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Written By: Forrest Hyde
Executive Editor, American Journal of Trial Advocacy
With the recent surge in online shopping due to health and safety concerns linked to COVID, there has never been a better time to find what you want to buy through an online retailer. It’s also never been easier to customize what you buy. Whether ordering for your own personal use, promotion of your business, or for an organization that is raising funds, numerous websites provide services that allow for anyone to have almost anything printed on merchandise at the click of a button. But what happens when an online service crosses the line, printing a trademarked logo or name on merchandise without permission, likely confusing customers about where the product came from? The Eleventh Circuit’s recent decision in Savannah College of Art and Design v. Sportswear, Inc. shed light on the subject, where an online company had been selling merchandise bearing the school’s trademarked logo and name without permission for years. [1]
I: Background of the Case
Savannah College of Art and Design, Inc. (“SCAD) is a private college based in Georgia known for their specialized art programs.[2] SCAD has used two word marks—“SCAD” and “SAVANNAH COLLEGE OF ART AND DESIGN”— since 1979, and a design mark depicting SCAD’s mascot, “Art the Bee,” since 2001.[3] Sportswear, Inc. (“Sportswear”) operates an online business that has sold made-to-order apparel and other items to schools, sports teams, and other organizations since 2003.[4] Without permission, Sportswear sold merchandise bearing SCAD’s marks for a period of five years before SCAD found out about these sales from a parent of one of their student-athletes.[5] SCAD promptly filed a trademark infringement suit against Sportswear, who thereafter stopped selling all merchandise bearing SCAD’s marks in its online store.[6]
SCAD needed to establish two things in order to prevail in its trademark infringement case: (A) “enforceable trademark rights in its marks used by Sportswear”, and (B) “that Sportswear’s unauthorized use of its marks was likely to confuse consumers.”[7] Initially, the district court granted summary judgment in favor of Sportswear on both requirements, but the Eleventh Circuit reversed on requirement (A) and remanded the case to determine requirement (B), which ultimately resulted in the district court entering permanent injunctive relief for SCAD against Sportswear.[8] The Court of Appeals for the Eleventh Circuit, as explained below, affirmed SCAD’s victory.[9]
II: The “Likelihood of Confusion” Factors
The bulk of the Eleventh Circuit’s decision centered around the “likelihood of confusion” analysis in order to determine if the lower court had applied the many factors correctly. The court here placed its focus on likely consumer confusion—allegedly created by Sportswear’s use of SCAD’s word marks—as to “origin, source, approval, affiliation, association, or sponsorship.”[10] The Eleventh Circuit considers seven factors in this analysis:
(1) Strength of the mark alleged to have been infringed; (2) similarity of the infringed and infringing marks; (3) similarity between the goods and services offered under the two marks; (4) similarity of the actual sales methods used by the holders of the marks, such as their sales outlets and customer base; (5) similarity of advertising methods; (6) intent of the alleged infringer to misappropriate the proprietor’s good will; and (7) the existence and extent of actual confusion in the consuming public.[11]
The court added that not every factor need be considered in every case, but that “[(1)] the type of mark and [(7)] the evidence of actual confusion are the most important” of all the factors.[12] Conversely, the court noted that the factors of “[(3)]similarity of product, [(4)] identity of retail outlets and purchasers, and [(5)] identity of advertising media utilized” are less relevant in cases—such as this one—where the concern for confusion arises from “the defendant’s misuse of the plaintiff’s reputation and good will as embodied in the plaintiff’s mark.”[13] Thus, before their analysis had even started, the court indicated that nearly half of the factors make little difference.
