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Fleet Feet, Inc. v. Nike Inc.

United States District Court, M.D. North Carolina

December 2, 2019

FLEET FEET, INC., Plaintiff,
v.
NIKE INC., et al., Defendants.

          MEMORANDUM OPINION AND ORDER

          Catherine C. Eagles, United States District Judge.

         The plaintiff Fleet Feet, Inc., has used two trademarks, “Change Everything” and “Running Changes Everything, ” for a number of years in connection with selling running shoes and other athletic apparel and with organizing running and walking races, training, and related events. This summer, the defendants Nike, Inc., Nike USA, Inc., and Nike Retail Services, Inc. (“Nike”), began to use the phrase “Sport Changes Everything” in a large-scale and ubiquitous advertising campaign expected to last through the holidays and into the New Year. Because Fleet Feet has demonstrated a likelihood of success on the merits of its trademark infringement claims and met the other requirements for a preliminary injunction, Fleet Feet's motion will be granted.

         Overview

         To obtain a preliminary injunction, a party must show that: (1) it is likely to succeed on the merits, (2) it is likely to suffer irreparable harm if the injunctive relief is denied, (3) the balance of equities tips in its favor, and (4) injunctive relief would be in the public interest. Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7, 20 (2008). “Satisfying these four factors is a high bar, as it should be.” SAS Inst., Inc. v. World Programming Ltd., 874 F.3d 370, 385 (4th Cir. 2017), cert. denied, 139 S.Ct. 67 (2018).

         To show a likelihood of success on the merits of its trademark infringement claims, Fleet Feet must make a strong case that Nike is infringing Fleet Feet's marks.[1]This requires proof that Fleet Feet owns a valid, protectable trademark and that Nike's use of the mark is likely to cause confusion among consumers.[2] Lone Star Steakhouse & Saloon, Inc. v. Alpha of Va., Inc., 43 F.3d 922, 930 (4th Cir. 1995).

         Fleet Feet offers significant evidence that it owns valid marks: the United States Patent and Trademark Office (USPTO) has recognized the validity of the “Change Everything” mark by registering it on the Principal Register, which is prima facie evidence of the validity of that mark, and Fleet Feet has used both marks for several years in connection with retail and online sales, training, and races. The evidence of reverse confusion-which occurs when the junior user's advertising and promotion overcomes the senior user's reputation in the market such that customers are likely to be confused into thinking that the senior user's goods are those of the junior user, 4 J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition § 23:10 (5th ed. 2019)-is substantial, as Nike is spending millions of dollars to intensely promote the “Sport Changes Everything” campaign.

         Nike challenges validity, contending that both “Change Everything” and “Running Changes Everything” are in common use and cannot be trademarked and that Fleet Feet does not use either phrase “as a trademark.” It also challenges Fleet Feet's evidence of confusion and asserts the affirmative defense of fair use, which if shown would ultimately defeat any liability.

         The Court, having reviewed the motions, the supporting documents, all matters of record, [3] and the briefing, makes the following findings of fact and conclusions of law for the purpose of this Order only.

         Findings of Fact

         The Parties

         1. Fleet Feet, through franchised, company-owned, and online stores, sells running and fitness merchandise, including footwear, apparel, accessories, and general fitness products, as well as training programs and related services. Doc. 10 at ¶ 9. As part of this business, Fleet Feet and its franchisees organize races, running groups, and training events. Doc. 10-3. Its primary focus is running gear, which is used by athletes from many sports as part of a fitness regimen. Doc. 47 at ¶ 6.

         2. Fleet Feet has 182 stores, including franchises, nationwide. Doc. 10 at ¶ 8.

         3. Since Sept. 1, 2014, Fleet Feet has spent approximately $1, 900, 000 on advertising and marketing its brand, not including what franchised stores may have spent; $800, 000 on advertising and marketing by its company-owned locations; and $1, 350, 000 on digital media advertising by its online store. Id. at ¶ 20. The record does not reflect how much of that spending was dedicated to or used the “Change Everything” mark or the “Running Changes Everything” mark.

         4. From Sept. 1, 2014, to Aug. 31, 2019, Fleet Feet's franchisees and affiliates earned more than $940, 000, 000 in revenue, resulting in more than $25, 000, 000 in royalties and license fees paid to Fleet Feet. Id. at ¶ 21.

