IP Law Daily, TOP STORY—S.D.N.Y.: Diesel Brothers merchandise infringes DIESEL apparel trademarks, (Apr 4, 2022)

By George Basharis, J.D.

Apparel designer granted summary judgment on claims of federal trademark infringement, unfair competition, and trademark dilution.

Apparel designer Diesel was entitled to summary judgment on claims that merchandise bearing the mark DIESEL POWER GEAR sold in connection with a television show about diesel trucks and the related mark DIESELSELLREZ used to promote the products at brick-and-mortar stores and online were confusingly similar and diluted the designer’s famous DIESEL brand, a federal district court in New York decided. The court found the DIESEL mark to be strong, substantially similar to DIESEL POWER GEAR and DIESELSELLREZ, and used to sell similar products in similar markets. Whether or not the DIESEL POWER GEAR and DIESELSELLREZ were adopted in bad faith to take advantage of the famous DIESEL brand, the marks were confusingly similar as a matter of law. Moreover, the DIESEL POWER GEAR and DIESELSELLREZ marks diluted the DIESEL mark, which had been in use for decades and featured in prominent publications throughout the United States (Diesel S.p.A. v. Diesel Power Gear, LLC, March 30, 2022, Vyskocil, M.).

Diesel S.p.A. and Diesel U.S.A., Inc. (Diesel) design, manufacture, market, and distribute apparel, footwear, and accessories using the word “Diesel.” The DIESEL mark was first registered in 1988, and products bearing the DIESEL brand have generated millions of dollars in annual sales and have been featured in prominent publications throughout the United States. Diesel Power Gear was formed in 2013 by two television personalities known as the Diesel Brothers. Diesel Power Gear’s principal revenue stream comes from the sales of apparel and gear promoting recreational diesel trucks.

In 2015, Diesel Power Gear filed an application to register the trademark DIESEL POWER GEAR. Diesel opposed the application, although Diesel Power Gear did not respond and the Trademark Trial and Appeal Board sustained the opposition, entered judgment against Diesel Power Gear, and refused the registration. In 2017, Diesel Power Gear again applied for registration, but the Board granted summary judgment in favor of Diesel after determining that its 2015 decision precluded the subsequent registration. Nonetheless, Diesel Power Gear continued to use the Diesel Power Gear mark on apparel. Consequently, Diesel sued Diesel Power Gear asserting claims for trademark infringement and dilution under the Lanham Act and unfair competition under federal and New York laws.

Claim preclusion. The Board entered summary judgment in favor of Diesel on its opposition, which claimed the applied-for mark DIESEL POWER GEAR would likely cause confusion with its registered DIESEL mark. The Board also determined that the proposed mark would dilute the registered DIESEL mark. The court determined that the default judgment entered by the Board acted as a final judgment on the merits and precluded Diesel Power Gear from re-litigating whether its alleged infringing mark was likely to cause confusion or dilute the DIESEL mark. The court rejected Diesel Power Gears’ arguments that it was not “incentivized” to zealously litigate the issue before the Board or that it did not have a full and fair opportunity to litigate the issue because of the “low stakes” nature of the opposition proceeding. The court noted that the U.S. Supreme Court has previously said that when registration is opposed, there is good reason to think that both sides will take the matter seriously. Nonetheless, even without the benefit of claim preclusion, the court ruled that Diesel was entitled to summary judgment on their infringement and federal unfair competition claims.

Confusion likely. The court’s federal trademark infringement and unfair competition analysis was premised on post-sale confusion. The court began by noting that the DIESEL mark was incontestable, and then concluded that the balance of the Polaroid factors weighed in favor of Diesel and a finding that the DIESEL POWER GEAR and DIESEL marks for wearing apparel and related products were confusingly similar. To begin with, Diesel Power Gear conceded that the DIESEL, and related marks using the word “diesel” in all capital letters, were strong marks. Moreover, where used at physical locations or on merchandise, Diesel Power Gear’s DIESELSELLERZ and DIESEL POWER GEAR emphasized the word “diesel,” often by displaying the word in all black capital letters and either in black font or in white font in front of a dark background. Given the strength of the DIESEL marks, their overall impression, and the context in which they are found, Diesel Power Gear’s marks create a likelihood of confusion with the DIESAL marks, according to the court.

