Dorpan, S.L. v. Hotel Melia, Inc.
2013 WL 4531783, 728 F.3d 55 (2013)
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Rule of Law:
The geographic scope of a senior, unregistered trademark user's common law rights is not limited to its physical location but extends to the area where a junior user's similar mark would create a likelihood of consumer confusion.
Facts:
- Hotel Meliá, Inc. (HMI) has operated a single hotel, the Hotel Meliá, in Ponce, Puerto Rico, continuously since at least the 1890s.
- HMI has never federally registered its "Meliá" mark.
- Dorpan, S.L., a subsidiary of the international hotel company Sol Meliá, has held several federally registered and incontestable trademarks using the name "Meliá" since the late 1990s.
- Prior to 2007, Dorpan had never used the Meliá mark in Puerto Rico.
- In 2007, Dorpan's parent company opened a luxury beach resort called "Gran Meliá" in Coco Beach, Puerto Rico, approximately eighty miles from HMI's hotel in Ponce.
- HMI presented evidence of actual confusion, including a misdirected pizza delivery, confused guests, misdirected correspondence from a government agency, and a confused vendor at a trade show.
Procedural Posture:
- HMI opposed Dorpan's petition to register the "Gran Meliá" mark with the Puerto Rico Department of State.
- HMI filed a complaint against Sol Meliá in the Superior Court of Puerto Rico (a Commonwealth trial court), asserting senior user rights to the Meliá mark throughout Puerto Rico.
- Dorpan filed a complaint against HMI in the U.S. District Court for the District of Puerto Rico (a federal trial court), seeking a declaratory judgment that its rights were superior everywhere except the city of Ponce.
- Dorpan removed HMI's state court case to the federal district court, which then consolidated the two cases.
- Dorpan moved for summary judgment on its declaratory judgment claim.
- The district court granted summary judgment for Dorpan, ruling that HMI's rights were limited to Ponce and Dorpan could use its mark throughout the rest of Puerto Rico.
- HMI (appellant) appealed the district court's grant of summary judgment to the U.S. Court of Appeals for the First Circuit, with Dorpan as the appellee.
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Issue:
Does a junior, federally registered trademark user's (Dorpan's) operation of a hotel under a similar mark eighty miles away from a senior, unregistered user's (HMI's) hotel create a genuine issue of material fact as to the likelihood of consumer confusion, thereby precluding summary judgment?
Opinions:
Majority - Lipez, Circuit Judge
Yes, a junior user's operation creates a genuine issue of material fact as to the likelihood of consumer confusion. The geographic area in which an unregistered trademark is 'in use' is defined by the area in which the use of a similar mark would create a likelihood of confusion. The district court erred in granting summary judgment because a reasonable factfinder could conclude that the two Meliá marks cannot co-exist in Puerto Rico without causing an impermissible likelihood of confusion. The court's analysis of the eight 'Pignons' factors shows that the marks, services, customers, and channels of trade are substantially similar, and there is evidence of actual confusion. The lower court improperly discounted the evidence of actual confusion and gave too much weight to the junior user's lack of bad faith. Crucially, the district court also erred by equating HMI's trade area with its physical location in Ponce, ignoring that a hotel's reputation and customer base can extend far beyond the city in which it operates.
Analysis:
This decision reinforces the principle that a senior common law trademark user's rights are geographically defined by the likelihood of confusion, not just by its physical footprint. It clarifies that for businesses like hotels, which serve a mobile and geographically diverse customer base, the protected trade area can be quite large. The ruling serves as a strong precedent against resolving fact-intensive likelihood-of-confusion analyses at the summary judgment stage, particularly when multiple factors—like similar marks, services, and evidence of actual confusion—weigh against the moving party. It protects established, local businesses from being overwhelmed by larger, federally registered junior users who enter their broader market area.
