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12-1346-cv
United States Court of Appeals
FOR THE SECOND CIRCUIT

UNITED STATES POLO ASSOCIATION, INC., USPA PROPERTIES, INC., Plaintiffs-Counter-Defendants-Appellants, against PRL USA HOLDINGS, INC., Defendant-Counter-Claimant-Appellee, LOREAL USA, INC., Intervenor-Defendant-Counter-Claimant-Appellee.
ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK

d
IN THE

REPLY BRIEF OF PLAINTIFFS-COUNTER-DEFENDANTS-APPELLANTS

GERALD J. FERGUSON, ESQ. GEORGE A. STAMBOULIDIS, ESQ. TRACY L. COLE, ESQ. DAVID J. SHEEHAN, ESQ. THOMAS D. WARREN, ESQ. BAKER & HOSTETLER LLP 45 Rockefeller Plaza New York, New York 10111 (212) 589-4200 Attorneys for Plaintiffs-CounterDefendants-Appellants

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TABLE OF CONTENTS Page REPLY ......................................................................................................................1 I. THE INFRINGEMENT FINDING MUST BE REVERSED BECAUSE THE DISTRICT COURT IGNORED FACTS SHOWING THE PARTIES TRADEMARKS FAIRLY COMPETE ..............................2 A. The District Court Erred by Ignoring U.S. Polo Assn.s Rights as a Trademark Owner .........................................................................3 1. It was Error For The Lower Court to Ignore U.S. Polo Assn.s Trademark Rights to Its Name, Which Has Achieved Market Recognition Among Consumers...................6 It Was Also Error For The Lower Court to Ignore U.S. Polo Assn.s Rights to the Double Horsemen Mark..................8

2. B.

The District Court Erred in Ignoring the Extensive Market Coexistence of Related Goods Without Any Evidence of Confusion ...........................................................................................12 The District Courts Finding of Bad Faith Cannot Be Reconciled With the Evidence ...........................................................14 The District Court Erred in Admitting the PRL Parties Flawed Survey Evidence and Concluding It Was Suggestive of Actual Confusion..........................................................................................15

C. D.

II. III.

UNDER EBAY, THE INJUNCTION IMPERMISSIBLY PRESUMES IRREPARABLE HARM..............................................................................17 THE DISTRICT COURTS OVERBROAD INJUNCTION CANNOT BE JUSTIFIED BY THE EVIDENCE.......................................21 A. B. The Overbroad Injunction Cannot Be Reconciled With The District Courts Narrow Infringement Findings.................................21 The Injunction Already Has Been Misused by PRL..........................28

CONCLUSION.......................................................................................................30 CERTIFICATE OF COMPLIANCE WITH TYPE-VOLUME LIMITATION, TYPEFACE REQUIREMENTS AND TYPE STYLE REQUIREMENTS..................................................................................................31 i

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TABLE OF AUTHORITIES Page(s) CASES 24 Hour Fitness USA, Inc. v. 24/7 Tribeca Fitness, LLC, 447 F. Supp. 2d 266 (S.D.N.Y. 2006) ................................................................16 Adidas Am., Inc. v. Herbalife Intl, Inc., No. 3:09cv00661(MO), 2012 WL 1831525 (D. Or. May 12, 2012)........18, 19 All England Lawn Tennis Club (Wimbledon) Ltd. v. Creations Aromatiques, Inc., 220 U.S.P.Q. 1069 (T.T.A.B. 1983) ...................................................................13 Aronowitz v. Health-Chem Corp., 513 F.3d 1229 (11th Cir. 2008) ..........................................................................27 Citizens Banking Corp. v. Citizens Fin. Grp., Inc., No. 07-11514 (AJT), 2008 WL 1995104 (E.D. Mich. May 6, 2008), affd, 320 F. Appx 341 (6th Cir. 2009) .............................................................16 eBay, Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006)..........................................................................17, 18, 19, 20 Estee Lauder, Inc. v. The Gap, Inc., 108 F.3d 1503 (2d Cir. 1997) ...............................................................................2 Gruner + Jahr USA Publg. v. Meredith Corp., 991 F.2d 1072 (2d Cir. 1993) ...............................................................................6 Higgins v. Mississippi, 217 F.3d 951 (7th Cir. 2000) ..............................................................................11 International Star Class Yacht Racing Assn v. Tommy Hilfiger U.S.A., Inc., No. 94-Civ-2663 (RPP),1995 WL 241875 (S.D.N.Y. April 26, 1995), revd in part on other grounds, 80 F.3d 749 (2d Cir. 1996) ..............................12 Jaguar Cars Ltd. v. Skandrani, 771 F. Supp. 1178 (S.D. Fla. 1991) ....................................................................13 Leatherman Tool Group, Inc. v. Coast Cutlery Co., 823 F. Supp. 2d 1150 (D. Or. 2011) ...................................................................19 ii

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TABLE OF AUTHORITIES (continued) Page(s) Libman Co. v. Vining Indus., Inc., 69 F.3d 1360 (7th Cir. 1995) ................................................................................3 Pristine Industries v. Hallmark Cards, Inc., 753 F. Supp. 140 (S.D.N.Y. 1990) .......................................................................4 PRL USA Holdings v. U.S. Polo Assn, Inc., 520 F.3d 109 (2d Cir. 2008) ...........................................................................8, 26 Salinger v. Colting, 607 F.3d 68 (2d Cir. 2010) .................................................................................17 Scarves by Vera, Inc. v. Todo Imports Ltd., 544 F.2d 1167 (2d Cir. 1976) .............................................................................13 Starbucks Corp. v. Wolfes Borough Coffee, Inc., 588 F.3d 97 (2d Cir. 2009) .................................................................................14 Starter Corp. v. Converse, Inc., 170 F.3d 286 (2d Cir. 1999) .............................................................24, 25, 26, 27 THOIP v. Walt Disney Co., 690 F. Supp. 2d 218 (S.D.N.Y. 2010) ................................................................16 Tommy Hilfiger Licensing v. Nature Labs, LLC, 221 F. Supp. 2d 410 (S.D.N.Y. 2002) ................................................................14 U.S. Polo Assn, Inc. v. Polo Fashions, Inc., No. 84-civ-1142 (LBS), 1984 WL 1309 (S.D.N.Y. Dec. 6, 1984) ......................7 Westchester Media v. PRL USA Holdings, Inc., 214 F.3d 658 (5th Cir. 2000) ................................................................................5 RULES Fed. R. Civ. P. 36(b) ................................................................................................11 OTHER AUTHORITIES 6 Michael H. Graham, Handbook of Federal Evidence 801.26 (7th ed. 2011) ...................................................................................................................11

