Court Opinion

ID: 2648382
Source: CourtListenerOpinion
Date Created: 2014-01-07 19:36:41.559365+00
Date Added: 2024-06-11T12:57:57.993046
License: Public Domain

PUBLISHED

                  UNITED STATES COURT OF APPEALS
                      FOR THE FOURTH CIRCUIT

                             No. 12-2126

SWATCH AG (SWATCH SA) (SWATCH LTD.),

                Plaintiff - Appellant,

           v.

BEEHIVE WHOLESALE, LLC, a limited liability company,

                Defendant - Appellee.

Appeal from the United States District Court for the Eastern
District of Virginia, at Alexandria.   Liam O’Grady, District
Judge. (1:11-cv-00434-LO-JFA)

Argued:   October 30, 2013                 Decided:   January 7, 2014

Before NIEMEYER, KING, and DUNCAN, Circuit Judges.

Affirmed by published opinion. Judge Duncan wrote the opinion,
in which Judge Niemeyer and Judge King joined.

ARGUED: Jeffrey A. Lindenbaum, COLLEN IP, INTELLECTUAL PROPERTY
LAW, P.C., Ossining, New York, for Appellant.     William Jerome
Utermohlen, OLIFF & BERRIDGE, PLC, Alexandria, Virginia, for
Appellee.   ON BRIEF: Thomas P. Gulick, COLLEN IP, INTELLECTUAL
PROPERTY LAW, P.C., Ossining, New York, for Appellant. James A.
Oliff, OLIFF & BERRIDGE, PLC, Alexandria, Virginia, for
Appellee.
DUNCAN, Circuit Judge:

     Appellant Swatch AG brings this action seeking reversal of

the district court’s order denying its opposition to appellee

Beehive    Wholesale,          LLC’s   trademark    application       and   dismissing

its related claims for federal, state, and common law trademark

infringement,        trademark         dilution,     and     unfair     competition.

Swatch     appeals        on    the    ground     that     the   district         court’s

underlying    factual          findings--that      there    is   no   likelihood       of

confusion     between          Swatch’s    and     Beehive’s     marks       and     that

Beehive’s mark is not merely descriptive--are clearly erroneous.

For the reasons that follow we affirm.

                                            I.

     Swatch    is     a    well-known      Swiss    corporation       that    produces

watches,     clocks,       jewelry,       and    various    materials       for     watch

collectors.     It is the owner of three U.S. registrations for the

mark SWATCH 1 and for materials bearing that mark.                      Beehive is a

Louisiana company engaged in wholesale and retail sales of a

variety of products including watches and watch parts.

     Beehive produces and sells watch bands and faces under the

mark SWAP.      The defining feature of these watch parts is that

     1
       For clarity, the marks will be rendered throughout in
capital letters while “Swatch” will refer to the appellant.

                                            2
they       are   interchangeable.               A       purchaser      of   Beehive’s    watch

components is able to affix any SWAP watch face to most or all

SWAP watchbands.               Swatch brand watches, which are typically sold

at     a    higher      price      point,        do       not    include      interchangeable

components.

       On July 30, 2004, Beehive applied to the U.S. Patent and

Trademark Office (“PTO”) to register its mark, SWAP, for use on

its    “[w]atch        faces,     ribbon       watch       bands,     slide    pendants,      and

beaded      watch      bands.”          J.A.    315.           Beehive’s     application      was

preliminarily granted and published for opposition 2 on December

26,    2005.         On    April     14,       2008, 3     Swatch      filed    a    notice    of

opposition        to      Beehive’s        application           on    three    grounds:      1)

priority of Swatch’s mark and likelihood of confusion; 2) mere

descriptiveness of Beehive’s mark; and 3) dilution of SWATCH by

Beehive’s        use      of    SWAP.       Swatch         primarily        argued   that     the

similarity        of      Beehive’s       SWAP          mark    to    its   SWATCH    mark     in

combination with the similar character of their products was

likely to result in confusion among consumers as to the origin

       2
       Interested parties may challenge the registration of a
mark by filing a notice of opposition with the PTO during the
mark’s publication period.
       3
       Although Swatch initially filed an opposition on February
3, 2006, its 2008 amended opposition is the relevant filing for
our purposes because it was the basis of the Trademark Trial and
Appeal Board’s proceeding.

                                                    3
of the goods.        It also argued that SWAP is too generic to be

registered.       The     parties      submitted     evidence       concerning       their

products, sales, revenue, and advertising, as well as deposition

testimony regarding Beehive’s selection of the SWAP mark.                             The

opposition     was      heard    and    dismissed      on     all    counts     by    the

Trademark Trial and Appeal Board (“TTAB”).

