No.

2016-2497

United States Court of Appeals

for the Federal Circuit
CONVERSE INC.,
Appellant

v.

INTERNATIONAL TRADE COMMISSION,

Appellee

SKECHERS U.S.A., INC., WAL-MART STORES, INC., NEW

BALANCE ATHLETICS, INC., fka New Balance Athletic Shoe, Inc.,
HU LIQUIDATION, LLC, fka Highline United LLC,
Intervenors.
__________________

Appeal from the United States International Trade Commission

Investigation No. 337-TA-936
__________________

CORRECTED NON-CONFIDENTIAL PRINCIPAL BRIEF OF

APPELLANT CONVERSE INC.

Christopher J. Renk Dale Cendali, P.C.

Erik S. Maurer Kirkland & Ellis LLP
Michael J. Harris 601 Lexington Avenue
Audra C. Eidem Heinze New York, NY 10022
Aaron P. Bowling Telephone: (212) 446-4800
Banner & Witcoff, Ltd.
Ten South Wacker Drive, Suite 3000 John C. OQuinn
Chicago, IL 60606 Kirkland & Ellis LLP
Telephone: (312) 463-5000 655 15th St., NW
Washington, DC 20005
Telephone: (202) 879-5000
Attorneys for Appellant Converse Inc.
 CERTIFICATE OF INTEREST

Counsel for Appellant Converse Inc. certifies the following:

1. The full name of every party or amicus represented by me is:

Converse Inc.
2. The name of the real party in interest (if the party named in the caption is not
the real party in interest) represented by me is:
Converse Inc.
3. All parent corporations and any publicly held companies that own 10 percent
or more of the stock of the party or amicus curiae represented by me are:
NIKE, Inc.
4. The names of all law firms and partners or associates that appeared for the
party or amicus now represented by me in the trial court or agency or are
expected to appear in this Court (and who have not or will not enter an
appearance in this case) are:
V. James Adduci, II, Deanna Tanner Okun, Jonathan J. Engler, Evan
H. Langdon, Daniel F. Smith, Asha Allam, Thomas R. Burns, Jr.,
Lauren E. Peterson, Michael R. Doman, Jr., Dana L. Watts, Paul M.
Bartkowski, James Ton-that (all of Adduci Mastriani & Schaumberg,
L.L.P.); Claudia Ray, Johanna Schmitt, Diana Torres, Allison Worthy
Buchner, Ian Block, Joseph A. Loy, Susan Tanaka, Mary C. Mazzello,
Joshua L. Simmons, Graham Cole, Laura Keay, Shanti E. Sadtler,
Robin McCue, Thomas O. Kuhns, Sarah P. Herlihy, Lawrence C.
Marshall, Nathan Mammen, Dennis J. Abdelnour (all of Kirkland &
Ellis LLP); Helen Hill Minsker, J. Peter Van Es, Janice V. Mitrius,
Michael L. Krashin, Katherine Laatsch Fink, Erik J. Hamp, Robert M.
Boyd, Tyler V. Myers, Christopher J. Galfano, Saranya Raghavan,
Erin E. Bryan, Nicholas Battey (all of Banner & Witcoff, Ltd.);
William G. Barber, Christopher M. Kindel (all of Pirkey Barber LLC).

Date: February 1, 2017 /s/ Christopher J. Renk .

Christopher J. Renk
Counsel for Appellant Converse Inc.

i
 TABLE OF CONTENTS

CERTIFICATE OF INTEREST ................................................................................ i

TABLE OF CONTENTS .......................................................................................... ii
TABLE OF AUTHORITIES ................................................................................... iv
STATEMENT OF RELATED CASES .....................................................................x
JURISDICTIONAL STATEMENT ..........................................................................1
PRELIMINARY STATEMENT ...............................................................................2
STATEMENT OF THE ISSUES ON APPEAL .......................................................7
STATEMENT OF THE CASE ..................................................................................9
I. The Converse Midsole Trademark: An Iconic Shoe
Configuration ...........................................................................................11
II. The PTOs Federal Registration of the Converse Midsole
Trademark................................................................................................16
III. The Converse Midsole Trademark Is the Subject of
Counterfeiting and Close Copying ..........................................................18
IV. Procedural Posture ...................................................................................21
A. The CALJs Initial Determination Found Converses Federal
Registration for the Converse Midsole Trademark Valid,
Enforceable, and Infringed ............................................................21
B. The Commission Opinion Reversed the CALJs Validity
Finding as to the Registered Converse Midsole Trademark .........23
SUMMARY OF THE ARGUMENT ......................................................................24
STANDARD OF REVIEW .....................................................................................27
ARGUMENT ...........................................................................................................29
I. The Commission Legally Erred by Ruling the Registered
Converse Midsole Trademark Invalid Based on Evidence
from the Distant Past ...............................................................................32
II. The Commission Legally Erred by Not Properly Applying the
Presumption of Validity ..........................................................................34
A. The Commissions Analysis Began from a Flawed Premise:
Considering Secondary Meaning in a Common Law Mark ......35

ii
 B. The Commission Cherry-Picked Evidence to Support Its
Common Law Analysis, Passing Over Evidence of
Secondary Meaning.......................................................................36
III. The Commission Legally Erred in Assessing Factor 2, Exclusivity
of Use, Through an Incorrect, Patent-Like, Legal Lens ..........................39
A. Determining a Marks Exclusivity of Use Must Account for
Consumer Perception within the Marketplace Context ................40
B. The Commission Erroneously Credited Third-Party Use
Evidence Divorced from Marketplace Context ............................43
C. The Commission Failed to Consider the Entire Record,
Including Marketplace Contextual Evidence of Secondary
Meaning.........................................................................................53
IV. The Commission Legally Erred in Assessing Factor 7, Evidence
of Actual Association, by Giving Disproportionate Consideration
to Intervenors Survey While Ignoring That It Actually Supports
Secondary Meaning .................................................................................58
A. The Commission Improperly Weighed Survey Evidence as
Nearly Dispositive .........................................................................58
B. Intervenors Survey, Despite Its Flaws, Supports Secondary
Meaning, Yet the Commission Erroneously Reached the
Opposite Conclusion .....................................................................60
C. The Commission Ignored Non-Litigation Survey Evidence
of Consumers Actual Association of the CMT ...........................67
CONCLUSION ........................................................................................................71

NOTE: The only confidential matter redacted from this brief is located in the
Addendum. (Fed. Cir. R. 28(d)(2)(B)).

iii
 TABLE OF AUTHORITIES

Cases
adidas Am., Inc. v. Skechers USA, Inc.,
149 F. Supp. 3d 1222 (D. Or. 2016) ............................................................. 63, 64

Al-Site Corp. v. VSI Intl, Inc.,

174 F.3d 1308 (Fed. Cir. 1999)............................................................................30

Aluminum Fabricating,
259 F.2d 314 (2d Cir. 1958).......................................................................... 25, 31

Am. Assn for Advancement of Sci. v. Hearst Corp.,

498 F. Supp. 244 (D.D.C. 1980) ................................................................... 46, 62

AmBrit, Inc. v. Kraft, Inc.,

812 F.2d 1531 (11th Cir. 1986) ...........................................................................47

Amkor Tech., Inc. v. Intl Trade Commn,

692 F.3d 1250 (Fed. Cir. 2012)............................................................................27

Apple Inc. v. Samsung Elecs. Co.,

786 F.3d 983 (Fed Cir. 2015)...............................................................................37

Applied Info. Scis. Corp. v. eBAY, Inc.,

511 F.3d 966 (9th Cir. 2007)................................................................................36

Audemars Piguet Holding S.A. v. Swiss Watch Intl, Inc.,

46 F. Supp. 3d 255 (S.D.N.Y. 2014)............................................................. 42, 56

B&B Hardware, Inc. v. Hargis Indus.,

569 F.3d 383 (8th Cir. 2009)......................................................................... 32, 36

Black & Decker (U.S.) Inc. v. Pro-Tech Power Inc.,

26 F. Supp. 2d 834 (E.D. Va. 1998) ....................................................................33

Centaur Commcns, Ltd. v. A/S/M Commcns, Inc.,

652 F. Supp. 1105 (S.D.N.Y. 1987), affd, 830 F.2d 1217 (2d Cir. 1987) ... 59, 63

Certain Ink Markers & Packaging Thereof,

Inv. No. 337-TA-522, Order No. 30 at 26 (ITC, July 25, 2005) .........................22

iv
Christian Louboutin S.A. v. Yves Saint Laurent Am. Holdings, Inc.,
696 F.3d 206 (2d Cir. 2012).................................................................................32

