Case: 22-50405 Document: 00516885530 Page: 1 Date Filed: 09/06/2023
United States Court of Appeals
for the Fifth Circuit United States Court of Appeals
Fifth Circuit
____________ FILED
September 6, 2023
No. 22-50405 Lyle W. Cayce
____________ Clerk
Rex Real Estate I, L.P.,
Plaintiff—Appellant,
versus
Rex Real Estate Exchange, Incorporated,
Defendant—Appellee.
______________________________
Appeal from the United States District Court
for the Western District of Texas
USDC No. 1:19-CV-696
______________________________
Before Richman, Chief Judge, and Haynes and Graves, Circuit
Judges.
James E. Graves, Jr., Circuit Judge:
Plaintiff Rex Real Estate I, L.P. sued Defendant Rex Real Estate
Exchange for trademark infringement. The district court granted
Defendant’s motion for judgment as a matter of law after Plaintiff rested its
case, and Plaintiff now appeals. A reasonable jury could not find in favor of
Plaintiff’s Section 32(1) claim, but it could find in favor of Plaintiff’s Section
43(a) claim. Therefore, we AFFIRM in part, REVERSE in part, and
REMAND for further proceedings.
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No. 22-50405
I. Background
a. Factual Background
Plaintiff is a real estate company founded by Rex and Sherese
Glendenning that “specializes in the acquisition and sale of commercial,
investment and development properties, both large and small, in the North
Texas growth corridor.” Plaintiff only brokers real estate in the state of
Texas, but it has clients throughout the United States and in other countries.
Mr. and Mrs. Glendenning first entered the Texas real estate business
in 1987. In February 1987, Mr. Glendenning registered a sole proprietorship
called “Rex Glendenning Real Estate.” Around this time, Mrs. Glendenning
thought their last name was too long and began answering the business’s
phone as “Rex Real Estate.” On July 10, 1990, Mr. Glendenning registered
another sole proprietorship called “Rex Real Estate.” On September 16,
1991, the Glendennings incorporated Rex Real Estate Inc., naming
themselves as the two members of the Board of Directors. Finally, in
December 1998, the Glendennings filed a limited partnership agreement
forming Rex Real Estate I, L.P., the Plaintiff in this case. Rex Real Estate, Inc.
was named as a general partner with a two percent ownership interest, and
Mr. and Mrs. Glendenning were each named as limited partners with fortynine percent ownership interests.
Plaintiff has used three trademarks throughout its existence: “REX,”
“REX Real Estate,” and a logo showing a crown alongside the words “REX
Real Estate” (“crown mark”). On January 13, 2015, the U.S. Patent and
Trademark Office (“USPTO”) accepted Plaintiff’s registration of the
crown mark. According to Plaintiff’s submission, the mark’s first use in
commerce was January 1, 1987. Plaintiff filed a federal trademark registration
for the “REX” mark in June 2018, claiming its first use in commerce was
December 31, 1987. Finally, it filed a federal trademark registration for the
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“Rex Real Estate” mark without the crown in June 2018, claiming its first
use in commerce was December 31, 1990.
According to its website, Plaintiff has developed “a diverse portfolio
of retail, office, industrial and mixed-used properties throughout Texas,
[and] REX Real Estate and founder Rex Glendenning have closed hundreds
of millions of dollars in investment transactions for private and institutional
investors.” Plaintiff has also brokered some residential real estate. At trial,
Mrs. Glendenning identified two instances where the business sold single
family homes. One of those homes was sold to the Glendennings’ daughter
and son-in-law, Matthew Kiran, who is also a long-time sales agent for
Plaintiff. Plaintiff’s residential listings from 2009 to 2022 include three
properties identified as single-family residences sold to individual buyers and
six properties identified as residences with acreage sold to individual buyers.
Three of these sales involved parties related to Plaintiff or its employees: one
was the sale of Mrs. Glendenning’s parents’ home, one was a sale to Kiran’s
son, and the other was the aforementioned sale to the Glendennings’
daughter and Kiran. The vast majority of Plaintiff’s “residential” listings
from 2009 to 2022 were investment properties sold to corporate entities.
These transactions averaged over 238 acres and over $6 million per sale.
Defendant Rex Exchange offers an online platform for homeowners
and homebuyers to transact the sale of single-family homes. It uses artificial
intelligence and other data-based technology to match likely buyers with
homes. It started in 2015 in California, and it is now headquartered in Austin,
Texas. Its business is designed to “help home buyers and sellers avoid
excessive costs associated with the traditional real estate agent-based
model.” It operates in twenty-five cities in fifteen states, and it first expanded
into Austin in 2018. Defendant’s historical average sales price of a home in
Texas is approximately $365,000, and the average lot size is 0.38 acres.
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Defendant’s CEO, Jack Ryan, testified that he came up with the name
Rex Exchange in 2012 or 2013 to “mimic” the idea of the New York Stock
Exchange but make it residential. He first learned of Plaintiff along with other
companies named Rex when his company’s lawyer performed a search with
the USPTO in June 2014. Defendant’s first website domain name was
Rexchange—“R” for residential real estate and “ex” for exchange. In
September 2014, Defendant purchased a “REX” trademark from a company
called Azavea that had registered the mark for the following use: “computer
software for use in search and displaying real estate information on a global
computer network.” Azavea’s mark was registered with the USPTO in
2006 with an October 31, 2002 priority date.
In Texas, Defendant advertised in print and radio advertisements
under the name “Rex.” It promoted its expansion into Dallas using the
names “Rex” and “REX Real Estate,” and it has used a logo with the words
“REX Real Estate” on its website and promotional materials.
b. Procedural Background
Plaintiff sued Defendant for trademark infringement, trademark
dilution, and unfair competition under federal and state law. After engaging
in discovery, the parties cross-moved for summary judgment. The magistrate
judge issued a report recommending that the district court deny both
motions. The magistrate judge noted there were still genuine disputes of
material fact as to: (1) whether Plaintiff’s marks have acquired secondary
meaning, (2) whether consumer confusion was probable, and (3) whether
Defendant holds priority of use through the Rex mark it acquired from
Azavea. Both parties filed objections, but the district court adopted the report
in full.
