ESTTA Tracking number:
`
`ESTTA1308334
`
`Filing date:
`
`09/06/2023
`
`IN THE UNITED STATES PATENT AND TRADEMARK OFFICE
`BEFORE THE TRADEMARK TRIAL AND APPEAL BOARD
`
`Proceeding no.
`
`91286303
`
`Party
`
`Correspondence
`address
`
`Submission
`
`Filer's name
`
`Filer's email
`
`Signature
`
`Date
`
`Attachments
`
`Defendant
`Pengu Swim School, LLC
`
`JOSHUA SHAMBURGER
`MATTHEWS, LAWSON, MCCUTCHEON & JOSEPH, PLLC
`2000 BERING DR STE 700
`HOUSTON, TX 77057
`UNITED STATES
`Primary email: jshamburger@matthewsfirm.com
`Secondary email(s): cnguyen@matthewsfirm.com, tmc-
`cutcheon@matthewsfirm.com, dkemeny@matthewsfirm.com
`713-355-4200
`
`Answer
`
`Joshua Shamburger
`
`jshamburger@mccutcheonjoseph.com, tmccutcheon@mccutcheonjoseph.com,
`cnguyen@mccutcheonjoseph.com
`
`/joshua shamburger/
`
`09/06/2023
`
`Answer.pdf(206079 bytes )
`Exhibit A.pdf(376981 bytes )
`
`

`

`
`
`IN THE UNITED STATES PATENT AND TRADEMARK OFFICE
`BEFORE THE TRADEMARK TRIAL AND APPEAL BOARD
`
`§
`§
`§
`§
`§
`§
`§
`§
`§
`§
`
`
`
`
`OPPOSITION NO.: 91286303
`
`SERIAL NO.: 90/820,154
`
`MARK: [Color Mark]
`
`
`BLUE LEGEND, LLC
`
` Opposer,
`
`v.
`
`PENGU SWIM SCHOOL,LLC
`
` Applicant.
`
`
`
`ANSWER TO NOTICE OF OPPOSTION
`
`
`
`Applicant Pengu Swim School, LLC, (herein “Applicant”) answers the Notice of
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`Opposition (herein “Notice”) filed on 28 July 2023 by Blue Legend, LLC (herein “Opposer”)
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`regarding TM App. No. 90/820,154 as follows:
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`ENUMERATED ANSWERS TO NOTICE
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`1. Applicant is without sufficient information to admit or deny paragraph 1.
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`2. Applicant admits paragraph 2.
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`3. Applicant admits paragraph 3.
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`4. To the extent paragraph 4 describes Opposer’s beliefs, Applicant is without sufficient
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`information to admit or deny.
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`5. Applicant admits paragraph 5.
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`6. Applicant admits paragraph 6.
`
`
`
`

`

`
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`7. To the extent paragraph 7 describes the content of the Examining Attorney’s initial
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`Office Action, prior to Applicant’s response submitting evidence establishing
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`acquired distinctiveness of its trade dress, Applicant admits paragraph 7.
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`8. Applicant admits paragraph 8.
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`9. Applicant admits paragraph 9.
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`10. Applicant admits paragraph 10.
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`11. Applicant denies paragraph 11. While it may have been accurate to say Applicant and
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`Opposer are “currently” parties at the time the Opposition was filed, the District
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`Court has since issued a final judgment, the Memorandum and Order to which is
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`attached as Exhibit A.1
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`12. Applicant denies paragraph 12.
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`13. Applicant denies paragraph 13.
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`14. Applicant denies paragraph 14.
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`15. To the extent paragraph 15 describes Opposer’s beliefs, Applicant is without
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`sufficient information to admit or deny.
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`AFFIRMATIVE DEFENSES
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`16. Opposer’s claims are barred by the doctrine of unclean hands, since Opposer
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`intentionally copied Applicant’s design, as shown by the materials submitted to the
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`Office during prosecution of the application. Indeed, the District Court Action
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`concluded that this was an “exceptional case” sufficient to award Applicant attorneys’
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`fees, and noted extensive evidence of willful infringement. (Exhibit A, pp. 29-32).
`
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`1 Exhibit A is a document from the District Court Action referenced by Opposer in paragraph 11 of their Notice, and
`therefore incorporated by reference.
`
`
`
`