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TABLE OF AUTHORITIES (continued) Page(s) Sandra Rierson, IP Remedies After eBay: Assessing the Impact on Trademark Law, 2 Akron Intell. Prop. J. 163 (2008) .........................................19

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REPLY Although LOreal and PRL, in their briefs to this Court, purport to speak with a common voice, they take contradictory positions that reflect the inconsistencies in the decision below. LOreal contendsin support of the district courts opinionthat fragrance products should be viewed in isolation from all other product categories, urging that the fragrance marketplace is drastically different from the apparel, leather goods and watches marketplace, where U.S. Polo Assn. has a settled right to use its trademarks. As a result, LOreals argument goes, the district court was justified in viewing its role as limited to conducting an abstract comparison of the physical similarities of the marks, disregarding the uncontested fact that U.S. Polo Assn. and PRL have extensively coexisted in those marketplaces, and not requiring PRL to present any evidence of consumer confusion or some other unfair competitive harm. In stark contrast, PRL contendsin support of the district courts order that the district courts findings concerning the fragrance marketplace should be applied without limitation to all categories of products and services that the parties have not previously litigated, covering marks and combinations of marks that were never before the district court and with respect to which the district court made no findings of infringement. PRL asks this Court to affirm the entry of an injunction

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that, under PRLs reading, bars U.S. Polo Assn. from licensing its name or its recognized logos on all categories of goods and services except those specifically established by jury verdict or settlement agreement. Its broad reading is manifested in PRLs recent initiation of contempt proceedings against the sale of U.S. Polo Assn. eyewear, a product category that has never been litigated. It is not surprising that the positions being urged by LOreal and PRL contradict, for the appellees seek to reconcile an opinion and order that cannot be reconciled. This Court should reverse the lower courts infringement finding because the district court clearly erred in its factual findings, failed to give weight to the actual market conditions in which the parties have competed, and failed to recognize that PRL presented no evidence of unfair competitive harm. The Court should also vacate the injunction as it was issued based upon an improper presumption, or, in the alternative, should vacate or modify the injunction to the extent it enjoins conduct with respect to marks or markets not before the district court. I. THE INFRINGEMENT FINDING MUST BE REVERSED BECAUSE THE DISTRICT COURT IGNORED FACTS SHOWING THE PARTIES TRADEMARKS FAIRLY COMPETE The likelihood of confusion analysis is reviewed de novo. Estee Lauder, Inc. v. The Gap, Inc., 108 F.3d 1503, 1510 (2d Cir. 1997). A district courts finding of infringement that purports to apply the Polaroid factors without

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considering undisputed factual evidence before it is invalid. [A] finding of likely confusion can no more be based on pure conjecture or a fetching narrative alone than on any other finding on an issue on which the proponent bears the burden of proof. Libman Co. v. Vining Indus., Inc., 69 F.3d 1360, 1363 (7th Cir. 1995). The district courts findings of likely confusion and bad faith emanated from its visual comparison of the marks. But the court failed to consider that the 2006 jury found identical marks to be non-infringing, based upon the same visual comparison. And the district court failed to consider other evidence in the record that further negated its findings: that U.S. Polo Assn. owns established trademark rights in its name and Double Horsemen mark, that U.S. Polo Assn. and PRL trademarks have coexisted in apparel and other product categories related to fragrance without evidence of consumer confusion, and that U.S. Polo Assn.s marks have achieved market recognition. The district courts failure to consider these facts requires reversal. A. The District Court Erred by Ignoring U.S. Polo Assn.s Rights as a Trademark Owner

Despite its acknowledgment of U.S. Polo Assn.s role as the governing body of the sport of polo and its multimillion dollar court-approved licensing program, the district court conducted its likelihood of confusion analysis as though U.S. Polo Assn. had no relevant trademark rights whatsoever. For example, in finding bad faith, the district court found that USPA could have avoided this situation entirely 3

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by choosing a logo that depicts a polo player in a position and from a perspective that differs from the Polo Player Logo with a more clearly distinct form of packaging. (SPA-46-47.) But U.S. Polo Assn. did not create a new mark for use on fragrance products; it used the very mark it had won the right to use in a lawsuit with PRL in 2006. As the 2006 jury verdict, affirmed by this Court, made clear, U.S. Polo Assn. has the right to use, and does use, its Double Horsemen logo on a wide array of related apparel products sold in the United States. It was error for the district court to ignore not only U.S. Polo Assn.s rights to its mark, but also that the mark has achieved market recognition among consumers as a result of hundreds of millions of dollars in sales across the United States. Such consumer recognition is directly relevant to the likelihood (or non-likelihood) that a consumer will confuse a U.S. Polo Assn. product with a PRL product. See Pristine Industries v. Hallmark Cards, Inc., 753 F. Supp. 140, 145 (S.D.N.Y. 1990) (Sweet, J.) (In several cases the Second Circuit has held that defendants use of its own well-known mark would ensure that the goods at issue would be associated with the defendant and not with plaintiff.) (citing cases). As set forth below, the same flaw applies to the district courts analysis of U.S. Polo Assn.s use of its namea use that was expressly approved by PRL in a settlement agreement executed by PRL and USPA Properties in 2003.

