This Federal Circuit trademark case is one of the more interesting ones I’ve seen recently. It’s chock full of thought-provoking legal issues. And it gave me a reason to carefully study high-end handbags online. This is a win-win situation, in my book.
Coach Services, Inc. v. Triumph Learning, Inc., No. 2011-1129 (Fed. Cir. Feb. 21, 2012) (Judges Newman, O’Malley, and Reyna)
I imagine Coach wants its COACH mark to live forever. As this case indicates, Coach also wants to be the only company that can use a “Coach” mark for any product. This goal ultimately comes down to fame—trademark fame. This time, though, fame didn’t conquer all.
All isn’t lost for Coach though. The Federal Circuit wasn’t convinced that Triumph’s marks—COACH for study guides—have become distinctive enough to get trademark registration either, and asked the Trademark Trial and Appeal Board (TTAB) to take a second look at whether Triumph had met acquired distinctiveness requirements.
Standardized Tests and … Sunglasses?
Triumph produces computer software and books to help teachers and students prepare for standardized tests. In 2004, it applied for 3 U.S. trademark registrations for COACH marks connected with these goods. The trademark examiner approved the applications and published them for opposition in September 2005.
Coach sells “accessible luxury” goods, like wallets, sunglasses, watches, and handbags. (“Accessible luxury” apparently means you have around $300 to spend on a handbag.) Coach is prominent in the retail scene: it has 400 retail stores, sells its products online and in department stores, and advertises in fashion magazines like Elle, Vogue, and Vanity Fair. Even though Coach is not, and has no plans to be, in the education and test-prep space, Coach opposed Triumph’s applications on the grounds of likelihood of confusion, dilution, and lack of acquired distinctiveness.
After several years of proceedings, the TTAB issued a decision in 2010 finding in favor of Triumph on all 3 substantive issues. Coach appealed to the Federal Circuit, arguing: (1) the TTAB should have given more weight to the fame factor in its likelihood of confusion analysis, (2) the TTAB ignored important evidence that showed Coach’s mark is famous for dilution purposes, and (3) the TTAB shouldn’t have found that Triumph acquired distinctiveness
Coach hoped that “fame” would be its linchpin for success on both the likelihood of confusion and the dilution claims. But these two claims incorporate different standards for fame, and the Federal Circuit looks at different factors to evaluate whether a mark is famous when analyzing these two discrete claims. In this case, the court didn’t think Coach’s fame could block Triumph’s applications on likelihood of confusion or dilution grounds.
Fame: The Classic
Since we see so few Federal Circuit trademark cases, here’s a quick reminder of how that court looks at likelihood of confusion. The court applies a 13-factor test called the “DuPont” test (after the case in which it was first used), and it usually analyzes only the factors that are relevant to a particular case. It’s not a mathematical test—in some cases, one factor favoring one party can outweigh 4 factors favoring the other party.
Here, the court looked at 5 of the 13 factors: (1) the fame of Coach’s COACH mark; (2) the similarity of the goods; (3) the channels of trade; (4) the sophistication of consumers; and (5) how similar the marks are as a whole.
Fame in the DuPont test is “The Classic”—the Irene Cara version. Even though fame alone can’t establish a likelihood of confusion, the factor gets a lot of weight—even more weight than a strong mark would get. Coach was able to establish that its mark is famous, for likelihood of confusion purposes, by introducing evidence of billions of dollars in sales, millions of dollars spent on advertising, that its products are sold in roughly 1,000 third-party retailers in addition to its own retail stores, and that a number of articles have commented on the mark’s renown, among other facts.
