# Sueros y Bebidas Rehidratantes, S.A. de D.V. v. Indus Enterprises, LLC

> District Court, S.D. Texas · September 5, 2023

URL: https://www.frixlaw.com/law-library/cases/10676928

## Case

- **Court:** District Court, S.D. Texas
- **Decided:** September 5, 2023
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

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## Opinion text

IN THE UNITED STATES DISTRICT COURT September 05, 2023
FOR THE SOUTHERN DISTRICT OF TEXAS Nathan Ochsner, Clerk
HOUSTON DIVISION

§
SUEROS Y BEBIDAS §
REHIDRATANTES, S.A. DE D.V., et al., §
§
Plaintiff, § CIVIL ACTION NO. H-22-1304
v. §
§
INDUS ENTERPRISES, LLC, §
§
Defendant. §
§

MEMORANDUM AND OPINION
Sueros & Bebidas Rehidratantes, S.A. de D.V., sells a rehydration beverage that is made
in Mexico and sold in the United States by an exclusive licensee, CAB Enterprises, Inc. The
beverage is sold under registered trademarks and trade dress as “Electrolit.” (Docket Entry No.
44 at 7). Sueros and CAB have sued Indus Enterprises, LLC, d/b/a Texas Jasmine, for selling a
materially different formula under an unauthorized and fake Electrolit trademark and dress. Texas
Jasmine purchases Mexican Electrolit, relabels it, and sells it to United States convenience stores
and grocers. (Docket Entry No. 49 at 20).
The plaintiffs have moved for partial summary judgment on counts I, III, VIII, IX, X, and
XI of the complaint. These counts allege federal and common law trademark infringement, false
designation of origin, common-law unfair competition, common-law unfair competition by
misappropriation, and unjust enrichment. In support of their motion, the plaintiffs submitted a
report and testimony about a survey conducted by Professor David Franklyn, who is a law school
professor with experience teaching at a business school. Texas Jasmine has moved to exclude his
report and testimony under Rule 702 of the Federal Rules of Evidence, describing them as “the
charlatan type of fools [sic] gold that [the Rule] was designed to prevent.” (Docket Entry No. 43
at 7).
The court has carefully reviewed the record, including the report and deposition of
Professor Franklyn, as well as Rule 702, Daubert v. Merrill Dow Pharms., Inc., 509 U.S. 579

(1993) and subsequent cases. Based on that review, the court concludes that while Professor
Franklyn’s report and testimony may not be pure gold, they meet the gold standard of sufficient
reliability to be helpful to the factfinder. Based on the parties’ briefing, the summary judgment
evidence, the record, and the relevant law, the court grants the plaintiffs’ motion for summary
judgment. The reasons are set out below.
I. The Standard for Expert Testimony
Federal Rule of Evidence 702 provides:
If scientific, technical, or other specialized knowledge will assist the trier of fact to
understand the evidence or to determine a fact in issue, a witness qualified as an expert by
knowledge, skill, experience, training, or education, may testify thereto in the form of an
opinion or otherwise, if
(1) the testimony is based upon sufficient facts or data,
(2) the testimony is the product of reliable principles and methods, and
(3) the witness has applied the principles and methods reliably to the facts of the
case.

“Rule 702 charges trial courts to act as ‘gate-keepers,’ making a ‘preliminary assessment of
whether the reasoning or methodology underlying the testimony is scientifically valid and of
whether that reasoning or methodology properly can be applied to the facts in issue.’” Pipitone v.
Biomatrix, Inc., 288 F.3d 239, 243–44 (5th Cir. 2002) (quoting Daubert v. Merrell Dow Pharm.,
Inc., 509 U.S. 579, 592–93 (1993)). Expert testimony must be both “relevant and reliable” to be
admissible. United States v. Tucker, 345 F.3d 320, 327 (5th Cir. 2003) (quoting Pipitone, 288 F.3d
at 243–44); Daubert, 509 U.S. at 589 (“[U]nder the Rules the trial judge must ensure that any and
all scientific testimony or evidence admitted is not only relevant, but reliable.”).
In making its reliability determination, the court considers the soundness of the general
principles or reasoning on which the expert relies and of the methodology that applies those
principles to the facts of the case. Daubert, 509 U.S. at 594–95; Watkins v. Telsmith, Inc., 121 F.3d

