Addressing the reach of the Supreme Court's landmark Coty decision, the Fifth Circuit upheld a grant of summary judgment to defendants who repackaged plaintiff's products with a disclaimer, holding that there was no issue of material fact and that the packages "cannot cause confusion." Farouk Systems, Inc. v. Target Corp. Inc., Case No. 06-20883; 2008 U.S. App. LEXIS 1225 (5th. Cir., Jan. 2008) (per curiam).
Defendant Pro's Choice Beauty Care combined bottles of Farouk's BIOSILK hair-care products into boxed sets for sale by Target. The plaintiff's products were visible through a front cut-out, and the BIOSILK mark appeared on all sides of the packaging. A disclaimer appeared on the back panel, in type size significantly smaller than the BIOSILK mark. The disclaimer stated that the original product had been repackaged and distributed by Pro's Choice, which was unrelated to and not licensed by the trademark holder, and that Pro's Choice assumed full responsibility for the product and the package. Farouk brought federal and state trademark claims against Target and Pro's Choice. The defendants were granted summary judgment, and Farouk appealed.
In an unpublished decision, the Fifth Circuit affirmed the grant of summary judgment for defendants. The Court began by noting that while likelihood of confusion is a question of fact in the Fifth Circuit, summary judgment is still appropriate if there is no material fact issue and the movant is entitled to judgment as a matter of law. Farouk first argued that summary judgment was inappropriate because it had not had an opportunity to conduct discovery or obtain expert survey evidence. The Court disagreed, saying a party cannot evade summary judgment by simply arguing that additional discovery is needed.
Next, the Court turned to the packaging itself. Farouk conceded that the repackaged products were genuine, unaltered and in their original bottles, as well as that no defects had been found in the repackaged products. As a result, consumers were correct in believing that by buying the packaged sets, they were buying genuine BIOSILK products. Farouk argued that the disclaimer was not sufficiently prominent and did not contain all the elements required under the Supreme Court's Coty decision and that consumers might believe Farouk created or commissioned the packaged sets. The Court countered that trademark law does not apply to the sale of genuine goods, even when the trademark owner does not consent to the sale. Further, repackagers are allowed to use another's trademarks to truthfully identify a product as being or containing the product to which the trademark belongs. The Court rejected a per se rule that a repackaging disclaimer must be in the same size as the trademark or that all the elements of a Coty disclaimer are required on all packages. The Court said a review of the packaging plainly showed that the disclaimer was sufficiently conspicuous to dispel any confusion about who packaged Farouk's genuine goods.
Practice Note: A trademark owner challenging repackaging should introduce evidence of a bona fide threat to its reputation presented by the repackaging; e.g., evidence that products combined in a set should not be used together, that the packaging does not sufficiently protect the products from damage, that the repackaged goods are beyond their shelf life, etc.
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