Stone Creek, Inc. v. Omnia Italian Design, Inc.
875 F.3d 426
9th Cir.2017Background
- Stone Creek (Arizona retailer) used the STONE CREEK logo on furniture since ~1990, obtained state registration in 1992 and federal registration in 2012.
- Omnia, a manufacturer and former business partner, produced leather furniture for Stone Creek under license but from 2008 began using an identical STONE CREEK logo to brand furniture sold to Bon-Ton, distributed in parts of the Midwest.
- Omnia copied Stone Creek’s logo from materials provided by Stone Creek and admitted in email correspondence that it sold furniture under the STONE CREEK mark to Bon-Ton.
- Stone Creek sued for federal and common-law trademark infringement and unfair competition; the district court found no likelihood of confusion and rejected a Tea Rose-Rectanus defense, and also addressed sanctions and the standard for disgorgement of profits.
- The Ninth Circuit reversed the no-likelihood-of-confusion ruling, rejected Omnia’s Tea Rose-Rectanus defense (no good-faith use because Omnia knew of Stone Creek’s prior use), held willfulness remains required to award defendant’s profits, and split the sanctions rulings (one reversed, one affirmed).
Issues
| Issue | Plaintiff's Argument (Stone Creek) | Defendant's Argument (Omnia) | Held |
|---|---|---|---|
| Likelihood of confusion under the Lanham Act | Identical, fanciful mark on identical goods sold in overlapping channels creates strong likelihood of confusion; evidence of actual confusion and Omnia’s intent | Argues geographic separation and limited Stone Creek recognition in Midwest defeat likelihood of confusion | Reversed district court: likelihood of confusion found (identical marks/goods, actual confusion, overlapping channels, copying/intent) |
| Tea Rose-Rectanus affirmative defense (good-faith remote use) | N/A (defense targets Omnia) | Omnia: acquired common-law rights in Midwest by prior use (2008) and acted in good faith | Rejected: good faith requires lack of knowledge of senior user; Omnia knew of Stone Creek’s prior use, so defense unavailable |
| Standard for disgorgement of defendant’s profits | Stone Creek: 1999 amendment eliminated requirement of willfulness for awarding profits | Omnia: willfulness remains prerequisite under Ninth Circuit precedent | Affirmed: willfulness remains required; remanded for district court to determine willfulness on the facts |
| Sanctions under 28 U.S.C. § 1927 | Stone Creek contends its filings (including motion on willfulness) were reasonable given circuit split; opposing party sought fees for meritless actual-damages claim | Omnia sought fees for unnecessary or vexatious litigation conduct | Mixed: reversed sanctions for summary-judgment willfulness motion (not frivolous); affirmed sanctions where Stone Creek persisted with an unsupported actual-damages claim and multiplied proceedings |
Key Cases Cited
- Hanover Star Milling Co. v. Metcalf, 240 U.S. 403 (Tea Rose) (establishes good-faith/knowledge focus in territorially distinct common-law trademark rights)
- United Drug Co. v. Theodore Rectanus Co., 248 U.S. 90 (Rectanus) (protects innocent junior users in remote markets absent notice)
- AMF Inc. v. Sleekcraft Boats, 599 F.2d 341 (9th Cir.) (Sleekcraft factors guide likelihood-of-confusion analysis)
- Brookfield Commc’ns, Inc. v. W. Coast Entm’t Corp., 174 F.3d 1036 (9th Cir. 1999) (identical marks on identical products often dispositive of confusion)
- Lindy Pen Co. v. Bic Pen Corp., 982 F.2d 1400 (9th Cir.) (Ninth Circuit requires willfulness as prerequisite for disgorgement of profits)
- Romag Fasteners, Inc. v. Fossil, Inc., 817 F.3d 782 (Fed. Cir.) (analyzed 1999 amendment and concluded willfulness requirement for profits remained intact)
- Money Store v. Harriscorp Fin., Inc., 689 F.2d 666 (7th Cir.) (interprets Tea Rose-Rectanus: knowledge defeats good-faith junior-user defense)