Mcle Self-study Article

• Publication year: 2019
• Author: Oscar M. Orozco-Botello

MCLE Self-Study Article

Oscar M. Orozco-Botello
One LLP

WHEN THE LAST ONE TO THE FINISH LINE CAN STILL WIN THE RACE: THE REVERSE CONFUSION THEORY OF TRADEMARK INFRINGEMENT

(See end of this article for information on receiving 1.0 hour MCLE self-study credit.)

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At times, trademark law sounds like a race. Some critical inquiries center on which party adopted the mark first, how many goods and services the party used the mark on, how widespread the use was, and with whom consumers associate the mark. But there's another type of trademark confusion theory—the one that protects the party that stepped out of the gate first and has been surpassed in commercial success by a late-adopter. This article explores that theory.

This article provides an overview of the reverse confusion theory of trademark infringement. That theory, to oversimply matters, protects a mark owner that is overshadowed by a newcomer that inundates the marketplace with advertisement for a similar or identical mark. Among other things, this article will provide an overview of the reverse confusion theory, discuss the most recent Ninth Circuit case to apply the theory, explain how the theory and likelihood of confusion analysis differs from a "typical" trademark infringement analysis, and comment on a recent case where the jury awarded damages against Walmart based on a reverse confusion theory.

An Almost Real Example

Let's take a stroll through time. The year is 1964. An adventurous track-and-field coach and a university track athlete join forces and amass a modest sum of $1,200. Together, with limited funds and a vision, the two started Blue Ribbon Sports. The pair originally imported shoes from a Japanese shoe manufacturer. Then, they grew bold and designed and manufactured their own shoes. In 1971, Blue Ribbon Sports officially became Nike, Inc., now a behemoth in the shoe manufacturing and athletic apparel industry.¹

For our example to work, we need to re-write history slightly. Let's pretend that, in 1971, instead of adopting the brand name "Nike," Blue Ribbon Sports co-founders Bill Bowerman and Phil Knight re-branded under the name "Dimension6." That is not too far of a stretch from what really happened. Mr. Knight really proposed to rebrand the Blue Ribbon Sports company as Dimension6. To be clear, in our hypothetical, the pair adopted Mr. Knight's suggestion and rebranded under the name "Dimension6." That same year, after Mr. Bowerman and Mr. Knight rebranded, an independent shoemaker started selling shoes under the brand name "Nike." Mr. Bowerman and Mr. Knight were unaware of Nike and the independent shoemaker was likewise totally unaware of Dimension6.²

Fast-forward to 2019. The independent shoemaker now has two brick-and-mortar locations and a modest e-commerce business that ships Nike shoes across the country. For years, he continuously sold shoes under the "Nike" brand and long ago registered a trademark for the word "Nike" in connection with his shoes. In the other lane, Dimension6 has become a multi-billion-dollar business that manufactures and ships athletic shoes and apparel to households across the country and beyond.³ At the height of success, Mr. Knight falls into nostalgia and recalled the early days of his company with his old track coach, this stirs a vague memory about an employee's suggestion to rebrand Blue Ribbon Sports under the brand name "Nike." In honor of the late Mr. Bowerman and the early times of Dimension6, Mr. Knight instructed his product development team to launch a new line of shoes under the brand name "Nike." Billboards spring up in voguish locales such as Santa Monica Boulevard, massive monitors display ads for the shoes in dazzling lights in Times Squares, and various A-list celebrities upload photos of themselves with the shoes on their social media accounts. The new Nike shoe line is a wild success.

A few months after Dimension6 launched the Nike shoe line, the independent shoemaker feels despondent. Years after starting his own business under the Nike brand, the only Nike that seems to matter to consumers is the one associated with Dimension6's own shoe line. He remembers that he has a registration for the mark Nike in connection with shoes and asks his attorney if he has a case against Dimension6 for trademark infringement. The lawyer informs the shoemaker that he might have a case against Dimension6 and that his most promising claim is a claim for trademark infringement under a reverse confusion theory. So, the independent shoemaker asks his attorney, "what is this 'reverse confusion theory of trademark infringement' that you mentioned?"

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Overview of Trademark Infringement

The Lanham Act provides a cause of action for the owner of a registered trademark against any person who, without consent of the owner, uses the trademark in commerce in connection with the sale or advertising of goods or services, when such use is likely to cause confusion.⁴ If the parties do not dispute the validity of a registered trademark, the query then becomes whether the defendant's conduct is likely to result in confusion in the minds of consumers about the origin of the goods in question.⁵ In analyzing a likelihood of confusion, courts utilize several non-exhaustive and pliable factors: (1) the strength of the mark; (2) proximity or relatedness of the goods; (3) similarity of the marks; (4) evidence of actual confusion; (5) marketing channels used; (6) type of goods and the degree of care likely to be exercised by the purchaser; (7) the defendant's intent in selecting the mark; and (8) the likelihood of expansion of the product lines.⁶

Forward Confusion and Reverse Confusion

The Ninth Circuit has recognized at least two theories of consumer confusion that support a claim of trademark infringement: forward confusion and reverse confusion.⁷ Forward confusion is the more intuitive form of consumer confusion. Forward confusion occurs when consumers believe that goods bearing the junior mark originate from, or were sponsored by, the senior mark holder.⁸ Usually, the senior mark holder is the one that has acquired fame and invested in the brand. Based on our example above, consumers would experience forward confusion if they believed that the shoes from Dimension6's Nike shoe line came from the independent shoemaker because the shoes featured the Nike mark. On the other hand, consumers would experience reverse confusion when they are dealing with the senior mark holder and believe that they are doing business with the junior mark holder.⁹ Based on our example, consumers would experience reverse confusion if they did business with the independent shoemaker, but believed that they were doing business with Dimension6, because they had come to associate the Nike mark with Dimension6, instead of with the...