                 FOR PUBLICATION
 UNITED STATES COURT OF APPEALS
      FOR THE NINTH CIRCUIT

KP PERMANENT MAKE-UP, INC.,           
                 Plaintiff-counter-
               defendant-Appellee,
                v.                          No. 01-56055
LASTING IMPRESSION I, INC; MCN
INTERNATIONAL INC,
                                             D.C. No.
                                          CV-00-00276-GLT
              Defendants-counter-            OPINION
             claimants-Appellants,
ROES 1 THROUGH 10, inclusive,
      Counter-defendant-Appellee.
                                      
    On Remand from the United States Supreme Court

                    Filed May 19, 2005

       Before: Procter Hug, Jr., Melvin Brunetti, and
         Diarmuid F. O’Scannlain, Circuit Judges.

                  Opinion by Judge Hug




                           5375
        KP PERMANENT MAKE-UP v. LASTING IMPRESSION I       5379


                         COUNSEL

Charles C. H. Wu and Mark H. Cheung, Jr., Irvine, California,
for the defendants-counterclaimants-appellants.

Michael Machat, Beverly Hills, California, for the plaintiff-
counter-defendant-appellee.


                          OPINION

HUG, Circuit Judge:

I.   Introduction

   This case concerns the term “micro colors” and who has the
right to use it. The parties use the term “micro color,” “micro-
color,” and “micro colors” interchangeably. For purposes of
this opinion, we will refer to the term as “micro color” or
“micro colors.” The minor difference in these terms has no
significance in this action. Lasting Impression I, Inc., owns an
incontestable, registered trademark, which consists of the
term “micro colors,” set in white, within a black box. It is the
5380     KP PERMANENT MAKE-UP v. LASTING IMPRESSION I
registration for this composite mark that is the basis of this lit-
igation.

   K.P. Permanent Make-Up, Inc. (“KP”) uses the term
“micro colors” on its products and brochures. Upon receiving
a cease and desist letter from Lasting Impression I, Inc., in
January 2000 demanding KP discontinue its use of the term
“micro color,” KP brought this action for declaratory relief
against the defendants Lasting Impression I, Inc., and its dis-
tributor, MCN International, Inc. (hereinafter collectively
referred to as “Lasting”). KP asserted that Lasting did not
have the exclusive right to use the term “micro colors” and
that the term was generic and incapable of receiving trade-
mark protection. Lasting counterclaimed, alleging that KP’s
use of the term “micro color” infringed Lasting’s incontest-
able, registered mark. The parties filed cross motions for sum-
mary judgment and summary adjudication.

   The district court concluded that the term “micro colors”
was generic, or if not generic, descriptive. The court then
determined that KP was entitled to continue use of the term
“micro colors,” in the manner that it had been since 1991, and
that Lasting could continue to use its trademarked logo. Last-
ing appealed the district court’s grant of summary judgment
in favor of KP, and we reversed. KP Permanent Make-Up,
Inc. v. Lasting Impression I, Inc., 328 F.3d 1061, 1073 (9th
Cir. 2003) (“KP I”). The Supreme Court granted certiorari,
540 U.S. 1099 (2004), and vacated the judgment. KP Perma-
nent Make-Up, Inc. v. Lasting Impression I, Inc., 543 U.S.
___, 125 S. Ct. 542 (2004) (“KP II”).1 On remand, we con-
tinue to have jurisdiction under 28 U.S.C. § 1291.
  1
   The Supreme Court did not address our holdings “as to the generic or
descriptive nature of the term ‘micro color’ and any secondary meaning
that term has acquired by any of the parties.” KP II, 125 S. Ct. at 546 n.3.
Accordingly, this amended opinion reinstates in full the sections of KP I
resolving these issues.
        KP PERMANENT MAKE-UP v. LASTING IMPRESSION I         5381
II.   Factual and Procedural Background

   KP and Lasting are direct competitors in the permanent
makeup industry. To better understand the nature of the term
“micro color,” a brief description of permanent makeup and
the permanent makeup industry is of use. Permanent makeup
is similar to a tattoo, in that both are created by injecting pig-
ment into the skin. Permanent makeup has both cosmetic and
medical uses. For example, it may be used to create perma-
nent eye liner and to enhance eyebrows, or it may be used in
scar revision or in cases of pigmentary disorder. Permanent
makeup is also known as micropigmentation.

