District Court Denies Preliminary Injunction Requested Under Reverse Confusion Theory Following PepsiCo Ruling

“Judge Schofield said that the likelihood of confusion in this case had not been proven as, ‘under Second Circuit law, plaintiff’s mark is in the category of descriptive because ‘RHODE’ is a personal name.’”

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Hailey Rhode Bieber

In a case that echoes they key issue in a recent U.S. Court of Appeals for the Second Circuit ruling for PepsiCo, Inc., U.S. District Court for the Southern District of New York Judge Lorna Schofield denied a brand owner’s request for a preliminary injunction enjoining model and influencer Hailey Rhode Bieber, who is also the spouse of superstar Justin Bieber, from selling products under the name “Rhode,” which is also her middle name.

Clash of the RHODE Marks

RHODE-NYC, LLC, a fashion brand, asked the court to issue a preliminary injunction based on a “reverse trademark confusion” theory. In a hearing held last week, Rhode-NYC’s lawyer argued that “the two founders have worked tirelessly building their signature styles, fighting to get their products in an array of retailers, managing the brand’s online presence, monitoring for celebrity interest, court influencers, providing interviews to media outlets, all to get their brand out into the world and create the goodwill that comes with a trademark.” While still a small brand, the company has enjoyed success, but cannot compete with Bieber’s celebrity reach. Rhode-NYC had been using the mark since 2014, whereas Bieber launched her skincare line under the name just before the lawsuit was filed this June. Bieber also reached out to Rhode-NYC in 2018 hoping to acquire the trademark, but the brand refused since they’d already been using the name for four years. “They were attached to it and they said no,” explained Rhode-NYC counsel, Lisa Simpson of Orrick, Herrington & Sutcliffe.

Nonetheless, Bieber launched her skincare brand “in possibly the most confusing creating way that they could, a massive media launch, blasted to millions of followers, broadcast on major networks, covered by dozens of news and fashion outlets, and conflating fashion and beauty all the way along,” Simpson said, adding that “there could not be a clearer case of reverse confusion here.”

Reverse confusion, as explained in the recent Second Circuit RiseandShine Corporation v. PepsiCo, Inc. ruling, “occurs when consumers ‘believe, erroneously, that the goods marketed by the prior user are produced by the subsequent user.”

However, counsel for Bieber, Brendan Hughes of Cooley LLP, explained that when the brand refused to sell the mark, Bieber did what she “was supposed to do,” namely, applied for the mark RHODE covering skincare through the U.S. Patent and Trademark Office (USPTO), which she was ultimately granted. When the mark was published for opposition in August of 2020, Rhode-NYC did not oppose it. Following a demand letter sent by Rhode-NYC in 2021 requesting that Bieber stop all use of the mark, an agreement was eventually reached that Bieber would not use the RHODE mark for clothing and Hughes said there was an understanding that Rhode-NYC had consented to Bieber’s use of the mark in connection with cosmetics. They subsequently did not hear from the plaintiffs until two days before Bieber’s brand launch, after which they filed the lawsuit.

Schofield Rules from the Bench

One day after the July 21 hearing on the preliminary injunction issue, Rhode-NYC applied for an emergency hearing after learning that Bieber planned to release a documentary titled “The Making of RHODE.” During that hearing, Judge Schofield delivered an oral ruling on the preliminary injunction, which she reserved the right to change after watching the documentary in question, in which she found that “plaintiff is not entitled to a preliminary injunction because it has not demonstrated a likelihood of success on the merits on the federal trademark claim.”

Schofield also found “the balance of hardships does not decidedly tip in favor of plaintiff.”

Citing to the recent Second Circuit opinion, she said that the likelihood of confusion in this case had not been proven because “under Second Circuit law, plaintiff’s mark is in the category of descriptive because ‘RHODE’ is a personal name.” The plaintiff’s co-founders acknowledged that they adopted the name from Greek mythology and thus, Schofield said, the mark is generally regarded as descriptive and the plaintiffs must therefore establish that it has acquired secondary meaning. But the record did not support a finding of secondary meaning under the Polaroid factors, since Rhode-NYC did not provide a basis for comparison of its expenditures on advertising or sales success to the general market; did not present consumer studies supporting a finding of secondary meaning; and did not present evidence of attempts to plagiarize the mark, among other factors.

While the “similarity of the marks” factor weighed in favor of Rhode-NYC, the “proximity of the marks and their competitiveness with each other” weighed in favor of defendants, the “bridge the gap” factor favored neither party, and none of the other factors weighed definitively in favor of plaintiff. Even the similarity of the marks “is undercut by the fact that the mark is weak without much evidence that plaintiff’s mark has acquired distinctiveness through secondary meaning,” Schofield said. She issued her order officially denying the preliminary injunction later that day.

In the Second Circuit’s PepsiCo decision, issued the same day as Schofield’s order, the appellate court determined that the Southern District of New York had erred in its evaluation of the strength of plaintiff Rise Brewing’s mark, which the Second Circuit said was “often the most important factor” considered in the likelihood of confusion analysis. The strong logical association between “RISE” and coffee puts Rise Brewing’s mark at the lower end of the suggestive mark spectrum, the Second Circuit ruled, and the district court’s failure to note this logical association constituted legal error.

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