Filed: Jan. 07, 2014
Latest Update: Mar. 02, 2020
Summary: PUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 12-2126 SWATCH AG (SWATCH SA) (SWATCH LTD.), Plaintiff - Appellant, v. BEEHIVE WHOLESALE, LLC, a limited liability company, Defendant - Appellee. Appeal from the United States District Court for the Eastern District of Virginia, at Alexandria. Liam O’Grady, District Judge. (1:11-cv-00434-LO-JFA) Argued: October 30, 2013 Decided: January 7, 2014 Before NIEMEYER, KING, and DUNCAN, Circuit Judges. Affirmed by published opinion. Jud
Summary: PUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 12-2126 SWATCH AG (SWATCH SA) (SWATCH LTD.), Plaintiff - Appellant, v. BEEHIVE WHOLESALE, LLC, a limited liability company, Defendant - Appellee. Appeal from the United States District Court for the Eastern District of Virginia, at Alexandria. Liam O’Grady, District Judge. (1:11-cv-00434-LO-JFA) Argued: October 30, 2013 Decided: January 7, 2014 Before NIEMEYER, KING, and DUNCAN, Circuit Judges. Affirmed by published opinion. Judg..
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PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 12-2126
SWATCH AG (SWATCH SA) (SWATCH LTD.),
Plaintiff - Appellant,
v.
BEEHIVE WHOLESALE, LLC, a limited liability company,
Defendant - Appellee.
Appeal from the United States District Court for the Eastern
District of Virginia, at Alexandria. Liam O’Grady, District
Judge. (1:11-cv-00434-LO-JFA)
Argued: October 30, 2013 Decided: January 7, 2014
Before NIEMEYER, KING, and DUNCAN, Circuit Judges.
Affirmed by published opinion. Judge Duncan wrote the opinion,
in which Judge Niemeyer and Judge King joined.
ARGUED: Jeffrey A. Lindenbaum, COLLEN IP, INTELLECTUAL PROPERTY
LAW, P.C., Ossining, New York, for Appellant. William Jerome
Utermohlen, OLIFF & BERRIDGE, PLC, Alexandria, Virginia, for
Appellee. ON BRIEF: Thomas P. Gulick, COLLEN IP, INTELLECTUAL
PROPERTY LAW, P.C., Ossining, New York, for Appellant. James A.
Oliff, OLIFF & BERRIDGE, PLC, Alexandria, Virginia, for
Appellee.
DUNCAN, Circuit Judge:
Appellant Swatch AG brings this action seeking reversal of
the district court’s order denying its opposition to appellee
Beehive Wholesale, LLC’s trademark application and dismissing
its related claims for federal, state, and common law trademark
infringement, trademark dilution, and unfair competition.
Swatch appeals on the ground that the district court’s
underlying factual findings--that there is no likelihood of
confusion between Swatch’s and Beehive’s marks and that
Beehive’s mark is not merely descriptive--are clearly erroneous.
For the reasons that follow we affirm.
I.
Swatch is a well-known Swiss corporation that produces
watches, clocks, jewelry, and various materials for watch
collectors. It is the owner of three U.S. registrations for the
mark SWATCH 1 and for materials bearing that mark. Beehive is a
Louisiana company engaged in wholesale and retail sales of a
variety of products including watches and watch parts.
Beehive produces and sells watch bands and faces under the
mark SWAP. The defining feature of these watch parts is that
1
For clarity, the marks will be rendered throughout in
capital letters while “Swatch” will refer to the appellant.
2
they are interchangeable. A purchaser of Beehive’s watch
components is able to affix any SWAP watch face to most or all
SWAP watchbands. Swatch brand watches, which are typically sold
at a higher price point, do not include interchangeable
components.
On July 30, 2004, Beehive applied to the U.S. Patent and
Trademark Office (“PTO”) to register its mark, SWAP, for use on
its “[w]atch faces, ribbon watch bands, slide pendants, and
beaded watch bands.” J.A. 315. Beehive’s application was
preliminarily granted and published for opposition 2 on December
26, 2005. On April 14, 2008, 3 Swatch filed a notice of
opposition to Beehive’s application on three grounds: 1)
priority of Swatch’s mark and likelihood of confusion; 2) mere
descriptiveness of Beehive’s mark; and 3) dilution of SWATCH by
Beehive’s use of SWAP. Swatch primarily argued that the
similarity of Beehive’s SWAP mark to its SWATCH mark in
combination with the similar character of their products was
likely to result in confusion among consumers as to the origin
2
Interested parties may challenge the registration of a
mark by filing a notice of opposition with the PTO during the
mark’s publication period.
