Opinion

Checkpoint Sys Inc v. Check Point Software

Court: Court of Appeals for the Third Circuit
Filed: Oct 19, 2001
Cited by: 0 cases
Authority: More cited than 40.1%

"Initial interest confusion" exist[s] when the defendant stood to materially or financially gain from said initial confusion by trading in on the value of plaintiff 's mark to initially attract customers."

How later courts described this case

"Initial interest confusion" exist[s] when the defendant stood to materially or financially gain from said initial confusion by trading in on the value of plaintiff 's mark to initially attract customers."
"The question . . . is whether consumers doing business with the senior user might mistakenly believe that they are dealing with the junior user."
"[R]elatedness of each company's prime directive isn't relevant. Rather, we must focus on [plaintiff 's] customers and ask whether they are likely to associate the[plaintiff 's products] with [the defendant]."
expensive health care equipment elevated concern of purchasers

Written by the judges who cited it.

The opinion

Opinions of the United

2001 Decisions States Court of Appeals

for the Third Circuit

10-19-2001

Checkpoint Sys Inc v. Check Point Software

Precedential or Non-Precedential:

Docket 00-2373

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Filed October 19, 2001

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No. 00-2373

CHECKPOINT SYSTEMS, INC.,

Appellant

CHECK POINT SOFTWARE TECHNOLOGIES, INC.

On Appeal from the United States District Court

for the District of New Jersey

D.C. Civil Action No. 96-cv-03153

(Honorable Jerome B. Simandle)

Argued April 5, 2001

Before: SCIRICA, AMBRO and GIBSON,*

Circuit Judges

(Filed October 19, 2001)

ROBERTA JACOBS-MEADWAY,

ESQUIRE (ARGUED)

Akin, Gump, Strauss, Hauer & Feld

One Commerce Square, Suite 2200

2005 Market Street

Philadelphia, Pennsylvania 19103

Attorney for Appellant

_________________________________________________________________

* The Honorable John R. Gibson, United States Circuit Judge for the

Eighth Judicial Circuit, sitting by designation.

BRUCE P. KELLER, ESQUIRE

(ARGUED)

Debevoise & Plimpton

919 Third Avenue

New York, New York 10022

Attorney for Appellee

OPINION OF THE COURT

SCIRICA, Circuit Judge.

In this Lanham Act case, plaintiff Checkpoint Systems,

Inc. alleges Check Point Software Technologies, Inc.

infringed on its trademark and engaged in unfair

competition in violation of 15 U.S.C. SS 1114, 1125(a).

Finding no likelihood of confusion between Checkpoint

Systems's and Check Point Software's marks, the District

Court found no Lanham Act violation. We will affirm.

Plaintiff Checkpoint Systems, Inc. has been

manufacturing and distributing commercial electronic

security control systems since 1967.1 Its devices are

designed to track the physical location of goods and are

sold to retailers to prevent merchandise theft. It is one of

the two dominant manufacturers in the retail security

products market. Since 1967 Checkpoint Systems has used

the "CHECKPOINT" mark, which is registered with the

United States Trademark office.2

_________________________________________________________________

1. Our recitation of the facts will be brief. A more detailed discussion

may be found in the District Court opinion. Checkpoint Sys., Inc. v.

Check Point Software Techs., Inc., 104 F. Supp. 2d 427 (D.N.J. 2000).

2. Over thirty-three years of business, Checkpoint Systems has acquired

several other companies and after each acquisition it has changed the

marks of these companies to Checkpoint Systems.

Checkpoint Systems primarily sells four types of security

monitoring devices: (1) electronic article surveillance

systems; (2) access control systems; (3) closed circuit

television systems; and (4) radio frequency identification

devices. Its principal and most successful products are

electronic article surveillance systems designed to alert

retailers when items are removed from confined areas.

Primarily used to prevent theft of merchandise from stores

and books from libraries, these systems consist of circuited

tags, electronic sensors, and deactivation equipment. The

systems work by placing circuited tags on merchandise

which are deactivated at the time of sale. If the tags are not

deactivated, an alarm sounds. Electronic article

surveillance systems cost between $2000 and $5000, plus

the cost of individual tags. A large retail chain, including

many of Checkpoint Systems's current clients, may spend

over $20 million a year on this technology.

Checkpoint Systems also manufactures electronic access

control systems in the form of security cards that permit

selected personnel to have access to restricted areas.

Checkpoint Systems intends to use these electronic access

control systems to make "smart cards" that will enable log-

on access to computers and will facilitate monitoring of

physical access to restricted areas. This product was in the

development stage when this lawsuit commenced.

Checkpoint Systems also sells closed circuit television

systems that monitor activity within confined areas and

transfer data to remote locations for employee audit and

inventory management security teams. Although these

systems currently transfer data and images over traditional

telephone lines, Checkpoint Systems intends to transfer

this data over customers' computer networks. These closed

circuit products can be integrated with other computer

systems, including other security application programs.

In 1997, Checkpoint Systems began developing radio

frequency identification devices with the view to creating

"intelligent tags" for merchandise to carry information on

"merchandise history." This radio technology would permit

greater information storage than currently available on

traditional bar code technology. These systems cost from

$80,000 to $140,000.

The sale of electronic article surveillance systems to

retail, industrial, institutional and government users

comprises 90% of Checkpoint Systems's business.

Revenues for article surveillance systems amounted to

$365-380 million in 1999; revenues for access control

systems were $15 million. Checkpoint Systems's electronic

article surveillance systems have a 30% market share, but

its systems dominate the drug store segment with a 70%

market share. Its largest competitor is Sensormatic

Electronic Corporation, which has a 45% share of the

overall market.

Checkpoint Systems promotes its products primarily

through its direct sales force, trade shows, direct mailings

to security systems dealers and its internet website. It

spends $8 million annually on advertising and marketing.

The trade shows in which it advertises are targeted to

security professionals and retailers. Checkpoint Systems

concentrates its print advertising in two magazines: Security3

and Today's Facility Manager.

The "CHECKPOINT" trademark is displayed prominently

on all of Checkpoint Systems's products including all

security tags, sensors, computer screens and access control

cards. Checkpoint Systems is a public company whose

stock is traded on the New York Stock Exchange under the

symbol "CKP."

Defendant Check Point Software Technologies, Inc. writes

computer programs that protect and manage access to

information. Check Point Software's principal product is

"firewall" technology. Firewalls are computer systems that

prevent unauthorized internal or external entry into

computer networks. Check Point Software's firewall systems

regulate data by acting as a screen between a business's

private computer networks (intranets) and the wider

Internet. These systems are sophisticated software

_________________________________________________________________

3. Security magazine is marketed to security industry specialists and

contains information about security hardware, security management and

training issues, and information security.

applications that cost $2,999 for a single firewall and

hundreds of thousands of dollars for more complicated

systems. Check Point Software firewall products must be

installed and maintained by computer network information

specialists.

At the time Check Point Software was founded in Israel

in 1993, its founders were unaware of Checkpoint Systems.

They adopted the "Check Point" mark because they believed

their computer firewall technology, which limited access to

data, resembled military check points that prevent access

to restricted areas.

Check Point Software is recognized as a leader in the

firewall market with 40% of the worldwide market share. In

1997, it expanded its product line beyond network security

products to include "network management products." This

software enables customers to design their own computer

network security programs that can be integrated with

Check Point Software programs. Check Point Software also

sells "private networking software" which enables

consumers to encrypt internal data so that outside users in

the wider internet community will be unable to access this

data when transmitted over unsecured public channels.

In its promotional materials, Check Point Software

markets itself as active in the corporate security industry.

Its products are installed as a part of the overall network

design or "architecture" of a business's computer system.

They are not functional software applications that can be

purchased by a consumer and installed at will.

Check Point Software uses "Check Point" as its trade

name. It has used this mark in several manifestations

including, "CHECK POINT," "Checkpoint," and

"CHECKPOINT."

Check Point Software promotes its network security

products through trade shows, direct advertising,

educational seminars, and its web site. The trade shows

and seminars in which it advertises are targeted to the

Internet and computer network markets. These exhibitions

do not include physical security manufacturers or their

products. It also advertises in two widely circulated

computer trade magazines, PC Week and Network World.

Its computer security programs are sold predominately to

institutional and corporate clients. Check Point Software's

principal competitors are computer companies like Cisco

Systems and Network Associates. Check Point Software is a

public company whose stock is traded on the NASDAQ

under the symbol "CHKP."

In early 1996, Checkpoint Systems attempted to register

the internet domain name www.checkpoint.com, but

discovered it was registered by Check Point Software. After

its request to discontinue use was rebuffed, Checkpoint

Systems filed suit alleging trademark infringement and

unfair competition under the Lanham Act. In a non-jury

trial, the District Court held Check Point Software neither

violated the Lanham Act nor infringed Checkpoint

Systems's trademark. Examining likelihood of confusion,

the District Court applied the factors enumerated in

Interpace Corp. v. Lapp, Inc., 721 F.2d 460, 463 (3d Cir.

1983), finding that only one factor--the strong similarity

between the parties' marks--favored plaintiff Checkpoint

Systems. With respect to the other Lapp factors, the court

found the litigants operated in different and non-competing

segments of the broad corporate security industry and that

the level of consumer care in making purchasing decisions

counseled against a finding of likely confusion. After

determining the parties employed different marketing

techniques in different industries, the court found there

was no evidence that the two markets are converging. The

court also found the few instances of misdirected

correspondence and "minor degree of investor confusion"

along with the failure to prove the existence of a single

instance of a mistaken purchasing decision based on mark

confusion weighed heavily against finding a Lanham Act

violation. Additionally, the District Court held there was

insufficient evidence of reverse confusion.4

_________________________________________________________________

4. As we discuss, 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." Fisons Horticulture, Inc. v. Vigro Indus., Inc., 30

F.3d

466, 474 (3d Cir. 1994) (citing Sands, Taylor & Wood Co. v. Quaker Oats

Co., 978 F.2d 947 (7th Cir. 1992)).

In this appeal, Checkpoint Systems contends the District

Court improperly evaluated the Lapp factors in its

likelihood of confusion analysis. In particular, Checkpoint

Systems argues the District Court improperly required

evidence of actual consumer confusion at the point of sale

and disregarded evidence of initial interest and investor

confusion.

II.

The District Court had jurisdiction over plaintiff 's

Lanham Act claims under 28 U.S.C. SS 1331, 1338(a) and

15 U.S.C. S 1051 et seq. We have jurisdiction over the final

judgment of the District Court under 28 U.S.C. S 1291. We

exercise plenary review over the District Court's legal

conclusions concerning the Lanham Act. Express Servs.,

Inc. v. Careers Express Staffing Servs., 176 F.3d 183, 185

(3d Cir. 1999), cert. denied, 531 U.S. 1052 (2000). We

review factual findings on the likelihood of confusion for

clear error. A&H Sportswear Inc. v. Victoria's Secret Stores,

Inc., 237 F.3d 198, 210 (3d Cir. 2000).

III.

Checkpoint Systems alleges Check Point Software

engaged in unfair competition and trademark infringement

in violation SS 32 and 43(a) of the Lanham Act when it

adopted the Checkpoint mark.5 To prove trademark

_________________________________________________________________

5. Section 32 of the Lanham Act, 15 U.S.C. S 1114, provides:

(1) Any person who shall, without consent of the registrant--

(a) use in commerce any reproduction, counterfeit, copy, or

colorable

imitation of a registered mark in connection with the sale,

offering

for sale, distribution, or advertising of any goods or services on

in connection with which such use is likely to cause confusion . .

. .

