United States Court of Appeals,
Third Circuit.
CHECKPOINT SYSTEMS, INC., Appellant,
v.
CHECK POINT SOFTWARE TECHNOLOGIES, INC.
No. 00-2373.
Argued April 5, 2001.
Filed Oct. 19, 2001.
Provider of physical asset security products and services for businesses, under trademark "Checkpoint," brought trademark infringement action against provider of computer network security products and services under trademarks "CHECKPOINT" "CheckPoint" and "Check Point." The United States District Court for the District of New Jersey, Jerome B. Simandle, J., found no likelihood of confusion, 104 F.Supp.2d 427. Provider of physical asset security products appealed. The Court of Appeals, Scirica, Circuit Judge, held that: (1) no likelihood of direct marketplace confusion existed; (2) initial interest confusion was de minimis; and (3) computer company failed to establish reverse confusion.
West Headnotes
[1] Trademarks 
1089
(Formerly 382k334.1)
In the
context of trademark infringement, "reverse confusion" occurs when a
larger, more powerful company uses the trademark of a smaller, less powerful
senior owner and thereby causes likely confusion as to the source of the senior
user's goods or services. Lanham
Trade-Mark Act, § 32, as amended, 15
U.S.C.A. § 1114.
[2] Trademarks 1360
(Formerly 382k255)
Trademark
of provider of physical asset security products and services was valid and
incontestable, since it had been registered and continuously used for five
consecutive years and there were no pending proceedings contesting provider's ownership of the mark. Lanham Trade-Mark Act, § 32, as amended,
[3] Trademarks 1081
(Formerly 382k337)
[3] Trademarks
1104
(Formerly 382k337)
In the
context of trademark infringement and unfair competition, the multi-factor test
used to determine likelihood of confusion between noncompeting goods should
also be applied in cases involving directly competing goods. Lanham Trade-Mark
Act, § § 32, 43(a), as amended, 15
U.S.C.A. § § 1114, 1125(a).
[4] Trademarks 1420
(Formerly 382k462)
[4] Trademarks 1421
(Formerly 382k332)
To prove
trademark infringement and unfair competition under the Lanham Act, a plaintiff
must prove that: (1) it owns the
trademark at issue; (2) the mark is
valid and legally protectable; and (3)
defendant's use of the mark to identify goods or services is likely to create
confusion. Lanham Trade-Mark Act, §
§ 32, 43(a), as amended, 15
U.S.C.A. § § 1114, 1125(a).
[5] Trademarks 1084
(Formerly 382k334.1)
To prove
likelihood of confusion in a trademark infringement and unfair competition
case, a plaintiff must show that consumers viewing the mark would probably
assume the product or service it represents is associated with the source of a
different product or service identified by a similar mark. Lanham Trade-Mark Act, § § 32, 43(a), as amended, 15
U.S.C.A. § § 1114, 1125(a).
[6] Trademarks 1081
(Formerly 382k363.1, 382k340.1,
382k334.1, 382k333)
The
relevant standards on likelihood of confusion in noncompeting goods cases,
commonly known as the Lapp factors are: (1) the degree of similarity
between the owner's mark and the alleged infringing mark; (2) the strength of
the owner's mark; (3) the price of the goods and other factors indicative of
the care and attention expected of consumers when making a purchase; (4) the
length of time the defendant has used the mark without evidence of actual
confusion; (5) the intent of the defendant in adopting the mark; (6) the
evidence of actual confusion; (7) whether the goods, though not competing, are
marketed through the same channels of trade and advertised through the same
media; (8) the extent to which the targets of the parties' sales efforts are
the same; (9) the relationship of the goods in the minds of consumers because
of the similarity of functions; and (10)
other facts suggesting that the consuming public might expect the prior owner
to manufacture a product in the defendant's market or that he is likely to
expand into that market. Lanham
Trade-Mark Act, § § 32, 43(a), as
amended, 15
U.S.C.A. § § 1114, 1125(a).
[7] Trademarks 1081
None of
the relevant standards on likelihood of confusion in noncompeting goods cases,
commonly known as the Lapp factors, are determinative and each factor
must be weighed and balanced one against the other. Lanham Trade-Mark Act, § § 32, 43(a), as amended, 15
U.S.C.A. § § 1114, 1125(a).
[8] Trademarks 1086
(Formerly 382k596)
[8] Trademarks
1092
(Formerly 382k596)
[8] Trademarks
1112
(Formerly 382k596)
No
likelihood of direct marketplace confusion existed in computer software
company's use of term "check point" in the marketing of its products;
although term "checkpoint" was
registered trademark of physical article security provider and there was
initial interest confusion, mark's strength was not strong in computer network
access security market and markets in which each party was engaged were not
converging, consumers exercised heightened degree of care in evaluating the
products and making purchasing decisions, and there was
no
evidence of actual customer confusion.
Lanham Trade-Mark Act, § § 32,
43(a), as amended, 15
U.S.C.A. § § 1114, 1125(a).
[9] Trademarks 1097
(Formerly 382k340.1)
[9] Trademarks
1098
(Formerly 382k340.1)
[9] Trademarks
1112
(Formerly 382k340.1)
When
determining the degree of similarity between the owner's trademark and the alleged infringing mark, courts attempt to move
into the mind of the roving consumer, and determine whether the labels create
the same overall impression when viewed separately; courts must compare the
appearance, sound and meaning of the marks to determine whether the average
consumer, on encountering one mark in isolated circumstances of marketplace and
having only a general recollection of the other mark, would likely confuse or
associate the two. Lanham Trade-Mark Act, § §
32, 43(a), as amended, 15
U.S.C.A. § § 1114, 1125(a).
[10] Trademarks 1095
(Formerly 382k340.1)
Trademark
similarity is not necessarily determinative of likely confusion. Lanham Trade-Mark Act, § § 32, 43(a), as amended, 15
U.S.C.A. § § 1114, 1125(a).
[11] Trademarks 1033
(Formerly 382k10)
The strength of a trademark is determined
by the distinctiveness or conceptual strength of the mark and its commercial
strength or marketplace recognition; under distinctiveness, a court looks at
the inherent features of the mark. Lanham Trade-Mark Act, § § 32, 43(a), as amended, 15
U.S.C.A. § § 1114, 1125(a).
[12] Trademarks 1033
(Formerly 382k25, 382k24,
382k23, 382k13)
Trademarks
protected under the Lanham Act are divided into four categories: (1) arbitrary
or fanciful marks that use terms that neither describe nor suggest anything
about the product, e.g., they bear no logical or suggestive relation to the
actual characteristics of the goods; (2) suggestive marks that require consumer
imagination, thought or perception to determine what the product is; (3)
descriptive terms that forthwith convey an immediate idea of the ingredients,
qualities or characteristics of the goods; and (4) generic marks that function
as the common descriptive name of a product class. Lanham Trade-Mark Act, § § 32, 43(a), as amended, 15
U.S.C.A. § § 1114, 1125(a).
[13] Trademarks 1033
(Formerly 382k25, 382k24, 382k23,
382k13)
While
generic marks do not receive trademark protection, arbitrary, suggestive and
descriptive marks with a demonstrated secondary meaning are entitled to trademark protection. Lanham Trade-Mark Act, § § 32, 43(a), as amended, 15
U.S.C.A. § § 1114, 1125(a).
[14] Trademarks 1037
(Formerly 382k331)
Trademarks
that are merely descriptive, e.g., without a secondary meaning, are generally
weak and not entitled to strong protection.
Lanham Trade-Mark Act, § § 32,
43(a), as amended, 15
U.S.C.A. § § 1114, 1125(a).
[15] Trademarks 1037
A
trademark is descriptive with a secondary meaning when the mark is interpreted
by the consuming public to be not only an identification of the product or
services, but also a representation of the origin of those products of
services; in general, a "secondary meaning" is established through
extensive advertising which creates in the minds of consumers an association
between the mark and the provider of the services advertised under the mark.
Lanham Trade-Mark Act, § § 32, 43(a), as
amended, 15
U.S.C.A. § § 1114, 1125(a).
[16] Trademarks 1033
(Formerly 382k331)
In a
trademark infringement and unfair competition case, courts must look at the
strength of the mark in the industry in which infringement is alleged. Lanham
Trade-Mark Act, § § 32, 43(a), as
amended, 15
U.S.C.A. § § 1114, 1125(a).
[17]
Trademarks 1112
(Formerly 382k336)
In a
trademark infringement and unfair competition case, if there is evidence that
both average consumers and specialized commercial purchasers buy goods, there
is a lower standard of care because of the lack of sophistication of some of
the relevant purchasers. Lanham
Trade-Mark Act, § § 32, 43(a), as
amended, 15
U.S.C.A. § § 1114, 1125(a).
[18] Trademarks 1437
(Formerly 382k595)
Evidence
of a party's intentional use of another party's trademark to cause confusion is
not a prerequisite to proving a Lanham Act violation. Lanham Trade-Mark Act, § 1 et seq., as amended, 15
U.S.C.A. § 1051 et seq.
[19] Trademarks 1102
(Formerly 382k363.1)
When evaluation the relationship of goods
in the minds of consumers because of the similarity of product functions in a
trademark infringement and unfair competition case, courts examine whether
buyers and users of each parties' goods are likely to encounter the goods of
the other, creating an assumption of common source affiliation or sponsorship;
the test is whether the goods are similar enough that a customer would assume
they were offered by the same source.
Lanham Trade-Mark Act, § § 32,
43(a), as amended, 15
U.S.C.A. § § 1114, 1125(a).
[20] Trademarks 1104
(Formerly 382k365)
Computer
software company's use of integration technology was not evidence that computer
software industry was moving into market of physical article security provider,
in trademark infringement and unfair competition lawsuit; although computer
software company's technology could be integrated with other technology,
including but not limited to physical security technology, it was not
necessarily proof that computer software company was moving into broader
security realms. Lanham Trade-Mark Act,
§ § 32, 43(a), as amended, 15 U.S.C.A.
§ § 1114, 1125(a).
[21] Trademarks 1104
(Formerly 382k363.1)
The
analysis of the "relatedness" of goods in the minds of consumers
because of the similarity of product functions is intensely factual since goods
may fall under the same general product category but operate in distinct
niches; when two products are part of distinct sectors of a broad product
category, they can be sufficiently unrelated that consumers are not likely to
assume the products originate from the same mark. Lanham Trade-Mark Act, § § 32, 43(a), as amended, 15
U.S.C.A. § § 1114, 1125(a).
[22] Trademarks 1110
(Formerly 382k363.1)
When
evaluating the extent to which the parties' goods are marketed through the same
channels of trade in a trademark infringement and unfair competition case,
courts must examine the trade exhibitions, publications and other media the parties use in marketing their products as well
as the manner in which the parties use their sales forces to sell their
products to consumers; this is a fact intensive inquiry. Lanham Trade-Mark Act, § § 32, 43(a), as amended, 15
U.S.C.A. § § 1114, 1125(a).
[23] Trademarks 1104
(Formerly 382k363.1)
[23]
Trademarks 1137(1)
(Formerly 382k363.1)
One of the
chief reasons for granting a trademark owner protection in a market not his own
is to protect his right someday to enter that market; when it appears extremely
likely that the trademark owner will soon enter the defendant's field,
injunctive relief is favored. Lanham
Trade-Mark Act, § § 32,
43(a), as
amended, 15
U.S.C.A. § § 1114, 1125(a).
[24] Trademarks 1104
When
evaluating evidence of converging markets in a trademark infringement and
unfair competition case, a court looks not only to evidence that a plaintiff
has actually moved into the defendant's market, but also to other facts
suggesting that the consuming public might expect the prior owner to manufacture
a product in the defendant's market, or that it is likely to expand into that
market; courts look to evidence that other companies sell products in both
markets, as well as evidence that the products at issue are so closely related
that the consuming public might find it natural for one company to do so. Lanham Trade-Mark Act, § § 32, 43(a), as amended, 15
U.S.C.A. § § 1114, 1125(a).
[25] Trademarks 1629(2)
(Formerly 382k596)
In a
trademark infringement and unfair competition case, evidence of actual
confusion is not required to prove likelihood of confusion, but evidence of
actual confusion may be highly probative of the likelihood of confusion. Lanham
Trade-Mark Act, § § 32, 43(a), as
amended, 15
U.S.C.A. § § 1114, 1125(a).
[26] Trademarks 1609
(Formerly 382k571.1)
In a
trademark infringement and unfair competition case, if a defendant's product
has been sold for an appreciable period of time without evidence of actual
confusion, one can infer that continued marketing will not lead to consumer
confusion in the future; the longer the challenged product has been in use, the
stronger this inference will be. Lanham
Trade-Mark Act, § § 32, 43(a), as
amended, 15
U.S.C.A. § § 1114, 1125(a).
[27] Trademarks 1088
(Formerly 382k334.1)
Initial
interest confusion is actionable under the Lanham Trademark Act.
Lanham
Trade-Mark Act, § 1 et seq., as amended,
15
U.S.C.A. § 1051 et seq.
[28] Trademarks 1088
(Formerly 382k334.1)
Initial
interest confusion is probative of a Lanham Trademark Act violation. Lanham Trade-Mark Act, § 1 et seq., as amended, 15
U.S.C.A. § 1051 et seq.
[29] Trademarks 1088
(Formerly 382k334.1)
Congress's
amendment of the Lanham Act in 1962 expanded trademark protection to include
instances in which a mark creates initial interest confusion. Lanham Trade-Mark Act, § 1 et seq., as amended, 15
U.S.C.A. § 1051 et seq.
[30] Trademarks 1088
(Formerly 382k334.1)
Product
relatedness and level of care exercised by consumers are relevant factors in
determining initial interest confusion under the Lanham Trademark Act. Lanham Trade-Mark Act, § 1 et seq., as amended, 15
U.S.C.A. § 1051 et seq.