`

`17. Opposer’s claims are further barred by the doctrine of prior judgment, as the District
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`Court Action also concluded that Applicant’s mark had acquired distinctiveness
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`(Exhibit A, p. 2), and issued a permanent injunction barring Opposer from using
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`elements of Applicant’s trade dress (Exhibit A, pp. 33-37); Opposer’s attempt to
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`undermine the District Court’s injunction via opposition is barred by res judicata, or
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`in the alternative, by collateral estoppel on the issue of acquired distinctiveness.
`
`
`
`Dated: 6 September 2023
`
`
`
`
`
`Respectfully submitted,
`
`/Joshua shamburger/___
`Joshua Shamburger
`(TX Bar #24075055)
`Terry L. McCutcheon
`(TX Bar #24039045)
`MCCUTCHEON & JOSEPH, PLLC
`5444 Westheimer Rd, Suite 1950
`Houston, Texas 77056
`TEL: (713) 355-4200
`FAX: (713) 355-9689
`Attorneys for Applicant
`
`
`
`
`
`
`
`

`

`
`
`CERTIFICATE OF SERVICE
`
`I certify that, on 6 September 2023, a copy of the foregoing Answer was served via email to:
`
`Douglas H. Elliott
`Elliott Law PLLC
`6750 W Loop S, Suite 995
`Bellaire, TX 77041
`TEL: (832) 485-3508
`doug@elliottiplaw.com
`Attorney for Opposer
`
`
`/joshua shamburger/___
`Joshua Shamburger
`(TX Bar #24075055)
`Terry L. McCutcheon
`(TX Bar #24039045)
`McCutcheon & Joseph, PLLC
`5444 Westheimer Rd, Suite 1950
`Houston, Texas 77056
`TEL: (713) 355-4200
`FAX: (713) 355-9689
`Attorneys for Applicant
`
`
`
`
`
`

`

`EXHIBIT A
`EXHIBIT A
`
`

`

`Case 4:21-cv-01525 Document 131 Filed on 08/29/23 in TXSD Page 1 of 38
`United States District Court
`Southern District of Texas
`ENTERED
`
`UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF TEXAS
`HOUSTON DIVISION
`
`August 29, 2023
`
`Nathan Ochsner, Clerk
`
`
`§
`§
`
`§
`
`§
`§
` Case No. 4:21-CV-1525
`§
`
`§
`
`
`
`
`§
`
`§ §
`
`PENGU SWIM SCHOOL, LLC, et al.,
`
`
` Plaintiffs,
`
`v.
`
`BLUE LEGEND, LLC, et al.,
`
` Defendants.
`
`MEMORANDUM AND ORDER1
`
`This is a trade dress infringement case.2 The parties are competing swimming
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`schools offering swim lessons to children in the Greater Houston area.3 In this action,
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`Pengu alleged that Blue Legend copied Pengu’s distinctive trade dress and used it in
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`its own swim schools, creating a likelihood of consumer confusion between Pengu
`
`and Blue Legend. A trial was held from May 16, 2023 through May 19, 2023, with
`
`the jury returning a verdict in favor of Pengu.
`
`1 On August 19, 2021, based on the parties’ consent, the case was transferred to this Court to
`conduct all proceedings pursuant to 28 U.S.C. § 636(c). Consent & Transfer Order, ECF No. 14.
`
`2 Trade dress is one type of trademark. Wal-Mart Stores v. Samara Bros., 529 U.S. 205, 209–10
`(2000). “A trademark is a distinctive mark, symbol, or emblem used by a producer or manufacturer
`to identify and distinguish his goods from those of others.” HealthONE of Denver, Inc. v.
`UnitedHealth Grp. Inc., 872 F. Supp. 2d 1154, 1174 (D. Colo. 2012) (quotation marks omitted).
`The Lanham Act provides a right of action for trade dress infringement. 15 U.S.C. § 1125(a).
`
`3 Plaintiffs are Pengu Swim School, LLC, Pengu Swim School Riverstone, LLC, Pengu Swim
`School Cinco Ranch, LLC, and Pengu Swim School Towne Lake, LLC (collectively, “Plaintiffs”
`or “Pengu”). Defendants are Blue Legend, LLC (“Blue Legend Sugar Land”), and Blue Legend
`Katy (“Blue Legend Katy”), LLC (collectively, “Defendants” or “Blue Legend”).
`
`1
`
`

