Likelihood of confusion Archives - Page 4 of 9

Likelihood of confusion

Up in Smoke: TTAB Dismisses E-Cigarette Opposition, Provides Guidance for Effective Evidence and Testimony

by Sarah Bro | Nov 10, 2022 | Trademarks

In a precedential opinion, the Trademark Trial & Appeal Board (Board) dismissed an opposition filed against an application for registration of a logo mark containing the word “SMOKES,” finding no likelihood of confusion with the opposer’s registered mark SMOK. The Board cited the dissimilarity of the marks and the weakness of the common mark element SMOK, as well as a lack of evidence that the parties’ trade channels overlapped. Shenzhen IVPS Technology Co. Ltd. v. Fancy Pants Products, LLC, Opp. No. 91263919 (Oct. 31, 2022) (precedential) (Goodman, Pologeorgis, English, ATJ). The decision was rendered without a brief, testimony or evidence filed by the trademark applicant.

Fancy Pants Products filed an application to register a logo mark (depicted above) that included the stylized word “SMOKES.” The application record disclaimed “smokes,” meaning that Fancy Pants conceded that the word “smokes” was not inherently distinctive for its applied-for goods: “[c]igarettes containing tobacco substitutes … with a delta-9 THC concentration of not more than 0.3% on a dry weight basis,” i.e., a description for hemp-derived products eligible for federal registration in accordance with the 2018 Farm Bill. Shenzhen IVPS Technology opposed registration of Fancy Pants’ mark on the ground of likelihood of confusion with Shenzhen’s alleged rights in the trademark SMOK. In support of the opposition, Shenzhen pleaded ownership of 11 registered SMOK and SMOK-variant marks for electronic cigarettes, parts and components (among other goods) and related retail services.

Fancy Pants did not take testimony or introduce any evidence during its testimony period, nor did it file a brief. The Board noted, however, that Fancy Pants was not required to make these submissions because Shenzhen bore the burden of proving its entitlement to a statutory cause of action and its trademark “likelihood of confusion” claim by a preponderance of the evidence.

The Board first looked at what trademark rights Shenzhen could properly rely on in the opposition proceeding in view of the rights pleaded. As a result of Shenzhen’s errors in the presentation of its trademark registrations into the record with respect to verifying the current status and title of the registrations, the Board found that 10 of Shenzhen’s 11 pleaded trademark registrations were not properly made of record. Nevertheless, Shenzhen was allowed to rely on common law rights for these 10 SMOK-variant trademarks since Fancy Pants failed to object to Shenzhen’s evidence of common law use.

Having determined the scope of the trademark rights at issue, the Board turned to the issue of priority in Shenzhen’s alleged trademarks. Priority over Fancy Pants’ mark was not at issue with respect to Shenzhen’s one properly pleaded §2(f) trademark registration for the SMOK mark that was made of record (and the goods and services covered thereby). As to Shenzhen’s common law rights in its alleged family of the other 10 SMOK-variant marks, the Board explained that Shenzhen first had to establish that it even owned a “family” of marks—i.e., marks that share a “recognizable common characteristic” [...]

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Don’t Dew It: Second Circuit Cans Likelihood of Confusion Argument

by Vincent Li, PhD | Aug 11, 2022 | Trademarks

The US Court of Appeals for the Second Circuit reversed and vacated a district court’s preliminary injunction grant because the district court erred in assessing the strength of a trademark. RiseandShine Corporation v. PepsiCo, Inc., Case No. 21-2786 (2d Cir. July 22, 2022) (Leval, Chin, Menashi, JJ.)

Rise Brewing began selling canned coffee under the registered mark “RISE” in 2016. The registered mark consists of the word “rise” in large, red, regular capital letters with the words “Brewing Co.” below in a smaller, similar font on a horizontal line. The mark appears on every bottle of Rise Brewing’s canned coffee products.

In March 2021, PepsiCo launched a canned energy drink product under the mark “MTN DEW RISE ENERGY,” which contains the word “rise” on the top of each can, followed by the word “energy” running vertically up its side in a much smaller font and the MTN DEW house mark above the word “rise.”

