APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO (D.C. NO. 1:10-CV-01221-PAB-CBS)
Lisel M. Ferguson (Heather A. Cameron, with her on the briefs), Procopio, Cory, Hargreaves & Savitch LLP, San Diego, California, for Defendant - Appellant.
Lee F. Johnston (Scott P. Sinor, with him on the brief), Dorsey & Whitney LLP, Denver, Colorado, for Plaintiff - Appellee.
Before LUCERO, HARTZ, and HOLMES, Circuit Judges.
HARTZ, Circuit Judge.
The parties to this trademark dispute make consumer products for rinsing sinus cavities. Med-Systems, Inc., the earlier entrant in this market, sells its products under the federally registered trademark SinuCleanse and two similar marks. Water Pik, Inc., which traditionally sold oral irrigators and showerheads, registered the trademark SINUSENSE with the intention of selling sinus-irrigation devices under the brand name "SinuSense." It brought an action against Med-Systems in the United States District Court for the District of Colorado, seeking a declaratory judgment that its use of the SinuSense brand name did not infringe on any of Med-Systems' marks. Med-Systems counterclaimed for trademark infringement and unfair competition under the Lanham Act, 15 U.S.C. §§ 1051–1127. Ruling that the SinuSense brand was not likely to cause consumer confusion, the district court awarded summary judgment to Water Pik on the counterclaims and dismissed Water Pik's declaratory-judgment claim as moot. We affirm.
Med-Systems was founded in 1997 by Dr. Diane Heatley and David Gallo. The company's business is selling nasal-irrigation products. One product line is a device known as a neti pot, which allows users to rinse their sinus passages with saline solution. Med-Systems also sells squeeze bottles and saline refill packets (which contain a powder to add to water to create the saline solution). These products are sold through a number of pharmacies and retail chains nationwide.
Med-Systems has obtained federal registration of three different trademarks to brand its products: the stylized word mark SinuCleanse, registered in 1998; the nonstylized word mark SINUCLEANSE, registered in 2008; and the nonstylized word mark SINUCLEANSE SQUEEZE, also registered in 2008. There is no dispute that these marks are statutorily incontestable under 15 U.S.C. § 1065 (2010). Photographs in the record indicate that the packaging for Med-Systems' products conspicuously features the stylized term "SinuCleanse, " with the first component printed in plain type and the second component italicized.
Since the 1970s Water Pik has developed, manufactured, and sold oral irrigators and showerheads. In 2008 it sought to enter the market for sinus-irrigation products. It expressed interest in acquiring Med-Systems, but negotiations between the two parties failed in December 2008. Water Pik began developing its own nasal-irrigation line, which it ultimately decided to market under the name "SinuSense." In May 2009 it filed an intent-to-use application for federal registration of the nonstylized word mark SINUSENSE, and in October 2009 the United States Patent and Trademark Office (PTO) published the mark for opposition. See 15 U.S.C. § 1051(b)(1) (2002) (allowing a person "who has a bona fide intention . . . to use a trademark in commerce" to file for registration of the mark); id. § 1062(a) (2000) (providing that if it appears to the PTO that an applicant is entitled to registration, "the Director shall cause the mark to be published in the Official Gazette of the [PTO]"); id. § 1063(a) (2006) (allowing those who believe that they will be damaged by registration to file an opposition to registration of the mark). Med-Systems commenced an opposition proceeding against the SINUSENSE mark before the Trademark Trial and Appeal Board in December 2009, but that proceeding has been stayed pending resolution of this case.
Water Pik filed this action against Med-Systems in May 2010. It sought a declaratory judgment (1) that its use of the SINUSENSE mark did not infringe on any of Med-Systems' registered trademarks under § 32 of the Lanham Act, id. § 1114 (2005); (2) that the trade dress for its SinuSense-branded products did not infringe on the trade dress for any of Med-Systems' SinuCleanse-branded products under § 43(a) of the Lanham Act, id. § 1125(a) (2012); (3) that its use of the SINUSENSE mark did not constitute unfair competition against Med-Systems under § 43(a); (4) that its use of the mark did not constitute dilution of any of Med-Systems' trademarks under § 43(c) of the Lanham Act, id. § 1125(c); and (5) that it had a right to register the SINUSENSE mark and to use it in connection with its sinus-irrigation line.