`

`Case 4:21-cv-01525 Document 131 Filed on 08/29/23 in TXSD Page 2 of 38
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`Thereafter, the parties filed a series of posttrial motions. Pending before the
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`Court are Pengu’s motion for attorneys’ fees, ECF No. 109,4 Pengu’s motion for
`
`enhanced damages, ECF No. 110,5 Pengu’s motion for permanent injunction, ECF
`
`No. 111,6 Pengu’s motion for entry of judgment on the jury verdict, ECF No. 112,7
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`Blue Legend’s motion for judgment as a matter of law, or in the alternative, motion
`
`for new trial, ECF No. 113,8 and Blue Legend’s motion for permanent injunction
`
`and setting aside or reducing award of profits, ECF No. 114.9 Based on a thorough
`
`review of the briefing, record,10 and applicable law, the Court finds that: (1) there is
`
`sufficient evidence to sustain the jury’s findings that Pengu’s trade dress acquired
`
`secondary meaning, there is a likelihood of confusion, and Pengu is entitled to
`
`disgorgement of Blue Legend’s profits; (2) the jury’s profit award should not be set
`
`
`4 Blue Legend filed a response, ECF No. 118, and Pengu filed a reply, ECF No. 126.
`
`5 Blue Legend filed a response, ECF No. 119, and Pengu filed a reply, ECF No. 124.
`
`6 Blue Legend filed a response, ECF No. 120, and Pengu filed a reply, ECF No. 123.
`
`7 Blue Legend filed a response, ECF No. 121, and Pengu filed a reply, ECF No. 125.
`
`8 Pengu filed a response, ECF No. 121, and Blue Legend filed a reply, ECF No. 127.
`
`9 Pengu filed a response, ECF No. 117, and Blue Legend filed a reply, ECF No. 114.
`
`10 The parties failed to order the transcript of the full trial and, other than a few trial exhibits, cited
`to virtually no evidence in the trial record in support of their various motions. Instead, Plaintiffs
`cited to some summary judgment evidence and Defendants made up citations to the hearing
`testimony as they recalled it. The parties’ failure to cite to the trial transcript “alone provides a
`sufficient basis on which to deny” their motions. FLOE Int’l, Inc. v. Newmans’ Mfg. Inc., No. CIV.
`04-5120 DWFRLE, 2007 WL 902809, at *4 (D. Minn. Mar. 12, 2007) (citing White v. McDonnell
`Douglas Corp., 904 F.2d 456, 458 (8th Cir.1990)). “The jury verdict is not clearly unreasonable
`and will not be disturbed” where a party fails to “cite to exact passages in the record [and] attach
`excerpts of the transcript.” Bankston v. State of Ill., No. 93 C 39, 1994 WL 11614, at *2 (N.D. Ill.
`Jan. 3, 1994), aff’d, 60 F.3d 1249 (7th Cir. 1995).
`
`
`
`2
`
`

`

`Case 4:21-cv-01525 Document 131 Filed on 08/29/23 in TXSD Page 3 of 38
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`aside, reduced, or increased; (3) Pengu is entitled to an award of attorneys’ fees; and
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`(4) Pengu is entitled to a permanent injunction enjoining Blue Legend from
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`infringing upon Pengu’s trade dress.
`
`I.
`
`BACKGROUND
`
`In 2013, Pengu swim schools opened for business in the Houston area. In
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`2020, Blue Legend opened two swim schools—one in Katy, Texas, and one in
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`Sugarland, Texas, each within a few miles of Plaintiffs’ schools in that area.
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`Plaintiffs introduced evidence that Defendants used Pengu’s total image and overall
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`appearance in the Blue Legend swim schools, infringing on Plaintiffs’ trade dress.
`
`On May 19, 2023, a jury returned a verdict in favor of Pengu. Verdict, ECF
`
`No. 106. The jury found that Pengu proved that its trade dress was protected because
`
`it obtained secondary meaning as of August 2020, id. at 5, and Blue Legend willfully
`
`infringed Pengu’s trade dress, id. at 6-7. The jury awarded Pengu Blue Legend’s
`
`profits in the amount of $67,5000 from Blue Legend Sugar Land and $120,000 from
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`Blue Legend Katy. Id. at 8.
`
`II.
`
`STANDARD FOR JUDGMENT AS A MATTER OF LAW AND FOR
`NEW TRIAL.
`
`“A motion for judgment as a matter of law . . . in an action tried by jury is a
`
`challenge to the legal sufficiency of the evidence supporting the jury’s verdict.”
`
`Orozco v. Plackis, 757 F.3d 445, 448 (5th Cir. 2014) (quoting SMI Owen Steel Co.
`
`v. Marsh USA, Inc., 520 F.3d 432, 437 (5th Cir. 2008) (per curiam) (citation and
`
`
`
`3
`
`

