This article has been written by Nikita Desai. This article explains the concept of trademark infringement in the USA and what are the contributory factors that give rise to trademark infringement, along with how to determine the same. Analytical factors such as the likelihood of confusion, second-corner doctrine, the standard of review, forward and reverse confusion, initial interest confusion, defenses, and remedies also shed light on how trademark infringement can be averted by trademark owners and how the consumers can stay protected from the frauds that place in the world of trade and commerce.

Introduction

Have you ever wondered what the logo or a symbol that is present on the product or services that you buy and enjoy is known as? Well, those symbols in the world of trade and commerce are known as trademarks, and these trademarks signify the value of a brand, trademark owner, or company. 

Trademark infringement is the word used in law when the trademarks of these products or services that are available in the market are violated. This occurs when a third party manufactures and sells counterfeit materials of the original goods or services. These kinds of products are sometimes also available at cheaper prices with cheap qualities, and that not only harms the trademark owner but also deprives the trust of customers regarding that particular famous or well-known brand. Together, we as consumers and the owners of goods or services have a responsibility to avert this kind of mistake so that a smooth and safe experience of availing the benefits of trade can take place. 

As a trademark owner, one can become a target of fraud when someone else is using the original trademark (brand or logo that became famous) to gain profit from the brand’s reputation. This can cause injury to the trademark owner. Simply, this is trademark infringement as the right of the trademark owner is violated through such fraud. 

As a consumer, one can become a target of fraud when one buys any cheap products available in the market, by being attracted to the brand logo, thinking that this product belongs to the original company. For example, there are many variants of shoes revolving in the market with the logo of Adidas or Addidas. When a consumer does not know the basic difference between the two, one can likely find themselves being tricked by this act. Therefore, it is important to know more about how as a trademark owner and as a consumer, one can protect oneself from fraud.

To understand trademark infringement and the various laws related to it, it’s important to understand the concept of ‘likelihood of confusion’ and the analytical factors used to determine it. This article provides an in-depth look at trademark infringement in the US and the various factors that come into play in determining if a trademark has been infringed upon.

Trademark Law

Before we dive into the concept of trademark infringement, let us first understand what a trademark is. According to 15 USC 1127 (definition), a trademark is a distinctive word, phrase, symbol, or design that identifies and distinguishes the source of goods or services from those of others. For example, consider a brand logo or a unique name, like McDonald’s, Gucci, Coca-Cola, etc. These symbols or words are known as trademarks in the language of law.

The exclusive right of the trademark owner to protect such a trademark from confusion among the customers in the marketplace is covered under the trademark law that falls under the ambit of the United States Patents and Trademark Office (USPTO). Trademark law is governed by the Lanham Act of 1946.

Protection from trademark infringement in the form of remedies to the trademark owner is available for both registered marks (15 USC 1114) and unregistered marks (15 USC 1125 (a)). When unfair competition or trade dress violation occurs, these laws play a vital role in protecting the unique marks.

Trademark infringement

Trademark infringement is a serious issue in the US and can have serious financial and legal repercussions for those who are found to be infringing on the trademark rights of others. 

According to the USPTO, using, copying, or intimidating the registered trademark during the trade is considered an infringement. This is for goods and services that bear a mark of registration.

According to the USPTO, trademark infringement is when someone uses a logo, name, or symbol (trademark) that belongs to another company. These companies use the source company trademark on their products or services without permission (unauthorized use). These actions trick, confuse, create deception, or create mistakes for the consumers into believing that such products and services are of the original trademark owner (original company).

This means that the original trademark is used by a secondary source to sell and market their products and services without the owner’s consent, which creates confusion among customers in the marketplace. For example, A opened a soda company called ‘Frizzy Cola’ and uses a similar logo to that of Company B, say the famous red label of ‘Coca-Cola.’ Now, this particular fact amounts to a trademark infringement because the consumers in the marketplace are likely to get confused into thinking that the Frizzy Cola produced by A is sold and owned by Coca-Cola (company B).

This use of the identical trademark on similar goods and services causes a likelihood of confusion.

Initial interest confusion

Initial interest confusion is a legal concept and a type of trademark infringement where the defendant’s mark creates initial interest in the plaintiff’s mark. This type of confusion can occur even if consumers are not confused about the source of the product or service. Instead, the initial interest confusion is caused by the defendant’s use of the plaintiff’s mark.

This means that the consumers are easily attracted to the products or services of the competitor in the marketplace because they are using a similar trademark as that of a source company, hence creating interest confusion in customers. 

For example, Company A with a trademark name ‘BuzzCafe’ (source company), and Company B with a trademark name ‘BuzCaffe’ (competitor) both own a coffee shop. Company A is known for its unique coffee blends and has been involved in this business for a longer time. Company B recently opened a coffee shop with a trademark and menu as that of Company A, but is not affiliated with Company A. When customers search online for a source company, and they see the competitor company in the search results, the customer clicks on the link and purchases competitor’s product instead of Company A’s product, thinking that Company B is related to Company A however, such is untrue. This creates initial interest confusion in customers. What happens here is that even if consumers figure out the difference between the two companies before purchasing the products, they are more attracted to the products offered by the competitor’s company. This means they are now more interested in Company’s B products. This causes injury to the reputation and status of the source company.

The Court uses this as a substitute to determine the likelihood of confusion when trademark infringement takes place on the Internet (use of trademark in metatags). Metatags are a hidden website code describing the content of the website. However, using such a doctrine makes it much easier for the trademark owner to bring rights violation lawsuits and to prove that infringement of the trademark had taken place, even if such is untrue. 

Criticism of initial interest confusion 

Some critics argue that the use of initial interest confusion by the courts to determine the likelihood of confusion instead of the traditional Eight Factor Test or Sleekcraft Test (likelihood of confusion test) is opposed to the very purpose of the trademark protection law. This method also affects the competition as well as consumers. This is because under such a concept likelihood of confusion is not necessary to be proved at the time of sale, it is only required to be proved whether the use of such a trademark captured the initial interest of the consumers or not.

For example, imagine if a consumer is searching online for a computer of the brand ‘Apple,’ which is a very famous and reputed brand, but instead, comes across a website that is using ‘Apple.com’ as a domain name but is selling products from a different company named ‘GadgetsCo.’ Here, the consumer will be attracted initially to the name because they are interested in the products of the brand ‘Apple’ and explore the website of the same. The customer to their dejection, however, finds that this site belongs to the company GadgetsCo thus, creating a conflict of interest (initial interest confusion), even though they were not confused about the origin of the products. 

Brookfield case (use of a trademark on the Internet)

Significance of the case

• In Brookfield Communications, Inc. v. West Coast Entertainment Corp (1999) this case established that trademark infringement can take place when trademarks are used on the Internet (metatags and domain name) because of the presence of the initial interest confusion among customers.
• The case enabled protection for online businesses from infringement, especially where metatags are involved. 
• Even it recognized how important it is to keep consumers safe in the online world, where misleading opportunities are abundant. 

Facts of the case

• Brookfield Communications Inc. was a software company, registered with a trademark name “MovieBuff,” that used to provide a database on the internet of the entertainment industry. 
• West Coast Entertainment Corp, on the other hand, used a domain name “moviebuff.com” (non-registered). It was to provide their services on the internet, which was kind of similar to that of Brookfield, while also operating a video rental store. On the metatags of the website, they even used the name MovieBuff.
• However, both companies operated in the same industry but were non-direct competitors of each other because their goods and services differed in functioning/ identity, even though evidence of actual confusion persisted among consumers.
• Brookfield alleged that the use of such a trademark caused infringement and West Coast was benefiting from the goodwill and the image (reputation) that they created in the marketplace by the use of their mark.

The Issue involved in the case

Whether the use of a registered trademark MovieBuff by WestCoast in their domain and metatags constituted a trademark infringement or not.

Judgment of the Court

• The U.S. Court of Appeals, Ninth Circuit verdict in favor of Brookfield and stated that the use of MovieBuff trademark by the West Coast caused trademark infringement.
• The Court applied the doctrine of initial interest confusion and stated that even after customers knew about the origin of the products, this likely created an initial interest attraction in customers for the products sold by the West Coast. However, the court admitted that there exists no likelihood of confusion between the two products.
• The Court stated that West Coast gained illegal benefits for their company from the use of such a trademark.

Multi Time Machine Inc. case (trademark use gives rise to confusion)

Significance of the case

• The Multi Time Machine, Inc. v. Amazon.com, Inc.(2015) case, clarified the heat between online search results and how it is likely to cause customer confusion. To avoid the likelihood of confusion, it is important to look at things as any “reasonably prudent consumer accustomed to shopping online.” 
• It also showed the importance of labeling a business and the goods and services that they are offering in the marketplace in an online business. 

