Simone Kelly-Brown and Own Your Power Communications, Inc., Plaintiffs-Appellants,
Oprah Winfrey, Harpo Productions, Inc., Harpo, Inc., Hearst Corporation, Hearst Communications, Inc., Wells Fargo & Co., Estee Lauder Companies, Inc., Clinique Laboratories, LLC, Chico's FAS, Inc., ABC Companies (1-100), and John Does (1-100), Defendants-Appellees.
Argued: September 25, 2012
On appeal from judgment entered pursuant to an Order dated March 6, 2012 by the United States District Court for the Southern District of New York (Paul A. Crotty, Judge) granting Defendants-Appellees' motion to dismiss. Plaintiff is the owner of a motivational services business named "Own Your Power Communications, Inc., " and has a registered service mark in "Own Your Power." Defendants published a magazine cover, hosted an event, and built a section of a website all utilizing the phrase "Own Your Power." Plaintiffs bring suit alleging trademark infringement under the Lanham Act. The District Court held that the defendants' use of the phrase "Own Your Power" constituted fair use and also held that plaintiffs' claims failed because she failed to meet the threshold requirement of showing use as a mark. We disagree with the District Court's holding that the defendants have demonstrated fair use and also with its holding that plaintiffs are required to make a threshold showing that defendants' used "Own Your Power" as a mark in order to state a claim for trademark infringement. We therefore VACATE the judgment of the District Court with respect to plaintiffs' trademark infringement, false designation of origin, and reverse confusion claims and REMAND for further proceedings not inconsistent with this opinion. The District Court granted defendants' motion to dismiss plaintiffs' counterfeiting, vicarious infringement, and contributory infringement claims on separate grounds, and we AFFIRM with respect to these claims. Judge Sack concurs in the result in a separate opinion.
Patricia Lawrence-Kolaras, The PLK Law Group, P.C., Hillsborough, NJ, for Plaintiffs-Appellants.
Jonathan R. Donnellan (Ravi V. Sitwala, Debra S. Weaver, on the brief), The Hearst Corporation, New York, NY, Charles L. Babcock, Jackson Walker L.L.P., Houston, TX, for Defendants-Appellees.
Before: Straub, Sack and Chin, Circuit Judges.
Straub, Circuit Judge
Plaintiff Simone Kelly-Brown ("Kelly-Brown") is the owner of a motivational services business, Own Your Power Communications, Inc., that holds events and puts out publications under the registered service mark "Own Your Power." Defendants Oprah Winfrey ("Oprah"), Harpo, Inc., and Harpo Productions, Inc. (collectively, "Harpo"), and Hearst Corp. and Hearst Communications, Inc. (collectively, "Hearst") were involved in the production of a magazine, event, and website also employing the phrase "Own Your Power." Kelly-Brown argues that in so using the phrase, the defendants infringed upon her mark. She brings suit for claims including trademark infringement, false designation of origin, reverse confusion, and counterfeiting. She also brings suit for vicarious and contributory infringement against Wells Fargo & Co. ("Wells Fargo"), Clinique Laboratories, LLC ("Clinique"), Estee Lauder Cos., Inc. ("Estee Lauder"), and Chico's FAS, Inc. ("Chico's"), which were all corporate sponsors of the allegedly infringing "Own Your Power" event.
Kelly-Brown appeals from the grant of a motion to dismiss in the Southern District of New York (Paul A. Crotty, Judge), finding that the defendants' use of the phrase "Own Your Power" was fair use. The District Court dismissed Kelly-Brown's counterfeiting, vicarious infringement, and contributory infringement claims on additional grounds. Because we find that the defendants have not adequately established a fair use defense, we VACATE the judgment of the District Court with respect to Kelly-Brown's trademark infringement, false designation of origin, and reverse confusion claims and REMAND this case for further proceedings not inconsistent with this opinion. We agree with the District Court's holdings with respect to Kelly-Brown's vicarious infringement, contributory infringement, and counterfeiting claims and therefore AFFIRM with respect to these claims.
The allegations recited below are taken from the complaint, and we assume they are true for the purposes of this appeal.