The likelihood of post-sale confusion also was strong because the products were in close market proximity to one another as both Diesel and Diesel Power Gear sold apparel and accessory products, including t-shirts and jeans. Moreover, the companies’ products were sold throughout the U.S., therefore, Diesel had already “bridged the gap” into Diesel Power Gear’s market. Diesel failed to establish actual confusion, but actual confusion does not need to be shown under the Lanham Act, the court said.

Diesel also failed to establish bad faith. Bad faith concerned whether Diesel Power Gear adopted its mark with the intention of capitalizing on Diesel’s reputation and goodwill and any likely confusion between the two companies’ products. When Diesel Power Gear was established in 2013, its graphic designer had actual knowledge of the DIESEL marks, which had been registered since 1988, and the brand had already acquired wide recognition. However, Diesel Power Gear’s chief operating officer testified that the company never used the word “diesel’ with the intent to benefit from the DIESEL brand. Although the court found the evidence “weak,” it concluded that Diesel failed to show bad faith as a matter of law.

Finally, there was no evidence that Diesel Power Gear’s products were of inferior quality to Diesel’s products or as to the sophistication of consumers. Still, the balance of the Polaroid factors favored Diesel and the court granted the company summary judgment on its trademark infringement claim. The court rejected Diesel Power Gears’ fair use defense given that the company conceded it used the DIESEL POWER GEAR mark in a “source identifying” manner. Consequently, the company’s argument that it used the term “diesel” in a descriptive sense and other than as mark was unconvincing. Despite its concession, Diesel Power Gear contended that the term “diesel” was descriptive of the “diesel-centric” services and products the company provided. However, Diesel Power Gear never sought to disclaim “diesel” from its registration, instead, as the company previously conceded, the term was used to identify the source of the products sold by the company.

Dilution. Diesel also was entitled to summary judgment on its trademark dilution claim. The company established that its mark was widely recognized by the general public and had become sufficiently famous under the Lanham Act. The DIESEL mark was incontestable and had inherent and acquired distinctiveness. The mark had been used for decades, during which time millions of dollars in sales had been made of products featured prominently in prominent publications. The court rejected Diesel Power Gear’s unsupported argument that the DIESEL mark had acquired only “niche” fame or that Diesel was required to support its dilution claim by evidence of actual recognition of the DIESEL mark.

Diesel further established that the DIESEL POWER GEAR mark diluted the DISEL mark by blurring. Dilution requires proof of the likelihood that use of a competing mark impairs the distinctiveness of a famous mark. The Lanham Act lists six factors, the balance of which favored Diesel. The marks were substantially similar, and the DIESEL mark was distinctive and highly recognizable. Diesel also enforced its rights to the mark, and despite the lack of evidence that Diesel Power Gear acted in bad faith or actual association between the companies’ products, Diesel was entitled to summary judgment. Moreover, the court found that Diesel Power Gear’s infringement was willful given the company’s reckless disregard of the DIESEL mark, which was widely known, and of which Diesel Power Gear had actual knowledge, when it created its designs bearing the DIESEL POWER GEAR mark.

Finally, the court dismissed as moot Diesel’s state law claim for unfair competition claim. The court already found in favor of Diesel on its trademark infringement, trademark dilution, and federal unfair competition claims. Therefore, further relief under the state law would be either be duplicative or impossible.

The Case is No. 1:19-cv-09308-MKV.

Attorneys: Ashly Erin Sands (Epstein Drangel LLP) for Diesel S.P.A. and Diesel USA, Inc. Jonathan Adam Winter (St. Onge Steward Johnston & Reens LLC) for Diesel Power Gear, LLC.

Companies: Diesel USA, Inc.; Diesel Power Gear, LLC

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