Facts of the case

• Multimedia Time Machine, Inc. (MTM) was a manufacturer of high-end watches (MTM special ops) whereas Amazon, Inc. is a popular and beloved e-commerce website. 
• MTM alleged that Amazon engaged in trademark infringement by the way they used to display the high-end watches of the MTM on their search results. According to MTM, a search for “mtm special ops” resulted in showing products of a third-party company (a competitor of MTM).
• Upon investigation, it was concluded that neither of the companies used to sell those watches on the Amazon website.
• MTM alleged that the absence of this information on their website for the consumers (Amazon does not sell MTM watches), resulted in “initial interest confusion” which led consumers to believe that MTM is associated with their competitor and enabled their competitor to increase their sales instead of MTM’s.

Issues involved in the case

• Whether the technique of the Amazon search results is liable to create an initial interest confusion among customers or not.
• Whether there is a likelihood of initial interest confusion is a question of fact or a question of law. 

Judgment of the Court

• The U.S. Court of Appeals, Ninth Circuit upheld the decision of the U.S. District Court that Amazon’s actions did not create room for the likelihood of confusion among customers. The Court stated that the display of products sold by a third party similar to that of the company, then for that Amazon is not contractually bound. Therefore, no existing likelihood of confusion.
• The Court concluded that because MTM brands were of high quality and high pricing no reasonably prudent online shopper would be confused between the two products i.e. Amazon’s search results showed third-party products that were labeled properly by them (proof of brand name, model number, and photographs).
• The Court stated that ‘MTM was mistaken with such information (allegations) but how MTM was mistaken is a question that is required to be determined properly which the Court of Ninth Circuit did not have the authority to do so.’

Types of trademark infringement 

In the U.S. the trademark is protected from infringement offenses in two aspects. These are known as civil and criminal trademark infringement.

Civil trademark infringement

In the US, civil trademark infringement is governed by the Lanham Act of 1946 (a federal statute). This Act was enacted by the Congress in 1946. It enables the trademark owner to have a national system for the registration of their trademark. If a trademark is registered, this law stops others from using similar or identical trademarks that have the potential to cause customer confusion or harm to the reputation of a famous trademark. 

When there is a dispute between the two parties (private parties) about the trademarks. The owner of the trademark can sue the alleged infringer for damages including monetary damages and can further prohibit the use of such marks through a court order. 

Criminal trademark infringement

In the US, criminal trademark infringement is governed by the Federal Trademark Dilution Act of 1995 (FTDA). This Act was enacted by the Congress in 1996. It enables the trademark owner to create a federal cause of action for protecting their famous mark from unauthorized use, to prevent others from gaining benefits off the goodwill of such marks, and also to prevent dilution of the trademark from blurring and tarnishment. 

This is more of a serious matter as compared to civil trademark infringement. When an infringer intentionally uses a counterfeit trademark (fake version of a registered trademark) on the goods or services provided by them in the marketplace to deceive the consumers and to gain profit from the reputation of a famous trademark, then the government has a right to take action against the infringer and such amounts to criminal trademark infringement. Penalties for such crimes include fines and imprisonment. 

To gain more knowledge about the types of trademark infringement, refer to the article “All About trademark dilution in the U.S.”

Difference between civil and criminal trademark infringement 

Serial No.	Basis of difference	Civil trademark infringement	Criminal trademark infringement
1.	Meaning	This is a private legal matter, as a lawsuit is filed by the trademark owner against the alleged infringer only.	This is a public legal matter as a lawsuit is prosecuted by the government against the alleged infringer.
2.	Plaintiff	The lawsuit is filed by the trademark owner for remedies such as damages, and injunctive relief.	The lawsuit is filed by the government on behalf of the society for the greater good.
3.	Nature	It is a civil offense as a trademark owner files a lawsuit, either in state court or either in federal court	It is a criminal offense and the government files a lawsuit in federal court.
4.	The burden of proof	The proof lies on the trademark owner to prove that the alleged infringer has caused harm to the registered trademark by engaging in infringement activities.	The proof lies on the prosecution to prove that the alleged infringer is at fault without any reasonable doubt.
5.	Penalties	The penalties are in the form of monetary damages, and injunctive relief against the harm suffered due to the infringement.	The penalties are in the form of fines and imprisonment, as it is more severe than civil infringement.

Essential elements of trademark infringement claims

To establish the violation of the trademark rights which are enabled by the USPTO to the trademark owner for trademark infringement claims, whether  registered or unregistered, the plaintiff or the trademark owner has to prove the following to the USPTO:

• The mark is valid and is legally competent to be protected under the trademark law of the U.S.
• The mark is owned and used by the source trademark owner (Superior or senior mark than the other party).
• The use of the mark by the third party (defendant) on their goods or services, created a likelihood of confusion among customers. 

Therefore, the key elements, i.e., ‘use, in commerce, and the likelihood of confusion’ etc. are necessary for establishing trademark infringement claims.

1. Use

For a trademark infringement, just having a similar idea, or being in a similar business does not make someone an infringer. The use of the trademark in dispute by the alleged infringer is a necessary element for raising a violation claim by the trademark owner under the Lanham Act. For example, pop-up advertisements on the internet or a display product in a store that is a similar reminder to a famous brand does not amount to an infringement. 

1-800 Contacts Inc. case

• In 1-800 Contacts Inc. v. Whenu.com Inc. and Vision Direct Inc. (2005) the case clarified the legal guidelines for online advertising. When the brands are not directly used to display the pop-up advertisements, then the trademark law is not violated by that particular company. 
• The display of online advertisements is a normal part of the internet, as these ads make the customer familiar with the products or services offered by the company in the marketplace.

Facts of the case

• 1-800 Contacts Inc. is a seller and marketer of replacement contact lenses through its website and was an appellant of the case.
• Whenu.com Inc. (software company), another defendant in this case, on the other hand, developed and distributed a software application (SaveNow). This software came as a bundle with other software and was provided free of cost to the users. This software remains in the core memory of the computers when installed therein and monitors the web browser activities of the users.
• The software (SaveNow) created by the defendant shows pop-up ads on the user’s computers (when the user types 1800contacts.com and links it to ‘eye-care’). This means that the pop-up ads displayed by the defendants on their website made the consumers believe that this business was conducted by 1800 Contacts Inc. (source company).
• According to the plaintiff, these pop-up ads created confusion in the customer’s mind in the marketplace, making the consumers believe that the plaintiff and defendant are working together rather than implying that they are competitors to each other. 
• This fact was proved by a study whereby 76% of consumers were unaware of the fact that SaveNow generated pop-up ads and 60% of consumers were unaware that the generated pop-up ads were planted by the source company.
• According to the defendants, this software only pops advertisements when the consumers need them (contextual marketing) and is like an instant messaging program.
• In 2003, Whenu.com was even served with a preliminary injunction and was barred from projecting pop-up ads to the users on allegations of trademark infringement laws.

Issues involved in the case

• Whether showing the pop-up ads on their website by Whenu.com and Vision Direct Inc. violated the trademark infringement laws or not.
• Whether 1800 Contacts Inc. had a claim regarding copyright infringement (17 USC 501) and unfair competition or not.

Judgment of the Court

• The District Court stated that the plaintiff does not have a right to the copyright infringement and unfair competition claim because presenting such pop-up ads did not violate the rights of the plaintiff to display and create the derivative work. However, his verdict was rejected by the Second Circuit. The United States Court of Appeals for the Second Circuit stated that the element of ‘use’ for trademark infringement claims by Whenu.com was absent under this case.
• The Appeal Court rejected the previous preliminary injunction based on trademark infringement claims bought by the plaintiff and kept the demand based on unfair competition and copyright infringement.

2. In commerce

For a trademark infringement, the alleged infringer must be involved in some kind of business that significantly impacts the trade (goods and services) between the different states. This rule is derived from the congressional power to regulate interstate commerce. For example, if a company in Alabama advertises and sells counterfeit products of shoes ‘Supersneakers’ in Kansas, then under such circumstances the company is liable for trademark infringement under federal law.

To prove that infringement did take place by the alleged infringer, the trademark owner must satisfy the following things:

• The alleged infringer is advertising their products in more than one state. This includes advertisements in newspapers, billboards near highways crossing state lines, and TV or radio stations.
• The alleged infringer is shipping the potentially infringed trademark products from one state to another.
• The alleged infringer sent the products to a different state for registration.

3. Validity of a trademark 

Do you know it is most common for trademark infringement cases to begin with cease and desist letters? This is an official written notice sent to the infringer (wrongdoer) by the trademark owner, describing the alleged misconduct and demanding the wrongdoer to stop the misconduct. The failure to stop the alleged misconduct can give rise to legal action by the trademark owner.

Trademark infringement forms the basis of liability. This means that a lawsuit (legal action) for claims by the aggrieved consumer or trade owner can be filed in the competent court, both through the FTDA and State Laws. 

