On September 19, 2012, California-based Fantasia Distribution, Inc. (“Fantasia”), a defendant in a trademark case, filed an appeal with the Eleventh Circuit.  The court below, the U.S. District Court for the Southern District of Florida, had entered judgment against Fantasia, permanently enjoining it from using the mark SURFER ON ACID for its tobacco products, and ruling that the plaintiff was entitled to awards of profits and costs of the action.

The plaintiff in the case, Miami-based Drew Estate Holding Company, LLC (“Drew Estate”), according to the district court, is the exclusive U.S. licensee of rights under U.S. Trademark Reg. No. 2,440,808, for the mark ACID, for cigars (“the ‘808 Mark”) and U.S. Trademark Reg. No. 3,687,647, for the mark ACID CIGARS (and Motorcycle Design), for “cigars, tobacco, and related products, namely cigar boxes, cigar and cigarette boxes, ashtrays, cigar bands, cigar cutters, humidors, and cigar tubes” (“the ‘647 Mark”).  Drew sued Fantasia for federal unfair competition (false designation of origin) under § 43(a) of the Lanham Act (15 U.S.C. § 1125(a)), alleging that the SURFER ON ACID mark infringed the ‘808 and ‘647 Marks.  Depicted below are examples of the asserted and accused marks as used.

Drew Estate moved for summary judgment on its federal unfair competition claim, arguing that there was no genuine dispute concerning its standing to bring suit, its priority of use over Fantasia, or likelihood of confusion between the asserted and accused marks.  The Southern District of Florida had little problem agreeing with Drew Estate that standing existed, based on the language of the license agreement between Drew Estate and its licensor.  The court also held that priority of use existed, even though Drew Estate had not used its marks on the particular tobacco product sold by Fantasia, because that product was sufficiently related to the products on which Drew Estate did use its marks before Fantasia began selling its tobacco products. 

Included within the court’s multi-factor likelihood of confusion inquiry[1] was the observation: “If the public has seen an ACID product featuring a figure on a motorcycle, the public could reasonably believe that SURFER ON ACID represented the same company’s product with a new surfer theme.”[2]  Of particular significance to the court were Fantasia’s counterclaims against Drew Estate for unfair competition and trademark infringement, in which Fantasia alleged that the marks were confusingly similar to one another.  Though the court found that the doctrine of judicial estoppel did not apply, since Fantasia’s position concerning its counterclaims did not induce the court to make any finding in Fantasia’s favor (indeed, it wound up dismissing those counterclaims), it found Fantasia’s position “highly persuasive evidence of the similarity of the marks.”[3]

Consequently, the Southern District of Florida granted Drew Estate’s motion.  On July 6, it entered a final judgment and permanent injunction against Fantasia.  In subsequent orders, it ruled that Drew Estate was entitled to an award of $311,509 in profits under 15 U.S.C. § 1117(a), plus $13,646.23 in costs, but deferred ruling on Drew Estate’s motion for attorneys fees pending resolution of the appeal.  The court also awarded a third-party defendant $8,578.33 in costs and similarly deferred ruling upon that party’s motion for attorneys fees.