         5. Nike is in the business of designing, developing, marketing, and selling athletic footwear, apparel, equipment, accessories, and services. Doc. 15-1 at 2. It is the largest seller of athletic footwear and apparel in the world. Id.

         6. Nike's consolidated gross profit in fiscal year 2019 was $17, 474, 000, 000, a 10% increase over the previous year, id. at 6, and it spends many millions of dollars on “demand creation expense, ” id., which the Court infers means the money was spent on various forms of advertising

         7. Nike focuses primarily on six product categories: running, Basketball, the Jordan Brand, soccer, training, and sportswear/ lifestyle products. Id. at 2. It also makes products for children and for other sports. Id. Nike's product lines include but are not limited to Fleet Feet's specialty.

         8. Fleet Feet sells shoes and other athletic wear made by several different companies, including Nike. See Doc. 10-2. Nike sells its products both directly, through Nike-owned retail stores and online, and through businesses like Fleet Feet. Doc. 15-1 at 2-3. Nike's relationship with Fleet Feet is longstanding. Fleet Feet is thus both Nike's customer and Nike's competitor.

         Fleet Feet's Trademarks at Issue

         9. Fleet Feet has trademark rights in two phrases, “Change Everything” and “Running Changes Everything, ” when used in connection with retail sporting goods stores, organizing running and walking race training events, or athletic shirts. Its rights to “Change Everything” arise from use under the common law, see infra at ¶¶ 10-12, and from registration on the Principal Register on October 13, 2015. See infra at ¶ 14; Doc. 7-1. Its rights to “Running Changes Everything” arise from use under the common law. See infra at ¶¶ 18-20.

         The “Change Everything” Mark

         10. Fleet Feet began using the phrase “Change Everything” (CE) in June 2013 for its retail stores and for race and training events and in August 2014 for apparel.[4]Fleet Feet has used it continuously since.[5]

         11. Fleet Feet uses “Change Everything” in a variety of ways, including on athletic shirts given away or sold as part of races or for training events, [6] in online and in-store advertising, [7] on promotional items such as referral cards[8] and materials for industry conferences, [9] and on in-store displays.[10] It is generally displayed alone, rather than textually in a sentence; for example, the phrase may be centered and without other adjacent text on T-shirts, or used as a banner headline on the website. See supra notes 6-10. Occasionally, CE is used in a more textual way. See, e.g., Doc. 38-13 at 2; Doc. 38-15 at 2.

         12. Fleet Feet generally uses an all-caps, non-italicized block font, similar to its company name.[11] On T-shirts, in stores, online, and in social media, the CE mark is typically displayed next to, or on the other side of the T-shirt from, another Fleet Feet mark, such as the company name or “flame” symbol.[12] Fleet Feet has not generally featured stories about individuals in using this mark, but where it has, it has generally used photographs rather than video. See, e.g., Doc. 38-15 (“latest news” posting on Fleet Feet website of running program participants' successful completion of 5K race, featuring RCE and CE marks). Fleet Feet and its licensees do use video advertisements online to promote their training programs; the three examples provided[13] have some 15, 400 views total. Doc. 10 at ¶¶ 40-42.

         13. In August 2014, Fleet Feet applied to the USPTO to register “Change Everything” as a trademark for three categories of use, called International Classes: retail sporting goods stores (Class 35), organizing running and walking race training events (Class 41), and athletic apparel (Class 25). See Doc. 38-23 at 17.[14]

         14. On October 13, 2015, the USPTO placed the “Change Everything” mark on the Principal Register for Classes 35 and 41, retail sporting goods stores and organizing running and walking race training events, Doc. 7-1, and on the Supplemental Register for Class 25, athletic apparel. Doc. 7-2. The mark “consists of standard characters without claim to any particular font, style, size, or color.” Docs. 7-1, 7-2.

         15. On Sept. 17, 2019, Fleet Feet applied to register its CE mark for athletic apparel (Class 25) on the Principal Register and sought other changes not raised as relevant here. Doc. 7-3 at 3-4. In response, the USPTO, inter alia, approved the mark on the Principal Register for Class 25, Doc. 48-10 at 5-8, 11, which gives notice of and opportunity to object to the potential change to the public and which precedes actual registration.[15]

         16. Nike has filed with the USPTO petitions for cancellation of the CE mark in all three classes. Docs. 38-22, 38-23; see Doc. 44-1. Fleet Feet has since asked that the Principal Register entry for CE in Class 25 be limited to shirts, rather than all apparel. Doc. 48-12.

