Swagway appeals; claims no confusion with Segway

Swagway, LLC v. International Trade Commission

2018-1672

Decided: May 9, 2019

Case Summary

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.

2019.06 Case summary of Swagway v ITC

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