                FOR PUBLICATION

  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT


JL BEVERAGE COMPANY, LLC,                 No. 13-17382
       Plaintiff-Counter-Defendant-
                          Appellant,       D.C. No.
                                        2:11-cv-00417-
                 v.                      MMD-CWH

JIM BEAM BRANDS CO.; BEAM
SUNTORY INC.,                              OPINION
     Defendants-Counter-Plaintiffs-
                        Appellees.


      Appeal from the United States District Court
               for the District of Nevada
       Miranda M. Du, District Judge, Presiding

         Argued and Submitted January 8, 2016
              San Francisco, California

                  Filed July 14, 2016

      Before: J. Clifford Wallace, John T. Noonan,
         and Marsha S. Berzon, Circuit Judges.

               Opinion by Judge Wallace
2             JL BEVERAGE V. JIM BEAM BRANDS

                           SUMMARY*


                            Trademark

    The panel reversed the district court’s summary judgment
in favor of Jim Beam Brands Co. on claims of trademark
infringement, false designation of origin, and unfair
competition brought under the Lanham Act and Nevada state
law by JL Beverage Co., which sells a competing line of
flavored vodkas.

    The panel held that the district court erred in failing to
place the burden of proof on Jim Beam Brands, the moving
party; failing to view the evidence in the light most favorable
to JL Beverage; and never analyzing whether a genuine
dispute of material fact existed.

    The panel held that genuine issues of material fact
remained as to the likelihood of consumer confusion between
plaintiff’s registered “Johnny Love Vodka” and “JL Lips”
marks and defendant’s “Pucker Vodka” logo. A reasonable
fact-finder could conclude that plaintiffs’ marks had
conceptual strength and either did or did not have commercial
strength, that the parties’ products were related flavored-
liquor products sold to the same customers and distributors,
that the products were similar, that consumers purchasing the
products were not likely to exercise a high degree of care in
distinguishing between the two, and that Jim Beam was aware
of JL Beverage’s trademarks prior to rolling out its Pucker


  *
    This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
           JL BEVERAGE V. JIM BEAM BRANDS               3

Vodka line. The panel therefore reversed and remanded for
further proceedings consistent with its opinion.


                       COUNSEL

Colin Christopher Holley (argued), Jeremy T. Katz, and
George L. Hampton, Hampton Holley, Corona Del Mar,
California; Ryan R. Gile, Weide & Miller, Las Vegas,
Nevada; for Plaintiff-Counter-Defendant-Appellant.

Mark J. Liss (argued), Claudia Stangle, and Angela Baylin,
Leydig, Voit & Mayer, Chicago, Illinois; Jonathan Fountain
and Michael McCue, Lewis Roca Rothgerber, Las Vegas,
Nevada; for Defendant-Counter-Plaintiff-Appellee.


                       OPINION

WALLACE, Senior Circuit Judge:

    JL Beverage Company, LLC (JL Beverage) appeals from
the district court’s summary judgment in favor of Jim Beam
Brands Company (Jim Beam) on JL Beverage’s trademark
infringement, false designation of origin, and unfair
competition claims. We have jurisdiction pursuant to
28 U.S.C. § 1291. Because genuine issues of material fact
remain, we reverse and remand for further proceedings
consistent with this opinion.

                            I.

   This dispute centers on two alcoholic beverage
manufacturers, JL Beverage and Jim Beam, which sell
4           JL BEVERAGE V. JIM BEAM BRANDS

competing lines of flavored vodkas. JL Beverage
manufactures, sells, and promotes a line of flavored and
unflavored vodka called “Johnny Love Vodka.” Restaurant
owner and bartender Johnny Metheny created the Johnny
Love line of vodkas around 2003–2004. To promote the new
line, Metheny enlisted a friend to design a unique logo, and
Metheny quickly adopted the proposed lips image. He
believed the lips were “definitely sexy” and could “impart the
flavor” of the vodka if colored to denote the flavor in the
bottle of vodka. The lips were colored red for unflavored,
purple for passionfruit, yellow for aloha, orange for tangerine,
and green for apple. In 2005, Metheny sold the Johnny Love
Vodka line to JL Beverage.

    Since July 2005, JL Beverage has used the following two
trademarks in connection with its sale of the Johnny Love
Vodka products:




The first mark, called “Johnny Love Vodka” or the “JLV
mark,” was registered on August 16, 2005, with the United
States Patent and Trademark Office (USPTO) as Registration
No. 2, 986,519 in International Class 33-Vodka. JL Beverage
registered the second mark, called the “JL Lips Mark,” with
            JL BEVERAGE V. JIM BEAM BRANDS                 5

USPTO on October 25, 2011 under Registration No.
4,044,182 in International Class 33-Distilled Spirits. Both
images appear on the Johnny Love line of vodkas and
flavored vodkas:




The JL Lips Mark is imprinted on the top of the bottle and on
the back label, and is incorporated into the JLV Mark as the
“o” in “Love.” The mark color on the back label also
corresponds to the flavor in the bottle:




The Johnny Love Vodka bottles come in four different sizes.
6           JL BEVERAGE V. JIM BEAM BRANDS

    After acquiring Johnny Love Vodka and the two
trademarks, JL Beverage expended substantial resources
developing, advertising, and marketing Johnny Love Vodkas
throughout the United States. JL Beverage at one point had
distributors in twenty states, and it holds a Federal Basic
Alcohol Permit for national use. JL Beverage’s nationwide
marketing campaign included print-media advertisements,
third-party publications, and the development of its own
website. Although in recent years its sales have been
substantially reduced, its overall marketing efforts resulted in
millions of dollars in sales of Johnny Love products
throughout the country.

