ADT Loses Trademark Infringement Appeal

ADT, the security company from Florida, appealed against a jury ruling denying it damages for trademark infringement against another security company, APT.  ADT had alleged that APT was taking its clients by claiming it was time to renew their security systems.  The company argued under the initial confusion doctrine that even though customers knew before they purchased the APT security service that they were not purchasing from ADT, the name and actions still constituted trademark infringement.

The United States Court of Appeals for the Eleventh Circuit ruled that it does not accept the initial interest confusion doctrine.  The court stated “The Eleventh Circuit has not yet decided whether a trademark infringement claim based on ‘initial confusion’ is actionable under the Lanham Act.”

ADT also argued that acronyms should be entitled to more significant protections as they are more likely to be confused, an argument that was also rejected by the Court of Appeals.

Initial interest confusion was most commonly associated with internet domain names, metatags and other internet related activities where it was being argued that companies were attempting to steal their competitor’s clients by leading them to their own websites rather than the competitors using domain names, or metatags similar or the same as their competitors.  Under initial interest confusion, trademark infringement was found  when a consumer was initially interested, attracted or distracted by the, e.g., metatag.  In recent years the initial interest confusion doctrine has seemed to be going out of style and more and more companies need to distinguish themselves on sites such as AMAZON.COM.  Indeed, AMAZON has won lawsuit filed against it for brining up results from companies other than the company trademark searched for.

It seems that in this case the court was more interested in actual confusion, which would have occurred at the point of sale.  According to APT, it clearly laid out to customers that it was not associated with ADT.

While ADT might have had a better argument for unfair competition, the ruling seems correct as the purpose of trademark law is to prevent consumer confusion in the marketplace.  The ADT jury found that consumers were not confused and that APT explained to them that it was not associated with ADT.

Whether the Eleventh Circuit will eventually accept this doctrine remains to be seen.  Circumstances where it should apply, however, would be when a competitor specifically uses a confusingly similar or the same mark to divert customers from its competitors websites to its own.  This is similar to what is covered under the World Intellectual Property Organization (WIPO) Uniform Domain Name Dispute Resolution Policy which covers situation in which competitors in “bad faith” register domain names of their competitors to unfairly compete with them.