  The pigments used for permanent makeup are sold in small
bottles for use by trained professionals. Both KP and Lasting
have a separate line of pigments for use in the permanent
makeup process. These pigments are sold in various colors.
Further, both KP and Lasting sell their pigments to the same
end users, such as beauty salons.

   Lasting began using “micro colors” commercially as a
trademark for its line of permanent makeup pigments in April
1992. The mark was registered on the Principal Register of
the United States Patent and Trademark Office on May 11,
1993, as Reg. No. 1,769,592. The mark is registered as a
design and word mark and consists of a solid black rectangle,
with the words “micro” and “colors” in reverse white letter-
ing. The word “micro” appears directly over the word “col-
ors,” and the two are separated by a green horizontal bar. In
1999, Lasting’s mark, as registered, became incontestable. An
illustration of the registered trademark is shown in Appendix
A.

   KP used the term “micro color” on its flyers beginning in
1990 and has continued to use the term on its pigment bottles
since 1991. KP’s use of the term “micro color” on its bottle
labels consists of the word in full capitals before the actual
color of the pigment in the bottle. For example, KP’s use of
5382    KP PERMANENT MAKE-UP v. LASTING IMPRESSION I
the word on a bottle containing black pigment would appear
as: “MICROCOLOR: BLACK.”

   In 1999, KP adopted a new use of the term “micro color.”
Rather than using it only on its bottles, KP began using the
term in its marketing brochures. The brochures display the
term “micro color” in a stylized format. “Micro color” sits
directly over the word “pigment,” and a vial with pigment
flowing out of it is depicted to the side of the word display.
Additionally, under both the vial and the phrase “micro color
pigment” is the word “chart.” Both the words “pigment” and
“chart” appear in a smaller size type than the term “micro
color,” making the term the most dominant feature of the
image. The brochure on which this image appears contains a
chart displaying all the various colors in which KP’s pigments
are available. An illustration of the term in the marketing bro-
chures is shown in Appendix B.

   In March 2000, KP commenced this trademark declaratory
relief action against Lasting. In response, Lasting counter-
claimed, alleging that KP’s use of the phrase “micro color”
infringed Lasting’s incontestable registration of its “micro
colors” mark and sought damages for the infringement. Last-
ing’s counterclaim also alleged unfair competition and false
advertising.

   KP filed a motion for summary judgment. KP’s contentions
consisted of the following: (1) Lasting’s picture mark registra-
tion did not give Lasting the exclusive right to the term
“micro color” separate from the logo; (2) the term “micro
color” is generic; (3) KP can use “micro color” under the fair
use doctrine; (4) the phrase has no secondary meaning; (5)
Lasting has also used “micro color” in a generic sense and is
estopped from arguing the term is not generic; (6) Lasting
cannot show likelihood of confusion; and (7) KP’s continuous
prior use of the term “micro color” defeats Lasting’s claim to
exclusivity.
        KP PERMANENT MAKE-UP v. LASTING IMPRESSION I       5383
   Lasting moved for summary adjudication of certain issues,
principally that KP’s contention that the term “micro colors”
is generic had no merit, that KP’s prior use contention had no
merit, and that Lasting’s registered trademark was not limited
to the composite.

   The district court granted KP’s motion for summary judg-
ment and denied Lasting’s motion for summary adjudication.
It held that KP could continue to use the term “micro color”
in the manner it has since 1991 and that Lasting could con-
tinue to use its trademarked logo containing the words “micro
color.” Specifically, the district court concluded that the term
“micro color” is generic, and, if not generic, descriptive. The
district court then determined that neither party had acquired
secondary meaning in the term “micro color.” Finally, the dis-
trict court held that KP’s use was protected under the “fair
use” defense, 15 U.S.C. § 1115(b)(4), and because its use was
fair, the court declined to discuss KP’s prior use contention or
likelihood of confusion.

