Case: 4:09-cv-02029-RWS Doc.

#: 76 Filed: 08/03/12 Page: 1 of 20 PageID #: 430

IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF MISSOURI EASTERN DIVISION THE NORTH FACE APPAREL CORP., Plaintiff, v. WILLIAMS PHARMACY, INC., JAMES A. WINKELMANN, JR., and THE SOUTH BUTT LLC, Defendants. ) ) ) ) ) Case No. 4:09-cv-02029-RWS ) ) ) ) ) )

MEMORANDUM OF LAW IN SUPPORT OF PLAINTIFFS MOTION FOR AN ORDER OF CIVIL CONTEMPT On April 12, 2010, this Court entered a consent permanent injunction (the Injunction) prohibiting The South Butt, LLC (TSB), its General Manager James A. Winkelmann, Sr. (Winkelmann, Sr.), and member James A. Winkelmann, Jr. (Winkelmann, Jr.) (collectively the Contempt Respondents) from, among other actions, using The South Butt Marks, including THE SOUTH BUTT, NEVER STOP RELAXING and the following designs,

or any other reproduction, counterfeit, copy or colorable imitation of the THE NORTH FACE Trademarks, using any other designation that is confusingly similar . . . in any manner as to be likely to dilute, cause confusion, deception or mistake, from diluting and infringing the THE NORTH FACE Trademarks, and damaging The North Faces goodwill and from otherwise competing unfairly with The North Face in any manner. (Doc. 71).

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Within two days of entry of the Injunction, and without The North Faces knowledge or consent, Winkelmann, Sr.who has admitted to running TSBformed a new company, Why Climb Mountains, LCC. In direct violation of the Injunction, the Winkelmanns began promoting and selling a new line of apparel under the mark:

It has now become clear that Winkelmann, Sr. and Winkelmann, Jr. never intended to abide by this Courts Injunction. As displayed on their new companys retail website selling goods in violation of the Injunction: Hi I am Jimmy Winkelmann after we put a smile on everyones face with our The South Butt brand a few years ago we thought there was some more smiling to do . . . . Within recent months, a user identified as jwinkelmann posted the following response in a thread discussing The South Butt and Contempt Respondents new venture on social news website Reddit.com: Iamsacdaddy How are u planning not to get into legal trouble again? jwinkelmann My goal is to make money... This motion follows. I. STATEMENT OF RELEVANT FACTS In 2009, The North Face Apparel Corp. (Plaintiff or The North Face) filed suit against TSB, Winkelmann, Jr. and others after TSB refused to cease selling knock-off apparel that infringed and diluted The North Faces famous marks, including THE NORTH FACE, 2

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NEVER STOP EXPLORING and the following design mark: (the THE NORTH FACE Trademarks). See Declaration of Christopher M. Turk (Turk Decl.), 15-16. TSB used publicity regarding the lawsuit to drive its sales and marketing exposure even higher. Indeed, as the Court may recall, TSBs counsel frequently issued press releases and appeared in the media to stir up publicity about the case. See, e.g., Turk Decl., 17. TSBs carefully orchestrated publicity and use of the lawsuit as a marketing campaign is detailed in Winkelmann, Sr.s sworn deposition testimony, wherein he described how even before The North Face filed its lawsuit against TSBTSB devised a plan to increase sales by stir[ring] up a lot of publicity. Declaration of G. Roxanne Elings (Elings Decl.), Exh. I., Tr. at 231:18-232:6. Winkelmann, Sr. viewed the lawsuit as an unbelievable publicity opportunity and was particularly drawn to the idea of a 7 billion apparel powerhouse against Jimmy. Elings Decl., Exh. I, Tr. at 202:11-203:4. While Winkelmann, Sr. admitted he was running the business, he described how he kept Winkelmann, Jr. involved to drive sales and to further the David & Goliath story make it a 19 year old versus North Face. Elings Decl., Exh. I, Tr. at 232:2-23. On receiving the initial letter from The North Face requesting that TSB desist from infringing on THE NORTH FACE Trademarks, Winkelmann, Sr. explained that he did two things: (1) he added a multitude of new products to meet the expected increased demand; and (2) rather than engage litigation counsel, he retained Albert Watkins for purposes of managing publicity. Elings Decl., Exh. I, Tr. at 93:24-94:14, 248:8-249:5. 3

