Reply Brief — University of South Carolina v. University of Southern California

\ 4 @g 270

IN THE

Supreme Court of the United States

UNIVERSITY OF SOUTH CAROLINA,

Petitioner,

Vv.

UNIVERSITY OF SOUTHERN CALIFORNIA,

Respondent.

On PETITION FOR A WRIT OF CERTIGRARI TO THE

UNITED STATES CourRT OF APPEALS

FOR THE FEDERAL CIRCUIT

REPLY BRIEF

NEIL C. JONES

Counsel of Record

JOHN C. MCELWAINE

ASHLEY B. SUMMER

NELSON MULLINS RILEY

& SCARBOROUGH LLP

Poinsett Plaza

104 S. Main Street, Suite 900

Greenville, SC 29601

(864) 250-2260

neil.jones@nelsonmullins.com

Counsel for Petitioner

$

COUNSEL PRESS

(800) 274-3321 * (800) 359-6859

i

TABLE OF CONTENTS

REPLY BRIEF

I. The Relevant Consumer is a Lens

Through Which Likelihood of Confusion

Must be Viewed

. The Expansion of Ornamental Marks

Represents a Widespread Departure

from Fundamental Trademark Law

III. Review of the Significant Issues in this

Case is Necessary

CONCLUSION

ii

TABLE OF CITED AUTHORITIES

Page

Cases:

Athletics Inv. Group LLC

v. Bd. of Trs. of the Univ. of Ala.,

Opposition No. 91172387

(TTAB Nov. 24, 2009)

Bd. of Trs. of the Univ. of Ala.

v. Atlanta Nat'l League Baseball Club, Inc.,

Opposition No. 91175702

(TTAB Feb. 5, 2007)

CAE, Inc. v. Clean Air Eng’g, Inc.,

267 F.3d 660 (7th Cir. 2001)

Dorr-Oliver, Inc. v. Fluid-Quip Inc.,

94 F-:3d 376 (7th Cir. 1996)

Gen. Motors Corp. v. Keystone Auto. Indus.,

453 F.3d 351 (6th Cir. 2006)

Insty* Bit, Inc. v. Poly-Tech Indus., Inc.,

95 F:3d 668 (&th Cir. 1996)

Univ. of Ala. Bd. of Trs. v. New Life Art Inc.,

677 F. Supp. 2d 1238 (N.D. Ala. 2009)

Univ. of S. Cal. v. President & Bd. of Trs.

of Santa Clara Coll.,

Opposition No. 91168693

(TTAB May 8, 2010)

Cited Authorities

Other:

Ann M. Bartow, Likelihood of Confusion, 41 San

Diego L. Rev. 721 (2004)

Barton Beebe, An Empirical Study of the

Multifactor Tests for Trademark Infringement,

94 Cal. L. Rev. 1581 (2006)

Stacey L. Dogan & Mark A. Lemley, Article:

The Merchandising Right: Fragile Theory or

Fait Accompli?, 54 Emory L.J. 461 (2005)

Rochelle Cooper Dreyfuss, Expressive Genericity:

Trademarks as Language in the Pepsi

Generation, 65 Notre Dame L. Rev. 397

(1990)

Anne M. McCarthy, Note: The Post-Sale

Confusion Doctrine: Why the General Public

Should be Included in the Likelihood of

Confusion Inquiry, 67 Fordham L. Rev. 3337

]

REPLY BRIEF

Current trademark law has been expanding

significantly beyond its traditional role and the Federal

Circuit and the Trademark Office have now added to

the confusion about trademark confusion. In particular,

uncertainty abounds as to the proper likelihood of

confusion inquiry under the Lanham Act, which governs

federal trademark registration and trademark

infringement. The gradual and unbridled expansion of

trademark protection has now transformed certain types

of trademarks from a means of designating the source

of products to nearly absolute intellectual property

rights in ornamental trademarks. This departure from

the traditional source-identifying nature of trademarks

has occurred without legislative intervention or review

by this Court. California (the Respondent) has simply

not refuted Carolina’s (the Petitioner) showing that the

courts are now in conflict in this area. In light of the

legal and commercial significance of this resulting

expansion, review by this Court is clearly warranted.

