No Free Ride for Copycat Perfume Company – Fair Use Rejected, False Advertising Found, Accounting of Profits Awarded

by Dorsey & Whitney LLP
Contact

Well-known perfume marketer Coty Inc. had a big win in New York federal district court, obtaining injunctive relief and $6.5 million dollars in an accounting of profits from copycat perfume seller Excell Brands, LLC. In an eighty-two page opinion (with product pictures helpfully included), Southern District Judge Furman rejected Excell’s arguments of nominative fair use and good faith intent to compete rather than bad faith intent to deceive and ruled for Coty on its claims for trademark infringement, unfair competition and dilution. The court also held that Excell had misleadingly communicated that its perfumes were of similar or equivalent quality to Coty’s brand name products.

It likely did not help Excell’s case that several of Excell’s principals and employees had been indicted on charges of money laundering for the benefit of certain Latin American drug cartels. As a result, several Excell witnesses One invoked their privilege against self-incrimination and refused to answer substantive questions during discovery and at trial. Putting that aside, what was the case about? As the saying goes, a picture is worth a thousand words.  Two examples of Excell’s copycat perfumes line are pictured below:

          

As the court recounted, Excell’s business model involved selecting well-known brand or celebrity fragrances and marketing imitations with similar evocative names (such as SERENITY instead of ETERNITY and POSSESSION instead of OBSESSION) and “nearly identical” trade dress. On the front of each package, Excell included a legend that the fragrance was “Our Version of” the brand name perfume, but the brand name was depicted more prominently than other wording and in imitative type font. On the back of the packages, Excell included a disclaimer that the product “is not associated with the maker of” the brand name product. An example of this packaging approach is set out below:

    

Particularly in light of the prominence of the name brands relative to the disclaimer language, the court did not accept Excell’s argument that it would be “clear” from the packaging that the products were not associated with Coty.

Nominative Fair Use Rejected

The court considered and rejected Excell’s argument that it was making “nominative fair use” of Coty’s marks. In accordance with recent Second Circuit precedent in Int’l Info. Sys. Sec. Certification Consortium Inc. v. Sec. Univ., LLC, 823 F. 3d 153 (2d Cir. 2016), the fair use argument was considered as additional factors in the “Polaroid” analysis of likely confusion, not as an affirmative defense. The court held that Excell’s nominative fair use argument “misses the mark” because “Excell sought to mirror Coty’s fragrances’ appearance in nearly every way possible”:  the fragrances were not sold in generic bottles and cartons but rather with imitative trade dress, the names chosen were related to Coty’s and Coty’s brands were prominently displayed on product packaging in the purported disclaimer statements.

Survey Evidence on Two Products Deemed Relevant to Other Products in the Excell Line

Coty faced a dilemma common to plaintiffs that assert claims against a varied product line with similar infringing elements but don’t want to have to present survey evidence of confusion about each and every variant product.  Coty ended up presenting survey evidence pertaining to two of the products at issue in the Excell line, which generated an average of 54% confusion, although the level for the two products varied. In response to Excell’s contention that the survey evidence should only be considered relevant to the two products actually tested, the court held: “No doubt the surveys are more compelling with respect to the fragrances tested than they are with respect to the other fragrances at issue in this litigation. Additionally, the survey itself provides reason to believe that the levels of consumer confusion would vary among the fragrances…But [the] results are still relevant, albeit in a more attenuated manner, to the other fragrances given that they share ‘common and prominent features’ with the tested fragrances.” Accordingly, the court found the survey to be “circumstantial evidence that each of Excell’s fragrances at issue here is likely to cause at least some level of confusion as to source in the minds of fragrance shoppers.”

False Advertising of Product Equivalence

Marketers of copycat products hope to convey the impression that “if you like” the brand name “you’ll love” their imitation product, or that “our version of” means the imitation will be very similar in nature and quality to the original. In this case, Coty argued that the use of the phrase “our version of” by Excell was false and misleading due to material differences in the quality of the fragrances. Without deciding whether the words were “literally false” the court found that Coty’s survey evidence helped establish that “our version of” communicated the implied message that the products “are similar if not equivalent” when that was not the case. Rather, the evidence showed that Excell “did not make any meaningful effort to replicate the scent of Coty’s products,” did not have first-hand knowledge of the chemical composition of the products and had no meaningful quality assurance program.

Remedies

As noted above, Coty was awarded an accounting of more than $6.5 million in Excell’s profits from the violative products. But Coty did not get everything it asked for. The court declined to grant an enhanced monetary award for counterfeit products, holding that more than “mere similarity” or “colorable imitation” is necessary for counterfeiting remedies. In addition, the court did not award attorneys’ fees to Coty, even though it had determined that Excell had acted in bad faith. The opinion noted that courts have “broad discretion” in the area of attorneys’ fee awards under the “exceptional case” language of the Lanham Act and that Coty had not presented material evidence that it had suffered “ascertainable damage” from Excell’s conduct.

********

Judge Furman began his opinion with the oft-quoted aphorism that “imitation may well be the sincerest form of flattery,” while adding that “if taken too far it can also be costly.” He closed with a paean to Justice Frankfurter’s opinion in Mishawaka Rubber & Woolen Mfg. Co. that described trademark protection as “the law’s recognition of the psychological function of symbols”  and held that if “another poaches upon the commercial magnetism of the symbol he has created, the owner can obtain legal redress.” Judge Furman concluded that Excell’s “knockoff fragrances poach upon the commercial magnetism of Coty’s fragrances,” entitling Coty to the injunctive and monetary relief granted.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Dorsey & Whitney LLP | Attorney Advertising

Written by:

Dorsey & Whitney LLP
Contact
more
less

Dorsey & Whitney LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.