[31] Trademarks 1088
(Formerly 382k334.1)
The
probative value of initial interest will vary, and must be determined on a case
by case basis; as with all cases involving the likelihood of confusion under
the Lanham Trademark Act, courts should employ all the relevant Lapp
factors and weigh each factor to determine whether in the totality of the
circumstances marketplace confusion is likely.
Lanham Trade-Mark Act, § 1 et
seq., as amended, 15
U.S.C.A. § 1051 et seq.
[32] Trademarks 1088
(Formerly 382k350.1)
Initial
interest confusion was de minimis, for purpose of court's evaluation of actual
confusion in computer software company's use of term "check point,"
in lawsuit by physical article security provider alleging violation of its
"checkpoint" trademark; although there was a handful of misdirected
telephone calls and e-mails and other
anecdotal evidence of mistaken consumer inquiries, they were not significant
given the size of the companies, and the large number of e-mails, customer
inquiries, and other communications they receive on a daily basis. Lanham Trade-Mark Act, § § 32, 43(a), as amended, 15
U.S.C.A. § § 1114, 1125(a).
[33] Trademarks 1089
(Formerly 382k596)
[33]
Trademarks 1110
(Formerly 382k596)
[33]
Trademarks 1112
(Formerly 382k596)
Computer
software company, as junior user of term "check point," failed to
establish reverse confusion against physical article security provider, as
senior user and owner of "checkpoint" trademark, on basis that mark
of junior user had become so strong in the
relevant market that the consuming public might assume that junior user was
actually the source of senior user's products, since there was a significant
level of distinctiveness of the relevant markets and a high level of care was
ordinarily exercised during purchasing decisions that substantially lessened
any likelihood of confusion. Lanham Trade-Mark Act, § § 32, 43(a), as amended, 15
U.S.C.A. § § 1114, 1125(a).
[34] Trademarks 1089
(Formerly 382k334.1)
In a
"direct confusion" case, the consuming public may assume that the
established, senior user is the source of the junior user's goods, but in a
"reverse confusion" case, the consuming public may assume the
converse, that is, that the junior, but more powerful, mark user is the source
of the senior user's products, and consequently, the harm to the senior user is
not just that its goodwill is appropriated, but that the value of its mark is
diminished; the fundamental issue in both cases, however, is whether the
consuming public is likely to be confused about the source of products of the
respective mark users. Lanham Trade-Mark
Act, § § 32, 43(a), as amended, 15
U.S.C.A. § § 1114, 1125(a).
[35] Trademarks 1101
(Formerly 382k334.1)
The proper
inquiry in a reverse confusion claim is whether consumers will assume the
senior user's goods are associated with the junior user, and consequently, just
as in a direct confusion claim, the relatedness of the parties' products is
integral to the finding of likely confusion; if two products are unrelated,
there is little reason to assume confusion since most consumers would not
assume that a single company would market two completely unrelated products,
but on the other hand, when the goods are related, a customer might reasonably
assume the junior user with a strong market presence would sell both
products. Lanham Trade-Mark Act, §
§ 32, 43(a), as amended, 15
U.S.C.A. § § 1114, 1125(a).
[36] Trademarks 1089
(Formerly 382k363.1)
[36] Trademarks 1104
(Formerly 382k363.1)
In a
trademark infringement and unfair competition case, product relatedness is a
very important factor to finding that a consumer might confuse the source of
products in order to find reverse confusion even though there is no requirement
that the goods directly compete. Lanham
Trade-Mark Act, § § 32, 43(a), as
amended, 15
U.S.C.A. § § 1114, 1125(a).
[37] Trademarks 1092
(Formerly 382k334.1)
In a
typical direct confusion claim, the stronger the senior user's trademark, the
greater the likelihood of confusion caused by a junior user's use of a similar
mark, but in a reverse confusion situation, the senior user's claim may be
strengthened by a showing that the junior user's mark is commercially
relatively strong; the greater relative strength of the junior mark allows the
junior user to overwhelm the marketplace, diminishing the value of the senior
user's mark. Lanham Trade-Mark Act, §
§ 32, 43(a), as amended, 15
U.S.C.A. §
§ 1114, 1125(a).
[38] Trademarks 1092
(Formerly 382k334.1)
When
considering reverse confusion in a trademark infringement and unfair
competition case, while analysis of the strength of the senior user's mark is
relevant, the more important inquiry focuses on the junior user's mark; the
lack of commercial strength of the smaller senior user's mark is to be given
less weight in the analysis because it is the strength of the larger, junior
user's mark which results in reverse confusion, consequently, courts should
look at the commercial strength of the junior user's mark to determine whether
its advertising and marketing has resulted in a saturation in the public
awareness of the junior user's mark.
Lanham Trade-Mark Act, § § 32,
43(a), as amended, 15
U.S.C.A. § § 1114, 1125(a).
[39] Trademarks 1101
(Formerly 382k334.1)
Reverse confusion is most likely in
trademark infringement and unfair competition cases involving competing or
related products because when products are related, consumers may be likely to
assume they are produced by the same company, but when not related, the
likelihood of confusion diminishes dramatically. Lanham Trade-Mark Act, § § 32, 43(a), as amended, 15
U.S.C.A. § § 1114, 1125(a).
[40] Trademarks 1081
(Formerly 382k334.1)
When a
reviewing court determines that almost all the relevant standards on likelihood
of confusion in noncompeting goods cases, known as the Lapp factors,
favor one party, it may discount one factor.
Lanham Trade-Mark Act, § § 32,
43(a), as amended, 15
U.S.C.A. § § 1114, 1125(a).
Trademarks
1800
(Formerly 382k736)
CHECKPOINT.
*276
Roberta Jacobs-Meadway, (Argued) Akin, Gump, Strauss,
Hauer & Feld, Philadelphia, PA, Attorney for Appellant.
Bruce
P. Keller, (Argued) Debevoise & Plimpton, New
York, NY, Attorney for Appellee.
Before SCIRICA, AMBRO and JOHN
R. GIBSON, [FN*] Circuit
Judges.
FN* The Honorable John
R. Gibson, United States Circuit Judge for the
Eighth Judicial Circuit, sitting by designation.
OPINION OF THE COURT
SCIRICA, Circuit Judge.
In this Lanham Act case, plaintiff Checkpoint
Systems, Inc. alleges Check Point Software Technologies, Inc. infringed on its
trademark and engaged in unfair competition in violation of 15
U.S.C. § § 1114, 1125(a). Finding no likelihood of confusion between Checkpoint
Systems's and Check Point Software's marks, the District Court found no Lanham
Act violation. We will affirm.
I.
A.
Plaintiff Checkpoint Systems, Inc. has been
manufacturing and distributing commercial electronic security control systems
since 1967. [FN1] Its devices are designed to track the
physical location of goods and are sold to retailers to prevent merchandise
theft. It is one of the two dominant
manufacturers in the retail security products market. Since 1967 Checkpoint Systems has used the
"CHECKPOINT" mark, which is registered with the United States
Trademark office. [FN2]
FN1. Our recitation
of the facts will be brief. A more
detailed discussion may be found in the District Court opinion. Checkpoint
Sys., Inc. v. Check Point Software Techs., Inc.,
104 F.Supp.2d 427 (D.N.J.2000).
FN2. Over
thirty-three years of business, Checkpoint Systems has acquired several other
companies and after each acquisition it has changed the marks of these
companies to Checkpoint Systems.
Checkpoint Systems primarily sells four types
of security monitoring devices: (1)
electronic article surveillance systems;
(2) access control systems; (3)
closed circuit television systems; and
(4) radio frequency identification devices.
Its principal and most successful products are electronic article
surveillance systems designed to alert retailers when items are removed from confined areas. Primarily used to prevent theft of merchandise
from stores and books from libraries, these systems consist of circuited tags,
electronic sensors, and deactivation equipment. The systems work by placing circuited tags
on merchandise which are deactivated at the time of sale. If the tags are not deactivated, an alarm
sounds. Electronic article surveillance
systems cost between $2000 and $5000, plus the cost of individual tags. A large retail chain, including many of
Checkpoint Systems's current clients, may spend over $20 million a year on this
technology.
Checkpoint Systems also manufactures
electronic access control systems in the form of security cards that permit
selected personnel to have access to restricted areas. Checkpoint Systems intends to use these
electronic access control systems to make "smart cards" that will
enable log-on access to computers and will facilitate monitoring of physical
access to restricted areas. This
product was in the development stage when this lawsuit commenced.
Checkpoint Systems also sells closed circuit
television systems that monitor activity *277 within confined areas and
transfer data to remote locations for employee audit and inventory management
security teams. Although these systems
currently transfer data and images over traditional telephone lines, Checkpoint
Systems intends to transfer this data over customers' computer networks. These closed circuit products can be
integrated with other computer systems, including other security application
programs.
In
1997, Checkpoint Systems began developing radio frequency identification
devices with the view to creating "intelligent tags" for merchandise
to carry information on "merchandise history." This radio technology
would permit greater information storage than currently available on
traditional bar code technology. These
systems cost from $80,000 to $140,000.
The sale of electronic article surveillance
systems to retail, industrial, institutional and government users comprises 90%
of Checkpoint Systems's business.
Revenues for article surveillance systems amounted to $365-380 million
in 1999; revenues for access control
systems were $15 million. Checkpoint
Systems's electronic article surveillance systems have a 30% market share, but
its systems dominate the drug store segment with a 70% market share. Its largest competitor is Sensormatic
Electronic Corporation, which has a 45% share of the overall market.
Checkpoint Systems promotes its products
primarily through its direct sales force, trade shows, direct mailings to
security systems dealers and its internet website. It spends $8 million annually on advertising
and marketing. The trade shows in which
it advertises are targeted to security professionals and retailers. Checkpoint Systems concentrates its print
advertising in two magazines: Security [FN3] and Today's Facility Manager.
FN3. Security
magazine is marketed to security industry specialists and contains information about security
hardware, security management and training issues, and information security.
The "CHECKPOINT" trademark is
displayed prominently on all of Checkpoint Systems's products including all
security tags, sensors, computer screens and access control cards. Checkpoint Systems is a public company whose
stock is traded on the New York Stock Exchange under the symbol
"CKP."
B.
Defendant Check Point Software Technologies,
Inc. writes computer programs that protect and manage access to
information. Check Point Software's
principal product is "firewall" technology. Firewalls are computer systems that prevent
unauthorized internal or external entry into computer networks. Check Point
Software's firewall systems regulate data by acting as a screen between a
business's private computer networks (intranets) and the wider Internet. These systems are sophisticated software
applications that cost $2,999 for a single firewall and hundreds of thousands
of dollars for more complicated systems.
Check Point Software firewall products must be installed and maintained
by computer network information specialists.
At the time Check Point Software was founded
in Israel in 1993, its founders were unaware of Checkpoint Systems. They adopted the "Check Point"
mark because they believed their computer firewall technology, which limited
access to data, resembled military check
points that prevent access to restricted areas.
Check Point Software is recognized as a leader
in the firewall market with 40% of *278 the worldwide market share. In 1997, it expanded its product line beyond
network security products to include "network management products."
This software enables customers to design their own computer network security
programs that can be integrated with Check Point Software programs. Check Point Software also sells
"private networking software" which enables consumers to encrypt
internal data so that outside users in the wider internet community will be
unable to access this data when transmitted over unsecured public channels.
In its promotional materials, Check Point
Software markets itself as active in the corporate security industry. Its products are installed as a part of the
overall network design or "architecture" of a business's computer
system. They are not functional
software applications that can be purchased by a consumer and installed at
will.
Check Point Software uses "Check
Point" as its trade name. It has
used this mark in several manifestations including, "CHECK POINT,"
"Checkpoint," and "CHECKPOINT."
Check Point Software promotes its network
security products through trade shows, direct advertising, educational
seminars, and its web site. The trade shows and seminars in which it advertises are
targeted to the Internet and computer network markets. These exhibitions do not include physical
security manufacturers or their products.
It also advertises in two widely circulated computer trade magazines, PC
Week and Network World. Its
computer security programs are sold predominately to institutional and
corporate clients. Check Point
Software's principal competitors are computer companies like Cisco Systems and
Network Associates. Check Point
Software is a public company whose stock is traded on the NASDAQ under the
symbol "CHKP."
C.
[1] In early 1996, Checkpoint Systems attempted to register
the internet domain name www.checkpoint.com, but discovered it was registered
by Check Point Software. After its
request to discontinue use was rebuffed, Checkpoint Systems filed suit alleging
trademark infringement and unfair competition under the Lanham Act. In a
non-jury trial, the District Court held Check Point Software neither violated
the Lanham Act nor infringed Checkpoint Systems's trademark. Examining likelihood of confusion, the
District Court applied the factors enumerated in Interpace
Corp. v. Lapp, Inc.,
721 F.2d 460, 463 (3d Cir.1983), finding that
only one factor--the strong similarity between the parties' marks--favored
plaintiff Checkpoint Systems. With
respect to the other Lapp factors, the court found the litigants
operated in different and non-competing segments of the broad corporate
security industry and that the level of
consumer care in making purchasing decisions counseled against a finding of
likely confusion. After determining the
parties employed different marketing techniques in different industries, the
court found there was no evidence that the two markets are converging. The court also found the few instances of
misdirected correspondence and "minor degree of investor confusion"
along with the failure to prove the existence of a single instance of a
mistaken purchasing decision based on mark confusion weighed heavily against
finding a Lanham Act violation.
Additionally, the District Court held there was insufficient evidence of
reverse confusion. [FN4]
FN4. As we discuss,
reverse confusion occurs when "a larger, more powerful company uses the
trademark of a smaller, less powerful senior owner and thereby causes likely
confusion as to the source of the senior user's goods or services." Fisons
Horticulture, Inc. v. Vigoro Indus., Inc.,
30 F.3d 466, 474 (3d Cir.1994) (citing Sands,
Taylor & Wood Co. v. Quaker Oats Co.,
978 F.2d 947 (7th Cir.1992)).
*279 In this appeal, Checkpoint Systems
contends the District Court improperly evaluated the Lapp factors in its
likelihood of confusion analysis. In
particular, Checkpoint Systems argues the District Court improperly required
evidence of actual consumer confusion at the point of sale and disregarded evidence of initial interest
and investor confusion.