984, 989 (5th Cir. 1997). Several factors guide a district court’s inquiry into the reliability of expert
testimony, including: “(1) whether the technique in question has been tested; (2) whether the
technique has been subject to peer review and publication; (3) the error rate of the technique; (4)
the existence and maintenance of standards controlling the technique's operation; and (5) whether
the technique has been generally accepted[.]” United States v. Perry, 35 F.4th 293, 329 (5th Cir.
2022) (citing Daubert v. Merrill Dow Pharms., 509 U.S. 579, 593–94 (1993)). Not all factors apply
in every case.
Admissibility of expert testimony is an issue for the trial judge to resolve under Federal
Rule of Evidence 104(a). Daubert, 509 U.S. at 592–93. The party offering the testimony must

prove by a preponderance of the evidence that the expert’s opinion is relevant and reliable.
Bourjaily v. United States, 483 U.S. 171, 175–76 (1987); Mathis v. Exxon Corp., 302 F.3d 448,
460 (5th Cir. 2002). “A trial court’s ruling regarding admissibility of expert testimony is protected
by an ambit of discretion and must be sustained unless manifestly erroneous.” Satcher v. Honda
Motor Co., 52 F.3d 1311, 1317 (5th Cir. 1995) (citation omitted).
II. The Rule 56 Standard
“Summary judgment is appropriate where ‘the movant shows that there is no genuine
dispute as to any material fact and the movant is entitled to judgment as a matter of law.’”
Springboards to Educ., Inc. v. Pharr-San Juan-Alamo Indep. Sch. Dist., 33 F.4th 747, 749 (5th
Cir. 2022) (quoting Fed. R. Civ. P. 56(a)). “A fact is material if it might affect the outcome of the
suit and a factual dispute is genuine if the evidence is such that a reasonable jury could return a
verdict for the nonmoving party.” Thompson v. Microsoft Corp., 2 F.4th 460, 467 (5th Cir. 2021)
(quoting reference omitted). The moving party “always bears the initial responsibility of
informing the district court of the basis for its motion[] and identifying” the record evidence
“which it believes demonstrate[s] the absence of a genuine issue of material fact.” Celotex Corp.

v. Catrett, 477 U.S. 317, 323 (1986).
“When ‘the non-movant bears the burden of proof at trial,’ a party moving for summary
judgment ‘may merely point to the absence of evidence and thereby shift to the non-movant the
burden of demonstrating by competent summary judgment proof that there is [a dispute] of
material fact warranting trial.” MDK S.R.L. v. Proplant Inc., 25 F.4th 360, 368 (5th Cir. 2022)
(alteration in original) (quoting reference omitted). “However[,] the movant ‘need not negate the
elements of the nonmovant’s case.’” Terral River Serv., Inc. v. SCF Marine Inc., 20 F.4th 1015,
1018 (5th Cir. 2021) (quoting Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (en
banc) (per curiam)). “If ‘reasonable minds could differ’ on ‘the import of the evidence,’ a court

must deny the motion.” Sanchez v. Young County, 956 F.3d 785, 791 (5th Cir. 2020) (quoting
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250–51 (1986)).
After the movant meets its Rule 56(c) burden, “the non-movant must come forward with
‘specific facts’ showing a genuine factual issue for trial.” Houston v. Tex. Dep’t of Agric., 17 F.4th
576, 581 (5th Cir. 2021) (quoting references omitted). The nonmovant “must identify specific
evidence in the record and articulate the ‘precise manner’ in which the evidence” aids their case.
Shah v. VHS San Antonio Partners, L.L.C., 985 F.3d 450, 453 (5th Cir. 2021) (quoting reference
omitted). Of course, all reasonable inferences are drawn in the nonmovant’s favor. Loftin v. City
of Prentiss, 33 F.4th 774, 779 (5th Cir. 2022). But a nonmovant “cannot defeat summary judgment
with conclusory allegations, unsubstantiated assertions, or only a scintilla of evidence.” Jones v.
Gulf Coast Rest. Grp., Inc., 8 F.4th 363, 369 (5th Cir. 2021) (quoting reference omitted).
III. Analysis
A. Professor Franklin’s Testimony
There are two major parts to the motion to exclude. The first is that Professor Franklyn’s

education, credentials, and experience are not in marketing and branding. The second is that his
survey was faulty.
Sueros retained Professor Franklyn to survey consumers as to whether the identified
differences between its products and the Texas Jasmine products were material differences. The
question was certainly relevant. As Texas Jasmine argues, the key for gray-market goods cases—
cases in which third parties import brand-name goods protected by trademark into the United
States—is whether the product differences would affect the consumer’s purchasing decisions and
are therefore material. To determine whether the differences between the plaintiff’s and the
defendants’ rehydration beverages were material, Professor Franklyn used a survey form that he
had developed and used five or six times. The form has not been used by others or peer reviewed.

