Global Brand Holdings, LLC v. Rae Dunn Design LLC

Background

Global Brand Holdings, LLC (GBH) alleged that it owns trademarks incorporating the letters “XOXO.” GBH alleged that it has sold products bearing those marks since 1991, promoted them through advertising, and established that the marks identify GBH as the source of the goods. Rae Dunn Design LLC sells products with words and phrases in the stylized lettering of its founder. Enchante Accessories Inc. manufactures and distributes Rae Dunn products in coordination with Rae Dunn Design.

GBH alleged that the defendants sold blankets and towels displaying “XOXO,” including blankets purchased at T.J. Maxx locations and towels listed on Amazon.com. GBH filed the action on February 27, 2023. The defendants moved to dismiss, arguing that their use of “XOXO” qualified as fair use.

Legal standard

On a motion to dismiss, the court accepts well-pleaded factual allegations as true and asks whether the complaint plausibly states a claim for relief. Fair use is an affirmative defense. To establish fair use, a defendant must show that it used the challenged term other than as a trademark, used it descriptively, and acted in good faith. The court explained that fair use ordinarily should not be decided on a motion to dismiss unless the facts establishing the defense are clear from the complaint and documents considered with it.

Court’s analysis

The court held that it was not clear from the complaint that the defendants used “XOXO” other than as a trademark. A trademark use occurs when a term acts as a symbol that attracts public attention or identifies the source of goods. GBH alleged that its XOXO marks had become distinctive and identified GBH as the exclusive source of goods bearing them. Images attached to the complaint showed a blanket and hand towels with red hearts and “XOXO” in large black lettering. Accepting GBH’s allegations and reasonable inferences in its favor, the court found that consumers could understand the defendants’ use of “XOXO” as indicating that GBH was the source of the products.

The defendants argued that references to Rae Dunn on the packaging and online listing meant that “XOXO” could not be functioning as a mark. The court rejected that argument at this stage. Rae Dunn’s branding was one consideration in a fact-intensive analysis, but there was no categorical rule that displaying another mark necessarily prevents a different term from being used as a mark. The court also found that additional product photographs showing small Rae Dunn labels and a Rae Dunn ribbon did not resolve the issue.

The defendants separately argued that “XOXO” was merely decorative or ornamental. The court stated that this issue also could not be decided at the motion-to-dismiss stage because the complaint alleged that GBH’s XOXO mark had acquired distinctive meaning and identified GBH as the source of the goods.

Disposition

The court denied Rae Dunn Design LLC’s and Enchante Accessories Inc.’s motions to dismiss. It also denied Rae Dunn’s request for oral argument as moot. The court noted that discovery and a later trial could produce a record showing that a reasonable jury could not find for GBH, or that the defendants did not use “XOXO” as a mark. The opinion therefore resolved only whether dismissal based on fair use was appropriate at this stage; it did not decide ultimate trademark liability.