III.   Analysis

  A.    Standard of Review

   A grant of summary judgment is reviewed de novo. Clicks
Billiards, Inc. v. Sixshooters, Inc., 251 F.3d 1252, 1257 (9th
Cir. 2001). We must determine, viewing the evidence in the
light most favorable to the nonmoving party, whether there
are any genuine issues of material fact and whether the district
court correctly applied the relevant substantive law. Id. “Be-
cause of the intensely factual nature of trademark disputes,
summary judgment is generally disfavored in the trademark
arena.” Entrepreneur Media, Inc. v. Smith, 279 F.3d 1135,
1140 (9th Cir. 2002) (quotation marks and citations omitted).

  B.   Trademark Infringement

  In evaluating the parties’ motions for summary judgment
and summary adjudication, it is easiest to frame the relevant
5384    KP PERMANENT MAKE-UP v. LASTING IMPRESSION I
issues in the context of a trademark infringement action. KP’s
motion raises essentially issues that are defenses to an
infringement action.

   [1] The Lanham Act allows the holder of a protectable
trademark to hold liable any person who, without consent,
“use[s] in commerce any . . . registered mark” in connection
with the sale, offering for sale, distribution, or advertising of
any goods or services” which is likely to cause confusion. 15
U.S.C. § 1114(1)(a). Before infringement can be shown, the
trademark holder must demonstrate that it owns a valid mark,
and thus a protectable interest. Tie Tech, Inc. v. Kinedyne
Corp., 296 F.3d 778, 783 (9th Cir. 2002). Once the trademark
holder shows that it has a protectable interest, the holder must
show that the alleged infringer’s use of the mark “is likely to
cause confusion, or to cause mistake, or to deceive.” 15
U.S.C. § 1114(1)(a) & (b); Thane Int’l, Inc. v. Trek Bicycle
Corp., 305 F.3d 894, 900 (9th Cir. 2002). The alleged
infringer has a number of defenses available.

   [2] Trademarks are generally divided into five categories:
(1) generic; (2) descriptive; (3) suggestive; (4) arbitrary; and
(5) fanciful. The latter three categories are deemed inherently
distinctive and are automatically entitled to protection
because they naturally “serve[ ] to identify a particular source
of a product . . . .” Two Pesos, Inc. v. Taco Cabana, Inc., 505
U.S. 763, 768 (1992).

   [3] Generic marks are not capable of receiving protection
because they identify the product, rather than the product’s
source. See Park ‘N Fly, Inc. v. Dollar Park & Fly, Inc., 469
U.S. 189, 194 (1985). “Generic terms are not registrable, and
a registered mark may be canceled at any time on the grounds
that it has become generic.” Id. Merely descriptive marks,
which describe the qualities or characteristics of a product,
may be registered only if the holder of the mark shows that
the mark has acquired distinctiveness through secondary
meaning. Id.
         KP PERMANENT MAKE-UP v. LASTING IMPRESSION I        5385
   [4] One advantage of registration on the Principal Register
is that the mark may attain incontestable status. 5 MCCARTHY
ON TRADEMARKS & UNFAIR COMPETITION § 32:142 (2002).
Incontestable status may be obtained by fulfilling the require-
ments of 15 U.S.C. § 1065. This requires that the registered
mark has been in use for five consecutive years and is still in
use in commerce. Id. In addition, the statute requires that
there has been no decision adverse to the registrant’s claim of
ownership of the mark, the right to register, or the right to
keep it on the register. Id. No incontestable right can be
obtained in a mark which is the generic name for the goods
or services. Id.

    The incontestability provisions of the Lanham Act were
designed to provide a means for a trademark holder to “quiet
title in the ownership of his mark.” Park ‘N Fly, 469 U.S. at
198. However, although a mark may become incontestable,
the label of “incontestability” is rather misdescriptive. 5
MCCARTHY § 32:147. An incontestable registration is still sub-
ject to certain defenses or defects, set forth in 15 U.S.C.
§ 1115, and as above stated does not apply to a mark that is
generic.

   The summary judgment entered for KP was based on the
following determinations:

    A.    The words “micro color,” as distinct from Last-
          ing’s entire logo, are not protected because the
          words are generic and thus cannot constitute a
          valid mark.

    B.    Even if those words are not generic, they are
          descriptive and have no secondary meaning and
          thus cannot constitute a valid mark.

