RE/MAX International, Inc. v. Trendsetter Realty, LLC (655 F. Supp. 2d 679, 2009)

M1EMORANDUM AND ORDER

LEE H. ROSENTHAL, District Judge.

RE/MAX International, Inc., brought this trademark infringement suit against Trend Setter Realty, LLC, one of its competitors in the real estate brokerage industry. RE/MAX also sued Pavnouty Abraham, Trend Setter’s registered agent, director, and president, and Deborah Miller, a former RE/MAX real estate agent who is now Trend Setter’s broker of record. RE/MAX has moved for partial summary judgment on its federal and state trademark infringement and unfair competition claims against all the defendants and on its breach of contract claim against Miller. (Docket Entry Nos. 44, 45). RE/ MAX also seeks cancellation of Trend Setter’s registered trademark on the ground that it causes confusion with RE/MAX’s registered trademarks. Finally, RE/MAX moves for summary judgment dismissing the defendants’ counterclaim for cancellation of RE/MAX’s registered mark. (Id,.).

The defendants have filed a response. (Docket Entry No. 55). Because the defendants missed the deadline to respond, they have also filed a motion for extension. (Docket Entry No. 50). Finally, they have filed a motion for leave to amend their original answer to RE/MAX’s complaint. (Docket Entry No. 51). RE/MAX opposes both motions. (Docket Entry Nos. 58, 59).

After careful review of the motions, responses, and replies; the record; and the relevant law, this court: (1) grants defendants’ motion to extend the deadline to file their response to RE/MAX’s summary judgment motion; (2) denies the defendants’ motion for leave to amend their complaint; (3) grants RE/MAX’s motion for partial summary judgment and RE/ MAX’S claim for cancellation of the mark registered as No. 3,222,708; and (4) denies the defendants’ claim for cancellation of the mark registered as No. 1,702,048.

No later than September 18, 2009, the parties must advise the court of any remaining issues and propose a timetable for resolving them or submit a proposed final judgment.

The reasons for these rulings are explained below.

I. Background

A. Factual Background

RE/MAX is a corporation that has provided real estate brokerage services through a network of franchisees and affiliated independent contractors and sales associates since the early 1970s. (Docket Entry No. 46 at ¶ 6, 7). Trend Setter is a limited liability company with offices in Houston and San Antonio. It has provided real estate brokerage services in the Houston area since around April 1, 2005. (Docket Entry No. 45-11 at 12, 13). Defendant Pavnouty Abraham founded Trend Setter in early 2005 and remains its sole owner. (Docket Entry Nos. 45-10 at 44, 45-11 at 12, 13). Abraham is responsible for marketing and promoting Trend Setter’s services to those interested in buying or selling real estate. (Docket Entry No. 45-8, at 8-9). Defendant Deborah Miller is currently the broker of record, or sponsoring broker, for Trend Setter. (Docket Entry No. 45-10 at 9, 42-44). She joined Trend Setter after working as a real estate agent with several firms, including two separate RE/MAX franchises. (Id. at 14-21).

RE/MAX holds several federal trademark registrations for service marks. (Docket Entry No. 45, Ex. A). All the marks feature a rectangular design consisting of three equally spaced horizontal bars. The top bar is red, the middle bar is white, and the bottom bar is blue. Some of RE/MAX’s marks also contain other words and/or design elements, the most well-known of which is the red, white, and blue RE/MAX hot-air balloon. (Id.). This suit involves three federal marks, U.S. Trademark Registration No. 1,691,854 (registered on June 9, 1992), No. 1,702,048 (registered on July 21, 1992), and No. 1,720,592 (registered on Sep. 29,1992), and one state mark, Texas State Trademark Registration No. 55729 (registered on June 5, 1996). (Id., Exs. A, B). RE/MAX’s Registration No. 1,691,854 and No. 1,720,-592 have the three horizontal red, white, and blue bars in the rectangular design and a slanted red, white, and blue hot-air balloon in the top left corner. (Id., Ex. A). The trademark application claims that these marks were first used in commerce in October 1979. (Id.) RE/MAX’s federal Trademark Registration No. 1,702,048 has the three red-over-white-over-blue horizontal bars without a balloon. (Id.) This mark was first used in commerce on January 1, 1974. (Id.) RE/MAX’s Texas Registration No. 55729 also has the red-over-white-over-blue horizontal bars without a balloon. (Docket Entry No. 45, Exhibit B). RE/MAX’s service marks are registered for use in conjunction with providing real estate brokerage and insurance brokerage services. (Id., Exs. A, B).

Since as early as 1974, RE/MAX and its affiliates have provided real estate brokerage services in the United States using the RE/MAX service marks. (Docket Entry No. 46 at ¶ 7). RE/MAX brokers and associates use these marks on a variety of advertising media — including yard signs, business cards, newspapers . and other print media, Internet web sites, hot-air balloons, brochures, banners, and other advertising items — to identify themselves as associated with the RE/MAX franchise. (Id. at ¶ 8). RE/MAX has invested billions of dollars developing and maintaining its marks in the United States and worldwide. (Id. at ¶ 9). RE/MAX affiliates have used “the RE/MAX Trademark” in connection with over 20 million real estates transactions around the world. (Id. at ¶ 10). RE/ MAX has continuously operated using its trademark in the Houston area since 1979 and in the San Antonio area since 1984. (Id. at ¶ 12).

Trend Setter is the owner of U.S. Trademark Registration No. 3,222,708, filed May 30, 2006 and issued on March 27, 2007. (Docket Entry No. 45-6). This trademark consists of a rectangular design with three parts. The top is red, the middle is white, and the bottom is blue. The middle white portion is in the shape of a stylized representation of a house. The top red portion would be a horizontal bar but for the protrusion of the white roof. The bottom blue portion is a straight horizontal bar. (Id.). The Trend Setter mark is registered for use in conjunction with real estate brokerage services. (Id.). Trend Setter’s registration application stated that the first use was in December 1996 and the first use in commerce was in October 19, 1998. (Id.).

Pavnouty Abraham testified in his deposition that he first used the Trend Setter trademark as early as 1998, when he ordered ten red, white, and blue yard signs for his previous realty business, Realty, Etc. (Docket Entry No. 45-11 at 126-129, Ex. 3). In March 2005, Abraham started a new real estate brokerage service, Trend Setter Realty, which opened its Houston location on April 1, 2005. (Docket Entry No. 45-11 at 12-13). Abraham hired Deborah Miller as Trend Setter’s broker of record. (Id. at 109, 110). By the end of 2005, Trend Setter had between 150 and 200 agents. (Docket Entry 45-11 at 241). By mid-2008, Trend Setter had approximately 700 agents. (Id.).

Since it opened in April 2005, Trend Setter agents have used the red, white, and blue mark with the stylized house shape in the center to identify the real estate agency to current and potential clients. Trend Setter has used the mark in various advertising media, including real estate yard signs, brochures, fliers, home listings, and newspaper advertisements, as well as on its website, http://www.trend setterrealty.com. (Docket Entry No. 45-8 at 8). The Trend Setter yard signs contain the red, white, and blue Trend Setter design with the words “For Sale” on the red top portion, the listing agent’s name and phone number on the bottom blue bar, and the name “Trend Setter” in bold across the white portion. (Docket Entry No. 55 at 5).

