Opinion ID: 771716
Heading Depth: 1
Heading Rank: 3

Heading: The Direct Confusion Claim

Text: 20 We measure federal trademark infringement, 15 U.S.C. S 1114, and federal unfair competition, 15 U.S.C. S 1125(a)(1)(A), by identical standards. See A&H III, 166 F.3d at 202. 5 To prove either form of Lanham Act violation, a plaintiff must demonstrate that (1) it has a valid and legally protectable mark; (2) it owns the mark; and (3) the defendant's use of the mark to identify goods or services causes a likelihood of confusion. See Commerce Nat'l Ins. Servs., Inc. v. Commerce Ins. Agency, Inc., 214 F.3d 432, 437 (3d Cir. 2000). The plaintiff bears the burden of proof. See American Home Prods. Corp. v. Barr Labs., Inc., 834 F.2d 368, 371 (3d Cir. 1987). It is undisputed that A&H owns Miraclesuit, and that it is a valid and legally protectable mark. Therefore, the questions in this case involve the delineation and application of standards for the evaluation of likelihood of confusion. 21
22 A likelihood of confusion exists when consumers viewing the mark would probably assume that the product or service it represents is associated with the source of a different product or service identified by a similar mark. Dranoff-Perlstein Assocs. v. Sklar, 967 F.2d 852, 862 (3d Cir. 1992) (quotation marks omitted). In Interpace Corp. v. Lapp, Inc., 721 F.2d 460 (3d Cir. 1983), we stated that when the goods involved in a trademark infringement action directly compete with each other, a court need rarely look beyond the mark itself  to determine the likelihood of confusion. Id. at 462. For noncompeting goods, we developed a nonexhaustive list of factors to consider in determining whether there is a likelihood of confusion between marks: 23 (1) the degree of similarity between the owner's mark and the alleged infringing mark; 24 (2) the strength of the owner's mark; 25 (3) the price of the goods and other factors indicative of the care and attention expected of consumers when making a purchase; (4) the length of time the defendant has used the mark without evidence of actual confusion arising; 26 (5) the intent of the defendant in adopting the mark; 27 (6) the evidence of actual confusion; 28 (7) whether the goods, though not competing, are marketed through the same channels of trade and advertised through the same media; 29 (8) the extent to which the targets of the parties' sales efforts are the same; 30 (9) the relationship of the goods in the minds of consumers because of the similarity of function; 31 (10) other facts suggesting that the consuming public might expect the prior owner to manufacture a product in the defendant's market, or that he is likely to expand into that market. 32 Id. at 463 (citing Scott Paper Co. v. Scott's Liquid Gold, Inc., 589 F.2d 1225, 1229 (3d Cir. 1978)). Throughout the opinion we will refer to these factors as the Lapp factors. 33 The District Court recognized that we have not explicitly elucidated what kind of factors should be considered in the case of directly competing goods. A&H IV, 57 F. Supp. 2d at 163. It chose not to use the Lapp test, but instead developed its own test, drawing on many of the same factors: 34 (1) strength of the plaintiff's mark; 35 (2) similarity between the marks; 36 (3) similarity of the products and the degree to which they directly compete with each other; 37 (4) marketing or advertising channels used; 38 (5) sophistication of consumers; 39 (6) defendant's intent in selecting the mark; and 40 (7) incidents of actual confusion. 41 Id. A&H contends that the District Court erred in three ways in applying these factors. First, it argues that when goods are directly competing, a district court need only examine the similarity of the marks. Second, it submits that inasmuch as the District Court fashioned its own test, the Lapp factors it omitted would have tipped the balance in favor of finding a likelihood of confusion. Third, it contends that on any test the similarity of the marks creates a likelihood of confusion.
