PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

SHAKESPEARE COMPANY,

Plaintiff-Appellant,

v.

No. 95-3208

SILSTAR CORPORATION OF AMERICA,

INCORPORATED,

Defendant-Appellee.

Appeal from the United States District Court

for the District of South Carolina, at Columbia.

Dennis W. Shedd, District Judge.

(CA-90-1695-3-19)

Argued: December 6, 1996

Decided: April 3, 1997

Before WIDENER, MURNAGHAN, and NIEMEYER,

Circuit Judges.

_________________________________________________________________

Affirmed by published opinion. Judge Niemeyer wrote the opinion,

in which Judge Murnaghan joined. Judge Widener wrote a dissenting

opinion.

_________________________________________________________________

COUNSEL

ARGUED: Sylvia Ann Petrosky, RENNER, KENNER, GREIVE,

BOBAK, TAYLOR & WEBER, Akron, Ohio, for Appellant. Francis

Morris Pinckney, SHEFTE, PINCKNEY & SAWYER, Charlotte,

North Carolina, for Appellee. ON BRIEF: Jack L. Renner, Ray L.
Weber, RENNER, KENNER, GREIVE, BOBAK, TAYLOR &

WEBER, Akron, Ohio; James M. Brailsford, III, Frank R. Ellerbe, III,

ROBINSON, MCFADDEN & MOORE, Columbia, South Carolina,

for Appellant. William C. Cleveland, Thomas S. White, HAYNSWORTH, MARION, MCKAY & GUERARD, Charleston, South

Carolina, for Appellee.

_________________________________________________________________

OPINION

NIEMEYER, Circuit Judge:

Shakespeare Company, the owner of a registered trademark for

fishing rods that have a "whitish translucent" tip and a contrasting

opaque shaft, brought this trademark infringement action against Silstar Corporation of America, Inc. which also manufactures a cleartipped fishing rod. Because of the functional or descriptive aspects of

Shakespeare's mark, the district court initially ordered the Commissioner of the Patent and Trademark Office to cancel its registration.

See Shakespeare Co. v. Silstar Corp. of America, Inc. (Shakespeare

I), 802 F. Supp. 1386 (D.S.C. 1992). On appeal, however, we held

that because Shakespeare's trademark had become incontestable

under 15 U.S.C. § 1065, it could not be canceled. We remanded the

case for resolution of the remaining infringement issues. See

Shakespeare Co. v. Silstar Corp. of America, Inc. (Shakespeare II),

9 F.3d 1091 (4th Cir. 1993). On remand, the district court found,

among other things, that "Silstar's use of the clear tip on its fishing

rods will [not] create a likelihood of confusion" and that, in any event,

Silstar had "established its fair-use defense." Shakespeare Co. v. Silstar Corp. of America, Inc. (Shakespeare III ), 906 F. Supp. 997, 1001

(D.S.C. 1995). We now affirm.

I

In the 1940s, fishing rods were manufactured from either hollow

or solid fiberglass. Hollow fiberglass rods were lighter and less

expensive than solid ones, but they were also more inclined to break,

particularly at the tip. While solid rods were stronger, they were also

heavier and more expensive than the hollow ones.

 2
Shakespeare, which has been one of the leading manufacturers of

fishing rods, developed a process that combined the benefits of each

type of rod by joining a hollow fiberglass base to a solid fiberglass

tip. With developments in graphite in the mid 1970s, Shakespeare

added a graphite core to the base of the rod, making it even stronger.

The tip remained solid fiberglass, which is both strong and flexible.

Shakespeare patented its invention and for years was the only manufacturer of fishing rods with a hollow graphite base and a solid fiberglass tip.

Because graphite is naturally charcoal gray and fiberglass is naturally clear or "whitish translucent," Shakespeare's rods had a distinctive appearance when compared to those of its competitors. While

Shakespeare was at first troubled by the aesthetically unappealing

two-toned rod, with increased consumer acceptance Shakespeare

sought to capitalize on its appearance, deliberately marketing it in its

natural two-toned appearance so that consumers could recognize the

graphite base and solid fiberglass tip. Shakespeare denominated the

rod the "Ugly Stik" and applied to the Patent and Trademark Office

to register both the "Ugly Stik" mark and the two-toned appearance

of the rod. The Patent and Trademark Office issued both trademarks.

