Case 2:12-cv-00400-RWS-RSP Document 84 Filed 07/21/14 Page 1 of 13 PageID #: 1911

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF TEXAS
MARSHALL DIVISION
DIECE-LISA INDUSTRIES, INC.,
Plaintiff,
v.
DISNEY STORE USA, LLC; and
DISNEY SHOPPING, INC.
Defendants.

Case No. 2:12-cv-00400

DEFENDANTS REPLY TO PLAINTIFFS RESPONSE TO DEFENDANTS MOTION

FOR SUMMARY JUDGMENT

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In reply to Plaintiffs Response (Dkt. # 72) Defendants would show as follows.

I.

PRELIMINARY STATEMENT
To deflect attention from failing to meet its burden of proof on the digits of confusion,

Plaintiff argues unreasonable inferences based on non-material quibbles about undisputed facts.
Disputes about non-material facts, unreasonable inferences, unsubstantiated assertions, and
speculation are not sufficient to defeat a motion for summary judgment. Yowman v. Jefferson
County Cmty. Supervision & Corr. Dept., 370 F. Supp. 2d 568, 580-81 (E.D. Tex. 2005).
Tellingly, Plaintiff does not begin to address the essential digits of confusion until page
17 of its Response and completely ignores the requirement set out in Scott Fetzer that the (i)
circumstances (here, that Defendants products are tightly associated with the Toy Story 3 movie)
and (ii) marketplace context for the products (here, in Disney Stores and on the Disney Shopping
website, in packaging prominently showing Disney, Pixar and Toy Story marks) must be
considered with special emphasis to avoid inadvertently lowering the standard of confusion.
Scott Fetzer Co. v. House of Vacuums Inc., 381 F.3d 477, 485-86 (5th Cir. 2004).
On summary judgment Plaintiff has the burden of presenting evidence upon which a
reasonable jury, first applying the Scott Fetzer rule and then considering the digits of confusion,
could find that confusion is not just possible but probable. Id. at 483. Plaintiff failed to do so
and summary judgment should be granted.
Finally, Plaintiff offers no evidence of injury but only circular arguments from inapposite
case law, and summary judgment is appropriate on this independent basis.
II.

PLAINTIFF HAS FAILED TO MEET ITS EVIDENTIARY BURDEN

Plaintiff takes issue with certain nonmaterial items in Defendants statement of facts;

however, Plaintiff has submitted no evidence on which a reasonable jury could rely to find a
likelihood of confusion, the issue on which Plaintiff bears the burden of proof.
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Defendants statement of facts (which Plaintiff largely admits) describes the

circumstance to be considered under Fetzerthat the independently-created character, named
Lotso, is closely associated with the successful Toy Story 3 movie in which he appears and the
contested words are that characters nameand the context in which the consumer will see
Defendants products in the marketplacein packaging or with tags bearing the Disney, Pixar,
and Toy Story 3 marks (and often an additional Disney Store red oval) and sold alongside other
similar properties in Disney Stores or on the Disney Shopping website.
Plaintiffs Response nitpicks some details (e.g., that the red oval mark is not ubiquitous)
but never deals with the overarching reality of products (i) depicting a character from a popular
animated motion picture, (ii) marked to emphasize its movie origins, and (iii) sold alongside
similar products in Defendants limited outlets that exclusively sell products based on motion
pictures and television programs produced by Walt Disney Studios, Pixar, and related entities.
Plaintiffs factual nitpicks are not material. Defendants do not deny that Andrew Stanton
developed his Lotso character over time, that there is one stuffed bear sold with Lots-OHuggin on the package, that Plaintiff produced images of Plaintiffs packaging with various
colored bears acting out its hugging technology with a child, or that Defendants sell a few toys
made by third parties without the Disney Store red oval logo.
But Plaintiffs nitpicks do not change the plain facts: Lotso is an independently
developed movie character, merchandized in toys as that character, distributed by Defendants
own stores and website, and always in packaging or with tags marked to reinforce his affiliation
with Disney, Pixar, and Toy Story 3 red oval or not. Similarly, if Plaintiffs licensee (Mr.
Sutton) opined that confusion might be possible that is not only the inadmissible opinion of a lay
person but also no evidence at all of what consumers probably think. See Freedom Card, Inc. v
JPMorgan Chase & Co., 432 F.3d 463 (3d Cir. 2005) (summary judgment granted in reverse
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confusion case despite evidence that potential investors declined investment based on fears of
possible confusion).
And while facts relating to Plaintiffs use of its descriptive mark do go to a lack of
confusion, Plaintiffs suggestions that Defendants have not proved abandonment or invalidity, or
are trying to prove prior use of Lotso as a mark, are red herrings. Defendants will tackle those
issues at trial if necessary. Here the burden is on Plaintiff to provide probative evidence to avoid
summary judgment under the digits of confusion analysis, and Plaintiff has failed its burden.
III.

