CAFC Affirms TTAB: STRATUS NETWORKS Confusable With STRATA NETWORKS for Telecommunications Services

In an enervating, yet precedential ruling, the CAFC affirmed the Board's decision sustaining an opposition to the mark STRATUS NETWORKS & Design for various telecommunications services, in view of the registered mark STRATA NETWORKS & Design for overlapping services. [TTAB opinion by Judge Peter W. Cataldo here]. The appellate court concluded that substantial evidence supported the Board's findings under du Pont, and further that the Board did not err in its legal analysis. Stratus Networks, Inc. v. UBTA-UBET Communications, Inc., 2020 USP2d 10341 (Fed. Cir. 2020) [precedential].

The Board found that six of the du Pont factors were relevant to its decision, but not the other seven ("five (fame), seven (nature of actual confusion), nine (variety of goods), ten (market interface), eleven (applicant’s right to exclude), twelve (potential confusion), or thirteen (effect of use)").

As to the first factor, the Board acknowledged the slight difference in meaning between STRATUS and STRATA, but there was little evidence that consumers would "significantly recognize" that different. It concluded that the “marks convey over-all commercial impressions that are more similar than dissimilar.”

The second du Pont factor "weighed heavily" in Opposer UBTA's favor, according to the Board, because its “telephone services encompass certain of [Stratus's] more specifically identified voice communication services and are legally equivalent thereto.” This legal equivalence of the services led to a presumption that they are offered in the same channels of trade to the same classes of consumers, under the third du Pont factor.

The fourth factor, the sophistication of consumers, was found by the Board to be neutral or weighing "slightly" in Stratus's favor, given the high cost of Stratus's services. However, the Board concluded that “the legal identity in part of the services and similarity of the marks outweigh any sophisticated purchasing decision.”

The sixth factor, the strength of UBTA's mark, was neutral. The Board found that the term "strata" is “arbitrary or, at most, slightly suggestive of [UBTA’s] services in that it connotes levels or divisions in an organized telecommunications system.” Dictionary and third-party use evidence failed to diminish the scope of protection merited by the mark STRATA.

Finally, the Board found the eighth factor to be neutral. There was no evidence of actual confusion, but the respective marks were not used in the same geographic areas during the relevant times: UBTA offered its services in Utah, Wyoming, Colorado, and Texas, while Stratus offered its services in Illinois and Missouri.

In sum, the Board concluded that Stratus’s “modest evidence of the sophistication of consumers and weakness of [the STRATA mark] is insufficient to overcome our findings with regard to the first, second, and third [DuPont] factors.” Accordingly, the Board held that UBTA had shown by a preponderance of the evidence that Stratus’s mark is “likely to cause consumer confusion when used in association with its services.”

Appellant Stratus challenged the Board’s factual findings on some of the du Pont factors, but the court observed that Stratus was "effectively ask[ing] us to reweigh the evidence considered by the Board. That is not the role of this court. Instead, we evaluate whether the Board’s factual findings for each considered DuPont factor are supported by substantial evidence." The court concluded that substantial evidence supported the Board's findings.

Stratus contended that the record evidence supported a different conclusion as to likelihood of confusion, but the CAFC pointed out that "[e]ven if Stratus were correct that different conclusions may reasonably be drawn from the evidence in record, we must sustain the Board’s decision as supported by the substantial evidence outlined above. See Real Foods Pty Ltd. v. Frito-Lay N. Am., Inc., 906 F.3d 965, 971 (Fed. Cir. 2018) ('The TTAB’s findings may be supported by substantial evidence even if two inconsistent conclusions can be drawn from the evidence.')."

Stratus also argued that the Board had committed legal error regarding consumer sophistication and actual confusion, but the court rejected those claims. According to Stratus, the Board “made no express finding as to [the consumer sophistication] factor and instead simply quoted case law that even sophisticated customers are not immune from confusion.” The CAFC was unimpressed: "While it is preferable for the Board to make explicit findings about each relevant DuPont factor, the absence of explicit findings on a given factor does not give rise to reversible error where the record demonstrates that the Board considered that factor and the corresponding arguments and evidence." The CAFC observed that the parties' extensive arguments regarding the sophistication issue, coupled with the Board’s written decision, demonstrated that the Board sufficiently considered the consumer sophistication factor.

Nor was there legal error as to the actual confusion factor. Although there was no evidence of actual confusion, the Board considered “the length of time during and conditions under which there has been concurrent use.” The evidence showed that the services of parties did not geographically overlap. Therefore no consumers were exposed to both trademarks during the relevant time periods, "further reducing the significance of the absence of actual confusion." See In re Majestic Distilling Co., 315 F.3d 1311, 1317 (Fed. Cir. 2003). The CAFC found no legal error in the Board’s finding as to the actual confusion factor.

The CAFC therefore affirmed the Board’s determination that UBTA proved a likelihood of confusion by a preponderance of the evidence.

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TTABlog comment: Why was this CAFC opinion deemed precedential?

Text Copyright John L. Welch 2020.