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Once the lawsuit was filed, Winkelmann, Sr. explained how he often posted under a pseudonym to appear unbiased about The South Butt line of apparel and The North Face and wrote blog entries to enflame the controversy. Winkelmann, Sr. also explained how he took advantage of a charity media opportunity of Winkelmann, Jr. by trading The South Butt clothing to inner city kids to jam at the NF blank holes. Elings Decl., Exh. I, Tr. at 244:15245:17. Ultimately, the parties agreed to settle with entry of the Injunction and execution of a separate settlement agreement. The Injunction enjoins the Winkelmanns and TSB from, among other things: [using] The South Butt Marks or any other reproduction, counterfeit, copy or colorable imitation of the THE NORTH FACE Trademarks . . . in connection with any advertising, marketing, promoting, distribution, offer for sale or sale of services or goods . . . [using] any other designation that is confusingly similar to any of the THE NORTH FACE Trademarks, including, but not limited to the THE SOUTH BUTT Trademarks, in any matter as to be likely to dilute, cause confusion, deception or mistake on or in connection with manufacturing, advertising, distributing, offering for sale or selling of any product not The North Faces . . . diluting and infringing the THE NORTH FACE Trademarks, and damaging The North Faces goodwill . . . otherwise competing unfairly with The North Face in any manner . . . [and] conspiring with, aiding, assisting or abetting any other person or business entity in engaging in or performing any of the activities referred to above. (Doc. 71) (emphasis added). As stated above, within two days of entry of the Injunction, and without The North Faces knowledge or consent, Winkelmann, Sr. formed a new company, Why Climb Mountains, LCC. Elings Decl. Exh. A; Turk Decl., 19. Since dissolution of TSB in 2011, the Winkelmanns and Why Climb Mountains, LLC (hereinafter, the Contempt 4

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Respondents) have embarked on an ever-expanding course of conduct that threatens irreparable harm to THE NORTH FACE Trademarks. Turk Decl., 20-23. In direct violation of the Injunction, the Contempt Respondents began promoting a new line of apparel using the mark:

(the THE BUTT FACE Trademark). A survey conducted by Plaintiff shows that approximately thirty-five percent of respondents identify The North Face as being associated with THE BUTT FACE Trademark when shown a sample of Contempt Respondents t-shirts. Not only are Contempt Respondents now engaged in the widespread sale and promotion of THE BUTT FACE branded goods, but Why Climb Mountains, LLC also has filed for registration of THE BUTT FACE Trademark with the United States Patent and Trademark Office. Elings Decl.,Exhs. C-H; Turk Decl., 20. II. ARGUMENT The Court has the inherent power to enforce compliance with its lawful orders through civil contempt. Shillitani v. United States, 384 U.S. 364, 370 (1966). The Court may punish a party for disregarding or violating a court order. 18 U.S.C. 401; United States ex rel. Shell Oil Co. v. Barco Corp., 430 F.2d 998, 1000 (8th Cir. 1970). Civil contempt may be employed either to coerce the defendant into compliance with a court order or to compensate the complainant for losses sustained, or both. Chicago Truck Drivers v. Brotherhood Labor Leasing, 207 F.3d 500, 505 (8th Cir. 2000) (citing United States v. United Mine Workers of America, 330 U.S. 258, 303-04 (1947)). 5