    In 2010, Jim Beam entered the flavored vodka market
with a new line of flavored vodkas called “Pucker Vodka.”
Jim Beam purchased the Pucker brand from Koninklijke De
Kuyper, B.V. (KDK). KDK had marketed a line of liqueurs
and cordials under the “Pucker” brand, and, in its original
design, used lips images in connection with its labeling and
logos. After Jim Beam purchased KDK’s flavored vodka line,
it decided to redesign and rebrand Pucker to “expand on the
equity of the Pucker brand and lips” into flavored vodka.” To
that end, Jim Beam hired the design firm of Libby, Perszyk,
Kathman, Inc. (LPK) to independently “develop a new and
unique look and feel” for its Pucker vodka product that would
communicate “[i]ntense flavor and [i]ntense fun” in
connection with the brand.

    The redesigned Pucker Vodka bottle contains a prominent
lips image on the center of its label. Like the Johnny Love
Vodka labels, the lips image varies in color depending on the
vodka flavor in the bottle:
            JL BEVERAGE V. JIM BEAM BRANDS                   7




Jim Beam instructed LPK to use both the Pucker name and
lips as part of any design it developed for Pucker’s new label.
After LPK provided Jim Beam with several possible design
options, Jim Beam’s project team made final selections of the
proposed Pucker Vodka products and sent their choices to the
company’s legal department for clearance. Jim Beam
instructed its legal counsel to perform a clearance search for
lips designs. The legal department found 40 references to lips
for alcohol-related products. JL Beverage’s JLV Mark was in
the search report. Although JL Beverage’s Lips Mark is
incorporated into the JLV Mark, it did not separately appear
in the search report because JL Beverage had not yet filed its
registration application for the standalone lips mark. Based on
its research, Jim Beam’s legal department approved the
Pucker brand’s bottle shape and label.

   Emily Johnson, a former Jim Beam employee, worked for
Jim Beam as a financial and business analyst during the
development of the Pucker Vodka product. Prior to her
employment at Jim Beam, Johnson met JL Beverage’s
8           JL BEVERAGE V. JIM BEAM BRANDS

president, T.J. Diab, and learned about JL Beverage’s
products. In March 2010, during her employment at Jim
Beam, she sent an email to Diab from her home account,
which stated “I was reading through some reporting on vodka
flavors and saw Aloha on the list!”

    Jim Beam attempted to register the Pucker lips design
around March 2011, filing applications for trademarks in the
bottle and cap, the stylized Pucker wording, and the lips
design. After the registration process began, an official in Jim
Beam’s legal department discovered that the lips mark that
LPK had selected to be featured in the center of the Pucker
Vodka label was “stock art” from iStockphoto LP. Because
Jim Beam could not claim ownership in the lips image, it
withdrew its USPTO application for the lips design.

    Prior to withdrawal, Jim Beam also received notice from
the USPTO that it had rejected Jim Beam’s registration
application. In the rejection letter, the USPTO cites JL
Beverage’s Lips Mark as a basis for refusing the registration.

    Jim Beam officially relaunched its newly-designed Pucker
Vodka products in March and April 2011. Jim Beam
advertises Pucker Vodka products nationally through
television and cable commercials, digital advertising, print
advertisements in national magazines, and in-store and on-
premise promotions at restaurants and bars.

    Shortly after the Pucker Vodka launch, Shaun Robertson,
a JL Beverage broker for Johnny Love Vodka, began
receiving phone calls and messages concerning the
similarities between the two vodkas. Robertson provided, in
a declaration to the court, a summary of in-person
conversations, text messages, and phone calls he had with
            JL BEVERAGE V. JIM BEAM BRANDS                     9

friends and acquaintances in which those individuals
confused a different flavored vodka product for Johnny Love.

    JL Beverage delivered a cease and desist letter to Jim
Beam on March 18, 2011. Jim Beam responded that it did not
believe its Pucker Vodka logo infringed JL Beverage’s mark.
JL Beverage filed a complaint in the United States District
Court for the District of Nevada in July 2011, alleging
trademark infringement, false designation of origin, and
unfair competition. JL Beverage moved for preliminary
injunction, which the district court denied. JL Beverage and
Jim Beam then filed cross-motions for summary judgment.
The district court denied JL Beverage’s motion and granted
Jim Beam’s motion. The district court subsequently denied JL
Beverage’s motion for reconsideration.