Two months after Water Pik filed its complaint, SinuSense-branded products began appearing in stores. They included neti pots, squeeze bottles, electric nasal pulsators, and saline refill packets. Exhibits to Water Pik's complaint show the packaging for these products. They feature the word "waterpik" in large, unitalicized white letters against a blue background, and, directly below it in larger letters, the word "SinuSense" in unitalicized blue letters against a white background. The letter i in "waterpik" is modified to include three vertically stacked dots instead of one:
Med-Systems raised seven counterclaims: (1) that Water Pik's use of the SINUSENSE mark infringed on Med-Systems' registered trademarks in violation of § 32; (2) that the packaging for Water Pik's SinuSense-branded products constituted trade-dress infringement under § 43(a); (3) that Water Pik's use of the SINUSENSE mark constituted unfair competition under § 43(a); (4) that Water Pik's activities had diluted Med-Systems' trademarks under § 43(c); (5) that Med-Systems was entitled to an injunction against Water Pik's use of the SINUSENSE mark under 15 U.S.C. § 1116 (2008); (6) that Water Pik had tortiously interfered with Med-Systems' contractual relations with a national retailer by inducing the retailer to place SinuSense-branded products on its shelves in place of SinuCleanse-branded products; and (7) that through the same conduct, Water Pik had also tortiously interfered with Med-Systems' existing economic relations with that retailer. Med-Systems later dismissed the sixth and seventh counterclaims with prejudice, and the district court awarded summary judgment to Water Pik on the remaining counterclaims. The court dismissed Water Pik's claims for declaratory judgment as moot. See Water Pik, Inc. v. Med-Systems, Inc., 848 F.Supp.2d 1262, 1283 (D. Colo. 2012).
Med-Systems' only challenges on appeal are to the summary judgment on its claims of trademark infringement and unfair competition. On those claims the district court ruled that Med-Systems had not produced adequate evidence that Water Pik's use of the SINUSENSE mark was likely to cause confusion among consumers. See id. at 1270–71. Med-Systems filed a motion to reconsider, arguing, among other things, that the court had overlooked a report on likelihood of confusion by one of its experts, Dr. Michael A. Belch. Dr. Belch's report was an analysis of a survey that measured consumer confusion arising from the SINUSENSE mark. After examining the survey and report, the court determined that they had too many methodological flaws to be of any probative value, so it did not revise its previous analysis.
On appeal Med-Systems argues that the district court erred in ruling that no genuine issue of fact existed regarding likelihood of confusion. It also suggests that an improper grant of summary judgment would violate its Seventh Amendment right to a jury trial; but we need not address that issue because the summary judgment was proper.
A. Likelihood of Confusion
Med-Systems claims that Water Pik's use of the SINUSENSE mark constitutes infringement of its registered trademarks as well as unfair competition, both of which are violations of the Lanham Act. Section 32 of the Act allows the owner of a registered mark to bring an infringement action against any person who
use[s] in commerce any reproduction, counterfeit, copy, or colorable imitation of a registered mark in connection with the sale, offering for sale, distribution, or advertising of any goods or services on or in connection with which such use is likely to cause confusion, or to cause mistake, or to deceive . . . .
15 U.S.C. § 1114(1)(a) (emphasis added). And § 43(a) of the Act provides:
Any person who, on or in connection with any goods or services, or any container for goods, uses in commerce any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which . . . is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person . . . shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act.
Id. § 1125(a) (emphasis added). Although Med-Systems does not clarify whether it is appealing summary judgment on its § 32 counterclaim, its § 43(a) counterclaim, or both, the central inquiry is the same: whether the junior user's mark is likely to cause confusion with the senior user's mark. See, e.g., Team Tires Plus, Ltd. v. Tires Plus, Inc., 394 F.3d 831, 832–33 (10th Cir. 2005) (§ 32 claim); Cardtoons, L.C. v. Major League Baseball Players Ass'n, 95 F.3d 959, 966 (10th Cir. 1996) (§ 43(a) claim); see also Jordache Enters., Inc. v. Hogg Wyld, Ltd., 828 F.2d 1482, 1484 (10th Cir. 1987) (noting that similar tests govern claims under both provisions).
Likelihood of confusion is a question of fact, but the court may grant summary judgment in appropriate circumstances. See Sally Beauty Co., Inc. v. Beautyco, Inc., 304 F.3d 964, 972 (10th Cir. 2002). In evaluating whether there is a likelihood of confusion, we examine six nonexhaustive factors: (1) evidence of actual confusion; (2) the strength of the contesting mark; (3) the degree of similarity between the competing marks; (4) the intent of the alleged infringer in adopting the contested mark; (5) the degree of care that consumers are likely to exercise in purchasing the parties' products; and (6) the similarity of the parties' products and the manner in which they market them. See Vail Assocs., Inc. v. Vend–Tel–Co., Ltd., 516 F.3d 853, 863 (10th Cir. 2008). The importance of any particular factor in a specific case can depend on a variety of circumstances, including the force of another factor. For example, if the two marks are not at all similar, the degree of consumer care is unlikely to make a difference. As we have said, "These [six] factors are interrelated and no one factor is dispositive." Sally Beauty, 304 F.3d at 972. "At all times . . . the key inquiry is whether the consumer is likely to be deceived or confused by the similarity of the marks." Team Tires, 394 F.3d at 833 (internal quotation marks omitted).