Rise Brewing filed a complaint for trademark infringement and filed a motion for a preliminary injunction to enjoin PepsiCo from using or displaying the challenged in the market pending trial. The district court granted the motion, finding that Rise Brewing was likely to succeed on the merits regarding likelihood of confusion. PepsiCo appealed.

The Second Circuit explained that the party seeking a preliminary injunction over the use of a trademark can meet the likelihood of success prong of the preliminary injunction standard by showing that a significant number of consumers are likely to be misled or confused as to the source of the products in question. Here, the district court found that there would be a likelihood of reverse confusion—that consumers would mistake Rise Brewing’s coffee products (the prior user) as Mountain Dew products (the subsequent user). The Court disagreed and reversed, finding that the district court erred in the evaluation of the most important factor: strength of the mark.

The strength of a trademark is assessed based on either or both of two components:

The degree to which it is inherently distinctive
The degree to which it has achieved public recognition in the marketplace.

Although the Second Circuit agreed with the district court that the RISE trademark was a suggestive mark, it disagreed on the extent to which it was distinctive. The Court explained that “[t]he district court failed to note that the strong logical associations between ‘Rise’ and coffee represent weakness and place the mark at the low end of the spectrum of suggestive marks.” Because of the legal element in determination of the strength of a given mark, the district court’s mistake constituted a legal error.

The Second Circuit found that the lack of distinctiveness in using the term “rise” to describe coffee products can be [...]

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Holdover Trademark Licensee Status Can’t Do Heavy Lifting on “Exceptionality”

by Brennen Baylor | Aug 4, 2022 | Trademarks

The US Court of Appeals for the Sixth Circuit addressed issues of enhanced remedies in a dispute regarding the sale of weightlifting equipment beyond the expiration of a licensing agreement between the involved parties. Pointing to the different standard required to prove a violation and damages, the Court ultimately reduced a trademark infringement award to about a quarter of the amount initially awarded. Max Rack, Inc. v. Core Health & Fitness, LLC, et al., Case No. 20-3598 (6th Cir. July 14, 2022) (Cole, Rogers, Murphy, JJ.)

In 2006, Max Rack exclusively licensed its patents and trademarks relating to weightlifting racks to Star Trac Strength. Core Health subsequently acquired Star Trac and its licensing agreements. The final patent covering the Max Rack equipment expired on November 21, 2015, thereby terminating the licensing agreements between Max Rack and Core Health. The agreements permitted Core Health to sell any remaining Max Rack units for six months following expiration of the license.

Following expiration of the licensing agreements, Max Rack learned that Core Health failed to update web pages, marketing materials and owner’s manuals to reflect the termination of Core Health’s affiliation with Max Rack. Core Health’s failure to scrub references to “Max Rack” extended to third-party sellers’ websites advertising Core Health’s competing “Freedom Rack” product using the Max Rack name. Core Health also sold 271 more units manufactured as Max Racks after the license expired, 238 of which were sold during the six-month grace period. Of the remaining 33 units, 24 were sold after the six-month window had closed, and nine were alleged to have had their labels changed from Max Rack to Core Health’s Freedom Rack. Core Health further failed to pay Max Rack royalties for any of the 271 sales made after the license expired.

Max Rack brought two federal claims under 15 U.S.C. §§ 1114(1)(a) and 1125(a)(1)(A), alleging trademark infringement and unfair competition. Max Rack also brought three claims under Ohio’s Deceptive Trade Practices Act, alleging that Core Health passed off the Max Rack as its own machine and caused a likelihood of confusion regarding the source of the machine and regarding Core Health’s affiliation with the Max Rack trademark. The jury awarded Max Rack $1 million in damages and $250,000 in Core Health’s profits. Ruling on post-trial motions, the district court overturned the $1 million damages award for lack of evidence of any consumer confusion but enhanced the $250,000 award to $500,000 and further awarded Max Rack attorneys’ fees. Both parties appealed.

