Marketquest Group, Inc. v. BIC Corp.

United States Court of Appeals for the Ninth Circuit
D.C. No. 3:11-cv-00618-BAS-JLB (2017)

ELI5:

Rule of Law:

The classic fair use defense in trademark law requires the defendant to prove their use of a term was (1) other than as a trademark, (2) descriptive of their goods, and (3) in good faith. Summary judgment on this defense is improper when genuine issues of material fact exist regarding any of these elements.

Facts:

Marketquest Group, Inc. (Marketquest) owns and has used the registered trademarks 'All-in-One' since 1999 and 'The Write Choice' since 2000 in connection with its promotional products business.
In 2009, BIC Corp. acquired Norwood Promotional Products, LLC (Norwood), another company in the promotional products industry.
In 2010, Norwood published a new, consolidated 2011 catalogue that combined eight of its previous 'hard goods' catalogues into a single volume.
Norwood featured the phrase 'All-in-One' on the cover of and within this 2011 catalogue.
Norwood also used the phrase in other advertisements, referring to 'the 2011 Norwood All in ONE catalogue' and 'a Norwood ALL in ONE Basket.'
In 2010, BIC used the phrase 'The WRITE Pen Choice for 30 Years' in advertising and on packaging for its pens as part of a thirtieth-anniversary promotion.

Procedural Posture:

Marketquest Group, Inc. filed a First Amended Complaint against Norwood, BIC Corp., and BIC USA, Inc. in federal district court, alleging trademark infringement.
Marketquest moved for a preliminary injunction, which the district court denied after finding that Defendants were likely to succeed on a fair use defense.
The parties filed cross-motions for summary judgment.
The district court granted summary judgment in favor of the Defendants, holding that the fair use defense provided a complete defense to all infringement claims.
Marketquest (Appellant) appealed the grant of summary judgment to the U.S. Court of Appeals for the Ninth Circuit.

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Issue:

Does the classic fair use defense shield defendants from trademark infringement liability as a matter of law, thus warranting summary judgment in their favor, when genuine issues of material fact exist as to whether their use of the plaintiff's marks was as a trademark, descriptive, and in good faith?

Opinions:

Majority - M. Smith, Circuit Judge

No. The classic fair use defense does not shield defendants from trademark infringement liability as a matter of law because genuine issues of material fact exist. Summary judgment is generally disfavored in trademark cases due to their intensely factual nature. Here, a reasonable jury could find that Defendants' use of 'All-in-One' was not a fair use. There are factual disputes as to whether the phrase was used 'other than as a trademark,' particularly in advertisements referring to the 'Norwood All in ONE catalogue.' Similarly, a factfinder could determine the use was not purely descriptive and that alternative descriptive words were available. Finally, while the evidence of bad faith is thin, it is not absent, creating a jury question. The court also held that 'reverse confusion' is a theory of liability, not a separate claim that must be specifically pleaded. The district court erred by granting summary judgment on the fair use defense.

Analysis:

This decision reinforces the high bar for obtaining summary judgment on the affirmative defense of fair use in trademark infringement cases, particularly within the Ninth Circuit. By emphasizing the 'intensely factual nature' of the defense's elements—non-trademark use, descriptive use, and good faith—the court signals that these issues should typically be decided by a jury. The ruling also provides a significant clarification on pleading standards, establishing that 'reverse confusion' is a theory of consumer confusion, not a distinct cause of action requiring specific pleading. This lowers a potential procedural hurdle for plaintiffs, especially smaller entities alleging infringement by larger, more dominant market players.

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