3
Although Swatch initially filed an opposition on February
3, 2006, its 2008 amended opposition is the relevant filing for
our purposes because it was the basis of the Trademark Trial and
Appeal Board’s proceeding.
3
of the goods. It also argued that SWAP is too generic to be
registered. The parties submitted evidence concerning their
products, sales, revenue, and advertising, as well as deposition
testimony regarding Beehive’s selection of the SWAP mark. The
opposition was heard and dismissed on all counts by the
Trademark Trial and Appeal Board (“TTAB”).
Swatch then filed a civil action in the Eastern District of
Virginia seeking the cancelation of Beehive’s registration under
15 U.S.C. § 1071(b). Swatch added new claims for trademark
infringement and federal unfair competition under the Lanham
Act, 15 U.S.C. §§ 1114, 1125(a); trademark dilution under the
Trademark Dilution Act, 15 U.S.C. § 1125(c); state trademark
infringement under Va. Code § 59.1-92.12; and common law unfair
competition. It also submitted documentary evidence not
presented to the TTAB including facts relevant to the SWAP
clock-face variant, the parties’ channels of distribution, and
Swatch’s dilution-by-blurring claim. The parties agreed to
forgo live testimony and have the matter decided solely on the
written record. The district court, upon consideration of the
materials before it, affirmed the TTAB, holding that its
determinations were supported by substantial evidence. It also
found facts based on evidence not presented to the TTAB pursuant
to its authority under 15 U.S.C. § 1071(b)(3). The district
court concluded, on the basis of these combined findings, that
4
there was no likelihood of confusion between the two marks and
no likelihood that SWAP would dilute SWATCH. It dismissed
Swatch’s infringement and unfair competition claims as a matter
of law. It also concluded that Beehive’s mark is registrable
because it is not merely descriptive. This appeal followed.
II.
On appeal, we review the district court’s factual findings
for clear error and its legal conclusions de novo. Likelihood
of confusion is an “inherently factual issue,” and we “review[]
district court determinations regarding [it] under a clearly
erroneous standard.” Petro Shopping Ctrs., L.P. v. James River
Petroleum Inc., 130 F.3d 88, 91-92 (4th Cir. 1997). The
strength of a mark and whether it is capable of being registered
are also questions of fact that we review for clear error.
Pizzeria Uno Corp. v. Temple,
747 F.2d 1522, 1533 (4th Cir.
1984). We have yet to provide definitive guidance as to how
dilution claims should be reviewed because the Trademark
Dilution Revision Act, 15 U.S.C. § 1125(c) (“TDRA”), 4 is a recent
enactment. However, likelihood of dilution, like likelihood of
confusion, is a fact-intensive inquiry, so the appropriate
4
Pub. L. No. 109-312, 120 Stat. 1730 (2006). The original
act required proof of actual dilution and actual economic harm.
Louis Vuitton Malletier, 507 F.3d 252, 264 n.2 (4th Cir. 2007).
5
standard of review is clear error. Cf. Louis Vuitton Malletier
S.A. v. Haute Diggity Dog, LLC, 507 F.3d 252, 264-65 (4th Cir.
2007) (reciting multifactor factual tests for determining the
likelihood of dilution, including proving the fame of the
plaintiff mark and the likelihood that an association between
two marks will impair the distinctiveness of the plaintiff
mark). 5
III.
A.
Section § 1071(b) of Title 15 of the United States Code
permits a party in a trademark suit to initiate a civil action
in the place of an appeal of the TTAB’s determination to the
Federal Circuit. 15 U.S.C. § 1071(b)(1). A brief description
of the procedural features of § 1071(b) is helpful to our
analysis.
In a § 1071(b) action, the district court reviews the
record de novo and acts as the finder of fact. Durox Co. v.
Duron Paint Mfg. Co., 320 F.2d 882, 883-84 (4th Cir. 1963). The
5
Our only other published case deciding the question of
dilution under the TDRA was in the posture of a summary judgment
and was therefore reviewed de novo. Rosetta Stone Ltd. v.
