ORDER RE: DEFENDANT’S MOTION FOR A PRELIMINARY INJUNCTION
Pending before the Court is Defendant and Counterclaimant By Lee Tillett, Inc.’s (“Tillett’s”) motion for a preliminary injunction, filed on February 11, 2013. (Docket No. 30.) Plaintiff and Counterdefendant Boldface Licensing + Branding (“Boldface”) opposed on February 19 and Tillett replied on February 25. The Court heard oral argument on Monday, March 11, 2013. For the reasons below, the motion is GRANTED.
BACKGROUND
This case is the second of two trademark lawsuits involving Boldface’s nationwide rollout of a cosmetics line under the mark KHROMA BEAUTY BY KOURTNEY, KIM AND KHLOE, which is affiliated with the celebrity Kardashian sisters— Kourtney, Kim, and Khloe. By way of this motion, Tillett seeks to enjoin Boldface’s use of the mark on its cosmetics throughout the United States, believing that the product launch has caused and will cause substantial consumer confusion with its federally registered KROMA mark for cosmetics. Similar issues were raised in the other lawsuit filed by a Los Angeles-based makeup studio using marks incorporating the word “Chroma” (the “Chroma case”). See Chroma Makeup Studio LLC v. Boldface Group Inc., No. CV 12-9893 ABC (PJWx) (C.D.Cal., filed Nov. 19, 2012). The Court denied a preliminary injunction in the Chroma case because, although the plaintiff demonstrated that it owned valid common law rights in trademarks that were likely infringed, that it would be ir
Tillett is a Florida-based company that sells beauty services and all-natural cosmetics under the trademark KROMA
Tillett filed a federal trademark application for the KROMA mark on cosmetics on November 12, 2010. The U.S. Patent and Trademark Office (“USPTO”) issued Registration No. 4079066 for the KROMA mark on January 3, 2012. (Tillett’s Request for Judicial Notice (“RJN”), Ex. A.)
Before this lawsuit, Tillett claims to have had prior interactions with Kim Kardashian’s representatives regarding KRO-MA products, although Kim Kardashian claims she was unaware of any of these interactions and that she never authorized her representatives to act as agents for her vis-a-vis Tillett. (Compare Tillett Decl. ¶¶ 32-35, Ex. D, with Kardashian Decl. ¶¶ 2-6.) For example, in May 2010, Tillett and a public relations and celebrity licensing company called TLK Fusion discussed possible product placement for KROMA products in the reality television show called The Spin Room
Boldface was founded by two women in April 2012 as a “celebrity cosmetics and beauty licensing company” with a business model to design, develop, and market cosmetics and beauty-related goods. (Ostoya Decl. ¶¶ 3, 6.) Before forming the company, in October 2011 the founders of Boldface were approached by the Kardashians
Before presenting possible brand names to the Kardashians, Boldface used an attorney to conduct a trademark search. (Id. ¶ 14.) The search yielded dozens of uses of the word “chroma” and certain variants in International Class 3 (which covers cosmetics and beauty products), and in light of this, Boldface concluded that the public was using the word “chroma” and its variants to denote “color.” (Id. ¶¶ 14-15.) After presenting three possible brand names, Boldface and the Kardashians gravitated toward the mark KHROMA BEAUTY, although they also discussed using KARDASHIAN KHROMA. (Id. ¶ 11.)
In June 2012, Boldface filed two trademark applications with the PTO for the marks “KHROMA BEAUTY BY KOURTNEY, KIM AND KHLOE” and “KARDASHIAN KHROMA,” Serial Nos. 85/646521 and 85/642342, covering “personal care products including cosmetics, body and beauty care products” in International Class 3. (Tillett’s RJN, Exs. C, E.) At this point, through news reports Tillett became aware of Boldface’s intent to use the word “Khroma” in connection with cosmetics, and sent Boldface a brief cease-and-desist letter on June 28, 2012, requesting a response within two weeks. (Tillett Decl. ¶¶ 41-42; Ostoya Decl. ¶ 25, Ex. A.) Boldface responded three weeks later in an email, on July 18, 2012, denying infringement, but not inviting any further response from Tillett. (Ostoya Decl. ¶ 26, Ex. B.) Tillett did not, in fact, respond to the email, and did not correspond again with Boldface until October 2012. (Id. ¶¶ 27, 29.)