The differences between the products do not appear disputed. They are:
a. Packaging and labeling on bottles of genuine U.S. Electrolit® contain text written
exclusively in English, while packaging and labeling applied on bottles of Unauthorized
Electrolit contain Spanish.

b. Genuine U.S. Electrolit® products contain the unique, U.S. Electrolit® formula, while
Unauthorized Electrolit contains a different formula. For example, genuine U.S.
Electrolit® uses all-natural flavoring, while Unauthorized Electrolit contains the artificial
sweetener, Sucralose.

c. To comply with U.S. Food and Drug Administration (“FDA”) regulations, labels on
genuine U.S. Electrolit® products all ingredients in the product and include FDA-
compliant “Nutrition Facts.” Labels on Unauthorized Electrolit products do not, because
those products are only authorized to be sold outside the United States where different
labeling regulations apply. For example, labels on Unauthorized Electrolit products do not
list that Sucralose is an ingredient in that formula.
d. Labels on genuine U.S. Electrolit® products list a U.S. toll-free number for customers
to call with comments or complaints. Labels on Unauthorized Electrolit products do not
list a U.S. toll-free number because they are not authorized to be sold in the United States.

e. Packaging on genuine U.S. Electrolit® states that the product is gluten-free and
sweetened with natural glucose, while Unauthorized Electrolit does not.

f. Packaging on genuine U.S. Electrolit® uses imperial measurements (e.g., fluid ounces)
that U.S. consumers are accustomed to whereas Unauthorized Electrolit packaging uses
metric measurements (e.g., milliliters) that international consumers are accustomed to.

g. Packaging on genuine U.S. Electrolit® does not make health claims regarding the
product because such pharmaceutical-like claims have not yet been approved by the FDA.
Unauthorized Electrolit packaging, by contrast, contains health claims that it treats and
prevents dehydration that comply with applicable regulations in the countries where
Unauthorized Electrolit is authorized to be sold.

h. Packaging on genuine U.S. Electrolit® lists a “USE BY” date that informs retailers and
consumers about the freshness and the quality of the product. Packaging on Unauthorized
Electrolit does not list a “USE BY” date.

i. Packaging on genuine U.S. Electrolit® includes bottle deposit refund information
applicable in the United States and written in English, while Unauthorized Electrolit
packaging does not.

(Docket Entry No. 46 at 4–5).
Professor Franklyn’s survey was systematic. It was a double-blind survey of 392
Americans who had purchased rehydration beverages over the past year or said that they were
likely to do so over the next year. (Id. at 9). Each respondent was asked how important each of 14
product differences would be to their decision to purchase such a beverage. Each question could
be answered either “very important,” “important,” “slightly important,” “not at all important,” and
“don’t know or don’t have an opinion about that.” (Docket Entry No. 45-12). The survey showed
that in all but one category — whether the label identified the product as gluten free—over 50%
of those responding found the difference “very important” or “important” to their purchasing
decision. (Id.). The greatest number of respondents stated that whether the label included a “use
by date,” whether it listed all ingredients, and whether the product was authorized for sale in the
United States was “very important” or “important” to their purchasing decision. (Id. at 13).
The defendants cite Jaguar Land Rover Ltd. v. Bombardier Recreations Products, Inc.,
2019 WL 13032105 (E.D. Mich. Jan. 4, 2019), as a case in which the judge excluded some of Mr.
Franklyn’s testimony. The testimony concerned whether a junior mark used for a recreational

