In trademark law, “likelihood of confusion” is the primary legal standard for trademark infringement.
A recent decision from the 9th Circuit Court of Appeals nicely articulates the black letter law behind the “likelihood of confusion” standard:
To show trademark infringement, a plaintiff must establish ownership of a trademark and a likelihood of consumer confusion. AMF, Inc. v. Sleekcraft Boats, 599 F.2d 341, 348–49 (9th Cir. 1979), abrogated on other grounds by Mattel, Inc. v. Walking Mountain Prods., 353 F.3d 792 (9th Cir. 2003). When determining whether a likelihood of confusion exists we weigh eight factors:
- the strength of the mark;
- the proximity of the goods;
- the similarity of the marks;
- evidence of actual confusion;
- marketing channels used;
- the type of goods and the degree of care likely to be exercised by the purchaser;
- defendant’s intent in selecting the mark; and
- likelihood of expansion of the product lines.
Id. The factors are intended to act as “guideposts” for determining whether a likelihood of consumer confusion exists, and are adaptable to specific cases. Fortune Dynamic, Inc. v. Victoria’s Secret Stores Brand Mgmt., Inc., 618 F.3d 1025, 1030 (9th Cir. 2010); see also Network Automation, Inc. v. Advanced Sys. Concepts, Inc., 638 F.3d 1137, 1151 (9th Cir. 2011). Quinta Real argues that the district court misapplied all of the above factors. But, for the reasons that follow, we conclude that the clear weight of the factors supports the district court’s conclusion that a likelihood of confusion exists.
1. Strength of the mark
The strength of a mark determines the level of trademark protection it is given. Brookfield Commc’ns, Inc. v. W. Coast Entm’t Corp., 174 F.3d 1036, 1058 (9th Cir. 1999). “The stronger a mark—meaning the more likely it is to be remembered and associated in the public mind with the mark’s owner—the greater the protection it is accorded by the trademark laws.” Id.; see One Indus., LLC v. Jim O’Neal Distrib., Inc., 578 F.3d 1154, 1164–65 (9th Cir. 2009); GoTo.com, Inc. v. Walt Disney Co., 202 F.3d 1199, 1207–08 (9th Cir. 2000). We determine the strength of a mark by examining its conceptual strength—that is, where it falls in the spectrum of marks—and the strength of the mark within the marketplace. One Indus., 578 F.3d at 1164.
Quinta Real does not challenge the district court’s conclusion that La Quinta’s mark is strong because it has extensive secondary meaning and a robust commercial presence. Instead, Quinta Real argues that because “both parties have strong marks, confusion is not likely to occur,” pushing against the district court’s conclusion that “[b]ecause both marks are strong, this factor weighs in favor of La Quinta.”
Both the district court and Quinta Real mistake this factor, and Quinta Real’s argument is without merit. The strength of the junior mark, here Quinta Real, is important to weighing this factor in cases of reverse infringement. In those cases, the issue is whether the strength of the junior user’s mark is so significant that it may overpower the senior user’s mark. See Surfvivor Media, Inc. v. Survivor Prod., 406 F.3d 625, 631–32 (9th Cir. 2005); Cohn v. Petsmart, Inc., 281 F.3d 837, 840 (9th Cir. 2002); Walter v. Mattel, Inc., 210 F.3d 1108, 1111 n.2 (9th Cir. 2000). This is not a reverse infringement case, and the district court should not have considered the strength of Quinta Real’s mark in determining what level of trademark protection to extend to La Quinta’s mark. As such, the district court erred in its analysis, but it correctly concluded that the factor weighs in favor of La Quinta because its mark is descriptive with significant secondary meaning and a large presence in the hotel marketplace.
2. Proximity of the Services Offered
Goods or services that are closely related are generally more likely than unrelated goods or services to confuse the public as to their sources. Brookfield, 174 F.3d at 1055. “The proximity of goods is measured by whether the products are: (1) complementary; (2) sold to the same class of purchasers; and (3) similar in use and function.” Network Automation, 638 F.3d at 1150.