In claimed reliance on Tillett’s silence following its July 18 email, Boldface moved forward with the KHROMA BEAUTY product launch by, for example, putting products and packaging into production in August, inking deals with retail partners by September, and moving forward with press launches in September and October 2012. (Id. ¶ 28.) Boldface claims that, had Tillett responded to its July 18 email before it had moved forward in August, “Boldface could have changed the name without suffering serious harm.” (Id. ¶ 31.) Amidst this activity, on September 26, 2012, the PTO issued office actions for both of Boldface’s trademark applications initially refusing registration because, inter alia, Boldface’s marks create likely confusion with Tillett’s registration for KROMA on cosmetics. (Tillett’s RJN, Ex. D.)
In parallel with these events and up through February 2013, Boldface indeed moved forward with its product rollout and expects that by the end of March 2013, KHROMA BEAUTY products will be in 5,321 stores in 48 states. (Ostoya Decl. ¶ 37.)
Based on orders already placed, Boldface expects substantial sales through December 2013. (Id. ¶ 34.)
On the other hand, Tillett claims that, as a result of the rollout of the KHROMA BEAUTY products, it has experienced a significant impact on its business. For example, Tillett identifies 10 instances of purported consumer confusion over its and Boldface’s products. (Tillett Decl. ¶¶ 48-58, Ex. G-O.) Tillett’s U.K. distributor has also experienced purported instances of
More generally, Tillett fears that its business will be irreparably harmed from Boldface’s national product rollout. Tillett markets the KROMA products as all-natural, which is good for sensitive skin, and customers with sensitive skin might be placed at risk if they mistakenly purchase KHROMA BEAUTY products instead. (Tillett Decl. ¶¶ 63-64.) Further, Tillett claims that sales have dropped 25% since the launch of KHROMA BEAUTY products and that securing major retailers would be impossible in light of consumer confusion. (Id. ¶¶ 65-67.) In short, Tillett believes its business would be destroyed by the continued presence of the KHROMA BEAUTY products in the marketplace. (Id. ¶ 68.)
Boldface filed this lawsuit to obtain a declaration that the KHROMA BEAUTY products do not infringe Tillett’s mark, and Tillett counterclaimed for trademark infringement and false designation of origin under the Lanham Act, 15 U.S.C. §§ 1114(l)(a) and 1125(a), trademark infringement under Cal. Bus. & Prof.Code § 14200, and unfair competition under CaL Bus. & Prof.Code § 17200. Tillett now moves for a preliminary injunction based upon all of these claims, although it focuses on its Lanham Act claims, conceding that the analysis is the same under sections 14200 and 17200. (Mot. 7 n. 2.)
LEGAL STANDARD
“A plaintiff seeking a preliminary injunction must establish that he is likely to succeed on the merits, that he is likely to suffer irreparable harm in the absence of preliminary relief, that the balance of hardships tips in his favor, and that an injunction is in the public interest.” Winter v. Natural Res. Defense Council, Inc.,
“In one version of the ‘sliding scale,’ a preliminary injunction could issue where the likelihood of success is such that serious questions going to the merits were
DISCUSSION
A. Likelihood of Success on the Merits
In order to show trademark infringement under the Lanham Act, the plaintiff must demonstrate that the defendant is “using a mark confusingly similar to a valid, protectable trademark” owned by the plaintiff. Brookfield Commc’ns, Inc. v. W. Coast Entm’t Corp.,
1. Validity
To be valid, a trademark must be “distinctive.” Zobmondo Entm’t, LLC v. Falls Media, LLC,
Federal registration of a trademark creates a presumption that the mark is valid, and where the PTO registers a mark without proof of secondary meaning, “the presumption is that the mark is inherently distinctive.” Id. at 1113-14. This shifts the burden to the alleged infringer to demonstrate that the mark is not protectable. Id. at 1114. Here, Boldface has not challenged the validity of Tillett’s registration of the KROMA trademark, which was registered on the Principal Register without proof of secondary meaning, so at this stage the Court assumes it is inherently distinctive and valid.
