A&H Sportswear, Inc. v. Victoria's Secret Stores, Inc.

BECKER, Chief Judge.

The critical question in this trademark infringement case, before us for the second time, is whether a typical consumer is likely to confuse MIRACLESUIT swimwear with THE MIRACLE BRA swimwear. The former is a product of Plaintiff A&H Sportswear Company ("A&H"), which manufactures ten percent of all swimsuits made in the United States. The latter is a product of Defendant Victoria's Secret, the lingerie leviathan that recently entered the swimwear market. A&H filed suit in the District Court for the Eastern District of Pennsylvania claiming that The Miracle Bra swimwear mark violates the Lanham Act because it is confusingly similar to the Miraclesuit swimwear mark, which A&H registered first.

A&H contends that: (1) consumers are likely to wrongly associate The Miracle Bra with A&H (the direct confusion claim); or, in the alternative, (2) consumers are likely to think that Miraclesuit is a product of Victoria's Secret (the reverse confusion claim). . . .

V. The Reverse Confusion Claim

A. Introduction

We recently recognized the doctrine of "reverse confusion" as a distinct basis for a claim under § 43(a) of the Lanham Act. While the essence of a direct confusion claim is that a junior user of a mark is said to free-ride on the "reputation and good will of the senior user by adopting a similar or identical mark," reverse confusion occurs when "the junior user saturates the market with a similar trademark and overwhelms the senior user." The harm flowing from reverse confusion is that

"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 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."

. . . As we explained in Fisons, reverse confusion protects "smaller senior users . . . against larger, more powerful companies who want to use identical or confusingly similar trademarks." Absent reverse confusion, "a company with a well established trade name and with the economic power to advertise extensively [would be immunized from suit] for a product name taken from a competitor."

The doctrine of reverse confusion--or, at least, some of its applications--is not without its critics. . . .

The chief danger inherent in recognizing reverse confusion claims is that innovative junior users, who have invested heavily in promoting a particular mark, will suddenly find their use of the mark blocked by plaintiffs who have not invested in, or promoted, their own marks. ... Further, an overly-vigorous use of the doctrine of reverse confusion could potentially inhibit larger companies with established marks from expanding their product lines --for instance, had Victoria's Secret thought, at the outset, that it would not be permitted carry over its popular The Miracle Bra mark from lingerie to swimwear, it might have chosen not to enter the swimsuit market at all.

This would be an undesirable result; in fact, it is precisely to allow a certain amount of "space" for companies to expand their product lines under established marks that we allow infringement suits against suppliers of noncompeting goods. . . . This is not to say that the reverse confusion doctrine does not have its proper place; as has been recognized, without the existence of such a claim, smaller business owners might not have any incentive to invest in their marks at all, for fear the mark could be usurped at will by a larger competitor. ... However, these concerns do sensitize us to the potential untoward effects of an overenthusiastic enforcement of reverse confusion claims, although they cannot supersede our judicial recognition of the doctrine.

B. The Test for Reverse Confusion

As in a direct confusion claim, the ultimate question in a reverse confusion claim is whether there is a likelihood of consumer confusion as to the source or sponsorship of a product. Although it would seem somewhat counter-intuitive to posit that the likelihood of confusion analysis changes from the direct confusion to the reverse confusion context, there are differences between the two situations that bear mentioning. Therefore, to clarify the test for reverse confusion that has developed in our jurisprudence, we will walk through the factors that a district court should consider (where relevant) in assessing a such a claim.

1. The Factors that are the Same

As an initial matter, there are several factors that should generally be analyzed in the same way for a reverse confusion claim as they are for a direct confusion claim. First, the attentiveness of consumers does not change (factor (3)); in both direct and reverse confusion, the question is whether this is the kind of product that consumers will care enough about to notice the differences, or purchase hastily with only a limited impression. ... Second, and similarly, the degree to which the channels of trade and advertisement overlap (factor (7)) should be analyzed in the same fashion. Finally, Lapp factors (8) and (9), considering the similarity of the targets of the parties' sales efforts and the similarity of products, are also analyzed no differently in the reverse confusion context. . .

2. Similarity of the Marks

Generally speaking, the similarity of the marks themselves is necessarily analyzed in the same way in direct and reverse confusion claims; the court looks to sight, sound, and meaning, and compares whether these elements combine to create a general commercial impression that is the same for the two marks. . . . Therefore, a district court would not need to examine these in a different manner than it would in a direct confusion claim.

