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Balancing Act

Bridgestone Americas Tire Operations, LLC v. Federal Corp., No. 2010-1376 (Fed. Cir. Mar. 16, 2011) (Judges Newman, Plager, and Bryson)

In this trademark drag race involving two tire companies, the Federal Circuit told the Trademark Trial and Appeal Board (TTAB) that its decision was off-track. For its tires, Bridgestone has been using the marks POTENZA (since 1981) and TURANZA (since 1991), and it has federal trademark registrations for both marks. Federal filed an intent-to-use application in October 2004 for MILANZA, also for tires. Bridgestone opposed Federal’s application, alleging that MILANZA was too close to POTENZA and TURANZA, and the similarity was likely to confuse consumers.

The TTAB applied its likelihood of confusion test, the DuPont test, to analyze this issue. It concluded that the marks are applied to the same goods, and those goods are sold to the same types of consumers in similar manners. These factors weighed in Bridgestone’s favor. But the TTAB also concluded that MILANZA is not similar to POTENZA and TURANZA, and that customers wouldn’t recognize POTENZA and TURANZA marks apart from the more famous BRIDGESTONE mark. According to the TTAB, those factors outweighed the Bridgestone-friendly factors, so it said there was no likelihood of confusion.

Sometimes Gaining Weight Is a Good Thing

The Federal Circuit disagreed with the TTAB and concluded that consumers, in fact, were likely to be confused because of the similarity of the marks. Before I explain the bases for the court’s opinion, I want to point out the Federal Circuit’s particular power position in the world of trademark law. In most circuit courts (9 of the 13), likelihood of confusion is a fact question, which means those courts have to show that the district court made a clear error when it balanced the factors of the likelihood of confusion test. That’s a high bar for an appeals court to overcome. But, while the Federal Circuit gives deference to the TTAB’s factual findings about the individual DuPont factors, the court gets to balance the factors on its own, from scratch. So, even if the Federal Circuit accepts the TTAB’s conclusions about the underlying facts, the court can reach a different conclusion about whether, on balance, customers are likely to confuse the two marks.

That’s what happened in this case. The Federal Circuit disagreed with the TTAB’s evaluation of POTENZA’s and TURANZA’s independent strength. The court stated, “A unique arbitrary word mark does not lose its strength as trademark when the manufacturer is identified along with the branded product. Each identification may have trade significance.” (See page 9 of the Bridgestone opinion.) Bridgestone had introduced “impressive” sales and advertising figures for tires bearing the marks, as well as advertisements displaying those marks far more prominently than the BRIDGESTONE mark. Based on this evidence, the Federal Circuit believed that the fame and strength of the POTENZA and TURANZA marks were entitled to much more weight than the TTAB afforded them. In the Federal Circuit’s balancing, then, the scales tipped in favor of Bridgestone.

Stay on Your Side!

The court was also skeptical of Federal’s proffered justifications for its brand name selection. Federal, a Taiwanese company, claimed that it had selected a mark ending in “NZA” because words ending in “ZA” impart emphasis in Chinese, and that marks ending in “NZA” are common in the car industry. The court didn’t accept these arguments and reminded Federal of the “heavy burden on the newcomer to avoid confusion.” Given that Federal’s goods are identical to Bridgestone’s, and Bridgestone’s marks are strong, the court indicated that Federal shouldn’t have inched into Bridgestone’s trademark lane.

While I can’t speculate about how another appeals court would have ruled in this case, I think the Federal Circuit’s standard of review on the likelihood of confusion issue was a key factor in the reversal decision. We don’t see this “rebalancing to a different outcome” too often—in fact, last year the Federal Circuit affirmed the TTAB on all the trademark cases the court heard, and in 2010, the court affirmed the TTAB’s substantive decisions 14 out of 15 times. So, it’s important to take note of the instances when rebalancing leads to a different result.

What do you think of the Bridgestone case? Read the full opinion if you like.

Photo credit: Ionntag