     13-1038-cv(L)
     U.S. Polo Ass’n, Inc. v. PRL USA Holdings, Inc.

 1                         UNITED STATES COURT OF APPEALS

 2                             FOR THE SECOND CIRCUIT

 3                               August Term, 2013

 4
 5   (Argued: February 19, 2014                        Decided: May 13, 2015)
 6
 7               Docket Nos. 13-1038-cv(L), 13-1130-cv(CON)
 8   - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
 9   UNITED STATES POLO ASSOCIATION, INC., USPA PROPERTIES, INC.,
10
11               Plaintiffs-Counter-Defendants-Appellants,
12
13   JRA TRADEMARK COMPANY, LTD.,
14             Intervenor-Plaintiff-Appellant,
15
16                  v.
17
18   PRL USA HOLDINGS, INC., L’OREAL USA, INC.,
19
20             Defendants-Counter-Claimants-Appellees.
21   - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - -
22
23   B e f o r e:        KEARSE, WINTER, and WESLEY, Circuit Judges.
24
25         Appeal from a contempt judgment entered in the United States

26   District Court for the Southern District of New York (Robert W.

27   Sweet, Judge).      We vacate and remand.
28
29                                       KYLE C. BISCEGLIE (Matteo J.
30                                       Rosselli, on the brief), Olshan
31                                       Frome Wolosky LLP, New York, NY,
32                                       for Plaintiffs-Counter-Defendants-
33                                       Appellants.
34
35                                       MICHAEL S. SOMMER (Jessica L.
36                                       Margolis & Scott D. Tenley, on the
37                                       brief), Wilson Sonsini Goodrich &
38                                       Rosati, P.C., New York, NY, for
39                                       Intervenor-Plaintiff-Appellant.
40

                                           1
 1                                   JOHN M. CALLAGY (William R. Golden,
 2                                   Jr., Andrea L. Calvaruso, Taraneh
 3                                   J. Marciano, on the brief), Kelley
 4                                   Drye & Warren LLP, New York, NY,
 5                                   for Defendants-Counter-Claimants-
 6                                   Appellees.
 7
 8   WINTER, Circuit Judge:
 9
10        This appeal is the latest chapter in a now over-30-year

11   dispute involving trademarks relating to the sport of polo used

12   on consumer goods.   United States Polo Association, Inc. and USPA

13   Properties, Inc. (together, “USPA”) and USPA’s licensee, JRA

14   Trademark Co., appeal from Judge Sweet’s order of contempt

15   finding USPA in violation of a permanent injunction.   The court

16   held that appellants’ logo on eyewear products was confusingly

17   similar to the logo used by appellees PRL USA Holdings, Inc. and

18   L’Oreal USA, Inc. (together, “PRL”) on PRL’s eyewear products.

19   USPA argues that the underlying injunction did not enjoin all

20   uses of the mark.    We agree and vacate the contempt order and

21   remand for further proceedings.

22                                BACKGROUND

23        USPA is the governing body of the sport of polo but also

24   markets certain consumer goods, often in competition with PRL.

25   PRL owns the trademark rights and exclusive licenses for the Polo

26   Ralph Lauren brand, which includes the “Polo Player Logo” –- an

27   image depicting a mounted polo player with a raised mallet -- and

28   the “POLO” word mark.

29

                                       2
 1   a)      The 1984 Injunction

 2           The conclusion of the opening litigation occurred in 1984,

 3   when, after a bench trial, Judge Sand issued an injunction

 4   against USPA.    U.S. Polo Ass’n v. Polo Fashions, Inc., No. 84

 5   Civ. 1142 (LBS), 1984 WL 1309 (S.D.N.Y. Dec. 6, 1984) (“1984

 6   Injunction”).    The 1984 Injunction prohibited USPA, inter alia,

 7   from “using any of the [PRL marks] or any name or mark or symbol

 8   which is confusingly similar thereto, in connection with the sale

 9   . . . of any goods or the rendering of any services[.]”      U.S.

