Swagway, LLC v. Int'l Trade Comm'n , 923 F.3d 1349 ( 2019 )

United States Court of Appeals
for the Federal Circuit
______________________
SWAGWAY, LLC,
Appellant
v.
INTERNATIONAL TRADE COMMISSION,
Appellee
SEGWAY, INC., DEKA PRODUCTS LIMITED
PARTNERSHIP, NINEBOT (TIANJIN)
TECHNOLOGY CO., LTD.,
Intervenors
______________________
2018-1672
______________________
Appeal from the United States International Trade
Commission in Investigation Nos. 337-TA-1007, 337-TA-
1021.
______________________
Decided: May 9, 2019
______________________
LAURENCE M. SANDELL, Mei & Mark LLP, Washington,
DC, argued for appellant. Also represented by LEI MEI,
ROBERT HALL, PHILIP ANDREW RILEY.
MICHAEL LIBERMAN, Office of the General Counsel,
United States International Trade Commission, Washing-
ton, DC, argued for appellee. Also represented by DOMINIC
2 SWAGWAY, LLC v. ITC
L. BIANCHI, WAYNE W. HERRINGTON, PANYIN HUGHES.
NICHOLAS A. BROWN, Greenberg Traurig LLP, San
Francisco, CA, argued for intervenors. Also represented by
JONATHAN D. BALL, New York, NY.
______________________
Before DYK, MAYER, and CLEVENGER, Circuit Judges.
CLEVENGER, Circuit Judge.
Swagway, LLC appeals the Final Determination of the
International Trade Commission (“the Commission”),
which found that Swagway violated 19 U.S.C. § 1337 (“Sec-
tion 337”). Because we conclude that the Commission did
not err in its determination, we affirm.
BACKGROUND
Segway, Inc., DEKA Products Limited Partnership,
and Ninebot (Tianjin) Technology Co., Ltd. (collectively,
“Segway”) filed a Complaint with the Commission on May
18, 2016, alleging violations of Section 337 based on in-
fringement of six patents not at issue in the current appeal,
and two trademarks: U.S. Trademark Registration Nos.
2,727,948 (“the ’948 mark”) and 2,769,942 (“the ’942
mark”).
Segway owns both the ’948 and ’942 marks. The ’948
mark is the non-stylized SEGWAY mark, which covers
“motorized, self-propelled, wheeled personal mobility de-
vices, namely, wheelchairs, scooters, utility carts, and
chariots.” J.A. 220. The ’942 mark is the stylized version
of the SEGWAY mark covering the same goods as its non-
stylized counterpart. The Complaint filed with the Com-
mission alleged that Swagway’s self-balancing hoverboard
products, marketed under the names SWAGWAY X1 and
X2, as well as SWAGTRON T1 and T3, infringed Segway’s
marks.
SWAGWAY, LLC v. ITC
3
On August 16, 2016, Segway filed another Complaint
with the Commission alleging infringement of the same pa-
tents and trademarks, but naming additional respondents.
The Commission instituted investigations based on both
complaints, consolidated them, and assigned an adminis-
trative law judge (“ALJ”).
On March 21, 2017, Swagway moved for partial termi-
nation of the investigation regarding the trademark in-
fringement allegations on the basis of a consent order
stipulation. Swagway amended its consent order stipula-
tion and the corresponding proposed consent order on two
separate occasions. The proposed consent order stipulated,
among other things, that Swagway would not sell or import
“SWAGWAY-branded personal transporter products as
well as all components thereof, packaging and manuals
therefor.” J.A. 560. Segway opposed the stipulation and
proposed consent order based on the fact that it addressed
only a subset of the claims and products at issue in the in-
vestigation, and because, according to Segway, it would al-
low Swagway to relitigate the issue of trademark
infringement with respect to the products covered by the
order.
During the investigation, the Commission granted Seg-
way’s motions to terminate the investigation as to four of
the six patents. By the time the ALJ held a hearing in the
investigation, only U.S. Patent Nos. 6,302,230 (“the ’230
patent”) and 7,275,607 (“the ’607 patent”), and the ’942 and
’948 trademarks remained.
The ALJ scheduled a hearing in the consolidated inves-
tigation for April 18, 2017. Prior to the hearing, the ALJ
held a prehearing conference during which counsel for
Swagway inquired about the pending motion for consent
order on which it had yet to receive a ruling. The ALJ in-
dicated that, because of the number of versions of the con-
sent order and the amount of briefing, “it certainly [wasn’t]
4 SWAGWAY, LLC v. ITC
going to be ruled on . . . before the end of the hearing.” J.A.