Abraham met Miller in the mid-1990s. (Docket Entry No. 45-10 at 38). During the 1990s, Miller worked as a sales associate at various real estate firms, including two RE/MAX franchises, in the Houston area. (Id. at 15-21). As a RE/MAX sales affiliate, Miller used RE/MAX service marks on RE/MAX yard signs with her name on them when she listed homes for sale. (Docket Entry No. 45-10 at 15-21, 41-42). Around 2000, while Miller was still a RE/MAX agent, she listed four or five houses on Abraham’s behalf using her RE/MAX yard sign. (Docket Entry No. 45-10 at 41M2). When Abraham began Trend Setter, he employed Miller as his broker of record. Miller, testified that she left RE/MAX on about February 28, 2005 to become the “jack of all trades” at Trend Setter. (Docket Entry No. 45-10 at 9).

When she worked at RE/MAX Elite, a RE/MAX franchise, Miller entered into an Independent Contractor Agreement (“ICA”) that allowed her to use RE/MAX’s service marks during her employment but stipulated that after her employment ended, she would stop using any of RE/MAX’s “distinguishing characteristics,” including RE/MAX’s service marks, trademarks, designs, slogans, logos, lawn signs, “color combinations and style,” and “other advertising copy now or hereafter displayed, used or becoming a part of the RE/MAX business.” (Docket Entry No. 45, Ex. D). W/hen Miller left RE/MAX in February 2005, her contractual obligations to cease using the RE/MAX marks began. RE/ MAX Elite has assigned its rights in the ICA to RE/MAX, including the right to bring suit to enforce the ICA. (Docket Entry Nos. 45-9,46 at ¶ 15).

According to RE/MAX, soon after Miller’s departure from RE/MAX Elite, RE/ MAX became aware that Miller was offering competing real estate brokerage services in the Houston area on Trend Setter’s behalf, using a red-over-white-over-blue yard sign. (Docket Entry No. 20 at 7). On April 18, 2006, RE/MAX wrote Miller a cease-and-desist letter, which Abraham also read, stating that her use of a “confusingly similar” yard sign in conjunction with offering real estate services was likely to cause consumer confusion with RE/MAX’s trademarks. (Docket No. 45-11 at 216-17). Soon after, Abraham retained counsel. (Id at 217). RE/MAX subsequently wrote several letters to Trend Setter informing it of the allegedly infringing activity. (Docket Entry No. 45 at 11). On May 30, 2006, Trend Setter filed its application for Trademark Registration No. 3,222,708. (Id). On July 25, 2007, RE/MAX filed this suit against Trend Setter, Abraham and Miller, alleging that they were using Trend Setter signs and other advertising materials that have a design and color arrangement confusingly similar to the RE/MAX marks. RE/MAX also alleges that Trend Setter had obtained a confusingly similar federal service mark despite knowing about the RE/MAX’s marks. (Docket Entry No. 1).

B. Procedural History

In its July 25, 2007 complaint, RE/MAX asserted claims for trademark infringement, trademark dilution, and unfair competition under federal law (Docket Entry No. 1, Counts I, II and III); trademark infringement and dilution under the Texas Business and Commerce Code § 16.26 and § 16.29 (Counts IV and V); and trademark infringement and unfair competition under Texas common law (Counts VII and VIII). RE/MAX also asserted a Texas common-law breach of contract claim against Miller for violating the ICA. (Count VIII). When it amended its complaint on September 24, 2007, RE/MAX added a claim for cancellation of Trend Setter’s trademark Registration No. 3,222,708 on the ground that it causes confusion with RE/MAX’s registered marks. (Docket Entry No. 14, Count IX).

The defendants answered and counterclaimed. (Docket Entry No. 11). The counterclaims seek a declaratory judgment of noninfringement and of nondilution, and request cancellation of RE/MAX’s federal trademark Registration No. 1,702,048. (Docket Entry No. 11). RE/MAX answered the counterclaims. (Docket Entry No. 15). The defendants did not answer RE/MAX’s amended complaint. On March 25, 2009, however, they moved for leave to amend their answer, (Docket Entry No. 51), and filed a proposed amended answer to the amended complaint. (Docket Entry No. 52).

RE/MAX seeks summary judgment on its federal and state trademark infringement and unfair competition claims against all the defendants and on its breach of contract claim against Miller. (Docket Entry Nos. 44, 45). In addition, RE/MAX seeks cancellation of Trend Setter’s Registration No. 3,222,708. (Docket Entry Nos. 44, 45). RE/MAX does not seek summary judgment on its dilution claims, which it has asked this court to dismiss if summary judgment is granted on the trademark infringement claims. (Docket Entry No. 45 at 3 n. 1). The defendants missed the March 16, 2009 deadline to respond to RE/MAX’s partial summary judgment motion. Shortly after the deadline, however, on March 23, 2009, the defendants moved to extend them deadline for filing a response. (Docket Entry No. 50). On March 27, the defendants filed a response, which they ask this court to deem filed as of that date. (Docket Entry Nos. 54, 55). The response asserts that material issues of fact preclude granting the summary judgment motion and asks this court to cancel RE/MAX’s Registration No. 1,702,-048. (Docket Entry No. 55).

RE/MAX opposes the defendants’ motion for an extension as well as the defendants’ motion for leave to amend their answer. (Docket Entry Nos. 58, 59). RE/ MAX also submitted a “further reply” addressing the issues raised in the defendants’ summary judgment response. (Docket Entry No. 58-2). RE/MAX has asked that the “further reply” be filed if this court grants the defendants’ motion for an extension of time to file their response. (Docket Entry No. 58).

II. The Rule 56 Summary Judgment Standard

Summary judgment is appropriate if no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law. Fed. R. Crv. P. 56(c). “The movant bears the burden of identifying those portions of the record it believes demonstrate the absence of a genuine issue of material fact.” Triple Tee Golf, Inc. v. Nike, Inc., 485 F.3d 253, 261 (5th Cir.2007) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 322-25, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)).

If the burden of proof at trial lies with the nonmoving party, the movant may satisfy its initial burden by “ ‘showing’ — that is, pointing out to the district court — that there is an absence of evidence to support the nonmoving party’s case.” See Celotex, 477 U.S. at 325, 106 S.Ct. 2548. While the party moving for summary judgment must demonstrate the absence of a genuine issue of material fact, it does not need to negate the elements of the nonmovant’s case. Boudreaux v. Swift Transp. Co., 402 F.3d 536, 540 (5th Cir.2005) (citation omitted). “A fact is ‘material’ if its resolution in favor of one party might affect the outcome of the lawsuit under governing law.” Sossamon v. Lone Star State of Texas, 560 F.3d 316, 326 (5th Cir.2009) (quotation omitted). “If the moving party fails to meet [its] initial burden, the motion [for summary judgment] must be denied, regardless of the nonmovant’s response.” United States v. $92,203.00 in U.S. Currency, 537 F.3d 504, 507 (5th Cir.2008) (quoting Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir.1994) (en banc)).

