Horphag Research Ltd v. Garcia

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT

HORPHAG RESEARCH LTD, 
Plaintiff-Appellee,
v.
LARRY GARCIA, dba No. 04-55373
Healthierlife.Com,
Defendant-Appellant,  D.C. No.
CV-00-00372-VAP
and OPINION
MARIO PELLEGRINI, dba
Healthdiscovery.Com,
Defendant.

Appeal from the United States District Court
for the Central District of California
Virginia A. Phillips, District Judge, Presiding

Submitted October 16, 2006*
Pasadena, California

Filed January 9, 2007

Before: Harry Pregerson and Sidney R. Thomas,
Circuit Judges, and Louis F. Oberdorfer,** Senior Judge.

Opinion by Judge Pregerson

*This panel unanimously finds this case suitable for decision without
oral argument. See Fed. R. App. P. 34(a)(2).
**The Honorable Louis F. Oberdorfer, Senior United States District
Judge for the District of Columbia, sitting by designation.

127
 HORPHAG RESEARCH v. GARCIA 131

COUNSEL

Larry Garcia, San Antonio, Texas, defendant-appellant pro se.

Marvin S. Gittes, Mintz, Levin, Cohn, Ferris, Glovsky &
Popeo., New York, New York, for the plaintiff-appellee.

OPINION

PREGERSON, Circuit Judge:

We are called upon to consider, for a second time, Defen-
dant Larry Garcia’s use of Horphag Research Ltd’s
(“Horphag’s”) trademark Pycnogenol. In a previous appeal,
we affirmed the district court’s grant of judgment as a matter
of law on Horphag’s trademark infringement claims. See Hor-
phag Research Ltd. v. Pelligrini, 337 F.3d 1036, 1042 (9th
Cir. 2003). We vacated the district court’s order on Horphag’s
trademark dilution claim and asked the district court to recon-
sider its decision in light of the Supreme Court’s opinion in
Moseley v. V Secret Catalogue, Inc., 537 U.S. 418 (2003). On
remand, the district court granted Horphag’s motion for sum-
mary judgment on its trademark dilution claim and reinstated
its original attorneys’ fees award. Defendant Larry Garcia,
appealing in pro per, again challenges the district court’s grant
of summary judgment on Horphag’s trademark dilution claim
and the corresponding attorneys’ fees award. We have juris-
132 HORPHAG RESEARCH v. GARCIA
diction under 28 U.S.C. § 1291, and we affirm the district
court.

I. Factual and Procedural Background

The facts of this case are largely the same as those upon
which we based our previous opinion, and we recount them
only in brief detail here. In 1969, Dr. Jack Masquelier, a
French professor of pharmacology, discovered a chemical
antioxidant substance made from the bark of a French mari-
time pine tree. The substance supposedly assists in nutritional
distribution and proper circulation. Around 1978, Masquelier
brought the product to market under the name “Pycnogenol.”
Masquelier1 received the trademark in France for the mark
Pycnogenol in 1989.

Around 1987, Horphag began selling the pine bark extract
outside of France under contractual relationship with Masque-
lier. Thereafter, things between Horphag and Masquelier went
sour, and the two parties dissolved their relationship. In 1993,
Horphag was granted the United States trademark for the
mark Pycnogenol.2 Since then, Horphag has made extensive
efforts to control the quality of Pycnogenol and has invested
heavily in research and marketing its product. Pycnogenol is
now one of the fifteen most sold herbal supplements in the
United States. Horphag has not authorized any other entity to
use its mark.
1
Masquelier has been associated with various corporations over the rele-
vant period, but the names of the individual companies are irrelevant for
our purposes. All references to Masquelier should be understood as refer-
ences to the company through which Masquelier distributed his product.
Likewise, Horphag’s company has gone through numerous corporate iter-
ations. We use “Horphag” to denote the various companies related to Hor-
phag Research Ltd with which Masquelier, and later Garcia, dealt.
2
All further references to Pycnogenol refer to Horphag’s trademarked
product unless otherwise noted.
 HORPHAG RESEARCH v. GARCIA 133
Garcia was once a licensed dealer for Horphag and sold
Horphag’s products through his Internet site “healthier-
life.com.” In February 1999, Garcia stopped distributing prod-
ucts manufactured by Horphag and began selling products
manufactured by Masquelier. One of the products Garcia sells
is “Masquelier’s Original OPCs,” a supplement derived from
grape pits that competes with Horphag’s pine-bark-based sup-
plement. Garcia claims that he stopped distributing for Hor-
phag after he discovered that Masquelier’s product, rather
than Horphag’s product, was the “true Pycnogenol.”

