Examining the issue of trademark fair use, the US Court of Appeals for the Ninth Circuit reversed a district court grant of summary judgment in favor of a promotional products company and remanded the case for reconsideration of the lower court’s finding that the company’s use of a competitor’s trademarks was wholly protected by the fair use defense. Marketquest Group, Inc. v. BIC Corp.; BIC USA, Inc.; Norwood Promotional Products, LLC, Case No. 15-55755 (9th Cir., July 7, 2017) (Smith, J).

In 2011, promotional products company Marketquest sued BIC and its promotion company, Norwood, for trademark infringement after Marketquest’s registered ALL-IN-ONE mark appeared on Norwood’s promotional products catalog, which combined the company’s various categories of hard goods “in one” resource, and after Marketquest’s THE WRITE CHOICE trademark appeared on BIC’s 30th anniversary packaging for its pens. After the parties filed cross-motions for summary judgment, the district court determined that Norwood’s use of the trademarks created “some likelihood of confusion and therefore the potential for trademark infringement liability.” However, the district court conducted no further analysis on the issue of confusion in finding that Norwood provided a “complete defense” to the claims of trademark infringement by alleging fair use of the marks. Marketquest appealed.

The Ninth Circuit first touched on the general disfavor toward summary judgment in trademark cases given the “intensely factual” nature of trademark infringement disputes. Turning to the merits of the case, the Court outlined the difference between forward and reverse confusion in the context of trademark infringement.

Forward confusion occurs when consumers believe that goods bearing a junior mark come from, or are affiliated with, a senior mark owner. Reverse confusion occurs when consumers that encounter the senior mark holder believe that they are actually doing business with the junior mark user, or that the parties are affiliated.

Marketquest argued that the dispute with BIC and Norwood qualified as reverse confusion, since customers began to associate Marketquest’s registered trademarks with the defendants. The Ninth Circuit agreed and rejected Norwood’s argument that Marketquest failed to specifically plead reverse confusion and thus was foreclosed from advancing such a claim. Instead, the Court explained that “when reverse confusion is compatible with the theory of infringement alleged in the complaint, a plaintiff need not specifically plead it.”

Also in regard to the theory of reverse confusion, the Ninth Circuit examined the applicability of the Sleekcraft likelihood of confusion factors, and in particular the intent factor, which focuses on the defendant’s intent in selecting the mark at issue. Here, the parties advanced conflicting views on the type of evidence required to establish intent. The Court explained that even though the “tenor of the intent inquiry shifts when considering reverse confusion due to the shift in the theory of confusion,” there is no particular type of evidence necessary to establish intent, and the weight of the intent factor and the evidence presented will vary depending on the facts of a case.

On the fair use defense, the Ninth Circuit separately analyzed Norwood’s and BIC’s respective uses of the trademarks ALL-IN-ONE and THE WRITE CHOICE, noting that a defendant must show that its use of the mark at issue is (1) other than as a trademark, (2) descriptive of defendant’s goods and (3) in good faith. The Court also looked to the degree of customer confusion in evaluating fair use.

Regarding the ALL-IN-ONE trademark, the Ninth Circuit concluded there was a “strong argument” that Norwood’s use of the phrase on the 2011 consolidated “all-in-one” catalog was descriptive. However, since the company used the phrase not just on its consolidated catalog but also in certain promotional materials and an online advertisement, the Court found a genuine issue of material fact as to whether Norwood only used “All-in-One” in its primary, descriptive sense “other than as a trademark,” or also as a trademark to indicate the source of goods.

As to the third element of fair use, the Ninth Circuit rejected the position advanced by Marketquest that Norwood’s mere knowledge of its ownership and use of the ALL-IN-ONE trademark established Norwood’s bad faith in using the phrase. Nevertheless, the Court determined that questions of fact remained as to whether Norwood’s use of the mark was actually done in good faith. Finally, noting that consumer confusion is a factor in the fair use analysis because “use that is likely to cause confusion or that has caused confusion, is less likely to be objectively fair,” the Court left it to the district court to determine on remand the relevance of the degree of consumer confusion in this case. 

The Ninth Circuit also briefly addressed THE WRITE CHOICE trademark, finding the district court’s fair use analysis to be in error, since fair use is an affirmative defense that only comes into play once the party alleging infringement has shown by a preponderance of the evidence that confusion is likely. Because the district court did not find evidence of confusion and did not conduct a Sleekcraft analysis in the earlier proceeding, the Court explained that it was improper to conclude that Norwood even qualified to raise a fair use defense. Thus, the Court reversed and remanded the finding of fair use in the case of both trademarks.