Business owners invest significant time and resources in building brands that customers recognize and trust. A strong trademark can become a valuable business asset that endures for generations.
When adopting a new trademark, companies should pay close attention to third-party use in similar and related fields, as that use may play an important role in future enforcement matters.
To prevail in a trademark infringement lawsuit, a trademark owner must prove that the other party’s actions are likely to cause consumer confusion as to the source of the goods or services. Courts evaluate consumer confusion using several factors, including the strength of the mark, the degree of similarity between marks, and the relatedness of the goods or services.
And although no one factor is dispositive, the strength of the plaintiff’s mark is often viewed as one of the most important factors. A trademark’s strength has two components: inherent or “conceptual” strength and acquired strength. Inherent strength refers to the distinctiveness of a trademark in relation to the product (generic, descriptive, suggestive, arbitrary, or fanciful), while acquired strength is considered in the marketplace, usually in the context of the number and nature of third-party marks with similar or related goods or services.
Most circuits consider trademark strength a question of fact for a jury to decide, but the US Court of Appeals for the Second Circuit held that it’s a question of law for a judge. On June 29, the US Supreme Court granted certiorari in RiseandShine Corp. v. PepsiCo, Inc., to resolve the circuit split. The decision will have significant consequences for trademark litigation nationwide because it could determine who evaluates a mark’s strength and whether disputes over that strength can be resolved at summary judgment or must proceed to a jury.
History
Founded in 2014, Rise Brewing sells canned, shelf-stable nitro cold brew coffee under its RISE-formative marks. After discussions between the companies about a potential partnership ended without an agreement, PepsiCo launched MTN DEW RISE ENERGY, prompting Rise Brewing to sue.
In 2021, the District Court for the Southern District of New York granted Rise Brewing a preliminary injunction. The Second Circuit vacated the order, finding that although “RISE” was suggestive, it was inherently weak because of the word’s “strong logical associations” with coffee and widespread use in the caffeinated beverage sector. The court also held that the district court clearly erred in finding the parties’ marks similar.
On remand, the district court granted summary judgment to PepsiCo. The Second Circuit affirmed, holding that its earlier inherent strength determination was binding and that no reasonable jury could find “RISE” had acquired strength identifying Rise Brewing as the source of the products. It also affirmed the district court’s likelihood of confusion analysis. Rise Brewing petitioned the Supreme Court, arguing in their most recent brief that trademark strength hinges on consumer perception, which must be determined by a jury.
What’s at Issue
The question before the Supreme Court is whether trademark strength is a question of fact in a likelihood of confusion analysis under the Lanham Act. The Second Circuit is the only circuit that treats this analysis as a question of law; all other circuits treat it as a question of fact.
Whether this is the right case for this determination is uncertain. This is only one “sub-factor” of a multi-factor test involving legal and factual issues. The solicitor general argued in an amicus brief that although the Second Circuit likely erred in treating the inherent strength as a matter of law, it’s unclear whether the error was outcome-determinative. Other, unchallenged factors also weighed against Rise Brewing, and the solicitor general argued there is no “compelling” or “important” reason for further review.
Even if the case is remanded, Rise Brewing would still have to convince a jury of its trademark’s inherent strength and the remaining likelihood of confusion factors, including similarity of the marks and proximity of the products. That’s far from a slam dunk.
Potential Implications
The Supreme Court’s decision could reshape how courts evaluate trademark strength and reinforce practical considerations for selecting and prosecuting marks.
Summary judgment may be harder to obtain in trademark infringement cases. The Supreme Court’s decision will have lasting consequences regardless of which side prevails. A ruling for Rise Brewing that a trademark’s inherent strength is a factual question for a jury may make summary judgment more challenging because disputed issues of material fact would need to go to a jury. A ruling in favor of PepsiCo, that trademark strength is a legal question for a judge, would require the other 12 circuits to change course and may require plaintiffs to present additional evidence supporting the inherent strength of their marks.
Be careful of statements made in prosecution for similar or related trademarks. In pursuing registration of “RISE COFFEE CO. & Design” for coffee in 2015, Rise Brewing received a likelihood of confusion refusal based on several other “RISE”-formative marks for coffee and related products. Rise Brewing argued that “RISE” was weak “because USPTO records demonstrate that many entities have used the word “RISE” for coffee and caffeinated beverages and that multiple third-party marks already peacefully coexist. Therefore, its use of “RISE” should also be able to coexist.
These statements may still be interpreted against Rise Brewing’s position in the current case.
When adopting a trademark, consider how much “runway” you may have in the future. Consider whether the field is already crowded or whether your brand has room to grow and keep competitors out. This became an important factor in RiseandShine Corp. v. PepsiCo, Inc. The number and nature of third-party uses could affect the strength of the mark and the court’s analysis of the relatedness of goods and services in a likelihood of confusion analysis.
The case underscores the importance of selecting marks with room to grow and maintaining a consistent position as to their strength from prosecution all the way through enforcement.
Originally published by Bloomberg Law.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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