PITTSBURGH –American Eagle Outfitters has recently settled a trademark infringement lawsuit it filed against Walmart over the design of a line of women’s jeans the latter retailer introduced in 2018.
American Eagle Outfitters, Inc. of Pittsburgh and Retail Royalty Company of Las Vegas, Nev. first filed in the U.S. District Court for the Western District of Pennsylvania on March 24, 2020 versus Walmart, Inc., of Bentonville, Ark.
“AEO asserts that, in 2003, AEO began using a particular back pocket stitch (BPS) on its women’s denim jeans, pants, shorts, and skirts. Said BPS appears as follows: AEO further asserts that the primary purpose of the BPS logo is to serve as a brand symbol. On May 27, 2004, the U.S. Patent and Trademark Office rejected AEO’s U.S. Trademark Application for the BPS design, stating that it was a decorative or ornamental feature of the goods and would not be perceived as a mark by the purchasing public,” Horan said.
“In 2018, Walmart introduced a line of women’s jeans under the private label Time and Tru. In summer 2018, Walmart introduced T&T jeans featuring the BPS design. AEO asserts that Walmart’s BPS infringes on its BPS trademark and claims false designation of origin and unfair competition under the Lanham Act (Count I), unlawful acts or practices under the Pennsylvania Unfair Trade Practices and Consumer Protection Law (Count II), and common law trademark infringement, unfair competition and misappropriation (Count III).”
Last year, U.S. District Court for the Western District of Pennsylvania Judge Marilyn J. Horan threw out American Eagle Outfitters’ summary judgment motion in a July 15, 2022 memorandum opinion, which also denied Walmart’s accompanying motion to strike as moot.
Horan found that in its motion for summary judgment, AEO purported to seek judgment on each of its three claims, but that the company’s brief only addressed trademark infringement.
Though the parties do not dispute that AEO’s BPS is not federally registered, AEO contends that it owns valid and enforceable trademark rights to its BPS, because it “is inherently distinctive and has acquired a secondary meaning” – while Wal-Mart maintains that AEO’s BPS design is “neither inherently distinctive nor capable of secondary meaning.”
“AEO argues that its BPS logo has acquired secondary meaning because the record supports that it has sold millions of units of women’s jean with the BPS; it has sold said jeans for 18 years; it has advertised said jeans featuring the BPS; it has exclusively used its BPS until Walmart’s BPS; Walmart allegedly copied AEO’s BPS; AEO’s internal marketing studies demonstrated consumer recognition of its BPS and AEO has found actual confusion from consumer comments,” Horan said.
“Walmart maintains there is ample evidence from which a jury could find no association between AEO’s BPS and AEO. In support of this contention, Walmart asserts that three witnesses’ testimonies, (two Walmart employees and AEO’s own expert witness), confirm a lack of familiarity with the AEO BPS. Walmart also argues that AEO did not present evidence of any specific ‘secondary meaning’ survey and that AEO’s internal market survey has been criticized by AEO’s own survey expert, Dr. Simonson.”
Horan ruled that “any conclusions to be drawn, based upon evidence relevant to secondary meaning, are best evaluated by the factfinder”, as “genuine issues of material facts in regard to the secondary meaning factors” exist.
According to Horan, an analysis of the 10 factors determined by the U.S. Court of Appeals for the Third Circuit in Interpace Corp. v. Lapp, Inc. showed that “this case presents questions of material fact that preclude summary judgment.”
“If AEO were to succeed on liability, it argues that the Lanham Act entitles it to both disgorgement of profits and a permanent injunction. Specifically, as regards money damages, AEO contends that Walmart should be ordered to disgorge profits from all of its infringing sales. As regards a permanent injunction, AEO maintains that irreparable harm is presumed from trademark infringement; an injunction would protect against future infringement and loss of control over AEO’s alleged trademark; the balance of harms favors a permanent injunction and the public interest favors eliminating the likelihood of confusion,” Horan said.
“Walmart contends that, even if infringement exists, the damages should be apportioned, i.e., it should only be liable for profits attributable to the BPS design. According to its damages expert, Walmart maintains that its BPS drove no more than 0.5 to 1.6 percent of the sales and profits from its jeans. Because the Court will not be granting summary judgment on liability, these issues are not ripe, and it need not render any decision on damages or injunctive relief at this stage. Accordingly, AEO’s motion for summary judgment, regarding disgorgement of profits and permanent injunction, will be denied.”
UPDATE
On March 31, U.S. Magistrate Judge Patricia L. Dodge explained that the parties planned to enter a confidential settlement to resolve their dispute. This was followed up by an order from Horan issued the very same day, closing the case.
“Based upon the report that the parties have reached a resolution, the trial and jury selection scheduled to begin on April 17, 2023 is cancelled. On or before May 15, 2023, the parties shall provide a stipulation of dismissal or, alternatively, a joint status report on when they expect a stipulation of dismissal to be filed. In the interim, the Court shall administratively close the case,” Horan concluded.
U.S. District Court for the Western District of Pennsylvania case 2:20-cv-00412
From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at nick.malfitano@therecordinc.com