B. Standard of Review
We review a summary judgment de novo, applying the same standard that the district court should have applied. See id. at 832. "Summary judgment is appropriate if the pleadings, depositions, other discovery materials, and affidavits demonstrate the absence of a genuine issue of material fact and that the moving party is entitled to judgment as a matter of law." Sally Beauty, 304 F.3d at 971; see Fed. R. Civ. P. 56(a). A factual issue is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Sally Beauty, 304 F.3d at 972 (internal quotation marks omitted). The nonmoving party is entitled to all reasonable inferences from the record; but if the nonmovant bears the burden of persuasion on a claim at trial, summary judgment may be warranted if the movant points out a lack of evidence to support an essential element of that claim and the nonmovant cannot identify specific facts that would create a genuine issue. See id. at 971–72. As the party alleging infringement under § 32 and unfair competition under § 43(a), Med-Systems bears the burden of proving a likelihood of confusion at trial. See John Allan Co. v. Craig Allen Co., 540 F.3d 1133, 1138 (10th Cir. 2008) (§ 43(a) unfair-competition claim); Jordache, 828 F.2d at 1484 (§ 32 infringement claim).
C. Application to This Dispute
Med-Systems contends that summary judgment was inappropriate because likelihood of confusion was a genuine issue of fact. We apply our six-factor test to evaluate likelihood of confusion between the SinuCleanse and SinuSense marks, addressing Med-Systems' specific arguments challenging the district court's evaluation of the factors. As we shall see, only the sixth factor favors Med-Systems and the factors as a whole strongly favor Water Pik.
1. Actual Confusion
"[A]ctual confusion in the marketplace is often considered the best evidence of likelihood of confusion." King of the Mountain Sports, Inc. v. Chrysler Corp., 185 F.3d 1084, 1092 (10th Cir. 1999) (internal quotation marks omitted). For one thing, such empirical data can be a reality check on the more theoretical analysis under the other factors. Med-Systems cites two different kinds of evidence of actual confusion: survey evidence gathered by Dr. Belch; and some emails, blog posts, and affidavits. We first address the survey evidence.
a. Survey Evidence
"Evidence of actual confusion is often introduced through the use of surveys, although their evidentiary value depends on the methodology and questions asked." Vail Assocs., 516 F.3d at 864 n.8 (internal quotation marks omitted). To test consumer confusion, Dr. Belch designed a questionnaire that respondents completed over the Internet. After first answering a few questions for demographic identification and to establish their experience with purchasing healthcare products, respondents were shown the unitalicized typewritten words "SinuCleanse, " "SinuSense, " and "NeilMed" in varying orders and were asked (Question 3) what came to mind when they saw those marks. Aplt. App., Vol. 6 at 1434. (NeilMed is a third competitor in the sinus-irrigation market.) They then viewed packages for SinuCleanse-branded products, SinuSense-branded products, and NeilMed-branded products in varying orders and were asked to rank, on a scale of one to seven, how appealing they found the design of each package. These initial questions were to disguise the goal of the survey while focusing attention on the packages.
Next, respondents were shown packaging for saline refill packets that carried the SinuCleanse, SinuSense, and NeilMed brands. After viewing each brand's package in isolation, then all three packages side by side, respondents were given a sequence of three questions aimed at measuring confusion. The first asked whether they thought that two or more of the displayed products were made by the same company. The second asked whether they thought that one or more of the companies whose brands were displayed had a business relationship with one of the other companies. And the third asked whether they thought that one or more of the companies whose brands were displayed had obtained permission or approval from one of the other companies. Respondents were presented with the second question only if they responded no or not sure to the first, and they were presented with the third question only if they had responded no or not sure to the second. Respondents who answered yes to any one question were asked to identify which two or three brands they thought were related and why. The survey also used this same procedure, with the same questions, to gauge reactions to neti pots branded as SinuCleanse, SinuSense, and NeilMed. In both cases, after the three-question sequence all respondents answered a final question in which they were shown three pairs of typewritten words—"SinuCleanse and SinuSense, " "NeilMed and SinuCleanse, " and "SinuSense and NeilMed"—and were asked (Question 10) to rank the similarity between the paired words on a scale from 1 to 7. Id. at 1446.
The district court ruled that the results of Dr. Belch's survey were "devoid of any probative value and therefore irrelevant, " id. Vol. 8 at 2244 (Order at 22, Water Pik, Inc. v. Med-Systems, Inc., Civ. No. 10-cr-01221-PAB-CBS (D. Colo. June 13, 2012)), because it perceived several serious methodological flaws in the survey: (1) Dr. Belch selected respondents from those whom he regarded as potential purchasers of sinus remedies in general, not potential purchasers of sinus-irrigation products in particular (which account for only 1% of sinus-remedy sales), thus creating an overinclusive survey universe; (2) Dr. Belch, based on the opinion of Med-Systems' CEO Gallo regarding the composition of the sinus-remedy market, skewed the survey population to ensure that 42% of respondents were older than 55, but an independent market study indicated that fewer than 29% of sinus-remedy consumers belonged to that age group; (3) Questions 3 and 10 did not present the marks as they would appear to a consumer because both marks were shown in a typewritten format, divorced from packaging, and without any italics; and the SinuSense mark was unaccompanied by the distinctive "waterpik" logo that appears on packaging for SinuSense products; (4) the survey presented images of Water Pik's products and images of Med-Systems' products side by side, ...