         17. At the moment, the CE mark is on the Supplemental Register for athletic apparel and on the Principal Register for retail sporting goods stores and organizing running and walking race training events. See supra ¶ 14.

         The “Running Changes Everything” Mark

         18. In February 2009, Fleet Feet used the phrase “Running Changes Everything” (RCE) in a print advertisement, Doc. 7-11 at 2-3, and the following month, in an advertisement in the magazine Runner's World. Doc. 10-6 at 5. Since then, Fleet Feet has consistently used RCE across multiple media and in a way that stands out to the consumer. See infra at ¶¶ 19-20.

         19. Specifically, Fleet Feet uses “Running Changes Everything” in its print advertising[16] and materials for industry conferences, [17] gift card holders, [18] its website[19] and social media, [20] its Fleet Feet-branded T-shirts[21] and van, [22] its brick-and-mortar stores, [23] and at training events and races.[24] The phrase is typically displayed alone, rather than used textually in a sentence. For example, it is used as a banner headline superimposed over photographs on the website, centered and without other adjacent text on T-shirts, and on a large sign over a store display. See supra notes 16-24. Occasionally, RCE is used in a more textual way. See, e.g., Doc. 38-10 at 3, Doc. 38-11 at 2, Doc. 38-12 at 2.

         20. As with the “Change Everything” mark, see supra at ¶ 12, Fleet Feet generally uses an all-caps, non-italicized block font, similar to its company name, for the “Running Changes Everything” mark, [25] though it also uses an all-caps handwriting font on some T-shirt designs and its website.[26] On T-shirts, in stores, online, and in social media, the RCE mark is typically displayed next to (or on the other side of the T-shirt from) another Fleet Feet mark, such as the company name or “flame” symbol.[27] As noted supra at ¶ 12, Fleet Feet has not often featured stories about individuals in using these marks, but where it has, it has generally used photographs rather than video.

         21. Fleet Feet has offered no evidence that it uses either mark on its product labels or hangtags, and the Court infers and finds that it does not.

         22. On July 10, 2019, Fleet Feet applied to register its trademark for “Running Changes Everything” on the Principal Register for Class 35 (retail sporting goods); the claimed mark “consist(s) of standard characters, without claim to any particular font style, size, or color.” Doc. 7-4 at 5. Fleet Feet asserted that RCE had acquired distinctiveness, i.e., secondary meaning, [28] based on five or more years' use. Doc. 7-4 at 2-3 (first used Mar. 28, 2012).

         23. On Aug. 8, 2019, Fleet Feet applied to register “Running Changes Everything” on the Principal Register for Classes 25 (apparel) and 41 (training events). Doc. 7-5 at 2-6. As with its July 2019 application, supra ¶ 22, it did not claim a particular font style and asserted the phrase had acquired distinctiveness since its first use on March 28, 2012. Id.

         24. On July 30, 2019, the USPTO issued a “nonfinal office action” for Fleet Feet's “Running Changes Everything” application for retail sporting goods (Class 35), stating that “the mark appears to be inherently distinctive and is eligible for registration on the Principal Register without proof of acquired distinctiveness.” Doc. 15-2 at 2-3. The USPTO gave Fleet Feet the option to withdraw the claim of acquired distinctiveness. Id. According to Fleet Feet's counsel at oral argument, Fleet Feet did so, but the Court did not locate record support for that assertion.

         25. After this notice, Fleet Feet submitted another application for the Principal Register for Class 35 for a different use-by and for franchisees-without claiming acquired distinctiveness. Doc. 7-6 at 3-4; Doc. 48-5 at 6-7.

         26. On Oct. 23, 2019, the USPTO approved Fleet Feet's RCE mark on the Principal Register for Classes 25, 35, and 41. Docs. 48-6, 48-7, 48-8. As noted supra at ¶ 15, publication gives notice to the public, and approval does not constitute registration.

         Nike's Use of “Sport Changes Everything”

         27. In May 2019, Nike began to design an advertising campaign around the phrase “Sport Changes Everything.” Doc. 37 at ¶ 8.