* * *

shall be liable in a civil action by the registrant . . . .

Section 43(a) of the Lanham Act, 15 U.S.C. S 1125, provides:

(a)(1) Any person who, on or in connection with any goods or

services . . . uses in commerce any word, term, name, symbol, or

infringement and unfair competition under the Lanham

Act, Checkpoint Systems must prove: (1) it owns the

Checkpoint mark; (2) the mark is valid and legally

protectable; and (3) Check Point Software's use of the mark

to identify goods or services is likely to create confusion.

Commerce Nat'l Ins. Servs., Inc. v. Commerce Ins. Agency,

Inc., 214 F.3d 432, 437-38 (3d Cir. 2000). Neither party

disputes the first two elements.6 The issue on appeal is

whether Check Point Software's use of the "CHECKPOINT"

mark is likely to create confusion as to the source of the

parties' products.7 Lapp, 721 F.2d at 462 ("The law of

trademark protects trademark owners in the exclusive use

of their marks when use by another would be likely to

cause confusion."). To prove likelihood of confusion,

plaintiffs must show that "consumers viewing the mark

would probably assume the product or service it represents

_________________________________________________________________

device, or any combination thereof, or any false designation of

origin, false or misleading description of fact, or false or

misleading

representation of fact, which--

(A) is likely to cause confusion, or to cause mistake, or to

deceive as

to the affiliation, connection, or association of such person with

another person, or as to the origin, sponsorship, or approval of

his

or her goods, services, or commercial activities by another person

. . .

* * *

shall be liable in a civil action by any person who believes that

or she is is likely to be damaged by such act.

6. In Commerce Nat'l Ins. Servs., Inc., we held, "[I]f the mark at issue

federally registered and has become incontestable, then validity, legal

protectability and ownership are proved." 214 F.3d at 438 (citing Ford

Motor Co. v. Summit Motor Prods., 930 F.2d 277, 292 (3d Cir. 1991)).

Checkpoint Systems's mark has been registered and continuously used

for five consecutive years and there are no pending proceedings

contesting Checkpoint Systems's ownership of the mark. The

"Checkpoint" mark is therefore valid and incontestable. Fisons, 30 F.3d

at 472 n.7.

7. As we recently held in A&H Sportswear, the relevant inquiry is not

whether consumer confusion is a "possibility," but whether confusion is

"likely." 237 F.3d at 198; see also Opticians Ass'n of Am. v. Indep.

Opticians of Am., 920 F.2d 187, 195 (3d Cir. 1990) ("Proof of actual

confusion is not necessary; likelihood is all that need be shown.").

is associated with the source of a different product or

service identified by a similar mark." Scott Paper Co. v.

Scott's Liquid Gold, Inc., 589 F.2d 1225, 1229 (3d Cir.

1978). In Interpace Corp. v. Lapp, Inc., 721 F.2d 460, 463

(3d Cir. 1983), we set forth the relevant standards on

likelihood of confusion in noncompeting goods cases, 8

commonly known as the Lapp factors:

(1) [The] degree of similarity between the o wner's mark

and the alleged infringing mark;

(2) the strength of the owner's mark;

(3) the price of the goods and other factors indic ative 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;

(5) the intent of the defendant in adopting the ma rk;

(6) the evidence of actual confusion;

(7) whether the goods, though 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 because of the similarity of functions; and

(10) other facts suggesting that the consuming pub lic

might expect the prior owner to manufacture a product

in the defendant's market or that he is likely to expand

into that market.

None of these factors is determinative in the likelihood of

confusion analysis and each factor must be weighed and

_________________________________________________________________

8. The multi-factor test used to determine likelihood of confusion

between noncompeting goods should also be applied in cases involving

directly competing goods. A&H Sportswear, 237 F.3d at 207 ("[W]e

conclude that the factors we have developed in the noncompeting goods

context are helpful tools and should be used to aid in the determination

of the likelihood of confusion in other cases.").

balanced one against the other. Fisons, 30 F.3d at 473

("[N]ot . . all factors must be given equal weight. The weight

given to each factor in the overall picture, as well as the

weighing for plaintiff or defendant, must be done on an

individual fact-specific basis."); see also A&H Sportswear,

237 F.3d at 215 ("[T]he Lapp test is a qualitative inquiry.

Not all factors will be relevant in all cases; further, the

different factors may properly be accorded different weights

depending on the particular factual setting."). We stated,

[W]here the plaintiff and defendant deal in non-

competing goods or services, the court must look

beyond the trademark to the nature of the products

themselves, and to the context in which they are

marketed and sold. The closer the relationship between

the products, and the more similar their sales contexts,

the greater the likelihood of confusion.

Fisons, 30 F.3d at 473.

As noted, the District Court applied the appropriate Lapp

factors to find there was no likelihood of confusion. We will

address the District Court's application of each factor.9

A. Similarity of Marks -- Lapp Factor (1)

Although the degree of similarity between the owner's

mark and the alleged infringing mark is but one factor in

the multi-factor confusion analysis, we have recognized that

when products directly compete, mark similarity"may be

the most important of the ten factors in Lapp ." Fisons, 30

F.3d at 476; see also A&H Sportswear, 237 F.3d at 216

("The single most important factor in determining likelihood

of confusion is mark similarity."). As we held in Versa

Prods. Co. v. Bifold Co. (Mfg.), 50 F.3d 189, 202 (3d Cir.

1995), "unless the allegedly infringing mark . . . is

substantially similar to the protectable mark . . ., it is

highly unlikely that consumers will confuse the product

_________________________________________________________________

9. Our analysis follows a somewhat different sequence than that

employed in Lapp. The sequence specified in Lapp is not necessary to the

likelihood-of-confusion analysis, and we have found that a slightly

different order better facilitates the analysis of the particular issues

presented by this case.

sources represented by the different marks.""[I]f the overall

impression created by marks is essentially the same,`it is

very probable that the marks are confusingly similar.' "

Opticians Assn. of Am., 920 F.2d at 195 (quoting J. Thomas

McCarthy, 2 McCarthy on Trademarks and Unfair

Competition, S 23:7 (2d ed. 1984)). In applying this test,

courts attempt to "move into the mind of the roving

consumer," A&H Sportswear, 237 F.3d at 216, and

determine "whether the labels create the same overall

impression when viewed separately." Fisons , 30 F.3d at

476; see also Banff, Ltd. v. Federated Dep't Stores, Inc., 841

F.2d 486, 492 (2d Cir. 1988). Courts must "compare the

appearance, sound and meaning of the marks," Harlem

Wizards Entm't. Basketball, Inc. v. NBA Props., Inc. , 952 F.

Supp. 1084, 1096 (D.N.J. 1997), to determine whether the

"average consumer, on encountering one mark in isolated

circumstances of marketplace and having only [a] general

recollection of the other, would likely confuse or associate

the two." Fisons, 30 F.3d at 477-78.

Here, the District Court found Check Point Software's

mark was very similar to Checkpoint Systems's mark. The

court noted that "[w]hen the dominant portions of the two

marks are the same and the overall impression created by

the marks is essentially the same `it is very probable that

the marks are confusingly similar.' " Checkpoint Sys., 104

F. Supp. 2d at 457-58 (quoting Opticians Assn. of Am., 920

F.2d at 195). The court found the dominant portion of each

parties' trademark is the word "Checkpoint." Even though

Check Point Software has at times used the mark in

slightly different forms including, "Checkpoint,"

"CheckPoint," or "Check Point," the dominant features of its

mark are still the words "check" and "point." Additionally

because "Systems," "Software," "Technologies," and "Inc.,"

are generic or descriptive terms, the District Court found

their addition to the dominant terms "check" and "point"

would not lead the average consumer to disassociate the

products. J. Thomas McCarthy, 3 McCarthy on Trademarks

and Unfair Competition, S 23:50 (4th ed. 2000) ("The

Trademark Board has said that the general rule is that a

subsequent user may not avoid likely confusion by

appropriating another's entire mark and adding descriptive

or non-descriptive matter to it."). We agree. The District

Court did not clearly err in finding the overall commercial

impression of the parties' marks was confusingly similar.

On appeal, Checkpoint Systems contends the District

Court ignored its finding of mark similarity when it

ultimately determined there was no likelihood of confusion.

But mark similarity is not necessarily determinative of

likely confusion, particularly when the products do not

directly compete. A&H Sportswear, 237 F.3d at 214

("[W]hen the marks directly compete . . . the factor

regarding the similarity of marks may increase in

importance, but it does not eliminate the other factors

entirely."); Fisons, 30 F.3d at 473 ("Where the goods or

services are not competing the similarity of the marks is

only one of a number of factors the court must examine to

determine likelihood of confusion."). Here, the District

Court determined that in weighing all the Lapp factors,

there was not a strong likelihood of confusion. We see no

error.

B. Strength of Mark -- Lapp Factor (2)

Courts have recognized that

[a] strong trademark is . . . one that carries

widespread, immediate recognition that one producer

(even if unknown) is associated with the mark, and so

with the product. If a second comer adopts a mark

substantially identical to a strong mark, there is a

correspondingly high likelihood that consumers will

mistakenly associate the newcomer's product with the

owner of the strong mark.

Versa Prods., 50 F.3d at 203.

The strength of a mark is determined by (1) the

distinctiveness or conceptual strength of the mark and (2)

its commercial strength or marketplace recognition. Fisons,

30 F.3d at 478-79. Under distinctiveness, we look at the

inherent features of the mark. Trademarks protected under

the Lanham Act are divided into four categories:

[1] arbitrary or fanciful marks [that] use terms that

neither describe nor suggest anything about the

product; they "bear no logical or suggestive relation to

the actual characteristics of the goods." [2] Suggestive

marks [that] require consumer "imagination, thought

or perception" to determine what the product is.[3]

Descriptive terms [that] "forthwith convey[ ] an

immediate idea of the ingredients, qualities or

characteristics of the goods" [and] [4] generic marks

. . . that "function as the common descriptive name of

a product class."

A&H Sportswear, 237 F.3d at 221-22(quoting A.J. Canfield

Co. v. Honickman, 808 F.2d 291, 296-97 (3d Cir. 1986)).

In Ford Motor Co., we further explained the categorization

of marks stating,

Arbitrary marks are "those words, symbols, pictures,

etc., which are in common linguistic use but which,

when used with the goods or services in issue, neither

suggest nor describe any ingredient, quality or

characteristic of those goods or services." . . .

Suggestive marks are virtually indistinguishable from

arbitrary marks, but have been defined as marks

which suggest a quality or ingredient of goods . . .. A

mark is considered descriptive if it describes the

"intended purpose, function, or use of the goods; of the

size of the goods, of the class of users of the goods, or

of the end effect upon the user."

930 F.2d at 292 n.18 (quoting 1 McCarthy, Trademarks

and Unfair Competition at S11:3-5, 20).