The mark covering the appearance of the rod claims exclusive right

to market a fishing rod,

in which the tipped portion of the shaft between the tip and

the second line guide elements consist of whitish translucent

material in contrast to the opaque remainder of the shaft.

United States Trademark Registration No. 1,261,786 (registered on

the Principal Register). In 1989, this trademark became incontestable

under 15 U.S.C. § 1065.

Silstar Corporation of America, Inc., a competing manufacturer

who desired for quality purposes to market a fishing rod with a graphite base and fiberglass tip, began manufacturing such a rod through

a process different from that used by Shakespeare. Because Silstar

wanted to communicate to consumers the rod's graphite and fiberglass properties, Silstar left these materials with their natural color.

The base and tip of its rods consequently appeared like Shakespeare's. Silstar called its rod the "Power Tip Crystal" rod. When Sil-

 3
star introduced this rod in 1990, it knew that Shakespeare had a

trademark for a rod with a "whitish translucent" tip and contrasting

opaque base.

In response to Silstar's introduction of the Power Tip Crystal rod,

Shakespeare filed this trademark infringement action. In defense, Silstar contended that Shakespeare could not claim a mark in the functional or descriptive design of the rod, arguing that even though

Shakespeare's mark had become incontestable, it should be canceled

by the court under 15 U.S.C. § 1119. The case was tried to the district

court without a jury, and after making findings of fact, the district

court agreed with Silstar that Shakespeare's mark should be canceled.

See Shakespeare I, 802 F. Supp. at 1399. The court found that Shakespeare's mark was nothing more than the natural appearance of the

functional features of graphite fishing rods with solid fiberglass tips

and therefore concluded that Shakespeare's mark was not subject to

registration. See id. at 1398-99. The court ordered the Commissioner

of the Patent and Trademark Office to cancel Shakespeare's mark

from the register. See id. at 1399.

On appeal we reversed, holding that the Lanham Act did not authorize courts to cancel trademark registrations because of their functionality once they had become incontestable under 15 U.S.C. § 1065. We

summarized:

[W]e hold that the district court erred in canceling, pursuant

to 15 U.S.C. § 1119, the trademark held by Shakespeare on

the grounds that it is functional, because that is not an authorized ground for cancellation under 15 U.S.C. § 1064. Since

no other ground enumerated under § 1064 was alleged by

Silstar, the mark is valid as a matter of law. We therefore

reverse the district court and remand the case for further

consideration of Shakespeare's statutory and common law

infringement and unfair competition claims. We further

instruct the district court that any inquiry into an alleged

"fair use" of the clear tip must be accompanied by an analysis of the likelihood of confusion among consumers that

may be created by Silstar's use of the clear tip.

Shakespeare II, 9 F.3d at 1099.

 4
On remand, the district court addressed the remaining infringement

issues and held that Shakespeare had failed to establish a likelihood

of confusion from Silstar's clear-tipped rods and, alternatively, that

Silstar had established its fair-use defense. See Shakespeare III, 906

F. Supp. at 1001. The court also concluded that Silstar had failed to

establish its unclean hands defense and its counterclaims. See id.

In assessing the likelihood of confusion from Silstar's fishing rods,

the district court noted that Shakespeare was not entitled to a presumption of a likelihood of confusion based on Silstar's copying of

Shakespeare's Ugly Stik rod. It concluded that because Silstar had

merely sought "to reproduce and utilize a functional attribute, which

is unquestionably a legitimate activity," Id. at 1010, the presumption

of a likelihood of confusion was not created because such a presumption arises only from an "`intent to exploit the good will created by

an already registered mark.'" Id. (quoting AMP, Inc. v. Foy, 540 F.2d

1181, 1186 (4th Cir. 1976)). In finding no exploitative intent, the

court reiterated several of its factual findings: that Silstar used the

clear tip to demonstrate its rods' quality, not as indicating origin; that

whatever attention was drawn to the clear tip served only to inform

buyers of the rods' components; that Silstar's descriptive use of the

clear tip was the most effective means of marketing its rods in the

descriptive sense; and, that there was no alternative as effective for

demonstrating to consumers the rods' components since a clear tip

and opaque gray shaft are the natural colors resulting from the manufacturing process. See id.