PLAINTIFF HAS FAILED TO PRESENT ANY EVIDENCE REBUTTING

DEFENDANTS SHOWING THAT THE DIGITS OF CONFUSION ARE
DECIDEDLY IN THEIR FAVOR.
Strength of the Mark. Plaintiff does not argue that its mark is strong, but quibbles over

whether it is suggestive and not merely descriptive. If Plaintiffs Lots of Hugs mark is
descriptive, then evidence of secondary meaning is required for the mark to be entitled to any
protection. See Xtreme Lashes, LLC v. Xtended Beauty, Inc., 576 F.3d 221, 227 (5th Cir. 2009)
(A descriptive term provides an attribute or quality of a good. descriptive terms merit
protection only if they have secondary meaning.). Even if the mark is suggestive, it would still
be commercially weak absent evidence of secondary meaning. Denimafia Inc. v. New Balance
Athletic Shoe, Inc., No. 12 Civ. 4112, 2014 WL 814532 at *11 (S.D.N.Y. March 3, 2014).
Plaintiff has presented no evidence of (i) secondary meaning for its mark or (ii) negative
correlation between Defendants use of the mark and Plaintiffs lack of success. Thus, the mark
is either (1) entitled to no protection, if generic or (2) a weak mark, if suggestive, and this digit
favors Defendants. Id. at **11-12. Although in some circumstances, the commercial weakness
of a mark weighs in favor of reverse confusion, that is not the case whereas herethere is no
evidence of any negative correlation between Defendants use of the mark and Plaintiffs lack of

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success. Id. at **13-14. Plaintiffs have presented no such evidence, and this issue weighs in
favor of summary judgment for Defendants.
Similarity of the Marks. The textual or phonetic comparison testimony on which
Plaintiff relies is irrelevant and does not create a fact issue or preclude summary judgment. See
Malaco Leaf, AB v. Promotion In Motion, Inc., 287 F. Supp. 2d 355, 372 (S.D.N.Y. 2003).
Under Fetzer, the similarity of marks is determined in the context of their actual use in
the marketplace. Plaintiffs completely ignores the cases cited by Defendants demonstrating that
contextthe impression of the mark in actual useis so important that even textually identical
marks may be non-infringing when considered in context.
Defendants presented uncontroverted evidence that (i) they use the Lotso character
names, both long and short forms, only and always in context with the Disney, Pixar, and Toy
Story or Toy Story 3 marks, (ii) Lotso always depicts the character in the animated motion
picture and (iii) Lotso looks nothing like Plaintiffs puppets.

Plaintiff simply ignores this

evidence and the uncontroverted authorities on which Defendants rely. Here, as in Sullivan
(Survivor vs. Survivor), Surfvivor Media (Surfvivor vs. Survivor), Hormel Foods
(SPAM vs. Spaam), and New Dana (Tinkerbell vs. Tinker Bell), there is no issue of
material factand no jury could reasonably findthat consumers will confuse plush toy or
plastic figurines featuring the character name Lotso or Lots-O-Huggin Bear (or no name at
all) sold at the Disney Store or on the Disney Shopping website with the Disney, Pixar, Toy Story
or Toy Story 3 and Disney Store marks with Plaintiffs oversized puppets. Sullivan, 385 F.3d at
776-77; Surfvivor Media, 406 F.3d at 633-34; Hormel Foods, 73 F.3d at 504; New Dana, 131 F.
Supp. 2d at 618, 631-32. Textual similarity (Plaintiffs one-note song) is not the test and
therefore does not raise a genuine issue.

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Similarity of Products.

Plaintiff offers no evidence, only argument, on this digit.

Plaintiffs puppets and the plush toys and figurines Defendants sell look nothing alike and
function differently. Lotso always depicts the distinctive character from Toy Story 3. By
contrast, Plaintiffs hugging puppets come as brown dogs, white cows, brown reindeer, white
reindeer with green horns, beige lambs, dark brown bears, pure white bears, orange bears with
blue noses, beige and white bears, white dogs with brown ears, black-and-white panda bears,
pink bunny rabbits with yellow muzzles, purple shmoo-shaped bears, black and white puppies,
and electric blue cool cats with purple muzzles.1 Plaintiff attempts to create similarity where
none exists by arguing a licensee once sold a puppet that was pink a decade or more before Lotso
products were sold.