     Swatch then filed a civil action in the Eastern District of

Virginia seeking the cancelation of Beehive’s registration under

15 U.S.C. § 1071(b).              Swatch added new claims for trademark

infringement      and    federal    unfair     competition      under     the    Lanham

Act, 15 U.S.C. §§ 1114, 1125(a); trademark dilution under the

Trademark Dilution Act, 15 U.S.C. § 1125(c); state trademark

infringement under Va. Code § 59.1-92.12; and common law unfair

competition.         It    also     submitted        documentary       evidence       not

presented    to   the     TTAB    including     facts       relevant    to    the    SWAP

clock-face variant, the parties’ channels of distribution, and

Swatch’s    dilution-by-blurring          claim.        The    parties       agreed    to

forgo live testimony and have the matter decided solely on the

written record.         The district court, upon consideration of the

materials     before      it,    affirmed      the    TTAB,     holding       that    its

determinations were supported by substantial evidence.                          It also

found facts based on evidence not presented to the TTAB pursuant

to its authority under 15 U.S.C. § 1071(b)(3).                          The district

court concluded, on the basis of these combined findings, that

                                           4
there was no likelihood of confusion between the two marks and

no    likelihood     that       SWAP    would      dilute    SWATCH.           It    dismissed

Swatch’s infringement and unfair competition claims as a matter

of law.       It also concluded that Beehive’s mark is registrable

because it is not merely descriptive.                      This appeal followed.

                                             II.

       On appeal, we review the district court’s factual findings

for clear error and its legal conclusions de novo.                                  Likelihood

of confusion is an “inherently factual issue,” and we “review[]

district     court     determinations           regarding     [it]      under        a   clearly

erroneous standard.”             Petro Shopping Ctrs., L.P. v. James River

Petroleum     Inc.,       130 F.3d 88,       91-92    (4th     Cir.      1997).       The

strength of a mark and whether it is capable of being registered

are   also    questions         of   fact    that    we     review      for    clear     error.

Pizzeria Uno Corp. v. Temple, 747 F.2d 1522, 1533 (4th Cir.

1984).       We have yet to provide definitive guidance as to how

dilution      claims      should        be   reviewed        because          the    Trademark

Dilution Revision Act, 15 U.S.C. § 1125(c) (“TDRA”), 4 is a recent

enactment.      However, likelihood of dilution, like likelihood of

confusion,     is     a    fact-intensive           inquiry,       so    the        appropriate

       4
       Pub. L. No. 109-312, 120 Stat. 1730 (2006). The original
act required proof of actual dilution and actual economic harm.
Louis Vuitton Malletier, 507 F.3d 252, 264 n.2 (4th Cir. 2007).

                                               5
standard of review is clear error.                 Cf.   Louis Vuitton Malletier

S.A. v. Haute Diggity Dog, LLC, 507 F.3d 252, 264-65 (4th Cir.

2007) (reciting multifactor factual tests for determining the

likelihood      of     dilution,    including       proving    the     fame    of    the

plaintiff mark and the likelihood that an association between

two    marks    will    impair     the   distinctiveness       of    the      plaintiff

mark). 5

                                         III.

                                          A.

       Section § 1071(b) of Title 15 of the United States Code

permits a party in a trademark suit to initiate a civil action

in the place of an appeal of the TTAB’s determination to the

Federal Circuit.         15 U.S.C. § 1071(b)(1).              A brief description

of    the   procedural     features      of    §   1071(b)    is    helpful     to   our

analysis.

       In   a   §    1071(b)   action,    the      district    court    reviews      the

record de novo and acts as the finder of fact.                         Durox Co. v.

Duron Paint Mfg. Co., 320 F.2d 882, 883-84 (4th Cir. 1963).                          The

       5
       Our only other published case deciding the question of
dilution under the TDRA was in the posture of a summary judgment
and was therefore reviewed de novo.      Rosetta Stone Ltd. v.
Google, Inc., 676 F.3d 144 (4th Cir. 2012).      However in our
unpublished decision in Super Duper, Inc. v. Mattel, Inc., we
explicitly stated that the elements of the TDRA analysis are
factual determinations. 382 F. App’x 308, 314 (4th Cir. 2010).

                                          6
district court has authority independent of the PTO to grant or

cancel registrations and to decide any related matters such as

infringement          and     unfair     competition        claims.       15     U.S.C.     §

1071(b)(1).          The district court must admit the PTO record if a

party so moves, and if admitted, the record “shall have the same

effect as if originally taken and produced in the suit.”                            Id. at

§    1071(b)(3).            Whether    or   not     the   record   is    admitted,        the

parties have an unrestricted right to submit further evidence as

long as it is admissible under the Federal Rules of Evidence and

Civil Procedure.                Id.; see also Kappos v. Hyatt, 132 S. Ct.
1690, 1700 (2012) (interpreting § 1071(b)’s patent parallel, 35

U.S.C. § 145).

