CAFC Affirms TTAB Decision Finding Likelihood of Confusion Between STRATUS and STRATA Marks

The U.S. Court of Appeals for the Federal Circuit (CAFC) affirmed a decision of the Trademark Trial and Appeal Board (TTAB) that denied registration of Stratus Networks, Inc.’s trademark (the STRATUS mark) on grounds of likelihood of confusion with UBTA-UBET Communication Inc.’s registered trademark (the STRATA mark). The CAFC reviewed the Board’s factual findings for each of the considered DuPont factors, determined that the Board’s findings were supported by substantial evidence, and found no legal error in the Board’s determination.

The Board Decision

Stratus, which is a facilities-based telecommunications provider, filed a U.S. Trademark   Application in August 2012 seeking to register the STRATUS mark. UBTA, which is also a telecommunications provider, opposed registration of the mark on grounds of a likelihood of confusion in December 2013. In October 2018, the Board found a likelihood of confusion between the marks and refused registration of the STRATUS mark. Stratus appealed to the CAFC.

The Board considered the “DuPont factors” when assessing the likelihood of confusion and concluded “six of the thirteen DuPont factors were relevant to UBTA’s opposition.” The Board found that the first factor, “similarity of the parties’ marks”, weighed in favor of finding a likelihood of confusion because there was little evidence that consumers would recognize the differences in the dictionary definitions of the terms “stratus” and “strata” and the “marks convey[ed] overall commercial impressions that [were] more similar than dissimilar.” The Board found that the second DuPont factor, “similarity of the parties’ services”, weighed “heavily in favor” of finding a likelihood of confusion based in part on the description of services in Stratus’s application and UBTA’s registration. Further, the Board found that the third DuPont factor, “similarity of trade channels”, weighed “heavily in favor” of finding a likelihood of confusion because a “legal equivalence between the parties’ services gives rise to a presumption that the services move in the same channels of trade and are offered to the same classes of consumers.” In considering the fourth DuPont factor, “consumer sophistication”, the Board found it “was neutral or weighed ‘slightly’ against a finding of likelihood of confusion.” The Board also found the sixth and eighth DuPont factors, “strength of the opposer’s mark” and “length of time during and conditions under which there has been concurrent use without evidence of actual confusion”, were neutral to a finding of likelihood of confusion. The Board concluded that “UBTA had shown by a preponderance of the evidence that Stratus’s mark [was] likely to cause consumer confusion when used in association with its services.”

Review of the Board’s Factual Findings

On appeal, the CAFC reviewed the Board’s factual findings on each DuPont factor for substantial evidence, i.e. “such relevant evidence that a reasonable mind would accept as adequate to support a conclusion.” The CAFC noted that the Board based its decision for each of the DuPont factors on record evidence, such as dictionary definitions and the services identified in Stratus’s application and UBTA’s registration. Stratus argued that the record evidence supported a different conclusion than that reached by the Board, but the CAFC noted that even if “different conclusions may reasonably be drawn from the evidence in record, we must sustain the Board’s decision as supported by the substantial evidence.” Thus, the CAFC concluded that the Board’s decision as a whole was supported by substantial evidence and Stratus’s arguments to the contrary were not persuasive.

Review of Consumer Sophistication and Actual Confusion

The CAFC also responded to Stratus’ arguments that the Board committed legal error when considering the DuPont factors of “consumer sophistication” and “actual confusion”. With respect to the consumer sophistication factor, Stratus argued that the Board “made no express finding as to this factor and instead simply quoted case law that even sophisticated customers are not immune from confusion.” In response, the CAFC explained that the Board is required to consider each DuPont factor for which it has evidence; however, the Board “may focus its analysis on dispositive factors, such as similarity of the marks and relatedness of the goods.” Citing Han Beauty, Inc. v. Alberto-Culver Co., the CAFC also noted that “[w]hile 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.” Thus, the CAFC found no legal error with respect to the Board’s decision on consumer sophistication.

With respect to actual confusion, Stratus argued that the Board erred in its decision because the parties’ marks coexisted for over six years without any examples of actual confusion, despite the parties’ overlapping trade channels. The CAFC noted that the parties’ services did not geographically overlap, and customers were not exposed to both trademarks during the relevant time periods. Thus, the CAFC explained, the significance of the actual confusion factor was reduced. In sum, the CAFC affirmed the Board’s determination of likelihood of confusion.

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