    C.    The “fair use” defense is applicable to KP and
          precludes a claim of infringement.
5386    KP PERMANENT MAKE-UP v. LASTING IMPRESSION I
   Because the district court held that the entire logo with the
words “micro colors” on it was valid and protected but that
the words “micro colors” were not, our first inquiry is
whether the words “micro colors” themselves are protected by
the registration of the mark or only the entire logo. We are
aided in this inquiry by the sequence of events in the Ninth
Circuit case of Park ‘N Fly v. Dollar Park & Fly, Inc., 718
F.2d 327 (9th Cir. 1983), rev’d, 469 U.S. 189 (1985).

  C.   Protection Afforded to the Words “Micro Colors”

   In Park ‘N Fly, the mark at issue, which had attained incon-
testable status, consisted of the words “Park ‘N Fly” and an
airplane logo. The alleged infringer challenged the mark’s
validity arguing that the words “Park ‘N Fly” were generic
with respect to airport parking lots. Id. at 330. Park ‘N Fly
had a separate registration for the words “Park ‘N Fly” with-
out the airplane logo that was not yet incontestable. In
addressing the issue of whether the words “Park ‘N Fly” were
generic, this court focused entirely on the words in the logo
mark, which was incontestable, as opposed to words in the
separate registration of the word mark.

  Judge Kennedy (now Justice Kennedy), in writing for the
court, held that because the most salient feature of the logo
mark was the phrase “Park ‘N Fly,” any infringement of the
word mark registration would also be an infringement of the
logo mark. Id. at 331 n.3. Thus, the opinion concluded that the
words “Park ‘N Fly” were the most salient feature of the logo
mark and that insufficient evidence had been presented to
show the words were generic. Id.

   It is significant that the United States Supreme Court, upon
reviewing the Ninth Circuit’s decision in Park ‘N Fly, also
recognized that Park ‘N Fly had a separate registration for the
words “Park ‘N Fly,” which had not become incontestable.
However, it determined that such registration did not affect
the resolution of the matter and focused on the incontestable
        KP PERMANENT MAKE-UP v. LASTING IMPRESSION I       5387
logo mark in making its ruling. Park ‘N Fly, 469 U.S. at 192
n.2.

   The Supreme Court reversed the Ninth Circuit’s opinion on
a different issue. The Ninth Circuit opinion had held that a
registrant could not use the incontestability of its mark offen-
sively to enjoin infringement and that a challenger could
defend such an action on the grounds that the mark is merely
descriptive. The Supreme Court reversed that aspect of the
Ninth Circuit decision, but remanded for consideration of the
challenger’s prior use defense and the defense that there was
no likelihood of confusion.

   The remand by the Supreme Court implicitly acknowl-
edged that it was the words “Park ‘N Fly” as the most salient
feature of the logo trademark that were to be considered on
remand. The Ninth Circuit on remand addressed the words of
the logo trademark and affirmed the district court’s finding
that the challenger did not qualify for the prior use exception
and that there was sufficient likelihood of confusion to justify
an injunction in favor of Park ‘N Fly. Park ‘N Fly, Inc. v.
Dollar Park & Fly, Inc., 782 F.2d 1508, 1509 (9th Cir. 1986).

   It is clear under Ninth Circuit law, implicitly approved by
the Supreme Court, that not only Lasting’s logo mark itself is
protected by the registration, but also the words “micro col-
ors” as the most salient feature of the logo mark. In Park ‘N
Fly, the words were held to be the most salient feature of a
logo with an airplane; whereas in this case the words in white
on a black background are virtually the only salient feature of
the logo.

   Because the words “micro colors” are the most salient fea-
ture of the mark, those words are the focus of the inquiry on
validity.

  D.   Genericness

  [5] KP contends that the words “micro colors” are generic
and, thus, not entitled to protection. To determine whether a
5388    KP PERMANENT MAKE-UP v. LASTING IMPRESSION I
term has become generic, we look to whether consumers
understand the word to refer only to a particular producer’s
goods or whether the consumer understands the word to refer
to the goods themselves. Park ‘N Fly, 718 F.2d at 330. If the
buyer understands the word to refer to the source of the
goods, the term is not generic. However, if the disputed term
is “identified with all such goods or services, regardless of
their suppliers, it is generic.” Id. (quotation marks and citation
omitted).

