Segway prevails in Fed Circuit TM appeal
The Federal Circuit yesterday, May 9, dismissed an appeal against a decision of the US International Trade Commission (ITC), which ruled that an American hoverboard manufacturer had infringed two Segway trademarks.
In its ruling, the US Court of Appeals for the Federal Circuit said that the ITC’s findings on trademark claims had no “preclusive effect” on Swagway’s ability to raise them in district court proceedings.
The court also found that little evidence of actual confusion did not prevent a strong finding of likely confusion between trademarks.
Segway filed a complaint with the ITC in 2016, alleging that multiple defendants, including Swagway, had imported hoverboards that infringed two of its trademarks (US numbers 2,727,948 and 2,769,942).
The ITC issued an initial determination finding that there was a likelihood of confusion between the ‘Swagway’ brand and Segway’s marks.
The commission also dismissed Swagway’s appeal against the ITC’s decision to reject a proposed consent order.
Under the terms of Swagway’s proposed order, it would have ceased selling and importing ‘Swagway’-branded personal transportation products such as hoverboards.
The ITC rejected the order as its own ruling preventing the sale and importing of the infringing products had the same effect.
Swagway, however, claimed it sought the order so that the ITC proceedings would not preclude it from raising its trademark claims in parallel district court proceedings.
The Federal Circuit, however, ruled that ITC rulings have no preclusive effect on district court trademark litigation.
This principle has already been applied to ITC rulings with respect to patents. In its ruling, the Federal Circuit said that it saw “no reason to differentiate between the effect of the commission’s patent-based decisions and the commission’s decisions regarding trademarks.”
Matt Rizzolo, IP litigation partner at Ropes & Gray in Washington, DC, told WIPR that until yesterday's decision, the Federal Circuit "never squarely addressed the potential preclusive effect of the ITC’s trademark decisions".
"Notably, the Federal Circuit’s decision appears to deviate from prior decisions by the 2nd and 4th Circuit Courts of Appeals, both of which have previously held that ITC adjudications of trademark infringement can have a preclusive effect in district court," Rizzolo said.
The ITC had also ruled that, despite finding little evidence of actual confusion between the brands, “the degree of similarity between the two marks in appearance, the pronunciation of the words, and the strength of the ‘Segway’ marks” indicated a likelihood of confusion.
In its appeal to the Federal Circuit, Swagway argued that the ITC had erred in not applying enough weight to the finding of little actual confusion between the companies’ products.
The appeals court, however, said that actual confusion is just one factor to be taken into account in trademark infringement proceedings, and need not necessarily be decisive in an analysis of the likelihood of confusion.
“[Swagway] failed to establish that the absence of actual confusion evidence should even weigh against, let alone strongly against, a likelihood-of-confusion finding under our precedent”, the Federal Circuit said.
Swagway also argued that Segway’s failure to bring survey evidence proving actual confusion, despite having the resources to do so, should lead to “an adverse inference that such a survey would not have shown a likelihood of confusion”.
The Federal Circuit rejected the argument, ruling that “consumer survey evidence is not required to show a likelihood of confusion”, and that such an adverse inference was not in line with legal precedent.
Did you enjoy reading this story? Sign up to our free daily newsletters and get stories like this sent straight to your inbox.