But even though Coach’s mark aced the “The Classic” test, the court agreed with the TTAB that there’s no likelihood of confusion between the marks. Considering the other factors, the court accepted the TTAB’s conclusions on the other factors. First, the marks are not similar in the likelihood of confusion sense. Even though they use the same word, the connotation and commercial impression of the marks is entirely different—a customer looking for teaching materials isn’t likely to think of COACH handbags. Second, the parties’ goods are entirely unrelated. And third, the parties’ products are sold in different ways to different people. The Federal Circuit didn’t buy Coach’s argument that the consumers of both products are ordinary people, like teachers, who might purchase Coach’s goods “without a great deal of thought.” The court noted the TTAB’s finding that teachers put a lot of thought into what materials they purchase, which makes likelihood of confusion less likely. (And would someone with a teacher’s salary buy one of these without thinking long and hard about it?)
Despite these findings, Coach thought its fame should outweigh the other factors. The Federal Circuit weighed the factors de novo—that is, without regard to how the TTAB weighed them—and concluded that no likelihood of confusion exists.
Fame: The Gaga
The next part of the Federal Circuit’s Coach opinion addressed trademark dilution, which is the concept that when a mark is very famous, any other trademark that’s similar to the famous mark could impair the famous mark’s distinctiveness (dilution by blurring) or harm the famous mark’s reputation (dilution by tarnishment). Dilution only shows up at the Federal Circuit through opposition or cancellation proceedings, since it’s not something a trademark examiner looks for. A mark owner has to prove four elements to succeed on a dilution claim: (1) it owns a distinctive, famous mark, (2) the defendant is using an allegedly diluting mark in commerce, (3) the plaintiff’s mark became famous prior to the defendant’s starting to use the diluting mark, and (4) the defendant’s use of the mark is likely to cause dilution. The critical elements for Coach were proving that its mark is famous and that it became famous before Triumph entered the scene.
Fame, for dilution purposes, is harder to prove than fame for likelihood of confusion. I’ll call the dilution test “The Gaga” in honor of Lady Gaga’s album and her vigilant trademark enforcement efforts. The factors courts consider in “The Gaga” analysis are: (1) the extent of the advertising and publicity of the mark has been, (2) the extent of the sales of the goods or services associated with the mark, (3) the extent of actual recognition of the mark, and (4) whether the mark was registered under one of the Trademark Acts that preceded the Lanham Act. (This last factor isn’t relevant here.)
To pass “The Gaga,” the mark must be so famous that it’s a household name—when people hear the term, they almost automatically think of the trademark owner. In “The Classic,” there’s a sliding scale—a trademark can be a little famous or a lot famous. But in “The Gaga,” the mark is either famous or it’s not. And “niche fame”—wide recognition in a particular group of consumers—won’t cut it either.
I’m highlighting these differences because it’s possible for a mark to pass “The Classic” and fail “The Gaga,” and that’s what happened to Coach here. Coach asserted the same evidence to prove fame under “The Gaga” that it used under “The Classic,” but that evidence was insufficient to meet the demanding dilution standard. Specifically, the Federal Circuit pointed to a number of flaws in Coach’s arguments. For one thing, the fact that Coach has 16 federal trademarks registration has no bearing on its general public recognition. For another, a brand awareness study on which Coach relied showed high awareness of the COACH mark only among the limited demographic of women ages 13-24, not the public generally. Additionally, the court gave no credence to joint marketing campaigns with LEXUS and CANON because Coach failed to provide any evidence demonstrating the success of those campaigns. All in all, Coach needed to dress up its evidence to convert “The Classic” into “The Gaga.”
All in the Timing
Coach’s other major misstep was its bad timing. As I mentioned above, a plaintiff alleging dilution has to prove that its mark was famous before the defendant started using the supposedly diluting mark. Triumph filed its applications in 2004, so Coach had to prove that COACH was famous before that year.
Again, Coach’s evidence fell short. Its brand awareness study was conducted in 2007. Several of the articles and media mentions it submitted had publication dates post-2004. Most significantly, the only sales and advertising records admitted into the record were for 2008, so nothing in the record showed the extent of Coach’s U.S. sales and advertising in the pre-2004 time period. The post-2004 proof further perforated Coach’s already imperfect evidence.
