Allstate Ins. Co. v. Kia Motors America, Inc.

• Court: Court of Appeals for the Ninth Circuit
• Decided: September 6, 2019
• Docket: 18-55164
• Status: Unpublished

Opinion

NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS SEP 6 2019 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT

ALLSTATE INSURANCE COMPANY, an No. 18-55164 Illinois insurance company, D.C. No. Plaintiff-Appellant, 2:16-cv-06108-SJO-AGR

v. MEMORANDUM* KIA MOTORS AMERICA, INC., a California corporation; KIA MOTORS CORPORATION, a foreign corporation,

Defendants-Appellees.

Appeal from the United States District Court for the Central District of California S. James Otero, District Judge, Presiding

Argued and Submitted August 12, 2019 Pasadena, California

Before: CALLAHAN, D.M. FISHER,** and R. NELSON, Circuit Judges.

Allstate Insurance Company appeals the District Court’s ruling that Kia

Motors America, Inc. and Kia Motors Corporation (collectively, “Kia”) did not

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The Honorable D. Michael Fisher, United States Circuit Judge for the U.S. Court of Appeals for the Third Circuit, sitting by designation. infringe on Allstate’s “Drivewise” trademark with its use of “Drive Wise.” We

affirm.

I.

The District Court had jurisdiction over Allstate’s trademark infringement

action pursuant to 15 U.S.C. § 1121 and 28 U.S.C. § 1338(a). We have appellate

jurisdiction pursuant to 15 U.S.C. § 1121 and 28 U.S.C. § 1291. We review a

district court’s finding of likelihood of confusion for clear error. Pom Wonderful

LLC v. Hubbard, 775 F.3d 1118, 1123 (9th Cir. 2014). The clearly erroneous

standard applies to both the court’s findings with regard to the applicable factors

and its weighing of the factors.1 Id.

II.

To prevail on its claim, Allstate needed to show that (1) it has a “protected

ownership interest” in the Drivewise trademark and (2) Kia’s use of Drive Wise “is

likely to cause consumer confusion, thereby infringing upon [Allstate’s] rights.” Id.

at 1124. Kia does not contest that Allstate demonstrated the former.

“The ‘likelihood of confusion’ inquiry generally considers whether a

reasonably prudent consumer in the marketplace is likely to be confused as to the

1 Allstate frames its arguments as legal error by the District Court in an effort to reach de novo review by this Court. See Pom Wonderful, 775 F.3d at 1123. However, Allstate’s arguments boil down to disagreement with the court’s factfinding, not its legal conclusions, so we review for clear error.

2 18-55164 origin or source of the goods or services bearing . . . the mark[].” Rearden LLC v.

Rearden Commerce, Inc., 683 F.3d 1190, 1209 (9th Cir. 2012). The question is

whether confusion is “probable, not simply a possibility.” Cohn v. Petsmart, Inc.,

281 F.3d 837, 842 (9th Cir. 2002) (quoting Rodeo Collection, Ltd. v. West Seventh,

812 F.2d 1215, 1217 (9th Cir. 1987)).

A.

We are guided by the eight factors announced in Sleekcraft. Pom Wonderful,

775 F.3d at 1125 (citing AMF Inc. v. Sleekcraft Boats, 599 F.2d 341, 348−49 (9th

Cir. 1979)). No one factor is dispositive, and, ultimately, our decision rests on the

“totality of facts.” Id. (quoting Entrepreneur Media, Inc. v. Smith, 279 F.3d 1135,

1140 (9th Cir. 2002)).

1. Strength of Allstate’s Drivewise mark

“The stronger a mark—meaning the more likely it is to be remembered and

associated in the public mind with the mark’s owner—the greater the protection”

under trademark laws. Brookfield Commc’ns, Inc. v. W. Coast Entm’t Corp., 174

F.3d 1036, 1058 (9th Cir. 1999). The mark’s strength consists of “two components:

the mark’s recognition in the market (i.e., its commercial strength) and the mark’s

inherent distinctiveness (i.e., its conceptual strength).” Stone Creek, Inc. v. Omnia

Italian Design, Inc., 875 F.3d 426, 432 (9th Cir. 2017).