I. The Relevant Consumer is a Lens Through

Which Likelihood of Confusion Must be Viewed

The various formulations of the likelihood of

confusion analysis adopted by the circuit courts have

resulted in “a circuit split of considerable proportions”

with “excessive intercircuit variation in the application

and outcome” of the primary analysis employed in

determining the scope of protection for trademarks.

See Barton Beebe, An Empirical Study of the

Multifactor Tests for Trademark Infringement, 94

Cal. L. Rev. 1581, 1588, 1646 (2006) (recommending

adopting “a new national multifactor test”). The most

2

troublesome aspect of the circuit split is that the courts

vary on the actual nature of confusion that is recognized

under the Lanham Act. Compare Insty*Bit, Inc. v. Poly-

Tech Indus., Inc., 95 F.8d 668, 672 (8th Cir. 1996)

(providing that “trademark infringement may be based

on confusion of consumers other than direct purchasers,

including observers of an allegedly infringing product

in use by a direct purchaser”) (emphasis added) with

Dorr-Oliver, Inc. v. Fluid-Quip Inc., 94 F.3d 376, 382

(7th Cir. 1996) (explaining that “the Lanham Act is

concerned with customer confusion when choosing to

purchase, or not to purchase, the items, not public

confusion at viewing them from afar”) (emphasis added).

California cannot credibly deny the existence of the

circuit split and does not diminish the national legal and

commercial significance of the issues raised in Carolina’s

petition. Instead, California argues that the Federal

Circuit did not apply an erroneous standard and that

any circuit split is irrelevant here. These arguments are

simply wrong. There is a need for circuit consensus on

the issues presented by the petition and this case is an

extremely suitable vehicle for establishing that

consensus.

The identity of the relevant consumer is (or should

be) at the forefront of any likelihood of confusion

analysis. California simply ignores the fact that the

Federal Circuit failed to find that any relevant consumer

existed who could be confused. Despite California’s

unwillingness to recognize the Federal Circuit’s error,

the fact of the matter is that this error extends through

other courts as well.

3

In a proper likelihood of confusion analysis, the

identification and existence of a relevant consumer is

not a mere factor. Instead, it is the lens through which

the entire analysis must be considered. Here, the

Federal Circuit relegated the existence and type of

consumers to a mere factor and did not use the relevant

consumer as the lens through which the likelihood of

confusion analysis was to be conducted.

Specifically, the Board found that many consumers,

including students, faculty, alumni, and fans (“Real

Fans”), are likely “to have a loyalty to and affinity for a

particular school or team, ... to be knowledgeable about

a particular school’s trademarks as used on the

merchandise, ... to exercise a degree of care in looking

for and making their decisions to purchase such goods”

and “to be able to distinguish between similar collegiate

marks based on their familiarity with the different

schools and their marks, and their familiarity with

national collegiate sports generally.” Pet. App. B, 41a.

The Federal Circuit left these findings intact.

However, California argued, and the Board found,

that consumers other than Real Fans may be less

familiar with the marks and may likely be confused by

the marks at issue. Cf Ann M. Bartow, Likelihood of

Confusion, 41 San Diego L. Rev. 721, 723 (2004)

(observing that “[w]here jurists perceive consumers as

ludicrously easily confused, trademark holders can

exploit these views to secure broad trademark ‘rights,’

often without offering a shred of evidentiary

corroboration concerning such confusion”). Specifically,

the TTAB found that two groups of consumers would

likely be confused: (i) persons unaffiliated with either

4

school, such as relatives, who would be purchasing for

others a gift bearing one of the trademarks (“Gift-Giving

Relatives”), and (ii) new or casual fans who may jump

on the school’s proverbial “bandwagon” when an athletic

team has a banner year but who are admittedly less

familiar with the school’s trademarks (“Fair Weather

Fans”). Pet. App. B, 4la-42a. On appeal, however, the

Federal Circuit correctly determined that the Board’s

decision that the care exercised by such consumers

“rested on speculation” and not the requisite substantial

evidence. Pet. App. A, 9a. In so doing, the Federal

Circuit never identified a group of relevant consumers

who would be confused or conducted the critical inquiry

from that viewpoint.

