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. e du/thir dc ir c uit_2001/244Filed October 19, 2001

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No. 00-2373

CHECKPOINT SYSTEMS, INC., Appellant

v.

CHECK POINT SOFTWARE TECHNOLOGIES, INC.

On Appeal from the United States District Court for the District of New Jersey

D.C. Civil Action No. 96-cv-03153 (Honorable Jerome B. Simandle)

Argued April 5, 2001

Before: SCIRICA, AMBRO and GIBSON,* Circuit Judges

(Filed October 19, 2001)

ROBERTA JACOBS-MEADWAY, ESQUIRE (ARGUED) Akin, Gump, Strauss, Hauer & Feld One Commerce Square, Suite 2200

2005 Market Street Philadelphia, Pennsylvania 19103

Attorney for Appellant

___________________________________________________ ______________ * The Honorable John R. Gibson, United States Circu it Judge for the Eighth Judicial Circuit, sitting by designation.BRUCE P. KELLER, ESQUIRE

(ARGUED) Debevoise & Plimpton

919 Third Avenue New York, New York 10022

Attorney for Appellee

OPINION OF THE COURT

SCIRICA, Circuit Judge.

In this Lanham Act case, plaintiff Checkpoint Syste ms, Inc. alleges Check Point Software Technologies, Inc

. infringed on its trademark and engaged in unfair competition in violation of 15 U.S.C. SS 1114, 1125 (a). Finding no likelihood of confusion between Checkpoi nt Systems's and Check Point Software's marks, the Dis trict

Court found no Lanham Act violation. We will affirm

.

I.

A.

Plaintiff Checkpoint Systems, Inc. has been manufacturing and distributing commercial electroni c security control systems since 1967.1 Its devices a re designed to track the physical location of goods an d are sold to retailers to prevent merchandise theft. It is one of

the two dominant manufacturers in the retail securi ty products market. Since 1967 Checkpoint Systems has used the "CHECKPOINT" mark, which is registered with the

United States Trademark office.2

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1. Our recitation of the facts will be brief. A mor e detailed discussion may be found in the District Court opinion. Checkpo int Sys., Inc. v. Check Point Software Techs., Inc., 104 F. Supp. 2d 427 (D.N.J. 2000).

2. Over thirty-three years of business, Checkpoint Systems has acquired several other companies and after each acquisition it has changed the marks of these companies to Checkpoint Systems.

2Checkpoint Systems primarily sells four types of se curity

monitoring devices: (1) electronic article surveill ance systems; (2) access control systems; (3) closed cir cuit television systems; and (4) radio frequency identif ication devices. Its principal and most successful products are electronic article surveillance systems designed to alert

retailers when items are removed from confined area s. Primarily used to prevent theft of merchandise from stores and books from libraries, these systems consist of circuited tags, electronic sensors, and deactivation equipmen t. The systems work by placing circuited tags on merchandi se which are deactivated at the time of sale. If the t ags are not deactivated, an alarm sounds. Electronic article surveillance systems cost between $2000 and $5000, plus the cost of individual tags. A large retail chain, including many of Checkpoint Systems's current clients, may s pend over $20 million a year on this technology.

Checkpoint Systems also manufactures electronic acc ess control systems in the form of security cards that permit selected personnel to have access to restricted are as. Checkpoint Systems intends to use these electronic access control systems to make "smart cards" that will ena ble logon access to computers and will facilitate monitori ng of physical access to restricted areas. This product w as in the development stage when this lawsuit commenced.

Checkpoint Systems also sells closed circuit televi sion systems that monitor activity within confined areas and transfer data to remote locations for employee audi t and inventory management security teams. Although these systems currently transfer data and images over tra ditional telephone lines, Checkpoint Systems intends to tran sfer this data over customers' computer networks. These closed circuit products can be integrated with other compu ter systems, including other security application progr ams.

In 1997, Checkpoint Systems began developing radio frequency identification devices with the view to c reating "intelligent tags" for merchandise to carry informa tion on "merchandise history." This radio technology would permit greater information storage than currently availabl e on traditional bar code technology. These systems cost from $80,000 to $140,000.

3The sale of electronic article surveillance systems to

retail, industrial, institutional and government us ers comprises 90% of Checkpoint Systems's business. Revenues for article surveillance systems amounted to $365-380 million in 1999; revenues for access contr ol systems were $15 million. Checkpoint Systems's elec tronic article surveillance systems have a 30% market shar e, but its systems dominate the drug store segment with a 70% market share. Its largest competitor is Sensormatic Electronic Corporation, which has a 45% share of th e overall market.

Checkpoint Systems promotes its products primarily through its direct sales force, trade shows, direct mailings to security systems dealers and its internet websit e. It spends $8 million annually on advertising and marke ting. The trade shows in which it advertises are targeted to security professionals and retailers. Checkpoint Sy stems concentrates its print advertising in two magazines : Security3 and Today's Facility Manager.

The "CHECKPOINT" trademark is displayed prominently on all of Checkpoint Systems's products including a ll security tags, sensors, computer screens and access control cards. Checkpoint Systems is a public company whose stock is traded on the New York Stock Exchange unde r the symbol "CKP."

B.

Defendant Check Point Software Technologies, Inc. w rites computer programs that protect and manage access to information. Check Point Software's principal produ ct is "firewall" technology. Firewalls are computer syste ms that prevent unauthorized internal or external entry int o computer networks. Check Point Software's firewall systems regulate data by acting as a screen between a busin ess's private computer networks (intranets) and the wider Internet. These systems are sophisticated software

___________________________________________________ ______________

3. Security magazine is marketed to security indust ry specialists and contains information about security hardware, secur ity management and training issues, and information security.

4applications that cost $2,999 for a single firewall and

hundreds of thousands of dollars for more complicat ed systems. Check Point Software firewall products mus t be installed and maintained by computer network inform ation specialists.

At the time Check Point Software was founded in Isr ael in 1993, its founders were unaware of Checkpoint Sy stems. They adopted the "Check Point" mark because they be lieved their computer firewall technology, which limited a ccess to data, resembled military check points that prevent access to restricted areas.

Check Point Software is recognized as a leader in t he

firewall market with 40% of the worldwide market sh are. In 1997, it expanded its product line beyond network s ecurity products to include "network management products." This software enables customers to design their own comp uter network security programs that can be integrated wi th Check Point Software programs. Check Point Software also sells "private networking software" which enables consumers to encrypt internal data so that outside users in the wider internet community will be unable to acce ss this data when transmitted over unsecured public channel s.

In its promotional materials, Check Point Software markets itself as active in the corporate security industry. Its products are installed as a part of the overall network design or "architecture" of a business's computer s ystem. They are not functional software applications that can be purchased by a consumer and installed at will.

Check Point Software uses "Check Point" as its trad e name. It has used this mark in several manifestatio ns including, "CHECK POINT," "Checkpoint," and

"CHECKPOINT."

Check Point Software promotes its network security products through trade shows, direct advertising, educational seminars, and its web site. The trade s hows and seminars in which it advertises are targeted to the Internet and computer network markets. These exhibi tions do not include physical security manufacturers or t heir products. It also advertises in two widely circulat ed computer trade magazines, PC Week and Network World

.

5Its computer security programs are sold predominate ly to

institutional and corporate clients. Check Point So ftware's principal competitors are computer companies like C isco Systems and Network Associates. Check Point Softwar e is a public company whose stock is traded on the NASDAQ under the symbol "CHKP."

C.

In early 1996, Checkpoint Systems attempted to regi ster the internet domain name www.checkpoint.com, but discovered it was registered by Check Point Softwar e. After its request to discontinue use was rebuffed, Checkp oint Systems filed suit alleging trademark infringement and unfair competition under the Lanham Act. In a non-j ury trial, the District Court held Check Point Software neither violated the Lanham Act nor infringed Checkpoint Systems's trademark. Examining likelihood of confus ion, the District Court applied the factors enumerated i n Interpace Corp. v. Lapp, Inc., 721 F.2d 460, 463 (3 d Cir. 1983), finding that only one factor--the strong sim ilarity between the parties' marks--favored plaintiff Check point Systems. With respect to the other Lapp factors, th e court found the litigants operated in different and non-c ompeting segments of the broad corporate security industry a nd that the level of consumer care in making purchasing dec isions counseled against a finding of likely confusion. Af ter determining the parties employed different marketin g techniques in different industries, the court found there was no evidence that the two markets are converging . The

court also found the few instances of misdirected correspondence and "minor degree of investor confus ion" along with the failure to prove the existence of a single instance of a mistaken purchasing decision based on mark confusion weighed heavily against finding a Lanham Act violation. Additionally, the District Court held th ere was insufficient evidence of reverse confusion.4

___________________________________________________ ______________

4. As we discuss, reverse confusion occurs when"a l arger, more powerful company uses the trademark of a smaller, less power ful senior owner and thereby causes likely confusion as to the sourc e of the senior user's goods or services." Fisons Horticulture, Inc. v. Vi gro Indus., Inc., 30

F.3d 466, 474 (3d Cir. 1994) (citing Sands, Taylor & Woo d Co. v. Quaker Oats Co., 978 F.2d 947 (7th Cir. 1992)).

6In this appeal, Checkpoint Systems contends the Dis trict

Court improperly evaluated the Lapp factors in its likelihood of confusion analysis. In particular, Ch eckpoint Systems argues the District Court improperly requir ed evidence of actual consumer confusion at the point of sale and disregarded evidence of initial interest and in vestor
confusion.

II.

The District Court had jurisdiction over plaintiff 's Lanham Act claims under 28 U.S.C. SS 1331, 1338(a) and 15 U.S.C. S 1051 et seq. We have jurisdiction over the final judgment of the District Court under 28 U.S.C. S 12 91. We exercise plenary review over the District Court's l egal conclusions concerning the Lanham Act. Express Serv s., Inc. v. Careers Express Staffing Servs., 176 F.3d 1 83, 185 (3d Cir. 1999), cert. denied, 531 U.S. 1052 (2000). We review factual findings on the likelihood of confus ion for clear error. A&H Sportswear Inc. v. Victoria's Secr et Stores, Inc., 237 F.3d 198, 210 (3d Cir. 2000).

III.

Checkpoint Systems alleges Check Point Software engaged in unfair competition and trademark infring ement in violation SS 32 and 43(a) of the Lanham Act when it adopted the Checkpoint mark.5 To prove trademark

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5. Section 32 of the Lanham Act, 15 U.S.C. S 1114, provides:

(1) Any person who shall, without consent of the re gistrant--

(a) use in commerce any reproduction, counte rfeit, copy, or

colorable imitation of a registered mark in connection with the sale, offering for sale, distribution, or advertising of an y goods or services on

or in connection with which such use is likely to cause confusion . .

. .

* * *

shall be liable in a civil action by the reg istrant . . . .

Section 43(a) of the Lanham Act, 15 U.S.C. S 1125, provides:

(a)(1) Any person who, on or in connection w ith any goods or services . . . uses in commerce any word, te rm, name, symbol, or7infringement and unfair competition under the Lanha m

Act, Checkpoint Systems must prove: (1) it owns the Checkpoint mark; (2) the mark is valid and legally protectable; and (3) Check Point Software's use of the mark to identify goods or services is likely to create c onfusion. Commerce Nat'l Ins. Servs., Inc. v. Commerce Ins. A gency, Inc., 214 F.3d 432, 437-38 (3d Cir. 2000). Neither party disputes the first two elements.6 The issue on appe al is

whether Check Point Software's use of the "CHECKPOI NT" mark is likely to create confusion as to the source of the parties' products.7 Lapp, 721 F.2d at 462 ("The la w of trademark protects trademark owners in the exclusiv e use of their marks when use by another would be likely to cause confusion."). To prove likelihood of confusio n, plaintiffs must show that "consumers viewing the ma rk would probably assume the product or service it rep resents

___________________________________________________ ______________

device, or any combination thereof, or any f alse designation of origin, false or misleading description of f act, or false or misleading representation of fact, which--

(A) is likely to cause confusion, or to caus e mistake, or to

deceive as to the affiliation, connection, or associati on of such person with another person, or as to the origin, sponsor ship, or approval of

his or her goods, services, or commercial activi ties by another person

. . .