In the District Court, Allstate presented no evidence of marketplace

3 18-55164 recognition, such as a consumer survey or its advertising investment. Additionally,

the parties stipulated that the mark was merely “suggestive,” and therefore

“presumptively weak.” Brookfield, 174 F.3d at 1058. The District Court therefore

did not clearly err in finding that the mark was “relatively weak” and “entitled to a

narrow scope of protection.”

2. Similarity of the marks

Similarity is assessed by “sight, sound, and meaning.” Sleekcraft, 599 F.2d

at 351. The District Court did not clearly err in concluding that the marks,

Allstate’s Drivewise and Kia’s Drive Wise, are “nearly identical,” which weighs in

favor of—but does not mandate—a likelihood of confusion. See, e.g., Cohn, 281

F.3d at 843.

3. Proximity of the marks

Proximity may be found where related goods are “[1] complementary, . . .

[2] sold to the same class of purchasers, or . . . [3] similar in use and function.”

Sleekcraft, 599 F.2d at 350 (citations omitted). The parties most vigorously debate

the District Court’s holding that their products are not proximate.

The District Court focused on similarity of use and function. It found that

Allstate’s Drivewise is primarily a service while Kia’s Drive Wise is a product;

Allstate’s Drivewise operates through either a device plugged into a car’s on-board

diagnostic system or a smartphone application, while Kia’s Drive Wise is

4 18-55164 “primarily a system of sensors” hardwired into the vehicle; none of Allstate’s

Drivewise features are available in Kia’s Drive Wise, and none of Kia’s Drive

Wise features are available in Allstate’s Drivewise; and Allstate’s Drivewise is

free, “while Kia’s system costs several thousand dollars and requires the purchase

of a vehicle.” The court found that “[t]he stark difference in price . . . greatly

reduces the likelihood that consumers will view the two as related . . . or emanating

from the same source” and determined that the marks are not closely related.

Allstate argues that this was error because the District Court correctly found

that Drivewise and Drive Wise are “related to improving driver safety.” However,

products in the same general field are not necessarily closely related, see M2

Software, Inc. v. Madacy Entm’t, 421 F.3d 1073, 1082 & n.7 (9th Cir. 2005), and

the District Court did not clearly err in concluding that differences in hardware and

software, features, and price meant that the products were not closely related.

Further, contrary to Allstate’s argument, the District Court did not legally err in

stating that, absent direct competition, “the likelihood of confusion would be

remote, or at least Allstate would bear the heavy burden of demonstrating . . .

confus[ion] as to the source or affiliation” of the products. See Brookfield, 174

F.3d at 1056 (holding that likelihood of confusion would follow if virtually

identical marks “were used with identical products or services”).

Allstate also argues that the District Court legally erred in its proximity

5 18-55164 analysis by explicitly considering some facts while omitting others. However, that

another court may have analyzed this factor differently does not necessarily

engender a “definite and firm conviction that a mistake has been made.” Pac.

Telesis Grp. v. Int’l Telesis Commc’ns, 994 F.2d 1364, 1367 (9th Cir. 1993). We

find no clear error in the proximity analysis.

4. Kia’s intent

Kia’s intent in selecting the Drive Wise mark is important because

“[a]dopting a designation with knowledge of its trademark status permits a

presumption of intent to deceive,” and such an intent is “strong evidence of a

likelihood of confusion.” Interstellar Starship Servs., Ltd. v. Epix, Inc., 184 F.3d

1107, 1111 (9th Cir. 1999)). Allstate argues that the District Court never

“acknowledged or applied the presumption.” The court, however, did acknowledge

the presumption—and then permissibly declined to apply it, finding that Kia

selected the mark independently and believed there would be no consumer

confusion. Allstate’s disagreement with these findings does not show clear error.

