IP Law Daily, TRADEMARK—S.D. Miss.: Jury must decide tobacco shops’ row over XHALE marks, (Oct 9, 2024)

By Kevin M. Finson

Summary judgment was inappropriate for either party in an infringement dispute over the mark XHALE because genuine questions of material fact existed as to whether there was a likelihood of confusion.

Neither of two tobacco shops using similar XHALE trademarks showed an absence of disputed of material fact on the question of likelihood of confusion, the U.S. District Court in Hattiesburg, Mississippi, has held. A jury would need to resolve fact questions about commercial strength and similarity of the marks, among other issues (Green Rush, LLC v. Xhale Tobacco & Hookah, Inc., No. 2:23-cv-00071-KS-MTP (S.D. Miss. Oct. 8, 2024)).

Green Rush, LLC (Green Rush), d/b/a Xhale City, was the owner of the federally registered trademark XHALE CITY in standard characters and used the mark in connection with a number of stores selling vape and tobacco products. Green Rush brought suit for infringement under federal and state trademark law, as well as for unfair competition and unjust enrichment, against Xhale Tobacco & Hookah, Inc. and a variety of related entities (collectively, Xhale), which operated a chain of tobacco and vape stores under the name Xhale Smoke Shop. Both parties moved for summary judgment.

Priority. Green Rush argued that it has a strong, suggestive trademark, and that its uncontestable federal trademark registration for XHALE CITY gave it nationwide priority to the mark and presumptively valid trademark rights. Xhale countered that while Green Rush possesses the exclusive right to use the term XHALE CITY for providing vape store services, it does not have the exclusive right to the words “Xhale” or “City.” Xhale argued that the term XHALE CITY is a weak, suggestive trademark, as Green Rush itself ha identified thirty-two competitors using “xhale” in their trade names and admitted that three competitors have superior trademark rights. Xhale also pointed to years of concurrent use without actual consumer confusion.

Trademark infringement. Green Rush moved for summary judgment on its federal trademark infringement claim, arguing there was no evidence in the record from which it could be disputed that it owned a legally protectable mark and that that there was a likelihood of confusion.

The court disagreed, finding that even if it assumed for the sake of argument that the mark was protectable there were genuine questions of material fact about the likelihood of confusion. Specifically, the court found questions existed about the commercial strength of the registered mark, the similarity of the marks, the similarity of the goods, retail outlets, purchasers, and advertising media, as well as actual confusion. All of these issues were disputed and relied on questions of fact which would need to be determined by a jury.

Other claims. Because there was a genuine question of material fact as to likelihood of confusion, summary judgment was also not appropriate on Lanham Act unfair competition, state law trademark infringement, and unjust enrichment claims, all of which depended on similar analyses.

Defendant’s motion. Xhale Smoke Shop moved for summary judgment on the ground that there was no likelihood of consumer confusion because Green Rush was attempting to exclude all other use of the word “xhale,” which should not be capable of trademark protection. The court held that genuine questions of material fact existed as to likelihood of confusion for the same reasons it reached that conclusion on Green Rush’s motion.

The court denied both motions for summary judgment.

The Case is No. 2:23-cv-00071-KS-MTP.

Judge: Starrett, K.

Attorneys: Matthew D. Miller (Taylor & Bush, PA) for Green Rush, LLC. Andrew W. Coffman (Phelps Dunbar, LLP) for Xhale Tobacco & Hookah, Inc.

Companies: Green Rush, LLC; Xhale Tobacco & Hookah, Inc.

Cases: Trademark MississippiNews