The owner of the trademark Greek Freak™, 2021 NBA Finals MVP Giannis Antetokounmpo, received different outcomes in two seemingly similar trademark infringement actions heard by the U.S. District Court for the Southern District of New York. At first glance, the facts are nearly identical: defendants sold infringing products, received cease-and-desist letters, and failed to stop the infringing activity; subsequently, default judgments were issued against them after their respective failures to answer the complaints. Inquest hearings to decide the amount of money due on claims for damages were set in both cases. Yet, only one resulted in an award of statutory damages.
How may the differing outcomes be explained?
Background
Antetokounmpo is a professional basketball player of Greek-Nigerian descent, acclaimed for his skill on the basketball court, which twice garnered him the NBA Most Valuable Player award and earned him MVP honors for the 2021 NBA Finals. He registered his nickname, “Greek Freak,” as a trademark on the federal trademark principal registry in international classes 018 (Backpacks) and 025 (Shirts, t-shirts, sweatshirts, hooded sweatshirts, jackets, hooded jackets, sports jerseys, socks, warm-up suits, caps, hats). He also applied for registration of a clever spelling variation of the nickname, “Greek Fr34k,” which incorporates his NBA jersey number. This application, covering nine different international classes, seeks protection for men's self-care products, apparel, snack foods, sports drinks and others, including a class 35 recitation for “promoting the goods and/or services of others through the issuance of product endorsements.”
Antetokounmpo distributes merchandise under his trademark online and via retail stores in the United States. He has also entered into licensing and endorsement agreements with third parties to use his mark in commerce for a variety of goods. In July 2020, he announced “his cooperation with GFG (Greek from Greece) Bakery-Café to advertise, promote and sponsor [Greek inspired] products of a brand called 776 Deluxe,” Among other products, GFG sells a line of gourmet salts, herbs and spices. An announcement on the 776deluxe.com website contains a headline, “[t]he Giannis Antetokounmpo family and GFG join forces to explore the Greek taste” and further references GFG's cooperation with Antetokounmpo.
The Lawsuits
The first lawsuit, captioned Antetokounmpo v. Searcy (USDC SDNY 20-CV-5055), involved the sale of a variety of phone cases, pillows, mugs, t-shirts, laptop covers, clocks, cards, pouches, notebooks, scarves and prints on Redbubble.com under the Greek Freak trademark by defendant Kenneth Searcy. Antetokounmpo's legal team sent a cease-and-desist letter to the defendant, demanding that the infringing sales stop immediately and that Searcy provide a full accounting of merchandise sold. While Searcy responded with a promise to remove the infringing items from Redbubble.com, no accounting was provided. Furthermore, approximately 30 different types of infringing products remained available for sale by the defendant on Redbubble.com. Antetokounmpo commenced a lawsuit, which Searcy failed to answer. Following the entry of a certificate of default, this matter was referred to a Magistrate Judge for an inquest on damages.
In the second matter, Antetokounmpo v. Paleo Prods. LLC & Nick Massie (USDC SDNY 20-cv-6224), defendants engaged in online sales of spices under the brand name Paleo Grind, with one of the spices named “Greek Freak.” Defendants' use of the Greek Freak mark postdated plaintiff's first use of the mark. Similar to Searcy, Antetokounmpo sent a cease-and-desist letter to the defendants, who never provided the requested accounting and continued to sell the “Greek Freak” spice. After a lawsuit was commenced, defendants similarly defaulted by failing to file an answer, and this matter also was referred to a Magistrate Judge for an inquest for damages.
The Southern District followed the same legal test to determine liability for trademark infringement: (1) whether the allegedly infringed mark is entitled to the protection and (2) whether the allegedly infringing mark is likely to cause consumer confusion as to the origin and sponsorship of the products to which it is attached. The court noted that a certificate of registration with the United States Patent and Trademark Office (USPTO) is prima facie evidence that the mark is registered and valid; and furthermore, that the mark Greek Fr34k was exclusively affiliated with the plaintiff, his products and services. In the absence of any other submission, plaintiff's allegations that the defendants were not authorized to use the marks were taken as true.
