Checkpoint Sys Inc v. Check Point Software ( 2001 )

Opinions of the United
2001 Decisions States Court of Appeals
for the Third Circuit
10-19-2001
Checkpoint Sys Inc v. Check Point Software
Precedential or Non-Precedential:
Docket 00-2373
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Filed 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 Circuit 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 Systems,
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 Checkpoint
Systems's and Check Point Software's marks, the District
Court found no Lanham Act violation. We will affirm.
I.
A.
Plaintiff Checkpoint Systems, Inc. has been
manufacturing and distributing commercial electronic
security control systems since 1967.1 Its devices are
designed to track the physical location of goods and are
sold to retailers to prevent merchandise theft. It is one of
the two dominant manufacturers in the retail security
products market. Since 1967 Checkpoint Systems has used
the "CHECKPOINT" mark, which is registered with the
United States Trademark office.2
_________________________________________________________________
1. Our recitation of the facts will be brief. A more detailed discussion
may be found in the District Court opinion. Checkpoint 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.
2
Checkpoint Systems primarily sells four types of security
monitoring devices: (1) electronic article surveillance
systems; (2) access control systems; (3) closed circuit
television systems; and (4) radio frequency identification
devices. Its principal and most successful products are
electronic article surveillance systems designed to alert
retailers when items are removed from confined areas.
Primarily used to prevent theft of merchandise from stores
and books from libraries, these systems consist of circuited
tags, electronic sensors, and deactivation equipment. The
systems work by placing circuited tags on merchandise
which are deactivated at the time of sale. If the tags 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 spend
over $20 million a year on this technology.
Checkpoint Systems also manufactures electronic access
control systems in the form of security cards that permit
selected personnel to have access to restricted areas.
Checkpoint Systems intends to use these electronic access
control systems to make "smart cards" that will enable log-
on access to computers and will facilitate monitoring of
physical access to restricted areas. This product was in the
development stage when this lawsuit commenced.
Checkpoint Systems also sells closed circuit television
systems that monitor activity within confined areas and
transfer data to remote locations for employee audit and
inventory management security teams. Although these
systems currently transfer data and images over traditional
telephone lines, Checkpoint Systems intends to transfer
this data over customers' computer networks. These closed
circuit products can be integrated with other computer
systems, including other security application programs.
In 1997, Checkpoint Systems began developing radio
frequency identification devices with the view to creating
"intelligent tags" for merchandise to carry information on
"merchandise history." This radio technology would permit
greater information storage than currently available on
traditional bar code technology. These systems cost from
$80,000 to $140,000.
3
The sale of electronic article surveillance systems to
retail, industrial, institutional and government users
comprises 90% of Checkpoint Systems's business.
Revenues for article surveillance systems amounted to
$365-380 million in 1999; revenues for access control
systems were $15 million. Checkpoint Systems's electronic
article surveillance systems have a 30% market share, 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 the
overall market.
Checkpoint Systems promotes its products primarily
through its direct sales force, trade shows, direct mailings
to security systems dealers and its internet website. It
spends $8 million annually on advertising and marketing.
The trade shows in which it advertises are targeted to
security professionals and retailers. Checkpoint Systems
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 all
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 under the
symbol "CKP."
B.
Defendant Check Point Software Technologies, Inc. writes
computer programs that protect and manage access to
information. Check Point Software's principal product is
"firewall" technology. Firewalls are computer systems that
prevent unauthorized internal or external entry into
computer networks. Check Point Software's firewall systems
regulate data by acting as a screen between a business's
private computer networks (intranets) and the wider
Internet. These systems are sophisticated software
_________________________________________________________________
3. Security magazine is marketed to security industry specialists and
contains information about security hardware, security management and
training issues, and information security.
4
applications that cost $2,999 for a single firewall and
hundreds of thousands of dollars for more complicated
systems. Check Point Software firewall products must be
installed and maintained by computer network information
specialists.
At the time Check Point Software was founded in Israel
in 1993, its founders were unaware of Checkpoint Systems.
They adopted the "Check Point" mark because they believed
their computer firewall technology, which limited access to
data, resembled military check points that prevent access
to restricted areas.
Check Point Software is recognized as a leader in the
firewall market with 40% of the worldwide market share. In
1997, it expanded its product line beyond network security
products to include "network management products." This
software enables customers to design their own computer
network security programs that can be integrated with
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 access this
data when transmitted over unsecured public channels.
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 system.
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 trade
name. It has used this mark in several manifestations
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 shows
and seminars in which it advertises are targeted to the
Internet and computer network markets. These exhibitions
do not include physical security manufacturers or their
products. It also advertises in two widely circulated
computer trade magazines, PC Week and Network World.
5
Its computer security programs are sold predominately to
institutional and corporate clients. Check Point Software's
principal competitors are computer companies like Cisco
Systems and Network Associates. Check Point Software is a
public company whose stock is traded on the NASDAQ
under the symbol "CHKP."
C.
In early 1996, Checkpoint Systems attempted to register
the internet domain name www.checkpoint.com, but
discovered it was registered by Check Point Software. After
its request to discontinue use was rebuffed, Checkpoint
Systems filed suit alleging trademark infringement and
unfair competition under the Lanham Act. In a non-jury
trial, the District Court held Check Point Software neither
violated the Lanham Act nor infringed Checkpoint
Systems's trademark. Examining likelihood of confusion,
the District Court applied the factors enumerated in
Interpace Corp. v. Lapp, Inc., 721 F.2d 460, 463 (3d Cir.
1983), finding that only one factor--the strong similarity
between the parties' marks--favored plaintiff Checkpoint
Systems. With respect to the other Lapp factors, the court
found the litigants operated in different and non-competing
segments of the broad corporate security industry and that
the level of consumer care in making purchasing decisions
counseled against a finding of likely confusion. After
determining the parties employed different marketing
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 confusion"
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 there was
insufficient evidence of reverse confusion.4
_________________________________________________________________
4. As we discuss, reverse confusion occurs when"a larger, more powerful
company uses the trademark of a smaller, less powerful senior owner
and thereby causes likely confusion as to the source of the senior user's
goods or services." Fisons Horticulture, Inc. v. Vigro Indus., Inc., 30
F.3d
466, 474 (3d Cir. 1994) (citing Sands, Taylor & Wood Co. v. Quaker Oats
Co., 978 F.2d 947 (7th Cir. 1992)).
6
In this appeal, Checkpoint Systems contends the District
Court improperly evaluated the Lapp factors in its
likelihood of confusion analysis. In particular, Checkpoint
Systems argues the District Court improperly required
evidence of actual consumer confusion at the point of sale
and disregarded evidence of initial interest and investor
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 1291. We
exercise plenary review over the District Court's legal
conclusions concerning the Lanham Act. Express Servs.,
Inc. v. Careers Express Staffing Servs., 176 F.3d 183, 185
(3d Cir. 1999), cert. denied, 531 U.S. 1052 (2000). We
review factual findings on the likelihood of confusion for
clear error. A&H Sportswear Inc. v. Victoria's Secret Stores,
Inc., 237 F.3d 198, 210 (3d Cir. 2000).