Christian Louboutin S.A. v. Yves Saint Laurent Am. Holdings, Inc.,

778 F. Supp. 2d 445 (S.D.N.Y. 2011)..................................................................32

Citizens Banking Corp. v. Citizens Fin. Grp., Inc.,

No. 07-11514, 2008 WL 1995104 (E.D. Mich. May 6, 2008),
affd, 320 F. Appx 341 (6th Cir. 2009)...............................................................60

Citizens to Preserve Overton Park v. Volpe,

401 U.S. 402 (1971) .............................................................................................28

Coit Drapery Cleaners, Inc. v. Coit Drapery Cleaners of New York, Inc.,
423 F. Supp. 975 (E.D.N.Y. 1976) ......................................................................36

Cold War Museum, Inc. v. Cold War Air Museum, Inc.,

586 F.3d 1352 (Fed. Cir. 2009)............................................................... 25, 36, 37

Co-Rect Prod., Inc. v. Marvy! Adver. Photography, Inc.,

780 F.2d 1324 (8th Cir. 1985) ...................................................................... 58, 59

Custom Access., Inc. v. Jeffrey-Allan Indus., Inc.,

807 F.2d 955 (Fed. Cir. 1986)..............................................................................37

Dastar Corp. v. Twentieth Century Fox Film Corp.,

539 U.S. 23 (2003) ...............................................................................................40

Echo Travel, Inc. v. Travel Assocs., Inc.,

870 F.2d 1264 (7th Cir. 1989) ...................................................................... 41, 42

Engineered Mech. Servs., Inc. v. Applied Mech. Tech., Inc.,

584 F. Supp. 1149 (M.D. La. 1984) .....................................................................57

Ferrari S.p.A. Esercizio Fabbriche Automobili e Corse v. McBurnie,

No. 86-1812, 1989 WL 298658 (S.D. Cal. June 1, 1989) ...................................62

Gemstar-TV Guide Intl, Inc. v. Intl Trade Commn,

383 F.3d 1352 (Fed. Cir. 2004)............................................................................27

George Basch Co. v. Blue Coral, Inc.,

968 F.2d 1532 (2d Cir. 1992)...............................................................................31

v
Goodyear Tire & Rubber Co. v. H. Rosenthal Co.,
246 F. Supp. 724 (D. Minn. 1965) .......................................................................33

Grupo Gigante SA De CV v. Dallo & Co.,

391 F.3d 1088 (9th Cir. 2004) .............................................................................60

Han Beauty, Inc. v. AlbertoCulver Co.,

236 F.3d 1333 (Fed. Cir. 2001)............................................................................41

Hana Fin., Inc. v. Hana Bank,

135 S. Ct. 907 (2015) ...........................................................................................29

Heartland Bank v. Heartland Home Fin., Inc.,

335 F.3d 810 (8th Cir. 2003)................................................................................59

In re GIE Media, Inc.,

No. 85253450, 2013 WL 5407245 (T.T.A.B. May 10, 2013) .............................64

In re Holmstead,
No. 75183278, Paper No. 16 (T.T.A.B. April 4, 2000) .......................................32

In re Intl Flavors & Fragrances, Inc.,

183 F.3d 1361 (Fed. Cir. 1999)............................................................................35

In re Nuvasive,
842 F.3d 1376 (Fed. Cir. 2016)............................................................................27

In re Sang-Su Lee,
277 F.3d 1338 (Fed Cir. 2002)................................................................ 26, 28, 57

In re Steelbuilding.com,
415 F.3d 1293 (Fed. Cir. 2005)..................................................................... 26, 30

Innovation Ventures, LLC v. N2G Distrib., Inc.,

779 F. Supp. 2d 671 (E.D. Mich. 2011)...............................................................67

L.A. Gear, Inc. v. Thom McAn Shoe Co.,

1989 WL 282850 (S.D.N.Y. Apr. 20, 1989) .......................................................30

L.A. Gear, Inc. v. Thom McAn Shoe Co.,

988 F.2d 1117 (Fed. Cir. 1993).................................................................... 29, 30

vi
Levi Strauss & Co v. Blue Bell, Inc., No. 70-
930, 1978 WL 21731 (N.D. Cal. July 14, 1978),
affd, 632 F.2d 817 (9th Cir. 1980) ......................................................................42

Levi Strauss & Co. v. Genesco, Inc.,

742 F.2d 1401 (Fed. Cir. 1984)............................................................................41

Longshore v. Retail Royalty Co.,

589 F. Appx 963, 2014 WL 4494770 (Fed. Cir. 2014) ......................................41

McDonalds Corp. v. Druck & Gerner DDS,

814 F. Supp. 1127 (N.D.N.Y. 1993) ....................................................................33

Motor Vehicle Mfrs. Assn v. State Farm Mut. Auto. Ins.,

463 U.S. 29 (1983) ............................................................................ 27, 39, 53, 57

OKeefe v. U.S. Postal Serv.,

318 F.3d 1310 (Fed. Cir. 2002)..................................................................... 28, 45

Packard Press, Inc. v. Hewlett-Packard Co.,

227 F.3d 1352 (Fed. Cir. 2000)............................................................................27

Palm Bay Imports, Inc. v. Veuve Clicquot Ponsardin Maison Fondee En 1772,
396 F.3d 1369 (Fed. Cir. 2005)..................................................................... 41, 45

Princeton Vanguard, LLC v. Frito-Lay North America, Inc.,

786 F.3d 960 (Fed. Cir. 2015)........................................................... 27, 39, 53, 67

Robarb, Inc. v. Pool Builders Supply of Carolinas Inc.,

No. 87 -2012, 1991 WL 335811 (N.D. Ga. Oct. 31, 1991),
affd, 996 F.2d 1231 (11th Cir. 1993) ........................................................... 42, 55

Roederer v. J. Garcia Carrion, S.A.,

732 F. Supp. 2d 836 (D. Minn. 2010) ..................................................................56

Royal Crown Company, Inc. et al. v. The Coca-Cola Company,

No. 91178927 (TTAB, May 23, 2016) ................................................................43

Scarves by Vera, Inc. v. Todo Imports, Ltd.,

544 F.2d 1167 (2d Cir. 1976)...............................................................................42

Singer Mfg. Co. v. Briley,

207 F.2d 519 (5th Cir. 1953)................................................................................32

vii
Specialty Brands, Inc. v. Coffee Bean Distrib., Inc.,
748 F.2d 669 (Fed. Cir. 1984)..............................................................................53

Texas Pig Stands v. Hard Rock Caf,

951 F.2d 684 (5th Cir. 1992)................................................................................32

Thomas & Betts Corp. v. Panduit Corp.,

138 F.3d 277 (7th Cir. 1998)................................................................................67

Tone Bros. v. Sysco Corp.,

28 F.3d 1192 (Fed. Cir. 1994)........................................................... 26, 29, 52, 61

Universal Camera Corp. v. N.L.R.B.,

340 U.S. 474 (1951) ................................................................................ 27, 28, 45

Vision Sports, Inc. v. Melville Corp.,

888 F.2d 609 (9th Cir. 1989)................................................................................60

Wal-Mart Stores, Inc. v. Samara Bros.,

529 U.S. 205 (2000) .............................................................................................29

Yamaha Intl Corp. v. Hoshino Gakki Co.,

231 U.S.P.Q. 926, 1986 WL 83747 (T.T.A.B. Oct. 9, 1986),
aff'd, 840 F.2d 1572 (Fed. Cir. 1988) .................................................................31

