The key purpose of a trade mark is to successfully differentiate the goods and services by one entity apart from the other. While determining the rightful owner of a trade mark, it is essential to identify the first user of the trade mark for the very claimed goods/services. The determination of a genuine trade mark for its original goods and rightful owner is journey through various confusion theories which have in fact paved the way to clearer functionality of a trade mark leading to better implementation trade mark law.
Countless options in the market of commodities and services have led to a drastic increase in demand, which has further resulted in surfacing of counterfeit goods and trade mark misappropriation. Consequently, causing confusion in the minds of consumers, which has been termed as consumer confusion theory. The vital role of a trademark is to prevent consumer confusion, however initial interest theory highlights how a consumer’s initial search about what they are looking for, in desired quality and preferred prices. However, the initial interest theory is now more applicable on internet researches.
The initial interest theory beyond a period of time creates liability to address the likelihood of confusion by thinking like a consumer with imperfect memory in consideration with multiple different aspects such as targeted section of society, age group and/or gender, linguistic barriers etc. Apart from the evolution of trade marks law and interpretations of the same, the judges have also adopted the practice of understanding the psychology as well as observing the behavioral pattern of consumers while deciding matters.
The consumer confusion theory can further be divided into forward confusion theory and the reverse confusion theory. The forward confusion theory is the most common case scenario where the small entity wrongfully takes disadvantage of the established reputation of a big entity by misrepresenting their trademark. A deliberate confusion is created about the ownership of the trade mark by small player in the market so that the general public is tricked to believe that the trade mark belongs to the bigger entity and therein under deception invests into counterfeit goods.
Nonetheless, such is not always the case as on many occasion the facts are contrary to the forward confusion theory and is termed as reverse confusion theory. In a situation where a small entity promotes and advertises its mark to a level where general public are well aware of the trade mark however mistakes it to be owned by a bigger entity. The main concern is not of suffering losses but instead the potential harm that can be caused to the reputation of big entity’s trade mark. The consumers will mistakenly believe that the bigger entity’s products were sponsored or approved by the smaller entity.
Analysis of Reverse Confusion Theory
The Reverse Confusion theory was established in Big O Tire Dealers, Inc. v. Goodyear Tire & Rubber Co., wherein it was held that ‘the second use of a trademark is actionable if it simply creates a likelihood of confusion about the source of the first user’s products. However, though not frequently, some Courts do not decide the case in the favor of the smaller entity despite there being reverse confusion, seeing as they generally come across the small entity free-riding on the commercial popularity and goodwill of the big entity.
The essence of reverse confusion is that the smaller entity’s mark will be relatively weaker as compared to the larger entity, wherein the prominence of the larger entity’s mark has established itself in the market good enough that the consumer is more prone to view the smaller entity’s product as either stemming from the larger entity or infringing upon the larger entity’s trademark rights. Consequently, the court should properly examine the strength of the larger entity’s mark and not only consider the reputation of the larger entity". In A H Sportswear, Inc. v. Victoria's Secret Stores, Inc., 237 F.3d 198, 231 (3d Cir. 2000), ". . . in the paradigmatic reverse confusion case, the senior user has a commercially weak mark when compared with the junior user's commercially strong mark. When it comes to conceptual strength, however, we believe that, just as in direct confusion cases, a strong mark should weigh in favor of a senior user. Our decision is supported by the fact that those courts that have clearly distinguished conceptual from commercial strength in the reverse confusion context have weighed a conceptually strong mark in the senior user's favor, in the same manner as they would in direct confusion cases".
To ensure that the smaller entity’s hard work and investments are not over shadowed by the reputation of a larger entity it is vital to study and compare extensively the trademark presence of the larger entity. Checkpoint Systems, Inc. v. Check Point Software Technologies, Inc., 269 F.3d 270, 303 (3d Cir. 2001), “..[w]hile analysis of the strength of the senior user's mark is relevant, the more important inquiry focuses on the junior user's mark. [T]he lack of commercial strength of the smaller senior user's mark is to be given less weight in the analysis because it is the strength of the larger, junior user's mark which results in reverse confusion . . .".
Though there is no particularly accepted test for reverse confusion hence mostly Courts apply a multi-factor test that has been modified for this purpose. The multi-factor test when used for forward confusion cases, evaluates factors such as proximity of the two products or services, the disparity of quality in the offerings, the sophistication of the consumer bases, etc. However, other factors such as mark strength, mark similarity, possibility of actual confusion and intent of the infringer are aspects that are evaluated differently in the case depending on whether it is regarding forward or reverse confusion. While these are generally used, it is important to note that no specific type of evidence is mandatorily needed for the rule, and the onus differs based on the court in which the case is heard and decided.
In terms of conceptual strength, courts evaluate the inherent ability of a trademark to identify the source or the sponsor of a product/ service. Conceptual strength involves looking at how suggestive, arbitrary or fanciful a mark is, depending on which the robustness of protection is decided. The conceptual strength of the small entity with senor usage of a mark is focused on in reverse confusion cases as well, seeing as if the mark does not have enough strength or acquired distinctiveness to identify the source of an offering, it is not entitled to have protection. Although, it is important to acknowledge that proving conceptual strength in cases of reverse confusion cases involving a descriptive mark, seeing as a reverse confusion case is by definition weak for the smaller entity who has been failing to generate widespread brand recognition for their trademark, unlike the larger entity. For instance, the “IBook” name was first used by an online book store, but it gained popularity later through the adoption of the name by Apple Computers. Seeing as Apple has a line of products starting with the “I” prefix, the products sold by the two companies are not similar, and there is no mala fide intention of adoption of the trademarked prefix, hence the case was decided in Apple’s favor.
Recently the 9th Circuit while deciding M2 Software, Inc. v. Madacy Entertainment, No. 03-55957 (9th Cir. Aug. 31, 2005) concerned an appeal from a jury verdict of no reverse confusion. The jury was intimated by the court when reverse confusion occurs i.e., "consumers doing business with the small entity with senior usage, erroneously consider that they are dealing with the larger entity with subsequent usage. The plaintiff argued that the term "dealing with" is too narrow, however, the same was rejected by the Court and observed that reverse confusion occurs in the broader context of when a consumer mistakenly believes there is an association between two trademark users.
Recently, in the suit of Ironhawk Technologies, Inc. v. Dropbox Inc. as decided again by the 9th Circuit, and it was observed that a reasonable jury would find a likelihood of consumer confusion. However, the dissenting opinion highlighted that the majority opinion did not consider that the potential consumers were “large, sophisticated, commercial enterprises, and any sale would be subject to a prolonged sales effort and careful customer decision making”, and therefore owing to this, customer confusion is unlikely. For instance, if a person is buying gum, it is likely an impulse purchase at the checkout aisle of a grocery store. However, when the offering is an expensive product that is sold after several rounds of negotiation, the likelihood of confusion is really cut down because a lot of time has been spent by the buyer in terms of research into the product.
The author believes that while reverse confusion was found in this case, owing to the proliferation of information in the digital and consumer media era, the possibility of better knowledge of smaller entity’s marks being attained increases, and so does the ability of consumers to gauge which company they are exactly dealing with. Therefore, in these evolving times, such factors should also be taken into account while using whichever criteria for determining the existence of reverse confusion trademark infringement.