Rockin’ the Boat after a Trademark Settlement

The ephemeral nature of trademark litigation comes out in Abercrombie & Fitch Co. v. Moose Creek, Inc., case no. 06-56774 (May 22, 2007). In 2004, Moose Creek sued Abercrombie, alleging that Abercrombie’s silhouette moose trademark infringed Moose Creek’s moose trademarks. Abercrombie, of course, claimed there was no likelihood of confusion between the marks.

The same year, while the action was pending, Abercrombie started using a new “outline” moose trademark in addition to its silhouette moose mark. The parties settled the lawsuit with an agreement that allowed each of them to continue using their marks.

After the case settled, Moose Creek started using two new moose trademarks, and now it was Abercrombie’s turn to allege infringement. Now making the argument in favor of likelihood of confusion under the venerable 8-factor analysis of AMF Inc. v. Sleekcraft Boats , 599 F.2d 341 (9th Cir. 1979), several of Abercrombie’s arguments were challenged as factually inconsistent with those it made in the first lawsuit, and the district court held that Abercrombie was thus judicially estopped from making those arguments.

The Ninth Circuit finds that the district court was within its discretion to preclude arguments on two of the Sleekcraft factors but abused its discretion by precluding arguments on two others. The parties’ reversal of position — Abercrombie having the senior mark this time, and Moose Creek having the junior mark — is instrumental in the analysis, as it changes the focus of inquiry regarding the relevant field of marks and which party’s customer base is the appropriate focus for evaluating likely confusion. On the other hand, two Sleekcraft factors — marketing channels and the likelihood of expansion in the product lines — are unaffected by the parties’ flip-flop in junior and senior status, and thus inconsistent arguments from Abercrombie are precluded absent an actual change in underlying facts. The court declines to reverse the trial court’s denial of a preliminary injunction against Moose Creek’s use of the marks, instead remanding to the district court for reconsideration in light of the arguments previously precluded.

All that said, this case caught my interest because of the business decision, not the legal one. My question: What the heck was Moose Creek thinking when it came out with two new moose marks? It already had a settlement agreement in place allowing it to continue using the old marks (which presumably continued to strengthen with time), and it knew that any new marks would be junior to Abercrombie’s marks, making them a potential litigatgion target. There must have been a strong market factor at work to justify the risk of litigation. My two cents to Moose Creek: when you settle this one, make sure you can live for a long, long time with the marks the agreement lets you continue to use.

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