Laches bars Peloton Magazine’s claim against Peloton

Move Press, LLC v. Peloton Interactive, Inc., No. LA
CV18-01686 JAK (RAOx), 2019 WL 4570018 (C.D. Cal. Sept. 5, 2019)
It’s hard to prove reverse confusion!  Featuring a cameo by IP’s own Orly Lobel.
Move Press uses PELOTON in connection with its print/digital
magazine, Peloton, featuring articles designed to appeal to the cycling
community. The first issue was distributed nationally in 2011. Move Press also allegedly
uses the mark in connection with its website, blog, documentary films, mobile
applications and social media and sells clothing, bags, footwear, hats and
drinking containers on its http://www.pelotonshop.com website. The initial 2010 application
to register PELOTON for “magazines in the field of bicycles” was denied on
grounds of descriptiveness; it was added to the Supplemental Register in July
2011. Move Press filed again on August 14, 2014, and got PELOTON on the Principal
Register for magazines and online magazines “featuring cycling, racing, food,
travel, clothing shoes, sports equipment, sports apparel, health, nutrition,
film, and photography.”
Peloton is the Peloton you’ve heard of, established in
January 2012. “It sells indoor exercise equipment and subscriptions to its
on-demand fitness classes.” A peloton is “a group of riders working
collaboratively while bicycling together,” and the name was chosen to “evoke
the supportive group environment the company sought to foster through its
virtual group fitness classes.”
In November 2012, Peloton filed to register PELOTON for use
in connection with “stationary bicycles equipped with interactive computer
systems, video players, and body bars,” “downloadable software in the nature of
an application for use by individuals participating in exercise classes,
physical training, and exercise instruction,” and “streaming of audio and video
materials on the Internet featuring physical fitness classes, training, and
instruction.” The registration issued on the Principal Register on August 5,
2014.  Peloton has additional registrations
for (i) sports apparel; (ii) as a service mark for retail and online store
services in the field of sports apparel, fitness equipment, and fitness classes;
and (iii) for its stylized “P” logo.
Peloton’s Kickstarter accepting bicycle orders launched on
June 24, 2013, as did http://www.pelotoncycle.com. Peloton began shipping bicycles in
January 2014.
The court granted summary judgment to Peloton on laches. The
most analogous limitation period was the four-year statute of limitations under
California law. When did the period begin to run? The court noted that Peloton’s
2013 launch “received national media coverage in The Wall Street Journal and
Time Magazine,” and the application was published in September 2013. After the
launch, Move Press’s creative director received an email about it from a former
employee, and forwarded it to a principal in late 2013. The principal visited
Peloton’s website and saw that Peloton was using the PELOTON mark and offering
an indoor exercise bicycle with the name Peloton. 2013 was thus the point at
which the limitation period began. Anyway, even if it began only when Peloton
first shipped its products, that was also more than four years before this
action was filed. There was therefore a rebuttable presumption of laches.
Move Press argued that the doctrine of progressive
encroachment justified its delay in bringing this action because Peloton now
sells clothing and has a blog and digital content that was independent of its
stationary bicycles, and because Peloton now targets a broader audience with an
advertising budget that has at least doubled since it started its business
operations. But “[a] junior user’s growth of its existing business and the
concomitant increase in its use of the mark do not constitute progressive
encroachment.”  Peloton had been selling PELOTON-branded
apparel and accessories since it launched its Kickstarter campaign in 2013, and
producing video content in the form of fitness classes since its inception,
always targeting “almost everyone who has any interest in fitness.” That wasn’t
progressive encroachment.
Was the delay unreasonable? The Ninth Circuit has identified
six relevant factors: (i) strength and value of trademark rights asserted; (ii)
plaintiff’s diligence in enforcing mark; (iii) harm to senior user if relief denied;
(iv) good faith ignorance by junior user; (v) competition between senior and
junior users; and (vi) extent of harm suffered by junior user because of senior
user’s delay.
The first two factors weighed in favor of Peloton. The marks
were relatively weak: descriptive or suggestive. But Peloton’s mark was
substantially more valuable due to its “rapid and continuing growth” relative
to that of Move Press. And Move Press was not diligent in protecting its mark;
despite actual and constructive knowledge in 2013, Move Press did not file an
opposition or seek to cancel any of Peloton’s federal registrations. Move Press
also didn’t seek to enforce its rights in the PELOTON mark against other
companies using PELOTON in connection with bicycle-related goods and services
(there were a couple). And there was a three-and-a-half-year delay between July
13, 2014, when it sent Peloton a C&D, and initiation of suit on February
28, 2018.
As for the harm to Move Press if relief is denied, that
turned on likely confusion, on which there were genuine factual issues (see
below).  The same with factor five
(whether the parties compete). Those couldn’t be weighed either way.
Factor four “focuses on whether Peloton had prior knowledge
of Move Press when it decided to adopt the mark PELOTON.” There was an email to
Peloton’s founder and CEO from his mother, on August 18, 2012, stating, “Just
saw at my grocery store the magazine Peloton.” “Although this provides some