* * *

shall be liable in a civil action by any per son who believes that

he or she is is likely to be damaged by such ac t.

6. In Commerce Nat'l Ins. Servs., Inc., we held, "[ I]f the mark at issue

is federally registered and has become incontestable, then validity, legal protectability and ownership are proved." 214 F.3d at 438 (citing Ford Motor Co. v. Summit Motor Prods., 930 F.2d 277, 292 (3d Cir. 1991)). Checkpoint Systems's mark has been registered and c ontinuously used for five consecutive years and there are no pending proceedings contesting Checkpoint Systems's ownership of the ma rk. The "Checkpoint" mark is therefore valid and incontesta ble. Fisons, 30 F.3d

at 472 n.7.

7. As we recently held in A&H Sportswear, the relev ant inquiry is not whether consumer confusion is a "possibility," but whether confusion is "likely." 237 F.3d at 198; see also Opticians Ass'n of Am. v. Indep. Opticians of Am., 920 F.2d 187, 195 (3d Cir. 1990) ("Proof of actualconfusion is not necessary; likelihood is all that need be shown.").

8is associated with the source of a different produc t or

service identified by a similar mark." Scott Paper Co. v. Scott's Liquid Gold, Inc., 589 F.2d 1225, 1229 (3d Cir. 1978). In Interpace Corp. v. Lapp, Inc., 721 F.2d 4 60, 463 (3d Cir. 1983), we set forth the relevant standards on likelihood of confusion in noncompeting goods cases , 8 commonly known as the Lapp factors:

(1) [The] degree of similarity between the o wner's mark and the alleged infringing mark;

(2) the strength of the owner's mark;

(3) the price of the goods and other factors indic ative of the care and attention expected of consumers when making a purchase;

(4) the length of time the defendant has use d the mark without evidence of actual confusion;

(5) the intent of the defendant in adopting the ma rk;

(6) the evidence of actual confusion;

(7) whether the goods, though not competing, are marketed through the same channels of trade and advertised through the same media;

(8) the extent to which the targets of the p arties ' sales efforts are the same;

(9) the relationship of the goods in the min ds of consumers because of the similarity of funct ions; and

(10) other facts suggesting that the consumi ng pub lic might expect the prior owner to manufacture a product

in the defendant's market or that he is like ly to expand

into that market.

None of these factors is determinative in the likel ihood of confusion analysis and each factor must be weighed and

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8. The multi-factor test used to determine likeliho od of confusion between noncompeting goods should also be applied i n cases involving directly competing goods. A&H Sportswear, 237 F.3d at 207 ("[W]e conclude that the factors we have developed in the noncompeting goods context are helpful tools and should be used to aid in the determination of the likelihood of confusion in other cases.").

9balanced one against the other. Fisons, 30 F.3d at 473

("[N]ot . . all factors must be given equal weight. The weight given to each factor in the overall picture, as wel l as the weighing for plaintiff or defendant, must be done o n an individual fact-specific basis."); see also A&H Spo rtswear, 237 F.3d at 215 ("[T]he Lapp test is a qualitative inquiry. Not all factors will be relevant in all cases; furt her, the different factors may properly be accorded differen t weights depending on the particular factual setting."). We stated,

[W]here the plaintiff and defendant deal in non- competing goods or services, the court must look beyond the trademark to the nature of the pr oducts themselves, and to the context in which they are marketed and sold. The closer the relationsh ip between the products, and the more similar their sal es contexts, the greater the likelihood of confusion.

Fisons, 30 F.3d at 473.

As noted, the District Court applied the appropriat e Lapp
factors to find there was no likelihood of confusio n. We will address the District Court's application of each fa ctor.9

A. Similarity of Marks -- Lapp Factor (1)

Although the degree of similarity between the owner 's mark and the alleged infringing mark is but one fac tor in the multi-factor confusion analysis, we have recogn ized that when products directly compete, mark similarity"may be the most important of the ten factors in Lapp ." Fi sons, 30 F.3d at 476; see also A&H Sportswear, 237 F.3d at 2 16 ("The single most important factor in determining l ikelihood of confusion is mark similarity."). As we held in V ersa Prods. Co. v. Bifold Co. (Mfg.), 50 F.3d 189, 202 ( 3d Cir. 1995), "unless the allegedly infringing mark . . . is substantially similar to the protectable mark . . . , it is highly unlikely that consumers will confuse the pro duct

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9. Our analysis follows a somewhat different sequen ce than that employed in Lapp. The sequence specified in Lapp is not necessary to the likelihood-of-confusion analysis, and we have found that a slightly different order better facilitates the analysis of the particular issues presented by this case.

10sources represented by the different marks.""[I]f t he overall

impression created by marks is essentially the same ,`it is very probable that the marks are confusingly simila r.' " Opticians Assn. of Am., 920 F.2d at 195 (quoting J. Thomas McCarthy, 2 McCarthy on Trademarks and Unfair Competition, S 23:7 (2d ed. 1984)). In applying thi s test, courts attempt to "move into the mind of the roving consumer," A&H Sportswear, 237 F.3d at 216, and

determine "whether the labels create the same overa ll impression when viewed separately." Fisons , 30 F.3 d at 476; see also Banff, Ltd. v. Federated Dep't Stores , Inc., 841 F.2d 486, 492 (2d Cir. 1988). Courts must "compare the appearance, sound and meaning of the marks," Harlem Wizards Entm't. Basketball, Inc. v. NBA Props., Inc . , 952 F. Supp. 1084, 1096 (D.N.J. 1997), to determine whethe r the "average consumer, on encountering one mark in isol ated circumstances of marketplace and having only [a] ge neral recollection of the other, would likely confuse or associate the two." Fisons, 30 F.3d at 477-78.

Here, the District Court found Check Point Software 's mark was very similar to Checkpoint Systems's mark. The court noted that "[w]hen the dominant portions of t he two marks are the same and the overall impression creat ed by the marks is essentially the same `it is very proba ble that the marks are confusingly similar.' " Checkpoint Sy s., 104 F. Supp. 2d at 457-58 (quoting Opticians Assn. of A m., 920 F.2d at 195). The court found the dominant portion of each parties' trademark is the word "Checkpoint." Even t hough

Check Point Software has at times used the mark in slightly different forms including, "Checkpoint," "CheckPoint," or "Check Point," the dominant featur es of its mark are still the words "check" and "point." Addit ionally because "Systems," "Software," "Technologies," and "Inc.," are generic or descriptive terms, the District Cour t found their addition to the dominant terms "check" and "p oint" would not lead the average consumer to disassociate the products. J. Thomas McCarthy, 3 McCarthy on Tradema rks and Unfair Competition, S 23:50 (4th ed. 2000) ("Th e Trademark Board has said that the general rule is t hat a subsequent user may not avoid likely confusion by appropriating another's entire mark and adding desc riptive or non-descriptive matter to it."). We agree. The D istrict

11Court did not clearly err in finding the overall co mmercial

impression of the parties' marks was confusingly si milar.

On appeal, Checkpoint Systems contends the District Court ignored its finding of mark similarity when i t ultimately determined there was no likelihood of co nfusion. But mark similarity is not necessarily determinativ e of likely confusion, particularly when the products do not directly compete. A&H Sportswear, 237 F.3d at 214 ("[W]hen the marks directly compete . . . the facto r regarding the similarity of marks may increase in importance, but it does not eliminate the other fac tors entirely."); Fisons, 30 F.3d at 473 ("Where the goo ds or services are not competing the similarity of the ma rks is only one of a number of factors the court must exam ine to determine likelihood of confusion."). Here, the Dis trict Court determined that in weighing all the Lapp fac tors, there was not a strong likelihood of confusion. We see no

error.

B. Strength of Mark -- Lapp Factor (2)

Courts have recognized that

[a] strong trademark is . . . one that carri es widespread, immediate recognition that one p roducer (even if unknown) is associated with the mar k, and so with the product. If a second comer adopts a mark substantially identical to a strong mark, th ere is a correspondingly high likelihood that consume rs will mistakenly associate the newcomer's product with the owner of the strong mark.

Versa Prods., 50 F.3d at 203.

The strength of a mark is determined by (1) the distinctiveness or conceptual strength of the mark and (2) its commercial strength or marketplace recognition. Fisons, 30 F.3d at 478-79. Under distinctiveness, we look a t the inherent features of the mark. Trademarks protected under the Lanham Act are divided into four categories:

[1] arbitrary or fanciful marks [that] use terms that neither describe nor suggest anything about the product; they "bear no logical or suggestive relation to

12the actual characteristics of the goods." [2 ] Suggestive

marks [that] require consumer "imagination, thought or perception" to determine what the product is.[3] Descriptive terms [that] "forthwith convey[ ] an immediate idea of the ingredients, qualities or characteristics of the goods" [and] [4] gene ric marks . . . that "function as the common descripti ve name of a product class."

A&H Sportswear, 237 F.3d at 221-22(quoting A.J. Can field Co. v. Honickman, 808 F.2d 291, 296-97 (3d Cir. 198 6)).

In Ford Motor Co., we further explained the categor ization of marks stating,

Arbitrary marks are "those words, symbols, p ictures, etc., which are in common linguistic use but which, when used with the goods or services in issu e, neither suggest nor describe any ingredient, quality or characteristic of those goods or services."

. . . Suggestive marks are virtually indistinguish able from arbitrary marks, but have been defined as ma rks which suggest a quality or ingredient of goo ds . . .. A mark is considered descriptive if it describ es the "intended purpose, function, or use of the g oods; of the size of the goods, of the class of users of the goods, or of the end effect upon the user."

930 F.2d at 292 n.18 (quoting 1 McCarthy, Trademark s and Unfair Competition at S11:3-5, 20).

While generic marks do not receive trademark protec tion, arbitrary, suggestive and descriptive marks with a demonstrated secondary meaning10 are entitled to

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10. But marks that are merely descriptive (without a secondary meaning) are generally weak and not entitled to strong prote ction. A mark is descriptive with a secondary meaning when the mark

"is interpreted by the consuming public to b e not only an identification of the product or services, b ut also a representation of the origin of those products of services." I n general [a secondary meaning] is established through extensive ad vertising which creates

in the minds of consumers an association bet ween the mark and the provider of the services advertised under th e mark.

13trademark protection.11

The District Court found Checkpoint Systems's mark was either suggestive or descriptive with a secondary m eaning

within the electronic article surveillance market. We see no error. The mark is suggestive to the extent it requ ires consumer imagination to determine that Checkpoint Systems's security products serve as "check points" to prevent unauthorized access and theft of merchandis e. But the mark is descriptive insofar as its products ser ve as checkpoints. That is, they occupy a point at which customers are checked for stolen merchandise or peo ple are

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Commerce Nat'l Ins. Serv. Inc., 214 F.3d at 438 (qu oting Scott Paper Co., 589 F.2d at 1228); see also Ford Motor Co., 930 F.2 d at 292 (listing a "non-exclusive list of factors which may be conside red [in determining whether a mark has achieved a secondary meaning,] i nclud[ing] the extent of sales and advertising leading to buyer as sociation, length of use, exclusivity of use, the fact of copying, custo mer surveys, customer testimony, the use of the mark in trade journals, t he size of the company, the number of sales, the number of custome rs, and actual confusion."); Charles Jacquin Et Cie, Inc. v. Desti leria Serralles, Inc.,

921 F.2d 467, 476 (3d Cir. 1990) ("While consumer surve ys are useful, and indeed the most direct method of demonstrating seco ndary meaning and likelihood of confusion, they are not essential whe re, as here, other evidence exists.").