The jury trial commenced on April 8, 2022. At trial, Plaintiff only
pressed its trademark infringement claims. It called seven witnesses: (1)
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Sherese Glendenning; (2) Matthew Kiran; (3) Jack Ryan; (4) Robert
Cheetham (by deposition); (5) Danielle Gervasi; (6) Rex Glendenning; and
(7) Jeffery Stec. The district court admitted 521 exhibits into evidence.
When Plaintiff rested its case on April 12, 2022, Defendant orally
moved for judgment as a matter of law. Defendant argued that Plaintiff failed
to meet its burden in three ways: (1) proof of legally protectable trademark
rights; (2) proof of a likelihood of confusion caused by Defendant’s use of its
“Rex” trademarks; and (3) proof of actual damages attributable to the alleged
infringement of Plaintiff’s marks.
The following day, the district court orally granted Defendant’s Rule
50 motion. The court then asked for supplemental briefing on the motion it
had granted. After Plaintiff and Defendant submitted their supplemental
briefs, the district court issued a written order granting the motion on May
18, 2022. It later entered final judgment in favor of Defendant, and Plaintiff
timely appealed. Plaintiff only appeals the judgment against its federal
infringement claims under the Lanham Act.
II. Standard of Review
We review de novo a district court’s grant of judgment as a matter of
law, applying the same legal standard it used. Foreman v. Babcock & Wilcox
Co., 117 F.3d 800, 804 (5th Cir. 1997). Judgment as a matter of law is proper
when “there is no legally sufficient evidentiary basis for a reasonable jury to
have found for that party with respect to that issue.” Fed. R. Civ. P. 50(a).
In evaluating the district court’s grant of judgment as a matter of law, we
“consider all of the evidence (and not just that evidence which supports the
non-mover’s case) in the light most favorable to the non-movant, drawing all
factual inferences in favor of the non-moving party, and leaving credibility
determinations, the weighing of the evidence, and the drawing of legitimate
inferences from the facts to the jury.” Foreman,
117 F.3d at 804. “A mere
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scintilla of evidence is insufficient to present a question for the jury.” Id.
(citation omitted). We can affirm the district court if the result is correct,
“even if our affirmance is upon grounds not relied upon by the district
court.”
Id.
III. Discussion
Plaintiff alleges trademark infringement in violation of Sections 32(1)
and 43(a) of the Lanham Act, which are codified as 15 U.S.C. § 1114(1) and
15 U.S.C. § 1125(a), respectively. Section 32(1) creates a cause of action for
infringement of registered marks; Section 43(a) creates a cause of action for
infringement of unregistered marks. Amazing Spaces, Inc. v. Metro Mini
Storage,
608 F.3d 225, 236 n.8 (5th Cir. 2010) (“The Lanham Act provides
separate causes of action for infringement of a registered mark and an
unregistered mark.”). The same two elements apply to both causes of action.
Id. To prevail on its claims, Plaintiff must show (1) it possesses a legally
protectable trademark and (2) Defendant’s use of this trademark “creates a
likelihood of confusion as to source, affiliation, or sponsorship.” Streamline
Prod. Sys., Inc. v. Streamline Mfg., Inc.,
851 F.3d 440, 450 (5th Cir. 2017)
(citation omitted). Before addressing these two prongs, we begin with a
threshold element: statutory standing.
a. Statutory Standing
Defendant first argues we should affirm the district court’s judgment
because Plaintiff has failed to show that it owns the marks. Whether a plaintiff
has a sufficient interest in a mark to sue under the Lanham Act is a question
of statutory standing. “Unlike Article III standing, statutory standing is not
jurisdictional. Instead, it asks the merits question of whether or not a
particular cause of action authorizes an injured plaintiff to sue.” Simmons v.
UBS Fin. Servs., Inc., 972 F.3d 664, 666 (5th Cir. 2020) (citation and internal
quotation marks omitted). We apply the same standard of review to statutory
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standing as we do to the elements of the cause of action. HCB Fin. Corp. v.
McPherson, 8 F.4th 335, 339 (5th Cir. 2021).
A claimant has “statutory standing” if its claim “fall[s] within the
zone of interests protected by” the statute. Allen v. Wright, 468 U.S. 737, 751
(1984). Section 32(1) protects registered trademarks and provides a cause of
action against any person who “use[s] in commerce any . . . imitation of a
registered mark . . . likely to cause confusion, or to cause mistake, or to
deceive.”
15 U.S.C. § 1114(1). This cause of action is only available to the
“registrant” of the trademark at issue, but “registrant” is defined to include
the original registrant’s “legal representatives, predecessors, successors and
assigns.”
Id. § 1127. Under the Lanham Act, the owner is the only proper
party to apply for registration of a mark. Id. § 1051(a)(1) (“The owner of a
trademark used in commerce may request registration of its trademark.”).
Therefore, only an owner or a true assignee has statutory standing to bring a
claim under section 32(1). Neutron Depot, L.L.C. v. Bankrate, Inc.,
798 F.
App’x 803, 806 (5th Cir. 2020)1; accord Fed. Treasury Enter. Sojuzplodoimport
v. SPI Spirits Ltd.,
726 F.3d 62, 72 (2d Cir. 2013).
On the other hand, Section 43(a) protects unregistered trademarks
and provides a cause of action to “any person who believes that he or she is
likely to be damaged by such [infringing] act.” Id. § 1125(a)(1).2 Thus,
_____________________
1
Although an unpublished opinion issued on or after January 1, 1996 is generally
not precedential, it may be considered as persuasive authority. Ballard v. Burton, 444 F.3d
391, 401 & n.7 (5th Cir. 2006).
2
The Supreme Court has cautioned that not just any person can sue under Section
43(a). In a case that involved a false advertising claim under Section 43(a)(1)(B) [15 U.S.C.
§ 1125(a)(1)(B)], the Court held that a plaintiff must show the following to establish
statutory standing: (1) it is within the “zone of interest” protected by the statute; and (2)
proximate causation between its injury and the alleged statutory violation. Lexmark Int’l,
Inc. v. Static Control Components, Inc.,
572 U.S. 118, 131–33 (2014).
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Section 43(a) does not require a plaintiff to establish ownership of a
trademark as an element of its cause of action. Belmora L.L.C. v. Bayer
Consumer Care AG, 819 F.3d 697, 706 (4th Cir. 2016) (“Significantly, the
plain language of § 43(a) does not require that a plaintiff possess or have used
a trademark in U.S. commerce as an element of the cause of action.”).
