IP Law Daily, TRADEMARK—E.D. La.: Business sufficiently alleged trademark infringement, citing confusion on the part of consumers, vendors, (Sep 12, 2022)

By Patricia K. Ruiz, J.D.

The plaintiffs alleged sufficient facts showing defendants’ intent to derive benefits from plaintiffs’ reputation, specifically to obtain credit with third-party vendors.

A pawn shop business sufficiently alleged trademark infringement claims under the Lanham Act, held the U.S. District Court for the Eastern District of Louisiana, which denied the defendant's motion to dismiss. The court applied a non-exhaustive, eight-factor test set forth by the Fifth Circuit and determined the facts alleged by the business established a very strong likelihood of confusion (AJ Holdings of Metairie, LLC v. BJ’s Jewelry & Loan, LLC, September 9, 2022, Lemelle, I.).

Background. BJ’s Pawn Shop has conducted business in the greater New Orleans metropolitan area for more than 33 years and has used the mark “Where the Smart Money’s At” and variations thereof for more than 33 years. It also used signage including: (1) red background with white lettering and/or white background with red lettering; (2) bold sans serif typeface; and (3) “BJ’s PAWN” and/or “BJ’s PAWN SHOP” and/or “CASH LOANS.” The decedent held all shares of BJ’s Pawn and Jewelry, Inc., which owned the trademark in dispute, prior to his death on September 23, 2016. Plaintiffs, the decedent’s children and AJ Holdings of Metairie, LLC, acquired all rights, title, and interest in and of BJ’s Pawn & Jewelry, Inc., through an Asset Purchase Agreement, which included the use of its intellectual property, such as trademarks, service marks, copyrights, and the use of its trade name, “BJ’s Pawn Shop.”

Alleged infringement. A former employee of BJ’s Pawn Shop is the founder, member, officer, director, manager, and registered agent of four BJ’s Jewelry & Loan, LLC entities (BJJL, collectively). The plaintiffs allege the former employee used his prior affiliation with BJ’s Pawn Shop and the similarity in the names between his entities and the business owned and operated by AJ Holdings to obtain credit with third-party vendors. They also allege BJJL utilized marks, advertisement, and signage identical to or deceptively similar to those belonging to AJ holdings. Thus, the plaintiffs allege BJJL caused confusion, mistake, and deceit in the New Orleans metropolitan area between BJ’s Pawn Shop and BJJL. The plaintiffs filed the instant complaint alleging trademark infringement, unfair competition, and false designation of origin. BJJL filed a motion to dismiss for failure to join fourteen indispensable parties, which the court denied. BJJL filed another motion to dismiss, this time for lack of subject matter jurisdiction, arguing the plaintiffs cannot assert a federal claim under the Lanham Act.

The plaintiffs seek to enforce alleged trademarks and service mark through several causes of action, and BJJL argues the plaintiff failed to state a claim for trademark infringement. The Lanham Act imposes civil liability on any person who without consent uses in commerce any reproduction, counterfeit, copy, or colorable imitation of a registered mark in connection with the sale, offering for sale, distribution, or advertising of any goods or services on or in connection with which such use is likely to cause confusion, or to cause mistake, or to deceive. To prevail on a trademark infringement claim, a plaintiff must show (1) a protectable right in a mark, and (2) that the defendant’s use of the marks creates a likelihood of confusion as to the mark’s source, affiliation, or sponsorship.

Eight factors. As to the first element, the court found the plaintiffs sufficiently alleged a protectable right in marks associated with BJ’s Pawn & Jewelry, based on the Asset Purchase Agreement with the former owner’s estate. The plaintiffs also sufficiently alleged BJJL’s use of protected marks causes a likelihood of confusion, the court found, having consulted the Fifth Circuit’s eight non-exhaustive and flexible “digits of confusion": (1) the type of mark allegedly infringed; (2) the similarity between the two marks; (3) the similarity of the products or services; (4) the identity of the retail outlets and purchasers; (5) the identity of the advertising media used; (6) the defendant’s intent; (7) any evidence of actual confusion; and (8) the degree of care exercised by potential purchasers.

The court held that, as to the first factor, the plaintiffs asserted the word marks “BJ’s Pawn Shop” and the phrase “Where the Smart Money’s At” are descriptive and denote an attribute or quality of goods the plaintiffs possess. Similarly, the plaintiffs assert the word marks are suggestive of the quality of goods and services offered by BJ’s Pawn and Jewelry. Regarding the marks’ similarity, the complaint alleged the defendants are using nearly, if not completely, identical marks as those used by the plaintiffs, including the phrase “Where the Smart Money’s At” and signage containing a red background with white lettering and/or white background with red lettering, in bold sans serif typeface. The plaintiffs allege that the names of the entities alone demonstrate mark similarity. The court also found the plaintiffs properly alleged facts to support that there is a similarity between the products and services being offered given the entities offer the exact same goods and services. Regarding the fourth element, the court found the plaintiffs alleged BJJL opened various retail locations in small shopping centers like the ones where the plaintiffs’ store is located and target the same customer base. Concerning the fifth element, the complaint alleges the defendants have used marks belonging to the plaintiffs on their website, social media pages, print advertisements, television advertisements, and signage. Additionally, the court found the plaintiffs allege facts showing defendants’ intent to derive benefits from plaintiffs’ reputation, specifically to obtain credit with third-party vendors. Finally, the plaintiffs alleged that actual confusion exists given several of its customers attempted to return items purchased at defendants’ stores, thinking the two were affiliated.

Accepting all factual allegations as true, the court held the plaintiffs pled sufficient facts demonstrating that BJJL used the plaintiffs’ protected marks, creating a very strong likelihood of confusion sufficient to allege a factual and legal basis for trademark infringement under the Lanham Act.

The case is No. 2:21-cv-00374-ILRL-JVM.

Attorneys: Vincent F. Wynne, Jr. (Wynne, Goux & Lobello, LLC) for AJ Holdings of Metairie, LLC. Robert T. Garrity, Jr. (Law Office of Robert T. Garrity, Jr.) for BJ's Jewelry & Loan, LLC.

Companies: AJ Holdings of Metairie, LLC; BJ's Jewelry & Loan, LLC

Cases: Trademark LouisianaNews