In finding a fair use defense and no “likelihood of confusion” in a cosmetics trademark infringement dispute, the US Court of Appeals for the 11th Circuit also considered, as an issue of first impression, whether the Seventh Amendment right to a trial by jury applies when a trademark plaintiff attempts to recover the defendant’s profits from the allegedly infringing goods. The Court concluded that the trademark plaintiff was not entitled to a jury because it was seeking remedies that were equitable in nature. Hard Candy, LLC v. Anastasia Beverly Hills, Inc., Case No. 18-10877 (11th Cir. Apr. 23, 2019) (Marcus, J).

Hard Candy is a Florida-based cosmetics company that licenses the registered mark HARD CANDY^® in connection with a beauty line sold exclusively through Walmart, with annual sales of approximately $36 million. In 2018, Hard Candy sued Anastasia Beverly Hills, a California-based cosmetics company, when Hard Candy learned about the launch of Anastasia’s “Gleam Glow Kit” makeup palette that included a peachy-pink highlighter shade referred to as “hard candy.” (Anastasia herself would later testify that the color designation was inspired by the color of candies regularly received from her grandmother.) The shade designation appeared on the inside and back of the palettes that sold between 2015 and 2016 as a limited edition product through retailers such as Macy’s and Sephora. During that time, the “hard candy” shade designation also appeared throughout Anastasia’s marketing materials and social media campaigns.

In the district court, Hard Candy’s complaint was based on trademark infringement and unfair competition, and sought an accounting and disgorgement of Anastasia’s profits, statutory damages and a permanent injunction. Hard Candy, however, did not seek actual damages. Given that all of Hard Candy’s requested remedies were considered to be equitable in nature, the district court struck Hard Candy’s jury trial demand. After a bench trial, the district court found that there was no likelihood of confusion caused by Anastasia’s use of “hard candy” and also held that Anastasia made out a fair use defense to infringement. Hard Candy appealed as to each of the district court’s determinations, including the denial of a jury trial.

The Seventh Amendment right to a trial by jury has long been understood to extend only to suits requiring the determination of legal rights, as opposed to those where equitable rights and remedies alone were recognized. The Supreme Court of the United States’ two-part test to determine whether the Seventh Amendment right applies to a particular claim requires a court to examine (1) the nature of the action and (2) the remedy sought. In the current case, the 11th Circuit labeled the first prong “indeterminate” since trademark cases historically have been recognized at both law and equity, and thus focused on the second prong. The Court found it to be undisputed that Hard Candy’s demands for injunctive relief and related costs and fees were equitable remedies that would not entitle it to a jury trial. The Court therefore centered its analysis on Hard Candy’s request for an accounting of Anastasia’s profits from sales of the allegedly infringing pallets and a disgorgement of those gains.

Running through a series of historical jurisprudence and dicta on the issue, and citing equivalent decisions from the Sixth and Ninth Circuits, the 11th Circuit concluded that the specific accounting and disgorgement remedy requested by Hard Candy under the Lanham Act was equitable, and not legal, in nature. The Court was “unpersuaded” by Hard Candy’s argument that the Supreme Court decision in Dairy Queen v. Wood stands for the proposition that a claim for a money judgment is wholly legal in nature. The Court pointed out that despite the plaintiff’s “accounting” language used in its call for remedies in Dairy Queen, the Supreme Court found that case to be an action for “debt” or “damages,” which does implicate the right to a jury trial. Thus, as to Hard Candy’s claims, the second prong of the Supreme Court’s Seventh Amendment test—the nature of the remedy—was found to weigh “decidedly in favor of Anastasia,” and the 11th Circuit confirmed that the district court did not err in refusing Hard Candy’s jury trial demand.

Turning to Hard Candy’s challenge of the district court’s denial of its trademark infringement and unfair completion claims, the 11th Circuit determined that, under its seven-factor test from Lone Star Steakhouse & Saloon v. Longhorn Steaks, Hard Candy did not demonstrate a likelihood of consumer confusion with Anastasia’s use of the “hard candy” color designation. The Court focused primarily on the similarity-of-marks factor and compared the overall impressions that the marks create, which it found to favor Anastasia, since the company was not using “hard candy” as a trademark. Also, while not necessary to a finding of likelihood of confusion, the Court found the absence of any evidence of actual consumer confusion in this case to be “significant,” given the extensive promotion of the Anastasia product to an arguably similar consumer base. Finally, the Court affirmed the district court’s finding of a fair use defense in that Anastasia used the terms “hard candy” descriptively to refer to the color and sheen of the highlighter product along with other descriptively named shades.