July 20, 2012
Intellectual Property Alerts

Non-Consumer Confusion Can Influence 'Atlas Shrugged' Business Name Feud
by Cyrus Wadia

Two Silicon Valley companies are returning to court to settle a trademark dispute over their similar “Rearden” names inspired by Ayn Rand's philosophical novel Atlas Shrugged.  The Ninth Circuit reversed dismissal of the case due to unresolved likelihood of confusion issues.  Rearden LLC v. Rearden Commerce, Inc., __ F.3d __ (9th Cir. June 27, 2012).

Rearden LLC is a "technology incubator" for start-up ventures and Rearden Commerce is a web-based concierge company. The name “Rearden” was inspired by the fictional entrepreneur Hank Rearden in Atlas Shrugged.  When Rearden Commerce registered numerous domain names including the Rearden name, Rearden LLC filed suit for trademark infringement and cybersquatting.  California's U.S. District Court for the Northern District of California applied the traditional Sleekcraft test to determine likelihood of confusion and concluded no reasonable consumer would confuse one service for the other.

The Ninth Circuit has time and again emphasized the open-ended nature of the Sleekcraft test.  Here, the court found various elements, i.e., the strength of "Rearden" as a suggestive mark and the proximity of the respective technology platforms, could favor either party.  The Ninth Circuit also found that purchasing decisions of consumers can be influenced vis-à-vis confusion of non-consumers like journalists, vendors, and investors. Circuit Judge Robert Cowen offered the following specific guideline:

"[W]e conclude that non-consumer confusion may also be relevant to the "likelihood of confusion" inquiry in three specific and overlapping circumstances—namely where there is confusion on the part of: (1) potential consumers; (2) non-consumers whose confusion could create an inference that consumers are likely to be confused; and (3) non-consumers whose confusion could influence consumers. In all three instances, the non-consumer confusion bears a relationship to the existence of confusion on the part of consumers themselves."

As to the cybersquatting claim, the Ninth Circuit also found factual issues on existence of bad or good faith.  The domain name registration could reflect bad faith as leverage in an ongoing trademark dispute or a simple "registration frenzy."  Stay tuned for further proceedings.

**Mr. Wadia recognizes Jong Cho's assistance in the preparation of this alert.

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