Plaintiffs Coty, Inc., et al. (Coty), producers/distributors of Calvin Klein, Vera Wang, and Lady Gaga fragrances, among others, sued Excell Brands, LLC (Excell) for trademark infringement, unfair competition, trademark dilution, and false advertising under federal and New York law. Coty Inc. v. Excell Brands
, LLC Case 1:15-CV-07029-JMF Document 156 (S.D.N.Y. Sept. 18, 2017).
At issue, were Excell’s bargain versions of Coty’s fragrances under similar names and packaging, for example:
After a three-day bench trial, the United States District Court for the Southern District of New York concluded that, “Excell’s imitation crossed the line from flattery to infringement, dilution, unfair competition, and false advertising.”
Coty established that its fragrances are “some of the most popular and recognizable” in the market and proved it spent hundreds of millions of dollars on advertising and promotion.
The defendant, on the other hand, conceded it manufactured and distributed knockoffs referred to as “versions” of Coty’s fragrances, and did so without authorization or royalty payments. Excell asserted the defenses of nominative fair use and laches. The affirmative laches defense was dismissed as Excell conceded its intent to infringe upon Coty’s brands.
The court analyzed Coty’s trademark infringement claim under the two-prong test as to whether a plaintiff’s mark is entitled to protection, and in the case of trade dress, whether it is nonfunctional; and secondly, whether use of the mark is likely to cause consumer confusion. The court easily concluded Coty’s trademarks are entitled to trademark protection, as are Coty’s unregistered trade dresses. The court further rejected Excell’s argument that Coty’s fragrance bottles should be deemed product designs that lacked acquired distinctiveness.
In assessing likelihood of confusion, the court found that five of eight of the Polaroid
factors weighed heavily in Coty’s favor, and none strongly favored Excell. While Excell argued that its products include a disclaimer on the product packaging, such as “Our Version Of” or “Not Associated With,” the court noted that courts have found that “disclaimers are not only ineffective, but actually cut against the allegedly infringing party.” Additionally, Excell displayed Coty’s marks more prominently than the disclaimer language undercutting any arguable purposes for a disclaimer.
Excell also argued against consumer confusion due to the significant price difference and different sales venues between its low-cost fragrances sold at discount retailers versus Coty’s higher-priced fragrances sold at higher-end or upscale retailers. While the court found that these factors weighed in Excell’s favor, it managed to downplay how significantly these factors favored Excell. All in all, in considering the Poloroid
factors, the court looked to the products “in their totality” and concluded “that consumers are likely to be confused by Excell’s knockoff fragrances.”
Finally, the court dismissed Excell’s nominative fair use defense to Coty’s trademark infringement claim finding, on the contrary, that Excell sought to mimic Coty’s fragrances as to brands, marks, and trade dress.
Turning to trademark dilution, Coty established all the elements such that the court concluded Excell diluted Coty’s famous trademarks under federal law and Coty’s distinctive trademarks under state law.
Lastly, as to false advertising, Coty was able to prove all five elements, including that Excell’s use of disclaimer phrases such as “Our Version Of” was likely to deceive or confuse consumers.
In conclusion, the court granted Coty’s request for injunctive relief, and awarded profits and reasonable costs, notwithstanding that Excell had shut down its operations by December 2016 after some of its owners and employees were criminally indicted on charges of money laundering for Latin American drug cartels.
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