3034.
After the hearing, the ALJ issued an Initial Determi-
nation (“ID”), finding that the respondents accused prod-
ucts did not infringe the asserted claims of the ’230 and
’607 patents, and that the technical prong of the domestic
industry requirement was not satisfied for those patents.
The ID also found that Swagway’s use of the SWAGWAY
designation, but not the SWAGTRON designation, in-
fringed the ’942 and ’948 trademarks. The ALJ’s trade-
mark infringement determination was based on its
analysis of six “likelihood of confusion” factors: (1) evidence
of actual consumer confusion; (2) the degree of similarity in
appearance and pronunciation between the marks; (3) the
intent of the actor in adopting the designation; (4) the rela-
tion in use and manner of marketing between the products
bearing the mark or designation; (5) the degree of care ex-
ercised by consumers of the marked or designated prod-
ucts; and (6) the strength of the mark.
As to the first factor, the ALJ found that there was
“overwhelming evidence” of actual confusion between the
SWAGWAY designation and the Segway marks. J.A. 230.
But the ALJ found only de minimis actual confusion be-
tween the SWAGTRON designation and the Segway
marks.
The ALJ found that the second factor weighed in favor
of finding a likelihood of confusion because the Segway
marks and SWAGWAY designation looked alike and had
similar pronunciations. The ALJ found the opposite for the
SWAGTRON designation.
The ALJ determined that Swagway’s founder did not
intend to infringe Segway’s trademarks based on his testi-
mony that he independently derived the SWAGWAY des-
ignation, and his testimony that he changed the
designation to SWAGTRON after receiving a cease-and-de-
sist letter from Segway’s counsel. The ALJ did not
SWAGWAY, LLC v. ITC
5
definitively state whether the intent of the actor factor
weighed in favor of or against a likelihood of confusion.
As to the fourth factor, the ALJ found that Segway’s
and Swagway’s products are sold on the same websites and
in the same stores. Thus, the products exist in a common
commercial channel. The ALJ determined, however, that
the goods offered in connection with the asserted trade-
marks are significantly more expensive than the
SWAGWAY and SWAGTRON products. The ALJ there-
fore found that the fourth factor weighed against a finding
that the SWAGWAY and SWAGTRON designations were
likely to cause consumer confusion.
The ALJ did not make a determination on the fifth fac-
tor because neither party presented evidence going to the
degree of care exercised by consumers in purchasing prod-
ucts associated with the asserted trademarks or the
SWAGWAY and SWAGTRON designations.
The ALJ found that the conceptual and commercial
strength of the asserted trademarks was high due to the
fact that the term “Segway” was coined “for the sole pur-
pose of functioning as a trademark” and because consum-
ers strongly associated the SEGWAY brand with the
products. J.A. 235-37.
The ALJ’s ID did not mention Swagway’s motion for
termination based on its consent order stipulation. The
ALJ stated in a footnote to its ID that “[a]ny pending mo-
tion that has not been adjudicated is denied, unless other-
wise noted.” J.A. 62 n.2. The ID said nothing more about
Swagway’s motion for termination based on a consent or-
der stipulation.
Swagway subsequently filed a petition for review of the
ALJ’s ID. As relevant here, Swagway appealed the denial
of its consent order motion and the ID’s finding that the
SWAGWAY mark infringed the ’942 and ’948 trademarks.
6 SWAGWAY, LLC v. ITC
The Commission issued a notice of its determination to
review the ID’s finding that actual confusion existed with
regard to the SWAGWAY mark. The Commission deter-
mined not to review the ALJ’s denial of Swagway’s consent
order motion.
The Commission issued an opinion reversing the ALJ’s
determination on the existence of actual confusion because
the incidents of actual confusion were small as compared
to the volume of sales of SWAGWAY-branded products,
and Segway failed to rebut Swagway’s argument and sup-
porting evidence that at least some of the proffered actual
confusion evidence was unreliable. The Commission there-
fore modified the ID, finding that evidence of actual confu-
sion “d[id] not weigh in favor of likelihood of confusion.”
J.A. 38. Nonetheless, the Commission agreed with the
ALJ’s likelihood-of-confusion determination and its trade-
mark infringement determination because the “[e]vidence
supporting the other factors considered by the ID, includ-
ing the degree of similarity between the two marks in ap-
pearance, the pronunciation of the words, and the strength
of the SEGWAY marks strongly support[ed] the ID’s find-
ing of infringement.” Id.