While generic marks do not receive trademark protection,

arbitrary, suggestive and descriptive marks with a

demonstrated secondary meaning10 are entitled to

_________________________________________________________________

10. But marks that are merely descriptive (without a secondary meaning)

are generally weak and not entitled to strong protection. A mark is

descriptive with a secondary meaning when the mark

"is interpreted by the consuming public to be not only an

identification of the product or services, but also a

representation of

the origin of those products of services." In general [a secondary

meaning] is established through extensive advertising which creates

in the minds of consumers an association between the mark and the

provider of the services advertised under the mark.

trademark protection.11

The District Court found Checkpoint Systems's mark was

either suggestive or descriptive with a secondary meaning

within the electronic article surveillance market. We see no

error. The mark is suggestive to the extent it requires

consumer imagination to determine that Checkpoint

Systems's security products serve as "check points" to

prevent unauthorized access and theft of merchandise. But

the mark is descriptive insofar as its products serve as

checkpoints. That is, they occupy a point at which

customers are checked for stolen merchandise or people are

_________________________________________________________________

Commerce Nat'l Ins. Serv. Inc., 214 F.3d at 438 (quoting Scott Paper Co.,

589 F.2d at 1228); see also Ford Motor Co., 930 F.2d at 292 (listing a

"non-exclusive list of factors which may be considered [in determining

whether a mark has achieved a secondary meaning,] includ[ing] the

extent of sales and advertising leading to buyer association, length of

use, exclusivity of use, the fact of copying, customer surveys, customer

testimony, the use of the mark in trade journals, the size of the

company, the number of sales, the number of customers, and actual

confusion."); Charles Jacquin Et Cie, Inc. v. Destileria Serralles, Inc.,

921

F.2d 467, 476 (3d Cir. 1990) ("While consumer surveys are useful, and

indeed the most direct method of demonstrating secondary meaning and

likelihood of confusion, they are not essential where, as here, other

evidence exists.").

11. In A&H Sportswear, we recently held,

Although the conceptual strength of a mark is often associated with

the particular category of "distinctiveness" into which a mark

falls

(i.e., arbitrary, suggestive, or descriptive), that is not the only

measure of conceptual strength. This is because the classification

system's primary purpose is to determine whether the mark is

protectable as a trademark in the first place--that is, to

determine

whether consumers are likely to perceive the mark as a signifier of

origin, rather than as a mere identification of the type of

product.

The classification of a mark as arbitrary, suggestive, or

descriptive

is [also] . . . used to determine the degree of protection a mark

should receive once protectability has been established. These two

inquiries--whether a mark is, in fact, a trademark, versus how

much protection the mark should receive--are often identical, but

they do not have to be.

237 F.3d at 222.

checked for authorization to access restricted areas. In

either event, the mark has achieved a strong secondary

meaning in the physical article security market. Checkpoint

Systems has spent millions of dollars in advertising its

physical article security systems and the mark has

achieved high recognition among consumers in this market.

The District Court was therefore correct in stating,

"Checkpoint [Systems] has used its name and mark in

connection with its electronic article surveillance products

for more than thirty years continuously, extensively, and in

a substantially exclusive manner, and that long use

renders the mark strong within the physical surveillance

field." Checkpoint Sys., 104 F. Supp. 2d at 458.

The mark has not, however, attained a strong secondary

meaning in other segments of the corporate security

market, particularly in the information technology market.

There is no evidence that Checkpoint Systems spent a

substantial amount of resources in advertising in this

market, nor is there any evidence that Checkpoint Systems

has achieved mark recognition in this segment of the

industry.12 Because Checkpoint Systems's descriptive mark

has not attained a secondary meaning within the

information technology market, it is not conceptually strong

within this sector of the corporate security market. The

District Court found that Checkpoint Systems's mark"may

be strong, but that strength does not appear to extend

beyond its own subfield of physical security with respect to

electronic article surveillance." 104 F. Supp. 2d at 460.

This finding is adequately supported in the record.

Although Checkpoint Systems manufactured other

products aside from physical article surveillance systems,

the court found these products constituted a very small

portion of its business. Its mark was not readily

recognizable by consumers outside the electronic article

surveillance market and there is "no evidence that any

witness from the information security field had ever heard

of [Checkpoint Systems]." Id.

_________________________________________________________________

12. As the District Court noted, Checkpoint Systems "did not present

any evidence of a customer survey indicating [its] marks' strength, and

thus there is no direct evidence probative of customer views." 104 F.

Supp. 2d at 460. `

Plaintiffs claim the District Court erred in its commercial

strength analysis because it undervalued the overwhelming

strength of the Checkpoint Systems mark in the article

surveillance market. But the District Court held, properly

in our view, that courts must look at the strength of the

mark in the industry in which infringement is alleged. See,

e.g., Homeowners Group, Inc., 931 F.2d at 1107-08 ("[A

mark] may . . . have high recognition which is limited to a

particular product or market segment."); Mead Data Cent.,

Inc. v. Toyota Motor Sales, U.S.A., Inc., 875 F.2d 1026, 1031

(2d Cir. 1989) (luxury car maker could not demonstrate

that its powerful mark extended to the completely unrelated

market of legal research tools); IDV N. Am., Inc. v. S&M

Brands, Inc., 26 F. Supp. 2d 815, 824 (E.D.Va. 1998) ("A

mark may be strong in the market in which it is used but

weak in another market in which it is not used."). Here, the

alleged infringement extends beyond the physical article

security field into other, broader segments of the security

industry, including computer security. The District Court

did not clearly err in finding that Checkpoint Systems's

mark's strength was limited to the physical article security

market. Because the mark was not strong in the network

access security market, it was not entitled to heightened

protection within that market.

C. Factors Indicative of the Care and Sophistication of

Purchasers -- Lapp Factor (3)

When consumers exercise heightened care in evaluating

the relevant products before making purchasing decisions,

courts have found there is not a strong likelihood of

confusion. Where the relevant products are expensive, or

the buyer class consists of sophisticated or professional

purchasers, courts have generally not found Lanham Act

violations. Versa Prods., 50 F.3d at 204 ("Inexpensive goods

require consumers to exercise less care in their selection

than expensive ones. The more important the use of the

product, the more care that must be exercised in its

selection."). As a leading treatise notes,

Obviously, the price level of the goods or services is an

important factor in determining the amount of care the

reasonably prudent buyer will use. If the goods or

services are relatively expensive, more care is taken

and buyers are less likely to be confused as to source

or affiliation.

3 McCarthy on Trademarks, S 23:95; see also Astra Pharm.

Prods., Inc. v. Beckman Instruments, Inc., 718 F.2d 1201,

1206-07 (1st Cir. 1983) (expensive health care equipment

elevated concern of purchasers). Similarly,

[w]here the relevant buyer class is composed solely of

professional, or commercial purchasers, it is

reasonable to set a higher standard of care than exists

for consumers. Many cases state that where the

relevant buyer class is composed of professionals or

commercial buyers familiar with the field, they are

sophisticated enough not to be confused by trademarks

that are closely similar. That is, it is assumed that

such professional buyers are less likely to be confused

than the ordinary consumer.

3 McCarthy on Trademarks, S 23:101; see also Ford Motor

Co., 930 F.2d at 293 ("Professional buyers, or consumers of

very expensive goods, will be held to a higher standard of

care."); Perini Corp. v. Perini Constr., Inc. , 915 F.2d 121, 128

(4th Cir. 1990) ("[I]n a market with extremely sophisticated

buyers, the likelihood of consumer confusion cannot be

presumed on the basis of the similarity in trade name

alone."); Oreck Corp. v. U.S. Floor Sys., Inc., 803 F.2d 166,

173-74 (5th Cir. 1986) (business purchasers of expensive

products not likely to confuse goods with similar marks).

When the purchasing class is mixed, courts normally do

not hold the general class to a high standard of care. Ford

Motor Co., 930 F.2d at 293 ("When the buyer class is

mixed, the standard of care to be exercised by the

reasonably prudent purchaser will be equal to that of the

least sophisticated consumer in the class."). If there is

evidence that both average consumers and specialized

commercial purchasers buy goods, there is a lower

standard of care because of the lack of sophistication of

some of the relevant purchasers. Id. ("Where the buyer

class `consists of both professional buyers and consumers

then the issue will center on the consumers, for confusion

within the lowest stratum of reasonably prudent buyers

may give rise to liability even if professional buyers in the

market are not confused.' ") (quoting Worthington Foods,

Inc. v. Kellogg Co., 732 F. Supp. 1417, 1488 (S.D. Ohio

1990)).

Evaluating the care and sophistication exercised by

consumers of Checkpoint Systems's and Check Point

Software's products, the District Court found,

[B]oth plaintiff 's products and defendant's products

are expensive. The purchasers of these respective

products are, for the most part, highly sophisticated,

and the sale process is lengthy . . . . Plaintiff 's and

defendant's products are not impulse purchases, but

rather are subject to long sales efforts and careful

customer decision making.

Checkpoint Sys., 104 F. Supp. 2d at 460.

We agree. The consumers of Checkpoint Systems's and

Check Point Software's products place great importance on,

and take great care in, purchasing these products.

Checkpoint Systems's consumers exercise a heightened

standard of care in their purchasing decisions because they

need to ensure the article surveillance equipment can be

quickly and easily repaired and is readily available for new

merchandise. Similarly, purchasers of Check Point

Software's firewall technology are highly technical computer

and information specialists that must ensure the software

is compatible with other programs.13 Because the security

provided is integral to loss prevention in the one case, and

confidentiality of communications in the other, the

products here are essential to the customers' business

needs. Because of the respective products' importance to

their buyers' security needs and their high cost, consumers

take care in making purchasing decisions and are not likely

to be confused by the parties' similar marks.

Checkpoint Systems contends that not all the relevant

consumers are sophisticated purchasers and that many

_________________________________________________________________

13. Although in its marketing materials Check Point Software states that

its firewall technology is "designed to be easily installed, configured,

and

managed," maintaining this equipment requires specialized expertise

beyond the knowledge of mere technically proficient computer users.

"mom and pop stores," which exercise a lower standard of

care, purchase both parties' products. The District Court

acknowledged these smaller commercial purchasers were

part of the relevant consumer class and adjusted its

evaluation of consumer sophistication accordingly. Because

the systems are expensive and require on-going

maintenance, the court found these smaller commercial

consumers view the purchase of both parties' products as

an important investment decision. The court also noted

that many small businesses turn to outside experts to

assist in the purchase of complicated computer and article

surveillance systems. Additionally, only computer

specialists with significant training can install and make

informed purchasing decisions about Check Point

Software's complicated firewall technology. Furthermore,

expert witnesses testified that smaller "mom and pop

stores" would likely not have need for the complicated

security software manufactured by Check Point Software.

The District Court properly evaluated the care exercised

by consumers of these products in making purchasing

decisions. The evidence supports the finding that the

purchase of both parties' products involve a significant

investment and even smaller commercial consumers

exercise a heightened degree of care in evaluating the

products and making purchasing decisions. We see no clear

error.

D. Intent of the Defendant in Adopting the Mark--

Lapp Factor (5)

While evidence of a party's intentional use of another

party's mark to cause confusion is not a prerequisite to

proving a Lanham Act violation, see generally Lois

Sportswear, U.S.A., Inc. v. Levi Strauss & Co., 799 F.2d

867, 875 (2d Cir. 1986), courts have recognized that

evidence of "intentional, willful and admitted adoption of a

mark closely similar to the existing marks" weighs strongly

in favor of finding the likelihood of confusion. National

Football League Props., Inc. v. New Jersey Giants, Inc., 637

F. Supp. 507, 518 (D.N.J. 1986). Here, the District Court

found, "[t]here is no evidence or even inference that

defendant chose its name with plaintiff 's name or products

in mind." Checkpoint Sys., 104 F. Supp. 2d at 465. We

agree.

E. Relationship of goods in the minds of consumers

because of the similarity of product functions --

Lapp Factor (7)

Under this prong, courts examine whether buyers and

users of each parties' goods are likely to encounter the

goods of the other, creating an assumption of common

source affiliation or sponsorship. Fisons, 30 F.3d at 481

("The question is whether the consumer might . . .

reasonably conclude that one company would offer both of

these related products."). The test is whether the goods are

similar enough that a customer would assume they were

offered by the same source. Wynn Oil Co. v. Thomas, 839

F.2d 1183, 1187 (6th Cir. 1988).