                               II.

    We review the district court’s summary judgment de
novo, including its decision on cross-motions for summary
judgment. Szajer v. City of L.A., 632 F.3d 607, 610 (9th Cir.
2011); Guatay Christian Fellowship v. Cty. of San Diego,
670 F.3d 957, 970 (9th Cir. 2011). Viewing the evidence in
the light most favorable to the nonmoving party, we
determine whether there are any genuine issues of material
fact. Olsen v. Idaho State Bd. of Med., 363 F.3d 916, 922 (9th
Cir. 2004). We review the district court’s conclusions of law
de novo, and its factual findings for clear error. Id.; Lahoti v.
VeriCheck, Inc., 586 F.3d 1190, 1195–96 (9th Cir. 2009).
“[W]here it is unclear whether the district court relied on
proper law, we may vacate the judgment and remand with
instructions to apply the correct legal standard.” Lahoti,
586 F.3d at 1196 (citing United States v. Pintado-Isiordia,
448 F.3d 1155, 1158 (9th Cir. 2009)).
10          JL BEVERAGE V. JIM BEAM BRANDS

    This appeal turns in large part on whether the district
court correctly applied the standard for deciding a motion for
summary judgment. The success of each of JL Beverage’s
claims turns on the same issue: whether there was a genuine
dispute of material fact as to the likelihood of consumer
confusion. JL Beverage asserts the following claims:
(1) federal trademark infringement under the Lanham Act,
15 U.S.C. § 1114; (2) false designation of origin and unfair
competition under the Lanham Act, 15 U.S.C. § 1125(a); and
(3) Nevada common law trademark infringement and unfair
competition. The likelihood of consumer confusion is central
to each claim. See 15 U.S.C. § 1114(1)(a) (providing that a
person is liable for trademark infringement where he or she
“use[s] in commerce any reproduction, counterfeit, copy, or
colorable imitation of a registered mark in connection with
the sale, offering for sale, distribution, or advertising of any
goods or services on or in connection with which such use is
likely to cause confusion, or to cause mistake, or to deceive”)
(emphasis added); A.L.M.N. v. Rosoff, 104 Nev. 274, 277, 281
(1988) (holding that Nevada’s common law trademark
infringement and unfair competition claims mirror their
federal counterparts, and plaintiffs need only prove that
(1) they own a protectable right in the marks, and (2) the
defendant’s use of the mark is likely to “confuse, cause
mistake, or deceive an ‘appreciable number’ of reasonable
customers” with respect to the marks).

    In its summary judgment ruling, the district court used the
standard applicable to preliminary injunctions instead of the
standard for summary judgment rulings. The district court,
having already ruled on JL Beverage’s motion for preliminary
injunction, continued to apply the standard it used at that
stage when it ruled on the parties’ cross-motions for summary
judgment. In its summary judgment order, the district court
             JL BEVERAGE V. JIM BEAM BRANDS                   11

concluded: “[f]or reasons articulated in the Order denying the
Preliminary Injunction, the Court determines that no issues of
material fact remain which could provide Plaintiff a basis for
success on any of its claims. Defendant’s Motion for
Summary Judgment is accordingly granted.”

    The district court’s failure to apply the correct standard is
significant: on motion for preliminary injunction, the
plaintiff–as the moving party–bears the burden of establishing
the merits of its claims. See Winter v. Nat. Res. Def. Council,
Inc., 555 U.S. 7, 20 (2008). In contrast, on a defendant’s
motion for summary judgment, not only does the movant
carry the burden of establishing that no genuine dispute of
material fact exists, but the court also views the evidence in
the light most favorable to the non-moving party. See, e.g.,
Olsen, 363 F.3d at 922. The defendant-movant must
demonstrate that, even viewing the evidence in the light most
favorable to the plaintiff, the plaintiff cannot satisfy its
burden to prove its claims. See Celotex Corp. v. Catrett,
477 U.S. 317, 322–23 (1986).

    But in its summary judgment order, the district court
ignored the important distinctions between the two standards,
and, when ruling on the defendant’s motion for summary
judgment, ultimately placed the burden on JL Beverage, the
plaintiff, to prove the merits of its claims. Moreover, it failed
to view the evidence in the light most favorable to JL
Beverage, and never analyzed whether a genuine dispute of
material fact existed.