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An injunction binds not only the parties to an action, but also "their officers, agents, servants, employees, and attorneys, and . . . persons in active concert or participation with them who receive actual notice of the court's order. FRCP 65(d). Here, the Injunction binds the two Winkelmanns and their agents, servants, employees, representatives, confederates, affiliates and any other persons or entities acting in concert or participation with them. (Doc. 71 at 2.) A nonparty with actual notice may be held in contempt where the nonparty aids or abets a named party in violation of a court order. Independent Fedn of Flight Attendants v. Cooper, 134 F.3d 917, 920 (8th Cir. 1998). The binding effect of FRCP 65(d) applies to individuals and corporate entities alike. See, e.g., State Industrial Prods. Corp. v. Beta Tech. Inc., 573 F.3d 450, 458 (8th Cir. 2009). The essence of this rule is that defendants may not nullify a decree by carrying out prohibited acts through aiders and abettors, although they were not parties to the original proceeding. Id. (citing Regal Knitwear Co. v. NLRB, 324 U.S. 9, 14, 65 S. Ct. 478 (1945). In a proceeding for civil contempt, the moving party must demonstrate violation of a court order by clear and convincing evidence. See Chicago Truck Drivers v. Bhd. Labor Leasing, 207 F.3d 500, 505 (8th Cir. 2000). The movant meets its burden by demonstrating that: 1) there is a specific and definite order of [the court]; and 2) the defendants have violated that order. FTC v. Neiswonger, 494 F. Supp. 2d 1067, 1080 (E.D. Mo. 2007). Once contempt has been shown, the burden shifts to the nonmoving party to show inability to comply. Chicago Truck Drivers, 207 F.3d at 505. While absence of willfulness cannot relieve a party from contempt, N.L.R.B v. Ralph Printing & Lithographing Co., 433 F.2d 1058, 1062 (8th Cir. 1970), Faegre & Benson, LLP v. Purdy, 367 F. Supp. 2d 1238, 1243-1244 (D. Minn. 2005), if the violation is willful, sanctions are appropriate. See, e.g., Jones v. Clinton, 57 F. Supp. 2d 719, 726 (E.D. Ark. 1999); U.S. v.

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Dinwiddie, 885 F. Supp. 1299, 1305 (W.D. Mo. 1995) (intent and willfulness may be considered on the issue of appropriate compensatory damages although intent is immaterial in considering whether defendant violated the permanent injunction). A consent decree is a judicial act . . . and possesses the same force and character as a judgment rendered following a contested trial. Siebring v. Hansen, 346 F.2d 474, 477 (8th Cir. 1965). Litigants who give up the advantages of a lawsuit in return for obligations contained in a negotiated decree, rely upon and have a right to expect a fairly literal interpretation of the bargain that was struck and approved by the court. AMF, Inc. v. Jewett, 711 F.2d 1096, 1101 (1st Cir. 1983). Here, the Contempt Respondents have engaged in precisely the conduct that the Injunction prohibits. A. The Injunction is Clear and Unambiguous The language in the Injunction is clear and unambiguous: this Court prohibited the Contempt Respondents from, inter alia, using The South Butt Marks or any other reproduction, counterfeit, copy or colorable imitation of the THE NORTH FACE Trademarks, using any other designation that is confusingly similar . . . in any manner as to be likely to dilute, cause confusion, deception or mistake, from diluting and infringing the THE NORTH FACE Trademarks, and damaging The North Faces goodwill and from otherwise competing unfairly with The North Face in any manner. Courts presiding over trademark litigations have uniformly upheld similar injunctive language. See, e.g., Scandia Down Corp. v. Euroquilt, Inc., 772 F.2d 1423, 1432 (7th Cir. 1985); Anheuser-Busch Inc. v. Strohs Brewery Co., 750 F.2d 631, 643 (8th Cir. 1984); and Stover v. Farmers Educ. and Coop. Union, 250 F.2d 809, 812-13 (8th Cir. 1958).

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B. The Contempt Respondents Are In Contempt of This Courts Injunction The principle question in trademark infringement contempt proceedings is whether the new trademark adopted by the enjoined defendants is so similar to the original mark that the injunction is violated. Wella Corp v. Wella Graphics, Inc., 37 F.3d 46, 48 (2d Cir. 1994). An enjoined defendant must keep a safe distance from the margin line even if that requirement involves a handicap as compared with those who have not disqualified themselves. Wolfard Glassblowing Co. v. Van-Bragt, 118 F.3d. 1320, 1322 (9th Cir. 1997). Consequently, a party enjoined by court order has an obligation to do more than show how close it could come with safety to that which [it was] enjoined from doing. AMF, 711 F.2d at 1107 (citation omitted); see also Stover, 250 F.2d at 812-13 (finding contempt where slight alterations in the [trademark] . . . were obviously to circumvent the letter of the injunction while adhering to the infringement and unfair competition.). This heavier burden placed on enjoined defendants applies equally under both infringement and dilution theories (see, e.g., Howard Johnson Co. v. Khimani, 892 F.2d 1512, 1517 (11th Cir. 1990) ([T]he legal posture of this case places a heavier burden upon defendants of avoiding a colorable imitation of or diluting [plaintiffs] trademarks than upon a party not already preliminarily enjoined from engaging in such activity.)); and it applies equally to both an injunction entered after trial and an injunction entered on consent. See, e.g., Badger Meter, Inc. v. Grinnell Corp., 13 F.3d 1145, 1155-56 (7th Cir. 1994) (applying the burden where injunction was entered after trial and verdict); Bear U.S.A., Inc. v. Kim, 71 F. Supp. 2d 237, 247 (S.D.N.Y. 1999) (same); Wolfard Glassblowing Co. v. Van-Bragt, 118 F.3d. 1320, 1322 (9th Cir. 1997) (applying the burden where parties entered into injunction on

