Lexington Furniture Industries, Inc. v. The Lexington Company, AB

Background

Lexington Furniture Industries, Inc. (LFI), doing business as Lexington Home Brands, sued The Lexington Company, AB (LCC), doing business as The Lexington Clothing Company. LFI asserted trademark-infringement and unfair-competition claims under the federal Lanham Act and New York law, as well as a claim for breach of a 2012 settlement agreement. Both parties moved for partial summary judgment, which asks a court to decide claims without a trial when no important factual dispute requires a trial.

LFI owns five federal trademark registrations containing “Lexington” that cover furniture or furniture-store services. LCC uses “Lexington,” “Lexington Company,” “Lexington Clothing Co.,” and a stylized flag logo in connection with clothing and home textiles. LCC does not sell furniture. LCC entered the U.S. market after the Trademark Trial and Appeal Board (TTAB) ruled in LFI’s favor in an earlier cancellation proceeding involving LCC’s flag-logo registration. While an appeal of that ruling was pending, the parties entered into the settlement agreement, which allowed LCC to use “Lexington” in the United States subject to restrictions.

Motion to Strike

LCC asked the court to exclude a declaration and sixteen attached exhibits submitted by LFI, arguing that LFI had not timely produced them during discovery. The court denied the motion to strike as moot because it found genuine disputes of material fact that prevented summary judgment without considering that evidence.

Trademark Claims

The court held that LFI’s registered “Lexington” marks were valid and entitled to protection. The central question was whether LCC’s use of its Lexington-related marks was likely to confuse consumers. The court applied the eight factors commonly used in the Second Circuit for that question: the strength of the mark, similarity of the marks, proximity of the products, actual confusion, the likelihood that the plaintiff would enter the defendant’s market, the defendant’s good faith, the quality of the defendant’s products, and consumer sophistication.

LFI argued that the TTAB’s earlier finding of likely confusion should prevent LCC from disputing that issue. The court rejected that argument. The TTAB had considered LCC’s registration before LCC entered the U.S. market, while this case concerned later marketplace use, including uses on websites, social media, advertisements, and product packaging. The court concluded that the current marketplace uses were materially different from those considered by the TTAB, so the earlier decision did not preclude litigation of consumer confusion in this case.

The court identified factual disputes concerning several factors. The parties disputed the commercial strength of LFI’s marks, including the significance of LFI’s advertising, sales, lack of consumer-survey evidence, and third-party registrations using “Lexington.” They also disputed the similarity of the marks because LCC used “Lexington” with its flag logo, while LFI sometimes used “Lexington” with other brand or collection names. The parties further disputed whether their products competed or were sufficiently related, including because both sold some home-textile products and because furniture and home textiles could be complementary products.

The court also concluded that the evidence concerning actual confusion and LCC’s good faith could not be resolved as a matter of law. Because reasonable jurors could reach different conclusions about the overall likelihood of confusion, the court denied both parties’ motions for summary judgment on LFI’s trademark-infringement and unfair-competition claims.

Settlement Agreement

The parties agreed that New York law governed LFI’s contract claim. The court stated that the undisputed elements were the existence of the agreement and LFI’s performance. The parties disputed whether LCC breached four provisions.

The first dispute concerned the agreement’s requirement that LCC use “Lexington Clothing Co.” as the “primary identifier” for its U.S. home-textile marketing and sales, in a way intended to avoid confusion with LFI. The court interpreted the agreement to require “Lexington Clothing Company” as the primary identifier, but not as the sole or exclusive identifier. The agreement restricted use of the flag logo on LCC’s goods, but did not impose the same restriction on advertising; instead, advertising had to be consistent with the agreement’s purpose. The court found a genuine factual dispute about whether LCC actually used “Lexington Clothing Company” as the primary identifier, so it did not grant summary judgment on that issue.

LFI also claimed that LCC breached the agreement by advertising and selling products through Perigold.com, allegedly a prohibited dedicated home or furniture store. The court concluded that, even if this activity was initially a breach, the undisputed evidence showed that LCC used Perigold.com for only one or two months, received LFI’s cease-and-desist letter, and worked to remove its products. LFI did not produce evidence that the activity continued beyond the agreement’s 60-day period to cure a breach. The court therefore granted LCC’s motion for summary judgment in part, finding no breach based on the Perigold.com activity.

Finally, LFI claimed that LCC breached the agreement by participating in a furniture-related trade show. LFI presented evidence that LCC participated in New York Now, while LCC presented testimony that it attended only the show’s textile-market portion, which did not involve furniture. The court found a factual dispute and denied summary judgment on that issue. The court also rejected LCC’s argument that LFI could not prove damages as a matter of law, explaining that nominal damages may be available even without proof of actual financial loss.

Disposition

The court denied LFI’s motion for summary judgment. It granted LCC’s motion for summary judgment in part as to the Perigold.com contract issue and otherwise denied LCC’s motion. It denied LCC’s motion to strike as moot and directed the clerk to terminate the motions.