Yamaha Intl Corp. v. Hoshino Gakki Co.,

840 F.2d 1572 (Fed. Cir. 1988).................................................................... passim

Zippo Mfg. Co. v. Rogers Imports, Inc.,

216 F. Supp. 670 (S.D.N.Y. 1963).......................................................................62

Statutes
15 U.S.C. 1057 ........................................................................................................7

15 U.S.C. 1115 ........................................................................................................7

15 U.S.C. 1127 ......................................................................................................52

19 U.S.C. 1337 ........................................................................................................1

28 U.S.C. 1295 ........................................................................................................1

5 U.S.C. 706 ..........................................................................................................27

viii
Rules
Federal Circuit Rule 30 ............................................................................................20

Other Authorities
Callmann on Unfair Comp., Tr. & Mono. (4th Ed. 2016.) ......................................67

Charles L. Cook & Theodore H. Davis, Jr., Litigating the Meaning of Prima
Facie Evidence Under the Lanham Act: The Fog and Art of War, 103
Trademark Rep. 437, 474482 (2013) .................................................................37

McCarthy on Trademarks & Unfair Competition (4th ed. 2016) ......... 26, 40, 59, 68

Mike Rappeport, Design Issues for Controls, in TRADEMARK AND

DECEPTIVE ADVERTISING SURVEYS: LAW, SCIENCE, AND
DESIGN 217 (Shari Seidman Diamond and Jerre B Swann, 2012)....................66

ix
 STATEMENT OF RELATED CASES

There is no other appeal in or from the same proceeding in the U.S.

International Trade Commission, Investigation No. 337-TA-936, previously before

this or any other appellate court.

The following cases will be directly affected by this Courts decision in the

pending appeal. Each case involves Converse Inc.s assertion of the Converse

Midsole Trademark, and each case is currently stayed until the determination of the

U.S. International Trade Commission Investigation No. 337-TA-936 becomes final

and all subsequent appeals have been exhausted.

Converse Inc. v. Skechers U.S.A., Inc., Case No. 1:14-cv-05977-DLI-

MDG (E.D.N.Y.)

Converse Inc. v. Wal-Mart Stores, Inc., Case No. 1:14-cv-05978-

JBW-CLP (E.D.N.Y.)

Converse Inc. v. Highline United LLC, Case No. 1:14-cv-05992-SLT-

PK (E.D.N.Y.)

Converse Inc. v. Orange Clubwear, Inc., Case No. 1:14-cv-05996

(E.D.N.Y.)

New Balance Athletic Shoe, Inc. v. Converse Inc., Case No. 1:14-cv-

14715 (D. Mass.)

x
 JURISDICTIONAL STATEMENT

This appeal arises from a determination of the U.S. International Trade

Commission (Commission). The Commission had jurisdiction over

Investigation No. 337-TA-936 under 19 U.S.C. 1337. Chief Administrative Law

Judge Bullock issued an Initial Determination on November 17, 2015. The

Commission issued a Review Notice on February 3, 2016, and a Commission

Opinion and Final Determination on June 23, 2016 (Commission Opinion). The

Commission Opinion and Final Determination is a final and appealable

determination.

Converse Inc. (Converse) timely filed a petition for review on August 15,

2016. See 19 U.S.C. 1337(c). This Court has jurisdiction to review the

Commission Opinion and Final Determination under 28 U.S.C. 1295(a)(6).

1
 PRELIMINARY STATEMENT

Unless reversed, the Commission Opinion and Final Determination will set a

new and dangerous precedent that undermines the ability to protect iconic

American brands. This action involves perhaps the most recognized shoe

configuration of all time: the midsole of Converses Chuck Taylor All Star shoe,1

consisting of the overall appearance of the toe cap, multi-layered toe bumper

featuring diamonds and line patterns, and midsole striping shown below

(collectively, the Converse Midsole Trademark, or CMT):

Converses CMT far surpasses the standard criteria for establishing

secondary meaning in product configuration trade dress. See Yamaha Intl Corp. v.

Hoshino Gakki Co., 840 F.2d 1572, 1583 (Fed. Cir. 1988) (affirming secondary

meaning in product configuration). Converse has consistently and continuously

used the CMT in connection with All Star shoes since 1932. The CMT is

1
Referred to as Chucks, Chuck Taylors, orin this matterAll Star.
2
prominently featured on Converses All Star shoes and is nearly universally visible

from all angles. All Star shoes featuring the CMT are the best-selling shoes of all

time and have been extensively advertised and promoted, with more than 1.3

billion pairs sold worldwide and over one hundred million dollars spent on

advertising over the past ten years alone. Empirical research confirms that

consumers associate the CMT with Converse. Example All Star shoes featuring

the CMT are shown below:

Converse All Star Shoes Featuring the CMT

The CMT is deliberately copied, despite Converses trademark policing

efforts. Chief Administrative Law Judge Charles Bullock (CALJ) found the

following shoe designs to be infringing:

Skechers Walmart New Balance Highline

3
 The evidence shows not only counterfeiting and close copying by others, but

also that some Respondents replicated the CMT because it is associated with

Converse and All Star shoes, and not a generic design:

Searching for terms such as Converse, Chucks, and Chuck Taylor on

some of Intervenors retail websites displayed Accused Products;

A Skechers email provides instructions to develop exact copies of

Converse All Star shoes bearing the CMT;

A Skechers email to the sales team about Skechers Accused Products states

if your retailer does not sell Co*verse Chuck Tay*or --- this should be an

EASY SELL! (asterisks in original);

A Skechers document refers to its design as a converse copy; and

A Walmart document refers to an Accused Product as the Chuck Taylor

style.

It is thus not surprising thatafter examining voluminous evidence of

secondary meaningthe U.S. Patent and Trademark Office (PTO) granted a

federal trademark registration for the CMT in 2013. No one opposed Converses

application to register the CMT. The PTOs registration confers the benefit of

federal trademark protection, including prima facie evidence of the CMTs

validity.

4
 After a full trial, the CALJ issued an extensive 143-page opinion finding that

(1) Converse owns a valid registered trademark for the CMT, and (2) each of the

remaining four Respondents (the Intervenors on appeal) sold at least one infringing

shoe model, such as those shown above. Twenty-one of the original thirty-two

Respondents to the Investigation settled with Converse; the other seven

Respondents acquiesced through default or termination. Violations of the CMT

were so significant the CALJ recommended entry of a General Exclusion Order.

Without a hearing, the Commission reversed, holding Converses registered

CMT invalid. The Commission Opinion dismissed the CALJs detailed

investigation, analyses, and findings in favor of a cursory, results-driven inquiry

thatin about twelve pagescommits four crippling legal errors:

First, the Commission legally erred in finding the CMT invalid today based

on a purported lack of secondary meaning in the past. Second, the Commission

legally erred by failing to properly apply the presumption of validity afforded the

CMT because of its registration. Third, the Commission legally erred in assessing

secondary meaning factor 2, exclusivity of use, by failing to consider the impact of

alleged third-party uses on the minds of relevant consumers in comparison to

Converses use of the CMT. Fourth, the Commission legally erred in assessing

secondary meaning factor 7, evidence of actual association, by dispositively

5
relying on one part of an otherwise discredited survey while ignoring other

evidence of actual association.

* * *

The Commission Opinion is at odds with well-settled trademark law.

