A&H Sportswear v. Victoria's Secret Stores

• Decision Date: 26 April 2000
• Docket Number: Nos. 99-1734 and 99-1735,s. 99-1734 and 99-1735
• Citation: 2000 WL 1763334,237 F.3d 198
• Parties: (3rd Cir. 2000) A&H SPORTSWEAR, INC; MAINSTREAM SWIMSUITS, INC., APPELLANTS V. VICTORIA'S SECRET STORES, INC.; VICTORIA'S SECRET CATALOGUE, INC. Argued:
• Court: U.S. Court of Appeals — Third Circuit

Page 198

237 F.3d 198 (3rd Cir. 2000)

A&H SPORTSWEAR, INC; MAINSTREAM SWIMSUITS, INC., APPELLANTS

V.

VICTORIA'S SECRET STORES, INC.; VICTORIA'S SECRET CATALOGUE, INC.

Nos. 99-1734 and 99-1735

U.S. Court of Appeals, Third Circuit

Argued: April 26, 2000

Filed December 01, 2000

On Appeal From the United States District Court For the Eastern District of Pennsylvania (D.C. Civ. No. 94-cv-07408) District Judge: Honorable Franklin S. Van Antwerpen

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Arthur H. Seidel, Esquire (argued) Stephen J. Meyers, Esquire Michael F. Snyder, Esquire Seidel, Gonda, Lavorgna & Monaco 1800 Two Penn Center Plaza Philadelphia, PA 19102 Norman Seidel, Esquire Laub, Seidel, Cohen & Hof Eastern Dollar Savings & Trust Co. Bldg. 8 Centre Square Easton, PA 18042 Counsel for Appellants

Frank J. Colucci, Esquire (argued) Richard P. Jacobson, Esquire Colucci & Umans 101 East 52nd Street Manhattan Tower New York, NY 10022 H. Robert Fiebach, Esquire Cozen & O'Connor The Atrium 1900 Market Street Philadelphia, PA 19103 Counsel for Appellees

Before: Becker, Chief Judge, Barry and Bright,^* Circuit Judges.

OPINION OF THE COURT

                I.   Facts .......................................................... 208
                II.  Procedural History ............................................. 209
                III. The Direct Confusion Claim ..................................... 210
                     A. The Lapp Test and the District Court's Opinion   ............ 211
                     B. The Test for Directly Competing Goods ....................... 212
                     C. The District Court's Methodology ............................ 215
                IV.  Review of the District Court's Analysis ........................ 216
                     A. Similarity of the Marks ..................................... 216
                        1. Sight, Sound, Meaning .................................... 217
                        2. The Housemarks and the Disclaimer ........................ 218
                        3. The PTO's Rejection of Victoria's Secret's Application ... 220
                        4. Summary .................................................. 221
                     B. Strength of the Marks ....................................... 221
                        1. Distinctiveness or Conceptual Strength ................... 221
                        2. Commercial Strength of the Mark .......................... 224
                        3. Summary .................................................. 224
                     C. Product Similarity .......................................... 224
                     D. Marketing and Advertising Channels .......................... 225
                     E. Sophistication of Consumers ................................. 225
                     F. The Intent of the Defendant ................................. 225
                     G. Actual Confusion ............................................ 226
                     H. Combining the Factors ....................................... 227
                V.   The Reverse Confusion Claim .................................... 227
                     A. Introduction ................................................ 227
                     B. The Test for Reverse Confusion .............................. 229
                        1. The Factors that are the Same ............................ 229
                        2. Similarity of the Marks .................................. 229
                        3. Strength of the Marks .................................... 230
                           a. Commercial Strength ................................... 230
                           b. Distinctiveness or Conceptual Strength ................ 231
                

                        4. The Intent of the Defendant .............................. 232
                        5. Factors Relating to Actual Confusion ..................... 233
                        6. Other Relevant Facts ..................................... 234
                        7. Summary of the Test for Reverse Confusion ................ 234
                     C. The District Court's Opinion................................. 234
                     D. Guidance for Remand ......................................... 236
                        1. Introduction ............................................. 236
                        2. Similarity of the Marks .................................. 236
                        3. Strength of the Marks .................................... 236
                        4. Intent ................................................... 237
                     E. Summary ..................................................... 237
                VI. Conclusion....................................................... 238
                

Becker, Chief Judge.