11. In A&H Sportswear, we recently held,

Although the conceptual strength of a mark i s often associated with the particular category of "distinctiveness" into which a mark

falls (i.e., arbitrary, suggestive, or descriptive ), that is not the only measure of conceptual strength. This is beca use the classification system's primary purpose is to determine whe ther the mark is protectable as a trademark in the first plac e--that is, to

determine whether consumers are likely to perceive the mark as a signifier of origin, rather than as a mere identification of the type of product. The classification of a mark as arbitrary, s uggestive, or descriptive is [also] . . . used to determine the degree of protection a mark should receive once protectability has been established. These two inquiries--whether a mark is, in fact, a tra demark, versus how much protection the mark should receive--are often identical, but they do not have to be.

237 F.3d at 222.14checked for authorization to access restricted area s. In

either event, the mark has achieved a strong second ary meaning in the physical article security market. Ch eckpoint Systems has spent millions of dollars in advertisin g its physical article security systems and the mark has achieved high recognition among consumers in this m arket. The District Court was therefore correct in stating

, "Checkpoint [Systems] has used its name and mark in

connection with its electronic article surveillance products for more than thirty years continuously, extensivel y, and in a substantially exclusive manner, and that long use renders the mark strong within the physical surveil lance field." Checkpoint Sys., 104 F. Supp. 2d at 458.

The mark has not, however, attained a strong second ary meaning in other segments of the corporate security market, particularly in the information technology market. There is no evidence that Checkpoint Systems spent a substantial amount of resources in advertising in t his market, nor is there any evidence that Checkpoint S ystems has achieved mark recognition in this segment of th e industry.12 Because Checkpoint Systems's descriptiv e mark has not attained a secondary meaning within the information technology market, it is not conceptual ly strong within this sector of the corporate security market . The District Court found that Checkpoint Systems's mark "may be strong, but that strength does not appear to ext end beyond its own subfield of physical security with r espect to electronic article surveillance." 104 F. Supp. 2d a t 460. This finding is adequately supported in the record. Although Checkpoint Systems manufactured other products aside from physical article surveillance s ystems, the court found these products constituted a very s mall portion of its business. Its mark was not readily recognizable by consumers outside the electronic ar ticle

surveillance market and there is "no evidence that any witness from the information security field had eve r heard of [Checkpoint Systems]." Id.

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12. As the District Court noted, Checkpoint Systems "did not present any evidence of a customer survey indicating [its] marks' strength, and thus there is no direct evidence probative of custo mer views." 104 F. Supp. 2d at 460. `

15Plaintiffs claim the District Court erred in its co mmercial

strength analysis because it undervalued the overwh elming strength of the Checkpoint Systems mark in the arti cle surveillance market. But the District Court held, p roperly in our view, that courts must look at the strength of the mark in the industry in which infringement is alleg ed. See, e.g., Homeowners Group, Inc., 931 F.2d at 1107-08 ( "[A mark] may . . . have high recognition which is limi ted to a particular product or market segment."); Mead Data Cent., Inc. v. Toyota Motor Sales, U.S.A., Inc., 875 F.2d 1026, 1031 (2d Cir. 1989) (luxury car maker could not demonstr ate that its powerful mark extended to the completely u nrelated market of legal research tools); IDV N. Am., Inc. v . S&M Brands, Inc., 26 F. Supp. 2d 815, 824 (E.D.Va. 1998 ) ("A mark may be strong in the market in which it is use d but weak in another market in which it is not used."). Here, the alleged infringement extends beyond the physical ar ticle security field into other, broader segments of the security industry, including computer security. The District Court did not clearly err in finding that Checkpoint Syst ems's mark's strength was limited to the physical article security market. Because the mark was not strong in the netw ork access security market, it was not entitled to heig htened protection within that market.

C. Factors Indicative of the Care and Sophisticatio n of Purchasers -- Lapp Factor (3)

When consumers exercise heightened care in evaluati ng the relevant products before making purchasing deci sions, courts have found there is not a strong likelihood of confusion. Where the relevant products are expensiv e, or the buyer class consists of sophisticated or profes sional purchasers, courts have generally not found Lanham Act violations. Versa Prods., 50 F.3d at 204 ("Inexpens ive goods require consumers to exercise less care in their se lection than expensive ones. The more important the use of the product, the more care that must be exercised in it s selection."). As a leading treatise notes,

Obviously, the price level of the goods or s ervices is an important factor in determining the amount o f care the reasonably prudent buyer will use. If the go ods or

16services are relatively expensive, more care is taken

and buyers are less likely to be confused as to source
or affiliation.

3 McCarthy on Trademarks, S 23:95; see also Astra P harm. Prods., Inc. v. Beckman Instruments, Inc., 718 F.2d 1201, 1206-07 (1st Cir. 1983) (expensive health care equi pment elevated concern of purchasers). Similarly,

[w]here the relevant buyer class is composed solely of professional, or commercial purchasers, it i s reasonable to set a higher standard of care than exists for consumers. Many cases state that where t he relevant buyer class is composed of professi onals or commercial buyers familiar with the field, t hey are sophisticated enough not to be confused by t rademarks that are closely similar. That is, it is ass umed that such professional buyers are less likely to be confused than the ordinary consumer.

3 McCarthy on Trademarks, S 23:101; see also Ford M otor Co., 930 F.2d at 293 ("Professional buyers, or cons umers of very expensive goods, will be held to a higher stan dard of care."); Perini Corp. v. Perini Constr., Inc. , 915 F.2d 121, 128 (4th Cir. 1990) ("[I]n a market with extremely soph isticated buyers, the likelihood of consumer confusion cannot be presumed on the basis of the similarity in trade na me alone."); Oreck Corp. v. U.S. Floor Sys., Inc., 803 F.2d 166, 173-74 (5th Cir. 1986) (business purchasers of expe nsive products not likely to confuse goods with similar m arks).

When the purchasing class is mixed, courts normally do not hold the general class to a high standard of ca re. Ford Motor Co., 930 F.2d at 293 ("When the buyer class i s mixed, the standard of care to be exercised by the reasonably prudent purchaser will be equal to that of the least sophisticated consumer in the class."). If th ere is evidence that both average consumers and specialize d commercial purchasers buy goods, there is a lower standard of care because of the lack of sophisticat ion of some of the relevant purchasers. Id. ("Where the bu yer class `consists of both professional buyers and con sumers then the issue will center on the consumers, for co nfusion within the lowest stratum of reasonably prudent buy ers

17may give rise to liability even if professional buy ers in the

market are not confused.' ") (quoting Worthington F oods, Inc. v. Kellogg Co., 732 F. Supp. 1417, 1488 (S.D. Ohio 1990)).

Evaluating the care and sophistication exercised by consumers of Checkpoint Systems's and Check Point Software's products, the District Court found,

[B]oth plaintiff 's products and defendant's products are expensive. The purchasers of these respe ctive products are, for the most part, highly soph isticated, and the sale process is lengthy . . . . Plai ntiff 's and defendant's products are not impulse purchas es, but rather are subject to long sales efforts and careful customer decision making.

Checkpoint Sys., 104 F. Supp. 2d at 460.

We agree. The consumers of Checkpoint Systems's and Check Point Software's products place great importa nce on, and take great care in, purchasing these products. Checkpoint Systems's consumers exercise a heightene d standard of care in their purchasing decisions beca use they need to ensure the article surveillance equipment c an be quickly and easily repaired and is readily availabl e for new merchandise. Similarly, purchasers of Check Point Software's firewall technology are highly technical computer and information specialists that must ensure the so ftware is compatible with other programs.13 Because the se curity provided is integral to loss prevention in the one case, and confidentiality of communications in the other, the products here are essential to the customers' busin ess needs. Because of the respective products' importan ce to their buyers' security needs and their high cost, c onsumers take care in making purchasing decisions and are no t likely to be confused by the parties' similar marks.

Checkpoint Systems contends that not all the releva nt consumers are sophisticated purchasers and that man y

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13. Although in its marketing materials Check Point Software states that its firewall technology is "designed to be easily i nstalled, configured,

and managed," maintaining this equipment requires speci alized expertise beyond the knowledge of mere technically proficient computer users.

18"mom and pop stores," which exercise a lower standa rd of

care, purchase both parties' products. The District Court acknowledged these smaller commercial purchasers we re part of the relevant consumer class and adjusted it s evaluation of consumer sophistication accordingly. Because the systems are expensive and require on-going maintenance, the court found these smaller commerci al consumers view the purchase of both parties' produc ts as an important investment decision. The court also no ted that many small businesses turn to outside experts to assist in the purchase of complicated computer and article surveillance systems. Additionally, only computer specialists with significant training can install a nd make informed purchasing decisions about Check Point Software's complicated firewall technology. Further more, expert witnesses testified that smaller "mom and po p stores" would likely not have need for the complica ted security software manufactured by Check Point Softw are.

The District Court properly evaluated the care exer cised by consumers of these products in making purchasing decisions. The evidence supports the finding that t he purchase of both parties' products involve a signif icant

investment and even smaller commercial consumers exercise a heightened degree of care in evaluating the products and making purchasing decisions. We see no clear

error.

D. Intent of the Defendant in Adopting the Mark-- Lapp Factor (5)

While evidence of a party's intentional use of anot her party's mark to cause confusion is not a prerequisi te to proving a Lanham Act violation, see generally Lois Sportswear, U.S.A., Inc. v. Levi Strauss & Co., 799 F.2d 867, 875 (2d Cir. 1986), courts have recognized tha t evidence of "intentional, willful and admitted adop tion of a mark closely similar to the existing marks" weighs strongly in favor of finding the likelihood of confusion. Na tional Football League Props., Inc. v. New Jersey Giants, Inc., 637 F. Supp. 507, 518 (D.N.J. 1986). Here, the District Court found, "[t]here is no evidence or even inference th at defendant chose its name with plaintiff 's name or products

19in mind." Checkpoint Sys., 104 F. Supp. 2d at 465. We

agree.

E. Relationship of goods in the minds of consumers because of the similarity of product functions -- Lapp Factor (7)

Under this prong, courts examine whether buyers and users of each parties' goods are likely to encounte r the goods of the other, creating an assumption of commo n source affiliation or sponsorship. Fisons, 30 F.3d at 481 ("The question is whether the consumer might . . . reasonably conclude that one company would offer bo th of these related products."). The test is whether the goods are similar enough that a customer would assume they we re offered by the same source. Wynn Oil Co. v. Thomas, 839 F.2d 1183, 1187 (6th Cir. 1988).

Checkpoint Systems contends that both parties opera te in the overlapping business of corporate security. While

each serves a different branch of this broad indust ry (i.e., Checkpoint Systems primarily focuses on physical se curity

while Check Point Software focuses on information a nd computer security), each is a smaller piece in the overall corporate security industry. Checkpoint Systems con tends that in the increasingly technical and sophisticate d business world, a reasonable business consumer migh t believe that Checkpoint Systems, who had developed a niche in physical article security, had expanded in to the computer technology market. See Dreamwerks Prod. Gr oup, Inc. v. SKG Studio, 142 F.3d 1127, 1131 (9th Cir. 1 998) ("[R]elatedness of each company's prime directive i sn't relevant. Rather, we must focus on [plaintiff 's] c ustomers and ask whether they are likely to associate the[pl aintiff 's products] with [the defendant]."). Checkpoint Syste ms argues the increasing awareness among security professionals of both physical and computer informa tion security systems has led professionals to be cogniz ant of both companies' products.