The Sixth Circuit sidestepped the fact-laden analysis to determine whether Core Health’s actions created a likelihood of consumer confusion, reasoning that the dispute related to the “holdover licensee.” Citing its own precedent and precedent from the Third, Fifth, Seventh and Eleventh Circuits, the Court applied a much more objective standard, finding that unauthorized use of a licensed trademark by a licensee after the license has expired is by itself sufficient to establish a likelihood of confusion in the mind of the consumer.

Although the Sixth Circuit used [...]

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Drink Up, but Not with Lehman Brand

by Paul Devinsky | Jun 9, 2022 | Trademarks

In the context of an opposition proceeding, the US Court of Appeals for the Federal Circuit upheld a Trademark Trial & Appeal Board (Board) refusal to register a trademark based on likelihood of confusion with a famous but expired mark, notwithstanding the applicant’s assertion of abandonment of the mark by the original registrant. Tiger Lily Ventures Ltd. v. Barclays Capital Inc., Case Nos. 21-1107;- 1228 (Fed. Cir. June 1, 2022) (Lourie, Bryson, Prost, JJ.)

Tiger Lily sought to register the word mark LEHMAN BROTHERS for beer and spirits and for bar services and restaurant services. Barclays, whose Lehman Brothers marks had expired, opposed the applications based on likelihood of confusion. Tiger Lily argued that Barclays had abandoned the mark and filed an opposition to Barclays’ application to register the work mark LEHMAN BROTHERS. The Board sustained Barclays’ oppositions on the grounds of likelihood of confusion and dismissed Tiger Lily’s opposition. Tiger Lily appealed.

Tiger Lily challenged the Board’s decision, arguing that the Board erred in its determination that Barclays did not abandon its rights in the LEHMAN BROTHERS mark and, relatedly, that Barclays established priority with respect to the LEHMAN BROTHERS mark in its own application. Tiger Lily also argued that the Board erred in finding that its proposed mark for beer and spirits and its proposed mark for bar services and restaurant services would cause a likelihood of confusion with Barclays’ LEHMAN BROTHERS mark.

Addressing the issue of abandonment, the Federal Circuit explained that “there are two elements to a claim for abandonment: (1) nonuse; and (2) intent not to resume use,” and “even limited use can be sufficient to avoid a finding that use of a mark has been ‘discontinued.’” The Court noted that Tiger Lily acknowledged that Barclays had used the mark “continuously in the course of winding up the affairs of at least one Lehman Brothers affiliated company” and thus failed to prove nonuse. Whether Lehman Brothers would exist after bankruptcy proceedings ended was immaterial.

On the issue of likelihood of confusion and the DuPont factors, the Federal Circuit found that “because the LEHMAN BROTHERS mark has achieved a high degree of fame, it is afforded a broad scope of protection.” Tiger Lily attempted to draw a distinction between “consumer recognition” as compared with “goodwill” as a factor and argued that it was actually trying to trade on the “bad will” associated with the mark. The Court found “no legal support for [this] subtle distinction.” The Court concluded that “Tiger Lily’s attempts to capitalize on the fame of the LEHMAN BROTHERS mark weighs in favor of finding a likelihood of confusion,” and that the Board’s findings on the remaining factors were supported by substantial evidence.

Wild and Untamed Trademarks: Madrid Protocol Grants Right of Priority as of Constructive Use Date

by Katherine Pappas | Apr 28, 2022 | Trademarks

Addressing for the first time the question of enforceability of a priority of right in a trademark granted pursuant to the Madrid Protocol where the registrant’s actual use in commerce began after the allegedly infringing use, the US Court of Appeals for the Ninth Circuit found that the Madrid Protocol grants priority as of the constructive use date, but to prevail on an infringement action based on that superior right of priority, the registrant must still establish the requisite likelihood of confusion under the Lanham Act. Lodestar Anstalt v. Bacardi & Co., Case No. 19-55864 (9th Cir. Apr. 21, 2022) (Baldock, Berzon, Collins, JJ.)

Under the Madrid Protocol, applicants with trademarks in another country may obtain an “extension of protection” (generally equivalent to trademark registration) in the United States without needing to first use the mark in US commerce. Instead, the grant may be based on an applicant’s declaration of bona fide intent to use its mark in the United States.