The district court found that both La Quinta and Quinta Real offer hotel services, and while they operate hotels in different tiers of the market, “a reasonable customer could conclude that the two hotel chains are from the same source because some American hotels operate several different levels of hotels under one umbrella brand.” It also noted that “the rates of the two hotel chains overlap significantly,” and for these reasons it concluded that the factor favors La Quinta. Id. Quinta Real points to no evidence showing that the district court’s conclusion regarding umbrella brands is clearly erroneous. Even if La Quinta has no plans to expand into the luxury hotel market, the district court reasonably concluded that the varying tiers of hotel service do not render the services less related because hotel consumers frequently encounter hotel umbrella brands, including Marriott and Hilton. We agree that this factor favors La Quinta.
3. Similarity of the Marks
The similarity of the marks is “a critical question in the likelihood-of-confusion analysis.” GoTo.com, 202 F.3d at 1205. To assess similarity, we compare the two marks in terms of sight, sound, and meaning, considering the marks “as a whole, as [they] appear in the marketplace.” M2 Software, Inc. v. Madacy Entm’t, 421 F.3d 1073, 1082 (9th Cir. 2005) (quotation marks and citation omitted). Generally, similarities between the marks weigh more heavily than differences. Sleekcraft, 599 F.2d at 351. And the amount of similarity required to support a likelihood of confusion declines as the services themselves become increasingly similar. Century 21 Real Estate Corp. v. Century Life of Am., 970 F.2d 874, 877 (Fed.Cir. 1992); Mobil Oil v. Pegasus Petroleum, 818 F.2d 254, 258 (2d Cir. 1987); E. Remy Martin & Co ., S.A. v. Shaw–Ross Int’l Imports, Inc., 756 F.2d 1525, 1530 (11th Cir. 1985); Exxon Corp. v. Texas Motor Exch. of Houston, Inc., 628 F.2d 500, 505 (5th Cir. 1980). Here, the district court correctly concluded that the marks are similar and that this factor favors La Quinta.
Quinta Real argues that: (1) the district court erroneously considered “Quinta” in isolation from other differentiating elements; and (2) by opening hotels in Mexico and coexisting with the La Quinta Resort and Club in California, La Quinta cannot argue that the marks are overly similar. We reject these arguments.
The district court’s conclusion that the marks are similar is not clearly erroneous. It examined the sight, sound, and meaning of “La Quinta” and “Quinta Real,” and reasonably determined that the words shared a similar meaning when translated (“country home” and “royal villa”) and an identical dominant word: “Quinta.” See E. & J. Gallo Winery v. Gallo Cattle Co., 967 F.2d 1280, 1292 (9th Cir. 1992) (holding that although the mark logos were dissimilar, “it does not appear that the district court committed clear error in relying on the dominant element GALLO for its finding of similarity in sight, sound and meaning”). This conclusion is supported by the fact that the dominant words frequently appear without anything more in the marketplace. Where both marks are attached to such closely related services and the senior user has a strong mark, the similarity of the words is sufficient for this factor to weigh in favor of La Quinta.
Quinta Real’s second argument regarding La Quinta’s expansion into Mexico does not succeed because it seeks to equate two separate trademark protection systems operating in different markets. While we are troubled by the inequitable circumstances, La Quinta’s use of its mark in Mexico does not determine whether the marks are similar or whether La Quinta will suffer injury in the United States by Quinta Real’s expansion into this market. As such, the district court did not clearly err in finding the marks to be similar.
4. Evidence of Actual Confusion
“Evidence that use of the two marks has already led to confusion is persuasive proof that future confusion is likely.” Sleekcraft, 599 F.2d at 352. However, due to “the difficulty of garnering such evidence, the failure to prove instances of actual confusion is not dispositive· [T]his factor is weighed heavily only when · the particular circumstances indicate such evidence should have been available.” Id.; see Brookfield, 174 F.3d at 1050 (“[D]ifficulties in gathering evidence of actual confusion make its absence generally unnoteworthy.”). Despite Quinta Real’s contention that the two marks have coexisted for twenty-five years and, therefore, evidence of actual confusion should be available, Quinta Real and La Quinta have never both operated in the U.S. market. Quinta Real has American customers, but it has only offered services within Mexico. The district court correctly concluded that a lack of actual confusion in the United States does not weigh against La Quinta.
