Opinion ID: 775328
Heading Depth: 2
Heading Rank: 4

Heading: Intent of the Defendant in Adopting the Mark--Lapp Factor (5)

Text: 67 While evidence of a party's intentional use of another party's mark to cause confusion is not a prerequisite 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 that evidence of intentional, willful and admitted adoption of a mark closely similar to the existing marks weighs strongly in favor of finding the likelihood of confusion. National 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 that defendant chose its name with plaintiff's name or products in mind. Checkpoint Sys., 104 F. Supp. 2d at 465. We agree. 68 E. Relationship of goods in the minds of consumers because of the similarity of product functions --Lapp Factor (7) 69 Under this prong, courts examine whether buyers and users of each parties' goods are likely to encounter the goods of the other, creating an assumption of common source affiliation or sponsorship. Fisons, 30 F.3d at 481 (The question is whether the consumer might... reasonably conclude that one company would offer both of these related products.). The test is whether the goods are similar enough that a customer would assume they were offered by the same source. Wynn Oil Co. v. Thomas, 839 F.2d 1183, 1187 (6th Cir. 1988). 70 Checkpoint Systems contends that both parties operate in the overlapping business of corporate security. While each serves a different branch of this broad industry (i.e., Checkpoint Systems primarily focuses on physical security while Check Point Software focuses on information and computer security), each is a smaller piece in the overall corporate security industry. Checkpoint Systems contends that in the increasingly technical and sophisticated business world, a reasonable business consumer might believe that Checkpoint Systems, who had developed a niche in physical article security, had expanded into the computer technology market. See Dreamwerks Prod. Group, Inc. v. SKG Studio, 142 F.3d 1127, 1131 (9th Cir. 1998) ([R]elatedness of each company's prime directive isn't relevant. Rather, we must focus on [plaintiff's] customers and ask whether they are likely to associate the[plaintiff's products] with [the defendant].). Checkpoint Systems argues the increasing awareness among security professionals of both physical and computer information security systems has led professionals to be cognizant of both companies' products. 71 Checkpoint Systems also contends it has developed integrated circuit technology in its radio frequency and closed circuit television products that allow consumers to link Checkpoint Systems hardware with their computer systems. It argues these physical security products employ secure information lines similar to the firewall products that Check Point Software manufactures. 14 On the basis of these products, it contends its physical security products overlap with computer and information security products making consumers likely to associate Checkpoint Systems's mark with Check Point Software's mark. 15 72 But the District Court found the parties operate in separate and distinct segments of the overall field of corporate security. Plaintiff's sphere includes physical security and control of flow of corporate goods and people.... Defendant's sphere includes 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 different trade shows. 73 Checkpoint Sys., 104 F. Supp. 2d at 466. 74 The court continued, 75 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 plaintiff, and vice versa. 76 Id. 77 The District Court did not clearly err. The relatedness analysis is intensely factual. Goods may fall under the same general product category but operate in distinct niches. When two products are part of distinct sectors of a broad product category, they can be sufficiently unrelated that consumers are not likely to assume the products originate from the same mark. See, e.g., Commerce Nat'l Ins. Servs., Inc., 214 F.3d at 441 (holding marks held by company operating in banking industry and company operating in insurance industry did not create consumer confusion because the two companies were involved in distinct highly regulated industries); Astra Pharm. Prods., 718 F.2d at 1207 (finding no product similarity in medical technology sold to different departments in hospital because  `the hospital community' is not a homogeneous whole, but is composed of separate departments with diverse purchasing requirements, which, in effect, constitute different markets for the parties' respective products.); Harlem Wizards, 952 F. Supp. at 1095 (finding no product similarity between professional competitive basketball team and show basketball team). 16 78 The District Court held that Checkpoint Systems's products are simply different from Check Point Software's products. While Checkpoint Systems's access control, closed circuit television and radio frequency products may employ similar technology, their purpose is physical article surveillance or personal access. On the other hand, Check Point Software's firewall technology is not intended to prevent theft of merchandise or limit physical access. Its purpose is to prevent third parties from accessing information from unsecure computer lines. Because the products serve different functions, and there is only minimal overlap in the product technology, it is unlikely consumers would be confused by the similar marks. 