CAFC Vacates TTAB Decision on FLEX Trademark Due to ‘Errors of Significance’

On Monday, the U.S. Court of Appeals for the Federal Circuit (CAFC) issued a precedential opinion that overturned a Trademark Trial and Appeal Board (TTAB) ruling that a trademark registration from GPS vehicle tracking company Spireon was likely to be confused with three trademarks from supply chain management company, Flex LTD. The appeals court found that the TTAB made several significant errors and thus vacated and remanded the case.

Flex LTD opposed Spireon’s FL FLEX trademark due to likely confusion with three of its marks, FLEX, FLEX (stylized), and FLEX PULSE.

The TTAB determined whether there was a likelihood of confusion using the Dupont factors. The Board found that Flex’s marks were inherently distinctive under the first factor, and using the second, third, and thirteenth Dupont factors concluded that there was overlap between the two companies’ marks and ruled that Spireon registered its mark in bad faith.

With this analysis, the Board found that there was a likelihood of confusion between the marks and sustained Flex LTD’s opposition to Spireon’s trademark registration. However, the CAFC found that the TTAB made errors at multiple points that impacted the ruling.

In its ruling, the CAFC also narrowly clarified the precedent for the burden of proof in determining the non-use of third-party trademark registrations brought forward for commercial analysis. The appeals court established that “the burden of showing non-use of identical marks for identical goods rests with the opposer.”

A Series of Significant Errors

The first TTAB error that the CAFC highlighted was that the Board included the analysis of the conceptual strength of the trademark in the first Dupont factor rather than the sixth. While this error was not claimed to impact the final judgment, the CAFC wrote, “the Board made other errors of significance.”

The court said that the Board erred in its analysis of the conceptual strength of Flex LTD’s marks. The TTAB discounted composite registrations from third parties even though Spireon’s FL FLEX is a composite trademark. The appeals court said the TTAB came to this mistake by erroneously ignoring the FL prefix in Spireon’s mark.

“While it is permissible to find that the FL prefix did not eliminate possible confusion with FLEX without the prefix, the Board cannot effectively eliminate consideration of other composite marks in these circumstances,” wrote the appeals court.

The court added that the Board compounded this error by also not considering Spireon’s argument that “flex” is a highly suggestive term as it’s a shortened version of “flexible.”

Commercial Strength and the Burden of Proof

In addition to the errors made determining the conceptual strength of the marks, the CAFC found that the Board erred in its analysis of commercial strength.

Here, the CAFC more explicitly clarified an assumed rule in prior cases, namely that the burden of proof should rest on the opposer to establish non-use rather than the applicant to establish use of third-party registrations brought forward by the applicant for commercial strength analysis.

But the appeals judges wrote, “in prior cases, we and our predecessor court appear to have assumed, without explicitly stating, that in connection with the analysis of commercial strength, the burden rested on the applicant to establish that prior marks were actually in use.”

The CAFC passed on determining which party bears this burden as a general matter because “this case presents the far narrower question of whether the burden of showing non-use of identical marks for identical goods rests with the opposer,” and the court continued, “we think it necessarily does.”

This determination results in the burden in this case falling to Flex LTD.

“Otherwise, the opposer would be able to dismiss the commercial significance of previously registered identical marks for identical goods where the opposer’s own mark should perhaps have not been granted registration in the first place,” wrote the appeals court.

The court wrote that identical marks for identical goods still have some protection from newer identical marks for identical goods. However, the court determined that this protection does not apply in the Flex LTD case because Spireon’s mark is not identical and does not cover identical goods. In the CAFC’s determination, Spireon’s mark covers related, but different goods.

Flex LTD failed to show the CAFC that Spireon’s mark is not an identical mark covering identical goods, but the company will have the chance to do so on remand.

Nevertheless, the CAFC provided its opinion on the future of the case, saying, “if Flex fails to establish non-use, the commercial strength of the Flex marks must be considered weak as to Spireon’s non-identical mark.”

Finally, the Boar erred in comparing FL FLEX to the wrong mark. The TTAB seemed to misread the FLEX PULSE mark as FLEX PLUS, commenting that the term “plus” in the “FLEX PLUS mark is merely laudatory with respect to Opposer’s identified products and services” because “[a]s an adjective, ‘PLUS’ is defined as ‘having, receiving, or being in addition to what is anticipated,’ ‘greater than that specified,’ or ‘possessing a specified quality to a high degree.’” While Flex called this harmless error, the court disagreed and said the Board must analyze the correct mark on remand.

With this laid out, the CAFC vacated the Board’s decision and remanded the case for reconsideration.

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