Synoptek, LLC v. Synaptek Corp.

Citation: 309 F. Supp. 3d 825Docket: Case No.: SACV 16–01838–CJC(JCGx)

Court: District Court, C.D. California; March 4, 2018; Federal District Court

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Plaintiff Synoptek, LLC initiated legal action on October 4, 2016, against Defendant Synaptek Corporation for trademark infringement, false designation of origin, unfair competition, and trademark cancellation concerning Synaptek's use of the trademark "SYNAPTEK." Synaptek counterclaimed on March 20, 2017, asserting non-infringement. Synoptek filed a motion for partial summary judgment to cancel Synaptek's trademark, which was granted.

Synoptek, an IT services provider, offers a range of computing services and has a diverse client base, including government entities and sectors like finance and healthcare. It holds U.S. Trademark Registration No. 3,424,720 for "Synoptek," registered since May 6, 2008. The term "Synoptek" is not an English word and is classified under International Class 42. Synaptek, incorporated in August 2008, also provides IT services and claims it was unaware of Synoptek when choosing its name. It is a certified small disadvantaged business serving the federal government and markets its services similarly to Synoptek.

Synaptek applied for its own trademark, U.S. Trademark Application No. 80/088,536, on October 10, 2013, but the application was denied by the U.S. Patent and Trademark Office (PTO) on February 23, 2014, due to a likelihood of confusion with existing marks, including "Synoptek." The PTO found that "Synaptek" was phonetically similar to the registered marks, and subsequent appeals by Synaptek did not reverse the denial. The '160 mark, registered since 2011, is one of the marks cited by the PTO in its decisions against Synaptek.

On March 3, 2015, Synaptek requested to suspend the prosecution of the '536 trademark application and filed a petition to cancel the Synaptyk marks. By July 2015, Synaptek acquired ownership of the Synaptyk marks and informed the PTO examiner, leading to the reinstatement of the '536 application. On July 15, 2015, Synaptek sought to amend the '160 mark to change its spelling from "SYNAPTYK" to "SYNAPTEK," but the PTO denied this request the same day due to an ongoing cancellation proceeding. Subsequently, Synaptek filed a motion to dismiss the cancellation proceeding and responded to the PTO's denial.

On October 27, 2015, the PTO issued a final office action rejecting the registration of "Synaptek" due to a likelihood of confusion with "Synoptek," citing phonetic similarities. On November 12, 2015, the PTO again denied the amendment request for the '160 mark, stating it would materially alter the mark's character. Synaptek filed a petition on April 20, 2016, to accept the amendment, noting two pending applications, but did not include the October 2015 office action in its submission.

After filing a request for reconsideration on April 27, 2016, the PTO again denied the '536 application on June 10, 2016, due to likelihood of confusion with "Synoptek." On September 27, 2016, the PTO reversed its previous denial and granted the Section 7 Amendment for the '160 mark, issuing an updated certificate for "Synaptek" on November 1, 2016. Prior to this, Synoptek had filed a trademark application for "Synoptek Edge" on February 29, 2016, which the PTO indicated might be refused due to potential confusion with "Synaptek."

On January 25, 2017, the PTO suspended the '471 application due to the pending '536 application, pending the registration or abandonment of the "Synaptek" mark, and because Synoptek failed to provide an acceptable specimen. As of this date, the '471 mark remains unregistered. Synoptek filed a Petition for Cancellation of the '160 mark on October 4, 2016, which is part of the current litigation, including claims for cancellation. 

The legal standard for summary judgment allows the court to grant it on any claim or defense where there is no genuine dispute regarding material facts, as outlined in Fed. R. Civ. P. 56(a). The moving party must demonstrate the absence of a genuine issue of material fact, where a "genuine" issue means sufficient evidence for a reasonable trier of fact to rule in favor of the nonmovant. A "material" fact influences the case's outcome under applicable law. Disputed facts that are irrelevant will not be considered.

If the moving party will bear the burden of proof at trial, they must show that no reasonable trier of fact could decide otherwise. If the nonmovant bears the burden, the moving party may meet their burden by negating an essential claim element or showing a lack of evidence supporting the nonmovant's case. After the moving party's burden is met, the nonmovant must present specific facts demonstrating a genuine trial issue. The opposition can counter the summary judgment by citing record materials, demonstrating the inadequacy of the moving party's evidence, or showing the moving party lacks admissible evidence. The court will assess all evidence favorably for the non-moving party and draw reasonable inferences in their favor.

The court in T.W. Elec. Serv. Inc. v. Pac. Elec. Contractors Ass'n emphasizes that it does not engage in credibility assessments or weigh conflicting evidence. Conclusory or speculative testimony in affidavits fails to create triable issues of fact necessary to oppose summary judgment. Evidence presented must be admissible, as per Federal Rule of Civil Procedure 56(c), which allows the court to acknowledge material facts not genuinely in dispute if relief is not fully granted.