2. Likelihood of Confusion
The touchstone of a Lanham Act claim is the likelihood of consumer confusion, which “requires the factfinder to determine whether a ‘reasonably prudent consumer in the marketplace is likely to be confused as to the origin of the good or service bearing one of the marks.’ ” Surfvivor Media, Inc. v. Survivor Prods.,
Although this case implicates both “forward” and “reverse” confusion, it appears to be primarily focused on reverse confusion, given that Tillett’s overarching concern is that the KHROMA BEAUTY
a. Similarity of the Marks
“ ‘The more similar the marks in terms of appearance, sound, and meaning, the greater the likelihood of confusion.’ ” Network Automation, Inc. v. Advanced Sys. Concepts, Inc.,
Sound and Meaning. Neither “kroma” nor “khroma” have any meaning in English, but Tillett claims without dispute that they are both derived from the word “chroma,” which is the Greek word for “color.” Moreover, the words “kroma” and “khroma” sound identical, despite the different spelling. See Surfvivor,
Sight. As the marks are used in the marketplace, they often appear nearly identical to consumers. The heart of both parties’ marks are, in fact, the words KHROMA and KROMA, which appear prominently on the parties’ products in all capital letters in a similar font:
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Further, despite Boldface’s registrations and its claim that it “always” uses the complete mark of KHROMA BEAUTY BY KOURTNEY, KIM AND KHLOE in advertising and on its products (Ostoya Deck ¶ 16), the words “KHROMA” and “KHROMA BEAUTY” often appear in the marketplace alone, apart from the Kardashians’ names.
• On Boldface’s Facebook and Twitter pages, Boldface calls the product line “Khroma Beauty”; magazines covering the product launch call it “Khroma Beauty”; and a search of Twitter messages (called “tweets”) reveals that the users frequently call the product line “Khroma Beauty.” (Kuo Decl. ¶¶ 2-5, Exs. A-C.)
• The KHROMA BEAUTY false eyelashes product bears the word KHROMA alone on the packaging. (Gipson Supp. Decl. ¶ 6, Ex. A.)
• Boldface’s two websites for the KHROMA BEAUTY products are www.khromabeauty.com (United States) and www.khromabeauty.eu (U.K.). (Gipson Decl. ¶¶ 6-8.)
• On websites selling the KHROMA BEAUTY products like Ulta.com, the products are identified only as “Khroma Beauty” products and the additional words on the packaging are frequently illegible. (Id., Ex. I.)9
Perhaps most telling, Boldface includes a “TM” symbol on its product packaging next to the word KHROMA, rather than at the end of the entire phrase, conveying the message that the prominent word KHROMA is Boldface’s trademark.
Moreover, both parties’ marks are derivative of the word “chroma,” but both have replaced the “C” with a “K.” While Tillett also eliminated the “H,” that variant of one letter is insignificant in this case, especially because the parties varied the word “chroma” in almost exactly the same way. See Dreamwerks,
b. Relatedness of the Goods
Under this factor, parties need not be direct competitors, but the goods must be “reasonably thought by the buying public to come from the same source if sold under the same mark.” Rearden LLC v. Rearden Commerce, Inc.,
In this case, the parties both sell cosmetics, and in fact, some of their products are identical, such as blush, compacts, gloss, lip kits, foundation, eye shadow, and bronzer. The Ninth Circuit has found far more disparate products and services sufficiently related to support finding likely
Boldface argues that this factor weighs less heavily in favor of finding likely confusion when “advertisements are clearly labeled or consumers exercise a high degree of care” in purchasing cosmetics, “because rather than being misled, the consumer would merely be confronted with choices among similar products.” Neüvork Automation,
c. Strength of the Mark
“ ‘The stronger a mark—meaning the more likely it is to be remembered and associated in the public mind with the mark’s owner—the greater the protection it is accorded by the trademark laws.’” Network Automation,
As to the parties’ comparative commercial strength, Tillett’s KROMA mark has some commercial strength, but Boldface’s marks are far stronger and could easily overwhelm Tillett’s efforts. Since 2008, Tillett has sold on average $200,000 annually in KROMA products domestically, including in stores in Florida, California, New York, New Jersey, Hawaii, South Carolina, Pennsylvania, and Connecticut.
