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For Trademark Infringement Claims, Confusion Is All That's Required

By Casey C. Sullivan, Esq. | Last updated on

The Third Circuit clarified trademark confusion standards under the Lanham Act last week. In a case involving two financial services firms, the court re-emphasized that a trademark is infringed when another mark is so similar that it is likely to cause confusion.

That's just confusion itself, not confusion to purchasers or confusion to customers, the Third Circuit ruled. This ruling reversed a lower court's determination that a trademark was unlikely to be infringed because evidence of confusion was not from "actual customers."

Arrowpoint v. Arrowpoint

Arrowpoint Capital, a holding company, sought to enjoin Arrowpoint Asset Management (AAM) and associated companies from using the name "Arrowpoint" in connection to investment products and services. Arrowpoint Capital, Arrowpoint Asset Management -- do those names seem confusingly similar? Arrowpoint Capital thought so, suing AAM for trademark infringement, unfair competition, and false advertising.

Arrowpoint Capital's lawsuit didn't make the Delaware federal court "quiver" with excitement. Four years after Capital initially moved for a preliminary injunction, the district court denied it. Capital appealed. As the Third Circuit noted, Capital's ability to get a P.I. depends on its likelihood of prevailing. In a Lanham Act trademark infringement case, Capital must show that the similarity between it and AAM "causes a likelihood of confusion."

Confusion Alone Is What Matters

In the Third Circuit, likelihood of confusion is examined under 10 Lapp factors. None of the factors are determinative, but evidence of actual confusion is the most important. Capital offered evidence of 11 instances of actual confusion, including misallocated securities purchases, delayed purchases, and the like. According to the district court, that confusion wasn't of much weight, since it was between brokers and dealers, rather than "actual customers."

That is too narrow a view of actionable confusion, the Third Circuit ruled. Under the Lanham Act, trademarks are infringed when a similar mark is "likely to cause confusion." The Act does not qualify confusion, nor does it limit it to actual consumers. Plenty of precedents supported that interpretation, from the Third Circuit itself and the Second, Sixth, and Seventh Circuit as well. As the Third notes, the district court cited the proper precedent, but it failed to follow it.

That means that Arrowpoint Capital's motion for a preliminary injunction returns to the district court for further assessment. While the Third Circuit criticized the lower court for sitting on the motion the first time around, it declined to reassign the case. The district court, they note, was completely impartial, if slow.

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