II.
The District Court had jurisdiction over
plaintiff's Lanham Act claims under 28
U.S.C. § § 1331, 1338(a) and 15
U.S.C. § 1051 et seq. We have jurisdiction
over the final judgment of the District Court under 28
U.S.C. § 1291. We exercise plenary review
over the District Court's legal conclusions concerning the Lanham Act. Express
Servs., Inc. v. Careers Express Staffing Servs.,
176 F.3d 183, 185 (3d Cir.1999), cert. denied,
531
U.S. 1052, 121 S.Ct. 656, 148 L.Ed.2d 559 (2000). We review factual findings on the likelihood
of confusion for clear error. A
& H Sportswear Inc. v. Victoria's Secret Stores, Inc.,
237 F.3d 198, 210 (3d Cir.2000).
III.
[2][3][4][5][6][7][8] Checkpoint Systems alleges Check Point Software engaged in
unfair competition and trademark infringement in violation § § 32 and 43(a) of the Lanham Act when it
adopted the Checkpoint mark. [FN5] To prove trademark infringement and unfair
competition under the Lanham Act, Checkpoint Systems must prove: (1) it owns the Checkpoint mark; (2) the mark is valid and legally
protectable; and (3) Check Point
Software's use of the mark to identify goods or services is likely to create
confusion. Commerce
Nat'l Ins. Servs., Inc. v. Commerce Ins. Agency, Inc.,
214 F.3d 432, 437-38 (3d Cir.2000). Neither party disputes the first two elements. [FN6] The issue on appeal is whether Check *280
Point Software's use of the "CHECKPOINT" mark is likely to create
confusion as to the source of the parties' products. [FN7] Lapp,
721 F.2d at 462 ("The law of trademark
protects trademark owners in the exclusive use of their marks when use by
another would be likely to cause confusion."). To prove likelihood of confusion, plaintiffs
must show that "consumers viewing the mark would probably assume the
product or service it represents is associated with the source of a different product
or service identified by a similar mark."
Scott
Paper Co. v. Scott's Liquid Gold, Inc.,
589 F.2d 1225, 1229 (3d Cir.1978). In Interpace
Corp. v. Lapp, Inc., 721
F.2d 460, 463 (3d Cir.1983), we set forth the
relevant standards on likelihood of confusion in noncompeting goods cases, [FN8] commonly
known as the Lapp factors:
FN5. Section 32 of
the Lanham Act, 15
U.S.C. § 1114, provides:
(1) Any person who shall, without consent of the
registrant--
(a) use 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....
* * *
* * *
shall
be liable in a civil action by the registrant....
Section 43(a) of the Lanham Act, 15
U.S.C. § 1125, provides:
(a)(1) Any person who, on or in connection with any goods
or services ... uses in commerce any word, term, name, symbol, or device, or
any combination thereof, or any false designation of origin, false or
misleading description of fact, or false or misleading representation of fact,
which--
(A) is likely to cause confusion, or to cause mistake, or
to deceive as to the affiliation, connection, or association of such person
with another person, or as to the origin, sponsorship, or approval of his or
her goods, services, or commercial activities by another person ...
* * *
* * *
shall be liable in a civil action by any person who believes
that he or she is is likely to be damaged by such act.
FN6. In Commerce
Nat'l Ins. Servs., Inc., we held, "[I]f the mark at issue is federally
registered and has become incontestable, then validity, legal protectability
and ownership are proved." 214
F.3d at 438 (citing Ford
Motor Co. v. Summit Motor Prods.,
930 F.2d 277, 292 (3d Cir.1991)). Checkpoint Systems's mark has been
registered and continuously used for five
consecutive years and there are no pending proceedings contesting Checkpoint
Systems's ownership of the mark. The
"Checkpoint" mark is therefore valid and incontestable. Fisons,
30
F.3d at 472 n. 7.
FN7. As we recently
held in A & H Sportswear, the relevant inquiry is not whether
consumer confusion is a "possibility," but whether confusion is
"likely." 237
F.3d at 198;
see also Opticians
Ass'n of Am. v. Indep. Opticians of Am.,
920 F.2d 187, 195 (3d Cir.1990) ("Proof of
actual confusion is not necessary;
likelihood is all that need be shown.").
FN8. The multi-factor
test used to determine likelihood of confusion between noncompeting goods
should also be applied in cases involving directly competing goods. A
& H Sportswear,
237 F.3d at 207 ("[W]e conclude that the
factors we have developed in the noncompeting goods context are helpful tools
and should be used to aid in the determination of the likelihood of confusion
in other cases.").
(1) [The] degree of similarity between the owner's mark and
the alleged infringing mark;
(2) the strength of the owner's mark;
(3) the price of the goods and other factors indicative of
the care and attention expected of consumers when making a purchase;
(4) the length of time the defendant has used the mark
without evidence of actual confusion;
(5) the intent of the defendant in adopting the mark;
(6) the evidence of actual confusion;
(7) whether the goods, though not competing, are marketed
through the same channels of trade and advertised through the same media;
(8) the extent to which the targets of the parties' sales
efforts are the same;
(9) the relationship of the goods in the minds of consumers
because of the similarity of functions;
and
(10) other facts suggesting that the consuming public might
expect the prior owner to manufacture a product in the defendant's market or
that he is likely to expand into that market.
None of these factors is determinative in the
likelihood of confusion analysis and each factor must be weighed and balanced
one against the other. Fisons,
30 F.3d at 473 ("[N]ot all factors must be
given equal weight. The weight given to
each factor in the overall picture, as well as the weighing for plaintiff or
defendant, must be done on an individual fact-specific basis."); see
also A
& H Sportswear,
237 F.3d at 215 ("[T]he Lapp test is a qualitative inquiry. Not all factors will be relevant in all
cases; further, the different factors
may properly be accorded different weights depending on the particular factual
setting."). We stated,
[W]here the plaintiff and defendant deal in non-competing
goods or services, the court must look beyond the trademark to the nature of
the products themselves, and to the context in which they are marketed and
sold. The closer the relationship
between the products, and *281 the more similar their sales contexts,
the greater the likelihood of confusion.
As noted, the District Court applied the
appropriate Lapp factors to find there was no likelihood of
confusion. We will address the District
Court's application of each factor. [FN9]
FN9. Our analysis
follows a somewhat different sequence than that employed in Lapp. The
sequence specified in Lapp is not necessary to the
likelihood-of-confusion analysis, and we have found that a slightly different
order better facilitates the analysis of the particular issues presented by
this case.
A. Similarity of
Marks--Lapp Factor (1)
[9] Although the degree of similarity between the owner's mark
and the alleged infringing mark is but one
factor in the multi-factor confusion analysis, we have recognized that when
products directly compete, mark similarity "may be the most important of
the ten factors in Lapp." Fisons,
30 F.3d at 476;
see also A
& H Sportswear,
237 F.3d at 216 ("The single most important
factor in determining likelihood of confusion is mark similarity."). As we held in Versa
Prods. Co. v. Bifold Co. (Mfg.),
50 F.3d 189, 202 (3d Cir.1995), "unless the
allegedly infringing mark ... is substantially similar to the protectable mark
..., it is highly unlikely that consumers will confuse the product sources
represented by the different marks."
"[I]f the overall impression created by marks is essentially the
same, 'it is very probable that the marks are confusingly similar.' " Opticians
Assn. of Am.,
920 F.2d at 195 (quoting J. Thomas McCarthy, 2
McCarthy
on Trademarks and Unfair Competition,
§ 23:7 (2d ed.1984)). In applying this
test, courts attempt to "move into the mind of the roving consumer," A
& H Sportswear,
237 F.3d at 216, and determine "whether the
labels create the same overall impression when viewed separately." Fisons,
30 F.3d at 476;
see also Banff,
Ltd. v. Federated Dep't Stores, Inc.,
841 F.2d 486, 492 (2d Cir.1988). Courts must "compare the appearance,
sound and meaning of the marks," Harlem
Wizards Entm't. Basketball, Inc. v. NBA Props., Inc.,
952 F.Supp. 1084, 1096 (D.N.J.1997), to determine
whether the "average consumer, on encountering one mark in isolated
circumstances of marketplace and having only
[a] general recollection of the other, would likely confuse or associate the
two." Fisons,
30 F.3d at 477-78.
Here, the District Court found Check Point
Software's mark was very similar to Checkpoint Systems's mark. The court noted that "[w]hen the
dominant portions of the two marks are the same and the overall impression
created by the marks is essentially the same 'it is very probable that the
marks are confusingly similar.' " Checkpoint
Sys.,
104 F.Supp.2d at 457-58 (quoting Opticians
Assn. of Am.,
920 F.2d at 195). The court found the dominant portion of each
parties' trademark is the word "Checkpoint." Even though Check Point Software has at
times used the mark in slightly different forms including,
"Checkpoint," "CheckPoint," or "Check Point," the
dominant features of its mark are still the words "check" and
"point." Additionally because
"Systems," "Software," "Technologies," and
"Inc.," are generic or descriptive terms, the District Court found
their addition to the dominant terms "check" and "point"
would not lead the average consumer to disassociate the products. J. Thomas McCarthy, 3
McCarthy
on Trademarks and Unfair Competition,
§ 23:50 (4th ed. 2000)
("The Trademark Board has said that the general rule is that a subsequent
user may not avoid likely confusion by appropriating another's *282
entire mark and adding descriptive or non-descriptive matter to
it."). We agree. The District Court did not clearly err in
finding the overall commercial impression of the parties' marks was confusingly similar.
[10] On appeal, Checkpoint Systems contends the District Court
ignored its finding of mark similarity when it ultimately determined there was
no likelihood of confusion. But mark
similarity is not necessarily determinative of likely confusion, particularly when
the products do not directly compete. A
& H Sportswear,
237 F.3d at 214 ("[W]hen the marks directly
compete ... the factor regarding the similarity of marks may increase in
importance, but it does not eliminate the other factors entirely."); Fisons,
30 F.3d at 473 ("Where the goods or services
are not competing the similarity of the marks is only one of a number of
factors the court must examine to determine likelihood of
confusion."). Here, the District
Court determined that in weighing all the Lapp factors, there was not a
strong likelihood of confusion. We see
no error.
B. Strength of Mark--Lapp Factor (2)
Courts have recognized that
[a] strong trademark is ... one that carries widespread,
immediate recognition that one producer (even if unknown) is associated with
the mark, and so with the product. If a
second comer adopts a mark substantially identical to a strong mark, there is a
correspondingly high likelihood that consumers will mistakenly associate the
newcomer's product with the owner of the strong mark.
[11][12] The strength of a mark is determined by (1) the
distinctiveness or conceptual strength of the mark and (2) its commercial
strength or marketplace recognition. Fisons,
30 F.3d at 478-79. Under distinctiveness, we look at the
inherent features of the mark.
Trademarks protected under the Lanham Act are divided into four
categories:
[1] arbitrary or fanciful marks [that] use terms that
neither describe nor suggest anything about the product; they "bear no logical or suggestive
relation to the actual characteristics of the goods." [2] Suggestive marks [that] require consumer
"imagination, thought or perception" to determine what the product
is.[3] Descriptive terms [that]
"forthwith convey[ ] an immediate idea of the ingredients, qualities or
characteristics of the goods" [and][4] generic marks ... that
"function as the common descriptive name of a product class."
A
& H Sportswear,
237 F.3d at 221-22 (quoting A.J.
Canfield Co. v. Honickman,
808 F.2d 291, 296-97 (3d Cir.1986)).
In Ford Motor Co., we further explained
the categorization of marks stating,
Arbitrary marks are "those words, symbols, pictures,
etc., which are in common linguistic use but which, when used with the goods or
services in issue, neither suggest nor describe any ingredient, quality or
characteristic of those goods or
services." ... Suggestive marks are
virtually indistinguishable from arbitrary marks, but have been defined as
marks which suggest a quality or ingredient of goods.... A mark is considered
descriptive if it describes the "intended purpose, function, or use of the
goods; of the size of the goods, of the
class of users of the goods, or of the end effect upon the user."
930
F.2d at 292 n. 18 (quoting 1 McCarthy, Trademarks
and Unfair Competition at § 11:3-5,
20).
[13][14][15] While generic marks do not receive trademark protection,
arbitrary, suggestive and descriptive marks with a *283 demonstrated
secondary meaning [FN10] are entitled to trademark protection. [FN11]
FN10. But marks that
are merely descriptive (without a secondary meaning) are generally weak and not
entitled to strong protection. A mark
is descriptive with a secondary meaning when the mark
"is interpreted by the consuming public to be not only
an identification of the product or services, but also a representation of the
origin of those products of services."
In general [a secondary meaning] is established through extensive
advertising which creates in the minds of consumers an association between the
mark and the provider of the services advertised under the mark.
Commerce
Nat'l Ins. Serv. Inc.,
214 F.3d at 438 (quoting Scott
Paper Co.,
589 F.2d at 1228); see also Ford
Motor Co.,
930 F.2d at 292 (listing a "non-exclusive
list of factors which may be considered [in determining whether a mark has
achieved a secondary meaning,] includ[ing] the extent of sales and advertising
leading to buyer association, length of use, exclusivity of use, the fact of
copying, customer surveys, customer testimony, the use of the mark in trade journals,
the size of the company, the number of sales, the number of customers, and
actual confusion."); Charles
Jacquin Et Cie, Inc. v. Destileria Serralles, Inc.,
921 F.2d 467, 476 (3d Cir.1990) ("While
consumer surveys are useful, and indeed the most direct method of demonstrating
secondary meaning and likelihood of confusion, they are not essential where, as
here, other evidence exists.").
FN11. In A &
H Sportswear, we recently held,
Although the conceptual strength of a mark is often
associated with the particular category of "distinctiveness" into
which a mark falls (i.e., arbitrary, suggestive, or descriptive), that is not
the only measure of conceptual strength.