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LOreal contends that U.S. Polo Assn. is attempting to assert trademark rights in gross relating to the concept of polo. (LOreal Br. at 19.) Not so. U.S. Polo Assn. seeks to safeguard its protectable rights in specific trademarks including the marks at issue in this litigationthat have achieved market recognition as a result of its extensive retail sales. (A-943-45; A-1489-1587.) If anything, to the extent that PRL seeks to negate U.S. Polo Assn.s rights to its own marks, it is PRL that is asserting rights in gross to the concept of polo, even though PRL conceded below that it has no claim of trademark dilution.1 As the Fifth Circuit noted, PRL products became famous by basking in the reflected glow of an elegant sport. PRL now asserts that it, not the sport, is the source of the glow. While PRLs primary claim is the essence of the ordinary trademark case, we cannot be blind, when balancing the equities, to the fact that PRL is arrogating the very name of a sport from the players publication. In a sense, PRL is biting the hand that fed it. Westchester Media v. PRL USA Holdings, Inc., 214 F.3d 658, 673 (5th Cir. 2000).

See PRL Parties Post-Trial Mem. of Law at 1 n.1, No. 09-civ-9476 (RWS) (S.D.N.Y. Nov. 4, 2010), ECF No. 73. The only question before the district court was whether consumers were likely to be confused between U.S. Polo Assn. and PRL marks on fragrance. 5

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1.

It was Error For The Lower Court to Ignore U.S. Polo Assn.s Trademark Rights to Its Name, Which Has Achieved Market Recognition Among Consumers

Contrary to the appellees assertions, U.S. Polo Assn. has legitimate trademark rights in its name, not merely a nebulous right to refer to the sport of polo in a non-trademark fashion. U.S. Polo Assn. has continuously used its name to identify its sporting association services since 1924, some 43 years before Ralph Lauren started using marks associated with the sport of polo. On the basis of this continuous use, U.S. Polo Assn. has incontestable trademark rights in its name that it uses on products and services. (A-1489-1587.) See, e.g., Gruner + Jahr USA Publg. v. Meredith Corp., 991 F.2d 1072, 1076 (2d Cir. 1993) (A registered mark becomes incontestable if it has been in continuous use for five consecutive years subsequent to its registration and is still in use . . . . If a mark became incontestable, its registration shall be conclusive evidence . . . of the registrants exclusive right to use the registered mark in commerce, subject to defenses not here relevant.). In contending that U.S. Polo Assn. lacks trademark rights in its name, PRL mischaracterizes the language of the 1984 Order, which recognizes, among other things, U.S. Polo Assn.s right to engage in a retail licensing program using its name and collective membership mark, which includes the associations name. (A-1592-53, paragraph 9(c).) The 1984 Order does not, as PRL contends, limit

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U.S. Polo Assn.s ability to refer to the sport of polo to generic, non-trademark uses.2 Instead, paragraph 8 of the 1984 Order only enjoins the emphasis of the word POLO separate and apart from U.S. Polo Assn.s name by, for example, putting the word POLO in a larger font or a different color than the other words in its name.3 (A-1592; see also Polo Fashions, 1984 WL 1309, at *14.) Moreover, U.S. Polo Assn. has used the U.S. POLO ASSN. mark on apparel and related goods since 1998, and the parties 2003 settlement agreement explicitly recognized U.S. Polo Assn.s right to use this mark on key product categories, including apparel. (A-973:18-974:10; Decl. of W. David Cummings, Ex. A, No. 09-9476 (RWS), Sept. 14, 2012, ECF No. 117.) U.S. Polo Assn.s rights in these marks, and the absence of any evidence from PRL of customer confusion concerning these marks in years of coexistence, were an essential part of

PRL further mischaracterizes the 1984 Order by attaching a mark to its brief that was not enjoined by the 1984 Order or even the district court in the fragrance litigation. See PRL Br. at 5. The mark in questiona composite mark of UNITED STATES POLO ASSOCIATION and a single horseman design (U.S. Ser. No. 73/419465)was addressed in Paragraph 5 of the 1984 Order, which expressly declined to provide direction to the U.S.P.T.O. with respect to the trademark application for Serial No. 73/419465. (A-1589.) And when describing the products enjoined by the 1984 Order, Judge Sand did not reference products bearing the composite mark. See U.S. Polo Assn, Inc. v. Polo Fashions, Inc., No. 84-civ-1142 (LBS), 1984 WL 1309, at *5, *8-9 (S.D.N.Y. Dec. 6, 1984).
3

PRL concedes that the district courts order in this case cannot apply to product categories where U.S. Polo Assn. already has legally recognized rights to use its marks (although the order is silent on this issue). 7

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any likelihood of confusion analysis; it was error for the district court to ignore them. 2. It Was Also Error For The Lower Court to Ignore U.S. Polo Assn.s Rights to the Double Horsemen Mark

U.S. Polo Assn.s trademark rights in its Double Horsemen mark are undisputed. In affirming the jury verdict that three versions of U.S. Polo Assn.s Double Horsemen mark did not infringe PRLs single horseman mark, this Court stated that the 1984 Order expressly permitted U.S. Polo Assn. to use a mounted polo player symbol. PRL USA Holdings v. U.S. Polo Assn, Inc., 520 F.3d 109, 118 (2d Cir. 2008). PRL concedes that the apparel litigation conclusively established that iterations of the Double Horsemen mark at issue there were not confusingly similar to PRLs marks and that the injunction in this case could not affect[] the USPA Parties trademark rights with respect to apparel that were established in prior litigation between them. (PRL Br. at 30-31.) The district court, however, gave no weight to U.S. Polo Assn.s established rights to use the Double Horsemen mark or to the previously determined absence of confusion. PRL attempts to defend the lower court by contending that the fragrance litigation involved a Double Horsemen logo different in presentation from any of those found to be non-infringing when used on apparel. (PRL Br. at 19.) LOreal, for its part, asserts that the Double Horsemen mark at issue here is a different mark because the marks at issue in the apparel litigation did not include 8