5. Marketing Channels Used
When examining the marketing channels used by the competing companies, we consider where the goods or services are sold, the sales and marketing methods employed, and the class of purchasers exposed to the marketing efforts. Sleekcraft, 599 F.2d at 353. The district court concluded that this factor weighed in favor of La Quinta because the marketing efforts of La Quinta and Quinta Real “converge with third-party internet travel sites and guidebooks.” This conclusion is supported by evidence in the record showing that both La Quinta and Quinta Real use internet travel sites such as Expedia.com and Orbitz.com to reach consumers, as well as placements in travel guidebooks. The use of identical third-party travel sites is particularly likely to cause confusion because “it allows for [the] competing marks to be encountered at the same time, on the same screen.” Perfumebay.com Inc. v. eBay, Inc., 506 F.3d 1165, 1174 (9th Cir. 2007) (quoting GoTo.com, 202 F.3d at 1207); see Network Automation, 638 F.3d at 1149. The district court correctly concluded that this factor favors La Quinta.
6. Type of Services and Degree of Care
Under this factor we look at the type of good or service offered and the degree of care one would expect from “the average buyer exercising ordinary caution.” Sleekcraft, 599 F.2d at 353. The district court found that 70% of Quinta Real’s guests are business travelers who rely on others to make their reservations and that on average guests stay at Quinta Real hotels for 2.4 nights and spend $439 per stay on their rooms. Combined with the overlapping marketing channels and room rates, the district court concluded that this factor favors La Quinta. That most of Quinta Real’s guests are business travelers who stay only a short amount of time at the hotel and spend a relatively modest sum supports the district court’s conclusion that this factor favors La Quinta, and we find no error on the part of the district court. Cf. Official Airline Guides, Inc. v. Goss, 6 F.3d 1385, 1393 (9th Cir. 1993) (concluding that consumers would exercise a high degree of care when purchasing ad buys for $2,400 to $16,000).
7. Quinta Real’s Intent in Selecting the Mark
“When the alleged infringer knowingly adopts a mark similar to another’s, reviewing courts presume that the defendant can accomplish his purpose: that is, that the public will be deceived.” Network Automation, 638 F.3d at 1153 (quoting Sleekcraft, 599 F.2d at 354). The district court erred in concluding that this factor favors La Quinta. Despite finding that Quinta Real adopted its name without knowledge of La Quinta and that Quinta Real had not exercised bad faith in trying to enter the U.S. market under that name, the district court concluded that the factor weighed against Quinta Real because it could use another name in the United States without prejudice. But the district court’s factual findings, that Quinta Real could use another name without prejudice, would only be relevant here in crafting a remedy. See Sleekcraft, 599 F.2d at 354 (“Good faith is less probative of the likelihood of confusion, yet may be given considerable weight in fashioning a remedy.”). However, because this factor, when properly considered, is neutral, the district court’s error in this respect is not so significant as to disturb its conclusion that a likelihood of confusion exists.
8. Zone of Expansion
When there is “a strong possibility that either party may expand his business to compete with the other,” this factor weighs in favor of finding “that the present use is infringing.” Sleekcraft, 599 F.2d at 354 (internal quotation marks and citation omitted). Although La Quinta has no plans to expand into luxury hotels and Quinta Real has no plans to expand into mid-tier hotels, the district court found that “[a] hotel in the United States competes with all the other hotels on its corner, regardless of rating or services offered.” A weakness in Quinta Real’s appellate challenge on this point is that this finding of fact is not clearly erroneous. La Quinta submitted witness testimony supporting this broad concept of competition and the testimony was admitted in evidence. Quinta Real gave no contrary evidence to support its assertion that “[e]ven if Quinta Real were to open a hotel in the same metropolitan area as La Quinta, the hotels still would not compete for the same consumers.” Because the record supports the conclusion that proximate hotels compete with each other regardless of tier and Quinta Real has definite plans to expand into major U.S. cities, the district court did not err in concluding that this factor favors La Quinta.
See La Quinta Worldwide LLC v. Q.R.T.M., S.A. De C.V., dba Quinta Real, Case No. 12-15985 (9th Cir., Aug. 6, 2014)