IP Law Daily, TRADEMARK—9th Cir.: District court erred in concluding RED GOLD mark was generic, (Mar 28, 2017)

By Peter Reap, J.D., LL.M.

A federal district court in Los Angeles erred in concluding that Solid 21’s registered word mark RED GOLD was invalid because the mark was a generic term for jewelry items that were made of red gold, the U.S. Court of Appeals in San Francisco has decided. The lower court erred in excluding testimony from Solid 21’s expert linguist and proffered customer declarations, the appellate court found. With this additional evidence, Solid 21 demonstrated a triable issue of material fact as to the genericness of the mark, and thus, the district court’s ruling was reversed and remanded (Solid 21, Inc. v. Hublot of America, March 24, 2017, per curiam).

Solid 21 Inc. received a federal registration for the word mark RED GOLD, for use with "[f]ine [j]ewelry made of a special alloying of gold with a distinct color made into fine jewelry, namely, watches, necklaces, bracelets, rings, anklets, cuff links." Defendants Hublot of America, LVMH Moet Hennessy Louis Vuitton Inc., LVMH Moet Hennessy Louis Vuitton SA, and LVMH Watch and Jewelry USA Inc. began to use the words "red gold" with their gold watches "since at least as early as 2005."

In 2014, Solid 21 sued the defendants for trademark infringement, trademark dilution, false description, unfair competition, and declaratory relief. The defendants sought summary judgment on all of those claims. In addition, they sought summary judgment on defendant Hublot’s counterclaims for: (1) a declaratory judgment of trademark invalidity and (2) cancellation of the mark’s federal registration. The defendants’ motion for summary judgment rested on the single overarching assertion that the term "red gold" was not entitled to trademark protection because it was generic.

Expert linguist. The district court excluded a portion of the declaration of Solid 21’s expert linguist, Dr. Ronald Butters, as going to the ultimate issue. In a civil case, "[a]n opinion is not objectionable just because it embraces an ultimate issue," the appellate court noted. Fed. R. Evid. 704(a). The district court excluded the portions of Dr. Butters’s declaration that related to anything other than dictionary definitions of "red gold."

The district court did not explain why this testimony was unhelpful or constituted nothing more than a legal conclusion. The exclusion of this testimony prejudiced Solid 21 by depriving it of evidence related to the primary significance that consumers assign Solid 21’s mark, the appellate court explained. The district court abused its discretion by excluding Dr. Butters’s linguistic opinions as going to the ultimate issue.

Consumer declarations. The district court excluded Solid 21’s proffered consumer declarations under Federal Rule of Civil Procedure 37(c) because Solid 21 did not disclose the witnesses in its initial disclosures or before filing its opposition to summary judgment. In order for Rule 37(c) to bar the introduction of evidence, a party’s failure to disclose must prejudice the opposing party. Hublot could have cured any prejudice by taking the opportunity to conduct additional discovery, including deposing the witnesses if it wished, and supplementing its motion for summary judgment if necessary, the Ninth Circuit reasoned.

The district court’s other stated reasons for excluding the declarations did not justify its ruling, the court held. Several of the consumers stated that they associate "red gold" with Chris Aire and Solid 21. Former Solid 21 employee Mary Davis described her understanding that "red gold" had not been used to describe watches before Solid 21 started using the term. This is the type of evidence that courts have admitted for purposes of determining genericness, the appellate court said.

Additionally, the district court stated that the declarations all came "from employees, former colleagues, or individuals who have known Aire[] for a ‘long time,’" and concluded that this sort of evidence was irrelevant under Ninth Circuit case law. But only one witness was a former Solid 21 employee, and none of the declarations actually described a close personal relationship with Aire. Accordingly, the district court abused its discretion by excluding the consumer declarations.

Triable issue. With this additional evidence, Solid 21 raised a triable issue of material fact concerning whether consumers understand "red gold" to refer only to a particular producer’s goods (in which case the term is not generic) or whether consumers understand the term to refer to the goods themselves (in which case the term is generic), according to the Ninth Circuit.

The case is No. 15-56036.

Attorneys: George Elonge Akwo (Law Offices of George Akwo) for Solid 21, Inc. Sharon Calhoun (Barack Ferrazzano Kirschbaum & Nagelberg LLP) and Stephen Youngerman (Youngerman & McNutt LLP) for Hublot of America, LVMH Moet Hennessy Louis Vuitton Inc. and LVMH Watch & Jewelry USA Inc.

Companies: Solid 21, Inc.; Hublot of America; LVMH Moet Hennessy Louis Vuitton Inc.; LVMH Watch & Jewelry USA Inc.

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