By Thomas Long, J.D.
The International Trade Commission (ITC) applied the wrong standard in determining that athletic shoe manufacturer Converse’s trademark in the midsole design of its Chuck Taylor All Star shoes was invalid for lack of secondary meaning and that the importation of shoes by several respondents did not violate Section 337 of the Tariff Act of 1930, as amended, 19 U.S.C. §1337, the U.S. Court of Appeals for the Federal Circuit has held. The ITC erred in failing to determine the relevant date for assessing the existence of secondary meaning and by taking third-party designs into account that were not similar enough to Converse’s design. The ITC also committed error in its analysis of the likelihood of confusion, the court said, which it had undertaken in the event the asserted trade dress was deemed valid. In finding that the accused products would have infringed the Converse design if it were protectable, the ITC failed to properly consider whether the accused products were "substantially similar" to the asserted design, as would be required for a finding of trade dress infringement. One member of the three-judge panel concurred in part and dissented in part, opining that the majority was correct in vacating the ITC’s decision but that it had addressed issues not properly before it, with respect to the validity and infringement analyses (Converse, Inc. v. ITC, October 30, 2018, Dyk, T.).
Trademarks at issue. Converse asserted that it held a trademark in the midsole design of its Chuck Taylor All Star shoes. It held U.S. Trademark Registration No. 4,398,753 ("the ’753 registration") in connection with the mark. The ’753 registration, issued to Converse on September 10, 2013, described the trade-dress configuration of three design elements: (1) the design of the two stripes on the midsole of the shoe; (2) the design of the toe cap; and (3) the design of the multi-layered toe bumper featuring diamonds and line patterns. The ’753 registration also claimed trade dress protection for the relative position of these elements. Converse also asserted that it held common-law rights in the trade dress prior to the registration, based on use of the design dating back to 1932.
ITC proceedings. Converse filed a complaint with the ITC alleging violations of Section 337 by various respondents in the importation into the United States, the sale for importation, and the sale within the United States after importation of shoes that infringed its trade dress. The ITC instituted an investigation on November 17, 2014. Some of the respondents defaulted, but several appeared and actively participated in the ITC proceedings, asserting that the accused products did not infringe the mark and that, in any event, it was invalid. These respondents—which included prominent Converse competitors Skechers and New Balance—intervened in Converse’s appeal.
Converse asserted that it had acquired secondary meaning, the mark having been used by Converse since 1932. The intervenors disputed secondary meaning, asserting that Converse’s use of the mark had not been substantially exclusive. They offered a survey (the Butler survey) purportedly supporting the conclusion that consumers did not associate the Converse mark with a single source. An administrative law judge (ALJ) found violations of Section 337 by the intervenors based on the ’753 registration, but the ALJ found that Converse failed to establish secondary meaning for the common-law mark. On review, the ITC issued a final determination reversing the ALJ’s finding of no invalidity of the registered mark and determining that the registered mark was invalid because it had not acquired secondary meaning. The ITC affirmed the ALJ’s finding that the common-law mark lacked secondary meaning. Finally, the ITC found that, if either trademark was valid, it was infringed. Converse appealed.
Distinction between registered and common-law marks. Unlike word marks and product-packaging trade dress, product-design trade dress can never be inherently distinctive. Therefore, a product design is protectable only upon a showing of secondary meaning. According to the court, the ITC erred in failing to distinguish between alleged infringers who began infringing before Converse obtained its trademark registration and those who began afterward. In the court’s view, it was "confusing and inaccurate" to refer to two separate marks—a registered mark and a common-law mark. "Rather, there is a single mark, as to which different rights attach from the common law and from federal registration," the court said. The ITC never determined the relevant date for assessing the existence of secondary meaning. In the court’s view, it was necessary to determine this date because Converse was required to establish that its mark had acquired secondary meaning before the first infringing use by each alleged infringer. Registered marks were presumed to be valid, but the presumption of validity afforded to registered marks did not apply to alleged acts of infringement that took place prior to registration, the court explained. That presumption was forward-looking; in issuing the registration, the USPTO had not made a factual determination that the mark had secondary meaning at some earlier point in time. The court pointed out that in the current case, the multiyear gap between infringement and registration meant that registration could not even be probative of secondary meaning at the time of infringement.
The court noted that the issue of whether the asserted trade dress had secondary meaning at the time of registration might still be relevant on remand to the ITC, as the case did not involve only the intervenors but could draw in other parties who would be subject to a general exclusion order. The court left it up to the ITC to make this determination itself. Although the non-intervening parties had defaulted, the court declined to order that a remedy be imposed against them, due to the ITC’s failure to properly decide the question of mark validity.