Converse urges this Court to reverse and hold that the CMT is a validly registered

trademark infringed by the Accused Products. To affirm would not only destroy

an iconic American brand and reward copiers, it would place Federal Circuit

trademark law at odds with other circuits. As set forth below, this Court should

reverse the Commissions invalidity finding and vacate its unnecessary common

law mark findings.

6
 STATEMENT OF THE ISSUES ON APPEAL

This appeal involves assertion of Converses CMT, a product configuration

trademark that the PTO registered on the Principal Register in 2013 as U.S.

Trademark Registration No. 4,398,753 (753 Registration). The CMT is used in

connection with Converses All Star (a/k/a Chuck or Chuck Taylor) shoes.

Reversing the CALJs finding that the registered CMT is a valid trademark,

the Commission held the CMT lacked secondary meaning in 2003 (when

Intervenor Skechers first sold an infringing shoe). The four issues presented are:

1. Whether the Commission finding the registered CMT invalid today

was legally erroneous or otherwise not supported by substantial evidence where the

Commission focused on previous decades and failed to consider secondary

meaning today or at the time of federal registration in 2013.

2. Whether the Commissions secondary meaning analysis was legally

erroneous or otherwise not supported by substantial evidence where it: (A) failed

to apply the statutory presumption of validity conferred on the CMT because of its

federal registration, 15 U.S.C. 1057(b), 1115(a), (B) focused on a common

law (i.e., unregistered) mark, and (C) ignored evidence that shows secondary

meaning in the CMT.

3. Whether the Commissions assessment of secondary meaning factor

2, exclusivity of use, was legally erroneous or otherwise not supported by

7
substantial evidence where it: (A) failed to assess whether alleged third-party uses

made a commercial impression on the relevant consumer group and (B) failed to

engage in reasoned decision-making by ignoring evidence showing alleged third-

party uses did not impact secondary meaning in the CMT.

4. Whether the Commissions assessment of secondary meaning factor

7, evidence of actual association, was legally erroneous or otherwise not supported

by substantial evidence where it: (A) gave dispositive weight to a single part of an

otherwise discredited two-part survey that, if it establishes anything, supports

secondary meaning, and (B) again failed to engage in reasoned decision-making by

ignoring other evidence showing the relevant consumer group associates the CMT

with Converse.

8
 STATEMENT OF THE CASE

The CMT, reproduced from the 753 Registration, appears below:

Illustration 1: CMT, 753 Registration Figure

(Appx015130015132)

The 753 Registration describes the CMT as the configuration of the two stripes on

the midsole of the shoe, the design of the toe cap, the design of the multi-layered

toe bumper featuring diamonds and line patterns, and the relative position of these

elements to each other. The CMT is not limited to a particular color, contrast, or

material. (Appx015130015132.)

Converse All Star shoes, such as those shown below, prominently feature the

CMT, making it nearly universally visible from all angles and allowing consumers

to instantly associate the shoes with Converse. (Appx000088000089;

Appx017209017210 at A55A57; Appx017166017174 at A59, A62, A64.)

9
 Illustration 2: CMT Featured on Converse All Star Shoes

(Appx031180; Appx031182)

The CMT is the iconic calling card of an iconic shoe that:

[was] . . . the ultimate insider shoe for the top athletes

back in the first 50 years of its existence, and then it was
the ultimate outsider shoe. But its always been a
mainstream shoe, too. It sort of represents America.

(Appx029458 (USA Today quoting Chucks! tribute book).)

Facing a wave of foreign counterfeits and domestic knockoffs bearing copies

of the CMT, Converse filed a Complaint in the U.S. International Trade

Commission, Investigation No. 337-TA-936, to stop importation and sale of

footwear products that violate Converses rights in a family of trademarks relating

to its All Star shoes including (i) the CMT, and (ii) the Converse Outsole

Trademark (COT) depicted and described in Converses U.S. Trademark

Registration Nos. 3,258,103 and 1,588,960. (Appx000053.)

Following a year-long investigation and week-long evidentiary hearing,

CALJ Bullocks Initial Determination (ID) found violations of both the CMT

10
and COT, and further recommended entry of General Exclusion Orders (GEOs)

as to the asserted marks. On review, the Commission Opinion upheld the IDs

COT validity and infringement findings and entered a GEO as to the COT, but

reversed the IDs CMT validity findings. The Commission held, however, that if

the CMT is confirmed valid (for example, by this Court in this appeal), each of the

Intervenors sold at least one infringing shoe model and a GEO should enter. The

present appeal, and this Statement of the Case, relate to the Commissions findings

as to the CMTs validity.

I. The Converse Midsole Trademark: An Iconic Shoe Configuration

Converse is the only company to consistently and continuously use the CMT

for over eighty years. (Appx017167 at A55; Appx016787016788 at A176

A178.) Unlike other companies that typically brand the lateral sides of their shoes

(e.g., adidas Three-Stripe mark or NIKEs Swoosh), Converses All Star shoes

include no traditional lateral branding. (Appx017168017169 at A59, A62;

Appx017173017174 at A64.) Instead, the CMT is the salient branding for All

Star shoes. (Appx017209017210 at A56A57; Appx017168017174 at A59,

A62, A64; see also Appx015301.) Because it is prominent and visible even when

the shoes are partially covered when worn, as shown below, the CMT allows

consumers to immediately associate shoes with Converse. (Id.)

11
 Illustration 3: Advertisement for All Star Shoes

(Appx015301)

All Star shoes featuring the CMT are the best-selling shoe of all time, with

more than 1.3 billion pairs sold worldwide (Appx017209 at A55). In the United

States, Converse has sold more than 350 million pairs since the 1970s

(Appx027622; Appx027980; Appx017243017244 at A16A20), and

approximately 150 million pairs in just the last five years. (Appx017244 at A19

A20; Appx017208 at A49; Appx017166 at A49; Appx000103.)

Converse has extensively advertised and promoted the CMT through

television, print, in-store, and online media. (See, e.g., Appx017204017208 at

A21A50; Appx017211017218 at A64A112.) Between 2007 and 2014,

12
Converse spent over $114 million marketing shoes featuring the CMT.

(Appx016795 at A221.) Example advertisements featuring the CMT follow.

Illustration 4: Advertisements and Promotions Featuring the CMT

1987 1991 2003

(Appx013871) (Appx013874) (Appx013878)

2007 2008 2009

(Appx013880) (Appx013880) (Appx013881)

2010 2012 2013

(Appx015318) (Appx033275) (Appx028940)

13
 Converse also employs social media and experiential marketing to reach

target consumers, making Converse the fifth leading brand on Facebook with more

than 43 million active followers. (Appx017211 at A64; Appx017217017221 at

A109, A113A118, A124; Appx016772016773 at A93A96; see Appx000101.)

Consumer posts to Converses Facebook page frequently feature the CMT, as

shown below. (Appx017218017219 at A117A118.)

Illustration 5: CMT on Facebook

Converse shoes featuring the CMT have earned widespread unsolicited

publicity. (Appx017204 at A20; Appx017207017209 at A46, A55;

Appx017225017227 at A136-A150.) All Star shoes are and have been worn by

popular athletes, including Kevin Durant and Serena Williams (Appx013897;

Appx000392); by world-famous celebrities, including former First Lady Michelle

14
Obama, Justin Bieber, Sir Paul McCartney, Rihanna, Ben Affleck, and Kevin

Bacon (Appx016796 at A227A228; Appx017225 at A140A142; Appx013897;

Appx014685014691); and by famous characters in blockbuster movies (e.g.,

Back to the Future (1985), The Fast and the Furious (2001), Harry Potter (2007,

2009)), and popular television shows (e.g., The Wonder Years, Saved by the Bell,

Friends, and Seinfeld) (Appx016797 at A232A233; Appx017225017227 at

A143A149; Appx013898; Appx014694014736). Examples of celebrities

wearing All Star shoes are shown below.

