Yes, I know that's contradictory, but it's a result of expansive doctrine which courts then seek to cabin by finding reasons to disregard certain evidence--such as evidence here that people in a sophisticated business still made errors about which entitty they were dealing with.
Arrowpoint Capital Corp. v. Arrowpoint Asset Management, LLC,
2014 WL 2123572, No. 10–161 (D. Del. May 20, 2014)
Arrowpoint Capital sued AAM and a number of related
Arrowpoint entities (using names like Arrowpoint Partners GP and Arrowpoint
Fundamental Opportunity Fund), alleging trademark infringement through
defendants’ use of the Arrowpoint name and logo. The court denied a preliminary
injunction.
The plaintiff is a holding corporation; its subsidiaries Arrowood
Indemnity Company and Arrowood Surplus Lines Insurance Company provide insurance and related services under
the trade name “Arrowpoint Capital.” As
part of its business, it manages assets derived from policy premiums, and
alleged that its primary source of income is the investment of its reserves in
fixed-income securities, enabling it to meet its financial obligations. It also allegedly “provided investment
management services to an unaffiliated insurer from March 4, 2007, until
October 15, 2009,” and marketed its investment management services to other
insurers and pension funds. Plaintiff
has registered ARROWPOINT CAPITAL and its design mark for insurance-related
products and services.
Meanwhile, defendants provide investment-related services
including individual investment management accounts and three separate private
investment funds, commonly referred to as “hedge funds.” They manage over $1.5
billion in assets for “high net worth individuals, companies operating
primarily for the benefit of wealthy individuals, family foundations, or
trusts.” Defendants allegedly selected
their marks after doing a trademark search and having counsel review their
availability.
Defendants' logo |
After plaintiff learned about defendants, it applied to
register ARROWPOINT CAPITAL for “investment management services”; AAM opposed;
and TTAB proceedings are currently suspended because of the pending litigation.
Defendants argued that plaintiff had no rights in investment
management services, only insurance. But that’s a question of confusion. Plaintiff’s rights in insurance related areas
were presumptively valid, given the registration, and the marks were inherently
distinctive.
Plaintiff argued that there were repeated instances of
actual confusion by brokage personnel who handle fixed-income securities
transactions. Defendants disagreed and
argued that the high level of consumer sophistication prevented any problem,
and also that the alleged confusion was among suppliers, not consumers. Sadly, the court rejected the defendants’
argument that the Lanham Act is about consumer protection and that the law does
not protect against confusion generally.
Instead, the Act covers “the use of trademarks which are likely to cause
confusion, mistake, or deception of any kind, not merely of purchasers nor
simply as to source of origin.”
The court first found the parties’ logos not confusingly
similar; the similarity was negligible.
Both had a chevron and a horizontal line, but the AC logo chevron was
small and uses the chevron as part of the dominant feature, which was the
phrase “Arrowpoint Capital.” By contrast, the AAM logo usesd a large chevron
surrounded by parallel lines to create its dominant feature, prominently placed
in the center of the mark. The full-color versions of the logos were even more
distinct: the former was dominated by blue lettering and had a thin red accent
line. The AAM logo had four distinct colors, drawing the viewer’s eye to the
center of the mark. But, of course, the
word marks were much more similar, with “Arrowpoint” the dominant feature and
first world; additional terms “asset management,” “partners,” “fundamental
opportunity fund,” and “structured opportunity fund” changed the overall visual
impact and sound of the marks, but conveyed a meaning somewhat similar to
“capital.” “But courts in this circuit
have found that very similar marks are able to coexist in the financial
services market, where consumers take greater care than many others, when the
parties use their full names in ‘official’ communications.” For the word marks, similarity slightly
favored the plaintiff.
Strength of the mark: inherently distinctive/suggestive, but
low commercial strength. The plaintiff’s
only support for marketplace strength was a claim that it spent about $390,000
promoting its marks. The court couldn’t determine whether that was sufficient
to establish marketplace recognition for investment management services. (Defendants
claimed to have spent almost double that amount for the same purpose.) This factor was neutral.
