The Split Personality of Likelihood of Confusion: in Lovely Skin, Inc. v. Ishtar Skin Care Products, L.l.c., the Eighth Circuit Correctly Applied Clear Error to Likelihood of Confusion

• Publication year: 2022

48 Creighton L. Rev. 345. THE SPLIT PERSONALITY OF LIKELIHOOD OF CONFUSION: IN LOVELY SKIN, INC. V. ISHTAR SKIN CARE PRODUCTS, L.L.C., THE EIGHTH CIRCUIT CORRECTLY APPLIED CLEAR ERROR TO LIKELIHOOD OF CONFUSION

THE SPLIT PERSONALITY OF LIKELIHOOD OF CONFUSION: IN LOVELY SKIN, INC. V. ISHTAR SKIN CARE PRODUCTS, L.L.C., THE EIGHTH CIRCUIT CORRECTLY APPLIED CLEAR ERROR TO LIKELIHOOD OF CONFUSION

Kari J. Grether

I. INTRODUCTION

The standard to determine whether infringement of a federally registered mark has occurred requires identifying if the defendant's action is likely to lead to mistake, confusion, or deception.(fn1) When deciding a likelihood of confusion issue, the federal circuits apply differing multi-factor tests.(fn2) Standards of review for likelihood of confusion also vary among the federal circuits.(fn3) For example, while the United States Court of Appeals for the Second Circuit reviews the overall weighing of the factors de novo, it reviews the facts presented for clear error; in contrast, the United States Court of Appeals for the Eighth Circuit reviews a district court's decision in its entirety for clear error.(fn4)

In Lovely Skin, Inc. v. Ishtar Skin Care Products, L.L.C.,(fn5) the Eighth Circuit articulated that likelihood of confusion was reviewed for clear error.(fn6) Next, the Eighth Circuit listed the factors used by the United States District Court for the District of Nebraska in deciding that no consumer confusion was likely between the trademark claimed by Lovely Skin, Inc. ("Lovely Skin") and the website operated by Ishtar Skin Care Products, L.L.C. ("Ishtar").(fn7) Ultimately, the Eighth Circuit determined that the district court did not err in its finding that there was no likelihood of confusion between the marks.(fn8)

This Note will first review the facts and holding of Lovely Skin.(fn9) This Note will then discuss the background of likelihood of confusion and the split among the circuits regarding whether this is an issue of fact or law.(fn10) This Note will argue that likelihood of confusion is a factual inquiry.(fn11) This Note will also contend that the clearly erroneous standard of review is the appropriate standard to apply in likelihood of confusion cases because the inquiry is heavily fact based.(fn12) Finally, this Note will conclude that the Eighth Circuit was correct in applying clear error to likelihood of confusion in order to maintain uniformity with the majority of the circuits.(fn13)

II. FACTS AND HOLDING

In Lovely Skin, Inc. v. Ishtar Skin Care Products, L.L.C.,(fn14) Lovely Skin, Inc. ("Lovely Skin") brought claims against Ishtar Skin Care Products, L.L.C. ("Ishtar") under: (1) the Lanham Act(fn15) for trademark infringement and false designation of origin; (2) the common law for unfair competition; and (3) Nebraska law for injury to business reputation in the United States District Court for the District of Nebraska.(fn16) Ishtar counterclaimed for cancellation of Lovely Skin's two trademarks.(fn17) Lovely Skin sold and marketed cosmeceutical skin care products primarily through its website www.LovelySkin.com.(fn18) The price for these products ranged anywhere from $3 to $400.(fn19) To increase consumer traffic on its website, Lovely Skin started buying keywords in 2003 from internet search engine businesses, enabling Lovely Skin's website to be listed toward the top of the search results internet page.(fn20) Lovely Skin utilized other methods of advertising including a mailed catalog, print advertisements, and an electronic newsletter.(fn21) In 2010, the company attempted to attract national attention by increasing media coverage for its brand.(fn22) Lovely Skin's revenue increased from $300,000 in 2002 to $13 million in 2011 due to the media coverage.(fn23)

In 1999, an attorney filed registration applications on behalf of Lovely Skin for the company's marks, LOVELYSKIN and LOVELYSKIN.COM.(fn24) The United States Patent and Trademark Office ("USPTO") deemed both marks merely descriptive and placed them on the Supplemental Register instead of the Principal Register.(fn25) Five years later, Lovely Skin filed an application to place the mark LOVELYSKIN on the Principal Register.(fn26) In 2005, the USPTO placed LOVELYSKIN on the Principal Register.(fn27) Two years later, Lovely Skin applied to have LOVELYSKIN.COM registered due to the distinctiveness it had gained through Lovely Skin's ownership of the mark LOVELYSKIN; thereafter, the USPTO placed LOVELYSKIN.COM on the Principal Register.(fn28)