Accordingly, Defendant’s challenge to Plaintiff’s ownership applies only to
Plaintiff’s infringement claim under Section 32(1).
“Rights in a trademark are determined by the date of the mark’s first
use in commerce. The party who first uses a mark in commerce is said to have
priority over other users.” Hana Fin., Inc. v. Hana Bank, 574 U.S. 418, 419
(2015); Blue Bell, Inc. v. Farah Mfg. Co., Inc.,
508 F.2d 1260, 1264–65 (5th
Cir. 1975) (“Ownership of a mark ‘requires a combination of both
appropriation and use in trade.’”). Plaintiff argues that “the Glendennings
have wholly controlled use of the marks from the start—first as sole
proprietors, then as sole directors of Rex Real Estate, Inc., and now as 49
percent owners each of the limited partnership (with the other 2 percent
owned by the corporation).” But according to the evidence submitted by
Plaintiff, Rex Glendenning first used the three marks in commerce between
1987 and 1990 as a sole proprietor. Under Texas law, a sole proprietorship is
one and the same as the person who is the proprietor. Ideal Lease Serv., Inc.
v. Amoco Prod. Co.,
662 S.W.2d 951, 952 (Tex. 1983). Thus, Mr. Glendenning
became the original owner of the marks when he first used them in commerce
many years before Plaintiff was formed.
Plaintiff claims the Lanham Act permitted it to register the marks
because “an applicant seeking to register a trademark may benefit from its
use by a related company.” 15 U.S.C. § 1055. A “related company” is
defined as “any person whose use of a mark is controlled by the owner of the
mark with respect to the nature and quality of the goods or services on or in
connection with which the mark is used.”
Id. § 1127. The term “person”
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includes juristic persons and natural persons. Id. While the owner who
registers the mark may benefit from the mark’s use by related companies, this
does not displace the requirement that only the owner can seek registration.
Id. § 1051(a)(1).
Under the Lanham Act, assignments of marks that have already been
federally registered must be in writing. Id. § 1060 (“Assignments shall be by
instruments in writing duly executed.”). Defendant relies on a Second
Circuit case to argue that the assignment here must have been in writing, but
that case is inapposite because it involved the transfer of a mark that was
already federally registered. SPI Spirits, 726 F.3d at 67. On the other hand,
Plaintiff argues that no assignment was needed because the marks were not
previously federally registered. In support, it cites Diebold for the proposition
that “[i]t is well settled that an assignment in writing is not necessary to pass
rights in a trademark.” Diebold, Inc. v. Multra-Guard, Inc.,
189 U.S.P.Q. 119,
1975 WL 20913, *6 (T.T.A.B. Oct. 2, 1975). However, the Trademark Trial
and Appeal Board went on to say that “[t]he acquisition of such rights may
be established by oral testimony and if such oral testimony is clear and
uncontradictory testimony it may be accepted to prove the assignment.”
Id.
While assignment by writing is not necessary to transfer ownership of a
trademark under common law, an assignment is still necessary. Id.; 3 J.
Thomas McCarthy, McCarthy on Trademarks and Unfair
Competition § 18:4 (5th ed. 2022) (“An assignment in writing is not
necessary to pass common law rights in a trademark.”). As our sister Circuit
has explained, “[r]equiring strong evidence to establish an assignment is
appropriate both to prevent parties from using self-serving testimony to gain
ownership of trademarks and to give parties incentives to identify expressly
the ownership of the marks they employ.” TMT N. Am., Inc. v. Magic Touch
GmbH,
124 F.3d 876, 884 (7th Cir. 1997).
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At trial, Plaintiff failed to produce any evidence that Mr. Glendenning
assigned his rights in the marks to Plaintiff. In one exchange, Defendant’s
counsel asked Mrs. Glendenning, “There’s never been a time when you and
your husband transferred any individual rights you might have had to any
trademark to the limited partnership, correct?” to which she responded, “I
don’t understand that question.” After some clarification, Defendant’s
counsel asked the question again, and Mrs. Glendenning responded, “I
apologize, but I truly do not understand the question. Rex and I own the
trademarks and Rex Real Estate I is our limited partnership.” There was no
other testimony regarding the assignment of the marks at trial.
No reasonable jury could conclude that these statements amount to
clear and uncontradictory testimony that Rex Glendenning assigned his
rights in the marks to Plaintiff. Accordingly, we affirm the district court’s
judgment as a matter of law as to Plaintiff’s Section 32(1) claim for any
alleged infringement of the marks after they were federally registered.
Foreman, 117 F.3d at 804 (Our affirmance can be upon grounds not relied
upon by the district court). However, Defendant’s ownership challenge does
not apply to Plaintiff’s claim under Section 43(a) for infringement of any
marks before they were federally registered. We proceed to analyze the
judgment as to that claim.
b. Protectable Marks
For the first prong of its claim, Plaintiff must show that the marks are
legally protectable. Streamline, 851 F.3d at 450. Plaintiff makes three
arguments to that effect: (1) the crown logo is incontestable; (2) each of the
three marks are inherently distinctive; and (3) each of the three marks have
developed secondary meaning. Since we find a reasonable jury could
conclude that the marks are inherently distinctive, we pretermit addressing
the other two arguments.
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Based on the evidence submitted, the district court concluded that no
reasonable jury could find that the marks are anything other than personal
name marks. Plaintiff claims this was error and that its three marks are at least
suggestive because it presented evidence that the marks refer not merely to
Rex Glendenning but also to the Latin translation of “rex” as “king.”
Marks are classified along a spectrum in order of increasing
distinctiveness: (1) generic; (2) descriptive; (3) suggestive; (4) arbitrary; or
(5) fanciful. Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 768 (1992).
Word marks that are suggestive, arbitrary, or fanciful are inherently
distinctive. Wal–Mart Stores, Inc. v. Samara Bros., Inc.,
529 U.S. 205, 210–11,
(2000). A generic term refers to the class of which a good is a member.
Xtreme Lashes, L.L.C. v. Xtended Beauty, Inc.,
576 F.3d 221, 227 (5th Cir.
2009). A descriptive term provides an attribute or quality of a good.