   [6] “Federal registration of a trademark endows it with a
strong presumption of validity. The general presumption of
validity resulting from federal registration includes the spe-
cific presumption that the trademark is not generic.” Coca-
Cola Co. v. Overland, Inc., 692 F.2d 1250, 1254 (9th Cir.
1982) (citations omitted). This presumption of validity
extends to the most salient feature of the mark, the words
“micro colors.”

   [7] We recently discussed the nature of that presumption in
Tie Tech, 296 F.3d at 782-83. Citing the wording of 15 U.S.C.
§ 1115(a), we stated:

       Validity . . . is a threshold issue. On this point, the
    plaintiff in an infringement action with a registered
    trademark is given the prima facie or presumptive
    advantage on the issue of validity, thus shifting the
    burden of production to the defendant to prove other-
    wise. . . . Or, to put it as we did in Vuitton [Et Fils
    S.A. v. J. Young Enterprises, Inc., 644 F.2d 769 (9th
    Cir. 1981)], the defendant then bears the burden with
    respect to invalidity.

Id. at 783. In granting the summary judgment to KP, the dis-
trict court erred in placing the burden on Lasting. The burden
was on KP to produce sufficient evidence to overcome the
presumption.
        KP PERMANENT MAKE-UP v. LASTING IMPRESSION I       5389
   [8] The question then becomes what evidence must be pro-
duced to overcome the presumption. We noted in Tie Tech at
the summary judgment stage that all inferences from facts
must be drawn most favorably to the non-moving party. Id. In
evaluating the summary judgment awarded to KP, those infer-
ences must be drawn in favor of Lasting, as the non-moving
party. We stated in Tie Tech, after noting that this type of
issue is generally viewed as an intensely factual issue, that if
the challenger “can demonstrate through law, undisputed facts
or a combination thereof that the mark is invalid the [trade-
mark holder] cannot survive summary judgment.” Id.

   KP relied principally on an affidavit of the owner, Theresa
Kim Plante, which stated: “There are various synonyms for
micro colors, such as: micropigment, micro color pigments,
micropigment colors and pigment colors. Both these terms
micropigments and micro colors are abbreviations for
micropigmentation colors. They all mean the same thing and
are generic.” Whether all of these terms could be synonyms
for each other is highly doubtful. KP produced no evidence
that consumers understood them to be synonyms. Both parties
agree that the cosmetic process is “micropigmentation.” That
term alone would no doubt be generic, however whether
“micropigmentation colors” is generic is a different question.
Plante’s affidavit says it is generic and that “micro colors” is
simply an abbreviation for that term, which she contends is
generic. The affidavits of Story, McKinstry and Leung state
that “pigment” is generally used to refer to the liquid injected
into the skin as permanent makeup, whereas “color” refers to
the hue or shade of the pigment. Thus, according to these affi-
ants, the color or hue of the pigment has nothing to do with
the generic process and, therefore, “micro colors” is not an
abbreviation for a generic process.

  The contention that “micropigmentation colors” is the
generic term for the micropigmentation process and that
“micro colors” is an abbreviation for that term and thus also
generic is not one that reasonably minded jurors could accept.
5390    KP PERMANENT MAKE-UP v. LASTING IMPRESSION I
The words themselves do not support that contention, and KP
introduced no evidence that the consumers so construed the
words.

   KP’s other support for its generic argument was a statement
that Story, the founder of Lasting, had made. KP contends
that she used “micro colors” as a generic term in a brochure
and an article. Story explained that neither reference was to
“micro colors” as generic and explained that, in context, the
references were to the “Micro Colors” brand name and not
intended as a generic term.

  The first alleged generic use is in a brochure in which Last-
ing stated,

    MICRO-COLORS® pigment is the first and only
    MICRO-COLORS available by MCN. All other
    brands with similar or identical names are not associ-
    ated with MCN. Due to the high demand for this
    superior quality pigment, many imposter pigments
    have been developed to create confusion in the mar-
    ketplace. Make an informed purchasing decision:
    verify that MCN is the manufacturer before you buy.
    MICRO-COLORS is a federally registered trade
    name and trademark that is available only via MCN.

