Use it or Lose It: the Sixth Circuit's New Approach to Evaluating Likelihood to Cause Consumer Confusion in Trademark Disputes

• Publication year: 2017
• Citation: Vol. 25 No. 1

Use it or Lose It: The Sixth Circuit's New Approach to Evaluating Likelihood to Cause Consumer Confusion in Trademark Disputes

Stuart F. Sumner
University of Georgia School of Law

USE IT OR LOSE IT: THE SIXTH CIRCUIT'S NEW APPROACH TO EVALUATING LIKELIHOOD TO CAUSE CONSUMER CONFUSION IN TRADEMARK DISPUTES

Stuart F. Sumner^*

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TABLE OF CONTENTS

I. INTRODUCTION.............................................................................................72

II. BACKGROUND................................................................................................72

A. PURPOSE AND FUNCTION OF A TRADEMARK...................................72
B. BRIEF HISTORY OF TRADEMARK LEGISLATION AND THE LANHAM ACT...........................................................................................73
C. LIKELIHOOD TO CAUSE CONFUSION..................................................74
D. THE SECOND CIRCUIT AND THE POLAROID TEST............................76
E. PRIOR APPLICATION OF TRADEMARK "USE"....................................77
F. THE SIXTH CIRCUIT'S "USE" GATEWAY..............................................79
G. THE SECOND CIRCUIT REJECTS THE "USE" GATEWAY....................81

III. WHY SPLIT? BENEFITS AND PITFALLS OF THE 6TH CIRCUIT'S GATEWAY TEST.............................................................................................81

A. ARGUMENT FOR ADOPTION OF THE SIXTH CIRCUIT'S GATEWAY.................................................................................................81
B. ARGUMENT AGAINST THE USE OF THE SIXTH CIRCUIT'S GATEWAY.................................................................................................82

IV. WHERE TO GO FROM HERE? WHAT IS CONVENIENT MAY NOT ALWAYS BE WHAT IS BEST................................................................83

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I. INTRODUCTION

People like simple. People like straightforward. People like easy. But life is not simple, life is not straightforward, life is not easy. And like life, neither is the law. Figuring out the more difficult answers, often requires more difficult work.

One of the biggest criticisms of the law is that it is overly complex; it should be simplified. Bright-line rules and tests help simplify the law. If a certain action falls into a category, the proceedings move forward; if it does not, then they do not. This provides notice and allows for judicial efficiency. Simple.

However, bright-line rules are not always ideal. What is simplest may not always be what is best. The law is complicated. There are grey areas. Each situation raised by the law has different facts that may not neatly fall onto one side of a bright-line. What happens if the law creates a rule that is too narrow, allowing certain actions that should be punished to skate by, or so broad it captures actions society does not wish to punish?

The Sixth Circuit recently tried to simplify a complicated doctrine in trademark law: likelihood to cause confusion. They did so by creating a bright-line gateway. The new rule stated that if a trademark dispute fell into a certain category the alleged offender would not be liable. However, in doing so, the court created a legal loophole. The loophole provides a way for actual customer confusion to exist but also allows courts not to find any likelihood to cause confusion, undermining the overall purpose of the law.

II. BACKGROUND

A. PURPOSE AND FUNCTION OF A TRADEMARK

Trademarks exist to prevent unfair competition and protect property rights.¹ A trademark is "any word, name, symbol, or device, or any combination thereof"² used by a person in commerce "to identify and distinguish his or her goods, including a unique product, from those manufactured or sold by others and to indicate the source of the goods, even if that source is unknown."³ Trademarks serve several functions. They identify the goods sold by one manufacturer from goods sold by another, signify that all the goods bearing a certain mark come from a single source,

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inform consumers that similar goods with the mark are of equal quality, and help advertise companies and their products.⁴ All of these functions are essential in today's competitive economic world.⁵

Imagine a world with no trademarks. A world with no Nike swoosh, no McDonald's golden arches, no Apple logo, or any image commonly associated with a specific company. There would be no way to distinguish products of high quality of a certain brand from cheaper knock-offs. So why would companies sell anything but the cheaper indistinguishable products?⁶ The driving factor behind trademarked symbols is that consumers relate the marks with a certain level of quality affiliated with products from the proprietor of the mark.⁷ That assurance of quality associated with the mark provides the company with customer loyalty and value.⁸ However, this also provides incentives for other companies to attempt to use another's trademark and benefit from their goodwill established by another.⁹ If one company believes another is infringing on its trademark, or interfering with the exclusive right to use its mark,¹⁰ it can file suit in federal court seeking an injunction to stop the use and potentially monetary damages.¹¹