vehicle was infringing on a similar senior mark used for related goods. The court in that case ruled
that the fact that Mr. Franklyn had taught courses in business, marketing, advertising, trademarks,
and survey design did not make him a marketing and branding expert. The court granted the
plaintiff’s motion to exclude Mr. Franklyn’s rebuttal testimony, but, importantly for the present
case, denied the plaintiff’s motion to exclude Mr. Franklyn’s survey as evidence. Jaguar Land
Rover, 2019 WL 13032105 at 3.
The defendants urge the court to exclude the survey because Professor Franklyn is not a
marketing expert, although he teaches trademark law in law school and has taught marketing and
advertising classes in business school. He does not have degrees in, or publications specifically

on, marketing or branding. Most of his “marketing related” services are in litigation. He
developed his own survey to measure “material differences” in products. He has used the survey
three or four other times but has not published it or otherwise sought or received peer reviews or
marketed it to others to adopt. He did not “pilot test” his survey form before using it in this case.
And, according to the defendants, he asked the wrong questions: he should have asked about
consumer behavior (the way people choose and use a product), but he instead asked about
consumer perception (the opinions, feelings, and beliefs customers have about the product brand).
The question is whether the weaknesses in training and experience the defendants point to
require excluding Professor Franklyn’s report and testimony about his opinions, or whether they
allow admission but affect the weight to be given those opinions. “As a general rule, questions
relating to the bases and sources of an expert’s opinion affect the weight to be assigned that opinion
rather than its admissibility and should be left for the jury’s consideration.” United States v. 14.38
Acres of Land, More or Less Sit. In Leflore County, Miss., 80 F.3d 1074, 1077 (5th Cir. 1996)
(quoting Viterbo v. Dow Chemical Co., 826 F.2d 420, 422 (5th Cir. 1987).

The court concludes that Professor Franklyn’s survey is admissible, because it is
straightforward, clear, and is consistent with the undisputed facts showing that the defendants’
rehydration beverage product copies the plaintiffs’ trade dress. The product packaging and
labeling make them appear to be virtually identical, but the contents are clearly materially different,
and, on closer inspection, the labeling information is materially different. (Docket Entry No. 14
at 14–16). The report and testimony on the survey are admissible.
B. Infringement Liability
Section 32 of the Lanham Act provides a cause of action for infringement when, without
the registrant’s consent, one 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. . . .” 15 U.S.C. § 1114(1)(a). To prove infringement,
a plaintiff must show that it owns a legally protectable mark and that there is a likelihood of
confusion between that mark and the defendants’ allegedly infringing material. Am. Rice Inc. v.
Producers Rice Mill, Inc., 518 F.3d 321, 329 (5th Cir. 2008). The defendant bears the burden in
challenging a registered mark’s validity. Pebble Beach Co. v. Tour18 I, Ltd., 942 F. Supp. 1513,
1537 (S.D. Tex. 1996).
The Fifth Circuit assesses the likelihood of confusion based on the following digits of
confusion: “(1) strength of the plaintiff’s mark; (2) similarity of design between the marks; (3)
similarity of the products; (4) identity of retail outlets and purchasers; (5) similarity of advertising
media used; (6) the defendants’ intent; (7) actual confusion; and (8) degree of care exercised by
potential purchasers.” Am. Rice, 518 F.3d at 329 (citing Oreck Corp. v. U.S. Floor Systems, Inc.,

803 F.2d 166, 170 (5th Cir. 1986)); Xtreme Lashes, LLC v. Xtended Beauty, Inc., 576 F.3d 221,
227 (5th Cir. 2009). The court must assess and weigh each digit to determine whether there is a
likelihood of confusion. “No one factor is dispositive, and a finding of a likelihood of confusion
does not even require a positive finding on a majority of these ‘digits of confusion.’” Elvis Presley
Enters., Inc. v. Capece, 141 F.3d 188, 194 (5th Cir. 1998) (quoting Conan Properties, Inc. v.
Conans Pizza, Inc., 752 F.2d 145, 150 (5th Cir. 1985)).
The likelihood of confusion standard used in Lanham Act infringement analysis also
applies to federal and common-law unfair competition and trademark infringement claims. Matrix
Essentials, Inc. v. Emporium Drug Mart, Inc., 988 F.2d 587, 592 (5th Cir. 1993); Scott Fetzer Co.