Swagway appeals the Commission’s decision finding
that Swagway infringed the ’942 and ’948 marks. Swag-
way also appeals the Commission’s failure to enter the pro-
posed consent order. We have jurisdiction over Swagway’s
appeal pursuant to 28 U.S.C. § 1295(a)(6).
DISCUSSION
I. Standard of Review
We review the ITC’s legal determinations de novo and
its factual findings for substantial evidence. Converse, Inc.
v. Int’l Trade Comm’n, 909 F.3d 1110, 1115 (Fed. Cir.
2018).
The Commission’s ultimate likelihood-of-confusion de-
termination is a legal determination that we review de
SWAGWAY, LLC v. ITC
7
novo. Id.; In re I.AM.Symbolic, LLC, 866 F.3d 1315, 1322
(Fed. Cir. 2017)(“Likelihood of confusion is a question of
law based on underlying findings of fact.”). We also accord
de novo review to the weight given to each likelihood-of-
confusion factor. Cf. Stone Lion Capital Partners, L.P. v.
Lion Capital LLP, 746 F.3d 1317, 1322 (Fed. Cir. 2014) (re-
viewing the weight given to the similarity-of-the-marks
factor for legal error). The likelihood-of-confusion determi-
nation is based upon factual underpinnings that this Court
reviews for substantial evidence. In re Mighty Leaf Tea,
601 F.3d 1342, 1346 (Fed. Cir. 2010). For example, the
question of the similarity between two marks and the re-
latedness of goods are factual determinations. See Shen
Mfg. Co. v. Ritz Hotel, Ltd., 393 F.3d 1238, 1241 (Fed. Cir.
2004).
II. Trademark Infringement
To prove trademark infringement, the owner of the as-
serted trademark must demonstrate that consumers would
likely confuse the alleged infringer’s mark with the as-
serted mark. Al-Site Corp. v. VSI Int’l, Inc., 174 F.3d 1308,
1330 (Fed. Cir. 1999). Whether a likelihood of confusion
exists is determined using the factors set out in In re E.I.
DuPont DeNemours & Co., 476 F.2d 1357 (C.C.P.A. 1973).
See In re Guild Mortg. Co., 912 F.3d 1376, 1378–79 (Fed.
Cir. 2019). 1 The DuPont factors are:
1 Our predecessor court articulated the DuPont
framework in assessing likelihood of confusion for purposes
of registration of trademarks. Recently, the Supreme
Court ruled that “likelihood of confusion for purposes of
registration is the same standard as likelihood of confusion
for purposes of infringement.” B & B Hardware, Inc. v.
Hargis Indus., Inc., 135 S. Ct. 1293, 1307 (2015). The pre-
sent matter comes to us from the International Trade Com-
mission’s ruling under 19 U.S.C. § 1337 relating to
8 SWAGWAY, LLC v. ITC
(1) The similarity or dissimilarity of the marks in
their entireties as to appearance, sound, connota-
tion and commercial impression.
(2) The similarity or dissimilarity and nature of
the goods or services as described in an application
or registration or in connection with which a prior
mark is in use.
(3) The similarity or dissimilarity of established,
likely-to-continue trade channels.
(4) The conditions under which and buyers to
whom sales are made, i.e. “impulse” vs. careful, so-
phisticated purchasing.
(5) The fame of the prior mark (sales, advertising,
length of use).
(6) The number and nature of similar marks in use
on similar goods.
(7) The nature and extent of any actual confusion.
(8) The length of time during and conditions under
which there has been concurrent use without evi-
dence of actual confusion.
(9) The variety of goods on which a mark is or is
not used (house mark, “family” mark, product
mark).
(10) The market interface between applicant and
the owner of a prior mark ....
(11) The extent to which applicant has a right to
exclude others from use of its mark on its goods.
trademark infringement. Accordingly, we apply our
DuPont framework to the likelihood of confusion issue in
reviewing the Commission’s infringement determination.
SWAGWAY, LLC v. ITC
9
(12) The extent of potential confusion, i.e.,
whether de minimis or substantial.
(13) Any other established fact probative of the ef-
fect of use.
Id. at 1379.
In this case, the ALJ considered only six factors that
are nearly identical to those outlined in DuPont: (1) actual
confusion; (2) the intent of the actor in adopting the desig-
nation; (3) the relation in use and manner of marketing be-
tween the goods and services marked by the actor and
those by the other; (4) the degree of similarity between the
designation and the trademark; (5) the strength of the
mark; and (6) the degree of care likely to be exercised by
purchasers. The Commission need not consider every
DuPont factor. Shen Mfg., 393 F.3d at 1241. It is required
to consider only those factors which are supported by evi-
dence in the record. Id. Moreover, neither party challenges
the Commissions’ choice of DuPont factors.