`

`Case 4:21-cv-01525 Document 131 Filed on 08/29/23 in TXSD Page 4 of 38
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`internal quotation marks omitted)). Under Rule 50(b) “[a] motion for judgment as a
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`matter of law should be granted if there is no legally sufficient evidentiary basis for
`
`a reasonable jury to find for a party.” Id. (citation and internal quotation marks
`
`omitted).
`
`At this stage, a court’s “review of a jury’s verdict is ‘especially deferential.’”
`
`OneBeacon Ins. Co. v. T. Wade Welch & Assocs., 841 F.3d 669, 675 (5th Cir. 2016)
`
`(quoting SMI Owen Steel Co. v. Marsh U.S.A., Inc., 520 F.3d 432, 437 (5th Cir.
`
`2008)). The court “view[s] the entire record in the light most favorable to the non-
`
`movant, drawing all factual inferences in favor of the non-moving party, and
`
`‘leaving credibility determinations, the weighing of evidence, and the drawing of
`
`legitimate inferences from the facts to the jury.’” Aetna Casualty & Surety Co. v.
`
`Pendleton Detectives of Mississippi, Inc., 182 F.3d 376, 378 (5th Cir. 1999) (quoting
`
`Conkling v. Turner, 18 F.3d 1285, 1300 (5th Cir. 1994)).
`
`A court must deny a motion for judgment as a matter of law “unless the facts
`
`and inferences point so strongly and overwhelmingly in the movant’s favor that
`
`reasonable jurors could not reach a contrary conclusion.” Baisden v. I’m Ready
`
`Prods., Inc., 693 F.3d 491, 498 (5th Cir. 2012) (quoting Flowers v. S. Reg’l
`
`Physician Servs. Inc., 247 F.3d 229, 235 (5th Cir. 2001)). “In deciding a Rule 50(b)
`
`motion, even if the court would reach a different conclusion as the trier of fact, the
`
`court is ‘not free to reweigh the evidence or to re-evaluate credibility of witnesses.’”
`
`
`
`4
`
`

`

`Case 4:21-cv-01525 Document 131 Filed on 08/29/23 in TXSD Page 5 of 38
`
`United States ex rel. Montcrieff v. Peripheral Vascular Assocs., P.A., No. SA-17-
`
`CV-00317-XR, 2023 WL 139319, at *4 (W.D. Tex. Jan. 9, 2023) (quoting Brown v.
`
`Kinney Shoe Corp., 237 F.3d 556, 564 (5th Cir. 2001). In short, “[u]nless there was
`
`no credible evidence presented which might authorize the verdict, the jury’s findings
`
`must stand.” Urban Developers LLC v. City of Jackson, Miss., 468 F.3d 281, 297
`
`(5th Cir. 2006) (internal quotations omitted) (quoting Ham Marine, Inc. v. Dresser
`
`Indus., Inc., 72 F.3d 454, 461 (5th Cir. 1995)).
`
`Federal Rule of Civil Procedure 59(a) allows a party to move for a new trial.
`
`In deciding whether to grant a new trial, the court conducts an “assessment of the
`
`fairness of the trial and the reliability of the jury’s verdict.” Wellogix, Inc. v.
`
`Accenture, LLP, 823 F. Supp. 2d 555, 571 (S.D. Tex. 2011), aff’d sub nom. Wellogix,
`
`Inc. v. Accenture, L.L.P., 716 F.3d 867 (5th Cir. 2013) (citing Seidman v. Am.
`
`Airlines, Inc., 923 F.2d 1134, 1140 (5th Cir. 1991)). Although Rule 59 does not
`
`specify or limit the grounds necessary to support such a decision, the court may grant
`
`a new trial if it finds that “‘the verdict is against the weight of evidence, the damages
`
`awarded are excessive, the trial was unfair, or prejudicial error was committed.’”
`
`Vargas v. Manson Gulf, LLC, 439 F. Supp. 3d 809, 813 (E.D. La. 2020) (quoting
`
`Smith v. Transworld Drilling Co., 773 F.2d 610, 613 (5th Cir. 1985)). “The party
`
`asserting the error has the burden of proving that the error was prejudicial.” Ball v.
`
`LeBlanc, 792 F.3d 584, 591 (5th Cir. 2015) (citation omitted).
`
`
`
`5
`
`

`

`Case 4:21-cv-01525 Document 131 Filed on 08/29/23 in TXSD Page 6 of 38
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`The decision as to whether to grant a new trial rests “within the sound
`
`discretion of the trial court[.]” Foradori v. Harris, 523 F.3d 477, 503–04 (5th Cir.
`
`2008) (quoting Shows v. Jamison Bedding, Inc., 671 F.2d 927, 930 (5th Cir. 1982)).
`
`This discretion is even broader when the trial court denies, rather than grants, such
`
`a motion. See Cates v. Creamer, 431 F.3d 456, 460 (5th Cir. 2005) (“Where a motion
`
`for a new trial is granted, we scrutinize that decision more closely.”).
`
`III. BLUE LEGEND’S MOTION FOR JUDGMENT AS A MATTER OF
`LAW IS DENIED.
`
`Blue Legend challenges the sufficiency of the evidence to support the jury’s
`
`finding on four grounds. First, Blue Legend claims that there was insufficient
`
`evidence for the jury to find that Pengu’s trade dress was protectable. ECF No. 113
`
`at 6–16. Second, Defendants argue there was insufficient evidence for the jury to
`
`find there was a likelihood of confusion. Id. at 16–19. Third, Defendants assert that
`
`there was insufficient evidence for the jury to find that Blue Legend’s infringement
`
`was willful. Id. at 19. Finally, Blue Legend contends that Pengu is not entitled to a
`
`disgorgement of Blue Legend’s profits. Id. at 19–24. The Court finds that a
`
`reasonable jury could have found in Pengu’s favor on each of these issues and Pengu
`
`is entitled to entry of judgment on the verdict.11
`
`
`11 For the same reasons, Blue Legend is not entitled to a new trial as it has failed to show that the
`verdict is against the weight of evidence, the damages awarded are excessive, the trial was unfair,
`or prejudicial error was committed. Vargas, 439 F. Supp. 3d at 813.
`
`
`
`6
`
`