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consent); Premium Nutritional Products, Inc. v. Ducote, No. 07-cv-2098, 2008 WL 2020390, at *3 (D. Kans. May 9, 2008) (same); Polo Ralph Lauren L.P. v. Schuman, No. Civ.A. H97-1855, 1998 WL 110059, at *6 (S.D. Tex. Feb. 9, 1998) (same). Moreover, any doubts are resolved against the enjoined defendant. ClearOne Communications, Inc. v. Chiang, 608 F. Supp. 2d 1270, 1283 (D. Utah 2009) (quoting A & H Sportswear Co., Inc. v. Victoria's Secret Stores, Inc., 967 F. Supp. 1457, 146970 (E.D.Pa.1997)); see also Polo Fashions, Inc. v. Dick Bruhn, Inc., 793 F.2d 1132, 1135 (9th Cir.1986) ([A] trademark plaintiff entitled to relief, is entitled to effective relief; and any doubt in respect of the extent thereof must be resolved in its favor as the innocent producer and against the [defendant], which has shown by its conduct that it is not to be trusted. (quoting William R. Warner & Co. v. Eli Lilly & Co., 265 U.S. 526, 532 (1924)). The trademarks that were the subject of this Courts Injunction included the following trademarks: THE SOUTH BUTT NEVER STOP RELAXING

Despite that Injunction, The Winkelmanns recently began using the following trademark:

Whereas the prior litigation concerned THE SOUTH BUTT versus THE NORTH FACE, Contempt Respondents took the exact same wordBUTTand simply moved it up a spot in

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their trademark so that now it is THE BUTT FACE versus THE NORTH FACE. In addition, as in the prior dispute, the marks share a similar arrangement of elements. THE BUTT FACE Trademark uses a halved and grooved image beside stacked, capitalized text similar to the composite THE NORTH FACE Trademark that combines THE NORTH FACE word mark and Half-Dome logo. The prior litigation also involved Contempt Respondents NEVER STOP RELAXING mark versus The North Faces NEVER STOP EXPLORING trademark. Contempt Respondents merely substituted SMILING in place of RELAXING to come up with their current tag line NEVER STOP SMILING. Contempt Respondents are fully aware that they have not maintained a safe distance from the enjoined activity. Their self-professed goal to make money (Elings Decl., 2 and Exh. H), makes clear their intention is to engage The North Face in legal battle and abuse this Courts resources for their personal goals of driving sales and making money. Contempt Respondents do so with total disregard for their prior agreement with The North Face and the integrity of this Courts authority and Injunction. C. Contempt Respondents May Not Avoid Contempt With A Claim of Parody Contempt Respondents thinly-veiled attempt to mask their disregard for this Courts Order by wrapping themselves in the parody banner is evident on their website: Hi I am Jimmy Winkelmann after we put a smile on everyones face with our The South Butt brand a few years ago we thought there was some more smiling to do. So we put together Why Climb Mountains a parody clothing company for people who just want to enjoy life and maybe laugh a little at ourselves, after all dont we all need to smile more? Elings Decl., Exh. D. Even were the parody defense valid, which it is not (see discussion below), Contempt Respondents have already effectively waived this defense by consenting to the Injunction after 10