Despite having correctly concluded that Real Fans

would likely distinguish the marks (and would not be

likely confused) and that the lower degree of care

exercised by the only other consumers identified — Fair

Weather Fans and Gift-Giving Relatives — was unproven,

the Federal Circuit nonetheless determined, as a matter

of law, that there was a likelihood of confusion. The

Federal Circuit arrived at that conclusion without

identifying that a class of relevant and proven

consumers would be confused. Moreover, the court failed

to properly conduct the likelihood of confusion analysis

through the lens of the relevant and proven consumer—

Real Fans. Instead, the Federal Circuit abstractly

agglomerated together other likelihood of confusion

factors to support its conclusion.

This approach to trademark law is untenable. The

only proper determination of the Lanham Act is to focus

on consumer confusion. See Bartow, supra p.8, at 817

D

(observing that “[uJnless a mark holder offers

persuasive evidence to the contrary, courts must reject

the specter of the gullible, harried, ignorant, and stupid

consumer as a standard by which to measure likelihood

of confusion”). The failure to use the relevant consumer

as the lens through which to determine likelihood of

confusion continues the trend of courts departing from

traditional consumer-based trademark law. See Anne M.

McCarthy, Note: The Post-Sale Confusion Doctrine:

Why the General Public Should be Included in the

Likelihood of Confusion Inquiry, 67 Fordham L. Rev.

3337, 3352 (1999) (“Courts are not in accord, however,

concerning the expansion of the relevant population and

relevant time of confusion that was brought about by

the 1962 amendment.”).

While California is correct that thirteen factors were

considered in the likelihood of confusion analysis in this

case, those factors must still be considered through the

eyes of relevant and proven consumers. This did not

occur here. Thus, while other cases indicate a split of

authority on which consumers must be confused, the

present case goes farther and dispenses altogether with

the need for any consumers to be confused.

Although California attempts to frame this issue as

outdated and irrelevant, current cases clearly indicate

otherwise. In particular, circuit courts remain divided

upon the proper perspective for determining likelihood

of confusion. For example, courts differ on whether post-

sale confusion can extend to confusion of the general

public at large or is limited to confusion amongst

potential consumers. Compare Gen. Motors Corp. v.

Keystone Auto. Indus. , 453 F-3d 351, 356 (6th Cir. 2006)

6

(observing that the Lanham Act extends beyond

consumer confusion to confusion of the non-consuming

general public at large) (emphasis added) with CAE,

Inc. v. Clean Air Eng’g, Inc., 267 F.3d 660, 683 (7th Cir.

2001) (observing that the Seventh Circuit has

“recognized that the Lanham Act’s protections also

extend to post-sale confusion of potential customers”)

(emphasis added).

II. The Expansion of Ornamental Marks Represents

a Widespread Departure from Fundamental

Trademark Law

Contrary to California’s characterization (Opp. 24),

Carolina does not contend that ornamental marks are

unprotectable. Instead, Carolina disputes the standard

applied by the Federal Circuit in evaluating the Lanham

Act’s likelihood of confusion standard when ornamental

marks are at issue.

When a mark is used ornamentally, the mark

functions like a good itself and not as a traditional

trademark to identify the source of the product.

See Rochelle Cooper Dreyfuss, Kxpressive Genericity:

Trademarks as Language in the Pepsi Generation, 65

Notre Dame L. Rev. 397, 397 (1990) (observing that

“ideograms that once functioned solely as signals

denoting the source, origin, and quality of goods, have

become products in their own right, valued as indicators

of the status, preferences, and aspirations of those who

use them”). Because the buying decision is premised

upon the buyer’s desire to associate with the entity

represented by the mark, the buyer necessarily comes

to the purchasing decision having a heightened

7

awareness of the mark and is, therefore, much less likely

to be confused. Use of the proper lens for making this

inquiry—that of the relevant consumer (and in this case,

the Real Fans)—would, as the Federal Circuit found,

result in consumers being able to distinguish the parties’

merchandise. If other consumers purchase the product

bearing the ornamental mark, they do so simply because

they like the appearance of the logo. In those situations

(as in the case of Fair Weather Fans and Gift-Giving

Relatives), the mark is not functioning as a source

identifier (i.e., a trademark) and does not invoke the

concerns of the Lanham Act. Finding a likelihood of

confusion in such instances should be much more

difficult than if the trademark is functioning as a source

identifier.

