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"The only thing necessary for the triumph of evil is for good men to do nothing"
Edmund Burke


[page 10]
We hold that the type of commercial injury actionable under 43(a) of the Lanham Act, 15 U.S.C. 1125(a), is not restricted to the loss of sales to actual and prospective buyers of the product in question. Confusion is relevant when it exists in the minds of persons in a position to influence the purchasing decision or persons whose confusion presents a significant risk to the sales, goodwill, or reputation of the trademark owner. This holding is consistent with our existing case law, under which post-sale confusion is actionable. See I.P. Lund Trading, ApS v. Kohler Co., 163 F.3d 27, 44 (1st Cir.1998). We also hold that relevant commercial injury includes not only loss of sales but also harm to the trademark holder's goodwill and reputation. See 3 McCarthy on Trademarks and Unfair Competition 25:5 (4th ed. 1996) [hereinafter, McCarthy].


[page 16]
Our holding is reinforced by the position of the Restatement of Unfair Competition, which treats confusion as relevant where it presents "a significant risk to the sales or good will of the trademark owner." Restatement (Third) of Unfair Competition 20 cmt. b (1995). The leading commentators also agree that harm to goodwill and harm to reputation are actionable. McCarthy states that the "post-sale confusion of a purchaser of an insurance policy who mistakenly makes a claim to another company with a similar name" is relevant and quotes Meridian, 128 F.3d at 1118, for the proposition that "the fact that a company's goodwill, rather than its pocketbook, is injured by actual confusion does not render the confusion meaningless." 3 McCarthy 23:7 & n. 12; see also 3A Callman on Unfair Competition, Trademarks and Monopolies 21:4 (4th ed. 1981) ("Even without `passing off' and diversion of trade, the injury [suffered by a trademark owner] may be grievous" because of harm to reputation). Indeed, OneBeacon, backing off its assertion to the district court that confusion must be linked to lost sales, now admits on appeal that confusion is relevant if it "threaten[s] the sales or goodwill of the trademark owner" (emphasis added).

It is true that when a Lanham Act case involves directly competing goods, as here, the usual harm from confusion is both the potential purchase of the defendant's product rather than the plaintiff's and the loss of goodwill and reputation occasioned when the defendant's product is inferior.[3] But nothing in the statute suggests that demonstrable harm to plaintiff's goodwill and reputation resulting from confusion of marks is restricted to this classic situation.

 

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