Horphag contends that Garcia used the mark Pycnogenol as
a “bait and switch” to induce customers to purchase his prod-
uct, Masquelier’s Original OPC. Garcia used the term Pycno-
genol as a metatag3 to lure would-be customers to his website.
Once at the website, consumers could find information
designed to educate prospective users about the debate over
the “rightful ownership” of the Pycnogenol patent and trade-
mark. Other parts of Garcia’s website, however, were more
problematic.

In several places, Garcia used the term Pycnogenol as a
generic term, referring to both Horphag’s product and
Masquelier’s product as Pycnogenol. Garcia attributes the
results of research conducted on Horphag’s Pycnogenol to
Masquelier’s product. For example, Garcia’s website
describes Masquelier’s OPC as “a patented peak performance
nutrient . . . among the best new weapons . . . to maintain
overall good health for longer and longer periods of time.” On
the “Safety Factor” section of Garcia’s healthierlife.com web-
site, Garcia states “Pycnogenol studies carried out at the Pas-
teur Institute in Lyon, France, have shown it to be nontoxic
to humans. . . . Pycnogenol should be viewed as a completely
safe nutrient.” Both of these statements are direct quotes from
Dr. Steven Lamm and Gerald Secor Couzens’ book, Younger
3
A metatag is an indexing tool used by Internet search engines to deter-
mine which websites correspond to the search terms provided by a user.
134 HORPHAG RESEARCH v. GARCIA
at Last (1997), which makes explicit that the health and safety
benefits to which it is referring attach to Horphag’s product.
Indeed, Lamm and Couzens warn consumers not to purchase
Pycnogenol imitators not manufactured by Horphag.

Garcia’s website also contains quotations from scientific
literature discussing Horphag’s Pycnogenol that were altered
to make them appear as though the quotes were discussing
Masquelier’s product. For instance, Garcia altered a quotation
taken from Dr. Richard A. Passwater’s book, Pycnogenol:
The Super “Protector” Nutrient (1994). On Garcia’s website,
the quotation reads: “Masquelier’s Original OPC has not only
withstood the test of time (since 1953),4 it was extensively
tested before it was made available as a food supplement.”
But Passwater’s book actually reads: “Pycnogenol has not
only withstood the test of time, it was extensively tested
before it was made available as a food supplement.” Pycno-
genol: The Super “Protector” Nutrient 99. Passwater’s book
makes clear that it intended to refer to Horphag’s product, a
fact Garcia’s website does not acknowledge.

Based on these and other alleged misuses of the Pycno-
genol trademark by Garcia, Horphag argues that Garcia “has
lessened the capacity of Pycnogenol to uniquely identify and
distinguish [its] product,” thereby diluting Horphag’s trade-
mark. Garcia, in turn, argues that Horphag’s suit is merely an
attempt to stifle the debate on the “true” origins of Pycno-
genol.

On June 18, 1999, Horphag sued Garcia alleging trademark
infringement, false designation of origin, and trademark dilu-
tion under federal law, as well as trademark dilution and
4
There is a slight discrepancy here, in that Garcia claims that Masque-
lier discovered the pine-bark-based supplement in 1969, while this state-
ment from the website suggests that the product has been around since
1953. The important thing for our purposes is that the quotation was
altered.
 HORPHAG RESEARCH v. GARCIA 135
unfair competition under California law. On July 24, 2000,
the district court granted summary judgment in favor of Gar-
cia on Horphag’s claim of false designation of origin. The dis-
trict court also denied Horphag’s request for a preliminary
injunction. A jury trial was held on the remaining claims from
July 24 through 27, 2001.

