Churchill Downs, Inc. v. Commemorative Derby Promotions

Having a prior, expired licensing agreement contributed to the finding of a likelihood of confusion in determining trademark infringement.

OPINION (Carnes) : Plaintiff, Churchill Downs Incorporated, ("Churchill Downs") owns a horse-racing facility in Louisville, Kentucky where the Kentucky Derby race is held annually. Churchill Downs holds trademarks related to Churchill Downs, the Kentucky Derby, and Kentucky Oaks. Defendant, Commemorative Derby Promotions Incorporated ("Derby Promotions") developed an idea for a “Dirt Shirt” which is a commemorative t-shirt dyed with turf from the racetrack. Churchill Downs and Derby Promotions negotiated an agreement authorizing defendant to produce Dirt Shirts using turf from Churchill Downs, along with a “nostalgia collection” of memorabilia. The agreement had a post-termination clause indicating that defendant must “immediately discontinue” their use of all Licensed Indicia upon expiration of the agreement. The agreement expired on December 31, 2013, but Churchill Downs claimed that Derby Promotions continued to produce “licensed indicia” in violation of the post-termination provision. Both parties moved for summary judgment. Churchill Downs asserted that Derby Promotions were engaging in trademark infringement under Section 32(1) of the Lanham Act. To prevail in an action for trademark infringement under the Lanham Act, the plaintiff must show, first that its mark is valid and, second, that the defendant’s use of the contested mark is likely to cause confusion. To be entitled to trademark protection, a mark must be valid and distinctive, but validity is not limited to registered trademarks. The Eleventh Circuit classifies marks into four levels of distinctiveness, from least to most distinctive: (1) generic - marks that suggest the basic nature of the product or service, (2) descriptive - marks that identify the characteristic or quality of a product or service, (3) suggestive - marks that suggest characteristics of the product or service and require an effort of the imagination by the consumer in order to be understood as descriptive, and (4) arbitrary or fanciful - marks that bear no relationship to the product or service. Churchill Downs held several registered trademarks in “Churchill Downs,” “The Kentucky Derby,” etc. Derby Promotions asserted that Churchill Downs was attempting to assert rights in other, invalid marks such as “Derby,” “Louisville Jockey Club,” etc. Defendants claimed that these marks are neither inherently distinctive nor sufficiently descriptive to claim a trademark right. Churchill Downs argued that its use of “Louisville Jockey Club” should be considered a valid mark because it has recently been using it to incorporate the history of the Kentucky Derby in relation to present activities. Churchill Downs had recently used images of the “Louisville Jockey Club” on Kentucky Derby programs. The court agreed with Churchill Downs that the use of “Louisville Jockey Club” constituted a valid trademark because the term hadn’t been used anywhere but Churchill Downs' merchandise until the Derby Promotions started using it. Turning to the likelihood of confusion element of the Lanham Act, the court looked to seven Conagra, Inc. factors. The court determined that even though not all factors pointed to a conclusion that there would be a likelihood of confusion, the totality of the analysis of the factors gave rise to a very strong likelihood of confusion. Courts applying the seven-factor likelihood of confusion test have routinely found it satisfied even when some of the factors are more equivocal than others. The court found further authority in support of a finding of a likelihood of confusion because of the parties’ license agreement. On that basis, the court found further grounds for determining that defendants’ actions created a likelihood of confusion. The court therefore, GRANTED Churchill Downs' motion for summary judgment.