Checkpoint Systems also contends it has developed integrated circuit technology in its radio frequenc y and closed circuit television products that allow consu mers to

20link Checkpoint Systems hardware with their compute r

systems. It argues these physical security products employ secure information lines similar to the firewall pr oducts

that Check Point Software manufactures.14 On the b asis of these products, it contends its physical security p roducts overlap with computer and information security prod ucts making consumers likely to associate Checkpoint Sys tems's

mark with Check Point Software's mark.15

But the District Court found the parties

operate in separate and distinct segments of the overall field of corporate security. Plaintiff 's sp here includes physical security and control of flow of cor porate goods and people . . . . Defendant's sphere includ es electronic information security on computer networks at the point

of connection to the Internet and within the customer's intranet. Their products are not substitutes for each other. . . . [Their products] are advertised in different magazines and are promoted in entirely diffe rent trade

shows.

Checkpoint Sys., 104 F. Supp. 2d at 466. The court continued,

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14. Checkpoint Systems contends its business has ex panded beyond

article surveillance into "electronic access contro l" products that help limit access to physical areas where computer softw are is located. It also points to its smart card technology that links comp uter networking to physical security.

15. Checkpoint Systems also argues that Check Point Software's firewall systems can be linked with other security systems, including some of the article surveillance products that Checkpoint Syste ms manufactures. It contends this integration technology is evidence th at the computer software industry is moving into the area of physic al security by allowing integration with physical security products. But th e mere fact that software technology can be integrated with other te chnology, including but not limited to physical security technology, is not necessarily proof that the manufacturer of software technology is mov ing into broader security realms. By developing technology that can be integrated with other products, Check Point Software allows consume rs to choose among various "speciality" programs that it wants to incl ude in its system. It does not necessarily mean that Check Point Software has itself moved into the market of these "speciality" security prog rams.

21That there is no overlap in the places these parties

market their products tends to diminish the chance that someone who is a specialist in network security will even come across an advertisement for p laintiff,

and vice versa.

Id.

The District Court did not clearly err. The "relate dness" analysis is intensely factual. Goods may fall under the same general product category but operate in distin ct niches. When two products are part of distinct sect ors of a broad product category, they can be sufficiently un related that consumers are not likely to assume the product s originate from the same mark. See, e.g., Commerce N at'l Ins. Servs., Inc., 214 F.3d at 441 (holding marks h eld by company operating in banking industry and company operating in insurance industry did not create cons umer confusion because the two companies were involved i n distinct highly regulated industries); Astra Pharm. Prods., 718 F.2d at 1207 (finding no product similarity in medical technology sold to different departments in hospita l because " `the hospital community' is not a homogen eous whole, but is composed of separate departments with diverse purchasing requirements, which, in effect, constitute different markets for the parties' respe ctive products."); Harlem Wizards, 952 F. Supp. at 1095 ( finding no product similarity between professional competit ive basketball team and "show basketball" team). 16

The District Court held that Checkpoint Systems's products are simply different from Check Point Soft ware's products. While Checkpoint Systems's access control

, closed circuit television and radio frequency produ cts may employ similar technology, their purpose is physica l article

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16. Products sold and marketed in the computer and information technology industry can be sufficiently distinct th at they do not lead to likely consumer confusion. See, e.g., Hasbro, Inc. v. Clue Computing,

Inc., 232 F.3d 1 (1st Cir. 2000) (per curiam) (computer g ame and computer consulting service not similar); but see Lambda Ele cs. Corp. v. Lambda Tech., Inc., 515 F. Supp. 915, 926 (S.D.N.Y. 1981) (finding "moderate product proximity" between computer software and co mputer hardware because both products are "intended to function in computers").

22surveillance or personal access. On the other hand, Check

Point Software's firewall technology is not intende d to prevent theft of merchandise or limit physical acce ss. Its purpose is to prevent third parties from accessing information from unsecure computer lines. Because t he products serve different functions, and there is on ly "minimal overlap" in the product technology, it is unlikely consumers would be confused by the similar marks. 1 7 Fisons, 30 F.3d at 481. The District Court did not clearly err in its application of the product similarity pr ong of the confusion analysis. See, e.g., Nutri/System, Inc. v . Con-Stan Indus., 809 F.2d 601, 606 (9th Cir. 1987) (weight l oss centers and weight loss counseling differed in meth ods, customer groups and facilities); Plus Prods. v. Plu s Disc. Foods, Inc., 722 F.2d 999, 1008 (2d Cir. 1983) (bar gain food

and health food were not so similar as to create li kelihood of confusion).

F. The extent to which the parties' goods are marketed through the same channels of trade -- Lapp Factor (9)

Courts have recognized that "the greater the simila rity in advertising and marketing campaigns, the greater th e likelihood of confusion." Acxiom Corp. v. Axiom, In c., 27 F. Supp. 2d 478, 502 (D. Del. 1998). Applying this fac tor, courts must examine the trade exhibitions, publicat ions and other media the parties use in marketing their products as well as the manner in which the parties use their sales forces to sell their products to consum ers. This is a fact intensive inquiry. Id.

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17. Simply because large corporations may purchase both Checkpoint Systems's physical article security systems and Che ck Point Software's computer security products does not necessarily pro ve that the same security professionals within these corporations ha ve knowledge of these different technologies and are responsible for purc hasing them. Electronic Design & Sales, Inc. v. Electronic Data Sys. Corp. , 954 F.2d 713, 717-18 (Fed. Cir. 1992) (overlap must exist among individu al purchasers).

Here, there is no evidence that a single security e xpert has sufficient knowledge in both the physical security and informa tion security realms that he purchases both of these products for his co rporation.

23Here, the District Court found the parties "product s are

advertised in different magazines and are promoted in entirely different trade shows." Checkpoint Sys., 1 04 F. Supp. 2d at 466. Checkpoint Systems advertises in t rade shows and trade publications that are marketed to p hysical and retail security specialists.18 Check Point Soft ware advertises in publications and at trade shows that are marketed to computer information specialists. As th e District Court found,

There is no evidence that plaintiff 's produ cts and defendant's products were offered at the sam e time in any magazine, trade show, or distribution ne twork. .. . That there is no overlap in the places these parties market their products tends to diminish the chance that someone who is a specialist in network security will even come across an advertisement for p laintiff,

and vice versa.

Id.

Additionally, Check Point Software's products are o nly sold to consumers through its "specialized value ad ded resellers." These "resellers" do not sell physical article security systems. On the other hand, consumers can purchase Checkpoint Systems's physical security pro ducts from its direct mailings and product catalogues or through its direct sales force. For these reasons, the Dist rict Court concluded, "[T]he parties do not market their produ cts through the same trade channels or markets, and . . . their target customers generally belong to distinctly dif ferent groups." Id. at 467. We see no clear error.

G. The extent to which targets of the parties' sale s efforts are the same -- Lapp Factor (8)

We have recognized that when parties target their s ales efforts to the same consumers, there is a stronger

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18. While Checkpoint Systems also advertises in sec urity magazines that sometimes contain advertisements about computer inf ormation security (i.e., Security magazine), these magazines are pred ominantly marketed to physical security professionals, and not to informa tion technology specialists.

24likelihood of confusion. Lapp, 721 F.2d at 463-64. This

analysis too is intensely factual.

The District Court found the parties market their products to different users. Checkpoint Systems mar kets its products to physical security consumers. Check Point Software markets its products to MIS professionals. Even though many companies often purchase both types of products, most rely on information specialists to m ake purchasing decisions about network security systems

, especially since Check Point Software's firewall sy stems must be installed as part of the overall architectu re of a business's total computer system. But information specialists are not essential to make purchasing de cisions about physical article security systems.

On the basis of this finding, the court concluded t here is not a strong likelihood that users and consumers of the parties' products were likely to come across advert isements about the other party's products. The court stated, "That there is no overlap in the places these parties mar ket their products tends to diminish the chance that someone who is a specialist in network security will even come acr oss an advertisement for plaintiff, and vice versa." Check point Sys., 104 F. Supp. 2d at 466. The court did not clearly e rr in its

determination.

H. Evidence of Converging markets -- Lapp Factor ( 10)

We have held that evidence that the markets in whic h the parties sell their goods are converging is "pivotal in noncompeting products cases." Lapp, 721 F.2d at 463. " One of the chief reasons for granting a trademark owner pr otection in a market not his own is to protect his right som eday to enter that market. When it appears extremely likely

. . . that the trademark owner will soon enter the defend ant's field, this . . . factor weighs heavily in favor of injunctive relief." Id. (internal citation omitted). Under thi s factor we look not only to evidence that a plaintiff has actu ally moved into the defendant's market, but also to "other fac ts suggesting that the consuming public might expect t he prior owner to manufacture a product in the defenda nt's market, or that it is likely to expand into that ma rket." Id.

25at 463. Evaluating this factor, courts look to evid ence that

other companies sell products in both markets, as w ell as evidence that the products at issue are so closely related that the consuming public might find it natural for one company to do so. Here, the District Court found th e physical article security market in which Checkpoin t Systems sold its products was not converging with t he computer information security market in which Check Point Software sold its firewall products. Nor would cons umers expect that Checkpoint Systems would naturally expa nd into the network information security market. The c ourt stated, "[T]he weight of the evidence indicates tha t, if anything, the fields are diverging as network secur ity becomes more and more specialized, and the

interrelatedness of Internet and intranets becomes more complex." Checkpoint Sys., 104 F. Supp. 2d at 452. The court noted that some of Checkpoint Systems's compe titors in the physical article security field had attempte d to move into the information security field. But these comp etitors had been largely unsuccessful in expanding into thi s field thereby

undermin[ing] . . . the idea that network se curity may be within the zone of natural expansion for companies that once had their focus on physical securi ty . . .. Network security . . . is a highly specializ ed field dominated by companies such as [Check Point Software] which are experts in the intricaci es of electronic networks and the techniques of el ectronic intrusion. Nothing in the record indicates t hat plaintiff had the requisite expertise or the interest in achieving entry into [Check Point Software's] field.

Id. at 467 n.17.

Checkpoint Systems disputes this finding contending that modern security specialists look to purchase n etwork security systems that work hand in hand with physic al security systems. It argues these specialists recog nize that computer security products are worthless if not phy sically secure. Consumers, they claim, are likely to assume that a company that sells products in the physical securit y market is likely to expand into the network securit y market to provide businesses with complete security packag es. But

26the District Court found that the increasingly comp lex

market for network security systems requires expert ise to understand evolving technology. Because of the high ly specialized and technical nature of network securit y systems, consumers would not likely assume that a company that has operated for over 30 years in the distinct physical security market would have the expertise t o move into the complicated network security market. Indee d Checkpoint Systems's own security expert witness te stified that he would turn to a network security profession al to assist in the purchase of this type of equipment be cause the knowledge required to make an informed purchasi ng decision was highly technical and specialized. Thus

, although consumers may require security products fr om both the physical security market and the informati on security market, it is reasonable to assume they wo uld turn to different companies to purchase these products.