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having asserted it in the prior court filings. Having subsequently conceded in the Injunction that THE SOUTH BUTT is not a parody, they cannot now argue that THE BUTT FACE is a parody. Indeed, the Injunction makes no exceptions for parodies. Moreover, the defense fails as a matter of law by the Contempt Respondents own actions. A parody cannot be a defense in a trademark dilution case if the trademarks are used as a designation of source for the competing products themselves. See 15 U.S.C. 1125(c) (3); Starbucks Corporation v. Wolfes Borough Coffee, Inc., 588 F.3d 97, 112 (2d Cir. 2009) (rejecting defendants parody defense to the claim that its use of CHARBUCKS diluted plaintiffs STARBUCKS marks where CHARBUCKS was used as a designation for [defendants] own goods). Here, the Contempt Respondents filing of a trademark application for registration of THE BUTT FACE Trademark clearly demonstrates an intent to use THE BUTT FACE Trademark as a designation of source. Accordingly, a parody defense to dilution is precluded. So, too, a purported parody that creates a likelihood of confusion constitutes trademark infringement. Anheuser Busch, Inc. v. Balducci Publns, 28 F.3d 769, 776 (8th Cir. 1994). Indeed, in finding that a parody Michelob ad nonetheless infringed the brewers trademarks, the Balducci court, 28 F.3d at 774, relied upon appellate decisions across the nation upholding trademark infringement judgments notwithstanding parody arguments far more viable than Contempt Respondents, including the Mutant of Omaha decision in Mutual of Omaha Ins. Co. v. Novak, 836 F.2d 397 (8th Cir. 1987) and the Debbie Does Dallas decision in Dallas Cowboy Cheerleaders, Inc. v. Pussycat Cinema Ltd., 604 F.2d 200 (2d Cir. 1979). Further, as Judge Mummert explained in entering a preliminary injunction halting the promotion and sale of Buttwiper dog chew toys: [T]he cry of parody! does not magically fend off otherwise legitimate claims of trademark infringement or dilution. There are confusing 11

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parodies and non-confusing parodies. All they have in common is an attempt at humor through the use of someone elses trademark. A non-infringing parody is merely amusing, not confusing. Anheuser-Busch, Inc. v. VIP Products, LLC, 666 F. Supp. 2d 974, 985 (E.D. Mo. 2008) (quoting Dr. Seuss Enters., L.P. v. Penguin Books, USA, 109 F.3d 1394, 1406 (9th Cir. 1997)). Accordingly, Judge Mummert rejected the defendants position that its Buttwiper dog toy was a non-confusing parody of plaintiffs BUDWEISER trademark. Judge Mummert observed that Anheuser-Busch also sold pet-related items under its BUDWEISER trademark, and sold them within a similar price range. In language fully applicable here, the Court held that courts are most vigilant to guard against a likelihood of confusion when the plaintiff and the defendant use their marks on directly competing products. Id. at *9 (quoting Tommy Hilfiger Licensing, Inc. v. Nature Labs, LLC, 221 F. Supp. 2d 410, 412 (S.D.N.Y. 2002) (emphasis added). In clear violation of the Injunction, Contempt Respondents products, including t-shirts, caps, and sweatshirts, directly compete with Plaintiffs products under THE NORTH FACE Trademarks. D. The Contempt Respondents Acts of Dilution and Infringement Violate the Injunction Even if this Court were to engage in a full analysis of dilution or infringement, which Plaintiff does not believe is warranted under the relevant case law, the result would be the same. Contempt Respondents are in contempt of the Injunction. A dilution plaintiff has the burden of proving only that: (a) it has a valid mark, (b) its mark is famous and distinctive, and (c) defendants use of the mark is likely to dilute plaintiffs mark. See, e.g., Viacom, Inc. v. Ingram Enters., Inc., 141 F.3d 886, 888 (8th Cir. 1998).1 Here, Plaintiffs trademark registrations are prima facie evidence of the marks validity. 15 U.S.C.

The Missouri statute does not require proof of fame. Otherwise, however, it is subject to the same analysis as the federal statute. See Archdiocese of St. Louis v. Internet Entertainment Group, Inc., 99 CV 27 SNL, 1999 WL 66022, at *6 (E.D. Mo. Feb. 12, 1999).