III.
Checkpoint Systems alleges Check Point Software
engaged in unfair competition and trademark infringement
in violation SS 32 and 43(a) of the Lanham Act when it
adopted the Checkpoint mark.5 To prove trademark
_________________________________________________________________
5. Section 32 of the Lanham Act, 15 U.S.C. S 1114, provides:
(1) Any person who shall, without consent of the registrant--
(a) use in commerce any reproduction, counterfeit, copy, or
colorable
imitation of a registered mark in connection with the sale,
offering
for sale, distribution, or advertising of any 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 registrant . . . .
Section 43(a) of the Lanham Act, 15 U.S.C. S 1125, provides:
(a)(1) Any person who, on or in connection with any goods or
services . . . uses in commerce any word, term, name, symbol, or
7
infringement and unfair competition under the Lanham
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 confusion.
Commerce Nat'l Ins. Servs., Inc. v. Commerce Ins. Agency,
Inc., 214 F.3d 432, 437-38 (3d Cir. 2000). Neither party
disputes the first two elements.6 The issue on appeal is
whether Check Point Software's use of the "CHECKPOINT"
mark is likely to create confusion as to the source of the
parties' products.7 Lapp, 721 F.2d at 462 ("The law of
trademark protects trademark owners in the exclusive use
of their marks when use by another would be likely to
cause confusion."). To prove likelihood of confusion,
plaintiffs must show that "consumers viewing the mark
would probably assume the product or service it represents
_________________________________________________________________
device, or any combination thereof, or any false designation of
origin, false or misleading description of fact, or false or
misleading
representation of fact, which--
(A) is likely to cause confusion, or to cause mistake, or to
deceive as
to the affiliation, connection, or association of such person with
another person, or as to the origin, sponsorship, or approval of
his
or her goods, services, or commercial activities by another person
. . .
* * *
shall be liable in a civil action by any person who believes that
he
or she is is likely to be damaged by such act.
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 continuously used
for five consecutive years and there are no pending proceedings
contesting Checkpoint Systems's ownership of the mark. The
"Checkpoint" mark is therefore valid and incontestable. Fisons, 30 F.3d
at 472 n.7.
7. As we recently held in A&H Sportswear, the relevant 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 actual
confusion is not necessary; likelihood is all that need be shown.").
8
is associated with the source of a different product 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 460, 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 used 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 parties ' sales
efforts are the same;
(9) the relationship of the goods in the minds of
consumers because of the similarity of functions; and
(10) other facts suggesting that the consuming pub lic
might expect the prior owner to manufacture a product
in the defendant's market or that he is likely to expand
into that market.
None of these factors is determinative in the likelihood of
confusion analysis and each factor must be weighed and
_________________________________________________________________
8. The multi-factor test used to determine likelihood of confusion
between noncompeting goods should also be applied in 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.").
9
balanced 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 well as the
weighing for plaintiff or defendant, must be done on an
individual fact-specific basis."); see also A&H Sportswear,
237 F.3d at 215 ("[T]he 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."). 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 products
themselves, and to the context in which they are
marketed and sold. The closer the relationship between
the products, and the more similar their sales contexts,
the greater the likelihood of confusion.
Fisons, 30 F.3d at 473.
As noted, the District Court applied the appropriate Lapp
factors to find there was no likelihood of confusion. We will
address the District Court's application of each factor.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 factor in
the multi-factor confusion analysis, we have recognized that
when products directly compete, mark similarity"may be
the most important of the ten factors in Lapp ." Fisons, 30
F.3d at 476; see also A&H Sportswear, 237 F.3d at 216
("The single most important factor in determining likelihood
of confusion is mark similarity."). As we held in Versa
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 product
_________________________________________________________________
9. Our analysis follows a somewhat different sequence 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.
10
sources represented by the different marks."[I]f the overall
impression created by marks is essentially the same,``it is
very probable that the marks are confusingly similar.' "
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 this 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 overall
impression when viewed separately." Fisons , 30 F.3d 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 whether the
"average consumer, on encountering one mark in isolated
circumstances of marketplace and having only [a] general
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 the two
marks are the same and the overall impression created by
the marks is essentially the same ``it is very probable that
the marks are confusingly similar.' " Checkpoint Sys., 104
F. Supp. 2d at 457-58 (quoting Opticians Assn. of Am., 920
F.2d at 195). The court found the dominant portion of each
parties' trademark is the word "Checkpoint." Even though
Check Point Software has at times used the mark in
slightly different forms including, "Checkpoint,"
"CheckPoint," or "Check Point," the dominant features of its
mark are still the words "check" and "point." Additionally
because "Systems," "Software," "Technologies," and "Inc.,"
are generic or descriptive terms, the District Court found
their addition to the dominant terms "check" and "point"
would not lead the average consumer to disassociate the
products. J. Thomas McCarthy, 3 McCarthy on Trademarks
and Unfair Competition, S 23:50 (4th ed. 2000) ("The
Trademark Board has said that the general rule is that a
subsequent user may not avoid likely confusion by
appropriating another's entire mark and adding descriptive
or non-descriptive matter to it."). We agree. The District
11
Court did not clearly err in finding the overall commercial
impression of the parties' marks was confusingly similar.
On appeal, Checkpoint Systems contends the District
Court ignored its finding of mark similarity when it
ultimately determined there was no likelihood of confusion.
But mark similarity is not necessarily determinative 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 factor
regarding the similarity of marks may increase in
importance, but it does not eliminate the other factors
entirely."); Fisons, 30 F.3d at 473 ("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."). Here, the District
Court determined that in weighing all the Lapp factors,
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 carries
widespread, immediate recognition that one producer
(even if unknown) is associated with the mark, and so
with the product. If a second comer adopts a mark
substantially identical to a strong mark, there is a
correspondingly high likelihood that consumers 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 at 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
12
the 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] generic marks
. . . that "function as the common descriptive name of
a product class."
A&H Sportswear, 237 F.3d at 221-22(quoting A.J. Canfield
Co. v. Honickman, 808 F.2d 291, 296-97 (3d Cir. 1986)).
In Ford Motor Co., we further explained the categorization
of marks stating,
Arbitrary marks are "those words, symbols, pictures,
etc., which are in common linguistic use but which,
when used with the goods or services in issue, neither
suggest nor describe any ingredient, quality or
characteristic of those goods or services." . . .
Suggestive marks are virtually indistinguishable from
arbitrary marks, but have been defined as marks
which suggest a quality or ingredient of goods . . .. A
mark is considered descriptive if it describes the
"intended purpose, function, or use of the goods; 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, Trademarks
and Unfair Competition at S11:3-5, 20).