In assessing the likelihood of confusion, the court considered the Polaroid factors (see Polaroid Corp. v. Polarad Electronics Corp, 287 F2d 492 (2nd Cir. 1961)). Observing that plaintiff's marks are strong and successful, defendant's marks were “essentially identical,” and that defendants acted in bad faith in adopting the use of plaintiff's marks, the court decided that the goods sold by both parties in the Searcy matter were largely similar whereas in Paleo Products, the plaintiff endorsed a similar line of products.
It is in the analysis of the remaining Polaroid factors that the two decisions begin to diverge. In the Paleo Products matter, the court highlighted the fact that the plaintiff does not sell spices; but due to his endorsement of another company that does, the court found that there may be a greater likelihood that customers may be confused into believing that the plaintiff also endorsed the Paleo spice. Interestingly, the court also was of the opinion that the respective quality of the parties' goods was not particularly relevant to the “false endorsement” claim whereas it was relevant in the Searcy matter. There, the court found that since the plaintiff had no control over the quality of the mark, any complaints or problems with the quality could harm the plaintiff's mark. The balance of the Polaroid factors weighed in favor of a likelihood of confusion, and the court moved on to considering the issue of damages.
The Issue of Damages
Under section 35(a) of the Lanham Act, a trademark owner may recover either actual or statutory damages for the marketing, sale and distribution of goods with counterfeit marks. In the Searcy matter, the Southern District relied on Second Circuit case law that treats a default as evidence of willfulness for the purposes of determining statutory damages, further noting that “the lack of information regarding defendants' sales and profits make[s] statutory damages particularly appropriate for these kinds of default cases.” If a trademark owner elects statutory damages in lieu of actual damages, it may be awarded “not less than $1,000 or more than $200,000 per counterfeit mark,” which can be increased to “not more than $2,000,000” if the court finds that the use was willful. Antetokounmpo requested and was awarded $9,000, the minimum compensation he could recover under the statute ($1,000 per the nine categories of goods that the defendant was selling using the plaintiff's mark). Antetokounmpo was also awarded interest and attorney's fees, in addition to a permanent injunction.
Following the issuance of the Report and Recommendation, the time for filing objections passed with no objection and Judge Koeltl reviewed it and found that it was well-founded, ordering that a judgment be presented.
In the Paleo Products matter, unlike the Searcy matter wherein the plaintiff requested the minimum statutory damages, Paleo requested $100,000 in statutory damages. The court determined, however, that plaintiff was not “entitled to statutory damages based on the types of infringement at issue in this case,” observing that “trademark use will be deemed a counterfeit only if used on the same goods or services for which the trademark is registered.” Since Antetokounmpo did not have a registration for “spices,” the plaintiff was not “passing off” its product as the original and thus was not a counterfeit. Rather, it was just presented in a manner likely to confuse some consumers. Antetokounmpo's theory was therefore grounded in false endorsement and not false designation of origin. Thus, the Magistrate, in issuing his Report and Recommendation, held that statutory damages were not available. Antetokounmpo was thus entitled only to recover defendant's profits, any damages sustained by plaintiff and the costs of the action under 15 U.S.C. 1117(c). Since Antetokounmpo did not provide any information as to profits or damages, the court declined to award any compensatory damages (the court, however, issued an injunction and awarded attorney's fees and costs, deeming the case “exceptional”).
Antetokounmpo objected to the Report and Recommendation, arguing that counterfeiting should be found, since the mark “‘is in use' for the advertisement and promotion of spice products that are sold, offered for sale and distributed.” Claiming that “false endorsement” “entails the element of false designation of origin,” Antetokounmpo argues that he alleged that defendants “intended to create the mistaken belief in consumer minds that Defendants' product is somehow legitimately affiliated, connected, associated with, or endorsed by Plaintiff.” The Objections to the Report and Recommendation are pending.
The divergence of the outcomes between the Searcy and the Paleo Products matters provides two lessons for trademark owners. First, when seeking a counterfeiting finding, plaintiff may need to seek a determination based on a false designation of origin, rather than merely a false endorsement. Second, in a false endorsement case, if a plaintiff wants to recover, it must take care and submit evidence of its damages or defendant's profits (which admittedly are usually difficult to prove). Defendants, on the other hand, should remember that in the event they choose to ignore cease and desist correspondence or default in trademark infringement actions, they may face monetary consequences, including the award of plaintiff's attorneys fees.
Originally Published by Sports Litigation Alert
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