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No Likelihood of Confusion, 11th Circuit Declares in Custom Manufacturing v. Midway Services Case
Custom Manufacturing and Engineering, Inc. v. Midway Services, Inc., et al.
No. 05-12906, 2007 WL 4165634, Court of Appeals for the Eleventh Circuit, 11/21/2007
Companies Mentioned: Automated Engineering Corp., Custom Manufacturing and Engineering, Inc., MDCO, Inc., Midway Services, Inc., NTU Electronics, Inc.
Holding
In this action for trademark infringement, the U.S. Court of Appeals for the Eleventh Circuit held that defendants' use and installation of modified version of trademarked circuit boards that were initially designed by plaintiff Custom Manufacturing and Engineering, Inc. ("CMEI"), and which bore plaintiff's trade name, did not create likelihood of confusion. According to the Federal Circuit, the unauthorized use of a trademark that is never perceived by anyone cannot be said to create a likelihood of consumer confusion under the Lanham Act. In this case, defendants affixed plaintiff's mark on sub-components used in water meter reading system that was marketed to apartment complex owners and managers, and not actually to plaintiff's customers. Since it was unlikely that such owners and managers would examine the circuit boards, and even if third parties might see plaintiff's trade name, confusion was unlikely. Thus, the Eleventh Circuit affirmed the district court's summary judgment rendered in favor of defendants.
Detailed Summary
Founded in 1997, plaintiff CMEI is a privately-held technology company that provides research and development, engineering, software, and manufacturing services to the government and industrial markets. On the other hand, defendant Midway Services, Inc. ("MSI") is a contractor of plumbing, electrical, sub-metering, and air conditioning services. Defendants Automated Engineering Corporation (“AEC”) and MDCO, Inc. are contract electronic manufacturers, and NTU Electronics, Inc. is a manufacturer of printed circuit boards.
CMEI had agreed to design for MSI a water meter reading system to be installed in residential complexes, but MSI later cancelled the contract, allegedly for the reason that Custom had breached it, and instead hired co-defendants AEC, MDCO, Inc., NTU Electronics, Inc. (“NTU”), and engineers to finish the job. CMEI sued for damages, and MSI counterclaimed, alleging breach of contract. In the course of the discovery stage of that lawsuit, CMEI learned that the water meter reading system that had been installed used printed circuit boards that were modified from the design it had created. This modified version of printed circuit boards retained a printed legend containing CMEI trade name. Armed with this discovery, CMEI brought this lawsuit, claiming, among others, trademark infringement against MSI, AEC, MDCO, and NTU.
In resolving defendants’ motions for summary judgment, the U.S. District Court for the Middle District of Florida found that plaintiff CMEI failed to establish the likelihood that the purchasing public would be confused by the presence of its trade name on the modified circuit boards. It therefore dismissed CMEI’s trademark infringement claim. Plaintiff thereafter filed this appeal.
Specifically, CMEI alleged a false designation of origin claim, which proscribes the behavior of “passing off” or “palming off,” which “occurs when a producer misrepresents his own goods or services as someone else’s.” Dastar Corp. v. Twentieth Century Fox Film Corp., 539 U.S. 23, 28 n. 1, 123 S.Ct. 2041, 2045, 156 L.Ed.2d 18 (2003). To establish a prima facie case under § 1125(a), a plaintiff must show (1) that the plaintiff had enforceable trademark rights in the mark or name, and (2) that the defendant made unauthorized use of it “such that consumers were likely to confuse the two.” Lone Star Steakhouse & Saloon, Inc. v. Longhorn Steaks, Inc., 106 F.3d 355, 358 (11th Cir.1997).
In the determination of the second element of “likelihood of confusion,” , a court must consider the following Frehling factors: (1) the type of mark (in short, whether the “relationship between the name and the service or good it describes” is such that the chosen name qualifies as generic, descriptive, suggestive, or arbitrary); (2) the similarity of the marks (based on “the overall impressions that the marks create, including the sound, appearance, and manner in which they are used”); (3) the similarity of the goods (“whether the products are the kind that the public attributes to a single source”); (4) the similarity of the parties’ retail outlets, trade channels, and customers (“consider[ing] where, how, and to whom the parties’ products are sold”); (5) the similarity of advertising media (examining “each party’s method of advertising” to determine “whether there is likely to be significant enough overlap” in the respective target audiences such “that a possibility of confusion could result”); (6) the defendant’s intent (determining whether the defendant had a “conscious intent to capitalize on [the plaintiff’s] business reputation,” was “intentionally blind,” or otherwise manifested “improper intent”); and (7) actual confusion (that is, whether there is evidence that consumers were actually confused). Frehling Enters., Inc. v. Int’l Select Group, Inc., 192 F.3d 1330, 1335-41 (11th Cir.1999).
According to the Eleventh Circuit, because the bottom line is the likelihood of consumer confusion, “application of the Frehling factors entails more than the mechanistic summation of the number of factors on each side; it involves an evaluation of the ‘overall balance.’” See Frehling, 192 F.3d at 1342. In resolving plaintiff’s appeal, the Eleventh Circuit qualified that this case did “not resemble the paradigmatic ‘passing off’ case.” Particularly, the goods on which CMEI’s mark was affixed were sub-components manufactured for use in a product that was marketed to apartment complex owners and managers, and not to plaintiff’s customers. Thus, the issue in this case involved the likelihood of confusion in the after-sales context, i.e., whether CMEI’s or MSI’s potential customers were likely to be confused as to the origin of the extant circuit boards. See United States v. Torkington, 812 F.2d 1347, 1352 (11th Cir.1987).
Resolving this issue in the negative, the Federal Circuit held that plaintiff’s trade name could not be viewed without first removing the opaque plastic housing units that completely cover the circuit boards in question. Because the system utilizes radio transmission, the transceivers are normally mounted as high as possible in attics, roofs, and exterior walls to reduce transmission interferences. The court found that it was “unlikely that the apartment owners and managers to whom Midway sold the water meter reading systems would remove these covers and examine the circuit boards contained therein.” Neither repair technicians nor fire marshals should be viewed as the customers, whether actual or potential, of CMEI or MSI. “Even if such persons qualified as the relevant purchasing public, Custom failed to proffer sufficient record evidence in support of its allegations. While there is no bright line test to determine the existence of a likelihood of consumer confusion, recovery under the Lanham Act requires, at a minimum, “that confusion, mistake, or deception be ‘likely,’ not merely ‘possible.’ ” “(citing Sears Roebuck & Co. v. All States Life Ins. Co., 246 F.2d 161, 168 (5th Cir.1957)).
On the basis of this reasoning, the Federal Circuit affirmed the district court’s summary judgment against plaintiff on its trademark infringement claim.
View a PDF of the judicial opinion.Trademark Law Commentary
Read the related Trademark Law commentary: Custom Manufacturing v. Midway Services Case: No Likelihood of Confusion If There Is No Actua, by Olivier A. Taillieu, Esq.
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