How to establish if a trademark is valid or not

For a trademark to be valid to receive protection under U.S. law, the mark must be:

• Regularly used in commerce (business) to identify goods or services.
• Distinct in nature (unique, fanciful, and strong).

The mark that is generic or descriptive (unless acquires secondary meaning) is not liable to receive protection under U.S. law, as such marks are not considered to be valid. Refer to our article “All about trademark dilution in the U.S.” for more detailed information. 

4. Likelihood of Confusion

Once the validity of the trademark is proven, the next step is to prove the existence of a likelihood of confusion. If the trademark owner (source company) bringing the suit succeeds in proving that the mark used by the competitor is confusingly similar to his or her mark, leading the consumer to believe that the competitor’s products or services are similar or are sponsored, affiliated, or connected to the source company, then under such circumstances the competitor amounts to an infringer, who violated the rights of the source company and committed trademark infringement.

This is one of the most important elements that the court provides to determine whether the trademark is infringed or not. If the alleged infringed trademark is creating confusion in the customer’s minds regarding the source products or services in the marketplace, then we can say that the trademark owner has a right to bring the claim for trademark infringement before the USPTO. For example, if a company starts selling ‘ifone’ smartphones, customers will assume that such a product is related to Apple’s ‘iPhone’, thus, confusing customers.

According to the USPTO, an application for federal registration of a trademark is thoroughly examined to check whether such an application meets the requirements of compliance with federal law and Trademark Rules of Practice or not. Many of the applications are rejected by the USPTO solely because of the absence of these requirements.

To determine if a trademark has been infringed upon, courts conduct an analysis known as the likelihood of confusion test. This test looks at various factors to determine if consumers are likely to be confused by the use of a trademark. This test is not applied in the strict mechanical sense (only acts as a guide) and depends upon the merits and facts of each particular case. 

Sleekcraft Test

The “likelihood of confusion” test, also known as a Sleekcraft Test is used to determine whether or not a trademark has been infringed upon by another. It is a standard used in trademark law that asks whether or not a person or company is likely to be confused about the source of a particular product or service. This test is used by courts to determine whether trademark infringement has occurred. 

There is another test or analysis that the court uses by applying two distinct standards to determine the likelihood of confusion between the disputed trademarks based on the competition of the alleged item with the original trademark item in the marketplace, and is known as the Lapp Test. 

The Lapp test based on direct and indirect competition

The Court for analyzing the likelihood of confusion applies two distinct standards depending on the competition of the alleged item with the trademark item (whether the competition is direct or indirect).

Direct Competition: if the accused item is directly competing with the trademarked item, the court, upon satisfaction of sufficient similar elements of consumer confusion, declares the trademarked item to be infringed upon.

Non-Direct Competition: if the accused item is related but does not directly relate to competition for sales, then under such circumstances we can say that there is the presence of non-direct competition. This factor makes the analysis for the presence of confusion much more difficult. 

To save from this complexity, the Lapp-Test (likelihood of confusion test) or Eight-Factor Test, a non-exhaustive list of factors is used by the courts to determine the element of confusion arising from the disputed marks in the customer’s mind in the marketplace. 

The test looks at a variety of factors, including the similarity of the marks, the strength of the marks, the similarity of the goods or services, the channels of trade and advertising, the proximity of the marks, the consumer sophistication and care, and actual confusion: survey evidence. Apart from these, the courts are free to assess other factors that prove the existence of the likelihood of confusion.

Interpace Corporation case (Determining element of confusion)

Significance of the case

• In Interpace Corporation v. Lapp Inc. (1983), the answer for trademark protection on non-competing goods was addressed as both these parties were using the same or identical trademarks. 
• The case also highlighted preventing customer confusion and unfair trade practices in trade commerce.

Facts of the case

• Interpace Corporation manufactures and sells ceramic insulators under the “Lapp” trademark.
• Lapp Inc. on the other hand ran a business of manufacturing and selling A-grade performance wires that are used in electronic appliances under the “Lapp” and “Lapp cable” trademarks. It was the competitor of Interpace Corporation.
• The Interpace Corporation alleged that Lapp Inc. violated federal and state laws by representing false advertising in their campaigns and engaging in unfair competition. According to them, Lapp Inc. was using their trademark on their products.
• The Interpace Corporation filed a suit against Lapp Inc. under direct infringement (15 USC 1114), false designation of origin (15 USC 14 (a)- (1064) of Lanham Act, and 15 USC 1125 (a)), and infringement of New Jersey common law trademark rights. 
• Interpace Corporation stated that Lapp Inc. deliberately made false and misleading statements in their marketing strategies about the performance of the products sold by them. The specific allegations included false representations regarding the tensile strength and temperature resistance of Interpace products (wires).

Issues involved in the case

• Whether Lapp Inc. was involved in unfair competition by using Lapp as a trademark which was registered with the USPTO by Interpace Corporation and constituted trademark infringement along with customer confusion or not.
• Whether Lapp Inc. engaged in false advertising of Interpace Corporation products as compared to theirs or not.

Judgment of the Court

• The US Court of Appeals for the Third Circuit found that the allegations made by Interface Corporation were indeed true and that the use of the registered trademark ‘Lapp’ amounts to trademark infringement.
• The Court stated that the use of similar trademarks on similar or identical products created confusion in the customer’s mind (presence of secondary meaning). This is because both companies were competitors to each other (selling the same products).
• The Court, through an injunction, prohibited Lapp Inc. from making further false and untrue statements and also ordered the company to discontinue the use of the ‘Lapp’ trademark.
• The Court even ordered Lapp Inc. to pay damages to the Interpace Corporation.

Analytical factors for the ‘likelihood of confusion’ test

The analytical factors or the multi-factored test used to determine the “likelihood of confusion” can vary by circuit. These are also known as Sleekcraft Tests. Generally, however, the factors that courts look at include

1. Mark similarity.
2. Mark strength.
3. Proximity or similarity of goods and services.
4. Evidence of actual customer confusion.
5. Intent
6. Channels of trade and advertising-proximity 
7. Consumer sophistication and care.
8. Likelihood of bridging the gap

In trademark infringement cases the first five factors are primarily considered by the court from which the two are the most important ones, the similarity of the marks and the similarity of goods and services.

One interesting thing to note here is that even if, both the disputed marks are unregistered with the USPTO but are exactly similar to each other, and even if the marks are on unrelated goods, then under such situations trademark infringement is not considered. For example, using a similar name, one by a restaurant and one by a bicycle shop in the same locality does not amount to trademark infringement. This means that to bring trademark infringement claims, the disputed businesses should be competing with each other, otherwise the case would be rejected by the court.

Let us understand the ‘Eight-Factor Test or Likelihood of Confusion Test’ with the help of a Sleekcraft Boats case decided by the U.S. Court of Appeals.

Sleekcraft Boats case (Validity of eight-factor test)

Significance of the case

• In AMF Inc. v. Sleekcraft Boats (1979) case had a significant impact in determining whether the disputed trademark was necessarily infringed or not when the goods were competing in business with each other.
• The case established an eight-factor test for determining the likelihood of confusion for trademark infringement claims and recognized the need for protection for weaker marks.

Facts of the case

• AMF was a manufacturer of recreational boats with a company named Slickcraft Boat Company and acquired its trademark ‘Slickcraft’ in the year 1969.
• Nescher Sleekcraft Boat Company was also involved in the same business as that of the AMF and was using the trademark name ‘Sleekcraft’ on its products. This was unintentionally adopted by the company.
• After being notified of this by AMF, Nescher started using the trademark with the suffix ‘Boats by Nescher’ in their promotional advertising.
• AMF later sued Nescher for trademark infringement by claiming that the products and services were in competitive lines with each other. This fact was denied by Nescher, and they further stated that their products were solely designed and manufactured for racing enthusiasts. 

Issues involved in the case

• Whether there is a standard of review or not.
• Whether there exists a likelihood of confusion between the disputed trademarks.

Judgment of the Court

• The U.S. District Court stated that the mark of the AMF was valid as it was a registered mark; however, the court rejected the infringement claim based on the absence of likelihood of confusion. 
• The U.S. Court of Appeals, Ninth Circuit stated that even though the goods were not in direct competition with each other, there exists the overlap factor in the purchase of the class of boats by the consumers because of the similarity in the use and functions of the products and because of this the presence of likelihood of confusion was established.

1. Mark similarity

The similarity of the marks is one of the most important factors in determining the likelihood of confusion. The marks are first inspected by the courts based on similarities and differences between them. 

The Court will look at the overall appearance of the marks, including the words, sounds, and designs used. This means that the court will look at whether these marks contain any meaning to them or not when the public associates such marks with goods or services.  These are the three levels of testing the similarities between the disputed marks, and they have more weightage than the differences. 

