BillFloat Inc. v. Collins Cash Inc.

Background

BillFloat Inc., doing business as SmartBiz Loans, sued Collins Cash Inc., doing business as Smart Business Funding, and its owner, Abraham Cohen. The operative complaint asserted five causes of action: federal trademark infringement, federal unfair competition, breach of contract, state-law trademark infringement, and unlawful business practices under state law.

The dispute centered on the marks “SmartBiz” and “Smart Business Funding.” The defendants moved for summary judgment, arguing that no reasonable jury could find a likelihood of confusion, that laches barred the federal and state trademark claims, and that BillFloat lacked evidence supporting its contract claim. Laches is a defense based on unreasonable delay that prejudiced the opposing party. BillFloat separately moved to exclude the testimony of the defendants’ expert, Mark Keegan, who conducted a consumer survey.

Summary Judgment

The court held that summary judgment was not warranted on likelihood of confusion. It identified factual disputes involving the similarity and strength of the marks, the parties’ related financial services, possible actual confusion, marketing channels, customer sophistication, and the parties’ intentions and potential expansion. The court noted that the marks shared the word “Smart” and that “Biz” abbreviated “Business,” although the marks also differed. The parties’ different logos, the types of financial services they provided, and the evidence concerning possible confusion also required evaluation of the facts.

The court likewise found factual disputes concerning the defendants’ laches defense. The defendants argued that BillFloat knew or should have known about the alleged infringement in August 2015 based on an email from BillFloat employee Aleks Flom. The court stated that a jury would have to decide whether Flom’s knowledge should be attributed to BillFloat, including whether he had responsibilities that would make his knowledge relevant to the company.

The court granted summary judgment to the defendants on BillFloat’s breach-of-contract claim. The court accepted the defendants’ argument that the Partner Terms Agreement barred use of the SmartBiz mark in specified circumstances but did not bar the defendants from using their own mark. The agreement therefore did not cover use of an allegedly infringing mark that was not one of the marks expressly protected by the agreement. The court denied the summary-judgment motion otherwise.

Expert Testimony

Keegan’s survey concluded that there was no likelihood of confusion and reported that an average net of 6.3 percent of respondents mistakenly believed that Smart Business Funding and SmartBiz were the same company or affiliated. BillFloat challenged the survey’s marketplace simulation, participant pool, controls, description of the services, ordering of webpages, and treatment of the legal issue of likelihood of confusion.

The court concluded that most of BillFloat’s challenges concerned the weight of the evidence rather than whether the testimony was admissible. In other words, those criticisms could be presented to the factfinder through cross-examination and competing evidence rather than requiring exclusion. The court found that BillFloat had not identified a fundamental problem with the survey’s participant pool, had not shown that using control questions instead of a separate control group was improper, and had not shown that the survey’s description of the services was improperly leading.

The court granted BillFloat’s motion in part under the rule allowing exclusion of evidence when its risk of unfair prejudice substantially outweighs its usefulness. Keegan could not testify outright that there was no likelihood of confusion. He could, however, testify about the survey and its reported results. The court otherwise denied the motion to exclude and did not preclude Keegan from testifying about the survey under the standards governing expert evidence.

Disposition

The court granted in part and denied in part the defendants’ motion for summary judgment and granted in part and denied in part BillFloat’s motion to exclude expert testimony. The court ordered the parties to contact Magistrate Judge Kim and explore further settlement talks. The order disposed of Docket No. 42.