5. Evidence of actual confusion

“[L]ack of evidence about actual confusion after an ample opportunity for

confusion ‘can be a powerful indication that the junior trademark does not cause a

meaningful likelihood of confusion.’” Cohn, 281 F.3d at 843 (quoting Nabisco,

Inc. v. PF Brands, Inc., 191 F.3d 208, 228 (2d Cir. 1999)). The District Court did

6 18-55164 not clearly err when it determined that Allstate had the opportunity to assess

confusion—particularly in twenty-seven Kia dealerships with an Allstate agent on

site—and weighed this factor against a likelihood of confusion.

6. Channels used to market the products

“Convergent marketing channels increase the likelihood of confusion.”

Sleekcraft, 599 F.2d at 353. The District Court determined that overlap in

marketing channels occurred only at the twenty-seven Kia dealerships and on the

internet, and therefore that this factor only slightly weighs in Allstate’s favor. The

agents at the twenty-seven dealerships represented only a tiny fraction of Allstate’s

Drivewise marketing efforts, and internet marketing is too ubiquitous to “shed

much light on the likelihood of consumer confusion.” Network Automation, Inc. v.

Advanced Sys. Concepts, Inc., 638 F.3d 1137, 1151 (9th Cir. 2011). The District

Court did not clearly err in affording this factor limited weight in Allstate’s favor.

7. Type of goods and likely degree of care exercised by the purchaser

“In assessing the likelihood of confusion to the public, the standard used by

the courts is the typical buyer exercising ordinary caution.” Sleekcraft, 599 F.2d at

353. Buyers “can be expected to exercise greater care” when purchasing more

expensive items, although there still may be a likelihood of confusion. Id. The

District Court noted that Kia’s Drive Wise is costly—$1000 to $3000—and is

purchased only in conjunction with an even-costlier vehicle purchase. Meanwhile,

7 18-55164 though Allstate’s Drivewise is free, consumers do “not participat[e] blindly,” as

evidenced by nearly half of all participants discontinuing use. The District Court

did not clearly err in weighing this factor against a likelihood of confusion.

8. Likelihood of expansion

The final Sleekcraft factor asks whether there is “a strong possibility of

expansion into competing markets.” M2 Software, 421 F.3d at 1085 (quoting E. &

J. Gallo Winery v. Gallo Cattle Co., 967 F.2d 1280, 1293 (9th Cir. 1992)). It was

not clear error for the District Court to weigh this factor against a likelihood of

confusion when Allstate was unable “to adduce any concrete evidence of

expansion plans.” Surfvivor Media, Inc. v. Survivor Prods., 406 F.3d 625, 634 (9th

Cir. 2005).

B.

The District Court weighed five factors in Kia’s favor, two in Allstate’s

favor, and one neutrally. Allstate argues that the District Court erred because it

“tallied” the factors and then concluded, in one sentence, that “[c]onsidering all the

factors together, Allstate has failed to meet its burden.” Allstate is correct that

courts do not merely “count beans.” Dreamwerks Prod. Grp., Inc. v. SKG Studio,

142 F.3d 1127, 1129 (9th Cir. 1998). However, we do not require the District

Court, after careful consideration of each factor, to explain with particularity how

it weighed the factors in relation to one another. That would go beyond the scope

8 18-55164 of our clear-error review. Here, we are not “left with the definite and firm

conviction that a mistake has been made.” Pac. Telesis, 994 F.2d at 1367. The

District Court committed no legal error and did not clearly err in finding no

likelihood of confusion after its assessment of the Sleekcraft factors.

C.

Allstate argues that the advisory jury’s contrary likelihood finding,

combined with asserted differences between the jury instructions and the law

applied by the district court, shows that the District Court committed legal error.

However, we conclude that the District Court did not err, and the advisory jury’s

conclusion does not affect our review of the court’s decision. Reachi v. Edmond,

277 F.2d 850, 854 (9th Cir. 1960).

AFFIRMED.

9 18-55164