In support of its factual finding that Silstar's Power Tip Crystal rod

was not likely to be confused with Shakespeare's Ugly Stik rod, the

court found that, other than color similarities of the materials themselves, Silstar's rod differed significantly in overall appearance from

the Shakespeare rod and that Silstar had taken specific measures to

distinguish its rod. See id. at 1011. The court noted that although both

companies used the same marketing facilities, the rods were usually

displayed in a way that allowed consumers readily to see the manufacturer's names, and that consumers usually inspected rods thoroughly before purchasing them. See id. The court acknowledged that

the similar advertising channels and relative strength of Shakespeare's

mark somewhat favored finding a likelihood of confusion. See id. at

1012-13. But, the court noted, Shakespeare's mark was not particu-

 5
larly strong; rather it was descriptive with some secondary meaning

on which Shakespeare's marketing had not put much emphasis. See

id. at 1013. At bottom, the court concluded that while the number of

factors which favored Shakespeare was greater than the number

which favored Silstar, the weight of the factors favoring Silstar was

significantly greater than the weight of those favoring Shakespeare.

See id. at 1014. The district court thus found as a matter of fact that

Shakespeare had failed to establish a likelihood of confusion, an

essential element of its infringement claim. See id.

In finding alternatively that Silstar had established a fair-use

defense, the district court concluded that the fair-use defense may be

available even where a likelihood of confusion has been established,

and that "`the strength of the plaintiff's mark and the extent of likely

or actual confusion are important factors in determining whether a use

is fair.'" Id. at 1015 (quoting Restatement (Third) of Unfair

Competition, § 28 cmt. b (1995)). The court reiterated that it did not

find Shakespeare's mark to be particularly strong, but that even if it

were strong, its strength did not "outweigh Silstar's right to use the

clear tip, . . . a functional attribute of these types of rods . . . as a

descriptive device." Id. The court noted that Silstar acted in good faith

in using the functional characteristics of the clear tip and in not seeking to use it as an identification of source. See id. at 1016. In reaching

that conclusion, the court considered that the functionality and

descriptiveness of Shakespeare's mark were relevant factors. See id.

This appeal followed.

II

Shakespeare first argues that as a matter of law, our earlier decision

in Shakespeare II foreclosed any district court ruling based on the

functional and descriptive aspects of its trademark because we held

that a mark cannot be canceled on the ground that it is functional after

it has become incontestable. Because the district court considered the

functional and descriptive aspects of Shakespeare's trademark in

determining that Silstar's actions were in good faith and constituted

fair use, the district court's findings must, Shakespeare contends, be

reversed. This argument raises a legal question which we review de

novo.

 6
In Shakespeare II, we held that the district court erred in canceling

Shakespeare's trademark pursuant to 15 U.S.C. § 1119 on the grounds

that it was functional. We concluded that 15 U.S.C.§ 1064 does not

include functionality as a ground for cancellation. See Shakespeare II,

9 F.3d at 1097. In reaching our conclusion, however, we considered

functionality only as it might be a ground for canceling incontestable

marks, observing that "since no other ground enumerated under

§ 1064 was alleged by Silstar, the mark is valid as a matter of law."

Id. at 1099. Having disposed of that one issue, we remanded the case

to the district court for consideration of the other issues in Shakespeare's infringement claim. See id. Under our holding, therefore, the

district court could not on remand cancel Shakespeare's registration

or find it otherwise invalid because of functionality. But in delimiting

the court's power under 15 U.S.C. § 1119 and saying that the mark

was valid as a matter of law, we did not hold that Shakespeare had

proved the other elements of its trademark infringement case. Nor did

we say that functionality or descriptiveness were irrelevant to other

issues before the district court on remand. Accordingly, to the extent

that either functionality or descriptiveness is relevant in considering

either Shakespeare's prima facie case for infringement or Silstar's

fair-use defense, the district court did not err.*

On remand, the district court considered the functionality and

descriptiveness of Shakespeare's mark in determining (1) whether

Silstar's copying Shakespeare's mark entitled Shakespeare to a presumption of a likelihood of confusion; (2) whether there was in fact

a likelihood of confusion; and (3) whether Silstar established its fair-

_________________________________________________________________

*While functionality and descriptiveness are distinct concepts in trademark law, they have the same legal effect on the issues before us. Silstar

claims that its gray-based and clear-tipped rod represents the natural

appearance of graphite and fiberglass used in a relationship that takes

advantage of those materials' properties, and to that extent the appearance is the product of function. It also claims that the gray base and clear

tip describe to the consumer the properties of those materials that make

them suitable for their function, and in that sense the rod's appearance

is descriptive. Whether the essence of Silstar's position -- and the district court's opinion which agreed with Silstar-- is that it was acting in

good faith because of its rods' functionality or their descriptiveness need

not be resolved, because, as we discuss below, either would supply a factual basis for a finding of good faith or fair use.

