In Playnation Play Systems, Inc. v. Velex Corporation, d.b.a. Gorilla Gym, Case No. 17-15226 (11th Cir. 2019) (Full opinion available here), the Court affirmed the lower court’s finding of infringement and cancellation of Velex’s mark, but vacated and remanded the award of profits based on a finding of willful infringement based solely because Velex continued to use its mark after it was served with the complaint.
Playnation Play Systems, Inc. (“Playnation”) sells children outdoor playground equipment under “Gorilla Playsets” brand since 2002. Playnation has three registered trademarks, issued in 2004 and 2014. Velex Corporation (“Velex”) sells “Gorilla Gym” doorway pull-up bars and accessories for children. Velex owns a registered mark, issued in 2014.
The district court entered judgment for Playnation finding trademark infringement, awarding damages to Playnation and cancelling Velex’s trademark. The 11th Circuit affirmed the lower court, except vacated and remanded the determination of damages based on Velex’s willful infringement.
The district court found Playnation’s mark was descriptive or suggestive, extensively used since 2002, was incontestable and there was a lack of third-party use, all resulting in a strong mark. The 11th Circuit found no error in the strength of the mark analysis. Playnation also produced two instances of actual confusion that weighed in favor of a likelihood of confusion. Additionally, the marks were similar and the products, retail outlets and advertising were found to be similar.
Velex argued that its reliance on the Trademark Office’s grant of a registered mark to it precluded Playnation from alleging infringement. The 11th Circuit found that issue preclusion does not bind Playnation, because it was not a party to the prior proceeding. Additionally, lack of survey evidence does not weight against the plaintiff when determining a likelihood of confusion.
As for the profit award, the district court concluded that Velex willfully infringed on Playnation’s trademark based solely on Velex’s continued sale of its Gorilla Gym products after it was served with the complaint. The 11th Circuit reasoned that under the district court’s construction of willfulness, a valid trademark holder risks losing all of its profits if it does not immediately cease selling its trademarked product upon receiving a complaint indicating it may be violating the law. The district court had determined that at the time Velex obtained its trademark, Velex did not intend to infringe on Playnation’s mark. Therefore, the continued sale under the color of a valid federal trademark cannot alone establish willfulness. The district court did not rely on any other evidence to establish willfulness. The 11th Circuit found that remand is appropriate so that the district court may consider whether other evidence of willfulness exists and whether those alternative theories support an accounting of profits.