Ninth Circuit: "Non-Consumer" Confusion Relevant to "Likelihood of Confusion" Question

I'm a bit delayed in blogging about this opinion and, to be perfectly frank, I didn't find the facts of particular interest.  Nonetheless, there were a couple of issues addressed by the Ninth Circuit that are worth at least a brief description.

This was a trademark case involving, as the case name suggests, a dispute over various REARDEN-formative marks, which apparently were inspired by the "Hank Rearden" character in Ayn Rand's Atlas Shrugged.

The first issue of interest was the Ninth Circuit's discussion of the "use in commerce" requirement for service marks, not because the opinion broke new ground but because it is an issue I still often hear discussed even among trademark attorneys.

The court emphasized that there are two elements required for a service mark to be used in commerce--the mark must be "used or displayed in the sale or advertising of services" and "the services are rendered in commerce"--both of which must be satisfied.  Evidence of actual sales, or the lack of such evidence, is not necessarily dispositive of the "use in commerce" determination, the court noted.  Rather, non-sales activities, like solicitation of potential customers, are relevant to the "totality of the circumstances" analysis used in the Ninth Circuit to determine whether both prongs of the "use in commerce" requirement have been met.

The second legal issue involved the "evidence of actual confusion" factor of the Sleekcraft "likelihood of confusion" factors used in the Ninth Circuit in trademark cases.  Specifically, the Ninth Circuit concluded that "non-consumer confusion" may be relevant to the "likelihood of confusion" inquiry "in three specific and overlapping circumstances" including:

where there is confusion on the part of:  (1) potential consumers; (2) non-consumers whose confusion could create an inference that consumers are likely to be confused; and (3) non-consumers whose confusion could influence consumers.  In all three instances, the non-consumer confusion bears a relationship to the existence of confusion on the part of consumers themselves.

The court found support for its conclusion that "non-consumer" confusion may be relevant in:  (1) the well-established relevance of confusion on the part of potential consumers; (2) the prior use of "non-consumer" confusion as a proxy for consumer confusion (citing, Inc. v. Edriver Inc., 653 F.3d 820 (9th Cir. 2011)); and (3) prior decisions recognizing that "non-consumer" confusion can contribute to consumer confusion as in the case of "post-purchase confusion" (citing Karl Storz Endoscopy-Am., Inc. v. Surgical Tech., Inc., 285 F.3d 848 (9th Cir. 2002)).

Summing it up, the court stated that:

it appears to be a matter of basic common sense to recognize the very real possibility that confusion on the part of at least certain non-consumers could either:  (1) turn into actual consumer confusion (i.e., potential consumers); (2) serve as an adequate proxy or substitute for evidence of actual consumer confusion (i.e., non-consumers whose confusion could create an inference of consumer confusion); or (3) otherwise contribute to confusion on the part of the consumers themselves (i.e., non-consumers whose confusion could influence consumer perceptions and decision-making).

The case cite is Rearden LLC v. Rearden Commerce, Inc., No. 10-16665 (9th Cir. June 27, 2012).

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