          Kappos     is   the    primary    case     interpreting       the    patent     and

trademark civil action statutes.                    In Kappos, the PTO argued that

in    a    §   145    proceeding       where   new     evidence    is    admitted,        the

district       court        should     defer   to     its    findings,        and   “should

overturn the PTO’s factual findings only if the new evidence

clearly establishes that the agency erred.”                           132 S. Ct. 1690,

1695-96 (2012).              The Supreme Court rejected the PTO’s premise

that a § 145 suit “creates a special proceeding that is distinct

from a typical civil suit filed in federal district court,” id.

at 1696, and adopted the Federal Circuit’s position that “where

new evidence is presented to the district court on a disputed

fact question, a de novo finding will be necessary to take such

                                               7
evidence     into     account     together      with    the     evidence      before    the

board.”      Id. at 1700 (quoting Fregeau v. Mossinghoff, 776 F.2d
1034, 1038 (Fed. Cir. 1985)).                It held that the district court

“does not act as the ‘reviewing court’ envisioned by the APA,”

because the court must determine, among other things, “how the

new evidence comports with the existing administrative record,”

and    “as      a     logical     matter        [it]     can     only      make       [this]

determination[] de novo because it is the first tribunal to hear

the evidence.”         Id. at 1696, 1700.

       Kappos       also   explicitly     defines       the    only   situation        where

consideration        of    the   TTAB   decision       is     permitted.        The    Court

adopted the Federal Circuit’s rule that “the district court may,

in its discretion, ‘consider the proceedings before and findings

of    the   Patent     Office     in    deciding       what    weight    to   afford     an

applicant’s         newly-admitted      evidence.’”           Id.   at   1700     (quoting

Hyatt v. Kappos, 625 F.3d 1320, 1335 (Fed. Cir. 2010)). 6                         In sum,

       6
       Although it is not obvious from Kappos exactly what this
means, it is explained quite clearly in Hyatt, the underlying
Federal Circuit decision.   The Federal Circuit permits district
courts to give “less weight to evidence whose reliability is
impacted by an applicant’s failure, without explanation, to
provide it to the Patent Office.” Hyatt, 625 F.3d at 1335. A
district court may, but is not required to, review the PTO
proceedings and give new evidence less weight if “the facts of a
particular case cast suspicion on the new evidence that an
applicant failed to introduce before the [PTO].”       Id.   The
district court did not find that Swatch improperly withheld
evidence, and Kappos seems to prohibit any other reliance on the
TTAB’s findings and conclusions.

                                            8
where new evidence is submitted, de novo review of the entire

record     is   required        because          the    district       court    “cannot

meaningfully     defer    to    the   PTO’s       factual    findings     if   the    PTO

considered a different set of facts.”                  Id.

                                            B.

     We are constrained to conclude that the standard of review

articulated by the district court is erroneous.                         Its statement

that in a § 1071(b) proceeding it sits in a “dual capacity” and

applies a “unique standard of review,” acting in part as an

appellate   body,    is    in   tension         with   the   statute     and   directly

conflicts   with    the    requirements          of    Kappos.     Swatch,     S.A.   v.

Beehive Wholesale, L.L.C., 888 F. Supp. 2d 738, 745 (E.D. Va.

2012).

     However, it is not clear from the record that the district

court did in fact improperly defer to the factual findings of

the TTAB, and remand is therefore unnecessary.                         As an initial

matter, the district court properly reviewed Swatch’s dilution-

by-blurring     claim     entirely     de    novo      because   the    TTAB   did    not

address it on the merits.             Swatch, 888 F. Supp. 2d at 756 n.15.

The district court also decided Swatch’s trademark infringement

and unfair competition claims, which were not before the TTAB,

de novo.    Although the district court stated that it would apply

an impermissible hybrid review to its likelihood of confusion

                                            9
and     strength-of-the-mark              analyses,        there     are      more        than

sufficient facts recited in its opinion to support its findings.

                                            1.

      The district court affirmed the TTAB’s finding that SWAP is

not merely descriptive and found on a de novo review of newly

submitted    evidence        that    SWAP     was     suggestive      and    not     merely

descriptive.       Although the district court stated that it was

deferring to the TTAB’s findings on the administrative record,

it also stated that it undertook “de novo review of the Swap’s

registerability to account for new evidence,” as required by the

statute.     Id.   at    760.         While      it   is   not     clear    exactly       what

standard of review the district court applied, it appears that

it made sufficient factual findings of its own to justify a

holding that SWAP is in fact suggestive and not descriptive.