Id. A
suggestive term suggests, but does not describe, an attribute of the good; it
requires the consumer to exercise his or her imagination to apply the
trademark to the good.
Id. This court prefers to “hav[e] a jury decide the
issue of the categorization of a mark.” Streamline,
851 F.3d at 453. Although
judgment as a matter of law “is rarely appropriate” on the factual question
of categorization, Xtreme Lashes,
576 F.3d at 232, we may affirm such a
judgment where the record compels it. Amazing Spaces,
608 F.3d at 234.
Under the Lanham Act, a mark that is “primarily merely a surname”
is not registerable in the absence of secondary meaning. 15 U.S.C. §
1052(e)(4). We also join our sister circuits in recognizing that “[f]or the
purpose of trademark analysis, personal names—both surnames
and first names—are generally regarded as descriptive terms which require
proof of secondary meaning.” 815 Tonawanda St. Corp. v. Fay’s Drug Co.,
842
F.2d 643, 648 (2d Cir. 1988); Perini Corp. v. Perini Const., Inc.,
915 F.2d 121,
125 (4th Cir. 1990); Tana v. Dantanna’s,
611 F.3d 767, 774 (11th Cir. 2010);
Quiksilver, Inc. v. Kymsta Corp.,
466 F.3d 749, 760 (9th Cir. 2006). A mark
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can still be inherently distinctive if the public perceives the mark to be
something other than a personal name. 2 J. Thomas McCarthy,
McCarthy on Trademarks & Unfair Competition § 13:2 (5th
ed. 2022) (“even if a mark actually consists of an actual personal name,
secondary meaning will be required only if the public perceives the mark to
be a personal name.”). However, “the mere fact that a word has a dictionary
definition does not exclude the possibility that it is primarily merely a
surname.” Lane Cap. Mgmt., Inc. v. Lane Cap. Mgmt., Inc., 192 F.3d 337, 346
(2d Cir. 1999). The relevant question is whether the purchasing public
perceives the mark as a whole as primarily referring to a personal name.
Id.
In concluding that the marks are nothing more than personal name
marks, the district court relied on Mr. Glendenning’s affidavit that Plaintiff
submitted to the USPTO when it sought to cancel Defendant’s trademarks.
In his declaration, he stated that “[a]mong consumers in the real estate
industry, the name ‘REX’ has become synonymous with REX and Rex
Glendenning as the exclusive source of the REX Real Estate Services, with
Rex Glendenning as an individual being uniquely identified and recognized
by consumers both in Texas and nationally as the founder of REX and REX
Real Estate Services.” At trial, Mr. Glendenning confirmed the statements
made in his declaration. But Mr. Glendenning also stated, “I believe in my
deposition, I also stated that we also named -- put the crown over Rex because
of the Latin meaning of king and -- but yes I don’t deny that my name’s Rex
and that it means king in Latin and we adopted it as -- the name of our
company.” At this point, Defendant’s counsel had Mr. Glendenning turn to
a page in his deposition where the following exchange occurred:
Q. (BY MR. FLYNN) And I’ll -- when you made the decision
to adopt the name Rex Real Estate, why did you make that
decision?
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A. Because I’m Rex, and I’m in the real estate business. And
it’s my mark and we think it’s an excellent one and we decided
to run with it the last three decades. The real Rex.
Defendant’s counsel then asked, “When you made the decision to adopt the
name Rex Real Estate, you did it because you’re Rex and you are in the real
estate business, correct?” to which Mr. Glendenning responded, “That’s
what it says.” However, there was other evidence at trial supporting
Plaintiff’s claim that the public perceives the marks by their Latin meaning.
For instance, Mrs. Glendenning testified that she “came up with the crown
because Rex means king and that was that.” Plaintiff’s counsel also had Mr.
Ryan, Defendant’s CEO, read a portion of Defendant’s response to an
interrogatory where it said: “Defendant uses its mark Rex alone while
plaintiff’s mark is Rex Real Estate. Defendant’s mark is most often
accompanied by a crown, reinforcing the translation of Rex as a king in
Latin.” Ryan confirmed this statement and clarified that the reference to
Defendant is a typo because Plaintiff’s mark is most often accompanied by a
crown.
Plaintiff argues that the district court erred by relying on Mr.
Glendenning’s affidavit because it looked only to what the company intended
for the mark, not how consumers perceive it. But Mr. Glendenning’s
declaration does not merely speak for himself or the company—he claimed
that the name Rex has become synonymous with him as a person and founder
of the company to consumers in the real estate industry. Plaintiff did not
submit any evidence showing that the relevant consuming public associates
the Rex marks with their purported Latin meaning. Nevertheless, it
submitted evidence that Defendant views its marks by their Latin translation.
While Defendant is not necessarily a member of the “purchasing public,”
the fact that some party outside of Plaintiff recognizes the Latin translation
support its claims that the marks could be inherently distinctive. While there
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was strong evidence that the marks are perceived by the public as primarily a
personal name, the record does not compel that conclusion. Amazing Spaces,
608 F.3d at 234. The district court erred by deciding as a matter of law that
Plaintiff’s marks are not inherently distinctive.
c. Likelihood of Confusion
The second prong—“likelihood of confusion”—requires Plaintiff to
show that Defendants’ use of the “Rex” marks “create[d] a likelihood of
confusion in the minds of potential consumers as to the source, affiliation, or
sponsorship.” Springboards To Educ., Inc. v. Houston Indep. Sch. Dist., 912
F.3d 805, 811-12 (5th Cir. 2019) (quoting Elvis Presley Enters., Inc. v. Capece,
141 F.3d 188, 193 (5th Cir. 1998)). To evaluate whether there is a likelihood of
confusion, we use a non-exhaustive list of factors known as the “digits of
confusion.” Xtreme Lashes,
576 F.3d at 227. The digits are: “(1) the type of
trademark; (2) mark similarity; (3) product similarity; (4) outlet and
purchaser identity; (5) advertising media identity; (6) defendant’s intent; (7)
actual confusion; and (8) care exercised by potential purchasers.”
Id. “No
digit is dispositive, and the digits may weigh differently from case to case,
‘depending on the particular facts and circumstances involved.’”
Id.