Additionally, there is little evidence that either party currently operates in both the physical security an d network security markets. On appeal, Checkpoint Sys tems points to several of its products, including its ph ysical access control systems, its "smart card" technology , its radio frequency identification devices, and its clo sed circuit television systems as examples of products that ope rate in both the physical security and network information security markets. It contends these products employ similar secure network lines to Check Point Software's network sec urity technology in order to provide physical article sec urity. But even though its products employ some overlapping computer technology, Checkpoint Systems's products are intended to provide physical article and access sec urity and are sold to consumers looking to purchase physical security products. Check Point Software's products are sold to consumers looking to purchase network information security products. The District Court's finding is supported by the evidence. We see no clear error.

I. Evidence of actual confusion and the length of t ime

the defendant has used the mark without evidence of actual confusion -- Lapp Factors (4),(6)

Evidence of actual confusion is not required to pro ve likelihood of confusion. Versa Prods., 50 F.3d at 2 05;

27Fisons, 30 F.3d at 476 ("[W]hile evidence of actual

confusion would strengthen plaintiff 's case, it is not essential."). We have recognized that it is difficu lt to find evidence of actual confusion because many instances are unreported. For this reason, evidence of actual con fusion may be highly probative of the likelihood of confus ion. Frisch's Rests., Inc. v. Elby's Big Boy of Steubenv ille, Inc., 670 F.2d 642, 648 n.5 (6th Cir. 1982); see also Tis ch Hotels, Inc. v. Americana Inn, Inc., 350 F.2d 609, 612 (7th Cir. 1965) ("[S]ince reliable evidence of actual co nfusion is difficult to obtain in trademark and unfair competi tion cases, any such evidence is substantial evidence of likelihood of confusion."). "If a defendant's produ ct has been sold for an appreciable period of time without evidence of actual confusion, one can infer that continued m arketing

will not lead to consumer confusion in the future. The longer the challenged product has been in use, the stronger this inference will be." Versa Prods., 50 F.3d at 2 05.

Here the District Court found, "Though there is som e evidence in the record of temporary initial confusi on between the companies, by experts, the media, inves tors and consumers, there is no evidence of actual custo mer confusion in connection with the purchase of defend ant's products." Checkpoint Sys., 104 F. Supp. 2d at 447. The court continued stating,

[N]o customer or potential customer for defe ndant's products has believed, to any meaningful deg ree, that the products originated with the plaintiff. Conversely, of the few customers of plaintiff, or other persons in the media, who momentarily thought plaintiff might have entered the firewall business, not one took any meaningful action while under that mistaken belief.

Id. at 450. The court concluded,

Here, there is some evidence of initial conf usion by the media and investors when defendant first gai ned success in the stock market, but that confus ion has dissipated, rather than grown, over the year s, such that there appears to have been none in the last few years. Moreover, the significance of such in itial confusion by the media and investors, like i nitial

28confusion by consumers, lies only in assessi ng whether

it supports the conclusion that confusion in consumer purchasing decision is likely.

Id. at 464.19

On appeal Checkpoint Systems argues the District Co urt erred because it limited its actual confusion inqui ry to evaluating evidence of consumer confusion at the po int of sale rather than according weight to evidence of in vestor
confusion and other initial interest confusion. It contends the Lanham Act affords protection against other typ es of confusion, including initial interest confusion, in vestor confusion and post-sale confusion.

Several courts of appeals have found initial intere st confusion and post-sale confusion actionable under the Lanham Act. We agree and hold initial interest conf usion is

actionable under the Lanham Act. We also hold the D istrict Court properly evaluated the evidence of initial in terest confusion and did not clearly err in finding this e vidence did not weigh heavily in favor of finding likely co nfusion.

We first turn to a discussion of the relevance of i nitial

interest to Lanham Act claims.

1.

A leading treatise on trademark infringement states :

[Trademark infringement] can be based upon c onfusion that creates initial customer interest, even though no actual sale is finally completed as a result of the

confusion.

* * *

[For example,] the likelihood that a potenti al purchaser of a specialized computer program may be dra wn to the junior user, thinking it was the senior user , is

actionable "confusion" even if over the cour se of several

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19. The court also stated that "plaintiff has not d emonstrated that the incidents of temporary confusion or other confusion in spheres unrelated to purchasing activity is a harbinger of likelihood of confusion in purchasing decisions." Checkpoint Sys., 104 F. Supp . 2d at 462.

29months of the purchasing decision-making pro cess, the

buyer's confusion is dissipated. Such a seni or user who is the opposer may suffer injury if a po tential purchaser is initially confused between the parties' respective marks in that the opposer may be precluded from further consideration by a potential pu rchaser in reaching his or her buying decision.

3 McCarthy on Trademarks and Unfair Competition,S 2 3:6 (internal quotations and footnotes omitted). Severa l courts of appeals, including the Second, Seventh, and Nint h

Circuits have found initial interest confusion acti onable under the Lanham Act. In Mobil Oil Corp. v. Pegasus Petroleum Corp., 818 F.2d 254 (2d Cir. 1987), the U nited States Court of Appeals for the Second Circuit foun d actionable initial interest confusion when it enjoi ned the defendant from using the trade name Pegasus because the name was confusingly similar to the plaintiff 's"fl ying

horse" mark. The court noted that in the oil indust ry, companies often attract potential consumers by maki ng "cold calls" to determine interest in purchasing pr oducts.

The court also noted that on the basis of the simil ar name and mark, it was likely that "Pegasus Petroleum wou ld gain crucial credibility during the initial phases of a deal. For example, an oil trader might listen to a cold phone call from Pegasus Petroleum . . . when otherwise he might not

, because of the possibility that Pegasus Petroleum i s related

to Mobil." Id. at 259. Because the similar marks co uld ultimately affect a consumer's consideration of the defendant's product as well as affect the plaintiff 's goodwill with its customers, the court found actionable conf usion under the Lanham Act. Id. at 260 ("[P]otential purc hasers would be misled into an initial interest in Pegasus

Petroleum. Such initial confusion works a sufficien t trademark injury."); see also Lois Sportswear , 799 F.2d at 867; Grotrian, Helfferich, Schulz, Th. Steinweg Nac hf v. Steinway and Sons, 365 F. Supp. 707, 717 (S.D.N.Y. 1973) ("Misled into an initial interest, a potential Stei nway buyer may satisfy himself that the less expensive Grotria nSteinweg is at least as good, if not better, than a Steinway. Deception and confusion thus work to appropriate [Steinway's] good will."), aff 'd , 523 F.2d 1331 ( 2d Cir. 1975).

30Similarly in Brookfield Communications, Inc. v. Wes t

Coast Entertainment Corp., 174 F.3d 1036, 1057 (9th Cir. 1999), the United States Courts of Appeals for the Ninth Circuit recognized that initial interest confusion is

actionable under the Lanham Act. In Brookfield Communications, plaintiffs alleged that defendant W est
Coast Entertainment's use of the web site www.moviebuff.com infringed on its "MovieBuff " mar k. Brookfield used the "MovieBuff " mark on computer software that it sold to industry professionals. Th is software

contained a searchable database of entertainment re lated data, including information about film release sche dules, box office receipts, films in development and other

entertainment news. West Coast's "moviebuff.com" we bsite

was a free searchable entertainment database that a ssisted its consumers in making educated decisions about th e rental and purchase of movies. The website also sol d movie

and other entertainment accessories. The court foun d actionable confusion under the Lanham Act reasoning :

People surfing the Web for information on "M ovieBuff " may confuse "MovieBuff " with the searchable

entertainment database at "moviebuff.com" an d simply assume that they have reached Brookfield's w ebsite. . . . Alternatively, they may incorrectly be lieve that

West Coast licensed "MovieBuff " from Brookf ield . . . or that Brookfield otherwise sponsored West Coa st's database. Other consumers may simply believe that West Coast bought out Brookfield or that the y are related companies.

Yet other forms of confusion are likely to e nsue. Consumers may wrongly assume that the "Movie Buff " database they were searching for is no longe r offered, having been replaced by West Coast's enterta inment database, and thus simply use the services a t West Coast's web ste. And even where people reali ze, immediately upon accessing "moviebuff.com," that they have reached a site operated by West Coast a nd wholly unrelated to Brookfield, West Coast will sti ll have gained a customer by appropriating the goodw ill that Brookfield has developed in its "MovieBuff " mark. A consumer who was originally looking for Broo kfield's

31products or services may be perfectly conten t with

West Coast's database (especially as it is o ffered free of charge); but he reached West Coast's site be cause of its

use of Brookfield's mark as its second-level domain name, which is a misappropriation of Brookfi eld's goodwill by West.

Id. at 1057 (internal citations omitted); see also Interstellar Starship Servs., Ltd. v. Epix Inc., 184 F.3d 1107, 1110 (9th Cir. 1999) ("We recognize a brand of confusion call ed `initial interest' confusion, which permits a finding of a l ikelihood of confusion although the consumer quickly becomes aware of the source's actual identity and no purchase is made as a result of the confusion."), cert. denied , 528 U. S. 1155 (2000); but see Bryce J. Maynard, Note, The Initial Interest Confusion Doctrine and Trademark Infringement on th e Internet, 57 Wash & Lee L. Rev. 1303 (urging cautio n in finding actionable initial interest confusion on th e Internet).

In Elvis Presley Enters., Inc. v. Capece, 141 F.3d 188 (5th Cir. 1998), the United States Court of Appeals for the Fifth Circuit also recognized initial interest confusion. The court there found the plaintiff assignees of the rights o f the estate of Elvis Presley were entitled to injunctive relief against the

defendant bar owner's use of the name "The Velvet E lvis" because it was likely to create confusion. In findi ng initial interest confusion the court reasoned,

The witnesses all testified that, upon enter ing and looking around the [defendants'] bar, they h ad no doubt that [plaintiff was] not affiliated wi th it in any way. Despite the confusion being dissipated, this

initial-interest confusion is beneficial to the Defendants because it brings patrons in the door; indee d, it brought at least one of the [plaintiff 's] w itnesses into the bar. Once in the door, the confusion has succeeded because some of the patrons may stay, despit e realizing that the bar has no relationship w ith [plaintiff]. This initial-interest confusion is even more significant because the Defendants' bar some times charges a cover charge for entry, which allo ws the

Defendants to benefit from initial-interest confusion before it can be dissipated by entry into th e bar.

32Id. at 204.

The United States Court of Appeals for the Seventh Circuit has equated initial interest confusion to a "bait and switch scheme." In Dorr-Oliver, Inc. v. Fluid-Quip, Inc., 94 F.3d 376, 382 (7th Cir. 1996), the court stated,

[T]he Lanham Act forbids a competitor from l uring potential customers away from a producer by initially passing off its goods as those of the produc er's, even if confusion as to the source of the goods is d ispelled by the time any sales are consummated. This "ba it and switch" of producers, also known as "initial interest" confusion, will affect the buying decisions of consumers in the market for the goods, effec tively allowing the competitor to get its foot in t he door by confusing consumers.

Id. (internal citation omitted); see also Eli Lilly & Co. v. Natural Answers, Inc., 233 F.3d 456, 464 (7th Cir. 2000) ("[Initial interest] confusion, which is actionable under the Lanham Act, occurs when a consumer is lured to a pr oduct by its similarity to a known mark, even though the consumer realizes the true identity and origin of t he product before consummating a purchase.").