Google, Inc., 676 F.3d 144 (4th Cir. 2012). However in our
unpublished decision in Super Duper, Inc. v. Mattel, Inc., we
explicitly stated that the elements of the TDRA analysis are
factual determinations. 382 F. App’x 308, 314 (4th Cir. 2010).
6
district court has authority independent of the PTO to grant or
cancel registrations and to decide any related matters such as
infringement and unfair competition claims. 15 U.S.C. §
1071(b)(1). The district court must admit the PTO record if a
party so moves, and if admitted, the record “shall have the same
effect as if originally taken and produced in the suit.” Id. at
§ 1071(b)(3). Whether or not the record is admitted, the
parties have an unrestricted right to submit further evidence as
long as it is admissible under the Federal Rules of Evidence and
Civil Procedure. Id.; see also Kappos v. Hyatt,
132 S. Ct.
1690, 1700 (2012) (interpreting § 1071(b)’s patent parallel, 35
U.S.C. § 145).
Kappos is the primary case interpreting the patent and
trademark civil action statutes. In Kappos, the PTO argued that
in a § 145 proceeding where new evidence is admitted, the
district court should defer to its findings, and “should
overturn the PTO’s factual findings only if the new evidence
clearly establishes that the agency erred.” 132 S. Ct. 1690,
1695-96 (2012). The Supreme Court rejected the PTO’s premise
that a § 145 suit “creates a special proceeding that is distinct
from a typical civil suit filed in federal district court,”
id.
at 1696, and adopted the Federal Circuit’s position that “where
new evidence is presented to the district court on a disputed
fact question, a de novo finding will be necessary to take such
7
evidence into account together with the evidence before the
board.” Id. at 1700 (quoting Fregeau v. Mossinghoff,
776 F.2d
1034, 1038 (Fed. Cir. 1985)). It held that the district court
“does not act as the ‘reviewing court’ envisioned by the APA,”
because the court must determine, among other things, “how the
new evidence comports with the existing administrative record,”
and “as a logical matter [it] can only make [this]
determination[] de novo because it is the first tribunal to hear
the evidence.”
Id. at 1696, 1700.
Kappos also explicitly defines the only situation where
consideration of the TTAB decision is permitted. The Court
adopted the Federal Circuit’s rule that “the district court may,
in its discretion, ‘consider the proceedings before and findings
of the Patent Office in deciding what weight to afford an
applicant’s newly-admitted evidence.’” Id. at 1700 (quoting
Hyatt v. Kappos,
625 F.3d 1320, 1335 (Fed. Cir. 2010)). 6 In sum,
6
Although it is not obvious from Kappos exactly what this
means, it is explained quite clearly in Hyatt, the underlying
Federal Circuit decision. The Federal Circuit permits district
courts to give “less weight to evidence whose reliability is
impacted by an applicant’s failure, without explanation, to
provide it to the Patent Office.” Hyatt, 625 F.3d at 1335. A
district court may, but is not required to, review the PTO
proceedings and give new evidence less weight if “the facts of a
particular case cast suspicion on the new evidence that an
applicant failed to introduce before the [PTO].”
Id. The
district court did not find that Swatch improperly withheld
evidence, and Kappos seems to prohibit any other reliance on the
TTAB’s findings and conclusions.
8
where new evidence is submitted, de novo review of the entire
record is required because the district court “cannot
meaningfully defer to the PTO’s factual findings if the PTO
considered a different set of facts.” Id.
B.
We are constrained to conclude that the standard of review
articulated by the district court is erroneous. Its statement
that in a § 1071(b) proceeding it sits in a “dual capacity” and
applies a “unique standard of review,” acting in part as an
appellate body, is in tension with the statute and directly
conflicts with the requirements of Kappos. Swatch, S.A. v.
Beehive Wholesale, L.L.C.,
888 F. Supp. 2d 738, 745 (E.D. Va.
2012).
However, it is not clear from the record that the district
court did in fact improperly defer to the factual findings of
the TTAB, and remand is therefore unnecessary. As an initial
matter, the district court properly reviewed Swatch’s dilution-
by-blurring claim entirely de novo because the TTAB did not
address it on the merits. Swatch, 888 F. Supp. 2d at 756 n.15.