In 2006, Lovely Skin discovered the existence of www.livelyskin.com, which sold products similar to those listed on www.LovelySkin.com.(fn29) Ishtar claimed it neither knew of Lovely Skin nor its website at the time of Ishtar's website registration.(fn30) In 2008, Cathy Huftless, Director of Internet Sales for Lovely Skin, noticed that a customer had replied to an email sent from Lovely Skin, while also including another recipient, Cathy@livelyskin.com.(fn31) Dr. Joel Schlessinger, owner of Lovely Skin, stated that this misunderstanding, along with quite a few other oral and written instances of confusion, occurred between the companies' websites.(fn32)

During the bench trial, Ishtar questioned Lovely Skin's claim of substantial exclusivity by presenting evidence of third parties employing marks similar to the trademarks registered by Lovely Skin.(fn33) To support its trademark registrations, Lovely Skin provided evidence of its advertising spending and increased revenue.(fn34) Lovely Skin also attempted to prove that a likelihood of confusion existed between Ishtar's website and Lovely Skin's trademarks.(fn35) Lovely Skin's expert witness testified that the trademarks owned by Lovely Skin were prestigious, recognizable, and had widespread brand awareness.(fn36) The district court articulated that cancellation of both trademark registrations was appropriate and found for Ishtar on all four of Lovely Skin's claims.(fn37)

Lovely Skin argued two issues on appeal to the United States Court of Appeals for the Eighth Circuit.(fn38) First, Lovely Skin claimed that the district court erred in cancelling its two trademark registrations.(fn39) Second, Lovely Skin contended that the district court also erred in finding no likelihood of confusion between Lovely Skin's marks and Ishtar's website, www.livelyskin.com.(fn40) The Eighth Circuit determined that the district court had erred in cancelling Lovely Skin's trademarks because Ishtar was unable to present a prima facie case that the trademarks had not acquired distinctiveness.(fn41)

Next, the Eighth Circuit required Lovely Skin to show likelihood of confusion between Lovely Skin's marks and www.livelyskin.com in order to succeed on its claims of false designation of origin, trademark infringement, deceptive trade practices, and unfair competition.(fn42) The Eighth Circuit noted that the appropriate standard of review for likelihood of confusion was clear error.(fn43) Additionally, the Eighth Circuit explained that the district court had applied six factors to decide whether a likelihood of confusion was present between Lovely Skin's trademarks and www.livelyskin.com.(fn44) The six factors included: (1) strength of the trademark owner's mark; (2) likeness between the infringer's mark and the trademark owner's mark; (3) degree of competition between the companies' goods; (4) intent of the infringer to pass off its products as those of the trademark owner; (5) any actual confusion; and (6) condition and price of purchase, as well as the type of goods.(fn45)

The Eighth Circuit agreed with the district court's determination that Lovely Skin's trademarks lacked commercial strength because there was no direct evidence showing Lovely Skin's marks had strong secondary meaning.(fn46) Next, the Eighth Circuit stated that Lovely Skin had weak marks highlighted by their lack of identity; hence, the Eighth Circuit determined that the district court was correct in its finding of similarity between the two companies' marks.(fn47) The Eighth Circuit explained that there was insufficient evidence of actual confusion because Dr. Schlessinger's statement regarding an increase in oral and written confusion was not only unsubstantiated but also contradicted by Ishtar claiming that it had not experienced any confusion.(fn48) Additionally, the Eighth Circuit determined the district court did not err in its finding that the email submitted by Lovely Skin as further evidence of confusion was merely a customer making a typographical error and not actual confusion.(fn49) The Eighth Circuit agreed with the district court's decision that likelihood of confusion would decrease in view of the last factor, which included expert testimony describing customer caution due to the expense of the products sold by Lovely Skin.(fn50) The Eighth Circuit reversed the district court's cancellation of Lovely Skin's trademarks and affirmed the ruling for Ishtar on Lovely Skin's four claims because no clear error was committed by the district court.(fn51)

III. BACKGROUND

A. THE UNITED STATES COURT OF APPEALS FOR THE EIGHTH CIRCUIT APPLIED A CLEARLY ERRONEOUS STANDARD OF REVIEW FOR LIKELIHOOD OF CONFUSION

In SquirtCo. v. Seven-Up Co.,(fn52) SquirtCo. brought a claim for trademark infringement against Seven-Up Co. and Seven-Up U.S.A. Inc. (collectively, "Seven-Up") in the United States District Court for the Eastern District of Missouri.(fn53) At...