`

`Case 4:21-cv-01525 Document 131 Filed on 08/29/23 in TXSD Page 7 of 38
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`A. A Reasonable Jury Could Have Found That Pengu’s Trade Dress
`Acquired Secondary Meaning.
`
`Blue Legend argues that Pengu failed to present sufficient evidence for the
`
`jury to find that its trade dress acquired secondary meaning. ECF No. 113 at 12.
`
`According to Blue Legend, Pengu presented evidence relevant to only four of the
`
`seven factors considered in the Fifth Circuit. Id. Pengu responds that sufficient
`
`evidence was presented. ECF No. 116 at 8. The Court finds there is ample support
`
`for the jury’s findings.
`
`“Secondary meaning occurs when, in the minds of the public, the primary
`
`significance of a mark is to identify the source of the product rather than the product
`
`itself.” Amazing Spaces, Inc. v. Metro Mini Storage, 608 F.3d 225, 247 (5th Cir.
`
`2010) (quoting Bd. of Supervisors for Louisiana State Univ. Agric. & Mech. Coll. v.
`
`Smack Apparel Co., 550 F.3d 465, 476 (5th Cir. 2008)). In the Fifth Circuit, the
`
`seven Pebble Beach factors are considered in determining if a trade dress has
`
`acquired secondary meaning:
`
`(1) length and manner of use of the mark or trade dress, (2) volume
`of sales, (3) amount and manner of advertising, (4) nature of use of
`the mark or trade dress in newspapers and magazines, (5) consumer-
`survey evidence, (6) direct consumer testimony, and (7) the
`defendant’s intent in copying the trade dress.
`
`Id.; Pebble Beach Co. v. Tour 18 I Ltd., 155 F.3d 526, 543 (5th Cir. 1998) (“Pebble
`
`Beach II”), abrogated on other grounds by TrafFix Devices, Inc. v. Mktg. Displays,
`
`Inc., 532 U.S. 23 (2001). “No one factor is dispositive, and a finding of a likelihood
`
`
`
`7
`
`

`

`Case 4:21-cv-01525 Document 131 Filed on 08/29/23 in TXSD Page 8 of 38
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`of confusion does not even require a positive finding on a majority of these digits of
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`confusion.” T-Mobile US, Inc. v. AIO Wireless LLC, 991 F. Supp. 2d 888, 914 (S.D.
`
`Tex. 2014) (quoting Am. Rice, Inc. v. Producers Rice Mill, Inc., 518 F.3d 321, 329
`
`(5th Cir. 2008)).
`
`Blue Legend first argues that the length and manner of use factor does not
`
`favor a finding of secondary meaning. ECF No. 113 at 12–13. According to Blue
`
`Legend, this is because only one Pengu swim school used Pengu’s trade dress for
`
`seven years prior to Blue Legend’s entrance into the market in August 2020. Id. Blue
`
`Legend does not explain why the Court should view this as significant or cite any
`
`caselaw that supports its position. In any case, evidence was presented at trial, and
`
`Blue Legend does not argue otherwise, that Pengu used its trade dress for seven years
`
`before Blue Legend entered the market. Therefore, the jury could have found that
`
`this factor favored a finding of secondary meaning. Pengu Swim Sch., LLC v. Blue
`
`Legend, LLC, No. 4:21-CV-1525, 2023 WL 3044607, at *8 (S.D. Tex. Apr. 21,
`
`2023) (on summary judgment, finding that Pengu’s use of its trade dress weighed in
`
`favor of secondary meaning).
`
`Next, Blue Legend argues that Pengu’s evidence regarding the volume of its
`
`sales is not relevant to the volume of sales factor because it did not “prove sales
`
`correspond[ed with Pengu’s] trade dress.” ECF No. 113 at 13. Again, Blue Legend
`
`does not provide any support for its contention that this factor requires a showing
`
`
`
`8
`
`