We join these circuits in holding that initial inte rest confusion is probative of a Lanham Act violation. 2 0 Without initial interest protection, an infringer could use an established mark to create confusion as to a produc t's source thereby receiving a "free ride on the goodwi ll" of the established mark. Mobil Oil Corp., 818 F.2d at 260 (likelihood that "potential purchasers would be mis led into an initial interest" justifies finding of infringem ent). Confining actionable confusion under the Lanham Act to confusion present at the time of purchase would

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20. We note that several District Courts in our cir cuit have found initial interest confusion probative of a Lanham Act violat ion. See, e.g., Sunquest Info. Sys., Inc. v. Park City Solutions, I nc., 130 F. Supp. 2d 680, 695 (W.D. Pa. 2000) ("Although the Third Circuit ha s not directly addressed the issue of initial interest confusion, the doctrine has been embraced by numerous courts, including a number of district courts in this Circuit."); Acxiom, 27 F. Supp. 2d at 497 ("Th e court finds that

there is a likelihood of pre-sale confusion.").

33undervalue the importance of a company's goodwill w ith its

customers.

Congress recognized the relevance of initial intere st confusion and its effect on a company's goodwill wh en it amended the Lanham Act in 1962. In its original for m, the Lanham Act only applied where the use of similar ma rks was "likely to cause confusion or mistake or to dec eive purchasers as to the source of origin of such goods or services." Esercizio v. Roberts, 944 F.2d 1235, 124 5 (6th Cir. 1991) (quoting 1946 Lanham Act.) (emphasis add ed). In 1962 Congress deleted the term "purchasers," afford ing Lanham Act protection where a mark is "likely to ca use confusion or mistake or to deceive." Id. Several co urts have found the amendment expanded the reach of the Lanha m Act beyond mere purchasers to recognize pre-sale co nfusion as well as post-sale confusion. See, e.g., id. ("Si nce Congress intended to protect the reputation of the manufacturer as well as to protect purchasers, the Act's protection is not limited to confusion at the point of sale."); Koppers Co. v. Krupp-Koppers GmbH, 517 F. Supp. 836
, 843-44 (W.D. Pa. 1981) (holding Congress intended t o broaden the scope of protections with the 1962 Amen dment to the Lanham Act); see also 3 McCarthy on Trademar ks & Unfair Competition, S 23.7 ("In 1962, Congress stru ck out language in the Lanham Act which required confusion

, mistake or deception of `purchasers as to the sourc e of origin of such goods and services.' Several courts have noted this expansion of the test of infringement an d held that it supports a finding of infringement when eve n nonpurchasers are deceived."). We agree with the view that Congress's amendment of the Lanham Act in 1962 expanded trademark protection to include instances in

which a mark creates initial interest confusion. 21

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21. The Federal Circuit has interpreted the 1962 am endment to the Lanham Act differently. In Elec. Design & Sales, In c., the court stated,

The legislative history states that the word "purchasers" was

deleted because "the provision actually relates to p otential purchasers as well as to actual purchasers." Therefore, we do not construe this deletion to suggest, much less compel, that purchaser confusion is no longer the primary focus of the inquiry. Instead, we believe that,

34Check Point Software notes that some circuits have only

found "initial interest" confusion probative of lik ely confusion when the products at issue are direct competitors or where there is a strong interrelated ness between the products.22 It claims these circuits ha ve recognized that initial interest confusion is proba tive of a Lanham Act violation when the defendant attempts to use the plaintiff 's more recognizable mark to "get a f oot in the door" with potential customers. But if the initial interest confusion does not ultimately result in a purchasin g decision, this factor counsels against finding the likelihood

of confusion under the Lanham Act.23

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at least in the case of goods and services t hat are sold, the inquiry generally will turn on whether actual or pot ential"purchasers" are

confused.

954 F.2d at 716 (quoting S. Rep. No. 2107, at 4 (19 62), reprinted in 1962 U.S.C.C.A.N. 2844, 2847).

22. Other courts appear to have adopted a facts and circumstances approach to evaluating initial interest confusion. BigStar Entm't, Inc. v. Next Big Star, Inc., 105 F. Supp. 2d 185, 211 (S.D. N.Y. 2000) (declining to apply initial interest confusion in the context of an internet case involving non-competitors whose web addresses were not identical); Northland Ins. Cos. v. Blaylock, 115 F. Supp. 2d 11 08, 1120 (D.Minn. 2000) ("Initial interest confusion" exist[s] when t he defendant stood to materially or financially gain from said initial co nfusion by trading in

on the value of plaintiff 's mark to initially attract customers.").

23. The disagreement over the use of initial intere st confusion is highlighted in Esercizio, 944 F.2d at 1249-50. Whil e the majority of the court found initial interest confusion generally pr obative of a Lanham Act violation, the dissent noted,

To be sure, some courts have expanded the ap plication of the

likelihood of confusion test to include indi viduals other than point- of-sale purchasers. These courts have includ ed potential purchasers who may contemplate a purchase in the future , reasoning that in the pre-sale context an "observer would iden tify the [product] with the [original manufacturer], and the [origin al manufacturer]'s reputation would suffer damage if the [produ ct] appeared to be of poor quality."

In applying the test in this manner, these c ourts appear to recognize that the deception of a consumer under these circumstances could35Some courts have looked at the relatedness of the

relevant products in evaluating whether initial int erest confusion is probative of likely confusion. See Has bro, Inc., 232 F.3d at 2 ("Certainly in a case involving such disparate products and services as this, the court's refusal to enter the `initial interest confusion' thicket is well ta ken given the unlikelihood of `legally significant' confusion."); Brookfield Communications, 174 F.3d at 1056 (when products are unrelated "the likelihood of confusion would probab ly be remote."). Other courts look at evidence that the d efendant intentionally adopted the plaintiff 's mark to crea te confusion among consumers making purchasing decisio ns. See, e.g., Dorr-Oliver, 94 F.3d at 382-83. Still ot her courts

view the level of care consumers exercise in their purchasing decisions to determine whether initial i nterest confusion has dissipated prior to a purchasing deci sion. See, e.g., Brookfield Communications, 174 F.3d at 1 057 (finding initial interest confusion actionable beca use "[I]n the Internet context, . . . entering a web site tak es little effort--usually one click from a linked site or a s earch engine's list; thus, Web surfers are more likely to be confused as to the ownership of a web site than tra ditional patrons of a brick-and-mortar store would be of a s tore's ownership."); Rust Env't & Infrastructure, Inc. v. Teunissen, 131 F.3d 1210, 1217 (7th Cir. 1997) (initial intere st confusion unlikely with sophisticated consumers). S afeway Stores, Inc. v. Safeway Disc. Drugs, 675 F.2d 1160, 1167 (11th Cir. 1982) ("Short-lived confusion or confusi on of individuals casually acquainted with a business is worthy of little weight.").

Product relatedness and level of care exercised by consumers are relevant factors in determining initi al interest confusion. When products are similar, a fi rm is

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dissuade such a consumer from choosing to bu y a particular product, thereby foreclosing the possibility of point-of-sale

confusion but nevertheless injuring the consumer based on this confusion. . .

. Hence, even when expanding the scope of this test, these courts did not lose sight of the focus of [the inquiry] : the potential purchaser.

944 F.2d at 1249-50 (Kennedy J., dissenting) (quoti ng Polo Fashions, Inc. v. Craftex, Inc., 816 F.2d 145, 148 (4th Cir. 1987) ).

36more likely to benefit from the goodwill of a firm with an

established mark. And when consumers do not exercis e a high level of care in making their decisions, it is more likely

that their initial confusion will result in a benef it to the alleged infringer from the use of the goodwill of t he other firm. Conversely, in the absence of these factors, some initial confusion will not likely facilitate free r iding on the goodwill of another mark, or otherwise harm the use r claiming infringement. Where confusion has little o r no meaningful effect in the marketplace, it is of litt le or no consequence in our analysis. Nonetheless, we declin e to issue a blanket rule limiting the probative value o f initial interest. Its significance will vary, and must be d etermined on a case-by-case basis. As with all cases involvin g the likelihood of confusion under the Lanham Act, court s should employ all the relevant Lapp factors and wei gh each factor to determine whether in the totality of the circumstances marketplace confusion is likely. See A&H Sportswear, 237 F3d at 215; Fisons, 30 F.3d at 476 n.11.

2.

We now turn to whether the District Court properly evaluated the evidence of actual confusion, includi ng Checkpoint Systems's evidence of initial interest c onfusion. It is undisputed that Checkpoint Systems presented no evidence of actual consumer confusion in the form o f mistaken purchasing decisions. But it presented the following evidence of initial interest confusion: ( 1) e-mails that Checkpoint Systems received inquiring about fi rewall products; (2) customer inquiries to Checkpoint Syst ems employees, including its CEO, that expressed an int erest in purchasing firewalls; (3) service calls made to Che ckpoint Systems that were intended for Check Point Software ; (4) misdirected calls to Checkpoint Systems's reception ist that were intended for Check Point Software; and (5) rep orts in the media that confused Checkpoint Systems and Chec k

Point Software. The District Court found this evide nce insufficient to support a finding of likely confusi on reasoning,

[A]ny evidence by the plaintiff of initial i nterest confusion by consumers and initial confusion by some

37reporters or other observers, is de minimis and weak,

and the record is completely devoid of any e vidence of an actual mistaken purchase or attempt to pu rchase one company's products believing they origin ated with the other company. Especially when viewed in light of the parties' co-existence for over five year s, this lack of evidence of any confusion in purchasing deci sions of either company's products falls strongly in defendant's

favor.

Checkpoint Sys., 104 F. Supp. 2d at 464-65.

On appeal Checkpoint Systems claims the District Co urt erred as a matter of law by requiring it to produce evidence

of actual consumer confusion in the form of mistake n purchasing decisions. It also contends the court er red in discounting its evidence of initial interest confus ion as de minimis. See Tisch Hotels, Inc., 350 F.2d at 612.

But the District Court properly evaluated the evide nce of

initial interest confusion within context of the re levant Lapp factors stating,

This Court does not read [the relevant case law] as holding that the initial interest confusion doctrine is never applicable if the parties are not comp etitors. However, Hasbro, and numerous other cases, c orrectly emphasize the importance of the parties' com petition or strong interrelatedness.

A review of the cases which have applied the initial interest doctrine indicates that the parties are either direct competitors, or strongly interrelated such that it could be expected that plaintiff would expan d into defendant's market. Other cases have also po inted out that one element of the applicability of the initial interest confusion doctrine is an intent by the

defendant to deceive.

Checkpoint Sys., 104 F. Supp. 2d at 462 (citations omitted). The court concluded,

[W]hile evidence of temporary initial intere st confusion is not completely irrelevant, such evidence is entitled to less weight than it might be in a case where the parties compete or are strongly interrelated, or whe re there is

38evidence or even an inference that defendant was

trying to trade on plaintiff 's goodwill. Th ese factors are utterly absent here. Moreover, the evidence of initial

interest confusion in this case is de minimi s.

Id. at 462-63.

This is the proper analysis. Checkpoint Systems's a nd Check Point Software's products are unrelated and a re sold

in different markets to consumers who exercise a heightened degree of care in making purchasing deci sions. The markets for the parties' products are not conve rging,

nor is there evidence that Check Point Software intentionally adopted the Check Point mark to creat e confusion.24 Given these factors, the District Cour t did not clearly err in finding no likelihood of confusion.

Nor did the District Court err in finding the evide nce of

initial interest confusion was de minimis. At oral argument, Checkpoint Systems averred that at most there was evidence of twenty instances of initial interest co nfusion over the period of time the parties operated in the United

States. Some of this confusion consisted of misdire cted

calls and therefore it is uncertain whether the con sumers were confused by the parties' similar names or whet her

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24. Checkpoint Systems's contention that the Distri ct Court disregarded

its initial interest evidence is erroneous. The Dis trict Court examined this evidence stating,

The Court acknowledges that evidence of any confusion at all, by investors, purchasers, or the media, may sti ll affect this Court's

determination of whether there is a likeliho od of confusion by purchasers, for if there is evidence that, f or example, the media, whose words purchasers read, is confused abo ut the names of these companies, then it is more likely that purch aser will be confused

as well.