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the word mark U.S. POLO ASSN. (LOreal Br. at 28.) These arguments are incorrect in several respects. First, the Double Horseman logo is not different. In 2003, PRL and U.S. Polo Assn. entered into a settlement agreement that provides that the use of the Double Horsemen mark on apparel would be litigated before the 2006 jury, and that the jury verdict would be incorporated into the settlement agreement. See Decl. of W. David Cummings, Ex. A 19(j), No. 09-9476 (RWS), Sept. 14, 2012, ECF No. 117. The jury found that three iterations of the Double Horsemen mark, pictured here, do not infringe on PRLs rights when used on apparel:

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Meanwhile, the three iterations of the Double Horsemen mark that were before the district court were:

As seen above, the Double Horsemen with USPA mark before the district court is identical to the Double Horsemen with USPA mark before the jury in the apparel litigation. And as to LOreals contention that the marks in the apparel litigation did not include the word mark U.S. POLO ASSN., this word mark was not tested by the jury in the apparel litigation because the parties already had agreed that its use on the product categories at issue in that litigation was non-infringing. By the terms of the settlement agreement, U.S. Polo Assn. has the right to market products bearing its U.S. POLO ASSN. mark together with symbolslike the Double

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Horsemen markfound to be non-infringing in the settled product categories.4 The appellees well understand that a finding of infringement as to an identical or nearly identical mark on a related product is relevant to the likelihood of confusion. In August 2012, PRL filed a motion urging the district court to hold U.S. Polo Assn. in contempt of the injunction for using the Double Horsemen mark on eyewear, even though eyewear was not at issue in the fragrance litigation. PRLs sole basis for claiming that the eyewear products infringe on PRLs mark is that the Double Horsemen mark used on eyewear is virtually indistinguishable from the Double Horsemen Mark at issue in the fragrance litigation. Mot. for Sanctions and Contempt at 13, 09-civ-9476 (RWS) (S.D.N.Y. Aug. 21, 2012), ECF No. 98. Using the same logic, it was clear error for the district court to find infringement without giving weight to the jurys finding of lack of confusion, as to the identical mark, on apparel.

See Decl. of W. David Cummings, Ex. A ., 5(A)-(N), No. 09-9476 (RWS), Sept. 14, 2012, ECF No. 117. LOreal is thus incorrect when it characterizes the agreement as conferring no rights on U.S. Polo Assn. LOreal further wrongly asserts that the response to a request for admission detailing the stipulation is inadmissible in this action under Federal Rule of Civil Procedure 36(b). Rule 36(b) concerns the weight, not admissibility, of judicial admissions. It is true that under Rule 36(b) a judicial admission is binding only in the litigation in which it is made, but it nevertheless operates as evidence in any other suit. See, e.g., Higgins v. Mississippi, 217 F.3d 951, 954-55 (7th Cir. 2000); 6 Michael H. Graham, Handbook of Federal Evidence 801.26 (7th ed. 2011). 11

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B.

The District Court Erred in Ignoring the Extensive Market Coexistence of Related Goods Without Any Evidence of Confusion

U.S. Polo Assn. has used the Double Horsemen and U.S. POLO ASSN. marks on a wide range of products and in connection with its association activities since 2006, including shirts, pants, jeans, jackets, dresses, shoes, watches, hats, key chains, jewelry, swimwear and eyewear. Despite the sale of hundreds of millions of dollars worth of merchandise bearing the Double Horsemen and U.S. POLO ASSN. marks during this time, the PRL Parties did not identify a single instance of a customer confusing a U.S. Polo Assn. product with a PRL product. The district court committed clear error when it ignored this failure of proof, and when it ignored the fact that the Double Horseman mark and PRLs polo player have coexisted in the marketplace without any evidence of customer confusion. (SPA33.) The district court held that [l]ack of confusion as to apparel may or may not be indicative of lack of confusion as to fragrances[.]5 But it is well settled that the

LOreal argues that it does not matter that U.S. Polo Assn. is the senior user of its own marks on the related category of apparel, because PRL was the first party to expand from apparel into fragrance. But that fact establishes only that PRL is the senior user in fragrance as to PRLs marks. PRL has no rights, nor has it asserted any, to U.S. Polo Assn.s marks. Nor does the fact that PRL is larger than U.S. Polo Assn. entitle it to displace the U.S. Polo Assn. parties from their own marks. See International Star Class Yacht Racing Assn v. Tommy Hilfiger U.S.A., Inc., No. 94-Civ-2663 (RPP), 1995 WL 241875, at *13 (S.D.N.Y. April 26, 1995), revd in part on other grounds, 80 F.3d 749 (2d Cir. 1996). Like any other party with 12

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fragrance and apparel markets are related for trademark purposes. See, e.g., Scarves by Vera, Inc. v. Todo Imports Ltd., 544 F.2d 1167, 1174-75 (2d Cir. 1976) (defendants cosmetic products were by their nature so closely related to plaintiffs apparel products that plaintiff was entitled to protection); Jaguar Cars Ltd. v. Skandrani, 771 F. Supp. 1178, 1184-85 (S.D. Fla. 1991) (natural for automobile manufacturer that licensed its trademarks for use on apparel to expand its program to include fragrance); see also All England Lawn Tennis Club (Wimbledon) Ltd. v. Creations Aromatiques, Inc., 220 U.S.P.Q. 1069, 1071 (T.T.A.B. 1983) (confusion likely when the same or similar marks were used in connection with cologne or other cosmetics on one hand and clothing on the other). Moreover, the evidence before the district court, reiterated in PRLs brief to this Court, shows that PRL markets fragrance and clothing together. For example, emails between PRL and LOreal employees indicate that the Big Pony Collection fragrances were inspired by the Big Pony Collection apparel line and the synergy between the two would drive sales of fragrance products (A-2591-92; A-852:4trademark rights, the U.S. Polo Assn. parties have the right to expand into related categories unless there is a specific showing that this expansion is likely to create confusion with PRLs existing marksa showing that PRL cannot make given the coexistence of these parties products in the apparel market. The district court failed to consider this right of expansion.

