Solid 21, Inc. v. Richemont North America, Inc.

Background

Solid 21 sells luxury watches and jewelry and owns the registered RED GOLD trademark. After an earlier motion to dismiss, the remaining defendants were Richemont North America, Inc., Richemont International S.A., and Montblanc-Simplo GmbH. Solid 21’s remaining claims included direct and contributory trademark infringement, unfair competition, trademark dilution, false description under the federal Lanham Act, and related New York claims. The defendants asserted counterclaims seeking invalidation and cancellation of Solid 21’s mark.

The parties filed cross-motions for summary judgment. The defendants sought judgment on Solid 21’s infringement and unfair-competition claims, their fair-use defense, and their counterclaims asserting that RED GOLD was generic. They also sought to exclude intracompany sales from potential liability. Solid 21 sought judgment against the defendants’ genericness counterclaims and first affirmative defense. Solid 21 did not oppose dismissal of its dilution claim.

Trademark Validity and Genericness

The court explained that a generic mark is a common name for a type of product and receives no trademark protection. Although Solid 21’s registered mark was asserted to be incontestable, the court noted that even an incontestable mark can be invalidated and cancelled if it has become generic.

The defendants presented expert evidence that “red gold” had long been used as a generic term for a high-copper-content gold alloy. They also offered survey evidence stating that 67% of respondents viewed “red gold” as a common name, while 16% viewed it as a brand name and 17% had no opinion or did not know. Solid 21 presented contrary expert opinions, survey evidence, dictionary evidence, and declarations from consumers and people in the watch and jewelry industry who understood RED GOLD to be a brand.

The court held that the conflicting evidence created a genuine factual dispute that could not be resolved on summary judgment. It therefore denied Defendants’ motion for summary judgment on Solid 21’s trademark claim based on genericness and denied their motion on the invalidity counterclaims. The court also denied Solid 21’s motion concerning the genericness defense and counterclaims because the evidence did not establish that issue as a matter of law.

Likelihood of Confusion

The court separately denied summary judgment for Defendants on the infringement claim because a reasonable jury could find that their use of “red gold” was likely to confuse consumers about the source of the products. The court considered the eight factors used in the Second Circuit to evaluate likely consumer confusion.

The parties disputed the strength of Solid 21’s mark, including whether it had acquired public recognition as a brand. They also disputed whether the defendants’ use of the identical term “red gold” was sufficiently similar to Solid 21’s mark to create confusion, whether the products were sufficiently close in the market, whether the defendants acted in bad faith, and how carefully luxury-watch purchasers shop. The court found that a jury could reasonably weigh these issues in Solid 21’s favor. The court found no evidence of actual confusion identified in the summary-judgment record, and treated the “bridging the gap” factor as irrelevant because the parties’ products were already in competitive proximity.

Fair Use

The defendants also sought summary judgment on their fair-use defense. Fair use permits certain descriptive uses of a trademark. To establish the defense, a defendant must show that it used the term other than as a mark, in a descriptive sense, and in good faith.

The court found factual disputes concerning all three requirements. The parties disagreed about the meaning and extent of the defendants’ marketing uses, including whether repeated uses of “red gold” created an association with Solid 21’s mark. They also disputed whether the term described an alloy and whether the defendants’ use was made in good faith. The court therefore denied summary judgment on the fair-use defense.

Intracompany Sales and Other Dispositions

The court granted Defendants’ summary-judgment motion as to intracompany sales from Richemont International S.A. and Montblanc-Simplo GmbH to their U.S. affiliate, Richemont North America, Inc. Solid 21 conceded that Richemont North America could not itself be confused by the defendants’ use of “red gold” in those transactions. The court noted that Solid 21 argued the relevant confusion was among end consumers, but concluded that Solid 21 had given up those claims.

The court dismissed Solid 21’s dilution claim. It denied Defendants’ summary-judgment motion in all other respects and denied Solid 21’s motion in its entirety. The court also denied Defendants’ motion for oral argument as moot. The amended opinion corrected citation errors in the earlier opinion and order without changing its analysis or conclusions.