In 2000 and 2001, Lichtenstein-based company Lodestar developed a brand of Irish whiskey called “The Wild Geese,” which was marketed in the US as “The Wild Geese Soldiers & Heroes.” Around 2008 and 2009, Lodestar developed the idea for the “Untamed” word marks, and in 2009 the US Patent & Trademark Office (PTO) accepted for filing two applications on behalf of Lodestar seeking extension of protection under the Madrid Protocol for the internationally registered “Untamed” word marks. The PTO published the marks for opposition, then granted the extensions of protection in 2011. In 2013, Lodestar developed a rum under The Wild Geese Soldiers and Heroes brand that used the Untamed word mark on the label. The rum was shown at the April 2013 Rum Renaissance Trade Show in Florida, where consumers sampled the rum. The rum was also featured in print advertisements associated with the trade show. But by June 2013, Lodestar had “decided to park the USA rum project as [it was] getting better returns in other markets.”

In 2012, Bacardi began developing the ad campaign “Bacardi Untameable.” Before launching the campaign, Bacardi ran a trademark clearance search that turned up Lodestar’s “Untamed” trademarks. From 2013 to 2017, Bacardi ran its “Bacardi Untameable” campaign. In response, Lodestar began promoting a then-nonexistent product “Untamed Revolutionary Rum” in an effort “to complement the Wild Geese Rum and also to combat Bacardi’s attempts to take over our Untamed mark.” In January 2015, the first Untamed Revolutionary Rum was sold to US retailers. In August 2016, Lodestar sued Bacardi for trademark infringement, arguing injury based on reverse confusion, as well as associated claims for unfair competition. The district court granted summary judgment in favor of Bacardi. Lodestar appealed.

The Ninth Circuit found that the district court erred on the threshold question of whether Lodestar’s Revolutionary Rum should be considered in the analysis of likelihood of confusion. The district court had found that the relevant products were those existing prior to launch of Bacardi’s campaign (excluding the later-created Revolutionary Rum). The Court found [...]

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Standing Challenge Brews Trouble in Trademark Dispute

by Paul Devinsky | Nov 4, 2021 | Trademarks

Addressing for the first time Article III standing in a trademark case, the US Court of Appeals for the Federal Circuit held that hypothetical future injury is insufficient to establish standing to oppose a trademark application. Brooklyn Brewery Corp. v. Brooklyn Brew Shop, LLC, Case No. 20-2277 (Fed. Cir. Oct. 27, 2021) (Dyk, J.)

Brooklyn Brewery brews and sells craft beers. Brooklyn Brew Shop (BBS) sells beer-making kits and related accessories. Between 2011 and 2016, the Brewery and BBS collaborated on the sale of co-branded beer-making kits. In 2011, BBS obtained a trademark in its name for beer-making kits. In 2014, BBS filed an application to register a mark in its name for several Class 32 goods, including various types of beer and beer-making kits, as well as Class 5 “sanitizing preparations.”

In 2015, the Brewery petitioned for cancellation of BBS’s 2011 trademark registration and filed a notice of opposition to BBS’s 2014 trademark application. The Trademark Trial & Appeal Board (TTAB) denied the petition for cancellation and rejected the opposition. The Brewery appealed.

On appeal, the Federal Circuit first addressed whether the Brewery had standing to appeal the TTAB’s decision. The Court noted that while it “ha[d] not yet had occasion to address Article III standing in a trademark case,” a party appealing a TTAB decision must satisfy both statutory and Article III requirements. The Court held that the Brewery did not have Article III standing to appeal the TTAB’s decision dismissing the opposition with respect to the Class 5 sanitizing preparations because the Brewery did not make or sell sanitizing preparations. The Court found the possibility that the Brewery might someday expand its business to include the sale of sanitizing preparations was not enough to establish the injury-in-fact prong of the Article III standing test. However, the Court found that the Brewery’s past involvement in the sale of co-branded beer-making kits with BBS was sufficient to establish the Brewery’s standing to challenge BBS’s registration and application for Class 32 beer-making kits.

