Reverse confusion often occurs in one of two ways. In the first way, a smaller business pursues legal action against a large company that uses the smaller company’s trademark in an authorized way or uses a similar mark in its advertising. As a result, the public mistakenly begins to think that the larger company is affiliated with the smaller company. In the second and more common type of reverse confusion case, a larger company pursues action against a smaller company for the same.

In both cases, the company that uses the mark in an infringing way does so because it wants to take advantage of the “good will” associated with the trademark. Because companies that use marks in this manner are able to realize financial gain through the application of little energy, § 43 of the Lanham Act exists as a method to prevent companies from this type of action.

Tests for Determining Reverse Confusion

Federal law does not distinguish between “reverse confusion” and other types of confusion. As a result, reverse confusion is a term used to describe circumstances that can result in confusion between marks. No matter how a reverse confusion case arises, the question often asked by courts is whether an ordinary consumer is likely to be confused about the origin of the product bearing the trademark.

The Third Circuit has developed a multi-factor test for determining whether reverse confusion exists, which is similar to the test used in cases of standard confusion. These factors include strength of the marks, intent of the defendant, and actual confusion. When determining the strength of a mark in reverse confusion cases, courts focus on both conceptual strength and marketplace recognition. Stronger junior marks are more likely to diminish the strength of senior marks. Less strong junior marks, however, are not as likely to diminish stronger senior marks. Some courts, however, have decided that this relationship is not relevant to strength of mark determination and instead focus primarily on the use of the junior mark.

Analyzing the Intent of the Junior Mark

Courts have an established approach when evaluating the intent of a junior mark user in reverse confusion cases. If a junior mark holder exploited the reputation of the senior mark, this would constitute a forward confusion case. Instead, courts will determine whether the junior mark holder exploited consumer confusion to increase the likelihood that consumers will believe that the senior mark is the source of the junior mark..

Other Factors Court Analyze in Reverse Confusion Cases

There are other factors that courts analyze when analyzing consumer expectations in reverse confusion cases. The Third Circuit’s reverse confusion test determines whether other factors suggest that consumers might expect the senior mark owner to create a product in the junior’s market or even expect that the senior holder might expand into the same market as the junior.

The Role of Secondary Meaning in Reverse Confusion Cases

Secondary meaning is an issue that frequently arises in reverse confusion cases. One court, in an effort to help smaller companies, sought to reduce the burden on smaller, senior holders to establish secondary use of the mark. The rationale behind this decision was that the smaller senior mark holders might not have the money or time to create a secondary meaning for a mark, but should not be subject to other companies who have the ability to do so. Courts, however, frequently decline to protect marks just due to sympathy for the senior mark holder.

How State Law Applies in Reverse Confusion Cases

Courts are currently split on how state law applies to reverse confusion cases. The Seventh Circuit holds that in accordance with state law, reverse confusion cases are not actionable. The Tenth Circuit, however, has held that under state law, legal action exists in reverse confusion cases. The Tenth Circuit’s reasoning was that state policy supports the protections of marks against confusion by consumers in the marketplace.