Compared to these efforts, though, Boldface’s commercial strength far surpasses Tillett’s. Boldface’s marks are backed by the Kardashian’s nationwide fame, and Boldface’s product line has received extensive nationwide media coverage, has been shown to millions of viewers on an episode of the Kardashians’ reality television show, has been promoted on each of the Kardashian sisters’ websites and social media pages, and in the national press. The products are now in 5,321 stores in 48 states, and by April 2013 the products will be available on Boldface’s website. And this is just Boldface’s initial launch. Boldface’s “ability to saturate the marketplace creates a potential that consumers will assume that [Tillett’s] mark refers to [Boldface], and thus perceive that the businesses are somehow associated.” Cohn v. Petsmart, Inc.,
As for conceptual strength, Boldface has not challenged the presumption of inherent distinctiveness created by Tillett’s federal registration. Even so, a federally registered mark is not automatically considered conceptually strong. See Miss World (UK) Ltd. v. Mrs. Am. Pageants, Inc.,
Boldface attempts to further weaken Tillett’s KROMA mark by demonstrating that it exists in a “crowded field” of uses of similar marks on similar products. “[A] mark which is hemmed in on all sides by similar marks on similar goods cannot be very ‘distinctive.’ It is merely one of a crowd of marks. In such a crowd, customers will not likely be confused between any two of the crowd and may have learned to carefully pick out one from the other.” Miss World,
Upon further research and briefing from the parties in this case, the Court is now convinced that these third-party registrations are not probative of conceptual weakness without evidence that the marks were actually used in commerce and viewed by consumers. See, e.g., 2 J. Thomas McCarthy, McCarthy On Trademarks & Unfair Competition § 11:89 (4th ed. 2013) (hereafter McCarthy) ("The mere citation of third party registrations is not proof of third party uses for the purpose of showing a crowded field and relative weakness" because "[t]hird party registrations are not evidence of use `so as to have conditioned the mind of prospective purchasers.’" (emphasis in original)); see also Olde Tyme Foods, Inc. v. Roundy’s, Inc.,
Boldface has also identified other uses of the word “kroma” in the marketplace in connection with beauty services, such as “Kroma Kolor Laboratories,” “Kroma Salon,” “Salon Kroma of Cary,” and “Kroma Hair Design.” (Drapeau Deck, Ex. B.) Unlike PTO registrations and applications, these marks appear to be names of businesses used in the marketplace and likely have been viewed by consumers. Even so, they have little probative value in assessing uses of the word “kroma” to establish a “crowded field” for cosmetics: “Kroma Kolor Laboratories” appears to manufacture hair color, not cosmetics; and the other businesses appear to be hair salons, although one indicates it also provides make
Even if Boldface’s evidence of a “crowded field” weakened the conceptual strength of Tillett’s KROMA mark, this factor is significantly less important here where the parties’ marks are so similar and the goods on which the marks appear are nearly identical. See Brookfield,
In the end, the parties’ comparative commercial strength favors finding likely confusion, and the conceptual strength of Tillett’s KROMA mark is neutral,
d. Actual Confusion
Although not required, “ ‘actual confusion among significant numbers of consumers provides strong support for the likelihood of confusion.’ ” Network Automation,
• An August 7, 2012, message from the owner of Lovelo Beauty LLC: Beauty Writer/Blogger, who wrote, “I have also heard that Kim K. and sisters are coming out with a line at the end of the year called Khroma ... is this related to you?” (Tillett Decl. ¶ 48, Ex. G.)
• An October 29, 2012 telephone call from a customer who said she was on the internet and was looking at the Kardashians’ cosmetics line, but then saw Tillett’s online presence, and called to ask if it was affiliated with the Kardashians. (Id. ¶ 50.)15
• A January 20, 2013, email from a client stating, “I was confused when I was in Ulta and wondered why you would change the spelling of your name.” (Id. ¶ 52, Ex. J.)
• A February 10, 2013, email from a client stating, “During the holidays while passing through Sears, I saw a makeup display saying Khroma. I was so excited to see Lee’s make up in the major department stores. As I got closer to the display it read Khroma Beauty by the Kardashian sisters. I was taken aback by how easy it was for the Kardashian’s to infringe on Lee’s trademark. I was so upset I even took a picture with my phone and sent it to Lee. Since then a few of my friends think that Less sold her company to the Kardashi[a]n’s. My friends know that I have been going to Kroma for years and when they too saw it in thestores they thought it was Lee’s brand just under the Kardashi[a]n’s name. This is a wrong that needs to be made right.” (Id. ¶ 54, Ex. K.)
• A February 5, 2013, email from a colleague stating, “As a colleague of yours I was shocked when I saw the Kardashian KHROMA Makeup line that was coming out into the market place ... At first glance I thought it was yours the font looks the same, how deceiving was that. When I worked for you I remember that you went to California to meet with the Kardashian’s Public Relation Group at their request. I first thought that maybe you had sold them the rights to your company and makeup line. I could not believe that you would do that since you worked so hard developing, marketing of such a fantastic line. I’m sure you will prevail when everything is presented through your legal representatives.” (Id. ¶ 55, Ex. L.)
• A February 5, 2013 email from a client stating, “I received a catalog in the mail from ULTA, featuring ‘KHROMA’ makeup line. I first thought this was your makeup line ‘KROMA,’ the name was almost identical as was the pronunciation of your brand. It was confusing, especially because the cheap prices listed on the ULTA catalog didn’t seem to match your higher quality product price. I can see this causing a lot of confusion, even the style of the name ‘KHROMA’ is basically identical to yours.” (Id. ¶ 56, Ex. M.)
