Solid 21, Inc. v. Breitling USA, Inc.
22-366 (2d Cir. 2024) (2024)
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Rule of Law:
The Lanham Act’s fair use defense permits a defendant to use a protected trademark in commerce if the use is made descriptively, not as a mark, and in good faith, even if some consumer confusion may result.
Facts:
- Gold wristwatches are made in different colors, such as reddish or pinkish, by combining pure gold with other metals like copper.
- Beginning as early as the mid-nineteenth century, various publications and industry professionals used terms like "yellow gold," "white gold," "red gold," and "pink gold" to describe these gold combinations.
- Chris Aire founded Solid 21, a luxury watch and jewelry business, and began using the term "red gold" in the 1980s, seeing a market need for a "masculine" product with a "deep, rich color."
- In 2002, Solid 21 filed a trademark application for “RED GOLD®” for fine jewelry, which was registered in 2003 and achieved incontestable status in 2009.
- Breitling, a Switzerland-based luxury watch manufacturer, sells gold watches with red/pink hues in the United States through its subsidiary.
- Breitling uses the term “red gold” in its advertisements, product listings, and catalogues to describe the material of these watches, typically appearing in smaller text alongside other material descriptors and near Breitling’s own trademarks.
Procedural Posture:
- In 2010 and 2011, Solid 21 filed trademark infringement suits against Breitling and several other watch companies in the Central District of California.
- Pursuant to a tolling agreement, Solid 21 refiled its suit against Breitling in 2019 in the District of Connecticut, asserting claims for trademark infringement under the Lanham Act, along with related claims under state law.
- Breitling moved for summary judgment, arguing that the term "red gold" was generic and the trademark registration was invalid, or alternatively, that Breitling’s use of the term fell under the Lanham Act’s fair use defense.
- Solid 21 filed its own motion for summary judgment.
- The United States District Court for the District of Connecticut initially denied Breitling’s motion for summary judgment, finding a genuine issue of fact as to whether Solid 21’s mark was generic and that Breitling did not carry its burden of showing descriptive use because alternative terms like “rose gold” existed.
- The district court granted Breitling’s reconsideration motion, reexamining precedents and determining that the mere existence of alternative terms did not preclude summary judgment, and that Breitling's use was descriptive and in good faith.
- The district court entered final judgment for Breitling.
- Solid 21, Inc. appealed the district court’s judgment to the United States Court of Appeals for the Second Circuit as Plaintiff-Counter-Defendant-Appellant, with Breitling U.S.A., Inc. and Breitling SA as Defendants-Counter-Claimants-Appellees.
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Issue:
Does a luxury watch manufacturer establish a fair use defense as a matter of law when it uses a registered trademark, "RED GOLD®", to descriptively identify the material and color of its products, even if alternative descriptive terms exist and it did not conduct a trademark search?
Opinions:
Majority - Wesley
Yes, Breitling established its fair use defense as a matter of law because its use of "red gold" was descriptive, not as a mark, and in good faith. The court held that Breitling used "red gold" descriptively, consistent with the term’s historical usage by watchmakers, to identify product materials for watches with red/pink hues. Breitling never used the term to describe any product not made from gold with a red/pink hue. This descriptive use was further confirmed by the physical layout of Breitling’s product descriptions, where "red gold" was listed as a material alongside other descriptors like "stainless steel" in smaller text and accompanied by Breitling's own trademarks. The court rejected Solid 21’s argument that the availability of alternative terms like "rose gold" precluded fair use, distinguishing EMI Catalogue by noting that "red gold" is inherently descriptive, unlike the phrase at issue in EMI Catalogue. The court found no evidence of bad faith on Breitling’s part, stating that failure to conduct a trademark search and some possibility of consumer confusion are not sufficient alone to prove bad faith, especially when the use is clearly descriptive and not as a source identifier. The majority emphasized that it is rare for a defendant who uses a descriptive term only to describe its products, and not as a trademark, to nevertheless intend to sow confusion between the two companies’ products.
Dissenting - Park
No, Breitling did not establish good-faith fair use as a matter of law, and the question of good faith, which is "singularly inappropriate" for summary judgment, should have been decided by a jury. Judge Park argued that Breitling, as the defendant, bore the burden of proving good faith, which requires a fact-intensive, totality-of-the-circumstances judgment. The dissent highlighted that Breitling began using "red gold" in 2010, well after Solid 21 trademarked it, without offering a plausible explanation for changing from "rose gold." Breitling also admitted to not conducting a trademark search, which, while not per se bad faith, can be evidence of it, especially when there is uncertainty. Judge Park noted that a reasonable jury could infer bad faith if Breitling had actual or constructive knowledge of Solid 21’s mark and still used it, particularly when "rose gold" was a known and arguably superior alternative term, as suggested by Solid 21's evidence of consumer understanding. The dissent criticized the majority for effectively eliminating the good-faith prong of the fair use defense by equating descriptive use with good faith, thereby minimizing good faith as an independent element.
Analysis:
This case reinforces the robust nature of the fair use defense in trademark law, particularly when descriptive terms with a history of common usage within an industry are at issue. It clarifies that the mere existence of alternative descriptive terms, or a defendant's knowledge of a trademark coupled with a failure to conduct a trademark search, are generally insufficient to defeat a fair use defense at summary judgment if the use is plainly descriptive and not intended as a source identifier. The ruling sets a high bar for plaintiffs to demonstrate bad faith when a term is inherently descriptive, potentially making it more challenging to challenge the descriptive use of such terms, especially in industries with established vocabularies.