      Because of the nature of the strength-of-the-mark inquiry,

the district court’s possible failure to reexamine all of the

evidence    de   novo   does        not   have    a   substantial      effect        on    its

analysis.        Marks        are     divided         into    four     categories          of

distinctiveness.        George & Co., LLC v. Imagination Entertainment

Ltd., 575 F.3d 383, 393-94 (4th Cir. 2009).                            The second and

third categories, suggestive and descriptive marks, are at issue

here.    Suggestive marks are “inherently distinctive.”                        Id.        They

“do   not   describe     a    product’s       features       but     merely    suggest[]

them,” and are therefore entitled to trademark protection.                                Id.

                                            10
A descriptive mark “define[s] a particular characteristic of the

product in a way that does not require any exercise of the

imagination.”           Id.     It is thus not entitled to protection unless

it has acquired a secondary meaning.                            Id.

       The question before the district court was whether SWAP is

merely       descriptive          of        a       feature          of    Beehive’s      products,

specifically the interchangeability of its watch parts.                                          While

we    have      recognized      that        it      is    often       difficult      to   categorize

suggestive        versus        descriptive              marks,       it    is   nevertheless         an

objective factual matter to be decided by the trier of fact

based      on    the     meaning       of       a   mark       and    the    attributes      of      the

accompanying           product.             Because           the     central       distinction       is

whether or         not    the    mark       imparts           information        about    the    goods

directly, id., it is difficult to see what evidence outside of

the     mark     and     the     attributes              of     the       product    could      be    of

assistance to the court. 7

       7
       Our precedent supports this position.   Although we have
considered outside evidence of distinctiveness in the past, it
is generally evidence of the meaning of the mark, or evidence
that a descriptive mark has acquired secondary meaning, neither
of which are at issue here.     E.g., U.S. Search, LLC v. U.S.
Search.com, Inc., 300 F.3d 517, 524-25 (4th Cir. 2002)
(determining the meaning of “search” using web pages, media
references, and recruiting materials, and determining if “U.S.
Search” had acquired secondary meaning based on a fact-intensive
six-factor inquiry).

                                                     11
       For this reason, we find that even if the district court

considered only the newly adduced evidence de novo, it found

facts sufficient to support its finding that SWAP is not merely

descriptive.           The       district     court           found,    based       on     the    new

advertisements             Swatch     submitted,          that     SWAP      was         suggestive

because merely showing the mark and the product together would

be   insufficient           to   convey      its       attributes.           While        a   merely

descriptive mark could be used in this manner, “[e]xplaining the

function         of   [Beehive’s]          product        requires      a        further      leap.”

Swatch,      888      F.    Supp.     2d     at        760.      The    court        found       that

individuals,          even       retail      professionals             familiar          with     the

products, 8 had to “exercise some imagination to connect ‘SWAP’

with       the    function       of   Beehive’s           watches,”         as     evidenced      by

diagrams on Beehive’s advertisements that “not only add[] arrows

but adorn[] ‘SWAP’ with the word ‘it!’”                         Id.

       8
       Swatch contends on appeal that the district court erred by
failing to consider the descriptiveness of the mark as it would
appear to a consumer aware of the specific nature of the goods.
This argument is meritless. First, the court’s opinion clearly
indicates that it evaluated the mark as it would appear to
“Beehive’s wholesaler customers,” who are undoubtedly familiar
with its goods. Swatch, 888 F. Supp. 2d at 760. Second, while
we have previously held that “the distinctiveness of a mark is
measured in connection with the particular goods or services
that are being offered,” we have not required that the goods be
defined with the degree of specificity Swatch desires.       U.S.
Search, LLC v. U.S. Search.com, Inc., 300 F.3d 517, 524 (4th
Cir. 2002); id. (citing as hypothetical examples of “particular
goods” generic sellers such as “a shop that sells diamonds,... a
furniture polish company, and ... an applesauce cannery.”)

                                                  12
       We    find      no   error    in   these       determinations,      and    Swatch’s

arguments        on    this    point      are        unavailing.        Aside    from    its

conclusory assertions that SWAP describes the interchangeability

feature of Beehive’s watches, Swatch primarily argues that the

district         court      erred    by   failing        to    credit    admissions       by

Beehive’s executives that SWAP is descriptive.                          For purposes of

this analysis the district court’s treatment of these statements

does     not     matter.        As     noted         above,    descriptiveness     is     an

objective determination that the district court makes on the

basis       of   the     meaning     of   a     mark     and    the   features     of   any

associated products.            For this reason, the opinion of a witness,

particularly a lay witness, that a mark is descriptive rather

than suggestive can be of no assistance.