The words of the trademarks in dispute are similar in sound, and perception, or even generate a similar commercial impression in the minds of the consumers, then the court will designate such marks to be infringed upon by analytical factors of ‘similarity’ to determine the existence of a likelihood of confusion. For example, let us consider the trademarks Coca-Cola or Koka-Kola, Nike or Nikke, Starbooks or Starbucks. The marks do not need to be identical for confusion to occur.

Opinion of the Ninth Circuit in the Sleekcraft case

In the Sleekcraft case, the court referred various cases such as Watkins Products, Inc. v. Sunway Fruits Products, Inc. (1962) and Syntex Laboratories, Inc. v. Norwich Pharmacal Co. (1971), to determine the factors contributing to the likelihood of confusion.

The U.S. Court of Appeals, Ninth Circuit after considering verdicts from various cases believed that:

• The U.S. District Court opined that the trademark Sleekcraft and Slickcraft, when written or spoken, could be easily recognized differently from each other because only minor differences of letters were held incorrect by the U.S. Court of Appeals, Ninth Circuit. 
• Besides looking at the similarities of appearances between the marks, the other factors from the likelihood of confusion test are also necessary to be considered. 
• If there is a presence of a suffix with the logo, it also helps to avoid confusion among the customers, but that was sometimes absent in the case of AMF Slickcraft promotional activities. However, the brand being famous the effects of the same were negligible and Slickcraft appeared to be more prominent.
• The sound also plays an important role in asserting whether the confusion existed or did not exist. Here, the sounds were very similar to each other. The meanings of words of the disputed trademarks were synonyms to each other.

Therefore, we can say that for a mark to be able to receive protection from trademark infringement the trademark owner has to make sure that the mark passes the three levels of similarity testing i.e., sound, meaning, and words.

2. Mark strength

The strength of the marks is also an important factor. The stronger the mark, the more likely it is to be confused with another. This includes the distinctiveness of the mark as well as how widely it is known and recognized. 

Strong trademark: If a defendant starts using the name ‘Coca-cola Lite’ which is a similar mark to a famous brand ‘Coca-cola,’ then the mark is considered to be strong for the plaintiff and easier for the customers to confuse the same with the defendant’s trademark.

Weak trademark: If the brand name ‘Marigold Bikes’ is not a very well-known, or famous brand of a plaintiff and the defendant starts using that particular name as  ‘Marigold Bike Tools,’ then the consumer will not recognize it easily and associate the same with the brand name, thus making such mark to be weaker. 

Opinion of the Ninth Circuit in the Sleekcraft case

The U.S. Court of Appeals, Ninth Circuit after considering verdicts from various cases believed that:

• Distinctiveness: A Trademark that possesses strong and unique characteristics can easily receive legal protection from the USPTO. For example, any made-up, creative,     or imaginative words and symbols such as ‘Dutch Boy’ are easily considered for protection.
• Descriptive mark: a descriptive trademark (describes what a product is) only receives protection when the customers associate the same with a specific brand. These can be used as a defense under the fair use by the infringer.
• Suggestive mark: a suggestive trademark (provides hints about a product) receives protection even when the customers do not associate the same with a specific brand. These can be used as a defense under the fair use by the infringer.
• Under the Sleekcraft case, the trademark Slickcraft was not strong and was more on the suggestive side, and to distinguish between both the court looked at the following essential things.

1. Whether the customers are easily able to recognize the trademark name with the product or not. Here, Slickcraft could mean other things as well to the customers.
2. Whether a trademark owner can stop others from using the trademark name or not. Here, this was not the case.
3. Whether customers associate the product source with a sign or just refer it to be descriptive. Here, customers saw Slickcraft as a brand when associated with AMF.

Therefore, we can say that for a mark to be able to receive protection from trademark infringement, the trademark owner has to make sure that the mark hold is stronger and unique in the marketplace among the customers.

3. Proximity or similarity of the goods or services

The Proximity or similarity of the goods or services is also an important factor. This means that if parties in dispute are using their trademarks on the same, related, or even complementary kinds of goods and services in the marketplace then this will easily confuse the consumer regarding the origin or source of such goods and services, hence causing a likelihood of confusion. The more closely related the goods or services are, the more likely it is that confusion will occur.

For example, A is a company selling soft drinks under the trademark name ‘SodaSip’ and B is a company selling fruit juices under the trademark name ‘DrinkSip.’ Here, these are kind of similar trademarks. The use of such trademarks can lead customers to relate the two different products with each other, hence, creating confusion in the origin of the products sold by the companies.

Another example is when a similar trademark belongs to a shoe company and also belongs to a sports clothing company, then such products are considered to be related to the public, and the consumers will think that both companies are the same. Hence, confusion about the origin of the products and services available in the marketplace. 

Opinion of the Ninth Circuit in the Sleekcraft case

The U.S. Court of Appeals, Ninth Circuit after considering verdicts from various cases believed that:

• When the goods and services of both the companies in dispute are of the same, related, or complementary kind, or
• Sold to the same purchaser, and are also similar in use and function, then under such circumstances there exists a similarity of the marks between the two products or services. This gives rise to confusion among customers.
• Here, the consumers start to believe that both parties are in association with each other, even though it is untrue. 
• The product lines of AMF and Sleekcraft were non-competing but similar in use and function which overlapped (used for similar activities such as boating, designed for water, and features with fiberglass bodies or open seating) with each other. 

Therefore, we can say that for a mark to be able to receive protection from trademark infringement the trademark owner has to satisfy the court that the goods and services are similar, related, or complementary in how they are used and how they function.

4. Evidence of actual confusion 

Actual confusion is a strong indication and also an important factor used to determine the evidence for a likelihood of confusion. However, proof of actual confusion is not required. The competitor using the mark of the source company is sufficient evidence for the proof of a likelihood of confusion. To check the parameters for the existence of actual confusion among customers, survey evidence is used (asking consumers if they are confused by the use of a trademark).

Frequent occurrence of confusion is an essential element or serves as evidence of actual confusion. When confusion has occurred frequently among consumers, then it is proof of actual confusion. 

For example, Company A with the trademark name ‘GadgetsFreak’ and Company B with the trademark name ‘GadgetsFrreak’ have similar trademarks, and consumers frequently mix up the products by purchasing the gadgets from Company A thinking that they are purchasing from Company B. There are complaints, returns, or exchanges related to mistaken purchases. These consistent patterns of confusion are evidence of actual confusion.

However, when confusion does not occur frequently among consumers, then it is proof that actual confusion does not exist. For example, when sales volumes of goods and services are relatively high in the marketplace, but confusion among customers is not that high, then we can say that actual confusion does not exist related to the goods or services.

For example, Company A with the trademark name ‘FusionTech,’ and Company B with the trademark name ‘FuzionTech’, both have high sales volumes for their electronic gadgets. However, despite having a similar trademark, there are few reports of customers confusing the two brands. These two brands are easily distinguishable by the consumer as purchases are made by them without any confusion. There are no complaints, returns, or exchanges related to mistaken purchases.

Survey Evidence

To prove whether the mark of the trademark owner is genuinely unique or distinct (famous and well-known), leaving no room for confusion among customers, survey evidence (empirical research) is used by the counsel of each party whose trademark is in issue/dispute. This is a kind of tool or technique used by trademark owners during the times when infringement claims need to be provided before the court for evidence of the absence of a likelihood of confusion. Here, questions are asked to the customers in such a way (indirectly) about whether they recognize the product name or logo in the market or not.

For more detailed information on survey evidence, refer to the article “All About Trademark Dilution in the U.S.” However, let us clarify some basics of survey evidence used for determining the likelihood of confusion for trademark infringement.

How the Court uses survey evidence

The Court relies upon a singular answer from the survey:

• How a consumer views the products and services of the businesses or organization.

It means how well consumers view the trademark of a company as a brand name and not a generic name. Generic refers to the status and reputation of a word or symbol used to describe a product or service type entirely, rather than just distinguishing one product or service from the other.

The two major surveys the court relies upon are:

• Teflon Survey
• Thermos Survey

Teflon Survey

• This survey was established from the case of El DuPont De Nemours and Co. v. Yoshida International, Inc. (1975) which was decided by the U.S. District Court for the Eastern District of New York. This case is mostly used to determine the challenges regarding trademark genericide. A Trademark Genericide occurs when the use of a trademark is too often and common in the marketplace for describing a product or service that the trademark loses its tag of being famous or a brand.
• This survey explains what it means for a trademark to be common (generic) and what it means to be a brand (famous). This survey consists of a three-factor test for determining the likelihood of confusion: 

1. Explanations and examples: Provide definitions and explanations of the terms common and brand. This helps to eliminate the bias and differentiate between the two.
2. Minor test: This is used to verify with the consumers their understanding of the first test by further asking for examples from them to explain the products.
3. Major test: Here, they ask the consumer to classify what they understand between the two:

• The trademark in issue, and 
• The distinction between identical marks and identical terms.

