Before Dyk, Mayer, and Clevenger. Appeal from the International Trade Commission.
Summary: Trademark decisions of the International Trade Commission, like the Commission’s patent decisions, do not have preclusive effect.
Segway filed a complaint with the International Trade Commission (“ITC”) alleging that Swagway’s products marketed under the names SWAGWAY X1 and X2, as well as SWAGTRON T1 and T3, infringed Segway’s SEGWAY marks. The ITC instituted an investigation. Swagway moved for partial termination of the investigation through the filing of a proposed consent order stipulation, which Swagway amended on two separate occasions. Segway opposed the proposed consent order. The Administrative Law Judge (ALJ) scheduled a hearing on the investigation. During a prehearing conference, counsel for Swagway inquired about the pending motion for a consent order. The ALJ indicated that because of the number of versions and the amount of briefing the motion for consent order would not be ruled on before the hearing. After the hearing, the ALJ issued an Initial Determination (“ID”), finding that Swagway’s use of the SWAGWAY designation—but not its use of the SWAGTRON designation—infringed Segway’s marks. THE ALJ’s ID did not mention Swagway’s motion for termination based on its consent order stipulation. Swagway filed a petition for review of the ALJ’s finding of trademark infringement, as well as the denial of its consent order motion.
The Commission determined not to review the ALJ’s denial of Swagway’s consent order motion. As for the finding on trademark infringement, the Commission issued an opinion reversing the ALJ’s determination on the existence of actual confusion because the incidents of confusion were small compared to the volume of sales of Swagway’s products. However, the Commission affirmed the ALJ’s ultimate finding of trademark infringement because evidence supporting the other likelihood of confusion factors strongly supported the finding of infringement. Swagway appealed the Commission’s finding of trademark infringement and its failure to enter the proposed consent order.
The Federal Circuit affirmed the Commission on both issues. As for the trademark infringement finding, the Court considered the factors set forth in In re E.I. DuPont DeNemours. The Court noted that although the DuPont factors are the framework for assessing likelihood of confusion for purposes of registration, the Supreme Court recently ruled that likelihood of confusion for purposes of registration is the same standard as likelihood of confusion for purposes of infringement in the B&B Hardware case. The Court also explained that the Commission need only “consider those factors which are supported by evidence in the record.” The Court then turned to Swagway’s argument that the Commission should have found the lack of actual confusion dispositive in this case. The court rejected this argument. Swagway also argued that the Commission failed to “properly re-weigh the likelihood-of-confusion factors” after it reversed the ALJ’s determination regarding actual confusion. The Court rejected this argument as a mischaracterization of the Commission’s decision which, the court found, did reweigh the factors. Finally, Swagway argued that Segway’s failure to conduct a survey should create an adverse inference. The Federal Circuit, however, observed that consumer survey evidence “is not required to show a likelihood of confusion,” and, thus, found that the Commission did not err by failing to draw such an inference.
As for the consent order, the Court did not believe there was any difference between Swagway’s proposed consent order and the Commission’s orders. Under either, the SWAGWAY-branded products at issue could not be imported into or sold within the United States. Swagway argued that preclusive effect would be given to the Commission’s orders and sought entry of its proposed consent order to avoid issue preclusion in a co-pending stayed district court case. The Federal Circuit held that the Commission’s trademark decisions, like its patent decisions, do not have preclusive effect.
Editor: Paul Stewart
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