42 We have not previously settled upon a method that district courts should use to examine whether there exists a likelihood of confusion between directly competing goods. Uncertainty on this point in the district courts within the circuit, as demonstrated in the margin, counsels that we clarify this area of law. 6 43 The multi-factored test rescribed above was developed to determine likelihood of confusion for noncompeting goods. See Versa Prods. Co., Inc. v. Bifold Co. (Mfg.) Ltd., 50 F.3d 189, 202 (3d Cir. 1995). This genesis is apparent in the substance of the test: factor (7) directs a court to look at the markets of the goods though not competing; factor (9) directs that the court examine the similarity of function; and factor (10) directs that the court look at other facts suggesting that the consuming public might expect the prior owner to manufacture a product in the defendant's market, or that he is likely to expand into that market. These factors are not apposite for directly competing goods: By definition, the goods are competing, their function is the same, and the senior and junior user are already in each other's markets. 44 Nonetheless, despite the test's etiology, the raison d'etre of the Lapp factors and the purpose of their development was to aid in the navigation of the difficult course of determining a likelihood of confusion. A district court should not be foreclosed from using any factors that it deems helpful in analyzing whether a likelihood of confusion exists between given products, whether or not they directly compete. Lapp's suggestion that, for competing goods, the court need rarely look beyond the mark itself, Interpace Corp. v. Lapp, Inc., 721 F.2d 460, 462 (3d Cir. 1983), may be an exercise in unjustified optimism; cases are often not easy, and courts will frequently need help in sorting out the likelihood of confusion. District courts within this circuit, as well as other appellate courts, have found that consideration of the Lapp factors (or their analogs from other circuits) can be quite useful for determining likelihood of confusion even when the goods compete directly. See, e.g., Barr e-National, Inc. v. Barr Labs., Inc., 773 F. Supp. 735, 742 (D.N.J. 1991); Banff, Ltd. v. Federated Dep't Stores, Inc., 841 F.2d 486, 490 (2d Cir. 1988). 45 Further, we recognize that many of the Lapp factors that are specifically applicable only to noncompeting goods are often used by courts to determine, in the first instance, whether goods are or are not directly competing. This makes the plaintiff's proposed prohibition on the examination of evidence beyond the marks themselves somewhat illusory. For instance, in AMF Inc. v. Sleekcraft Boats, 599 F.2d 341 (9th Cir. 1979), the Court of Appeals for the Ninth Circuit concluded that two lines of recreational boats were not directly competitive because they were marketed to different consumers and were designed for different uses. See id. at 348. This inquiry approximates Lapp factors (8) and (9), which look to the different functions of the products and the different target customers. Similarly, in Induct-O-Matic Corp. v. Inductotherm Corp., 747 F.2d 358 (6th Cir. 1984), the court affirmed a district court's conclusion that the parties were direct competitors based on an examination of the similarity of the parties' customer base, geographical trading area, and products, see id. at 362, factors which approximate Lapp factors (7), (8), and (9). Indeed, in A&H I, the District Court first applied the Lapp test in analyzing A&H's infringement claim regarding the use of The Miracle Bra mark on lingerie, and then observed that much of the same analysis could be used to determine whether The Miracle Bra swimsuit and the Miraclesuit shared the same market. See id. at 1266. 7 46 The above observations lead us to conclude that the Lapp factors should be used both for competing and for noncompeting goods. As for those factors that specifically refer to noncompeting goods, we believe that, rather than force courts first to inquire as to whether or not the goods are directly competitive simply for the purpose of determining if those factors apply--and, presumably, applying Lapp factors to make this initial determination-- factors (7), (9), and (10) of the Lapp test must be adapted to make them applicable whether the products directly compete or not. 47 In holding that the Lapp test is to be employed when examining both competing and noncompeting goods, we acknowledge that we have at times suggested that the method for comparing competing goods is different from that for noncompeting goods. In Williamson-Dickie Manufacturing Co. v. Davis Manufacturing Co., 251 F.2d 924 (3d Cir. 1958), for example, we did not look beyond the marks themselves in upholding a trial court's determination that the marks Dickie Davis and Dickie's for boys' clothing were confusingly