On the merits, the Federal Circuit affirmed the TTAB’s decision with respect to BBS’s 2011 trademark registration. The Court agreed with the TTAB that the Brewery failed to establish inevitable confusion as to the beer-making kits and failed to establish that BBS’s mark was merely descriptive. The Court vacated the TTAB’s decision with respect to the 2014 trademark application, finding that the TTAB erred by not considering whether BBS proved acquired distinctiveness of its application and remanded for further proceedings.

Practice Note: Before seeking review of a TTAB decision in federal court, a party should ensure that it has satisfied the three-part test for Article III standing.

Greek God or Continent? Defining “Confusing Similarity” under the Anti-Cybersquatting Consumer Protection Act

by Thomas DaMario | Sep 2, 2021 | Trademarks

Examining whether a registered mark and a domain name were confusingly similar under the Anti-Cybersquatting Consumer Protection Act (ACPA), the US Court of Appeals for the 11th Circuit affirmed the district court’s grant of summary judgment in favor of the trademark owner because the mark and domains are nearly identical in sight, sound and meaning. Boigris v. EWC P&T, LLC, Case No. 20-11929 (11th Cir. Aug. 6, 2021) (Marcus, J.) (Newsom, J. dissenting). The registered trademark is “European Wax Center” and the domain names in issue are “europawaxcenter.com” and “euwaxcenter.com.”

EWC runs a nationwide beauty brand titled European Wax Center that offers hair removal services and beauty products and also holds a trademark under the same name. Since 2015, EWC sold cosmetics under the marks “reveal me,” “renew me” and “smooth me.” Bryan Boigris has no direct background related to the production of beauty products, but in April 2016, he claimed an intent to begin selling such products and attempted to register trademarks at the US Patent & Trademark Office (PTO) for “reveal me,” “renew me” and “smooth me,” none of which had been used in commerce before by Boigris. Boigris also registered 11 domain names including, “euwaxcenter.com” and “europawaxcenter.com.” Upon discovery of Boigris’s pending applications, EWC filed for its own trademark applications for “reveal me,” “renew me” and “smooth me” and filed an opposition to Boigris’s pending applications at the Trademark Trial and Appeal Board (TTAB). The TTAB sustained the oppositions.

Boigris elected to contest the TTAB’s decision in district court. Specifically, Boigris sought reversal of the TTAB’s decision and an affirmative declaration that he was entitled to register the disputed marks. EWC counterclaimed for an affirmation of the TTAB’s decision as well as declaratory judgment that it had priority rights in the disputed marks, that Boigris’s use constituted infringement under the Lanham Act, damages and an injunction under the ACPA against Boigris’s use of the two domains, “europawaxcenter.com” and “euwaxcenter.com.” EWC moved for summary judgment on all of its claims, which the district court granted. Boigris appealed the ACPA decision only.

Under the ACPA, a trademark holder must prove that: (1) its trademark was distinctive when the defendant registered the challenged domain name; (2) the domain name is identical or confusingly similar to the plaintiff’s trademark and (3) the defendant registered the domain name with a bad faith intent to profit. Boigris challenged the second element only and did not contest that EWC’s trademarks were distinctive or that he registered the domains in bad faith. Specifically, Boigris argued that the issue of whether or not the “European Wax Center” mark and the “europawaxcenter.com” and “euwaxcenter.com” domains are confusingly similar should have been a question for the jury.

The 11th Circuit affirmed the district court’s ruling, determining that no reasonable jury could conclude that Boigris’s domain names are not confusingly similar to EWC’s mark. The Court acknowledged the difference between the Lanham Act’s traditional multi-factor likelihood of confusion test for trademark infringement and the test for confusing similarity, noting [...]

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Texas Hammer Nails Trademark Infringement Appeal

by Joshua Revilla | Sep 2, 2021 | Trademarks

The US Court of Appeals for the Fifth Circuit reversed a district court’s dismissal of an initial confusion trademark complaint, finding that the plaintiff alleged a plausible claim of trademark infringement under the Lanham Act. Adler v. McNeil Consultants, LLC, Case No. 20-10936 (6th Cir. Aug. 10, 2021) (Southwick, J.)

