Brother Records, Inc. v. Jardine

Citations: 318 F.3d 900; 2003 WL 192084Docket: No. 01-57095

Court: Court of Appeals for the Ninth Circuit; January 27, 2003; Federal Appellate Court

SummaryOriginalCytator Case TreatmentBackward CitatorAnalysis

EnglishEspañolSimplified EnglishEspañol Fácil

Alan Jardine appeals the district court’s summary judgment favoring Brother Records, Inc. (BRI) on trademark infringement under the Lanham Act, claiming he infringed BRI's 'The Beach Boys' trademark. Jardine also challenges the judgment dismissing his counterclaims against BRI for breach of a lifetime employment agreement and a license agreement, as well as the denial of his motion to amend his counterclaim to add third-party claims and additional counterclaims. The court affirms the district court's decisions.

In 1961, Jardine co-founded The Beach Boys, which later incorporated BRI to manage the band's intellectual property. BRI is co-owned by Jardine and other members, with BRI holding the trademark. Disputes among the members led to some not touring. In 1991, Brother Tours, Inc. was established to manage touring logistics and income. By 1998, internal conflicts intensified, and Love began negotiating a license to use the trademark for his band. During a July 1998 board meeting, it was proposed that BRI issue non-exclusive licenses to all members, which was agreed upon by Jardine and two others.

BRI executed a license with Love on October 1, 1998, which included trademark protection clauses. The existence of a similar license agreement for Jardine remains disputed. Following the board meeting, Jardine began touring with his own band without BRI’s approval. In October 1998, Jardine's attorney claimed a license was unnecessary for his performances. BRI warned Jardine of potential infringement, leading him to propose a license with different terms, which BRI rejected during a November board meeting.

Jardine engaged in negotiations regarding a license while continuing to perform under names that incorporated 'The Beach Boys' trademark. His performances, promoted under various similar titles, led to confusion among show organizers and attendees, with many mistakenly believing they were booking the actual Beach Boys. In response, BRI sent cease and desist letters and subsequently filed a complaint for trademark infringement on April 9, 1999. Jardine raised defenses including fair use and laches, along with counterclaims related to employment and licensing agreements. The district court issued a preliminary injunction on March 28, 2000, restricting Jardine's use of the trademark but allowing descriptive references to his past membership. On March 19, 2001, Jardine sought to amend his pleadings with third-party claims and additional counterclaims, which the court denied. BRI moved for summary judgment on June 4, 2001, resulting in the court granting judgment in favor of BRI and issuing a permanent injunction against Jardine's use of the trademark. This appeal followed the summary judgment ruling, which will be reviewed de novo, with a focus on whether genuine issues of material fact remain and if the district court accurately applied substantive law. Jardine argues that his use of the trademark falls under the fair use doctrine, referencing case law that clarifies the limitations of this defense in trademark disputes.

A defendant may assert a nominative fair use defense when using a trademark to describe the plaintiff's product rather than their own. This distinction between nominative and classic fair use was emphasized in Cairns v. Franklin Mint Co., where it was clarified that nominative fair use applies when the defendant uses the plaintiff’s mark to refer to the plaintiff's product, even if the defendant's intent is to describe their own product. In contrast, classic fair use pertains only to instances where the plaintiff's mark is used solely to describe the defendant's product. 

Several cases demonstrate the application of nominative fair use, including New Kids, where newspapers used the trademark to refer to the band for a poll; Volkswagenwerk, where a repair shop used 'Volkswagen' in its service sign; and Smith v. Chanel, where a seller advertised a perfume as similar to 'Chanel No. 5'. In these instances, the defendants used the trademarks to denote the plaintiff's products. 

Further examples include Abdul-Jabbar v. Gen. Motors Corp., where a commercial referenced the basketball player to promote a car, and Downing v. Abercrombie & Fitch, where a clothing company utilized surfing champions' marks to market shirts. Both cases illustrate nominative fair use, as the trademarks were used descriptively, despite the defendants' ultimate goal of promoting their own products. 

Additionally, in Playboy Enterprises, Inc. v. Welles, the defendant was allowed to use her title as 'Playboy Playmate of the Year' on her website, which highlighted the application of nominative fair use even when the trademark constituted the defendant’s title.

The classic fair use analysis does not apply in cases where a trademark is used to describe the trademark holder's product, as established in the Cairns case. Welles' use of the Playboy mark was disqualified from classic fair use because it referred to Playboy's product, despite her also using it to describe herself as a former Playmate. Jardine's case presents a similar ambiguity regarding the use of "The Beach Boys" mark. He argues for both classic and nominative fair use: first, that his use describes the Beach Boys' product, which would invoke nominative fair use, and second, that it only describes himself, which would invoke classic fair use. This dual argument complicates the analysis, as it blurs the line between referencing the trademark holder and not. 

The classic fair use defense, as codified in the Lanham Act, applies strictly to marks with both primary and secondary meanings, used in their primary descriptive sense. A junior user can use descriptive terms in good faith without infringing on trademark rights. The Lanham Act allows the non-trademark use of descriptive terms in certain situations, emphasizing that trademark rights should not restrict the language available for describing goods. The classic fair use defense aims to prevent trademark registrants from monopolizing descriptive terms, thereby preserving language for accurate descriptions of product characteristics. The court typically applies this analysis to cases involving descriptive marks used in their primary sense.