(citation omitted). “In addition to the digits of confusion, the particular
context in which the mark appears must receive special emphasis.” Scott
Fetzer Co. v. House of Vacuums Inc.,
381 F.3d 477, 485-86 (5th Cir. 2004).
“While likelihood of confusion is typically a question of fact, summary
judgment is proper if the ‘record compels the conclusion that the movant is
entitled to judgment as a matter of law.’” Xtreme Lashes,
576 F.3d at 227
(citation omitted); see also Springboards,
912 F.3d at 818 (affirming grant of
summary judgment because “the great weight of the digits suggests there is
no likelihood of confusion.”); Perry v. H. J. Heinz Co. Brands, L.L.C.,
994
F.3d 466, 473 (5th Cir. 2021) (affirming grant of summary judgment on
likelihood of confusion). We address each digit in turn.
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i. The type of trademark.
“‘Type of trademark’ refers to the strength of the senior mark.”
Xtreme Lashes, 576 F.3d at 227. “We analyze two factors in determining the
strength of a mark: (1) the mark’s position along the distinctiveness
spectrum, and (2) ‘the standing of the mark in the marketplace.’”
Springboards,
912 F.3d at 814 (citation omitted). The first factor refers to the
five categories of increasing distinctiveness that marks generally fall into.
Xtreme Lashes,
576 F.3d at 227. As discussed above, Plaintiff has presented
sufficient evidence for a reasonable jury to conclude that the marks are at
least suggestive.
The second factor is “the standing of the mark in the marketplace.”
Springboards, 912 F.3d at 814 (internal quotation marks and citation omitted).
Here, the district court found that the marks had low standing because many
other entities in Texas have “Rex” names, and some of those businesses are
involved in real estate. Plaintiff challenges the district court’s reliance on
third-party usage in other industries, but “[a]ll third-party use of a mark, not
just use in the same industry as a plaintiff, may be relevant to whether a
plaintiff’s mark is strong or weak.” Bd. of Supervisors for La. State Univ. Agric.
& Mech. Coll. v. Smack Apparel Co.,
550 F.3d 465, 479 (5th Cir. 2008). Still,
third-party usage is especially relevant when it falls within the same industry
or category of services. Springboards,
912 F.3d at 815 (numerous third-party
literacy programs using language similar or nearly identical to plaintiff’s
marks “suggests that consumers will not associate the junior mark’s use with
the senior mark user”); Sun Banks of Fla., Inc. v. Sun Fed. Sav. & Loan Ass’n,
651 F.2d 311, 316 (5th Cir. 1981) (A significant number of other Florida
financial institutions using “Sun” in their names lessened the standing of the
mark). “[T]he key is whether the third-party use diminishes in the public’s
mind the association of the mark with the plaintiff.” Smack Apparel,
550 F.3d
at 479.
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Defendant claims there are hundreds of entities using “Rex” in their
business name, including in real estate. It follows this assertion with ranges
of citations to over 1000 pages in the record on appeal, and it does not specify
which pages in these ranges show other “Rex” entities involved in Texas real
estate. We have noted that “it is not the function of the Court of Appeals to
comb the record for possible error, but rather it is counsel’s responsibility to
point out distinctly and specifically the precise matters complained of, with
appropriate citations to the page or pages in the record where the matters
appear.” United States v. Martinez-Mercado, 888 F.2d 1484, 1492 (5th Cir.
1989). The same goes for the Appellee—we will not go on a fishing
expedition in search of evidence to support Defendant’s argument. While
there are many other entities named “Rex” in Texas, Defendant has not
satisfactorily pointed us to evidence of other Texas businesses using the term
“Rex” in real estate. Furthermore, the jury saw proof that only Plaintiff and
Defendant appear in the first page of results in a Google search for “Rex Real
Estate Texas.” Plaintiff also asserts that the numerous calls it received from
confused consumers who heard Defendant’s advertisements shows that the
marks have strong standing in the marketplace because it could mean that the
callers assumed that Plaintiff was the sole source of the advertising. This is a
plausible inference for a jury to make. Taken together and in the light most
favorable to the Plaintiff, a reasonable jury could find that this factor weighs
in favor of Plaintiff.
ii. Mark similarity.
The degree of similarity between marks “is determined by comparing
the marks’ appearance, sound, and meaning.” Elvis Presley Enters., 141 F.3d
at 201. “Similarity of appearance is determined on the basis of the total effect
of the designation, rather than on a comparison of individual features,” but
“courts should give more attention to the dominant features of a mark.”
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Xtreme Lashes, 576 F.3d at 228 (internal quotation marks and citations
omitted).
The district court concluded that the crown logo and one of
Defendant’s logos are visually distinct because they use different fonts,
colors, and design elements. However, these two logos contain the same
words, “Rex Real Estate,” in a similar configuration. Plaintiff also submitted
evidence that Defendant has advertised itself as “Rex Real Estate” and
“Rex.” A reasonable jury could find these marks similar enough to confuse
their origin. Xtreme Lashes, 576 F.3d at 228.
iii & iv. Product similarity and identity of purchasers.
“The greater the similarity between the products and services, the
greater the likelihood of confusion.” Exxon Corp. v. Texas Motor Exch. of
Houston, Inc., 628 F.2d 500, 505 (5th Cir. 1980). Likewise, “[d]issimilarities
between the retail outlets for and the predominant consumers of plaintiff’s
and defendants’ goods lessen the possibility of confusion, mistake, or
deception.”
Id. (quotation marks and citation omitted). “When products or
services are noncompeting, the confusion at issue is one of sponsorship,
affiliation, or connection.” Elvis Presley Enters.,
141 F.3d at 202. “The danger
of affiliation or sponsorship confusion increases when the junior user’s
services are in a market that is one into which the senior user would naturally
expand . . . The actual intent of the senior user to expand is not particularly
probative of whether the junior user’s market is one into which the senior
user would naturally expand . . . Consumer perception is the controlling
factor.”
Id. “If consumers believe, even though falsely, that the natural
tendency of producers of the type of goods marketed by the prior user is to
expand into the market for the type of goods marketed by the subsequent
user, confusion may be likely.”
Id. (citation omitted).
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Plaintiff argues that it and Defendant offer similar services because
both offer “real estate brokerage services,” both “firms have brokered deals
for various types of properties,” and “both regard the same companies as
their direct competitors.”
