Rex Real Est I v. Rex Real Est
Unpublished Slip Opinion (2023)
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Rule of Law:
A plaintiff lacks statutory standing to sue for infringement of a registered trademark under Lanham Act § 32(1) without evidence of ownership via assignment from the original owner. However, a claim for infringement of an unregistered mark under § 43(a) may proceed to a jury if the plaintiff presents sufficient evidence that the mark is protectable and that the defendant's use creates a likelihood of confusion.
Facts:
- In 1987, Rex and Sherese Glendenning entered the Texas real estate business, later operating a sole proprietorship called 'Rex Real Estate'.
- The business, which focused on commercial, investment, and development properties in North Texas, used the trademarks 'REX,' 'REX Real Estate,' and a crown logo.
- In 1998, the Glendennings formed Rex Real Estate I, L.P. (Plaintiff), a limited partnership.
- Plaintiff brokered very few single-family residential homes, with most of those transactions involving family members or employees.
- In 2015, Rex Real Estate Exchange, Inc. (Defendant) was founded as an online platform for buying and selling single-family homes, using artificial intelligence to match buyers and sellers.
- In 2014, before launching, Defendant purchased a 'REX' trademark from a third party, Azavea, which had registered the mark in 2006 for use with real estate search software.
- Defendant expanded its operations into Texas in 2018 and advertised using the names 'Rex' and 'REX Real Estate'.
Procedural Posture:
- Rex Real Estate I, L.P. sued Rex Real Estate Exchange, Inc. in the U.S. District Court for the Western District of Texas for federal and state trademark infringement, dilution, and unfair competition.
- The parties filed cross-motions for summary judgment, which the district court denied.
- The case proceeded to a jury trial.
- After Plaintiff rested its case, Defendant moved for judgment as a matter of law under Federal Rule of Civil Procedure 50.
- The district court granted Defendant's motion and entered a final judgment in its favor.
- Plaintiff appealed the judgment on its federal trademark infringement claims to the U.S. Court of Appeals for the Fifth Circuit.
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Issue:
Did the district court err in granting judgment as a matter of law for the defendant on federal trademark infringement claims under both § 32(1) and § 43(a) of the Lanham Act?
Opinions:
Majority - Graves, J.
Yes, in part. The district court's judgment was correct as to the § 32(1) claim for registered marks because the plaintiff failed to prove ownership, but it erred as to the § 43(a) claim for unregistered marks because a reasonable jury could find the marks were protectable and that a likelihood of confusion existed. For the § 32(1) claim, only the 'registrant' of a mark has statutory standing to sue. Here, the evidence showed the marks were first used by Rex Glendenning as a sole proprietor, making him the original owner. Plaintiff failed to produce any evidence, written or oral, that Mr. Glendenning ever assigned his ownership rights in the marks to the limited partnership. Therefore, Plaintiff was not the owner and lacked standing to sue for infringement of the registered marks. For the § 43(a) claim, ownership is not a standing prerequisite. The court found that a reasonable jury could find the 'REX' marks to be protectable as inherently distinctive (suggestive), rather than merely a descriptive personal name, because of evidence suggesting a connection to the Latin word for 'king.' Furthermore, after analyzing the 'digits of confusion,' the court concluded that a reasonable jury could find a likelihood of confusion. The court noted sufficient evidence of mark similarity, potential for expansion into similar markets, and several instances of actual confusion, which does not require proof of swayed customer purchases. Because these were disputed factual issues, judgment as a matter of law was inappropriate for the § 43(a) claim.
Analysis:
This decision clarifies a significant point of trademark law within the Fifth Circuit regarding the 'actual confusion' factor. The court explicitly resolved an intra-circuit split by holding that proof of swayed customer purchases is not required to establish actual confusion, thereby lowering the evidentiary bar for plaintiffs. This reaffirms the 'initial interest confusion' doctrine's relevance. The case also serves as a crucial reminder of the distinction in standing requirements between § 32(1) and § 43(a) of the Lanham Act, underscoring the necessity for formal, documented assignment of intellectual property from a founder to their business entity to enforce rights associated with federal registration.