Thermos Survey

This survey is less popular than the Teflon survey and is related to the brand name Termos and the product used as a vacuum bottle. Here, the survey only talks about how consumers would approach the market and what questions they would ask to acquire the product.

Will they refer to the product with a brand name or with the name of the product that was originally intended to be used? Then, based on that, the trademark genericide is decided. If the trademark genericide is present, the trademark cannot be protected from trademark infringement.

So basically, if the product category is defined for acquiring the product rather than the brand name such as Termos, then under such situations, the product has become generic (common) and otherwise not. However, the loyalty factor, as seen in Teflon, is absent in this survey.

Opinion of the Ninth Circuit in the Sleekcraft case

The U.S. Court of Appeals, Ninth Circuit after considering verdicts from various cases believed that:

• The evidence of confusion in the present is a strong indication of evidence of a likelihood of confusion in the future. However, much weightage is not given to this factor in case the evidence is not clear and strong.
• AMF provided conclusive proof of evidence for a likelihood of confusion among customers from their sales volume and promotional activities exhibits. However, conclusive proof of evidence for a likelihood of confusion in the past also matters the most for deciding whether actual confusion existed or not.

Therefore, we can say that for a mark to be able to receive protection from trademark infringement, the trademark owner has to make sure that there is an absence of actual confusion among customers in the marketplace when providing proof of evidence through surveys. 

5. Intent

The intent of the parties is also an important factor for determining the likelihood of confusion. If the competitor is intentionally and knowingly using the trademark of the source company (famous brand) to identify similar goods and services and to derive benefit from the reputation of the source company, then it is proof of intention on the part of the competitor to cause a likelihood of confusion. However, in the absence of intentional knowledge, the use of the trademark by the competitor is sufficient to establish trademark infringement.

In simpler words, if the party using the trademark was aware of the other party’s mark and intended to create confusion, that is a strong indication of trademark infringement.

For example, A is a company that owns a coffee shop under the trademark name ‘CoffeeSip’ that is famous among the public due to being in business for a very long time. B, on the other hand, is a company that opened a new coffee shop under the trademark name ‘CoffeeSipLite.’ Here, B by intentionally using A’s trademark name tried to gain benefit from their reputation for their own company and confused the customers in respect of the origin of the shop.

Opinion of the Ninth Circuit in Sleekcraft case

The U.S. Court of Appeals, Ninth Circuit after considering verdicts from various cases believed that:

• Nescher Sleekcraft Boats was unaware of the knowledge of the use of the trademark by the AMF. The notification served by AMF to Sleekcraft, led them to change their logo even to a distinctive one. 
• Nescher Sleekcraft Boats used the AMF trademark in good faith, which is a defense available to the infringer in trademark infringement claims bought by the plaintiff. 

Therefore, we can say that for a trademark to be able to receive protection from trademark infringement, the trademark owner has to make sure that there is a presence of intentional intention of creating confusion among customers in the marketplace on the part of the infringer. 

6. Channels of trade and advertising-proximity

The channels of trade and advertising proximity are also important factors for determining the likelihood of confusion. If the products and services of both the companies in dispute are likely to be sold, and advertised in the same or similar stores and media, then under such a situation there is a likelihood of confusion among customers. In simpler terms, it means the use of similar marketing strategies including the types of outlets used to distribute the goods or services, and the proximity of the marks in the marketplace can confuse the customers.

For example, A is using the trademark ‘Delicious Icecream,’ and B is using the trademark ‘Happy Flavors’ for their ice-cream shop. Both these companies are using similar bright color trucks, media channels, and radio to advertise their ice cream. This similarly led customers to believe that both the shops are owned by only one company, thus causing confusion among customers.

Opinion of the Ninth Circuit in the Sleekcraft case

The U.S. Court of Appeals, Ninth Circuit believed that:

• The Products of both the companies (AMF and Nescher) were only sold at the boat shows and nowhere else, however, the strategies used by both to sell were similar to each other such as authorized stores in the same locality, sales techniques, prices, frequent advertising, local dealers promoting their products. 
• Even though the target customers were different in both companies, customers of boats were likely to buy their products without differentiating were similar. There was a presence of an overlap factor in them.

Therefore, we can say that for a trademark to be able to receive protection from trademark infringement, the trademark owner has to make sure that the marketing strategies are used such that customer confusion is avoided in differentiating the goods and services that are sold and advertised.

7. Consumer sophistication and care

The sophistication and care of the consumers are also important for determining the likelihood of confusion. This factor depends upon the consumers as well, apart from the trademark owners. When a consumer is about to purchase something from the marketplace, whether it is related to the goods or services offered by the companies, the consumers will always be extra careful and cautious regarding the purchase depending on how costly or fanciful the goods (products) and services are. When consumers are this picky and careful, there is very little room for likelihood of confusion to occur for trademarks.

In simpler terms, it means that the more sophisticated and careful the consumers are, the less likely they are to be confused by using a trademark. For example, when a consumer is about to buy a luxury watch, they will exercise great caution, gather every information, and then buy the watch, thereby averting any room for confusion about a brand or trademark that is present in the market.

Opinion of the Ninth Circuit in the Sleekcraft case

The U.S. Court of Appeals, Ninth Circuit after considering verdicts from various cases believed that:

• The Products of both the companies (AMF and Nescher) were high in quality and price. The customers also only purchase after gathering and inspecting every piece of information. To assess the existence of a likelihood of confusion, the customers also had a bigger role to play. However, their ignorance is excused under the law, even if they are experts in the field of boats.
• Despite customers’ knowledge of the boats and the care taken in their purchases, they are likely to get confused about the products in the marketplace because the logos of a brand do not matter that much to customers.
• The high quality of products sold by either of the companies does not mean that harm will be caused to either of the company’s reputations. However, the qualities of products can change anytime therefore, this cannot be a defense against the trademark infringement claims bought by the plaintiff. 

Therefore, we can say that for a trademark to be able to receive protection from trademark infringement, the trademark owner has to make sure that their products stand out from the other products available in the marketplace. However, confusion cannot be averted by the company when the customer also has a significant role to play.

8. Likelihood of bridging the gap

The likelihood of bridging the gap between the two marks is also an important factor for determining the likelihood of confusion. Imagine a scenario where both companies in dispute for trademark infringement cases are selling different products or services. 

For example, one company is selling shoes (source company) and the other is selling bags (competitor). However, the competitor is using the source company’s trademark on their bags. Further,  the source company starts selling bags (entering into the competitor company market), then under such circumstances there arises the chances of likelihood of confusion among customers in the marketplace about the origin of the products. This is because consumers think that both companies are associated with each other, which is untrue. 

This means that when a company expands its business (starts selling and manufacturing products that they were already doing for years) more chances are for customer confusion. There arises a gap between the origin of the products or services. How well the consumers can identify and bridge the gap of origin of products, or services, marks an essential element in deciding trademark infringement.

In simpler terms, it means that bridging the gap factor looks at the similarity of the marks and how likely it is that the consumer will bridge the gap between the two marks and assume they are from the same source.

For example, A is a company that sells and produces sports shoes, while B is a company that sells software solutions and already uses the logo of company A on their software solutions. However, if by noticing company A enters into the market of software solutions, then under such circumstances confusion arises within the potential customer’s marketplace. The consumer will think that company B is related to company A.

Opinion of the Ninth Circuit in the Sleekcraft case

The U.S. Court of Appeals, Ninth Circuit believed that:

• There exists a chance that companies that sell and produce different goods and services might enter the same market shortly and compete with each other. Under such circumstances, the company that possesses a registered trademark has a stronger chance of protecting its mark from trademark infringement than the latter one. 
• The goods or services offered by one company are closely related to the goods or services offered by another company when either of the companies expands its business, then what the companies are already dealing with creates competition in the marketplace between those goods or services and confusion among customers. 

Therefore, we can say that for a trademark to be able to receive protection from trademark infringement, the trademark owner has to make sure to register their trademark with USPTO to gain an upper hand during infringement situations. This is because related goods create competition in the market, ultimately creating a likelihood of confusion among customers. How well a consumer can bridge the gap between the two can be easily known through evidence of surveys, thereby avoiding any chances of mishaps.

Concepts related to the likelihood of confusion

There are concepts that are related to the likelihood of confusion. These include:

• Question of Law or Fact: Standard of Review
• Forward and Reverse confusion

1. Questions of law or fact : standard of review

One of the most interesting things about the likelihood of confusion is the uncertainty regarding the likelihood of confusion itself. What we mean by this is the courts need to determine whether the likelihood of confusion that took place among the consumers or reasonably prudent consumers is a question of fact or a question of law, before asserting whether trademark infringement took place or not. To do this, the court uses the Standard of Review. 