• A February 5, 2013, email from a client stating, “I did, in fact, see something in a magazine for Khroma. Made me do a double take realizing this is NOT my favorite makeup product! I do believe it is ‘too close’ and actually resent another company using such a similar name.” (Id. ¶ 57, Ex. N.)
• A February 7, 2013, email from a client stating, “When I have needed to make an appointment, I have become confused. Many times I Google the web for Kroma makeup. When I did this, I was provided with imagery and websites such as Ulta for your makeup. At first glance I thought it was your makeup. As I am a longtime loyal customer, I have no[w] overlooked this error. However, it can be as I am sure you are aware, very disconcerting to your typical customer. If I were just purchasing makeup I would most likely have bought the makeup this way. Since I am also a client for brow services & such, I continue to look further for your phone number and email to make a reservation. I do feel you have possibly lost much business due to this. I feel terrible for you. Your makeup is wonderful and the quality is unmatched in my opinion. You also give a delightful personal touch that no store bought makeup can deliver. If there is any way that you are able to get rid of this label confusion it would be great!” (Id. ¶ 58, Ex. O.)16
Boldface attacks the messages sent after February 5, 2013 because they came in response to an email from Tillett asking customers and colleagues if they have ex
This evidence of actual confusion is not overwhelming, especially in light of Boldface’s extensive product rollout. Cf. Entrepreneur Media, Inc. v. Smith,
e. Overlapping Marketing Channels
“ ‘Convergent marketing channels increase the likelihood of confusion.’ ” Network Automation,
f. Degree of Customer Care
Low consumer care increases the likelihood of confusion. Id. at 1152. This factor focuses on the nature, cost, and marketing channels of the goods at issue. Id. This factor weighs against finding likely confusion because Tillett sells “high end cosmetics” to an “upscale clientele” who likely exercise care in selecting Tillett’s higher-priced products. (Tillett Deck ¶ 5.) Tillett argues that the Court should focus on the purchasers of Boldface’s mass-market products, who probably exercise less care in selecting cosmetics. This might be true when those purchasers select among competing lower-priced cosmetics lines, but here, purchasers of the lower-priced KHROMA products would likely take care before paying higher prices for Tillett’s KROMA products.
The customer care factor, however, is entitled to only minimal weight in this case. As noted above, given the similarity of the parties’ marks and relatedness of the goods on which those marks appear, even purchasers exercising a high degree of care would likely be confused, and some, in fact, have been confused. Therefore, even the high degree of care exercised by purchasers does not dispel the likely con
g. Intent
The intent factor generally carries minimal weight because “ ‘an intent to confuse customers is not required for a finding of trademark infringement.’ ” GoTo.com,
This case, however, is one of reverse confusion, so the intent inquiry must focus on “whether the defendant was aware of the senior user’s use of the mark in question, or whether the defendant conducted an adequate name search for other companies marketing similar goods or services under that mark.” Commerce Nat’l Ins. Servs., Inc. v. Commerce Ins. Agency, Inc.,
Here, Boldface was unquestionably aware of Tillett’s rights and still proceeded with the multi-million-dollar rollout of the KHROMA BEAUTY product line. As early as January 2012, Boldface had constructive knowledge of Tillett’s rights when Tillett’s registration issued. It is unclear whether Boldface’s initial trademark search uncovered Tillett’s registration (although even a cursory PTO search should have)
h. Expansion of Product Lines
The expansion of product lines factor does not carry much weight here because
3. Conclusion on the Merits
An overall evaluation of the Sleekcraft factors demonstrates that a factfinder would likely find a likelihood of confusion here. Six of the factors favor Tillett: similarity of the marks; relatedness of the goods; actual confusion; overlapping marketing channels; Boldface’s intent; and expansion of product lines. The other two factors either weigh partly in Tillett’s favor or are neutral: Boldface’s commercially strong mark supports finding likely confusion, although the conceptual strength of Tillett’s mark is neutral; and the customer care factor has little impact on the analysis. Therefore, Tillett has demonstrated likely success on the merits of its infringement claims.
