Updated: Nov 10
Swagway, LLC v. International Trade Commission
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
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.