Illustration 6: CMT Featured on Celebrity Feet

Former First Lady

Michelle Obama Rihanna Justin Bieber
(Appx029436) (Appx029430) (Appx014688)

All Star shoes and the CMT have also been featured in widely distributed,

nationwide newspapers and magazines; and entire books and websites have been

15
dedicated to the All Star shoes iconic status in American culture. (Appx013896;

Appx016796016797 at A229.)

Illustration 7: CMT Featured in Nationwide Publicity

The Washington Post USA Today Chucks! By Hal Peterson

March 28, 2008 March 12, 2008 (2007)
(Appx029459029460) (Appx029458) (Appx022948022950)

II. The PTOs Federal Registration of the Converse Midsole Trademark

Based on consistent and continuous use of the CMT, Converse applied to

register the CMT on the PTOs Principal Register on August 6, 2012.

(Appx015131.) Because it is a product configuration, Converse needed to prove to

the PTO that the CMT had acquired distinctiveness, i.e., secondary meaning.

Yamaha, 840 F.2d at 1581.

Converses application included hundreds of pages of evidence of secondary

meaning in the CMT, including a declaration addressing evidence similar to that

described above. (Appx030348 at A83.) The Examiner also had the benefit of two

16
earlier registrations in the family of marks relating to the configuration of All Star

shoes, including U.S. Trademark Registration Nos. 4,062,112 and 4,065,482 (the

112 and 482 Registrations).2 The file histories for these registrations contain

over one thousand pages of additional evidence, including evidence relating to (A)

Converses use of the CMT, and (B) alleged third-party uses of the CMT

(Appx030348030350 at A75A78, A89A92), many of which were before the

Commission below (Appx021846; Appx021849; Appx021852; Appx021859;

Appx021863; Appx015236015237 (citing the 112 and 482 Registrations)).

Illustration 8: Figures from U.S. Trademark Registration

Nos. 4,062,112 and 4,065,482

U.S. Trademark Reg. No. 4,062,112 U.S. Trademark Reg. No. 4,065,482
(Appx022509022510) (Appx022513022514)

2
Converse did not assert the 112 or 482 Registrations against
Respondents. Recently, Intervenors Walmart, Skechers, and Highline filed
petitions to cancel the 112 Registration, and Walmart and Highline filed petitions
to cancel the 482 Registration.
17
 The Trademark Examiner analyzed whether the CMT had acquired

distinctiveness and was non-functional. (Appx030345 at A54A58.) Further to

her investigation, the Examiner searched for marks confusingly similar to the

CMT. (Appx030346 at A63.)

Having determined that Converse proved the CMT had secondary meaning,

the PTO published the mark in the Official Gazette so that anyone believing he or

she may be damaged by registration could oppose. (Appx030351 at A99A100.)

No one opposed the CMTs registration. (Appx030351 at A101.)

The PTO registered the CMT on the Principal Register as the 753

Registration on September 10, 2013, whereby presumptions attached under 15

U.S.C. 1057 and 1115(a). (Appx000062000063; Appx015130015131;

Appx017165 at A45.)

III. The Converse Midsole Trademark Is the Subject of Counterfeiting and

Close Copying

As a result of its substantial goodwill and commercial value, the CMT has

been the subject of counterfeiting and close copying. (Appx017261017263 at

A1722; Appx017266017267 at A3338.) To combat unauthorized uses of the

CMT, Converse established and runs extensive anti-counterfeiting programs,

spending millions of dollars and adding various tells to distinguish genuine All

Star shoes from counterfeits. (Appx017261017263 at A1722.) From 2007 to

2014, approximately 4.5 million counterfeit All Star shoes were seized in sixty-
18
four countries, all of which, by definition, bore identical, unauthorized copies of

the CMT. (Appx017264017265 at A28.)

Converse also enforced the CMT against knockoffs (Appx017265017270

at A3253), which are shoes bearing the CMT or close copies of the CMT, but

lacking other marks or indicia purporting to originate from Converse. The number

of knockoffs started to increase around the time of Converses 100th Anniversary

in 2008, which resulted in substantial publicity featuring the CMT, see, e.g.,

Illustration 7 above. (Appx017265017266 at A32). Converse responded to the

increase in knockoffs by sending over 120 cease and desist letters asserting rights

in the CMT, pursuing settlement agreements with infringers, and filing multiple

lawsuits that resulted in outcomes favorable to Converse, including Converse Inc.

v. Autonomie Project, Inc., 1:13-cv-12220 (D. Mass.); Nike, Inc. and Converse Inc.

v. Superstar International, Inc., et al., 12-5240 (C.D. Cal.); Nike, Inc. and

Converse Inc. v. QiLoo International Limited, Civil Action No. 2:12-cv-00191 (D.

Nev.); and Converse Inc. v. ModCloth, Inc., Civil Action No. 1:12-cv-00891

(S.D.N.Y.). (Appx017268017270 at A4253.)

It was only after its policing efforts failed to stem the tide of violations that

Converse pursued this Investigation. Twenty-one of the thirty-two Respondents to

the Investigation settled with Converse, acknowledging Converses rights and

agreeing to stop violating the CMT; the majority of those Respondents also paid

19
money to Converse. (See Appx000054000056, n.4; see also, e.g., Appx002460

0024673.) Seven Respondents acquiesced in Converses claims, through default or

termination from the Investigation. (Appx000056, n.57.)

As to other Respondents, evidence reveals an intent to copy the CMT. For

example:

Searches for Converse, Chucks, and Chuck Taylor on some

Intervenors websites returned Accused Products (Appx015138015142

(Skechers website); Appx032202032204 (Walmarts website).4

Skechers email provides specific instructions to develop exact

copies of Converse All Star shoes. (Appx017473.)

Skechers document refers to its design of an Accused Shoe as a

converse copy. (Appx017470017471.)

Skechers document provides instructions for making the toe bumper

on Skechers Accused Product more like the toe bumper of the CMT.

(Appx017466017468 (Pls. [sic] move the bottom eyelet hole forward to follow

convers* . . . The foxing toe bumper is too flared/curved out. The convers* shoe is

3
Per Fed. Cir. R. 30(a)(2)(B) and (C), the entirety of every settlement
agreement is not cited; instead, Converse cites excerpts from an exemplary
agreement.
4
After institution of the Investigation, Skechers and Walmart modified their
sites so that Accused Products do not appear in results listings.
20
more undercut and more vertical, not out like ours . . . The goal again is for the toe

bumper to be more undercut . . . pattern seems off compared to Converse)

(asterisks in original).)

Skechers email to its sales team about a Skechers Accused Product

states if your retailer does not sell Co*verse Chuck Tay*or --- this should be an

EASY SELL! (Appx017491 (asterisks in original).)

Walmart email referring to an Accused Product as a Chuck Taylor

style. (Appx017562.)

IV. Procedural Posture

Converses October 14, 2014, Complaint alleged violations under 19 U.S.C.

1337 naming thirty-one Respondents. (Appx000053000054.) The Commission

instituted the Investigation on November 17, 2014. (Appx000053.) The

Commission added New Balance as a Respondent-Intervenor on February 19,

2015. (Appx000011.) Skechers, Highline, New Balance, and Walmart

participated in the evidentiary hearing before the CALJ, August 410, 2016.

A. The CALJs Initial Determination Found Converses Federal

Registration for the Converse Midsole Trademark Valid,
Enforceable, and Infringed

CALJ Bullocks November 17, 2015, ID held: (1) Converse owns valid and

enforceable trademark rights in the registered CMT, but not in a so-called

common law (i.e., unregistered) CMT; (2) each Respondent sold at least one
21
infringing accused product; and (3) Respondents failed to prove any of their

affirmative defenses. (Appx000182000184.) The ID recommended entry of a

GEO. (Appx000187000188.)

