Swagway, LLC v. Int'l Trade Comm'n
923 F.3d 1349
Fed. Cir.2019Background
- Segway sued Swagway at the ITC alleging infringement of two SEGWAY trademarks (the non-stylized ’948 mark and stylized ’942 mark) by Swagway-branded hoverboards (SWAGWAY X1/X2) and related products.
- The consolidated ITC investigation also involved two patents, but by the hearing only the two trademarks and two patents remained; later the ALJ found noninfringement of the patents.
- Swagway moved to terminate trademark claims via a proposed consent order (agreeing not to import/sell SWAGWAY-branded transporters); Segway opposed, and the ALJ did not rule on the motion before issuing an Initial Determination (ID).
- The ALJ found trademark infringement for the SWAGWAY designation (but not SWAGTRON), relying on six likelihood-of-confusion factors and significant evidence of actual consumer confusion; the ALJ did not fully adjudicate the consent-order motion.
- The Commission reversed the ALJ on the weight of “actual confusion” (finding the proffered incidents insubstantial relative to sales and some evidence unreliable), but nonetheless affirmed infringement based on other DuPont factors—especially mark strength and similarity—and denied the consent-order motion.
- The Federal Circuit affirmed the Commission: it upheld the Commission’s reweighing of factors, rejected Swagway’s argument that lack of actual confusion was dispositive, and held ITC trademark decisions do not have preclusive effect in district courts.
Issues
| Issue | Segway's Argument | Swagway's Argument | Held |
|---|---|---|---|
| Whether Swagway’s SWAGWAY designation infringes Segway’s ’942 and ’948 marks (likelihood of confusion) | Marks are similar; SEGWAY marks are strong; other DuPont factors support likely confusion | Lack of actual consumer confusion and other factors weigh against likelihood of confusion; absence of survey evidence should be adverse to Segway | Affirmed infringement: Commission permissibly reweighed factors; strength and similarity dominated despite limited actual-confusion evidence |
| Proper weight of actual confusion evidence | Actual confusion incidents support infringement (ALJ found overwhelming evidence) | Incidents are de minimis relative to sales; lack of long-term concurrent use makes absence of confusion significant | Commission correctly discounted actual confusion incidents as not weighing in favor of confusion after review; absence of confusion is not automatically dispositive |
| Whether Commission erred by failing to enter Swagway’s proposed consent order (procedural) | (Segway) Opposed entry; enforcement order suffices | Commission should have entered consent order to provide preclusive effect and foreclose relitigation in district court | Court declined to remand: practical relief granted by Commission matched consent order; also held ITC trademark/patent decisions are not accorded preclusive effect in district courts, mooting Swagway’s consent-order argument |
| Preclusive effect of ITC decisions on district court actions | (Segway) ITC decisions are persuasive and enforceable but not necessarily preclusive | Swagway sought issue preclusion via consent order to bar district-court relitigation | Held ITC determinations on trademark/patent issues do not have preclusive effect in subsequent district-court proceedings |
Key Cases Cited
- Converse, Inc. v. Int’l Trade Comm’n, 909 F.3d 1110 (Fed. Cir.) (standard of review for ITC legal and factual determinations)
- In re I.AM.Symbolic, LLC, 866 F.3d 1315 (Fed. Cir.) (likelihood-of-confusion is a legal conclusion based on factual findings)
- In re Guild Mortgage Co., 912 F.3d 1376 (Fed. Cir.) (concurrent use/absence of actual confusion must be balanced with other evidence)
- M2 Software, Inc. v. M2 Commc’ns, Inc., 450 F.3d 1378 (Fed. Cir.) (DuPont factors need only those supported by record; some factors may be dispositive)
- Han Beauty, Inc. v. Alberto-Culver Co., 236 F.3d 1333 (Fed. Cir.) (strength/fame of a mark can play a dominant role)
- Tex. Instruments Inc. v. Cypress Semiconductor Corp., 90 F.3d 1558 (Fed. Cir.) (Congress did not intend ITC patent decisions to have preclusive effect; applied here to trademark determinations)