    While the district court must apply the correct standard in
any case, the necessity to do so is heightened in cases turning
on the likelihood of consumer confusion. Because the
determination is based on a non-exhaustive, multi-factor,
12          JL BEVERAGE V. JIM BEAM BRANDS

fact-intensive inquiry, we have cautioned against granting
summary judgment in these cases. Rearden LLC v. Rearden
Commerce, Inc., 683 F.3d 1190, 1210 (9th Cir. 2012) (“Given
the open-ended nature of this multi-prong inquiry, it is not
surprising that summary judgment on ‘likelihood of
confusion’ grounds is generally disfavored”); Au-Tomotive
Gold, Inc. v. Volkswagen of Am., Inc., 457 F.3d 1062, 1075
(9th Cir. 2006) (“Because the likelihood of confusion is often
a fact-intensive inquiry, courts are generally reluctant to
decide this issue at the summary judgment stage”); Thane
Int’l, Inc. v. Trek Bicycle Corp., 305 F.3d 894, 901–02 (9th
Cir.2002) (“We have cautioned that district courts should
grant summary judgment motions regarding the likelihood of
confusion sparingly, as careful assessment of the pertinent
factors that go into determining likelihood of confusion
usually requires a full record”), superseded by statute on
other grounds, 15 U.S.C. § 1125. Where, as here, conflicting
facts render it unclear whether there was a likelihood of
consumer confusion, summary judgment is inappropriate.

                             III.

    To determine whether a likelihood of consumer confusion
exists, our court relies on the eight-factor Sleekcraft test,
which reviews: (1) the strength of the mark; (2) proximity or
relatedness of the goods; (3) similarity of the marks;
(4) evidence of actual confusion; (5) marketing channels
used; (6) type of goods and the degree of care likely to be
exercised by the purchaser; (7) the defendant’s intent in
selecting the mark; and (8) the likelihood of expansion of the
product lines. AMF Inc. v. Sleekcraft Boats, 599 F.2d 341,
348–49 (9th Cir. 1979), abrogated in part on other grounds
by Mattel, Inc. v. Walking Mountain Prods., 353 F.3d 792,
810 (9th Cir. 2003). The factors are non-exhaustive and
            JL BEVERAGE V. JIM BEAM BRANDS                  13

applied flexibly; the Sleekcraft factors are not intended to be
a “rote checklist.” Rearden, 683 F.3d at 1209. “A
determination may rest on only those factors that are most
pertinent to the particular case before the court, and other
variables besides the enumerated factors should also be taken
into account based on the particular circumstances.” Id.

    Utilizing the eight-factor test, plaintiffs may establish a
likelihood of consumer confusion as a result of either
(1) forward confusion, or (2) reverse confusion. Surfvivor
Media, Inc. v. Survivor Prods., 406 F.3d 625, 630 (9th Cir.
2005). JL Beverage alleges both forward and reverse
trademark confusion. “Forward confusion occurs when
consumers believe that goods bearing the junior mark came
from, or were sponsored by, the senior mark holder.” Id.
Reverse confusion, on the other hand, “occurs when
consumers dealing with the senior mark holder believe that
they are doing business with the junior one.” Id.

    In its order denying a preliminary injunction, the district
court determined that factors two, five, and six of the
Sleekcraft test favor JL Beverage and a finding of a likelihood
of confusion. Jim Beam does not dispute that these factors
favor JL Beverage. Rather, Jim Beam contends that there is
no genuine dispute of material fact concerning factors one,
three, four, and seven, and, accordingly, no genuine dispute
of material fact concerning a likelihood of confusion. So the
issue before us is whether, viewing the evidence in the light
most favorable to JL Beverage, there is a genuine dispute of
material fact concerning whether factors one, three, four, and
seven favor JL Beverage, and, accordingly, a genuine dispute
of material fact as to the likelihood of consumer confusion.
14          JL BEVERAGE V. JIM BEAM BRANDS

                             A.

    JL Beverage contends that there is a factual dispute as to
the strength of its standalone lips logo (Lips Mark) and
composite mark consisting of the lips logo and the words
“Johnny Love Vodka” (JLV Mark). We examine the strength
of JL Beverage’s mark to determine the scope of trademark
protection to which the mark is entitled. Surfvivor, 406 F.3d
at 631 (citing Entrepreneur Media, Inc. v. Smith, 279 F.3d
1135, 1141 (9th Cir. 2002)). As the uniqueness of the mark
increases, so too does the degree of protection. Id. A mark’s
strength is “evaluated in terms of its conceptual strength and
commercial strength.” GoTo.com, Inc. v. Walt Disney Co.,
202 F.3d 1199, 1207 (9th Cir. 2000).

     A mark’s conceptual strength “depends largely on the
obviousness of its connection to the good or service to which
it refers.” Fortune Dynamic, Inc. v. Victoria’s Secret Stores
Brand Mgmt., Inc., 618 F.3d 1025, 1032–33 (9th Cir. 2010).
To determine a mark’s conceptual strength, we classify a
mark along a spectrum of five categories ranging from
strongest to weakest: arbitrary, fanciful, suggestive,
descriptive, and generic. Network Automation, Inc. v.
Advanced Sys. Concepts, Inc., 638 F.3d 1137, 1149 (9th Cir.
2011). Arbitrary and fanciful marks, which employ words and
phrases with no commonly understood connection to the
product, are the two strongest categories, and “trigger the
highest degree of trademark protection.” Surfvivor, 406 F.3d
at 631. In the middle of the spectrum are suggestive marks,
which suggest a product’s features and require consumers to
exercise some imagination to associate the suggestive mark
with the product. Fortune Dynamic, 618 F.3d at 1033, (citing
Zobmondo Entm’t, LLC v. Falls Media, LLC, 602 F.3d 1108,
1114 (9th Cir. 2010)). Descriptive and generic marks, at the
            JL BEVERAGE V. JIM BEAM BRANDS                 15

other end of the spectrum, are the two weakest categories.
Descriptive marks define a particular characteristic of the
product in a way that does not require any imagination, while
generic marks describe the product in its entirety and are not
entitled to trademark protection. Surfvivor, 406 F.3d at 632.