III: The “Likelihood of Confusion” Analysis
Beginning the likelihood of confusion analysis, the court first focused on the strength of SCAD’s word marks, which the court held to be incontestable, even though “incontestable status” does not lead to a presumption that the mark is a strong one.[14] Nevertheless, the court held SCAD’s word marks to had acquired significant strength through their decades of use “through [their] investment and goodwill,” despite Sportswear’s arguments that a few other third-parties had diminished the strength of SCAD’s marks through their uses.[15] The court then made quick work of the second factor, noting that Sportswear used identical marks to SCAD’s word marks on its apparel; this easily weighed in SCAD’s favor.[16]
The next three factors, the court noted throughout, hold lesser weight in cases like this one, “where the defendant seeks to trade off the plaintiff’s goodwill and reputation, as opposed to its products.”[17] The third factor—similarity of goods or services—normally assess “whether the goods are so related in the minds of consumers that they get the sense that a single producer is likely to put out both goods.”[18] However, this factor was held to bear little significance because SCAD’s marks embody their goodwill and reputation.[19] The fourth factor—similarity of actual sales methods—considers the similarity of the parties’ customer bases, which overlapped in this case.[20] This weighed in SCAD’s favor, albeit not by very much given the factor’s diminished significance.[21] Then, the court held that the fifth factor—similarity of advertising methods—was neutral as to both SCAD and Sportswear, who both advertised over the internet.[22]
The sixth factor considered “Sportswear’s intent to misappropriate SCAD’s goodwill,” which might be proved by circumstantial evidence.[23] Here, SCAD had to present evidence that Sportswear not only copied intentionally, but also copied with the intent to confuse customers.[24] The court noted that “[t]he very nature of sports memorabilia relies upon the goodwill, reputation, and affiliation people associate with that school,” and that Sportswear could not “reasonably argue against a finding of intent here.”[25] Sportswear argued that their website’s disclaimers, that their store was “not sponsored or endorsed” by SCAD, negated intent, but the court held that this was insufficient “to totally negate confusion” that Sportswear intentionally created in order to profit off of SCAD’s goodwill and reputation.[26]
Finally, the court focused on the “actual-confusion factor,” which “weighs heavily in the balance” but is a “demonstrably different concept[]” from likelihood of confusion.[27] SCAD happened to have one piece of evidence to show actual confusion—one parent’s notification regarding Sportswear’s website—which was “hardly strong evidence of actual confusion.”[28] This was the only factor that weighed in favor of Sportswear, but the court concluded yet again that the significance of a factor may diminish in cases such as this one, explaining that “with a smaller market and inexpensive goods… [the court] has cautioned that weak evidence of actual consumer confusion is not dispositive.”[29] The court explained that “the likelihood-of-confusion analysis must be mindful that ‘casual purchasers of small items’ are more likely to be confused than more sophisticated consumers of complex goods.”[30]
Thus, when taken together with the other diminished factors, the court weakened the significance of more than half of the factors leading up to a holding that favored SCAD. At the outset, the court noted that “actual confusion” would be a very important factor, but waited until later in its decision to dilute this factor, even though SCAD showed evidence in their favor that a customer was actually confused about the source of the goods they found online. Odd result, but would it have made a difference in the court’s ultimate conclusion in a case such as this? Likely not.
IV: Conclusion and Outlook
After balancing all of the factors and noting which factors have diminished significance due to the nature of the case, the court concluded that Sportswear’s use of SCAD’s word marks posed a likelihood of confusion,[31] as did Sportswear’s used of SCAD’s design mark, “Art the Bee.”[32] Accordingly, the Eleventh Circuit Court of Appeals affirmed the district court’s grant of “summary judgment and the corresponding permanent injunction in favor of SCAD.”[33]
Thus, in similar online markets for inexpensive goods, “likelihood” may outweigh “actual” confusion. Here, actual confusion, in the form of one parent’s notification, made no difference in the court’s conclusion as to the broader “likelihood” that Sportswear’s use would confuse other consumers seeking SCAD merchandise simply because the goods were cheap and the market small. This could possibly lead to a conclusion that casual online shoppers—of which there are millions—perhaps looking for cheap merchandise from their alma mater, may end up ordering from an infringing seller, up until the point that a concerned parent speaks up, that is. Remember, there may not have been a trademark infringement suit here to begin with, had that one parent not notified SCAD of their actual confusion.[34] Online shopping is an enormous area of business, with millions of miniscule “markets” for every product imaginable. Perhaps the Supreme Court will weigh-in on this holding in order to establish that actual confusion in these many markets carries more weight, only time will tell.[35]
[1] 983 F.3d 1273, 1277 (11th Cir. 2020).