`

`Case 4:21-cv-01525 Document 131 Filed on 08/29/23 in TXSD Page 9 of 38
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`that sales corresponded with a plaintiff’s trade dress. Regardless, in the Fifth Circuit,
`
`no such requirement exists. See Nola Spice Designs, L.L.C. v. Haydel Enterprises,
`
`Inc., 783 F.3d 527, 544 (5th Cir. 2015) (analyzing volume of sales factor without
`
`considering whether sales corresponded with use of mark). Because Pengu presented
`
`evidence of significant sales during the seven years in which it used its trade dress
`
`prior to August 2020, a reasonable jury could have found that this factor favored a
`
`finding of secondary meaning.
`
`Third, Blue Legend contends that Pengu “presented little or no evidence of
`
`advertising effectiveness.” ECF No. 113 at 14. However, Blue Legend does not
`
`argue that Pengu failed to present evidence of the amount and manner of its
`
`advertising. Nor could it. Pengu presented evidence that it spent hundreds of
`
`thousands of dollars on advertising that incorporated its trade dress. Such evidence
`
`alone does not demonstrate the effectiveness of the promotional efforts in altering
`
`the meaning of Pengu’s trade dress in the minds of the public. However, Pengu also
`
`presented evidence demonstrating its growth in its revenue over that time, which the
`
`Fifth Circuit has found can lead to an inference of such efforts’ effectiveness. See
`
`Viacom Int’l v. IJR Cap. Invs., L.L.C., 891 F.3d 178, 191 (5th Cir. 2018) (“The
`
`effectiveness of this advertising is evident from the success of product sales”).
`
`Therefore, a reasonable jury could have found that this factor favored a finding of
`
`secondary meaning.
`
`
`
`9
`
`

`

`Case 4:21-cv-01525 Document 131 Filed on 08/29/23 in TXSD Page 10 of 38
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`Blue Legend next argues that Pengu failed to present evidence that Blue
`
`Legend copied Pengu’s trade dress to take advantage of its reputation or perceived
`
`secondary meaning. ECF No. 113 at 15–16. In the Fifth Circuit, “evidence of
`
`deliberate copying can be a weighty factor if it appears the copying attempted to
`
`benefit from the perceived secondary meaning.” Beatriz Ball, L.L.C. v. Barbagallo
`
`Co., L.L.C., 40 F.4th 308, 320 (5th Cir. 2022). Here, there was substantial evidence
`
`of deliberate copying, including:
`
`(cid:120) Blue Legend obtained Pengu’s blueprints and drawings when
`designing its facilities, PX-3;
`
`(cid:120) Blue Legend took photographs of Pengu’s trade dress as “help for
`[Blue Legend’s] design,” PX-17;
`
`(cid:120) Blue Legend asked its architects to base the design of its changing
`rooms on pictures of Pengu’s changing rooms, PX-5.
`
`Further, Blue Legend repeatedly stressed that it wanted its color combination to be
`
`the same as Pengu’s. See PX-6 (“I sen[t] to Ed before the photo ‘I like (Pengu Swim
`
`School)’”). In that same email, Michael Yang recognized that Blue Legend might
`
`not be permitted to copy Pengu’s color scheme, but, nonetheless, ultimately did so.
`
`Id.
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`Based on the evidence of deliberate copying presented to the jury, it could
`
`have inferred that the copying was done with the intention of taking advantage of
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`Pengu’s reputation and the perceived secondary meaning of its trade dress. Although
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`there was no direct evidence that Blue Legend copied Pengu’s trade dress for this
`
`
`
`10
`
`