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853:7), LOreal markets PRL fragrance products by employing salespeople dressed in PRL clothing bearing the same logos as those on the fragrance products (A828:1-13; A-846:13-847:7), and advertisements for the PRL Big Pony Collection fragrances prominently feature models clothed in apparel from the Big Pony Collection (A-829:24-830:3). LOreal contends that [l]ack of evidence regarding confusion is not the same as evidence of lack of confusion. (LOreal Br. at 48.) But when the parties related products have coexisted in the market for several years, these concepts are synonymous. [L]oud silence gives rise to only one inference: consumers have not been confused. Tommy Hilfiger Licensing v. Nature Labs, LLC, 221 F. Supp. 2d 410, 419 (S.D.N.Y. 2002); see also Starbucks Corp. v. Wolfes Borough Coffee, Inc., 588 F.3d 97, 117 (2d Cir. 2009) (eleven years of coexistence with no evidence of customer confusion supports finding of no likely confusion). C. The District Courts Finding of Bad Faith Cannot Be Reconciled With the Evidence

The district courts infringement finding was grounded in its erroneous conclusion that U.S. Polo Assn. acted in bad faith. It found that U.S. Polo Assn.s bad faith can be inferred from its decision to adopt a mark that is so strikingly similar to the PRL Polo Player Logo and initially employ the same color and similar trade dress to that used for PRLs [Polo Blue fragrance]. (SPA-46.) Both aspects of this conclusion were in error. First, by the time U.S. Polo Assn. started 14

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to use the Double Horsemen mark on fragrance, the mark had been found by a jury to be non-infringing on apparel. Use of the marks found non-infringing by the 2006 jury is evidence of good faith, not bad. Second, U.S. Polo Assn. had been using its Double Horsemen and U.S. POLO ASSN. marks together, with blue and gold trade dress, on apparel and related products without complaint by PRL. Accordingly, bad faith cannot be inferred from the use of such trade dress on fragrance either.6 D. The District Court Erred in Admitting the PRL Parties Flawed Survey Evidence and Concluding It Was Suggestive of Actual Confusion

Other than the district courts visual determination that the marks were confusingly similara determination contradicted by the 2006 jury findingsthe only evidence upon which the district court found a likelihood of confusion was survey evidence submitted by PRL that used the iconic Mustang Grille trademark as a control. But this survey, with its improper control, had no evidentiary value. LOreal asserts that there is no evidence that the Mustang Grille is a famous mark. But more than 64% of the survey respondents recognized the Mustang

LOreal contends that U.S. Polo Assn. decided to switch from blue to cream packaging after LOreal filed its motion for a preliminary injunction. But emails entered into evidence at trial showed that U.S. Polo Assn. made this decision before LOreal filed its motion. (A-2598-99; A-1003:19-1004:10.) 15

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Grille as being associated with Ford, Mustang, or another automobile stimulus. (A-2147-74; A- 903:18-904:7.) A mark cannot function as a control if respondents recognize it. See, e.g., Citizens Banking Corp. v. Citizens Fin. Grp., Inc., No. 0711514 (AJT), 2008 WL 1995104, at *10 (E.D. Mich. May 6, 2008), affd, 320 F. Appx 341 (6th Cir. 2009) (most significant flaw in survey was control that was more recognizable than one of marks at issue). More fundamentally, the appellees gloss over the fact that the PRL survey did not control for U.S. Polo Assn.s right to use marks relating to the sport of polo. A proper control in a likelihood of confusion survey must share as many characteristics with the experimental stimulus as possible, with the key exception of the characteristic whose influence is being assessed. THOIP v. Walt Disney Co., 690 F. Supp. 2d 218, 240 (S.D.N.Y. 2010) (internal quotations and citation omitted). A proper control in this case thus needed to reference the sport of polo in order to determine the appropriate level of confusion responses stemming from permitted references to the sport of polo in U.S. Polo Assn. trademarks. See 24 Hour Fitness USA, Inc. v. 24/7 Tribeca Fitness, LLC, 447 F. Supp. 2d 266, 280-81 (S.D.N.Y. 2006) (a control must screen for confusion responses arising from element of gym name that refers to gym being open 24 hours, because no gym has the exclusive or protectable right to state that it is open 24 hours).

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The sport of polo has nothing to do with a riderless galloping wild horse. It was clear error for the district court to accord weight to a survey that used it as a control. For all these reasons, the district courts finding of infringement cannot be sustained. II. UNDER EBAY, THE INJUNCTION IMPERMISSIBLY PRESUMES IRREPARABLE HARM The injunction is improper because, under eBay, Inc. v. MercExchange, L.L.C., 547 U.S. 388, 391 (2006), an injunction may no longer issue based upon a presumption of irreparable harm. Rather, after eBay, plaintiffs must show that, on the facts of their case, the failure to issue an injunction would actually cause irreparable harm. Salinger v. Colting, 607 F.3d 68, 82 (2d Cir. 2010) (emphasis added). PRL does not dispute that the district court correctly held that eBay applies with equal force to trademark infringement cases. (PRL Br. at 14.)7 The upshot of eBays application to trademark cases is that where, as here, actual market evidence exists concerning the likelihood of irreparable harm, it is impermissible to presume such harm based solely on a finding of likelihood of confusion.