Relevant to this appeal, the ID evaluated secondary meaning under the ITCs

Ink Markers test, which considers direct and circumstantial evidence relating to the

asserted mark, including: (1) degree and manner of use; (2) exclusivity of use; (3)

length of use; (4) degree and manner of sales, advertising, promotional activities;

(5) effectiveness of efforts to create secondary meaning; (6) evidence of deliberate

copying; and (7) evidence that actual purchasers associate the trade dress with a

particular source. (Appx000067 (citing Certain Ink Markers & Packaging

Thereof, Inv. No. 337-TA-522, Order No. 30 at 26 (July 25, 2005).)

The ID concluded four factors1, 3, 4, and 6all weigh[] in favor of a

finding of secondary meaning (Appx000001000008, Appx000089;

Appx000101; Appx000103; Appx000106); and two factors2 and 5are neutral

(Appx000098; Appx000100; Appx000106000107). The ID found one factor

7weighs against Converse because survey evidence was insufficient to

establish secondary meaning. (Appx000088.) The ID said that the secondary

meaning determination is a close call. (Appx000108.)

Despite previously recognizing that Converses federally registered and

common law rights pertain to the same mark, the ID treated the CMT as two

22
marks: a federally registered mark and a separate common law (i.e., unregistered)

mark. (Appx000108000109.) The ID held that the 753 registration is

presumed valid, and Respondents have not met their burden in proving it is not.

Thus, the ID found the registered CMT valid. Id. Nevertheless, and

notwithstanding the presumption of validity afforded a registered mark, the ID

went on to place a burden on Converse to establish secondary meaning in a

common law CMT. (Appx000108.) The ID held that Converse had not met its

burden, and therefore the common law trade dress had not acquired secondary

meaning. (Appx000108000109.)

B. The Commission Opinion Reversed the CALJs Validity Finding

as to the Registered Converse Midsole Trademark
The Commissions June 23, 2016, Opinion: (1) upheld the IDs invalidity

finding as to a common law mark and reversed the IDs validity finding as to the

registered CMT based on an alleged lack of secondary meaning and, thus, no

violation of the CMT; (2) upheld the IDs infringement findings in toto (in the

event the CMT is determined to be valid); and (3) upheld the IDs findings that

Respondents failed to prove their affirmative defenses. (Appx000018 n.4;

Appx000035000036.)

23
 SUMMARY OF THE ARGUMENT

The Commission Opinion departs from this Courts precedent and that of

other circuits. Looking to the past and treating the mere existence of alleged third-

party uses and one part of a two-part consumer survey as dispositive of secondary

meaning, the Commission disregarded the PTOs judgment, bypassed the CMTs

presumption of validity, applied incorrect legal standards, and compounded those

legal errors by ignoring evidence courts find more than sufficient to show

secondary meaning. The Opinion should be reversed for four independent reasons.

First, the Commission legally erred in ruling the registered CMT invalid

today based on a purported lack of secondary meaning in the past. Even if the

Commissions secondary meaning analysis was correct, which it was not, at most,

the Commission should have entered a finding of non-infringement as to Accused

Products sold before registrationnot found the CMT invalid today. Secondary

meaning is not static and can change over time; yet, no one proved or can prove the

CMT lacked secondary meaning when the PTO registered the CMT in 2013, much

less today.

Second, the Commission legally erred by not properly applying the

presumption of validity flowing from federal trademark registration. This Court

places the burden on the party challenging a registered mark to prove it is not

valid. Cold War Museum, Inc. v. Cold War Air Museum, Inc., 586 F.3d 1352,

24
1358 (Fed. Cir. 2009). If there is a close call and it can be argued with equal

force whether a mark is valid, the courts should not overrule the action of the

Patent Office to whose care Congress has entrusted the preliminary determination

as to whether a mark fulfills the requirements of the statute. Aluminum

Fabricating Co. of Pittsburgh v. Season-All Window Corp., 259 F.2d 314, 316 (2d

Cir. 1958). The Commission, however, erroneously focused on a common law

mark to find the registered CMT invalid. The Commissions failure to apply the

registrations presumption of validity constitutes legal error that infected the rest of

its secondary meaning analysis.

Third, the Commission improperly adopted a patent-like prior art analysis,

relying on sporadic and decades-old shoe images without any evidence the shoes

made a material impression on the relevant consumer group. But in this trademark

case, the question is whether any alleged third-party uses impacted secondary

meaning in the minds of relevant consumers, not what prior art products were in

the market fifty years ago. As one trademark treatise explains:

[T]he test is not simply one of who used the mark first
chronologically. The touchstone is how the buying
public has come to interpret plaintiffs mark. For [marks
that require secondary meaning], the issue of priority and
ownership is not which party first used the mark, but
which party first achieved secondary meaning in the
mark.

25
2 McCarthy on Trademarks & Unfair Competition 16:34 (4th ed. 2016) (citations

omitted).

The Commission compounded these legal errors by disregarding voluminous

evidence of secondary meaning in the CMT. The Commissions decision is thus

not supported by substantial evidence, and the Commissions failure to explain its

reasoning by addressing such evidence is itself a violation of the Administrative

Procedure Act (APA). In re Sang-Su Lee, 227 F.3d 1338, 134345 (Fed. Cir.

2002).

Fourth, the Commissions myopic approach to survey evidence is

inconsistent with the law of this Court and of other circuits, which have held no

single factor is determinative and that surveys are not necessary to the secondary

meaning analysis. In re Steelbuilding.com, 415 F.3d 1293, 1300 (Fed. Cir. 2005);

Tone Bros. v. Sysco Corp., 28 F.3d 1192, 1201-05 (Fed. Cir. 1994). Even taken

on its own terms, the Commission Opinion is again not supported by substantial

evidence and separately violates the APA by ignoring critical contrary evidence

rather than addressing it through reasoned decisionmaking. Sang-Su Lee, 277

F.3d at 134345.

26
 STANDARD OF REVIEW

On review from an agency decision, the Court reviews legal determinations

de novo and factual determinations for substantial evidence. Amkor Tech., Inc. v.

Intl Trade Commn, 692 F.3d 1250, 1254 (Fed. Cir. 2012); Gemstar-TV Guide

Intl, Inc. v. Intl Trade Commn, 383 F.3d 1352, 1360 (Fed. Cir. 2004); 5 U.S.C.

706. For substantial evidence, the Court must consider the whole record and

take into account whatever in the record fairly detracts from [the agencys

finding]. Universal Camera Corp. v. N.L.R.B., 340 U.S. 474, 488 (1951). The

Courts review can only take place when the agency explains its decisions with

sufficient precision, including the underlying factfindings and the agencys

rationale. Princeton Vanguard, LLC v. Frito-Lay North America, Inc., 786 F.3d

960, 970 (Fed. Cir. 2015) (quoting Packard Press, Inc. v. Hewlett-Packard Co.,

227 F.3d 1352, 1357 (Fed. Cir. 2000)).

To that end, an agency must examine all relevant evidence and articulate a

satisfactory explanation for its action including a rational connection between the

facts found and the choice made. In re Nuvasive, 842 F.3d 1376, 1382 (Fed. Cir.

2016) (quoting Motor Vehicle Mfrs. Assn v. State Farm Mut. Auto. Ins., 463 U.S.

29, 43 (1983)). Failure to address evidence is inconsistent with an agencys

obligation to engage in reasoned decisonmaking that addresses all of the

27
relevant factors. Sang-Su Lee, 227 F.3d at 1343-45 (quoting Citizens to Preserve

Overton Park v. Volpe, 401 U.S. 402, 416 (1971)).

When a final agency determination and trial fact-finder reach different

factual conclusions, as happened below, this Court engages in a more searching

scrutiny of the record, OKeefe v. U.S. Postal Serv., 318 F.3d 1310, 1313 (Fed.