12

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1057(6). With regard to fame, a court may consider all relevant factors, including: (i) The duration, extent, and geographic reach of advertising and publicity of the mark . . . (ii) The amount, volume, and geographic extent of sales of goods or services offered under the mark. (iii) The extent of actual recognition of the mark. [and] (iv) Whether the mark was registered . . . on the principal register. 15 U.S.C. 1125(c) (2) (A). THE NORTH FACE Trademarks are registered on the Principal Register, have been in use since 1966, and have been the subject of hundreds of millions of dollars of nationwide advertising and promotion. Turk Decl., 6, 9. Plaintiff has generated billions in sales of products bearing these trademarks. Turk Decl., 6. In addition, a survey conducted by Plaintiff shows that approximately thirty-five percent (34.50%) of respondents identify The North Face as being associated with THE BUTT FACE Trademark when shown a sample of Contempt Respondents t-shirts. See Declaration of Dr. Gerald L. Ford, sworn to on August 1, 2012 at 4, 16. Given these facts, there is no question as to the fame of THE NORTH FACE Trademarks. See, e.g., Nissan Motor Co. v.. Nissan Computer Corp., 2007 U.S. Dist. LEXIS 90487 (C.D. Cal. 2007); Century 21 Real Estate v. New Century Servs., 2007 T.T.A.B. LEXIS 149 (TTAB 2007). As for the third elementlikelihood of dilutiona plaintiff meets its burden by showing that a defendants use of a trademark will likely blur the plaintiffs mark or that such use will likely tarnish the mark. See Anheuser-Busch, Inc. v. Balducci Publications, 28 F.3d 769, 777 (8th Cir. 1994). Here, both blurring and tarnishment exist. 1. Likelihood of Dilution by Blurring

In 15 U.S.C. 1125(c) (2) (b), Congress provided the courts with a set of factors to consider in determining the likelihood of dilution by blurring:

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(i) (ii) (iii) (iii) (v) (vi)

The degree of similarity between the mark or trade name and the famous mark. The degree of inherent or acquired distinctiveness of the famous mark. The extent to which the owner of the famous mark is engaging in substantially exclusive use of the mark. The degree of recognition of the famous mark. Whether the user of the mark or trade name intended to create an association with the famous mark. Any actual association between the mark or trade name and the famous mark.

Here, both intent and similarity weigh strongly in The North Faces favor. An inference of intent arises where defendants, with knowledge of a competitors marks, choose a similar mark from an infinite number of possibilities. Empi, Inc. v. Iomed, Inc., 923 F. Supp. 1159, 1167 (D. Minn. 1996); Aveda Corp. v. Evita Marketing, Inc., 706 F. Supp. 1419, 1429 (D. Minn. 1989). There can be no legitimate dispute that the Contempt Respondents selection of THE BUTT FACE Trademark was to trade upon the fame of THE NORTH FACE Trademarks. Significantly, the first blurring factor renders unnecessary any finding that marks be substantially similar; instead, courts should treat degree of similarity as one of several factors in determining blurring , which must ultimately focus on whether an association, arising from the similarity between the subject marks, impairs the distinctiveness of the famous mark. Starbucks Corporation v. Wolfes Borough Coffee, Inc., 588 F.3d 97, 108109 (2d Cir. 2009) (emphasis in original; citations omitted). Second, THE NORTH FACE Trademarks are not only inherently distinctive (as either arbitrary or suggestive trademarks), see Two Pesos, Inc. v. Taco Cabana, Inc., 505 14

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U.S. 763 (1992), but they have tremendous acquired distinctiveness by virtue of Plaintiffs longstanding and exclusive use, sales success, media coverage, and advertising expenditures. See, e.g., Centaur Communications, Ltd. v. A/S/M Communications, Inc., 830 F.2d 1217 (2d Cir. 1987). Third, Plaintiff regularly enforces its trademark rights and therefore has been and is engaged in substantially exclusive use of THE NORTH FACE Trademarks since 1966. Turk Decl. 6, 13-14. Fourth, survey results indicating that 34.5% of respondents associate THE BUTT FACE Trademark with The North Face show both extremely high recognition of THE NORTH FACE Trademarks as well as a high level of association with THE BUTT FACE Trademark. See, e.g., Starbucks, 588 F.3d at 109 (survey in which 30.5% of consumers associated Starbucks with Charbucks actionable); Natl Pork Bd. v. Supreme Lobster and Seafood Co., 2010 T.T.A.B. LEXIS 225 at *35 (TTAB 2010) (THE OTHER RED MEAT held likely to dilute THE OTHER WHITE MEAT; 35% level of association between marks demonstrates they are highly similar). In short, each of the likelihood of dilution by blurring factors weighs against the Contempt Respondents. 2. Likelihood of Dilution by Tarnishment