After both sides rested their cases on July 27, 2001, but
before the case was submitted to the jury, the district court
granted Horphag’s motion for judgment as a matter of law
under Federal Rule of Civil Procedure 50(b) on both its trade-
mark dilution claim and infringement claim. The district court
held that Garcia infringed and unlawfully diluted Horphag’s
trademark Pycnogenol and awarded attorneys’ fees to Hor-
phag in its judgment on August 28, 2001. Garcia appealed the
judgment as a matter of law and the award of attorneys’ fees.

On July 29, 2003, this court issued an amended opinion
affirming the district court’s summary judgment in favor of
Horphag on its trademark infringement claim. See Horphag
Research, 337 F.3d at 1042. We vacated the judgment on
Horphag’s trademark dilution and remanded it for reconsider-
ation of the claim in light of Moseley v. V Secret Catalogue,
Inc., 537 U.S. 418 (2003), which altered the showing of dilu-
tion required for an anti-dilution claim. See id. at 1041. We
also directed the lower court to reconsider the portion of the
attorneys’ fees analysis that related to the dilution claim. See
id. at 1042.

On November 24, 2003, Horphag filed a motion for sum-
mary judgment with respect to its dilution claim.5 Horphag
argued that evidence already admitted at trial conclusively
proved that Garcia actually diluted its trademark. On January
5
The district court reviewed Horphag’s filing under the standard for
summary judgment, given that the parties had the opportunity to submit
additional evidence relevant to the element of actual dilution. We do like-
wise.
136 HORPHAG RESEARCH v. GARCIA
22, 2004, the district court granted Horphag’s motion for
summary judgment. It concluded that none of Garcia’s pur-
ported “material questions of fact” were relevant and that
Horphag was entitled to summary judgment as a matter of
law. The court also reinstated the award of attorneys’ fees.
Garcia appealed.6

II. Standard of Review

A grant of summary judgment is reviewed de novo. See
Buono v. Norton, 371 F.3d 543, 545 (9th Cir. 2004). In
reviewing an order granting summary judgment, we view the
evidence in the light most favorable to the nonmoving party,
drawing all reasonable inferences in his favor. See Hernandez
v. Hughes Missile Sys. Co., 362 F.3d 564, 568 (9th Cir. 2004).
We must determine whether there are genuine issues of mate-
rial fact and whether the district court correctly applied the
relevant substantive law. See Olsen v. Idaho State Bd. of
Med., 363 F.3d 916, 922 (9th Cir. 2004). The moving party
bears the initial burden to demonstrate the absence of any
genuine issue of material fact. See T.W. Elec. Serv., Inc. v.
Pac. Elec. Contractors Ass’n, 809 F.2d 626, 630 (9th Cir.
1987). Once the moving party meets its initial burden, how-
ever, the burden shifts to the non-moving party to “set forth,
by affidavit or as otherwise provided in Rule 56, ‘specific
facts showing that there is a genuine issue for trial.’ ” Id. (cit-
ing Fed. R. Civ. P. 56(e)) (emphasis omitted). In reviewing an
order granting summary judgment, this court may not weigh
the evidence or pass on the credibility of witnesses but is
instead limited to determining whether there is any genuine
issue for trial. See Abdul-Jabbar v. Gen. Motors Corp., 85
F.3d 407, 410 (9th Cir. 1996).

As an initial matter, Garcia argues that the district court
6
Garcia’s appeal was filed pro se. Because we read pro se appeals liber-
ally, we have given Garcia every benefit of the doubt as to which issues
are properly before this court.
 HORPHAG RESEARCH v. GARCIA 137
incorrectly required him, as the non-moving party, to present
substantive evidence raising a disputed issue of material fact
to avoid summary judgment. Based on Rule 56(e), however,
the district court properly shifted the burden to Garcia to set
forth evidence raising a disputed issue of material fact after
Horphag, as the moving party, satisfied its initial burden by
presenting evidence that demonstrated the absence of any
genuine issue of material fact.