Jim Adler is a personal injury lawyer who trademarked and used several terms, including JIM ADLER, THE HAMMER and TEXAS HAMMER, to market his business, including via keyword advertisements. McNeil Consultants, a personal injury lawyer referral service, purchased keyword ads using Adler’s trademarked terms, which allowed McNeil’s advertisements to appear at the top of any Google search of Adler’s trademarked terms. McNeil’s advertisements used generic personal injury terms, did not identify any particular law firm and clicking on the ads placed a phone call to McNeil’s call center rather than directing the user to a website. The call center used a generic greeting so consumers did not realize with whom they were speaking.

Adler filed suit against McNeil, asserting Texas state law claims as well as trademark infringement under the Lanham Act. McNeil moved to dismiss, arguing that its keyword ads did not create a likelihood of confusion. The district court agreed and dismissed Adler’s complaint. Adler appealed.

To successfully plead a trademark infringement claim under Fifth Circuit law, the holder of a protectable trademark must establish that the alleged infringing use “creates a likelihood of confusion as to source, affiliation, or sponsorship.” To determine whether a likelihood of confusion exists, the Court weighs a non-exhaustive list of several confusion factors, including the similarity of the marks, the similarity of the products, the defendant’s intent and the care exercised by potential consumers.

The Fifth Circuit explained that Adler alleged initial interest confusion, which exists where the confusion creates consumer interest in the infringing party’s services even where no sale is completed because of the confusion. The Court noted that this case presented the first opportunity for the Fifth Circuit to consider initial interest confusion as it pertains to search engine keyword advertising. Relying on Ninth Circuit precedent and parallel reasoning to its own opinions on initial interest confusion in the context of metatag usage, the Court concluded that Adler’s complaint alleged a plausible claim of trademark infringement under the Lanham Act.

The Fifth Circuit noted that initial interest confusion alone is not enough to raise a Lanham Act claim. The Court explained that if a consumer searches TOYOTA and is directed to search results containing a purchased ad clearly labeled as selling VOLKSWAGEN products, a consumer who clicks on the VOLKSWAGEN ad has been distracted, not confused or misled into purchasing the wrong product. Distraction does not violate the Lanham Act. However, the Court explained that where the use of keyword ads creates confusion as to the source of the advertisement—not mere distraction—an infringement may have occurred. Because McNeil’s advertisements were admittedly generic and could have been associated with any personal injury law firm, the Court found that the keyword [...]

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Initial Confusion? Relax, Eighth Circuit Has Your Number

by Paul Devinsky | May 20, 2021 | Trademarks

Addressing a novel issue regarding when confusion must occur for it to be actionable, the US Court of Appeals for the Eighth Circuit concluded that initial-interest confusion was a viable infringement theory. Select Comfort Corp. v. Baxter, Case No. 19-1113 (8th Cir. May 11, 2021) (Melloy, J.)

Select Comfort owns registered trademarks, including “SELECT COMFORT,” “SLEEP NUMBER” and “WHAT’S YOUR SLEEP NUMBER,” for adjustable air mattresses, which it sells online and in stores across the United States. Baxter sells competing air mattresses online and through a call center. Select Comfort brought a suit asserting trademark infringement, trademark dilution and false advertising theories against Baxter. Select Comfort alleged that Baxter used Select Comfort’s registered trademarks in an identical or confusingly similar manner to advertise Baxter’s mattresses and divert consumers to its website and phone lines instead of Select Comfort’s. Select Comfort also alleged that Baxter made false representations about its products and failed to dispel consumer confusion about the products. At trial, Select Comfort pointed to similar terms in Baxter’s online advertising text, graphics and domain addresses, in addition to examples of actual confusion about the products in Baxter’s call-center transcripts.