Cir. 2002), because evidence supporting a conclusion may be less substantial

when an impartial, experienced examiner who has observed the witnesses and

lived with the case has drawn conclusions different from the [agencys] than when

he has reached the same conclusion, Universal Camera, 340 U.S. at 496.

28
 ARGUMENT

The Commission Opinion, departing from the CALJs determination,

invalidated the CMT based on a series of critical legal errors that demonstrate

misunderstandings of trademark law. Once these legal errors are corrected, it is

plain that the Commission Opinion is neither supported by substantial evidence nor

otherwise sustainable.

Simply put, the Commission reaches the wrong conclusion because it asked

the wrong questions about secondary meaning. A product configuration, such as

the CMT, is a trademark once it acquires secondary meaning, i.e., once its primary

significance among the relevant consumer group is to identify source rather than

the product itself. Wal-Mart Stores, Inc. v. Samara Bros., 529 U.S. 205, 211

(2000); L.A. Gear, Inc. v. Thom McAn Shoe Co., 988 F.2d 1117, 1130 (Fed. Cir.

1993). Secondary meaning is a contextual inquiry into the commercial impression

a mark conveys, determined from the perspective of the relevant consumer of the

kinds of goods with which the mark is used. See Hana Fin., Inc. v. Hana Bank,

135 S. Ct. 907, 910 (2015); Tone Bros. v. Sysco Corp., 28 F.3d 1192, 1202 (Fed.

Cir. 1994).

Secondary meaning may be shown in several ways, including through

evidence of the mark owners degree and manner of use, exclusivity of use, length

of use, degree and manner of sales, advertising, and promotional activities,

29
unsolicited publicity, as well as evidence of actual association and copying, e.g.,

Al-Site Corp. v. VSI Intl, Inc., 174 F.3d 1308, 132627 (Fed. Cir. 1999); In re

Steelbuilding.com, 415 F.3d 1293, 1300 (Fed. Cir. 2005).

Applying these principles, the Commission should have found that the CMT

possesses secondary meaning and is valid because there is undisputed evidence of

(A) counterfeiting and close-copying of the CMT, (B) nearly a century of

continuous and consistent use of the CMT by Converse, (C) sales of shoes bearing

the CMT exceeding one billion pairs, (D) advertisements featuring the CMT year

after year for nearly a century, (E) hundreds of millions of dollars in advertising

expenditures, and (F) extensive unsolicited publicity.

The disconnect between the Commission Opinion and the normal practice in

trademark actions is illustrated by comparison to another case decided by this

Court. There, this Court affirmed secondary meaning in a footwear trade dress

based on the trademark owners six months use, sales of four million pairs of

shoes, and five million dollars of advertising expenditure, despite that many of the

individual trade dress elements appeared on shoes before the plaintiffs first use.

L.A. Gear, 988 F.2d at 112124, 1130; accord L.A. Gear, No. 88 Civ. 6444, 1989

WL 282850, at *2 (S.D.N.Y. Apr. 20, 1989).

As explained in detail below, Converses evidence goes well beyond the

evidence in L.A. Gear and other cases where courts found secondary meaning,

30
even in the absence of a registration. See, e.g., George Basch Co. v. Blue Coral,

Inc., 968 F.2d 1532, 1536 (2d Cir. 1992) (secondary meaning in a trade dress based

on six years of use, sales of $7 million, and advertising expenditures of $75,000);

Yamaha Intl Corp. v. Hoshino Gakki Co., 231 U.S.P.Q. 926, 1986 WL 83747, at

*5, *8 (T.T.A.B. Oct. 9, 1986) (finding secondary meaning based on substantial

sales activity of approximately 60,000 guitars over a six year period), affd, 840

F.2d 1572 (Fed. Cir. 1988).

Here, the CMT is registered and the PTO previously assessed and

determined secondary meaning. Thus, even if it could be argued with equal

force that the CMT acquired secondary meaning and on the contrary did not

acquire secondary meaning, the courts should not overrule the action of the Patent

Office to whose care Congress has entrusted the preliminary determination as to

whether a mark fulfills the requirements of the statute. See Aluminum

Fabricating, 259 F.2d at 316. Tellingly, under circumstances analogous to this

case, the Second Circuit found that Christian Louboutins registered mark for a

contrasting red shoe sole had acquired secondary meaning based, in part, on 20

years of use and 240,000 pairs sold in the U.S. annuallybut even Louboutins

use pales in comparison to the length of use and sales in this case. Christian

Louboutin S.A. v. Yves Saint Laurent Am. Holdings, Inc., 696 F.3d 206, 22628 (2d

31
Cir. 2012) (citing Christian Louboutin, 778 F. Supp. 2d 445, 44748 (S.D.N.Y.

2011)).

The Commission, however, took a different legal approach, committing a

series of procedural and substantive errors along the wayany one of which

requires reversal.

I. The Commission Legally Erred by Ruling the Registered Converse

Midsole Trademark Invalid Based on Evidence From the Distant Past

It is well established that secondary meaning is not static and can develop

over time. To that end, [t]he determination of whether a mark has secondary

meaning depends on dynamic factual scenarios. B&B Hardware, Inc. v. Hargis

Indus., 569 F.3d 383, 388 (8th Cir. 2009). Even if a mark once lacked secondary

meaning (or even once was generic), it can still become a valid trademark if

consumers come to associate it as identifying a particular source. See, e.g., Texas

Pig Stands v. Hard Rock Caf, 951 F.2d 684, 691 (5th Cir. 1992) (Whether pig

sandwich has acquired a secondary meaning greatly depends on whether the

question is asked in 1930 . . . or in 1990.); In re Holmstead, No. 75183278, Paper

No. 16 at 1213 (T.T.A.B. April 4, 2000) (non-precedential) (finding the Hershey

Company established secondary meaning in Kisses despite substantial evidence

showing it started out as generic term) (Appx050001050015); Singer Mfg. Co. v.

Briley, 207 F.2d 519, 520 n.3 (5th Cir. 1953) (holding Singer a valid trademark

despite prior decision finding it unprotectable); Goodyear Tire & Rubber Co. v. H.
32
Rosenthal Co., 246 F. Supp. 724, 72829 (D. Minn. 1965) (holding Goodyear

acquired secondary meaning despite earlier finding of genericness).

The PTO determined the CMT had secondary meaning and registered the

mark in 2013. The Commission, however, focused on evidence from decades ago

to evaluate whether the CMT had secondary meaning in 2003, finding this the

earliest year any Intervenors sold an infringing shoe. (See, e.g., Appx000033

000034; Appx000093.) Because Converse seeks only prospective relief in the

form of an exclusion order, not past damages, the relevant inquiry for Accused

Products on the market today is whether the CMT has secondary meaning now.

McDonalds Corp. v. Druck & Gerner DDS, 814 F. Supp. 1127, 113233

(N.D.N.Y. 1993) (holding that the proper date from which to assess the strength

of Plaintiffs family of marks is the present standpoint because the plaintiff

requested injunctive relief only and not damages for past infringement); Black &

Decker (U.S.) Inc. v. Pro-Tech Power Inc., 26 F. Supp. 2d 834, 850 n.10 (E.D. Va.