Garcia also complains that the district court’s grant of sum-
mary judgment at this stage is contrary to its earlier findings
at the preliminary injunction stage. Specifically, Garcia notes
that the district court found that there was no likelihood of
confusion between the two marks and that the statements on
Garcia’s website were not false or misleading. Garcia’s argu-
ment is unavailing because such findings were made before
discovery was completed and before the evidence was fully
developed at trial. As such, they are not binding on the district
court at this stage of the litigation.

III. Discussion

A. The District Court Properly Granted Horphag’s
Motion for Summary Judgment on Its Trademark
Dilution Claim

[1] The Federal Trademark Dilution Act (“FTDA”) pro-
vides in relevant part:

The owner of a famous mark shall be entitled, sub-
ject to the principles of equity and upon such terms
as the court deems reasonable, to an injunction
against another person’s commercial use in com-
merce of a mark or trade name, if such use begins
after the mark has become famous and causes dilu-
tion of the distinctive quality of the mark, and to
obtain such other relief as is provided in this subsec-
tion.
138 HORPHAG RESEARCH v. GARCIA
15 U.S.C. § 1125(c)(1). Dilution, as defined under 15 U.S.C.
§ 1127, is “the lessening of the capacity of a famous mark to
identify and distinguish goods or services” of the owner of the
famous mark such that the strong identification value of the
owner’s trademark whittles away or is gradually attenuated as
a result of its use by another. See 4 J. Thomas McCarthy,
McCarthy on Trademarks and Unfair Competition § 24:71
(4th ed. 2006) [hereinafter “McCarthy”] (discussing the
underlying rationale of the dilution cause of action, which is
to protect “the senior user’s property right and good will in
his mark” from the “gradual diminution or whittling away of
the value of [his] trademark, resulting from use by another”).

[2] The test for trademark dilution, as modified by Moseley,
requires the trademark owner to show (a) that its mark is
famous; (b) that the junior user has made commercial use of
the famous mark; (c) that the junior user began using the mark
after it had became famous; and (d) that such use caused
actual dilution. See Avery Dennison Corp. v. Sumpton, 189
F.3d 868, 873-74 (9th Cir. 1999) (citing Panavision Int’l, L.P.
v. Toeppen, 141 F.3d 1316, 1324 (9th Cir. 1998)); Moseley,
537 U.S. at 433. Garcia, the junior user, does not challenge
the district court’s finding as to the first three requirements.
Therefore, we consider his challenges regarding actual dilu-
tion, and we also consider his various defenses.

1. Horphag has shown actual dilution of its
trademark

Garcia argues that the district court erred when it found that
Horphag proved actual dilution. We disagree.

[3] The Supreme Court, in Moseley, altered the last element
of our Avery Dennison test to require a showing of “actual
dilution.” 537 U.S. at 433. As to the evidence required to
prove actual dilution, the Court distinguished between identi-
cal marks and non-identical marks. In cases where the con-
flicting marks are identical, the Court observed that “[i]t may
 HORPHAG RESEARCH v. GARCIA 139
well be . . . that direct evidence of dilution such as consumer
surveys will not be necessary if actual dilution can reliably be
proved through circumstantial evidence—the obvious case is
one where the junior and senior marks are identical.” Id. On
the other hand, in cases where the conflicting marks are non-
identical, “the mere fact that consumers mentally associate the
junior user’s mark with a famous mark is not sufficient to
establish actionable dilution.” Id. at 433.

[4] To apply this standard from Moseley, we first examine
whether the junior and senior marks are identical. Assessing
whether marks are identical is a fact-based determination. As
the Second Circuit has explained, determination of whether
the marks are identical tends to be “context-and/or media-
specific and factually intensive in nature.” Savin Corp. v. The
Savin Group, 391 F.3d 439, 453 (2d Cir. 2004). We review
the district court’s factual findings for clear error. See Husain
v. Olympic Airways, 316 F.3d 829, 835 (9th Cir. 2002), aff’d,
540 U.S. 644 (2004). Here, the district court examined the
marks and their use, and concluded that the marks were iden-
tical. The district court noted that Garcia’s use of the word
Pycnogenol was “identical to Horphag’s registered trademark
Pycnogenol.” The district court did not clearly err in deter-
mining that the marks were identical.