This is because the classification system's primary purpose is to
determine whether the mark is protectable as a trademark in the first
place--that is, to determine whether consumers are likely to perceive the mark
as a signifier of origin, rather than as a mere identification of the type of
product. The classification of a mark
as arbitrary, suggestive, or descriptive is
[also] ... used to determine the degree of protection a mark should receive
once protectability has been established.
These two inquiries--whether a mark is, in fact, a trademark, versus how
much protection the mark should receive--are often identical, but they do not
have to be.
The District Court found Checkpoint Systems's
mark was either suggestive or descriptive with a secondary meaning within the
electronic article surveillance market.
We see no error. The mark is
suggestive to the extent it requires consumer imagination to determine that Checkpoint
Systems's security products serve as "check points" to prevent unauthorized
access and theft of merchandise. But
the mark is descriptive insofar as its products serve as checkpoints. That is, they occupy a point at which
customers are checked for stolen merchandise or people are checked for
authorization to access restricted areas.
In either event, the mark has achieved a strong secondary meaning in the
physical article security market.
Checkpoint Systems has spent millions of dollars in advertising its
physical article security systems and the mark has achieved high recognition
among consumers in this market. The
District Court was therefore correct in stating, "Checkpoint [Systems] has
used its name and mark in connection with its electronic article surveillance
products for more than thirty years
continuously, extensively, and in a substantially exclusive manner, and that
long use renders the mark strong within the physical surveillance
field." Checkpoint
Sys.,
104 F.Supp.2d at 458.
The mark has not, however, attained a strong
secondary meaning in other segments of the corporate security market,
particularly in the information technology market. There is no evidence that Checkpoint Systems
spent a substantial amount of resources in advertising in this market, nor is
there any evidence that Checkpoint Systems has achieved mark recognition in *284
this segment of the industry. [FN12] Because Checkpoint
Systems's descriptive mark has not attained a secondary meaning within the
information technology market, it is not conceptually strong within this sector
of the corporate security market. The
District Court found that Checkpoint Systems's mark "may be strong, but
that strength does not appear to extend beyond its own subfield of physical
security with respect to electronic article surveillance." 104
F.Supp.2d at 460. This finding is adequately supported in the
record. Although Checkpoint Systems manufactured other products aside from
physical article surveillance systems, the court found these products
constituted a very small portion of its business. Its mark was not readily recognizable by
consumers outside the electronic article surveillance market and there is
"no evidence that any witness from the information security field had ever
heard of [Checkpoint Systems]." Id.
FN12. As the District Court noted, Checkpoint Systems "did
not present any evidence of a customer survey indicating [its] marks' strength,
and thus there is no direct evidence probative of customer views." 104
F.Supp.2d at 460.'
[16] Plaintiffs claim the District Court erred in its
commercial strength analysis because it undervalued the overwhelming strength
of the Checkpoint Systems mark in the article surveillance market. But the District Court held, properly in our
view, that courts must look at the strength of the mark in the industry in
which infringement is alleged. See,
e.g., Homeowners Group, Inc., 931 F.2d at 1107-08 ("[A mark]
may ... have high recognition which is limited to a particular product or
market segment."); Mead
Data Cent., Inc. v. Toyota Motor Sales, U.S.A., Inc.,
875 F.2d 1026, 1031 (2d Cir.1989) (luxury car
maker could not demonstrate that its powerful mark extended to the completely
unrelated market of legal research tools); IDV
N. Am., Inc. v. S & M Brands, Inc.,
26 F.Supp.2d 815, 824 (E.D.Va.1998) ("A mark
may be strong in the market in which it is used but weak in another market in
which it is not used."). Here, the
alleged infringement extends beyond the physical article security field into
other, broader segments of the security industry, including computer
security. The District Court did not clearly err in finding that Checkpoint
Systems's mark's strength was limited to the physical article security
market. Because the mark was not strong
in the network access security market, it was not entitled to heightened
protection within that market.
C. Factors Indicative of the Care and Sophistication of
Purchasers--Lapp
Factor (3)
When consumers exercise heightened care in
evaluating the relevant products before making purchasing decisions, courts
have found there is not a strong likelihood of confusion. Where the relevant products are expensive,
or the buyer class consists of sophisticated or professional purchasers, courts
have generally not found Lanham Act violations.
Versa
Prods.,
50 F.3d at 204 ("Inexpensive goods require
consumers to exercise less care in their selection than expensive ones. The more important the use of the product,
the more care that must be exercised in its selection."). As a leading treatise notes,
Obviously, the price level of the goods or services is an
important factor in determining the amount of care the reasonably prudent buyer
will use. If the goods or services are
relatively expensive, more care is taken and buyers are less likely to be
confused as to source or affiliation.
3
McCarthy
on Trademarks,
§ 23:95; see also *285Astra
Pharm. Prods., Inc. v. Beckman
Instruments, Inc.,
718 F.2d 1201, 1206-07 (1st Cir.1983) (expensive
health care equipment elevated concern of purchasers). Similarly,
[w]here the relevant buyer class is composed solely of
professional, or commercial purchasers, it is reasonable to set a higher
standard of care than exists for consumers.
Many cases state that where the relevant buyer class is composed of
professionals or commercial buyers familiar with the field, they are
sophisticated enough not to be confused by trademarks that are closely
similar. That is, it is assumed that
such professional buyers are less likely to be confused than the ordinary
consumer.
3
McCarthy
on Trademarks,
§ 23:101; see also Ford
Motor Co.,
930 F.2d at 293 ("Professional buyers, or
consumers of very expensive goods, will be held to a higher standard of
care."); Perini
Corp. v. Perini Constr., Inc.,
915 F.2d 121, 128 (4th Cir.1990) ("[I]n a
market with extremely sophisticated buyers, the likelihood of consumer
confusion cannot be presumed on the basis of the similarity in trade name
alone."); Oreck
Corp. v. U.S. Floor Sys., Inc.,
803 F.2d 166, 173-74 (5th Cir.1986) (business
purchasers of expensive products not likely to confuse goods with similar
marks).
[17] When the purchasing class is mixed, courts normally do not
hold the general class to a high standard of care. Ford
Motor Co.,
930 F.2d at 293 ("When the buyer class is
mixed, the standard of care to be exercised by the reasonably prudent purchaser
will be equal to that of the least sophisticated consumer in the
class."). If there is evidence
that both average consumers and specialized
commercial purchasers buy goods, there is a lower standard of care because of
the lack of sophistication of some of the relevant purchasers. Id. ("Where the buyer class
'consists of both professional buyers and consumers then the issue will center
on the consumers, for confusion within the lowest stratum of reasonably prudent
buyers may give rise to liability even if professional buyers in the market are
not confused.' ") (quoting Worthington
Foods, Inc. v. Kellogg Co.,
732 F.Supp. 1417, 1448 (S.D.Ohio 1990)).
Evaluating the care and sophistication
exercised by consumers of Checkpoint Systems's and Check Point Software's
products, the District Court found,
[B]oth plaintiff's products and defendant's products are expensive. The purchasers of these respective products
are, for the most part, highly sophisticated, and the sale process is
lengthy.... Plaintiff's and defendant's products are not impulse purchases, but
rather are subject to long sales efforts and careful customer decision making.
Checkpoint
Sys.,
104 F.Supp.2d at 460.
We agree.
The consumers of Checkpoint Systems's and Check Point Software's
products place great importance on, and take great care in, purchasing these
products. Checkpoint Systems's
consumers exercise a heightened standard of care in their purchasing decisions
because they need to ensure the article surveillance equipment can be quickly
and easily repaired and is readily available
for new merchandise. Similarly,
purchasers of Check Point Software's firewall technology are highly technical
computer and information specialists that must ensure the software is
compatible with other programs. [FN13] Because the security provided is integral *286
to loss prevention in the one case, and confidentiality of communications in
the other, the products here are essential to the customers' business
needs. Because of the respective
products' importance to their buyers' security needs and their high cost,
consumers take care in making purchasing decisions and are not likely to be
confused by the parties' similar marks.
FN13. Although in
its marketing materials Check Point Software states that its firewall
technology is "designed to be easily installed, configured, and
managed," maintaining this equipment requires specialized expertise beyond
the knowledge of mere technically proficient computer users.
Checkpoint Systems contends that not all the
relevant consumers are sophisticated purchasers and that many "mom and pop
stores," which exercise a lower standard of care, purchase both parties'
products. The District Court acknowledged
these smaller commercial purchasers were part of the relevant consumer class
and adjusted its evaluation of consumer sophistication accordingly.
Because the systems are expensive and require on-going maintenance, the
court found these smaller commercial consumers view the purchase of both
parties' products as an important investment decision. The court also noted that many small
businesses turn to outside experts to assist in the purchase of complicated
computer and article surveillance systems. Additionally, only computer
specialists with significant training can install and make informed purchasing
decisions about Check Point Software's complicated firewall technology. Furthermore, expert witnesses testified that
smaller "mom and pop stores" would likely not have need for the
complicated security software manufactured by Check Point Software.
The District Court properly evaluated the care
exercised by consumers of these products in making purchasing decisions. The evidence supports the finding that the
purchase of both parties' products involve a significant investment and even
smaller commercial consumers exercise a heightened degree of care in evaluating
the products and making purchasing decisions.
We see no clear error.
D. Intent of the Defendant in Adopting the Mark--Lapp
Factor (5)
[18] While evidence of a party's intentional use of another
party's mark to cause confusion is not a prerequisite to proving a Lanham Act
violation, see generally Lois
Sportswear, U.S.A., Inc. v. Levi Strauss & Co.,
799 F.2d 867, 875 (2d Cir.1986), courts have
recognized that evidence of "intentional, willful
and admitted adoption of a mark closely similar to the existing marks"
weighs strongly in favor of finding the likelihood of confusion. National
Football League Props., Inc. v. New Jersey Giants, Inc.,
637 F.Supp. 507, 518 (D.N.J.1986). Here, the District Court found,
"[t]here is no evidence or even inference that defendant chose its name
with plaintiff's name or products in mind." Checkpoint
Sys.,
104 F.Supp.2d at 465. We agree.
E. Relationship of goods in the minds of consumers because of the
similarity of
product functions--Lapp Factor (7)
[19] Under this prong, courts examine whether buyers and users
of each parties' goods are likely to encounter the goods of the other, creating
an assumption of common source affiliation or sponsorship. Fisons,
30 F.3d at 481 ("The question is whether the
consumer might ... reasonably conclude that one company would offer both of
these related products."). The
test is whether the goods are similar enough that a customer would assume they
were offered by the same source. Wynn
Oil Co. v. Thomas,
839 F.2d 1183, 1187 (6th Cir.1988).
Checkpoint Systems contends that both parties
operate in the overlapping business of corporate security. While each serves a different branch of this
broad industry (i.e., Checkpoint Systems primarily focuses *287 on
physical security while Check Point Software focuses on information and
computer security), each is a smaller piece in the overall corporate security
industry. Checkpoint Systems contends that
in the increasingly technical and sophisticated business world, a reasonable
business consumer might believe that Checkpoint Systems, which had developed a
niche in physical article security, had expanded into the computer technology
market. See Dreamwerks
Prod. Group, Inc. v. SKG Studio,
142 F.3d 1127, 1131 (9th Cir.1998)
("[R]elatedness of each company's prime directive isn't relevant. Rather, we must focus on [plaintiff's]
customers and ask whether they are likely to associate the [plaintiff's products]
with [the defendant].").
Checkpoint Systems argues the increasing awareness among security
professionals of both physical and computer information security systems has
led professionals to be cognizant of both companies' products.
[20] Checkpoint Systems also contends it has developed
integrated circuit technology in its radio frequency and closed circuit
television products that allow consumers to link Checkpoint Systems hardware
with their computer systems. It argues
these physical security products employ secure information lines similar to the
firewall products that Check Point Software manufactures. [FN14] On the basis of
these products, it contends its physical security products overlap with
computer and information security products making consumers likely to associate
Checkpoint Systems's mark with Check Point Software's mark. [FN15]
FN14. Checkpoint Systems contends its business has expanded
beyond article surveillance into "electronic access control" products
that help limit access to physical areas where computer software is
located. It also points to its smart
card technology that links computer networking to physical security.
FN15. Checkpoint
Systems also argues that Check Point Software's firewall systems can be linked
with other security systems, including some of the article surveillance
products that Checkpoint Systems manufactures. It contends this integration
technology is evidence that the computer software industry is moving into the
area of physical security by allowing integration with physical security
products. But the mere fact that
software technology can be integrated with other technology, including but not
limited to physical security technology, is not necessarily proof that the
manufacturer of software technology is moving into broader security
realms. By developing technology that
can be integrated with other products, Check Point Software allows consumers to
choose among various "speciality" programs that it wants to include
in its system. It does not necessarily
mean that Check Point Software has itself moved into the market of these
"speciality" security programs.
But
the District Court found the parties
operate in separate and distinct segments of the overall
field of corporate security.
Plaintiff's sphere includes physical security and control of flow of
corporate goods and people.... Defendant's sphere includes electronic
information security on computer networks at the point of connection to the
Internet and within the customer's intranet.
Their products are not substitutes for each other.... [Their products]
are advertised in different magazines and are promoted in entirely different
trade shows.
Checkpoint
Sys.,
104 F.Supp.2d at 466. The court continued,
That there is no overlap in the places these parties market
their products tends to diminish the chance that someone who is a specialist in
network security will even come across an advertisement for plaintiff, and vice
versa.
Id.