Pl. Resp., p. 3. Aside from looking nothing like Lotso, the puppets

Happiness Express sold predate the issuance of the Lots of Hugs mark.
Retail Outlets and Purchaser Identity. Because Plaintiff cannot contest the fact that
the product outlets are entirely different, and, therefore present no likelihood of confusion, it
relies on Xtreme Lashes to argue that the different outlets somehow increase the likelihood of
confusion because the products cannot be compared side-by-side. But in Xtreme Lashes the
products were false eyelashes and were therefore difficult to distinguish even if sold side by side.
Here, the products are easily distinguishable, whether side-by-side or by comparison of images.
Under the circumstances-and-context analysis required by Fetzer, Defendants sale of Lotso
products only through Defendant-branded outlets to customers looking for Pixar, Disney, and
Toy Story 3 products undercuts any likelihood of confusion.
Identity of Advertising Media.

Plaintiff points out that both Plaintiff and one

Defendant have a web site; however, Plaintiff can identify no other commonalities in the

App. 176-179 (Plaintiffs product photos from http://www.lotsofhugs.org/products/default.htm); see

also http://www.lotsofhugs.org/video/default.htm (product video showing last four animal varieties).

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advertising media of the parties. Moreover, Plaintiff admits that its advertising targets licensees,
whereas Defendants advertising targets children.

Plaintiffs conclusory allegation (without

evidence) that its licensees advertising targets children (through unspecified media) does not
prevent this digit from supporting summary judgment for no likelihood of confusion.
Defendants Intent. The summary judgment burden on this digit is the same for forward
confusion or for reverse confusion: The burden of proving bad faith rests with the party
claiming infringement. J.T. Colby & Co. v. Apple Inc., 2013 WL 1903883, at *23 (S.D.N.Y.
May 8, 2013) (reverse confusion). Plaintiff fails to point to any facts, as opposed to unsupported
speculations, that Defendants intended to confuse the market or to harm Plaintiffs business in
any way. There is not a scintilla of evidence that these Defendants intent in marketing the
accused products had anything at all to do with Plaintiff, or its mark, or business. None.
Instead, Plaintiff relies solely on the fact that, in connection with the Toy Story 3
characters name, Pixar conducted a trademark search that identified Plaintiffs then pending
application. Plaintiff then unsuccessfully tries to impute Pixars knowledge of the application to
Disney Enterprises, Inc. (DEI) and from there to Defendants. But even if knowledge of
Plaintiffs pending application were imputed to Defendants (not simply DEI), that does not
satisfy Plaintiffs burden of proof.

The law is clear that prior knowledge of the mark is

insufficient to create an inference of bad faith in a reverse confusion case. 2

As courts have routinely found, mere knowledge of a prior mark can be completely
consistent with good faith and is insufficient to raise an inference of an intent to confuse.
Indeed, even actual knowledge of another's prior registration of a very similar mark may be
2

Plaintiffs allegations that Disney chose to hide behind the attorney-client privilege are meritless.
Defendants affirmatively testified they did not know of the trademark search results, Plaintiffs never
deposed DEI or served it with discovery, and most importantly, Pixars assertion of privilege cannot
be imputed to Defendants because the assertion of privilege in connection with a clearance opinion
cannot be used to establish wrongful intent or bad faith. Freedom Card, 432 F.3d at 479, n.25.