[5] Under Moseley, Horphag need only provide circumstan-
tial evidence that Garcia’s use of Pycnogenol diluted its
famous trademark. See 537 U.S. at 433. Moseley explains,
however, that use of an identical mark is itself circumstantial
evidence. Id.; see also Savin, 391 F.3d at 452 (noting that
“where a plaintiff who owns a famous senior mark can show
the commercial use of an identical junior mark, such a show-
ing constitutes circumstantial evidence of the actual-dilution
element of an FTDA claim”).

[6] Even if the conflicting marks were not identical, Garcia
(the junior user) would still not prevail because Horphag pre-
sented additional evidence of dilution. Specifically, Horphag
140 HORPHAG RESEARCH v. GARCIA
presented circumstantial evidence that Garcia’s use of the
Pycnogenol mark constituted blurring. “Blurring occurs when
a defendant uses a plaintiff’s trademark to identify the defen-
dant’s goods or services, creating the possibility that the mark
will lose its ability to serve as a unique identifier of the plain-
tiff’s product.” Panavision Int’l, 141 F.3d at 1326 n.7. The
theory of dilution by blurring thus protects the benefits that
flow from a sharp and distinct connection between one mark
and one product. See McCarthy § 24:70.

[7] Garcia has blurred the sharp connection between Hor-
phag’s product and the mark Pycnogenol. Horphag’s
employee Victor Ferrari testified that numerous consumers
who contacted Horphag learned, after purchasing Garcia’s
product, that the product they purchased was not Horphag’s
Pycnogenol. He also received calls asking whether Garcia
“was selling a real Pycnogenol product.” This testimony rep-
resents evidence that Garcia’s actions have lessened the abil-
ity of the mark Pycnogenol to uniquely identify Horphag’s
product. Not only does the infringing use create a “mental
association” in the consumer’s mind between Horphag’s
product and the product Garcia sells, but indeed, the evidence
shows that some consumers believed they were purchasing
Pycnogenol—with its good will and reputation—when they
purchase Garcia’s product. See Moseley, 537 U.S. at 435
(Kennedy, J., concurring) (“If a mark will erode or lessen the
power of the famous mark to give customers the assurance of
quality and the full satisfaction they have in knowing they
have purchased goods bearing the famous mark, the elements
of dilution may be established.”).

[8] Contrary to Garcia’s arguments, consumer surveys and
the like are not necessary in cases like this, where the junior
and senior mark were identical and where there is circumstan-
tial evidence that blurring actually resulted. See id. at 434.
Garcia’s use of the mark Pycnogenol has clearly weakened
the unique connection between Horphag’s mark and Hor-
phag’s product.
 HORPHAG RESEARCH v. GARCIA 141
[9] Nor can Garcia avoid summary judgment simply by
calling Horphag’s evidence a “bald assertion.” See Gasaway
v. Nw. Mut. Life Ins. Co., 26 F.3d 957, 960 (9th Cir. 1994)
(holding that where the moving party has provided competent
evidence, the non-moving party cannot avoid summary judg-
ment simply by arguing that the evidence is “self-serving
speculation that should be disregarded”). Accordingly, we
conclude that Horphag has provided circumstantial and
uncontroverted evidence that actual blurring has occurred,
such that the district court properly granted summary judg-
ment on Horphag’s trademark dilution claims.7

2. Fair Use Defense

[10] Garcia argues that his use of Horphag’s trademark is
protected by the fair use doctrine. We disagree. Eligibility for
a fair use defense based on “comparative commercial adver-
tising” is conditioned on the challenged use being fair. See
McCarthy § 24.97.10. To qualify for a fair use defense, the
use must not “create an improper association between a mark
and a new product” but must, instead, “merely identify the
trademark holder’s products.” See Playboy Enters., Inc. v.
Welles, 279 F.3d 796, 806 (9th Cir. 2002).

