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For the first time, the 3rd U.S. Circuit Court of Appeals has held that “initial interest” confusion is actionable in a trademark infringement suit. But victory on that legal issue was not enough for the plaintiff in Checkpoint Systems Inc. v. Check Point Software Technologies Inc. because the court went on to find that the minimal evidence of initial interest confusion was not enough to establish any “likelihood of confusion.” Checkpoint Systems markets shoplifter security systems. In early 1996, Checkpoint Systems attempted to register the Internet domain name www.checkpoint.com but discovered it was registered by Check Point Software, a company that markets computer security software such as firewall systems. After its request to discontinue use was rebuffed, Checkpoint Systems filed suit, alleging trademark infringement and unfair competition under the Lanham Act. In a nonjury trial, U.S. District Judge Jerome B. Simandle held that Check Point Software’s use of the “Checkpoint” mark neither violated the Lanham Act nor infringed Checkpoint Systems’ trademark. Applying the so-called Lapp factors, named after the 3rd Circuit’s 1983 decision in Interpace Corp. v. Lapp Inc., Simandle found that only one factor — the strong similarity between the parties’ marks — favored plaintiff Checkpoint Systems. Simandle ruled in favor of Check Point Software after finding that the two companies operate in different and noncompeting segments of the broad corporate security industry. Because purchasers of both companies’ products are sophisticated and because the products themselves are expensive, Simandle found that the level of consumer care in making purchasing decisions counseled against a finding of likely confusion. Simandle also found that the companies use different marketing techniques in different industries and that there was no evidence that the two markets are converging. Now the 3rd Circuit has upheld Simandle’s decision in its entirety. In the appeal, Checkpoint Systems argued that Simandle improperly evaluated Lapp by requiring evidence of actual consumer confusion at the point of sale and disregarding evidence of initial interest and investor confusion. But U.S. Circuit Judge Anthony J. Scirica found that Simandle correctly found that while Checkpoint Systems has a strong mark in the market for electronic article surveillance products, that strength did not carry over into the entire market for corporate security products. Simandle found that Checkpoint Systems’ mark “may be strong, but that strength does not appear to extend beyond its own subfield of physical security with respect to electronic article surveillance.” Scirica agreed, saying that “although Checkpoint Systems manufactured other products aside from physical article surveillance systems, the court found these products constituted a very small portion of its business.” Checkpoint Systems argued that Simandle erred in his commercial strength analysis because he undervalued the overwhelming strength of the Checkpoint Systems mark in the article surveillance market. Scirica disagreed, saying that “the district court held, properly in our view, that courts must look at the strength of the mark in the industry in which infringement is alleged.” When consumers exercise “heightened care” in choosing products before making purchasing decisions, Scirica said, courts have found there is not a strong likelihood of confusion. Simandle found that both companies market expensive products that “are not impulse purchases, but rather are subject to long sales efforts and careful customer decision-making.” Scirica agreed, saying that “the consumers of Checkpoint Systems’ and Check Point Software’s products place great importance on, and take great care in, purchasing these products.” On the subject of initial interest confusion, Scirica found that several courts of appeals have held that initial interest confusion and post-sale confusion are actionable under the Lanham Act. “We agree and hold initial interest confusion is actionable under the Lanham Act,” Scirica wrote. “We join these circuits in holding that initial interest confusion is probative of a Lanham Act violation. Without initial interest protection, an infringer could use an established mark to create confusion as to a product’s source, thereby receiving a ‘free ride on the goodwill’ of the established mark.” Holding otherwise would ignore Congress’ intent when it amended the law, Scirica said, because “confining actionable confusion under the Lanham Act to confusion present at the time of purchase would undervalue the importance of a company’s goodwill with its customers.” But Scirica found that Simandle “properly evaluated the evidence of initial interest confusion and did not clearly err in finding this evidence did not weigh heavily in favor of finding likely confusion.”

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