    After identifying whether a mark is generic, descriptive,
suggestive, arbitrary, or fanciful, the court determines the
mark’s commercial strength. Miss World (UK) Ltd. v. Mrs.
Am. Pageants, Inc., 856 F.2d 1445, 1449 (9th Cir. 1988),
abrogated in part on other grounds by Eclipse Assocs. Ltd. v.
Data Gen. Corp., 894 F.2d 1114, 1116 n.1 (9th Cir. 1990).
Commercial strength “is based on actual marketplace
recognition.” Network Automation, 638 F.3d at 1149 (citation
omitted). As a result, advertising expenditures, which
increase marketplace recognition, offer evidence of
commercial strength and “can transform a suggestive mark
into a strong mark.” Id. (citation omitted).

    JL Beverage has alleged both forward and reverse
confusion claims. The JLV and Lips Marks’ conceptual and
commercial strength plays a different role in each type of
claim. “In the usual [forward] infringement case,” the court
“determine[s] whether the junior user is palming off its
products as those of the senior user.” Dreamwerks Prod.
Grp., Inc. v. SKG Studio, 142 F.3d 1127, 1129–30 (9th Cir.
1998). Consequently, for JL Beverage’s claim of forward
confusion, we evaluate the conceptual and commercial
strength of the JLV and Lips Marks to determine whether a
customer interested in purchasing vodka would be confused
into thinking that JL Beverage produces Jim Beam’s Pucker
Vodka, or that Johnny Love Vodka is the same product as
Pucker Vodka. In contrast, in claims of reverse confusion, the
question is “whether consumers doing business with the
16          JL BEVERAGE V. JIM BEAM BRANDS

senior user might mistakenly believe that they are dealing
with the junior user.” Id. at 1130. As a result, the court
evaluates the conceptual strength of JL Beverage’s marks and
compares it to the commercial strength of Jim Beam’s mark.
Id. at 1130 n.5.

                               1.

    We turn first to analyzing the JLV and JL Lips Marks’
conceptual strength. Jim Beam contends the JLV Mark is
descriptive because it contains the word “vodka,” and
therefore describes the product. Jim Beam, however, ignores
the color-coordinated feature of the JLV Mark. Instead of just
labeling the bottle “vodka,” the JLV Mark has color-
coordinated lips that match a particular flavor. Reasonable
jurors, viewing the Mark in its entirety, could conclude that
the Mark is suggestive because they must use their
imaginations to connect the color of the lips to the vodka
flavor.

    Jim Beam also contends that the Lips Mark has weak
conceptual strength. Jim Beam overlooks that the salient
feature of the Lips Mark–the lips–have no commonly
understood connection with the alcohol product it represents.
As a result, a fact-finder could reasonably conclude that the
Lips Mark is arbitrary, garnering the highest degree of
trademark protection.

    Jim Beam counters that the Lips Mark is part of a
“crowded field” of similar lips logos, and thus there is less
likelihood of consumer confusion. Jim Beam argues that JL
Beverage waived its right to contest this issue on appeal
because it failed to raise it before the district court. However,
because the district court considered this issue, it is not
            JL BEVERAGE V. JIM BEAM BRANDS                   17

waived on appeal. Cmty. House, Inc. v. City of Boise,
490 F.3d 1041, 1054 (9th Cir. 2007) (“[E]ven if a party fails
to raise an issue in the district court, we generally will not
deem the issue waived if the district court actually considered
it”). Returning to the issue, when “the marketplace is replete
with products using a particular trademarked” symbol, it
“indicates not only the difficulty in avoiding its use but also,
and directly, the likelihood that consumers will not be
confused by its use.” Entrepreneur Media, Inc. v. Smith,
279 F.3d 1135, 1144 (9th Cir. 2002). Jim Beam has provided
several examples of lips marks used on product labels for
different types of alcohol. The lips logos Jim Beam presents,
however, lack the crucial feature of the Lips Mark: unlike the
Lips Mark, they are not color-coordinated by flavor for an
entire line of flavored vodkas.