evidence as to Peloton’s awareness of the existence of Move Press in 2012 prior
to announcing or selling its products, there are undisputed facts showing that
Peloton selected the name PELOTON [in 2011] before it was aware of Move Press.”
The final factor was the harm to Peloton from Move Press’s
delay.  Peloton’s investment in the brand
was substantial during the period of delay. It had invested millions of
dollars, hired a lot of people, opened PELOTON-branded retail showrooms across
the US, received numerous awards and widespread media coverage, and overall
developed substantial good will and recognition in the fitness market. The
prejudice would be “substantial” if Peloton were to lose rights to the PELOTON
name.
Overally, the weighable factors weighed heavily in favor of
Peloton, entitling it to summary judgment on whether the delay was unreasonable.
For the same reasons, Peloton would be prejudiced by allowing suit.  “[A]t least some reliance on the absence of a
lawsuit” is necessary to show prejudice.
When Peloton filed its trademark
application for PELOTON, the PTO initially rejected it, citing Schwinn’s
PELOTON registration for outdoor bicycles. Thereafter, Peloton contacted
Schwinn, which led to an agreement between the two that allowed Schwinn to
maintain its registration for its mark for its outdoor bicycle while allowing
Peloton to use the mark in connection with home fitness products and services. The
PTO then approved Peloton’s amended application. This evidence supports an
inference that Peloton would have acted differently had Move Press challenged
Peloton’s use of the PELOTON mark when Peloton filed its trademark application.
There was also no triable issue on prejudice.
Move Press argued that willful infringement wasn’t subject
to laches. This requires knowledge on the defendant’s part that its conduct
constitutes infringement. The record was insufficient to allow a jury to conclude
that there was willful infringement. Numerous courts have found that “[p]rior
knowledge of a senior user’s trademark does not necessarily give rise to an inference
of bad faith and may be consistent with good faith.” There was no evidence of
wrongful intent to capitalize on Move Press’s goodwill, and when the founder learned
of Move Press, he believed there was no likelihood of confusion between PELOTON
Magazine and Peloton’s goods and services. “[A] knowing use in the belief that
there is no confusion is not bad faith.”  Nor was it bad faith to continue using PELOTON
after receiving the C&D.  Peloton
responded by rejecting Move Press’s claims and concluded by stating “[w]e trust
that this resolves the matter; however, if you have questions, please contact
the undersigned.” There was no response, until Move Press sued three and a half
years later. “By failing to respond to Peloton’s response letter, Move Press
reinforced Peloton’s belief that it was not infringing on the Move Press mark.”
Turning to Move Press’s motion for summary judgment, Peloton
argued that Move Press couldn’t establish priority, which would have to be
based on common law rights preceding Peloton’s Nov. 9, 2012 filing date. “According
to Move Press, by the end of 2011, 25,000 print copies had been distributed
nationwide and Move Press had 15,000 digital subscribers.” Move Press also
relied on statements by Peloton’s founder’s mother about seeing a copy of the
PELOTON magazine in a grocery store in Texas.
Move Press was not entitled to summary judgment on whether
it had sufficient nationwide market penetration to give it common-law rights.
The evidence of use included only copies of 2014 magazines, not 2011 magazines.
Internal emails about promotional reach weren’t enough to show that the use was
“sufficiently public” as of 2011. Sufficient penetration had to be assessed
considering “volume of sales and growth trends, the number of persons buying
the trademarked product in relation to the number of potential purchasers, and
the amount of advertising.”  There wasn’t
any evidence about the actual location of its subscribers or the actual sales
in each state.
There were also triable issues on likely confusion sufficient
to reject Move Press’s motion for summary judgment on confusion.
Even if the Move Press mark was suggestive, “suggestive
marks are presumptively weak,” and there were several other PELOTON-related
marks in the cycling market.  Although there
was some evidence of Move Press’s commercial strength (in 2018, it distributed
12,000 printed copies of the magazine, and the number of digital subscribers
dropped to 7000; over eight years it had “approximately one billion online
responses to its social media content”), Peloton’s was substantially stronger.
There was a potential for reverse confusion, making the strength of the mark
factor favor Move Press. [Other courts would say that higher-than-suggestive
conceptual strength is required to make the strength factor favor the plaintiff
in a reverse confusion case.]
Relatedness/proximity of goods: triable issues on how close
they were.
Similarity of the marks: though the words were the same, the
visual appearances differed. Move Press began with a serif font in all
lowercase letters, underlined with the caption “fuel the ride” beneath it. It later
changed to a non-serif font and in all capital letters. At all times, it was black
and white and was often preceded by “Move Press” and followed by “Magazine.” Peloton,
meanwhile, uses a san serif font in all capital letters, frequently in
conjunction with its registered “P” logo in bright red. This was enough to create
a triable issue of fact on visual dissimilarity. And a reasonable jury could
find a difference in meaning between PELOTON alone (used as a metaphor for a
body of riders) and PELOTON Magazine (which could be reasonably understood as a
publication about bicycle races).
 