To be clear and to illustrate the scope of proper

protection, a California alumnus may seek a sweatshirt

having a California logo and may choose between a Nike,

Adidas, or other brand, but the consumer will not seek

sweatshirts bearing other school’s emblems. In that

case, the consumer can distinguish those other goods

not bearing her school’s mark due to the fact that she

specifically desires to purchase the product because of

the mark, not because it is a high quality product. The

Trademark Board recognized this scenario, explaining:

[A] mark appearing on a collegiate sports

team’s merchandise such as hats or shirts

serves as an indication of secondary source;

it refers to or identifies the team itself.

The purchasers’ decision to purchase the

product often is not based on who actually

manufactured the product, but rather is

8

based on the ornamental presence of the

secondary source mark itself on the product.

The decision to purchase arises from the

purchasers’ desire to demonstrate his or her

connection to or affiliation with that secondary

source (the school, or the team) or if the

purchaser is purchasing the product as a gift

to allow the gift recipient to demonstrate that

connection or affiliation.

Pet. App. B, 44a.

When an ornamentally-used trademark is asserted,

the likelihood of confusion analysis should account for

the nature of that ornamental use and the attendant

commercial realities with which the Lanham Act is

concerned. Configuring the analysis through this

perspective will properly limit the scope of protection

to instances in which the reasonably prudent and

relevant consumer is likely to be confused. The

Trademark Board and the Federa! Circuit erred by

failing to properly account for these realities and then

departing from the intended scope of protection

afforded by the Lanham Act. Instead, the decision relied

upon irrelevant and unproven confusion.

California’s contention that Carolina’s argument

dooms its own case (Opp. 31-32) is both incorrect and

irrelevant. As indicated above, Carolina does not argue

that ornamentally-used trademarks cannot be federally

registered or protected. Carolina only argues that

California’s ornamental marks and Carolina’s

ornamental marks are not likely to be confused,

especially given the nature of the goods and the relevant

9

consumers. Due to the ornamental nature of California’s

marks versus Carolina’s mark, there is no likelihood that

relevant consumers would confuse the parties’ goods.

Even if correct, California’s argument that it uses

its mark in a non-ornamental manner (Opp. 29-30) does

not prevent this Court’s review. The Board’s decision,

and the Federal Circuit’s review thereof, was not

premised upon such use now relied upon by California.

There was no finding that California used its marks in a

non-ornamental manner and the Board appears to have

accepted that the California marks were ornamentally

used (see Pet. App. B, 44a).

Moreover, even if California had used the marks in

a non-ornamental fashion (an issue not asserted at the

Federal Circuit), California cannot avoid the fact that

purchasers of California-branded merchandise are

knowledgeable consumers that come to the purchasing

decision with extensive knowledge of California’s marks

and with the capability to distinguish goods bearing

those marks from goods bearing Carolina’s ornamental

marks. Ultimately, California’s attempt to argue the

factual merits as a means to divert the Court’s attention

from the legal issues is telling.

Carolina has not waived this argument concerning

merchandising rights. As an initial matter, the likelihood

of confusion centers around a comparison of the marks

at issue, and Carolina argued throughout trial and

appeal that goods bearing the parties’ respective marks

were unlikely to be confused. In addition, as expressly

recognized by the Board, Carolina argued that the

marks would not be confused in light of their ornamental

10

nature (referenced as secondary source marks in the

proceedings below). Pet. App. B, 44a-45a. This argument

was also presented to the Federal Circuit, in which

Carolina argued that “[nJo one purchases collegiate

apparel because they like the quality of a piece of

clothing—they purchase the product because they want

others to see that they are a fan of, or somehow affiliated

with, the college.” Carolina Fed. Cir. Reply Br. at 18; see

also Carolina Fed Cir. Br. at 18-83 (arguing the nroper

consumer for consideration in the likelihood of confusion

analysis). Carolina argued that such consumers with an

intimate knowledge of both the college and the logo were

not likely to be confused. /d.

