Valador, Inc. v. HTC Corp.

242 F. Supp. 3d 448, 2017 U.S. Dist. LEXIS 38929, 2017 WL 1037589
CourtDistrict Court, E.D. Virginia
DecidedMarch 15, 2017
DocketCase No. 1:16-cv-1162
StatusPublished
Cited by8 cases

This text of 242 F. Supp. 3d 448 (Valador, Inc. v. HTC Corp.) is published on Counsel Stack Legal Research, covering District Court, E.D. Virginia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Valador, Inc. v. HTC Corp., 242 F. Supp. 3d 448, 2017 U.S. Dist. LEXIS 38929, 2017 WL 1037589 (E.D. Va. 2017).

Opinion

MEMORANDUM OPINION

T.S. Ellis, III, United States District Judge

At issue in this trademark infringement case is whether plaintiffs expert on the question of likelihood of confusion should be excluded pursuant to Rule 702, Fed. R. Evid., and Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993). As the matter has been fully briefed, and because oral argument would not aid the decisional process,1 this question is now ripe for resolution.

I.

This action arises from defendants’ alleged trademark infringement on plaintiffs registered mark, “VIVE,” which plaintiff claims to use in connection with the sale of its software. Plaintiff, Valador, Inc., is a small Virginia stock corporation headquartered in Herndon. The three defendants in this action are (1) HTC Corporation, a Taiwanese corporation, (2) HTC America, Inc., a Washington state corporation headquartered in Seattle, and (3) Valve Corporation, a Washington state corporation headquartered in Bellevue, Washington. Plaintiff alleges that each defendant has infringed on plaintiffs VIVE mark through defendants’ marketing, advertising, and sale of a headset, the “HTC Vive,” capable of running software that renders three-dimensional images. Yet, plaintiff does not label any of its end products or delivera-bles with its “VIVE” mark; rather, plaintiff inserts its “VIVE” mark in the text of its service contracts, the overwhelming majority of which are for government agencies. See Valador, Inc. v. HTC Corp., No. 1:16-cv-1162 (E.D. Va. Mar. 3, 2017) (Hr’g Tr.) at 32:2-16; 34:6-13.2

[453]*453To demonstrate trademark infringement, plaintiff must prove “that it ha[d] a valid, protective trademark and that the defendant’s use of a colorable imitation of the trademark is likely to cause confusion among consumers.” Synergistic Int’l, LLC v. Korman, 470 F.3d 162, 171 (4th Cir. 2006) (quotation marks omitted). Of course, the touchstone of a trademark-infringement claim is whether “the defendant’s actual practice is likely to produce confusion in the minds of consumers about the origin of the goods or services in question.” George & Co., LLC v. Imagination Entm’t Ltd., 575 F.3d 383, 393 (4th Cir. 2009) (quoting CareFirst of Md., Inc. v. First Care, P.C., 434 F.3d 263, 267 (4th Cir. 2006)). Courts have recognized two forms of confusion in trademark infringement cases: “forward confusion” and “reverse confusion.” The traditional pattern of forward confusion occurs “when customers mistakenly think that the junior user’s goods or services are from the same source as or connected with the senior user’s goods or services.” 4 McCarthy on Trademarks and Unfair Competition § 23:10 (4th ed. 2017). Thus, a forward confusion case here would mean that con-suiners mistakenly think that the HTC Vive is connected with Valador. By contrast, in a reverse confusion case,3 the junior user overwhelms the market such that “customers purchase the senior user’s goods under the mistaken impression that they are getting the goods of the junior user.” Id.4 Here, reverse confusion would occur if someone purchasing Valador’s Vive software was under the mistaken impression that they were buying an HTC Vive. Thus, to prove likelihood of confusion under a reverse confusion theory, plaintiff must show “that because of the similar marks, [Valador]’s customers are likely [and mistakenly] to ... think that [HTC] is the source of, or is sponsoring or backing, [Valador]’s goods or services.” Id. Although plaintiff has not unequivocally chosen a theory, plaintiffs counsel at the summary judgmént hearing relied exclusively on reverse confusion.5

To support its claim of likelihood of confusion, plaintiff hired Christopher Bonney, who purports to be an expert in marketing, marketing research, and conducting market surveys. At plaintiffs request, Bonney performed a survey ostensibly to determine whether there is or likely will [454]*454be confusion regarding the source of the parties’ products using the “Vive” marks.6 Specifically, “[t]he purpose of this study was to determine whether there is or will be confusion between two companies using similar marks to promote similar products; namely, computer software applications for three dimensional (3D) presentation of information and event simulation[.]’” Bon-ney Report (“Report”) at 5. The universe' for the survey comprised “men between the ages of 18 and 34 who enjoy virtual reality entertainment,” which -is, in Bonnets view, the target audience for the HTC Vive. Id. at 4. The survey defined “virtual reality” as “video games or computer generated simulation of a 3D image or environment that can be interacted with in a seemingly real or physical way.” Id. at 20. Although Bonney testified in his deposition that this definition of “virtual reality” is common, he could not remember where he obtained that definition.

The survey asked four sets of questions:

(1)The, first set of questions “addressed the extent to which the .Valador and HTC VIVE products are perceived by members of the HTC target audience to be described by!’ the Patent and Trademark Office’s' category purportedly “in question” in the case, which Bonney defined as “computer software application for three dimensional (3D) presentation of information and event simulation.” Id. at 13.
a. Respondents were orally presented with one-sentence descriptions purportedly of plaintiffs and defendants’ products, and asked whether they believed these products fit within the trademark category quoted above. Id. The survey described plaintiffs product, identified as “Product A,” as “[a] software program that integrates gaming technology, 3D modeling and realworld or simulation information-to give the user an interactive three-dimensional (3D) experience.” Id. The survey described the HTC Vive, identified as “Product B,’’ as “[a] gaming system that uses a headset and software combined with gaming controllers to give the user a- 3D virtual reality gaming experience.” Id.
(2) The second set of questions claimed to address “perceived similarities between Valador Vive and HTC Vive.” Id. at 14. The survey asked respondents to state whether the parties’ products, as described above, were ■ “very alike,” “somewhat alike,” “not very alike,” “not at all alike.” A respondent could also answer “I don’t know.” Id. at 21. The survey also asked, “How likely do you think it is that there will be confusion between the two products?” and offered the same answer choices. Id.
(3) The third set of questions sought to evaluate “perceived similarities between Valador and HTC VIVE names.” Id. at 14. The survey informed respondents that Product A ' “is called VIVE” and Product B “is also called VIVE.” Id. at 22. Thereafter, respondents were shown two seemingly identical, black-and-white 'images of the word “VIVE,” without any other styling, words, symbols, or images that typically accompany defendants’ alleged use of the “VIVE” mark in the marketplace. The survey also placed the labels, “Product A” [455]*455and “Product B,” beneath these black-and-white images. Id. Importantly, the “VIVE” images respondents saw were not

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Bluebook (online)
242 F. Supp. 3d 448, 2017 U.S. Dist. LEXIS 38929, 2017 WL 1037589, Counsel Stack Legal Research, https://law.counselstack.com/opinion/valador-inc-v-htc-corp-vaed-2017.