This simply means that it is important to know the issues that are involved in a particular case is a question of fact or law when a court is determining whether trademark infringement occurred.

Question of law

Questions of law are decided by the court. The standard of review for questions of law is de novo, meaning the court will make its determination of the law without giving reference to the lower court’s ruling. This means that the disputed case will be looked upon through fresh, new, and without any pre-determined assumptions.

In terms of trademark infringement cases, when the court has to determine whether the likelihood of confusion occurred or not because of the use of the source company trademark by the competitor, (use of plaintiff’s mark by defendants) courts will refer and apply the legal principles, laws, precedents established by the U.S. law without referring any verdicts ruled by the lower court.

Question of fact

Questions of fact are usually decided by a jury or at a bench trial. This is done by examining how strong the evidence is and how credible the witnesses are. This is the opposite of what courts apply for a standard of review in the question of law.

When the court has to determine whether the likelihood of confusion occurred or not because of the use of the source company trademark by the competitor, courts will refer and rely upon verdicts from the previous cases, credible witness sources, and presented shreds of evidence (including Sleekcraft Test) as exhibits for trademark infringement.

Standard of review

There were various debates among critics and lawyers alike for whether the likelihood of confusion is a question of fact or a question of law. To put an end to this long battle for once and all the court for Ninth Circuit in the case of Sleekcraft Boats (as discussed earlier) relied on the case of J.B. Williams Company, Inc v. Le Conte Cosmestics Inc (1976), decided by the U.S. Court of Appeals, Ninth Circuit and made the following observations to determine this very issue at hand.

The Court explained that:

• The question of the likelihood of confusion for a standard of review depends upon the disputed facts that are present in the case. This varies from case to case depending upon the circumstances of the case.
• When there are disputed facts present in the case at issue for trademark infringement, the appeal court should uphold the decisions laid out by the trial courts, until and unless the appeal court has a reason to believe that the disputed facts are interpreted wrong by the trial court.
• When there are such decisions in cases where the interpretation given by the trial court is entirely wrong, then the appeal court has full authority to provide its conclusion for whether the issue of likelihood of confusion is a question of fact or a question of law.

2. Forward and reverse confusion

Whenever there is a likelihood of confusion in customers’ minds about the disputed trademarks, the U.S. Court of Ninth Circuit further provides weightage to the theory of confusion known as forward confusion and reverse confusion for supporting the claims brought by the trademark owner for trademark infringement.

Both types of confusion are more likely to occur when the defendant’s mark is more well-known than the plaintiff’s mark.

Forward confusion

Forward confusion is a type of trademark infringement that occurs when a competitor introduces his or her new products or services in the marketplace with a trademark that is similar to the source company’s trademark. The mark of the competitor is also very famous in the marketplace. Here, the consumers believe that the products or services associated with the junior mark (competitor) are supported or come from the senior mark (source company) present in the marketplace. For example, a new snack company uses its logo and brand name ‘Cheat-os’ which is deceptively very similar to the famous snack company ‘Cheetos,’ and is causing confusion among customers in the marketplace regarding the source of the product. 

Reverse confusion

Reverse confusion is a type of trademark infringement where the defendant’s mark (competitor) is so similar to the plaintiff’s mark (source company) that consumers are confused about the source of the product or service. Here, the consumers start believing that the defendant’s mark is associated with the plaintiff’s mark as they are engaged in business with each other. 

However, this claim cannot be pleaded as a separate trademark claim. This can be used more as a theory and only applicable to support forward confusion or trademark infringement claims when there is the existence of a likelihood of confusion. 

Marketquest Grp Inc. case (reverse confusion)

Significance of the case

In Marketquest Grp. Inc. v. BIC Corp. (2017), the U.S. Court of Appeals for the Ninth Circuit clarified the parameters required to be presented during the trademark infringement claims under the reverse confusion.

• This made it easier for the trademark owner to bring a cause of action without separately pleading reverse confusion. The proving of the intent factor was made easy for such cases.
• The case established that good faith is a necessary element to defend against a trademark infringement and just a factor of fair-use defense, as fair use can only be raised after confusion is proved.

Facts of the case

• Markquest Grp Inc. owned the trademark for “All-in-One” and “The Write Choice” for sale and promoting its products.
• BCI Corp and BIC USA Inc., on the other hand, had a promotional company named Norwood. They used the phrases in their promotional catalog that were trademarked by Markquest Inc. as “All-in-One” and “The WRITE Pen Choice for 30 Years” for 30 years of sale anniversary of pens.
• A Lawsuit was filed by Markquest for trademark infringement under both theories of confusion (as discussed earlier).
• The US District for Southern District of California granted judgment in favor of BCI Corp. based on good faith defense against the infringement claims.

Issues involved in the case

• Whether reverse confusion can be bought as a separate claim or can be used to support forward confusion for infringement claims or not.
• Whether there are parameters to establish intent in reverse confusion or not.

Judgment of the Court

• The U.S. Court of Appeals for the Ninth Circuit stated that reverse confusion can be used to support trademark infringement claims rather than solely initiated as a separate claim.
• The Court stated that parameters for intent depend upon various other factors such as ‘defendants were aware of the existence of the mark of the plaintiff, intentionally creating reverse confusion, failure to conduct a proper trademark search, etc.’

Ironhawk Techs. Case (Proving actual confusion necessary)

Significance of the case

In the case of Ironhawk Tech. v. Dropbox, Inc. (2021), the complexity of trademark infringement cases involving reverse confusion theory was clarified. This case demonstrated how even experienced judges can have differences in opinions.

The case signifies that while assessing the likelihood of confusion in trademark infringement, it is important to consider the sophistication of customers and the nature of the product.

Facts of the case

• The Ironhawak Tech. (software company) with a trademark name, SmartSync was a service provider for the U.S. Military.
• Dropbox, on the other hand, a cloud storage provider, launched a product called Smart Sync.
• The Ironhawak Tech. sued Dropbox, Inc. for trademark infringement and unfair competition. 
• The Ironhawk Tech alleged that Dropbox had infringed upon their trademark name SmartSync. They connoted that Dropbox already knew about this information and still, they copied the trademark This trademark was registered 10 years ago by Ironhawk Tech. 

Issues involved in the case

• Whether there was a likelihood of confusion between Ironhawk’s SmartSync trademark and Dropbox’s SmartSync product or not.
• Whether consumers mistakenly believe that Dropbox was the source of Ironhawks’s products or not. 

Judgment of the Court

The U.S. Court of Appeals for the Ninth Circuit rejected the verdict of the U.S. District Court. The District Court held in favor of Dropbox and rejected the claims made by Ironhawk Tech. based on the absence of the likelihood of confusion. This led to the filing of a case based on reverse confusion before the U.S. Court of Appeals. 

The U.S. Court of Appeals for the Ninth Circuit stated that the existence of evidence of actual confusion is a strong parameter for the likelihood of confusion in customers in the marketplace and for that, the court applied the Sleekcraft factors in assessing the trademark infringement. 

The Court stated that consumers associated the SmartSync trademark with the Dropbox product Smart Sync as the court applied the reverse confusion theory. The Court stated that despite Ironhawk being a small company, their trademark was senior in use and Dropbox being a larger company, their trademark was junior in use. 

Liability for trademark infringement 

Consider a situation where you are a manufacturer or distributor of a pillow cover (product), if you intentionally induce another to infringe a trademark of that product then under such a situation you are contributorily responsible (liable) for the harm or injury that occurs to the trademark as a result of deceit. Let us understand this in detail, for better clarification. 

Second corner doctrine

The second corner doctrine goes by many names such as secondary trademark infringement, secondary liability for trademark infringement, or contributory infringement for that matter, with all of them having just one meaning. It simply means that even if a person is indirectly involved in trademark infringement activities, still that person can be held directly liable for the same. 

Brands are known for their trademarks that associate them with the selling and manufacturing of only high-end products and when fake products of the same are revolving in the marketplace the image and reputation of such brands are injured because customers assume the brand products are cheap, even when that is not the case.

For example, a person selling counterfeit (fake) designer bags in their store intentionally, even though they did not manufacture or design that bag. This makes such a person an accomplice or a contributory factor in trademark infringement because such a person committed such a crime knowingly and intentionally. The reputation and status of a source company are at the brink of a risk along with losing the trust of the customers regarding their brand.

The second-corner doctrine is not explicitly stated in the Lanham Act, but the Supreme Courts of the U.S. have recognized the same in many instances. To determine the liability for contributory trademark infringement, first arose in the case of Inwood Laboratories.