 7
use defense. We turn to the question of whether functionality or

descriptiveness is relevant to these issues.

A

The presumption that intentionally copying someone else's mark

causes a likelihood of confusion arises from the recognition that one

who tries to deceive the public should hardly be allowed to prove that

the public has not in fact been deceived. See Osem Foods Indus. v.

Sherwood Foods, Inc., 917 F.2d 161, 165 (4th Cir. 1990). But that

presumption arises only when the copier "inten[ds] to exploit the

good will created by an already registered trademark." AMP, 540 F.2d

at 1186 (emphasis added). "A likelihood of confusion should not be

inferred from proof that the actor intentionally copied the other's designation if the actor acted in good faith under circumstances that do

not otherwise indicate an intent to cause confusion or to deceive."

Restatement (Third) of Unfair Competition, § 22(2) (1995) (emphasis

added).

The district court in this case was thus required to determine

whether Silstar intended to deceive the public and exploit Shakespeare's goodwill. Conversely, it was free to consider as a factual

matter, whether Silstar copied Shakespeare's rod with the intent of

reproducing and using a functional aspect, which it was legally entitled to do. See Bonita Boats, Inc. v. Thundercraft Boats, Inc., 489

U.S. 141, 164 (1989) (reproducing a functional attribute is a legitimate competitive activity); Inwood Labs., Inc. v. Ives Labs., Inc., 456

U.S. 844, 857-58 n.20 (1982) ("[b]y establishing . . . that uniform capsule colors served a functional purpose, the petitioners offered a legitimate reason for producing an imitative product"); see also

Restatement (Third) of Unfair Competition, § 22 cmt. c ("If the actor

reasonably believes that the other's designation is functional . . .,

proof that the actor intentionally copied the other's designation does

not justify an inference of confusion"). Accordingly, when the district

court considered the functional and descriptive aspects of Shakespeare's mark in determining whether to presume a likelihood of confusion, it considered relevant factors.

B

Similarly, the district court considered the functional and descriptive aspects of Shakespeare's marks in determining whether Silstar's

 8
competing clear-tipped fishing rod was in fact likely to confuse. In

determining the likelihood of confusion, the court may consider --

indeed, should consider -- the mark's strength. See Lonestar Steakhouse & Saloon, Inc. v. Alpha of Virginia, Inc., 43 F.3d 922, 934-35

(4th Cir. 1995). Marks may be, in ascending order of strength,

generic, descriptive, suggestive, or arbitrary. See id. at 933.

In this case when considering the strength of Shakespeare's mark,

the court concluded that the mark was primarily descriptive, although

it had some secondary meaning. See Shakespeare III, 906 F. Supp. at

1013. The court found that the mark carries very little secondary

meaning since the functional aspects of the clear tip, rather than its

source-identifying power, were emphasized in marketing. See id. In

considering the functional or descriptive nature of the mark in this

context, the court was simply following the factors already established earlier by this court. See Perini Corp. v. Perini Const., Inc.,

915 F.2d 121, 127 (4th Cir. 1990) (including strength of mark as a

factor courts should consider); Pizzeria Uno Corp. v. Temple, 747

F.2d 1522, 1527 (4th Cir. 1984) (same).

C

Finally, in resolving whether Silstar established a fair-use defense,

the district court considered the functional and descriptive aspects of

Shakespeare's mark. It concluded that functionality was a relevant

factor where a party "in good faith and not as a means of sourceidentification [seeks] . . . to use a functional feature of a product

which another party . . . has registered as a trademark." Shakespeare

III, 906 F. Supp. at 1016. The district court had also previously noted

that a clear-tip on a fishing rod demonstrates that the tip has strength

because of its solid fiberglass construction. See Shakespeare I, 802 F.