The district court also decided Swatch’s trademark infringement
and unfair competition claims, which were not before the TTAB,
de novo. Although the district court stated that it would apply
an impermissible hybrid review to its likelihood of confusion
9
and strength-of-the-mark analyses, there are more than
sufficient facts recited in its opinion to support its findings.
1.
The district court affirmed the TTAB’s finding that SWAP is
not merely descriptive and found on a de novo review of newly
submitted evidence that SWAP was suggestive and not merely
descriptive. Although the district court stated that it was
deferring to the TTAB’s findings on the administrative record,
it also stated that it undertook “de novo review of the Swap’s
registerability to account for new evidence,” as required by the
statute. Id. at 760. While it is not clear exactly what
standard of review the district court applied, it appears that
it made sufficient factual findings of its own to justify a
holding that SWAP is in fact suggestive and not descriptive.
Because of the nature of the strength-of-the-mark inquiry,
the district court’s possible failure to reexamine all of the
evidence de novo does not have a substantial effect on its
analysis. Marks are divided into four categories of
distinctiveness. George & Co., LLC v. Imagination Entertainment
Ltd., 575 F.3d 383, 393-94 (4th Cir. 2009). The second and
third categories, suggestive and descriptive marks, are at issue
here. Suggestive marks are “inherently distinctive.”
Id. They
“do not describe a product’s features but merely suggest[]
them,” and are therefore entitled to trademark protection.
Id.
10
A descriptive mark “define[s] a particular characteristic of the
product in a way that does not require any exercise of the
imagination.”
Id. It is thus not entitled to protection unless
it has acquired a secondary meaning.
Id.
The question before the district court was whether SWAP is
merely descriptive of a feature of Beehive’s products,
specifically the interchangeability of its watch parts. While
we have recognized that it is often difficult to categorize
suggestive versus descriptive marks, it is nevertheless an
objective factual matter to be decided by the trier of fact
based on the meaning of a mark and the attributes of the
accompanying product. Because the central distinction is
whether or not the mark imparts information about the goods
directly,
id., it is difficult to see what evidence outside of
the mark and the attributes of the product could be of
assistance to the court. 7
7
Our precedent supports this position. Although we have
considered outside evidence of distinctiveness in the past, it
is generally evidence of the meaning of the mark, or evidence
that a descriptive mark has acquired secondary meaning, neither
of which are at issue here. E.g., U.S. Search, LLC v. U.S.
Search.com, Inc., 300 F.3d 517, 524-25 (4th Cir. 2002)
(determining the meaning of “search” using web pages, media
references, and recruiting materials, and determining if “U.S.
Search” had acquired secondary meaning based on a fact-intensive
six-factor inquiry).
11
For this reason, we find that even if the district court
considered only the newly adduced evidence de novo, it found
facts sufficient to support its finding that SWAP is not merely
descriptive. The district court found, based on the new
advertisements Swatch submitted, that SWAP was suggestive
because merely showing the mark and the product together would
be insufficient to convey its attributes. While a merely
descriptive mark could be used in this manner, “[e]xplaining the
function of [Beehive’s] product requires a further leap.”
Swatch, 888 F. Supp. 2d at 760. The court found that
individuals, even retail professionals familiar with the
products, 8 had to “exercise some imagination to connect ‘SWAP’
with the function of Beehive’s watches,” as evidenced by
diagrams on Beehive’s advertisements that “not only add[] arrows
but adorn[] ‘SWAP’ with the word ‘it!’” Id.
8
Swatch contends on appeal that the district court erred by
failing to consider the descriptiveness of the mark as it would
appear to a consumer aware of the specific nature of the goods.
This argument is meritless. First, the court’s opinion clearly
indicates that it evaluated the mark as it would appear to
“Beehive’s wholesaler customers,” who are undoubtedly familiar
with its goods.
Swatch, 888 F. Supp. 2d at 760. Second, while
we have previously held that “the distinctiveness of a mark is
measured in connection with the particular goods or services
that are being offered,” we have not required that the goods be
defined with the degree of specificity Swatch desires. U.S.
Search, LLC v. U.S. Search.com, Inc.,
300 F.3d 517, 524 (4th
Cir. 2002);
id. (citing as hypothetical examples of “particular
goods” generic sellers such as “a shop that sells diamonds,... a
furniture polish company, and ... an applesauce cannery.”)
