<em>Spireon, Inc. v. Flex Ltd.</em>

71 F.4th 1355 (Fed. Cir. 2023)

The Federal Circuit ruled that the TTAB failed to properly weigh the conceptual and commercial strength of a mark by not considering third-party registrations and by placing the burden to establish non-use on the applicant.

Spireon, Inc. v. Flex Ltd. involves a dispute over the registration of the “FL FLEX” trademark by Spireon, Inc. (“Spireon”). See generally Spireon, Inc. v. Flex Ltd., 71 F.4th 1355 (Fed. Cir. 2023). Flex Ltd. (“Flex”) opposed the mark on the grounds that there was a likelihood of confusion because Flex had three similar registered trademarks: “FLEX,” “FLEX (stylized),” and “FLEX PULSE.”

Spireon, a producer of vehicle intelligence solutions, applied for a trademark for “FL Flex” in October of 2018, describing FL Flex as  “electronic location tracking devices for trailers, cargo containers, and mobile assets.” Flex is a Texas-based electronics manufacturer whose registered trademarks are used for “transportation logistics services, supply chain and inventory management, and related software and solutions.”

Following the approval of Spireon’s application, the application was published, and Flex opposed the registration. Spireon, 71 F. 4th at 1359. The Trademark Trial and Appeal Board (the “Board”) sustained Flex’s opposition to the registration, finding that a likelihood of confusion existed under the relevant DuPont factors. Spireon appealed the Board’s decision to the Federal Circuit.

First, the Federal Circuit analyzed the strength of the prior user’s mark, relevant under the fifth and sixth DuPont factors. While the Court found that the fifth DuPont factor (the “fame of the prior mark”) was not at issue in this case, they analyzed the strength of the mark under the sixth factor, the “number and nature of similar marks in use on similar goods.” Under the sixth factor, courts must undergo a two-prong analysis of the mark’s conceptual strength (or “distinctiveness”) and of the mark’s commercial strength (or “marketplace recognition value”).

Regarding conceptual strength, the Federal Circuit found that the Board had made several errors. First, the Court found that the existence of third-party registrations on similar goods, particularly registrations containing common elements between both the opposer’s and applicant’s trademarks, can weigh in favor of finding a trademark as descriptive or suggestive, which entitle it to a narrower scope of protection.  The Court found that the Board failed to consider numerous registrations by discounting and effectively “eliminat[ing] consideration” of other composite marks.  Furthermore, the Court found that it was improper for the Board to disregard Spireon’s argument that the relationship between “FLEX” and the word “flexible” rendered the trademark highly suggestive; instead, the Board should have weighed whether the mark’s “hint” at “some attribute of the goods” was evidence of the mark’s conceptual weakness in the relevant industry.

Regarding commercial strength, the Federal Circuit found that the Board erred in declining to consider the use or lack thereof of composite marks in connection with commercial strength. Although the record lacked explicit evidence of use, the evidence demonstrated multiple “FLEX” marks, as well as a “FLeX” mark, all registered in the context of digital technology in relation to vehicles, supply chains, management, etc. Evidence also suggested that this context was the ”backdrop” against which Flex registered its trademarks.  While recognizing the burden of an opposition proceeding generally lies with the opposer, but that the burden within a likelihood of confusion analysis generally rests with the trademark proprietor, the Court questioned which party held the burden of establishing non-use in this case.  The Court identified that applicants generally bear the burden of producing relevant registrations of third-party marks, but ruled that, in this case, the burden should rest on the opposer to establish non-use instead of the applicant.

Although the burden of establishing that the marks are in use, concerning the commercial strength analysis, was on the applicant in prior cases, the Federal Circuit ruled that, where the dispute is involves “identical marks for identical goods,” the use should be assumed, and the burden of establishing non-use should be on the opposer. Although Flex failed to show that the identical marks for identical goods were not in use, the Court ruled that they should be allowed to make that showing on remand; if they fail to do so, the Court ruled that the commercial strength of the Flex marks should be considered weak in the analysis against Spireon’s non-identical mark. The Court declined to decide the “broader question of which party bears the burden of establishing non-use as a general matter” (i.e., where the dispute does not involve identical marks for identical goods). The Court also clarified that, although “FL FLEX” is for “different, albeit related, goods[,]” the existence of other “identical marks for identical goods” still weighs on the general commercial strength of Flex’s marks in the likelihood of confusion analysis.

The Federal Circuit also recognized that the Board analyzed the first DuPont factor under the context of a typographical error (“FL FLEX” was compared to “FLEX PLUS” instead of “FLEX PULSE”). Contrary to Flex’s assertion, the Court found that this was not a harmless error and should be analyzed correctly by the Board on remand.

Thus, the case was remanded to the Board to reconsider the likelihood of confusion test, with instructions that the Board should consider third-party registrations under both the conceptual and commercial strength prongs of the sixth DuPont factor, as well as that the burden of establishing non-use under the commercial strength prong belongs to Flex (the opposer).