[11] Garcia did more than merely identify Horphag’s prod-
uct as part of an attempt to educate the public on the Pycno-
genol debate. Rather, as we found in the previous appeal,
Garcia intentionally “spawn[ed] confusion as to sponsorship
and attempt[ed] to appropriate the cachet of the trademark
Pycnogenol to his product.” Horphag, 337 F.3d at 1041. Gar-
cia’s attempt to capitalize on the popularity of Horphag’s
product was not “fair.” We thus agree with the district court
that Garcia has not adequately shown a genuine issue of mate-
rial fact as to his fair use defense.
7
Because we find that dilution by blurring occurred, we do not reach
Horphag’s alternative theory of dilution by tarnishment.
142 HORPHAG RESEARCH v. GARCIA
3. Comity and Collateral Estoppel

Garcia also argues that this court should, for reasons of
comity, follow the decision of the French court in Bordeaux
(“the Bordeaux Decision”), which he alleges found that Hor-
phag was not the rightful owner of its trademark in the United
States. We agree with the district court that the Bordeaux
Decision is inadmissible. The Bordeaux Decision explicitly
states that “although the . . . agreement confers on C.E.P.
[(one of Masquelier’s companies)] an interest to take action
to protect the two . . . French trademarks [(one of which is
Pycnogenol)], it cannot give [C.E.P.] the right under French
law to prevent the Horphag company from using, outside
France, the verbal trademark ‘Pycnogenol’ filed in another
country.”

4. Derivative Fame “Defense”

Garcia also challenges Horphag’s dilution cause of action
by claiming that he should not be liable for trademark dilution
when the Pycnogenol trademark had already been diluted
prior to his use. In Garcia’s opposition to summary judgment,
he argued that the “famousness of [Horphag’s] ‘Pycnogenol’
is derived from . . . [and] rel[ies] upon the famousness of the
Masquelier ‘Pycnogenol.’ ” He appears to raise the same issue
on appeal by arguing that Horphag is capitalizing on Masque-
lier’s good will and popularity, rather than the other way
around.

We disagree. Garcia has not presented any evidence show-
ing that the Masquelier’s product enjoys any fame in the
United States that is independent of Horphag’s Pycnogenol
mark. It is Horphag’s product that is a “buzz item” in the
United States, not Masquelier’s. It is Horphag that has
invested in research and marketing to increase the “famous-
ness” of its product in this country, not Masquelier. Hor-
phag’s Pycnogenol trademark is famous not because of a
 HORPHAG RESEARCH v. GARCIA 143
French product, but because of Horphag’s own investment in
advertising, research, and quality control.

B. The District Court Did Not Abuse Its Discretion in
Reinstating the Award of Attorneys’ Fees to
Horphag

On remand, this court directed the district court to recon-
sider the portion of the attorneys’ fees analysis related to the
dilution claim. See Horphag Research, 337 F.3d at 1042. On
February 5, 2004, the district court ordered the reinstatement
of the award of attorneys’ fees to Horphag.

[12] Garcia waived any argument relating to the award of
attorneys’ fees by failing to raise it in his opening brief. See
Arpin v. Santa Clara Valley Transp. Agency, 261 F.3d 912,
919 (9th Cir. 2001). But even if we were to overlook this
technical failure, the district court’s award of attorneys’ fees
was not an abuse of discretion. See Cairns v. Franklin Mint
Co., 292 F.3d 1139, 1156 (9th Cir. 2002) (reviewing award of
attorneys fees for abuse of discretion). Under 15 U.S.C.
§ 1117(a), a court may award reasonable attorneys’ fees to the
prevailing party in exceptional circumstances, which includes
cases in which the act is fraudulent, deliberate, or willful. See
Gracie v. Gracie, 217 F.3d 1060, 1068 (9th Cir. 2000). Garcia
made deliberate and calculated attempts to confuse Masque-
lier’s product with Horphag’s Pycnogenol by altering quota-
tions from research publications that refer exclusively to
Horphag’s product. Accordingly, the district court did not
abuse its discretion when it reinstated the award of attorneys’
fees to Horphag.

IV. Conclusion

For the foregoing reasons, the district court’s grant of sum-
mary judgement of Horphag’s trademark dilution claim is
AFFIRMED.