12
We find no error in these determinations, and Swatch’s
arguments on this point are unavailing. Aside from its
conclusory assertions that SWAP describes the interchangeability
feature of Beehive’s watches, Swatch primarily argues that the
district court erred by failing to credit admissions by
Beehive’s executives that SWAP is descriptive. For purposes of
this analysis the district court’s treatment of these statements
does not matter. As noted above, descriptiveness is an
objective determination that the district court makes on the
basis of the meaning of a mark and the features of any
associated products. For this reason, the opinion of a witness,
particularly a lay witness, that a mark is descriptive rather
than suggestive can be of no assistance.
2.
The district court found that there was no likelihood of
confusion between SWATCH and SWAP. Swatch argues on appeal that
the district court erred because SWAP is so similar to SWATCH
that customers are likely to be confused about the origin of
Beehive’s products. Although the district court did improperly
review TTAB determinations for substantial evidence in some
instances, because it was presented with different evidence and
13
applied a test with different factors from the TTAB, 9 the court
made sufficient de novo determinations to support its finding.
To demonstrate a likelihood of confusion, Swatch must prove
both that it has a valid and protectable mark, an element that
Beehive concedes in this case, and that Beehive’s use of SWAP
creates a likelihood of confusion. Petro Shopping Ctrs., 130
F.3d at 91. Likelihood of confusion is an “inherently factual
issue.”
Id. at 92.
A likelihood of confusion exists between two marks if “the
defendant’s actual practice is likely to produce confusion in
the minds of consumers about the origin of the goods or services
in question.” CareFirst of Maryland, Inc. v. First Care, P.C.,
434 F.3d 263, 267 (4th Cir. 2006) (quoting KP Permanent Make-Up,
Inc. v. Lasting Impression I, Inc.,
543 U.S. 111, 117 (2004)).
To determine if there is a likelihood of confusion between two
marks, we consider nine non-exclusive and non-mandatory factors:
(1) the strength or distinctiveness of the plaintiff's
mark as actually used in the marketplace; (2) the
similarity of the two marks to consumers; (3) the
similarity of the goods or services that the marks
identify; (4) the similarity of the facilities used by
the markholders; (5) the similarity of advertising
used by the markholders; (6) the defendant's intent;
(7) actual confusion; (8) the quality of the
9
The TTAB follows the Court of Customs and Patent Appeals’
(predecessor to the Federal Circuit) thirteen factor DuPont test
for likelihood of confusion. In re E.I. DuPont de Nemours &
Co., 476 F.2d 1357 (C.C.P.A. 1973).
14
defendant's product; and (9) the sophistication of the
consuming public.
George & Co., 575 F.3d at 393. These nine factors serve as a
guide rather than “a rigid formula for infringement”; they are
not all of equal importance and not all factors are relevant in
every case.
Id. 10
The parties agree on appeal that the first and third
factors weigh in favor of Swatch. The district court found,
however, that the other factors weigh heavily against a
likelihood of confusion.
First, the district court determined under the second
factor that SWATCH and SWAP are not confusingly similar. The
court stated that it “agree[d]” with the TTAB that the marks
themselves were dissimilar in sight, sound, and meaning and that
the TTAB’s finding was therefore supported by substantial
10
For example, in this case the district court properly
declined to consider the eighth and ninth factors in the George
& Co. analysis. Factor eight, the quality of the defendant’s
product, “is most appropriate in situations involving the
production of cheap copies or knockoffs of a competitor’s
trademark-protected goods.” Sara Lee Corp. v. Kayser-Roth
Corp., 81 F.3d 455, 467 (4th Cir. 1996). Despite Swatch’s
assertions that Beehive’s products are both similar to its
products and sold at a lower price point, there is no evidence
that Beehive’s products are “markedly inferior” and rely heavily
on similarity to Swatch’s products “to generate undeserved
sales.”
Id. As for factor nine, in the typical case, buyer
sophistication is only considered “when the relevant market is
not the public at-large.”
Id. The record clearly reflects that
both parties hope and intend to sell their watches to as many
consumers as possible without restriction.
15
evidence, implying impermissible deference. Swatch, 888 F.