Regarding the Lanham Act, 15 U.S.C. § 1119 permits federal courts to cancel invalid trademark registrations. Cancellation is warranted when (1) valid grounds exist for contesting the trademark's registration and (2) the petitioner has standing, demonstrated by a "real interest" in the case. Synoptek claims ownership of the "Synoptek" mark, establishing its standing. Federal courts can cancel registrations based on grounds applicable by the PTO, specifically 15 U.S.C. § 1064.

For the first five years of registration, a trademark can be challenged for any reason that would justify refusal of the original registration, including likelihood of confusion. However, after five years, the grounds for cancellation are limited, excluding likelihood of confusion. Synoptek contends that the likelihood of confusion cannot be used for cancellation since the '160 mark has been registered since 2011. Nevertheless, the '160 mark was associated with "Synaptyk" until it was amended in 2016 to "Synaptek." As such, "Synaptek" has only been registered since 2016, making likelihood of confusion a valid ground for cancellation. Allowing Synoptek to benefit from an older registration would undermine the intent of the five-year limitation, which aims to balance property rights and public interest in trademark registrations.

Synaptek did not possess a property interest in the trademark "Synaptek" until 2016, and even then, its ownership was questionable due to previous denials by the PTO for registration. The registration must include registrable matter as a whole, and no parties had notice of the mark until the relevant certificate was issued in 2016, which provides constructive notice of ownership claims nationwide. The PTO determined that the change from "Synaptyk" to "Synaptek" was not material, hence the mark was not republished for opposition before the certificate was issued. 

Synoptek is seeking summary judgment to cancel the "Synaptek" mark, arguing that it closely resembles "Synoptek" and is likely to cause confusion among consumers. In response, Synaptek contends that Synoptek has not demonstrated a likelihood of confusion nor proven that no genuine issues of material fact exist. However, applying the Sleekcraft factors to the undisputed evidence, the Court concludes that public confusion between the two marks is likely, granting Synoptek summary judgment for cancellation.

Under the Lanham Act, trademark infringement applies to both registered and unregistered marks if the use is likely to cause confusion. The "likelihood of confusion" standard for trademark registration mirrors that for infringement. Factors to assess consumer confusion include the similarity of marks, strength of the mark, actual confusion, proximity of goods, marketing channels, purchaser care level, intent behind mark selection, and the potential for business expansion. The Court evaluates these factors flexibly, allowing Synoptek not to prove every factor favors its position, as they are designed as adaptable tools for assessing consumer confusion, not a strict checklist.

The test for likelihood of confusion in trademark cases is flexible; plaintiffs do not need to meet all factors but must show strength in some. Certain factors, such as the similarity of marks and proximity of goods, hold more weight and are evaluated on a case-by-case basis. The Ninth Circuit advises against summary judgment in these matters unless no genuine material facts are in dispute. The evaluation begins with the similarity of the marks, where greater similarity increases the likelihood of confusion. Factors for assessing similarity include the overall appearance, sound, and meaning of the marks. In comparing "Synoptek" and "Synaptek," the marks are nearly identical, differing by only one letter and being phonetically equivalent, as supported by various case precedents. The PTO has previously denied registration of "Synaptek" due to its similarity to "Synoptek." Synaptek's arguments to argue against this similarity include a technical pronunciation explanation and claims of different connotative meanings, both of which are rejected based on established legal principles regarding trademark phonetics and meaning similarity. Courts have consistently found that minor phonetic differences do not suffice to distinguish similar marks.

Synaptek contends that the visual presentation of its mark differs from that of Synoptek due to contrasting colors and shapes. However, both marks are registered as word marks, making display differences less significant. Trademark law allows for a determination of likelihood of confusion based on similarities in form, spelling, or sound, as exemplified by the case involving "HOHOs" and "YO-YO'S." In composite marks, the verbal component is often more influential in identifying the source of goods. The striking similarity between "Synaptek" and "Synoptek" in both sound and appearance strongly supports a likelihood of consumer confusion, outweighing any display differences.

Regarding the proximity of services, related goods or services are those perceived by the public as coming from the same source. Synoptek does not need to prove direct competition to show proximity; services can be complementary or similar in function. Both companies provide IT and computing services, including IT operations and cloud services, and are registered in International Class 42. The PTO has previously found their services to be identical or closely related when denying Synaptek's registration application. Despite Synaptek's disagreement with this characterization, evidence from its marketing materials and witness testimony supports Synoptek's claims. The identical nature of their services weighs heavily in favor of finding consumer confusion.

