Sabinsa Corp. v. Creative Compounds, LLC

609 F.3d 175, 95 U.S.P.Q. 2d (BNA) 1897, 2010 U.S. App. LEXIS 14023, 2010 WL 2705162
CourtCourt of Appeals for the Third Circuit
DecidedJuly 9, 2010
Docket08-3255
StatusPublished
Cited by39 cases

This text of 609 F.3d 175 (Sabinsa Corp. v. Creative Compounds, LLC) is published on Counsel Stack Legal Research, covering Court of Appeals for the Third Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Sabinsa Corp. v. Creative Compounds, LLC, 609 F.3d 175, 95 U.S.P.Q. 2d (BNA) 1897, 2010 U.S. App. LEXIS 14023, 2010 WL 2705162 (3d Cir. 2010).

Opinions

OPINION

ROTH, Circuit Judge:

Sabinsa Corporation appeals the District Court’s judgment in favor of Creative Compounds, LLC, on Sabinsa’s trademark infringement and unfair competition claims. The District Court found that there was no likelihood of confusion between Sabinsa’s mark, ForsLean, and Creative Compounds’s mark, Forsthin, both of which refer to Coleus forskohlii extract, an ingredient used in weight management products. Because the District Court erred in its findings on the Lapp factors and its ultimate finding on likelihood of confusion, we will reverse the judgment. Further, because the undisputed facts weigh heavily in favor of Sabinsa so that any reasonable fact finder, weighing the Lapp factors properly, would find that Sabinsa had demonstrated a likelihood of confusion, we conclude that there is no need to remand for a re-weighing by the District Court of the Lapp factors. We therefore remand this case for entry of judgment in favor of Sabinsa.

I. Background

The following facts are undisputed.

Forskohlin is an extract derived from the roots of the plant Coleus forskohlii, a member of the mint family, found primarily in India. It is manufactured by harvesting and drying the Coleus forskohlii root and then extracting the forskohlin into a highly-concentrated slurry. The slurry is then combined with inactive ingredients to make various concentrations, which are sold in powder form.

[181]*181Sabinsa, an ingredient supplier for nutraeeutical1 manufacturers, was founded in 1988 by Dr. Muhammed Majeed, a scientist with experience in the pharmaceutical industry. In 1996, Dr. Majeed began research into the potential use of forskohlin to promote lean body mass. After completing a clinical trial, Sabinsa filed an intent-to-use application for the trademark, ForsLean, formed by combining “Fors” from forskohlin with “Lean” for lean body mass. Sabinsa first marketed ForsLean to nutraceutical manufacturers in 2000. Sabinsa has also created pamphlets marketing ForsLean directly to the public. ForsLean was Sabinsa’s highest revenue-generating product for at least five years preceding the trial in the District Court.

In 2003, a severe drought struck India and affected Sabinsa’s supply of forskohlin. As a result, Sabinsa both worked to keep its customers interested in ForsLean and spent significant resources helping farmers in India cultivate Coleus forskohlii to ensure a continued supply in the future. Forskohlin was available again in the spring of 2004, in part due to Sabinsa’s efforts. Sabinsa thereafter created the “ForsLean promise,” a commitment to its customers to ensure the supply of forskohlin in the future.

Creative Compounds is also an ingredient supplier to the nutraceutical industry although it operates with only seven employees, none of whom is a scientist or Ph.D., and it conducts no research and development. Creative Compounds began selling forskohlin at the end of 2002. It did not, however, adopt the trade name Forsthin for its product until the spring of 2004 — just as Sabinsa’s supply problems were coming to an end. Though there is no indication that Creative Compounds ever had a problem with supply associated with the drought in India, it heavily promoted “The Return of Coleus” as it introduced its new Forsthin brand: “Not long ago, Coleus was one of the most powerful options in stimulant-free weight loss. That was until raw material shortages and low-quality extracts made maintaining a Coleus formula a nightmare. Those days are over.” Creative Compounds made very few sales of forskohlin in 2002, 2003, and 2004, but sold more than 1000 kilograms in 2005, nearly 600 kilograms in 2006, and nearly 700 kilograms in 2007.

Sabinsa sent a cease-and-desist letter to Creative Compounds in the summer of 2004, soon after the latter began using the name Forsthin. Within a week and without contacting Sabinsa, Creative Compounds filed a declaratory judgment action in the United States District Court for the District of Missouri. Sabinsa then filed this suit, and the Missouri suit was dismissed in favor of this one.

Sabinsa’s Complaint alleged five claims, all of which required that it prove both its ownership of a valid and legally protectable trademark and a likelihood of confusion caused by Creative Compounds’s use of the mark Forsthin. E.T. Browne Drug Co. v. Cococare Prods., Inc., 538 F.3d 185, 191 (3d Cir.2008). Creative Compounds has conceded that Sabinsa owns the ForsLean mark and that the mark is valid and legally protectable. Therefore, the only issue for trial was “whether or not Defendant’s use of the mark Forsthin is likely to create confusion in the marketplace when compared to Plaintiffs mark Fors[L]ean.”

On June 16, 2008, after a bench trial, the District Court read into the record an oral [182]*182decision in favor of Creative Compounds. Sabinsa appealed. We have jurisdiction pursuant to 28 U.S.C. § 1291.

II. Standard of Review

We exercise plenary review over the District Court’s legal conclusions regarding the Lanham Act. See Checkpoint Sys., Inc. v. Check Point Software Techs., Inc., 269 F.3d 270, 279 (3d Cir.2001). Factual findings concerning the likelihood of confusion are reviewed for clear error. See A & H Sportswear, Inc. v. Victoria’s Secret Stores, Inc., 237 F.3d 198, 210 (3d Cir.2000). “Clear error exists when, giving all deference to the opportunity of the trial judge to evaluate the credibility of witnesses and to weigh the evidence, we are left with a definite and firm conviction that a mistake has been committed.” Id. at 194 (quotation marks and citation omitted). Though “[l]ikelihood of confusion is a factual question[,] ... legal principles govern what evidence may, or must, be considered by the District Court in reaching that conclusion, and also what standards apply to its determination.” Id. at 210.

Pursuant to Federal Rule of Civil Procedure 52, a trial court must make clear factual findings to support its conclusions. 9 Wright & Miller, Federal Practice & Procedure § 2574, at 690. Rule 52 is not satisfied “by the statement of the ultimate fact without the subordinate factual foundations for it which also must be the subject of specific findings.” O’Neill v. United States, 411 F.2d 139, 146 (3d Cir. 1969). “If [subordinate findings] did not enter into the process by which the ultimate factual finding was made, then it was without any supporting foundation.” H. Prang Trucking Co., Inc. v. Local Union No. m, 613 F.2d 1235, 1238 (3d Cir.1980) (citation omitted).

III. The District Court’s Likelihood of Confusion Analysis

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609 F.3d 175, 95 U.S.P.Q. 2d (BNA) 1897, 2010 U.S. App. LEXIS 14023, 2010 WL 2705162, Counsel Stack Legal Research, https://law.counselstack.com/opinion/sabinsa-corp-v-creative-compounds-llc-ca3-2010.