Despite California’s attempt to convey the issue of

merchandising rights as a relic of “vintage” case law

(Opp. 26-29), recent trademark commentators designate

this issue as significant and fit for review today by this

Court. £.g., Stacey L. Dogan & Mark A. Lemley, Article:

The Merchandising Right: Fragile Theory or Fait

Accompli?, 54 Emory L.J. 461, 465 (2005) (observing

that “recent Supreme Court case law suggests that, if

the Supreme Court had the opportunity to evaluate the

merchandising theory (something it has never done), it

would deny the existence of such a right” and “it would

be right to do so”). Even if merchandising rights were

well accepted by lower tribunals, as California appears

to argue, this Court has yet to review the broad extra-

statutory protection that such rights now apparently

offer.

In addition, the impact of this issue is not remote.

Other matters are pending and future actions are nearly

certain. For example, similar issues are likely to arise

)]

between California and Santa Clara College in a case

that has been suspended pending the final resolution of

this case, see Univ. of S. Cal. v. President & Bd. of Trs.

of Santa Clara Coll., Opposition No. 91168693 (TTAB

May 8, 2010) (suspension order) and in a case between

the University of Alabama and the Atlanta Braves, see

Bd. of Trs. of the Univ. of Ala. v. Atlanta Nat'l League

Baseball Club, Inc., Opposition No. 91175702 (TTAB

filed Feb. 5, 2007). Moreover, in a previous case, the

Oakland A’s opposed the registration of a trademark by

the University of Alabama. See Athletics Inv. Group LLC

v. Bd. of Trs. of the Univ. of Ala., Opposition No.

91172387 (TTAB Nov. 24, 2009) (dismissal order).

Moreover, it appears that the University of Alabama has

gone so far as to allege that paintings showing players

in its football uniforms give rise to confusion. See Univ.

of Ala. Bd. of Trs. v. New Life Art Inc., 677 F. Supp. 2d

1238, 1244 (N.D. Ala. 2009) (indicating that the main

dispute is whether “defendants infringe on plaintiff’s

trademark if they create and sell paintings and prints

which include as part of their depictions the uniforms

of University of Alabama football players”). Thus, this

case is not an anomaly and the need exists for a clear

standard for determining the likelihood of confusion

with respect to ornamentally-used trademarks.

III. Review of the Significant Issues in this Case is

Necessary

Instead of rebutting the implications of this case and

the need for this Court’s review, California resorts to

arguing that the Federal Circuit’s opinion was

nonprecedential and to resting upon the parties’

historical uses of their respective marks and logos.

12

First, the designation of the Federal Circuit’s

opinion as nonprecedential actually reinforces the need

for review of this case. In particular, by designating its

opinion as nonprecedential, the Federal Circuit

indicated that it believes the law on these matters is

settled. As explained above, that is far from accurate. If

the Federal Circuit incorrectly views this law as settled,

then the need for this Court’s intervention is demanded.

Second, the way each party historically used its

marks bears no impact upon application of the proper

legal standard in this case. Despite South Carolina

having its name since the colonial era and its flagship

university’s longtime use of the letters “SC,” California’s

argument over who first and continually used the letters

“SC” does not implicate whether a consumer would

actually confuse the marks at issue here. Ultimately,

purchasing consumers, who purchase because of the

ornamental logo itself, are capable of distinguishing their

team’s merchandise.

13

CONCLUSION

The petition for a writ of certiorari should be

granted.

Respectfully submitted,

NEIL C. JONES

Counsel of Record

JOHN C. MCELWAINE

ASHLEY B. SUMMER

NELSON MULLINS RILEY

& SCARBOROUGH LLP

Poinsett Plaza

104 S. Main Street, Suite 900

Greenville, SC 29601

(864) 250-2260

neil.jones@nelsonmullins.com

Counsel for Petitioner