u.s. polo association v. prl usa holdings, 12-1346-cv (2d cir.) (appellant u.s. polo association's...

7/31/2019 U.S. Polo Association v. PRL USA Holdings, 12-1346-CV (2d Cir.) (Appellant U.S. Polo Association's 10-31-12 reply b

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12-1346-cvIN THE

United States Court of AppealsFOR THE SECOND CIRCUIT

UNITED STATES POLO ASSOCIATION, INC., USPA PROPERTIES, INC.,

Plaintiffs-Counter-Defendants-Appellants,

against

PRL USA HOLDINGS, INC.,

Defendant-Counter-Claimant-Appellee,

LOREAL USA, INC.,

Intervenor-Defendant-Counter-Claimant-Appellee.

ON APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF NEW YORK

REPLY BRIEF OF PLAINTIFFS-COUNTER-DEFENDANTS-APPELLANTS

d

GERALD J. FERGUSON, ESQ.

GEORGE A. STAMBOULIDIS, ESQ.

TRACY L. COLE, ESQ.

DAVID J. SHEEHAN, ESQ.

THOMAS D. WARREN, ESQ.BAKER & HOSTETLER LLP

45 Rockefeller Plaza

New York, New York 10111

(212) 589-4200

Attorneys for Plaintiffs-Counter-

Defendants-Appellants

Case: 12-1346 Document: 92 Page: 1 10/31/2012 759040 37


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TABLE OF CONTENTS

Page

i

REPLY......................................................................................................................1

I. THE INFRINGEMENT FINDING MUST BE REVERSED

BECAUSE THE DISTRICT COURT IGNORED FACTS SHOWINGTHE PARTIES TRADEMARKS FAIRLY COMPETE..............................2

A. The District Court Erred by Ignoring U.S. Polo Assn.s Rightsas a Trademark Owner .........................................................................3

1. It was Error For The Lower Court to Ignore U.S. Polo

Assn.s Trademark Rights to Its Name, Which HasAchieved Market Recognition Among Consumers...................6

2. It Was Also Error For The Lower Court to Ignore U.S.Polo Assn.s Rights to the Double Horsemen Mark..................8

B. The District Court Erred in Ignoring the Extensive MarketCoexistence of Related Goods Without Any Evidence of

Confusion ...........................................................................................12

C. The District Courts Finding of Bad Faith Cannot BeReconciled With the Evidence ...........................................................14

D. The District Court Erred in Admitting the PRL Parties Flawed

Survey Evidence and Concluding It Was Suggestive of ActualConfusion..........................................................................................15

II. UNDER EBAY, THE INJUNCTION IMPERMISSIBLY PRESUMES

IRREPARABLE HARM..............................................................................17

III. THE DISTRICT COURTS OVERBROAD INJUNCTIONCANNOT BE JUSTIFIED BY THE EVIDENCE.......................................21

A. The Overbroad Injunction Cannot Be Reconciled With TheDistrict Courts Narrow Infringement Findings.................................21

B. The Injunction Already Has Been Misused by PRL..........................28CONCLUSION.......................................................................................................30

CERTIFICATE OF COMPLIANCE WITH TYPE-VOLUME

LIMITATION, TYPEFACE REQUIREMENTS AND TYPE STYLEREQUIREMENTS..................................................................................................31



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ii

TABLE OF AUTHORITIES

Page(s)

CASES

24 Hour Fitness USA, Inc. v. 24/7 Tribeca Fitness, LLC,

447 F. Supp. 2d 266 (S.D.N.Y. 2006) ................................................................16

Adidas Am., Inc. v. Herbalife Intl, Inc.,No. 3:09cv00661(MO), 2012 WL 1831525 (D. Or. May 12, 2012)........18, 19

All England Lawn Tennis Club (Wimbledon) Ltd. v. Creations

Aromatiques, Inc.,220 U.S.P.Q. 1069 (T.T.A.B. 1983)...................................................................13

Aronowitz v. Health-Chem Corp.,513 F.3d 1229 (11th Cir. 2008) ..........................................................................27

Citizens Banking Corp. v. Citizens Fin. Grp., Inc.,

No. 07-11514 (AJT), 2008 WL 1995104 (E.D. Mich. May 6, 2008),

affd, 320 F. Appx 341 (6th Cir. 2009) .............................................................16

eBay, Inc. v. MercExchange, L.L.C.,

547 U.S. 388 (2006)..........................................................................17, 18, 19, 20

Estee Lauder, Inc. v. The Gap, Inc.,108 F.3d 1503 (2d Cir. 1997) ...............................................................................2

Gruner + Jahr USA Publg. v. Meredith Corp.,

991 F.2d 1072 (2d Cir. 1993) ...............................................................................6

Higgins v. Mississippi,217 F.3d 951 (7th Cir. 2000) ..............................................................................11

International Star Class Yacht Racing Assn v. Tommy Hilfiger U.S.A., Inc.,

No. 94-Civ-2663 (RPP),1995 WL 241875 (S.D.N.Y. April 26, 1995),revd in part on other grounds, 80 F.3d 749 (2d Cir. 1996) ..............................12

Jaguar Cars Ltd. v. Skandrani,771 F. Supp. 1178 (S.D. Fla. 1991)....................................................................13

Leatherman Tool Group, Inc. v. Coast Cutlery Co.,

823 F. Supp. 2d 1150 (D. Or. 2011) ...................................................................19



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(continued)

Page(s)

iii

Libman Co. v. Vining Indus., Inc.,69 F.3d 1360 (7th Cir. 1995) ................................................................................3

Pristine Industries v. Hallmark Cards, Inc.,753 F. Supp. 140 (S.D.N.Y. 1990) .......................................................................4