                                                2.

       The district court found that there was no likelihood of

confusion between SWATCH and SWAP.                      Swatch argues on appeal that

the district court erred because SWAP is so similar to SWATCH

that customers are likely to be confused about the origin of

Beehive’s products.             Although the district court did improperly

review      TTAB      determinations       for       substantial      evidence    in    some

instances, because it was presented with different evidence and

                                                13
applied a test with different factors from the TTAB, 9 the court

made sufficient de novo determinations to support its finding.

     To demonstrate a likelihood of confusion, Swatch must prove

both that it has a valid and protectable mark, an element that

Beehive concedes in this case, and that Beehive’s use of SWAP

creates a likelihood of confusion.     Petro Shopping Ctrs., 130
F.3d at 91.     Likelihood of confusion is an “inherently factual

issue.”   Id. at 92.

     A likelihood of confusion exists between two marks if “the

defendant’s actual practice is likely to produce confusion in

the minds of consumers about the origin of the goods or services

in question.”    CareFirst of Maryland, Inc. v. First Care, P.C.,

434 F.3d 263, 267 (4th Cir. 2006) (quoting KP Permanent Make-Up,

Inc. v. Lasting Impression I, Inc., 543 U.S. 111, 117 (2004)).

To determine if there is a likelihood of confusion between two

marks, we consider nine non-exclusive and non-mandatory factors:

     (1) the strength or distinctiveness of the plaintiff's
     mark as actually used in the marketplace; (2) the
     similarity of the two marks to consumers; (3) the
     similarity of the goods or services that the marks
     identify; (4) the similarity of the facilities used by
     the markholders; (5) the similarity of advertising
     used by the markholders; (6) the defendant's intent;
     (7)   actual  confusion;  (8)   the  quality   of  the

     9
       The TTAB follows the Court of Customs and Patent Appeals’
(predecessor to the Federal Circuit) thirteen factor DuPont test
for likelihood of confusion.    In re E.I. DuPont de Nemours &
Co., 476 F.2d 1357 (C.C.P.A. 1973).

                                14
      defendant's product; and (9) the sophistication of the
      consuming public.

George & Co., 575 F.3d at 393.                 These nine factors serve as a

guide rather than “a rigid formula for infringement”; they are

not all of equal importance and not all factors are relevant in

every case.    Id. 10

      The   parties     agree     on    appeal    that    the    first    and    third

factors weigh in favor of Swatch.                  The district court found,

however,    that     the   other        factors   weigh     heavily      against     a

likelihood of confusion.

      First,   the      district       court   determined       under    the    second

factor that SWATCH and SWAP are not confusingly similar.                           The

court stated that it “agree[d]” with the TTAB that the marks

themselves were dissimilar in sight, sound, and meaning and that

the   TTAB’s   finding      was    therefore       supported      by     substantial

      10
        For example, in this case the district court properly
declined to consider the eighth and ninth factors in the George
& Co. analysis.    Factor eight, the quality of the defendant’s
product, “is most appropriate in situations involving the
production of cheap copies or knockoffs of a competitor’s
trademark-protected goods.”     Sara Lee Corp. v. Kayser-Roth
Corp., 81 F.3d 455, 467 (4th Cir. 1996).        Despite Swatch’s
assertions that Beehive’s products are both similar to its
products and sold at a lower price point, there is no evidence
that Beehive’s products are “markedly inferior” and rely heavily
on similarity to Swatch’s products “to generate undeserved
sales.”   Id.   As for factor nine, in the typical case, buyer
sophistication is only considered “when the relevant market is
not the public at-large.” Id. The record clearly reflects that
both parties hope and intend to sell their watches to as many
consumers as possible without restriction.

                                          15
evidence,      implying      impermissible         deference.         Swatch,     888    F.

Supp. 2d at 750.             However, in a practical sense, the district

court      could    not   have     concluded      that     the   TTAB’s     finding     was

supported by substantial evidence without performing a de novo

review.       It is clear from both the TTAB’s and the district

court’s      opinions       that    the    only     relevant       evidence    for     this

finding was the marks themselves and dictionary definitions of

the words they contain. 11               The district court clearly considered

the   marks        themselves      and    the     dictionary       definitions,      which

appear in its opinion.                   Although the district court said it

agreed with the TTAB, given the nature of the question before it

there was little need for deference.                  It would be apparent to an

average consumer that SWATCH and SWAP: 1) look different when

written; 2) sound different when spoken; and 3) have completely

different meanings in common usage.