[2] Savannah Coll., 983 F.3d at 1277.
[3] Id. at 1278.
[4] Id.
[5] Id.
[6] Savannah Coll., 983 F.3d at 1278 (explaining that SCAD sued Sportswear under the Lanham Act also for “unfair competition and false designation of origin, and counterfeiting, and under Georgia common law for unfair competition and trademark infringement”).
[7] Id. at 1279.
[8] Id. at 1279-80.
[9] Id. at 1280.
[10] Savannah Coll., 983 F.3d at 1280.
[11] Id. at 1280-81 (quoting Sovereign Military Hospitaller Order of Saint John of Jerusalem of Rhodes & of Malta v. Fla. Priory of the Knights Hospitallers of the Sovereign Order of Saint John of Jerusalem, Knights of Malta, The Ecumenical Order, 809 F.3d 1171, 1181 (11th Cir. 2015)).
[12] Savannah Coll., 983 F.3d at 1281 (quoting Fla. Int’l Univ. Bd. of Trs. v. Fla. Nat’l Univ., Inc., 830 F.3d 1242, 1255 (11th Cir. 2016)).
[13] Savannah Coll., 983 F.3d at 1281 (citing Univ. of Ga. Athletic Ass’n v. Laite, 756 F.2d 1535, 1547 (11th Cir. 1985)).
[14] Savannah Coll., 983 F.3d at 1281-82; see also Dieter v. B&H Indus. of Sw. Fla., Inc., 880 F.2d 322, 328 (11th Cir. 1989) (explaining that a descriptive mark becomes “incontestable” if the holder of the descriptive mark proves that the mark has acquired “secondary meaning”— the mark has become distinctive of the trademark holder’s product—and that the mark has been in use for five years after registering the mark).
[15] Savannah Coll., 983 F.3d at 1282-83; see also 87 C.J.S. Trademarks, Etc. § 126 (2021) (“Generally, the stronger the mark, the greater the likelihood that consumers will be confused by competing uses of the mark.”).
[16] Savannah Coll., 983 F.3d at 1283.
[17] Id. at 1284 (emphasis added).
[18] Id. at 1283.
[19] Savannah Coll., 983 F.3d at 1284.
[20] Id.
[21] Id.
[22] Id.
[23] Savannah Coll., 983 F.3d at 1284.
[24] Id. at 1285 (citing Yellowfin Yachts, Inc. v. Barker Boatworks, LLC, 898 F.3d 1279, 1293-94 (11th Cir. 2018)); see also Sovereign Military Hospitaller Order, 809 F.3d at 1188 (“When intent is present, it can ‘justify the inference that there is a confusing similarity.’. . . But ‘it is neither a necessary nor sufficient condition for determining the ultimate legal fact of the “likelihood of confusion.”’”) .
[25] Savannah Coll., 983 F.3d at 1285.
[26] Id. at 1285-86.
[27] Savannah Coll., 983 F.3d at 1286; see also Stacy L. Davis et al., Fed. Proc., Law. Ed. § 74:534 (2021) (“Although proof of actual confusion is no necessary to show a likelihood of confusion on a claim of trademark infringement, the absence of any evidence of actual confusion over a substantial period of time creates a strong inference that there is no likelihood of confusion.”).
[28] Savannah Coll., 983 F.3d at 1286.
[29] Id.
[30] Id. at 1287 (quoting Fla. Int’l Univ., 830 F.3d at 1256).
[31] Savannah Coll., 983 F.3d at 1287.
[32] Id. at 1287-88.
[33] Id. at 1288.
[34] Id. at 1277.
[35] See Sportswear Maker Asks High Court To Take College’s TM Row, Law360, https://www.law360.com/articles/1372585/sportswear-maker-asks-high-court-to-take-college-s-tm-row (April 6, 2021, 6:52 PM EDT) (noting that Sportswear has petitioned for a writ of certiorari with the United States Supreme Court in this case).
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