PRL USA Holdings v. U.S. Polo Assn, Inc.,

520 F.3d 109 (2d Cir. 2008) ...........................................................................8, 26

Salinger v. Colting,607 F.3d 68 (2d Cir. 2010) .................................................................................17

Scarves by Vera, Inc. v. Todo Imports Ltd.,

544 F.2d 1167 (2d Cir. 1976) .............................................................................13

Starbucks Corp. v. Wolfes Borough Coffee, Inc.,588 F.3d 97 (2d Cir. 2009) .................................................................................14

Starter Corp. v. Converse, Inc.,

170 F.3d 286 (2d Cir. 1999) .............................................................24, 25, 26, 27

THOIP v. Walt Disney Co.,

690 F. Supp. 2d 218 (S.D.N.Y. 2010) ................................................................16

Tommy Hilfiger Licensing v. Nature Labs, LLC,221 F. Supp. 2d 410 (S.D.N.Y. 2002) ................................................................14

U.S. Polo Assn, Inc. v. Polo Fashions, Inc.,

No. 84-civ-1142 (LBS), 1984 WL 1309 (S.D.N.Y. Dec. 6, 1984) ......................7

Westchester Media v. PRL USA Holdings, Inc.,

214 F.3d 658 (5th Cir. 2000) ................................................................................5

RULES

Fed. R. Civ. P. 36(b) ................................................................................................11

OTHERAUTHORITIES

6 Michael H. Graham,Handbook of Federal Evidence 801.26 (7th ed.2011) ...................................................................................................................11



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(continued)

Page(s)

iv

Sandra Rierson,IP Remedies AftereBay:Assessing the Impact onTrademark Law, 2 Akron Intell. Prop. J. 163 (2008) .........................................19



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REPLY

Although LOreal and PRL, in their briefs to this Court, purport to speak

with a common voice, they take contradictory positions that reflect the

inconsistencies in the decision below.

LOreal contendsin support of the district courts opinionthat fragrance

products should be viewed in isolation from all other product categories, urging

that the fragrance marketplace is drastically different from the apparel, leather

goods and watches marketplace, where U.S. Polo Assn. has a settled right to use its

trademarks. As a result, LOreals argument goes, the district court was justified in

viewing its role as limited to conducting an abstract comparison of the physical

similarities of the marks, disregarding the uncontested fact that U.S. Polo Assn.

and PRL have extensively coexisted in those marketplaces, and not requiring PRL

to present any evidence of consumer confusion or some other unfair competitive

harm.

In stark contrast, PRL contendsin support of the district courts order

that the district courts findings concerning the fragrance marketplace should be

applied without limitation to all categories of products and services that the parties

have not previously litigated, covering marks and combinations of marks that were

never before the district court and with respect to which the district court made no

findings of infringement. PRL asks this Court to affirm the entry of an injunction



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that, under PRLs reading, bars U.S. Polo Assn. from licensing its name or its

recognized logos on all categories of goods and services except those specifically

established by jury verdict or settlement agreement. Its broad reading is

manifested in PRLs recent initiation of contempt proceedings against the sale of

U.S. Polo Assn. eyewear, a product category that has never been litigated.

It is not surprising that the positions being urged by LOreal and PRL

contradict, for the appellees seek to reconcile an opinion and order that cannot be

reconciled.

This Court should reverse the lower courts infringement finding because the

district court clearly erred in its factual findings, failed to give weight to the actual

market conditions in which the parties have competed, and failed to recognize that

PRL presented no evidence of unfair competitive harm. The Court should also

vacate the injunction as it was issued based upon an improper presumption, or, in

the alternative, should vacate or modify the injunction to the extent it enjoins

conduct with respect to marks or markets not before the district court.

I. THE INFRINGEMENT FINDING MUST BE REVERSED BECAUSE

THE DISTRICT COURT IGNORED FACTS SHOWING THE

PARTIES TRADEMARKS FAIRLY COMPETE

The likelihood of confusion analysis is reviewed de novo. Estee Lauder,

Inc. v. The Gap, Inc., 108 F.3d 1503, 1510 (2d Cir. 1997). A district courts

finding of infringement that purports to apply thePolaroidfactors without



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considering undisputed factual evidence before it is invalid. [A] finding of likely

confusion can no more be based on pure conjecture or a fetching narrative alone

than on any other finding on an issue on which the proponent bears the burden of

proof. Libman Co. v. Vining Indus., Inc., 69 F.3d 1360, 1363 (7th Cir. 1995).

The district courts findings of likely confusion and bad faith emanated from

its visual comparison of the marks. But the court failed to consider that the 2006

jury found identicalmarks to be non-infringing, based upon the same visual

comparison. And the district court failed to consider other evidence in the record

that further negated its findings: that U.S. Polo Assn. owns established trademark

rights in its name and Double Horsemen mark, that U.S. Polo Assn. and PRL

trademarks have coexisted in apparel and other product categories related to

fragrance without evidence of consumer confusion, and that U.S. Polo Assn.s

marks have achieved market recognition. The district courts failure to consider

these facts requires reversal.

A. The District Court Erred by Ignoring U.S. Polo Assn.s Rights as

a Trademark Owner

Despite its acknowledgment of U.S. Polo Assn.s role as the governing body

of the sport of polo and its multimillion dollar court-approved licensing program,

the district court conducted its likelihood of confusion analysis as though U.S. Polo

Assn. had no relevant trademark rights whatsoever. For example, in finding bad

faith, the district court found that USPA could have avoided this situation entirely



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by choosing a logo that depicts a polo player in a position and from a perspective

that differs from the Polo Player Logo with a more clearly distinct form of

packaging. (SPA-46-47.)

