Likelihood of Confusion-Reverse Confusion

What is Reverse Confusion? "[T]he doctrine of reverse confusion is designed to prevent. . . a larger, more powerful company usurping the business identity of a smaller senior user." Commerce National Ins., v. Commerce Insurance Agency, Inc., 214 F.3d 432, 445 (3rd Cir.2000).

“[T]ademark law not only protects the consumer from likelihood of confusion as to commercial sources and relationships, but also protects the registrant and senior user from adverse commercial impact due to use of a similar mark by a newcomer.  The term “reverse confusion” has been used to describe the situation where a significantly larger or prominent newcomer “saturates the market” with a trademark confusingly similar to that of a smaller, senior registrant for related goods or services. …  The junior user does not seek to benefit from the goodwill of the senior user; however, the senior user may experience diminution or even loss of its mark’s identity and goodwill due to extensive use of a confusingly similar mark by the junior user.”  

In re Shell Oil Co., 992 F.2d 1204, 26 USPQ2d 1688, 1690 (Fed. Cir. 1987).

There are two types of "likelihood of confusion" claims –"direct [or forward] confusion" claims and "reverse confusion" claims. Direct confusion and reverse confusion are also defined in Freedom Card, Inc. v. JP Morgan Chase & Co., 432 F.3d 463 (Fed. 3rd Cir., 2005) as:

“The essence of a direct confusion claim is that a junior user of a mark attempts to free-ride on the reputation and goodwill of the senior user by adopting a similar or identical mark. . . . In a direct confusion claim, "the new or junior user of the mark will use to its advantage the reputation and goodwill of the senior user by adopting a similar or identical mark." . . . Thus, "the consuming public may assume that the established, senior user is the source of the junior user's goods." [internal citations removed]

The Third Circuit goes on to describe reverse confusion: “We first recognized Lanhan Act Section 43(a) reverse confusion claims in Fisons Horticulture. (Fisons Horticulture, Inc. v. Vigoro Industries, Inc., 30 F.3d 466, 472 (3d Cir.1994)). "Reverse confusion occurs when a larger, more powerful company uses the trademark of a smaller, less powerful senior owner and thereby causes likely confusion as to the source of the senior user's goods or services." Thus, the "junior" user is junior in time but senior in market dominance or size.”  [internal citations removed]

In National Cable Television Ass'n, Inc. v. American Cinema Editors, Inc., 937 F.2d 1572 (C.A.Fed., 1991) the Federal Circuit addresses that not recognizing reverse confusion results in an inequity to the senior user.

Regardless of the amounts Cable [the junior user] expended to popularize its ACE Awards, we can reach no other conclusion but that it acted at its peril. If we assume, as Cable asks us to, that its ACE awards have become better known than Editors' [the senior user], it still cannot prevail. In essence, we would have to hold that "Might makes right." On the contrary, the appropriate adage is that a latecomer acts at its peril in promoting and investing in a mark which impinges on the rights of another. See Big O Tire Dealers, Inc. v. Goodyear Tire & Rubber Co., 561 F.2d 1365, 1372, 195 USPQ 417, 423 (10th Cir.1977), cert. dismissed, 434 U.S. 1052, 98 S.Ct. 905, 54 L.Ed.2d 805 (1978).

Likelihood of Confusion Test-The LAPP Factors

The Third Circuit has identified specific changes in the LAPP Factors that take into account the specific changes required for reverse confusion in Freedom Card, Inc. v. JP Morgan Chase & Co., 432 F.3d 463 (Fed. 3rd Cir., 2005):

Summary of test for reverse confusion

        In A & H V (A & H Sportswear, Inc. v. Victoria's Secret Stores, Inc., 166 F.3d 197, 202 (3d Cir.1999)), we summarized the test for reverse confusion as follows:

        [I]n the typical case in which there is a claim of reverse confusion, a court should examine the following factors [in determining] whether or not there is a likelihood of confusion:

        (1) the degree of similarity between the owner's mark and the alleged infringing mark;

        (2) the strength of the two marks, weighing both a commercially strong junior user's mark and a conceptually strong senior user's mark in the senior user's favor;

        (3) the price of the goods and other factors indicative of the care and attention expected of consumers when making a purchase;

        (4) the length of time the defendant has used the mark without evidence of actual confusion arising;

        (5) the intent of the defendant in adopting the mark;

        (6) the evidence of actual confusion;

        (7) whether the goods, competing or not competing, are marketed through the same channels of trade and advertised through the same media;

        (8) the extent to which the targets of the parties' sales efforts are the same;

        (9) the relationship of the goods in the minds of consumers, whether because of the near-identity of the products, the similarity of function, or other factors;

        (10) other facts suggesting that the consuming public might expect the larger, more powerful company to manufacture both products, or expect the larger company to manufacture a product in the plaintiff's market, or expect that the larger company is likely to expand into the plaintiff's market.

        Here again, "no one factor is dispositive." The weight given each factor can vary with the circumstances of a particular case. (citation and internal quotations omitted).

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