Rather than using the term in the generic sense, it is clear
from the document itself that Lasting was distinguishing its
mark from those who may have used MICRO-COLORS with-
out authorization.

   The second alleged generic use is in a trade article where
Lasting discusses its product. In this article, Lasting states “all
Lasting Impression I pigments (Micro-Colors) are six
microns.” From then on in the article, Lasting uses the term
“Micro-Colors” (capitalized) instead of pigments in a general
sense. Again, in context, it is clear that Lasting was not refer-
ring to “micro colors” in a generic sense. Rather, Lasting had
        KP PERMANENT MAKE-UP v. LASTING IMPRESSION I      5391
defined its product by its trademark “Micro-Colors” and uses
that term to describe its pigments elsewhere in the article.

   [9] KP presented no evidence that “micro colors” was used
or understood by consumers as a generic term rather than a
brand name. Lasting did present evidence that “Micro Colors”
is used and understood as a brand name not a generic term.
We held in Park ‘N Fly that “Without evidence that to the
consuming public the primary significance of the term [Park
‘N Fly] is to denote the service Park ‘N Fly offers and not its
source, we are without a sufficient evidentiary basis to find
Park ‘N Fly’s mark generic.” Park ‘N Fly, 718 F.2d at 330.

   [10] There is no genuine issue of material fact as to
whether the salient part of Lasting’s trademark, the words
“micro colors,” is generic. A reasonably minded jury could
not conclude from the evidence produced that “micro colors”
is a generic term. See Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 249 (1986).

   [11] Based on the foregoing discussion of genericness,
KP’s motion for summary judgment cannot be upheld on this
ground. Furthermore, Lasting’s motion for summary adjudica-
tion on the issue of genericness should be granted.

  E.   Descriptiveness

   [12] The district court also determined that the words
“micro colors” were not protected because they were descrip-
tive and Lasting had not acquired a secondary meaning in
those words. A descriptive mark that has become incontest-
able is conclusively presumed to have acquired secondary
meaning. Entrepreneur Media, 279 F.3d at 1142 n.3. This
means that a defendant in a trademark infringement action
cannot assert that an incontestable mark is invalid because it
is descriptive and lacks secondary meaning. Park ‘N Fly, 469
U.S. at 205.
5392    KP PERMANENT MAKE-UP v. LASTING IMPRESSION I
   The district court recognized that Lasting’s registered logo
mark was incontestable. However, it held that the logo mark’s
incontestable status did not apply to the term “micro colors”
because the registration was for the “micro colors” logo, and
not merely the term.

   [13] We conclude that the district court erred in requiring
that Lasting demonstrate secondary meaning in the term apart
from the mark. As we have discussed, a registered mark may
be infringed even if the exact mark is not being imitated and,
thus, the challenger of an incontestable mark cannot assert
that the most salient feature of the mark is descriptive and
lacks secondary meaning. See Park ‘N Fly, 469 U.S. at 192
n.2, 205. When the holder of an incontestable mark is com-
plaining that the most salient feature of its mark is being imi-
tated and a likelihood of confusion may result, the holder of
the mark does not have to show that the salient feature, apart
from the mark, has acquired secondary meaning. Rather, the
conclusive presumption that the mark has acquired secondary
meaning extends to the most salient feature of the mark.

  [14] Thus, Lasting’s incontestable registration is conclusive
evidence that the mark is non-descriptive or has acquired sec-
ondary meaning, and there is no need to require a showing of
secondary meaning in the term “micro colors” apart from the
mark. Therefore, KP’s motion for summary judgment cannot
be upheld on this ground.

  F.   The Fair Use Defense and Likelihood of Confusion

   [15] We next turn to the issues of fair use and likelihood
of confusion. The district court granted KP’s motion for sum-
mary judgment on the basis of fair use and held that it need
not discuss any likelihood of confusion. We reversed this
decision, holding that “there can be no fair use if there is a
likelihood of confusion,” and that “the likelihood of confusion
analysis must be addressed.” KP I, 328 F.3d at 1072. The
Supreme Court’s opinion in KP II clarified the relationship
         KP PERMANENT MAKE-UP v. LASTING IMPRESSION I                5393
between fair use and likelihood of confusion. It noted that the
Lanham Act provides a fair use defense against the infringe-
ment of an incontestable mark to a party whose

     “use of the name, term, or device charged to be an
     infringement is a use, otherwise than as a mark, . . .
     of a term or device which is descriptive of and used
     fairly and in good faith only to describe the goods or
     services of such party, or their geographic origin
     . . . .”