10   Polo Ass’n v. PRL USA Holdings, Inc., No. 09 Civ. 9476, 2013 WL

11   837565, at *1 (S.D.N.Y. Mar. 6, 2013).     While the 1984 Injunction

12   applied to all markets, the term “confusingly similar” was not a

13   bright line.    Rather, as amplified in subsequent litigation,

14   discussed infra, its meaning turned on a comparison of competing

15   logos and the words associated with them, see PRL USA Holdings,

16   Inc. v. U.S. Polo Ass’n, 520 F.3d 109 (2d Cir. 2008), and varied

17   with the nature of the various markets in which the logos and

18   words are used, see U.S. Polo Ass’n v. PRL USA Holdings, Inc.,

19   511 F. App’x 81 (2d Cir. 2013) (summary order).

20   b)      The Apparel Litigation

21           The mark at issue in this appeal is styled the “Double

22   Horsemen Mark.”    It depicts two mounted polo players vying for a

23   ball.    When USPA began using four variations of this mark in

24   1996, PRL brought an action seeking to enjoin its use on a

25   variety of products (“Apparel Litigation”).

                                        3
 1        In 2003, the parties resolved most of the issues in a

 2   settlement agreement involving a number of USPA logos and word

 3   marks.   However, the parties went to trial on whether four

 4   varieties of the Double Horsemen Mark infringed PRL’s marks.

 5   After a three-week trial, the jury concluded that three of four

 6   Double Horsemen Marks, see Note 1 infra, did not infringe PRL’s

 7   marks in the markets for apparel, leather goods, and watches.

 8   PRL USA Holdings, Inc. v. U.S. Polo Ass’n, No. 99-cv-10199(GDB),

 9   2006 WL 1881744, at *3 (S.D.N.Y. July 7, 2006).           We affirmed.

10   PRL USA Holdings, Inc., 520 F.3d at 119.

11   c)   The Fragrance Litigation and Injunction

12        After conclusion of the Apparel Litigation, USPA continued

13   using the Double Horsemen Mark1 on a variety of products.            In

14   2009, USPA expanded its marketing into fragrance products.             After

15   failed negotiations with PRL, USPA sought a declaratory judgment

16   that, inter alia, the Double Horsemen Mark did not violate

17   Sections 43(a) and (c) of the Lanham Act, 15 U.S.C. §§ 1125(a),

18   (c), when used in connection with its fragrance products

19   (“Fragrance Litigation”).      PRL and its licensee, L’Oreal USA,

20   Inc., brought trademark counterclaims for infringement and sought

21   an injunction against the use of the Double Horsemen Mark, the



           1
             The “Double Horsemen Mark” hereinafter refers only to the three of
     four Double Horsemen Marks that the Apparel Litigation jury found did not
     infringe on PRL’s marks. See PRL USA Holdings, Inc., 2006 WL 1881744, at *1.

                                           4
 1   word mark, “U.S. POLO ASSN,” and “1890" (the year USPA was

 2   founded) on “fragrance or cosmetics products.”

 3        After a bench trial, Judge Sweet rejected USPA’s claims,

 4   holding that using the Double Horsemen Mark on fragrance products

 5   violated PRL’s trademark rights.       U.S. Polo Ass’n v. PRL USA

 6   Holdings, Inc., 800 F. Supp. 2d 515, 542 (S.D.N.Y. 2011).        The

 7   court held that USPA’s favorable verdict in the Apparel

 8   Litigation did not dictate the outcome in the Fragrance

 9   Litigation because the apparel decision did not “address[] the

10   marks at issue here in the fragrance market.”      Id. at 529.

11        In March 2012, the district court entered a permanent

12   injunction enjoining USPA from using the Double Horsemen Mark on

13   fragrances and related products (“Fragrance Injunction”).