v. House of Vacuums Inc., 381 F.3d 477, 483–84 (5th Cir. 2004). False designation of origin and
unjust enrichment claims are also analyzed under this test when the crux of the claim is based on
use of a trademark. Am. Century Proprietary Holdings, Inc. v. Am. Century Cas. Co., 295 F. App’x
630, 635 (5th Cir. 2008); Bos. Pro. Hockey Ass’n, Inc. v. Dallas Cap & Emblem Mfg., Inc., 510
F.2d 1004, 1010 (5th Cir. 1975). Although the likelihood of confusion is generally a fact question,
Elvis Presley Enters., 141 F.3d at 196, summary judgment is proper if the undisputed facts in the
“summary judgment record compel[] the conclusion that the movant is entitled to judgment as a
matter of law.” Bd. of Supervisors for La. State Univ. Agric. & Mech. Coll. v. Smack Apparel Co.,
550 F.3d 465, 474 (5th Cir. 2008) (citing Beef/Eater Rests., Inc. v. James Burrough Ltd., 398 F.2d
637, 639 (5th Cir. 1968)).
i. Possession of a Legally Protectable Mark
The first element of trademark infringement is possession of a legally protectable mark.
Am. Rice, 518 F.3d at 329. To be protectable, a mark must be distinctive, either inherently or by

achieving secondary meaning. Id. Sueros has multiple federally registered trademarks. (Docket
Entry No. 45 at 12). Under the Lanham Act, Sueros’s certificate of registration for each of its
federal trademarks is prima facie evidence of the validity of the marks and of the exclusive right
to use them in connection with the sale of rehydration beverages. 15 U.S.C. § 1057(b), § 1115(a).
Three of Sueros’s four federal trademarks have become incontestable, and Texas Jasmine concedes
that all are valid. (Docket Entry No. 46 at 3). Once a mark becomes incontestable, its federal
registration is conclusive evidence of its validity, subject only to the defenses set out in the Lanham
Act, including that the mark has been abandoned or that it is generic. § 1115(a); see § 1115(b)(2),
§ 1065(4); see also Am. Rice, 518 F.3d at 330.

Texas Jasmine argues that although three of the four trademarks are incontestable, the
“Electrolit marks are not protectable because they consist of a term (‘Electrolyte’) that is a generic
term for the product that Plaintiffs sell.” (Docket Entry No. 49 at 23). This argument is addressed
below.
ii. The Likelihood of Confusion
a) The Strength of the Mark
“The stronger the mark, the greater the protection it receives.” Elvis Presley Enters., 141
F.3d at 201. A trademark’s strength is determined by its classification and the degree to which it
is recognized in the marketplace. Am. Rice, 518 F.3d at 330; Sun Banks of Fla., Inc. v Sun Fed.
Sav. & Loan Ass’n, 651 F.2d 311, 315 (5th Cir. 1981). Marks are classified along a spectrum
running from generic to descriptive, suggestive, or arbitrary and fanciful. Am. Rice, 518 F.3d at
330. “[W]ithin this spectrum, the strength of a mark, and of its protection, increases as one moves
away from generic and descriptive marks toward arbitrary marks.” Id. (quoting Falcon Rice Mill,
Inc. v. Cmty. Rice Mill, Inc., 725 F.2d 336, 346 (5th Cir. 1984)). “Marketplace recognition depends

on ‘advertising, length of time in business, public recognition, and uniqueness.’” RE/MAX Int'l,
Inc. v. Trendsetter Realty, LLC, 655 F. Supp. 2d 679, 698–99 (S.D. Tex. 2009) (quoting Century
21 Real Estate Corp. v. Sandlin, 846 F.2d 1175, 1179 (9th Cir. 1988)).
Texas Jasmine argues that “Electrolit” is a spelling variation of the generic term
“Electrolyte” and is therefore not entitled to protection. A trademark is or may become generic if
the public does not identify the mark with a particular source, but instead identifies it with the
genus of the goods or services at issue. Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 768
(1992). A generic term communicates “information about the nature or class of an article or
service” and cannot be a service mark. Sun Banks of Fla., 651 F.2d at 315. A word may be generic