125 S. Ct. at 548 (quoting 15 U.S.C. § 1115(b)(4)). The
Supreme Court noted that there was a division among the Cir-
cuit Courts of Appeals as to whether a likelihood of confusion
precludes the fair use defense. The Fifth, Sixth, and Ninth
Circuits held that it did; and the Fourth and Seventh Circuits
held it did not.2 In resolving the conflict, the Supreme Court
summarized its holding as follows:

     In sum, a plaintiff claiming infringement of an
     incontestable mark must show likelihood of con-
     sumer confusion as part of the prima facie case, 15
     U.S.C. § 1115(b), while the defendant has no inde-
   2
     Compare KP I, 328 F.3d at 1072, citing Lindy Pen Co. v. Bic Pen
Corp., 725 F.2d 1240, 1248 (9th Cir. 1984) (likelihood of confusion bars
the fair use defense), PACCAR, Inc. v. TeleScan Technologies, L.L.C., 319
F.3d 243, 256 (6th Cir. 2003) (“[A] finding of a likelihood of confusion
forecloses a fair use defense”), and Zatarains, Inc. v. Oak Grove Smoke-
house, 698 F.2d 786, 796 (5th Cir. 1983) (alleged infringers were free to
use words contained in a trademark “in their ordinary, descriptive sense,
so long as such use [did] not tend to confuse customers as to the source
of the goods”), with Cosmetically Sealed Indus., Inc. v. Chesebrough-
Pond’s USA Co., 125 F.3d 28, 30-31 (2d Cir. 1997) (the fair use defense
may succeed even if there is likelihood of confusion), Shakespeare Co. v.
Silstar Corp. of Am., 110 F.3d 234, 243 (4th Cir. 1997) (“[A] determina-
tion of likely confusion [does not] preclud[e] considering the fairness of
use”), and Sunmark, Inc. v. Ocean Spray Cranberries, Inc., 64 F.3d 1055,
1059 (7th Cir. 1995) (finding that likelihood of confusion did not preclude
the fair use defense).
5394    KP PERMANENT MAKE-UP v. LASTING IMPRESSION I
    pendent burden to negate the likelihood of any con-
    fusion in raising the affirmative defense that a term
    is used descriptively, not as a mark, fairly, and in
    good faith.

Id. at 551.

  The Supreme Court also stated:

    Our holding that fair use can occur along with some
    degree of confusion does not foreclose the relevance
    of the extent of any likely consumer confusion in
    assessing whether a defendant’s use is objectively
    fair.

Id. at 550. This issue was left for the consideration of the
Ninth Circuit in this case. As the Supreme Court noted, two
other Circuit Courts of Appeals have considered the extent of
any customer confusion to be relevant to the determination of
the fairness of the use, citing Shakespeare Co. v. Silstar
Corp., 110 F.3d 234 (4th Cir. 1997), and Sunmark v. Ocean
Spray Cranberries, Inc., 64 F.3d 1055 (7th Cir. 1995). The
Court also cited the Restatement (Third) of Unfair Competi-
tion § 28 for the same proposition. KP II, 125 S. Ct. at 550-
51.

  In Shakespeare Co., the opinion stated: “to the degree that
confusion is likely, a use is less likely to be found fair.” 110
F.3d at 243. The Restatement section cited by the Supreme
Court provides that

    the strength of the plaintiff’s mark and the extent of
    likely or actual confusion are important factors in
    determining whether a use is fair. Surveys and other
    evidence relating to the perceptions of prospective
    purchasers are thus relevant to the application of the
    defense, and a use that is likely to create substantial
    confusion will not ordinarily be considered a fair
        KP PERMANENT MAKE-UP v. LASTING IMPRESSION I       5395
    use. The defendant bears the burden of establishing
    the defense of fair use under this Section.

