Finance Trademark Confused Brokers, If Not Clients

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By Tony Dutra

July 20 — Likelihood of confusion in a trademark case doesn't require evidence that purchasers are the ones confused, the U.S. Court of Appeals for the Third Circuit held July 16.

For Arrowpoint Capital Corp. and its financial investment-related services, the investors themselves weren't necessarily confused, but attorneys, salespeople and customer service reps at brokerage firms were.

The appeals court consequently reversed a district court's denial of a preliminary injunction that would stop Arrowpoint Asset Management LLC from using Capital's word mark.

The court essentially restated a 2004 holding, updated to account for services rather than just products.

Dueling Arrowpoints

Arrowpoint Capital Corp. is an insurance company that started managing and investing assets derived from insurance policy premiums in 2007. It registered the “Arrowpoint” word mark in 2008 for insurance-related services, in 2011 for “business auditing” and in 2012 for “employee retirement plans.”

Denver-based Arrowpoint Asset Management LLC is an SEC-registered investment adviser, providing, according to the court, “investment-related services, including individual investment management services and administration services for hedge funds.”

Arrowpoint Capital sued Arrowpoint Asset Management, with claims including trademark infringement under 15 U.S.C. §1114, and moved for preliminary and permanent injunctions, in February 2010.

Judge Gregory M. Sleet of the U.S. District Court for the District of Delaware took four years to deny the motion, and Arrowpoint Capital appealed.

Confusion Isn't Just for Purchasers

“The likelihood of confusion with which the Lanham Act is concerned is not limited to confusion of products among purchasers,” the court said.

The Third Circuit had previously held that evidence of confusion among “suppliers and other business contacts” was pertinent in a 1991 case, the court said.

Kos Pharms., Inc. v. Andrx Corp., 369 F.3d 700, 711, 70 U.S.P.Q.2d 1874 (3d Cir. 2004), said that “the Lanham Act extends to ‘the use of trademarks which are likely to cause confusion, mistake, or deception of any kind, not merely of purchasers nor simply as to source of origin.' ”

The court also relied on Morningside Group, Ltd. v. Morningside Capital Group, L.L.C., 182 F.3d 133, 51 U.S.P.Q.2d 1183 (2d Cir. 1999), because “it involved the highly regulated financial industry.”

In that case, “sophisticated members of the financial community” were confused about the relationship between two entities with the same name.

The district court had discounted Arrowpoint Capital's proffered evidence “because the confusion was among brokers and dealers, rather than being ‘actual customer confusion,' ” and that was erroneous, the appeals court said.

The appeals court further rejected Arrowpoint Asset Management's argument that the evidence Arrowpoint Capital had provided was self-serving, because each incident had been recorded by an Arrowpoint Capital employee.

Had the district court discounted such evidence as lacking credibility, it was error not to hold an evidentiary hearing “to cross examine the individuals who were confused,” the appeals court said.

The court distinguished cases—such as Checkpoint Sys., Inc. v. Check Point Software Techs., Inc., 269 F.3d 270, 60 U.S.P.Q.2d 1609 (3d Cir. 2001)—which had allowed skepticism of evidence produced “at later stages of each case.”

“That procedural distinction explains why the self-serving hearsay affidavits in Kos, a case involving a preliminary injunction, were sufficient, but the same kind evidence was not enough to sustain a judgment for the plaintiff in Checkpoint,” the court said.

The court vacated the denial of a preliminary injunction and remanded the matter for reconsideration of the evidence.

The court also vacated the district court's denial of two motions by Arrowpoint Capital to supplement the record during the four-year wait for a decision, because the appeals court was “unable to discern the basis” for those decisions.

However, it denied Arrowpoint Capital's request that the case be reassigned to another judge, as “[w]e have never held that delay alone merits reassignment.”

Judge Kent A. Jordan wrote the court's opinion, which was joined by Judges D. Brooks Smith and Dolores Korman Sloviter.

Corby C. Anderson of Parkowski, Guerke & Swayze, Wilmington, Del., represented Arrowpoint Capital. Lewis D. Prutzman of Tannenbaum, Helpern, Syracuse & Hirschtritt, New York, represented Arrowpoint Asset Management.

To contact the reporter on this story: Tony Dutra in Washington at

To contact the editor responsible for this story: Anandashankar Mazumdar in Washington at

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