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Horphag Research Ltd. v. Larry Garcia, dba Healthierlife.com

The Ninth Circuit affirmed so much of the District Court's decision which held that defendant infringed plaintiff's trademark by his "pervasive" use of plaintiff's mark in both the metatags and text of his websites, on which he sold a competing product.  The Ninth Circuit also affirmed so much of the District Court's decision which awarded plaintiff substantial attorneys' fees for this infringement, agreeing with the lower court's determination that this was an "exceptional" case justifying such an award in light of defendant's willful use of the mark.

The Ninth Circuit reversed and remanded so much of the District Court's decision that held that defendant's conduct diluted plaintiff's mark, in light of the Supreme Court's recent decision in Moseley v. V. Secret Catalogue, Inc, which mandated proof of actual dilution to sustain a trademark dilution claim.

Plaintiff Horphag Research Ltd. ("Horphag") is the owner of the federally registered trademark "Pycnogenol," which mark it uses to market a pine bark extract product.  Defendant Larry Garcia ("Garcia") operates a website at the domain "healthierlife.com" at which he sells various pharmaceutical products including "a competing LifePlus dietary and nutritional supplement product" identified as "Masquelier's."  Apparently, defendant operates a number of additional related websites as well.

In an admitted effort to enhance his sites' performance in response search engine queries for "Pycnogenol," defendant repeatedly used plaintiff's mark both in the metatags of his sites, and in the content thereof.  From the District Court's judgment, it appears that this content included literature about plaintiff's Pycnogenol product.  In addition, defendant described his competing product as "Masqueliers:  the original French Pycnogenol."

Plaintiff brought suit, charging that defendant's use of its mark, as described above, constituted both trademark infringement and dilution in violation of the Lanham Act.  The District Court agreed, and awarded plaintiff judgment as a matter of law during the trial of this action.  The trial court rested this holding on its determination that "the foregoing gives rise to . . . initial interest confusion among Internet users searching the term Pycnogenol, as such users are unwittingly diverted by Larry Garcia's metatags to his websites . . .  ".  The District Court also awarded plaintiff substantial attorneys' fees and costs.

The Ninth Circuit affirmed the District Court's finding of trademark infringement.  In so doing, the Court rejected defendant's nominative fair use defense.  Because some items can only be described by using the trademark associated therewith, the law recognizes a right to use another's mark to describe such items, where the party seeking to use the mark satisfies the requirements of the nominative fair use test.

As explained by the Ninth Circuit:

This Court looks to three factors in determining whether a defendant is entitled to the nominative fair use in defense:  (1) the product must not be readily identifiable without use of the mark; (2) only so much of the mark may be used as is reasonably necessary to identify the product; and (3) the user must do nothing that would, in conjunction with the mark, suggest sponsorship or endorsement by the trademark holder.

The Ninth Circuit held that defendant could not satisfy either the second or third prongs of this test, and accordingly held that defendant's use was not protected by the nominative fair use doctrine.  Said the Court:

By using the mark so pervasively, not just in the text of his websites but also in the metatags and to link others to his websites, Garcia exceeds any measure of reasonable necessity in using the Pycnogenol mark.  Moreover, the constant use of Horphag's Pycnogenol trademark and variants thereof, such as "The Original French Pycnogenol" likely suggests that Horphag sponsors or is associated with Garcia's websites and products.  Therefore, Garcia cannot successfully assert this defense.

The Ninth Circuit also affirmed the District Court's award of substantial attorneys' fees and costs to plaintiff as compensation for the costs incurred in pursuing its trademark infringement claim.  "Under §1117(a) of the Lanham Act, a court may award the prevailing party reasonable attorneys' fees in exceptional circumstances.  Exceptional cases include cases which the infringement is malicious, fraudulent, deliberate or willful."

The Ninth Circuit agreed with the District Court that this was an appropriate "exceptional" case, because defendant's conduct was willful and deliberate.  In reaching this result, the Court relied heavily on defendant's admission that he used plaintiff's mark in his site's metatags so as to give his sites priority in searches for Pycnogenol.

Lastly, the Ninth Circuit reversed and remanded the dilution claim to the District Court, in light of the Supreme Court's decision in Moseley, which, as noted above, changed the showing a plaintiff must make to prevail on a federal trademark dilution claim.