Supp. at 1391. The clarity was found to be a natural characteristic of

solid fiberglass used in fishing rod tips, see id., and such tips are

undoubtedly functional. Thus, clarity is merely descriptive of a functional aspect of the rod. While such descriptive features would not

normally be entitled to any trademark protection, the district court

correctly noted that the mark had acquired some secondary meaning,

entitling it to protection. But because clarity was a natural and

descriptive characteristic of the rod's functional tip, the district court

concluded that Silstar did not act in bad faith, but had a legitimate

 9
non-predatory reason for giving its solid fiberglass tips a clear appearance. See Shakespeare III, 906 F. Supp. at 1010, 1015-16.

In Inwood Labs, the Supreme Court concluded that color could

serve an identifying function, which gave a good faith reason for imitation. See 456 U.S. at 857-58 n.20. There, the court accepted the district court's conclusions that a drug's color could function to identify

its therapeutic affects. Id. Similarly, the district court, in deciding

whether Silstar acted in good faith, considered clarity of fishing rod

tips as identifying or describing the rod's construction. See

Shakespeare III, 906 F. Supp. at 1015-16. To identify the rods' construction is a legitimate, nonpredatory purpose which tends to show

a good-faith motivation for copying, which is an element of the fairuse defense. Identifying the clear tip's functional and descriptive

nature was thus relevant to the court's inquiry.

III

Shakespeare next challenges the district court's conclusion that Silstar's sale of its Power Tip Crystal rods would not likely cause confusion with Shakespeare's Ugly Stik rods. Shakespeare contends that

the district court (1) improperly denied it the presumption of a likelihood of confusion that flows from intentional copying and (2) clearly

erred in finding as a fact that Shakespeare had not established a likelihood of confusion. We will address these points in order.

A

Whether Shakespeare was entitled to a presumption of a likelihood

of confusion involves a question of law which we review de novo.

Because the district court found that Silstar "had knowledge of, and

essentially copied, Shakespeare's trademark," Shakespeare III, 906 F.

Supp. at 1010, Shakespeare argues that the law of this circuit requires

the court to have presumed that confusion was likely.

In Osem Food, we recognized that a presumption of a likelihood

of confusion is appropriate in some circumstances:

When a newcomer to the market copies a competitor's

trade dress, its intent must be to benefit from the goodwill

 10
of the competitor's customers by getting them to believe

that the new product is either the same, or originates from

the same source as the product whose trade dress was copied. Logic requires, no less than the presumption of secondary meaning from copying, that from such intentional

copying arises a presumption that the newcomer is successful and that there is a likelihood of confusion.

917 F.2d at 165. Our cases make clear, however, that that presumption arises only where the intentional copying is motivated by an "intent to exploit the good will created by an already registered

trademark," AMP, 540 F.2d at 1186. We noted explicitly in Osem

Food that a court should "require one who tries to deceive customers

to prove that they have not been deceived." 917 F.2d at 165 (emphasis

added); see also Polo Fashions, Inc. v. Craftex, Inc., 816 F.2d 145,

148 (4th Cir. 1987) ("[w]here . . . one produces counterfeit goods in

an apparent attempt to capitalize upon the popularity of, and demand

for, another's product, there is a presumption of a likelihood of confusion") (emphasis added); Allen v. Standard Crankshaft & Hydraulic

Co., 323 F.2d 29, 36 (4th Cir. 1963) ("an apparent motive of the

junior party to create confusion and to give to his goods a superficial

appearance of being those of the senior party is properly considered").

In contrast, where the owner of the junior mark essentially copies a

mark with no intent to exploit the senior mark's goodwill -- such as

to describe a functional aspect of the product -- the party claiming

infringement must prove the likelihood of confusion without the benefit of a presumption. See Restatement (Third) of Unfair Competition,

§ 22(2) (1995) ("[a] likelihood of confusion should not be inferred

from proof that the actor intentionally copied the other's designation

if the actor acted in good faith under circumstances that do not otherwise indicate an intent to cause confusion or to deceive"). Thus,

Shakespeare is entitled to the presumption of a likelihood of confusion only if Silstar's intent is to free-ride on Shakespeare's goodwill.

The district court concluded as a factual matter that "it is equally

clear from the evidence presented at trial that Silstar's intent was not,

and is not, to capitalize on, or otherwise exploit, Shakespeare's trademark." Shakespeare III, 906 F. Supp. at 1010. Indeed, although Silstar

used a clear tip, the district court concluded that it had taken care to

distinguish the overall appearance of its rods so consumers would not

 11
confuse Silstar's Power Tip Crystal rod for Shakespeare's Ugly Stik

rod. See id. at 1011. Although we readily acknowledge that a factfinder could have concluded that Silstar intended to free-ride on

Shakespeare's goodwill, we cannot conclude that the district court's

contrary finding is clearly erroneous.