But U.S. Polo Assn. did not create a new mark for use on fragrance

products; it used the very mark it had won the right to use in a lawsuit with PRL in

2006. As the 2006 jury verdict, affirmed by this Court, made clear, U.S. Polo

Assn. has the right to use, and does use, its Double Horsemen logo on a wide array

of related apparel products sold in the United States. It was error for the district

court to ignore not only U.S. Polo Assn.s rights to its mark, but also that the mark

has achieved market recognition among consumers as a result of hundreds of

millions of dollars in sales across the United States. Such consumer recognition is

directly relevant to the likelihood (or non-likelihood) that a consumer will confuse

a U.S. Polo Assn. product with a PRL product. See Pristine Industries v. Hallmark

Cards, Inc., 753 F. Supp. 140, 145 (S.D.N.Y. 1990) (Sweet, J.) (In several cases

the Second Circuit has held that defendants use of its own well-known mark

would ensure that the goods at issue would be associated with the defendant and

not with plaintiff.) (citing cases). As set forth below, the same flaw applies to the

district courts analysis of U.S. Polo Assn.s use of its namea use that was

expressly approved by PRL in a settlement agreement executed by PRL and USPA

Properties in 2003.



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LOreal contends that U.S. Polo Assn. is attempting to assert trademark

rights in gross relating to the concept of polo. (LOreal Br. at 19.) Not so. U.S.

Polo Assn. seeks to safeguard its protectable rights in specific trademarks

including the marks at issue in this litigationthat have achieved market

recognition as a result of its extensive retail sales. (A-943-45; A-1489-1587.) If

anything, to the extent that PRL seeks to negate U.S. Polo Assn.s rights to its own

marks, it isPRL that is asserting rights in gross to the concept of polo, even though

PRL conceded below that it has no claim of trademark dilution.1

As the Fifth

Circuit noted,

PRL products became famous by basking in the reflectedglow of an elegant sport. PRL now asserts that it, not the

sport, is the source of the glow. While PRLs primaryclaim is the essence of the ordinary trademark case, we

cannot be blind, when balancing the equities, to the fact

that PRL is arrogating the very name of a sport from theplayers publication. In a sense, PRL is biting the hand

that fed it.

Westchester Media v. PRL USA Holdings, Inc., 214 F.3d 658, 673 (5th Cir. 2000).

1 See PRL Parties Post-Trial Mem. of Law at 1 n.1, No. 09-civ-9476 (RWS)

(S.D.N.Y. Nov. 4, 2010), ECF No. 73. The only question before the district court

was whether consumers were likely to be confused between U.S. Polo Assn. andPRL marks on fragrance.



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1. It was Error For The Lower Court to Ignore U.S. Polo

Assn.s Trademark Rights to Its Name, Which Has

Achieved Market Recognition Among Consumers

Contrary to the appellees assertions, U.S. Polo Assn. has legitimate

trademarkrights in its name, not merely a nebulous right to refer to the sport of

polo in a non-trademark fashion. U.S. Polo Assn. has continuously used its name

to identify its sporting association services since 1924, some 43 years before Ralph

Lauren started using marks associated with the sport of polo. On the basis of this

continuous use, U.S. Polo Assn. has incontestable trademark rights in its name that

it uses on products and services. (A-1489-1587.) See, e.g., Gruner + Jahr USA

Publg. v. Meredith Corp., 991 F.2d 1072, 1076 (2d Cir. 1993) (A registered mark

becomes incontestable if it has been in continuous use for five consecutive years

subsequent to its registration and is still in use . . . . If a mark became

incontestable, its registration shall be conclusive evidence . . . of the registrants

exclusive right to use the registered mark in commerce, subject to defenses not

here relevant.).

In contending that U.S. Polo Assn. lacks trademark rights in its name, PRL

mischaracterizes the language of the 1984 Order, which recognizes, among other

things, U.S. Polo Assn.s right to engage in a retail licensing program using its

name and collective membership mark, which includes the associations name.

(A-1592-53, paragraph 9(c).) The 1984 Order does not, as PRL contends, limit



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U.S. Polo Assn.s ability to refer to the sport of polo to generic, non-trademark

uses.2 Instead, paragraph 8 of the 1984 Order only enjoins the emphasis of the

word POLO separate and apart from U.S. Polo Assn.s name by, for example,

putting the word POLO in a larger font or a different color than the other words

in its name.3 (A-1592;see also Polo Fashions, 1984 WL 1309, at *14.)

Moreover, U.S. Polo Assn. has used the U.S. POLO ASSN. mark on

apparel and related goods since 1998, and the parties 2003 settlement agreement

explicitly recognized U.S. Polo Assn.s right to use this mark on key product

categories, including apparel. (A-973:18-974:10; Decl. of W. David Cummings,

Ex. A, No. 09-9476 (RWS), Sept. 14, 2012, ECF No. 117.) U.S. Polo Assn.s

rights in these marks, and the absence of any evidence from PRL of customer

confusion concerning these marks in years of coexistence, were an essential part of

2 PRL further mischaracterizes the 1984 Order by attaching a mark to its brief that

was not enjoined by the 1984 Order or even the district court in the fragrancelitigation. See PRL Br. at 5. The mark in questiona composite mark of

UNITED STATES POLO ASSOCIATION and a single horseman design (U.S.

Ser. No. 73/419465)was addressed in Paragraph 5 of the 1984 Order, whichexpressly declined to provide direction to the U.S.P.T.O. with respect to the

trademark application for Serial No. 73/419465. (A-1589.) And when describing

the products enjoined by the 1984 Order, Judge Sand did not reference productsbearing the composite mark. See U.S. Polo Assn, Inc. v. Polo Fashions, Inc., No.84-civ-1142 (LBS), 1984 WL 1309, at *5, *8-9 (S.D.N.Y. Dec. 6, 1984).

3 PRL concedes that the district courts order in this case cannot apply to product

categories where U.S. Polo Assn. already has legally recognized rights to use itsmarks (although the order is silent on this issue).