Inwood Laboratories case (Standard to determine Second-Corner Doctrine)

Significance of the case

• In Inwood Laboratories v. Ives Laboratories (1982) the case clarified the scope of the contributory trademark infringement liability and established that manufacturers cannot control the chain of distribution by supplying goods to the infringing parties, despite knowing the information of misuse of a trademark by them. 
• The standard for determining the liability of a party for contributory trademark infringement was established, even when they are not directly an infringing party. 

Facts of the case

• Inwood Laboratories Inc. was a pharmaceutical manufacturer.
• Ives Laboratories Inc. on the other hand, was also in the same business and engaged in the sale of generic drugs to third parties (retail pharmacists).
• These pharmacists used to buy drugs from Inwood Laboratories, relabel them with the Ives Laboratories trademark, and then sell the same.
• Despite knowing these facts, Inwood Laboratories continued to sell those drugs to third parties.

Issues Involved in the case

• Whether Inwood Laboratories was indirectly liable for contributory trademark infringement by supplying generic drugs to retail pharmacists or not.

Judgment of the Court

The U.S. Supreme Court after observing the facts of the case established a standard for determining the factors that can make a company liable for contributory trademark infringement. The Court stated that the liability for trademark infringement can go beyond the third party who directly uses the trademark of a source company. The manufacturer or distributor can be held liable when:

1. A company intentionally encourages a third party to use the trademark of a source company unlawfully.
2. Sells its products to a third-party company that knows that they are misusing the trademark of a source company. 

Under such circumstances, the company is causing harm to the reputation or status of a source company (by an act of deception).

The Court stated that Inwood was liable for contributory trademark infringement because of its intentional actions. 

Tiffany Case (Liability of online platforms)

Significance of the case

• In Tiffany (NJ) Inc. v. eBay Inc. (2010) a significant precedent was set by the case for the online platforms when the question of contributory trademark infringement arises.
• The case established that online platforms cannot be directly held liable for the second-corner doctrine when third parties are selling fake products on their website.
• Specific knowledge regarding the listing that is infringing or likely to be infringed is a  necessary element to make the service provider liable, mere general knowledge is insufficient. 

Facts of the case

• Tiffany (NJ) Inc. is a famous jewelry brand in the U.S. 
• eBay, on the other hand, is an auction website that facilitates commercial activities between individual buyers and sellers.
• A Lawsuit was filed by Tiffany on the allegations that eBay indulged in contributory trademark infringement by selling counterfeit goods of Tiffany on its platform.
• Tiffany also alleged that eBay knew about this information and continued to sell those fake products.
• However, eBay stated that they took action on this particular issue by removing the listing and blocking the infringers after they received notice of the same from Tiffany. However, Tiffany was not satisfied with the same, as they thought such measures to be inadequate.

Issues Involved in the case

• Whether eBay was liable for contributory trademark infringement on e-commerce websites or not. 
• Whether actions taken by eBay were insufficient to avoid the liability of contributory trademark infringement or not.

Judgment of the Court

• The U.S. Court of Appeal, Second Circuit rejected the verdict of the U.S. District Court that held in favor of Tiffany and further stated that for such liability to exist on eBay, the auction website should have possessed more than general knowledge and information that third-party are selling counterfeits goods on and through their websites.
• The Court stated that the burden of proof lay on Tiffany Inc. The jewelry brand should have investigated and sought help for the removal of the same from the website as eBay was not duty-bound to investigate or prevent any selling of counterfeit goods on their website.
• The Court observed that service providers cannot shield themselves from the sale of counterfeit goods on the website, even when they believe that trademark infringement is taking place. 
• The Court stated that eBay took measures to prevent the infringement activities after the notice from Tiffany. However, the success or failure of the same does not depend on the service provider, hence, they cannot be held liable for the contributory trademark infringement. 

USPTO’s take on second corner doctrine

The USPTO carried out a report “Secondary Trademark Infringement Liability in E-commerce Setting” on the current states of law and public opinions on second-corner doctrine in the e-commerce setting and published it on November 13, 2020, based on the then president report Memorandum on Combating Trafficking in Counterfeit and Pirated Goods-2019. The USPTO further passed down the report of 2020 to the Department of Homeland Security (DHS) whereby in response to the same the DHS observed that:

• Customers are using the internet for online shopping and because of that fake goods are easier to sell to counterfeits. This way they can reach maximum targets for selling fake products alongside the real ones.
• Online shopping websites work hard to stop the websites of counterfeiters from selling fake products online. Evidence of the same was presented by the DHS. However, this was enough to stop the sale of fake products.
• The U.S. government needs to take action to resolve this particular issue by encouraging private companies to upgrade their technologies in spotting the sale of counterfeit goods. 

The USPTO through the U.S. Department of Commerce (DOC) provided a series of summaries of solutions (report of 2020) in response to the action carried out by DHS in “Assess Contributory Trademark Infringement Liability for Platforms.” 

Remedies for trademark infringement claims

The remedies for trademark infringement, include monetary damages, injunctions, and other equitable relief. The aggrieved owner has a remedy to file a lawsuit for Unfair Trade Practices- 15 USC 45 parameters. This creates a right to receive compensation from the infringer through the court for using its brand’s name or logo without their consent, even if the trademark is not registered. This remedy also protects consumers in the marketplace from getting duped by market competition. 

However, money is not always guaranteed under the compensation, sometimes an injunction (Ban on using a trademark by the infringer and destroying the infringing materials) as a remedy is also used by the Courts. On successfully proving the occurrence of intentional infringement by the trademark owner, the monetary damages can be three times higher than the profit made by the infringer from such activities. 

For claiming damages and profits

• According to 17 USC 504– For claiming damages and profits regarding trademark infringement, the trademark owner has to provide proper details regarding the registered trademark or give written notice to the infringer about the registration of the source mark.
• In cases regarding unintentional infringement (by media housing publications) and related or associated activities, the owner can only ask for an injunction to retaliate but cannot ask for damages or profits from the infringer.

Victoria’s Secret Stores case (Trademark violation)

Significance of the case

• In A&H Sportswear Inc. Mainstream Swimsuits Inc. v. Victoria’s Secret Stores Inc. Victoria’s Secret Catalogue (1999) case had a significant impact on dealing with various other cases with intellectual property and unfair competition in the fashion industry.
• The boundaries for the protection of the apparel elements under the trade dress law and whether copying the competitor’s design by companies can make them liable for infringement were explored because of this.
• This case also enables us to give a peek into the challenges of proving distinctiveness and non-functionality in trade dress cases involving fashion items.
• According to the trade dress law, only inherently distinctive design elements of a trademark can receive protection. This means that designs that are unusual and memorable (itched into the customer’s mind with particular supremacy of a brand) that help a brand to stand out from various other products or services available in the marketplace are eligible for protection. For example, unique bottles and boxes of perfumes, clothes packaging, watch packaging, etc.

Facts of the case

• A&H Sportswear Inc. and Mainstream Swimsuits Inc. were the swimsuit manufacturers and retailers.
• Victoria’s Secret Stores, Inc. and Victoria’s Secret Catalogue Inc. on the other hand, were well-known and reputed lingerie and swimwear companies, globally.
• A&H Sportswear Inc. claimed that Victoria’s Secret Inc. engaged in unfair trade competition by copying their swimwear designs (specific elements such as placement of zippers, buttons, and other decorative elements) and trade dress. These features of the designs were distinctive and non-functional, meaning superior and unique from other brand’s products available in the marketplace.

Issues involved in the case

• Whether Victoria’s Secret Inc. engaged in unfair competition by copying the design elements of the swimsuits or not.
• Whether the design elements in dispute were distinctive and non-functional, making them eligible for protection under the trade dress law or not.
• Whether A&H Sportswear Inc. was entitled to relief for the alleged unfair competition or not.

Judgment of the Court

• The United States Court of Appeal, Third Circuit ruled in favor of Victoria’s Secret Inc.
• According to the court, the design elements involved in the dispute were found to be functional and ineligible for protection under the trade dress law. Hence, it proved that Victoria’s Secret Inc. was not involved in an unfair competition as alleged by A&H Sportswear Inc.
• According to the court, the swimsuits had certain elements of functional aspects contained therein that directly related to the design elements at issue, making  A&H ineligible for a valid claim of unfair competition based on trade dress law. This means that the designs of the swimsuits were not inherently distinctive.
• The Court stated that A&H Sportswear Inc. cannot receive any form of relief due to the absence of alleged unfair completion on the part of Victoria’s Secret Inc.

Defenses to trademark infringement

When a trademark owner officially registers the trademark with the USPTO under the Lanham Act, the owner possesses the upper hand during the claims for trademark infringement. This is one of the advantages of registered trademarks. The trademark owner of a registered trademark can bring a claim of Trademark Dilution under 15 USC 1125. 