Actual confusion: While actual confusion is highly probative
of likely confusion, “isolated and idiosyncratic” confusion can be discounted,
as can confusion resulting from “mere carelessness or accident.” Plaintiff
argued that broker dealers had been misled.
Its evidence came from third-party inquiries about the relationship
between the parties; misdirected trades; and incidents of mistaken identity,
which inhibited the plaintiff’s ability to complete trades.
For example, a Royal Bank of Scotland salesperson contacted
the plaintiff regarding a large security purchase that the defendants had made
using a different broker, and asked why the plaintiff had not engaged RBS for
the transaction. A Barclays Capital
lawyer negotiating a security agreement for the plaintiff asked whether it was
“a different entity from the arrowpoint that is being represented by [a
different law firm].” In connection with
a securities agreement, Citigroup sent a request for general information
regarding the plaintiff, and asked it to do the same exercise for two of the
defendants’ entities. JP Morgan misallocated
the defendants’ trades to the plaintiff’s brokerage account three times, though
the plaintiff rejected each trade before settlement, and the plaintiff’s
representative testified that misallocated trades are not uncommon in the
financial services industry. Also, the
plaintiff alleged that it had trouble acquiring certain
securities/participating in a corporate bond offering because of confusion, but
defendants argued that confusion wasn’t the cause of these difficulties and
that there was ultimately no problem.
The court was skeptical about many of the alleged inquiries
about the parties’ affiliation, because the testimony came from interested
sources instead of the allegedly confused people. And the court didn’t have enough evidence to
distinguish confusion from mere carelessness, mistake, or clerical error on a
broker’s part. There was also no evidence that three misdirected trades were significant,
absent evidence about the total number of trades. The remaining incidents also
didn’t convince the court that confusion was likely. This factor slightly
favored the plaintiff.
Consumer care and sophistication strongly favored the
defendants. Along with the large sums at issue and sophisticated consumers, the
parties make individual, face-to-face presentations to potential investors, “which
militates against a likelihood of confusion.”
The court couldn’t evaluate the length of time the mark was used
without actual confusion, as the parties had conflicting evidence about the
scope of defendants’ activities.
Defendants’ intent: Defendants
argued that “AAM selected its marks because arrowpoints had personal
significance to [AAM’s founder] and to suggest a connection between digging for
arrowpoints and the thorough manner in which AAM conducts the fundamental
research on which it bases its investment management services.” Plus,
defendants’ clearance included counsel’s review of a full U.S. availability
trademark search report, “which indicated that the plaintiff was engaged in
property and casualty insurance, not investment management or related services.”
This favored defendants.
Channels of trade and advertising media: both parties
promote their services through industry meetings, events, and direct
presentations to prospective clients. But defendants target events of interest
to hedge fund investors, family foundations, and endowments. Plaintiff doesn’t “because
it is not a hedge fund.” “Further, the defendants rely on word-of-mouth
referrals, which intuitively eliminate the possibility of confusion.” And the
parties use direct client presentations incorporating their respective distinct
logos. This factor strongly favored the defendants.
Similarity of target customers and the relationship of the
goods in the minds of customers: The parties sought distinct groups of
customers. Plaintiff targeted customers
“experiencing some sort of financial distress,” while the defendants pursued
“high net worth individuals and institutional investors,” not distressed
companies. While insurance companies and
pension funds are potential clients for both parties, those clients would
retain the parties for different purposes—the plaintiff’s expertise is in
fixed-income investments, while the defendants claim to “offer expertise across
the capital spectrum.” While some
potential customers might overlap, there was still little likelihood of
confusion because the parties offer “distinctly different investment management
strategies to generally different classes of investors.”
Moreover, “any broker-dealer confusion is attributable to
the similarity of the marks and the fungible nature of commonly traded
securities” and shouldn’t be weighed again under the similarity of customers
factor. Broker-dealers offering
fixed-income securities were selling the same things, no matter who was buying
them; any weight given to their confusion was properly addressed under the
actual confusion factor.
The balance of the factors tipped (no pun intended) in defendants’
favor.
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