The Lanham Act defines dilution by tarnishment as an association arising from the similarity between a mark or trade name and a famous mark that harms the reputation of the famous mark. 15 U.S.C. 1125(c) (2) (b). Here, Contempt Respondents clear intent is to trade off of THE NORTH FACE Trademarks by denigrating THE NORTH FACE Trademarks through use of the word BUTT in place of the term NORTH in an unwholesome or degrading context. Archdiocese of St. Louis, supra, 1999 WL 66022, at *8. Indeed, use of 15

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the term butt has already been held to constitute dilution by tarnishment. See, e.g., Anheuser-Busch, Inc. v. Andys Sportswear, Inc., 40 U.S.P.Q.2d 1542 (N.D. Cal. 1996) (buttwiser t-shirts constitute dilution by tarnishment of BUDWEISER mark). 3. Infringement

In analyzing likelihood of success on infringement claims, courts in the Eighth Circuit consider the six SquirtCo factors: (a) the strength of the trademark; (b) the degree of similarity between the two marks; (c) the competitive proximity of the products; (d) the alleged infringers intent to confuse; (e) actual confusion; and (f) the degree of care reasonably expected of potential consumers. SquirtCo v. Seven-Up Co., 628 F.2d 1086, 1091 (8th Cir. 1980). Strength, similarity, and intent have already been addressed herein and [w]here products are closely related, less similarity in trademarks is necessary to support a finding of infringement. SquirtCo, 628 F.2d at 1091. The factors not previously discussed proximity, actual confusion, and degree of carealso weigh in Plaintiffs favor or are neutral. Defendants are selling directly-competitive items of apparel on the Internet, thus making them available throughout the United States and the world. In addition, a plaintiff need not prove actual confusion in order to obtain relief. It is enough that plaintiff proves a likelihood of confusion. 15 U.S.C. 1114(1). Lastly, although likelihood-of-confusion analysis, including the degree of care factor is often focused at the point of sale, it is well-established that the Lanham Act protects post-sale as well as point-of-sale confusion. Insty*Bit, Inc. v. Poly-Tech Indus., Inc., 95 F.3d 663, 672 (8th Cir. 1996). An action for trademark infringement may be based on confusion of consumers other than direct purchasers, including observers of an allegedly infringing product in use by a direct purchaser. Id. (citing Payless Shoesource, Inc. v. Reebok Intern. Ltd., 998 F. 2d 985 (Fed. Cir. 1993) (emphasizing the widespread recognition by so many other circuits of the importance of post-sale confusion and citing several decisions that recognized that an action 16

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for trademark infringement may be based on confusion of consumers other than direct purchasers, including observers of those wearing an accused article Id. at 989)). Under SquirtCo, no one factor controls, and because the inquiry is inherently casespecific, different factors may be entitled to more weight in different cases. Kemp v. Bumble Bee Seafoods, Inc., 398 F.3d 1049, 1054 (8th Cir. 2005). In the matter before this Court, the high degree of similarity and the Contempt Respondents willful intent to trade upon THE NORTH FACE Trademarks, despite being previously enjoined, strongly support a finding of likelihood of confusion. E. Sanctions Should Be Imposed Against the Contempt Respondents It is well-settled that a court may sanction a party held in civil contempt. Harris v. Wrob, 2012 WL 666735 at *4 (E.D. Mo. Feb 29, 2012) (Webber, J.) (sanctions: disgorgement of defendants infringement-related profits and an award of plaintiffs attorneys fees and costs); Hunter Engineering Co. v. Hennessy Industries, Inc., 2010 WL 1186454, at *6 (E.D. Mo. March 29, 2010). The purpose of civil contempt sanctions is to compensate parties aggrieved by contumacious conduct or to coerce compliance with the courts orders. Katoch v. Mediq/PRN Life Support Servs., 2007 WL 4365734 (E.D. Mo. Dec. 11, 2007) at *1 (citing United States v. United Mine Workers, 330 U.S. 258, 303 (1947)). Plaintiff has provided clear and convincing evidence that the Contempt Respondents have violated the Injunction, and have done so willfully and knowingly, with complete disregard for this Courts authority. Consequently, Plaintiff is entitled to attorneys fees and costs incurred in prosecuting the motion. See Faegre & Benson, 367 F. Supp. 2d 1238, 1243-1244; Jake's, Ltd., Inc., v. City of Coates, 356 F.3d 896, 900 (8th Cir. 2004) (award of reasonable attorneys' fees and expenses incurred by the party seeking to enforce court-ordered injunction was within district court's remedial discretion in civil contempt proceedings); Kehm v. Procter & Gamble 17