B. BRIEF HISTORY OF TRADEMARK LEGISLATION AND THE LANHAM ACT

Congress is granted the power to regulate trademarks through the Commerce Clause.¹² This Clause grants Congress the power to "regulate [c]ommerce with foreign [n]ations, and among the several states, and with the Indian Tribes."¹³ Congress first attempted to federally regulate trademarks in 1870.¹⁴ However, the Supreme Court struck that law down as unconstitutional.¹⁵ Congress passed the first successful modern federal trademark registration statute in 1905.¹⁶ Despite initial success, that act ultimately proved problematic in the long-term and eventually needed to be replaced.¹⁷ As a result, Congress passed the Federal Trademark Act of 1946:

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the Lanham Act.¹⁸ Though amended several times since its inception, the Lanham Act is the primary legislation governing federal trademark infringements.

Congress codified much of the existing trademark common law when it enacted the Lanham Act.¹⁹ The Act continues to establish federal standards for trademarks, service marks, and unfair competition.²⁰ It provides a standard for establishing what a trademark is and procedures for federally registering trademarks.²¹ Additionally, it lays out very specifically when trademark owners might be entitled to federal trademark infringement claims and what remedies may be available if a trademark is violated.²²

C. LIKELIHOOD TO CAUSE CONFUSION

The Lanham Act set forth the standard in federal trademark disputes: unauthorized use of a registered mark in commerce that is likely to cause confusion.²³ That standard applies in all cases except for causes of action relating to dilution of famous marks.²⁴ The "likelihood to cause confusion" standard is incredibly complex. Debates over some of the issues surrounding it could fill articles and chapters substantially longer than this one. Therefore, this section will only serve to provide a brief overview of the standard and the importance of its interpretation.

On its face, likelihood to cause confusion seems relatively simple. However, the difficulties it presents become readily apparent once the standard is applied in practice. For instance, does an image or symbol appearing on a product look similar enough to a trademarked symbol to cause consumer confusion over who produced the goods? How similar do symbols need to be in order to be likely to cause confusion? How many consumers must be confused by the symbols used to justify a trademark infringement?²⁵ Should it be enough if one consumer is confused, and if not, how many need to be until we reach the requisite threshold? Furthermore, the Lanham Act only requires a likelihood to cause confusion, so does someone whose

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trademark is allegedly being infringed upon need to show actual confusion by consumers or just the potential for confusion?²⁶

While many of these questions continue to cause problems for the legal system, two of the biggest concerns are whether consumers actually need to be confused by a mark²⁷ and how similar a mark must be to be considered an infringement.²⁸ Courts largely address these questions on a case-by-case basis, and the outcome depends on the type of trademark in question.²⁹ This section will address and provide some examples of how courts have attempted to resolve these problems.

Courts have held that plaintiffs do not need to show actual confusion to establish likelihood of confusion, though evidence of actual confusion can be persuasive evidence.³⁰ Surveys and witness testimony are frequently used to prove actual confusion in court.³¹ However, actual confusion is not entirely reliable, as sometimes outside factors, other than a potential trademark infringement, cause a consumer's confusion over the manufacturer of a product.³² Moreover, should the court take into consideration the sophistication of the confused party³³ when weighing the evidence or is it sufficient that a single group may be confused, while another is not?³⁴

Additionally, exact similarity between marks is not required to show likelihood to confuse consumers.³⁵ The Ninth Circuit has held it is sufficient that enough be taken from the trademark to "deceive the public in the purchase of a protected article."³⁶ This is not just limited to symbols or markings placed on products that closely resemble trademarked symbols,³⁷ but also if products are phonetically substantially similar. The Seventh Circuit held that "[s]light differences in the sound of similar trademarks will not protect the infringer."³⁸ Some examples of trademark infringements held likely to cause confusion based on phonetics include: Cup-O'-Cola infringing on Coca-Cola,³⁹ Air-O infringing on Arrow,⁴⁰ and Gliss'n infringing on Glisten.⁴¹

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Phonetic trademark...