Supp. 2d at 750. However, in a practical sense, the district
court could not have concluded that the TTAB’s finding was
supported by substantial evidence without performing a de novo
review. It is clear from both the TTAB’s and the district
court’s opinions that the only relevant evidence for this
finding was the marks themselves and dictionary definitions of
the words they contain. 11 The district court clearly considered
the marks themselves and the dictionary definitions, which
appear in its opinion. Although the district court said it
agreed with the TTAB, given the nature of the question before it
there was little need for deference. It would be apparent to an
average consumer that SWATCH and SWAP: 1) look different when
written; 2) sound different when spoken; and 3) have completely
different meanings in common usage.
Swatch argues that the district court erred because it
should have focused on “SWA-” as the dominant portion of both
marks. We compare whole words, not parts, see Sara Lee Corp. v.
Kayser-Roth Corp., 81 F.3d 455, 465 (4th Cir. 1996), and
generally use the phrase “dominant portion” to refer to the non-
generic words in multiword marks, see Lone Star Steakhouse &
11
Swatch submitted the American Heritage College Dictionary
definitions for “swap” and “swatch” to the TTAB.
16
Saloon, Inc. v. Alpha of Virginia, Inc., 43 F.3d 922, 936 (4th
Cir. 1995) (identifying “Lone Star” as the dominant portion of
the “Lone Star Steakhouse & Saloon” and “Lone Star Grill”
marks). Therefore the district court correctly considered the
similarities between SWAP and SWATCH as whole words and did not
err in finding that the stylized marks are dissimilar. 12
Moreover, the district court explicitly determined de novo
that the marks were dissimilar as they generally appear in
commerce. Swatch, 888 F. Supp 2d at 751. The appearance of the
mark in commerce is the relevant inquiry under our precedent.
Anheuser-Busch, Inc. v. L & L Wings, Inc., 962 F.2d 316, 319
(holding that to determine if the use of a mark creates a
likelihood of confusion with a protected trademark “we must
examine the allegedly infringing use in the context in which it
is seen by the ordinary consumer.”)
The district court correctly noted that accompaniments to
marks and the manner in which they are presented in connection
with goods can significantly reduce the likelihood of confusion
between similar marks. See CareFirst, 434 F.3d at 271-72. It
12
Swatch also argues, somewhat confusingly given its focus
on “swa-”, that we should consider as evidence of their
similarity the fact that both full marks are sometimes
accompanied by the word “watch.” However, generic terms do not
aid our analysis. If one mark was accompanied by “watch” and
the other by “timepiece,” we would not consider that to be
evidence of dissimilarity.
17
found that SWATCH almost exclusively appears accompanied by a
Swiss flag both on products and in advertisements, while SWAP is
generally accompanied by the phrase “by Beehive.” It also found
that there was a substantial difference in the fonts used by the
two marks. Swatch’s argument that courts may only consider
elements accompanying a mark when that mark is weak, while
SWATCH was found to be strong, misstates our precedent. We have
held only that disparate design elements are “most significant”
when the mark claiming infringement is weak. Id. at 271. Its
other argument, that the district court failed to consider the
similar placement of SWATCH and SWAP on watch faces, is
frivolous. There are a limited number of places that a mark can
reasonably appear on a watch face, and, more importantly, most
of Swatch’s watch faces include the word “Swiss” while SWAP
appears alone. The district court’s finding of dissimilarity in
commerce was therefore not erroneous.
The court also found on a de novo review of the evidence
that the SWAP clock-face variant, which frequently appears on
products and advertisements, did not create a likelihood of
confusion. On appeal, Swatch repeats its argument that the
clock-face variant, in which SWAP appears over the word “watch,”
and the lower curve of the “S” contains two clock hands,
confuses consumers by indicating that they should read “S” and
“watch” together. The district court did not err by finding
18
this argument unpersuasive; the picture in the “S” curve is
clearly intended to portray clock hands and not arrows
connecting the two words. Therefore the district court did not
err by finding that the clock-face variant of SWAP is not
confusingly similar to SWATCH.
Finally, we have never held, as Swatch argues, that courts
in this Circuit must apply a lower threshold for similarity of
marks when the parties’ products are more similar. Swatch has
not advanced any argument that justifies the application of this
rule when the similarity of the parties’ products is already
accounted for under the third factor of the analysis.