17 Fisons, 30 F.3d at 481. The District Court did not clearly err in its application of the product similarity prong of the confusion analysis. See, e.g., Nutri/System, Inc. v. Con-Stan Indus., 809 F.2d 601, 606 (9th Cir. 1987) (weight loss centers and weight loss counseling differed in methods, customer groups and facilities); Plus Prods. v. Plus Disc. Foods, Inc., 722 F.2d 999, 1008 (2d Cir. 1983) (bargain food and health food were not so similar as to create likelihood of confusion). 79 F. The extent to which the parties' goods are marketed through the same channels of trade -- Lapp Factor (9) 80 Courts have recognized that the greater the similarity in advertising and marketing campaigns, the greater the likelihood of confusion. Acxiom Corp. v. Axiom, Inc., 27 F. Supp. 2d 478, 502 (D. Del. 1998). Applying this factor, courts must examine the trade exhibitions, publications 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 consumers. This is a fact intensive inquiry. Id. 81 Here, there is no evidence that a single security expert has sufficient knowledge in both the physical security and information security realms that he purchases both of these products for his corporation. 82 Here, the District Court found the parties products are advertised in different magazines and are promoted in entirely different trade shows. Checkpoint Sys., 104 F. Supp. 2d at 466. Checkpoint Systems advertises in trade shows and trade publications that are marketed to physical and retail security specialists. 18 Check Point Software advertises in publications and at trade shows that are marketed to computer information specialists. As the District Court found, 83 There is no evidence that plaintiff's products and defendant's products were offered at the same time in any magazine, trade show, or distribution network.... 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 plaintiff, and vice versa. 84 Id. 85 Additionally, Check Point Software's products are only sold to consumers through its specialized value added resellers. These resellers do not sell physical article security systems. On the other hand, consumers can purchase Checkpoint Systems's physical security products from its direct mailings and product catalogues or through its direct sales force. For these reasons, the District Court concluded, [T]he parties do not market their products through the same trade channels or markets, and... their target customers generally belong to distinctly different groups. Id. at 467. We see no clear error. 86 G. The extent to which targets of the parties' sales efforts are the same -- Lapp Factor (8) 87 We have recognized that when parties target their sales efforts to the same consumers, there is a stronger likelihood of confusion. Lapp, 721 F.2d at 463-64. This analysis too is intensely factual. 88 The District Court found the parties market their products to different users. Checkpoint Systems markets 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 make purchasing decisions about network security systems, especially since Check Point Software's firewall systems must be installed as part of the overall architecture of a business's total computer system. But information specialists are not essential to make purchasing decisions about physical article security systems. 89 On the basis of this finding, the court concluded there is not a strong likelihood that users and consumers of the parties' products were likely to come across advertisements about the other party's products. The court stated, 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 plaintiff, and vice versa. Checkpoint Sys., 104 F. Supp. 2d at 466. The court did not clearly err in its determination. 90 H. Evidence of Converging markets -- Lapp Factor (10) 91 We have held that evidence that the markets in which the parties sell their goods are converging is pivotal in non-competing products cases. Lapp, 721 F.2d at 463. One of the chief reasons for granting a trademark owner protection in a market not his own is to protect his right someday to enter that market. When it appears extremely likely... that the trademark owner will soon enter the defendant's field, this... factor weighs heavily in favor of injunctive relief. Id. (internal citation omitted). Under this factor we look not only to evidence that a plaintiff has actually moved into the defendant's market, but also to other facts suggesting that the consuming public might expect the prior owner to manufacture a product in the defendant's market, or that it is likely to expand into that market. Id. at 463. Evaluating this factor, courts look to evidence that other companies sell products in both markets, as well 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 the physical article security market in which Checkpoint Systems sold its products was not converging with the computer information security market in which Check Point Software sold its firewall products. Nor would consumers expect that Checkpoint Systems would naturally expand into the network information security market. The court stated, [T]he weight of the evidence indicates that, if anything, the fields are diverging as network security becomes more and more specialized, and the inter-relatedness of Internet and intranets becomes more complex. Checkpoint Sys., 104 F. Supp. 2d at 452. The court noted that some of Checkpoint Systems's competitors in the physical article security field had attempted to move into the information security field. But these competitors had been largely unsuccessful in expanding into this field thereby 92 undermin[ing]... the idea that network security may be within the zone of natural expansion for companies that once had their focus on physical security.... Network security... is a highly specialized field dominated by companies such as [Check Point Software] which are experts in the intricacies of electronic networks and the techniques of electronic intrusion. Nothing in the record indicates that plaintiff had the requisite expertise or the interest in achieving entry into [Check Point Software's] field. 