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consistent with good faith. J.T. Colby, 2013 WL 1903883 at *23.; Denimafia, 2014 WL
814532 at *23 (knowledge of mark insufficient to create adverse inference on summary
judgment); see also El Chico, Inc. v. El Chico Cafe, 214 F.2d 721, 726 (5th Cir. 1954)
(knowledge is not inconsistent with good faith on forward confusion); W.W.W. Pharm. Co. v.
Gillette Co., 984 F.2d 567, 575 (2d Cir. 1993) (Defendant selected a name which matched the
image it was trying to project. ... [Defendant's] knowledge of [plaintiff's] trademark does not
necessarily give rise to an inference of bad faith, because adoption of a trademark with actual
knowledge of another's prior registration of a very similar mark may be consistent with good
faith. [Plaintiff] has not put forth any evidence that [defendant] intended to promote confusion
between the products or appropriate [plaintiff's] good will and therefore has not shown any bad
faith on [defendant's] part.) (citations omitted).
In a response to this line of cases, Plaintiff relies on two older district court decisions
from the Third Circuit whose reasoning has subsequently been rejected by the Third Circuit. The
district court cases on which Plaintiff relies adopted a carelessness standard for the intent digit
in reverse confusion cases. Besides imputing Pixars knowledge to Defendants, Plaintiffs basic
allegation on intent is that Pixar proceeded with the name for the Lotso character in Toy Story 3
after becoming aware of Plaintiffs pending application and that such a supposed lack of care for
Plaintiffs alleged rights is all that is required as a matter of law to establish a wrongful intent.
Pl. Resp. 16-17. In support of this argument, Plaintiff cites Dream Team Collectibles, Inc. v.
NBA Properties, Inc., 958 F. Supp. 1401, 1415 (E.D. Mo. 1997) and Rainforest Cafe, Inc. v.
Amazon, Inc., 86 F. Supp. 2d 886, 900 (D. Minn. 1999), which, in turn, relied on the decision in
Fisons Horticulture, Inc. v. Vigoro Industries, Inc., 30 F.3d 466 (3d Cir. 1994). But the mere
carelessness standard adopted in Fisons, was explicitly rejected by the Third Circuit in A & H
Sportswear, Inc. v. Victorias Secret Stores, Inc., 237 F.3d 198, 232-33 (3d Cir. 2000).
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In A&H Sportswear, the Third Circuit considered and rejected the carelessness
standard, and instead required the senior user to establish the junior user intended to push it out
of the market. The district court was instructed on remand to consider whether the larger
company in the reverse confusion case intended to usurp plaintiffs goodwill by deliberately
undertaking to cause consumer confusion (and thereby destroy [plaintiffs] business identity).
Id. at 237.3 Thus the intent question in reverse confusion is whether the junior user (Defendants)
intended to confuse the public in order to drive Plaintiff out of business. Kinbook, LLC v.
Microsoft Corp., 866 F. Supp. 2d 453 (E.D. Penn. 2012), affd, 490 F. Appx 491 (3d Cir. 2013).
Accordingly, Plaintiffs allegation that Pixar (a non-defendant)or that Defendants
themselveschose to ignore Plaintiffs application (Pl. Resp. 14), even if true, is insufficient
evidence to meet Plaintiffs burden of establishing that Defendants adopted and used the names
Lotso and Lots-o Huggin for toys in an effort to confuse anyone of anything, or to drive Plaintiff
out of business by usurping its goodwill (even supposing it had some). At most it shows that
Defendantsassuming Pixars knowledge can be imputed to DEI, and then DEIs knowledge
could then be imputed to Defendants, and that knowledge of an application as opposed to an
issued mark is enoughhad knowledge of Plaintiffs mark and decided to move forward. As the
cases cited above make clear, any such knowledge does not create an inference of bad intent.
See also J.T. Colby, 2013 WL 1903883 at *23.; Denimafia, 2014 WL 814532 at *23; El Chico,
214 F.2d at 726; W.W.W. Pharm. Co., 984 F.2d at 575.
Not only is it incorrect for Plaintiff to assert that knowledge by a subsidiary of an
application creates an inference of the required type of intent (it does not) but it is also incorrect
to argue that supposed fact out of context. When, as it must under Fetzer, the Court compares
3

The Fifth Circuit noted it has yet to consider infringement in the context of reverse confusion, but
points to A & H Sportswear as relevant authority. Great Am. Rest. Co. v. Dominos Pizza LLC, 348
Fed. Appx. 907 (5th Cir. 2009).

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the parties products and looks at how Defendants packaged and sold their products, there can be
no question that Defendants intent was not to confuse consumers or to harm Plaintiffs.

The

context and circumstances all indicate that use of the contested names was intended to take
advantage of the goodwill of the movie, by closely associating the products with the character in
the animated motion picture and Disney, Pixar, and Toy Story 3 marks. The products look just
like the character in the motion picture and nothing like Plaintiffs puppets, and the packaging
and tags make the connection to Toy Story 3, Pixar and Disney unmistakable. There is simply no
evidence that raises a genuine issue to support the proposition that Defendants, or any other
Disney-related entity, intended to drive Plaintiffs business under. Thus, the digit of intent points
decidedly away from a finding that consumers would likely be confused by the use of Lotso or
Lots-O- Huggin Bear on toys that uniformly depict the movie character.
In sum and as a matter of law, Plaintiffs allegation does not support a reasonable
inference of wrongful intent. This summary judgment digit of confusion favors Defendants.
Actual Confusion. Plaintiff admits that it has no direct evidence of actual confusion. Pl.
Resp., pp. 8, 23.

