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Eleventh Circuit: Insufficient evidence of likely confusion dooms 43(a) claim
November 28, 2007
In a decision last week, the Eleventh Circuit affirmed a district court's decision granting summary judgment of no trademark infringement and no unfair competition. The plaintiff and defendant had entered into a contract for the plaintiff to design a water meter reading system. After the plaintiff allegedly breached the contract, the defendant engaged different companies to complete the project. The replacement companies used some of the parts the plaintiff had used when it was performing the initial work, and some of the circuit boards used retained the plaintiff's trade name.The court held that this was insufficient to create a likelihood of consumer confusion. The circuit boards were housed in an opaque plastic unit and placed as high as possible in attics and on the exterior of buildings in order to minimize interference. The court therefore noted that confusion was highly unlikely for purchasers of the products, namely owners and managers of apartment complexes. There was also insufficient evidence of likely confusion in the context of repair technicians, who may actually view the circuit boards in question. As a result, there could be no likely confusion. The failure of the trademark infringement claim also doomed the plaintiff's unfair competition claim, and the district court's decision was affirmed.More detail of Custom Mfg. & Eng'g, Inc. v. Midway Servs., Inc. after the jump.Midway and Custom had entered a contract for Custom to install and design water meter reading systems for use in apartment complexes. While the prototype Custom designed worked, the systems began to malfunction after installation. Custom began to fail to meet deadlines for delivery, and Midway then cancelled the contract due to Custom's breach. Midway then hired AEC to redesign the system and finish the job. Custom sued for damages and Midway counterclaimed for breach of contract. During discovery, Custom learned that AEC used circuit boards provided to them from Midway which had Custom's name on them. AEC simply modified these and proceeded to install them. Custom then brought claims of trademark infringement, unfair competition, and tortious interference with business relations.The district court granted summary judgment for Midway and AEC, holding that Custom had not established the likelihood that public would be confused by AEC's use and installation of the circuit boards with Custom's name on them. They also then dismissed the state unfair competition claim on the same basis. Then the court not only granted Summary Judgment and dismissed the tortious interference claim but held that the claim was meritless and imposed sanctions under Rule 11 on counsel for Custom. Custom appeal the court's ruling on the first two counts.The Eleventh Circuit affirmed the district court's decision on each of the two counts. With respect to the Lanham Act claim, the court held that there was no likelihood of confusion as the circuit boards were subcomponents manufactured for use in a product that was marketed to owners of apartment complexes, and thus were not marketed to Custom's customers. The court also discussed the concept of likelihood of confusion in a post-sale context addressing whether Custom or Midway's potential customers would be confused as to the origin of their extant circuit boards. Here, the court noted that the circuit boards could not be seen without first removing the opaque plastic housing. The court also noted that the boards were also meant to act as transceivers and are mounted in attics and roofs to reduce transmission interference. Custom argued that technicians servicing the devices might be confused, but the court held that this argument "does not cut the mustard," as technicians were not the purchasers of these products. Thus the court agreed with the district court that there was no likelihood of confusion. The court then addressed the state claims, holding that the failure of Custom's Lanham Act claim also defeated its unfair competition claim under Florida law. In a previous case, the Eleventh Circuit held that the analysis under the Florida statute and common law for trademark infringement and unfair competition was identical.To read the full decision in Custom Mfg. & Eng'g, Inc. v. Midway Servs., Inc., click here.
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