The district court properly made all of its findings under
the fourth and fifth factors de novo. The TTAB did not find
facts related to the similarity of Swatch’s and Beehive’s
facilities because the relevant facts were not before it.
Swatch, 888 F. Supp. 2d at 752 n.12. The TTAB did not find
facts related to the similarity of Swatch’s and Beehive’s
advertising because advertising is not a factor in the DuPont
test. In re E.I. DuPont de Nemours & Co.,
476 F.2d 1357, 1361
(C.C.P.A. 1973).
The district court found that the similarity of the
parties’ facilities gave “insignificant support” to Swatch
because there are “basic differences between plaintiff’s and
defendant’s modes of distributing their products.” CareFirst,
19
434 F.3d at 273. Although the district court acknowledged some
similarity, it found the overlap to be de minimis between
Swatch, which sells primarily to end consumers in Swatch-brand
stores and department stores, and Beehive, which is primarily a
wholesaler selling to independent retail and gift stores and
through trade shows. It found insignificant overlap in Swatch’s
minimal sales to gift and jewelry stores and Beehive’s minimal
department store sales. It found no evidence in the record that
the parties’ products had ever been sold in the same store, and
found that both parties’ internet sales were limited to their
own brand websites. Swatch’s attempts on appeal to distinguish
the facts of this case from those of CareFirst and Louis Vuitton
Malletier with conclusory assertions that Beehive’s goods and
channels of trade are identical to its own are unavailing.
There is no error in the district court’s finding that this
factor is of no assistance to Swatch.
The district court found that Beehive’s advertising is
limited in scope and directed almost entirely toward wholesale
customers through catalogues and appearances at trade shows. It
found that Swatch advertises through television, magazines,
social media, and a billboard in Times Square. The district
court also found that neither party had purchased advertisements
on the internet, and that the mere maintenance of a brand store
on the internet does not constitute advertising. Swatch appears
20
to concede on appeal that there are substantial differences in
its and Beehive’s advertising but argues speculatively that
Beehive might have reduced or changed its advertising as a
result of Swatch’s opposition to its trademark application.
This contention finds no support in the record. The district
court did not err by finding that the dissimilarity of the
parties’ advertising favored Beehive.
Although the district court improperly characterized its
findings regarding the sixth factor, “‘intent to confuse the
buying public,’” as an affirmance of the TTAB, that
characterization did not render its findings erroneous. George
& Co., 575 F.3d at 397 (quoting Pizzeria Uno
Corp., 747 F.2d at
1535). In support of its allegation that Beehive intended to
mislead consumers, Swatch argued in its trial brief, as before
the TTAB, only that 1) Beehive had prior knowledge of Swatch’s
mark, 2) Beehive failed to conduct a trademark dispute despite
this knowledge, and 3) the marks are confusingly similar as they
are used in commerce. 13 We have already determined that the
district court’s finding of the dissimilarity of the marks in
commerce was not erroneous. Although the district court states
13
Swatch argues for the first time on appeal that Beehive
mimicked Swatch’s product designs and that this serves as
evidence of intent. This argument has been waived and is not
properly before us. Moreover it is unsupported by the record.
21
that it is affirming the TTAB on the other two arguments, the
facts that Beehive knew of SWATCH before selecting its mark and
that it failed to conduct a trademark analysis are not in
dispute. Therefore, the district court’s holdings that these
facts do not constitute bad faith under Action Temp. Servs. Inc.
v. Labor Force Inc., 870 F.2d 1563, 1566 (Fed. Cir. 1989), 14 and
George &
Co., 575 F.3d at 398, 15 are conclusions of law. Because
we review conclusions of law de novo, there can be no prejudice
to Swatch from the district court’s improper characterization.
We find no error in the district court’s conclusion that
Beehive’s actions do not show an intent to mislead consumers.
Because the TTAB applies a different standard for actual
confusion, the district court properly found on a de novo review
of the record that there was no evidence of actual confusion,
and that this factor weighed heavily in favor of Beehive. The
district court found that although SWAP had been in use since
2003, Swatch had not adduced evidence of a single instance of
actual customer confusion about the origin of the parties’
14
“[M]ere knowledge of the existence of the prior user
should not, by itself, constitute bad faith.”
15
“[T]he failure to conduct a trademark search or contact
counsel shows carelessness at most, but is in any event
irrelevant because knowledge of another's goods is not the same
as an intent to mislead and to cause consumer confusion."