14   Paragraph 3, the basis of the district court’s contempt finding

15   in the present matter, enjoined USPA from:

16             a. Using the Double Horsemen Mark . . . alone
17             or in combination with any name, symbol,
18             device, or other word(s) in connection with
19             the advertising, promotion, offering for sale
20             or sale of fragrances or related products
21             such as cosmetics, personal care products and
22             beauty products;
23
24             b. Using the word “POLO” alone or in
25             combination with any name, symbol, device or
26             other word(s) in connection with the
27             advertising, promotion, offering for sale or
28             sale of fragrances or related products such
29             as cosmetics, personal care products and
30             beauty products;
31
32

                                        5
 1               c. Using the PRL marks or any other name or
 2               mark, including the image of one or more
 3               mounted polo players, that constitutes a
 4               colorable imitation of or is confusingly
 5               similar to PRL’s Polo Player Logo . . . or
 6               “POLO” word mark in connection with the sale
 7               or offering for sale of any goods or
 8               rendering of any services;
 9
10               d. Using for any commercial purpose
11               whatsoever any symbol, logo, trade name,
12               trademark, or trade dress that which is
13               calculated to or has the effect of
14               representing that the products or services of
15               or licensed by the USPA Parties are
16               associated with, sponsored, endorsed, or
17               authorized by, or are in any way connected or
18               associated with the PRL Parties or any entity
19               affiliated with them.
20
21   U.S. Polo Ass’n, 2013 WL 837565, at *4; see also U.S. Polo Ass’n

22   v. PRL USA Holdings, Inc., No. 09 Civ. 9476, 2012 WL 697137, at

23   4-5 (S.D.N.Y. Mar. 5, 2012).    USPA appealed the injunction, and

24   we affirmed by summary order.   U.S. Polo Ass’n, 511 F. App’x at

25   82.   On its appeal, USPA argued that the Apparel Litigation

26   precluded the injunction.   However, we rejected that argument on

27   the ground that the issue of confusing similarity regarding

28   USPA’s use of the Double Horsemen Mark was market-specific.    Id.

29   at 83-84.   We also rejected USPA’s argument that the Fragrance

30   Injunction’s terms were overbroad, in part because of the

31   district court’s finding of bad faith which we declined to

32   overturn, but also because Paragraph 3(c), which applies to all

33   markets, merely tracked the 1984 Injunction, to which USPA was

34   already subject.   Id. at 86.

                                       6
 1   d)    The Contempt Order

 2         Between 2009 and 2012, USPA sold nearly one million pairs of

 3   sunglasses bearing the Double Horsemen Mark.           In August 2012, PRL

 4   moved for an order of contempt, claiming that USPA violated both

 5   the 1984 Injunction and the Fragrance Injunction by its use of

 6   the Double Horsemen Mark on eyewear.         The district court issued a

 7   contempt order based on its finding that there was clear and

 8   convincing evidence that USPA violated Paragraphs 3(c) and (d) of

 9   the Fragrance Injunction.       U.S. Polo Ass’n, 2013 WL 837565, at

10   *9-14.2

11         The district court held that:        (i) Paragraph 3(c) of the

12   Fragrance Injunction clearly and unambiguously applied to all

13   markets, id. at *9-12; (ii) PRL proved by clear and convincing

14   evidence that “the Double Horsemen Mark is a ‘colorable

15   imitation’ or is ‘confusingly similar’ to PRL’s Polo Player

16   Logo,” id. at *12; and (iii) USPA did not diligently comply with

17   the Fragrance Injunction, id. at *13.         In reaching these

18   conclusions, the court declined to engage in a market-specific

19   analysis of whether use of the Double Horsemen Mark in eyewear

20   was confusingly similar to PRL’s use of its marks in that market.

21   In relying on Paragraph 3(c) of the Fragrance Injunction, the

22   court held that a market-by-market analysis was inappropriate in


           2
             The district court also granted JRA Trademark’s motion to intervene,
     2013 WL 837565, at *7-8, and declined to decide whether USPA was in contempt
     of the 1984 Injunction, id. at *14.

