Marketquest Group v. BIC Corporation: The New Perspective on Reverse Confusion Theory

Introduction to the Case

The 9th Circuit of the U.S. Court of Appeals in its recent judgement of Marketquest Group v. BIC Corporation clarified the requirements for establishing a trademark infringement suit under the Reverse Confusion Theory. 

Interestingly, the court stepped away from their previously narrow requirements established in the year 2003, in the case of M2 Software, Inc. v. Madacy Entertainment and settled for more flexible requirements for parties who claim protection of their trademark rights under the Reverse Confusion Theory.

Explanation of the Reverse Confusion Theory

Theoretically, trademark infringement suits are claimed under the Lanham Act based on the Forward Confusion Theory and Reverse Confusion Theory. By definition, Forward confusion occurs when trademark use by a junior user is likely to lead consumers to mistakenly believe the junior user’s goods emanate from or are associated with the senior user of the mark. 

And that the trademark leads to the junior user benefitting from the goodwill and reputation, built by the senior user, whether intentionally or not. While, on the other hand, Reverse Confusion occurs when a junior user engages in such extensive promotion of its products and services under a trademark when the market is overwhelmed. This type of use results in a confusion that consumers mistakenly believe the senior user’s products and services are associated with that of the junior user.

Details of the Marketquest Group v. BIC Corporation Case

In Marketquest Group v. BIC Corporation, the Marketquest Group owned the trademarks “All-in-One” and “The Write Choice” for marketing and sale of production of products. In 2011 the BIC corporations published a promotional catalogue for their pens which displayed the phrase “All-in-One” on the cover and inside the catalogue. 

And, before that BIC Corporation used the phrase “The Write Pen Choice for 30 years” for 30th anniversary promotion of its products. This led to Marketquest Group asserting a trademark infringement suit against the BIC Corporation for using its trademark phrases “All-in-One” and “The Write Choice”.

In its analysis, the court clarified that reverse confusion is not a separate trademark infringement claim that must be specifically pleaded, but instead is a theory of likelihood of confusion that may be alleged by itself or in addition to forward confusion. Additionally, the court held there is no specific standard to clearly establish intent for the likelihood of confusion analysis. And that intent would vary depending on the type of confusion being claimed.

However, the court did provide certain decisive factors as potential signs of intent for infringement. Such as, in a general trademark infringement suit, the defendant party had knowledge of the mark, the defendant party fails to conduct a due diligence trademark search, or even the defendant party simply ignores the risk of reverse confusion. Another factor which shows intent is the defendant party pushes the plaintiff party out of the market by flooding the market with its own promotional advertising thereby creating reverse confusion.

Finally, the court held that fair use is an affirmative defense that would come only after likelihood of confusion is duly established. If there is no likelihood of confusion, then a plaintiff’s infringement claim fails and there is no need to consider defense of fair use as well. Since a likelihood of confusion claim is fact-intensive, it is difficult to resolve it at the summary judgment level. This will make it harder for defendants to rely on a fair use defense -at least at the summary judgment level.

The New Perspective on the Reverse Confusion Theory

What is commendable is the changing perspective of the courts towards the Reverse Confusion Theory. In the year 2003, in M2 Software, Inc. v. Madacy Entertainment, the 9th Circuit of Court of Appeals upheld the District Court’s jury instruction that reverse confusion occurs when "consumers doing business with the senior user mistakenly believe that they are dealing with the larger user.” 

This past ruling meant that a new company launching its products in the market must conduct a due diligence to see if the mark they want to use or are already using is already. At that time, the M2 Software Inc. judgement had greatly narrowed the concept of Reverse Confusion theory in trademark infringement suits, making the theory unattractive for individuals and entities to use in order to claim ownership of their trademark rights under the Reverse confusion theory.

Conclusion

During the last 14 years the 9th Circuit has loosened its viewpoint on Reverse Confusion Theory. In the Marketquest Group v. BIC judgement, the court’s ruling encourages flexible standards for proving intent for infringement in reverse confusion cases.

This new flexible perspective makes it easier for individuals and entities to assert reverse confusion because now it is sufficient to show that consumers were confused with respect to any affiliation, connection, or association between the opposite parties.

Given the new flexible requirements for claims, it is the time, when new businesses must prepare themselves, and take good care while choosing marks, before they majorly invest into promotion of their products and services, under the already used marks, and ultimately face claims like forward confusion and reverse confusion under trademark infringement suits.