As discussed above, Plaintiff presented at most nine recorded
instances where it was involved in the sale of single-family homes to
individual buyers between 2009 and 2022. However, Plaintiff closes
thousands of real estate deals, including almost four-hundred deals in 2015
alone. Even the vast majority of its “residential” listings were sold to
corporate entities. On the other hand, Defendant exclusively focuses on
selling single family homes to homebuyers who are seeking a home to live in.
Clearly, Plaintiff and Defendant operate in different corners of the real estate
market and cater to different sets of prospective customers. While Plaintiff
and Defendant may both regard Sotheby’s, Coldwell Banker, and Redfin as
competitors, Plaintiff’s expert testified that these companies sell both
residential and commercial real estate. Thus, Plaintiff primarily competes
with their commercial listings while Defendant primarily competes with their
residential listings, and this does not support Plaintiff’s argument that both
companies provide the same services.
Plaintiff rarely brokers single-family homes, and there is no indication
that it intends to expand into this market. But its actual intent to expand into
this market is not particularly probative. Elvis Presley Enters., 141 F.3d at 202.
The question is whether the consuming public would believe that the natural
tendency of brokers involved in commercial and investment real estate is to
expand into the brokerage of single-family homes.
Id. While this progression
strikes us as unlikely, we cannot say that no reasonable jury could reach this
conclusion with regard to the consuming public since Plaintiff and Defendant
are both involved in brokering real estate. A reasonable jury could weigh this
digit in Plaintiff’s favor.
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v. Advertising media identity.
For this factor, we look to the “similarity between the parties’
advertising campaigns. The greater the similarity in the campaigns, the
greater the likelihood of confusion.” Exxon, 628 F.2d at 506.
Plaintiff’s and Defendant’s divergent advertising identities reflect
their divergent business practices. Plaintiff spends 86% of its annual
advertising budget on leasing its corporate suite at AT&T Stadium for
entertaining clients. It also hosts an annual dove hunt for both existing and
prospective clients. Matthew Kiran, Plaintiff’s long-time sales agent,
testified that Plaintiff focuses its business on face-to-face interactions:
“you’ll hear a lot of stuff about high tech and algorithms and matching this
and that. We’re high touch. We want to do business face-to-face, people-topeople. That’s what we do. And so, our business is different from the internet
computer thing.” Mr. Glendenning testified that Plaintiff does not use digital
marketing. By contrast, Mr. Ryan testified that Defendant’s business model
is “direct to consumer with internet . . . we’re very much a digital
relationship.” Accordingly, Defendant focuses on targeting potential
consumers with online advertisements. While both companies use signage,
print advertisements, and radio spots to a limited extent, the lions’ share of
Plaintiff’s advertising expenses go to entertaining its clients in person while
the lions’ share of Defendant’s advertising expenses go to targeting potential
customers online. No reasonable jury could find that this factor weighs in
Plaintiff’s favor.
vi. Defendant’s intent.
The district court found no evidence that Defendant intentionally
used the Rex mark because of Plaintiff’s business. Plaintiff does not challenge
this finding, but it does challenge the district court’s conclusion that this
factor weighs against it. Plaintiff is correct. “If there is no evidence of intent
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to confuse, then this factor is neutral.” Viacom Int’l v. IJR Cap. Invs., L.L.C.,
891 F.3d 178, 195 (5th Cir. 2018). This factor does not weigh in favor of either
party.
vii. Actual confusion.
“Actual confusion need not be proven,” but it is “the best evidence
of a likelihood of confusion.” Xtreme Lashes, 576 F.3d at 229. “A plaintiff
may show actual confusion using anecdotal instances of consumer confusion,
systematic consumer surveys, or both.” Streamline,
851 F.3d at 457 (citation
omitted). A plaintiff alleging infringement must show that the defendant’s
use of marks, “as opposed to some other source, caused a likelihood of
confusion.” Scott Fetzer,
381 F.3d at 487.
In this appeal, Plaintiff relies only on anecdotal instances of confusion.
Plaintiff presents instances of people who inadvertently contacted one party
while looking to do business with or contact the other. It also presents
evidence of people confused about whether Plaintiff is affiliated with
Defendant. Relying principally on our decision in Elvis Presley Enterprises, it
argues that these instances are sufficient to show actual confusion even if they
did not result in swayed customer purchases. See 141 F.3d at 204. In turn,
Defendant relies principally on our decision in Streamline Production Systems
to argue that Plaintiff’s anecdotes show nothing more than a “fleeting mixup of names” and that proof of swayed customer purchases is required. See
851 F.3d at 457. Since there has been some confusion over what kind of actual
confusion counts,3 we now take a closer a look at our precedent in this area.
_____________________
3
See, e.g., Savage Tavern, Inc. v. Signature Stag, L.L.C., 589 F. Supp. 3d 624, 655
(N.D. Tex. 2022) (“the Fifth Circuit’s caselaw is muddled as to whether a sale is required
for proof of actual confusion.”)
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More recently, this court has held that plaintiffs must show instances
of confusion resulting in swayed customer purchases. Future Proof Brands,
L.L.C. v. Molson Coors Beverage Co., 982 F.3d 280, 297 (5th Cir. 2020)
(plaintiff failed to show actual confusion because it “provide[d] no evidence
that that confusion ‘swayed consumer purchases.’”); Streamline,
851 F.3d at
457 (evidence of actual confusion “must show that ‘[t]he confusion was
caused by the trademarks employed and it swayed consumer purchases.’”).
However, this requirement conflicts with some of our earlier cases. For
instance, in World Carpets, the plaintiff was a wholesale distributor of carpets
who sued a group of Texas carpet retailers. World Carpets, Inc. v. Dick
Littrell’s New World Carpets,
438 F.2d 482, 484 (5th Cir. 1971). While
plaintiff “found it economically advantageous to refrain from participating in
any retail activity in order to retain the good will of its independent retail
customers,” the defendant’s use of a similar mark led plaintiff’s own retailers
to complain to plaintiff because they believed it had entered the retail market.
Id. Considering evidence that the plaintiff’s customers were confused as to
whether plaintiff had entered the retail market, we affirmed the district
court’s directed verdict on a likelihood of confusion.