Kelly-Brown owns a motivational services business organized around the concept "Own Your Power." Kelly-Brown hosts a radio show, holds conferences and retreats, and writes a blog promoting the concept of "owning" one's power. She also has a federally registered service mark in the phrase "Own Your Power."
The service mark registered with the United States Patent and Trademark Office is displayed in a distinctive font that Kelly-Brown uses on her website and other materials, as follows: 
The service mark states, "THE COLOR(S) LIGHT BLUE IS/ARE CLAIMED AS A FEATURE OF THE MARK. THE MARK CONSISTS OF LIGHT BLUE SCRIPTED LETTERS WHICH CREATE THE WORDS OWN YOUR 'POWER.'" Kelly-Brown's service mark was registered May 27, 2008.
Defendant Oprah almost needs no introduction, but warrants one in this context. She runs a vast media empire, which consists of, inter alia, a magazine, and a website, which is run by Harpo, and (until recently) a television program. Oprah's name and images figure prominently in the branding of these enterprises.
At roughly the same time that Kelly-Brown was seeking to register her service mark in "Own Your Power, " the defendants also sought to register a trademark in a new Oprah venture, the Oprah Winfrey Network, to be known as "OWN." During the creation of OWN, Harpo arranged for the transfer of a trademark in "OWN ONYX WOMAN NETWORK" from its original owner to Harpo to avoid an infringement action from that mark's original owner. Defendants would likely have been aware of Kelly-Brown's pending registration for the service mark in "Own Your Power, " since the same search defendants would have run to locate and negotiate the transfer of the trademark in "OWN ONYX WOMAN NETWORK" would have also revealed Kelly-Brown's mark.
Kelly-Brown alleges that the defendants infringed upon her service mark by producing a bevy of publications, events, and online content all using the phrase, "Own Your Power." For example, the October 2010 issue of O, the Oprah Magazine (the "Magazine"), which was distributed on or about September 13, 2010, prominently featured the words "Own Your Power" on its front cover. Beneath these words were the sub-headings "How to Tap Into Your Strength"; "Focus Your Energy"; and "Let Your Best Self Shine." It also contained the following headline set off to the right side: "THE 2010 O POWER LIST! 20 Women Who Are Rocking the World."
The Power List therein consisted of a list of people who were influential in various fields, with each serving as an example of a particular "kind" of power. For example, one page contained a photograph of the actress Julia Roberts and a paragraph describing her. Set off from the text is a red circle containing the phrase "THE POWER OF . . . living large."
On September 16, 2010, the Magazine, in connection with various other businesses, including defendants Wells Fargo, Clinique, and Chico's, held an "Own Your Power" event (the "Event"). At the Event, various celebrities posed for promotional photographs in front of an "Own Your Power" backdrop that also contained trademarks for Chico's, Wells Fargo, Clinique, and the Magazine. The Event involved a seminar and workshop offering motivational advice regarding self-awareness, self-realization, and entrepreneurship, under the aegis of the theme "Own Your Power." The Event was subsequently described in the December 2010 issue of the Magazine as the "FIRST-EVER OWN YOUR POWER EVENT."
Following the Event, the Harpo website (the "Website") contained video clips from the Event and placed "Own Your Power" banners and content on at least 75 different individual webpages. Each page containing the "Own Your Power" banner displayed the same header image, with font and graphics that resembled the layout of the October issue of the Magazine. In the center of the banner were the words "Own Your Power!" in a large italicized font. On either side of these words were truncated, colored circles, each containing text. The text inside the leftmost circle contained the words, "The Power of . . ." To the right were arrayed other circles containing ellipses followed by the words, ". . . heart, " ". . . vision, " ". . . one voice, " and ". . . seizing the moment."
The October issue contained pages with a similar format, with the phrase "the power of . . ." surrounded by various concepts written in colored circles, each beginning with an ellipsis. The "Own Your Power" bannered pages of the website included articles such as, "How to Tap Into Your True Power, " "Motivation: One Entrepreneur's Fabulous Story, " and "The Secrets of Success." Each page is accompanied by banner advertisements.
Approximately two weeks after the Event occurred, the Magazine's Facebook page displayed photographs taken that evening. On September 27, 2010, Oprah appeared on her television show and displayed the cover of the October 2010 issue of the Magazine. In addition, the December 2010 issue of the Magazine, circulated around November 13, 2010, contained information encouraging readers to view the videos from the Event online at the Website.
