The Fourth Circuit Court of Appeals recently issued a decision confirming that using similar names for businesses in the same industry can result in a likelihood of confusion despite the physical distance of the entities. In reversing a lower court ruling, the court concluded geographic remoteness alone did not overcome the other likelihood of confusion factors. The decision demonstrates the importance of conducting thorough trademark clearance searches and recognizing the risk of conflict with geographically remote entities.
In Westmont Living, Inc. v. Retirement Unlimited, Inc., both parties operate retirement communities – the plaintiff in California and Oregon, and the defendant in Virginia, North Carolina, and Florida. The plaintiff operates and markets its facilities using the trademark “Westmont Living”, which it registered with the United States Patent and Trademark Office (“USPTO”). The defendant opened a facility near Richmond, Virginia that it named “The Westmont at Short Pump.” The district court granted summary judgment to the defendant on the basis that the physical facilities were in such different geographic markets that confusion was impossible. In doing so, it relied on the long-standing Second Circuit Dawn Donut case, which held that when parties use trademarks in separate and distinct markets, there can be no likelihood of confusion.
The Fourth Circuit reversed and remanded the case for consideration of all factors relevant to assessing potential confusion. Specifically, the court found both parties market their facilities nationwide and, as a result, draw customers from all over the United States. The similarity of their respective advertising campaigns resulted in their online advertisements appearing adjacent to each other in search results. The plaintiff also submitted survey evidence demonstrating consumer confusion among survey participants.
What This Means for Business Owners
Advertising and marketing have changed greatly since Dawn Donut was issued in 1959. As a result, geographic remoteness can no longer be dispositive of likelihood of confusion. Courts will look beyond geography to assess confusion, particularly in economic sectors that use substantial Internet advertising and draw customers nationwide.
Businesses should be certain to:
- Conduct clearance searches before launching a new venture. Consider the risks carefully when the search identifies a prior right, even if it is geographically remote.
- File trademark applications to secure nationwide rights. The court noted the plaintiff had registered multiple registrations for the Westmont name. Federal trademark registration provides notice and construction nationwide use of the mark. Just as important, it makes a trademark owner’s rights easier to identify.
- Use the trademark registration system as an additional check. The court also noted that the USPTO rejected defendant’s application to register “Westmont at Short Pump” in view the plaintiff’s multiple registrations for Westmont. While the decisions of a trademark examining attorney are not binding, they can provide useful insight on potential confusion. Since applications can be filed based on an applicant’s intent-to-use a trademark, a business can have an application examined well before undertaking the expense of launching a brand.
Legal extern Anthony Guadagna contributed to this legal alert.