When the moving party has met its Rule 56(c) burden, the nonmoving party cannot survive a summary judgment motion by resting on the mere allegations of its pleadings. The nonmovant must identify specific evidence in the record and articulate how that evidence supports that party’s claim. Baranowski v. Hart, 486 F.3d 112, 119 (5th Cir.2007). “This burden will not be satisfied by ‘some metaphysical doubt as to the material facts, by conclusory allegations, by unsubstantiated assertions, or by only a scintilla of evidence.’ ” Boudreaux, 402 F.3d at 540 (quoting Little, 37 F.3d at 1075). In deciding a summary judgment motion, the court draws all reasonable inferences in the light most favorable to the nonmoving party. Connors v. Graves, 538 F.3d 373, 376 (5th Cir.2008).

III. The Defendants’ Motion for Extension of Time

After the deadline to respond passed, the defendants filed both a response to RE/MAX’s motion for partial summary judgment and a motion for extension, asking this court accept its tardy response. (Docket Entry Nos. 50, 54, 55). Rule 6(b)(1) of the Federal Rules of Civil Procedure provides that “[w]hen an act may or must be done within a specified time, the court may, for good cause, extend the time ... (B) on motion made after the time has expired if the party failed to act because of excusable neglect.” Fed. R. Civ. P. 6(b)(1). “Relevant factors to the excusable neglect inquiry include: the danger of prejudice to the non-movant, the length of the delay and its potential impact on the judicial proceedings, the reason for the delay, including whether it was within the reasonable control of the movant, and whether the movant acted in good faith.” Adams v. Travelers Indemnity Co., 465 F.3d 156, 161 n. 8 (5th Cir.2006) (citing Farina v. Mission Inv. Trust, 615 F.2d 1068, 1076 (5th Cir.1980); Pioneer Inv. Services Co. v. Brunswick Assocs. Ltd. P’ship, 507 U.S. 380, 395-97, 113 S.Ct. 1489, 123 L.Ed.2d 74 (1993)) (quotation marks removed).

In Adams, the Fifth Circuit found that the district court did not abuse its discretion by refusing to grant a plaintiffs request for an extension under Rule 6(b)(2). The plaintiff had already been granted two extensions. 465 F.3d at 161-62. In the present case, by contrast, although the defendants have delayed in meeting other deadlines, this is their first request for extension with respect to the summary judgment motion. The defendants filed their opposition on March 27, 2009, a little over one week after the March 16 deadline. They have presented a reason for the delay: unsuccessful efforts to settle the case and a delay in hearing from RE/MAX that the settlement proposal was unacceptable. (Docket Entry No. 50 at 1-2). The record does not show that the defendants were acting in bad faith. The defendants apparently believed that a settlement was likely and did not want to “expend[] the time and expense” of responding to the motion. (Id). When RE/MAX refused their settlement proposals, the defendants began drafting their response to the summary judgment motion. (Docket Entry No. 50 at 2). The delay was short and RE/MAX has suffered no prejudice as a result. On April 13, 2009, RE/MAX filed a thorough reply as an attachment to its response to the motion for extension. (Docket Entry No. 58-2).

The defendants’ motion for an extension is granted. The defendants’ response to the summary judgment motion and memorandum is deemed filed as of March 27, 2009.

IV. The Defendants’ Motion for Leave to Amend Their Answer

The defendants have also moved for leave to amend their answer, affirmative defenses and counterclaims, (Docket Entry No. 51), and have filed a proposed first amended answer, (Docket Entry No. 52). Rule 15 of the Federal Rules of Civil Procedure requires leave of court for a party to file an amended pleading. Leave is freely given but is “by no means automatic.” Little v. Liquid Air Corp., 952 F.2d 841, 845-46 (5th Cir.1992). A district court may consider factors such as undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party, and futility of amendment. See Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 9 L.Ed.2d 222 (1962); Wimm v. Jack Eckerd Corp., 3 F.3d 137, 139 (5th Cir.1993).

On March 25, 2009, the defendants moved for leave to amend their answer under Rule 15(a). (Docket Entry No. 51). The scheduling and docket control order set a February 8, 2008 deadline to amend the pleadings and a January 30, 2009 deadline to complete discovery. (Docket Entry No. 59 at 2). The Rule 16(b) “good cause” standard, rather than the “freely given” standard of Rule 15(a), governs a motion to amend filed after the deadline set in the scheduling order. See Parker v. Columbia Pictures Inds., 204 F.3d 326 (2d Cir.2000); Eastern Minerals & Chems. Co. v. Mahan, 225 F.3d 330 (3d Cir.2000); In re Milk Prods. Antitrust Litig., 195 F.3d 430, 437 (8th Cir.1999); Sosa v. Airprint Sys., Inc., 133 F.3d 1417, 1419 (11th Cir.1998) (per curiam); Johnson v. Mammoth Recreations, Inc., 975 F.2d 604, 607-08 (9th Cir.1992); SIL-FLO, Inc. v. SFHC, Inc., 917 F.2d 1507, 1518 (10th Cir.1990). As the Eleventh Circuit has noted, “[i]f we considered only Rule 15(a) without regard to Rule 16(b), we would render scheduling orders meaningless and effectively would read Rule 16(b) and its good cause requirement out of the Federal Rules of Civil Procedure.” Sosa, 133 F.3d at 1419; see also Johnson, 975 F.2d at 610 (“[d]isregard of the [scheduling] order would undermine the court’s ability to control its docket, [and] disrupt the agreed-upon course of the litigation”); Riofrio Anda v. Ralston Purina, Co., 959 F.2d 1149, 1155 (1st Cir.1992) (permitting amendment using Rule 15(a)’s standards after scheduling order cutoff “would have nullified the purpose of Rule 16(b)(1)”).

Once a scheduling order deadline to amend a pleading has expired, the party seeking to amend is effectively asking the court for leave to amend both the scheduling order and the pleading. See, e.g., Johnson, 975 F.2d at 607-08; SIL-FLO, 917 F.2d at 1518. If the movant satisfies the requirements of Rule 16(b), the court must then determine whether to grant leave to amend under Rule 15(a). See Johnson, 975 F.2d at 608; Tschantz v. McCann, 160 F.R.D. 568, 571 (N.D.Ind.1995); American Tourmaline Fields v. International Paper Co., 1998 WL 874825, at *2 (N.D.Tex. Dec. 7, 1998). Rule 16(b) requires that a party seeking to modify a scheduling order show good cause. See Fed. R. Civ. P. 16(b); Reliance Ins. Co. v. Louisiana Land & Exploration Co., 110 F.3d 253, 257 (5th Cir.1997); Barrett v. Atlantic Richfield Co., 95 F.3d 375, 380 (5th Cir.1996). To demonstrate “good cause,” the movant must show that, despite diligence, he could not have reasonably met the scheduling deadline. 6A Wright, et al. Federal Practice & Procedure, § 1522.1 at 231 (2d ed. 1990). In the context of a motion for leave to amend, the court may deny the motion if the movant “knows or should have known of the facts upon which the proposed amendment is based but fails to include them in the original complaint.” Pallottino v. City of Rio Rancho, 31 F.3d 1023, 1027 (10th Cir.1994); Pope v. MCI Telecommunications Corp., 937 F.2d 258, 263 (5th Cir.1991) (denying, under Rule 15(a)’s more lenient standard, a late-filed motion to amend a complaint to include claims based on same facts); Sosa, 133 F.3d at 1419 (denying leave to amend under Rule 16(b) when the facts were known to plaintiff at the time of the first complaint); Parker, 204 F.3d at 340 (same).