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PRL contends that it would unquestionably lose control over its reputation as applied to fragrances without a permanent injunction. (PRL Br. at 15.) But U.S. Polo Assn.s retail licensing program competed extensively for years with PRL in apparel, using marks identical to the ones at issue in this case, and PRL presented no evidence below that it had lost control of its marks during that period. Indeed, given the parties past coexistence in the apparel space without any evidence of confusion, PRL had to offer concrete evidence that absent an injunction, it would in fact suffer harm. But PRL offered no evidence of actual loss of reputation or goodwill to the district court in the absence of an injunction. Instead, PRL merely speculatedas it does on appeal, with its telling use of the term unquestionablythat it might suffer reputational harm if customers were confused into mistaking U.S. Polo Assn. products for PRL products in fragrances. That is insufficient as a matter of law. Since eBay, courts have refused to issue injunctions even in the face of an infringement finding when plaintiffs do no more than speculate about potential loss of reputation or control. For example, in Adidas America, Inc. v. Herbalife International, Inc., No. 3:09cv00661(MO), 2012 WL 1831525, at *1 (D. Or. May 12, 2012), the district court refused to issue a permanent injunction despite finding that the defendant had breached the parties trademark settlement agreement. The plaintiffs argued that they were entitled to a permanent injunction because the defendants breach of the

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settlement agreement might cause confusion in the marketplace, dilute the distinctiveness of the plaintiffs mark, and otherwise diminish its value. Id. But the district court noted that eBay signifies a return to traditional equitable principles, under which presumptions of harm are not allowed. Id. (internal quotations and citation omitted). Because the plaintiffs presented no evidence that defendants breaches have in fact caused tangible harm such as lost sales or profits, actual consumer confusion, or trademark dilution, id., the district court refused to issue a permanent injunction. See also Leatherman Tool Group, Inc. v. Coast Cutlery Co., 823 F. Supp. 2d 1150, 1158 (D. Or. 2011) (rejecting preliminary injunction because plaintiff failed to present evidence of likelihood of irreparable harm from the defendants false advertising; plaintiffs declaration that consumers will be diverted to the defendants knives and that that diversion erodes Leathermans overall market share, without more, was insufficient to support a finding that Leatherman has indeed lost consumers or market share). PRL attempts to justify the permanent injunction on the fact that it cannot quantify the extent of reputational harm and damage to the goodwill of PRL[.] (PRL Br. at 21.) But [c]ompanies benefitting from goodwill or brand equity as a tangible asset on their balance sheets should not be allowed to skirt the requirements for proving injunctive relief, solely on the theory that they cannot place a price tag on their goodwill. Sandra Rierson, IP Remedies After eBay:

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Assessing the Impact on Trademark Law, 2 Akron Intell. Prop. J. 163, 175 (2008). Polo Ralph Lauren carries more than $1 billion of goodwill and other intangibles on its balance sheet.8 Given its demonstrated ability to put a dollar value on its goodwill and other intangibles, PRL should be in a position to demonstrate any unfair competitive harm caused to these assets by its coexistence in the marketplace with U.S. Polo Assn. Its failure to present any such evidence constitutes a failure to meet its burden to prove irreparable harm. Even if PRL were found to have met its burden of proving irreparable harm with respect to USPAs use of the Double Horseman mark in conjunction with the word mark U.S. Polo Assn. 1890 on fragrance, there can be no reasonable dispute that PRL has failed to meet its burden with respect to marks (including combinations of marks) and markets not specifically found by the district court to be infringing. Indeed, given that the 2006 jury found that three iterations of the Double Horseman were not infringing in the apparel context, and given that the 1984 Order allowed U.S. Polo Assn. to use its name as long as Polo is not unduly emphasized, the issuance of a permanent injunction into areas not covered by the lower courts fragrance infringement finding cannot be justified under eBay. Having failed to adduce any proof of loss of control even with respect to the
8

Ralph Lauren Reports First Quarter Fiscal 2013 Results, http://phx.corporateir.net/phoenix.zhtml?c=65933&p=irol-newsArticle&ID=1723698&highlight=.

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particular combination of marks at issue below, PRL cannot seriously contend that it has met its burden of proof with respect to marks, combinations of marks or markets that were not part of the infringement finding below. Accordingly, PRL failed in its burden of proof as to the issuance of a permanent injunction, and the district court abused its discretion in adopting PRLs sweeping injunction language. III. THE DISTRICT COURTS OVERBROAD INJUNCTION CANNOT BE JUSTIFIED BY THE EVIDENCE The overbroad injunction entered here contradicted the 1984 Order, the 2006 jury findings and final judgment, and the district courts own findings. Indeed, if the injunction is permitted to stand, not only would it preclude U.S. Polo Assn. from having any fragrance program whatsoever, butif PRLs interpretation of the injunction is acceptedit would prohibit U.S. Polo Assn. from having any licensing program in any market, except those previously secured through litigation and settlement. It was an abuse of discretion for the district court to adopt this overbroad injunction. A. The Overbroad Injunction Cannot Be Reconciled With The District Courts Narrow Infringement Findings

In making its infringement findings below, the district court was faced with the fact that, in the related apparel context, a jury had already determined that three iterations of the Double Horseman marktwo used in connection with USPA

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and one withoutdid not cause a likelihood of confusion, and thus did not infringe upon PRLs marks. Given the fact that Double Horseman marks had already been found noninfringing on apparel, the only way that the district court could attempt to justify (wrongly, as shown above) a finding of infringement with respect to fragrances was to limit the scope of that infringement finding to the context and manner in which they have been used here on a mens fragrance. (SPA-18-19 (emphasis added).) The district courts emphasis on the narrow nature of its infringement findingslimiting the finding only to the use of the Double Horseman mark with U.S. POLO ASSN. 1890 on mens fragrancepermeated its opinion. (See, e.g., SPA-61 (The USPA Parties[] use of POLO in conjunction with the Double Horseman mark in the context here infringes the PRL Parties substantive trademark rights.).) Indeed, the district court expressly distinguished its findings from the jurys findings in the 2006 apparel litigation, reasoning that this issue here involves different transactional facts material to the claim. Therefore the district courts order in the apparel litigation does not have preclusive effect on this proceeding. (SPA-21 (internal citation and quotations omitted).) The district court further reasoned that this Courts affirmance of the 2006 jury verdict was not relevant