93 Id. at 467 n.17. 94 Checkpoint Systems disputes this finding contending that modern security specialists look to purchase network security systems that work hand in hand with physical security systems. It argues these specialists recognize that computer security products are worthless if not physically secure. Consumers, they claim, are likely to assume that a company that sells products in the physical security market is likely to expand into the network security market to provide businesses with complete security packages. But the District Court found that the increasingly complex market for network security systems requires expertise to understand evolving technology. Because of the highly specialized and technical nature of network security 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 to move into the complicated network security market. Indeed Checkpoint Systems's own security expert witness testified that he would turn to a network security professional to assist in the purchase of this type of equipment because the knowledge required to make an informed purchasing decision was highly technical and specialized. Thus, although consumers may require security products from both the physical security market and the information security market, it is reasonable to assume they would turn to different companies to purchase these products. 95 Additionally, there is little evidence that either party currently operates in both the physical security and network security markets. On appeal, Checkpoint Systems points to several of its products, including its physical access control systems, its smart card technology, its radio frequency identification devices, and its closed circuit television systems as examples of products that operate 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 security technology in order to provide physical article security. But even though its products employ some overlapping computer technology, Checkpoint Systems's products are intended to provide physical article and access security 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. 96 I. Evidence of actual confusion and the length of time the defendant has used the mark without evidence of actual confusion -- Lapp Factors (4),(6) 97 Evidence of actual confusion is not required to prove likelihood of confusion. Versa Prods., 50 F.3d at 205; Fisons, 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 difficult to find evidence of actual confusion because many instances are unreported. For this reason, evidence of actual confusion may be highly probative of the likelihood of confusion. Frisch's Rests., Inc. v. Elby's Big Boy of Steubenville, Inc., 670 F.2d 642, 648 n.5 (6th Cir. 1982); see also Tisch Hotels, Inc. v. Americana Inn, Inc., 350 F.2d 609, 612 (7th Cir. 1965) ([S]ince reliable evidence of actual confusion is difficult to obtain in trademark and unfair competition cases, any such evidence is substantial evidence of likelihood of confusion.). If a defendant's product has been sold for an appreciable period of time without evidence of actual confusion, one can infer that continued marketing 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 205. 98 Here the District Court found, Though there is some evidence in the record of temporary initial confusion between the companies, by experts, the media, investors and consumers, there is no evidence of actual customer confusion in connection with the purchase of defendant's products. Checkpoint Sys., 104 F. Supp. 2d at 447. The court continued stating, 99 [N]o customer or potential customer for defendant's products has believed, to any meaningful degree, 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. 100 Id. at 450. The court concluded, 101 Here, there is some evidence of initial confusion by the media and investors when defendant first gained success in the stock market, but that confusion has dissipated, rather than grown, over the years, such that there appears to have been none in the last few years. Moreover, the significance of such initial confusion by the media and investors, like initial confusion by consumers, lies only in assessing whether it supports the conclusion that confusion in consumer purchasing decision is likely. Id. at 464. 19 102 On appeal Checkpoint Systems argues the District Court erred because it limited its actual confusion inquiry to evaluating evidence of consumer confusion at the point of sale rather than according weight to evidence of investor confusion and other initial interest confusion. It contends the Lanham Act affords protection against other types of confusion, including initial interest confusion, investor confusion and post-sale confusion. 103 Several courts of appeals have found initial interest confusion and post-sale confusion actionable under the Lanham Act. We agree and hold initial interest confusion is actionable under the Lanham Act. We also hold the District Court properly evaluated the evidence of initial interest confusion and did not clearly err in finding this evidence did not weigh heavily in favor of finding likely confusion. We first turn to a discussion of the relevance of initial interest to Lanham Act claims.
104 A leading treatise on trademark infringement states: 105 [Trademark infringement] can be based upon confusion that creates initial customer interest, even though no actual sale is finally completed as a result of the confusion. 106