Id. at 489. While there
was evidence that its own customers were confused as to the defendant’s
affiliation with plaintiff, there was no proof that this confusion swayed
customer purchases. Further, proof of confusion on the part of ultimate
purchasers is not required. Fuji Photo Film Co. v. Shinohara Shoji Kabushiki
Kaisha,
754 F.2d 591, 597 (5th Cir. 1985) (“the trial court appears to have
believed that only actual confusion on the part of ultimate purchasers was
relevant, and for this reason to have discounted the evidence (and its own
findings) of actual confusion on the part of distributors and trade show
visitors. This was error as well.”). In Elvis Presley Enterprises, we explicitly
noted that “[i]nfringement can be based upon confusion that creates initial
consumer interest, even though no actual sale is finally completed as a result
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of the confusion.” 141 F.3d at 204. Accordingly, to the extent our more
recent cases require proof of swayed customer purchases, our prior holdings
control. Arnold v. U.S. Dep’t of Interior,
213 F.3d 193, 196 n.4 (5th Cir. 2000)
(“[U]nder the rule of orderliness, to the extent that a more recent case
contradicts an older case, the newer language has no effect.”).
Still, we must determine what weight to assign to the instances that
Plaintiff has submitted. Plaintiff relies on Xtreme Lashes for the proposition
that “very little proof of actual confusion [is] necessary to prove the
likelihood of confusion.” 576 F.3d at 229. It also cites Streamline where we
explained that likelihood of confusion “can be supported by testimony of a
single known incident of actual confusion.”
851 F.3d at 457 (citing La. World
Exposition, Inc. v. Logue,
746 F.2d 1033, 1041 (5th Cir. 1984)). However, the
plaintiff in Louisiana World Exposition submitted testimony from a customer
who purchased one of defendant’s tee shirts thinking it was made by plaintiff.
Id. And Xtreme Lashes involved two instances where potential customers of
plaintiff were confused into buying products from defendant. Xtreme Lashes,
576 F.3d at 230. Thus, very little proof is required when customer purchases
were actually swayed. However, as discussed below, more is required when
the confusion did not or cannot sway purchases.
In Domino’s Pizza, we reversed the district court’s holding that there
was a likelihood of confusion between plaintiff’s “Domino” mark and
defendant’s “Domino’s Pizza” mark. Amstar Corp. v. Domino’s Pizza, Inc.,
615 F.2d 252, 255 (5th Cir. 1980). In that case, the plaintiff presented
evidence that two people had inquired about whether defendant was related
to plaintiff. “In view of the fact that both plaintiff’s and defendants’ sales
currently run into the millions of dollars each year, these isolated instances
of actual confusion are insufficient to sustain a finding of likelihood of
confusion.”
Id. at 263. Thus, isolated instances of confusion about the
affiliation of two companies that do not result in redirected business are not
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enough to sustain a finding of actual confusion. Additionally, proof of actual
confusion not involving swayed customer purchases should be weighed
against the parties’ total volume of sales.
In Sun Banks, we reversed a district court’s finding of a likelihood of
confusion between the marks of plaintiff, Sun Banks of Florida, and
defendant, Sun Federal Savings and Loan Association. Sun Banks of Fla., Inc.
v. Sun Fed. Sav. & Loan Ass’n, 651 F.2d 311, 313 (5th Cir. 1981). For evidence
of actual confusion, the plaintiff’s president requested that employees report
incidents of confusion stemming from the defendant’s use of the word
“Sun” in its name.
Id. at 319. Less than fifteen incidents were reported over
a three-year period, and none were contacts by “a potential customer
considering whether to transact business with one or the other of the
parties.”
Id. The plaintiff also produced four witnesses who had inquired
whether the two companies were related, but “in each instance there is no
indication that the inquiry was made by a potential customer concerning the
transaction of business.”
Id. “Although the record contains several isolated
instances of uncertainty whether there was a connection between the two
businesses, in light of the number of transactions conducted and the extent
of the parties’ advertising, the amount of past confusion is negligible.”
Id. In
addition to reaffirming that instances of uncertainty about affiliation or
connection can be weighed against each company’s volume of business as a
whole, Sun Banks instructs that we also look to the volume of each company’s
advertising. Additionally, actual confusion has more weight if it is a potential
customer considering whether to transact business with one or the other.
In Armco, we affirmed the trial court’s finding of a likelihood of
confusion. Armco, Inc. v. Armco Burglar Alarm Co., 693 F.2d 1155, 1156 (5th
Cir. 1982). In that case, plaintiff provided evidence that one of its employees
received phone calls once a month from people trying to reach defendant,
and two other employees who had received one phone call each from people
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trying to reach the defendant. Id. at 1160. There, we distinguished Domino’s
Pizza and Sun Banks because the evidence of actual confusion was “thin” in
those cases.
Id. Citing an Eleventh Circuit case analyzing Fifth Circuit case
law, we explained that our “precedents give varying weight to evidence of
actual confusion, depending on whether it is short-lived confusion by
individuals casually acquainted with a business or lasting confusion by actual
customers.”
Id. at n.11 (citing Safeway Stores, Inc. v. Safeway Discount Drugs,
675 F.2d 1160, 1166–1167 (11th Cir. 1982)). The two companies provided
different products to different customers, so there was no possibility that the
misdirected phone calls could divert sales away from the plaintiff.
Nevertheless, we credited this evidence in affirming the lower court’s finding
of likelihood of confusion on clear error review.
Id. at 1160.
In Elvis Presley Enterprises, we held that “[i]nfringement can be based
upon confusion that creates initial consumer interest, even though no actual
sale is finally completed as a result of the confusion.” Elvis Presley Enterprises,
Inc. v. Capece, 141 F.3d 188, 204 (5th Cir. 1998) (citing 3 J. Thomas
McCarthy, McCarthy On Trademarks and Unfair
Competition § 23:6 (4th ed. 1997)). Initial confusion, even if it is “later
dissipated by further inspection of the goods, services, or premises . . . is
relevant to a determination of a likelihood of confusion.” Id. (citations
omitted). Such confusion “gives the junior user credibility during the early
stages of a transaction and can possibly bar the senior user from consideration
by the consumer once the confusion is dissipated.” Id. In that case, Elvis
Presley Enterprises (“EPE”), the assignee and registrant of all trademarks,
copyrights, and publicity rights belonging to the Elvis Presley estate, sued the
owner of a Houston bar called “the Velvet Elvis.” Id. at 191. EPE presented
the testimony of various witnesses who “initially thought the Defendants’
bar was a place that was associated with Elvis Presley and that it might have
Elvis merchandise for sale.” Id. at 204. After entering, each witness had no
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doubt the bar was not affiliated with Elvis in any way. Id. Concluding that this
kind of initial interest confusion was still relevant, we observed the following:
Despite the confusion being dissipated, this initial-interest
confusion is beneficial to the Defendants because it brings
patrons in the door; indeed, it brought at least one of EPE’s
witnesses into the bar. Once in the door, the confusion has
succeeded because some patrons may stay, despite realizing
that the bar has no relationship with EPE. This initial-interest
confusion is even more significant because the Defendants’ bar
sometimes charges a cover charge for entry, which allows the
Defendants to benefit from initial-interest confusion before it
can be dissipated by entry into the bar.