    In addition, the vast majority of the products on which
lips are used are not liquor products, but rather beer, wine, or
non-alcoholic beverages. In that regard, the parties dispute
how broadly the relevant market should be characterized for
the purposes of evaluating whether the field is crowded with
lips uses. In other words, there are genuine disputes of
material fact as to what constitutes the relevant “field,”
whether the field is “crowded,” and the effect of the
foregoing on the likelihood of confusion analysis. See also
Maker’s Mark Distillery, Inc. v. Diageo N. Am., Inc.,
679 F.3d 410, 420–21 (6th Cir. 2012) (agreeing with the
district court that, in a trademark dispute between a bourbon
maker and a tequila maker, the relevant market was not “all
distilled spirits,” but rather a narrower field); Fleischmann
Distilling Corp. v. Maier Brewing Co., 314 F.2d 149, 159–60
(9th Cir. 1963) (calling, in a pre-Sleekcraft case, scotch
whiskey and beer “related” for purposes of the likelihood of
confusion). Perhaps most importantly, the impact of a
18          JL BEVERAGE V. JIM BEAM BRANDS

“crowded field” of lips logos is not dispositive in determining
a mark’s conceptual strength; rather, it is but one factor a
court considers in evaluating the overall strength of the mark.
See Entrepreneur Media, 279 F.3d at 1143–44.

    Here, the district court failed to construe the evidence
concerning the JLV and Lips Marks’ conceptual strength in
the light most favorable to JL Beverage to determine whether
a genuine dispute of material fact exists. Had the district court
applied the correct standard, it may well have concluded that
the Marks’ conceptual strength placed the Marks in a
category that warranted a higher degree of protection.

                               2.

    We now turn to the second step of our inquiry: the Marks’
commercial strength. Jim Beam argues that JL Beverage has
a “relatively weak” market presence, while it maintains a
“relatively strong” market presence.

    JL Beverage concedes that Jim Beam has a strong market
presence. JL Beverage correctly points out, however, that this
finding supports its reverse confusion claim: evidence that
Jim Beam’s junior mark, the Pucker Vodka lips, is well-
known suggests a greater likelihood that consumers will
confuse JL Beverage’s senior mark for the Pucker Vodka
line. See Walter v. Mattel, Inc., 210 F.3d 1108, 1111 n. 2 (9th
Cir. 2000) (“In a reverse confusion case . . . the inquiry
focuses on the strength of the junior mark because the issue
is whether the junior mark is so strong as to overtake the
senior mark”). The national recognition of the Jim Beam
mark increases the likelihood that consumers will believe
they are doing business with Jim Beam, not JL Beverage,
when they purchase Johnny Love Vodka. See Cohn v.
            JL BEVERAGE V. JIM BEAM BRANDS                  19

Petsmart, Inc., 281 F.3d 837, 842 (9th Cir. 2002) (explaining
that, in reverse confusion cases, the junior mark holder’s
commercial strength “creates a potential that consumers will
assume that” the senior holder’s mark refers to the junior
holder’s mark, “and thus perceive that the businesses are
somehow associated”).

    To support its forward confusion claim, JL Beverage
argues in the alternative that it too has a strong market
presence. JL Beverage submitted evidence that it sold its
products nationally, and that it spent considerable resources
on marketing through print media, third-party publications,
and internet advertising.

    Viewing the evidence in the light most favorable to JL
Beverage, there is a genuine dispute of material fact as to the
commercial strength of JL Beverage’s Johnny Love Vodka in
the marketplace. Moreover, the determination as to whether
the evidence demonstrates that JL Beverage has robust
commercial strength will lend support to JL Beverage
whatever the fact-finder decides, as JL Beverage has raised
both forward and reverse confusion claims.

                              B.

   We now address factor three of the Sleekcraft test, the
similarity of the marks. JL Beverage contends that the
similarity of shape and color in the competing lips designs
renders the marks similar.

     Similarity of the marks “has always been considered a
critical question in the likelihood-of-confusion analysis.”
GoTo.com, 202 F.3d at 1205. Three principles guide a court
in determining whether marks are similar. Fortune Dynamic,
20          JL BEVERAGE V. JIM BEAM BRANDS

618 F.3d at 1032. First, “similarity is best adjudged by
appearance, sound, and meaning.” Id. (citation and alteration
omitted). “Second, the marks must be considered in their
entirety and as they appear in the marketplace.” Id. (citation
omitted). “Third, similarities are weighed more heavily than
differences.” Id. (quoting GoTo.com, 202 F.3d at 1206).

    In viewing the competing JL Beverage and Jim Beam
marks in their entirety, there are numerous similarities in their
appearance: both have puckered, human lips as the focal point
of their design; the lips have a similar angle and shape; and
the lips are color-coordinated with the flavor of the vodka. In
addition to the photos of the marks, which suggest a similar
appearance, JL Beverage offered evidence from officials who
concluded that the marks are similar. First, JL Beverage relies
upon the Chief Administrator of the North Carolina Alcoholic
Beverage Control Commission’s (NCABCC) statement that
the Jim Beam mark “looks a lot like” JL Beverage’s design.
Second, it provided evidence that a USPTO Examiner stated,
in his initial review of Jim Beam’s application to register its
lips, that the Jim Beam and JL Beverage “marks are highly
similar lip designs oriented at a similar angle. Consequently,
the marks create an overall similar commercial impression.”
The entirety of the marks’ appearances, coupled with
documented statements stating that the marks appear similar,
establishes a genuine dispute of material fact concerning their
similarity.