Restatement (Third) of Unfair Competition § 28 cmt. b
(1995).

   In its motion for summary judgment, KP’s contentions
included in part that Lasting cannot show likelihood of confu-
sion and that KP can use “micro color” under the fair use doc-
trine. Therefore, in once again addressing KP’s motion for
summary judgment on remand, we must confront two ques-
tions: (1) whether, on the record before us, Lasting has pro-
duced adequate evidence to create a material issue of fact
regarding likelihood of confusion; and if so, (2) whether KP
has proven the elements of its fair use defense despite some
possible confusion. See KP II, 125 S. Ct. at 549. After receiv-
ing supplemental briefing from the parties, we once again find
ourselves unable to uphold the district court’s summary judg-
ment in favor of KP at this juncture.

    Likelihood of Confusion

   KP’s motion for summary judgment asserted that no genu-
ine issue of material fact existed with respect to likelihood of
confusion. Viewing the facts in the light most favorable to
Lasting, we disagree. Likelihood of confusion exists when
consumers viewing the mark would probably assume that the
goods it represents are associated with the source of a differ-
ent product identified by a similar mark. Clicks Billiards, 251
F.3d at 1265. “[S]ummary judgment is inappropriate when a
jury could reasonably conclude that there is a likelihood of
confusion.” Downing v. Abercrombie & Fitch, 265 F.3d 994,
1008 (9th Cir. 2001). Due to the factual nature of likelihood
of confusion, determining whether a likelihood of confusion
exists at the summary judgment stage is generally disfavored
because a full record is usually required to fully assess the
facts. Clicks Billiards, 251 F.3d at 1265.
5396    KP PERMANENT MAKE-UP v. LASTING IMPRESSION I
   We generally rely on an eight-factor test in determining
whether a likelihood of confusion exists. AMF, Inc. v. Sleek-
craft Boats, 599 F.2d 341, 348-49 (9th Cir. 1979). Those fac-
tors are: 1) the strength of the mark; 2) proximity or
relatedness of the goods; 3) the similarity of the marks; 4) evi-
dence of actual confusion; 5) the marketing channels used; 6)
the degree of care customers are likely to exercise in purchas-
ing the goods; 7) the defendant’s intent in selecting the mark;
and 8) the likelihood of expansion into other markets. Id.
Although the above factors are all appropriate for consider-
ation in determining whether likelihood of confusion exists,
not all of the factors are of equal importance or applicable in
every case. Downing, 265 F.3d at 1008.

   [16] Viewing the facts in the light most favorable to Last-
ing, it appears from the record that genuine issues of material
fact remain as to the likelihood of customer confusion in this
case. Accordingly, we cannot uphold the district court’s grant
of summary judgment to KP on this ground.

    Fair Use

   The fair use defense only comes into play once the party
alleging infringement has shown by a preponderance of the
evidence that confusion is likely. See KP II, 125 S. Ct. at 549.
We hold in accordance with Shakespeare Co., 110 F.3d at
243, that the degree of customer confusion remains a factor
in evaluating fair use.

   [17] Summary judgment on the defense of fair use is also
improper. There are genuine issues of fact that are appropriate
for the fact finder to determine in order to find that the
defense of fair use has been established. Among the relevant
factors for consideration by the jury in determining the fair-
ness of the use are the degree of likely confusion, the strength
of the trademark, the descriptive nature of the term for the
product or service being offered by KP and the availability of
alternate descriptive terms, the extent of the use of the term
        KP PERMANENT MAKE-UP v. LASTING IMPRESSION I      5397
prior to the registration of the trademark, and any differences
among the times and contexts in which KP has used the term.

  The district court should consider the effect of any specific
concessions Lasting may have made during the course of liti-
gation. See KP II, 125 S. Ct. at 551 n.6.

IV.   Conclusion

   We reverse the district court’s grant of summary judgment
for KP. With regard to Lasting’s motion for summary adjudi-
cation, we hold that the words “micro colors,” as the most
salient feature of the trademark, are protected and are not
generic. We remand the case for further proceedings in accor-
dance with this opinion.

  REVERSED AND REMANDED.
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