`

`Case 4:21-cv-01525 Document 131 Filed on 08/29/23 in TXSD Page 11 of 38
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`purpose, Blue Legend cites no caselaw, and the Court can find none, requiring direct
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`evidence of a defendant’s intent when copying. Instead, the jury was free to infer, in
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`light of the totality of the evidence, that there was “no logical reason for the precise
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`copying save an attempt to realize upon a secondary meaning that is in existence.”
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`Ferrari S.P.A. v. Roberts, 944 F.2d 1235, 1239 (6th Cir. 1991) (quoting Audio
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`Fidelity, Inc. v. High Fidelity Recordings, Inc., 283 F.2d 551, 558 (9th Cir. 1960));
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`see also Clearline Techs. Ltd. v. Cooper B-Line, Inc., 948 F. Supp. 2d 691, 704 (S.D.
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`Tex. 2013).
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`Drawing all inferences in favor of Pengu, the jury was presented with more
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`than a scintilla of evidence from which it was entitled to conclude that Pengu’s trade
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`dress acquired secondary meaning. Clearline, 948 F. Supp. 2d at 710.
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`B. A Reasonable Jury Could Have Found That There Was a
`Likelihood of Confusion.
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`Defendants also argue there was insufficient evidence for the jury to find there
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`was a likelihood of confusion. ECF No. 113 at 16–19.
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`In assessing whether there is a likelihood of confusion, courts in the Fifth
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`Circuit consider: (1) similarity of the two products; (2) identity of retail outlets and
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`purchasers; (3) identity of advertising media; (4) strength of the trade dress; (5) intent
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`of the defendant; (6) similarity of design; (7) actual confusion; and (8) degree of care
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`employed by consumers. Yeti Coolers, LLC v. Blueworks, LLC, No. 1:20-CV-
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`01159-RP, 2021 WL 5828375, at *2 (W.D. Tex. Dec. 8, 2021), report and
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`recommendation adopted, No. 1:20-CV-1159-RP, 2021 WL 8444875 (W.D. Tex.
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`Dec. 28, 2021). “[T]he absence or presence of any one factor ordinarily is not
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`dispositive.” Pengu, 2023 WL 3044607, at *13. Moreover, “‘a finding of a
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`likelihood of confusion need not be supported by a majority of the [digits].’” Future
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`Proof Brands, L.L.C. v. Molson Coors Beverage Co., 982 F.3d 280, 289 (5th Cir.
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`2020) (quoting Streamline Prod. Sys., Inc. v. Streamline Mfg., Inc., 851 F.3d 440,
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`455 (5th Cir. 2017)).
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`The jury heard evidence from which they could conclude that there was a
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`likelihood of confusion between Pengu and Blue Legend. Regarding the first and
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`sixth factors—the similarity of the products and design—the jury was presented with
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`photographs of Pengu and Blue Legend’s facilities demonstrating the substantial
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`similarities between the swimming schools. PX-11; PX-29. Additionally, Pengu’s
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`expert Rhonda Harper testified to survey evidence, which indicated that when shown
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`photos of the two swim school facilities, survey respondents found them to be
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`similar. The second factor—identity of retail outlets and purchasers—also could be
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`found to favor a likelihood of confusion, as Pengu and Blue Legend both offer
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`swimming lessons to children in the greater Houston area. Moreover, the evidence
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`established that Blue Legend opened both of its facilities a short distance from
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`Pengu’s already existing facilities in Sugar Land and Katy. Although the jury heard
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`no evidence of actual confusion, such evidence “is not necessary to a finding of a
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`Case 4:21-cv-01525 Document 131 Filed on 08/29/23 in TXSD Page 13 of 38
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`likelihood of confusion.” Kodiak Prod. Co. v. Tie Down, Inc., No. CIV.A.4:03-CV-
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`1474-Y, 2004 WL 2599353, at *10 (N.D. Tex. Nov. 12, 2004).
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`Moreover, there was substantial evidence that Blue Legend intentionally
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`copied Pengu’s trade dress. Although the intent factor is not necessary, it “‘may
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`alone be sufficient to justify an inference that there is a likelihood of confusion.’”
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`Future Proof Brands, 982 F.3d at 289 (quoting Streamline, 851 F.3d at 455).
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`Accordingly, there was more than sufficient evidence for a reasonable jury to
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`find that there was a likelihood of confusion.
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`C. There Was Sufficient Evidence For The Jury To Conclude That
`Pengu’s Trade Dress Infringement Was Willful.
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`Blue Legend argues that there was no evidence that its infringement was
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`willful because no evidence of its state of mind was presented to the jury. ECF
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`No. 113 at 19. This argument is without merit.
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`Again, Plaintiffs introduced extensive evidence of copying. For example,
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`Mr. Yang directed
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`the architects and contractors
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`to copy Pengu while
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`acknowledging that they might not be permitted to do so. See PX-6. Multiple emails
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`documented Mr. Yang’s instructions to copy, instructions to study Pengu, and desire
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`to copy. See PX-5; PX-17. Further, Mr. Yang acknowledged that he went to Pengu’s
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`facility with his son, posing as a parent interested in obtaining swimming lessons for
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`his child, while taking pictures of the facility that he sent to his architects to use in
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`designing Blue Legend’s facility. E.g., PX-17. The emails and this admission present
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`Case 4:21-cv-01525 Document 131 Filed on 08/29/23 in TXSD Page 14 of 38