On the other hand, the direct confusion claim in this case was rejected by the District Court in considerable measure because the court felt that the Victoria's Secret housemark, coupled with the disclaimer, alleviated any confusion that might otherwise result. ... Yet in the reverse confusion context, the presence of housemarks or disclaimers must obviously be treated differently than in the direct confusion context. It is the essence of the reverse confusion claim that, when consumers come across the Miraclesuit in the stream of commerce, they will confuse it with The Miracle Bra and think that it is a Victoria's Secret product. Therefore, the weight of a disclaimer on the Victoria's Secret product is necessarily lessened. Because A&H puts no disclaimer on its product to distinguish it from The Miracle Bra, the consumer considering a purchase of the Miraclesuit will not have the same handy reminder that Miraclesuit is not associated with The Miracle Bra or Victoria's Secret. This is not to say that such a disclaimer may not, in fact, mitigate confusion in some cases; if consumers are faced with the disclaimer every time they flip through the Victoria's Secret catalogue, they are less likely to forget that Miraclesuit is unrelated to The Miracle Bra swimwear.

As to the presence of the housemark on the Victoria's Secret product, not only is there the possibility that consumers will fail to remember the mark when encountering A&H's swimwear, but there is also the possibility that the mark will aggravate, rather than mitigate, reverse confusion, by reinforcing the association of the word "miracle" exclusively with Victoria's Secret. . . . Of course, we do not suggest that this actually occurred in this particular case; after all, the District Court observed that A&H typically includes its own housemark on Miraclesuits, but, because the court only conducted a likelihood of confusion analysis for the direct confusion claim, it only briefly addressed the significance of the A&H housemark.

Clearly, the proper significance to be accorded these facts is a matter best suited for the determination of the trial court. Instead, we merely highlight the questions raised by the use of the housemarks and disclaimers in order to emphasize that a district court must separately examine the similarity factor to determine whether there are any aspects of the analysis that should be different for a reverse confusion claim, and, if so, alter its examination accordingly.

3. Strength of the Marks

An important difference between reverse and direct confusion manifests in the analysis of the strength of the marks. . .

a. Commercial Strength

It has been observed that a consumer first encountering a mark with one set of goods is likely to continue to associate the mark with those goods, and whether any subsequent confusion is "direct" or "reverse" will depend on whether the consumer's first experience was with the junior or the senior user of the mark. ... The greater the commercial disparity between the manufacturers, the more likely it is that a consumer's first experience with a mark will be with one particular manufacturer. That is, if one manufacturer--junior or senior--expends tremendous sums in advertising while the other does not, consumers will be more likely to encounter the heavily advertised mark first. Where the greater advertising originates from the senior user, we are more likely to see a case of direct confusion; if the greater advertising originates from the junior user, reverse confusion is more likely. . . .

Logically, then, in a direct confusion claim, a plaintiff with a commercially strong mark is more likely to prevail than a plaintiff with a commercially weak mark. Conversely, in a reverse confusion claim, a plaintiff with a commercially weak mark is more likely to prevail than a plaintiff with a stronger mark, and this is particularly true when the plaintiff 's weaker mark is pitted against a defendant with a far stronger mark. McCarthy has written that "the relatively large advertising and promotion of the junior user . . . is the hallmark of a reverse confusion case." "The 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." As we explained in Fisons, "the evidence of commercial strength is different from what we expect in a case of forward confusion, where the junior user tries to palm off his goods as those of the senior user."

Therefore, in a reverse confusion claim, a court should analyze the "commercial strength" factor in terms of (1) the commercial strength of the junior user as compared to the senior user; and (2) any advertising or marketing campaign by the junior user that has resulted in a saturation in the public awareness of the junior user's mark.

b. Distinctiveness or Conceptual Strength

In Fisons we remanded the case for the district court to "reevaluate[] . . . distinctiveness as well as [the mark's] commercial strength" for the reverse confusion claim. Although we explained that the evaluation of commercial strength would have to be altered for reverse confusion claims, we did not discuss how distinctiveness, or conceptual strength, should be re-weighed in light of our adoption of the reverse confusion doctrine. Nor did we clarify this aspect of our jurisprudence in Commerce National Insurance Services, Inc. v. Commerce Insurance Agency, Inc., where we referred to the different test for "commercial strength," in a reverse confusion context, without reference to "conceptual strength."

As stated above, in the paradigmatic reverse confusion case, the senior user has a commercially weak mark when compared with the junior user's commercially strong mark. When it comes to conceptual strength, however, we believe that, just as in direct confusion cases, a strong mark should weigh in favor of a senior user. Our decision is supported by the fact that those courts that have clearly distinguished conceptual from commercial strength in the reverse confusion context have weighed a conceptually strong mark in the senior user's favor, in the same manner as they would in direct confusion cases. . . .

In H. Lubovsky, Inc. v. Esprit de Corp., the court explained that conceptual distinctiveness was relevant in the same way for a reverse confusion claim because "if a customer saw a doll in a toy store bearing a strong familiar trademark like 'Exxon,' he might well assume that the oil company had gone into the toy business; if, on the other hand, he saw a doll bearing a familiar but weak laudatory trademark like Merit, he would be unlikely to assume that it is connected with the similarly named gasoline or cigarettes."