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any likelihood of confusion analysis; it was error for the district court to ignore

them.

2. It Was Also Error For The Lower Court to Ignore U.S. Polo

Assn.s Rights to the Double Horsemen Mark

U.S. Polo Assn.s trademark rights in its Double Horsemen mark are

undisputed. In affirming the jury verdict that three versions of U.S. Polo Assn.s

Double Horsemen mark did not infringe PRLs single horseman mark, this Court

stated that the 1984 Order expressly permitted U.S. Polo Assn. to use a mounted

polo player symbol. PRL USA Holdings v. U.S. Polo Assn, Inc., 520 F.3d 109,

118 (2d Cir. 2008). PRL concedes that the apparel litigation conclusively

established that iterations of the Double Horsemen mark at issue there were not

confusingly similar to PRLs marks and that the injunction in this case could not

affect[] the USPA Parties trademark rights with respect to apparel that were

established in prior litigation between them. (PRL Br. at 30-31.)

The district court, however, gave no weight to U.S. Polo Assn.s established

rights to use the Double Horsemen mark or to the previously determined absence

of confusion. PRL attempts to defend the lower court by contending that the

fragrance litigation involved a Double Horsemen logo different in presentation

from any of those found to be non-infringing when used on apparel. (PRL Br. at

19.) LOreal, for its part, asserts that the Double Horsemen mark at issue here is a

different mark because the marks at issue in the apparel litigation did not include



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the word mark U.S. POLO ASSN. (LOreal Br. at 28.)

These arguments are incorrect in several respects. First, the Double

Horseman logo is not different. In 2003, PRL and U.S. Polo Assn. entered into a

settlement agreement that provides that the use of the Double Horsemen mark on

apparel would be litigated before the 2006 jury, and that the jury verdict would be

incorporated into the settlement agreement. See Decl. of W. David Cummings, Ex.

A 19(j), No. 09-9476 (RWS), Sept. 14, 2012, ECF No. 117. The jury found that

three iterations of the Double Horsemen mark, pictured here, do not infringe on

PRLs rights when used on apparel:



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Meanwhile, the three iterations of the Double Horsemen mark that were

before the district court were:

As seen above, the Double Horsemen with USPA mark before the district

court is identicalto the Double Horsemen with USPA mark before the jury in the

apparel litigation.

And as to LOreals contention that the marks in the apparel litigation did

not include the word mark U.S. POLO ASSN., this word mark was not tested by

the jury in the apparel litigation because the parties already had agreedthat its use

on the product categories at issue in that litigation was non-infringing. By the

terms of the settlement agreement, U.S. Polo Assn. has the right to market products

bearing its U.S. POLO ASSN. mark together with symbolslike the Double



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Horsemen markfound to be non-infringing in the settled product categories.4

The appellees well understand that a finding of infringement as to an

identical or nearly identical mark on a related product is relevant to the likelihood

of confusion. In August 2012, PRL filed a motion urging the district court to hold

U.S. Polo Assn. in contempt of the injunction for using the Double Horsemen mark

on eyewear, even though eyewear was not at issue in the fragrance litigation.

PRLs sole basis for claiming that the eyewear products infringe on PRLs mark is

that the Double Horsemen mark used on eyewear is virtually indistinguishable

from the Double Horsemen Mark at issue in the fragrance litigation. Mot. for

Sanctions and Contempt at 13, 09-civ-9476 (RWS) (S.D.N.Y. Aug. 21, 2012), ECF

No. 98. Using the same logic, it was clear error for the district court to find

infringement without giving weight to the jurys finding of lack of confusion, as to

the identical mark, on apparel.

4 See Decl. of W. David Cummings, Ex. A ., 5(A)-(N), No. 09-9476 (RWS),

Sept. 14, 2012, ECF No. 117. LOreal is thus incorrect when it characterizes the

agreement as conferring no rights on U.S. Polo Assn. LOreal further wronglyasserts that the response to a request for admission detailing the stipulation is

inadmissible in this action under Federal Rule of Civil Procedure 36(b). Rule36(b) concerns the weight, not admissibility, of judicial admissions. It is true that

under Rule 36(b) a judicial admission is binding only in the litigation in which it is

made, but it nevertheless operates as evidence in any other suit. See, e.g.,Higgins

v. Mississippi, 217 F.3d 951, 954-55 (7th Cir. 2000); 6 Michael H. Graham,Handbook of Federal Evidence 801.26 (7th ed. 2011).



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B. The District Court Erred in Ignoring the Extensive Market

Coexistence of Related Goods Without Any Evidence of

Confusion

U.S. Polo Assn. has used the Double Horsemen and U.S. POLO ASSN.

marks on a wide range of products and in connection with its association activities

since 2006, including shirts, pants, jeans, jackets, dresses, shoes, watches, hats, key

chains, jewelry, swimwear and eyewear. Despite the sale of hundreds of millions

of dollars worth of merchandise bearing the Double Horsemen and U.S. POLO

ASSN. marks during this time, the PRL Parties did not identify asingle instance of

a customer confusing a U.S. Polo Assn. product with a PRL product. The district

court committed clear error when it ignored this failure of proof, and when it

ignored the fact that the Double Horseman mark and PRLs polo player have

coexisted in the marketplace without any evidence of customer confusion. (SPA-

33.)

The district court held that [l]ack of confusion as to apparel may or may not

be indicative of lack of confusion as to fragrances[.]5 But it is well settled that the

5 LOreal argues that it does not matter that U.S. Polo Assn. is the senior user of itsown marks on the related category of apparel, because PRL was the first party to

expand from apparel into fragrance. But that fact establishes only that PRL is thesenior user in fragrance as toPRLs marks. PRL has no rights, nor has it asserted

any, to U.S. Polo Assn.s marks. Nor does the fact that PRL is larger than U.S.Polo Assn. entitle it to displace the U.S. Polo Assn. parties from their own marks.