                                           7
 1   the context of a motion for contempt.          This ruling was based on

 2   our decision in Wella Corp. v. Wella Graphics, Inc., 37 F.3d 46,

 3   48 (2d Cir. 1994) (holding that the district court erred in

 4   considering the Polaroid factors, Polaroid Corp. v. Polarad

 5   Elecs. Corp., 287 F.2d 492, 495 (2d Cir. 1961), in making its

 6   contempt determination).3

 7         Finally, because PRL had been on notice of USPA’s use of the

 8   Double Horsemen Mark in eyewear for at least two years prior to

 9   its motion for a contempt judgment, the court awarded PRL only

10   prospective relief -- that is, “future profits of any sales of

11   sunglasses containing the Double Horsemen Mark sixty days

12   following the [court’s] order.”           U.S. Polo Ass’n, 2013 WL 837565,

13   at *15.

14                                 DISCUSSION

15         We review a contempt order with a “more exacting” version of

16   the abuse-of-discretion standard.          Perez v. Danbury Hosp., 347

17   F.3d 419, 423 (2d Cir. 2003).        Before issuing a contempt order, a

18   district court must find that the alleged contemnor had notice of

19   the underlying order, that the terms of the order were clear and

20   unambiguous, and that proof of noncompliance was clear and



           3
             We note that the Polaroid test is not strictly in issue here because
     Polaroid involved a plaintiff alleging trademark infringement within a market
     the plaintiff had not yet entered. Rather, USPA and PRL appear to have been
     competing head-to-head in the same markets, similar to the parties in
     Brennan’s Inc. v. Brennan’s Rest., L.L.C., 360 F.3d 125, 133 (2d Cir. 2004)
     (“Because the ultimate issue is the likelihood of confusion, analysis focuses
     on the particular industry where the marks compete.”) (emphasis added).

                                           8
 1   convincing.    Perfect Fit Indus. v. Acme Quilting Co., Inc., 646

 2   F.2d 800, 808 (2d Cir. 1981).   The district court’s underlying

 3   factual determinations are reviewed for clear error, but

 4   questions of law, including interpretation of the order, are

 5   reviewed de novo.    Latino Officers Ass’n of N.Y., Inc. v. City of

 6   New York, 558 F.3d 159, 164 (2d Cir. 2009).

 7        Central to this appeal is whether the district court’s

 8   finding of a violation of the Fragrance Injunction by USPA’s use

 9   of the Double Horsemen Mark on eyewear required application of

10   market-specific standards.

11        Our resolution of what conduct is barred by the Fragrance

12   Injunction and of whether USPA engaged in such conduct requires

13   scrutiny of the history of the parties’ litigation.   A critical

14   fact in this history is that, after entry of the 1984 Injunction,

15   a jury in the Apparel Litigation found the Double Horsemen Mark

16   to be non-infringing -- not “confusingly similar” to, or a

17   “colorable imitation” of, PRL’s marks -- when used as a logo in

18   marketing apparel, leather goods, and watches.   This verdict

19   clearly indicated at the very least that use of the Double

20   Horsemen Mark is non-infringing in some markets.   In the

21   Fragrance Litigation, the district court viewed the verdict in

22   the Apparel Litigation as not binding because of the differences

23   between the apparel and fragrance/cosmetic markets.   We agreed

24   and affirmed the Fragrance Injunction.    U.S. Polo Ass’n, 511 F.

25   App’x at 82.

                                       9
 1        However, in the present matter -- the contempt proceeding

 2   based on the Fragrance Injunction -- the district court concluded

 3   that the Fragrance Injunction barred use of the Double Horsemen

 4   Mark in every market but that for apparel.   U.S. Polo Ass’n, 2013

 5   WL 837565, at *10, 12.   We disagree with that ruling.   The fact

 6   that the Apparel Litigation does not shield USPA’s use of a

 7   Double Horsemen Mark on eyeglasses from an infringement finding

 8   does not, without more, render it liable for infringement in that

 9   and all other markets save for apparel.   Indeed, our affirmance

10   of the Fragrance Injunction, in holding that infringement in one

11   industry does not “as a matter of law, preclude a finding of

12   similarity in another,” U.S. Polo Ass’n, 511 F. App’x at 83,

13   stated that a market-by-market analysis is needed.   Id.