similar. See id. at 926-27. Furthermore, in Lapp we stated that 48 [w]here the trademark owner and the alleged infringer deal in competing goods or services, the court need rarely look beyond the mark itself. In those cases the court will generally examine the registered mark, determine whether it is inherently distinctive or has acquired sufficient secondary meaning to make it distinctive, and compare it against the challenged mark. 49 721 F.2d at 462 (emphasis added). Additionally, in Fisons, we noted that the 50 showing of proof plaintiff must make for [likelihood of confusion] depends on whether the goods or services offered by the trademark owner and the alleged infringer are in direct competition . . . . Where the goods or services are not competing, the similarity of the marks is only one of a number of factors the court must examine to determine likelihood of confusion. 51 30 F.3d at 472-73. Finally, in A&H III, we stated that the standard to be applied when goods . . . are directly competing . . . is different than that applied when the goods are not competing. 166 F.3d at 202. In each of these cases, we arguably implied that when the goods are competing, the similarity of the marks is the only relevant factor. 52 Nonetheless, we read our prior opinions on this subject to counsel only that a district court may, if it so chooses, examine only mark similarity for directly competing goods. 53 A&H urges us to take the quoted statement from A&H III to mean that a district court should not consider any factors at all beyond the similarity of the marks themselves. However, we believe that the word standard is different from the word test. The better reading of this statement is the literal one: The standard for determining when marks are likely to be confused is different when the marks directly compete, i.e., the factor regarding the similarity of marks may increase in importance, but it does not eliminate the other factors entirely. This proposition is not only unremarkable, it flows naturally from the Lapp test, which considers the competition and potential competition of the products in the marketplace. We have certainly never held that a court may not look beyond the marks themselves to determine likelihood of confusion. The quote from Lapp itself, rescribed in our prior opinion in this case (the court need rarely look beyond the mark itself ) presumes that a court might sometimes need to look beyond the mark. Lapp, 721 F.2d at 462. 54 We think that this inference is a sound one, for there appears to be no reason, statutory or otherwise, to impose the restrictive rule proposed by A&H. Indeed, the cases relied upon by A&H do no more than suggest that the Lapp inquiry may be unnecessary in some directly competing goods cases. See, e.g., A&H III, 166 F.3d at 202 (holding that in directly competing goods cases, the multi-factored test is not required). At all events, because we have never before been confronted with this question, any implication in our prior cases that courts are foreclosed from looking beyond mark similarity for competing goods would have been dictum. 55 Our conclusion that the Lapp factors may be used to determine the likelihood of confusion in cases of directly competing goods, at least when the marks are not identical, accords with the approaches of the Second, Sixth, Eighth, and Ninth Circuits, which also have approved using multi-factored tests, developed for noncompetitive goods, in the competitive goods arena. See Banff, Ltd. v. Federated Dep't Stores, Inc., 841 F.2d 486, 490 (2d Cir. 1988); Jet, Inc. v. Sewage Aeration Sys., 165 F.3d 419, 421-22 (6th Cir. 1999); Duluth News-Tribune v. Mesabi Publ'g Co., 84 F.3d 1093, 1096 (8th Cir. 1996); Dr. Seuss Enters., L.P. v. Penguin Books U.S.A., Inc., 109 F.3d 1394, 1404 (9th Cir. 1997). 56 As explained above, we do not hold that a District Court must use the factors. In fact our precedents suggest the opposite. If products are directly competing, and the marks are clearly very similar, a district judge should feel free to consider only the similarity of the marks themselves. See, e.g., Opticians Ass'n of Am. v. Independent Opticians of Am., 920 F.2d 187, 195 (3d Cir. 1990) ([v]ery little analysis was necessary in a case where a splinter group of a larger organization continued to use the organization's collective mark). Moreover, the court often need not apply each and every factor; when goods are directly competing, both precedent and common sense counsel that the similarity of the marks takes on great prominence. 8 At all events, the factors are meant to be tools, not hurdles. On the other hand, when, as in this case, the degree of confusing similarity of the marks is not clear, see Barre-National, Inc., 773 F. Supp. at 742, a court can turn to the other factors. Here, the District Court did not err in choosing to look beyond the marks themselves. 