Atallah Group US Inc. v. GMA Accessories, Inc.

Background

GMA Accessories, Inc. brought trademark-infringement and counterfeiting claims involving its registered CHARLOTTE mark. The remaining defendants were New Six Limited and Atallah Group US Inc. Atallah owns the SSENSE online retail platform, and New Six owned the Charlotte Knowles brand by assignment and manufactured, branded, and sold Charlotte Knowles clothing. The defendants also asserted counterclaims, including unfair competition, a claim under New York General Business Law § 349, cancellation of GMA’s mark based on abandonment and fraud, and declaratory relief concerning treble damages and attorneys’ fees.

The defendants moved to dismiss under Federal Rule of Civil Procedure 12(c) or, alternatively, for summary judgment on GMA’s claims and the abandonment counterclaim. GMA cross-moved for summary judgment on the same claims and sought treble damages and attorneys’ fees.

Trademark infringement

The court applied the eight-factor test used in the Second Circuit to assess the likelihood that consumers would confuse the marks. It concluded that GMA’s CHARLOTTE mark was a somewhat weak suggestive mark. The word “Charlotte” had been used extensively by third parties, including in clothing and jewelry trademarks, and GMA did not provide evidence that consumers had come to recognize CHARLOTTE specifically as a source of GMA’s products.

The court found that the marks were somewhat different in context. GMA used a white, stylized, lowercase script, while Atallah displayed “Charlotte Knowles” in black block lettering among many other brands on SSENSE. The court could not evaluate the appearance of the mark used on New Six’s clothing because neither side provided sufficient visual evidence, so that factor was neutral as to New Six.

The court also found that the parties’ products did not compete. Charlotte Knowles clothing was high-end and sold at prices ranging from $286 to $5,207, while GMA’s products were lower-cost clothing and accessories, including a twenty-pack of girls’ socks priced at $6.97. There was no evidence that GMA planned to enter the high-end luxury fashion market. GMA identified no actual consumer confusion despite more than three years of coexistence. The quality of the Charlotte Knowles products and the sophistication of their buyers also favored the defendants. Overall, six of the eight factors favored the defendants, and the remaining two were neutral or unsupported by sufficient evidence.

The court held that no reasonable jury could find a likelihood of confusion. It therefore granted the defendants’ motion for summary judgment on GMA’s trademark-infringement claim.

Counterfeiting

The court explained that counterfeiting requires a mark identical or substantially indistinguishable from a registered mark. It found no evidence that the Charlotte Knowles mark met that standard or that either defendant falsified logos or tried to deceive customers into buying fake goods. Because no reasonable jury could find that the mark was counterfeit, the court granted the defendants’ motion for summary judgment on the counterfeiting claim.

Abandonment counterclaim

The defendants sought cancellation of GMA’s registered mark based on abandonment. Under the governing statute, abandonment requires proof that the owner stopped using the mark and lacked an intent to resume use in the reasonably foreseeable future. Three consecutive years of non-use creates an initial presumption of abandonment, but the party asserting abandonment retains the ultimate burden of persuasion.

The court rejected the defendants’ reliance on an earlier Trademark Trial and Appeal Board proceeding because that decision had later been vacated. It also found factual disputes concerning GMA’s commercial use of CHARLOTTE between 2018 and 2022 and whether GMA intended to resume use during the alleged break before resuming direct-to-consumer sales in 2022. The court therefore denied both parties’ motions for summary judgment on the abandonment counterclaim.

Other rulings and disposition

Because the defendants obtained summary judgment on GMA’s claims, the court denied as moot their request to dismiss the Third Amended Complaint under Rule 12(c). The court denied GMA’s motion for summary judgment as to all claims and denied as moot GMA’s requests for attorneys’ fees and trebled damages.

The order states that the defendants’ motion for summary judgment was granted in part and denied in part: it was granted on the trademark-infringement and counterfeiting claims and denied on the abandonment counterclaim. The surviving claims were the defendants’ counterclaims for unfair competition, violation of New York General Business Law § 349, cancellation based on abandonment and fraud, and declaratory judgment for treble damages and attorneys’ fees. The parties were directed to file a joint letter proposing next steps.