The critical question in this trademark infringement case, before us for the second time, is whether a typical consumer is likely to confuse MIRACLESUIT swimwear with THE MIRACLE BRA swimwear.¹ The former is a product of Plaintiff A&H Sportswear Company ("A&H"), which manufactures ten percent of all swimsuits made in the United States. The latter is a product of Defendant Victoria's Secret, the lingerie leviathan that recently entered the swimwear market. A&H filed suit in the District Court for the Eastern District of Pennsylvania claiming that The Miracle Bra swimwear mark violates the Lanham Act because it is confusingly similar to the Miraclesuit swimwear mark, which A&H registered first. A&H contends that: (1) consumers are likely to wrongly associate The Miracle Bra with A&H (the direct confusion claim²); or, in the alternative, (2) consumers are likely to think that Miraclesuit is a product of Victoria's Secret (the reverse confusion claim).

During an extensive bench trial, A&H argued that Victoria's Secret should be enjoined from using The Miracle Bra mark for swimwear. Finding a "possibility of confusion," the District Court granted relief to A&H. Following an appeal to this Court that clarified that likelihood of confusion (instead of possibility of confusion) was the correct standard, the District Court concluded that A&H had failed to show by a preponderance of the evidence that Victoria's Secret's The Miracle Bra swimwear mark created a likelihood of either direct or reverse confusion with the Miraclesuit product.

In Interpace Corp. v. Lapp, Inc., 721 F.2d 460, 463 (3d Cir. 1983), this Court established a ten-factor test (the "Lapp" test) to determine the likelihood of confusion for direct confusion claims between goods that do not directly compete in the same market, but we have never decided what factors should be considered in the case of directly competing goods. The District Court therefore fashioned its own multi-factored test that approximates, but does not completely match, the Lapp test. In employing its test, the District Court acknowledged that the most important factor was the similarity of the marks, and determined that their overall commercial impressions were not similar.

The District Court placed particular emphasis on the fact that the The Miracle Bra mark typically appears alongside Victoria's Secret's housemark (the mark of the manufacturer), and that Victoria's Secret uses a disclaimer with its mark that explicitly states that The Miracle Bra swimwear is unrelated to Miraclesuit or A & H. The court also concluded that Victoria's Secret's intent, the paucity of credible incidents of actual confusion, and the sophistication of the consumers weighed in favor of Victoria's Secret, while the competitive proximity of the products and the strength of the Miraclesuit mark weighed in favor of A&H. Taking all this into account, the District Court found no likelihood of direct confusion between the marks, rejected A&H's direct confusion claim, and, on the assumption that the disclaimer would continue to be used in an effective manner, denied injunctive relief. Notwithstanding that likelihood of confusion is an issue of fact subject to deferential review, the District Court's disposition of the direct confusion claim has given rise to a number of important issues in this appeal.

A&H first contends that multi-factored tests, like the one used by the District Court, are inapplicable to competing goods, and that with directly competing goods a court should examine only the similarity of the marks. We disagree. Though a court need not look beyond the marks when goods are directly competing and the marks virtually identical, we 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. Our jurisprudence does not preclude this result, and the District Court did not err in taking other considerations into account.

Alternatively, A&H submits that the District Court erred as a matter of law by not following precisely the ten-factor Lapp test that we have previously developed to determine likelihood of confusion. It argues that by not considering certain factors that would clearly have weighed in favor of A&H, the District Court distorted the likelihood of confusion standard. We reject this argument for two reasons. First, we have developed the ten-factor Lapp test only as a guide. Although all of the factors can be useful, the Lanham Act does not require that they be followed precisely so long as the relevant comparisons suggested by the test are made. More importantly, although the District Court arguably used a creative test, all of the Lapp factors are integrated, in one way or another, into the court's analysis. Therefore, even if the Lapp test were mandatory, A&H could not show prejudice.

A&H also argues that, regardless of the test to be used, the District Court clearly erred in resting its finding that there was no likelihood of confusion on Victoria Secret's disclaimer. A&H asserts that it constitutes legal error even to consider such a disclaimer, but we disagree, seeing no reason to forbid courts from considering this kind of distinguishing feature. In this case, the District Court properly weighed the disclaimer. We also reject A&H's assertion that the District Court erred in failing to give weight to the refusal of a Patent and Trademark Office ("PTO") examining attorney to register The Miracle Bra mark...