If a movant establishes “good cause” to extend the deadline for pleading amendments, the court decides whether to grant leave to file the amended pleading under Rule 15(a). See Johnson, 975 F.2d at 608; Tschantz, 160 F.R.D. at 571; American Tourmaline Fields, 1998 WL 874825, at *2. In deciding whether to grant leave to file an amended pleading, a district court may consider factors such as undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party, and futility of amendment. See Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 9 L.Ed.2d 222 (1962); Wimm v. Jack Eckerd Corp., 3 F.3d 137, 139 (5th Cir.1993).

The defendants seek to amend their answer in two respects. The first is to deny Count IX in the first amended complaint, which is RE/MAX’s claim for cancellation of Trend Setter’s trademark. (Docket Entry No. 52). The second is to replace paragraph 79 in the answer, which recites the defendants’ claim for cancellation of RE/MAX’s Registration No. 1,702,048. The paragraph reads:

RE/MAX’s color design mark in Registration No. 1,702,048 consists solely of the colors of the flag of the United States of America, namely red, white and blue, displayed in a horizontal pattern similar to the pattern contained in the flag of the United States of America.

(Docket Entry No. 11 at ¶ 79). Paragraph 89 of the proposed amended answer reads:

RE/MAX’s color design mark in Registration No. 1,702,048 consists of or comprises the flag or coat of arms or other insignia of the United States, or of any State or Municipality, or of any foreign nation, or any simulation thereof.

(Docket Entry No. 52 at ¶ 89).

The defendants’ reason for amending the answer is that the original answer was “intended to track the language of 15 U.S.C. § 1052(b)” and the proposed amendment would “allow the paragraph and the allegations therein to track the language more closely” and allow the court to decide their claims on the merits rather than on “technicalities.” (Docket Entry No. 51 at 2). This characterization of the second part of the proposed amendment is questionable. The proposed amendment to replace paragraph 79 of the answer with paragraph 89 of the proposed amended answer does not, as the defendants suggest, merely enhance the accuracy of their presentation and use of the statutory language. Rather, the proposed amendment presents a new and different basis for asserting that RE/MAX’s Registration No. 1,702,048 should be cancelled. (Docket Entry No. 55 at 20-22). Section 1052(b) prohibits registration of trademarks consisting of a “flag or coat of arms or other insignia of the United States or of any State or municipality, or of any foreign nation, or any simulation thereof.” 15 U.S.C. § 1052(b). The defendants’ original answer asserted that the red-over-white-over-blue mark comprises the United States flag. The proposed new answer asserts that the mark comprises the flag of the Netherlands and the flag of Luxembourg. (Docket Entry No. 55 at ¶¶ 61-67).

The defendants argue that this change will not cause prejudice because RE/MAX “has already pled and denied any of its trademarks are prohibited by 15 U.S.C. § 1052(b).” (Docket Entry No. 51 at 2). But the “good cause” requirement of Rule 16 focuses on the diligence of the party asking the court to modify the scheduling order. Parker, 204 F.3d at 340; In re Milk Prods., 195 F.3d at 437; Johnson, 975 F.2d at 609; Marcum v. Zimmer, 163 F.R.D. 250, 254 (S.D.W.Va.1995). The absence of prejudice to the nonmovant is relevant to Rule 15(a) but does not satisfy the “good cause” requirement of Rule 16(b). Tschantz, 160 F.R.D. at 571. The defendants have not shown good cause for the delay in raising this additional ground under § 1052(b) or for denying the claim for cancellation.

In addition, this court denies the motion for leave to amend as futile. Even assuming that the defendants oppose the cancellation of their mark, this court finds and concludes that, on the merits, RE/MAX is entitled to such relief. This court also finds and concludes that the defendants’ claims for cancellation of RE/MAX’s marks on the basis of § 1052(b) are without merit, taking into account the allegations that the marks resemble not only the United States flag but the flags of the Kingdom of the Netherlands and Luxembourg.

The defendants’ motion for leave to amend their answer is denied.

Y. The Trademark Infringement and Unfair Competition Claims

RE/MAX contends that it is entitled to judgment as a matter of law that the defendants are infringing on its federal trademarks because the red, white, and blue Trend Setter signs are likely to cause confusion as to the source of Trend Setter’s services. (Docket Entry No. 45 at 14). RE/MAX argues that the undisputed facts show that: (1) the defendants’ red-over-white-over-blue mark and signs are “virtually identical” to RE/MAX’s marks and signs; (2) the services offered by the two real estate brokerage agencies are identical; (3) both firms promote their services in similar advertising channels; (4) they cater to the same classes of consumers; and, “most importantly, (5) [RE/ MAX’s] empirically-conducted survey provides strong evidence that consumers have actually been confused as to the source, affiliation or connection of Defendants’ services.” (Id.).

The defendants oppose RE/MAX’s motion for summary judgment on the ground that neither their mark nor its use on yard signs is likely to cause confusion among consumers. (Docket Entry No. 55 at ¶ 41, 42). The defendants concede that they offer services identical to RE/MAX’s and promote their services in similar advertising channels to an identical class of consumers. (Id. at ¶ 45). The defendants argue that their marks are not likely to cause confusion because the signs are not sufficiently similar; the survey conducted by RE/MAX is insufficient to demonstrate that consumers have actually been confused as to source, affiliation, or connection; and there is insufficient evidence that the defendants intended to “pass off’ their services as originating from or connected to RE/MAX. (Id. at ¶ 41, 45). The defendants argue that there are material issues of fact precluding summary judgment. (Id. at ¶ 42).

Section 32 of the Lanham Act provides a cause of action for infringement when, without the registrant’s consent, one uses “in commerce, any reproduction, counterfeit, copy[,] or colorable imitation of a registered mark in connection with the sale, offering for sale, distribution, or advertising of any goods or services on or in connection with which such use is likely to cause confusion or to cause mistake or to deceive....” 15 U.S.C. § 1114(1)(a). To prove infringement, a plaintiff must show that he owns a legally protectable mark and that there is a likelihood of confusion between that mark and the defendants’ allegedly infringing material. American Rice Inc. v. Producers Rice Mill, Inc., 518 F.3d 321, 329 (5th Cir.2008).

