Converse, Inc. v. Int'l Trade Comm'n

909 F.3d 1110

CONVERSE, INC., Appellant

v.INTERNATIONAL TRADE COMMISSION, Appellee

SKECHERS U.S.A., INC., New Balance Athletics, Inc., FKA New Balance Athletic Shoe, Inc., HU Liquidation, LLC, FKA Highline United LLC, Intervenors

2016-2497

United States Court of Appeals, Federal Circuit.

Decided: October 30, 2018

Christopher J. Renk, Banner & Witcoff, Ltd., Chicago, IL, argued for appellant. Also represented by Aaron Patrick Bowling, Michael Joseph Harris, Audra Carol Eidem Heinze ; Dale M. Cendali, Kirkland & Ellis LLP, New York, NY; John C. O'Quinn, Washington, DC.

Clint A. Gerdine, Office of the General Counsel, United States International Trade Commission, Washington, DC, argued for appellee. Also represented by Dominic L. Bianchi, Wayne W. Herrington.

Morgan Chu, Irell & Manella LLP, Los Angeles, CA, argued for intervenor Skechers U.S.A., Inc. Also represented by Grace Chen, Samuel Kai Lu, Jane Shay Wald ; Barbara A. Murphy, Foster, Murphy, Altman & Nickel, PC, Washington, DC.

Mark S. Puzella, Fish & Richardson, PC, Boston, MA, argued for intervenors New Balance Athletics, Inc., HU Liquidation, LLC. Intervenor New Balance Athletics, Inc. also represented by Sheryl Garko, Richard David Hosp, Robert M. O'Connell, Jr. ; Elizabeth Eilleene Brenckman, New York, NY; Thomas S. Fusco, Richard Alex Sterba, Washington, DC. Intervenor HU Liquidation, LLC also represented by Jeff E. Schwartz, Austen Conrad Endersby, Fox Rothschild, LLP, Washington, DC.

Gregory Dolin, University of Baltimore School of Law, Baltimore, MD, for amici curiae Saurabh Vishnubhakat, Gregory Dolin, Christopher Frerking, Hugh Hansen, Jay P. Kesan, Irina D. Manta, Kristen J. Osenga, Eric Priest, Ted M. Sichelman.

James J. Aquilina, II, Design IP, PC, Allentown, PA, for amicus curiae Industrial Designers Society of America, Inc.

Adam Mossoff, Antonin Scalia Law School, George Mason University, Arlington, VA, for amicus curiae Adam Mossoff.

Mark Schultz, Antonin Scalia Law School, George Mason University, Arlington, VA, for amicus curiae Mark Schultz.

Cynthia S. Arato, Shapiro Arato LLP, New York, NY, for amici curiae Fashion Law Institute, Christian Louboutin SAS, Tiffany and Company. Also represented by Mary Catherine Brennan, Fashion Law Institute, New York, NY.

David Hal Bernstein, Debevoise & Plimpton LLP, New York, NY, for amici curiae All Market Inc., Case-Mate, Inc., General Mills, Inc., Herman Miller, Inc., Honeywell International Inc., Mark Anthony International SRL, Owens Corning Intellectual Capital, LLC, Princeton Vanguard, LLC, Snyder’s-Lance, Inc.

Before Dyk, O’Malley, and Hughes, Circuit Judges.

Opinion concurring-in-part, dissenting-in-part filed by Circuit Judge O’Malley.

Dyk, Circuit Judge.

Converse, Inc., appeals from a final determination of the International Trade Commission ("ITC") that held invalid Converse’s trademark in the midsole design of its Chuck Taylor All Star shoes, U.S. Trademark Registration No. 4,398,753 ("the ’753 trademark"). Because it found the registered mark invalid and that Converse could not establish the existence of common-law trademark rights, the ITC determined there was no violation of section 337 of the Tariff Act of 1930, as amended, 19 U.S.C. § 1337 (2012), by the importation of the accused products. The ITC nonetheless addressed infringement, finding that various accused products would have infringed Converse’s mark if valid.

We hold that the ITC erred in applying the wrong standard in aspects of both its invalidity and infringement determinations. We vacate and remand for further proceedings.

BACKGROUND

This case involves alleged infringement of Converse’s rights in trade dress arising from the common law and its trademark registration. The ’753 trademark was issued to Converse on September 10, 2013, and describes the trade-dress configuration of three design elements on the midsole of Converse’s All Star shoes. In particular, as described in the registration, "the mark consists of the design of the two stripes on the midsole of the shoe, the design of the toe cap, the design of the multi-layered toe bumper featuring diamonds and line patterns, and the relative position of these elements to each other." The mark is depicted in a single drawing in the registration:

Converse asserts common-law rights in the same mark predating its registration.