         28. None of the people on the Nike creative team who developed the “Sport Changes Everything” campaign worked with Fleet Feet or were familiar with Fleet Feet's “Change Everything” and “Running Changes Everything” marks. Doc. 35 at ¶¶ 3-4; Doc. 37 at ¶¶ 3-4. But numerous Nike employees in its running sales group were familiar with and knew about Fleet Feet's use of CE and RCE as marks. See, e.g., Doc. 36 at ¶ 9; Doc. 7 at ¶¶ 40-42; Doc. 7-13; Doc. 22 at ¶ 41; Doc. 10 at ¶ 32; Doc. 10-17. Nike has presented no evidence as to whether it did or did not do a trademark search before beginning to use the SCE phrase. From this silence and Nike's level of business sophistication generally and as to trademarks specifically, [29] the Court infers and finds for purposes of this motion that Nike did do such a search and was aware of Fleet Feet's “Change Everything” mark.

         29. The “Sport Changes Everything” campaign is directed towards multiple sports.[30]Usually the SCE phrase is accompanied by a Nike trademark, such as the Nike “swoosh” or the Nike name, [31] but not always.[32] Nike sometimes uses the SCE phrase in a discrete way similar to its mark “Just Do It.”[33]

         30. The SCE campaign involves placement of the phrase in advertisements online[34]and on television, [35] in social media posts (including as hashtags), [36] in videos posted on YouTube and other websites, [37] on billboards, [38] in stores, [39] and at large[40]and small-scale[41] sporting events. Doc. 35 at ¶¶ 9-11, 13. Many of these uses include endorsements by accomplished athletes. See, e.g., Doc. 10-25.

         31. The “Sport Changes Everything” campaign began in July 2019. Doc. 35 at ¶ 6. Nike intends to use it through the holiday season, id., and the campaign will culminate at the Super Bowl in early February next year. Doc. 31 at ¶ 6; Doc. 32 at ¶ 5. Nike has already spent over $16, 000, 000 on the SCE campaign. Doc. 31 at ¶ 16.

         32. The SCE campaign began with televised commercials during the July 9, 2019, Major League Baseball All-Star Game and the July 2019 ESPY Awards, and with videos posted on YouTube. Doc. 35 at ¶ 6, Doc. 37-1 at 4 (ESPY Awards); Doc. 7-15 (commercial); Doc. 10-21 (videos). As of Oct. 25, 2019, Nike had posted 31 videos online as part of this campaign, featuring stories of individual athletes, which have been viewed over 18.5 million times. Doc. 46 at ¶¶ 4-5. At least three of these videos feature running. Id. at ¶¶ 5-6. In the videos, Nike uses the “Sport Changes Everything” phrase in a title and a hashtag viewable on the website while the video plays (e.g. “Sport Changes Everything: Justin Gallegos, ” and #SportChangesEverything) and as a still shot, with no other text on the screen, at the end of the video.

         33. Nike displays the phrase “Sport Changes Everything” on various social media posts in multiple fonts akin to handwriting. See Doc. 35-2. Its in-store displays use one font of all-caps, forward-slanting handwriting, see Docs. 11-1, 11-2, 11-3, 11-4, similar to some of Fleet Feet's uses of its RCE mark. See, e.g., Doc. 7-4 at 10 (Fleet Feet website); Doc. 10-9 at 2-3 (T-shirt); Doc. 46-1 at 3, 6 (T-shirt); see also Doc. 10-20. Nike's manner of displaying SCE in stores, on its website, and on apparel is also similar to the way Fleet Feet uses its “Change Everything” and “Running Changes Everything” marks.[42]

         34. Media coverage of the SCE campaign has featured running. See, e.g., Doc. 46-8 (article noting Nike's revenue goal and associated new product lines, with photographs of runners including one holding a Nike shoe with “SCE” written on the sole).

         35. Nike does not claim trademark rights in the phrase “Sport Changes Everything.” Doc. 35 at ¶¶ 7-8; Doc. 37 at ¶ 7. It is not used on product labels or hangtags. Doc. 35 at ¶ 8; Doc. 37 at ¶ 7.

         Fleet Feet Learns of Nike's SCE Campaign

         36. Fleet Feet became aware of the Nike “Sport Changes Everything” campaign shortly after it began and contacted Nike on Aug. 7, 2019. Doc. 7-18. After Nike's response, and after Nike's website briefly used the phrase “Running Changes Everything, ” Fleet Feet's lawyers sent a cease-and-desist letter to Nike on Aug. 13, 2019. Doc. 10-18. The parties engaged in discussions about the SCE campaign. Doc. 36 at ¶ 11; Doc. 53 at ¶ 3.