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because [n]o prior decision addressed the marks at issue here in the fragrance market[.] (SPA-17.) In light of the context-specific nature of its infringement finding, it is not surprising that the district court found the scope of the relief sought to be similarly narrownamely, an injunction prohibiting the USPA Parties from using the U.S. POLO ASSN. name in conjunction with the Double Horseman mark in mens fragrances[.] (SPA-52 (emphasis added).) Despite the district courts explicit recognition that both its holding and any resulting injunction must necessarily be limited in scope in order to be reconciled with the 2006 jury verdict and the district courts infringement findings, when it came to the language of the injunction itself, the district court went well beyond the narrow infringement findings it had made, and well beyond the scope of the relief sought. Rather than precluding the use of the name/logo combination actually litigated, the injunction bars U.S. Polo Assn. from using either the Double Horsemen mark . . . alone or in combination with any name, symbol, device or other word(s), or the word POLO alone or in combination with any name, symbol, device or other word(s) not only in connection with mens fragrances, but also in connection with fragrances or related products such as cosmetics, personal care products and beauty products, without defining related products. (SPA-65-66.) And PRL further contends that the injunction prohibits

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U.S. Polo Assn. from using the POLO word mark in connection with the sale or offering for sale of any goods or rendering of any services. (PRL Br. at 29.)9 In other words, if PRLs interpretation of the injunction were accepted, U.S. Polo Assn. would be precluded from using its own namenot just on fragrance products, but on any and all goods and services, except as to rights it previously secured through litigation and settlement. Under this reading of the injunction, U.S. Polo Assn. could not even use its name in connection with promoting polo tournaments. The district courts injunction contravenes established Second Circuit law. In Starter Corp. v. Converse, Inc., 170 F.3d 286, 299-300 (2d Cir. 1999), this Court held that when a jury found infringement only with the use of certain marks on athletic shoes, the district court abused its discretion in issuing a trademark injunction that proscribed the use of these marks (a) on any footwear, and (b) in combination with any other words or designs. The Court in Starter held that the district courts injunction was impermissibly overbroad, in that it covered combinations of marks that were not
9

LOreal argues that much of this language tracks the 1984 Order. (LOreal Br. at 61.) But the 1984 Order included affirmative statements recognizing the right of U.S. Polo Assn. to conduct a retail licensing program using its name and a distinctive mounted polo player mark. (See A-1592-93.) Moreover, the parties have coexisted for more than 25 years under the 1984 Order; their actions, including the 2003 settlement agreement, have rendered the potential overbreadth of that order moot. 24

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specifically addressed by the jury. [T]he jurys findings went only to the use of the Starter Star marks when used alone; the jury reached no conclusion as to the use of the marks in combination with other designs. Id. at 300. In addition, the Court held that because the jurys findings related solely to athletic footwear, not footwear generally, the injunction should be similarly limited: The language of the injunction is also too broad because on its face it would include any and all footwear. The jurys verdict however, specified athletic footwear. Id. For these reasons, the district courts injunction could not stand. We have vacated injunctions in other trademark cases that have gone beyond the scope of the issues tried in the case. Id. This is precisely what has happened here. The district courts infringement findings were limited solely to the use of the Double Horseman mark in connection with the U.S. POLO ASSN. 1890 mark on mens fragrances. But the injunction issued by the district court reached beyond mens fragrances, and enjoined the use of the U.S. POLO ASSN. mark alone as a trademark. As the injunction went beyond the scope of the issues tried in the case, it must be vacated. PRL attempts to distinguish Starter by arguing that the defendant, Converse, judicially admitted that the plaintiffs trademarks could be used on hiking boots without infringement. (PRL Br. at 26-27.) But in vacating the injunction, this Court did not hinge its decision on that admission or limit its rationale to the fact

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that the injunction covered hiking boots. Instead, the Court held that the injunction was overbroad because the jurys infringement findings did not reach any behavior other than the use of the plaintiffs marks, alone, on athletic footwear. Moreover, to the extent that Converses limited admission was relevant at all to the analysis, the instant case presents a strikingly similar, if not more compelling rationale to strictly scrutinize the scope of the injunction: the jurys finding in 2006 that the use of the Double Horseman marks on apparel is non-infringing. PRL also attempts to distinguish Starter by claiming that U.S. Polo Assn. was a prior infringer, citing to this Courts safe distance discussion in the appeal of the 2006 jury verdict. (PRL Br. at 27.) But PRL fails to mention that this Court rejected the use of the safe distance instruction in the apparel litigation, calling it particularly inappropriate because the 1984 Order expressly provided that USPA remained free to use a mounted polo player or equestrian or equine symbol which is distinctive from the [Ralph Lauren] polo player symbol[.] PRL USA Holdings v. U.S. Polo Assn, Inc., 520 F.3d 109, 117 (2d Cir. 2008). To instruct the jury that USPA was required to keep a safe distance without further explanation of how this related to USPAs right, under the injunction, to use a mounted polo player, this Court held, could have led the jury to find liability based on conduct which the earlier injunction had expressly permitted. Id. (emphasis added). Accordingly, not only is this distinction of Starter inapposite,

