Hokto Kinoko Co. v. Concord Farms, Inc.

When a trademark holder alleged that a competitor wrongly imported and marketed mushrooms under its marks, the competitor's importation of its mushrooms was likely to confuse consumers under the Lanham Act despite no evidence of actual confusion.

Opinion (Wardlaw): In 2003, Appellee Hokuto Japan, a Japanese corporation that produces mushrooms in Japan, registered Japanese and U.S. trademarks. In 2008, Hokuto Japan licensed its U.S. marks to Hokto USA. Appellant Concord Farms, a U.S. corporation that grows and imports mushrooms, had imported Hokuto Japan's mushrooms from Japan since 2003. Because Concord Farms purchased these products through a series of wholesalers, Hokuto Japan was initially unaware that Concord Farms was importing its mushrooms. The mushrooms Concord Farms imported into the United States featured the Hokto marks. Hokto USA claimed that when Concord Farms imported mushrooms bearing the Hokto marks from Hokuto Japan and sold those mushrooms in the United States, it infringed Hokto USA's rights to those marks. This case thus implicated the set of trademark principles governing "gray-market goods." A gray-market good is "a foreign-manufactured good, bearing a valid United States trademark, that is imported without the consent of the United States trademark holder." The appellate court in this case found the mushrooms at issue fit comfortably within the Supreme Court's definition.The sale of gray-market goods may infringe on the U.S. trademark holder's rights, subject to the consumer confusion analysis that generally governs trademark infringement claims, including the following factors: (1) the similarity of the marks; (2) the strength of the mark that has allegedly been infringed; (3) evidence of actual confusion; (4) the relatedness or proximity of the goods; (5) the normal marketing channels used by both parties; (6) the type of goods and the degree of care likely to be exercised by the purchaser; (7) the alleged infringer’s intent in selecting the mark; and (8) evidence that either party may expand his business to compete with the other.The appellate court weighed the factors and determined that seven of the eight factors weighed substantially in Hokto USA's favor. While there was no evidence as to the third factor, actual consumer confusion, the appellate court recognized that likelihood of confusion may be established absent such evidence.The court ultimately AFFIRMED the district court’s order granting Hokto USA's and Hokuto Japan's motions for summary judgment and denying Concord Farms’s motion for summary judgment. The court also AFFIRMED the district court’s permanent injunction enjoining Concord Farms from importing Hokuto Japan’s products.