Swagway argues that the Commission accorded the
wrong weight to the actual confusion factor. According to
Swagway, lack of actual confusion evidence is especially
probative in cases such as this where the products bearing
the registered trademarked and the allegedly infringing
products are sold concurrently over a substantial period of
time. Swagway contends, therefore, that the Commission
should have found the lack of actual confusion essentially
dispositive in this case.
First, while the DuPont factors recognize the relevance
of concurrent use without evidence of actual confusion, we
have never indicated that the concurrent use factor always
bars a likelihood-of-confusion finding. Instead, we have
found that “[s]uch evidence weighs against a likelihood of
confusion, but must then be balanced against the other ev-
idence of record.” Guild, 912 F.3d at 1381.
10 SWAGWAY, LLC v. ITC
Second, the Commission never determined that the
lack of actual confusion evidence cannot in any circum-
stance weigh against a likelihood-of-confusion finding. In-
stead, it found that the lack of actual confusion “d[id] not
weigh in favor of a finding of a likelihood of confusion.” J.A.
38. Swagway does not argue on appeal that its evidence
presented below warranted a finding of long-term, concur-
rent use in the same channels of trade. See Guild, 912 F.3d
at 1381 (holding that the period during which two marks
are used concurrently in similar geographic markets and
channels of trade is “relevant when assessing whether the
absence of actual confusion is indicative of the likelihood of
confusion”). Thus, it failed to establish that the absence of
actual confusion evidence should even weigh against, let
alone strongly against, a likelihood-of-confusion finding
under our precedent.
Swagway also argues more generally that, after revers-
ing the ALJ’s determination with regard to actual confu-
sion, the Commission failed to “properly re-weigh the
likelihood-of-confusion factors.” Appellant’s Br. at 25. The
Commission did, however, reweigh the factors and found
that the “[e]vidence supporting the other factors considered
by the ID, including the degree of similarity between the
two marks in appearance, the pronunciation of the words,
and the strength of the SEGWAY marks strongly support
the ID’s finding of infringement.” J.A. 38. To the extent
that Swagway argues that the Commission erred in its de-
termination because “only two of the six factors considered
. . . favor a likelihood-of-confusion finding,” while “three
factors . . . weigh against such a finding,” that argument is
unpersuasive as a matter of both fact and law. Appellant’s
Br. at 26.
The ALJ never stated that the “intent of the actor” fac-
tor weighed in favor of or against a likelihood-of-confusion
finding. It stated only that there appeared “to be concrete
actions taken by [Swagway’s founder] Mr. Zhu that lend
credibility to his testimony regarding his lack of intent to
SWAGWAY, LLC v. ITC
11
infringe the Segway trademarks.” J.A. 232. The Commis-
sion also did not find that the lack of actual confusion evi-
dence weighed against a likelihood-of-confusion finding.
Instead, it found that the lack of such evidence did not
weigh in favor of such a finding. There was, therefore, only
one factor, “relation in use and manner of marketing,” that
the Commission found to weigh against a likelihood of con-
fusion between the asserted trademarks and the
SWAGWAY designation.
Moreover, the likelihood-of-confusion analysis cannot
be reduced to a simple tally of the factors. The factors are
accorded different weights in different circumstances. See
M2 Software, Inc. v. M2 Commc’ns, Inc., 450 F.3d 1378,
1382 (Fed. Cir. 2006) (noting that it is necessary to con-
sider only the DuPont factors relevant to and of record in a
specific case, and that any one factor may control a partic-
ular case). Our precedent supports the Commission’s find-
ing that the strength of the asserted trademark, along with
the comparable similarity of the asserted and allegedly in-
fringing marks, can weigh strongly in favor of a likelihood
of confusion. See Han Beauty, Inc. v. Alberto-Culver Co.,
236 F.3d 1333, 1336 (Fed. Cir. 2001) (“While it must con-
sider each factor for which it has evidence, the Board may
focus its analysis on dispositive factors, such as similarity
of the marks and relatedness of the goods.”);
I.AM.Symbolic, 866 F.3d at 1324 (finding that the similar-
ity of the marks weighed heavily in favor of a likelihood of
confusion); Kenner Parker Toys Inc. v. Rose Art Indus., Inc.,
963 F.2d 350, 352 (Fed. Cir. 1992) (“The fifth [D]uPont fac-
tor . . . plays a dominant role in cases featuring a famous
or strong mark.”); Specialty Brands, Inc. v. Coffee Bean Dis-
tribs., Inc., 748 F.2d 669, 675 (Fed. Cir. 1984) (holding that
“[w]hen an opposer’s trademark is a strong, famous mark,
it can never be of little consequence” in a likelihood-of-con-
fusion analysis (internal quotation marks omitted).