In an effort to mask this admission, Plaintiff offers a partial quote to

mischaracterize the testimony of its licensee (Sutton, who is not a customer) and the hearsay
recollection of an interested witness, Plaintiffs owner, about what she says she remembers
Sutton saying years ago about his opinion. Pl. Resp., p. 23 (citing Pl. Resp. at pp. 5-6). In fact,
he did not testify that he or anyone else was actually confused or would be likely confused, he
affirmatively denied ever saying so, and his statement is not evidence of confusion or likelihood
of confusion. Aside from not being a consumer, Sutton is not an expert, and Plaintiff has laid no
predicate for Suttons lay opinion. Defendants object to this evidence and also to the opinion
of Dr. Jukam, who was not disclosed as a knowledgeable witness or affirmative expert witness
and whose opinion about Dr. Scotts survey rests on intentionally throwing participants out of
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the survey universe in order to skew the result.

Because it is unreliable and, therefore,

inadmissible under Daubert and Rule 702, Jukams testimony does not create a fact issue.
Degree of Care Exercised by Potential Purchasers. Plaintiff offers no evidence on this
digit, only argument about pricewhich again ignores circumstance and context. Some parents
always exercise a high degree of care about the source of their childrens toys, and Defendants
customers, by definition, have exercised a high degree of care by shopping at Defendant-branded
outlets to insure that their Lotso is a genuine Pixar, Disney, or Toy Story 3-affiliated product.
III.

PLAINTIFF HAS FAILED TO SHOW A LIKELIHOOD OF INJURY

Finally, Plaintiff offers no evidence of injury from the alleged infringement of its mark,

only allegations of its virtual inability to license to the primary market of licensees or
potential licensees. Pl. Resp., p. 24 (emphasis in original).
The Maltina and American Rice authorities cited by Plaintiff are not relevant to the
summary judgment question, because they address the selection of remedies under Section 1117
available to the Court after a plaintiff has first proved a Section 1125 trademark violation. 4
Compare 15 U.S.C. 1117 with 15 U.S.C. 1125(a).5 Likewise, Plaintiffs re-hash of its intent
arguments is not evidence that it was or is likely to be damaged. Pl. Resp., pp. 24-25.
To survive summary judgment, the plaintiff who believes it has been or will be injured
must show more than a scintilla of evidence of a causal connection to the alleged infringement of
its mark. See Vexcon Chems., Inc. v. Curecrete Chem. Co., Inc., No. 07-943; 2008 WL 834392
(E.D. Pa. March 28, 2008) (applying Joint Stock Soc'y v. UDV N. Am., Inc., 266 F.3d 164 (3d
Cir. 2001) to grant summary judgment for defendant on Lanham Act false advertising).

American Rice, Inc. v. Producers Rice Mill, Inc., 518 F.3d 321 (5th Cir. 2008); Maltina Corp. v.
Cawy Bottling Co., Inc., 613 F.2d 582 (5th Cir. 1980).
5
Plaintiff has not alleged the other violations remedied under Section 1117, that is, Sections 1125(c)
(blurring of famous marks) and 1125(d) (cyberpiracy).

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Dated: July 21, 2014

Respectfully submitted,
/s/ Roy W. Hardin
Roy W. Hardin
Texas Bar Number: 08968300
rhardin@lockelord.com
Jason E. Mueller
Texas Bar Number: 24047571
jmueller@lockelord.com
Stephen D. Wilson
Texas Bar Number: 24003187
swilson@lockelord.com
Ethan M. Lange
Texas Bar No. 24064150
elange@lockelord.com
Darrian L. Campbell
Texas Bar No. 24087250
dcampbell@lockelord.com
LOCKE LORD LLP
2200 Ross Avenue, Suite 2200
Dallas, Texas 75201-6776
(214) 740-8000 (telephone)
(214) 740-8800 (facsimile)
ATTORNEYS FOR DEFENDANTS,
DISNEY STORE USA, LLC and
DISNEY SHOPPING, INC.

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CERTIFICATE OF SERVICE
The undersigned hereby certifies that all counsel of record who are deemed to have
consented to electronic service are being served on this 21st day of July, 2014, with a copy of
this document via the Courts CM/ECF system per Local Rule CV-5(a)(3), including:
Richard Schwartz
rschwartz@whitakerchalk.com
Thomas F. Harkins
tharkins@whitakerchalk.com
WHITAKER CHALK SWINDLE
& SCHWARTZ PLLC
301 Commerce Street, Suite 3500
Fort Worth, Texas 76102
Phone: (817) 878-0500
Fax: (817) 878-0501
/s/ Roy W. Hardin
Roy W. Hardin, Attorney for Defendants

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