The Fifth Circuit assesses likelihood of confusion based on the following factors, which it refers to as “digits of confusion”: “(1) strength of the plaintiffs mark; (2) similarity of design between the marks; (3) similarity of the products; (4) identity of retail outlets and purchasers; (5) similarity of advertising media used; (6) the defendants’ intent; (7) actual confusion; and (8) degree of case exercised by potential purchasers.” Id. (citing Oreck Corp. v. U.S. Floor Systems, Inc., 803 F.2d 166, 170 (5th Cir.1986); Sun-Fun Products v. Suntan Research & Dev., 656 F.2d 186, 189 (5th Cir.1981)). After assessing each digit, the court must weigh them to determine whether is a likelihood of confusion. “No one factor is dispositive, and a finding of a likelihood of confusion does not even require a positive finding on a majority of these ‘digits of confusion.’ ” Elvis Presley Enters., Inc. v. Capece, 141 F.3d 188, 194 (5th Cir.1998) (quoting Conan Properties, Inc. v. Conans Pizza, 752 F.2d 145, 150 (5th Cir.1985)).

The likelihood-of-confusion standard used in Lanham Act infringement analysis also applies to RE/MAX’s federal and state unfair competition claims, its Texas statutory trademark infringement claim, and its common-law trademark infringement claim. Matrix Essentials, Inc. v. Emporium Drug Mart, Inc., 988 F.2d 587, 592 (5th Cir.1993); Scott Fetzer Co. v. House of Vacuums Inc., 381 F.3d 477, 483-84 (5th Cir.2004). Although likelihood of confusion is generally a fact question, Elvis Presley Enters., 141 F.3d at 196, summary judgment may be proper if the undisputed facts in the “summary judgment record compel[ ] the conclusion that the movant is entitled to judgment as a matter of law.” Board of Supervisors for Louisiana State Univ. Agric. & Mech. Coll. v. Smack Apparel Co., 550 F.3d 465, 474 (5th Cir.2008) (citing Beef/Eater Rests., Inc. v. James Burrough Ltd., 398 F.2d 637, 639 (5th Cir.1968)).

A. Possession of a Legally Protectable Mark

The first element of trademark infringement is possession of a legally protectable mark. American Rice, 518 F.3d at 329. To be protectable, a mark must be distinctive, either inherently or by achieving secondary meaning. Id. (citing Pebble Beach Co. v. Tour 18 I Ltd., 155 F.3d 526, 536 (5th Cir.1998) (abrogated on other grounds by TrafFix Devices, Inc. v. Marketing Displays, Inc., 532 U.S. 23, 32-33, 121 S.Ct. 1255, 149 L.Ed.2d 164 (2001)) (citations omitted)). RE/MAX has three federally registered marks and one Texas mark. (Docket Entry No. 45, Exs. A, B). Under the Lanham Act, RE/MAX’s certificate of registration for each of its federal trademarks is prima facie evidence of the validity of the mark and of RE/MAX’s exclusive right to use it in connection with real estate brokerage and insurance brokerage services. 15 U.S.C. § 1057(b), § 1115(a). RE/MAX’s three federal trademarks have been registered and used in commerce for over five years, achieving incontestable status. 15 U.S.C. § 1065; see also American Rice, 518 F.3d at 330. Once a mark becomes incontestable, its federal registration constitutes conclusive evidence of its validity, subject only to the defenses enumerated in the Lanham Act, including that the mark has been abandoned or that it is generic. § 1115(a); see § 1115(b)(2), § 1065(4); see also American Rice, 518 F.3d at 330.

The defendants concede the validity and incontestable status of RE/MAX’s federal Registration No. 1,691,854 and No. 1,720,-592, each comprising three red-over-white-over-blue horizontal bars with a slanted hot-air balloon in the top left corner. The defendants challenge the validity of RE/ MAX’s federal Registration No. 1,702,048, comprising three red-over-white-over-blue horizontal bars without a balloon, on three grounds: it comprises a flag, prohibited under § 1052(b); RE/MAX has abandoned and/or mutilated this mark, prohibited under § 1065; and it is generic, prohibited under § 1064(3), 1065(4). (Docket Entry No. 11 at ¶¶ 105-110). Each of the defendants’ arguments for invalidity and cancellation is addressed below. The likelihood-of-confusion analysis applies to all the RE/ MAX trademarks, including the indisputably valid Registration No. 1,691,854 and No. 1,720,592 (with the hot-air balloon) and No. 1,702,048 (without a balloon).

B. The Likelihood of Confusion

The second element of trademark infringement is the likelihood of confusion. American Rice, 518 F.3d at 329. The factors for establishing a likelihood of confusion are: “(1) strength of the plaintiffs mark; (2) similarity of design between the marks; (3) similarity of the products; (4) identity of retail outlets and purchasers; (5) similarity of advertising media used (6) the defendant’s intent; (7) actual confusion; and (8) degree of case exercised by potential purchasers.” Id.

(1) The Strength of the Mark

“The stronger the mark, the greater the protection it receives.... ” Elvis Presley Enters., Inc. v. Capece, 141 F.3d 188, 201 (5th Cir.1998). A trademark’s strength is determined by the quality of the mark and, more importantly, by the degree to which it is recognized in the marketplace. American Rice, 518 F.3d at 330; Sun Banks of Florida, Inc. v. Sun Fed. Sav. & Loan Ass’n, 651 F.2d 311, 315 (5th Cir.1981). Marks can be classified as generic, descriptive, suggestive, or arbitrary and fanciful. Id. “[W]ithin this spectrum, the strength of a mark, and of its protection, increases as one moves away from generic and descriptive marks toward arbitrary marks.” American Rice, 518 F.3d at 330 (citing Falcon Rice Mill, Inc. v. Cmty. Rice Mill, Inc., 725 F.2d 336, 346 (5th Cir.1984)). Marketplace recognition depends on “advertising, length of time in business, public recognition, and uniqueness.” Century 21 Real Estate Corp. v. Sandlin, 846 F.2d 1175, 1179 (9th Cir.1988).

RE/MAX’s trademarks all include a rectangular design consisting of three evenly spaced horizontal bars, with the top red, the middle white, and the bottom blue. RE/MAX’s Trademark Registration No. 1,691,854 and No. 1,720,592 also contain a slanted red, white, and blue hot air balloon in the top left corner. RE/MAX’s federal Trademark Registration No. 1,702048 and RE/MAX’s Texas Registration No. 55729 do not contain a balloon. Trend Setter’s marks and signs do not have balloons.

The defendants contend that RE/MAX’s marks differ in commercial impression and in commercial strength. The defendants argue that it is “patently obvious” that RE/MAX’s claims in this suit relate only to the similarity of the Trend Setter signs (which have no balloons) to RE/MAX’s conceptually weak tri-bar marks. (Docket Entry No. 55 at ¶22). RE/MAX, however, claims to possess ownership to an entire “family” of marks, all of which comprise the red-over-white-over-blue tri-bar feature, and which collectively constitute the “RE/MAX Trademark.” (Docket Entry No. 45 at ¶ 1, 3). “A family of marks is a group of marks having a recognizable common characteristic....” J & J Snack Foods Corp. v. McDonald’s Corp., 932 F.2d 1460, 1462 (Fed.Cir.1991). “Simply using a series of similar marks does not of itself establish the existence of a family. There must be recognition among the purchasing public that the common characteristic is indicative of a common origin of the goods.” Id. The “recognizable common characteristic” of the RE/ MAX “family” is the tri-bar design consisting of equally spaced red, white, and blue bars. (See Docket Entry No. 45, Exs. A, B). For RE/MAX to obtain protection for its family of marks, this common element must be sufficiently strong on its own to deserve such strong protection.