See International Star Class Yacht Racing Assn v. Tommy Hilfiger U.S.A., Inc.,No. 94-Civ-2663 (RPP), 1995 WL 241875, at *13 (S.D.N.Y. April 26, 1995), revd

in part on other grounds, 80 F.3d 749 (2d Cir. 1996). Like any other party with



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fragrance and apparel markets are related for trademark purposes. See, e.g.,

Scarves by Vera, Inc. v. Todo Imports Ltd., 544 F.2d 1167, 1174-75 (2d Cir. 1976)

(defendants cosmetic products were by their nature so closely related to

plaintiffs apparel products that plaintiff was entitled to protection);Jaguar Cars

Ltd. v. Skandrani, 771 F. Supp. 1178, 1184-85 (S.D. Fla. 1991) (natural for

automobile manufacturer that licensed its trademarks for use on apparel to expand

its program to include fragrance);see also All England Lawn Tennis Club

(Wimbledon) Ltd. v. Creations Aromatiques, Inc., 220 U.S.P.Q. 1069, 1071

(T.T.A.B. 1983) (confusion likely when the same or similar marks were used in

connection with cologne or other cosmetics on one hand and clothing on the

other).

Moreover, the evidence before the district court, reiterated in PRLs brief to

this Court, shows that PRL markets fragrance and clothing together. For example,

emails between PRL and LOreal employees indicate that the Big Pony Collection

fragrances were inspired by the Big Pony Collection apparel line and the synergy

between the two would drive sales of fragrance products (A-2591-92; A-852:4-

trademark rights, the U.S. Polo Assn. parties have the right to expand into relatedcategories unless there is a specific showing that this expansion is likely to createconfusion with PRLs existing marksa showing that PRL cannot make given the

coexistence of these parties products in the apparel market. The district courtfailed to consider this right of expansion.



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853:7), LOreal markets PRL fragrance products by employing salespeople dressed

in PRL clothing bearing the same logos as those on the fragrance products (A-

828:1-13; A-846:13-847:7), and advertisements for the PRL Big Pony Collection

fragrances prominently feature models clothed in apparel from the Big Pony

Collection (A-829:24-830:3).

LOreal contends that [l]ack of evidence regarding confusion is not the

same as evidence of lack of confusion. (LOreal Br. at 48.) But when the parties

related products have coexisted in the market for several years, these concepts are

synonymous. [L]oud silence gives rise to only one inference: consumers have

not been confused. Tommy Hilfiger Licensing v. Nature Labs, LLC, 221 F. Supp.

2d 410, 419 (S.D.N.Y. 2002);see also Starbucks Corp. v. Wolfes Borough Coffee,

Inc., 588 F.3d 97, 117 (2d Cir. 2009) (eleven years of coexistence with no evidence

of customer confusion supports finding of no likely confusion).

C. The District Courts Finding of Bad Faith Cannot Be Reconciled

With the Evidence

The district courts infringement finding was grounded in its erroneous

conclusion that U.S. Polo Assn. acted in bad faith. It found that U.S. Polo Assn.s

bad faith can be inferred from its decision to adopt a mark that is so strikingly

similar to the PRL Polo Player Logo and initially employ the same color and

similar trade dress to that used for PRLs [Polo Blue fragrance]. (SPA-46.) Both

aspects of this conclusion were in error. First, by the time U.S. Polo Assn. started



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to use the Double Horsemen mark on fragrance, the mark had been found by a jury

to be non-infringing on apparel. Use of the marks found non-infringing by the

2006 jury is evidence ofgood faith, not bad. Second, U.S. Polo Assn. had been

using its Double Horsemen and U.S. POLO ASSN. marks together, with blue and

gold trade dress, on apparel and related products without complaint by PRL.

Accordingly, bad faith cannot be inferred from the use of such trade dress on

fragrance either.6

D. The District Court Erred in Admitting the PRL Parties FlawedSurvey Evidence and Concluding It Was Suggestive of Actual

Confusion

Other than the district courts visual determination that the marks were

confusingly similara determination contradicted by the 2006 jury findingsthe

only evidence upon which the district court found a likelihood of confusion was

survey evidence submitted by PRL that used the iconic Mustang Grille

trademark as a control. But this survey, with its improper control, had no

evidentiary value.

LOreal asserts that there is no evidence that the Mustang Grille is a famous

mark. But more than 64% of the survey respondents recognized the Mustang

6 LOreal contends that U.S. Polo Assn. decided to switch from blue to cream

packaging after LOreal filed its motion for a preliminary injunction. But emails

entered into evidence at trial showed that U.S. Polo Assn. made this decisionbefore LOreal filed its motion. (A-2598-99; A-1003:19-1004:10.)



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Grille as being associated with Ford, Mustang, or another automobile stimulus.

(A-2147-74; A- 903:18-904:7.) A mark cannot function as a control if respondents

recognize it. See, e.g., Citizens Banking Corp. v. Citizens Fin. Grp., Inc., No. 07-

11514 (AJT), 2008 WL 1995104, at *10 (E.D. Mich. May 6, 2008), affd, 320 F.

Appx 341 (6th Cir. 2009) (most significant flaw in survey was control that was

more recognizable than one of marks at issue).

More fundamentally, the appellees gloss over the fact that the PRL survey

did not control for U.S. Polo Assn.s right to use marks relating to the sport of

polo. A proper control in a likelihood of confusion survey must share as many

characteristics with the experimental stimulus as possible, with the key exception

of the characteristic whose influence is being assessed. THOIP v. Walt Disney

Co., 690 F. Supp. 2d 218, 240 (S.D.N.Y. 2010) (internal quotations and citation

omitted). A proper control in this case thus needed to reference the sport of polo in

order to determine the appropriate level of confusion responses stemming from

permitted references to the sport of polo in U.S. Polo Assn. trademarks. See 24

Hour Fitness USA, Inc. v. 24/7 Tribeca Fitness, LLC, 447 F. Supp. 2d 266, 280-81

(S.D.N.Y. 2006) (a control must screen for confusion responses arising from

element of gym name that refers to gym being open 24 hours, because no gym has

the exclusive or protectable right to state that it is open 24 hours).