[21] The District Court did not clearly err. The "relatedness" analysis is
intensely *288 factual. Goods
may fall under the same general product category but operate in distinct
niches. When two products are part of
distinct sectors of a broad product category, they can be sufficiently
unrelated that consumers are not likely to assume the products originate from
the same mark. See, e.g., Commerce
Nat'l Ins. Servs., Inc.,
214 F.3d at 441 (holding marks held by company
operating in banking industry and company operating in insurance industry did
not create consumer confusion because the two
companies were involved in distinct highly regulated industries); Astra
Pharm. Prods.,
718 F.2d at 1207 (finding no product similarity
in medical technology sold to different departments in hospital because "
'the hospital community' is not a homogeneous whole, but is composed of
separate departments with diverse purchasing requirements, which, in effect,
constitute different markets for the parties' respective products."); Harlem
Wizards,
952 F.Supp. at 1095 (finding no product
similarity between professional competitive basketball team and "show
basketball" team). [FN16]
FN16. Products sold
and marketed in the computer and information technology industry can be
sufficiently distinct that they do not lead to likely consumer confusion. See, e.g., Hasbro,
Inc. v. Clue Computing, Inc.,
232 F.3d 1 (1st Cir.2000) (per curiam) (computer
game and computer consulting service not similar); but see Lambda
Elecs. Corp. v. Lambda Tech., Inc.,
515 F.Supp. 915, 926 (S.D.N.Y.1981) (finding
"moderate product proximity" between computer software and computer
hardware because both products are "intended to function in
computers").
The District Court held that Checkpoint
Systems's products are simply different from Check Point Software's
products. While Checkpoint Systems's
access control, closed circuit television and radio frequency products may employ similar technology, their purpose is
physical article surveillance or personal access. On the other hand, Check Point Software's
firewall technology is not intended to prevent theft of merchandise or limit physical
access. Its purpose is to prevent third
parties from accessing information from unsecure computer lines. Because the products serve different
functions, and there is only "minimal overlap" in the product
technology, it is unlikely consumers would be confused by the similar marks. [FN17] Fisons,
30 F.3d at 481.
The District Court did not clearly err in its application of the product
similarity prong of the confusion analysis.
See, e.g., Nutri/System,
Inc. v. Con-Stan Indus.,
809 F.2d 601, 606 (9th Cir.1987) (weight loss
centers and weight loss counseling differed in methods, customer groups and
facilities); Plus
Prods. v. Plus Disc. Foods, Inc.,
722 F.2d 999, 1008 (2d Cir.1983) (bargain food
and health food were not so similar as to create likelihood of confusion).
FN17. Simply because
large corporations may purchase both Checkpoint Systems's physical article
security systems and Check Point Software's computer security products does not
necessarily prove that the same security professionals within these
corporations have knowledge of these different technologies and are responsible
for purchasing them. Electronic
Design & Sales, Inc. v. Electronic Data Sys. Corp., 954
F.2d 713,
717-18 (Fed.Cir.1992) (overlap must exist among
individual purchasers).
Here, there is no evidence that a single security expert
has sufficient knowledge in both the physical security and information security
realms that he purchases both of these products for his corporation.
F. The extent to
which the parties' goods are marketed through the same
channels of trade--Lapp
Factor (9)
[22] Courts have recognized that "the greater the
similarity in advertising and *289 marketing campaigns, the greater the
likelihood of confusion." Acxiom
Corp. v. Axiom, Inc.,
27 F.Supp.2d 478, 502 (D.Del.1998). Applying this factor, courts must examine
the trade exhibitions, publications and other media the parties use in
marketing their products as well as the manner in which the parties use their
sales forces to sell their products to consumers. This is a fact intensive inquiry. Id.
Here, there is no evidence that a single
security expert has sufficient knowledge in both the physical security and
information security realms that he purchases both of these products for his
corporation.
Here, the District Court found the parties
"products are advertised in different magazines and are promoted in
entirely different trade shows." Checkpoint
Sys.,
104 F.Supp.2d at 466. Checkpoint Systems advertises in trade shows and trade publications that are
marketed to physical and retail security specialists. [FN18] Check Point
Software advertises in publications and at trade shows that are marketed to
computer information specialists. As
the District Court found,
FN18. While
Checkpoint Systems also advertises in security magazines that sometimes contain
advertisements about computer information security (i.e., Security
magazine), these magazines are predominantly marketed to physical security
professionals, and not to information technology specialists.
There is no evidence that plaintiff's products and
defendant's products were offered at the same time in any magazine, trade show,
or distribution network.... That there is no overlap in the places these
parties market their products tends to diminish the chance that someone who is
a specialist in network security will even come across an advertisement for
plaintiff, and vice versa.
Id.
Additionally, Check Point Software's products
are only sold to consumers through its "specialized value added
resellers." These
"resellers" do not sell physical article security systems. On the other hand, consumers can purchase Checkpoint Systems's physical security
products from its direct mailings and product catalogues or through its direct
sales force. For these reasons, the
District Court concluded, "[T]he parties do not market their products
through the same trade channels or markets, and ... their target customers
generally belong to distinctly different groups." Id. at 467. We see no clear error.
G. The extent to which targets of the parties' sales efforts are
the same--
Lapp Factor (8)
We have recognized that when parties target
their sales efforts to the same consumers, there is a stronger likelihood of
confusion. Lapp,
721 F.2d at 463-64. This analysis too is intensely factual.
The District Court found the parties market
their products to different users.
Checkpoint Systems markets its products to physical security
consumers. Check Point Software markets
its products to MIS professionals. Even though many companies often purchase
both types of products, most rely on information specialists to make purchasing
decisions about network security systems, especially since Check Point
Software's firewall systems must be installed as part of the overall
architecture of a business's total computer system. But information specialists are not essential
to make purchasing decisions about physical article security systems.
On the basis of this finding, the court
concluded there is not a strong likelihood
that users and consumers of the parties' products were likely to come across
advertisements *290 about the other party's products. The court stated, "That there is no
overlap in the places these parties market their products tends to diminish the
chance that someone who is a specialist in network security will even come
across an advertisement for plaintiff, and vice versa." Checkpoint
Sys.,
104 F.Supp.2d at 466. The court did not clearly err in its
determination.
H. Evidence of Converging markets--Lapp Factor (10)
[23][24] We have held that evidence that the markets in which the
parties sell their goods are converging is "pivotal in non-competing
products cases." Lapp,
721 F.2d at 463.
"One of the chief reasons for granting a trademark owner protection
in a market not his own is to protect his right someday to enter that
market. When it appears extremely
likely ... that the trademark owner will soon enter the defendant's field, this
... factor weighs heavily in favor of injunctive relief." Id. (internal citation omitted). Under
this factor we look not only to evidence that a plaintiff has actually moved
into the defendant's market, but also to "other facts suggesting that the
consuming public might expect the prior owner to manufacture a product in the
defendant's market, or that it is likely to expand into that market." Id. at 463. Evaluating this factor, courts look to
evidence that other companies sell products in both markets, as well as
evidence that the products at issue are so
closely related that the consuming public might find it natural for one company
to do so. Here, the District Court
found the physical article security market in which Checkpoint Systems sold its
products was not converging with the computer information security market in
which Check Point Software sold its firewall products. Nor would consumers expect that Checkpoint
Systems would naturally expand into the network information security
market. The court stated, "[T]he
weight of the evidence indicates that, if anything, the fields are diverging as
network security becomes more and more specialized, and the interrelatedness of
Internet and intranets becomes more complex." Checkpoint
Sys.,
104 F.Supp.2d at 452. The court noted that some of Checkpoint
Systems's competitors in the physical article security field had attempted to
move into the information security field.
But these competitors had been largely unsuccessful in expanding into
this field thereby
undermin[ing] ... the idea that network security may be
within the zone of natural expansion for companies that once had their focus on
physical security.... Network security ... is a highly specialized field
dominated by companies such as [Check Point Software] which are experts in the
intricacies of electronic networks and the techniques of electronic
intrusion. Nothing in the record
indicates that plaintiff had the requisite expertise or the interest in
achieving entry into [Check Point Software's] field.
Id. at 467 n. 17.
Checkpoint Systems disputes this finding
contending that modern security specialists look to purchase network security
systems that work hand in hand with physical security systems. It argues these specialists recognize that
computer security products are worthless if not physically secure. Consumers, they claim, are likely to assume
that a company that sells products in the physical security market is likely to
expand into the network security market to provide businesses with complete
security packages. But the District
Court found that the increasingly complex market for network security systems
requires expertise to understand evolving technology. Because of *291 the highly
specialized and technical nature of network security systems, consumers would
not likely assume that a company that has operated for over 30 years in the
distinct physical security market would have the expertise to move into the
complicated network security market.
Indeed Checkpoint Systems's own security expert witness testified that
he would turn to a network security professional to assist in the purchase of this
type of equipment because the knowledge required to make an informed purchasing
decision was highly technical and specialized.
Thus, although consumers may require security products from both the
physical security market and the information security market, it is reasonable
to assume they would turn to different companies to purchase these products.
Additionally, there is little evidence that
either party currently operates in both the
physical security and network security markets. On appeal, Checkpoint Systems points to
several of its products, including its physical access control systems, its
"smart card" technology, its radio frequency identification devices,
and its closed circuit television systems as examples of products that operate
in both the physical security and network information security markets. It contends these products employ similar
secure network lines to Check Point Software's network security technology in
order to provide physical article security.
But even though its products employ some overlapping computer
technology, Checkpoint Systems's products are intended to provide physical
article and access security and are sold to consumers looking to purchase
physical security products. Check Point
Software's products are sold to consumers looking to purchase network
information security products. The District Court's finding is supported by the
evidence. We see no clear error.
I. Evidence of actual confusion and the length of time the
defendant has used
the mark without evidence of actual confusion--Lapp Factors
(4),(6)
[25][26] Evidence of actual confusion is not required to prove likelihood
of confusion. Versa
Prods.,
50 F.3d at 205;
Fisons,
30 F.3d at 476 ("[W]hile evidence of actual
confusion would strengthen plaintiff's case, it is not essential."). We have recognized that it is difficult to
find evidence of actual confusion because many instances are unreported. For this reason,
evidence of actual confusion may be highly probative of the likelihood of
confusion. Frisch's
Rests., Inc. v. Elby's Big Boy of Steubenville, Inc.,
670 F.2d 642, 648 n. 5 (6th Cir.1982); see also Tisch
Hotels, Inc. v. Americana Inn, Inc.,
350 F.2d 609, 612 (7th Cir.1965) ("[S]ince
reliable evidence of actual confusion is difficult to obtain in trademark and
unfair competition cases, any such evidence is substantial evidence of
likelihood of confusion.").
"If a defendant's product has been sold for an appreciable period
of time without evidence of actual confusion, one can infer that continued
marketing will not lead to consumer confusion in the future. The longer the challenged product has been
in use, the stronger this inference will be." Versa
Prods.,
50 F.3d at 205.
Here the District Court found, "Though
there is some evidence in the record of temporary initial confusion between the
companies, by experts, the media, investors and consumers, there is no evidence
of actual customer confusion in connection with the purchase of defendant's
products." Checkpoint
Sys.,
104 F.Supp.2d at 447. The court continued stating,
[N]o customer or potential customer for defendant's
products has believed, to any meaningful degree, that the products originated
with the plaintiff. Conversely, *292 of the few customers of plaintiff,
or other persons in the media, who momentarily thought plaintiff might have
entered the firewall business, not one took any meaningful action while under
that mistaken belief.
Id. at 450. The court concluded,
Here, there is some evidence of initial confusion by the
media and investors when defendant first gained success in the stock market,
but that confusion has dissipated, rather than grown, over the years, such that
there appears to have been none in the last few years. Moreover, the significance of such initial
confusion by the media and investors, like initial confusion by consumers, lies
only in assessing whether it supports the conclusion that confusion in consumer
purchasing decision is likely.
Id. at 464. [FN19]
FN19. The court also
stated that "plaintiff has not demonstrated that the incidents of
temporary confusion or other confusion in spheres unrelated to purchasing
activity is a harbinger of likelihood of confusion in purchasing
decisions." Checkpoint
Sys.,
104 F.Supp.2d at 462.
On appeal Checkpoint Systems argues the
District Court erred because it limited its actual confusion inquiry to
evaluating evidence of consumer confusion at the point of sale rather than
according weight to evidence of investor confusion and other initial interest
confusion. It contends the Lanham Act
affords protection against other types of confusion, including initial interest
confusion, investor confusion and post-sale confusion.
[27] Several courts of
appeals have found initial interest confusion and post-sale confusion
actionable under the Lanham Act. We agree and hold initial interest confusion
is actionable under the Lanham Act. We also hold the District Court properly
evaluated the evidence of initial interest confusion and did not clearly err in
finding this evidence did not weigh heavily in favor of finding likely
confusion. We first turn to a
discussion of the relevance of initial interest to Lanham Act claims.
1.
A leading treatise on trademark infringement
states:
[Trademark infringement] can be based upon confusion that
creates initial customer interest, even though no actual sale is finally
completed as a result of the confusion.
* * *
[For example,] the likelihood that a potential purchaser of
a specialized computer program may be drawn to the junior user, thinking it was
the senior user, is actionable "confusion" even if over the course of
several months of the purchasing decision-making process, the buyer's confusion
is dissipated. Such a senior user who is the opposer may suffer injury if a
potential purchaser is initially confused between the parties' respective marks
in that the opposer may be precluded from further consideration by a potential
purchaser in reaching his or her buying decision.
3
McCarthy
on Trademarks and Unfair Competition,
§ 23:6
(internal quotations and footnotes omitted).
Several courts of appeals, including the Second, Seventh, and Ninth
Circuits have found initial interest confusion actionable under the Lanham Act.
In Mobil
Oil Corp. v. Pegasus Petroleum Corp.,
818 F.2d 254 (2d Cir.1987), the United States
Court of Appeals for the Second Circuit found actionable initial interest
confusion when it enjoined the defendant from using the trade name Pegasus
because the name was confusingly similar to the plaintiff's "flying
horse" *293 mark. The court
noted that in the oil industry, companies often attract potential consumers by
making "cold calls" to determine interest in purchasing
products. The court also noted that on
the basis of the similar name and mark, it was likely that "Pegasus Petroleum
would gain crucial credibility during the initial phases of a deal. For example, an oil trader might listen to a
cold phone call from Pegasus Petroleum ... when otherwise he might not, because
of the possibility that Pegasus Petroleum is related to Mobil." Id.
at 259.