The RE/MAX trademark is best classified as arbitrary. It is not generic because the public identifies it with a particular source, not as identifying real estate services in general. There is no descriptive or suggestive connection between real estate services and three vertical bars or a red, white, and blue color scheme. Such color combinations and design are used in a variety of industries. While classifying a mark as arbitrary weighs in favor of its strength, it does not end the inquiry. A mark’s “ultimate strength” depends on “its standing in the marketplace.” Sun Banks, 651 F.2d at 315.

The summary judgment record reveals that RE/MAX’s tri-color designs, including those lacking balloons, have come to develop marketplace significance and serve as source identifiers. RE/MAX has used its tri-color mark continuously for over thirty years, devoting substantial time and resources to developing and maintaining the potency of its marks as source identifiers. (Docket Entry No. 46). RE/MAX has invested billions of dollars developing and maintaining the integrity of its marks in the United States and worldwide. (Id.). RE/MAX’s Trademark & Graphic Standards meticulously outline the stylistic requirements that RE/MAX imposes on franchisees and affiliates using the RE/MAX brand, to ensure “[p]roper use of RE/MAX trademarks” and “protect ] [RE./MAX’s] hard-earned goodwill.” (Docket Entry No. 55-2 at iv). All of these efforts evidence the mark’s strength.

RE/MAX’s empirical survey provides evidence that consumers associate RE/ MAX’S tri-bar marks with RE/MAX real estate brokerage services. (Docket Entry No. 47). 25.3 percent of Houston-area survey respondents shown the Trend Setter sign thought that the sign was either promoting RE/MAX, promoting a company affiliated with RE/MAX, or promoting a company that would have needed RE/ MAX’s permission to use the sign. (Id.). Most of the survey participants making up that 25.3 percent based their responses specifically on the red, white, and blue color and arrangement of the Trend Setter sign. (Docket Entry No. 47-4 at 8-10). For example, one respondent explained that he thought RE/MAX was the company being promoted or advertised by the Trend Setter sign “[b]ecause its (sic) their sign, they are the only one’s (sic) that I know of that have this color of sign ... The red, white and blue sign ... they have always had this color of sign.” (Id. at 8). Another said he thought the company being promoted by the Trend Setter sign was affiliated with RE/MAX because “[i]t looks exactly like a Remax (sic) sign. The sign is red, blue and white just like a remax (sic) sign.” (Id. at 9).

The survey evidence, both statistical and anecdotal, of actual consumer association demonstrates the substantial market force of the RE/MAX trademark in the Houston area. This court finds that the RE/MAX trademark is strong, weighing in favor of finding a likelihood of confusion.

(2) The Similarity of the Marks

The next factor considers the similarity between “the marks in the context that a customer perceives them in the marketplace, which includes their presentation in advertisements.” Elvis Presley Enters., 141 F.3d at 197. The court must not restrict itself to a comparison of individual features, but must consider “the commercial impression created by the mark as a whole.” Amstar Corp. v. Domino’s Pizza, Inc., 615 F.2d 252, 261 (5th Cir.1980) (citation omitted). “ ‘The relevant inquiry is whether, under the circumstances of the use,’ the marks are sufficiently similar that prospective purchasers are likely to believe that the two users are somehow associated.” Elvis Presley Enters., 141 F.3d at 201 (quoting Restatement (Third) of Unfair Competition § 21 cmt. c (1995)).

RE/MAX argues that a side-by-side comparison of the parties’ real estate yard signs supports a likelihood-of-confusion finding. RE/MAX notes that the Trend Setter sign, like RE/MAX’s sign, has three “color bands,” the top of which is red, the middle of which is white, and the bottom of which is blue, and that the relative width of the three bands on the Trend Setter signs are the same as the widths of the bars on RE/MAX’s signs. (Docket Entry No. 45 at 16). The defendants argue that despite the similarity in color scheme, the signs are sufficiently different that the overall impression conveyed to consumers does not create a likelihood of confusion.

The defendants point out several differences. The RE/MAX sign contains the distinctive red, white, and blue RE/MAX hot-air balloon in the left corner, while the Trend Setter sign does not. The RE/MAX sign has three equally sized horizontal bars, while the Trend Setter sign includes a stylized representation of a house in the middle white portion, and, consequently, the Trend Setter color bands are not equally sized and the red and white portions are not simple horizontal bars. The text elements on the two signs are also different. “For Sale” appears on different areas of the top red portions. TSR’s name and RE/MAX’s name appear on different areas. The individual agent’s name appears in different areas. The typeface is different. And the realtor logos are different. (Docket Entry No. 55 at ¶ 45(a)).

Dissimilarities in individual features may be insufficient to distinguish otherwise similar marks in the eyes of consumers, especially when the “dominant” elements of a mark or the “attention-getting” features are similar or identical. Elvis Presley Enters., 141 F.3d at 201-02 (citing Lone Star Steakhouse & Saloon, Inc. v. Alpha of Va., Inc., 43 F.3d 922, 936 (4th Cir.1995); Oreck Corp. v. U.S. Floor Systems, Inc., 803 F.2d 166, 171). Minor differences in style, such as different typefaces, are particularly unhelpful for distinguishing marks in the eyes of consumers. See Scott Fetzer Co., 381 F.3d at 486, n. 4 (citation omitted). In this case, despite the presence or absence of certain elements in Trend Setter signs as compared to RE/MAX signs, including differences in the shape of the color bands, the balloon, and text placement, the dominant feature of both signs is identical. Both Trend Setter and RE/MAX signs have the same color schemes and virtually identical placement and arrangement of the colors. The red, white, and blue tribar color arrangement is a dominant feature of the RE/MAX marks and of the Trend Setter marks. As the survey responses reveal, the tri-bar red-white-and-blue is the significant “attention-getting” feature on both the RE/MAX and Trend Setter signs. (Docket Entry No. 47). This similarity in color and arrangement supports the conclusion that the signs are similar in their overall commercial impression. See Smack Apparel, 550 F.3d at 480 (noting that “[although the [defendant’s] shirt [did] not use the initials “LSU” anywhere, its identification of [Louisiana State University] as the national champion [was] unmistakable from the [purple and gold] colors and from the references to the games in which LSU played.”).

“ ‘The setting in which a designation is used affects its appearance and colors the impression conveyed by it.’ ” Amstar, 615 F.2d at 261 (quoting Restatement of Torts § 729, cmt. b (1938)). A real estate yard sign is intended to catch the attention of people driving past. The details on the signs, such as text content and placement, are not what catch and hold attention. In this context, the color and dominant design are more important because, unlike words or even logos, they can communicate a source to consumers viewing the signs from a distance, or while passing, without requiring significant or prolonged attention. To a consumer driving by, the red, white, and blue tri-bar design stand out, not differences in smaller, less significant design elements.

