When most people think of trademark infringement, they think of knockoffs like fake Rolex® watches or dubious Louis Vuitton® bags sold by street vendors. In these cases, a junior user comes along and tries to profit from the goodwill of a well-known senior user, either through outright deception or by using branding that calls the senior user’s mark to mind, even if they don’t intend to deceive anyone. In trademark law, this is called “forward” or “classic” confusion.
But for most small to medium sized businesses, that’s not really where trademark infringement lives. Most small to medium sized businesses are building their brands and infringement isn’t always targeted at trading off the goodwill of the senior user. Instead, trademark infringement tends to come from one of two sources: 1) comparable sized competitors who see a growing brand and think they can do it better in a market that has room to grow; or 2) giants in the market who may have independently come up with the same idea for a mark and simply disregard the rights of the senior user. This blog post focuses on the second of those, a category of trademark infringement known as “reverse confusion.”
The primary problem in reverse confusion is that an industry giant comes along, adopts a trademark that is the same or otherwise confusingly similar to your trademark, and that giant comes to dominate the market with that brand effectively shutting you out of use of your own trademark to the point where consumers come to believe that your product is the knockoff, and the junior user is the original source of goods or services with the trademark.
Reverse Confusion Is Not a Separate Claim Under the Lanham Act
Reverse confusion is not a separate cause of action. You do not bring a “reverse confusion claim” on top of a standard Lanham Act infringement claim. As the Eleventh Circuit explained in its 2022 decision in Wreal, LLC v. Amazon.com, Inc., 38 F.4th 114 (11th Cir. 2022) reverse confusion is a way that trademark infringement can occur, not a different legal claim with different elements. The claim is still trademark infringement. The question is still likelihood of confusion. What changes is how the court evaluates that confusion when the plaintiff is the smaller, earlier user of the mark and the defendant is the much larger, later entrant that overwhelms the marketplace.
How Wreal Changed the Reverse Confusion Analysis in the Eleventh Circuit
Before Wreal, courts in this Circuit generally applied the same likelihood of confusion analysis to forward and reverse confusion without much distinction. Wreal clarified that when you are dealing with a “David versus Goliath” situation, where a mom-and-pop senior user is up against a multinational junior user, some of the familiar factors look different in practice. The analysis does not throw out the old test, but it does shift the emphasis in important ways.
One of the most important changes in Wreal is the treatment of house marks. In a classic forward confusion case, a defendant will often argue that using its well-known house mark (its main brand) alongside the challenged mark helps to reduce confusion, because consumers will recognize the house mark and understand that the product comes from that source. In a reverse confusion case, the Eleventh Circuit reached the opposite conclusion. When a powerful junior user puts its famous house mark next to a confusingly similar product mark, that combination can make reverse confusion more likely because it teaches consumers to associate that product term with the junior user and its house brand, not with the smaller senior user who was there first.
The Role of the Junior User’s Commercial Strength and Market Power
Wreal also emphasized the commercial strength of the junior user’s mark. In forward confusion, courts often focus on how strong the senior user’s mark is. In reverse confusion, the Eleventh Circuit held that courts must consider the relative commercial strength of the defendant’s mark when the defendant is the junior user. A large advertising budget, nationwide distribution, “widespread availability,” and deeply entrenched customer and distributor relationships can all work against the junior user in this context because they show exactly how easily the junior user can swamp the senior user’s identity in the marketplace. Evidence that would normally be used to show how strong a defendant’s brand is for purposes of defending its own mark can become powerful evidence of reverse confusion when that defendant adopted a mark that is confusingly similar to a smaller competitor’s earlier mark.
Intent in Reverse Confusion Cases: Knowledge and Reckless Adoption
Intent is evaluated through a similar lens. The Wreal opinion notes that intent can be inferred when a defendant proceeds with adoption of a mark in circumstances where it has constructive or actual knowledge of the plaintiff’s earlier rights. In reverse confusion, the concern is not that the junior user set out to pass itself off as the senior user, but that, with knowledge of the senior mark and far greater market power, it moved forward in a way that made it highly likely that consumers would view the senior user as the copycat or affiliate.
Pleading Reverse Confusion Alongside Forward Confusion
Courts have also rejected the idea that reverse confusion is some “new” theory that must be separately pled or is easily waived. The Eleventh Circuit in Wreal stated that “[r]everse confusion is not a standalone claim in trademark law,” and other courts, including the First Circuit in Dorpan v. Hotel Melia, Inc., 728 F.3d 55, fn 12 (1st Cir. 2013) and the Southern District of New York in Trouble v. the Wet Seal, Case No. 99-cv-10997 (S.D.N.Y. Dec. 14, 2001), have treated forward and reverse confusion as alternative ways of proving a single infringement claim. Allegations that the defendant’s use of a confusingly similar mark is likely to cause confusion as to source, sponsorship, or affiliation are sufficient to encompass both. That said, practitioners should be aware that not all courts are equally receptive to reverse confusion theories being pled generally, and care should be taken to plead forward and reverse confusion in the alternative.
Practical Takeaways for Small Businesses Facing a Market “Goliath”
The practical takeaway for small and medium sized businesses is straightforward. If you used a mark first and a much larger company later adopts a confusingly similar mark, the law gives you a path to push back even if the larger company never tries to pass itself off as you. The focus will be on the junior user’s market power, its advertising and distribution, its use of a strong house mark with the accused mark, and the real-world effect of those actions on how consumers see your brand. In a true David versus Goliath scenario, those are not side issues; they are at the center of the likelihood of confusion analysis.
Contact Jimerson Birr to Protect Your Brand Against Reverse Confusion
To discuss how to protect your brand against reverse confusion and safeguard the value of your trademarks from the market Goliaths of the world, contact Jimerson Birr.