Because the similar marks could ultimately affect a consumer's
consideration of the defendant's product as well as affect the plaintiff's
goodwill with its customers, the court found actionable confusion under the
Lanham Act. Id.
at 260 ("[P]otential purchasers would be
misled into an initial interest in Pegasus Petroleum. Such initial confusion works a sufficient
trademark injury."); see also
Lois
Sportswear,
799 F.2d at 867;
Grotrian, Helfferich,
Schulz, Th. Steinweg Nachf v. Steinway and Sons,
365 F.Supp. 707, 717 (S.D.N.Y.1973) ("Misled
into an initial interest, a potential Steinway buyer may satisfy himself that
the less expensive Grotrian Steinweg is at least as good, if not better, than a
Steinway. Deception and confusion thus
work to appropriate [Steinway's] good will."), aff'd, 523
F.2d 1331 (2d Cir.1975).
Similarly in Brookfield
Communications, Inc. v. West Coast Entertainment Corp.,
174 F.3d 1036, 1057 (9th Cir.1999), the United
States Courts of Appeals for the Ninth Circuit recognized that initial interest
confusion is actionable under the Lanham Act.
In Brookfield Communications, plaintiffs alleged that defendant
West Coast Entertainment's use of the web site www.moviebuff.com infringed on
its "MovieBuff" mark.
Brookfield used the "MovieBuff" mark on computer software that
it sold to industry professionals. This
software contained a searchable database of entertainment related data,
including information about film release schedules, box office receipts, films
in development and other entertainment news.
West Coast's "moviebuff.com" website was a free searchable
entertainment database that assisted its consumers in making educated decisions
about the rental and purchase of movies. The website also sold movie and other
entertainment accessories. The court
found actionable confusion under the Lanham Act reasoning:
People surfing the Web for information on
"MovieBuff" may confuse "MovieBuff" with the searchable
entertainment database at "moviebuff.com" and simply assume that they have reached
Brookfield's website.... Alternatively, they may incorrectly believe that West
Coast licensed "MovieBuff" from Brookfield ... or that Brookfield
otherwise sponsored West Coast's database. Other consumers may simply believe
that West Coast bought out Brookfield or that they are related companies.
Yet other forms of confusion are likely to ensue. Consumers may wrongly assume that the
"MovieBuff" database they were searching for is no longer offered,
having been replaced by West Coast's entertainment database, and thus simply
use the services at West Coast's web ste.
And even where people realize, immediately upon accessing
"moviebuff.com," that they have reached a site operated by West Coast
and wholly unrelated to Brookfield, West Coast will still have gained a
customer by appropriating the goodwill that Brookfield has developed in its
"MovieBuff" mark. A consumer
who was originally looking for Brookfield's products or services may be
perfectly content with West Coast's database (especially as it is offered free
of charge); but he reached West Coast's
site because of its use of *294 Brookfield's mark as its second-level
domain name, which is a misappropriation of Brookfield's goodwill by West
Coast.
Id. at 1057 (internal citations
omitted); see also Interstellar
Starship Servs., Ltd. v. Epix Inc.,
184 F.3d 1107, 1110 (9th Cir.1999) ("We
recognize a brand of confusion called 'initial interest' confusion, which permits a finding of a likelihood of confusion
although the consumer quickly becomes aware of the source's actual identity and
no purchase is made as a result of the confusion."), cert. denied, 528
U.S. 1155, 120 S.Ct. 1161, 145 L.Ed.2d 1073 (2000); but see Bryce J. Maynard, Note, The
Initial
Interest Confusion Doctrine and Trademark Infringement on the Internet,
57 Wash & Lee L.Rev. 1303 (urging caution in
finding actionable initial interest confusion on the Internet).
In Elvis
Presley Enters., Inc. v. Capece,
141 F.3d 188 (5th Cir.1998), the United States
Court of Appeals for the Fifth Circuit also recognized initial interest
confusion. The court there found the
plaintiff assignees of the rights of the estate of Elvis Presley were entitled
to injunctive relief against the defendant bar owner's use of the name
"The Velvet Elvis" because it was likely to create confusion. In finding initial interest confusion the
court reasoned,
The witnesses all testified that, upon entering and looking
around the [defendants'] bar, they had no doubt that [plaintiff was] not
affiliated with it in any way. Despite
the confusion being dissipated, this initial-interest confusion is beneficial
to the Defendants because it brings patrons in the door; indeed, it brought at least one of the
[plaintiff's] witnesses into the bar.
Once in the door, the confusion has succeeded because some of the
patrons may stay, despite realizing that the bar has no relationship with [plaintiff].
This initial-interest confusion is even more significant because the
Defendants' bar sometimes charges a cover charge for entry, which allows the
Defendants to benefit from initial-interest confusion before it can be
dissipated by entry into the bar.
Id. at 204.
The United States Court of Appeals for the
Seventh Circuit has equated initial interest confusion to a "bait and
switch scheme." In Dorr-Oliver,
Inc. v. Fluid Quip, Inc.,
94 F.3d 376, 382 (7th Cir.1996), the court
stated,
[T]he Lanham Act forbids a competitor from luring potential
customers away from a producer by initially passing off its goods as those of
the producer's, even if confusion as to the source of the goods is dispelled by
the time any sales are consummated.
This "bait and switch" of producers, also known as
"initial interest" confusion, will affect the buying decisions of
consumers in the market for the goods, effectively allowing the competitor to
get its foot in the door by confusing consumers.
Id. (internal citation omitted); see also Eli
Lilly & Co. v. Natural Answers, Inc.,
233 F.3d 456, 464 (7th Cir.2000) ("[Initial
interest] confusion, which is actionable under the Lanham Act, occurs when a
consumer is lured to a product by its similarity to a known mark, even though
the consumer realizes the true identity and origin of the product before
consummating a purchase.").
[28] We join these circuits in holding that initial interest
confusion is probative of a Lanham Act
violation. [FN20] Without initial*295 interest
protection, an infringer could use an established mark to create confusion as
to a product's source thereby receiving a "free ride on the goodwill"
of the established mark. Mobil
Oil Corp.,
818 F.2d at 260 (likelihood that "potential
purchasers would be misled into an initial interest" justifies finding of
infringement). Confining actionable confusion under the Lanham Act to confusion
present at the time of purchase would undervalue the importance of a company's
goodwill with its customers.
FN20. We note that
several District Courts in our circuit have found initial interest confusion
probative of a Lanham Act violation. See,
e.g., Sunquest
Info. Sys., Inc. v. Park City Solutions, Inc.,
130 F.Supp.2d 680, 695 (W.D.Pa.2000)
("Although the Third Circuit has not directly addressed the issue of
initial interest confusion, the doctrine has been embraced by numerous courts,
including a number of district courts in this Circuit."); Acxiom,
27 F.Supp.2d at 497 ("The court finds that
there is a likelihood of pre-sale confusion.").
[29] Congress recognized the relevance of initial interest
confusion and its effect on a company's goodwill when it amended the Lanham Act
in 1962. In its original form, the
Lanham Act only applied where the use of similar marks was "likely to cause confusion or mistake
or to deceive purchasers as to the source of origin of such goods or
services." Esercizio
v. Roberts,
944 F.2d 1235, 1245 (6th Cir.1991) (quoting 1946
Lanham Act.) (emphasis added). In 1962
Congress deleted the term "purchasers," affording Lanham Act
protection where a mark is "likely to cause confusion or mistake or to
deceive." Id. Several courts
have found the amendment expanded the reach of the Lanham Act beyond mere
purchasers to recognize pre-sale confusion as well as post-sale confusion. See, e.g., id. ("Since Congress intended to protect the
reputation of the manufacturer as well as to protect purchasers, the Act's
protection is not limited to confusion at the point of sale."); Koppers
Co. v. Krupp-Koppers GmbH,
517 F.Supp. 836, 843-44 (W.D.Pa.1981) (holding
Congress intended to broaden the scope of protections with the 1962 Amendment
to the Lanham Act); see also 3 McCarthy
on Trademarks & Unfair Competition, §
23.7 ("In 1962, Congress struck out language in the Lanham Act
which required confusion, mistake or deception of 'purchasers as to the source
of origin of such goods and services.'
Several courts have noted this expansion of the test of infringement and
held that it supports a finding of infringement when even non-purchasers are
deceived."). We agree with the
view that Congress's amendment of the Lanham Act in 1962 expanded trademark
protection to include instances in which a mark creates initial interest
confusion. [FN21]
FN21. The Federal Circuit has interpreted the 1962 amendment to
the Lanham Act differently. In Elec.
Design & Sales, Inc., the court stated,
The legislative history states that the word "purchasers"
was deleted because "the provision actually relates to potential
purchasers as well as to actual purchasers." Therefore, we do not construe this deletion
to suggest, much less compel, that purchaser confusion is no longer the primary
focus of the inquiry. Instead, we
believe that, at least in the case of goods and services that are sold, the
inquiry generally will turn on whether actual or potential
"purchasers" are confused.
954
F.2d at 716 (quoting S.Rep. No. 2107, at 4
(1962), reprinted in 1962 U.S.C.C.A.N. 2844, 2847).
Check Point Software notes that some circuits
have only found "initial interest" confusion probative of likely
confusion when the products at issue are direct competitors or where there is a
strong interrelatedness between the products. [FN22] It *296 claims these circuits have
recognized that initial interest confusion is probative of a Lanham Act
violation when the defendant attempts to use the plaintiff's more recognizable
mark to "get a foot in the door" with potential customers. But if the initial interest confusion does
not ultimately result in a purchasing decision, this factor counsels against finding the likelihood of confusion
under the Lanham Act. [FN23]
FN22. Other courts
appear to have adopted a facts and circumstances approach to evaluating initial
interest confusion. BigStar
Entm't, Inc. v. Next Big Star, Inc.,
105 F.Supp.2d 185, 211 (S.D.N.Y.2000) (declining
to apply initial interest confusion in the context of an internet case
involving non-competitors whose web addresses were not identical); Northland
Ins. Cos. v. Blaylock,
115 F.Supp.2d 1108, 1120 (D.Minn.2000)
("Initial interest confusion exist[s] when the defendant stood to
materially or financially gain from said initial confusion by trading in on the
value of plaintiff's mark to initially attract customers.").
FN23. The
disagreement over the use of initial interest confusion is highlighted in Esercizio,
944 F.2d at 1249-50. While the majority of the court found
initial interest confusion generally probative of a Lanham Act violation, the
dissent noted,
To be sure, some courts have expanded the application of
the likelihood of confusion test to include individuals other than
point-of-sale purchasers. These courts have included potential purchasers who
may contemplate a purchase in the future, reasoning that in the pre-sale
context an "observer would identify the
[product] with the [original manufacturer], and the [original manufacturer]'s
reputation would suffer damage if the [product] appeared to be of poor
quality."
In applying the test in this manner, these courts appear to
recognize that the deception of a consumer under these circumstances could
dissuade such a consumer from choosing to buy a particular product, thereby
foreclosing the possibility of point-of-sale confusion but nevertheless
injuring the consumer based on this confusion.... Hence, even when expanding
the scope of this test, these courts did not lose sight of the focus of [the
inquiry]: the potential purchaser.
944 F.2d at 1249-50 (Kennedy J., dissenting) (quoting Polo
Fashions, Inc. v. Craftex, Inc.,
816 F.2d 145, 148 (4th Cir.1987)).
Some courts have looked at the relatedness of
the relevant products in evaluating whether initial interest confusion is
probative of likely confusion. See
Hasbro,
Inc.,
232 F.3d at 2 ("Certainly in a case
involving such disparate products and services as this, the court's refusal to
enter the 'initial interest confusion' thicket is well taken given the
unlikelihood of 'legally significant' confusion."); Brookfield
Communications,
174 F.3d at 1056 (when products are unrelated
"the likelihood of confusion would probably be remote."). Other courts look at evidence that the
defendant intentionally adopted the
plaintiff's mark to create confusion among consumers making purchasing
decisions. See, e.g., Dorr-Oliver,
94 F.3d at 382-83. Still other courts view the level of care
consumers exercise in their purchasing decisions to determine whether initial
interest confusion has dissipated prior to a purchasing decision. See, e.g., Brookfield
Communications,
174 F.3d at 1057 (finding initial interest
confusion actionable because "[I]n the Internet context, ... entering a
web site takes little effort--usually one click from a linked site or a search
engine's list; thus, Web surfers are
more likely to be confused as to the ownership of a web site than traditional
patrons of a brick-and-mortar store would be of a store's ownership."); Rust
Env't & Infrastructure, Inc. v. Teunissen,
131 F.3d 1210, 1217 (7th Cir.1997) (initial
interest confusion unlikely with sophisticated consumers). Safeway
Stores, Inc. v. Safeway Disc. Drugs,
675 F.2d 1160, 1167 (11th Cir.1982)
("Short-lived confusion or confusion of individuals casually acquainted
with a business is worthy of little weight.").
[30][31] Product relatedness and level of care exercised by
consumers are relevant factors in determining initial interest confusion. When products are similar, a firm is more
likely to benefit from the goodwill of a firm with an established mark. And when consumers do not exercise a high
level of care in making their *297 decisions, it is more likely that
their initial confusion will result in a benefit to the alleged infringer from
the use of the goodwill of the other firm.
Conversely, in the absence of these factors, some initial confusion will not
likely facilitate free riding on the goodwill of another mark, or otherwise
harm the user claiming infringement.
Where confusion has little or no meaningful effect in the marketplace,
it is of little or no consequence in our analysis. Nonetheless, we decline to issue a blanket
rule limiting the probative value of initial interest. Its significance will vary, and must be
determined on a case-by-case basis. As
with all cases involving the likelihood of confusion under the Lanham Act,
courts should employ all the relevant Lapp factors and weigh each factor
to determine whether in the totality of the circumstances marketplace confusion
is likely. See A
& H Sportswear,
237 F.3d at 215;
Fisons,
30 F.3d at 476 n. 11.
2.