(internal quotation marks and citations omitted).
22
products. The district court correctly noted that actual
confusion is generally considered to be the “most important
factor” in a likelihood of confusion analysis, George & Co., 575
F.3d at 398, and that the “absence of any evidence of actual
confusion over a substantial period of time ... creates a strong
inference that there is no likelihood of confusion.”
CareFirst,
434 F.3d at 269. On appeal, Swatch does not contend that the
record includes any evidence of actual confusion. It argues
that the district court accorded too much weight to the lack of
actual confusion in its overall analysis. However, as the court
noted, the factors are weighed differently depending on the
circumstances of the cases, and actual confusion is “often
paramount.”
CareFirst, 434 F.3d at 268 (quotation marks and
citation omitted). Swatch also attempts to argue, as it did
under the fifth factor, that the lack of actual confusion could
have resulted from Beehive modifying its advertising and use of
the mark as a result of Swatch’s opposition. Again this
argument is speculative and unsupported by the record. The
district court’s finding that there is no evidence of actual
confusion between SWATCH and SWAP was not erroneous.
The district court properly found, on a sufficient de novo
review of the entire record, that despite the fame of SWATCH and
the similarity of the goods, the “lack of similarity between the
marks, lack of predatory intent, lack of similar advertising and
23
only minimal similarity in facilities,” in combination with “the
most significant factor, actual confusion,” resulted in no
likelihood of confusion between SWATCH and SWAP. Swatch, 888 F.
Supp. 2d at 756 (internal quotation marks and citations
omitted).
3.
The district court dismissed Swatch’s trademark
infringement and unfair competition claims as a matter of law.
We review this holding de novo. Having found no error in the
district court’s finding that there is no likelihood of
confusion between SWATCH and SWAP, we conclude that Swatch’s
federal, state, and common law trademark infringement and unfair
competition claims must be dismissed. The Lanham Act requires a
finding of a likelihood of confusion to prove federal trademark
infringement, 15 U.S.C. § 1114(a), and federal unfair
competition, 15 U.S.C. § 1125(a)(1)(A). Virginia law requires a
finding of likelihood of confusion to prove trademark
infringement. Va. Code Ann. § 59.1-92.12(i). Virginia common
law trademark infringement and unfair competition claims require
the same proof, including a likelihood of confusion, as the
Lanham Act offenses. See Lone Star Steakhouse & Saloon, 43 F.3d
922, 930 n.10 (4th Cir. 1995). Because there is no likelihood
of confusion between the marks, these causes of action fail as a
matter of law.
24
4.
Because the TTAB did not decide Swatch’s dilution claim on
the merits, the district court properly reviewed the entire
record de novo to determine that there is no likelihood that
SWAP will dilute SWATCH by blurring. Swatch, 888 F. Supp. 2d at
756 n.15. Therefore, we review the district court’s finding for
clear error.
Dilution by blurring occurs when the “‘association arising
from a similarity between’” two marks “‘impairs the
distinctiveness of the famous mark.’” Louis Vuitton Malletier,
507 F.3d at 264 (quoting 15 U.S.C. § 1125(c)(2)). To succeed on
a dilution claim, the plaintiff must show that 1) it owns a
famous, distinctive mark, 2) the defendant uses an allegedly
diluting mark in commerce, 3) an association arose from the
similarity of the marks, and 4) the association is likely to
impair the distinctiveness of the famous mark.
Id. at 264-65.
The district court assumed without deciding that Swatch had
satisfied the first three factors, but found that it had not
proven the fourth.
On appeal, Swatch argues only that “the district court
erroneously found a lack of similarity between the SWATCH and
SWAP marks [and] overlooked evidence that Beehive’s goods copied
both the SWATCH mark and designs” in its dilution analysis.
Appellant’s Br. 43. As explained in detail above, the two marks
25
are not confusingly similar and there is no evidence that
Beehive intended to confuse consumers by copying Swatch’s
designs or otherwise. Finding no clear error, we affirm on this
ground.
IV.
For the foregoing reasons, the district court’s order
denying Swatch’s opposition to Beehive’s trademark application
and dismissing Swatch’s related claims for federal, state, and
common law trademark infringement and unfair competition is
AFFIRMED.
26