as to some things and not others. “‘Ivory’ is generic of elephant tusks but arbitrary as applied to
soap.” Soweco, Inc. v. Shell Oil Co., 617 F.2d 1178, 1183 (5th Cir. 1980). The defendant has the
burden of challenging a registered mark’s validity. Pebble Beach Co., 942 F. Supp. at 1537.
Texas Jasmine has neither pointed to nor submitted evidence showing that the public
perceives “Electrolit” as communicating information about the “nature or class” of rehydration
beverages. Although Texas Jasmine offers evidence that CAB’s corporate representative
sometimes pronounces “Electrolit” as “Electrolyte,” (Docket Entry No. 49 at 24), Texas Jasmine
does not address public perception of the mark “Electrolit.” Texas Jasmine has failed to raise a
factual dispute as to whether the “Electrolit” mark is generic.
The Electrolit marks comprise not only the word “Electrolit,” but also a four-colored splash
logo above the word “Electrolit.” Texas Jasmine has not pointed to evidence that another entity
has used or registered the “Electrolit” mark. Amstar Corp. v. Domino's Pizza, Inc., 615 F.2d 252,
259–60 (5th Cir. 1980). This digit weighs in favor of finding a strong mark.
b) The Similarity of the Marks

This factor requires the court to consider the similarity between “marks in the context that
a customer perceives them in the marketplace, which includes their presentation in
advertisements.” Elvis Presley Enters., 141 F.3d at 197. The court does not restrict itself to
comparing individual features, instead considering “the commercial impression created by the
mark as a whole.” Amstar Corp., 615 F.2d at 261 (citation omitted). “‘The relevant inquiry is
whether, under the circumstances of the use,’ the marks are sufficiently similar that prospective
purchasers are likely to believe that the two users are somehow associated.” Elvis Presley Enters.,
141 F.3d at 201.
Texas Jasmine has admitted that it sells Electrolit products. (Docket Entry No. 45-7).

Photos of those products show that the marks used are identical to the trademarked Electrolit
marks. (Docket Entry No. 44 at 14). The similarity of the marks weighs strongly in favor of finding
a likelihood of confusion.
c) The Identity of the Products Sold
“The greater the similarity between products and services, the greater the likelihood of
confusion.” Elvis Presley Enters., 141 F.3d at 202. Texas Jasmine has admitted that it sells
repackaged Electrolit rehydration beverages. (Docket Entry No. 45-7). This digit weighs strongly
in favor of finding a likelihood of confusion.
d) The Identity of the Purchasers
“Differences in the parties’ customer bases can lessen the likelihood of confusion.”
Quantum Fitness Corp. v. Quantum LifeStyle Centers, LLC, 83 F. Supp. 2d 810, 826 (S.D. Tex.
1999) (citing Exxon Corp. v. Texas Motor Exch. Of Houston, Inc., 628 F.2d 500, 505–506 (5th
Cir. 1980)). Both parties sell rehydration beverages, and it is alleged that Texas Jasmine undercuts
the prices of CAB’s Electrolit. (Docket Entry No. 44 at 6). However, no evidence has been

submitted as to the consumer bases of each product. This factor is neutral.
e) The Similarity of Advertising Media
The record contains scant evidence about advertising beyond a screen shot of Texas
Jasmine’s website. (Docket Entry No. 44 at 8). However, “[i]t is the labels that the prospective
purchaser sees. The trademarks cannot be isolated from the labels on which they appear.” Sun–
Maid Raisin Growers of Ca. v. Sunaid Food Prods., Inc., 356 F.2d 467, 469 (5th Cir. 1966).
Because the parties use the same visible marks on their labels, this digit weighs in favor of finding
a likelihood of confusion.
f) The Defendant’s Intent

“Proof of the defendant’s intent to benefit from the good reputation of the plaintiff's
products is not required in order to establish infringement.” Oreck, 803 F.2d at 173. “If, however,
a plaintiff can show that a defendant adopted a mark with the intent of deriving benefit from the
reputation of the plaintiff, that fact alone ‘may be sufficient to justify the inference that there is
confusing similarity.’” Exxon Corp. v. Texas Motor Exch. Of Houston, Inc., 628 F.2d 500, 506
(5th Cir.1980). However, Texas Jasmine has claimed that it was participating in valid gray-market
sales of Electrolit, that is, importing Mexican Electrolit into the United States for sale. The
plaintiffs have not alleged bad faith on the part of Texas Jasmine. This factor is therefore neutral.
g) Actual Confusion
“Although evidence of actual confusion is not necessary to a finding of likelihood of
confusion, it is nevertheless the best evidence of likelihood of confusion.” Amstar, 615 F.2d at 263
(citing Roto–Rooter Corp. v. O’Neal, 513 F.2d 44, 46 (5th Cir.1975)). A plaintiff may show actual
confusion using anecdotal instances of consumer confusion, systematic consumer surveys, or both.
See Scott Fetzer, 381 F.3d at 486 (2004); Moore Bus. Forms, Inc. v. Ryu, 960 F.2d 486, 491 (5th