[32] We now turn to whether the District Court properly
evaluated the evidence of actual confusion, including Checkpoint Systems's
evidence of initial interest confusion.
It is undisputed that Checkpoint Systems presented no evidence of actual
consumer confusion in the form of mistaken purchasing decisions. But it presented the following evidence of
initial interest confusion: (1) e-mails
that Checkpoint Systems received inquiring about firewall products; (2) customer inquiries to Checkpoint Systems
employees, including its CEO, that expressed an interest in purchasing firewalls;
(3) service calls made to Checkpoint Systems that were intended for
Check Point Software; (4) misdirected
calls to Checkpoint Systems's receptionist that were intended for Check Point
Software; and (5) reports in the media
that confused Checkpoint Systems and Check Point Software. The District Court found this evidence
insufficient to support a finding of likely confusion reasoning,
[A]ny evidence by the plaintiff of initial interest
confusion by consumers and initial confusion by some reporters or other
observers, is de minimis and weak, and the record is completely devoid of any
evidence of an actual mistaken purchase or attempt to purchase one company's
products believing they originated with the other company. Especially when viewed in light of the
parties' co-existence for over five years, this lack of evidence of any
confusion in purchasing decisions of either company's products falls strongly
in defendant's favor.
Checkpoint
Sys.,
104 F.Supp.2d at 464-65.
On appeal Checkpoint Systems claims the
District Court erred as a matter of law by requiring it to produce evidence of
actual consumer confusion in the form of mistaken purchasing decisions. It also contends the court erred in
discounting its evidence of initial interest confusion as de minimis. See Tisch
Hotels, Inc.,
350 F.2d at 612.
But the District Court properly evaluated the
evidence of initial interest confusion
within the context of the relevant Lapp factors stating,
This Court does not read [the relevant case law] as holding
that the initial interest confusion doctrine is never applicable if the parties
are not competitors. However, Hasbro,
and numerous other cases, correctly emphasize the importance of the parties'
competition or strong interrelatedness.
A review of the cases which have applied the initial
interest doctrine indicates that the parties are either direct competitors, or
strongly interrelated such that it could be expected that plaintiff would
expand into defendant's market. Other *298
cases have also pointed out that one element of the applicability of the
initial interest confusion doctrine is an intent by the defendant to deceive.
Checkpoint
Sys.,
104 F.Supp.2d at 462 (citations omitted). The court concluded,
[W]hile evidence of temporary initial interest confusion is
not completely irrelevant, such evidence is entitled to less weight than it
might be in a case where the parties compete or are strongly interrelated, or
where there is evidence or even an inference that defendant was trying to trade
on plaintiff's goodwill. These factors
are utterly absent here. Moreover, the
evidence of initial interest confusion in this case is de minimis.
Id. at 462-63.
This is the proper analysis. Checkpoint Systems's and Check Point
Software's products are unrelated and are sold in different markets to
consumers who exercise a heightened degree of care in making purchasing
decisions. The markets for the parties'
products are not converging, nor is there evidence that Check Point Software
intentionally adopted the Check Point mark to create confusion. [FN24] Given these factors, the District Court did
not clearly err in finding no likelihood of confusion.
FN24. Checkpoint
Systems's contention that the District Court disregarded its initial interest
evidence is erroneous. The District
Court examined this evidence stating,
The Court acknowledges that evidence of any confusion at
all, by investors, purchasers, or the media, may still affect this Court's
determination of whether there is a likelihood of confusion by purchasers, for
if there is evidence that, for example, the media, whose words purchasers read,
is confused about the names of these companies, then it is more likely that
purchaser will be confused as well.
* * *
* * *
Though that evidence is relevant, here it is minimal,
especially when contrasted against the glaring absence of evidence of any
actual confusion in purchasing decisions in
the time that the parties have co-existed, and the incentives to ferret out
such confusion during the long pendency of this dispute....
Checkpoint
Sys.,
104 F.Supp.2d at 463-64.
Nor did the District Court err in finding the
evidence of initial interest confusion was de minimis. At oral argument, Checkpoint Systems averred
that at most there was evidence of twenty instances of initial interest
confusion over the period of time the parties operated in the United
States. Some of this confusion
consisted of misdirected calls and therefore it is uncertain whether the
consumers were confused by the parties' similar names or whether directory
assistance erred in connecting consumers with the parties. Duluth
News-Tribune v. Mesabi Publ'g Co.,
84 F.3d 1093, 1098 (8th Cir.1996) (misdirected
communications are not evidence of confusion where the sender knows which party
he or she wished to send his communication but erred in the delivery of the
message). Furthermore, the District
Court properly took into account the potential bias of Checkpoint Systems's
employees who testified they had been approached by consumers interested in Check
Point Software's firewall products as well as Checkpoint Systems's expert
security witnesses who testified they erroneously believed that Check Point
Software was affiliated with Checkpoint Systems. A
& H Sportswear,
237 F.3d at 227; Reed-Union
Corp. v. Turtle Wax, Inc., 77
F.3d 909, 911-12 (7th Cir.1996) (fact finder's
credibility judgments about confusion testimony are virtually never clearly
erroneous).
We agree with the District Court that this
limited initial interest confusion
(i.e., the handful of e-mails and other anecdotal evidence of mistaken
consumer inquiries) was de minimis when viewed in light of the *299
length of time the parties operated together in the United States [FN25] without significant evidence of confusion. Versa
Prods.,
50 F.3d at 205 ("If a defendant's product
has been sold for an appreciable period of time without evidence of actual
confusion, one can infer that continued marketing will not lead to consumer
confusion in the future. The longer the
challenged product has been in use, the stronger this inference will
be."); Universal
Money Ctrs. v. AT & T,
22 F.3d 1527, 1535 (10th Cir.1994) (a few
instances of confusion over a long period of time are insufficient to support a
finding of confusion); Barre-National,
Inc. v. Barr Labs., Inc.,
773 F.Supp. 735, 744 (D.N.J.1991) ("Use of
similar marks for a substantial period of time with no confusion among
consumers may create a presumption that there is little likelihood of
confusion."). Nor were the
isolated instances of confusion in the media probative of likely
confusion. Centaur
Communications, Ltd. v. A/S/M Communications, Inc.,
830 F.2d 1217, 1227 (2d Cir.1987) (newspaper
mis-attributions were isolated incidents not probative of actual
confusion). Given the size of these companies, and the large
number of e-mails, customer inquiries, and other communications they receive on
a daily basis, these isolated instances of initial interest confusion counsel
against a finding of likely confusion. A
& H Sportswear,
237 F.3d at 227 ("isolated" instances
of confusion insufficient to support finding of likely confusion); Scott
Paper Co.,
589 F.2d at 1231 (nineteen misdirected letters
over four years weighed against finding of confusion); Nippondenso Co. v. Denso Distribs.,
Civ. No. 86-3982, 1987
WL 10703 at *5 (E.D.Pa. May 11, 1987) ("The
weight attributed to instances of actual confusion depends to some extent upon
the circumstances of the case, including the volume of sales of the goods
involved. If isolated instances of
actual confusion result from the sale of a substantial number of goods, the
weight given to the evidence of actual confusion is markedly reduced.")
(citing Scott
Paper Co.,
589 F.2d at 1225). The District Court did not clearly err.
FN25. Check Point
Software has sold its products in the United States since late 1994. While its products were not widely
circulated until late 1996, its products were co-branded with Sun MicroSystems
products from 1995-1996 in order to promote the Check Point Software mark. Therefore the District Court did not err
when it stated "when viewed in light of the parties' co-existence for over
five years, this lack of [actual confusion] evidence
... falls strongly in defendant's favor."
Checkpoint
Sys.,
104 F.Supp.2d at 465.
3.
On appeal, Checkpoint Systems contends the
District Court erred in evaluating evidence of investor confusion. While a handful of district courts have
found evidence of investor confusion probative of a Lanham Act violation, see,
e.g., Acxiom
Corp. v. Axiom, Inc.,
27 F.Supp.2d 478 (D.Del.1998); Koppers
Co. v. Krupp-Koppers GmbH,
517 F.Supp. 836 (W.D.Pa.1981), no appellate court
has yet so held.
In Acxiom, the district court held that
"investor confusion may be considered by the trial court as part of its
application of the Lapp factors."
27
F.Supp.2d at 501. In support of its likelihood of confusion
claim, plaintiff in that case presented evidence of two investors and a
potential investor who testified that they were confused by the similar names.
The court held this evidence counseled in favor of finding likely confusion. It
reached this conclusion on the basis of its view that the 1962 amendment to the
Lanham Act evinced "a clear congressional intent to 'outlaw the use of
trademarks which are likely to cause confusion, mistake, or deception of any
kind, not merely of purchasers *300 nor simply as to source of origin.'
" Id.
at 501 (quoting Koppers,
517 F.Supp. at 843-45).
Checkpoint Systems contends investor confusion
is probative of the likelihood of confusion and the District Court erred in
discounting this evidence. But given
the parties limited briefing on this issue as well as the scant evidence of
investor confusion here, [FN26] we will reserve decision on this issue. We make a few
observations nonetheless. Arguably, the 1962 amendments to the Lanham
Act extended actionable confusion beyond purchasers to other instances
affecting a party's business or goodwill.
Investor confusion may well threaten a party's business or goodwill if
it would likely deter or inhibit a company's ability to attract investors and
raise capital.
FN26. Checkpoint
Systems presented the following evidence of investor confusion: (1) financial reports and analyses that
confused Checkpoint Systems's and Check Point Software's stock symbols; and (2) two investors and one potential
investor who were initially confused by mistaken media reports about the
parties' stocks. But these investors
averred that they quickly realized their mistake and did not make any
investment decision based on their mistake.
Their confusion was an isolated example of confusion when compared to
the large number of investors in both companies. Homeowners Group, Inc., 931 F.2d at
1110 (existence of only a "handful" of instances of confusion leads
to inference that confusion is unlikely).
Here it seems unlikely that investors would be
confused by the parties' similar marks or somewhat similar stock symbols
("CKP" and "CHKP" for Checkpoint Systems and Check Point
Software, respectively). Many investors
are sophisticated parties who exercise a high degree of care in making
investment decisions. Also, the
parties' shares are traded on different exchanges (Checkpoint Systems's stock
is traded on the New York Stock Exchange and Check Point Software's stock is
traded on the NASDAQ). Given the
paucity of evidence of investor confusion here, it is unnecessary to resolve
the issue here, and we believe it is prudent to reserve judgment at this time. [FN27] Cf. Hoover
Co. v. Citicorp Venture Capital Ltd.,
674 F.Supp. 460, 461 (S.D.N.Y.1987) (finding no
Lanham Act violation where there was "only scant evidence of investor
confusion in connection with a single advertisement for a securities
offering.").
FN27. We note that
the District Court did not completely disregard the evidence of investor
confusion Checkpoint Systems presented stating,
The Court acknowledges that evidence of any confusion at
all, by investors, purchasers, or the media, may still affect this Court's
determination of whether there is a likelihood of confusion ...
Though that evidence is relevant, here it is minimal....
Checkpoint
Sys.,
104 F.Supp.2d at 463-64.
J. Totality of Lapp
Factors
The District did not err in its factual
findings nor in its application of the individual Lapp factors to those
findings. Furthermore, the District
Court's conclusion that the combination of the Lapp factors do not
establish substantial likelihood of confusion in the marketplace is consistent
with its findings. Even though mark
similarity--a factor favorable to Checkpoint Systems--is ordinarily the most
important element in the multi-factor Lapp analysis, it is not
necessarily determinative, especially where, as here, the markets for competing
marks are highly distinct. Because
Checkpoint Systems's and Check Point Software's products are not related, and
are marketed to different consumers through different channels, the evidence *301
demonstrates it is unlikely the relevant consumers, who exercise a high degree
of care in purchasing and selecting among these products, were likely to be
confused by the marks. Additionally,
there is no evidence that Check Point Software intended to use its mark to gain
a competitive advantage. Also, the
evidence supports the District Court's finding that the markets are unlikely to
converge in the future. The minimal
evidence of actual initial interest confusion
is insufficient to override this conclusion.
Because the District Court did not clearly err in its application of the
Lapp factors-- individually and in combination--we will affirm its
holding there was no likelihood of (direct) marketplace confusion. See A
& H Sportswear,
237 F.3d at 237 ("The question of likelihood
of confusion is ultimately one of fact, and [the appellate court] cannot roll
up [its] sleeves and engage in the balancing [itself].").
IV.
A.
[33] On appeal, Checkpoint Systems challenges the District
Court's analysis of its "reverse confusion" claim, contending the
mark of Check Point Software (the junior user) has become so strong in the
relevant market that the consuming public might assume that Check Point
Software is actually the source of the products of Checkpoint Systems (the
senior user).
In Fisons,
30 F.3d at 475, we expressly recognized a cause
of action for reverse confusion, stating,
Ordinarily, one expects that the new or junior user of the
mark will use to its advantage the reputation and good will of the senior user
by adopting a similar or identical mark.
Reverse confusion occurs when a larger, more powerful company uses the
trademark of a smaller, less powerful senior owner and thereby causes likely
confusion as to the source of the senior user's goods and services.
30
F.3d at 474 (citing Sands,
Taylor & Wood Co.,
978 F.2d at 947).
[FN28]
FN28. In a reverse
confusion situation,
the junior user saturates the market with a similar
trademark and overwhelms the senior user.
The public comes to assume the
senior user's products are really the junior user's or that the former has
become somehow connected to the latter.
The result is that the senior user loses the value of the trademark--its
product identity, corporate identity, control over its goodwill and reputation,
and ability to move into new markets.
