Is Peloton Spinning Its Wheels? Peloton Petitions to Cancel “SPINNING” Registrations
by Stites & Harbison, PLLC
In my post last week I promised to discuss how the Board decides likelihood of confusion cases. How the Board decides these issues is of particular interest because it bears on a case currently pending before the Supreme Court, B&B Hardware v. Hargis Industries, Inc., concerning what effect a decision on the issue of likelihood of confusion between marks by the Trademark Trial and Appeal Board should have on a court deciding the same issue.
The issues in that Supreme Court case are (1) whether the Trademark Trial and Appeal Board's finding of likelihood of confusion precluded Hargis from relitigating that issue in infringement litigation in a district court and (2) if Hargis is not precluded from relitigating the issue whether the U.S. district court should defer to the Board's finding in the absence of strong evidence to the contrary.
There are certainly differences between the effects of a decision as to likelihood of confusion by the Board and such a decision in a district court. If the Board finds that there is a likelihood of confusion between an earlier mark or trade name and a later mark, the only consequence is that the later mark will not be allowed registration or that the registration of the later mark will be cancelled.
By contrast, if a district court finds that there is a likelihood of confusion between a later mark and an earlier mark, it makes a finding of infringement of prior rights that can result in an order that there can be no further use of the later mark and also a significant monetary award to the owner of the earlier mark or name.
At first glance it would appear that the Board, like a district court, looks at a number of real world factors to determine likelihood of confusion and whether a mark is registrable (or should remain registered). In determining whether there is a likelihood of confusion, the Board and the Trademark Office Examiners are guided by any or all of the Dupont factors (the factors set out in In re E.I. du Pont de Nemours):
1. The similarity or dissimilarity of the marks in their entireties as to appearance, sound, connotation, and commercial impression.
2. The similarity or dissimilarity and nature of the goods . . . described in an application or registration or in connection with which a prior mark is in use.
3. The similarity or dissimilarity of established, likely-to-continue trade channels.
4. The conditions under which and buyers to whom sales are made, i.e. "impulse" vs. careful, sophisticated purchasing.
5. The fame of the prior mark.
6. The number and nature of similar marks in use on similar goods.
7. The nature and extent of any actual confusion.
8. The length of time during and the conditions under which there has been concurrent use without evidence of actual confusion.
9. The variety of goods on which a mark is or is not used.
10. The market interface between the applicant and the owner of a prior mark.
11. The extent to which applicant has a right to exclude others from use of its mark on its goods.
12. The extent of potential confusion.
13. Any other established fact probative of the effect of use.
The various U.S. district courts use similar lists of factors, which may vary among the eleven Federal circuits. However, the fact that the Board is considering registrability rather than infringement makes a very significant difference in how those factors are considered.
For example, as I mentioned in an earlier post, the Board did not consider the way the "McSweet" mark was actually used to determine whether there was a likelihood of confusion. It looked only at the mark as presented in the application, which, of course, is what it should do to determine whether the mark should be allowed registration. This is very significant since it is not hard to imagine that a "Mc" mark such as "McSweet" could be presented in such a style and with such a unique and fanciful background that, under actual circumstances in the marketplace, no one could possibly think that it belonged to the McDonald's family of "McMarks".
By contrast, a district court would be focused on how the mark is actually experienced in the marketplace. It is clear from this factor alone that likelihood of confusion before the Trademark Office should not result in a finding of likelihood of confusion in a U.S. District Court.
Similarly, as to the second factor, since it is determining registrability, the Board will look at the identifications of goods or services in the applications or registrations involved to determine the issue of likelihood of confusion rather than at the actual goods sold. For example, a prior registration and an application for registration could both identify the goods with which the marks are used as "computers" i.e. apparently "identical" goods even though the actual products might be as different as a wrist-worn wearable computer for use by disabled children and a super computer used for research in quantum physics.
Although this problem was recognized and addressed in the Trademark Law Revision Act of 1998, amending Section 18 of the Trademark Act to give the Board the authority to limit or modify the goods or services in a registration or application in order to avoid a likelihood of confusion, the Board will not on its own modify the descriptions to fit the evidence of actual use provided by the parties.
What would be required is action by the applicant to introduce the distinctions and persuade the Board to restrict the identification in the prior registration. This is not easily done. For example, the applicant for registration of a mark for "computers" whose application for registration has been opposed by the owner of a registered mark for "computers" might seek to amend its own identification of goods to "wrist-worn wearable computer for disabled children" and petition for restriction of the identification of goods in the registration to "super computers used for research in quantum physics". The applicant might even consider trying to obtain a restriction which will specify the nature of the purchasers and channels of trade. However, to convince the Board to restrict the identification of goods in the prior registration, the Applicant would have to plead and prove that the entry of the restriction will avoid a finding of likelihood of confusion and that the registration owner is not using its mark for the goods which will be excluded.
Because the issue is registrability rather than infringement, there can be indeterminacy in whether the Board is going to look at actual marketplace circumstances or simply look at the application or registration and prior registration. For example, looking at the third factor, channels of trade, we saw in the McSweet case that the Board stated that McSweet could not distinguish between the channels of trade in which its products sold and the McDonald's products were sold because the McSweet applications did not include restrictions in the channels of trade. However, it also stated that McDonald's evidence showed that other restaurant-branded foods are sold in supermarkets or grocery stores (though not McDonald's foods) and also found it significant that there were McDonald's restaurants inside Walmart stores.
I asked what the Board would have done if McSweet had submitted evidence which showed that in fact restaurant-branded foods were not sold in grocery stores and that McDonald's was not in any stores. Presumably it would have still stated that McSweet could not distinguish between channels of trade because there were no restrictions in channels of trade in its applications.
As the logic of the issue of whether a mark is registrable is applied to all of the factors the limitations become apparent. For example, if there has been a significant amount of use of both marks a significant real world factor is whether there has been actual confusion in the marketplace because of the use of the later mark.. As you may remember, McSweet had been using its "McSweet" mark for twenty years with no known instance of confusion. However, the Board stated that there was not was "scant evidence in the record upon which to determine whether there has been a meaningful opportunity for confusion to occur" and concluded that twenty years of no evidence of confusion did not even weigh in McSweet's favor.
Although might think that the absence of actual confusion over twenty years would be a pretty good indicator that it would be very speculative to conclude that there is a likelihood of confusion, the Board was in a difficult position. It was not really making a determination of whether there was a likelihood of confusion based on what actually happened in the marketplace but whether there is a likelihood of confusion with the mark shown in the application, a simple word mark that did not include all of the trade dress that appears on the products in a sale and appearing with an identification that did not include a description of the particular types of stores in which the product was sold or other restrictions that would more clearly distinguish it from McDonald's.
In determining registrability the Board has to imagine how a mark as shown in an application or registration could be likely to cause confusion without regard to what has happened in the past. Because of the fundamental difference between what the Board decides and what a court decides and in how they must go about making decisions, a Board's decision should not have any preclusive effect on a court's decision and should be given weight only to the extent that the Board has looked at the same evidence in the same way that a court would look at that evidence.
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