IP Law Daily Ruling of no likelihood of confusion in favor of Kia Motors, despite contrary advisory verdict, was not clear error
Monday, September 9, 2019

Ruling of no likelihood of confusion in favor of Kia Motors, despite contrary advisory verdict, was not clear error

By Cheryl Beise, J.D.

Evidence supported the district court’s likelihood of confusion analysis, including that Allstate’s DRIVEWISE mark was weak and Kia’s DRIVE WISE vehicle system was not similar to Allstate’s insurance product.

The federal district court in Los Angeles properly found that Allstate Insurance Company failed to establish that Kia Motors America, Inc. and Kia Motors Corporation (collectively, "Kia") infringed Allstate’s registered DRIVEWISE mark by selling a DRIVE WISE vehicle sensor system on Kia vehicles, the U.S. Court of Appeals in San Francisco has ruled. While an advisory jury had found a likelihood of consumer confusion between the parties safety-related products, the district court did not clearly err in its independent analysis of the Sleekcraft likelihood of confusion factors, including its finding that Kia’s DRIVE WISE vehicle system was not similar to Allstate’s insurance product (Allstate Insurance Co. v. Kia Motors America, Inc. September 6, 2019, per curiam).

Allstate Insurance Co. has operated its Drivewise Program for insurance customers since 2010. Allstate obtained two federal registrations for DRIVEWISE in International Classes 9, 35, 36, and 42. Allstate’s Board Diagnostics II device and the Drivewise Mobile App prominently feature the Drivewise Mark. In 2016, Kia filed an application to register the mark DRIVE WISE as a stylized design mark in connection with "drive assist and safety device and system." Kia also applied to register KIA DRIVE WISE.

Allstate filed suit against Kia for trademark infringement. An advisory jury reached a verdict in favor of Allstate on the likelihood of confusion issue, and the court took the issue under submission. On December 22, 2017, the district court issued its opinion, concluding that Allstate failed to establish that the Kia’s DRIVE WISE mark created a likelihood of confusion with Allstate’s DRIVEWISE mark. Allstate appealed.

The Ninth Circuit reviewed the lower court’s likelihood of confusion analysis for clear error, noting that, contrary to Allstate’s contention, the district court’s decision rested on factual, rather than legal findings. The lower court analyzed the Sleekcraft likelihood of confusion factors, and found that two factors favored Allstate, one factor was neutral, and the rest favored Kia.

The district court acknowledged that the parties marks were "nearly identical," which weighed in favor of—but did not mandate—a finding of likelihood of confusion. The court also found that the marketing channels for the parties’ products slightly favored Allstate—at least to the extent they converged in 27 Kia dealerships where Allstate maintained an office or agent on site. However, most other evidence weighed against a finding of confusion.

The Ninth Circuit found no error in the district court’s finding that Allstate’s mark was "relatively weak" and "entitled to a narrow scope of protection." The parties had stipulated that the mark was merely "suggestive," and therefore "presumptively weak" and Allstate presented no evidence of marketplace recognition, such as a consumer survey or its advertising investment.

The district court did not err in concluding that the parties’ products were not similar. The district court observed that Allstate’s Drivewise was primarily a service while Kia’s Drive Wise was a product; Allstate’s Drivewise operated through either a device plugged into a car’s on-board diagnostic system or a smartphone application, while Kia’s Drive Wise was "primarily a system of sensors" hardwired into the vehicle; and Allstate’s Drivewise was free, while Kia’s system cost several thousand dollars and required the purchase of a vehicle. Allstate argued the district court erred because both marks were "related to improving driver safety." However, products in the same general field are not necessarily closely related, the Ninth Circuit noted. The district court did not clearly err in concluding that differences in hardware and software, features, and price meant that the products were not closely related.

Allstate also objected that the district court’s explicit consideration of some facts to the exclusion of others. However, that another court may have weighed the evidence differently did not establish clear error. Similarly, Allstate’s disagreement with the district court’s analysis of Kia’s intent did not show error. Contrary to Allstate’s assertion, the district court did acknowledge that Kia’s prior awareness of Allstate’s mark created a presumption of bad faith intent, but nevertheless found that Kia had selected the mark independently and had believed that there would be no confusion with Allstate’s mark. The district court also was permitted to draw an inference against Allstate from its failure to present evidence of actual confusion in this case because Allstate had ample opportunity to assess confusion—particularly in the 27 Kia dealerships with an Allstate agent on site—and weighed this factor against a likelihood of confusion.

The appeals court concluded that the district court committed no legal error and did not clearly err in finding no likelihood of confusion after its assessment of the Sleekcraft factors.

The case is No. 18-55164.

Attorneys: Sierra Elizabeth (Kirkland & Ellis LLP) for Allstate Insurance Co. Lance Etcheverry (Skadden, Arps, Slate, Meagher & Flom LLP) for Kia Motors America, Inc.

Companies: Companies: Allstate Insurance Co.; Kia Motors America Inc.; Kia Motors Corp.

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