Even if Shakespeare were entitled to the presumption, the district

court found that Silstar had introduced sufficient evidence to rebut the

presumption (returning the burden of persuasion to Shakespeare) and

to entitle the court to find that there was no likelihood of confusion.

See id. at 1011 n.17. Again, we cannot conclude that the district court

was clearly erroneous in finding that Silstar had presented enough

evidence to rebut a presumption of the likelihood of confusion.

B

Shakespeare contends further that, in any event, the court clearly

erred in holding that it had not factually established a likelihood of

confusion. Whether Silstar's Power Tip Crystal rod is likely to cause

confusion with Shakespeare's Ugly Stik rod, so that an appreciable

number of the public attribute Silstar's product to Shakespeare, is "an

inherently factual issue that depends on the facts and circumstances

in each case." Lonestar Steak House, 43 F.3d at 933 (internal quotations omitted). In resolving that factual question, a district court must

consider any factor relevant to whether confusion is likely between

the two marks. See Durox Co. v. Duron Paint Mfg. Co., 320 F.2d 882,

885 (4th Cir. 1963). We review the district court's findings for clear

error. See Pizzeria Uno, 747 F.2d at 1526.

We have, over the course of several cases, developed factors for

courts to consider in determining the likelihood of confusion. They

include (1) the strength or distinctiveness of the mark; (2) the similarity of the two marks; (3) the similarity of the goods or services

which the marks identify; (4) the similarity of the facilities used by

the parties in conducting their businesses; (5) the similarity of advertising used by the parties; (6) the defendant's intent in using the

mark; (7) actual confusion; (8) the proximity of the products as they

are actually sold; (9) the probability that the senior mark owner will

"bridge the gap" by entering the defendant's market; (10) the quality

of the defendant's product in relationship to the quality of the senior

 12
mark owner's product; and (11) the sophistication of the buyers. See,

e.g., Perini, 915 F.2d at 127; Pizzeria Uno, 747 F.2d at 1527. The list

of these factors, however, is neither exhaustive nor exclusive, and

some of the factors may not always be relevant or equally emphasized

in each case. See Anheuser-Busch Inc. v. L & L Wings, Inc, 962 F.2d

316, 320 (4th Cir. 1992); Durox, 320 F.2d at 885. We articulate them

to focus an inquiry that must be tailored to the factual circumstances

of each case.

In resolving this case, the district court applied each of the Pizzeria

Uno/Perini factors, concluding that while a larger number of factors

favored Shakespeare, the more relevant and weighty factors favored

Silstar. Thus the court found that (1) the mark's strength, which

somewhat favored Shakespeare, nevertheless had little power in identifying its source, see Shakespeare III, 906 F. Supp. at 1012-13;

(2) the marks' similarity was largely negated by overall appearances

of the rods and the buyers' sophistication, see id. at 1011; (3) the

fishing rods were found to differ in overall appearance, see id.;

(4) though Shakespeare and Silstar used similar facilities, the sophistication of buyers and the marketing of the rods at eye level negated

the possible confusion that might result, see id.; (5) although the

companies used similar advertising media, little emphasis was placed

on the tip as identifying Shakespeare, and the sophistication of buyers

negated any confusion, see id. at 1012; (6) Silstar's intent did nothing

to establish the likelihood vel non of confusion, see id. at 1012 n.21;

(7) actual confusion, even though favoring Silstar, was of limited

importance because significant distribution of Silstar rods had been

prevented by preliminary injunction, see id.; (8) although the products were marketed very close to one another, the overall appearance

and sophistication of buyers negated any confusion, see id. at 1012;

(9) "bridging the gap" was of no relevance since the two companies

were already competitors, see id. at 1012 n.21; (10) since the quality

of the products was almost identical, a comparison was not helpful,

see id.; (11) the sophistication of buyers, how they examined the rods

and what inspection they did before buying, strongly favored Silstar,

see id. at 1011-13. We can find no clear error in the district court's

conclusions. Each relevant factor was considered and the weight

accorded to each factor was reasonably defended.