      Swatch       argues    that    the    district       court    erred     because    it

should have focused on “SWA-” as the dominant portion of both

marks.      We compare whole words, not parts, see Sara Lee Corp. v.

Kayser-Roth         Corp.,    81 F.3d 455,     465    (4th     Cir.     1996),    and

generally use the phrase “dominant portion” to refer to the non-

generic words in multiword marks, see Lone Star Steakhouse &

      11
       Swatch submitted the American Heritage College Dictionary
definitions for “swap” and “swatch” to the TTAB.

                                             16
Saloon, Inc. v. Alpha of Virginia, Inc., 43 F.3d 922, 936 (4th

Cir. 1995) (identifying “Lone Star” as the dominant portion of

the    “Lone    Star      Steakhouse   &    Saloon”     and       “Lone   Star   Grill”

marks).       Therefore the district court correctly considered the

similarities between SWAP and SWATCH as whole words and did not

err in finding that the stylized marks are dissimilar. 12

       Moreover, the district court explicitly determined de novo

that    the    marks   were    dissimilar        as   they    generally       appear    in

commerce.      Swatch, 888 F. Supp 2d at 751.                The appearance of the

mark in commerce is the relevant inquiry under our precedent.

Anheuser-Busch, Inc. v. L & L Wings, Inc., 962 F.2d 316, 319

(holding      that   to    determine   if       the   use    of    a   mark   creates    a

likelihood      of   confusion    with      a    protected        trademark    “we   must

examine the allegedly infringing use in the context in which it

is seen by the ordinary consumer.”)

       The district court correctly noted that accompaniments to

marks and the manner in which they are presented in connection

with goods can significantly reduce the likelihood of confusion

between similar marks.           See CareFirst, 434 F.3d at 271-72.                     It

       12
        Swatch also argues, somewhat confusingly given its focus
on “swa-”, that we should consider as evidence of their
similarity the fact that both full marks are sometimes
accompanied by the word “watch.” However, generic terms do not
aid our analysis.    If one mark was accompanied by “watch” and
the other by “timepiece,” we would not consider that to be
evidence of dissimilarity.

                                           17
found that SWATCH almost exclusively appears accompanied by a

Swiss flag both on products and in advertisements, while SWAP is

generally accompanied by the phrase “by Beehive.”                          It also found

that there was a substantial difference in the fonts used by the

two    marks.      Swatch’s     argument       that     courts      may   only   consider

elements     accompanying       a    mark     when    that    mark    is     weak,    while

SWATCH was found to be strong, misstates our precedent.                            We have

held only that disparate design elements are “most significant”

when the mark claiming infringement is weak.                         Id. at 271.         Its

other argument, that the district court failed to consider the

similar      placement     of     SWATCH      and     SWAP    on     watch     faces,     is

frivolous.       There are a limited number of places that a mark can

reasonably appear on a watch face, and, more importantly, most

of    Swatch’s     watch   faces      include     the     word     “Swiss”    while     SWAP

appears alone.          The district court’s finding of dissimilarity in

commerce was therefore not erroneous.

       The court also found on a de novo review of the evidence

that the SWAP clock-face variant, which frequently appears on

products     and    advertisements,         did     not   create     a    likelihood      of

confusion.         On   appeal,      Swatch    repeats       its    argument     that    the

clock-face variant, in which SWAP appears over the word “watch,”

and    the   lower      curve   of    the     “S”    contains       two    clock     hands,

confuses consumers by indicating that they should read “S” and

“watch” together.           The district court did not err by finding

                                            18
this    argument      unpersuasive;       the     picture    in    the    “S”    curve     is

clearly       intended      to     portray      clock     hands     and     not       arrows

connecting the two words.               Therefore the district court did not

err    by    finding     that     the   clock-face       variant    of     SWAP      is   not

confusingly similar to SWATCH.

        Finally, we have never held, as Swatch argues, that courts

in this Circuit must apply a lower threshold for similarity of

marks when the parties’ products are more similar.                              Swatch has

not advanced any argument that justifies the application of this

rule when the similarity of the parties’ products is already

accounted for under the third factor of the analysis.

       The district court properly made all of its findings under

the fourth and fifth factors de novo.                       The TTAB did not find

facts       related    to   the    similarity       of     Swatch’s      and     Beehive’s

facilities       because     the    relevant       facts    were     not    before        it.

Swatch, 888 F. Supp. 2d at 752 n.12.                        The TTAB did not find

facts       related    to   the    similarity       of     Swatch’s      and     Beehive’s

advertising because advertising is not a factor in the DuPont

test.       In re E.I. DuPont de Nemours & Co., 476 F.2d 1357, 1361

(C.C.P.A. 1973).