14        To be sure, Paragraph 3(c) of the Fragrance Injunction

15   applies to all markets, but the language in question merely

16   repeats that of the 1984 Injunction.   That Injunction, as our

17   holding in affirming the Fragrance Injunction states, requires a

18   market-by-market analysis regarding confusing similarity.     Id. at

19   86 (noting that the Fragrance Injunction pertains to the

20   fragrance market and closely related fields; “[t]o the extent it

21   reaches any further, it merely tracks the language of the 1984"

22   Injunction).

23        Given the present record, it is not apparent that the

24   differences between the fragrance/cosmetic and eyeglass


                                     10
 1   industries are not as great as the differences between the

 2   apparel and fragrance/cosmetic industries.    Indeed, at least

 3   without an evidentiary record demonstrating otherwise, the

 4   eyeglass and apparel industries seem closer to each other than

 5   either is to the fragrance/cosmetic market.   But, in holding USPA

 6   in contempt, the district court declined to apply a market-

 7   specific test.

 8        In holding that the Fragrance Injunction was violated, the

 9   district court explicitly rejected USPA’s argument that the order

10   “is limited to fragrance[/cosmetic] products . . . and proof of

11   confusion.”   U.S. Polo Ass’n, 2013 WL 837565, at *9.   That

12   rejection is not consistent with our decision affirming the

13   Fragrance Injunction or with the arguments that PRL made on that

14   appeal.   To be sure, Paragraph 3(c) bars use of “the image of one

15   or more mounted polo players, that constitute a colorable

16   imitation of or is confusingly similar to PRL’s Polo Player logo

17   . . . in connection with the sale . . . of any goods, . . . .”

18   However, as noted, that language merely tracks the 1984

19   Injunction which, as explained earlier, does not bar use of the

20   Double Horsemen Mark in all markets.   When entry of the Fragrance

21   Injunction was challenged by USPA on its appeal, PRL’s brief

22   emphasized over and over again that the Fragrance Injunction was

23   limited to the fragrance market, Brief for Defendant-Counter-

24   Claimant-Appellee at 15, 19, 20, 23, 24, U.S. Polo Ass’n, 511 F.


                                     11
 1   App’x 81 (No. 12-1346), and to the prohibitions of the 1984

 2   Injunction, id. at 29, 31-32.   Most importantly, in affirming the

 3   Fragrance Injunction against an overbreadth claim, we clearly

 4   read the order to apply only to the fragrance/cosmetics market

 5   and to be limited to the scope of the 1984 Injunction.     We

 6   stated:

 7              This case presents no concerns akin to those
 8              raised in Starter Corp. v. Converse, Inc.,
 9              170 F.3d 286 (2d Cir. 1999), where an
10              injunction covered an entire market that was
11              not the one in which the infringing mark was
12              used, and prohibited use of the mark for a
13              category of goods that had been judicially
14              admitted not to be at issue, see id. at 300.
15              Here, the injunction pertains to use of the
16              Double Horsemen logo and the word “polo” in
17              the fragrance market, the focus of this
18              litigation, as well as closely related fields
19              such as cosmetics. To the extent it reaches
20              any further, it merely tracks the language of
21              the 1984 Order, to which USPA was already
22              subject. Moreover, the injunction does not
23              impede USPA’s use of its outlined Double
24              Horsemen mark on apparel, which was found
25              non-infringing in the 2006 litigation, a
26              determination that has issue-preclusive
27              effect here.
28
29   U.S. Polo Ass’n, 511 F. App’x at 86.

30        Therefore, the fact that the Apparel Litigation does not

31   preclude the Fragrance Litigation does not imply that the Double

32   Horsemen Mark infringes PRL’s marks in every market except

33   apparel.   It simply means that a finding of confusing similarity

34   must be made on a market-by-market analysis.