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The sport of polo has nothing to do with a riderless galloping wild horse. It

was clear error for the district court to accord weight to a survey that used it as a

control.

For all these reasons, the district courts finding of infringement cannot be

sustained.

II. UNDER EBAY, THE INJUNCTION IMPERMISSIBLY PRESUMES

IRREPARABLE HARM

The injunction is improper because, undereBay, Inc. v. MercExchange,

L.L.C., 547 U.S. 388, 391 (2006), an injunction may no longer issue based upon a

presumption of irreparable harm. Rather, aftereBay, plaintiffs must show that, on

the facts of their case, the failure to issue an injunction would actually cause

irreparable harm. Salinger v. Colting, 607 F.3d 68, 82 (2d Cir. 2010) (emphasis

added). PRL does not dispute that the district court correctly held that eBay

applies with equal force to trademark infringement cases. (PRL Br. at 14.)7 The

upshot ofeBays application to trademark cases is that where, as here, actual

market evidence exists concerning the likelihood of irreparable harm, it is

impermissible to presume such harm based solely on a finding of likelihood of

confusion.

7 LOreal contends that there are sound reasons why it believes eBay should notapply to trademark cases, but does not elaborate on those reasons.



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PRL contends that it would unquestionably lose control over its reputation

as applied to fragrances without a permanent injunction. (PRL Br. at 15.) But

U.S. Polo Assn.s retail licensing program competed extensively for years with

PRL in apparel, using marks identical to the ones at issue in this case, and PRL

presented no evidence below that it had lost control of its marks during that period.

Indeed, given the parties past coexistence in the apparel space without any

evidence of confusion, PRL had to offer concrete evidence that absent an

injunction, it would in fact suffer harm. But PRL offered no evidence of actual

loss of reputation or goodwill to the district court in the absence of an injunction.

Instead, PRL merely speculatedas it does on appeal, with its telling use of the

term unquestionablythat it mightsuffer reputational harm if customers were

confused into mistaking U.S. Polo Assn. products for PRL products in fragrances.

That is insufficient as a matter of law. Since eBay, courts have refused to

issue injunctions even in the face of an infringement finding when plaintiffs do

no more than speculate about potential loss of reputation or control.

For example, inAdidas America, Inc. v. Herbalife International, Inc., No.

3:09cv00661(MO), 2012 WL 1831525, at *1 (D. Or. May 12, 2012), the district

court refused to issue a permanent injunction despite finding that the defendant had

breached the parties trademark settlement agreement. The plaintiffs argued that

they were entitled to a permanent injunction because the defendants breach of the



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settlement agreement might cause confusion in the marketplace, dilute the

distinctiveness of the plaintiffs mark, and otherwise diminish its value. Id. But

the district court noted that eBay signifies a return to traditional equitable

principles, under which presumptions of harm are not allowed. Id. (internal

quotations and citation omitted). Because the plaintiffs presented no evidence

that defendants breaches have in fact caused tangible harm such as lost sales or

profits, actual consumer confusion, or trademark dilution, id., the district court

refused to issue a permanent injunction. See also Leatherman Tool Group, Inc. v.

Coast Cutlery Co., 823 F. Supp. 2d 1150, 1158 (D. Or. 2011) (rejecting

preliminary injunction because plaintiff failed to present evidence of likelihood of

irreparable harm from the defendants false advertising; plaintiffs declaration that

consumers will be diverted to the defendants knives and that that diversion

erodes Leathermans overall market share, without more, was insufficient to

support a finding that Leatherman has indeed lost consumers or market share).

PRL attempts to justify the permanent injunction on the fact that it cannot

quantify the extent of reputational harm and damage to the goodwill of PRL[.]

(PRL Br. at 21.) But [c]ompanies benefitting from goodwill or brand equity as a

tangible asset on their balance sheets should not be allowed to skirt the

requirements for proving injunctive relief, solely on the theory that they cannot

place a price tag on their goodwill. Sandra Rierson,IP Remedies AftereBay:



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Assessing the Impact on Trademark Law, 2 Akron Intell. Prop. J. 163, 175 (2008).

Polo Ralph Lauren carries more than $1 billion of goodwill and other intangibles

on its balance sheet.8 Given its demonstrated ability to put a dollar value on its

goodwill and other intangibles, PRL should be in a position to demonstrate any

unfair competitive harm caused to these assets by its coexistence in the

marketplace with U.S. Polo Assn. Its failure to present any such evidence

constitutes a failure to meet its burden to prove irreparable harm.

Even if PRL were found to have met its burden of proving irreparable harm

with respect to USPAs use of the Double Horseman mark in conjunction with the

word mark U.S. Polo Assn. 1890 on fragrance, there can be no reasonable

dispute that PRL has failed to meet its burden with respect to marks (including

combinations of marks) and markets not specifically found by the district court to

be infringing. Indeed, given that the 2006 jury found that three iterations of the

Double Horseman were not infringing in the apparel context, and given that the

1984 Order allowed U.S. Polo Assn. to use its name as long as Polo is not

unduly emphasized, the issuance of a permanent injunction into areas not covered

by the lower courts fragrance infringement finding cannot be justified undereBay.

Having failed to adduce any proof of loss of control even with respect to the

8Ralph Lauren Reports First Quarter Fiscal 2013 Results, http://phx.corporate-

ir.net/phoenix.zhtml?c=65933&p=irol-newsArticle&ID=1723698&highlight=.