B. Likelihood of Irreparable Harm
Tillett argues that irreparable harm may be presumed from its showing of likelihood of success on its trademark infringement claims. That proposition is doubtful following the Supreme Court’s decisions in eBay Inc. v. MercExchange, L.L.C.,
Tillett has demonstrated that it will likely lose business opportunities, customers, and goodwill due to Boldface’s use of the confusingly similar KHROMA BEAUTY marks. See Stuhlbarg Int’l Sales Co. v. John D. Brush & Co.,
Boldface argues that Tillett has not shown irreparable harm because it unreasonably delayed in enforcing its rights following Boldface’s July 2012 response to Tillett’s June 2012 cease-and-desist letter. See, e.g., Oakland Tribune, Inc. v. Chronicle Publ’g Co.,
Boldface does not dispute that Tillett sent its first cease-and-desist letter promptly on June 28, 2012, when it learned of Boldface’s planned product launch. Boldface responded three weeks later on July 18, 2012, defending the use of the KHROMA BEAUTY marks. In that email, Boldface did not request a further response from Tillett, and unsurprisingly, none came. Boldface chose to rely on Tillett’s silence to move forward with its product launch beginning in August 2012; although Boldface does not identify a specific date in August, that could have been as few as 13 days later.
Tillett contends without contradiction that it was unaware of Boldface’s activities in August and September 2012. (Tillett Supp. Decl. ¶ 6.) Boldface’s applications were pending during this time, but because they were “intent-to-use” applications, they would not have suggested to Tillett that Boldface would move forward so quickly. An intent-to-use application can remain pending for years before the registration issues based upon use in commerce. See Spin Master, Ltd. v. Zobmondo Entm’t, LLC,
Then, on September 28, 2012, the PTO issued initial refusals, finding likely confusion between Boldface’s marks and Tillett’s mark. A month later, Tillett sent its second cease-and-desist letter on October 28, 2012. The parties engaged in settlement negotiations, which ended on November 27, 2012, and Boldface filed suit three days later. Tillett spent three weeks finding local counsel in this District (Tillett Supp. Decl. ¶ 14), and by the time it found counsel, the preliminary injunction motion in the Chroma case had been filed. It then reasonably waited for the Court to resolve the preliminary injunction motion, which raised issues that overlapped with this case. Once the Court denied that motion on January 23, 2013, Tillett filed the instant motion on February 11, 2013.
Again, while Tillett could have moved more quickly in seeking an injunction, the delay here was not unreasonable. See, e.g., GoTo.com,
C. Public Interest
The public interest favors an injunction to prevent likely confusion in this case. See Mattel, Inc. v. MCA Records, Inc.,
D. Balance of Hardships
Even if Tillett has shown it will likely prevail on the merits of its claim, “an injunction is a matter of equitable discretion; it does not follow from success on the merits as a matter of course.” Winter,
Here, the Court is well-aware of the impact an injunction will have on Boldface’s business, which could amount to millions of dollars in losses. But the Court is also fully convinced that withholding an injunction will destroy Tillett’s business, which it has built over a decade, causing losses of hundreds of thousands (and perhaps millions) of dollars in past investment and future revenue. The difference between the two is that Tillett has superior rights to Boldface. As a result, the balance of hardships tips sharply in Tillett’s favor.
The equities also rest firmly with Tillett. Boldface moved forward with its multi-million-dollar product rollout using a trademark it knew was similar to Tillett’s registered mark based upon the thinnest of reeds: as few as 13 days of silence from Tillett after receipt of Boldface’s July 18 email. While it admittedly could have changed the KHROMA BEAUTY marks at that time "without suffering serious harm" (Ostoya Decl. ¶ 31), it did not. And it forged ahead even when a neutral arbiter in the PTO sided with Tillett’s view that the KHROMA BEAUTY marks caused likely confusion. This is precisely the type of case in which "any injury that [Boldface] may suffer if preliminarily enjoined may be discounted by the fact that [Boldface] brought the injury upon [itself] by intentionally adopting deceptively similar trademarks and packaging." Moroccanoil, Inc. v. Moroccan Gold, LLC,
E. Scope of the Injunction
Boldface briefly suggests that the injunction may only cover markets in which
[I]f the use of the marks by the registrant and the unauthorized user are confined to two sufficiently distinct and geographically separate markets, with no likelihood that the registrant will expand his use into defendant’s market, so that no public confusion is possible, then the registrant is not entitled to enjoin the junior user’s use of the mark.
Id. (citing Fairway Foods).