       The     district     court       found     that   the      similarity         of   the

parties’       facilities        gave    “insignificant        support”         to    Swatch

because      there    are   “basic      differences      between      plaintiff’s         and

defendant’s modes of distributing their products.”                              CareFirst,

                                             19
434 F.3d at 273.        Although the district court acknowledged some

similarity,     it   found     the   overlap     to    be   de    minimis    between

Swatch, which sells primarily to end consumers in Swatch-brand

stores and department stores, and Beehive, which is primarily a

wholesaler selling to independent retail and gift stores and

through trade shows.         It found insignificant overlap in Swatch’s

minimal sales to gift and jewelry stores and Beehive’s minimal

department store sales.          It found no evidence in the record that

the parties’ products had ever been sold in the same store, and

found that both parties’ internet sales were limited to their

own brand websites.          Swatch’s attempts on appeal to distinguish

the facts of this case from those of CareFirst and Louis Vuitton

Malletier with conclusory assertions that Beehive’s goods and

channels   of   trade    are     identical     to     its   own   are    unavailing.

There is no error in the district court’s finding that this

factor is of no assistance to Swatch.

     The   district      court    found   that      Beehive’s      advertising    is

limited in scope and directed almost entirely toward wholesale

customers through catalogues and appearances at trade shows.                      It

found   that    Swatch    advertises      through       television,       magazines,

social media, and a billboard in Times Square.                          The district

court also found that neither party had purchased advertisements

on the internet, and that the mere maintenance of a brand store

on the internet does not constitute advertising.                   Swatch appears

                                       20
to concede on appeal that there are substantial differences in

its   and     Beehive’s        advertising      but     argues      speculatively       that

Beehive      might     have     reduced    or      changed    its    advertising    as    a

result      of   Swatch’s       opposition      to     its    trademark    application.

This contention finds no support in the record.                            The district

court      did   not    err    by   finding     that    the    dissimilarity       of    the

parties’ advertising favored Beehive.

      Although         the    district    court      improperly      characterized      its

findings regarding the sixth factor, “‘intent to confuse the

buying       public,’”         as   an     affirmance         of     the   TTAB,        that

characterization did not render its findings erroneous.                            George

& Co., 575 F.3d at 397 (quoting Pizzeria Uno Corp., 747 F.2d at

1535).       In support of its allegation that Beehive intended to

mislead consumers, Swatch argued in its trial brief, as before

the TTAB, only that 1) Beehive had prior knowledge of Swatch’s

mark, 2) Beehive failed to conduct a trademark dispute despite

this knowledge, and 3) the marks are confusingly similar as they

are used in commerce. 13              We have already determined that the

district court’s finding of the dissimilarity of the marks in

commerce was not erroneous.                Although the district court states

      13
        Swatch argues for the first time on appeal that Beehive
mimicked Swatch’s product designs and that this serves as
evidence of intent.   This argument has been waived and is not
properly before us. Moreover it is unsupported by the record.

                                              21
that it is affirming the TTAB on the other two arguments, the

facts that Beehive knew of SWATCH before selecting its mark and

that    it    failed    to   conduct     a    trademark    analysis     are    not    in

dispute.        Therefore, the district court’s holdings that these

facts do not constitute bad faith under Action Temp. Servs. Inc.

v. Labor Force Inc., 870 F.2d 1563, 1566 (Fed. Cir. 1989), 14 and

George & Co., 575 F.3d at 398, 15 are conclusions of law.                      Because

we review conclusions of law de novo, there can be no prejudice

to Swatch from the district court’s improper characterization.

We   find      no   error    in   the    district       court’s   conclusion     that

Beehive’s actions do not show an intent to mislead consumers.

       Because the TTAB applies a different standard for actual

confusion, the district court properly found on a de novo review

of the record that there was no evidence of actual confusion,

and that this factor weighed heavily in favor of Beehive.                            The

district court found that although SWAP had been in use since

2003, Swatch had not adduced evidence of a single instance of

actual       customer   confusion       about     the   origin    of   the    parties’

       14
        “[M]ere knowledge of the existence of the prior user
should not, by itself, constitute bad faith.”
       15
        “[T]he failure to conduct a trademark search or contact
counsel shows carelessness at most, but is in any event
irrelevant because knowledge of another's goods is not the same
as an intent to mislead and to cause consumer confusion."
(internal quotation marks and citations omitted).

