Swagway appeals; claims no confusion with Segway
Swagway, LLC v. International Trade Commission 2018-1672 Decided: May 9, 2019
To establish infringement, the owner of a trademark must prove that
consumers are likely to confuse its own mark with an alleged infringer’s
mark. And to determine whether a likelihood of confusion exists, courts
apply a multi-factor test first articulated by the CCPA in DuPont. One of the
DuPont factors asks whether there is evidence of actual consumer confusion.
At issue in this Federal Circuit case is whether an absence of actual
consumer confusion requires a finding of no infringement; the Court held that even if there is no actual consumer confusion, weighing the other DuPont factors—such as strength of the trademark and the similarities between the accused and registered marks—may still compel a finding of infringement.
Segway, Inc., a manufacturer of self-balancing vehicles, filed an ITC action that asserted two of its “Segway” trademarks against Swagway, LLC, which imports and sells self-balancing hover boards marketed under the names “SwagwayX1” and “SwagwayX2.”
In making his initial determination, Administrative Law Judge Shaw considered six “likelihood of confusion” factors similar to those articulated in DuPont, including (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 relation in use and manner of marketing between the products bearing the mark or designation; (5) the degree of care exercised by consumers of the marked or designated products; and (6) the strength of the mark.
The ALJ ultimately found the Swagway marks to infringe the Segway marks; importantly, the ALJ found there to be “overwhelming evidence” of actual consumer confusion between the two.
The Commission later reversed the ALJ’s determination on actual confusion, finding that the incidences of actual confusion were small compared to the volume of the Swagway-branded products’ sales. But the Commission still upheld the ALJ’s infringement determination, explaining that other factors—
including the strength of the Segway marks, and similarities in the appearances and pronunciations of the Segway and Swagway marks—weigh heavily in favor of infringement.
On appeal, Swagway argued essentially that there can be no trademark infringement as a matter of law, because (a) there is no evidence of actual consumer confusion; and (b) the accused Swagway products were sold concurrently with the Segway products for an extended period of time. The Federal Circuit disagreed, explaining that although the DuPont factors recognize that concurrent use of the two marks without actual consumer confusion weighs against infringement, this evidence must be weighed against other evidence on the record. The Court also said that the likelihood of confusion analysis “cannot be reduced to a simple tally of the [DuPont] factors;” rather, the factors must be accorded different weights in different circumstances, and Federal Circuit precedent supports the Commission’s finding that the strength of the asserted trademarks—along with the similarity of the asserted and allegedly infringing marks—weigh strongly in favor of finding that consumers are likely to confuse the marks.
Finally, the Court of Appeals addressed a procedural dispute involving Swagway’s proposed consent order: The Commission rejected Swagway’s proposed consent order (under which Swagway agreed not to import and sell any Swagway-branded products), and instead entered enforcement and cease-and-desist orders that prohibited the importation and sale of Swagway-
branded products. The panel noted that Swagway’s proposed order and the Commission’s cease and desist/enforcement orders did essentially the same thing, but that Swagway feared the Commission’s order would have a preclusive effect in a co-pending District Court trademark infringement case.
The Federal Circuit resolved the issue by pointing to a 1996 decision in which it held that “Congress did not intend decisions of the ITC on patent issues to have preclusive effect.” Seeing no reason to differentiate between the Commission’s patent- and trademark-based decisions, the Federal Circuit held that the Commission’s trademark decisions also do not have preclusive effect outside of the ITC.