 13
IV

Finally, Shakespeare contends that (1) because it established a

likelihood of confusion, the district court should not, as a matter of

law, have considered Silstar's fair-use defense, and (2) in any event

the court clearly erred in finding as a matter of fact that Silstar's use

of the clear tip was fair.

A

To maintain its argument that a finding of a likelihood of confusion

legally precludes consideration of the fair-use defense, Shakespeare

relies on the district court decision in Dayton Progress Corp. v. Lane

Punch Corp., 12 U.S.P.Q.2d 1695 (W.D.N.C. 1989), and our review

of the same case, Dayton Progress Corp. v. Lane Punch Corp., 917

F.2d 836 (4th Cir. 1990). We do not agree, however, that these decisions support Shakespeare's legal position.

The district court in Dayton Progress concluded that the infringer's

use of Dayton's product "was not undertaken in good faith and was

not intended by [the infringer] as a non-trademark use" of the product.

12 U.S.P.Q.2d at 1708. The court concluded, therefore, that the

infringer could not rely on the defense of fair use. See id. The court

did not conclude, however, that the likelihood of confusion precluded

the fair-use defense; rather its finding of bad faith precluded use of

the defense. On appeal, we so understood the district court's decision,

observing:

To establish a fair use defense for these [products], [the

infringer] must prove that [the products] are used "fairly and

in good faith" only to describe the punches and that the

infringing mark is not used as a trademark. Here, the district

court found that [the infringer's] adoption and use of [the

marks] was not in good faith.

Dayton Progress, 917 F.2d at 840 (citations omitted). Because we

concluded that the district court's finding of bad faith was not clearly

erroneous, we affirmed the district court's rejection of a fair-use

defense. See id. We did not, however, hold that a finding of a likeli-

 14
hood of confusion per se precludes consideration of the fair-use

defense.

Beside the fact that our prior cases do not support Shakespeare's

legal argument, it defies logic to argue that a defense may not be

asserted in the only situation where it even becomes relevant. If a fairuse defense is not to be considered when there is a likelihood of confusion, then it is never to be considered. The fair-use defense comes

into play only when infringement -- including a likelihood of confusion -- has been established. A defense which can be considered only

when the prima facie case has failed is no defense at all. While it is

true that to the degree that confusion is likely, a use is less likely to

be found fair, it does not follow that a determination of likely confusion precludes considering the fairness of use. The district court correctly followed our mandate in Shakespeare II that "any inquiry into

an alleged `fair use' of the clear tip must be accompanied by an analysis of the likelihood of confusion among consumers that may be created by Silstar's use of the clear tip." 9 F.3d at 1099.

B

In considering Silstar's fair-use defense, the district court found as

a fact that Silstar had acted in good faith. The court found expressly

that Silstar's use of a clear tip was to take advantage of its functional

and descriptive aspects and not "to use the clear tip as [identifying]

a source of origin of the rods." Shakespeare I, 802 F. Supp. at 1393.

The court continued that "Silstar does not seek to use the clear tip on

the Power Tip Crystal rod in a trademark sense" but only in its "descriptive sense." Id. at 1396. The district court concluded:

There is no indication that Silstar's attempt to utilize the

clear tip is unfair or in bad faith.

* * *

In this case, there is no alternative design to Shakespeare's mark which would be as effective in communicating to consumers the fact that the rod is made of a graphite

base and a solid fiberglass tip since the clear tip and the

 15
opaque base represent the natural colors of the graphite and

the fiberglass resin which compose the rod.

Id. at 1396, 1398. The court summarized that Silstar sought "in good

faith and not as a means of source-identification, to use a functional

feature of a product" which Shakespeare had registered as a mark.

Shakespeare III, 906 F. Supp. at 1016.

We cannot conclude that any of these factual findings of the district

court are clearly erroneous.

Accordingly, the judgment of the district court is

AFFIRMED.

WIDENER, Circuit Judge, dissenting:

I respectfully dissent.

As did the district court before it, the majority errs in failing to

apply this circuit's presumption of confusion to Silstar's deliberate

copying of the clear tip and opaque base on Shakespeare's "Ugly

Stik" fishing rods. Shakespeare maintains this color configuration as

a registered trademark. Both the majority and the district court recognize that "Silstar had knowledge of, and essentially copied, Shakespeare's trademark." Slip op. at 14; Shakespeare Co. v. Silstar Corp.

of America, Inc., 906 F. Supp. 997, 1010 (D.S.C. 1995). With that

acknowledgement, the majority should then proceed to apply the

mandate of Osem Food Industries v. Sherwood Foods, Inc., 917 F.2d

161 (4th Cir. 1990):

When a newcomer to the market copies a competitor's trade

dress, its intent must be to benefit from the goodwill of the

competitor's customers by getting them to believe that the

new product is either the same, or originates from the same

source as the product whose trade dress was copied. Logic

requires, no less than the presumption of secondary meaning

from copying, that from such intentional copying arises a

presumption that the newcomer is successful and that there

is a likelihood of confusion.