Id. at 204. Unlike Sun Banks, these instances involved potential customers of
plaintiff because they were interested in official Elvis merchandise, but they
walked in defendant’s door because they were confused as to affiliation.
With these decisions to guide our analysis, we turn to the evidence in
this case. Plaintiff points to two instances of people who inadvertently
contacted Defendant while looking to do business with or contact Plaintiff.
On September 13, 2018, one person sent Defendant a chat message on their
website stating, “I need REX Glendenning email or phone number.”
Defendant’s chat agent responded, “We currently don’t have anyone with
that name at this company.” On June 14, 2019, another person sent a chat
message inquiring about a property stating, “You have your signs up in
Prosper and areas around there for large parcels of land,” but the chat agent
responded, “Sorry, we do not sell land and we are not in the Dallas area.” In
both of those cases, people intending to contact Plaintiff inadvertently
contacted Defendant. In each case, the person inquiring clearly intended to
contact or transact business with Plaintiff. Thus, unlike the initial interest
confusion in Elvis Presley, this confusion did not present the possibility of
garnering the Defendant business before or after it was dissipated.
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Plaintiff next points to three instances where it received phone calls
from people who had seen or heard Defendant’s advertisements. It also
presents one instance where a customer of Defendant sent a letter to Plaintiff
complaining about Defendant’s services. The district court disregarded
these instances because none involved people who were seeking to do
business with Plaintiff. However, under Armco, proof that the plaintiff is
receiving calls from people who are trying to do business with the other party
can still be relevant even where there is no realistic possibility that business
can be diverted. 693 F.2d at 1160. Finally, Plaintiff presents two instances of
third parties confusing the companies or their locations. As we have
explained, those anecdotes are relevant because proof of actual confusion is
not limited to actual or potential customers. Fuji,
754 F.2d at 597.
Plaintiff’s anecdotal proof of confusion does not involve swayed
customer purchases or initial interest confusion that can result in swayed
business. It also does not involve “potential customer[s] considering whether
to transact business with one or the other of the parties.” Sun Banks, 651 F.2d
at 319. But it has presented instances of potential customers of each
respective company mistakenly contacting the other. Armco,
693 F.2d at
1160. These instances are relevant, but their weight is lessened by Plaintiff’s
and Defendant’s high volume of business and extensive advertising. Sun
Banks,
651 F.2d at 319. Nevertheless, because Plaintiff has presented some
relevant evidence of actual confusion, a reasonable jury could conclude that
this digit weighs in its favor.
viii. Degree of care exercised by potential purchasers.
For the final digit, we determine the degree of care by looking to both
the kind of goods or services offered and the kind of purchasers. “Where
items are relatively inexpensive, a buyer may take less care in selecting the
item, thereby increasing the risk of confusion . . . However, a high price tag
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alone does not negate other [digits of confusion], especially if the goods or
marks are similar.” Streamline, 851 F.3d at 458 (internal quotation marks and
citations omitted). “[P]rofessional and institutional” purchasers “are
virtually certain to be informed, deliberative buyers.” Oreck Corp. v. U.S.
Floor Sys., Inc.,
803 F.2d 166, 173 (5th Cir. 1986).
Plaintiff relies on the Trademark Trial and Appeal Board’s conclusion
that “average homeowners do not use a high degree of care in selecting their
broker.” Real Est. One, Inc. v. Real Est. 100 Enterprises Corp., 212 U.S.P.Q.
957,
1981 WL 40478, at *3 (T.T.A.B. 1981). That case involved two real
estate brokerage companies that were “primarily directed to residential
listings and sales.”
Id. Even if Defendant’s customers do not use a high
degree of care in selecting their broker for single-family homes, Plaintiff’s
customers are not average homebuyers or homeowners—they are by and
large corporate entities and wealthy individuals investing in commercial and
residential real estate. Such customers are “virtually certain to be informed,
deliberative buyers.” Oreck,
803 F.2d at 173; accord Int’l Council of Shopping
Centers, Inc. v. RECONCRE, L.L.C.,
2021 WL 148387, at *5 (D.D.C. Jan. 14,
2021) (“it is hard to deny that commercial real estate market participants are,
by and large, sophisticated consumers.”). Plaintiff’s potential customers
exercise a high degree of care, so no reasonable jury could find that this digit
weighs in favor of Plaintiff.
ix. Weighing the Digits
Since a reasonable jury could conclude that some of these factors,
including the important factor of actual confusion, weigh in Plaintiff’s favor,
a reasonable jury could also find a “probability of confusion” between
Plaintiff and Defendant’s marks. Xtreme Lashes, 576 F.3d at 226. The district
court erred by holding that Plaintiff could not establish a likelihood of
confusion as a matter of law.
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d. Damages
Plaintiff also challenges the district court’s holding on damages for
corrective advertising and reasonable royalties. Since we remand for a new
trial, we need not address those issues.
IV. Conclusion
No reasonable jury could conclude that Plaintiff owned the marks, so
we affirm the district court’s judgment as a matter of law as to Plaintiff’s
Section 32(1) claim for alleged infringement of the marks after federal
registration. However, taking the evidence in the light most favorable to
Plaintiff and “leaving credibility determinations, the weighing of the
evidence, and the drawing of legitimate inferences from the facts to the jury,”
a reasonable jury could find in favor of Plaintiff’s claim under Section 43(a)
for infringement of the marks before they were federally registered. We
AFFIRM in part, REVERSE in part, and REMAND for further
proceedings.
28