The Ninth Circuit later explained that Fairway Foods addressed a narrow factual scenario; in that circumstance, “where the federal registrant and the intrastate user of conflictingly similar trade marks are using the respective marks in geographically separate and distinct market areas, with no real competition between them, and where there is no present likelihood that the federal registrant will expand his use into the area of use of the intrastate user, there is no cause shown for injunctive relief based on infringement.” Mister Donut of Am., Inc. v. Mr. Donut, Inc.,
The Court declines to apply the Dawn Donut/Fairway Foods rule to this case for two reasons. First, Tillett sells products over the internet and across the country, has promoted them in nationwide media, and has engaged in discussions with a U.K. retailer in the hope of using that deal to spur further retail deals in the United States. As in Mister Donut, this evidence demonstrates a “present likelihood” that Tillett will expand nationally into areas occupied by Boldface. (See Ostoya Decl. ¶ 39 (stating that KHROMA BEAUTY products will be in 48 states by March 2013).)
Perhaps more important, applying the Dawn Donut/Fairway Foods rule in this reverse confusion case would have a significant adverse impact on Tillett’s rights arising from its federal registration. As McCarthy explains, a federal registration creates a “nationwide right, but the injunctive remedy does not ripen until the registrant shows a likelihood of entry into the disputed territory” because there is no likelihood of confusion in that area unless and until the registrant enters that market or is likely to do so. McCarthy, § 26:33 (emphasis in original). This rule makes sense in forward-confusion cases with remote junior users occupying limited geographic locations as in Dawn Donut and Fairway Foods, but not so when the case involves reverse confusion with a nationwide junior user.
Reverse confusion is actionable because “ ‘the senior user loses the value of the trademark—its product identity, corporate identity, control over its goodwill and reputation, and ability to move into new markets.’ ” Commerce,
Boldface further suggests that, because the KHROMA BEAUTY products are already in the marketplace and there are millions of units in production, an injunction barring the sale of these products would amount to a “mandatory injunction,” which is “ ‘particularly disfavored.’ ” Marlyn Nutraceuticals,
Moreover, as the Ninth Circuit has explained, an injunction returning the parties to their positions prior to infringement does not alter the status quo ante litem. “The status quo ante litem refers not simply to any situation before the filing of a lawsuit, but instead to ‘the last uncontested status which preceded the pending controversy.’” GoTo.com,
In any case, Tillett has agreed to tailor the injunction to permit Boldface’s retailers to sell through products in their possession (Reply 22), which the Court finds appropriate.
F. Bond
Under Federal Rule of Civil Procedure 65(c), upon obtaining an injunction, the movant must post a bond “in an amount that the court considers proper to pay the costs and damages sustained by any party found to have been wrongfully enjoined and restrained.” The Court has wide discretion to set any amount for the bond. GoTo.com,
CONCLUSION AND STAY
For the reasons above, Tillett’s motion for a preliminary injunction is GRANTED.
At oral argument, Boldface’s counsel requested that the Court stay the injunction pending appeal. Boldface does not have a right to a stay; instead, the Court may exercise discretion depending on the circumstances of the particular case. Lair v. Bullock,
Here, the Court’s analysis on the issuance of the preliminary injunction dictates that a stay is not warranted. See id. at 1203 n. 2 (noting that “ ‘[t]here is a substantial overlap between these and the factors governing preliminary injunctions.’ ”). However, the Court will stay entry of the preliminary injunction for at least seven days pursuant to Ninth Circuit Rule 27-2, provided that Boldface seeks a stay from the Ninth Circuit within that time. If Boldface seeks a stay, the Court will stay entry of the injunction until the Ninth Circuit rules on that request. If after the expiration of seven days Boldface has not sought a stay from the Ninth Circuit, the Court will enter the injunction without further notice to the parties. Tillett is not required to post the bond ordered by the Court until the Court enters the injunction. The parties are ORDERED to update the Court of the status of this matter, as well as their further settlement efforts, no later than seven days from the date of this Order.
Further, Tillett is ORDERED to lodge a proposed injunction consistent with this opinion within five days of the date of this Order.
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Notes
. The Court has reviewed the parties’ objections to evidence and to the extent those objections are inconsistent with the Court’s ruling, they are OVERRULED. The Court GRANTS both parties' requests for judicial notice.
. Tillett’s marks have varied over the years, but have always included the work KROMA. (Tillett Decl. ¶ 7.) Examples of Tillett's products appear in Appendix 1 to this Order.
. Tillett mistakenly identified the show as The SPINdustry, but Boldface explains that the show was called The Spin Room and "The SPINdustry” was the title of the first episode. (Kardashian Decl. ¶ 2.)
. Boldface has six months from the date of those actions to respond.
. Examples of Boldface’s products are in Appendix 2 to this Order.
. Because Boldface has filed its revenue figures and other financial information under seal, the Court will not set forth the exact figures in this Order, nor are the exact figures necessary to the resolution of this motion.
