Patagonia, Inc. v. Anheuser-Busch, LLC, No. 2:19-CV-02702-VAP-JEM (C.D. Cal. Apr. 9, 2019), order hosted by IPWatchdog.
On September 3rd, 2019, the U.S. District Court for the Central District of California denied all five of defendant Anheuser-Busch (“AB”)’s motions to dismiss in its ongoing trademark litigation with the outdoor gear company Patagonia, Inc.
The dispute centers on the registered trademark PATAGONIA for use in connection with beer, which AB purports to own. Patagonia filed suit seeking damages and cancellation of AB’s trademark registration on April 9, 2019, claiming unfair competition, trademark infringement, and dilution of a famous mark under the Lanham Act, 15 U.S.C. §§ 1051 et seq. (2012), and California law. AB’s motion to dismiss covered Patagonia’s claims for trademark dilution, trademark infringement under California law, and all three cancellation claims.
Patagonia contends that AB recently launched a new beer under the fictitious business name “Patagonia Brewing Co.” targeting Patagonia’s customers. By marketing the beer with a logo similar to their own and by attempting to connect the beer to conservation efforts, Patagonia alleges that AB deliberately misappropriated the “tremendous goodwill” that they have cultivated in their brand. AB maintains that PATAGONIA branded beer has been part of its South American portfolio since the AB-InBev merger of 2008 and that it has owned the trademark in the United States since 2012 when another company (Warsteiner) assigned the registration and trademark to them.
When evaluating a motion to dismiss at the pleading stage, the court takes the plaintiff’s material allegations and any reasonable inferences that can be drawn from them as true and construes them in the light most favorable to the plaintiff.
The court first considered Patagonia’s trademark dilution claim under the Trademark Dilution Revision Act of 2006, 15 U.S.C. § 1125(c) (2012), which protects “famous mark[s]” from “dilution by blurring.” Patagonia asserts that it is among the most identifiable brands in the world, with customers across the globe and billions of dollars in sales since it started using its current jagged peak logo around 1974. The privately held company also claims that it has exerted enormous amounts of time, money, and effort in cultivating its brand and earning a reputation as a company dedicated to environmental conservation.
Andrew Avsec of Brinks, Gilson & Lione noted that “Patagonia did allege facts concerning the length of time and rough sales figures under the mark, but only pled more generalized allegations pertaining to marketing, worldwide sales, and consumer recognition.” Nevertheless, “[t]he court did not appear to hesitate in concluding that the facts as alleged were sufficient to plead that the mark was famous and distinctive.”
The court also found that Patagonia had alleged sufficient facts to survive a motion to dismiss on each of its three cancellation claims. Patagonia is seeking the cancellation of AB’s PATAGONIA trademark on multiple grounds, including (1) that the assignment from Warsteiner to AB was void, (2) that the mark falsely suggests a connection between the beer and Patagonia, and (3) that the registration was fraudulently procured.
For the void assignment claim, the court considered Patagonia’s allegations that the original mark owner (Warsteiner) never used the mark in commerce before assigning it to AB, that AB attorneys were involved in the application before Warsteiner’s Statement of Use was filed, and that the lack of a registration number on the assignment makes it appear that the date “ha[s] been falsely stated.” Patagonia also contends that AB “made no bona fide commercial use” of the mark in the five years following its registration. The court found these allegations sufficiently plausible to survive a motion to dismiss.
On the false connection claim, the court again considered Patagonia’s assertions regarding the reach and prominence of its brand. The court concluded that determining the perception of consumers would require a “fact-intensive inquiry” that should not be decided at the pleading stage and allowed the claim to move forward.
Finally, the court found that the fraudulent procurement claim was sufficiently specific. Patagonia alleges that Warsteiner never actually used the trademark commercially, and therefore its “Statement of Use” to the Trademark Office was false. In support of this claim, Patagonia contends that the evidence of commercial use, which was filed four days before the mark was set to fall abandoned, consisted of “two photos of a single bottle of PATAGONIA-labeled beer on a table in a white-walled room” and was insufficient to show bona fide commercial use. Finding the “who, what, when, where, and how of the misconduct charged” present in the complaint, the court denied the motion to dismiss (quoting Cafasso v. Gen. Dynamics C4 Sys., 637 F.3d 1047, 1055 (9th Cir. 2011)).
The case is currently set for a scheduling conference before Chief Judge Virginia A. Phillips on December 9th, 2019.