         37. In response to Fleet Feet's concerns, Nike made some adjustments and “reworked” the SCE campaign for the Chicago and New York City marathons. Doc. 35 at ¶¶ 15-16. While Nike's witnesses did not explicitly say so, the Court infers that Nike removed the phrase “Sport Changes Everything” from its advertising used specifically for these two events. Id.; Doc. 37 at ¶¶ 10-13. The record does not reflect how much these adjustments cost Nike or how long it took to make these adjustments, beyond vague testimony that it took “numerous hours” and “significant financial resources, ” Doc. 37 at ¶ 12, and was “very expensive.” Doc. 35 at ¶ 16. Otherwise, Nike continued to use the phrase in a ubiquitous ad campaign, and it continues to appear in some running-related online advertisements, videos, and social media posts.[43]

         Third-Party Use of the Phrases “Change Everything” and “Running Changes Everything”

         38. Nike commissioned a “trademark research report” by a third party using the search terms “changes everything, ” “changing everything, ” “ changes, ” and “everything changes.” See Doc. 38-17. That search, executed on Oct. 4, 2019, indicated extensive third-party trademark registrations in other classes including these phrases, mostly in combination with other words. Doc. 38-17.[44] None of the active registrations contain only the words “change everything” in any order.[45] None of the registered marks included the phrase “running changes everything.” See generally Doc. 38-17.

         39. Many of the report's registrations are not currently active: of 230 federal search hits, 129 were canceled, abandoned, or due to be abandoned. Doc. 48 at ¶¶ 4-7. Fourteen of the 103 “alive” registrations are in Class 35 (which designates “advertising and business services, ” Doc. 38-17 at 8); four of these registrations are for retail stores, but none sell athletic goods or services. Doc. 48 at ¶ 10. Twenty-six of the “alive” references are for Class 41 (“education and entertainment services, ” Doc. 38-17 at 8), but none pertain to athletic training or racing. Two are in Class 25 (“clothing and footwear, ” Doc. 38-17 at 7), but neither is in athletic apparel generally or athletic shirts specifically. Doc. 48 at ¶ 8.

         40. In addition to the registrations, the phrase “Change Everything” has occasionally been used both alone and in combination with other words for advertising other athletic products, such as an Adidas “Boost” sneaker in 2014 (“Boost Changes Everything, ” where Boost was the name of a material used in the shoe), a sports cap in 2013 (“First Changes Everything, ” where the New Era Cap company featured Jackie Robinson as “the quintessential first”), Gatorade in 2018 (“Everything Changes”), and an ESPN campaign for the 2010 England World Cup (“One Game Changes Everything”). Doc. 38 at ¶¶ 2-5. These videos end with or include prominently a still shot of the quoted tag line alone and in large, distinct print.

         41. The phrase “Change Everything” has also been used textually at times in writing about athletics and other product areas. Doc. 38 at ¶¶ 19-22. For instance, the Beauty Bank Boot Camp website published an article titled “Home Fitness: How 20 Minutes A Day Can Change Everything, ” Doc. 38-18; the Drees Performance Training website published an article titled “Keystone Habits: Change One Thing, Change Everything, ” Doc. 38-20; and the Play Like A Girl website published an article called “Why Play? Sport and Physical Activity Can Change Everything For Girls.” Doc. 38-21. 42. There is no evidence that anyone uses or has used the phrase “Running Changes Everything” as a trademark or to identify goods, and for purposes of this Order the Court finds it has not been so used.

         Conclusions of Law

         As noted supra, to obtain a preliminary injunction, a party must show that: (1) it is likely to succeed on the merits, (2) it is likely to suffer irreparable harm if the injunctive relief is denied, (3) the balance of equities tips in its favor, and (4) injunctive relief would be in the public interest. A preliminary injunction is an “extraordinary remedy involving the exercise of very far-reaching power.” Pashby v. Delia, 709 F.3d 307, 319 (4th Cir. 2013). In the appropriate case, preliminary injunctions “protect the status quo” and “prevent irreparable harm during the pendency of a lawsuit ultimately to preserve the court's ability to render a meaningful judgment on the merits.” In re Microsoft Corp. Antitrust Litig., 333 F.3d 517, 525 (4th Cir. 2003), abrogated on other grounds by eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006).

         I. Likelihood of ...


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