A New York federal court has sided with model Hailey Bieber, refusing to issue a preliminary injunction that would have required her newly-launched skincare brand to stop using the name “Rhode” for the duration of a trademark lawsuit lodged against it by a fashion brand of the same name. The plaintiff argued that in addition to barring the defendants from using the Rhode “trade name or domain name” and thereby, “swamping [Rhode’s] market presence” and confusing consumers, the injunction was necessary in light of the fact that Bieber was planning to release a documentary about her brand titled, “The Making of Rhode,” which would further exacerbate the risk of reverse confusion. The court disagreed with Rhode, with Judge Lorna G. Schofield of the U.S. District for the Southern District of New York stating in a brief order on Friday that following the parties’ conference on July 22 and after viewing the documentary, “Plaintiff’s motion for a preliminary injunction is denied without prejudice.”
The order follows from a hearing and oral ruling on July 21, during which Judge Schofield stated that Rhode failed to demonstrate a likelihood of success on the merits on its trademark claim. While the “similarity of the marks” factor weighed in favor of Rhode (but barely, as the plaintiff’s mark “is weak without much evidence that [the] mark has acquired distinctiveness through secondary meaning”), the judge held that the “proximity of the marks and their competitiveness with each other” weighed more towards Bieber’s brand. (Turns out, the court does not view clothing and skincare as closely as one might think in a market of fully-fledged lifestyle brands.)
Rhode first filed its lawsuit against Bieber and her companies RHODEDEODATO CORP. and HRBEAUTY, LLC d/b/a RHODE for trademark infringement and unfair competition under federal and New York state law in June, accusing the defendants of co-opting the Rhode name, which Rhode says that it first adopted eight years ago and has been using consistently ever since. In its complaint, Rhode alleges that it began selling luxury garments under the Rhode name back in 2014 and since then, co-founders Purna Khatau and Phoebe Vickers and their brand have garnered media attention from the likes of Vogue; had their wares carried by retailers like Net-a-Porter, Neiman Marcus, Shopbop, and Saks Fifth Avenue, among others; and garnered fans, such as Beyoncé, Tracee Ellis Ross, and Lupita Nyong’o, while building a business that is on track to generate “sales of approximately $14.5 million for the year 2022 and $20 million in 2023.”
All the while, New York-based Rhode declared in the complaint that it has amassed trademark rights in – and registrations for – its name for use on apparel and accessories, among other things, with plans to expand into additional categories of goods/services in furtherance of its founders’ aim to build out a fully-fledged lifestyle brand.
Against that background, Rhode argued that on June 15, model-slash-budding beauty entrepreneur Hailey Bieber launched a skincare brand of the same name. While Rhode contends that it maintains superior rights in the brand name and “has achieved great success in the competitive and challenging fashion industry and has established a strong brand identity, there is no question that Ms. Bieber’s worldwide fame affords her a more substantial platform from which to [promote and] sell products.” More specifically, Rhode asserts that “Bieber’s new, trademark-infringing brand will quickly swamp [its] market presence, confuse the marketplace, and ultimately, destroy the goodwill and reputation of the RHODE brand.”
In addition to potentially confusing consumers as to the source of Rhode-branded goods, the potential for harm that comes from Bieber’s new brand is significant, according to the lawsuit lodged by Rhode, which argues that such reverse confusion is “likely to cause Rhode to lose control over its goodwill and reputation, which it has spent nearly a decade building,” and “more than $1 million on brand advertisement” in 2021, alone.
A spokesman for Rhode told TFL, “Friday’s court ruling is simply a decision by the judge not to prohibit Hailey Bieber’s skin care line from using our brand name while litigation proceeds, deferring the ruling until we have the opportunity to gather more evidence. It is exceedingly rare for a judge to issue the preliminary order we sought, and so we expected this outcome. We remain confident that we will win at trial. ‘Rhode’ is our name and brand, we built it, and federal and state laws protect it. We ask Hailey to achieve her goals without using the brand name we have spent the last nine years building. Our team remains focused on continuing to grow our brand and thank you again to everyone for your support.”
Reverse Confusion in Second Circuit District Courts
Not the only reverse confusion-centric case to be filed in a New York federal court as of late, the Rhode v. Rhode case was closely followed by the filing of a trademark suit against Kim Kardashian, her corporate entity Kimsaprincess Inc., and Coty, Inc. In a complaint dated June 28, Brooklyn, New York-based Beauty Concepts, which does business as SKKN+, claims the mega-star and her cosmetics manufacturing collaborator are on the hook for trademark infringement and unfair competition, as well as civil conspiracy under New York common law, for launching the “confusingly similar” SKKN by Kim brand and using the mark on goods and services that are “identical to, or highly related to, services offered by Beauty Concepts under [its own] SKKN+ trademark.”