    In response, Jim Beam first argues that the marks are
“dramatically different” because the bottle shapes are distinct,
the product labeling is not similar, and both products
prominently feature their house marks. While a fact-finder
may ultimately conclude that these factors render the marks
dissimilar, Jim Beam’s competing factual analysis does
            JL BEVERAGE V. JIM BEAM BRANDS                   21

nothing to alleviate the existence of a dispute of material fact
concerning the marks’ similarity.

    Jim Beam next contends that the USPTO Examiner’s
statement is unpersuasive as it was only a preliminary
assessment for determining whether its lips design would be
trademarked. Regardless of whether the statement was the
result of a preliminary assessment, it suggests that others
found the marks similar.

                              C.

    The fourth factor of the Sleekcraft test looks to evidence
of actual consumer confusion. Surfvivor, 406 F.3d at 633. JL
Beverage contends that there is evidence of actual consumer
confusion through Shaun Robertson, a manager of one of JL
Beverage’s product brokers, who submitted a declaration with
an attached email in which he lists instances of confusion
about which individuals informed him. The district court,
although it did not ultimately rule on the admissibility of the
statements in Robertson’s declaration, concluded in its
preliminary injunction order that factor four favored neither
party because the evidence was hearsay, and unreliable, and
because many of the cited instances actually showed a lack of
consumer confusion.

    Robertson’s declaration presents a smattering of
statements that JL Beverage alleges serve as evidence of
actual consumer confusion. For instance, Robertson reported
that a woman named Missy Giblin contacted Robertson
stating that she saw JL Beverage’s new commercial for
Johnny Love Vodka, when in fact JL Beverage was not
running commercials at that time; a man named Sam Mills
told Robertson that he mistakenly purchased Pucker Vodka,
22           JL BEVERAGE V. JIM BEAM BRANDS

having thought it was Johnny Love Vodka; and Micheal C.
Herring, the Chief Administrator of the NCABCC, sent
Robertson an email that stated “see attached. This is Jim
Beam’s new line of vodka. Looks a lot like Johnny Love.”

    Jim Beam argues, and the district court correctly
concluded, that the statements contained in Robertson’s
declaration and email are hearsay. See Japan Telecom., Inc.
v. Japan Telecom, Am. Inc., 287 F.3d 866, 874 n.1 (9th Cir.
2002) (concluding that statements made by the declarant that
the declarant knows of others who were confused by similar
trademarks are inadmissible hearsay). Almost all of the
instances that Robertson recounts are statements that he
gathered from others via email, telephone calls, or text
messages. At times, Robertson even fails to specify where or
how some of the alleged conversations took place.

    We note, however, that at summary judgment a district
court may consider hearsay evidence submitted in an
inadmissible form, so long as the underlying evidence could
be provided in an admissible form at trial, such as by live
testimony. See Fraser v. Goodale, 342 F.3d 1032, 1036–37
(9th Cir. 2003). But here, JL Beverage has not argued that the
hearsay declarants would be available to testify at trial, or that
its hearsay evidence would be admissible at trial in some
other form. We address, therefore, only the district court’s
conclusion that the statements discussed in Robertson’s
declaration are hearsay, not subject to an exception.

    In addition to being hearsay, some of the reported
statements were provided to Robertson by friends and
acquaintances. For example, Diab testified that while he
personally did not know Missy Giblin, he believed that she
was a friend of Robertson and his co-worker. In addition, text
            JL BEVERAGE V. JIM BEAM BRANDS                  23

messages Robertson received on his personal cell phone,
which suggested consumer confusion, showed that Robertson
and the sender had a high level of familiarity, as the messages
contained phrases such as “hey babes,” “dude,” and “call me
back hun.” Evidence from such “partial source[s] possesses
very limited probative value.” Filipino Yellow Pages v. Asian
Journal Publ’ns, Inc., 198 F.3d 1143, 1152 (9th Cir. 1999).

    JL Beverage acknowledges that the statements submitted
in Robertson’s declaration are hearsay, but alleges that at
least some of the statements are admissible under the “state
of mind” exception to the hearsay rule. Federal Rule of
Evidence 803(3) allows admission of “[a] statement of the
declarant’s then-existing state of mind . . . or emotional,
sensory, or physical condition.”