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particular combination of marks at issue below, PRL cannot seriously contend that

it has met its burden of proof with respect to marks, combinations of marks or

markets that were not part of the infringement finding below. Accordingly, PRL

failed in its burden of proof as to the issuance of a permanent injunction, and the

district court abused its discretion in adopting PRLs sweeping injunction

language.

III. THE DISTRICT COURTS OVERBROAD INJUNCTION CANNOT

BE JUSTIFIED BY THE EVIDENCE

The overbroad injunction entered here contradicted the 1984 Order, the 2006

jury findings and final judgment, and the district courts own findings. Indeed, if

the injunction is permitted to stand, not only would it preclude U.S. Polo Assn.

from having any fragrance program whatsoever, butif PRLs interpretation of

the injunction is acceptedit would prohibit U.S. Polo Assn. from having any

licensing program in any market, except those previously secured through

litigation and settlement. It was an abuse of discretion for the district court to

adopt this overbroad injunction.

A. The Overbroad Injunction Cannot Be Reconciled With The

District Courts Narrow Infringement Findings

In making its infringement findings below, the district court was faced with

the fact that, in the related apparel context, a jury had already determined that three

iterations of the Double Horseman marktwo used in connection with USPA



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and one withoutdid not cause a likelihood of confusion, and thus did not infringe

upon PRLs marks.

Given the fact that Double Horseman marks had already been found non-

infringing on apparel, the only way that the district court could attempt to justify

(wrongly, as shown above) a finding of infringement with respect to fragrances

was to limit the scope of that infringement finding to the context and manner in

which they have been used here on a mens fragrance. (SPA-18-19 (emphasis

added).) The district courts emphasis on the narrow nature of its infringement

findingslimiting the finding only to the use of the Double Horseman mark with

U.S. POLO ASSN. 1890 on mens fragrancepermeated its opinion. (See, e.g.,

SPA-61 (The USPA Parties[] use of POLO in conjunction with the Double

Horseman mark in the context here infringes the PRL Parties substantive

trademark rights.).)

Indeed, the district court expressly distinguished its findings from the jurys

findings in the 2006 apparel litigation, reasoning that this issue here involves

different transactional facts material to the claim. Therefore the district courts

order in the apparel litigation does not have preclusive effect on this proceeding.

(SPA-21 (internal citation and quotations omitted).) The district court further

reasoned that this Courts affirmance of the 2006 jury verdict was not relevant



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because [n]o prior decision addressed the marks at issue here in the fragrance

market[.] (SPA-17.)

In light of the context-specific nature of its infringement finding, it is not

surprising that the district court found the scope of the relief sought to be similarly

narrownamely, an injunction prohibiting the USPA Parties from using the U.S.

POLO ASSN. name in conjunction with the Double Horseman mark in mens

fragrances[.] (SPA-52 (emphasis added).)

Despite the district courts explicit recognition that both its holding and any

resulting injunction must necessarily be limited in scope in order to be reconciled

with the 2006 jury verdict and the district courts infringement findings, when it

came to the language of the injunction itself, the district court went well beyond

the narrow infringement findings it had made, and well beyond the scope of the

relief sought. Rather than precluding the use of the name/logo combination

actually litigated, the injunction bars U.S. Polo Assn. from using eitherthe

Double Horsemen mark . . . alone orin combination with any name, symbol,

device or other word(s), orthe word POLO alone orin combination with any

name, symbol, device or other word(s) not only in connection with mens

fragrances, but also in connection with fragrances or related products such as

cosmetics, personal care products and beauty products, without defining related

products. (SPA-65-66.) And PRL further contends that the injunction prohibits



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specifically addressed by the jury. [T]he jurys findings went only to the use of

the Starter Star marks when used alone; the jury reached no conclusion as to the

use of the marks in combination with other designs. Id. at 300. In addition, the

Court held that because the jurys findings related solely to athletic footwear, not

footwear generally, the injunction should be similarly limited: The language of

the injunction is also too broad because on its face it would include any and all

footwear. The jurys verdict however, specified athletic footwear. Id. For these

reasons, the district courts injunction could not stand. We have vacated

injunctions in other trademark cases that have gone beyond the scope of the issues

tried in the case. Id.

This is precisely what has happened here. The district courts infringement

findings were limited solely to the use of the Double Horseman mark in connection

with the U.S. POLO ASSN. 1890 mark on mens fragrances. But the injunction

issued by the district court reached beyond mens fragrances, and enjoined the use

of the U.S. POLO ASSN. mark alone as a trademark. As the injunction went

beyond the scope of the issues tried in the case, it must be vacated.

PRL attempts to distinguish Starterby arguing that the defendant, Converse,

judicially admitted that the plaintiffs trademarks could be used on hiking boots

without infringement. (PRL Br. at 26-27.) But in vacating the injunction, this

Court did not hinge its decision on that admission or limit its rationale to the fact



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that the injunction covered hiking boots. Instead, the Court held that the injunction

was overbroad because the jurys infringement findings did not reach anybehavior

other than the use of the plaintiffs marks, alone, on athletic footwear. Moreover,

to the extent that Converses limited admission was relevant at all to the analysis,

the instant case presents a strikingly similar, if not more compelling rationale to

strictly scrutinize the scope of the injunction: the jurys finding in 2006 that the

use of the Double Horseman marks on apparel is non-infringing.