While generic marks do not receive trademark protection,
arbitrary, suggestive and descriptive marks with a
demonstrated secondary meaning10 are entitled to
_________________________________________________________________
10. But marks that are merely descriptive (without a secondary meaning)
are generally weak and not entitled to strong protection. A mark is
descriptive with a secondary meaning when the mark
"is interpreted by the consuming public to be not only an
identification of the product or services, but also a
representation of
the origin of those products of services." In general [a secondary
meaning] is established through extensive advertising which creates
in the minds of consumers an association between the mark and the
provider of the services advertised under the mark.
13
trademark protection.11
The District Court found Checkpoint Systems's mark was
either suggestive or descriptive with a secondary meaning
within the electronic article surveillance market. We see no
error. The mark is suggestive to the extent it requires
consumer imagination to determine that Checkpoint
Systems's security products serve as "check points" to
prevent unauthorized access and theft of merchandise. But
the mark is descriptive insofar as its products serve as
checkpoints. That is, they occupy a point at which
customers are checked for stolen merchandise or people are
_________________________________________________________________
Commerce Nat'l Ins. Serv. Inc., 214 F.3d at 438 (quoting Scott Paper Co.,
589 F.2d at 1228); see also Ford Motor Co., 930 F.2d at 292 (listing a
"non-exclusive list of factors which may be considered [in determining
whether a mark has achieved a secondary meaning,] includ[ing] the
extent of sales and advertising leading to buyer association, length of
use, exclusivity of use, the fact of copying, customer surveys, customer
testimony, the use of the mark in trade journals, the size of the
company, the number of sales, the number of customers, and actual
confusion."); Charles Jacquin Et Cie, Inc. v. Destileria Serralles, Inc.,
921
F.2d 467, 476 (3d Cir. 1990) ("While consumer surveys are useful, and
indeed the most direct method of demonstrating secondary meaning and
likelihood of confusion, they are not essential where, as here, other
evidence exists.").
11. In A&H Sportswear, we recently held,
Although the conceptual strength of a mark is 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 because the classification
system's primary purpose is to determine whether the mark is
protectable as a trademark in the first place--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, suggestive, 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 trademark, versus how
much protection the mark should receive--are often identical, but
they do not have to be.
237 F.3d at 222.
14
checked for authorization to access restricted areas. In
either event, the mark has achieved a strong secondary
meaning in the physical article security market. Checkpoint
Systems has spent millions of dollars in advertising its
physical article security systems and the mark has
achieved high recognition among consumers in this market.
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, extensively, and in
a substantially exclusive manner, and that long use
renders the mark strong within the physical surveillance
field." Checkpoint Sys., 104 F. Supp. 2d at 458.
The mark has not, however, attained a strong secondary
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 this
market, nor is there any evidence that Checkpoint Systems
has achieved mark recognition in this segment of the
industry.12 Because Checkpoint Systems's descriptive mark
has not attained a secondary meaning within the
information technology market, it is not conceptually 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 extend
beyond its own subfield of physical security with respect to
electronic article surveillance." 104 F. Supp. 2d at 460.
This finding is adequately supported in the record.
Although Checkpoint Systems manufactured other
products aside from physical article surveillance systems,
the court found these products constituted a very small
portion of its business. Its mark was not readily
recognizable by consumers outside the electronic article
surveillance market and there is "no evidence that any
witness from the information security field had ever heard
of [Checkpoint Systems]." Id.
_________________________________________________________________
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 customer views." 104 F.
Supp. 2d at 460. ``
15
Plaintiffs claim the District Court erred in its commercial
strength analysis because it undervalued the overwhelming
strength of the Checkpoint Systems mark in the article
surveillance market. But the District Court held, properly
in our view, that courts must look at the strength of the
mark in the industry in which infringement is alleged. See,
e.g., Homeowners Group, Inc., 931 F.2d at 1107-08 ("[A
mark] may . . . have high recognition which is limited 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 demonstrate
that its powerful mark extended to the completely unrelated
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 used but
weak in another market in which it is not used."). Here, the
alleged infringement extends beyond the physical article
security field into other, broader segments of the security
industry, including computer security. The District Court
did not clearly err in finding that Checkpoint Systems's
mark's strength was limited to the physical article security
market. Because the mark was not strong in the network
access security market, it was not entitled to heightened
protection within that market.
C. Factors Indicative of the Care and Sophistication of
Purchasers -- Lapp Factor (3)
When consumers exercise heightened care in evaluating
the relevant products before making purchasing decisions,
courts have found there is not a strong likelihood of
confusion. Where the relevant products are expensive, or
the buyer class consists of sophisticated or professional
purchasers, courts have generally not found Lanham Act
violations. Versa Prods., 50 F.3d at 204 ("Inexpensive goods
require consumers to exercise less care in their selection
than expensive ones. The more important the use of the
product, the more care that must be exercised in its
selection."). As a leading treatise notes,
Obviously, the price level of the goods or services is an
important factor in determining the amount of care the
reasonably prudent buyer will use. If the goods or
16
services 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 Pharm.
Prods., Inc. v. Beckman Instruments, Inc., 718 F.2d 1201,
1206-07 (1st Cir. 1983) (expensive health care equipment
elevated concern of purchasers). Similarly,
[w]here the relevant buyer class is composed solely of
professional, or commercial purchasers, it is
reasonable to set a higher standard of care than exists
for consumers. Many cases state that where the
relevant buyer class is composed of professionals or
commercial buyers familiar with the field, they are
sophisticated enough not to be confused by trademarks
that are closely similar. That is, it is assumed that
such professional buyers are less likely to be confused
than the ordinary consumer.
3 McCarthy on Trademarks, S 23:101; see also Ford Motor
Co., 930 F.2d at 293 ("Professional buyers, or consumers of
very expensive goods, will be held to a higher standard of
care."); Perini Corp. v. Perini Constr., Inc. , 915 F.2d 121, 128
(4th Cir. 1990) ("[I]n a market with extremely sophisticated
buyers, the likelihood of consumer confusion cannot be
presumed on the basis of the similarity in trade name
alone."); Oreck Corp. v. U.S. Floor Sys., Inc., 803 F.2d 166,
173-74 (5th Cir. 1986) (business purchasers of expensive
products not likely to confuse goods with similar marks).
When the purchasing class is mixed, courts normally do
not hold the general class to a high standard of care. Ford
Motor Co., 930 F.2d at 293 ("When the buyer class is
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 there is
evidence that both average consumers and specialized
commercial purchasers buy goods, there is a lower
standard of care because of the lack of sophistication of
some of the relevant purchasers. Id. ("Where the buyer
class ``consists of both professional buyers and consumers
then the issue will center on the consumers, for confusion
within the lowest stratum of reasonably prudent buyers
17
may give rise to liability even if professional buyers in the
market are not confused.' ") (quoting Worthington Foods,
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 respective
products are, for the most part, highly sophisticated,
and the sale process is lengthy . . . . Plaintiff 's and
defendant's products are not impulse purchases, 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 importance on,
and take great care in, purchasing these products.