The USPTO also enables the infringer or competitors (defendants), or second parties with defenses against the claim of trademark infringement bought by the source company (plaintiff). These are known as equitable defenses or equitable doctrines. These defenses are awarded as remedies for innocent infringers under Title VI Remdies of U.S. Trademark Law and Title VIII- 43  (15 USC 1125). 

The defenses available to an infringer for trademark infringement are the same as the defenses available under the trademark dilution laws of the U.S. They are in several forms including:

1. The Invalidity of the plaintiff’s mark.
2. Fraud.
3. Antitrust violations.
4. Fair use.
5. Laches
6. Estoppel.
7. Acquiescence 
8. Parody

From these defenses, the two affirmative ones available to an infringer include the defense of fair use and parody.

Fair use occurs when the competitor of a source company uses the descriptive term honestly for its original meaning without causing any likelihood of confusion or uses the nominative term in need or necessity, meaning the competitor uses the trademark of a source company to identify the products or services of the source company. For example, using the trademark ‘Fish Fry’ by a competitor instead of the trademark ‘Fish-Fri’ of a source company. Parodies on the other hand are protected through the First Amendment if they are not exactly used for commercial purposes.

To know more about the available remedies to trademark owners, defenses against the trademark infringement claims bought by the source company, and how different circuits dealt with those issues at hand, refer to our article “All about trademark dilution in the US.”

Anti-trust violations

When a trademark owner uses the trademark to violate the antitrust laws by bringing a claim for trademark infringement then such a trademark through petition is canceled by the USPTO even if the mark in dispute is incontestable (famous or well-known). 

The trademark misuse defense is only acceptable by the court if the misuse is connected with the legal dispute that arose between the parties. In this infamous case of U.S. Jaycees v. Cedar Rapids Jaycees (1985) the U.S. District Court, N.D. Iowa, Cedar Rapids Division stated that preventing discrimination was more important than protecting the trademark. The U.S. Jaycees was a national organization that provided leadership to young minds through their community services and allowed only full membership of men and not of women. However, they formed some local groups that allowed women to join with full membership. The U.S. Jaycees claimed and alleged that this very action injured the reputation of their trademark and filed a claim for trademark infringement. 

Conclusion

Trademark infringement is a serious issue in the US and can have serious financial and legal repercussions for those who are found to be infringing on the trademark rights of others. It not only amounts to violating the rights of trademark owners but also causes injury and damage to their hard build success, reputation, goodwill, and status that they hold in the marketplace among consumers. 

When there are hundreds of goods present in the market naturally, it is easier for consumers to get attracted to the outer shells of a product rather than knowing the real implications of their choices, whether they are holding the real products or the fake ones. It might not be a big deal for us as consumers during that point of time when we buy a product at a cheap bargain, but if we look closer, our trust in the brand also deteriorates over time when the quality of a cheap bargain does not satisfy our need of expectations. 

The trade of commerce (demand & supply) runs because of one single source, the consumers. The more we allow for a fake product to be sustained in the marketplace, the more likely we are going to fall into the hands of the infringer. It is also, therefore, necessary to educate oneself on trademark infringement, take precautions when buying goods or services, and also by not allowing to sustain those goods and services in the marketplace as a trademark owner. 

If you as a trademark owner believe or suspect that your trademark has been infringed upon, it’s always important and advisable to speak with an experienced trademark attorney to discuss your cautious options. 

Frequently Asked Questions (FAQs)

What is trademark infringement?

Trademark infringement is a right violation of a trademark owner who has registered their mark with the USPTO. It occurs when the competitor of the source company uses an identical and confusingly similar trademark on their product or services (counterfeit products), leading to confusion in the consumer’s mind about the origin of the goods or services. 

How to know if a trademark is being infringed?

It is the responsibility of the trademark owner to keep a check on their trademark whether it is being infringed upon in the marketplace or not. Generally, one can look at the signs of trademark infringement through the eight-factor test, market research, customer complaints, or by visiting the official website of USPTO.

What are the rights of a trademark owner for trademark infringement?

The trademark owner possesses the exclusive right to use their mark on the goods or services in the marketplace. When such rights are violated or infringed, a trademark owner can bring a lawsuit against the infringer, either in the civil court of U.S. law or in criminal court. These rights can also be enforced through cease and desist letters and negotiating settlements. 

What are the remedies available for a trademark infringement lawsuit?

A Trademark owner has the right to receive remedies in the form of relief such as injunction, monetary, or damages. These remedies are only awarded by the court after being satisfied that the infringed trademark is a valid mark and causes a likelihood of confusion among customers.

What is the validity of a trademark in the marketplace?

In the USA, a trademark generally lasts for 10 years and if a trademark owner continuously keeps on filing maintenance documents with the USPTO, it continues to last indefinitely. 

What are the reasons that the USPTO may reject the application for registration of a trademark?

The USPTO may reject the application for registration of a trademark where such a trademark is conflicting, causing confusion with an already registered mark, and someone has filed a registration of a similar mark before yours. Even if a trademark owner does his/her research to apply for registration of their mark with the USPTO there are chances the USPTO may still reject the application therefore, it is always advisable to consult an expert or trademark attorney.

Is there an alternative method to resolve the dispute of a trademark infringement? 

Yes, there exists an alternative method instead of the traditional court method to resolve the dispute of trademark infringement. The trademark owner can take a route of mediation or arbitration.

Can the claim for the initial interest confusion be successful in a court of law?

Initial interest confusion is a form of trademark infringement, as recognized for the first time by the U.S. Court in the case of Brookfield (as discussed earlier). However, this cannot be used as a separate defense. It can be used to support the claim of trademark infringement when there is a certain surety of the presence of likelihood of confusion. Initial interest confusion occurs when there is a conflict of interest among consumers in the marketplace or online before buying any product or service. The consumer is diverted from the rightful owner to what is shown or depicted by the infringer because such a mark is confusingly similar to a famous or well-known mark.

What is secondary liability and how can one determine secondary liability?

Secondary liability occurs when the parties are not directly infringing on the source of a trademark. It means that the trademark is infringed upon by the command chain of a supply, such as through distributors, retailers, or by the use of online websites. It is when some other individual is contributing to, or facilitating, trademark infringement. Furthermore, it can be determined through contributory or vicarious liability.

References

• Infringement of the Trademark “Coca-Cola” is accessible at https://www.jstor.org/stable/40684879.
• Sensible Agnosticism: An Updated Approach to Domain-Name Trademark Infringement is accessible at https://www.jstor.org/stable/23034815.
• Technical Terms for Comparative Trademark Analysis is accessible at https://www.jstor.org/stable/26421632.
• Standing the Test of Time is accessible at https://www.jstor.org/stable/26377773.
• Initial Interest Confusion in Metatag Cases: The Move From Confusion to Diversion is accessible at https://www.jstor.org/stable/24118233.
• Lanham Act Section 43(a): The Sleeping Giant Is Now Wide Awake is accessible at https://www.jstor.org/stable/1192070.
• Principles Governing Damages in Trademark Infringement is accessible at https://nopr.niscpr.res.in/handle/123456789/10213.
• Trademark Infringement and Unfair Competition. Is accessible at https://heinonline.org/hol-cgi-bin/get_pdf.cgi?handle=hein.journals/lcp14&section=18
• Equitable Defenses in Incontestable Trademark Infringement Actions: United States Jaycees v. Cedar Rapid Jaycees is accessible at https://heinonline.org/hol-cgi-bin/get_pdf.cgi?handle=hein.journals/byulr1987&section=37 
• An Empirical Study of the Multifactor Tests for Trademark Infringement is accessible at https://heinonline.org/hol-cgi-bin/get_pdf.cgi?handle=hein.journals/calr94&section=51 
• Trademark Law- Confusion over the Likelihood of Confusion? is accessible at https://heinonline.org/hol-cgi-bin/get_pdf.cgi?handle=hein.journals/vllalr38&section=49 
• Searching for Confusion: The Initial Interest Confusion Doctrine and its Misapplication to Search Engine Sponsored Links is accessible at https://heinonline.org/hol-cgi-bin/get_pdf.cgi?handle=hein.journals/clqv91&section=46 
• Misuse: An Equitable Defense to Intellectual Property Infringement Actions is accessible at https://heinonline.org/hol-cgi-bin/get_pdf.cgi?handle=hein.journals/hascom14&section=18 
• Secondary Trademark Infringement Liability in The E-Commerce Setting is accessible at https://www.uspto.gov/sites/default/files/documents/Secondary-TM-Infringement-Liability-Response.pdf 
• The Liability of Online Markets for Counterfeit Goods: A Comparative Analysis of Secondary Trademark Infringement in the United States and Europe is accessible at https://heinonline.org/hol-cgi-bin/get_pdf.cgi?handle=hein.journals/nwjilb32&section=6