And still yet, on the heels of facing complaints from more than one company following its name change last year, Meta Platforms, Inc. landed on the receiving end of a newly-filed lawsuit in New York’s Southern District, with a small virtual reality-focused company accusing the social media behemoth formerly known as Facebook, Inc. of “brazenly violat[ing] fundamental intellectual property rights enshrined in U.S. law to obliterate” a business that has been using the Meta name for more than ten years. In the lawsuit that it filed in a New York federal court on July 19, experiential and immersive technologies company Meta claims that in opting to rebrand to “Meta” last fall, Facebook, Inc. “astoundingly … ignored [its] federal registrations for the META mark,” and the company has since “saturate[d] the marketplace with its infringing META mark,” leaving Meta with little chance to survive.
Given that Facebook, Inc.’s AR, VR, and XR-centric offerings, its consumers, and its channels of trade are “identical to those of Meta – albeit at a much larger scale,” Meta contends that Facebook, Inc.’s adoption of the Meta trademark makes for “a textbook reverse confusion case.”
As distinct from traditional “forward” confusion, which is the most common case infringement scenario and one in which the junior user is a small entity that wrongfully makes use of the established brand of a larger entity (the senior user) by misrepresenting their trademark, reverse confusion results from a situation where consumers are likely to be confused in believing that both the junior and senior users’ goods/services are manufactured by or associated with the junior user. (In a reverse confusion scenario, the junior user is the larger, more established entity.) Because of its established position in the market and robust marketing efforts, the junior user is able to saturate the market with its goods/services, thereby, overshadowing the existence of the senior user.
To date, most reverse confusion cases have been litigated in district courts that fall within the jurisdiction of the U.S. Court of Appeals for the Ninth Circuit, and thanks to an array of opinions from the Ninth Circuit, plaintiffs have a relatively clear framework for pleading and establishing a trademark infringement claim under a “reverse confusion” theory in this Circuit. In connection with its decision in July 2017 in Marketquest Group v. BIC, for instance, the Ninth Circuit “relieved plaintiffs from having to specifically plead reverse confusion if it is compatible with the theory of infringement alleged in the complaint and supported a more malleable standard for proving intent in reverse confusion cases,” Fenwick partner Eric Ball wrote at the time. More recently, in its 2021 decision in Ironhawk Technologies, Inc. v. Dropbox, Inc., the court – after applying the Sleekcraft factors – refused to grant summary judgment for the defendant, a move that Weintraub Tobin’s James Kachmar says is a reminder that the Sleekcraft factors “can play an importantly equal role in cases where a senior mark holder brings a reverse confusion case against a more popular and commercially successful junior holder.”
And most recently, the Second Circuit issued its decision in RiseandShine Corporation v. PepsiCo, Inc. this month., in which it reversed a preliminary injunction entered by the U.S. District Court for the Southern District of New York that would bar PepsiCo from marketing its “Mtn DEW Rise Energy” energy drink, taking issue with the merits of Rise Brewing’s reverse confusion theory. Among other things, the Second Circuit disagreed with the lower court in terms of the strength of Rise Brewing’s mark, finding that links between the word “Rise” and coffee make it a suggestive mark entitled to a narrow scope of protection. Beyond that, the appeals court agreed with PepsiCo, which argued that “where a plaintiff claims it will be the victim of reverse confusion – in that consumers will believe that its product comes from the junior user – a plaintiff’s showing of acquired strength of its mark does not support its claim.”
The budding number of reverse confusion-focused cases being filed in federal district courts in New York, the Rhode lawsuit included, stand to bring some guidance for both plaintiffs and defendants should they seek to lodge – or be forced to defend – similar cases. And as Meta’s lead counsel Dyan Finguerra-DuCharme stated in connection with that case, “The facts provide the 2nd Circuit courts with the opportunity, for the first time this decade, to ensure that liability standards, injunctive relief, and damages awards in reverse confusion cases are commensurate with the fundamental purpose of the doctrine to protect the IP rights of small businesses in a contemporary era of corporate consolidation and dominance.”
The case is Rhode-NYC, LLC v. Rhodedeodato Corp. et al, 1:22-cv-05185 (SDNY).
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