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`direct evidence of intent to copy. Further, “[a] defendant’s willful intent to infringe
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`on a mark need not be proven directly, but may be inferred from circumstantial
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`evidence of his conduct.” JUUL Labs, Inc. v. Chou, 557 F. Supp. 3d 1041, 1055
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`(C.D. Cal. 2021), reconsideration denied, No. CV 21-3056 DSF (PDX), 2022 WL
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`4596556 (C.D. Cal. Aug. 22, 2022). Based on the evidence presented, the jury could
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`have reasonably inferred that Blue Legend acted with an intent to infringe.
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`D. There Was Sufficient Evidence To Award Profits.
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`Blue Legend contends that Pengu is not entitled to a disgorgement of Blue
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`Legend’s profits. ECF No. 113 at 19–24.
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`“A plaintiff who proves infringement may be entitled to a defendant’s profits,
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`to the extent they are attributable to the defendant’s unlawful use of plaintiff’s trade
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`dress.” Clearline, 948 F. Supp. 2d at 707 (citing 15 U.S.C. § 1117(a); Pebble Beach
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`II, 155 F.3d at 554–55). “An award of profits is not automatic, but discretionary.”
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`Id. In determining whether disgorgement is appropriate, courts in the Fifth Circuit
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`evaluate whether disgorgement is equitable under the Pebble Beach factors:
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`(1) whether the defendant had the intent to confuse or deceive;
`(2) whether sales have been diverted; (3) the adequacy of other
`remedies; (4) any unreasonable delay by the plaintiff in asserting his
`rights; (5) the public interest in making the misconduct unprofitable;
`and (6) whether it is a case of palming off.
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`Pebble Beach II, 155 F.3d at 554. Blue Legend argues that the Pebble Beach factors
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`support setting aside or reducing the profits the jury awarded. ECF No. 114 at 10.
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`Case 4:21-cv-01525 Document 131 Filed on 08/29/23 in TXSD Page 15 of 38
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`The Court considers each of the six Pebble Beach factors below.
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`1.
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`There was sufficient evidence to support a finding that Blue
`Legend intended to confuse or deceive.
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`There is evidence in the record that Blue Legend intended to confuse or
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`deceive. Specifically, there is substantial evidence of copying. For example, Blue
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`Legend’s owner Michael Yang repeatedly instructed his architects in designing Blue
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`Legend’s facilities to copy Pengu and specifically consult the photos he took of
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`Pengu. E.g., PX-17 (“The followings are the pictures I took from Pengu Swim
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`School. Please check if there is any help for our design.”). Multiple pictures of Blue
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`Legend’s facility in evidence show that it not only copied the trade dress but also
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`copied many other features of Pengu’s facilities. The result was that Blue Legend’s
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`facilities looked remarkably similar to, or almost indistinguishable from, Pengu’s
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`facilities. Although copying features that are not protected trade dress poses no
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`violation, it shows Mr. Yang’s intention was to copy Pengu’s trade dress and its
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`overall look, making Blue Legend’s facility nearly indistinguishable from Pengu’s
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`except for the signage outside and at the front desk. Furthermore, the two Blue
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`Legend facilities were opened close to Pengu’s Sugar Land and Katy locations. A
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`jury could infer that this showed an intent to confuse by directly competing within
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`blocks of a facility that looked nearly identical to the new Blue Legend facility.
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`Furthermore, the jury determined that Blue Legend’s infringement was willful
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`after being instructed that “[w]illful means the infringement was done voluntarily,
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`Case 4:21-cv-01525 Document 131 Filed on 08/29/23 in TXSD Page 16 of 38
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`intentionally, and with the specific intent to cause the likelihood of consumer
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`confusion.” Tr. Transcript 164:8–22, ECF No. 129. The jury’s determination
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`supports the conclusion that Blue Legend intended to deceive or confuse—and
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`thereby sought to appropriate Pengu’s goodwill—which in turn supports
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`disgorgement of profits. See Neal Techs., Inc. v. Unique Motorsports, Inc., No. 4:15-
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`CV-385, 2017 WL 2903175, at *6 (E.D. Tex. Jan. 20, 2017) (“A jury finding of
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`willfulness can equate to a finding that the defendant had the intent to confuse or
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`deceive.”).
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`2.
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`There was sufficient evidence to support a finding of diverted
`sales.
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`The second Pebble Beach factor is diverted sales. Blue Legend contends that
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`the “evidence at trial did not demonstrate” that any of Pengu’s sales were diverted.
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`ECF No. 114 at 11. However, there was sufficient evidence that a reasonable jury
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`could infer that sales were diverted. Pengu and Blue Legend are both swim schools
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`offering lessons to children in Sugar Land and Katy, making them direct
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`competitors. The jury also heard testimony that Pengu’s revenue did not achieve its
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`pre-pandemic growth trajectory after Blue Legend opened. Reservoir, Inc. v.
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`Truesdell, 1 F. Supp. 3d 598, 619 (S.D. Tex. 2014) (finding factor favored
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`disgorgement where there was testimony of a drop in sales); cf. Gibson Brands, Inc.
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`v. Armadillo Distribution Enterprises, Inc., No. 4:19-CV-358, 2022 WL 3008501,
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`at *8 (E.D. Tex. July 28, 2022), motion for relief from judgment denied, No. 4:19-
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