Q: Our company's name is Lily. There is nothing similar in the space with the same name, but obvisouly the name is general. Should we be worried?
A: Trademark infringement hinges on whether there is a “likelihood of confusion” caused by the two marks at issue. In the U.S., this analysis varies from state to state, but the factors considered by a court and how to balance those factors largely overlap.
Differences between states often relate to how the factors are grouped, a shift in the burden of proof, or other distinctions which do not often have an impact on the outcome.
The common factors described below often carry the most weight when considering infringement.
Comparison of the marks
Often considered the most important factor, this is the only factor that, by itself, can decide the whole case. After all, if the marks are not similar, there is no infringement.
How do we analyze the similarity (or dissimilarity) of marks? A court considers appearance such as common letters, pronunciation, connotation (meaning) and commercial impression. For example, marks being compared could have different pronunciations and meanings, but are sufficiently close visually, such that may cause confusion: BOYS v. BUOYS. Or, the marks could be different, but something about their meanings may cause an issue. Since Apple owns APPLE and MACINTOSH (MAC), they would have a strong basis to challenge someone from starting a computer company under another “apple” variety brand such as GOLDEN DELICIOUS.
Comparison of the goods or services
This factor looks to whether the goods or services under the respective marks are closely related. For example, a consumer may expect that car tires and motorcycle tires are sold under the same trademark come from the same company, but a consumer may not have that expectation if the same mark is used for bicycle tires which have different shapes and functionality from motorized vehicle tires.
One common misconception is to decide whether goods or services are related by the International Class number used at the U.S. Patent and Trademark Office. Class numbers are only used in the U.S. to determine the fees owed by the applicant and have nothing to do with the owner’s rights. (In most other countries, the class number is highly relevant.) For example, class 28 houses hockey sticks and Christmas tree ornaments -- not usually considered related goods. On the other hand, class 25 covers clothing and class 35 includes retail clothing stores, which could produce a related good or service. Thus, when considering the relatedness of goods and services, compare the actual goods and services rather than the class numbers in a registration.
Channels of trade, purchaser and pricing
Often this factor is split into several different factors, but the idea is to analyze how the mark appears with the goods and the target consumer. For example, a sophisticated consumer who takes time in making an important, expensive purchase decision (such as enterprise software) is much less likely to be confused by similar marks. On the other hand, less similar marks such as those used on candy purchased as an “impulse buy” at a checkout counter are more susceptible to confusion.
Strength of the mark
Every trademark expresses some level of strength -- from weak to very strong. This is viewed in the context of whether the mark is suggestive of the goods (the weakest form of marks) to fanciful marks (Ii.e. made up terms like KODAK). An arbitrary mark (think APPLE for computers) is viewed as strong since the term has nothing to do with the underlying goods.
Within this factor, we also consider whether the mark is in a crowded field, which occurs when marks for certain goods have similar attributes. In a crowded field situation, other parties may adopt similar marks as long as those marks are different from each other and not closer to any one other mark in the group.
Famous marks are treated differently in the overall analysis, as they are provided rights under a theory called "dilution," which allows the owner to pursue users of the same or similar marks regardless of the underlying goods or services. COCA-COLA is a famous mark, providing a strong basis to preclude the adoption of COCA-COLA for completely unrelated goods such as industrial computers.
Has there been actual confusion? Have customers called the wrong company or returned product to the wrong place? While this factor can be very favorable in finding infringement, the lack of actual confusion is not always meaningful. Quite often, if the two marks have only coexisted for a short time or in disparate settings, confusion may not have had a chance to occur.
The determination of trademark infringement is not limited to these factors. Use of other marks (like a housemark) in conjunction with the marks in question could be considered. Advertising, disclaimers and the actual packaging may be also part of the analysis.
There is no algorithm to determine infringement. It is subjective. The same set of facts could result in different outcomes depending on which factors a court might choose to consider or how it might be weighed or allocated.
Obviously, contacting a trademark attorney to help sort through these and other factors is an important way to analyze a particular set of circumstances. The subtleties in this subjective test are not always intuitive and going it alone may only add to the likelihood of confusion.