Peloton with logo

Peloton Magazine with slogan

Actual confusion: Move Press cited nine examples of customer
confusion, five of them Peloton Magazine being tagged in posts about
Peloton.  E.g., Orly Lobel tweeted “Hugh
giving all the rest of us in the #Peloton family goals to aspire to @onepeloton
@pelotonmagazine though I bet he doesn’t have near 500 @classpass classes yet!”;
in response to the tweet “Follow us for cycling news, photos, features and RT’s
of intrigue,” a user wrote “I think I will pass.. You pulled your ads from
@Hannity #diseasedLiberals don’t get my $$$$”; “Stay away from Peloton spin
bikes … worst customer service ever @pelotonmagazine #peloton #spinning
@PelotonBikes Paid for now two weeks with no show appointments…. shop
elsewhere.”  One person wrote to Move
Press seeking to feature a Peloton spin bicycle on a show; one entity sent a
vehicle for review to the magazine along with a personal note stating, “My
coworker just took delivery of a new Peloton bike today.” The owner of a
cycling industry insurance agency asked about PELOTON Magazine’s affiliation
with the PELOTON bicycle and whether Peloton paid Move Press a licensing fee to
use PELOTON, and one talent/media agency approached Move Press to discuss
providing PELOTON-branded cycling packages and global live racing; when Move
Press said there was no affiliation, the executives ended the meeting.
This wasn’t enough to avoid a triable issue on actual confusion.
“Given that the two marks have been in the market for more than four years and
that both parties use Twitter, ‘a handful of examples of anecdotal confusion
are insufficient to support a finding confusion.’” The four non-Twitter
examples were insufficient show “persuasive evidence that a significant number
of consumers have formed a similar mental association” to demonstrate actual
confusion.
Marketing channels: it wasn’t enough to both advertise on
the internet (everyone does) or at the Tour de France (only one marketing
channel among many for both parties). Weighed against likely confusion.
Degree of care: Although Move Press argued that its
consumers were unsophisticated, it also contended that its magazine “is trying
to reach a high-end cycling male-dominated base of consumers” with an “average
household income of 175 [thousand]” who are “highly-educated.” And Peloton’s
customers “exercise a higher standard of care when deciding whether to spend
$2000 on an exercise bicycle or $4,000 on a treadmill.” Triable issue of fact.
Peloton’s intent: in a reverse confusion case, bad intent
could be shown with “evidence that a defendant deliberately intended to push
the plaintiff out of the market by flooding the market with advertising to
create reverse confusion,” or that “the defendant knew of the mark, should have
known of the mark, intended to copy the plaintiff, failed to conduct a
reasonably adequate trademark search, or otherwise culpably disregarded the
risk of reverse confusion ….”  But
there was no particularized evidence of purposeful disregard for the risk of
reverse confusion. Peloton’s declaration said that it discovered several
companies that were using “Peloton” as their brand name or in connection with
their products and services, but none used “Peloton” for interactive home
fitness products. There was a triable issue on bad faith.
Product expansion: The triable issue of fact as to the
relatedness of the goods made this factor neutral.
Overall, Move couldn’t prevail on summary judgment of likely
confusion.

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