35


                                     12
 1        We acknowledge that confusion may exist as to whether there

 2   is an automatic bar to application of a market-by-market test in

 3   contempt proceedings.   In declining to apply such a test, the

 4   district court relied upon our decision in Wella, in which we

 5   held that undertaking a market-by-market Polaroid analysis was

 6   error in that particular contempt proceeding.     In Wella, a hair-

 7   products manufacturer named “Wella Corporation” sought an

 8   injunction against a graphics company named “Wella Graphics” from

 9   using the name “Wella.”   Wella Corp., 37 F.3d at 47.     Because

10   Wella Graphics never answered the complaint, the district court

11   entered a default judgment, enjoining Wella Graphics from

12   “[u]sing Wella or any mark confusing[ly] similar to [Wella

13   Corporation’s] mark Wella.”    Id.    Wella Graphics then slightly

14   altered its name to Wello Graphics.     The district court held that

15   this change did not warrant a contempt order because the two

16   companies were not in direct competition with one another.     Id.

17   On appeal, we held that the district court’s use of a market-by-

18   market analysis was error.    Id. at 48.    However, in Wella, the

19   genuinely contested issue was not whether the name “Wello” was

20   “confusingly similar” to the name “Wella” -- it was an obvious

21   attempt at evading the injunction -- but whether the lack of

22   direct competition between the parties rendered the injunction

23   inapplicable.   Id.   Of course, it did not.

24        Unlike Wella, the present matter is not a case of a minor

25   and immaterial alteration of an unquestionably infringing mark.

                                      13
 1   Rather, it is a dispute over the use of marks that have been held

 2   not to be confusingly similar to PRL’s marks in another major

 3   market.   By contrast, Wella is limited to cases where a clearly

 4   confusingly similar mark is governed by an injunction that

 5   applies to all markets.

 6        However, we add a word of caution about the use of market-

 7   specific standards in contempt proceedings.    The parties bound by

 8   an injunction are entitled to clear notice of what specifically

 9   they may or may not do, and any test involving a non-exhaustive

10   list of multiple factors, see Brennan’s Inc., 360 F.3d at 130,

11   may not yield easily predictable results or fair notice.    Use of

12   market-specific standards in contempt proceedings will,

13   therefore, lead to an order of contempt only when reasonably

14   obvious infringement is shown by clear and convincing evidence.

15        There is no record before us as to the application of

16   market-specific factors to the eyeglass and fragrance/cosmetic

17   markets, and we do not preclude a resumption of the contempt

18   proceedings on remand.    However, because of the often

19   unpredictable results of market-by-market analysis, a finding

20   that the Double Horsemen Mark is, when used on eyewear,

21   confusingly similar to PRL’s marks, while sufficient to find

22   liability in an infringement proceeding, is not sufficient to

23   support a contempt finding.   To hold USPA in contempt, two

24   additional findings must be made:     (i) a reasonable firm in


                                      14
 1   USPA’s position, knowing the context of the Fragrance Injunction

 2   -- in particular, the verdict in the Apparel Litigation and our

 3   order affirming the Fragrance Injunction that adopted PRL’s

 4   arguments described above -- would have been on clear notice that

 5   use of the Double Horsemen Mark on eyewear violated the

 6   injunction; and (ii) the finding of confusing similarity is

 7   supported by clear and convincing evidence.   The present record

 8   does not support either such finding.

 9                               CONCLUSION

10        We therefore vacate and remand for further proceedings in

11   accordance with this opinion.   Given the efforts this panel has

12   expended on this matter and its resultant familiarity with it, we

13   order that the clerk refer any appeal from an order of contempt

14   based on the Fragrance Injunction involving eyewear to this

15   panel.   This directive does not apply to an appeal from a finding

16   of infringement or non-infringement in a new infringement

17   proceeding involving eyewear or one not involving eyewear.

18

19

20

21

22

23




                                     15
