In Appliance Liquidation Outlet LLC v. Axis Supply Corp., No. 23-50413, — F.4th — (5th Cir. June 21, 2024), the Fifth Circuit affirmed that competitor's use of “Appliance Liquidation” infringed Plaintiff ALO's common law trademark for “Appliance Liquidation Outlet” in San Antonio. Although “Appliance Liquidation Outlet” was a descriptive mark, it had acquired secondary meaning based on the length and manner of use of the mark for over two decades; sales of $3.5 million in 2022; advertising including a large billboard displaying “Appliance Liquidation Outlet” prominently and promotions with local sports teams; statements made by consumers who associate “Appliance Liquidation Outlet” with the plaintiff; and the defendant's intent in copying the mark.

[T]he mere fact that a defendant uses a plaintiff's mark after the initiation of litigation does not establish intent to copy for this [secondary meaning] factor.

The district court appeared to find that this factor weighed in favor of secondary meaning because Axis used a name similar to ALO's yet did not provide consumers with any contact information or service infrastructure. Record evidence supports both those findings. The words on Axis's banner (“Appliance Liquidation”) are nearly identical to ALO's billboard (“Appliance Liquidation Outlet”). And the evidence showed that ALO never provided any contact information on its social media site or gave prospective customers a phone number to call.

Axis's strikingly similar banner, coupled with its complete lack of a service infrastructure and its recent entry into the market, allows the district court to infer that Axis intended to copy ALO's mark. At a minimum, it goes beyond mere awareness of ALO's mark or merely using the mark after the initiation of litigation.

The Fifth Circuit also held that “Appliance Liquidation” was a source identifier even though the plaintiff's employees used “Appliance Liquidation” was a shorthand for “Appliance Liquidation Outlet"; the record did not contain any specific instance showing “Appliance Liquidation” being intentionally used to identify its store.

The record does contain evidence that ALO's employees referred to the business as “Appliance Liquidation.” For example, one employee testified that she tells people she works at “Appliance Liquidation” and that she answers the phone using “Appliance Liquidation” and “Appliance Liquidation Outlet” interchangeably. And one of ALO's owners testified that advertisements would “either say Appliance Liquidation or Appliance Liquidation Outlet.”

But, comparing the accused use of “Appliance Liquidation” with “Appliance Liquidation Outlet"; the Court affirmed the district court's finding of infringement that was based entirely on evidence of actual confusion. See World Carpets, Inc. v. Dick Littrell's New World Carpets, 438 F.2d 482, 489 (5th Cir. 1971) (“There can be no more positive or substantial proof of the likelihood of confusion than proof of actual confusion. Moreover, reason tells us that while very little proof of actual confusion would be necessary to prove the likelihood of confusion, an almost overwhelming amount of proof would be necessary to refute such proof.” (internal citation omitted)). “Evidence of actual confusion must show more than a fleeting mix-up of names; rather it must show that the confusion was caused by the trademarks employed and it swayed consumer purchases.” Streamline Prod. Sys., Inc. v. Streamline Mfg., Inc., 851 F.3d 440, 457 (5th Cir. 2017); see also Armco, Inc. v. Armco Burglar Alarm Co., 693 F.2d 1155, 1160 (5th Cir. 1982) (finding actual confusion where an “employee[] testified that he had received phone calls at least once a month from people trying to reach” the defendants).  

"[G]iven the repeated instances of actual confusion presented at trial," the Fifth Circuit held that the district court "permissibly found infringement on this digit alone."

The attorneys at Thomas P. Howard, LLC are experienced in trademarks nationwide including in Colorado.