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917 F.2d at 165 (emphasis added). It is patent that the majority simply

declines to read the phrase "must be" in the above quotation from

Osem Food. And it can point to no precedent in this circuit requiring

a showing of something more than intentional copying before the presumption arises.* It is thus my opinion that our precedent entitles

Shakespeare to a presumption of likelihood of confusion.

Had the district court properly applied this presumption, its findings of fact may well have been altered. We cannot speculate as to

what those findings would have been had it employed the correct

legal standard. Thus, the case should be remanded for such an examination.

With regard to Silstar's fair-use defense, I do not believe such a

defense is viable if a likelihood of confusion is established. The

majority would allow a fair-use defense even when there is a likelihood of confusion, and states that it "defies logic" to hold otherwise.

Slip op. at 15. I disagree. A leading commentator has explained the

logical relationship between fair use and likelihood of confusion as

follows: "The better view is that it is inconsistent to find both likely

confusion and a fair use. Rather, `fair use' should be viewed as

merely one type of use which is not likely to cause confusion and

hence is a `defense' only in that sense." 1 J. Thomas McCarthy,

McCarthy on Trademarks and Unfair Competition§ 11:47 (4th ed.

1996).

The majority's holding would place this circuit in the minority of

courts that permit a fair-use defense even if a likelihood of confusion

exists. See 1 McCarthy, supra, § 11:47 n.2 (citing cases allowing fairuse defense even when likely confusion shown). I do not believe such

a departure is warranted, or even permissible under circuit precedent.

_________________________________________________________________

*The majority refers to several cases allowing a presumption of confusion when there has been proof of intent to exploit the good will created

by an already registered trademark. Slip op. at 10-11. These cases, however, do not directly address the effect of intentional copying and, at any

rate, do not hold that intent to exploit is the only means of establishing

a likelihood of confusion.

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In Dayton Progress Corp. v. Lane Punch Corp., 917 F.2d 836 (4th

Cir. 1990), we affirmed a district court which, after holding that a

likelihood of confusion existed, held that "[defendant] cannot now

rely on the defense of `fair use' to justify its use of [plaintiff's] triliteral product designators." Dayton Progress Corp. v. Lane Punch

Corp., 12 U.S.P.Q.2d 1695, 1708 (W.D.N.C. 1989). Although the

majority states that the district court's finding of bad faith, rather than

its finding of likelihood of confusion, precluded the fair-use defense

in Dayton Progress, that statement by the majority is hardly accurate

because the Dayton Progress district court's finding of bad faith was

based on the defendant's exact copying and identical use of the plaintiff's product. 12 U.S.P.Q.2d at 1708. On appeal, we concluded that

the district court's finding of bad faith was not clearly erroneous, and

hence we accepted the district court's factual basis for that determination. Dayton Progress, 917 F.2d at 840. Read in conjunction with the

district court's decision, as it must be, our Dayton Progress opinion

supports the position that it is inconsistent to find both a likelihood

of confusion and a legitimate fair-use defense when intentional copying has occurred.

Thus, the majority opinion adopts the minority view of the authorities, that a fair-use defense is available even in the face of intentional

copying, and declines to follow the circuit precedent of Dayton

Progress.

Finally, I should add that the penultimate rationale in the majority

opinion, slip op. at 16, is:

The [district] court summarized that Silstar sought "in good

faith and not as a means of source-identification, to use a

functional feature of a product" which Shakespeare had registered as a mark. Shakespeare III, 906 F.Supp. at 1016.

While the majority concludes that that factfinding is not clearly

erroneous, in my opinion it is inherently incredible.

Accordingly, I would vacate the judgment of the district court and

remand this case for the district court to make its factual findings after

applying the presumption of likelihood of confusion. I would also

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require the district court to correctly apply the rule with respect to a

fair-use defense, as I have discussed above.

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