Checkpoint Systems contends that both parties operate

in the overlapping business of corporate security. While

each serves a different branch of this broad industry (i.e.,

Checkpoint Systems primarily focuses on physical security

while Check Point Software focuses on information and

computer security), each is a smaller piece in the overall

corporate security industry. Checkpoint Systems contends

that in the increasingly technical and sophisticated

business world, a reasonable business consumer might

believe that Checkpoint Systems, who had developed a

niche in physical article security, had expanded into the

computer technology market. See Dreamwerks Prod. Group,

Inc. v. SKG Studio, 142 F.3d 1127, 1131 (9th Cir. 1998)

("[R]elatedness of each company's prime directive isn't

relevant. Rather, we must focus on [plaintiff 's] customers

and ask whether they are likely to associate the[plaintiff 's

products] with [the defendant]."). Checkpoint Systems

argues the increasing awareness among security

professionals of both physical and computer information

security systems has led professionals to be cognizant of

both companies' products.

Checkpoint Systems also contends it has developed

integrated circuit technology in its radio frequency and

closed circuit television products that allow consumers to

link Checkpoint Systems hardware with their computer

systems. It argues these physical security products employ

secure information lines similar to the firewall products

that Check Point Software manufactures.14 On the basis of

these products, it contends its physical security products

overlap with computer and information security products

making consumers likely to associate Checkpoint Systems's

mark with Check Point Software's mark.15

But the District Court found the parties

operate in separate and distinct segments of the overall

field of corporate security. Plaintiff 's sphere includes

physical security and control of flow of corporate goods

and people . . . . Defendant's sphere includes electronic

information security on computer networks at the point

of connection to the Internet and within the customer's

intranet. Their products are not substitutes for each

other. . . . [Their products] are advertised in different

magazines and are promoted in entirely different trade

shows.

Checkpoint Sys., 104 F. Supp. 2d at 466. The court

continued,

_________________________________________________________________

14. Checkpoint Systems contends its business has expanded beyond

article surveillance into "electronic access control" products that help

limit access to physical areas where computer software is located. It also

points to its smart card technology that links computer networking to

physical security.

15. Checkpoint Systems also argues that Check Point Software's firewall

systems can be linked with other security systems, including some of the

article surveillance products that Checkpoint Systems manufactures. It

contends this integration technology is evidence that the computer

software industry is moving into the area of physical security by allowing

integration with physical security products. But the mere fact that

software technology can be integrated with other technology, including

but not limited to physical security technology, is not necessarily proof

that the manufacturer of software technology is moving into broader

security realms. By developing technology that can be integrated with

other products, Check Point Software allows consumers to choose among

various "speciality" programs that it wants to include in its system. It

does not necessarily mean that Check Point Software has itself moved

into the market of these "speciality" security programs.

That there is no overlap in the places these parties

market their products tends to diminish the chance

that someone who is a specialist in network security

will even come across an advertisement for plaintiff,

and vice versa.

Id.

The District Court did not clearly err. The "relatedness"

analysis is intensely factual. Goods may fall under the

same general product category but operate in distinct

niches. When two products are part of distinct sectors of a

broad product category, they can be sufficiently unrelated

that consumers are not likely to assume the products

originate from the same mark. See, e.g., Commerce Nat'l

Ins. Servs., Inc., 214 F.3d at 441 (holding marks held by

company operating in banking industry and company

operating in insurance industry did not create consumer

confusion because the two companies were involved in

distinct highly regulated industries); Astra Pharm. Prods.,

718 F.2d at 1207 (finding no product similarity in medical

technology sold to different departments in hospital

because " `the hospital community' is not a homogeneous

whole, but is composed of separate departments with

diverse purchasing requirements, which, in effect,

constitute different markets for the parties' respective

products."); Harlem Wizards, 952 F. Supp. at 1095 (finding

no product similarity between professional competitive

basketball team and "show basketball" team). 16

The District Court held that Checkpoint Systems's

products are simply different from Check Point Software's

products. While Checkpoint Systems's access control,

closed circuit television and radio frequency products may

employ similar technology, their purpose is physical article

_________________________________________________________________

16. Products sold and marketed in the computer and information

technology industry can be sufficiently distinct that they do not lead to

likely consumer confusion. See, e.g., Hasbro, Inc. v. Clue Computing,

Inc.,

232 F.3d 1 (1st Cir. 2000) (per curiam) (computer game and computer

consulting service not similar); but see Lambda Elecs. Corp. v. Lambda

Tech., Inc., 515 F. Supp. 915, 926 (S.D.N.Y. 1981) (finding "moderate

product proximity" between computer software and computer hardware

because both products are "intended to function in computers").

surveillance or personal access. On the other hand, Check

Point Software's firewall technology is not intended to

prevent theft of merchandise or limit physical access. Its

purpose is to prevent third parties from accessing

information from unsecure computer lines. Because the

products serve different functions, and there is only

"minimal overlap" in the product technology, it is unlikely

consumers would be confused by the similar marks. 17

Fisons, 30 F.3d at 481. The District Court did not clearly

err in its application of the product similarity prong of the

confusion analysis. See, e.g., Nutri/System, Inc. v. Con-Stan

Indus., 809 F.2d 601, 606 (9th Cir. 1987) (weight loss

centers and weight loss counseling differed in methods,

customer groups and facilities); Plus Prods. v. Plus Disc.

Foods, Inc., 722 F.2d 999, 1008 (2d Cir. 1983) (bargain food

and health food were not so similar as to create likelihood

of confusion).

F. The extent to which the parties' goods are

marketed through the same channels of trade -- Lapp

Factor (9)

Courts have recognized that "the greater the similarity in

advertising and marketing campaigns, the greater the

likelihood of confusion." Acxiom Corp. v. Axiom, Inc., 27 F.

Supp. 2d 478, 502 (D. Del. 1998). Applying this factor,

courts must examine the trade exhibitions, publications

and other media the parties use in marketing their

products as well as the manner in which the parties use

their sales forces to sell their products to consumers. This

is a fact intensive inquiry. Id.

_________________________________________________________________

17. Simply because large corporations may purchase both Checkpoint

Systems's physical article security systems and Check Point Software's

computer security products does not necessarily prove that the same

security professionals within these corporations have knowledge of these

different technologies and are responsible for purchasing them. Electronic

Design & Sales, Inc. v. Electronic Data Sys. Corp. , 954 F.2d 713, 717-18

(Fed. Cir. 1992) (overlap must exist among individual purchasers).

Here, there is no evidence that a single security expert has sufficient

knowledge in both the physical security and information security realms

that he purchases both of these products for his corporation.

Here, the District Court found the parties "products are

advertised in different magazines and are promoted in

entirely different trade shows." Checkpoint Sys., 104 F.

Supp. 2d at 466. Checkpoint Systems advertises in trade

shows and trade publications that are marketed to physical

and retail security specialists.18 Check Point Software

advertises in publications and at trade shows that are

marketed to computer information specialists. As the

District Court found,

There is no evidence that plaintiff 's products and

defendant's products were offered at the same time in

any magazine, trade show, or distribution network. .. .

That there is no overlap in the places these parties

market their products tends to diminish the chance

that someone who is a specialist in network security

will even come across an advertisement for plaintiff,

and vice versa.

Id.

Additionally, Check Point Software's products are only

sold to consumers through its "specialized value added

resellers." These "resellers" do not sell physical article

security systems. On the other hand, consumers can

purchase Checkpoint Systems's physical security products

from its direct mailings and product catalogues or through

its direct sales force. For these reasons, the District Court

concluded, "[T]he parties do not market their products

through the same trade channels or markets, and . . . their

target customers generally belong to distinctly different

groups." Id. at 467. We see no clear error.

G. The extent to which targets of the parties' sales

efforts are the same -- Lapp Factor (8)

We have recognized that when parties target their sales

efforts to the same consumers, there is a stronger

_________________________________________________________________

18. While Checkpoint Systems also advertises in security magazines that

sometimes contain advertisements about computer information security

(i.e., Security magazine), these magazines are predominantly marketed to

physical security professionals, and not to information technology

specialists.

likelihood of confusion. Lapp, 721 F.2d at 463-64. This

analysis too is intensely factual.

The District Court found the parties market their

products to different users. Checkpoint Systems markets

its products to physical security consumers. Check Point

Software markets its products to MIS professionals. Even

though many companies often purchase both types of

products, most rely on information specialists to make

purchasing decisions about network security systems,

especially since Check Point Software's firewall systems

must be installed as part of the overall architecture of a

business's total computer system. But information

specialists are not essential to make purchasing decisions

about physical article security systems.

On the basis of this finding, the court concluded there is

not a strong likelihood that users and consumers of the

parties' products were likely to come across advertisements

about the other party's products. The court stated,"That

there is no overlap in the places these parties market their

products tends to diminish the chance that someone who is

a specialist in network security will even come across an

advertisement for plaintiff, and vice versa." Checkpoint Sys.,

104 F. Supp. 2d at 466. The court did not clearly err in its

determination.

H. Evidence of Converging markets -- Lapp Factor (10)

We have held that evidence that the markets in which the

parties sell their goods are converging is "pivotal in non-

competing products cases." Lapp, 721 F.2d at 463. "One of

the chief reasons for granting a trademark owner protection

in a market not his own is to protect his right someday to

enter that market. When it appears extremely likely . . .

that the trademark owner will soon enter the defendant's

field, this . . . factor weighs heavily in favor of injunctive

relief." Id. (internal citation omitted). Under this factor we

look not only to evidence that a plaintiff has actually moved

into the defendant's market, but also to "other facts

suggesting that the consuming public might expect the

prior owner to manufacture a product in the defendant's

market, or that it is likely to expand into that market." Id.

at 463. Evaluating this factor, courts look to evidence that

other companies sell products in both markets, as well as

evidence that the products at issue are so closely related

that the consuming public might find it natural for one

company to do so. Here, the District Court found the

physical article security market in which Checkpoint

Systems sold its products was not converging with the

computer information security market in which Check Point

Software sold its firewall products. Nor would consumers

expect that Checkpoint Systems would naturally expand

into the network information security market. The court

stated, "[T]he weight of the evidence indicates that, if

anything, the fields are diverging as network security

becomes more and more specialized, and the

interrelatedness of Internet and intranets becomes more

complex." Checkpoint Sys., 104 F. Supp. 2d at 452. The

court noted that some of Checkpoint Systems's competitors

in the physical article security field had attempted to move

into the information security field. But these competitors

had been largely unsuccessful in expanding into this field

thereby

undermin[ing] . . . the idea that network security may

be within the zone of natural expansion for companies

that once had their focus on physical security . . ..

Network security . . . is a highly specialized field

dominated by companies such as [Check Point

Software] which are experts in the intricacies of

electronic networks and the techniques of electronic

intrusion. Nothing in the record indicates that plaintiff

had the requisite expertise or the interest in achieving

entry into [Check Point Software's] field.

Id. at 467 n.17.

Checkpoint Systems disputes this finding contending

that modern security specialists look to purchase network

security systems that work hand in hand with physical

security systems. It argues these specialists recognize that

computer security products are worthless if not physically

secure. Consumers, they claim, are likely to assume that a

company that sells products in the physical security

market is likely to expand into the network security market

to provide businesses with complete security packages. But

the District Court found that the increasingly complex

market for network security systems requires expertise to

understand evolving technology. Because of the highly

specialized and technical nature of network security

systems, consumers would not likely assume that a

company that has operated for over 30 years in the distinct

physical security market would have the expertise to move

into the complicated network security market. Indeed

Checkpoint Systems's own security expert witness testified

that he would turn to a network security professional to

assist in the purchase of this type of equipment because

the knowledge required to make an informed purchasing

decision was highly technical and specialized. Thus,

although consumers may require security products from

both the physical security market and the information

security market, it is reasonable to assume they would turn

to different companies to purchase these products.

Additionally, there is little evidence that either party

currently operates in both the physical security and

network security markets. On appeal, Checkpoint Systems

points to several of its products, including its physical

access control systems, its "smart card" technology, its

radio frequency identification devices, and its closed circuit

television systems as examples of products that operate in

both the physical security and network information security

markets. It contends these products employ similar secure

network lines to Check Point Software's network security

technology in order to provide physical article security. But

even though its products employ some overlapping

computer technology, Checkpoint Systems's products are

intended to provide physical article and access security and

are sold to consumers looking to purchase physical security

products. Check Point Software's products are sold to

consumers looking to purchase network information

security products. The District Court's finding is supported

by the evidence. We see no clear error.

I. Evidence of actual confusion and the length of time

the defendant has used the mark without evidence of

actual confusion -- Lapp Factors (4),(6)

Evidence of actual confusion is not required to prove

likelihood of confusion. Versa Prods., 50 F.3d at 205;

Fisons, 30 F.3d at 476 ("[W]hile evidence of actual

confusion would strengthen plaintiff 's case, it is not

essential."). We have recognized that it is difficult to find

evidence of actual confusion because many instances are

unreported. For this reason, evidence of actual confusion

may be highly probative of the likelihood of confusion.

Frisch's Rests., Inc. v. Elby's Big Boy of Steubenville, Inc.,

670 F.2d 642, 648 n.5 (6th Cir. 1982); see also Tisch

Hotels, Inc. v. Americana Inn, Inc., 350 F.2d 609, 612 (7th

Cir. 1965) ("[S]ince reliable evidence of actual confusion is

difficult to obtain in trademark and unfair competition

cases, any such evidence is substantial evidence of

likelihood of confusion."). "If a defendant's product has

been sold for an appreciable period of time without evidence

of actual confusion, one can infer that continued marketing

will not lead to consumer confusion in the future. The

longer the challenged product has been in use, the stronger

this inference will be." Versa Prods., 50 F.3d at 205.

Here the District Court found, "Though there is some

evidence in the record of temporary initial confusion

between the companies, by experts, the media, investors

and consumers, there is no evidence of actual customer

confusion in connection with the purchase of defendant's

products." Checkpoint Sys., 104 F. Supp. 2d at 447. The

court continued stating,

[N]o customer or potential customer for defendant's

products has believed, to any meaningful degree, that

the products originated with the plaintiff. Conversely,

of the few customers of plaintiff, or other persons in

the media, who momentarily thought plaintiff might

have entered the firewall business, not one took any

meaningful action while under that mistaken belief.

Id. at 450. The court concluded,

Here, there is some evidence of initial confusion by the

media and investors when defendant first gained

success in the stock market, but that confusion has

dissipated, rather than grown, over the years, such

that there appears to have been none in the last few

years. Moreover, the significance of such initial

confusion by the media and investors, like initial

confusion by consumers, lies only in assessing whether

it supports the conclusion that confusion in consumer

purchasing decision is likely.

Id. at 464.19

On appeal Checkpoint Systems argues the District Court

erred because it limited its actual confusion inquiry to

evaluating evidence of consumer confusion at the point of

sale rather than according weight to evidence of investor

confusion and other initial interest confusion. It contends

the Lanham Act affords protection against other types of

confusion, including initial interest confusion, investor

confusion and post-sale confusion.

Several courts of appeals have found initial interest

confusion and post-sale confusion actionable under the

Lanham Act. We agree and hold initial interest confusion is

actionable under the Lanham Act. We also hold the District

Court properly evaluated the evidence of initial interest

confusion and did not clearly err in finding this evidence

did not weigh heavily in favor of finding likely confusion.

We first turn to a discussion of the relevance of initial

interest to Lanham Act claims.

A leading treatise on trademark infringement states:

[Trademark infringement] can be based upon confusion

that creates initial customer interest, even though no

actual sale is finally completed as a result of the

confusion.

* * *

[For example,] the likelihood that a potential purchaser

of a specialized computer program may be drawn to the

junior user, thinking it was the senior user, is

actionable "confusion" even if over the course of several

_________________________________________________________________

19. The court also stated that "plaintiff has not demonstrated that the

incidents of temporary confusion or other confusion in spheres unrelated

to purchasing activity is a harbinger of likelihood of confusion in

purchasing decisions." Checkpoint Sys., 104 F. Supp. 2d at 462.

months of the purchasing decision-making process, the

buyer's confusion is dissipated. Such a senior user

who is the opposer may suffer injury if a potential

purchaser is initially confused between the parties'

respective marks in that the opposer may be precluded

from further consideration by a potential purchaser in

reaching his or her buying decision.

3 McCarthy on Trademarks and Unfair Competition,S 23:6

(internal quotations and footnotes omitted). Several courts

of appeals, including the Second, Seventh, and Ninth

Circuits have found initial interest confusion actionable

under the Lanham Act. In Mobil Oil Corp. v. Pegasus

Petroleum Corp., 818 F.2d 254 (2d Cir. 1987), the United

States Court of Appeals for the Second Circuit found

actionable initial interest confusion when it enjoined the

defendant from using the trade name Pegasus because the

name was confusingly similar to the plaintiff 's"flying

horse" mark. The court noted that in the oil industry,

companies often attract potential consumers by making

"cold calls" to determine interest in purchasing products.

The court also noted that on the basis of the similar name

and mark, it was likely that "Pegasus Petroleum would gain

crucial credibility during the initial phases of a deal. For

example, an oil trader might listen to a cold phone call from

Pegasus Petroleum . . . when otherwise he might not,

because of the possibility that Pegasus Petroleum is related

to Mobil." Id. at 259. Because the similar marks could

ultimately affect a consumer's consideration of the

defendant's product as well as affect the plaintiff 's goodwill

with its customers, the court found actionable confusion

under the Lanham Act. Id. at 260 ("[P]otential purchasers

would be misled into an initial interest in Pegasus

Petroleum. Such initial confusion works a sufficient

trademark injury."); see also Lois Sportswear , 799 F.2d at

867; Grotrian, Helfferich, Schulz, Th. Steinweg Nachf v.

Steinway and Sons, 365 F. Supp. 707, 717 (S.D.N.Y. 1973)

("Misled into an initial interest, a potential Steinway buyer

may satisfy himself that the less expensive Grotrian-

Steinweg is at least as good, if not better, than a Steinway.

Deception and confusion thus work to appropriate

[Steinway's] good will."), aff 'd , 523 F.2d 1331 (2d Cir.

1975).

Similarly in Brookfield Communications, Inc. v. West

Coast Entertainment Corp., 174 F.3d 1036, 1057 (9th Cir.

1999), the United States Courts of Appeals for the Ninth

Circuit recognized that initial interest confusion is

actionable under the Lanham Act. In Brookfield

Communications, plaintiffs alleged that defendant West

Coast Entertainment's use of the web site

www.moviebuff.com infringed on its "MovieBuff " mark.

Brookfield used the "MovieBuff " mark on computer

software that it sold to industry professionals. This software

contained a searchable database of entertainment related

data, including information about film release schedules,

box office receipts, films in development and other

entertainment news. West Coast's "moviebuff.com" website

was a free searchable entertainment database that assisted

its consumers in making educated decisions about the

rental and purchase of movies. The website also sold movie

and other entertainment accessories. The court found

actionable confusion under the Lanham Act reasoning:

People surfing the Web for information on "MovieBuff "

may confuse "MovieBuff " with the searchable

entertainment database at "moviebuff.com" and simply

assume that they have reached Brookfield's website.

. . . Alternatively, they may incorrectly believe that

West Coast licensed "MovieBuff " from Brookfield . . . or

that Brookfield otherwise sponsored West Coast's

database. Other consumers may simply believe that

West Coast bought out Brookfield or that they are

related companies.

Yet other forms of confusion are likely to ensue.

Consumers may wrongly assume that the "MovieBuff "

database they were searching for is no longer offered,

having been replaced by West Coast's entertainment

database, and thus simply use the services at West

Coast's web ste. And even where people realize,

immediately upon accessing "moviebuff.com," that they

have reached a site operated by West Coast and wholly

unrelated to Brookfield, West Coast will still have

gained a customer by appropriating the goodwill that

Brookfield has developed in its "MovieBuff " mark. A

consumer who was originally looking for Brookfield's

products or services may be perfectly content with

West Coast's database (especially as it is offered free of

charge); but he reached West Coast's site because of its

use of Brookfield's mark as its second-level domain

name, which is a misappropriation of Brookfield's

goodwill by West.

Id. at 1057 (internal citations omitted); see also Interstellar

Starship Servs., Ltd. v. Epix Inc., 184 F.3d 1107, 1110 (9th

Cir. 1999) ("We recognize a brand of confusion called `initial

interest' confusion, which permits a finding of a likelihood

of confusion although the consumer quickly becomes aware

of the source's actual identity and no purchase is made as

a result of the confusion."), cert. denied , 528 U.S. 1155

(2000); but see Bryce J. Maynard, Note, The Initial Interest

Confusion Doctrine and Trademark Infringement on the

Internet, 57 Wash & Lee L. Rev. 1303 (urging caution in

finding actionable initial interest confusion on the Internet).

In Elvis Presley Enters., Inc. v. Capece, 141 F.3d 188 (5th

Cir. 1998), the United States Court of Appeals for the Fifth

Circuit also recognized initial interest confusion. The court

there found the plaintiff assignees of the rights of the estate

of Elvis Presley were entitled to injunctive relief against the

defendant bar owner's use of the name "The Velvet Elvis"

because it was likely to create confusion. In finding initial

interest confusion the court reasoned,

The witnesses all testified that, upon entering and

looking around the [defendants'] bar, they had no

doubt that [plaintiff was] not affiliated with it in any

way. Despite the confusion being dissipated, this

initial-interest confusion is beneficial to the Defendants

because it brings patrons in the door; indeed, it

brought at least one of the [plaintiff 's] witnesses into

the bar. Once in the door, the confusion has succeeded

because some of the patrons may stay, despite

realizing that the bar has no relationship with

[plaintiff]. This initial-interest confusion is even more

significant because the Defendants' bar sometimes

charges a cover charge for entry, which allows the

Defendants to benefit from initial-interest confusion

before it can be dissipated by entry into the bar.

Id. at 204.

The United States Court of Appeals for the Seventh

Circuit has equated initial interest confusion to a"bait and

switch scheme." In Dorr-Oliver, Inc. v. Fluid-Quip, Inc., 94

F.3d 376, 382 (7th Cir. 1996), the court stated,

[T]he Lanham Act forbids a competitor from luring

potential customers away from a producer by initially

passing off its goods as those of the producer's, even if

confusion as to the source of the goods is dispelled by

the time any sales are consummated. This "bait and

switch" of producers, also known as "initial interest"

confusion, will affect the buying decisions of

consumers in the market for the goods, effectively

allowing the competitor to get its foot in the door by

confusing consumers.

Id. (internal citation omitted); see also Eli Lilly & Co. v.

Natural Answers, Inc., 233 F.3d 456, 464 (7th Cir. 2000)

("[Initial interest] confusion, which is actionable under the

Lanham Act, occurs when a consumer is lured to a product

by its similarity to a known mark, even though the

consumer realizes the true identity and origin of the

product before consummating a purchase.").

We join these circuits in holding that initial interest

confusion is probative of a Lanham Act violation. 20 Without

initial interest protection, an infringer could use an

established mark to create confusion as to a product's

source thereby receiving a "free ride on the goodwill" of the

established mark. Mobil Oil Corp., 818 F.2d at 260

(likelihood that "potential purchasers would be misled into

an initial interest" justifies finding of infringement).

Confining actionable confusion under the Lanham Act to

confusion present at the time of purchase would

_________________________________________________________________

20. We note that several District Courts in our circuit have found initial

interest confusion probative of a Lanham Act violation. See, e.g.,

Sunquest Info. Sys., Inc. v. Park City Solutions, Inc., 130 F. Supp. 2d

680,

695 (W.D. Pa. 2000) ("Although the Third Circuit has not directly

addressed the issue of initial interest confusion, the doctrine has been

embraced by numerous courts, including a number of district courts in

this Circuit."); Acxiom, 27 F. Supp. 2d at 497 ("The court finds that

there

is a likelihood of pre-sale confusion.").

undervalue the importance of a company's goodwill with its

customers.

Congress recognized the relevance of initial interest

confusion and its effect on a company's goodwill when it

amended the Lanham Act in 1962. In its original form, the

Lanham Act only applied where the use of similar marks

was "likely to cause confusion or mistake or to deceive

purchasers as to the source of origin of such goods or

services." Esercizio v. Roberts, 944 F.2d 1235, 1245 (6th

Cir. 1991) (quoting 1946 Lanham Act.) (emphasis added). In

1962 Congress deleted the term "purchasers," affording

Lanham Act protection where a mark is "likely to cause

confusion or mistake or to deceive." Id. Several courts have

found the amendment expanded the reach of the Lanham

Act beyond mere purchasers to recognize pre-sale confusion

as well as post-sale confusion. See, e.g., id. ("Since

Congress intended to protect the reputation of the

manufacturer as well as to protect purchasers, the Act's

protection is not limited to confusion at the point of sale.");

Koppers Co. v. Krupp-Koppers GmbH, 517 F. Supp. 836,

843-44 (W.D. Pa. 1981) (holding Congress intended to

broaden the scope of protections with the 1962 Amendment

to the Lanham Act); see also 3 McCarthy on Trademarks &

Unfair Competition, S 23.7 ("In 1962, Congress struck out

language in the Lanham Act which required confusion,

mistake or deception of `purchasers as to the source of

origin of such goods and services.' Several courts have

noted this expansion of the test of infringement and held

that it supports a finding of infringement when even non-

purchasers are deceived."). We agree with the view that

Congress's amendment of the Lanham Act in 1962

expanded trademark protection to include instances in

which a mark creates initial interest confusion. 21

_________________________________________________________________

21. The Federal Circuit has interpreted the 1962 amendment to the

Lanham Act differently. In Elec. Design & Sales, Inc., the court stated,

The legislative history states that the word "purchasers" was

deleted

because "the provision actually relates to potential purchasers as

well as to actual purchasers." Therefore, we do not construe this

deletion to suggest, much less compel, that purchaser confusion is

no longer the primary focus of the inquiry. Instead, we believe

that,

Check Point Software notes that some circuits have only

found "initial interest" confusion probative of likely

confusion when the products at issue are direct

competitors or where there is a strong interrelatedness

between the products.22 It claims these circuits have

recognized that initial interest confusion is probative of a

Lanham Act violation when the defendant attempts to use

the plaintiff 's more recognizable mark to "get a foot in the

door" with potential customers. But if the initial interest

confusion does not ultimately result in a purchasing

decision, this factor counsels against finding the likelihood

of confusion under the Lanham Act.23

_________________________________________________________________

at least in the case of goods and services that are sold, the

inquiry

generally will turn on whether actual or potential"purchasers" are

confused.

954 F.2d at 716 (quoting S. Rep. No. 2107, at 4 (1962), reprinted in 1962

U.S.C.C.A.N. 2844, 2847).

22. Other courts appear to have adopted a facts and circumstances

approach to evaluating initial interest confusion. BigStar Entm't, Inc. v.

Next Big Star, Inc., 105 F. Supp. 2d 185, 211 (S.D.N.Y. 2000) (declining

to apply initial interest confusion in the context of an internet case

involving non-competitors whose web addresses were not identical);

Northland Ins. Cos. v. Blaylock, 115 F. Supp. 2d 1108, 1120 (D.Minn.

2000) ("Initial interest confusion" exist[s] when the defendant stood to

materially or financially gain from said initial confusion by trading in

the value of plaintiff 's mark to initially attract customers.").

23. The disagreement over the use of initial interest confusion is

highlighted in Esercizio, 944 F.2d at 1249-50. While the majority of the

court found initial interest confusion generally probative of a Lanham

Act violation, the dissent noted,

To be sure, some courts have expanded the application of the

likelihood of confusion test to include individuals other than

point-

of-sale purchasers. These courts have included potential purchasers

who may contemplate a purchase in the future, reasoning that in

the pre-sale context an "observer would identify the [product] with

the [original manufacturer], and the [original manufacturer]'s

reputation would suffer damage if the [product] appeared to be of

poor quality."

In applying the test in this manner, these courts appear to

recognize

that the deception of a consumer under these circumstances could

Some courts have looked at the relatedness of the

relevant products in evaluating whether initial interest

confusion is probative of likely confusion. See Hasbro, Inc.,

232 F.3d at 2 ("Certainly in a case involving such disparate

products and services as this, the court's refusal to enter

the `initial interest confusion' thicket is well taken given the

unlikelihood of `legally significant' confusion."); Brookfield

Communications, 174 F.3d at 1056 (when products are

unrelated "the likelihood of confusion would probably be

remote."). Other courts look at evidence that the defendant

intentionally adopted the plaintiff 's mark to create

confusion among consumers making purchasing decisions.

See, e.g., Dorr-Oliver, 94 F.3d at 382-83. Still other courts

view the level of care consumers exercise in their

purchasing decisions to determine whether initial interest

confusion has dissipated prior to a purchasing decision.

See, e.g., Brookfield Communications, 174 F.3d at 1057

(finding initial interest confusion actionable because "[I]n

the Internet context, . . . entering a web site takes little

effort--usually one click from a linked site or a search

engine's list; thus, Web surfers are more likely to be

confused as to the ownership of a web site than traditional

patrons of a brick-and-mortar store would be of a store's

ownership."); Rust Env't & Infrastructure, Inc. v. Teunissen,

131 F.3d 1210, 1217 (7th Cir. 1997) (initial interest

confusion unlikely with sophisticated consumers). Safeway

Stores, Inc. v. Safeway Disc. Drugs, 675 F.2d 1160, 1167

(11th Cir. 1982) ("Short-lived confusion or confusion of

individuals casually acquainted with a business is worthy

of little weight.").

Product relatedness and level of care exercised by

consumers are relevant factors in determining initial

interest confusion. When products are similar, a firm is

_________________________________________________________________

dissuade such a consumer from choosing to buy a particular

product, thereby foreclosing the possibility of point-of-sale

confusion

but nevertheless injuring the consumer based on this confusion. . .

Hence, even when expanding the scope of this test, these courts did

not lose sight of the focus of [the inquiry]: the potential

purchaser.

944 F.2d at 1249-50 (Kennedy J., dissenting) (quoting Polo Fashions, Inc.

v. Craftex, Inc., 816 F.2d 145, 148 (4th Cir. 1987)).

more likely to benefit from the goodwill of a firm with an

established mark. And when consumers do not exercise a

high level of care in making their decisions, it is more likely

that their initial confusion will result in a benefit to the

alleged infringer from the use of the goodwill of the other

firm. Conversely, in the absence of these factors, some

initial confusion will not likely facilitate free riding on the

goodwill of another mark, or otherwise harm the user

claiming infringement. Where confusion has little or no

meaningful effect in the marketplace, it is of little or no

consequence in our analysis. Nonetheless, we decline to

issue a blanket rule limiting the probative value of initial

interest. Its significance will vary, and must be determined

on a case-by-case basis. As with all cases involving the

likelihood of confusion under the Lanham Act, courts

should employ all the relevant Lapp factors and weigh each

factor to determine whether in the totality of the

circumstances marketplace confusion is likely. See A&H

Sportswear, 237 F3d at 215; Fisons, 30 F.3d at 476 n.11.

We now turn to whether the District Court properly

evaluated the evidence of actual confusion, including

Checkpoint Systems's evidence of initial interest confusion.

It is undisputed that Checkpoint Systems presented no

evidence of actual consumer confusion in the form of

mistaken purchasing decisions. But it presented the

following evidence of initial interest confusion: (1) e-mails

that Checkpoint Systems received inquiring about firewall

products; (2) customer inquiries to Checkpoint Systems

employees, including its CEO, that expressed an interest in

purchasing firewalls; (3) service calls made to Checkpoint

Systems that were intended for Check Point Software; (4)

misdirected calls to Checkpoint Systems's receptionist that

were intended for Check Point Software; and (5) reports in

the media that confused Checkpoint Systems and Check

Point Software. The District Court found this evidence

insufficient to support a finding of likely confusion

reasoning,

[A]ny evidence by the plaintiff of initial interest

confusion by consumers and initial confusion by some

reporters or other observers, is de minimis and weak,

and the record is completely devoid of any evidence of

an actual mistaken purchase or attempt to purchase

one company's products believing they originated with

the other company. Especially when viewed in light of

the parties' co-existence for over five years, this lack of

evidence of any confusion in purchasing decisions of

either company's products falls strongly in defendant's

favor.

Checkpoint Sys., 104 F. Supp. 2d at 464-65.

On appeal Checkpoint Systems claims the District Court

erred as a matter of law by requiring it to produce evidence

of actual consumer confusion in the form of mistaken

purchasing decisions. It also contends the court erred in

discounting its evidence of initial interest confusion as de

minimis. See Tisch Hotels, Inc., 350 F.2d at 612.

But the District Court properly evaluated the evidence of

initial interest confusion within context of the relevant Lapp

factors stating,

This Court does not read [the relevant case law] as

holding that the initial interest confusion doctrine is

never applicable if the parties are not competitors.

However, Hasbro, and numerous other cases, correctly

emphasize the importance of the parties' competition or

strong interrelatedness.

A review of the cases which have applied the initial

interest doctrine indicates that the parties are either

direct competitors, or strongly interrelated such that it

could be expected that plaintiff would expand into

defendant's market. Other cases have also pointed out

that one element of the applicability of the initial

interest confusion doctrine is an intent by the

defendant to deceive.

Checkpoint Sys., 104 F. Supp. 2d at 462 (citations omitted).

The court concluded,

[W]hile evidence of temporary initial interest confusion

is not completely irrelevant, such evidence is entitled to

less weight than it might be in a case where the parties

compete or are strongly interrelated, or where there is

evidence or even an inference that defendant was

trying to trade on plaintiff 's goodwill. These factors are

utterly absent here. Moreover, the evidence of initial

interest confusion in this case is de minimis.

Id. at 462-63.

This is the proper analysis. Checkpoint Systems's and

Check Point Software's products are unrelated and are sold

in different markets to consumers who exercise a

heightened degree of care in making purchasing decisions.

The markets for the parties' products are not converging,

nor is there evidence that Check Point Software

intentionally adopted the Check Point mark to create

confusion.24 Given these factors, the District Court did not

clearly err in finding no likelihood of confusion.

Nor did the District Court err in finding the evidence of

initial interest confusion was de minimis. At oral argument,

Checkpoint Systems averred that at most there was

evidence of twenty instances of initial interest confusion

over the period of time the parties operated in the United

States. Some of this confusion consisted of misdirected

calls and therefore it is uncertain whether the consumers

were confused by the parties' similar names or whether

_________________________________________________________________

24. Checkpoint Systems's contention that the District Court disregarded

its initial interest evidence is erroneous. The District Court examined

this evidence stating,

The Court acknowledges that evidence of any confusion at all, by

investors, purchasers, or the media, may still affect this Court's

determination of whether there is a likelihood of confusion by

purchasers, for if there is evidence that, for example, the media,

whose words purchasers read, is confused about the names of these

companies, then it is more likely that purchaser will be confused

well.

* * *

Though that evidence is relevant, here it is minimal, especially

when

contrasted against the glaring absence of evidence of any actual

confusion in purchasing decisions in the time that the parties have

co-existed, and the incentives to ferret out such confusion during

the long pendency of this dispute. . . .

Checkpoint Sys., 104 F. Supp. 2d at 463-64.

directory assistance erred in connecting consumers with

the parties. Duluth News-Tribune v. Mesabi Publ'g Co., 84

F.3d 1093, 1098 (8th Cir. 1996) (misdirected

communications are not evidence of confusion where the

sender knows which party he or she wished to send his

communication but erred in the delivery of the message).

Furthermore, the District Court properly took into account

the potential bias of Checkpoint Systems's employees who

testified they had been approached by consumers

interested in Check Point Software's firewall products as

well as Checkpoint Systems's expert security witnesses who

testified they erroneously believed that Check Point

Software was affiliated with Checkpoint Systems. A&H

Sportswear, 237 F.3d at 227; Reed-Union Corp. v. Turtle

Wax, Inc., 77 F.3d 909, 911-12 (7th Cir. 1996) (fact finder's

credibility judgments about confusion testimony are

virtually never clearly erroneous).

We agree with the District Court that this limited initial

interest confusion (i.e., the handful of e-mails and other

anecdotal evidence of mistaken consumer inquiries) was de

minimis when viewed in light of the length of time the

parties operated together in the United States25 without

significant evidence of confusion. Versa Prods. , 50 F.3d at

205 ("If a defendant's product has been sold for an

appreciable period of time without evidence of actual

confusion, one can infer that continued marketing will not

lead to consumer confusion in the future. The longer the

challenged product has been in use, the stronger this

inference will be."); Universal Money Ctrs. v. AT&T, 22 F.3d

1527, 1535 (10th Cir. 1994) (a few instances of confusion

over a long period of time are insufficient to support a

finding of confusion); Barre-National, Inc. v. Barr Labs., Inc.,

773 F. Supp. 735, 744 (D.N.J. 1991) ("Use of similar marks

_________________________________________________________________

25. Check Point Software has sold its products in the United States since

late 1994. While its products were not widely circulated until late 1996,

its products were co-branded with Sun MicroSystems products from

1995-1996 in order to promote the Check Point Software mark.

Therefore the District Court did not err when it stated "when viewed in

light of the parties' co-existence for over five years, this lack of

[actual

confusion] evidence . . . falls strongly in defendant's favor." Checkpoint

Sys., 104 F. Supp. 2d at 465.

for a substantial period of time with no confusion among

consumers may create a presumption that there is little

likelihood of confusion."). Nor were the isolated instances of

confusion in the media probative of likely confusion.

Centaur Communications, Ltd. v. A/S/M Communications,

Inc., 830 F.2d 1217, 1227 (2d Cir. 1987) (newspaper mis-

attributions were isolated incidents not probative of actual

confusion). Given the size of these companies, and the large

number of e-mails, customer inquiries, and other

communications they receive on a daily basis, these

isolated instances of initial interest confusion counsel

against a finding of likely confusion. A&H Sportswear, 237

F. 3d at 227 ("isolated" instances of confusion insufficient

to support finding of likely confusion); Scott Paper Co., 589

F.2d at 1231 (nineteen misdirected letters over four years

weighed against finding of confusion); Nippondenso Co. v.

Denso Distribs., Civ. No. 86-3982, 1987 WL 10703 at *5

(E.D. Pa. May 11, 1987) ("The weight attributed to

instances of actual confusion depends to some extent upon

the circumstances of the case, including the volume of

sales of the goods involved. If isolated instances of actual

confusion result from the sale of a substantial number of

goods, the weight given to the evidence of actual confusion

is markedly reduced.") (citing Scott Paper Co., 589 F. 2d at

1225). The District Court did not clearly err.

On appeal, Checkpoint Systems contends the District

Court erred in evaluating evidence of investor confusion.

While a handful of district courts have found evidence of

investor confusion probative of a Lanham Act violation, see,

e.g., Acxiom Corp. v. Axiom, Inc., 27 F. Supp. 2d 478 (D.

Del. 1998); Koppers Co. v. Krupp-Koppers GmbH , 517 F.

Supp. 836 (W.D. Pa. 1981), no appellate court has yet so

held.

In Acxiom, the district court held that"investor confusion

may be considered by the trial court as part of its

application of the Lapp factors." 27 F. Supp. 2d at 501. In

support of its likelihood of confusion claim, plaintiff in that

case presented evidence of two investors and a potential

investor who testified that they were confused by the

similar names. The court held this evidence counseled in

favor of finding likely confusion. It reached this conclusion

on the basis of its view that the 1962 amendment to the

Lanham Act evinced "a clear congressional intent to `outlaw

the use of trademarks which are likely to cause confusion,

mistake, or deception of any kind, not merely of purchasers

nor simply as to source of origin.' " Id. at 501 (quoting

Koppers, 517 F. Supp. at 843-45).

Checkpoint Systems contends investor confusion is

probative of the likelihood of confusion and the District

Court erred in discounting this evidence. But given the

parties limited briefing on this issue as well as the scant

evidence of investor confusion here,26 we will reserve

decision on this issue. We make a few observations

nonetheless. Arguably, the 1962 amendments to the

Lanham Act extended actionable confusion beyond

purchasers to other instances affecting a party's business

or goodwill. Investor confusion may well threaten a party's

business or goodwill if it would likely deter or inhibit a

company's ability to attract investors and raise capital.

Here it seems unlikely that investors would be confused

by the parties' similar marks or somewhat similar stock

symbols ("CKP" and "CHKP" for Checkpoint Systems and

Check Point Software, respectively). Many investors are

sophisticated parties who exercise a high degree of care in

making investment decisions. Also, the parties' shares are

traded on different exchanges (Checkpoint Systems's stock

is traded on the New York Stock Exchange and Check Point

Software's stock is traded on the NASDAQ). Given the

paucity of evidence of investor confusion here, it is

_________________________________________________________________

26. Checkpoint Systems presented the following evidence of investor

confusion: (1) financial reports and analyses that confused Checkpoint

Systems's and Check Point Software's stock symbols; and (2) two

investors and one potential investor who were initially confused by

mistaken media reports about the parties' stocks. But these investors

averred that they quickly realized their mistake and did not make any

investment decision based on their mistake. Their confusion was an

isolated example of confusion when compared to the large number of

investors in both companies. Homeowners Group, Inc., 932 F.2d at 1110

(existence of only a "handful" of instances of confusion leads to

inference

that confusion is unlikely).

unnecessary to resolve the issue here, and we believe it is

prudent to reserve judgment at this time.27 Cf. Hoover Co.

v. Citicorp Venture Capital Ltd., 674 F. Supp. 460, 461

(S.D.N.Y. 1987) (finding no Lanham Act violation where

there was "only scant evidence of investor confusion in

connection with a single advertisement for a securities

offering.").

J. Totality of Lapp Factors

The District did not err in its factual findings nor in its

application of the individual Lapp factors to those findings.

Furthermore, the District Court's conclusion that the

combination of the Lapp factors do not establish

substantial likelihood of confusion in the marketplace is

consistent with its findings. Even though mark similarity--

a factor favorable to Checkpoint Systems--is ordinarily the

most important element in the multi-factor Lapp analysis,

it is not necessarily determinative, especially where, as

here, the markets for competing marks are highly distinct.

Because Checkpoint Systems's and Check Point Software's

products are not related, and are marketed to different

consumers through different channels, the evidence

demonstrates it is unlikely the relevant consumers, who

exercise a high degree of care in purchasing and selecting

among these products, were likely to be confused by the

marks. Additionally, there is no evidence that Check Point

Software intended to use its mark to gain a competitive

advantage. Also, the evidence supports the District Court's

finding that the markets are unlikely to converge in the

future. The minimal evidence of actual initial interest

confusion is insufficient to override this conclusion.

_________________________________________________________________

27. We note that the District Court did not completely disregard the

evidence of investor confusion Checkpoint Systems presented stating,

The Court acknowledges that evidence of any confusion at all, by

investors, purchasers, or the media, may still affect this Court's

determination of whether there is a likelihood of confusion . . .

* * *

Though that evidence is relevant, here it is minimal. . . .

Checkpoint Sys., 104 F. Supp. 2d at 463-64.

Because the District Court did not clearly err in its

application of the Lapp factors--individually and in

combination--we will affirm its holding there was no

likelihood of (direct) marketplace confusion. See A&H

Sportswear, 237 F.3d at 237 ("The question of likelihood of

confusion is ultimately one of fact, and [the appellate court]

cannot roll up [its] sleeves and engage in the balancing

[itself].").

IV.

On appeal, Checkpoint Systems challenges the District

Court's analysis of its "reverse confusion" claim, contending

the mark of Check Point Software (the junior user) has

become so strong in the relevant market that the

consuming public might assume that Check Point Software

is actually the source of the products of Checkpoint

Systems (the senior user).

In Fisons, 30 F.3d at 475, we expressly recognized a

cause of action for reverse confusion, stating,

Ordinarily, one expects that the new or junior user of

the mark will use to its advantage the reputation and

good will of the senior user by adopting a similar or

identical mark. 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 and services.

30 F.3d at 474 (citing Sands, Taylor & Wood Co. , 978 F.2d

at 947).28

_________________________________________________________________

28. In a reverse confusion situation,

the junior user saturates the market with a similar trademark and

overwhelms the senior user. The public comes to assume the senior

user's products are really the junior user's or that the former has

become somehow connected to the latter. The result is that the

senior user loses the value of the trademark--its product identity,

corporate identity, control over its goodwill and reputation, and

ability to move into new markets.

Ameritech, Inc. v. Am. Info. Techs. Corp., 811 F.2d 960, 964 (6th Cir.

1987).

Courts have recognized that "failure to recognize reverse

confusion would essentially immunize from unfair

competition liability companies that have well established

trade names and the financial ability to advertise a senior

mark taken from smaller, less powerful competitors."

Harlem Wizards, 952 F. Supp. at 1091-92 (citing Big O Tire

Dealers, Inc., v. Goodyear Tire & Rubber Co., 561 F.2d

1365, 1372 (10th Cir. 1977); see also Dreamwerks , 142

F.3d at 1130. "Were reverse confusion not a sufficient basis

to obtain Lanham Act protection, a larger company could

with impunity infringe the senior mark of a smaller one."

Fisons, 30 F.3d at 475.

In a direct confusion case, the consuming public may

assume that the established, senior user is the source of

the junior user's goods. In a reverse confusion case, the

consuming public may assume the converse; that is, that

the junior, but more powerful, mark user is the source of

the senior user's products. The harm to the senior user is

not just that its goodwill is appropriated, but that the value

of its mark is diminished. The fundamental issue in both

cases, however, is essentially the same: whether the

consuming public is likely to be confused about the source

of products of the respective mark users.