Lastly, the strength of the SYNOPTEK mark is assessed by its classification: generic, descriptive, suggestive, or arbitrary/fanciful. The stronger the mark, the greater the protection. Synoptek's mark is deemed "highly arbitrary" and unique in the English language, indicating it is strong and deserving of robust protection.

In evaluating the likelihood of consumer confusion between the trademarks of Synaptek and Synoptek, the strength of Synoptek's mark is acknowledged as "arbitrary" or "fanciful," which typically garners maximum trademark protection. Synaptek does not contest this strength, indicating that this factor favors a likelihood of confusion. However, there is no evidence of actual consumer confusion presented by Synoptek, which weighs against finding such confusion, as actual confusion is not necessary for this determination but is considered significant when present. 

The evaluation of marketing channels reveals both parties utilize advertising, press releases, word-of-mouth, and print media, though Synoptek emphasizes Synaptek's reliance on its website for advertising. Synaptek argues its website is not intended for direct sales but rather for attracting clients through competitive bidding for government contracts. Despite the extensive information provided on Synaptek's website, there is no evidence it generates sales. The mere presence of internet marketing does not automatically imply overlapping channels; the Ninth Circuit requires an assessment of whether both parties leverage the Internet as a significant marketing avenue. Currently, the record lacks sufficient evidence to determine the significance of each party's internet presence, and the extent of overlap in their marketing channels remains unclear.

Synaptek targets government agencies, while Synoptek markets its services to both commercial and government sectors, leading to minimal overlap in their marketing channels. This lack of substantial overlap results in only a slight inclination toward a likelihood of consumer confusion, as established in previous case law. The "likelihood of confusion" analysis considers how a reasonably prudent consumer perceives the origin of the goods or services, with the degree of consumer sophistication being a relevant factor. While Synoptek argues that IT service consumers are generally unsophisticated and thus more prone to confusion, Synaptek contends that its federal contracting officers are highly sophisticated, reducing the likelihood of confusion. However, the potential for confusion among Synoptek's consumers, vendors, and partners remains significant, leading to a slight favorability towards finding consumer confusion.

Regarding intent, if an alleged infringer knowingly adopts a similar mark, courts may infer intent to deceive, which can lead to confusion. Although Synaptek claims it was unaware of the Synoptek mark when it established its name in 2008, Synoptek asserts that Synaptek had knowledge of the mark through its attempts to register "Synaptek" and the Trademark Office's prior findings of potential confusion. This history suggests that Synaptek had constructive notice of the Synoptek mark, implying a presumption of intent to deceive.

Synaptek's intent to deceive consumers through the registration of its mark is inferred but not directly evidenced, weakening the argument for likelihood of confusion. Although Synaptek had knowledge of the "Synoptek" mark, this factor only slightly supports a finding of confusion. The likelihood of market expansion factor requires evidence of imminent competition, which Synoptek lacks despite claims of servicing government agencies. Consequently, this factor does not favor finding consumer confusion. The Court emphasizes that the determination of likelihood of confusion is not merely quantitative. The similarity of the marks, the proximity of goods, and the strength of Synoptek's mark strongly indicate confusion, as evidenced by multiple denials of Synaptek's mark registration by the PTO. Overall, these factors collectively support a legal finding of likelihood of confusion. Synoptek's motion for partial summary judgment to cancel Synaptek's '160 trademark is granted. Both parties provide similar IT services, with specific registrations detailed under International Class 42 for their respective marks.

The Court finds that there is a likelihood of public confusion between the trademarks of Synoptek and Synaptek, making it unnecessary to consider Synoptek's claim regarding the fraudulent acquisition of a Section 7 amendment for the '160 mark. Synaptek previously asserted that its mark "Synaptek" and Synoptek's mark "Synoptek" were phonetic equivalents, contradicting its current argument that the single vowel difference makes them dissimilar. Expert testimony from Ronald R. Butters, Ph.D., detailing linguistic differences, is deemed irrelevant to the Court's assessment, as the similarity in appearance and sound is easily recognizable to a reasonably prudent consumer without expert analysis. The Ninth Circuit precedent allows the trial court to exclude expert opinions on common knowledge matters, reinforcing the Court's view that the marks’ similarity is apparent.

Synoptek's claim that Synaptek lacks evidence of actual confusion is misplaced; the burden lies with Synoptek to demonstrate each of the Sleekcraft factors. Synoptek argues that initial interest confusion might lead its consumers to inadvertently visit Synaptek's website, but this concept only requires capturing initial consumer attention and does not necessitate a completed sale. Previous Ninth Circuit cases have established that initial interest confusion is a relevant consideration, particularly in online contexts. However, Synoptek presents no concrete evidence to support its claim of consumer diversion, leading the Court to afford little weight to Synoptek's speculation regarding potential confusion among consumers.