Checkpoint Systems's consumers exercise a heightened
standard of care in their purchasing decisions because they
need to ensure the article surveillance equipment can be
quickly and easily repaired and is readily available for new
merchandise. Similarly, purchasers of Check Point
Software's firewall technology are highly technical computer
and information specialists that must ensure the software
is compatible with other programs.13 Because the security
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' business
needs. Because of the respective products' importance to
their buyers' security needs and their high cost, consumers
take care in making purchasing decisions and are not likely
to be confused by the parties' similar marks.
Checkpoint Systems contends that not all the relevant
consumers are sophisticated purchasers and that many
_________________________________________________________________
13. Although in its marketing materials Check Point Software states that
its firewall technology is "designed to be easily installed, configured,
and
managed," maintaining this equipment requires specialized expertise
beyond the knowledge of mere technically proficient computer users.
18
"mom and pop stores," which exercise a lower standard of
care, purchase both parties' products. The District Court
acknowledged these smaller commercial purchasers were
part of the relevant consumer class and adjusted its
evaluation of consumer sophistication accordingly. Because
the systems are expensive and require on-going
maintenance, the court found these smaller commercial
consumers view the purchase of both parties' products as
an important investment decision. The court also noted
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 and make
informed purchasing decisions about Check Point
Software's complicated firewall technology. Furthermore,
expert witnesses testified that smaller "mom and pop
stores" would likely not have need for the complicated
security software manufactured by Check Point Software.
The District Court properly evaluated the care exercised
by consumers of these products in making purchasing
decisions. The evidence supports the finding that the
purchase of both parties' products involve a significant
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 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
19
in 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 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).
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.
Checkpoint Systems also contends it has developed
integrated circuit technology in its radio frequency and
closed circuit television products that allow consumers to
20
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
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.
Checkpoint Sys., 104 F. Supp. 2d at 466. The court
continued,
_________________________________________________________________
14. Checkpoint Systems contends its business has expanded beyond
article surveillance into "electronic access control" products that help
limit access to physical areas where computer software is located. It also
points to its smart card technology that links computer 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 Systems manufactures. It
contends this integration technology is evidence that the computer
software industry is moving into the area of physical security by allowing
integration with physical security products. But the mere fact that
software technology can be integrated with other technology, including
but not limited to physical security technology, is not necessarily proof
that the manufacturer of software technology is moving into broader
security realms. By developing technology that can be integrated with
other products, Check Point Software allows consumers to choose among
various "speciality" programs that it wants to include in its system. It
does not necessarily mean that Check Point Software has itself moved
into the market of these "speciality" security programs.
21
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.
Id.
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
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
_________________________________________________________________
16. Products sold and marketed in the computer and information
technology industry can be sufficiently distinct that 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 game and computer
consulting service not similar); but see Lambda Elecs. Corp. v. Lambda
Tech., Inc., 515 F. Supp. 915, 926 (S.D.N.Y. 1981) (finding "moderate
product proximity" between computer software and computer hardware
because both products are "intended to function in computers").
22
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).
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 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.
_________________________________________________________________
17. Simply because large corporations may purchase both Checkpoint
Systems's physical article security systems and Check Point Software's
computer security products does not necessarily prove that the same
security professionals within these corporations have knowledge of these
different technologies and are responsible for purchasing them. Electronic
Design & Sales, Inc. v. Electronic Data Sys. Corp. , 954 F.2d 713, 717-18
(Fed. Cir. 1992) (overlap must exist among individual purchasers).
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.
23
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,
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.
Id.
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.
G. The extent to which targets of the parties' sales
efforts are the same -- Lapp Factor (8)
We have recognized that when parties target their sales
efforts to the same consumers, there is a stronger
_________________________________________________________________
18. While Checkpoint Systems also advertises in security magazines that
sometimes contain advertisements about computer information security
(i.e., Security magazine), these magazines are predominantly marketed to
physical security professionals, and not to information technology
specialists.
24
likelihood 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 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.
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.
H. Evidence of Converging markets -- Lapp Factor (10)
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.
25
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
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 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
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.
Id. at 467 n.17.
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
26
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.
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.
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)
Evidence of actual confusion is not required to prove
likelihood of confusion. Versa Prods., 50 F.3d at 205;
27
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.
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,
[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.
Id. at 450. The court concluded,
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
28
confusion by consumers, lies only in assessing whether
it supports the conclusion that confusion in consumer
purchasing decision is likely.
Id. at 464.19
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.
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.
1.
A leading treatise on trademark infringement states:
[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.
* * *
[For example,] the likelihood that a potential purchaser
of a specialized computer program may be drawn to the
junior user, thinking it was the senior user, is
actionable "confusion" even if over the course of several
_________________________________________________________________
19. The court also stated that "plaintiff has not demonstrated 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.
29
months of the purchasing decision-making process, the
buyer's confusion is dissipated. Such a senior user
who is the opposer may suffer injury if a potential
purchaser is initially confused between the parties'
respective marks in that the opposer may be precluded
from further consideration by a potential purchaser in
reaching his or her buying decision.
3 McCarthy on Trademarks and Unfair Competition,S 23:6
(internal quotations and footnotes omitted). Several courts
of appeals, including the Second, Seventh, and Ninth
Circuits have found initial interest confusion actionable
under the Lanham Act. In Mobil Oil Corp. v. Pegasus
Petroleum Corp., 818 F.2d 254 (2d Cir. 1987), the United
States Court of Appeals for the Second Circuit found
actionable initial interest confusion when it enjoined the
defendant from using the trade name Pegasus because the
name was confusingly similar to the plaintiff 's"flying
horse" mark. The court noted that in the oil industry,
companies often attract potential consumers by making
"cold calls" to determine interest in purchasing products.
The court also noted that on the basis of the similar name
and mark, it was likely that "Pegasus Petroleum would 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 is related
to Mobil." Id. at 259. Because the similar marks could
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 confusion
under the Lanham Act. Id. at 260 ("[P]otential purchasers
would be misled into an initial interest in Pegasus
Petroleum. Such initial confusion works a sufficient
trademark injury."); see also Lois Sportswear , 799 F.2d at
867; Grotrian, Helfferich, Schulz, Th. Steinweg Nachf v.
Steinway and Sons, 365 F. Supp. 707, 717 (S.D.N.Y. 1973)
("Misled into an initial interest, a potential Steinway buyer
may satisfy himself that the less expensive Grotrian-
Steinweg 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).
30
Similarly in Brookfield Communications, Inc. v. West
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 West
Coast Entertainment's use of the web site
www.moviebuff.com infringed on its "MovieBuff " mark.