The defendants also argue their sign is not red, white, and blue because the middle portion of the Trend Setter mark is not white but “colorless.” (Id. at ¶ 14). This argument is contradicted by their own federal Registration No. 3,222,708, which states:

The colors red, white and blue are claimed as a feature of the mark. The color red appears in the top portion of the rectangle, the color white appears in the stylized representation of the house, and the color blue appears in the bottom rectangle.

(Docket Entry No. 11, Exhibit A). Even if the Trend Setter mark middle space is “colorless,” it appears as white. The court must “consider the marks in the context that a customer perceives them in the marketplace, which includes their presentation in advertisements.” Elvis Presley Enters., Inc., 141 F.3d at 197. The Trend Setter marks and advertisements all use the same red, white, and blue color scheme and similar vertical bar arrangement as the RE/MAX marks and advertisements.

In sum, despite some differences, the signs are similar enough in their most significant features to cause confusion in the market for real estate brokerage services.

(S) The Identity of Services Offered

The defendants concede that they offer real estate brokerage services identical to those offered by RE/MAX. (Docket Entry No. 55 at ¶ 45). This factor weighs in favor of finding a likelihood of confusion.

(4) The Identity of the Purchasers

The defendants concede that they market or intend to market their services to the same group of customers as RE/MAX. This group is “the general public with an interest in purchasing or selling real estate.” (Docket Entry No. 45 at 17; Docket Entry No. 55 at ¶ 45). This factor weighs in favor of finding a likelihood of confusion.

(5) The Similarity of Advertising Channels

The defendants concede that they promote their real estate services in the same marketing and advertising channels as RE/MAX, including. (Docket Entry No. 55 at ¶ 45). Most significantly, both companies rely heavily on yard signs. (Docket Entry No. 55 at ¶¶ 3-4).

(6) The Intent to Confuse the Public

“Proof of the defendant’s intent to benefit from the good reputation of the plaintiff’s products is not required in order to establish infringement.” Oreck, 803 F.2d at 173. “If, however, a plaintiff can show that a defendant adopted a mark with the intent of deriving benefit from the reputation of the plaintiff, that fact alone ‘may be sufficient to justify the inference that there is confusing similarity.’ ” Exxon Corp. v. Texas Motor Exch. Of Houston, Inc., 628 F.2d 500, 506 (5th Cir.1980) (quoting Restatement of Torts § 729, cmt. f (1938)).

RE/MAX asserts that the circumstantial evidence in the record indicates that the defendants intended to pass off their services as associated with or approved by RE/MAX. The record shows that the defendants were aware of the RE/MAX trademarks at least as early as December 1996. (Docket Entry No. 45, Ex. G at 7). Deborah Miller worked as a RE/MAX affiliate before joining Trend Setter, during which time she listed several properties — using a RE/MAX sign — on behalf of Pavnouty Abraham. (Docket Entry No. 45 at 18; Docket Entry No. 45-10 at 41-42). RE/MAX has submitted an invoice from Ad-Mar Signs, dated November 30, 1998, showing that Abraham ordered ten real estate yard signs on behalf of his prior business, Realty, Etc, containing the same red-over-white-over-blue design that Trend Setter subsequently used and trademarked. (Docket Entry No. 45-11 at 126-28, Exhibit 3). The invoice is for ten steel sign panels with a “White background w/ R/M red and blue” and states, “Imprint: Per Customer Specifications.” (Docket Entry Nos. 45 at 18, 45-11 at 127-28, Ex. 3).

In some situations, a defendant’s use with “knowledge of the predecessor’s mark may give rise to the presumption that the defendant intended to cause public confusion.” Scott Fetzer Co., 381 F.3d at 486 (citations and quotation marks omitted). But mere knowledge of a prior user’s mark is generally not sufficient to infer bad faith. Conans Pizza, 752 F.2d at 150. The record evidence does not support a finding of a bad faith intent to mislead. The record includes Abraham’s statement that he did not adopt a red, white, and blue design with any intent to cause confusion and that his decision was unrelated to RE/MAX’s use of those colors. (Docket Entry No. 55 at 13). When asked in his deposition why he chose the design, Abraham responded: “That’s a dream. That’s the American flag colors.” (Docket Entry No. 55-5 at 315, Lines 6-7).

It is telling, the defendants argue, that “[p]rominent on each of [Trend Setter’s] signs, even more so than RE/MAX’s own signs, is the phrase “Trend Setter Realty” appearing in the largest typeface of any other information and which spans the entire width of the sign.” The defendants argue that this clear display of source is inconsistent with an intent to “pass off’ their services as RE/MAX’s. (Docket Entry No. 55 at 14). As for the 1998 Ad-Mar invoice, the defendants contend that it is unclear that “R/M” stands for “RE/ MAX.” The defendants point to evidence that Abraham told Ad-Mar only what colors the signs should be and did not “specify RE/MAX white and blue or red and blue.” The defendants contend that Ad-Mar, not Abraham, wrote “R/M” on the invoice. (Docket Entry No. 55-5 at 130, 313).

Because the defendants are the nonmoving party, this court may not consider the credibility of Abraham’s testimony for the purposes of deciding this motion. Reeves v. Sanderson Plumbing Products, Inc., 530 U.S. 133, 150, 120 S.Ct. 2097, 147 L.Ed.2d 105 (2000). The record does not permit the conclusion that, as a matter of law, the defendants acted with the intent to deceive. The fact that the “Trend Setter” name is displayed in very large bold letters across the white portion of the signs weighs in the defendants’ favor. See Skechers U.S.A., Inc. v. Vans, Inc., 2007 WL 4181677, *8 (C.D.Cal. Nov. 20, 2007) (“[Although Skechers does not deny that it knew of the Vans design when it designed its shoes, the clear labeling of the accused shoes with Skechers’ brand negates any inference of intent to trade on Vans’ mark.”).

An intent to mislead is not required for a finding of infringement. “If the defendant acted in good faith, then this digit of confusion becomes a non-factor in the likelihood-of-confusion analysis.” Elvis Presley Enters., 141 F.3d at 203. This factor favors neither party.

(7) Actual Confusion

“Although evidence of actual confusion is not necessary to a finding of likelihood of confusion, it is nevertheless the best evidence of likelihood of confusion.” Amstar, 615 F.2d at 263 (citing Roto-Rooter Corp. v. O’Neal, 513 F.2d 44, 46 (5th Cir.1975)). A plaintiff may show actual confusion using anecdotal instances of consumer confusion, systematic consumer surveys, or both. Compare Moore Bus. Forms, Inc. v. Ryu, 960 F.2d 486, 491 (5th Cir.1992) with Scott Fetzer Co. v. House of Vacuums, Inc., 381 F.3d 477, 486 (2004) (citations omitted). RE/MAX relies on survey evidence. (Docket Entry No. 47).

