Stone Lion Capital Partners, L.P. v. Lion Capital LLP
110 U.S.P.Q. 2d (BNA) 1157, 746 F.3d 1317, 2014 WL 1229530 (2014)
Rule of Law:
When determining the likelihood of confusion for trademark registration, the Trademark Trial and Appeal Board (TTAB) must consider the scope of services as recited in the application and registration, rather than the parties' current actual business practices, especially concerning channels of trade and purchaser sophistication.
Facts:
- Stone Lion Capital Partners, L.P. is a New York-based investment management company founded in November 2008, which manages a hedge fund focusing on credit opportunities.
- Lion Capital LLP is a private equity firm based in the United Kingdom that invests primarily in companies selling consumer products, having started using its marks in the United States in April 2005.
- Lion has two registered marks with the U.S. Patent and Trademark Office (PTO): 'LION CAPITAL' (applied for May 2005, registered December 2008) and 'LION' (applied for October 2007, registered June 2009).
- Lion’s registered services include 'financial and investment planning and research,' 'investment management services,' 'capital investment consultation,' 'equity capital investment,' and 'venture capital services.'
- On August 20, 2008, Stone Lion filed an intent-to-use application to register the mark 'STONE LION CAPITAL' for 'financial services, namely investment advisory services, management of investment funds, and fund investment services.'
- Lion has priority over Stone Lion with respect to its registered marks.
- Both Stone Lion and Lion, in their actual business practices, target 'sophisticated' investors and require large minimum investments.
- Stone Lion admitted during oral argument that it could someday offer investment services in connection with college education funds.
Procedural Posture:
- Stone Lion filed an intent-to-use application with the U.S. Patent and Trademark Office (PTO) to register the mark 'STONE LION CAPITAL' on August 20, 2008.
- Lion opposed the registration under section 2(d) of the Lanham Act before the Trademark Trial and Appeal Board (TTAB), alleging likelihood of confusion with its registered marks 'LION CAPITAL' and 'LION'.
- The TTAB conducted a likelihood of confusion inquiry pursuant to the thirteen factors set forth in In re E.I. du Pont de Nemours & Co.
- The TTAB found that factors one through four (similarity of marks, similarity of services, similarity of trade channels, and sophistication of purchasers) weighed in favor of finding a likelihood of confusion, and the remaining factors were neutral.
- The TTAB ultimately found Lion met its burden to establish a likelihood of confusion by a preponderance of the evidence and refused Stone Lion’s application.
- Stone Lion Capital Partners, L.P. (Appellant) filed a timely appeal of the TTAB's decision to the United States Court of Appeals for the Federal Circuit, with Lion Capital LLP as the Appellee.
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Issue:
Does the Trademark Trial and Appeal Board (TTAB) properly determine the likelihood of confusion between two marks when it considers the broad scope of services recited in a trademark application and existing registrations, rather than the parties' actual, narrower business practices, for factors like channels of trade and purchaser sophistication?
Opinions:
Majority - wallach, Circuit Judge
Yes, the Trademark Trial and Appeal Board (TTAB) properly determined the likelihood of confusion when it considered the broad scope of services recited in Stone Lion's application and Lion's registrations, rather than the parties' actual, narrower business practices, for factors like channels of trade and purchaser sophistication. The court affirmed the TTAB's decision, finding it supported by substantial evidence and in accordance with the law. Regarding the similarity of marks (DuPont factor one), the TTAB properly found 'LION' to be the dominant part of both marks, and the addition of 'STONE' was insufficient to distinguish them, consistent with the principle that adding a suggestive or descriptive element often does not avoid confusion. For the similarity of trade channels (DuPont factor three), the TTAB correctly focused on the broad scope of services recited in the application and registrations, presuming they travel through all usual channels of trade and are offered to all normal potential purchasers. This approach is mandated because registrability is based on the identification of goods/services in the application, which cannot be narrowed by testimony about actual use restrictions. Concerning purchaser sophistication (DuPont factor four), the TTAB properly considered the sophistication of all potential customers for the broadly recited services, not just the parties' current sophisticated investors. Since Stone Lion's 'investment advisory services' and Lion's 'capital investment consultation' were broadly recited and not explicitly restricted to high-dollar or sophisticated consumers, the TTAB reasonably found they could be offered to ordinary consumers. The court noted that trademark registration benefits align with the recited scope, not current use, and a broad application is not narrowed by actual restricted use. It distinguished this case from precedent where a binding contractual agreement limited the scope of use, as Stone Lion had no such agreement and admitted its services could expand. Therefore, the TTAB appropriately applied its precedent requiring the decision to be based on the least sophisticated potential purchasers when a buyer class is mixed.
Analysis:
This case reinforces the principle that trademark registrability determinations, particularly regarding likelihood of confusion, are based on the scope of services as recited in the application and registration, not merely the applicant's current business practices. It highlights the importance of precise language in trademark applications, as broad descriptions can lead to a presumption of overlapping trade channels and target consumers, even if actual current practices are narrower and involve sophisticated purchasers. The decision underscores that applicants bear the risk of broad recitations, as they cannot later argue for a narrower interpretation to avoid confusion findings, especially in the absence of a binding contractual agreement limiting use.