57 To summarize, we hold that whether or not the goods directly compete, the Lapp factors should be employed to test for likelihood of confusion. Therefore, likelihood of confusion for both competing and noncompeting goods should be tested with reference to the following: 58 (1) the degree of similarity between the owner's mark and the alleged infringing mark; 59 (2) the strength of the owner's mark; 60 (3) the price of the goods and other factors indicative of the care and attention expected of consumers when making a purchase; 61 (4) the length of time the defendant has used the mark without evidence of actual confusion arising; 62 (5) the intent of the defendant in adopting the mark; 63 (6) the evidence of actual confusion; 64 (7) whether the goods, competing or not competing, are marketed through the same channels of trade and advertised through the same media; 65 (8) the extent to which the targets of the parties' sales efforts are the same; 66 (9) the relationship of the goods in the minds of consumers, whether because of the near-identity of the products, the similarity of function, or other factors; 67 (10) other facts suggesting that the consuming public might expect the prior owner to manufacture both products, or expect the prior owner to manufacture a product in the defendant's market, or expect that the prior owner is likely to expand into the defendant's market. 68 As we stress further below, the Lapp test is a qualitative inquiry. Not all factors will be relevant in all cases; further, the different factors may properly be accorded different weights depending on the particular factual setting. A district court should utilize the factors that seem appropriate to a given situation.
69 A&H argues in the alternative that inasmuch as the District Court used a multi-factored test, it should have considered all of the Lapp factors, and that the missing factors would have favored A&H. It therefore contends that the court erred as a matter of law in fashioning its own test. However, the test used by the District Court is functionally the same as the Lapp test. A comparison of these factor lists reveals that the ostensibly missing Lapp factors appear to be incorporated into the District Court's test. Lapp factor (9), the relationship of the goods in the minds of the consumers because of the similarity of function, and Lapp factor (8), the extent to which the targets of the parties' sales efforts are the same, are subsumed in the court's factor (3), which considers the similarity of the products and the degree to which they directly compete with each other. Lapp factor (4), the length of time the defendant has used the mark without evidence of actual confusion is subsumed along with factor (6), evidence of actual confusion, within the District Court's factor (7), incidents of actual confusion. Lapp factor (10), other facts suggesting that the consuming public might expect the prior owner to manufacture both products, or expect the prior owner to manufacture a product in the defendant's market, or expect that the prior owner is likely to expand into the defendant's market, is unmentioned, but also unnecessary, because the similarity of the goods and their competitive relationship was accounted for in the court's factor (3). 70 A&H essentially argues that, had the Lapp test been applied as written, a greater absolute number of factors would have been decided in its favor, thus leading to a different outcome; for instance, the court's factor (3), rather than counting in its favor a single time, would have been divided into at least two factors, each of which would have weighed in its favor. However, we have repeatedly insisted that the Lapp factors are not to be mechanically tallied, but rather that they are tools to guide a qualitative decision. See Fisons, 30 F.3d at 476 n.11 (The weight given to each factor in the overall picture, as well as its weighing for plaintiff or defendant, must be done on an individual fact- specific basis.). 71 The District Court did not engage in a simplistic quantitative comparison, but accurately understood the role of the factors: 72 No single factor is dispositive, and a finding of a likelihood of confusion does not require a positive finding on a majority of these factors. Instead, they are simply a guide to help determine whether confusion would be likely between the use of two contested trademarks on competing products. In addition to the listed factors, a court is free to consider other relevant factors in determining whether a likelihood of confusion exists. 73 A&H IV, 57 F. Supp. 2d at 164 (citations omitted). Although it might promote clarity always to use the same factors in the same order, the District Court covered all the ground covered by the Lapp factors and did so with care. Therefore, we conclude, the court did not err in its use of the factors.