Secondary meaning—standards. After discussing tests employed by the ITC and various courts, the Federal Circuit clarified that the question of whether a mark has acquired secondary meaning can be resolved by weighing the following six factors: (1) association of the trade dress with a particular source by actual purchasers (typically measured by customer surveys); (2) length, degree, and exclusivity of use; (3) amount and manner of advertising; (4) amount of sales and number of customers; (5) intentional copying; and (6) unsolicited media coverage of the product embodying the mark.
Timing of use. The ITC had treated length, degree, and exclusivity of use as separate factors, but the court felt that these were substantially interrelated and should be evaluated together. With respect to the trademark owner’s and third parties’ prior uses of the mark, the ITC relied too heavily on prior uses that occurred long before the first infringing uses and the date of registration, the court said. Because secondary meaning related to what was in the minds of consumers at the relevant point in time, the analysis of this factor needed to take the timing into consideration, with evidence of use in the recent period before the first use date or date of infringement being most relevant. Drawing support from Section 2(f) of the Lanham Act, the court opined that the most relevant period was the five years before the relevant date. "The critical issue for this factor is whether prior uses impacted the perceptions of the consuming public as of the relevant date," the court explained. With this in mind, uses older than five years were relevant only if there was evidence that the uses were likely to have affected consumers’ perceptions of the mark as of the relevant date. Because the ITC relied heavily on evidence of uses far predating the relevant timeline, it should reevaluate this evidence on remand, the court said.
Exclusivity of use. With respect to exclusivity of use, the court noted that the ITC apparently had considered third-party uses of shoe designs that were not "substantially similar" to the design in the ’753 registration. Several examples cited by the ITC bore "at most a passing resemblance" to Converse’s mark, and many more were missing at least one element described in the ’753 registration. According to the court, although evidence of third-party uses of similar but not identical marks could be relevant, to be worthy of consideration these uses must have been "substantially similar" to the asserted mark. On remand, the ITC was to retrain its analysis to such uses.
Survey evidence. Noting that the ITC had relied heavily on the Butler survey to support its determination that Converse’s trade dress had not acquired secondary meaning, the Federal Circuit stated that this survey likely had little relevance to the issue of secondary meaning with regard to the intervenors. The survey was conducted in the spring of 2015—two years after the date of registration, whereas the ITC had to consider whether Converse’s mark had acquired secondary meaning as of each first infringing use by each intervenor, the earliest of which was more than 10 years before the date of the Butler survey and the latest of which was probably more than five years before the survey.
If secondary meaning at the time of registration were deemed still relevant on remand, the survey could be relevant for that analysis, the court said. However, the fact that Butler concluded that the ’753 trademark had a 21.5% net rate of association with a single source—a figure that reasonably supported the conclusion that the survey did not establish the existence of secondary meaning—did not mean that the survey affirmatively supported the conclusion that there was a lack of secondary meaning, according to the court. The survey evidence could merely be neutral. If the ITC took up the question of secondary meaning at the time of registration on remand, it was directed to analyze whether the survey showed lack of secondary meaning as of the date of registration.
Likelihood of confusion—substantial similarity. The court agreed with the intervenors that the ITC erred in finding a likelihood of confusion with respect to accused products that lacked one or more elements of the ’753 trademark. The court held that that accused products that are not "substantially similar" cannot infringe. Noted the court, "We have applied an analogous requirement in the design-patent context, where infringement cannot be found unless an ordinary observer would perceive that the ‘two designs are substantially the same.’" The court concluded, "On remand, the ITC should reassess the accused products to determine whether they are substantially similar to the mark in the infringement analysis."
The court also briefly explained that the presence of brand-name labeling on the accused products did not automatically require a finding of no likelihood of confusion; that the ITC was not required to find that the accused uses harmed Converse’s reputation in order to find infringement; and that the ITC did not err in determining that Converse’s asserted mark was nonfunctional.
Concurring and dissenting opinion. Circuit Judge Kathleen O’Malley wrote separately, concurring in part and dissenting in part. Judge O’Malley agreed that the ITC erred in its legal analysis and that its decision must be vacated and the case remanded. However, Judge O’Malley said she believed the majority’s opinion reached issues that were not properly before it. Specifically, she opined that the majority: (1) misperceived the scope of the ITC’s authority to invalidate IP rights when it addressed the issue of the validity of a registered mark; (2) blurred the line between the concepts of priority of use under common law and the validity of a registered mark; (3) put forth unnecessary advisory opinions on the weight to be given the Butler survey and the question of infringement; and (4) ignored the ITC’s statutory obligation to enter remedies against defaulting parties.
This case is No. 2016-2497.
Attorneys: Christopher J. Renk (Banner & Witcoff, Ltd.) for Converse, Inc. Clint A. Gerdine for the ITC.
Companies: Converse, Inc.
MainStory: TopStory Trademark FedCirNews
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