One Industries, LLC v. Jim O'Neal Distributing, Inc.
578 F.3d 1154, 92 U.S.P.Q. 2d (BNA) 1065, 74 Fed. R. Serv. 3d 778 (2009)
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Rule of Law:
For a newer trademark to 'tack' onto the priority date of an older mark, the two marks must be legally equivalent and create the same, continuing commercial impression, a standard that is exceedingly strict and does not permit material alterations.
Facts:
- Jim O’Neal Distributing, Inc. ('O’Neal'), a motocross apparel company, was founded in 1970.
- In 1991, O’Neal began using a stylized 'O'' mark on its products and modified the design several times over the subsequent years.
- In 1997, O'Neal developed a thicker, boxier version with rounded corners known as the 'Rounded O'' mark.
- One Industries, LLC, was founded in 1997 and in 1999, it developed its 'One Icon' mark.
- In 2003, O'Neal adopted a new version of its mark, the 'Angular O'' mark, which had sharp angles and an attached, triangular apostrophe.
- By 2003, One Industries had expanded its product line to include helmets and clothing, putting it in direct competition with O’Neal.
- In 2006, O’Neal accused One Industries of infringing its 'O'' mark, claiming continuous use for over a decade.
Procedural Posture:
- One Industries sought a declaratory judgment in the U.S. District Court for the Southern District of California that its marks did not infringe O'Neal's trademarks.
- O'Neal filed counterclaims against One Industries for trademark infringement, trade dress infringement, and unfair competition.
- One Industries filed a Rule 12(e) motion for a more definite statement, asking the court to compel O'Neal to specify which 'O'' mark was allegedly infringed.
- The district court granted the motion, ruling as a matter of law that O'Neal's different 'O'' marks could not be 'tacked' together because they were more than slightly different.
- O'Neal amended its counterclaim to allege infringement of only the 1997 'Rounded O'' mark.
- The district court subsequently granted summary judgment to One Industries on all of O'Neal's claims.
- O'Neal, as the appellant, appealed the district court's orders to the U.S. Court of Appeals for the Ninth Circuit.
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Issue:
Does a newer version of a trademark 'tack' onto an older version for priority purposes when the two versions have material visual differences, such as the overall shape, line thickness, and the design and attachment of an apostrophe?
Opinions:
Majority - Judge O'Scannlain
No. A newer mark does not tack onto an older one for priority purposes if the marks are not legally equivalent and create different commercial impressions under the 'exceedingly strict' tacking standard. Here, the material differences between O'Neal's 1997 'Rounded O'' mark and its 2003 'Angular O'' mark prevent tacking. The court noted significant visual distinctions: the apostrophes were different (one separate, one connected and triangular), the line thickness varied, and the overall shape differed, with the court describing one as 'boxy' and the other as looking 'like the outline of a lemon.' Because these marks are not 'indistinguishable,' they do not create the same, continuing commercial impression, and tacking is improper. Consequently, O'Neal's priority date for its Angular O' mark is 2003, which is after One Industries began using its One Icon in 1999. Furthermore, when comparing O'Neal's 1997 Rounded O' mark to the One Icon, there is no likelihood of confusion under the Sleekcraft factors, as the marks are visually dissimilar, there is no evidence of actual confusion, and no evidence of intent to deceive.
Concurring in part and dissenting in part - Judge Graber
The court should not have answered the tacking question as a matter of law at such an early procedural stage. Tacking is a highly fact-sensitive inquiry that the Ninth Circuit treats as a question of fact, not law. The district court committed reversible error by resolving this factual dispute on a pre-discovery Rule 12(e) motion for a more definite statement, without receiving any evidence or finding that reasonable minds could not differ. Given that the majority itself concedes this is a 'close case,' it was inappropriate to decide the issue as a matter of law before the parties had conducted discovery. The case should be reversed and remanded to allow for proper factual development of the tacking claim.
Analysis:
This decision reinforces the Ninth Circuit's commitment to an 'exceedingly strict' standard for trademark tacking, clarifying that even moderate stylistic evolutions of a logo can be deemed 'material alterations' that sever priority rights. The ruling serves as a crucial caution for brand owners that significant logo redesigns risk forfeiting the brand's history and priority date, potentially making them junior to an intervening competitor. While the majority upheld the district court's procedural handling, the dissent's strong objection highlights the tension in resolving fact-intensive trademark questions on pre-discovery motions, signaling that such a practice is disfavored.