Ameritech,
Inc. v. Am. Info. Techs. Corp.,
811 F.2d 960, 964 (6th Cir.1987).
Courts have recognized that "failure to
recognize reverse confusion would essentially immunize from unfair competition
liability companies that have well established trade names and the financial
ability to advertise a senior mark taken from smaller, less powerful
competitors." Harlem
Wizards,
952 F.Supp. at 1091-92 (citing Big
O Tire Dealers, Inc., v. Goodyear Tire & Rubber Co.,
561 F.2d 1365, 1372 (10th Cir.1977)); see also Dreamwerks,
142
F.3d at 1130.
"Were reverse confusion not a sufficient basis to obtain Lanham Act
protection, a larger company could with
impunity infringe the senior mark of a smaller one." Fisons,
30 F.3d at 475.
[34] In a direct confusion case, the consuming public may
assume that the established, senior user is the source of the junior user's
goods. In a reverse confusion case, the
consuming public may assume the converse;
that is, that the junior, but more powerful, mark user is the source of
the senior user's products. The harm to
the senior user is not just that its goodwill is appropriated, but that the
value *302 of its mark is diminished.
The fundamental issue in both cases, however, is essentially the
same: whether the consuming public is
likely to be confused about the source of products of the respective mark
users.
[35][36] In A & H Sportswear, we held that in a typical
reverse confusion case, courts should employ the same Lapp factors in assessing
likelihood of confusion. [FN29] But in a reverse confusion case, some of the Lapp
factors must be analyzed differently. [FN30] The strength of the parties' marks, the
intent in adopting the marks, [FN31] and the
evidence of actual confusion are analyzed differently from the method employed
in a typical direct confusion case. A
& H Sportswear,
237 F.3d at 236.
On appeal, Checkpoint Systems argues the District Court did not follow
the analysis of actual confusion and strength of mark outlined in A & H
Sportswear. [FN32]
FN29. In reaching that conclusion, we rejected the notion that
courts should apply a threshold test to determine whether a junior user has
used its economic power to saturate the market in reverse confusion cases. The proper inquiry is to apply all of the
relevant Lapp factors. A
& H Sportswear,
237 F.3d at 208.
FN30. In A &
H Sportswear, we noted that the application of the following Lapp
factors is typically the same in both types of claims: (1) sophistication and
attentiveness of consumers; (2) the
degree to which the channels of trade and advertisement overlap; (3) the similarity of the targets of the
parties' sales efforts; and (4) the
similarity of the products themselves.
We also noted that absent the presence of housemarks and disclaimers,
the similarity of marks factor should generally be examined in a similar
fashion in both direct and reverse confusion cases. As discussed at length, the
District Court properly applied these factors and found that there was no
likelihood of confusion. A
& H Sportswear,
237 F.3d at 236 ("[T]he factors concerning
the market, sales, and function similarity ... need not be reexamined for the
reverse confusion claim because the District Court has already discussed them
in connection with direct confusion and there is typically no difference in the
analysis of these factors for reverse and
direct confusion claims."). We see
no error.
FN31. Neither party
disputes the District Court's analysis of the intent of the parties in adopting
the marks.
FN32. Additionally,
plaintiff argues the District Court improperly held that a claim for reverse
confusion is only actionable when the parties' products directly compete. But the District Court did not state this
proposition. Rather, the court stated
reverse confusion threatens harm when the junior user
'overwhelms' the marketplace such that the senior user begins to lose its
identity and profile. This concern is
of greatest force with competing or related products. In the present case, involving non-competing,
unrelated products, such "overwhelming" has not even remotely occurred.
Checkpoint
Sys.,
104 F.Supp.2d at 461.
The proper inquiry in a reverse confusion claim is whether
consumers will assume the senior user's goods are associated with the junior
user. Just as in a direct confusion
claim, the relatedness of the parties' products is integral to the finding of
likely confusion. If two products are
unrelated, there is little reason to assume confusion since most consumers would not assume that a single company would
market two completely unrelated products. On the other hand, when the goods are
related, a customer might reasonably assume the junior user with a strong
market presence would sell both products.
Fisons,
30 F.3d at 481 ("The question is whether the
consumer might therefore reasonably conclude that one company would offer both
of these related products.").
The District Court recognized that consumers of Check Point
Software's highly sophisticated technical computer security systems would have
no reason to believe that Checkpoint Systems's physical article surveillance
system was manufactured by Check Point Software. Because the "computer
information" niche that Check Point Software operated in was unique and
technical there is no reason to believe a consumer would assume that Check
Point Software had expanded into the market for a different type of security
product. The same is true of Checkpoint
Systems's customers. Because of the complicated technology involved in the
"computer information" niche, these customers would not assume that
Checkpoint Systems had moved into this market.
The court properly recognized that even though the relevant case law
does not require directly competing goods in order to find reverse confusion,
product relatedness is a very important factor to finding that a consumer might
confuse the source of products. See, e.g., id.; Scott
Paper,
589 F.2d at 1230. We see no error.
[37][38] In a typical direct confusion claim, the stronger the
senior user's mark, the greater the likelihood of confusion caused by a junior
user's use of a similar mark. But in a
reverse confusion situation, the senior user's claim may be strengthened by a
showing that the junior user's mark is commercially relatively strong. The greater relative strength of the junior
mark allows the junior user to "overwhelm" the marketplace, diminishing
the value of the senior user's mark.
While analysis of the strength of the senior user's mark is relevant,
the more important inquiry focuses on the junior user's mark. "[T]he lack of commercial strength of
the smaller senior user's mark is to be given less weight in the analysis
because it is the strength of the larger, junior user's mark which results in
reverse confusion.' " A
& H Sportswear,
237 F.3d at 231 (quoting Commerce
Nat'l Ins. Servs., Inc.,
214 F.3d at 444). Courts should look at the commercial
strength of the junior user's mark to determine whether its advertising and
marketing has resulted in a "saturation in the public awareness of the
junior user's mark." Id.
Checkpoint Systems contends the District Court
improperly evaluated the strength of the marks. Because the court found its mark weak in the
electronic access control products (the product most similar to Check Point Software's firewall technology), [FN33] and by
inference that Check Point Software's mark was relatively strong in that
market, plaintiffs claim the court should have found actionable reverse
confusion. In other words, as a
stronger junior user in the network information security market, Check Point
Software's mark allegedly overwhelmed Checkpoint Systems's senior, but weaker
mark in the relevant market.
FN33. The court
found that its mark was strong in the physical article surveillance market.
Unlike its other findings, the District Court
did not scrutinize the reverse confusion claim, perhaps because it was not
extensively argued. It did not
expressly analyze the relative strengths of the marks for purposes of this
claim, nor did it directly examine the strength of Check Point Software's mark. As noted, it is the strength of the junior
user's mark that is crucial in establishing a reverse confusion claim, because
it is the strength of its mark that might lead consumers to mistakenly identify
"Checkpoint"--labeled products with Check Point Software. A
& H Sportswear,
237 F.3d at 231.
In its limited discussion of the reverse confusion claim, the court
stated,
[R]everse confusion threatens harm when the junior user
"overwhelms" the marketplace such that the senior user begins to lose
its identity and profile. This concern is
of greatest force with competing or related products. In the present case, involving
non-competing, unrelated products, such "overwhelming" has not even
remotely occurred.
Checkpoint
Sys.,
104 F.Supp.2d at 461.
Had the District Court the benefit of our
recent opinion in A & H Sportswear, it doubtless would have been
guided by our analysis. But its failure
to do so does not require reversal. In
light of its Lapp-factors findings, a focused analysis under *304
A & H Sportswear could not have changed the court's conclusion of no
reverse confusion.
[39] The District Court properly noted that reverse confusion
is most likely in cases involving competing or related products. When products are related, consumers may be
likely to assume they are produced by the same company. But when not related, the likelihood of
confusion diminishes dramatically.
Given the strong distinctiveness of the respective markets as found by
the District Court, any confusion would appear unlikely. For this reason, a focused analysis of the
strength of Check Point Software's mark would not affect the court's
conclusion.
To establish a claim of reverse confusion,
there must be evidence that consumers of Checkpoint Systems's products were
likely to assume that Check Point Software was the source of those
products. See Dreamwerks,
142 F.3d at 1130 ("The question ... is
whether consumers doing business with the senior user might mistakenly believe that they are
dealing with the junior user."). But as noted, the court found the
decision makers who purchased Checkpoint Systems's products were not likely to
be the target audience of Check Point Software's advertising or marketing. See Checkpoint
Sys.,
104 F.Supp.2d at 466 ("That there is no
overlap in the places these parties market their products tends to diminish the
chance that someone who is a specialist in network security will even come
across an advertisement for plaintiff, and vice versa."). And even if purchasers received such
marketing materials, the high level of care with which they ordinarily made
their purchasing decisions substantially lessened the likelihood of
confusion. Put another way, the
strength of Check Point Software's mark within the corporate information
security market would not likely affect the consumers within Checkpoint
Systems's market, given the level of distinctiveness of the relevant markets
found by the District Court.
In light of these findings, the strength of
Check Point Software's mark could have a determinative effect on the outcome of
the reverse confusion analysis, if at all, only if extremely powerful. Only then could it "overwhelm" the
marketplace diminishing the value of Checkpoint Systems's mark. Although the District Court did not analyze
this factor, it was correct in finding that, "[i]n the present case,
involving non-competing, unrelated products, such 'overwhelming' has not even
remotely occurred." Checkpoint
Sys.,
104 F.Supp.2d
at 461.
[40] As we held in Fisons, the court's application of
the Lapp factors is not mechanical;
rather it must weigh each factor against the others. 30
F.3d at 473.
When the reviewing court determines that almost all the relevant factors
favor one party, it may discount one factor.
See, e.g., Jet,
Inc. v. Sewage Aeration Sys.,
165 F.3d 419, 423 (6th Cir.1999) (finding no
reversible error when the district court erred in its application of the
"converging markets" factor but correctly applied other
factors); Freedom
Sav. and Loan Ass'n v. Way,
757 F.2d 1176, 1186 (11th Cir.1985) (finding no
reversible error where District Court erred in its application of the
"similarity of products or services" factor but correctly applied
other factors). We see no legal error
here.
C.
Checkpoint Systems also contends the District
Court erred in its evaluation of the evidence of actual confusion in its
reverse confusion claim. In A & H Sportswear, we stated that in most
trademark cases, parties allege both direct and reverse confusion since
"the manifestation of consumer confusion as 'direct' or 'reverse' may
merely be a function of the context in *305 which the consumer first
encountered the mark. Isolated
instances of 'direct' confusion may occur in a reverse confusion case, and
vice-versa." 237
F.3d at 233.
We declined "to create a strict bar to the use of 'direct' confusion evidence in a 'reverse'
confusion case, or vice versa." Id. [FN34] Under
this view, evidence that the public thought Check Point Software was the origin
of Checkpoint Systems's products is just as probative of likely confusion as
evidence that the public thought Checkpoint Systems was the origin of Check
Point Software's products. [FN35] Here, the District Court properly examined
the evidence of actual confusion [FN36] and found it to be de minimis. We see no error.
FN34. We noted that
"as a matter of intuition" one might assume evidence that the public
thought that the senior user was the origin of the junior users products would
support a direct confusion claim while evidence that the public thought the
junior user was the source of the senior user's product would support a reverse
confusion claim. But we stated, "In
our view, if we were to create a rigid division between 'direct' and 'reverse'
confusion evidence, we would run the risk of denying recovery to meritorious
plaintiffs." A
& H Sportswear,
237 F.3d at 233.
FN35. However, we
noted in A & H Sportswear that "evidence working in the same
direction as the claim is preferred, and 'misfitting' evidence must be treated
carefully, for large amounts of one type of confusion in a claim for a
different type may in fact work against the plaintiff." 237 F.3d
at 233.
Here the court found minimal evidence supporting both Checkpoint
Systems's direct and reverse confusion claims.
FN36. The District
Court stated:
Though plaintiff did have incentive and ability to find
[instances of actual] confusion if it occurred, by asking its sales persons,
distributors, and customers, [Checkpoint Systems] did not offer any testimony
of a confused purchaser at trial, showing an absence of reverse confusion
(i.e., where a [Checkpoint Systems] customer seeks to purchase a [Checkpoint
Systems] product because the customer believes it originated from [Check Point
Software] ). Similarly, plaintiff
located no [Check Point Software] customers who indicated they became
interested in a [Check Point Software] product because they thought it
originated from[Checkpoint Systems].
Checkpoint
Sys.,
104 F.Supp.2d at 464 (internal citations
omitted).
Finally, Checkpoint Systems contends the
District Court erred in requiring evidence of actual confusion of purchasers at
the point of sale to prove its reverse confusion claim. But as we have discussed, plaintiffs have
mischaracterized the court's analysis.
The court factored Checkpoint Systems's evidence of initial interest and
investor confusion into its confusion
analysis but found the evidence insubstantial.
We see no clear error.
V.
For the foregoing reasons, we will affirm the
judgment of the District Court.
•In re: CHECKPOINT SYSTEMS, INC. CHECKPOINT
SYSTEMS, INC., Appellant, v. CHECK POINT SOFTWARE TECHNOLOGIES, LTD.,
Appellee., 2000
WL 34001895 (Appellate Brief) (C.A.3 December 18,
2000), Brief of Appellant, Checkpoint Systems, Inc.
•CHECKPOINT SYSTEMS, INC.,
Plaintiff-Appellant, v. CHECK POINT SOFTWARE TECHNOLOGIES, INC., Defendant-Appellee,
2001
WL 34117880 (Appellate Brief) (C.A.3 January 22,
2001), Brief of Defendant-Appellee
•In Re: CHECKPOINT SYSTEMS, INC. CHECKPOINT
SYSTEMS, INC., Appellant, v. CHECK POINT SOFTWARE TECHNOLOGIES, LTD.,
Appellee., 2001
WL 34117879 (Appellate Brief) (C.A.3 February 5,
2001), Reply Brief of Appellant, Checkpoint Systems, Inc.
269 F.3d 270, 187 A.L.R. Fed. 585, 60
U.S.P.Q.2d 1609
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DOCUMENT