Following the Magazine's Own Your Power cover, Kelly-Brown and Own Your Power Communications, Inc. received numerous inquiries from people who appear to have confused Kelly-Brown's services with Oprah's Event, Website, and Magazine. Competition from Oprah has been detrimental to Kelly-Brown's brand.
As a result, Kelly-Brown brought this suit in the District of New Jersey on July 28, 2011, alleging six causes of action under the Lanham Act: trademark counterfeiting, trademark infringement, reverse confusion, false designation of origin, contributory trademark infringement, and vicarious trademark infringement, as well as seven New Jersey state law claims. On November 3, 2011, the District of New Jersey granted a motion to transfer venue of the case to the Southern District of New York.
The defendants moved to dismiss. The District Court granted their motion in its entirety. Kelly-Brown v. Winfrey, No. 11 Civ. 7875, 2012 WL 701262 (S.D.N.Y. Mar. 6, 2012). With regard to the Lanham Act claims, the District Court held that the defendants' use of the words Own Your Power constituted fair use. The defense of fair use requires proof that the use was made "(1) other than as a mark, (2) in a descriptive sense, and (3) in good faith." JA Apparel Corp. v. Abboud, 568 F.3d 390, 400 (2d Cir. 2009) (internal quotation marks omitted).
The District Court first reasoned that defendants engaged in a non-trademark use because there was no chance that an observer of the Magazine or Event would believe that they were created by Kelly-Brown and her company. Kelly-Brown, 2012 WL 701262, at *3. It noted that Oprah was pictured on the October 2010 Magazine cover, indicating to the viewer who it was that had put forward the Magazine. Id. Further, it stated that the placement of the phrase on the Magazine's cover indicated that it was simply a headline describing the contents of the Magazine. Id. In deciding that the Magazine Cover employed a non-trademark use of "Own Your Power, " the District Court indicated that the satisfaction of the first factor of the fair use analysis alone would be sufficient to dismiss Kelly-Brown's Lanham Act claims, but it went on to discuss the other two elements of the analysis because these, too, it believed, supported its determination that the defendants had engaged in fair use of the phrase "Own Your Power." Id. at *4.
Thus, the District Court determined that the use of the words "Own Your Power" was descriptive because it described an action that it hoped that Magazine readers would take after reading the Magazine. Id. at *4-5.
Finally, the District Court held that the defendants did not exhibit bad faith in using the mark. It decided that Kelly-Brown had pleaded no facts that plausibly suggested that the defendants intended to capitalize on her good will. Id. at *6. It reasoned further that there was no likelihood of consumer confusion because the font, color, and formatting of the defendants' use was significantly different from that protected by Kelly-Brown's registered service mark. Id. The District Court therefore held that all three of the elements of the fair use defense were met.
Having found that the defendants' use constituted fair use, the District Court went on to dismiss Kelly-Brown's trademark infringement, reverse confusion, and false designation of origin claims on that basis. Id. at *6-7. With regard to contributory and vicarious trademark infringement, it held that those claims should be dismissed because there was no primary infringement to which any defendant could have contributed, and because Kelly-Brown had not adequately alleged a partnership or agency relationship among any of the defendants. Id. at *7-8.
The District Court then dismissed Kelly-Brown's trademark counterfeiting claim because there was no evidence that the defendants' use was identical in appearance to her own. Id. at *8-9. Because it found that Kelly-Brown's complaint must be dismissed for all the above reasons, it declined to reach the defendants' First Amendment arguments. Id. at *9. The District Court also declined to exercise supplemental jurisdiction over Kelly-Brown's state law claims, thereby dismissing her complaint in its entirety. Id.
This timely appeal followed.
On an appeal from a grant of a motion to dismiss, we review de novo the decision of the district court. Capital Mgmt. Select Fund Ltd. v. Bennett, 680 F.3d 214, 219 (2d Cir. 2012). We accept all factual allegations in the complaint as true, drawing all reasonable inferences in favor of the plaintiff. Tiberio v. Allergy Asthma Immunology of Rochester, 664 F.3d 35, 36 (2d Cir. 2011). "To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal quotation marks omitted).