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U.S. Polo Assn. has greater rightsas expressed not only in the 1984 Order but also in the 2006 jury verdict that this Court affirmedin its marks than did the plaintiff in Starter. The Eleventh Circuits decision in Aronowitz v. Health-Chem Corp., 513 F.3d 1229, 1242 (11th Cir. 2008), mirrors Starter. The court vacated a permanent injunction that applied to any other marks similar to Defendants trademark because it interfered with the plaintiffs preexisting license agreement. PRL argues that Aronowitz is distinguishable because U.S. Polo Assn.s trademark rights are not established by license. In fact, U.S. Polo Assn.s rights were established in part by settlement agreement between the parties, much like a license agreement. In any event, how preexisting rights are created is not the point; the point is that those preexisting rights exist, and the permanent injunction cannot interfere with the exercise of those rights. In the end, in order to justify the district courts finding of infringement in the face of the jurys rejection of PRLs infringement claims in the apparel litigation, PRL has been quick to claim, contrary to the visual evidence, see supra pp. 9-10, that the iterations of the Double Horseman mark that the jury found noninfringing in 2006 are different from those at issue in this case. (See PRL Br. 30.) But PRL wrongly concludes that those alleged differences render the apparel litigation irrelevant to the injunction analysis. To the contrary, it is precisely

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because a likelihood of confusion is context- and mark-dependent that sweeping injunctive relief is inappropriate. The district court agreed with this reasoning in the infringement context, holding that the analysis of which symbols are distinctive from PRLs Polo Player logothat is, not infringingand whether the United States Polo Association name or other name is used in a manner that is likely to cause confusion requires application of Polaroid. (SPA-19 (emphasis added).) Yet despite this recognition, the district court issued an injunction that ignored that very context-based analysis. If, as the district court found, the question of whether a likelihood of confusion exists hinges upon how the Double Horseman mark is usedincluding with which name and in which marketthere is no basis in law for the district court to have adopted an injunction that glosses over those very distinctions. B. The Injunction Already Has Been Misused by PRL

The upshot of this overbroad injunction is that PRL is now attempting to circumvent an infringement trial by instituting summary contempt proceedings based upon the overbroad injunction instead. Contending that the injunction prohibits U.S. Polo Assn. from using either the Double Horsemen mark or the U.S. Polo Assn. name in connection with the sale or offering for sale of any goods or rendering of any services, PRL now seeks sanctions and a disgorgement of profits

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for U.S. Polo Assn.s use of various marks on sunglassesnone of which bear a relationship to the context-specific infringement finding beloweven though sunglasses are an apparel accessory, not a fragrance product, and even though the only fact-finder with respect to apparel found the use of the Double Horseman marks non-infringing. By its contempt motion, PRL has proveneven before oral argument in this casewhat U.S. Polo Assn. set forth in its opening brief: that the injunction invites contempt proceedings on products and services for which there is no legitimate basis for challenging such use, and invites uncertainty into every aspect of U.S. Polo Assn.s legitimate retail licensing program. Tellingly, the appellees have objected to this Courts taking judicial notice of their own contempt motion.

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CONCLUSION The Court should reverse the judgment, vacate the permanent injunction, and direct judgment in favor of the appellants. Date: New York, New York October 30, 2012 Respectfully submitted, /s/ Gerald J. Ferguson Gerald J. Ferguson George A. Stamboulidis Tracy L. Cole David J. Sheehan Thomas D. Warren BAKER & HOSTETLER LLP 45 Rockefeller Plaza New York, New York 10111 Telephone: (212) 589-4200 Facsimile: (212) 589-4201 Attorneys for United States Polo Association, Inc., and USPA Properties, Inc.

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CERTIFICATE OF COMPLIANCE WITH TYPE-VOLUME LIMITATION, TYPEFACE REQUIREMENTS AND TYPE STYLE REQUIREMENTS This brief complies with the type-volume limitation of Fed. R. App. P. 32(a)(7)(B) because this brief contains 6,866 words, excluding the parts of the brief exempted by Fed. R. App. P. 32(a)(7)(B)(iii). This brief complies with the typeface requirements of Fed. R. App. P. 32(a)(5) and the type style requirements of Fed. R. App. P. 32(a)(6) because this brief has been prepared in a proportionally spaced typeface using Microsoft Office Word 2010 in 14-point Times New Roman font. Date: New York, New York October 30, 2012 Respectfully submitted, /s/ Gerald J. Ferguson Gerald J. Ferguson George A. Stamboulidis Tracy L. Cole David J. Sheehan Thomas D. Warren BAKER & HOSTETLER LLP 45 Rockefeller Plaza New York, New York 10111 Telephone: (212) 589-4200 Facsimile: (212) 589-4201 Attorneys for United States Polo Association, Inc., and USPA Properties, Inc.

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CERTIFICATE OF SERVICE & CM/ECF FILING 12-1346-cv United States Polo Association, Inc. v. PRL USA Holdings, Inc. I hereby certify that on October 30, 2012 the foregoing Reply Brief of Plaintiffs-Counter-Defendants-Appellants was caused to be served on counsel for Defendant-Counter-Claimant-Appellee and Intervenor-Defendant-CounterClaimant-Appellee via Electronic Mail (since the Courts electronic filing system (CM/ECF) was unavailable), pursuant to Local Appellate Rule 25.1: William Robert Golden, Jr., Esq. Kelley Drye & Warren, LLP 101 Park Avenue New York, New York 10178 (212) 808-7800 wgolden@kelleydrye.com Attorneys for Defendant-CounterClaimant-Appellee Robert L. Sherman, Esq. Paul Hastings LLP 75 East 55th Street New York, New York 10022 (212) 318-6037 robertsherman@paulhastings.com Attorney for Intervenor-DefendantCounter-Claimant-Appellee

I certify that an electronic copy was uploaded to the Courts electronic filing system. Six hard copies of the foregoing Reply Brief of Plaintiffs-CounterDefendants-Appellants will be delivered to the Clerks Office by hand delivery upon the Courts opening at the below address: Clerk of Court United States Court of Appeals, Second Circuit United States Courthouse 500 Pearl Street, 3rd floor New York, New York 10007 (212) 857-8500 on this 31st day of October 2012. _________________________ /s/ William McKenzie William McKenzie Record Press, Inc.