Brookfield used the "MovieBuff " mark on computer
software that it sold to industry professionals. This software
contained a searchable database of entertainment related
data, including information about film release schedules,
box office receipts, films in development and other
entertainment news. West Coast's "moviebuff.com" website
was a free searchable entertainment database that assisted
its consumers in making educated decisions about the
rental and purchase of movies. The website also sold movie
and other entertainment accessories. The court found
actionable confusion under the Lanham Act reasoning:
People surfing the Web for information on "MovieBuff "
may confuse "MovieBuff " with the searchable
entertainment database at "moviebuff.com" and simply
assume that they have reached Brookfield's website.
. . . Alternatively, they may incorrectly believe that
West Coast licensed "MovieBuff " from Brookfield . . . or
that Brookfield otherwise sponsored West Coast's
database. Other consumers may simply believe that
West Coast bought out Brookfield or that they are
related companies.
Yet other forms of confusion are likely to ensue.
Consumers may wrongly assume that the "MovieBuff "
database they were searching for is no longer offered,
having been replaced by West Coast's entertainment
database, and thus simply use the services at West
Coast's web ste. And even where people realize,
immediately upon accessing "moviebuff.com," that they
have reached a site operated by West Coast and wholly
unrelated to Brookfield, West Coast will still have
gained a customer by appropriating the goodwill that
Brookfield has developed in its "MovieBuff " mark. A
consumer who was originally looking for Brookfield's
31
products or services may be perfectly content with
West Coast's database (especially as it is offered free of
charge); but he reached West Coast's site because of its
use of Brookfield's mark as its second-level domain
name, which is a misappropriation of Brookfield'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 called ``initial
interest' confusion, which permits a finding of a likelihood
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 the
Internet, 57 Wash & Lee L. Rev. 1303 (urging caution in
finding actionable initial interest confusion on the 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 of the estate
of Elvis Presley were entitled to injunctive relief against the
defendant bar owner's use of the name "The Velvet Elvis"
because it was likely to create confusion. In finding initial
interest confusion the court reasoned,
The witnesses all testified that, upon entering and
looking around the [defendants'] bar, they had no
doubt that [plaintiff was] not affiliated with 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; indeed, it
brought at least one of the [plaintiff 's] witnesses into
the bar. Once in the door, the confusion has succeeded
because some of the patrons may stay, despite
realizing that the bar has no relationship with
[plaintiff]. This initial-interest confusion is even more
significant because the Defendants' bar sometimes
charges a cover charge for entry, which allows the
Defendants to benefit from initial-interest confusion
before it can be dissipated by entry into the bar.
32
Id. 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 luring
potential customers away from a producer by initially
passing off its goods as those of the producer's, even if
confusion as to the source of the goods is dispelled by
the time any sales are consummated. This "bait and
switch" of producers, also known as "initial interest"
confusion, will affect the buying decisions of
consumers in the market for the goods, effectively
allowing the competitor to get its foot in the 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 product
by its similarity to a known mark, even though the
consumer realizes the true identity and origin of the
product before consummating a purchase.").
We join these circuits in holding that initial interest
confusion is probative of a Lanham Act violation. 20 Without
initial interest protection, an infringer could use an
established mark to create confusion as to a product's
source thereby receiving a "free ride on the goodwill" of the
established mark. Mobil Oil Corp., 818 F.2d at 260
(likelihood that "potential purchasers would be misled into
an initial interest" justifies finding of infringement).
Confining actionable confusion under the Lanham Act to
confusion present at the time of purchase would
_________________________________________________________________
20. We note that several District Courts in our circuit have found initial
interest confusion probative of a Lanham Act violation. See, e.g.,
Sunquest Info. Sys., Inc. v. Park City Solutions, Inc., 130 F. Supp. 2d
680,
695 (W.D. Pa. 2000) ("Although the Third Circuit has 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 ("The court finds that
there
is a likelihood of pre-sale confusion.").
33
undervalue the importance of a company's goodwill with its
customers.
Congress recognized the relevance of initial interest
confusion and its effect on a company's goodwill when it
amended the Lanham Act in 1962. In its original form, the
Lanham Act only applied where the use of similar marks
was "likely to cause confusion or mistake or to deceive
purchasers as to the source of origin of such goods or
services." Esercizio v. Roberts, 944 F.2d 1235, 1245 (6th
Cir. 1991) (quoting 1946 Lanham Act.) (emphasis added). In
1962 Congress deleted the term "purchasers," affording
Lanham Act protection where a mark is "likely to cause
confusion or mistake or to deceive." Id. Several courts have
found the amendment expanded the reach of the Lanham
Act beyond mere purchasers to recognize pre-sale confusion
as well as post-sale confusion. See, e.g., id. ("Since
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 to
broaden the scope of protections with the 1962 Amendment
to the Lanham Act); see also 3 McCarthy on Trademarks &
Unfair Competition, S 23.7 ("In 1962, Congress struck out
language in the Lanham Act which required confusion,
mistake or deception of ``purchasers as to the source of
origin of such goods and services.' Several courts have
noted this expansion of the test of infringement and held
that it supports a finding of infringement when even non-
purchasers 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
_________________________________________________________________
21. The Federal Circuit has interpreted the 1962 amendment to the
Lanham Act differently. In Elec. Design & Sales, Inc., the court stated,
The legislative history states that the word "purchasers" was
deleted
because "the provision actually relates to potential 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,
34
Check Point Software notes that some circuits have only
found "initial interest" confusion probative of likely
confusion when the products at issue are direct
competitors or where there is a strong interrelatedness
between the products.22 It claims these circuits have
recognized that initial interest confusion is probative of a
Lanham Act violation when the defendant attempts to use
the plaintiff 's more recognizable mark to "get a foot in the
door" with potential customers. But if the initial interest
confusion does not ultimately result in a purchasing
decision, this factor counsels against finding the likelihood
of confusion under the Lanham Act.23
_________________________________________________________________
at least in the case of goods and services that are sold, the
inquiry
generally will turn on whether actual or potential"purchasers" are
confused.
954 F.2d at 716 (quoting S. Rep. No. 2107, at 4 (1962), 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 1108, 1120 (D.Minn.
2000) ("Initial interest confusion" exist[s] when the defendant stood to
materially or financially gain from said initial confusion by trading in
on
the value of plaintiff 's mark to initially attract customers.").
23. The disagreement over the use of initial interest confusion is
highlighted in Esercizio, 944 F.2d at 1249-50. While the majority of the
court found initial interest confusion generally probative of a Lanham
Act violation, the dissent noted,
To be sure, some courts have expanded the application of the
likelihood of confusion test to include individuals other than
point-
of-sale purchasers. These courts have included potential purchasers
who may contemplate a purchase in the future, reasoning that in
the pre-sale context an "observer would identify the [product] with
the [original manufacturer], and the [original manufacturer]'s
reputation would suffer damage if the [product] appeared to be of
poor quality."