RE/MAX and Trend Setter have concurrently used their marks in connection with providing real estate services in the Houston area since at least March 2005. (Docket Entry No. 55 at 6). Abraham may have been using similar signs on behalf of Realty, Etc. as early as 1998. (Docket Entry No. 45-7 at 3). By the end of 2005, Trend Setter had between 150 and 200 agents advertising their real estate brokerage services using red, white, and blue Trend Setter yard signs. (Docket Entry No. 45 at 10). By mid-2008, Trend Setter had approximately 700 agents. (Id.) RE/MAX does not include evidence of actual incidents of confusion. The absence of such evidence, despite at least 24 months of concurrent use in a similar geographic area, must be considered. See Oreck Corp., 803 F.2d at 173 (“In light of the concurrent use of the [marks] for seventeen months, [plaintiffs] inability to point to a single incident of actual confusion is highly significant.”); see also Amstar, 615 F.2d at 263 (“Indeed, the fact that only three instances of actual confusion were found after nearly 15 years of extensive concurrent sales under the parties’ respective marks raises a presumption against likelihood of confusion in the future.”). But courts also recognize that even if there has been a significant period of concurrent use of the marks, evidence of actual confusion can be “difficult to find ... because many instances are unreported.” Checkpoint Sys., Inc. v. Check Point Software Techs., Inc., 269 F.3d 270, 280 (3d Cir.2001).

To help establish likelihood of confusion, a plaintiff may present survey evidence instead of direct evidence of confusion. Scott Fetzer Co. v. House of Vacuums, Inc., 381 F.3d 477, 486 (2004) (citations omitted). RE/MAX has offered a survey designed and commissioned by Robert Peterson, a professor of marketing at the University of Texas at Austin, editor-in-chief of two major academic marketing journals, author of many articles dealing with research methodology and brand naming, and recipient of several awards for his contributions to marketing research. (Docket Entry No. 47 at ¶¶ 1-4). The survey consisted of 225 individuals in the Houston metropolitan area over 18 years of age and either using, recently having used, or considering the use of a real estate agent or broker to purchase or sell a home. (Docket Entry No. 47 at ¶¶ 7-10). In this survey, 150 individuals were shown a picture of Trend Setter’s red-over-white-over-blue yard sign pitched in front of a house, with “Trend Setter Realty” written across the front in large typeface. (Id.; Docket Entry No. 47-4, Attachment 5). The survey asked a series of open-ended questions regarding what company was being promoted or advertised by the sign. (Docket Entry No. 47 at ¶ 15). Of those participating, 25.3% stated either that: (i) RE/MAX was the company being promoted or advertised by the sign (16.7% of the sample); (ii) the company being promoted or advertised by the sign was affiliated or connected with RE/MAX (7.3%); or (iii) the company being promoted or advertised by the sign would have to get permission or approval from RE/MAX to use the sign (1.3%). (Id. at ¶ 18; Docket Entry No. 47-4 at 7-10). The survey also asked the same questions of a control group of 75 individuals shown a modified Trend Setter sign with the red and blue bars removed but otherwise unchanged. (Docket Entry Nos. 47 at ¶¶ 9, 16, 47-4 at 12). Only 2.7% of these individuals mentioned RE/MAX as the company being promoted by the sign, a figure that is “not statistically different from zero.” (Docket Entry No. 47 at ¶ 20).

A plaintiff submitting a survey must demonstrate that it is an accurate reflection of consumer confusion. Two factors affect the weight given to such surveys: the question format and how the survey is conducted. Holiday Inns, Inc. v. Holiday Out in America, 481 F.2d 445, 447 (5th Cir.1973). Survey questions cannot properly suggest a link between the defendant’s business and the plaintiff, but must permit participants to make their own associations. Scott Fetzer Co., 381 F.3d at 488. And the questions must take into account other factors that might contribute to participants associating the defendant’s mark with the plaintiff. Holiday Inns, 481 F.2d at 448. “For a survey to be valid, ‘the persons interviewed must adequately represent the opinions which are relevant to the litigation’ and ‘include a fair sampling of those purchasers most likely to partake of the alleged infringer’s goods or services.’ ” Scott Fetzer Co., 381 F.3d at 487-88 (quoting Amstar, 615 F.2d at 264). Only when “serious flaws in a survey will make any reliance on that survey unreasonable” and “[n]o reasonable jury could view the proffered survey as evidence of confusion among relevant consumers” should the survey be discounted entirely. Scott Fetzer Co., 381 F.3d at 488.

RE/MAX’s survey meets the criteria for reliability. The survey included a fair sampling of potential real estate brokerage service users. (Docket Entry No. 47 at ¶¶ 7-8). The survey questions did not suggest an affiliation with RE/MAX or a link between RE/MAX and Trend Setter. Instead, the questions asked which company the participants thought was being promoted or advertised by the signs and why. (Id. at ¶ 15). Nor did the survey questions simply ask whether the Trend Setter sign brought any other company to mind. Rather, the survey asked what about the sign elicited the participants’ responses. (Id.).

In addition, RE/MAX has submitted verbatim responses of the 25.3% of those participating who stated either: (i) that RE/MAX was the company being promoted or advertised by the sign; (ii) that the company being promoted or advertised by the sign was affiliated or connected with RE/MAX; or (iii) that the company being promoted or advertised by the sign would have to get permission or approval from RE/MAX to use the sign. (Docket Entry No. 47-4 at 8-10). The survey showed that many of the participants based their responses specifically on the red, white, and blue colors and arrangement of the sign. (Id.). The survey responses also demonstrate that, for at least some participants, the presence of the name “Trend Setter” on the defendants’ signs did not eliminate confusion with RE/MAX. Some respondents thought they saw the name “RE/MAX” on the Trend Setter sign, despite the presence of the words “Trend Setter” in bold face across the middle. (Id. at 8). One participant said that he thought a Trend Setter sign was a RE/ MAX sign because he “remember[ed] seeing an ‘R’ on the top right corner.” (Id.). One participant “saw ReMax (sic) name on the sign.” (Id.).

The defendants do not argue that the survey methodology was flawed or that its results are unreliable. They do not dispute that the survey should be given “appropriate consideration.” (Docket Entry No. 55 at 15). Rather, the defendants argue that even if the survey is accurate, the results do not deserve significant weight because countervailing circumstances lessen their impact and support the contrary position that consumers are not likely to be confused in the marketplace. (Id.).

First, the defendants point out that the survey only shows a 25.3% confusion level and “also unmistakably reveals that 74.7% of the individuals show[n] (sic) the unmodified sign did not believe the company being promoted was RE/MAX.” (Docket Entry No. 55 at 15) (emphasis removed). This argument is unpersuasive. The Fifth Circuit gives strong weight to evidence of actual confusion, holding that “very little proof of actual confusion would be necessary to prove the likelihood of confusion.” World Carpets, Inc. v. Dick Littrell’s New World Carpets, 438 F.2d 482, 489 (1971). Other courts have upheld the finding of a likelihood