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Edmund Burke

[page 989]
However, by exclusively focusing on confusion at the point of sale, the district court effectively disregarded Reebok's argument relating to "post-sale confusion." Reebok contended that such confusion occurs, for example, when a consumer observes someone wearing a pair of Payless accused shoes and believes that the shoes are Reebok's. As a consequence, the consumer may attribute any perceived inferior quality of Payless shoes to Reebok, thus damaging Reebok's reputation and image. The district court rejected that contention because the Tenth Circuit had not adopted the theory of post-sale confusion.[4] We agree with Reebok that the district court abused its discretion in failing to adequately consider the extent of such post-sale confusion.

Section 32 of the Lanham Act was amended in 1962 to include confusion of nonpurchasers as well as direct purchasers by striking out language limiting its scope to confusion of "purchasers as to the source of origin of such goods or services." Pub.L. No. 87-772, 76 Stat. 769, 773 (1962). As a result, several of our sister circuits have recognized that an action for trademark infringement may be based on confusion of consumers other than direct purchasers, including observers of those wearing an accused article. See, e.g., Keds Corp. v. Renee Int'l Trading Corp., 888 F.2d 215, 222, 12 USPQ2d 1808, 1813 (1st Cir.1989) ("[P]oint of sale confusion [is] not the only issue."); Lois Sportswear, U.S.A., Inc. v. Levi Strauss & Co., 799 F.2d 867, 872, 230 USPQ 831, 835 (2d Cir.1986) ("[I]t is ... clear that post-sale confusion ... is actionable under the Lanham Act."); Polo Fashions, Inc. v. Craftex, Inc., 816 F.2d 145, 148, 2 USPQ2d 1444, 1445-46 (4th Cir.1987) (confusion in "after sale context" can harm plaintiff's reputation); Marathon Mfg. Co. v. Enerlite Prods. Corp., 767 F.2d 214, 221, 226 USPQ 836, 840 (5th Cir.1985) ("[Plaintiff] need not prove confusion on the part of actual customers."); Levi Strauss & Co. v. Blue Bell, Inc., 632 F.2d 817, 822, 208 USPQ 713, 718 (9th Cir.1980) (mitigation of point of sale confusion does not obviate confusion by prospective purchasers); United States v. Torkington, 812 F.2d 1347, 1352, 2 USPQ2d 1166, 1170 (11th Cir.1987) ("[T]he likely to confuse test is satisfied when potential customers ... would be likely to be confused should they encounter the [accused products] in a post-sale context - for example, in a direct purchaser's possession.").

Although, as the district court pointed out, the Tenth Circuit apparently has not expressly addressed the role of post-sale confusion in its case law, it has nevertheless acknowledged that "[t]he facts of a particular case may require consideration of other variables" in addition to those enumerated in Section 729 of the Restatement of Torts. Beer Nuts, 711 F.2d at 940, 221 USPQ at 215. We conclude that consideration of post-sale confusion in determining likelihood of confusion is not inconsistent with Tenth Circuit trademark law, cf. Amoco Oil Co. v. Rainbow Snow, 748 F.2d 556, 224 USPQ 128 (10th Cir.1984) (recognizing the breadth of protection afforded by the Lanham Act), and would likely be adopted by the Tenth Circuit if it considered the issue head-on. In so concluding, we are persuaded not only by the merits of the issue, but also by the widespread recognition by so many other circuits of the importance of post-sale confusion.

Consideration of post-sale confusion is singularly warranted in the instant case. The degree of similarity between Payless' marks and the indisputedly strong STARCREST and STRIPECHECK marks is, as the district court recognized, remarkable. The district court discounted that similarity because other factors (viz., the nature of the marketing, the market channels, and the degree of care exercised by a purchasing consumer) weighed against a finding of a likelihood of confusion. Those factors, however, are all directed to pre-sale confusion. They are immaterial [page 990] to the issue whether actionable confusion is likely to occur after the marked product has entered the public arena. For example, post-sale observers may be unaware that Payless and Reebok shoes are sold in different stores or at different prices, yet their confusion may be detrimental to Reebok.

Similarly, with respect to Reebok's federal and state unfair competition claims, the district court concluded that the difference in the marketing channels and the degree of care exercised by the purchasing consumer precluded Reebok from showing a likelihood of confusion, notwithstanding that it acknowledged the similarity between the trade dress of the accused shoes and Reebok's shoes. Post-sale confusion is equally relevant to a claim of trade dress infringement as it is to trademark infringement. See, e.g., Lois Sportswear, 799 F.2d at 871, 872-73, 230 USPQ at 834, 835 (post-sale confusion also relevant to section 43(a)). We thus hold that the district court abused its discretion by failing to consider adequately all the issues relating to likelihood of confusion, including the existence of post-sale confusion.


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