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From Intellectual Property Law Daily, April 24, 2019

No right to jury trial for accounting and disgorgement of profits

By Brian Craig, J.D.

A cosmetics company in a trademark infringement case seeking the remedy of an accounting and disgorgement of profits over use of the mark HARD CANDY was not entitled to a jury trial.

The U.S. Court of Appeals in Atlanta has held that the cosmetics company Hard Candy, LLC in a trademark infringement case seeking the remedy of an accounting and disgorgement of profits over use of its mark HARD CANDY was not entitled to a jury trial because the remedy was equitable in nature. The appeals court also concluded that the federal district court in Miami, following a bench trial, properly found no likelihood of confusion and a fair use defense when a competing cosmetics company used the term "hard candy" (Hard Candy, LLC v. Anastasia Beverly Hills, Inc., April 23, 2019, Marcus, S.).

Hard Candy, LLC, a cosmetics company headquartered in Hollywood, Florida, owns the registered HARD CANDY mark in connection with the sale of cosmetics. Anastasia Beverly Hills, Inc., another cosmetics company, announced the release of a new edition in its line of "Glow Kits." The Gleam Glow Kit included the words "hard candy" in capital letters on the back and inside of the package to designate a peach-pink shade of makeup. Hard Candy filed a complaint alleging trademark infringement and other related claims against Anastasia. Hard Candy sought an accounting and the disgorgement of Anastasia’s profits, statutory damages, a permanent injunction barring Anastasia’s use of its mark, declaratory relief, and fees and costs. The complaint included a request for actual damages, but Hard Candy dropped the request for actual damages before trial. The district court then struck Hard Candy’s jury trial demand because all of the remaining remedies were equitable in nature. After a three-day bench trial, the district court determined that Hard Candy had not met its burden on likelihood of confusion. The district court also concluded that even if Hard Candy could establish infringement, Anastasia had made out a fair use defense because it used the term "hard candy" in good faith as a description of the product, not as a mark. Hard Candy appealed.

Jury trial. The appeals court first concluded that Hard Candy was not entitled to a jury trial on its claim for an accounting and disgorgement of the defendant’s profits. The court looked to the Seventh Amendment and other cases to conclude that the remedy of an accounting and disgorgement of profits for trademark infringement is equitable in nature and has long been considered that way. An action for disgorgement of improper profits is traditionally considered an equitable remedy. Furthermore, Hard Candy expressly disclaimed its request for actual damages prior to trial. Thus, the district court properly held that a plaintiff seeking the defendant’s profits in lieu of actual damages is not entitled to a jury trial.

Likelihood of confusion. The appeals court then turned the merits of the case whether Hard Candy showed a likelihood of confusion. The district court properly applied the seven likelihood of confusion factors, include intent to infringe and evidence of actual confusion. The record indicated that there was ample factual evidence to support the trial court’s findings. The district court weighed each of the factors with great care. Viewing the evidence as a whole, the trial court properly determined that Hard Candy had not established a likelihood of confusion.

Fair use defense. Finally, the Eleventh Circuit affirmed the district court’s conclusion that Anastasia made out a fair use defense to infringement. The district court looked to the overall context; the lettering, the type, the style, the size, and the visual placement of the words on the product. The district court accepted the argument that "hard candy" was used in a descriptive sense because "it was used to describe the sheen" of the makeup shade that the term labeled. The district court attempted to discern how a reasonable consumer of cosmetics would perceive Anastasia’s use of the mark, not relying purely on Anastasia’s subjective intent. Hard Candy’s argument that Anastasia was required to introduce evidence of actual consumer perception has no support in the law. Finding no clear error, the Eleventh Circuit affirmed the district court’s decision.

This case is No. 18-10877.

Attorneys: John P. Margiotta (Fross Zelnick Lehrman & Zissu, PC) for Hard Candy, LLC. Travis R. Wimberly (Pirkey Barber, PLLC) for Anastasia Beverly Hills, Inc.

Companies: Hard Candy, LLC; Anastasia Beverly Hills, Inc.

MainStory: TopStory Trademark AlabamaNews FloridaNews GeorgiaNews

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