Kelly-Brown brings suit pursuant to §§ 32 and 43 of the Lanham Act. 15 U.S.C. §§ 1114, 1125. Section 32(1)(a) of the Lanham Act prohibits any person from "us[ing] in commerce any reproduction, counterfeit, copy, or colorable imitation of a registered mark in connection with the sale, offering for sale, distribution, or advertising of any goods or services on or in connection with which such use is likely to cause confusion, or to cause mistake, or to deceive." 15 U.S.C. § 1114(1)(a). Section 43(a) similarly prohibits any person from "us[ing] in commerce, " in connection with any goods or services, "any word, term, name, symbol, or device, or any combination thereof . . . which . . . is likely to cause confusion, or to cause mistake, or to deceive . . . as to the origin, sponsorship, or approval of his or her goods [or] services . . . by another person . . . ." 15 U.S.C. § 1125(a)(1).
With one exception we discuss below, defendants here do not argue that Kelly-Brown has failed to adequately allege the elements of an infringement claim. Rather, the defendants argue, as the District Court decided, that their actions are protected by the doctrine of fair use. Before we discuss the substance of that defense, it is helpful as background to observe that the Lanham Act protects marks from two kinds of confusion. It protects against direct confusion, where there is a likelihood that consumers will "believe that the trademark owner sponsors or endorses the use of the challenged mark." EMI Catalogue P'ship v. Hill, Holliday, Connors, Cosmopulos Inc., 228 F.3d 56, 62 (2d Cir. 2000). It also protects against so-called "reverse confusion, " where the consumer will believe "that the junior user is the source of the senior user's goods." Banff, Ltd. v. Federated Dep't Stores, Inc., 841 F.2d 486, 490 (2d Cir. 1988). In reverse confusion cases, consumers may believe that the senior user is "an unauthorized infringer, and the [junior user's] use of the mark may in that way injure [the senior user's] reputation and impair its good will." Id. Kelly-Brown here alleges that defendants' repeated use of the phrase "Own Your Power" causes reverse confusion within the market for motivational services and publications, and therefore infringes her service mark in that same phrase.
In order to make a successful fair use defense to a trademark infringement claim, the defendant must prove three elements: that the use was made (1) other than as a mark, (2) in a descriptive sense, and (3) in good faith. See 15 U.S.C. § 1115(b)(4); EMI Catalogue P'ship, 228 F.3d at 64. The defendants offer only this narrow challenge to the adequacy of Kelly-Brown's pleading of infringement: that the first element of a fair use defense, use as a trademark, is a threshold requirement for adequately alleging a claim of infringement. That is to say, if Kelly-Brown has not satisfied the "as a mark" requirement, her infringement claims fail as a matter of law. We consider this argument and then discuss defendant's fair use defense.
I. Trademark Use as a Threshold Requirement
In its analysis the District Court stated that unless Kelly-Brown showed that the defendants used the phrase "Own Your Power" as a trademark, her claim must fail as a matter of law. Kelly-Brown, 2012 WL 701262, at *4. The defendants advance the same argument on appeal. Defendants claim that our prior decisions and law from the Sixth Circuit support the conclusion that use as a mark is a threshold requirement. We conclude that defendants misinterpret our prior law, and we conclude that the Sixth Circuit's analysis does not comport with our law on consumer confusion.
In interpreting our prior decisions, defendants conflate two distinct concepts, use of a trademark in commerce and use as a mark, both of which, confusingly, we describe by the shorthand phrase "trademark use." Plaintiffs are required to show "use in commerce" as an element of an infringement claim. See 18 U.S.C. §§ 1114(1)(a), 1125(a)(1). The Lanham Act defines "use in commerce" as follows:
The term "use in commerce" means the bona fide use of a mark in the ordinary course of trade, and not made merely to reserve a right in a mark. For purposes of this chapter, a mark shall be deemed to be in use in commerce--
(1) on goods when--
(A) it is placed in any manner on the goods or their containers or the displays associated therewith or on the tags or labels affixed thereto, or if the nature of the goods makes such placement impracticable, then on ...