In applying the test in this manner, these courts appear to
recognize
that the deception of a consumer under these circumstances could
35
Some courts have looked at the relatedness of the
relevant products in evaluating whether initial interest
confusion is probative of likely confusion. See Hasbro, 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 taken given the
unlikelihood of ``legally significant' confusion."); Brookfield
Communications, 174 F.3d at 1056 (when products are
unrelated "the likelihood of confusion would probably be
remote."). Other courts look at evidence that the defendant
intentionally adopted the plaintiff 's mark to create
confusion among consumers making purchasing decisions.
See, e.g., Dorr-Oliver, 94 F.3d at 382-83. Still other courts
view the level of care consumers exercise in their
purchasing decisions to determine whether initial interest
confusion has dissipated prior to a purchasing decision.
See, e.g., Brookfield Communications, 174 F.3d at 1057
(finding initial interest confusion actionable because "[I]n
the Internet context, . . . entering a web site takes little
effort--usually one click from a linked site or a search
engine's list; thus, Web surfers are more likely to be
confused as to the ownership of a web site than traditional
patrons of a brick-and-mortar store would be of a store's
ownership."); Rust Env't & Infrastructure, Inc. v. Teunissen,
131 F.3d 1210, 1217 (7th Cir. 1997) (initial interest
confusion unlikely with sophisticated consumers). Safeway
Stores, Inc. v. Safeway Disc. Drugs, 675 F.2d 1160, 1167
(11th Cir. 1982) ("Short-lived confusion or confusion 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 initial
interest confusion. When products are similar, a firm is
_________________________________________________________________
dissuade such a consumer from choosing to buy 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) (quoting Polo Fashions, Inc.
v. Craftex, Inc., 816 F.2d 145, 148 (4th Cir. 1987)).
36
more likely to benefit from the goodwill of a firm with an
established mark. And when consumers do not exercise a
high level of care in making their decisions, it is more likely
that their initial confusion will result in a benefit to the
alleged infringer from the use of the goodwill of the other
firm. Conversely, in the absence of these factors, some
initial confusion will not likely facilitate free riding on the
goodwill of another mark, or otherwise harm the user
claiming infringement. Where confusion has little or no
meaningful effect in the marketplace, it is of little or no
consequence in our analysis. Nonetheless, we decline to
issue a blanket rule limiting the probative value of initial
interest. Its significance will vary, and must be determined
on a case-by-case basis. As with all cases involving the
likelihood of confusion under the Lanham Act, courts
should employ all the relevant Lapp factors and weigh 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, including
Checkpoint Systems's evidence of initial interest confusion.
It is undisputed that Checkpoint Systems presented no
evidence of actual consumer confusion in the form of
mistaken purchasing decisions. But it presented the
following evidence of initial interest confusion: (1) e-mails
that Checkpoint Systems received inquiring about firewall
products; (2) customer inquiries to Checkpoint Systems
employees, including its CEO, that expressed an interest in
purchasing firewalls; (3) service calls made to Checkpoint
Systems that were intended for Check Point Software; (4)
misdirected calls to Checkpoint Systems's receptionist that
were intended for Check Point Software; and (5) reports in
the media that confused Checkpoint Systems and Check
Point Software. The District Court found this evidence
insufficient to support a finding of likely confusion
reasoning,
[A]ny evidence by the plaintiff of initial interest
confusion by consumers and initial confusion by some
37
reporters or other observers, is de minimis and weak,
and the record is completely devoid of any evidence of
an actual mistaken purchase or attempt to purchase
one company's products believing they originated with
the other company. Especially when viewed in light of
the parties' co-existence for over five years, this lack of
evidence of any confusion in purchasing decisions 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 Court
erred as a matter of law by requiring it to produce evidence
of actual consumer confusion in the form of mistaken
purchasing decisions. It also contends the court erred in
discounting its evidence of initial interest confusion as de
minimis. See Tisch Hotels, Inc., 350 F.2d at 612.
But the District Court properly evaluated the evidence of
initial interest confusion within context of the relevant 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 competitors.
However, Hasbro, and numerous other cases, correctly
emphasize the importance of the parties' competition 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 expand into
defendant's market. Other cases have also pointed 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 interest 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 where there is
38
evidence or even an inference that defendant was
trying to trade on plaintiff 's goodwill. These factors are
utterly absent here. Moreover, the evidence of initial
interest confusion in this case is de minimis.
Id. at 462-63.
This is the proper analysis. Checkpoint Systems's and
Check Point Software's products are unrelated and are sold
in different markets to consumers who exercise a
heightened degree of care in making purchasing decisions.
The markets for the parties' products are not converging,
nor is there evidence that Check Point Software
intentionally adopted the Check Point mark to create
confusion.24 Given these factors, the District Court did not
clearly err in finding no likelihood of confusion.
Nor did the District Court err in finding the evidence 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 confusion
over the period of time the parties operated in the United
States. Some of this confusion consisted of misdirected
calls and therefore it is uncertain whether the consumers
were confused by the parties' similar names or whether
_________________________________________________________________
24. Checkpoint Systems's contention that the District Court disregarded
its initial interest evidence is erroneous. The District Court examined
this evidence stating,
The Court acknowledges that evidence of any confusion at all, by
investors, purchasers, or the media, may still affect this Court's
determination of whether there is a likelihood of confusion by
purchasers, for if there is evidence that, for example, the media,
whose words purchasers read, is confused about the names of these
companies, then it is more likely that purchaser will be confused
as
well.
* * *
Though that evidence is relevant, here it is minimal, especially
when
contrasted against the glaring absence of evidence of any actual
confusion in purchasing decisions in the time 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.
39
directory assistance erred in connecting consumers with
the parties. Duluth News-Tribune v. Mesabi Publ'g Co., 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 his
communication but erred in the delivery of the message).
Furthermore, the District Court properly took into account
the potential bias of Checkpoint Systems's employees who
testified they had been approached by consumers
interested in Check Point Software's firewall products as
well as Checkpoint Systems's expert security witnesses who
testified they erroneously believed that Check Point
Software was affiliated with Checkpoint Systems. A&H
Sportswear, 237 F.3d at 227; Reed-Union Corp. v. Turtle
Wax, Inc., 77 F.3d 909, 911-12 (7th Cir. 1996) (fact 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 and 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 without
significant evidence of confusion. Versa Prods. , 50 F.3d at
205 ("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."); Universal Money Ctrs. v. AT&T, 22 F.3d
1527, 1535 (10th Cir. 1994) (a few instances of confusion
over a long period of time are insufficient to support a
finding of confusion); Barre-National, Inc. v. Barr Labs., Inc.,
773 F. Supp. 735, 744 (D.N.J. 1991) ("Use of similar marks
_________________________________________________________________
25. Check Point Software has sold its products in the United States since
late 1994. While its products were not widely circulated until late 1996,
its products were co-branded with Sun MicroSystems products from
1995-1996 in order to promote the Check Point Software mark.