Earlier in the case, in connection with summary judgment, the district court found that the relevant consumers were sophisticated as a matter of law, and, citing Eight Circuit precedent, rejected application of a theory of initial-interest confusion. The district court instead instructed the jury that in order to prevail on its trademark infringement claim, Select Comfort had to prove likelihood of confusion at the time of purchase. Based on this limiting instruction, the jury rejected Select Comfort’s trademark infringement claims. Select Comfort appealed.

The Eighth Circuit reversed. The Court explained that the district court erred on the availability of an initial-interest confusion as an infringement theory. For trademark infringement claims, the likelihood of confusion test is a fact-intensive inquiry with many factors. However, circuit courts have not definitively agreed on when confusion must exist. Must confusion occur only at the time of ultimate purchase, or can it also exist during pre-sale? The theory of initial-interest confusion involves the latter scenario, namely, when confusion about a product’s ownership causes a customer to have initial interest in the product, even if there is no actual sale at the time of the confusion. Actionable initial infringement protects competitors from getting a free ride on the goodwill of an established mark if a consumer falsely infers an affiliation between the companies.

In the precedential 2010 Eighth Circuit case Sensient Techs. v. Sensory Effects Flavor, the Court neither rejected nor adopted the initial-interest/pre-sale confusion theory. Instead, it merely found that the theory did not apply where consumers were sophisticated (i.e., where they exercise a high degree of care in purchasing products, a factor weighing against likelihood of confusion). Here, influenced by Lanham Act amendments and other circuit courts, the Court addressed the issue previously left open: whether the initial-interest confusion may be actionable in the Eighth Circuit in cases where the jury is left to [...]

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Reverse Confusion Suit Not Ironclad, but SmartSync Lives On

by Joshua Revilla | Apr 29, 2021 | Trademarks

In a split decision, the US Court of Appeals for the Ninth Circuit vacated a district court’s summary judgment and remanded the case for trial in an action brought under the Lanham Act in order to resolve material issues of fact on likelihood of confusion/reverse confusion factors that remain in dispute. Ironhawk Technologies, Inc. v. Dropbox, Inc., Case No. 19-56347 (9th Cir. Apr. 20, 2021) (Smith, J.) (Tashima, J., dissenting)

Ironhawk developed computer software designed to transfer data efficiently in “bandwidth-challenged environments” and has marketed the software since 2004 using the name “SmartSync.” Ironhawk registered the SmartSync mark in 2007. In 2017, Dropbox launched a feature entitled “Smart Sync,” which allowed users to see and access files in their Dropbox cloud storage accounts without taking up space on their hard drive. Ironhawk sued Dropbox for trademark infringement and unfair competition in 2018, alleging that that Smart Sync intentionally infringed upon Ironhawk’s SmartSync trademark and was likely to cause confusion among consumers. The district court granted summary judgment in favor of Dropbox, concluding that “a reasonable trier of fact could not conclude that Dropbox’s use of Smart Sync is likely to cause consumer confusion.”

Ironhawk appealed, focusing primarily on its reverse confusion theory of infringement. Reverse confusion occurs where consumers dealing with the holder of the senior mark (Ironhawk) believe they are dealing with the junior (Dropbox). This occurs when someone who is only aware of the well-known junior (Dropbox) comes into contact with the lesser-known senior (Ironhawk) and incorrectly believes the senior is the same as, or affiliated with, the junior user because of the similarity of the two marks.

The Ninth Circuit first defined the relevant consumer market. This issue revolved around whether the relevant market should be limited to Ironhawk’s only active customer, the US Navy, or whether it should include commercial customers. Dropbox argued that the market should be limited to the Navy and that consequently the relevant consumer would be less likely to be confused as to the source or affiliation of SmartSync. In terms of procurement, it was undisputed that the Navy exercised significant care and effort. However, Ironhawk argued that it previously had a commercial customer, and that it actively markets and pursues business with other commercial businesses. The Court held that because Ironhawk had a previous commercial customer and had made recent attempts to acquire more commercial accounts, a reasonable jury could include the potential commercial customers in the relevant market.

The Ninth Circuit next turned to the “highly factual inquiry” of the eight Sleekcraft factors: