Reverse Confusion Rises

On August 14, 2014, the United States Court of Appeals for the Seventh Circuit in Fortres Grand Corp. v. Warner Bros. Entm’t Inc. was confronted with an issue of reverse confusion in a unique trademark infringement case.  Traditionally, in a trademark action, the origin of confusion is mistaking a junior user’s product as originating from a senior user.  The term “senior user” is employed to describe the first to use and the protected user of the mark, whereas the “junior user” describes a later and allegedly infringing user of the mark at issue.  Alternatively, reverse confusion occurs when a larger, more renown entity allegedly employs the trademark of a smaller, less powerful senior owner and thereby causes a likelihood of confusion as to the source of the senior user’s goods and services.  Thus, the “junior user saturates the market with a similar trademark and overwhelms the senior user.” Checkpoint Sys. v. Check Point Software Techs., Inc, 269 F.3d 270, 301 (3d Cir. 2001).  As a result, 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.”  Id.  Consequently, 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.”  Id.   This occurs because “theatricality, deception, [and reverse confusion] are powerful agents to the uninitiated… but we are initiated, aren’t we Bruce? Members of the League of Shadows!” (Bane voice).

In Fortres Grand Corp, the Seventh Circuit Court of Appeals reviewed an order granting a motion to dismiss in a reverse confusion case.  No. 13–2337, 2014 U.S. App. LEXIS 15609, at 7* (7th Cir. Ind. Aug. 14, 2014).  Plaintiff, Fortres Grand, develops and sells a desktop management program entitled “Clean Slate.”  Further, Fortres Grand federally registered the CLEAN SLATE Mark to identify the source of “[c]omputer software used to protect public access computers by scouring the computer drive back to its original configuration upon reboot.” (Trademark Reg. No. 2,514,853).  However, in July 2012, Warner Bros. released the newest Batman movie, The Dark Knight Rises, which also utilized the term “clean slate” to describe a hacking program in the movie that can eliminate information from any and every database on earth.  A program that Selina Kyle (Catwoman)—a career criminal—desperately sought to acquire.  Subsequent to the release of the movie, Fortres Grand noticed a drop in sales of its software allegedly resulting from Warner Bros.’ use of the term “clean slate.”  As a result, Fortres Grand filed suit for trademark infringement seeking to recoup the decrease in sales.  The district court held that Fortres Grand failed to state a claim under both traditional and reverse trademark confusion.  Fortres Grand appealed the decision.

In the instant case, Fortres Grand must plausibly allege that Warner Bros.’ use of the term “clean slate” in The Dark Knight Rises to describe a hacking program capable of clearing a criminal’s record on all databases caused a likelihood that consumers will be confused into thinking that Fortres Grand’s Clean Slate software “emanates from, is connected to, or is sponsored by” Warner Bros.  Id. at 10.  “The fire rises.”  (Bane Voice).

In considering the plausibility of Plaintiff’s reverse confusion allegation, the Court applied a seven-factor test:

[1] the degree of similarity between the marks in appearance and suggestion; [2] the similarity of the products for which the name is used; [3] the area and manner of concurrent use; [4] the degree of care likely to be exercised by consumers; [5] the strength [or “distinctiveness”] of the complainant’s mark; [6] actual confusion; and [7] an intent on the part of the alleged infringer to palm off his products as those of another.

Id. at 11–12.  Addressing the similarity of the products, the Court noted that “[t]here is little authority on how to treat the ‘similarity of the products’ factor when one of them is fictional, but what few cases have confronted the issue have considered the likelihood of confusion between the senior user’s product and the junior user’s creative work—not any fictional product therein.”  Id. at 12.  The Court noted that, based on the limited precedent, comparing the senior user’s product to Warner Bros.’ movie rather than the fictional product contained therein “makes sense in light of the Supreme Court’s emphasis on confusion about the origin, sponsorship, or approval of ‘the tangible product sold in the marketplace.’”  Id. at 13 (quoting Dastar Corp. v. Twentieth Century Fox Film Corp., 539 U.S. 23, 31 (2003)).  Further, the Court reasoned:

Because the confusion is about the origin, sponsorship, or approval of the senior user’s product, which is tangible, there is no clear command that we compare that product (the software) to Warner Bros.’ tangible product (its movie) when considering the factor.  Regardless, because the infringing act is the junior user’s use of the mark “in connection with any goods,” 15 U.S.C. § 1125, we think the word “goods” must mean the same thing there (tangible goods) that it means in the later clause, and so we conclude that Warner Bros.’ movie—its tangible good—is the correct comparator product, even while using the product-similarity factor to analyze reverse confusion.

The Court then articulated the issue:  whether the products are the kind the public attributes to a single source.  However, in this case, the problem is that Fortres Grand seeks to allege confusion regarding the source of a “utilitarian desktop management software based solely on the use of a mark in a movie and two advertising websites.”  Id. at 16.  Accordingly, the Court emphasized that “the only products available to compare—Fortres Grand’s software and Warner Bros.’ movie—are quite dissimilar, even considering common merchandising practice.”  Id.  Further, the Seventh Circuit stated “Fortres Grand has alleged no facts that would make it plausible that a super-hero movie and desktop management software are ‘goods related in the minds of consumers in the sense that a single producer is likely to put out both goods.’” Id.  The Court also emphasized that “Warner Bros.’ use of the mark is not a traditional use in the marketplace, but in the dialogue of its movie and in extensions of its fictional universe, so the ‘the area and manner of concurrent use’ also makes confusion unlikely.”  Id. at 17.

Finally, the Court noted that Fortres Grand “has not and could not plausibly allege that consumers are confused into thinking Fortres Grand is selling such a diabolical hacking tool licensed by Warner Bros.”  Id. at 19–20.  The Court clarified that “Fortres Grand’s real complaint is that Warner Bros.’ use of the words ‘clean slate’ has tarnished Fortres Grand’s ‘clean slate’ mark by associating it with illicit software.”  Id.  However, this type of harm may only be remedied with a dilution claim.  See 15 U.S.C. § 1125(c).  The Court quickly dismissed this idea, as “it would not be appropriate to use a contorted and broadened combination of the ‘reverse confusion’ and ‘related products’ doctrines to extend dilution protection to non-famous marks which are explicitly excluded from such protection by statute.”  Id.

In short, the Court should have articulated, in a Bane voice, “you think the darkness is your ally.  But you merely adopted the dark.  I was born in it, molded by it.”  However, the court reasonably stated that the only factor in favor of Fortres Grand was the similarity of the marks at issue.  Id. at 20–22.  Conversely, juxtaposed against the weaknesses of the other factors, the Court found that this was insufficient to plausibly allege reverse confusion because trademark law protects the source-denoting function of terms used in conjunction with goods and services in the marketplace, not the words themselves.