Estee Lauder, Inc. v. Old Navy Clothing Co.

Estee Lauder, Inc. (Lauder) (plaintiff) manufactured beauty products, which it sold through upscale outlets. Old Navy Clothing Company, a division of The Gap Inc. (Gap) (defendant), was a clothing retailer that targeted the mass middle market through its own stores. Lauder sold and Gap sought to sell personal-care products using the term “100%.” There were significant differences between the companies’ products, including: (1) different bottle sizes, materials, and shapes; (2) different uses of 100%; and (3) vastly different prices. The Lauder and Gap bottles used the respective house marks and indicated their sources. Before Gap could release its line, Lauder sued for trademark infringement pursuant to § 43 of the Lanham Act, alleging a likelihood of confusion. The district court analyzed Gap’s use of 100% (which undisputedly had no secondary meaning) via the factors set forth in Polaroid Corp. v. Polarad Electronics Corp. Per the district court, four Polaroid factors favored Lauder: (1) Lauder’s mark was moderately strong due to its inherent distinctiveness despite not being wholly original, (2) the parties’ prominent use of 100% to convey the same idea regarding closely related products made the marks similar, (3) the differences between the products and sales channels did not foreclose confusion, and (4) some customers are not knowledgeable. The district court further found that four Polaroid factors favored Gap: (1) Lauder did not intend to enter Gap’s market, (2) there was no actual confusion, (3) Gap acted in good faith, and (4) Gap’s products were not of inherently poor quality. Weighing these factors, the district court found a likelihood of confusion. Gap appealed.