The US Court of Appeals for the Second Circuit affirmed a district court’s grant of summary judgement to a luxury-watchmaker defendant, holding that its use of a registered and incontestable trademarked term was fair use because it was used descriptively and in good faith. Solid 21, Inc. v. Breitling U.S.A., Inc., Case No. 22-366 (2d Cir. Mar. 14, 2024) (Wesley, Sullivan, JJ.) (Park, J., dissenting). The case is notable for its analysis of the fair use defense’s good faith prong, which, as the Second Circuit majority notes, “is not litigated frequently.” This was also the element that provoked Judge Park’s dissent, who argued that the majority’s analysis attempts to resolve factual disputes about Breitling’s intentions that should, instead, go to a jury.

“Red gold” and “rose gold” are terms used to describe a gold-copper alloy that causes gold to have a pinkish hue. Sellers of men’s watches sometimes prefer the term “red gold” because “rose gold” sounds effeminate. Solid 21 is a luxury watch and jewelry business that sells a collection of jewelry and watches under the RED GOLD mark, which was registered in 2003 and now has incontestable status. Breitling is a Swiss company that makes and sells luxury watches, some of which it advertises as available in “red gold,” among other color choices. Solid 21 filed a trademark infringement suit against Breitling, alleging that its use of the term “red gold” was “likely to cause confusion, reverse confusion, mistake, and/or deception as to the source” of Breitling’s watches. Breitling moved for summary judgment on the grounds that the term “red gold” was generic, and the trademark registration was invalid, or alternatively, that its use of the term fell under the Lanham Act’s fair use defense, which allows use of a protected mark to describe one’s goods so long as the use is in good faith and not used as a mark.

Initially, the district court denied Breitling’s motion for summary judgment, finding that Breitling could have used terms like “rose gold” to describe its products and thus did not satisfy the descriptive use requirement. However, on reconsideration, the district court decided that the mere existence of alternative terms for the alloy did not preclude summary judgment, and that Breitling’s materials showed clearly that it was using the term “red gold” descriptively to indicate hue. The district court also found that Breitling satisfied the good faith element, even if Breitling was aware of Solid 21’s RED GOLD mark. Solid 21 appealed.

The Second Circuit affirmed, finding that Breitling’s advertising materials clearly showed that it used the term “red gold” as a descriptor for color and not as a mark. The Court rejected the argument that this conclusion as to descriptive use was undermined by the availability of the term “rose gold” as an alternative descriptor and pointed out that Solid 21 bears the risk of some consumer confusion in choosing to trademark a descriptive term that describes a color of metal. Finally, the Court found that Breitling’s use of the term “red gold” was in good faith notwithstanding Solid 21’s argument that Breitling’s use was in bad faith because it had constructive or actual knowledge of Solid 21’s trademark; it did not conduct a trademark search before using the term “red gold”; it began using the term two decades after Solid 21 did; and it had the alternative “rose gold” descriptor available. The Court pointed out that none of these facts, without more, are dispositive on the issue of bad faith because none of them show that Breitling intended to confuse customers as to source or sponsorship. Rather, the Court explained that “red gold” was just a way to describe the color of the watches.

The Second Circuit observed that descriptiveness and good faith “often travel together,” but rejected the dissent’s complaint that it had effectively collapsed the latter into the former. The Court held out the possibility that, as a matter of law, a defendant might well use a term descriptively and yet do so in bad faith. However, that was not the case here.

In his dissent, Judge Park argued that the majority improperly resolved “factual disputes about Breitling’s mental state at summary judgment.” As he stated, “the record shows that Breitling (1) relatively recently began using the ‘red gold’ mark, (2) without conducting a trademark search, (3) possibly knowing of Solid 21’s use, (4) despite previously using a substitute ‘rose gold.’ In response, Breitling offers no explanation for the change whatsoever.”

Practice Note: When an incontestable mark is used as a descriptive term, a defendant may be able to prevail on a fair use defense. Trademark owners using weak or descriptive marks bear a risk of some confusion when their term is used descriptively and in good faith.