Tacking standard "exceedingly strict", says Ninth Circuit

In One Industries LLC v Jim O'Neal Distributing Inc (Case 08-55316, 24th August 2009) the US Court of Appeals for the Ninth Circuit held that the standard for tacking marks to claim priority based on the date of first use is "exceedingly strict" and very rarely met.

The case involved two competitors in the motocross racing apparel industry that both used marks containing a stylised "O". Jim O'Neal Distributing Inc registered a mark consisting of an "O" with an apostrophe in 1991. However, the mark changed in appearance four times after it was first registered. Only the last two changes were relevant to this case: 

• in 1997 O'Neal debuted and registered a mark in which the "O" was thicker, boxier and with rounded corners; and
• in 2003 O'Neal adopted and registered a mark in which the corners of the "O" were more angular.

One Industries LLC is a relative newcomer to the motocross racing industry. Its mark is a stylised, blocky and angular "O" with breaks that form a "Z-like" white space in the middle of the mark. The mark was developed and registered in 1999 - that is, after O'Neal's "rounded O" mark, but before its "angular O" mark.

In 2006 O'Neal accused One Industries of infringing its "angular O" mark, claiming that the "O" mark had been in use for over 10 years. In response, One Industries filed a declaratory judgment action. O'Neal counterclaimed for trademark infringement, among other things.

The most crucial part of the district court's decision occurred before discovery. One Industries filed a motion under Rule 12(e) of the Federal Rules of Civil Procedure, claiming that O'Neal's infringement claims were not sufficiently definite as they did not specify which iteration of the "O" mark had been infringed. O'Neal argued that it did not have to specify because the "O" mark was a singular mark that had changed only slightly since its initial registration. In other words, O'Neal wanted the court to tack the use of its previous "O" marks to its most recent mark to claim priority with the "angular O" mark.

However, the district court ruled against O'Neal and did not allow the tacking for two reasons. First, the district court held that the two marks were registered separately, which, according to the court, indicated that they were separate marks. Second, the court stated that "the marks presented appear[ed] to this court to be more than just slightly different". O'Neal amended its complaint to specify that the "rounded O" mark was the mark that was infringed. The court subsequently granted summary judgment to One Industries on all claims.

On appeal, the Ninth Circuit addressed two main issues:

• whether the district court had acted properly in resolving the tacking question on the basis of a pre-discovery motion; and 
• whether the district court's ruling on the tacking question was correct.

The Ninth Circuit stated that pre-discovery was the wrong time to decide the tacking issue:

"Because tacking requires a highly fact-sensitive inquiry, the better practice is to resolve it on summary judgment, after full discovery [...]. We encourage district courts to avoid resolving merits issues, especially fact-sensitive questions, on Rule 12(e) motions."

However, the Ninth Circuit held that while the decision was an error, it was not a reversible error because O'Neal did not ask the court to postpone the decision or move for reconsideration. The one dissenting judge argued that the district court had committed a reversible error due to its early ruling on the tacking issue. The dissent argued that because the Ninth Circuit had found that tacking was a question of fact:

"[a]t that state in the litigation, it would have been impossible for the district court to conclude that reasonable minds could not differ and that the evidence permitted only one conclusion regarding tacking."

The Ninth Circuit then considered whether the tacking ruling was correct. It held that:

• the standard for tacking is "exceedingly strict";
• tacking is allowed "only in narrow circumstances"; and
• "tacking will be allowed only if the marks are virtually identical".

In this case, the Ninth Circuit found that O'Neal's two "O" marks were not sufficiently similar to meet this strict standard: the apostrophes were "markedly different" and the horizontal lines were "thinner". Moreover, the "rounded O" mark was "boxy", while the "angular O" mark was shaped like a "lemon". Adding all these differences up, the Ninth Circuit said, "established that the two marks [were] not indistinguishable".

With O'Neal doomed to claim that its "rounded O" mark was the mark infringed, the Ninth Circuit found there was no likelihood of confusion between this mark and One Industries' mark, because:

"the marks do not look alike, […] O'Neal has not produced evidence of actual confusion and […] no reasonable jury could infer that One Industries deliberately appropriated the goodwill associated with the 'O' mark."

The appeal was thus dismissed.

This article first appeared in World Trademark Report, 28th October 2009.