* * *

Though that evidence is relevant, here it is minimal, especially

when contrasted against the glaring absence of ev idence of any actual confusion in purchasing decisions in the tim e that the parties have co-existed, and the incentives to ferret out such confusion during the long pendency of this dispute. . . .

Checkpoint Sys., 104 F. Supp. 2d at 463-64.

39directory assistance erred in connecting consumers with

the parties. Duluth News-Tribune v. Mesabi Publ'g C o., 84 F.3d 1093, 1098 (8th Cir. 1996) (misdirected

communications are not evidence of confusion where the sender knows which party he or she wished to send h is communication but erred in the delivery of the mess age). Furthermore, the District Court properly took into account the potential bias of Checkpoint Systems's employee s who testified they had been approached by consumers interested in Check Point Software's firewall produ cts as well as Checkpoint Systems's expert security witnes ses who testified they erroneously believed that Check Poin t Software was affiliated with Checkpoint Systems. A& H Sportswear, 237 F.3d at 227; Reed-Union Corp. v. Tu rtle Wax, Inc., 77 F.3d 909, 911-12 (7th Cir. 1996) (fac t finder's credibility judgments about confusion testimony are virtually never clearly erroneous).

We agree with the District Court that this limited initial interest confusion (i.e., the handful of e-mails an d other anecdotal evidence of mistaken consumer inquiries) was de minimis when viewed in light of the length of time the parties operated together in the United States25 wi thout significant evidence of confusion. Versa Prods. , 5 0 F.3d at 205 ("If a defendant's product has been sold for an appreciable period of time without evidence of actu al confusion, one can infer that continued marketing w ill not lead to consumer confusion in the future. The longe r the challenged product has been in use, the stronger th is inference will be."); Universal Money Ctrs. v. AT&T , 22 F.3d 1527, 1535 (10th Cir. 1994) (a few instances of con fusion over a long period of time are insufficient to supp ort a finding of confusion); Barre-National, Inc. v. Barr Labs., Inc., 773 F. Supp. 735, 744 (D.N.J. 1991) ("Use of simila r marks

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25. Check Point Software has sold its products in t he United States since late 1994. While its products were not widely circu lated until late 1996, its products were co-branded with Sun MicroSystems products from 1995-1996 in order to promote the Check Point Softw are mark.

Therefore the District Court did not err when it st ated "when viewed in light of the parties' co-existence for over five ye ars, this lack of
[actual confusion] evidence . . . falls strongly in defenda nt's favor." Checkpoint Sys., 104 F. Supp. 2d at 465.

40for a substantial period of time with no confusion among

consumers may create a presumption that there is li ttle likelihood of confusion."). Nor were the isolated i nstances of confusion in the media probative of likely confusio n. Centaur Communications, Ltd. v. A/S/M Communication s, Inc., 830 F.2d 1217, 1227 (2d Cir. 1987) (newspaper misattributions were isolated incidents not probative of actual confusion). Given the size of these companies, and the large number of e-mails, customer inquiries, and other communications they receive on a daily basis, these

isolated instances of initial interest confusion co unsel against a finding of likely confusion. A&H Sportswe ar, 237 F. 3d at 227 ("isolated" instances of confusion ins ufficient to support finding of likely confusion); Scott Pape r Co., 589 F.2d at 1231 (nineteen misdirected letters over fou r years weighed against finding of confusion); Nippondenso Co. v. Denso Distribs., Civ. No. 86-3982, 1987 WL 10703 at *5 (E.D. Pa. May 11, 1987) ("The weight attributed to instances of actual confusion depends to some exten t upon the circumstances of the case, including the volume of sales of the goods involved. If isolated instances of actual

confusion result from the sale of a substantial num ber of goods, the weight given to the evidence of actual c onfusion is markedly reduced.") (citing Scott Paper Co., 589 F. 2d at 1225). The District Court did not clearly err.

3.

On appeal, Checkpoint Systems contends the District Court erred in evaluating evidence of investor conf usion.

While a handful of district courts have found evide nce of investor confusion probative of a Lanham Act violat ion, see, e.g., Acxiom Corp. v. Axiom, Inc., 27 F. Supp. 2d 4 78 (D. Del. 1998); Koppers Co. v. Krupp-Koppers GmbH , 517 F. Supp. 836 (W.D. Pa. 1981), no appellate court has y et so

held.

In Acxiom, the district court held that"investor co nfusion may be considered by the trial court as part of its application of the Lapp factors." 27 F. Supp. 2d at 501. In support of its likelihood of confusion claim, plain tiff in that case presented evidence of two investors and a pote ntial investor who testified that they were confused by t he

41similar names. The court held this evidence counsel ed in

favor of finding likely confusion. It reached this conclusion

on the basis of its view that the 1962 amendment to the Lanham Act evinced "a clear congressional intent to `outlaw the use of trademarks which are likely to cause con fusion, mistake, or deception of any kind, not merely of pu rchasers nor simply as to source of origin.' " Id. at 501 ( quoting Koppers, 517 F. Supp. at 843-45).

Checkpoint Systems contends investor confusion is probative of the likelihood of confusion and the Di strict Court erred in discounting this evidence. But given the parties limited briefing on this issue as well as t he scant evidence of investor confusion here,26 we will res erve decision on this issue. We make a few observations nonetheless. Arguably, the 1962 amendments to the Lanham Act extended actionable confusion beyond purchasers to other instances affecting a party's b usiness or goodwill. Investor confusion may well threaten a party's business or goodwill if it would likely deter or in hibit a company's ability to attract investors and raise ca pital.

Here it seems unlikely that investors would be conf used by the parties' similar marks or somewhat similar s tock symbols ("CKP" and "CHKP" for Checkpoint Systems an d Check Point Software, respectively). Many investors are sophisticated parties who exercise a high degree of care in making investment decisions. Also, the parties' sha res are traded on different exchanges (Checkpoint Systems's stock is traded on the New York Stock Exchange and Check Point Software's stock is traded on the NASDAQ). Given th e paucity of evidence of investor confusion here, it is

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26. Checkpoint Systems presented the following evid ence of investor confusion: (1) financial reports and analyses that confused Checkpoint Systems's and Check Point Software's stock symbols; and (2) two investors and one potential investor who were initi ally confused by mistaken media reports about the parties' stocks. B ut these investors averred that they quickly realized their mistake an d did not make any

investment decision based on their mistake. Their c onfusion was an isolated example of confusion when compared to the large number of investors in both companies. Homeowners Group, Inc. , 932 F.2d at 1110 (existence of only a "handful" of instances of conf usion leads to

inference that confusion is unlikely).

42unnecessary to resolve the issue here, and we belie ve it is

prudent to reserve judgment at this time.27 Cf. Hoo ver Co. v. Citicorp Venture Capital Ltd., 674 F. Supp. 460, 461 (S.D.N.Y. 1987) (finding no Lanham Act violation wh ere there was "only scant evidence of investor confusio n in connection with a single advertisement for a securi ties offering.").

J. Totality of Lapp Factors

The District did not err in its factual findings no r in its application of the individual Lapp factors to those findings. Furthermore, the District Court's conclusion that t he combination of the Lapp factors do not establish substantial likelihood of confusion in the marketpl ace is consistent with its findings. Even though mark simi larity-- a factor favorable to Checkpoint Systems--is ordina rily the most important element in the multi-factor Lapp an alysis, it is not necessarily determinative, especially whe re, as here, the markets for competing marks are highly di stinct. Because Checkpoint Systems's and Check Point Softwa re's products are not related, and are marketed to diffe rent consumers through different channels, the evidence demonstrates it is unlikely the relevant consumers, who exercise a high degree of care in purchasing and se lecting among these products, were likely to be confused by the marks. Additionally, there is no evidence that Chec k Point Software intended to use its mark to gain a competi tive advantage. Also, the evidence supports the District Court's finding that the markets are unlikely to converge i n the

future. The minimal evidence of actual initial inte rest
confusion is insufficient to override this conclusi on.

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27. We note that the District Court did not complet ely disregard the evidence of investor confusion Checkpoint Systems p resented stating,

The Court acknowledges that evidence of any confusion at all, by investors, purchasers, or the media, may sti ll affect this Court's

determination of whether there is a likeliho od of confusion . . .

* * *

Though that evidence is relevant, here it is minimal. . . .

Checkpoint Sys., 104 F. Supp. 2d at 463-64.

43Because the District Court did not clearly err in i ts

application of the Lapp factors--individually and i n combination--we will affirm its holding there was n o likelihood of (direct) marketplace confusion. See A &H Sportswear, 237 F.3d at 237 ("The question of likel ihood of confusion is ultimately one of fact, and [the appel late court] cannot roll up [its] sleeves and engage in the bala ncing [itself].").

IV.

A.

On appeal, Checkpoint Systems challenges the Distri ct Court's analysis of its "reverse confusion" claim, contending the mark of Check Point Software (the junior user) has become so strong in the relevant market that the consuming public might assume that Check Point Soft ware is actually the source of the products of Checkpoin t Systems (the senior user).

In Fisons, 30 F.3d at 475, we expressly recognized a cause of action for reverse confusion, stating,

Ordinarily, one expects that the new or juni or user of the mark will use to its advantage the reput ation and good will of the senior user by adopting a s imilar or

identical mark. Reverse confusion occurs whe n a larger, more powerful company uses the trade mark of a smaller, less powerful senior owner and th ereby causes likely confusion as to the source of the senior user's goods and services.

30 F.3d at 474 (citing Sands, Taylor & Wood Co. , 9 78 F.2d at 947).28

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28. In a reverse confusion situation,

the junior user saturates the market with a similar trademark and overwhelms the senior user. The public comes to assume the senior user's products are really the junior user's or that the former has

become somehow connected to the latter. The result is that the

senior user loses the value of the trademark --its product identity, corporate identity, control over its goodwil l and reputation, and ability to move into new markets.

Ameritech, Inc. v. Am. Info. Techs. Corp., 811 F.2d 960, 964 (6th Cir. 1987).

44Courts have recognized that "failure to recognize r everse

confusion would essentially immunize from unfair competition liability companies that have well esta blished trade names and the financial ability to advertise a senior mark taken from smaller, less powerful competitors. " Harlem Wizards, 952 F. Supp. at 1091-92 (citing Big O Tire Dealers, Inc., v. Goodyear Tire & Rubber Co., 561 F .2d 1365, 1372 (10th Cir. 1977); see also Dreamwerks , 142

F.3d at 1130. "Were reverse confusion not a suffici ent basis to obtain Lanham Act protection, a larger company c ould with impunity infringe the senior mark of a smaller one." Fisons, 30 F.3d at 475.

In a direct confusion case, the consuming public ma y assume that the established, senior user is the sou rce of the junior user's goods. In a reverse confusion cas e, the consuming public may assume the converse; that is, that the junior, but more powerful, mark user is the sou rce of the senior user's products. The harm to the senior user is not just that its goodwill is appropriated, but tha t the value

of its mark is diminished. The fundamental issue in both cases, however, is essentially the same: whether th e consuming public is likely to be confused about the source of products of the respective mark users.

In A&H Sportswear, we held that in a typical revers e confusion case, courts should employ the same Lapp factors in assessing likelihood of confusion.29 But in a reverse confusion case, some of the Lapp factors mu st be analyzed differently.30 The strength of the parties ' marks,

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29. In reaching that conclusion, we rejected the no tion that courts should apply a threshold test to determine whether a junior user has used its economic power to saturate the market in r everse confusion cases. The proper inquiry is to apply all of the re levant Lapp factors. A&H Sportswear, 237 F.3d at 208.