    To support its argument, JL Beverage relies heavily on
Lahoti v. Vericheck, Inc., 636 F.3d 501, 509 (9th Cir. 2011)
(Lahoti II), which admitted hearsay statements regarding
consumer confusion under the state of mind exception. In
Lahoti II, the court admitted testimony from Vericheck
company representatives who received telephone calls from
confused customers who could not find information about
Vericheck on the website www.Vericheck.com, which the
defendant had created. Id. The statements in Robertson’s
declaration differ from the testimony in Lahoti II in two
important ways. First, many of the alleged conversations
Robertson had were not with customers calling because they
were currently confused and seeking information about JL
Beverage; rather, the individuals were reporting, after the
fact, that they had mistaken two products. Second, unlike the
spontaneous calls of confusion that company representatives
received in Lahoti II, Robertson received some of the reports
of confusion from possible biased sources: his friends and
24          JL BEVERAGE V. JIM BEAM BRANDS

acquaintances. Accordingly, JL Beverage’s reliance on Lahoti
II is of little help.

    Finally, some of the statements included in the
declaration, including Herring’s, state only that the Johnny
Love Vodka and Pucker Vodka products “look alike.”
Statements that the products look alike do not necessarily
demonstrate consumer confusion: consumers who identify
products as “looking alike” recognize the products’
similarities, but the question is whether they have mistaken
one product for another.

    Whether JL Beverage may be able to supplement its
evidence of actual consumer confusion through further
discovery is not known. However, as it now stands, this
evidence of actual consumer confusion does not weigh in JL
Beverage’s favor. Nevertheless, as we have previously held,
“[b]ecause of the difficulty in garnering” evidence of actual
confusion, “the failure to prove instances of actual confusion
is not dispositive.” Sleekcraft, 599 F.2d at 353.

                              D.

     We turn last to factor seven of the Sleekcraft test, which
assesses the defendant’s intent in selecting the mark. JL
Beverage contends that Jim Beam knew of the registered JLV
and Lips Marks, yet proceeded to use a colored lips logo on
its Pucker Vodka bottles.

    Factor seven favors the plaintiff “where the alleged
infringer adopted his mark with knowledge, actual or
constructive, that it was another’s trademark.” Brookfield
Comnc’ns, Inc. v. W. Coast Entm’t Corp., 174 F.3d 1036,
1059 (9th Cir. 1999). When “an alleged infringer knowingly
            JL BEVERAGE V. JIM BEAM BRANDS                  25

adopts a mark similar to another’s, courts will presume an
intent to deceive the public.” Official Airline Guides, Inc. v.
Goss, 6 F.3d 1385, 1394 (9th Cir. 1993).

    JL Beverage has set forth evidence to create a genuine
dispute of material fact as to whether Jim Beam knew of JL
Beverage’s registered trademarks, yet proceeded to use its
colored-lips logo anyway. JL Beverage provided the
following: (1) as a result of a trademark search that Jim
Beam’s legal team performed, Jim Beam was aware of JL
Beverage’s JLV trademark; (2) Jim Beam employee Emily
Johnson, who worked with a Pucker flavored-vodka team,
was aware of Johnny Love Vodka prior to joining Jim Beam;
and (3) Jim Beam continued its nationwide rollout of Pucker
Vodka even after the USPTO denied its trademark
application; as a basis for that denial, the USPTO identified
the similarity of Jim Beam’s proposed marks to JL
Beverage’s.

    Jim Beam contends that we should nonetheless conclude
that factor seven weighs in its favor because there is no
evidence that Jim Beam intended to infringe JL Beverage’s
trademarks. Unfortunately for Jim Beam, “[a]bsence of
malice is no defense to trademark infringement.”
Dreamwerks, 142 F.3d at 1132 n.12. The relevant inquiry is
not Jim Beam’s intent, but rather whether it adopted the
colored lips logo with the knowledge that the mark already
belonged to JL Beverage. Viewing the evidence in the light
most favorable to JL Beverage, there is a dispute of material
fact concerning what Jim Beam knew when it launched the
Pucker Vodka line.
26          JL BEVERAGE V. JIM BEAM BRANDS

                             IV.

    In ruling on the parties’ cross-motions for summary
judgment, the district court does not appear to have viewed
the evidence in the light most favorable to JL Beverage and
to determine whether a genuine dispute of material fact
existed. Balancing the Sleekcraft factors as a whole, we
conclude there is a genuine dispute of material fact as to the
likelihood of consumer confusion. A reasonable fact-finder
could conclude that: the JLV Mark has conceptual strength
because the Mark’s salient feature, the color-coordinated lips,
requires consumers to use their imagination to connect the
color to the vodka flavor; the Lips Mark has conceptual
strength because the lips have no commonly understood
connection to the vodka product; Johnny Love Vodka does or
does not have commercial strength (because a finding of
either would support one of JL Beverage’s theories of
confusion–reverse or forward); Johnny Love and Pucker
Vodka are related flavored-liquor products sold to the same
customers and distributors; the products are similar given
their use of color-coordinated, puckered human lips as the
focal point of their bottle designs; consumers purchasing the
vodka products are not likely to exercise a high degree of care
in distinguishing between the two; and Jim Beam was aware
of JL Beverage’s trademarks prior to rolling out its Pucker
Vodka line. Accordingly, we reverse and remand for further
proceedings consistent with this opinion.

     REVERSED and REMANDED.