Swagway also takes issue with the Commission’s fail-
ure to weigh Segway’s lack of survey evidence against a
12 SWAGWAY, LLC v. ITC
likelihood-of-confusion finding. According to Swagway,
Segway had the financial means to conduct surveys, and
thus, its failure to do so should create “an adverse inference
that such a survey would not have shown a likelihood of
confusion with respect to the asserted trademarks.” Appel-
lant’s Br. 27. But the adverse inference Swagway encour-
ages us to adopt belies our precedent. Consumer survey
evidence is not required to show a likelihood of confusion.
Midwestern Pet Foods, Inc. v. Societe des Produits Nestle
S.A., 685 F.3d 1046, 1054 (Fed. Cir. 2012). We have also
previously declined to infer that the lack of survey evidence
indicates that such evidence would be harmful to the party
alleging infringement. Id. The Commission therefore did
not err in according no weight to Segway’s lack of survey
evidence.
III. Consent Order Motion
In addition to its arguments on the merits of the Com-
mission’s determination, Swagway also argues that the
Commission erred procedurally by failing to provide any
basis for its denial of Swagway’s consent order motion.
Swagway asks this Court to reverse the Commission’s de-
nial of its motion and remand with a direction to the Com-
mission to enter the proposed consent order. During oral
argument, a question arose regarding the possible moot-
ness of that issue.
Swagway’s proposed consent order stipulated and
agreed that Swagway would not sell for importation, im-
port, or sell after importation into the United States prod-
ucts sold under the SWAGWAY mark, “that is,
SWAGWAY-branded personal transporter products as well
as all components thereof, packaging and manuals there-
for.” J.A. 560. The Commission determined that the
SWAGWAY mark infringed the ’948 and ’942 marks, and
therefore entered enforcement and cease-and-desist orders
prohibiting importation and sale of “SWAGWAY-branded
personal transporters, components thereof, and packaging
SWAGWAY, LLC v. ITC
13
and manuals thereof.” J.A. 7, 12. Comparatively, there
appeared to be no difference, as a practical matter, between
the orders entered by the Commission and Swagway’s pro-
posed consent order. Either way, the SWAGWAY-branded
personal transporters could not be imported into or sold
within the United States.
Swagway contended at oral argument that the differ-
ence between its proposed consent order and the orders is-
sued by the Commission was the preclusive effect it
believed would be afforded to the Commission’s final deci-
sion and its resulting orders. Swagway, therefore, sought
entry of its proposed consent order to avoid issue preclusion
in the co-pending case in the United States District Court
for the District of Delaware, which is stayed pending reso-
lution of the current appeal. Segway, Inc. v. Swagway,
LLC, No. 1:15-cv-01198-SLR-SRF (D. Del.).
We have previously determined that “Congress did not
intend decisions of the ITC on patent issues to have preclu-
sive effect.” Tex. Instruments Inc. v. Cypress Semiconduc-
tor Corp., 90 F.3d 1558, 1569 (Fed. Cir. 1996); see Tandon
Corp. v. U.S. Int’l Trade Comm’n, 831 F.2d 1017, 1019
(Fed. Cir. 1987) (“[O]ur appellate treatment of decisions of
the Commission does not estop fresh consideration by other
tribunals.”). We see no reason to differentiate between the
effect of the Commission’s patent-based decisions and the
Commission’s decisions regarding trademarks. Because
we hold that the Commission’s trademark decisions, like
its patent decisions, do not have preclusive effect, we need
not reach Swagway’s procedural arguments regarding its
consent order motion. 2
2 Oral Arg. at 35:04–35:09, 34:31–40 (agreeing to
withdraw its argument regarding its consent order motion
if this Court held that the Commission’s trademark deter-
minations are not entitled to preclusive effect).
14 SWAGWAY, LLC v. ITC
CONCLUSION
For the reasons above, we affirm the Commission’s de-
termination that the SWAGWAY-branded personal-trans-
porter products infringe the ’948 and ’942 marks. We also
conclude that the Commission’s decisions pertaining to
trademark infringement or validity are not entitled to pre-
clusive effect in the district courts. Based on Swagway’s
concession at oral argument, we therefore decline to reach
Swagway’s remaining arguments regarding its consent or-
der motion.
AFFIRMED
COSTS
No costs.