Ninth Circuit Finds Reversible Error in Considering Only Dissimilarity of the Marks When Judging Likelihood of Confusion

Case: Jada Toys, Inc. v. Mattel, Inc. (9th Cir. No. 05-55627, 8/2/2007)

The One Sentence Summary: Trademark infringement, dilution and copyright claims should be allowed to proceed because issues of fact prevent summary judgment - in evaluating likelihood of confusion, the court may not rely upon dissimilarity of the marks alone, but must weigh all of the Sleekcraft factors.


What They Were Fighting About: Plaintiff-Appellee Jada Toys, Inc. (“Jada”) specializes in miniature cars and trucks. In 2002, Jada trademarked “HOT RIGZ” for a line of toy trucks. Defendant-Appellant Mattel, Inc. (“Mattel”) produces, among other toys, HOT WHEELS miniature vehicles. Mattel has trademarked two HOT WHEELS logos.

On April 20, 2004, Jada sued Mattel for trademark infringement, false designation or origin, and unfair competition. Its claims, however, were not based on HOT RIGZ (that mark comes into play later), but on Mattel’s OLD SCHOOL and NEW SCHOOL products, which Jada alleged infringed its registered OLD SKOOL trademark.

Mattel counterclaimed for trademark infringement, dilution, and copyright infringement based on Jada’s HOT RIGZ mark. Both parties filed motions for summary judgment.

As to Jada’s OLD SKOOL claims, the district court granted summary judgment in Mattel’s favor. As to Mattels’ HOT RIGZ counterclaims for trademark infringement, dilution, and copyright infringement, the court granted summary judgment in Jada’s favor. In granting summary judgment in Jada’s favor as to Mattel’s claims, the district court relied on the dissimilarity of the marks alone to find no likelihood of confusion and therefore no trademark infringement.

Mattel appealed the grant of summary judgment as to its HOT RIGZ counterclaims, and the Ninth Circuit reversed.

Ninth Circuit Holdings:

• The eight-factor Sleekcraft test is the proper test for evaluating likelihood of confusion. The lower court erred in considering only one factor: the dissimilarity of the marks. The Ninth Circuit acknowledged that the Sleekcraft test is flexible, and that some factors are more important than others, but it firmly rejected reliance on any single factor. To hold otherwise would allow the possibility that persuasive evidence of a single factor could trump other relevant factors. For instance, it might lead a judge to elevate his impressions of the dissimilarity of the marks over evidence of, for example, actual confusion. Previous cases suggesting that dissimilarity alone is enough to judge likelihood of confusion have done so only in dicta.
• As to Mattel’s dilution claim, the court found that the district court’s entry of summary judgment was improper because genuine issues of material fact exist. The court affirmed that dilution should be found if (1) the mark is famous, (2) the defendant uses it for a commercial use, (3) the use began after the mark became famous, and (4) actual dilution is shown. In order meet the "commercial use" requirement, the mark used by the alleged diluter must be identical or nearly identical to the protected mark. Mattel had produced a survey showing that a number of respondents believed "HOT RIGZ" were associated with Mattel. While the district court found that the marks were not sufficiently identical to fulfill factor (2), the Ninth Circuit concluded that a reasonable trier of fact could find that the marks are nearly identical because they both use “HOT,” both use flames, both use similar colors, and both have similar connotations. The Ninth Circuit also found that (i) Mattel's mark was famous (used for 37+ years, $350 million spent on advertising, sale of 3 billion units, and sales throughout the world), (ii) Mattel's mark was employed before Jada's mark, and (iii) a reasonable trier of fact could find actual dilution.
• As to Mattel’s copyright claim, the court found that the district court’s entry of summary judgment was improper because genuine issues of material fact exist. The district court had found that the marks were not substantially similar because they had no similarity of ideas and no reasonable person could believe they conveyed a similar expression. The Ninth Circuit stated conclusively that a reasonable trier of fact could find that the marks were objectively similar, and that the HOT RIGZ mark could express that “the product sold under that mark is, essentially, a HOT WHEELS product.”