PRL also attempts to distinguish Starterby claiming that U.S. Polo Assn.

was a prior infringer, citing to this Courts safe distance discussion in the appeal

of the 2006 jury verdict. (PRL Br. at 27.) But PRL fails to mention that this Court

rejectedthe use of the safe distance instruction in the apparel litigation, calling it

particularly inappropriate because the 1984 Order expressly provided that

USPA remained free to use a mounted polo player or equestrian or equine symbol

which is distinctive from the [Ralph Lauren] polo player symbol[.] PRL USA

Holdings v. U.S. Polo Assn, Inc., 520 F.3d 109, 117 (2d Cir. 2008). To instruct

the jury that USPA was required to keep a safe distance without further

explanation of how this related to USPAs right, under the injunction, to use a

mounted polo player, this Court held, could have led the jury to find liability

based on conduct which the earlier injunction had expressly permitted. Id.

(emphasis added). Accordingly, not only is this distinction ofStarterinapposite,



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because a likelihood of confusion is context- and mark-dependent that sweeping

injunctive relief is inappropriate.

The district court agreed with this reasoning in the infringement context,

holding that the analysis of which symbols are distinctive from PRLs Polo Player

logothat is, not infringingand whether the United States Polo Association

name or other name is used in a manner that is likely to cause confusion requires

application ofPolaroid. (SPA-19 (emphasis added).)

Yet despite this recognition, the district court issued an injunction that

ignored that very context-based analysis. If, as the district court found, the

question of whether a likelihood of confusion exists hinges upon how the Double

Horseman mark is usedincluding with which name and in which marketthere

is no basis in law for the district court to have adopted an injunction that glosses

over those very distinctions.

B. The Injunction Already Has Been Misused by PRL

The upshot of this overbroad injunction is that PRL is now attempting to

circumvent an infringement trial by instituting summary contempt proceedings

based upon the overbroad injunction instead. Contending that the injunction

prohibits U.S. Polo Assn. from using either the Double Horsemen mark or the U.S.

Polo Assn. name in connection with the sale or offering for sale ofany goods or

rendering ofany services, PRL now seeks sanctions and a disgorgement of profits



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for U.S. Polo Assn.s use of various marks on sunglassesnone of which bear a

relationship to the context-specific infringement finding beloweven though

sunglasses are an apparel accessory, not a fragrance product, and even though the

only fact-finder with respect to apparel found the use of the Double Horseman

marks non-infringing.

By its contempt motion, PRL has proveneven before oral argument in this

casewhat U.S. Polo Assn. set forth in its opening brief: that the injunction

invites contempt proceedings on products and services for which there is no

legitimate basis for challenging such use, and invites uncertainty into every aspect

of U.S. Polo Assn.s legitimate retail licensing program. Tellingly, the appellees

have objected to this Courts taking judicial notice of their own contempt motion.



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CONCLUSION

The Court should reverse the judgment, vacate the permanent injunction,

and direct judgment in favor of the appellants.

Date: New York, New York Respectfully submitted,

October 30, 2012

/s/ Gerald J. Ferguson

Gerald J. Ferguson

George A. StamboulidisTracy L. Cole

David J. SheehanThomas D. Warren

BAKER & HOSTETLER LLP45 Rockefeller Plaza

New York, New York 10111

Telephone: (212) 589-4200Facsimile: (212) 589-4201

Attorneys for United States PoloAssociation, Inc., and USPA

Properties, Inc.



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CERTIFICATE OF COMPLIANCE

WITH TYPE-VOLUME LIMITATION, TYPEFACE

REQUIREMENTS AND TYPE STYLE REQUIREMENTS

This brief complies with the type-volume limitation of Fed. R. App. P.

32(a)(7)(B) because this brief contains 6,866 words, excluding the parts of the

brief exempted by Fed. R. App. P. 32(a)(7)(B)(iii).

This brief complies with the typeface requirements of Fed. R. App. P.

32(a)(5) and the type style requirements of Fed. R. App. P. 32(a)(6) because this

brief has been prepared in a proportionally spaced typeface using Microsoft Office

Word 2010 in 14-point Times New Roman font.

Date: New York, New York

October 30, 2012

Respectfully submitted,

/s/ Gerald J. Ferguson

Gerald J. FergusonGeorge A. Stamboulidis

Tracy L. Cole

David J. SheehanThomas D. WarrenBAKER & HOSTETLER LLP

45 Rockefeller PlazaNew York, New York 10111

Telephone: (212) 589-4200

Facsimile: (212) 589-4201

Attorneys for United States Polo

Association, Inc., and USPA Properties,Inc.



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CERTIFICATE OF SERVICE & CM/ECF FILING

12-1346-cv United States Polo Association, Inc. v. PRL USA Holdings, Inc.

I hereby certify that on October 30, 2012 the foregoingReply Brief of

Plaintiffs-Counter-Defendants-Appellants was caused to be served on counsel for

Defendant-Counter-Claimant-Appellee and Intervenor-Defendant-Counter-Claimant-Appellee via Electronic Mail (since the Courts electronic filing system

(CM/ECF) was unavailable), pursuant to Local Appellate Rule 25.1:

William Robert Golden, Jr., Esq.Kelley Drye & Warren, LLP101 Park AvenueNew York, New York 10178(212) [email protected]

ttorneys for Defendant-Counter-Claimant-Appellee

Robert L. Sherman, Esq.Paul Hastings LLP75 East 55th StreetNew York, New York 10022(212) [email protected]

Attorney for Intervenor-Defendant-Counter-Claimant-Appellee

I certify that an electronic copy was uploaded to the Courts electronic filing

system. Six hard copies of the foregoing Reply Brief of Plaintiffs-Counter-

Defendants-Appellants will be delivered to the Clerks Office by hand delivery

upon the Courts opening at the below address:

Clerk of CourtUnited States Court of Appeals, Second Circuit

United States Courthouse500 Pearl Street, 3

rdfloor

New York, New York 10007(212) 857-8500

on this 31st day of October 2012. _________________________

Willi M K i/s/ William McKenzie


u.s. polo association v. prl usa holdings, 12-1346-cv (2d cir.) (appellant u.s. polo association's...

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