Trademark Registration and the Presumption of Secondary Meaning
October 31 2018
The U.S. Court of Appeals for the Federal Circuit was recently tasked with reviewing determinations made by the International Trade Commission (“ITC”) relating to trade infringement claims brought by Converse, Inc. with regard to a number of imported shoes that it alleged infringed on one of its trademarks. Although Converse sneakers have had largely the same appearance since the 1930s, Converse registered a trademark in 2013 relating to the design of its midsole and the toe cap/bumpers on its shoes. The primary issue before the Federal Circuit was the timing of a second meaning inquiry in connection with the trademark infringement claim in light of the actual trademark registration in 2013.
Section 337 of the Tariff Act of 1930 provides for remedies at the ITC for holders of trademarks against companies and people who import goods that infringe on a valid and enforceable trademark. Converse brought claims against a number of respondents for trademark violations regarding the importing of various footwear products in 2014. Although some of the entities defaulted as to the claims, a number contested Converse’s claims to the ITC and received a favorable ruling that they either did not infringe on Converse’s mark, or that the mark was invalid. Converse appealed that finding to the Federal Circuit which recognized that the primary issue was “whether the mark had acquired secondary meaning” and the timing issues surrounding that determination.
Converse argued that its mark had long ago acquired secondary meaning in that it had been in use since 1932. The respondents on the other hand contended that Converse did not exclusively use the mark during that time and provided evidence by way of a survey showing that consumers did not necessarily associate the Converse mark with a single source. The Federal Circuit concluded that the ITC had made several errors in findings against Converse on its trademark infringement claims.
First, the Federal Circuit held that the ITC erred in failing to distinguish those respondents who were alleged to have infringed before Converse obtained its trademark registration in 2013 and those who began afterward. The Federal Circuit noted that while the Lanham Act does not create trademarks, “it may create some new substantive rights in trademarks unless the trademarks preexist [and] there is nothing to be registered.” Although Converse had secured its trademark registration in September 2013, it claimed that both before registration and after registration acts of infringement violated its rights in the trademark. The Federal Circuit noted that to establish infringement Converse had to show: “(1) it has a valid and legally protectable mark; (2) it owns the mark; and (3) the defendant’s use of the mark to identify goods or services causes a likelihood of confusion.” Because Converse was seeking protection for its mark in the form of unregistered product design trade dress, it had to show “that its mark has acquired distinctiveness, i.e., secondary meaning.” The problem with the ITC’s decision the Federal Circuit found was that it had not determined the relevant date for determining whether secondary meaning existed. In essence, the ITC was urging an interpretation that the secondary meaning had not attached at any time. The Federal Circuit disagreed with this approach and found that it needed, “a specific determination of secondary meaning as of the relevant date” so that a court could determine whether or not there had been infringing activity.
The statutory effect of Converse’s registration of its mark in 2013 was to create a “presumption of secondary meaning which would operate only prospectively from the date of registration.” While Converse argued that this presumption should apply to the use of its mark since its first use in the 1930s, the Federal Circuit rejected this and held that the statute made clear that the presumption only applies to post-registration conduct. With regard to any possible infringement that predated the registration of the mark, Converse would be required to establish “that its mark had acquired secondary meaning before the first infringing use by each respondent” without any benefit of the statutory presumption.
The Federal Circuit then turned its attention to the standards that the ITC should have applied in determining whether the mark had acquired secondary meaning. The Federal Circuit then found that the ITC had applied incorrect legal standards in rendering a finding that the mark had not acquired secondary meaning. In clarifying the standard that the ITC should have used in determining whether secondary meaning had been acquired in the mark, the Court held that the following six factors should be considered: “(1) association of the trade dress of the particular source by actual purchasers (typically measured by customer surveys); (2) the length, degree and exclusivity of use; (3) amount and manner of advertising; (4) amount of sales and number of customers; (5) intentionally copying; and (6) unsolicited media coverage of the product embodying the mark.” The Federal Circuit cautioned that the ITC should consider each of these six factors together in determining the existence of secondary meaning.
The Federal Circuit then turned to the issue of the prior use of the mark by Converse and the alleged infringers. In reviewing the Lanham Act, the Court found that the most relevant evidence would be the prior use in the five years immediately preceding first use or infringement. Thus, given the importance of looking to a five year period, the Federal Circuit instructed the ITC to “rely principally on uses within the last five years.” This was because the “critical issue for this factor is whether prior use has impacted the perceptions of the consuming public as of the relevant date.” The Federal Circuit reasoned that “consumers are more likely to remember and be impacted in their perceptions by third party uses within five years and less likely with respect to older uses.” Thus, uses that predate the five year period should only be considered if they were likely to have impacted a consumer’s perception of the market as of the relevant date.
The Federal Circuit noted a further error in the ITC’s findings in that in determining prior uses by other third parties, it had considered several instances of shoes that had “at most a passing resemblance to the [Converse] trademark.” The Court noted that many of these examples were missing at least one of the elements of the trademark and that others had been reproduced in poor resolution that prevented any reasonable comparison. Thus, the Federal Circuit instructed the ITC to limit its analysis only to those uses by Converse and its competitors of the “marks substantially similar to Converse’s registered mark.” The Federal Circuit noted that there was a similar error by the ITC in applying the similarity in its likelihood of confusion analysis. The Federal Circuit concluded by vacating the ITC’s findings and remanding it for further proceeding.
The Converse decision reiterates the importance of determining the impact of a mark registration date and whether a presumption of secondary meaning attached when dealing with products that have been in use for years.