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The 2d U.S. Circuit Court of Appeals has upheld a jury verdict finding that the U.S. Polo Association did not infringe on a Ralph Lauren trademark. PRL USA Holdings Inc. v. U.S. Polo Association Inc., No. 06-3691-cv. In 2005, PRL USA Holdings Inc., the holder of the Ralph Lauren trademark for clothing, asked the jury to find infringement by trademarks used by U.S. Polo Association and its licensee, Jordache Ltd. Each of the polo group logos at issue depicts a pair of mounted players known as the “double horsemen marks.” The first shows a solid silhouette of the two horsemen, the second shows the same silhouette with the letters USPA underneath, the third shows a drawing of the two horsemen and the fourth shows the same drawing with USPA underneath. The jury found that, in the case of the first mark, the association was guilty of infringement. But it concluded there was no likelihood of confusion between the other three marks and those controlled by PRL USA Holdings. PRL used the polo player symbol trademark that has been employed on Ralph Lauren clothing since 1972. The U.S. Polo Association, founded in 1890, has had a licensing agreement with Jordache since 1998. In 1984, PRL won an injunction blocking the association from using certain marks that infringed on PRL’s trademarks. However, the court said that the association could still conduct a retail licensing program that used “a mounted polo player or equestrian or equine symbol which is distinctive” from the Ralph Lauren polo player symbol. The association and the company engaged in settlement negotiations in 1996. At the 2005 trial before Judge George Daniels of the U.S. District Court for the Southern District of New York, Daniels allowed the association to introduce evidence that, during those negotiations, PRL told the association it would not object to its use of the double horsemen mark. Based on that assurance, the association claimed, it went ahead and developed and licensed the trademark. Jordache, using the mark, spent $41 million on the clothing line. Former PRL General Counsel Lee Sporn said the association had been given no such assurance. Writing on behalf of the 2d Circuit, Judge Pierre Leval said the admissibility of the settlement discussions turned on Fed. R. Evid. 408, which bars use of statements or conduct in compromise negotiations to show liability or the invalidity of a claim or the amount of money involved. However, in this case the evidence was offered for another purpose. Daniels had ruled that it was admissible to show that PRL was estopped from claiming infringement because it led the association to believe no infringement claim would be brought. Leval said “the only way” the association could place its “entitlement to estoppel in contention was by offering that evidence. “While we recognize that in some instances a defendant could employ a claim of estoppel pretextually and abusively as a ploy to suggest impermissible inferences derived from settlement discussions, this is not the case,” he said. PRL had argued that the evidence violated Rule 408 because it was offered to prove the invalidity of the claim. But Leval said that Rule 408′s “prohibition should not apply to the affirmative defense of estoppel by acquiescence, which depended on issues distinct from the elements of the claim of infringement.” To do otherwise, he said, “would unfairly curtail” a defendant’s ability to use that defense. Leval rejected PRL’s claim that, in any event, it suffered “spillover” prejudice from admission of the settlement evidence and that Daniels erred by refusing to give a limiting instruction to the jury.

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