Therefore the District Court did not err when it stated "when viewed in
light of the parties' co-existence for over five years, this lack of
[actual
confusion] evidence . . . falls strongly in defendant's favor." Checkpoint
Sys., 104 F. Supp. 2d at 465.
40
for a substantial period of time with no confusion among
consumers may create a presumption that there is little
likelihood of confusion."). Nor were the isolated instances of
confusion in the media probative of likely confusion.
Centaur Communications, Ltd. v. A/S/M Communications,
Inc., 830 F.2d 1217, 1227 (2d Cir. 1987) (newspaper mis-
attributions 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 counsel
against a finding of likely confusion. A&H Sportswear, 237
F.3d at 227 ("isolated" instances of confusion insufficient
to support finding of likely confusion); Scott Paper Co., 589
F.2d at 1231 (nineteen misdirected letters over four 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 extent 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 number of
goods, the weight given to the evidence of actual confusion
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 confusion.
While a handful of district courts have found evidence of
investor confusion probative of a Lanham Act violation, see,
e.g., Acxiom Corp. v. Axiom, Inc., 27 F. Supp. 2d 478 (D.
Del. 1998); Koppers Co. v. Krupp-Koppers GmbH , 517 F.
Supp. 836 (W.D. Pa. 1981), no appellate court has yet so
held.
In Acxiom, the district court held that"investor confusion
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, plaintiff in that
case presented evidence of two investors and a potential
investor who testified that they were confused by the
41
similar names. The court held this evidence counseled 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 confusion,
mistake, or deception of any kind, not merely of purchasers
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 District
Court erred in discounting this evidence. But given the
parties limited briefing on this issue as well as the scant
evidence of investor confusion here,26 we will reserve
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 business
or goodwill. Investor confusion may well threaten a party's
business or goodwill if it would likely deter or inhibit a
company's ability to attract investors and raise capital.
Here it seems unlikely that investors would be confused
by the parties' similar marks or somewhat similar stock
symbols ("CKP" and "CHKP" for Checkpoint Systems and
Check Point Software, respectively). Many investors are
sophisticated parties who exercise a high degree of care in
making investment decisions. Also, the parties' shares 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 the
paucity of evidence of investor confusion here, it is
_________________________________________________________________
26. Checkpoint Systems presented the following evidence 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 initially confused by
mistaken media reports about the parties' stocks. But these investors
averred that they quickly realized their mistake and did not make any
investment decision based on their mistake. Their confusion 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 confusion leads to
inference
that confusion is unlikely).
42
unnecessary to resolve the issue here, and we believe it is
prudent to reserve judgment at this time.27 Cf. Hoover Co.
v. Citicorp Venture Capital Ltd., 674 F. Supp. 460, 461
(S.D.N.Y. 1987) (finding no Lanham Act violation where
there was "only scant evidence of investor confusion in
connection with a single advertisement for a securities
offering.").
J. Totality of Lapp Factors
The District did not err in its factual findings nor in its
application of the individual Lapp factors to those findings.
Furthermore, the District Court's conclusion that the
combination of the Lapp factors do not establish
substantial likelihood of confusion in the marketplace is
consistent with its findings. Even though mark similarity--
a factor favorable to Checkpoint Systems--is ordinarily the
most important element in the multi-factor Lapp analysis,
it is not necessarily determinative, especially where, as
here, the markets for competing marks are highly distinct.
Because Checkpoint Systems's and Check Point Software's
products are not related, and are marketed to different
consumers through different channels, the evidence
demonstrates it is unlikely the relevant consumers, who
exercise a high degree of care in purchasing and selecting
among these products, were likely to be confused by the
marks. Additionally, there is no evidence that Check Point
Software intended to use its mark to gain a competitive
advantage. Also, the evidence supports the District Court's
finding that the markets are unlikely to converge in the
future. The minimal evidence of actual initial interest
confusion is insufficient to override this conclusion.
_________________________________________________________________
27. We note that the District Court did not completely disregard the
evidence of investor confusion Checkpoint Systems presented stating,
The Court acknowledges that evidence of any confusion at all, by
investors, purchasers, or the media, may still affect this Court's
determination of whether there is a likelihood of confusion . . .
* * *
Though that evidence is relevant, here it is minimal. . . .
Checkpoint Sys., 104 F. Supp. 2d at 463-64.
43
Because the District Court did not clearly err in its
application of the Lapp factors--individually and in
combination--we will affirm its holding there was no
likelihood of (direct) marketplace confusion. See A&H
Sportswear, 237 F.3d at 237 ("The question of likelihood of
confusion is ultimately one of fact, and [the appellate court]
cannot roll up [its] sleeves and engage in the balancing
[itself].").
IV.
A.
On appeal, Checkpoint Systems challenges the District
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 Software
is actually the source of the products of Checkpoint
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 junior user of
the mark will use to its advantage the reputation and
good will of the senior user by adopting a similar or
identical mark. Reverse confusion occurs when a
larger, more powerful company uses the trademark of
a smaller, less powerful senior owner and thereby
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. , 978 F.2d
at 947).28
_________________________________________________________________
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 goodwill and reputation, and
ability to move into new markets.
Ameritech, Inc. v. Am. Info. Techs. Corp., 811 F.2d 960, 964 (6th Cir.
1987).
44
Courts have recognized that "failure to recognize reverse
confusion would essentially immunize from unfair
competition liability companies that have well established
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 sufficient basis
to obtain Lanham Act protection, a larger company could
with impunity infringe the senior mark of a smaller one."
Fisons, 30 F.3d at 475.
In a direct confusion case, the consuming public may
assume that the established, senior user is the source of
the junior user's goods. In a reverse confusion case, the
consuming public may assume the converse; that is, that
the junior, but more powerful, mark user is the source of
the senior user's products. The harm to the senior user is
not just that its goodwill is appropriated, but that the value
of its mark is diminished. The fundamental issue in both
cases, however, is essentially the same: whether the
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 reverse
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 must be
analyzed differently.30 The strength of the parties' marks,
_________________________________________________________________
29. In reaching that conclusion, we rejected the notion that courts
should apply a threshold test to determine whether a junior user has
used its economic power to saturate the market in reverse confusion
cases. The proper inquiry is to apply all of the relevant Lapp factors.
A&H Sportswear, 237 F.3d at 208.
30. In A&H Sportswear, we noted that the application 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
45
the intent in adopting the marks,31 and the evidence 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 the
analysis of actual confusion and strength of mark outlined
in A&H Sportswear.32
_________________________________________________________________
in a similar fashion in both direct and reverse confusion cases. As
discussed at length, the District Court properly applied 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 reverse confusion claim
because the District Court has already discussed them in connection
with direct confusion and there is typically no difference in the analysis
of these factors for reverse and direct confusion claims."). We see no
error.