The timeline issue also brings up an interesting procedural point. Coach tried to admit its annual reports from 2001-2008 into evidence using a notice of reliance dated October 20, 2008. A notice of reliance allows the TTAB to presume that a document is genuine and allows a party to skip the cumbersome step of having a live witness authenticate it. Under the Trademark Rules of Practice, only certain documents, like trademark registrations and printed publications, can be admitted using a notice of reliance, and as of 2008, annual reports were not among them.
In 2010, in Safer Inc. v. OMS Investments, Inc., the TTAB changed its policy on notices of reliance: documents downloaded from the Internet could be admitting using a notice of reliance if they contained publication or access date information and identified its source (i.e., the URL). The TTAB clarified that format matters; it specifically mentioned, in a footnote, that “‘a corporate annual report available only in paper form may not be admissible through a notice of reliance because it is not a document in general circulation,’ while a report ‘in digital form publically available over the Internet would be admissible through a notice of reliance because its publication on the Internet places it in general circulation.’” (See page 10 of the Coach opinion.)
Coach argued that its annual reports should come in under the new rule because they were available online, and the new rule went into effect before the TTAB issued its decision in this case. The TTAB mentioned the Safer case in its opinion but distinguished Coach’s reports because they weren’t printed from the Internet. Since no witness testimony authenticated the annual reports, the TTAB excluded them.
The Federal Circuit sided with the TTAB. The court pointed out that the Safer case was irrelevant—annual reports were not admissible via a notice of reliance in 2008, when Coach submitted its notice of reliance. Moreover, even if Coach had better timing, its printed annual reports didn’t have the required identifying information to meet the new Safer standard.
The court made a final point about “The Gaga” standard:
[W]e pause to emphasize the fact-specific nature of our holding today. While the burden to show fame in the dilution context is high—and higher than that for likelihood of confusions purposes—it is not insurmountable. We do not hold that [Coach] could never establish the requisite level of fame for dilution purposes. We hold only that, on the record presented to it, the [TTAB] had substantial support for its conclusion that [Coach’s] evidentiary showing was just too weak to do so here.
Despite its closing comment, the Federal Circuit’s analysis of this issue makes clear that a party proving dilution-level fame needs a hefty amount of strong evidence above and beyond what it submits for likelihood of confusion.
Does “Coach” and “Test” Still Remind You of Gym Class?
Triumph didn’t entirely triumph at the Federal Circuit, though. Coach argued that Triumph’s use of “Coach” for educational materials was merely descriptive and not entitled to registration.
First, a procedural point. Triumph claimed that Coach didn’t have standing to assert descriptiveness because Coach doesn’t use its COACH mark descriptively. Plus, Coach admitted that someone using “Coach” descriptively wouldn’t harm its brand. According to Triumph, “no harm” translates to “no standing” for this claim. The Federal Circuit, like the TTAB, rejected Triumph’s argument. The court reminded Triumph that once a party has standing to oppose a registration on any ground, it can raise additional claims.
Moving onto the substance. The TTAB acknowledged that the mark is descriptive for the goods, but that Triumph had gained enough recognition that the mark had acquired distinctiveness (see 15 U.S.C. § 1052(f).) The Federal Circuit disagreed that Triumph had proven acquired distinctiveness. The court found that the TTAB erred by disregarding several books that use “coach” descriptively in their titles. The TTAB dismissed those books partly because they were published after Triumph filed its applications. But the court clarified that acquired distinctiveness should be tested at the time the issue is being considered, not the filing date. The Federal Circuit sent the case back to the TTAB so it could reconsider this issue.
It’s interesting that Coach’s likelihood of confusion and dilution claims, which were unsuccessful, gave it standing to bring this descriptiveness claim, which might ultimately block Triumph’s registration.
The key lesson from this case, though, is that fame doesn’t always equal power.
Check out the Coach opinion for yourself.
Photo credit: Caleb Kung