. Tillett named the Kardashians' individual companies in its counterclaims, but did not direct the motion against those counterdefendants. It believes—and the Court agrees— that any injunction against Boldface would effectively block all infringing activity by all of the counterdefendants.
. As Tillett points out, Boldface is not even using the actual mark KHROMA BEAUTY BY KOURTNEY, KIM AND KHLOE on its products; instead, the actual use is “KOURTNEY KIM KHLOE KHROMA BEAUTY.”
. In some reverse confusion cases, the addition of a "house mark" may aggravate, rather than mitigate, confusion by enhancing the risk that consumers would associate the plaintiff’s products with the defendant. See Glow Indus., Inc. v. Lopez, 252 F.Supp.2d 962, 995 (C.D.Cal.2002). At this stage, though, there is no specific evidence to suggest that consumers would more likely associate Tillett’s products with Boldface because the Kardashians’ names and images appear on Boldface’s products. This evidence is unnecessary because the similarity factor weighs strongly in favor of likely confusion even without it. But see Cohn v. Petsmart, Inc.,
. In the Chroma case, the Court suggested that the plaintiff's focus on only the words KHROMA and CHROMA improperly attempted to strip away other portions of the parties’ marks, contrary to the Ninth Circuit’s dictate to look at the marks as a whole and as they appear in the marketplace. See GoTo.com, 202 F.3d at 1206. In that case, though, the record was not nearly as strong as it is here to demonstrate that Boldface’s mark frequently appears simply as KHROMA or KHROMA BEAUTY.
. The Court agrees with Boldface that Tillett's overseas sales and promotional activities do not demonstrate whether domestic purchasers recognize Tillett’s mark in the United States. See 5 J. Thomas McCarthy, McCarthy On Trademarks & Unfair Competition § 29:2
. In the Chroma case, the Court analyzed the distinctiveness of plaintiff’s marks incorporating the word "chroma” and concluded that they were suggestive. For those same reasons, the Court would likely conclude that Tillett’s mark is suggestive here. But because Boldface has not attacked the validity of Tillett’s registration and Tillett has not argued that the KROMA mark is arbitrary or fanciful, the Court assumes without analysis that Tillett's mark is suggestive.
. It also appears that some of these registrations have expired or have been cancelled due to non-use, and some of the applications have "intent to use” status only. By their nature, those applications and canceled registrations cannot be proof that those marks are used in the marketplace and viewed by consumers.
. Tillett cites other instances of actual confusion in the U.K., but again, this evidence is not relevant to the likelihood of confusion analysis. See supra, n. 16.
. The Court rejects Boldface's argument that this instance of confusion should be disregarded as simply a "misdirected” phone call,
. The Court agrees with Boldface that the email from a graphic artist that Tillett claims worked for Kim Kardashian in the past does not show actual confusion because the email itself does not reference the Kardashians. (Tillett Deck ¶ 49, Ex. H.) The Court also agrees that the January 16, 2013 email from a client does not demonstrate actual confusion. (Id. ¶ 51, Ex. I.)
. The Court rejects Tillett's evidence of "online confusion” because it lacks foundation for how the identified websites actually operate. (Gipson ¶¶ 8-10, 18.)
. While Kim Kardashian and Boldface deny knowledge of these discussions, there is no dispute that they occurred.
. (See Mantell Decl. ¶ 2 (explaining that PTO search submitted in Boldface’s RJN, Ex. 2, did not contain the results of the initial search conducted by Boldface’s counsel before adopting the KHROMA marks).)
. The Court need not resolve the parties’ dispute over whether Kim Kardashian knew about Tillett's interactions with TLK Fusion in 2010 because, even absent this evidence, the record amply demonstrates Boldface's knowledge of Tillett's rights and its calculation to move forward with the KHROMA BEAUTY products notwithstanding. The Court also fails to see the significance of Tillett’s prior application for the KROMA mark, which was denied by the PTO in light of a then-active registration for the mark "KROMA BONDZ” on cosmetics, which has since been cancelled. (Opp. 6.) In any case, when Tillett applied to register the mark KROMA in 2004, the company that owned the KROMA BONDZ mark had ceased doing business, although its mark was still on the Principal Register. (Gipson Supp. Deck, Ex. J.)
. Boldface attacks Tillett's lost opportunity with a U.K. retail chain on various grounds. Even assuming these attacks are meritorious, Boldface's nationwide presence likely eliminates Tillett's current and future opportunities for expansion into mass-market retailers, creating significant irreparable harm.