Cairns cites In re Dual-Deck Video Cassette Recorder Antitrust Litig. as a prime illustration of classic fair use, where the defendant's labeling of terminals as 'VCR-1' and 'VCR-2' was found to be descriptive of its product rather than infringing on the plaintiff's trademark. The court determined that the defendant's good faith use of the descriptive mark 'VCR-2' did not constitute infringement. Similarly, in Entrepreneur Media, Inc. v. Smith, trademark protection was limited to the secondary meaning of the descriptive mark 'Entrepreneur', allowing the mark to be used in its primary sense without exclusive rights. The document also discusses the classic fair use of suggestive marks, which may have both unprotectable primary meanings and protected secondary meanings. In Brookfield Communications, the term 'Movie Buff' was deemed usable in its primary sense for descriptive purposes, but not the suggestive trademark 'MovieBuff' of the plaintiff. 

The excerpt distinguishes between classic fair use and nominative fair use, noting that Jardine's use of 'The Beach Boys' does not qualify for classic fair use because it utilizes the mark in its secondary trademark sense, referring to the band rather than a primary descriptive meaning. Nominative fair use applies when a mark is necessary for comparison or reference without causing consumer confusion, emphasizing that the core of trademark infringement law is the likelihood of confusion regarding product origin. The nominative fair use defense is valid only if it does not exploit consumer confusion or the reputation of another product.

The three requirements for the nominative fair use defense established in New Kids are: (1) the product or service must not be identifiable without the trademark; (2) only the necessary part of the mark may be used; and (3) the user's actions must not imply sponsorship or endorsement by the trademark holder. Jardine meets the first two requirements by demonstrating that it is impractical to refer to the Beach Boys without using the trademark and that no additional distinctive logos were used. However, Jardine fails the third requirement because its promotional materials prominently feature "The Beach Boys," suggesting a sponsorship that misleads consumers. Evidence indicates that Jardine's use of the trademark caused actual confusion among event organizers and attendees regarding the performance. Consequently, Jardine's nominative fair use defense is unsuccessful, and the court affirmed the district court's summary judgment in favor of BRI for trademark infringement.

Regarding the laches defense, the court found it inapplicable, as BRI acted promptly after Jardine's notification of intent to tour under a name implying connection to the Beach Boys. BRI sent a cease and desist letter shortly after Jardine's notice and filed a complaint five months later, rejecting Jardine's claim that BRI's delay allowed for a laches defense. The district court's rejection of this defense was deemed appropriate.

Equitable estoppel was denied by the district court, with the review standard being abuse of discretion. Jardine failed to demonstrate knowledge of BRI's objections to his use of 'The Beach Boys' trademark, leading to the conclusion that the district court acted appropriately in rejecting his estoppel defense. For the unclean hands defense, Jardine could not provide evidence of BRI's inequitable conduct, despite BRI's negotiation attempts with Jardine regarding a license agreement. The court found no abuse of discretion in rejecting this defense.

Regarding the breach of employment contract claim, Jardine could not substantiate the existence of an employment relationship with BRI, as any agreement would have been with Brother Tours, Inc., which is not involved in this case. Therefore, the court affirmed the summary judgment in favor of BRI.

On the breach of license agreement issue, the district court acknowledged a potential triable issue regarding a non-exclusive license for Jardine, which expired on December 31, 1999. However, Jardine's arguments regarding damages were deemed speculative, as he claimed that touring under 'Beach Boys Family and Friends' resulted in less income compared to touring as 'The Beach Boys,' but did not provide sufficient evidence to quantify these damages against the competing entity led by Love.

Jardine failed to provide specific facts demonstrating damages with reasonable certainty, which led to the affirmation of the district court's summary judgment in favor of BRI regarding Jardine’s counterclaim for breach of a license agreement. The court also denied Jardine’s motion to amend pleadings to add a counterclaim against BRI and additional claims against BRI’s directors for breach of fiduciary duty, ruling that granting the motion would cause undue delay in the proceedings, thus not constituting an abuse of discretion. Summary judgment was affirmed on the trademark infringement claim, as no genuine issue of material fact regarding likelihood of confusion was present. The court outlined the classification of trademarks by increasing distinctiveness: generic, descriptive, suggestive, and arbitrary or fanciful. Descriptive marks, which directly describe goods or services, typically lack trademark protection unless they acquire secondary meaning. Suggestive marks require some imagination to interpret their relation to the goods. The use of trademarked terms in their primary descriptive sense is permissible, as illustrated by an auto manufacturer’s use of "SWEET" for cars not hindering a candy manufacturer from advertising the sweetness of its products.

Defendant newspapers in the New Kids case did not employ the trademark "New Kids on the Block" in its primary descriptive sense of "children who recently moved to this area." Instead, they used it to refer to the subjects of telephone polls. Similarly, in Playboy, the trademark "Playboy Playmate of the Year" was not used descriptively but to identify an individual recognized by that title. The district court found that Jardine’s use of the trademark caused significant confusion among both the general public and event producers, a conclusion that Jardine did not contest on appeal. Trademark infringement law aims to protect trademark owners' goodwill and assist consumers in distinguishing between producers. The classic fair use defense is unavailable when there is a likelihood of confusion regarding the product's origin. In this case, actual confusion was evident, reinforcing the likelihood of future confusion. The third requirement of the nominative fair use defense—absence of any suggestion of sponsorship or endorsement—relates directly to the likelihood of confusion. The nominative fair use analysis replaces the traditional likelihood-of-confusion analysis in this circuit, shifting the burden of proof to the defendant to demonstrate no likelihood of confusion.