imported Japanese mushrooms were “genuine” goods exempting Concord from liability, (2) Concord’s marketing caused a likelihood of consumer confusion, and (3) Hokuto Japan’s U.S. registrations were vulnerable to cancellation for fraud or abandonment by naked licensing.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Are the imported Japanese mushrooms “genuine goods” that preclude Lanham Act liability? | Hokto: Concord’s imports materially differ from Hokto USA’s organic, English‑labeled, quality‑controlled products, so they are not genuine. | Concord: The imports are the same Hokto products (admitting they were produced by Hokuto Japan) and thus genuine. | Held: Not genuine. Differences in organic status, quality controls, packaging language/units/origin labeling are material. |
| Did Concord’s sale of the foreign-produced mushrooms create a likelihood of consumer confusion? | Hokto: Identical marks, overlapping products/channels, low-cost product, and Concord’s intent support likelihood of confusion. | Concord: No actual confusion and products are genuine, so no infringement. | Held: Likelihood of confusion found under Sleekcraft factors (most factors favor Hokto despite no direct evidence of actual confusion). |
| Can Hokuto Japan’s U.S. registrations be canceled for fraud (false statements of bona fide intent)? | Concord: Registrations include false statements of intent to use marks on many goods, so registration was procured by fraud. | Hokto: False statements were a mistaken lawyer-driven error without intent to deceive; Concord lacks evidence of intent, reliance, and damages. | Held: No cancellation for fraud. Material misstatement existed but Concord failed to prove intent to deceive, reliance, or damages. |
| Did Hokuto Japan abandon rights via naked licensing by granting Hokto USA use without formal quality-control provisions? | Concord: Lack of formal quality-control terms means abandonment/naked license. | Hokto: Close parent-subsidiary relationship, joint development and oversight, and reliance on Hokto USA’s quality controls prevented abandonment. | Held: No naked licensing. The close working relationship and oversight avoided abandonment. |
Key Cases Cited
- K Mart Corp. v. Cartier, Inc., 486 U.S. 281 (definition and framework for gray‑market goods)
- NEC Elecs. v. CAL Circuit Abco, 810 F.2d 1506 (genuine‑goods threshold in gray‑market context)
- Am. Circuit Breaker Corp. v. Or. Breakers, Inc., 406 F.3d 577 (applying NEC Electronics and material‑difference test)
- AMF Inc. v. Sleekcraft Boats, 599 F.2d 341 (Sleekcraft likelihood‑of‑confusion factors)
- Brookfield Commc’ns v. W. Coast Entm’t Corp., 174 F.3d 1036 (distinctiveness/strength of mark and purchaser care analysis)
- Bordeau Bros. v. Int’l Trade Comm’n, 444 F.3d 1317 (one material difference can render imported goods non‑genuine)