In A&H Sportswear, we held that in a typical reverse

confusion case, courts should employ the same Lapp

factors in assessing likelihood of confusion.29 But in a

reverse confusion case, some of the Lapp factors must be

analyzed differently.30 The strength of the parties' marks,

_________________________________________________________________

29. In reaching that conclusion, we rejected the notion that courts

should apply a threshold test to determine whether a junior user has

used its economic power to saturate the market in reverse confusion

cases. The proper inquiry is to apply all of the relevant Lapp factors.

A&H Sportswear, 237 F.3d at 208.

30. In A&H Sportswear, we noted that the application of the following

Lapp factors is typically the same in both types of claims: (1)

sophistication and attentiveness of consumers; (2) the degree to which

the channels of trade and advertisement overlap; (3) the similarity of the

targets of the parties' sales efforts; and (4) the similarity of the

products

themselves. We also noted that absent the presence of housemarks and

disclaimers, the similarity of marks factor should generally be examined

the intent in adopting the marks,31 and the evidence of

actual confusion are analyzed differently from the method

employed in a typical direct confusion case. A&H

Sportswear, 237 F.3d at 236. On appeal, Checkpoint

Systems argues the District Court did not follow the

analysis of actual confusion and strength of mark outlined

in A&H Sportswear.32

_________________________________________________________________

in a similar fashion in both direct and reverse confusion cases. As

discussed at length, the District Court properly applied these factors and

found that there was no likelihood of confusion. A&H Sportswear, 237

F.3d at 236 ("[T]he factors concerning the market, sales, and function

similarity . . . need not be reexamined for the reverse confusion claim

because the District Court has already discussed them in connection

with direct confusion and there is typically no difference in the analysis

of these factors for reverse and direct confusion claims."). We see no

error.

31. Neither party disputes the District Court's analysis of the intent of

the parties in adopting the marks.

32. Additionally, plaintiff argues the District Court improperly held that

a claim for reverse confusion is only actionable when the parties'

products directly compete. But the District Court did not state this

proposition. Rather, the court stated

reverse confusion threatens harm when the junior user `overwhelms'

the marketplace such that the senior user begins to lose its

identity

and profile. This concern is of greatest force with competing or

related products. In the present case, involving non-competing,

unrelated products, such "overwhelming" has not even remotely

occurred.

Checkpoint Sys., 104 F. Supp. 2d at 461.

The proper inquiry in a reverse confusion claim is whether consumers

will assume the senior user's goods are associated with the junior user.

Just as in a direct confusion claim, the relatedness of the parties'

products is integral to the finding of likely confusion. If two products

are

unrelated, there is little reason to assume confusion since most

consumers would not assume that a single company would market two

completely unrelated products. On the other hand, when the goods are

related, a customer might reasonably assume the junior user with a

strong market presence would sell both products. Fisons, 30 F.3d at 481

("The question is whether the consumer might therefore reasonably

conclude that one company would offer both of these related products.").

In a typical direct confusion claim, the stronger the

senior user's mark, the greater the likelihood of confusion

caused by a junior user's use of a similar mark. But in a

reverse confusion situation, the senior user's claim may be

strengthened by a showing that the junior user's mark is

commercially relatively strong. The greater relative strength

of the junior mark allows the junior user to "overwhelm"

the marketplace, diminishing the value of the senior user's

mark. While 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.' " A&H

Sportswear, 237 F.3d at 231 (quoting Commerce Nat'l Ins.

Servs., Inc., 214 F.3d at 444). Courts should look at the

commercial strength of the junior user's mark to determine

whether its advertising and marketing has resulted in a

"saturation in the public awareness of the junior user's

mark." Id., 237 F.3d at 231.

Checkpoint Systems contends the District Court

improperly evaluated the strength of the marks. Because

the court found its mark weak in the electronic access

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The District Court recognized that consumers of Check Point

Software's highly sophisticated technical computer security systems

would have no reason to believe that Checkpoint Systems's physical

article surveillance system was manufactured by Check Point Software.

Because the "computer information" niche that Check Point Software

operated in was unique and technical there is no reason to believe a

consumer would assume that Check Point Software had expanded into

the market for a different type of security product. The same is true of

Checkpoint Systems's customers. Because of the complicated technology

involved in the "computer information" niche, these customers would not

assume that Checkpoint Systems had moved into this market. The court

properly recognized that even though the relevant case law does not

require directly competing goods in order to find reverse confusion,

product relatedness is a very important factor to finding that a consumer

might confuse the source of products. See, e.g. , id.; Scott Paper, 589

F.2d at 1230. We see no error.

control products (the product most similar to Check Point

Software's firewall technology),33 and by inference that

Check Point Software's mark was relatively strong in that

market, plaintiffs claim the court should have found

actionable reverse confusion. In other words, as a stronger

junior user in the network information security market,

Check Point Software's mark allegedly overwhelmed

Checkpoint Systems's senior, but weaker mark in the

relevant market.

Unlike its other findings, the District Court did not

scrutinize the reverse confusion claim, perhaps because it

was not extensively argued. It did not expressly analyze the

relative strengths of the marks for purposes of this claim,

nor did it directly examine the strength of Check Point

Software's mark. As noted, it is the strength of the junior

user's mark that is crucial in establishing a reverse

confusion claim, because it is the strength of its mark that

might lead consumers to mistakenly identify "Checkpoint"-

labeled products with Check Point Software. A&H

Sportswear, 237 F.3d at 231). In its limited discussion of

the reverse discrimination claim, the court stated,

[R]everse confusion threatens harm when the junior

user "overwhelms" the marketplace such that the

senior user begins to lose its identity and profile. This

concern is of greatest force with competing or related

products. In the present case, involving non-competing,

unrelated products, such "overwhelming" has not even

remotely occurred.

Checkpoint Sys., 104 F. Supp. 2d at 461.

Had the District Court the benefit of our recent opinion

in A&H Sportswear , it doubtless would have been guided

by our analysis. But its failure to do so does not require

reversal. In light of its Lapp-factors findings, a focused

analysis under A&H Sportswear could not have changed

the court's conclusion of no reverse confusion.

The District Court properly noted that reverse confusion

is most likely in cases involving competing or related

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33. The court found that its mark was strong in the physical article

surveillance market.

products. When products are related, consumers may be

likely to assume they are produced by the same company.

But when not related, the likelihood of confusion

diminishes dramatically. Given the strong distinctiveness of

the respective markets as found by the District Court, any

confusion would appear unlikely. For this reason, a focused

analysis of the strength of Check Point Software's mark

would not affect the court's conclusion.

To establish a claim of reverse confusion, there must be

evidence that consumers of Checkpoint Systems's products

were likely to assume that Check Point Software was the

source of those products. See Dreamwerks, 142 F.3d at

1130 ("The question . . . is whether consumers doing

business with the senior user might mistakenly believe that

they are dealing with the junior user."). But as noted, the

court found the decision makers who purchased

Checkpoint Systems's products were not likely to be the

target audience of Check Point Software's advertising or

marketing. See Checkpoint Sys., 104 F. Supp. 2d at 466

("That there is no overlap in the places these parties market

their products tends to diminish the chance that someone

who is a specialist in network security will even come

across an advertisement for plaintiff, and vice versa."). And

even if purchasers received such marketing materials, the

high level of care with which they ordinarily made their

purchasing decisions substantially lessened the likelihood

of confusion. Put another way, the strength of Check

Point's Software's mark within the corporate information

security market would not likely affect the consumers

within Checkpoint Systems's market, given the level of

distinctiveness of the relevant markets found by the District

Court.

In light of these findings, the strength of Check Point

Software's mark could have a determinative effect on the

outcome of the reverse confusion analysis, if at all, only if

extremely powerful. Only then could it "overwhelm" the

marketplace diminishing the value of Checkpoint Systems's

mark. Although the District Court did not analyze this

factor, it was correct in finding that, "[i]n the present case,

involving non-competing, unrelated products, such

`overwhelming' has not even remotely occurred." Checkpoint

Sys., 104 F. Supp. 2d at 461.

As we held in Fisons, the court's application of the Lapp

factors is not mechanical; rather it must weigh each factor

against the others. 30 F.3d at 473. When the reviewing

court determines that almost all the relevant factors favor

one party, it may discount one factor. See, e.g. , Jet, Inc. v.

Sewage Aeration Sys., 165 F.3d 419, 423 (6th Cir. 1999)

(finding no reversible error when the district court erred in

its application of the "converging markets" factor but

correctly applied other factors); Freedom Sav. and Loan

Ass'n v. Way, 757 F.2d 1176, 1186 (11th Cir. 1985)

(finding no reversible error where District Court erred in its

application of the "similarity of products or services" factor

but correctly applied other factors). We see no legal error

here.

Checkpoint Systems also contends the District Court

erred in its evaluation of the evidence of actual confusion in

its reverse confusion claim. In A&H Sportswear , we stated

that in most trademark cases, parties allege both direct and

reverse confusion since "the manifestation of consumer

confusion as `direct' or `reverse' may merely be a function of

the context in which the consumer first encountered the

mark. Isolated instances of `direct' confusion may occur in

a reverse confusion case, and vice-versa." 237 F.3d at 233.

We declined "to create a strict bar to the use of`direct'

confusion evidence in a `reverse' confusion case, or vice

versa." Id.34 Under this view, evidence that the public

thought Check Point Software was the origin of Checkpoint

Systems's products is just as probative of likely confusion

as evidence that the public thought Checkpoint Systems

was the origin of Check Point Software's products. 35 Here,

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34. We noted that "as a matter of intuition" one might assume evidence

that the public thought that the senior user was the origin of the junior

users products would support a direct confusion claim while evidence

that the public thought the junior user was the source of the senior

user's product would support a reverse confusion claim. But we stated,

"In our view, if we were to create a rigid division between `direct' and

`reverse' confusion evidence, we would run the risk of denying recovery

to meritorious plaintiffs." A&H Sportswear , 237 F.3d at 233.

35. However, we noted in A&H Sportswear that "evidence working in the

same direction as the claim is preferred, and `misfitting' evidence must

the District Court properly examined the evidence of actual

confusion36 and found it to be de minimis. We see no error.

Finally, Checkpoint Systems contends the District Court

erred in requiring evidence of actual confusion of

purchasers at the point of sale to prove its reverse

confusion claim. But as we have discussed, plaintiffs have

mischaracterized the court's analysis. The court factored

Checkpoint Systems's evidence of initial interest and

investor confusion into its confusion analysis but found the

evidence insubstantial. We see no clear error.

For the foregoing reasons, we will affirm the judgment of

the District Court.

A True Copy:

Teste:

Clerk of the United States Court of Appeals

for the Third Circuit

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be treated carefully, for large amounts of one type of confusion in a

claim for a different type may in fact work against the plaintiff." 237

F.3d

at 233. Here the court found minimal evidence supporting both

Checkpoint Systems's direct and reverse confusion claims.

36. The District Court stated:

Though plaintiff did have incentive and ability to find [instances

actual] confusion if it occurred, by asking its sales persons,

distributors, and customers, [Checkpoint Systems] did not offer any

testimony of a confused purchaser at trial, showing an absence of

reverse confusion (i.e., where a [Checkpoint Systems] customer

seeks to purchase a [Checkpoint Systems] product because the

customer believes it originated from [Check Point Software]).

Similarly, plaintiff located no [Check Point Software] customers

who

indicated they became interested in a [Check Point Software]

product because they thought it originated from[Checkpoint

Systems].

Checkpoint Sys., 104 F. Supp. 2d at 464 (internal citations omitted).

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.