In an exhaustive and exhausting decision, the Board sustained an opposition to registration of the mark HME in the stylized from shown below, for various types of pipes and other building products, finding confusion likely with opposer's mark KME for overlapping goods. There was no dispute regarding priority, nor regarding the similarity of the goods, channels of trade, and classes of consumers. The Board found opposer's mark to be "inherently distinctive and conceptually strong, of average commercial strength." "Opposer’s history of renaming and restructuring itself, combined with
Opposer’s prior ownership of Applicant’s brass division, industry norms
concerning legal entity changes, and the similarities between the marks
and the goods sold thereunder, outweigh any sophisticated purchasing decision." And the parties’ market interface weighed slightly in favor of opposer "to the extent the parties acknowledged a need for Applicant to choose a non-confusingly similar mark." KME Germany GmbH v. Zhejiang Hailiang Co., Ltd., 2023 USPQ2d 1136 (TTAB 2023) [precedential] (Opinion by Judge Cindy B Greenbaum).
In 2019, applicant effectively acquired the assets of opposer’s brass division and tubes manufacturing business. Applicant manufactures, advertises and sells, under the stylized HME mark, goods that opposer previously sold, to customers who previously were opposer’s customers in the United. States.
Opposer and applicant agreed in the Asset Purchase Agreement ("APA") that opposer would “maintain sole rights in the designation ‘KME’ for use as a trademark” and that applicant would “eliminate references to ‘KME’” and “cease making use of the trade names and product or service marks of [Opposer] or confusingly similar designations or trademarks.”
The Marks: The Board found the involved marks to be similar in appearance, sound, connotation and commercial impression. "Although the marks begin with different letters, K versus H, the last two letters, ME, are identical, so they sound somewhat similar. Moreover, the letters K and H are visually similar—both have an overall rectangular shape consisting only of straight lines, both have a vertical straight line on their left sides, and another line extending to the right from roughly the middle section of that vertical line."
The stylization of applicant's mark is "minimal." Moreover, applicant's mark is displayed in a similar "blocky" font, as shown in opposer’s uses of its KME mark:
There was no evidence that either mark has any meaning or significance regarding the involved goods.
The Board observed that "it is inherently difficult for consumers to distinguish between marks involving similar letters," finding it "more likely than not that "consumers will remember the overall commercial impressions of the marks, which we find similar, largely due to the structural and visual similarities between the marks . . . ." Although there are some specific differences between the marks, "these differences are outweighed by the marks’ overall similarities."
Strength of Opposer's Mark: Opposer claimed that KME is a "well-known mark" because opposer "is an internationally acclaimed producer in its product market." The Board pointed out, however, that "'nowhere in the Lanham Act itself is the well known mark doctrine specified.'"
Opposer claimed use of the KME mark for 25 years, but it provided only worldwide revenue and advertising figures. Opposer provided no evidence of market share in the United States, and its evidence of media attention was not probative regarding reputation of the mark in this country.
Applicant contended that KME is entitled to only a narrow scope of protection because the letters "ME" are in frequent use the metals industry to refer to "metal," pointing to eight existing registrations and uses. However, only two of those marks involved similar goods, and they were distinguishable: "the ACME mark comprises an English word defined as 'the highest point; summit; peak.' And the stylized DME mark is a clear reference to the company’s name, as shown on the webpage for DME STEEL."
In any case, even if one assumes that the letters "ME" are highly suggestive of “metal” and are widely used in the metals industry, "it does not follow that Opposer’s mark KME, which comprises a three-letter combination, also is conceptually or commercially weak."
In sum, applicant’s evidence of third-party uses and registrations "does not show that Opposer’s mark KME is conceptually or commercially weak."
Customer Sophistication: Opposer's witness testified that suppliers in the metal industry, such as Opposer, “often undergo name changes, mergers, spinoffs, and other changes to their legal form," and consequently "even sophisticated customers are likely to be confused as to the origin of the goods associated with the HME mark because of [Opposer’s] history of changing its name, [Opposer’s] prior ownership of [Applicant’s] brass division, and industry norms in this regard."
Market Interface: The tenth DuPont factor requires the Board to consider the "market interface" between the parties, including evidence of any past dealings between the parties that might indicate a lack of confusion.
This case presents an opportunity for the Board to expand the types of “market interfaces” relevant under the tenth DuPont factor to include the sale of a portion of an ongoing business to a direct competitor, and to consider the impact of certain "agreement provisions” in the APA “designed to preclude confusion.”
The Board noted that, according to DuPont, when the parties enter into an agreement stating that confusion won't occur, "the scales of evidence are clearly tilted" against a finding of likely confusion. The Board concluded that this same rationale applies in the context of the APA, where the parties, who are “most familiar with use in the marketplace and most interested in precluding confusion[,] enter[ed] into an agreement designed to avoid it.” [Seems like a nonsequitur to me - ed.]
Opposer and Applicant, who are competitors in the metals industry, included a specific contractual provision in the APA requiring Applicant not to use a confusingly similar mark after ceasing use of Opposer’s mark and name. We apply this reverse presumption to the facts of this case, and find the market interface factor weighs slightly in favor of a finding of likelihood of confusion, to the extent the parties acknowledged a need for Applicant to choose a non-confusingly similar mark per APA § 19.5.2.
Actual Confusion: Opposer pointed to four emails purportedly evidencing actual confusion, but they concerned European customers and had no relevance here. The absence of evidence of actual confusion was not a factor favorable to applicant because the parties have used their marks contemporaneously for only three years, which does not amount to "a reasonable period of time and opportunity for confusion to have occurred."
Conclusion: The Board concluded that opposer proved its claim of likelihood of confusion by a preponderance of the evidence.
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TTABlogger comment: In this otherwise mundane decision, the Board's expansion of the 11th duPont factor apparently carried it (the decision, not the Board) over the precedential finish line. I don't understand how the applicant's agreement to avoid a confusingly similar mark has any bearing on whether it has done so - i.e., on whether consumers would likely be confused.
Text Copyright John L. Welch 2023.
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