                                             22
products.           The   district       court     correctly         noted    that     actual

confusion      is    generally      considered       to    be    the    “most    important

factor” in a likelihood of confusion analysis, George & Co., 575
F.3d at 398, and that the “absence of any evidence of actual

confusion over a substantial period of time ... creates a strong

inference that there is no likelihood of confusion.”                            CareFirst,
434 F.3d at 269.            On appeal, Swatch does not contend that the

record includes any evidence of actual confusion.                               It argues

that the district court accorded too much weight to the lack of

actual confusion in its overall analysis.                       However, as the court

noted,   the      factors    are     weighed       differently        depending      on   the

circumstances        of    the     cases,    and    actual      confusion       is     “often

paramount.”          CareFirst, 434 F.3d at 268 (quotation marks and

citation omitted).           Swatch also attempts to argue, as it did

under the fifth factor, that the lack of actual confusion could

have resulted from Beehive modifying its advertising and use of

the   mark     as    a    result    of     Swatch’s       opposition.          Again      this

argument     is     speculative      and    unsupported         by    the    record.      The

district court’s finding that there is no evidence of actual

confusion between SWATCH and SWAP was not erroneous.

      The district court properly found, on a sufficient de novo

review of the entire record, that despite the fame of SWATCH and

the similarity of the goods, the “lack of similarity between the

marks, lack of predatory intent, lack of similar advertising and

                                             23
only minimal similarity in facilities,” in combination with “the

most    significant         factor,    actual          confusion,”        resulted   in   no

likelihood of confusion between SWATCH and SWAP.                           Swatch, 888 F.

Supp.     2d    at    756     (internal         quotation      marks       and   citations

omitted).

                                                3.

       The      district        court           dismissed          Swatch’s      trademark

infringement and unfair competition claims as a matter of law.

We review this holding de novo.                       Having found no error in the

district       court’s      finding     that          there   is     no    likelihood      of

confusion between SWATCH and SWAP, we conclude that Swatch’s

federal, state, and common law trademark infringement and unfair

competition claims must be dismissed.                     The Lanham Act requires a

finding of a likelihood of confusion to prove federal trademark

infringement,         15     U.S.C.         §    1114(a),      and        federal    unfair

competition, 15 U.S.C. § 1125(a)(1)(A).                       Virginia law requires a

finding        of    likelihood        of       confusion      to     prove      trademark

infringement.         Va. Code Ann. § 59.1-92.12(i).                      Virginia common

law trademark infringement and unfair competition claims require

the    same    proof,      including    a       likelihood     of    confusion,      as   the

Lanham Act offenses.           See Lone Star Steakhouse & Saloon, 43 F.3d
922, 930 n.10 (4th Cir. 1995).                       Because there is no likelihood

of confusion between the marks, these causes of action fail as a

matter of law.

                                                24
                                            4.

       Because the TTAB did not decide Swatch’s dilution claim on

the    merits,    the    district       court    properly      reviewed      the   entire

record de novo to determine that there is no likelihood that

SWAP will dilute SWATCH by blurring.                   Swatch, 888 F. Supp. 2d at

756 n.15.      Therefore, we review the district court’s finding for

clear error.

       Dilution by blurring occurs when the “‘association arising

from     a     similarity         between’”          two     marks     “‘impairs      the

distinctiveness of the famous mark.’”                       Louis Vuitton Malletier,
507 F.3d at 264 (quoting 15 U.S.C. § 1125(c)(2)).                        To succeed on

a dilution claim, the plaintiff must show that 1) it owns a

famous, distinctive mark, 2) the defendant uses an allegedly

diluting     mark   in    commerce,      3)     an    association      arose   from   the

similarity of the marks, and 4) the association is likely to

impair the distinctiveness of the famous mark.                         Id. at 264-65.

The    district     court   assumed       without      deciding       that   Swatch   had

satisfied the first three factors, but found that it had not

proven the fourth.

       On    appeal,     Swatch    argues     only     that    “the    district    court

erroneously found a lack of similarity between the SWATCH and

SWAP marks [and] overlooked evidence that Beehive’s goods copied

both   the    SWATCH     mark     and   designs”       in    its   dilution    analysis.

Appellant’s Br. 43.         As explained in detail above, the two marks

                                            25
are   not   confusingly     similar   and   there   is   no   evidence    that

Beehive     intended   to   confuse    consumers    by   copying    Swatch’s

designs or otherwise.       Finding no clear error, we affirm on this

ground.

                                      IV.

      For   the   foregoing    reasons,     the   district    court’s    order

denying Swatch’s opposition to Beehive’s trademark application

and dismissing Swatch’s related claims for federal, state, and

common law trademark infringement and unfair competition is

                                                                   AFFIRMED.

                                      26