Section 337 provides a remedy at the ITC for, among other things, "[t]he importation into the United States, the sale for importation, or the sale within the United States after importation by the owner, importer, or consignee, of articles that infringe a valid and enforceable United States trademark registered under the Trademark Act of 1946." 19 U.S.C. § 1337(a)(1)(C). On October 14, 2014, Converse filed a complaint with the ITC alleging violations of section 337 by various respondents in the importation into the United States, the sale for importation, and the sale within the United States after importation of shoes that infringe its trademark. The ITC instituted an investigation on November 17, 2014. Although some of the respondents defaulted, several appeared and actively participated in the ITC proceedings, asserting that the accused products did not infringe the mark and that, in any event, it was invalid. These respondents have now intervened in Converse’s appeal and are referred to herein as the intervenors.

A central issue was whether the mark had acquired secondary meaning. Converse asserted that it had acquired secondary meaning, the mark having been used by Converse since 1932. The intervenors, on the other hand, disputed secondary meaning, claiming that Converse’s use of the mark had not been substantially exclusive and offering a survey (the Butler survey) concluding that consumers did not associate the Converse mark with a single source. The parties also disputed infringement. Both the ITC Administrative Law Judge ("ALJ") and the ITC treated Converse as claiming two separate marks—a common-law mark and a registered mark.

On November 17, 2015, the ALJ issued an initial determination finding violations of section 337 by the intervenors because the registered ’753 trademark was infringed and not invalid, relying on the presumption of secondary meaning afforded to the registered mark. However, the ALJ found that Converse had not established secondary meaning for the common-law mark (but that, if protectable, the common-law mark was infringed). Converse, the intervenors, and the ITC staff petitioned for review.

On June 23, 2016, the ITC issued its final determination. The ITC reversed the ALJ’s finding of no invalidity of the registered mark. The ITC found the registered mark invalid in light of its determination that the mark had not acquired secondary meaning. With respect to the common-law mark, the ITC affirmed the ALJ’s finding that the mark had not acquired secondary meaning. The ITC determined that, if either trademark was not invalid or protectable, it was infringed, affirming the ALJ’s finding in this respect. The ITC refused to enter an exclusion order with respect to any of the respondents, including those who had defaulted. Converse timely appealed, and we have jurisdiction under 28 U.S.C. § 1295(a)(6).

The court held oral argument on February 8, 2018. On June 7, 2018, the court requested supplemental briefing on the following questions:

1. Was Converse required to show priority in the mark (i.e., secondary meaning at the time of first infringement) without regard to the presumption of validity that would exist if the trademark registration is valid?

2. What significance does the registration of the mark or its validity have in these proceedings?

3. Was it necessary or appropriate for the ITC to address the validity of the registered mark?

Converse, Inc. v. Int’l Trade Comm’n , 726 F. App'x 818, 819 (Fed. Cir. 2018) (per curiam) (nonprecedential order). Each of the parties filed supplemental briefs in response.

DISCUSSION

We review the ITC’s legal determinations de novo and its factual findings for substantial evidence. Cisco Sys., Inc. v. Int’l Trade Comm’n , 873 F.3d 1354, 1360–61 (Fed. Cir. 2017). We conclude that the ITC made a series of errors that require a remand. In Part I, we discuss the relevant date for assessing secondary meaning, the significance of Converse’s trademark registration, and the benefits arising from that registration. In Part II, we define the factors to be weighed in determining whether a mark has acquired secondary meaning. And in Part III, we address the standard for evaluating likelihood of confusion for the purposes of determining infringement.

I. The Timing of the Secondary Meaning Inquiry and the Relevance of Trademark Registration

The ITC’s first error was failing to distinguish between alleged infringers who began infringing before Converse obtained its trademark registration and those who began afterward. This error was not identified as such in Converse’s briefing, no doubt because the error was beneficial to Converse. The intervenors argued in their principal and supplemental briefs that the ITC erred in this respect.

In addressing these issues, we think that it is confusing and inaccurate to refer to two separate marks—a registered mark and a common-law mark. Rather, there is a single mark, as to which different rights attach from the common law and from federal registration. E.g. , In re Int’l Flavors & Fragrances Inc. , 183 F.3d 1361, 1366 (Fed. Cir. 1999) ("The federal registration of a trademark does not create an exclusive property right in the mark. The owner of the mark already has the property right established by prior use .... However, those trademark owners who register their marks with the [Patent and Trademark Office (‘PTO’) ] are afforded additional protection not provided by the common law."); In re Deister Concentrator Co. , 289 F.2d 496, 501 (CCPA 1961) ("[T]he Lanham Act does not create trademarks. While it may create some new substantive rights in trademarks, unless the trademarks pre-exist there...