30. In A&H Sportswear, we noted that the applicatio n of the following Lapp factors is typically the same in both types of claims: (1) sophistication and attentiveness of consumers; (2) the degree to which the channels of trade and advertisement overlap; (3 ) the similarity of the targets of the parties' sales efforts; and (4) the similarity of the products themselves. We also noted that absent the presence of housemarks and disclaimers, the similarity of marks factor should generally be examined

45the intent in adopting the marks,31 and the evidenc e of

actual confusion are analyzed differently from the method employed in a typical direct confusion case. A&H Sportswear, 237 F.3d at 236. On appeal, Checkpoint Systems argues the District Court did not follow th e analysis of actual confusion and strength of mark o utlined in A&H Sportswear.32

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in a similar fashion in both direct and reverse con fusion cases. As discussed at length, the District Court properly ap plied these factors and

found that there was no likelihood of confusion. A& H Sportswear, 237 F.3d at 236 ("[T]he factors concerning the market, sales, and function similarity . . . need not be reexamined for the rev erse confusion claim because the District Court has already discussed th em in connection with direct confusion and there is typically no dif ference in the analysis

of these factors for reverse and direct confusion c laims."). We see no

error.

31. Neither party disputes the District Court's ana lysis of the intent of the parties in adopting the marks.

32. Additionally, plaintiff argues the District Cou rt improperly held that a claim for reverse confusion is only actionable wh en the parties' products directly compete. But the District Court d id not state this proposition. Rather, the court stated

reverse confusion threatens harm when the ju nior user `overwhelms' the marketplace such that the senior user be gins to lose its identity and profile. This concern is of greatest for ce with competing or related products. In the present case, invol ving non-competing, unrelated products, such "overwhelming" has not even remotely

occurred.

Checkpoint Sys., 104 F. Supp. 2d at 461.

The proper inquiry in a reverse confusion claim is whether consumers will assume the senior user's goods are associated with the junior user. Just as in a direct confusion claim, the relatednes s of the parties' products is integral to the finding of likely confu sion. If two products

are unrelated, there is little reason to assume confusi on since most consumers would not assume that a single company wo uld market two completely unrelated products. On the other hand, w hen the goods are related, a customer might reasonably assume the jun ior user with a strong market presence would sell both products. Fi sons, 30 F.3d at 481 ("The question is whether the consumer might theref ore reasonably conclude that one company would offer both of these related products.").

46B.

In a typical direct confusion claim, the stronger t he senior user's mark, the greater the likelihood of c onfusion caused by a junior user's use of a similar mark. Bu t in a reverse confusion situation, the senior user's clai m may be strengthened by a showing that the junior user's ma rk is commercially relatively strong. The greater relativ e strength of the junior mark allows the junior user to "overw helm" the marketplace, diminishing the value of the senio r user's mark. While analysis of the strength of the senior user's mark is relevant, the more important inquiry focuse s on the junior user's mark. "[T]he lack of commercial stren gth of the smaller senior user's mark is to be given less weight in the analysis because it is the strength of the larg er, junior

user's mark which results in reverse confusion.' " A&H Sportswear, 237 F.3d at 231 (quoting Commerce Nat'l Ins. Servs., Inc., 214 F.3d at 444). Courts should look at the commercial strength of the junior user's mark to de termine whether its advertising and marketing has resulted in a "saturation in the public awareness of the junior u ser's mark." Id., 237 F.3d at 231.

Checkpoint Systems contends the District Court improperly evaluated the strength of the marks. Bec ause the court found its mark weak in the electronic acc ess

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The District Court recognized that consumers of Che ck Point Software's highly sophisticated technical computer security systems would have no reason to believe that Checkpoint Sys tems's physical article surveillance system was manufactured by Che ck Point Software. Because the "computer information" niche that Check Point Software operated in was unique and technical there is no re ason to believe a

consumer would assume that Check Point Software had expanded into the market for a different type of security product . The same is true of Checkpoint Systems's customers. Because of the comp licated technology involved in the "computer information" niche, these customers would not assume that Checkpoint Systems had moved into this market. The court properly recognized that even though the relevant c ase law does not require directly competing goods in order to find r everse confusion, product relatedness is a very important factor to f inding that a consumer might confuse the source of products. See, e.g. , i d.; Scott Paper, 589

F.2d at 1230. We see no error.

47control products (the product most similar to Check Point

Software's firewall technology),33 and by inference that Check Point Software's mark was relatively strong i n that market, plaintiffs claim the court should have foun d actionable reverse confusion. In other words, as a stronger junior user in the network information security mar ket, Check Point Software's mark allegedly overwhelmed Checkpoint Systems's senior, but weaker mark in the

relevant market.

Unlike its other findings, the District Court did n ot scrutinize the reverse confusion claim, perhaps bec ause it was not extensively argued. It did not expressly an alyze the relative strengths of the marks for purposes of thi s claim, nor did it directly examine the strength of Check P oint Software's mark. As noted, it is the strength of th e junior user's mark that is crucial in establishing a rever se confusion claim, because it is the strength of its mark that might lead consumers to mistakenly identify "Checkp oint"- labeled products with Check Point Software. A&H Sportswear, 237 F.3d at 231). In its limited discus sion of the reverse discrimination claim, the court stated,

[R]everse confusion threatens harm when the junior user "overwhelms" the marketplace such that the senior user begins to lose its identity and profile. This concern is of greatest force with competing or related products. In the present case, involving non -competing, unrelated products, such "overwhelming" has not even remotely occurred.

Checkpoint Sys., 104 F. Supp. 2d at 461.

Had the District Court the benefit of our recent op inion in A&H Sportswear , it doubtless would have been gu ided by our analysis. But its failure to do so does not require reversal. In light of its Lapp-factors findings, a focused analysis under A&H Sportswear could not have change d

the court's conclusion of no reverse confusion.

The District Court properly noted that reverse conf usion is most likely in cases involving competing or rela ted

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33. The court found that its mark was strong in the physical article

surveillance market.

48products. When products are related, consumers may be

likely to assume they are produced by the same comp any. But when not related, the likelihood of confusion diminishes dramatically. Given the strong distincti veness of the respective markets as found by the District Cou rt, any confusion would appear unlikely. For this reason, a focused analysis of the strength of Check Point Software's mark

would not affect the court's conclusion.

To establish a claim of reverse confusion, there mu st be evidence that consumers of Checkpoint Systems's pro ducts were likely to assume that Check Point Software was the source of those products. See Dreamwerks, 142 F.3d at 1130 ("The question . . . is whether consumers doin g business with the senior user might mistakenly beli eve that they are dealing with the junior user."). But as no ted, the court found the decision makers who purchased Checkpoint Systems's products were not likely to be the target audience of Check Point Software's advertisi ng or marketing. See Checkpoint Sys., 104 F. Supp. 2d at 466 ("That there is no overlap in the places these part ies market their products tends to diminish the chance that so meone who is a specialist in network security will even c ome across an advertisement for plaintiff, and vice ver sa."). And even if purchasers received such marketing material s, the high level of care with which they ordinarily made their purchasing decisions substantially lessened the lik elihood of confusion. Put another way, the strength of Chec k Point's Software's mark within the corporate inform ation security market would not likely affect the consume rs within Checkpoint Systems's market, given the level of distinctiveness of the relevant markets found by th e District

Court.

In light of these findings, the strength of Check P oint

Software's mark could have a determinative effect o n the outcome of the reverse confusion analysis, if at al l, only if extremely powerful. Only then could it "overwhelm" the marketplace diminishing the value of Checkpoint Sys tems's mark. Although the District Court did not analyze t his factor, it was correct in finding that, "[i]n the p resent case, involving non-competing, unrelated products, such `overwhelming' has not even remotely occurred." Che ckpoint Sys., 104 F. Supp. 2d at 461.

49As we held in Fisons, the court's application of th e Lapp

factors is not mechanical; rather it must weigh eac h factor against the others. 30 F.3d at 473. When the review ing

court determines that almost all the relevant facto rs favor one party, it may discount one factor. See, e.g. , Jet, Inc. v. Sewage Aeration Sys., 165 F.3d 419, 423 (6th Cir. 1 999) (finding no reversible error when the district cour t erred in its application of the "converging markets" factor but correctly applied other factors); Freedom Sav. and Loan Ass'n v. Way, 757 F.2d 1176, 1186 (11th Cir. 1985) (finding no reversible error where District Court e rred in its application of the "similarity of products or servi ces" factor but correctly applied other factors). We see no leg al error

here.

C.

Checkpoint Systems also contends the District Court

erred in its evaluation of the evidence of actual c onfusion in its reverse confusion claim. In A&H Sportswear , we stated that in most trademark cases, parties allege both d irect and

reverse confusion since "the manifestation of consu mer confusion as `direct' or `reverse' may merely be a function of

the context in which the consumer first encountered the mark. Isolated instances of `direct' confusion may occur in a reverse confusion case, and vice-versa." 237 F.3d at 233.
We declined "to create a strict bar to the use of`d irect' confusion evidence in a `reverse' confusion case, o r vice versa." Id.34 Under this view, evidence that the pu blic thought Check Point Software was the origin of Chec kpoint Systems's products is just as probative of likely c onfusion as evidence that the public thought Checkpoint Syst ems was the origin of Check Point Software's products. 35 Here,

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34. We noted that "as a matter of intuition" one mi ght assume evidence that the public thought that the senior user was th e origin of the junior users products would support a direct confusion cla im while evidence that the public thought the junior user was the sou rce of the senior user's product would support a reverse confusion cl aim. But we stated, "In our view, if we were to create a rigid division between `direct' and `reverse' confusion evidence, we would run the risk of denying recovery to meritorious plaintiffs." A&H Sportswear , 237 F. 3d at 233.

35. However, we noted in A&H Sportswear that "evide nce working in the same direction as the claim is preferred, and `misf itting' evidence must

50the District Court properly examined the evidence o f actual

confusion36 and found it to be de minimis. We see n o error.

Finally, Checkpoint Systems contends the District C ourt erred in requiring evidence of actual confusion of purchasers at the point of sale to prove its revers e confusion claim. But as we have discussed, plaintif fs have mischaracterized the court's analysis. The court fa ctored Checkpoint Systems's evidence of initial interest a nd investor confusion into its confusion analysis but found the

evidence insubstantial. We see no clear error.

V.

For the foregoing reasons, we will affirm the judgm ent of

the District Court.

A True Copy:

Teste:

Clerk of the United States Court of Appeals

for the Third Circuit

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be treated carefully, for large amounts of one type of confusion in a claim for a different type may in fact work against the plaintiff." 237

F.3d at 233. Here the court found minimal evidence suppo rting both Checkpoint Systems's direct and reverse confusion c laims.

36. The District Court stated:

Though plaintiff did have incentive and abil ity to find [instances

of actual] confusion if it occurred, by asking its sales persons, distributors, and customers, [Checkpoint Sys tems] did not offer any testimony of a confused purchaser at trial, showing an absence of reverse confusion (i.e., where a [Checkpoint Systems] customer seeks to purchase a [Checkpoint Systems] pro duct because the customer believes it originated from [Check Point Software]). Similarly, plaintiff located no [Check Point Software] customers

who indicated they became interested in a [Check Point Software] product because they thought it originated f rom[Checkpoint Systems].

Checkpoint Sys., 104 F. Supp. 2d at 464 (internal c itations omitted).

51