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Mfg. Co., 724 F.2d 630, 630-631 (8th Cir. 1984) (per curium) (affirming award of $10,000 in attorneys fees for litigating contempt motion); Ford Motor Co. v. B&H Supply, Inc., 646 F. Supp. 975, 1001-1002 (D. Minn. 1986) (awarding attorneys fees and costs incurred in enforcement of preliminary injunction in trademark infringement action). In addition, an award of the Contempt Respondents profits is warranted. Judicial sanctions in civil contempt proceedings may, in a proper case, be employed for either or both of two purposes: to coerce the defendant into compliance with the court's order and to compensate the complainant for losses sustained. Spindelfabrik Suessen-Schurr v. Schubert & Salzer Maschinenfabrik Aktiengesellschaft, 903 F.2d 1568, 1578 (Fed. Cir. 1990). Civil contempt may also be punished by a remedial fine, which compensates the party who won the injunction for the effects of his opponent's noncompliance. Hutto v. Finney, 437 U.S. 678, 691, 98 S.Ct. 2565, 57 L.Ed.2d 522 (1978). In trademark actions, sanctions may include an award of the contemnors profits made during the period in which the contemnor was in contempt of the consent judgment. See, e.g., Manhattan Indus. v. Sweater Bee by Banff, Ltd., 885 F.2d 1, cert denied, 494 U.S. 1029, 110 S.Ct. 1477 (1990); Chanel Indus., Inc. v. Pierre Marche, Inc., 1964 U.S. Dist. LEXIS 7874 at *7 (E.D. Mo. Sept. 4, 1964). III. CONCLUSION Without the relief requested by Plaintiff, further violation of the Injunction will continue unabated and, as a result, Plaintiff will suffer further irreparable harm to its trademarks goodwill and reputation. For the foregoing reasons, Plaintiff respectfully urges the Court to grant its motion.

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Respectfully submitted, /s/ Michael A. Kahn Michael A. Kahn, #35411MO BRICKHOUSE LAW GROUP 1006 Olive Street, Suite 303 St. Louis, MO 63101-2034 Telephone: (314) 932-1076 Facsimile: (314) 932-1078 mkahn@brickhouselaw.com G. Roxanne Elings (pro hac vice) Charles A. LeGrand DAVIS WRIGHT TREMAINE LLP 1633 Broadway, 27th Floor New York, NY 10019-6708 Telephone: (212) 603-6416 Facsimile: (212) 379-5226 Attorneys for Plaintiff The North Face Apparel Corp.

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CERTIFICATE OF SERVICE The undersigned certifies that on this 3rd day of August, 2012, a true copy of this Memorandum of Law, along with true copies of the Declaration of Dr. Gerald L. Ford (with Exhibits A through D), the Declaration of Christopher M. Turk, and the Declaration of G. Roxanne Elings (with Exhibits A through I) were served: (a) via the Courts electronic filing system on all counsel of record, which includes Albert Watkins, who is counsel of record for Defendant James A. Winkelmann, Jr. and James A. Winkelmann, Sr. (who is a party to the Injunction and the Registered Agent of Why Climb Mountains, LLC) and who has informed Plaintiff in writing that he is the attorney for Why Climb Mountains, LLC; and (b) by hand delivery to the address of the Registered Agent of Why Climb Mountains, LLC, James A. Winkelmann, at 21 N. Meramec, 2nd Floor, Clayton, MO 63105. /s/ Michael A. Kahn

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