Cir. 1992). Here, no evidence has been provided showing actual confusion, because the goods in
question are gray-market goods. This factor is neutral.
h) The Degree of Care by Potential Purchasers
The sophistication and degree of care exercised by potential purchasers is a separate factor
in the likelihood of confusion analysis. Am. Rice, 518 F.3d at 333–34. “[C]onfusion is more likely
. . . if the products in question are ‘impulse’ items or are inexpensive.” Falcon Rice Mill, Inc. v.
Community Rice Mill, Inc., 725 F.2d 336, 345 n.9 (5th Cir.1984) (rice); see also Smack Apparel,
550 F.3d at 483 (t-shirts). The products here are inexpensive beverages, and no record evidence
suggests that potential purchasers exercise a high degree of care in their decisions to purchase the

products. This factor weighs in favor of a likelihood of confusion.
iii. Defenses
Although Texas Jasmine concedes that it sells Electrolit produced outside the United States
within the United States, it claims that the plaintiffs cannot succeed in their infringement claims
because Texas Jasmine is selling “gray-market” goods. “A gray-market good is a foreign-
manufactured good, bearing a valid United States trademark, that is imported without the consent
of the United States trademark holder.” K Mart Corp. v. Cartier, Inc., 486 U.S. 281, 285 (1988).
Infringement claims for gray-market goods may succeed “where the foreign goods imported by
the defendant gray market importer are materially different from the goods sold by the plaintiff
authorized to sell the trademarked goods in the domestic market.” Martin's Herend Imports, Inc.
v. Diamond & Gem Trading USA, Co., 112 F.3d 1296, 1301 (5th Cir. 1997).
Texas Jasmine claims that there is no material difference between the plaintiffs’ Electrolit
and the Electrolit Texas Jasmine sells in the United States, because both are “manufactured by a
single manufacturer in Mexico, under the direct quality control standards maintained by

Plaintiffs.” (Docket Entry No. 49 at 13–14). This does not mean there are no material differences
between the two Electrolit products. “[T]he threshold of materiality is always quite low in such
cases.” Societe Des Produits Nestle, S.A. v. Casa Helvetia, Inc., 982 F.2d 633, 641 (1st Cir. 1992).
The Electrolit sold by Texas Jasmine may be manufactured by Sueros, but Sueros makes
multiple Electrolit versions for different national markets that are “customized to reflect
differences in terms of government regulations, consumer preferences, and language, among other
considerations.” (Docket Entry No. 44 at 8). The manufacturer’s identity does not determine
whether material differences exist in the Electrolit sold in the United States market. Even small
differences in packaging and ingredients may be material. Nestle, 982 F.2d at 641. As discussed

above, there are several differences in the Electrolit labelling, including differences in ingredients
and compliance with FDA regulations. (Docket Entry No. 46 at 4–5). The importance of this
information to consumers is laid out in Professor Franklyn’s survey, and there is no contrary survey
or other evidence. As other courts have ruled, “[t]he failure to comply with such federal and state
laws and regulations constitutes a material difference.” Bayer Corp. v. Custom Sch. Frames, LLC,
259 F. Supp. 2d 503, 508 (E.D. La. 2003).
Finally, Texas Jasmine’s argument that the “[p]laintiffs are not entitled to a presumption
of a likelihood of confusion,” (Docket Entry No. 49 at 27), fails. The record shows a strong
likelihood of confusion. Texas Jasmine has failed to raise a factual dispute material to determining
material differences or the likelihood of confusion between the products.
IV. Conclusion
The court denies the defendant’s motion to exclude the testimony of Professor Franklyn.
The court grants the plaintiffs’ motion for partial summary judgment, on Counts I, IH, VIII, IX,
X, AND XI of the amended complaint.

SIGNED on September 5, 2023, at Houston, Texas.

LW Cnt
Lee H. Rosenthal
United States District Judge

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10676928. Public record. Not legal advice.