31. Neither party disputes the District Court's analysis of the intent of
the parties in adopting the marks.
32. Additionally, plaintiff argues the District Court improperly held that
a claim for reverse confusion is only actionable when the parties'
products directly compete. But the District Court did not state this
proposition. Rather, the court stated
reverse 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.
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 relatedness of the parties'
products is integral to the finding of likely confusion. If two products
are
unrelated, there is little reason to assume confusion since most
consumers would not assume that a single company would market two
completely unrelated products. On the other hand, when the goods are
related, a customer might reasonably assume the junior user with a
strong market presence would sell both products. Fisons, 30 F.3d at 481
("The question is whether the consumer might therefore reasonably
conclude that one company would offer both of these related products.").
46
B.
In a typical direct confusion claim, the stronger the
senior user's mark, the greater the likelihood of confusion
caused by a junior user's use of a similar mark. But in a
reverse confusion situation, the senior user's claim may be
strengthened by a showing that the junior user's mark is
commercially relatively strong. The greater relative strength
of the junior mark allows the junior user to "overwhelm"
the marketplace, diminishing the value of the senior user's
mark. While analysis of the strength of the senior user's
mark is relevant, the more important inquiry focuses on the
junior user's mark. "[T]he lack of commercial strength of
the smaller senior user's mark is to be given less weight in
the analysis because it is the strength of the larger, 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 determine
whether its advertising and marketing has resulted in a
"saturation in the public awareness of the junior user's
mark." Id., 237 F.3d at 231.
Checkpoint Systems contends the District Court
improperly evaluated the strength of the marks. Because
the court found its mark weak in the electronic access
_________________________________________________________________
The District Court recognized that consumers of Check Point
Software's highly sophisticated technical computer security systems
would have no reason to believe that Checkpoint Systems's physical
article surveillance system was manufactured by Check Point Software.
Because the "computer information" niche that Check Point Software
operated in was unique and technical there is no reason 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 complicated 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 case law does not
require directly competing goods in order to find reverse confusion,
product relatedness is a very important factor to finding that a consumer
might confuse the source of products. See, e.g. , id.; Scott Paper, 589
F.2d at 1230. We see no error.
47
control 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 in that
market, plaintiffs claim the court should have found
actionable reverse confusion. In other words, as a stronger
junior user in the network information security market,
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 not
scrutinize the reverse confusion claim, perhaps because it
was not extensively argued. It did not expressly analyze the
relative strengths of the marks for purposes of this claim,
nor did it directly examine the strength of Check Point
Software's mark. As noted, it is the strength of the junior
user's mark that is crucial in establishing a reverse
confusion claim, because it is the strength of its mark that
might lead consumers to mistakenly identify "Checkpoint"-
labeled products with Check Point Software. A&H
Sportswear, 237 F.3d at 231). In its limited discussion 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 opinion
in A&H Sportswear , it doubtless would have been guided
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 changed
the court's conclusion of no reverse confusion.
The District Court properly noted that reverse confusion
is most likely in cases involving competing or related
_________________________________________________________________
33. The court found that its mark was strong in the physical article
surveillance market.
48
products. When products are related, consumers may be
likely to assume they are produced by the same company.
But when not related, the likelihood of confusion
diminishes dramatically. Given the strong distinctiveness of
the respective markets as found by the District Court, 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 must be
evidence that consumers of Checkpoint Systems's products
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 doing
business with the senior user might mistakenly believe that
they are dealing with the junior user."). But as noted, 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 advertising or
marketing. See Checkpoint Sys., 104 F. Supp. 2d at 466
("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."). And
even if purchasers received such marketing materials, the
high level of care with which they ordinarily made their
purchasing decisions substantially lessened the likelihood
of confusion. Put another way, the strength of Check
Point's Software's mark within the corporate information
security market would not likely affect the consumers
within Checkpoint Systems's market, given the level of
distinctiveness of the relevant markets found by the District
Court.
In light of these findings, the strength of Check Point
Software's mark could have a determinative effect on the
outcome of the reverse confusion analysis, if at all, only if
extremely powerful. Only then could it "overwhelm" the
marketplace diminishing the value of Checkpoint Systems's
mark. Although the District Court did not analyze this
factor, it was correct in finding that, "[i]n the present case,
involving non-competing, unrelated products, such
``overwhelming' has not even remotely occurred." Checkpoint
Sys., 104 F. Supp. 2d at 461.
49
As we held in Fisons, the court's application of the Lapp
factors is not mechanical; rather it must weigh each factor
against the others. 30 F.3d at 473. When the reviewing
court determines that almost all the relevant factors favor
one party, it may discount one factor. See, e.g. , Jet, Inc. v.
Sewage Aeration Sys., 165 F.3d 419, 423 (6th Cir. 1999)
(finding no reversible error when the district court 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 erred in its
application of the "similarity of products or services" factor
but correctly applied other factors). We see no legal error
here.
C.
Checkpoint Systems also contends the District Court
erred in its evaluation of the evidence of actual confusion in
its reverse confusion claim. In A&H Sportswear , we stated
that in most trademark cases, parties allege both direct and
reverse confusion since "the manifestation of consumer
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``direct'
confusion evidence in a ``reverse' confusion case, or vice
versa." Id.34 Under this view, evidence that the public
thought Check Point Software was the origin of Checkpoint
Systems's products is just as probative of likely confusion
as evidence that the public thought Checkpoint Systems
was the origin of Check Point Software's products. 35 Here,
_________________________________________________________________
34. We noted that "as a matter of intuition" one might assume evidence
that the public thought that the senior user was the origin of the junior
users products would support a direct confusion claim while evidence
that the public thought the junior user was the source of the senior
user's product would support a reverse confusion claim. 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 "evidence working in the
same direction as the claim is preferred, and ``misfitting' evidence must
50
the District Court properly examined the evidence of actual
confusion36 and found it to be de minimis. We see no error.
Finally, Checkpoint Systems contends the District Court
erred in requiring evidence of actual confusion of
purchasers at the point of sale to prove its reverse
confusion claim. But as we have discussed, plaintiffs have
mischaracterized the court's analysis. The court factored
Checkpoint Systems's evidence of initial interest and
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 judgment of
the District Court.
A True Copy:
Teste:
Clerk of the United States Court of Appeals
for the Third Circuit
_________________________________________________________________
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 supporting both
Checkpoint Systems's direct and reverse confusion claims.
36. The District Court stated:
Though plaintiff did have incentive and ability to find [instances
of
actual] confusion if it occurred, by asking its sales persons,
distributors, and customers, [Checkpoint Systems] 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] product 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 from[Checkpoint
Systems].
Checkpoint Sys., 104 F. Supp. 2d at 464 (internal citations omitted).
51