The H. Lubovsky logic resonates, for it makes more sense to hold that conceptual strength, unlike commercial strength, works in the plaintiff 's favor. That is, if we were to apply the rule stated above for commercial strength, i.e., weighing weakness in the plaintiff's favor, we would bring about the perverse result that less imaginative marks would be more likely to win reverse confusion claims than arbitrary or fanciful ones. We therefore hold that, as in direct confusion claims, a district court should weigh a conceptually strong mark in the plaintiff's favor, particularly when the mark is of such a distinctive character that, coupled with the relative similarity of the plaintiff 's and defendant's marks, a consumer viewing the plaintiff 's product is likely to assume that such a mark would only have been adopted by a single source--i.e., the defendant.

4. The Intent of the Defendant

In the direct confusion context, the intent of the defendant is relevant to the extent that it bears on the likelihood of confusion analysis. . . .

When reverse, rather than direct, confusion is alleged, "intent to confuse" is unlikely to be present. However, though perhaps unusual, should an intent to confuse exist, it would be relevant to the likelihood of confusion analysis in the same manner as it would for a direct confusion claim. For instance, in Commerce National Insurance Services, Inc. v. Commerce Insurance Agency, Inc., we were confronted with a situation in which the litigants had used very similar marks in noncompetitive industries for a number of years, each fully aware of the other and with no incidents of actual confusion. Eventually, however, the larger company expanded into the smaller company's line of business, deliberately choosing to promote its services under an almost identical mark. In holding that the smaller company could maintain its claim against the larger for reverse confusion, we specifically highlighted the possibility that the larger company had adopted the mark with the deliberate intent of pushing its rival out of the market, and that it was this sort of usurpation of business identity that the reverse confusion doctrine was designed to prevent. . . .

5. Factors Relating to Actual Confusion

As a matter of intuition, one would expect that in a reverse confusion claim, evidence of actual confusion would be as important as in a direct confusion claim, though the nature of the confusion that would be probative would be quite different. . . . As applied to this case, for example, evidence that consumers thought that The Miracle Bra was an A&H product would be probative on a direct confusion claim, but not on a reverse confusion claim. Conversely, evidence that consumers thought that Miraclesuit was a Victoria's Secret product would support a reverse confusion claim, but not a direct confusion claim. This was apparently the District Court's intuition; although it declined to consider A&H's reverse confusion claim, it did observe that most of the evidence A&H had put forth with regard to "actual confusion" related to direct, rather than reverse, confusion.

However, marshalling evidence of actual confusion is often difficult. ... 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. For example, if a plaintiff alleged theories of both direct and reverse confusion and was able to prove a few instances of "actual" confusion in each direction, we might conclude that the plaintiff did not have enough evidence of either type to succeed on either of its claims, even though, taken together, all of the evidence of actual confusion would be probative of a real problem. As we explained in Part V.B.3, supra, 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. Though we might expect that, in most instances, the consumer's first encounter will be with the mark that has greater commercial strength, this will not invariably be the case.

Given the problems litigants typically encounter in locating evidence of actual confusion, then, we decline to create a strict bar to the use of "direct" confusion evidence in a "reverse" confusion case, or vice versa. However, evidence working in the same direction as the claim is preferred, and "misfitting" evidence must 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. For instance, the existence of reverse confusion might disprove a plaintiff 's claim that its descriptive mark has secondary meaning, thus resulting in no recovery at all. . . .

It follows that the other factor relating to actual confusion, Lapp factor (4), examining the time the mark has been used without evidence of actual confusion, should be approached similarly. . .

7. Summary of the Test for Reverse Confusion

In sum, in the typical case in which there is a claim of reverse confusion, a court should examine the following factors as aids in its determination whether or not there is a likelihood of such confusion:

(1) the degree of similarity between the owner's mark and the alleged infringing mark;
(2) the strength of the two marks, weighing both a commercially strong junior user's mark and a conceptually strong senior user's mark in the senior user's favor;
(3) the price of the goods and other factors indicative 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 arising;
(5) the intent of the defendant in adopting the mark;
(6) the evidence of actual confusion;
(7) whether the goods, competing or 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, whether because of the near-identity of the products, the similarity of function, or other factors;
(10) other facts suggesting that the consuming public might expect the larger, more powerful company to manufacture both products, or expect the larger company to manufacture a product in the plaintiff 's market, or expect that the larger company is likely to expand into the plaintiff's market.

As with the test for direct confusion, no one factor is dispositive, and in individual cases, particular factors may not be probative on the issue of likelihood of confusion. "The weight given to each factor in the overall picture, as well as its weighing for plaintiff or defendant, must be done on an individual fact-specific basis."

. . .
VI. Conclusion

We will affirm the District Court's judgment for Victoria's Secret on the direct confusion claim. However, we will vacate the judgment with respect to the reverse confusion claim, and remand to the District Court for further proceedings consistent with this opinion. The District Court may wish to hear and consider additional evidence from the parties on reverse confusion. . . .