1998) (recognizing that injunctive relief only requires proof that secondary

meaning exists at the time of suit (citing McDonalds, 814 F. Supp. at 113233)).5

5
As set forth below in Argument Sections II, III, and IV, the CMT
possessed secondary meaning at all timespast and presentmaterial to this
dispute. That said, this Section accepts arguendo the Commissions finding that
the CMT lacked or only possessed insufficient secondary meaning in 2003.
33
 Thus, while Converse disputes that the CMT lacked secondary meaning in

2003, even if that finding is upheld, the Commission legally erred in finding the

CMT invalid today. Because the Commissions finding only relates to the historic

strength of the mark around 2003, not present-day validity, it shouldat most

have entered a finding of non-infringement as to Intervenors Accused Products

sold in 2003. Because the PTO registered the CMT in 2013, ten years after the

focus of the Commissions findings, the Commission erred in not entering the

prospective GEO recommended by the ID as to all other Accused Products

infringed by the registered CMT.6

II. The Commission Legally Erred by Not Properly Applying the

Presumption of Validity

The Commission acknowledged that registration of the CMT shall be prima

facie evidence of the CMTs validity under 1057(b) and 1115(a)

(Appx000024), but legally erred in failing to actually apply this presumption. The

Commissions error is evidenced by two distinct grounds for reversal. First, the

Commission considered the CMT as separate common law and registered marks, a

flawed premise that divorced the CMT from its presumption of validity. Second,

6
Notably, the Office of Unfair Import Investigations likewise argued to the
Commission that a finding of no secondary meaning in the past would not be a
determination that the CMT is invalid after the date of its registration.
(Appx012101 n.5; see also Appx011644 n.7.)

34
the Commission found the CMT lacked secondary meaning after considering only

Intervenors evidence and ignoring evidence of secondary meaning, thereby failing

to assess the entire record. At a minimum, the decision invalidating the registered

CMT should be reversed and the findings relating to a common law mark should

be vacated.

A. The Commissions Analysis Began From a Flawed Premise:

Considering Secondary Meaning in a Common Law Mark
The Commission cited inconsistency in the ID finding the CMT

simultaneously valid and invalid, but rather than vacate the IDs unnecessary

common law findings as Converse petitioned (Appx011674011681), the

Commission set out to reach a result consistent with the IDs common law

finding and then analyzed the CMT as a common law (i.e., unregistered) mark.

(See, e.g., Appx000023000026; Appx000025 n.7.) The Commission, thus,

legally erred in analyzing the CMT as not registered, not afforded a presumption of

validity, andin seeking to reach a result consistent with the IDs common law

findingpreordained to find the CMT not valid.

But there is, and only has been, one CMT at issue, and that mark is federally

registered. (Appx000014; Appx000067.) Federal registration does not create a

new and independent trademark. In re Intl Flavors & Fragrances, Inc., 183 F.3d

1361, 1366 (Fed. Cir. 1999). Rather, registration confers a number of advantages,

35
including the presumption of validity. B & B Hardware, Inc. v. Hargis Indus.,

Inc., 135 S. Ct. 1293, 1300 (2015).

The presumption of validity discharges a trademark owners common law

burden of proving validity and shifts the burden to the challenger to prove that the

mark is not valid. See, e.g., Cold War, 586 F.3d at 1356; Applied Info. Scis. Corp.

v. eBay, Inc., 511 F.3d 966, 970 (9th Cir. 2007) (registration discharges the

[trademark owners] original common law burden of proving validity in an

infringement action); Coit Drapery Cleaners, Inc. v. Coit Drapery Cleaners of

New York, Inc., 423 F. Supp. 975, 978 (E.D.N.Y. 1976) (The Lanham Act . . .

confers procedural advantages on the registrant in the protection of the common

law substantive right of trademark ownership. . . . The burden of going forward

thereupon shifts to the individual asserting a right to the use of the mark.).

Despite elsewhere recognizing that registration does not create a new or

separate trademark (Appx000026), the Commission legally erred when it

divorced the CMT into common law and registered marks, and analyzed a

common law mark to find the registered CMT invalid. (Appx000024000025.)

B. The Commission Cherry-Picked Evidence to Support Its

Common Law Analysis, Passing Over Evidence of Secondary
Meaning
In this Court, the party challenging a registered mark bears the initial burden

of production and the ultimate burden of persuading the trier-of-fact that the mark

36
lacks secondary meaning. Cold War, 586 F.3d at 1358; see also Charles L. Cook

& Theodore H. Davis, Jr., Litigating the Meaning of Prima Facie Evidence

Under the Lanham Act: The Fog and Art of War, 103 Trademark Rep. 437, 474

482 (2013) (conducting in-depth analysis of the prima facie language in the

Trademark Act).

The Commission ignored this Courts Cold War decision, declined to decide

whether Intervenors bear the burden of production and/or the burden of

persuasion, and erroneously reasoned that, regardless of the standard, the CMT

has not acquired secondary meaning. 7 (Appx000025.) Side-stepping this

Courts burden of proof allocation, the Commission constructed a selective version

of facts to fit its conclusion that the CMT purportedly lacked secondary meaning.

Cf. Custom Access., Inc. v. Jeffrey-Allan Indus., Inc., 807 F.2d 955, 959, 961 (Fed.

Cir. 1986) (misapplication of presumption of validity in patent context).

However, after a mark is registered, the party challenging the mark always

bears the burden of persuasion. Cold War, 586 F.3d at 135859. To that end, the

7
The Commission failed to even cite Cold War and, instead, characterized
the law on the issue as unsettled, citing to cases applying the law of the Second,
Fourth, Fifth, and Ninth Circuits. (Appx000025.) Among the Commissions
citations is Apple Inc. v. Samsung Elecs. Co., 786 F.3d 983 (Fed. Cir. 2015), which
applied the law of the Ninth Circuit and does not overrule this Courts Cold War
decision. See Apple, 786 F.3d at 990, 995 (applying Ninth Circuit law when
reciting the burden), revd on other grounds, 137 S. Ct. 429 (2016).

37
salient inquiry is whether the challenger has satisfied its ultimate burden of

persuasion, based on all the evidence made of record. Id. at 1358 (emphasis

added).

Beyond its initial, passing reference to the presumption of validity, the

Commission never indicated giving any weight to the PTOs registration of the

CMT, let alone that it considered all the evidence made of record. Id. For

example, the Commission erroneously concluded that factor 2, exclusivity of use,

favored Intervenors after considering only Intervenors evidence. (Appx000027

000034.) The Commission never mentioned evidence refuting Intervenors

evidence or evidence that demonstrates secondary meaning in the CMT. See, e.g.,

Argument Sections III and IV.

Notably, the Commissions approach does not satisfy even the lower

standard applicable in an opposition proceeding before the Trademark Trial and

Appeal Board (TTAB)before a mark is registered. In an opposition

proceeding challenging registration of an applied-for trademark, the TTAB is

required to consider the entire record, including evidence presented by both the

opposer and the applicant. Yamaha, 840 F.2d at 1578.

The Commissions approach also runs afoul of the substantial evidence

standard, which requires it to explain[] its decision[] with sufficient precision,

including the underlying factfindings and the agencys rationale. See Princeton

38
Vanguard, 786 F.3d at 970 (Though the Board is not required to discuss every

piece of evidence, it cannot focus primarily on evidence of the word crisps in

isolation, select a few pieces of evidence involving the combined pretzel crisps,

and conclude that the trademark is generic. . . . Just as it may not short-cut its

legal analysis, the Board may not short-cut its consideration of the factual record

before it.). Failure to consider the full record and render a reasoned decision

addressing that record is itself a violation of the APA. See, e.g., Nuvasive, 842

F.3d at 1382; State Farm, 463 U.S. at 43.

Moreover, as discussed in the next two sections, the Commissions failure to

apply the presumption of validity fatally infected its analysis and explication of the

secondary meaning evidence.

III. The Commission Legally Erred in Assessing Factor 2, Exclusivity of

Use, Through an Incorrect, Patent-Like, Legal Lens

The Commissions assessment of factor 2, exclusivity of use, adopted a

patent-like, prior art view of alleged third-party use. This is an improper lens for

assessing secondary meaning of a trademark, which focuses on the perception of

the relevant consumer group. The Commissions wrong-lens legal error is

evidenced by two independent grounds for reversal. First, the Commission

adopted evidence divorced from consumer perception and, in some cases, evidence

that the CALJ determined to be unreliable, not probative of secondary meaning,

and/or insufficient in view of Converses extensive use of the CMT. Second, the
39
Commission legally erred by failing to consider evidence showing that alleged

third-party uses were inconsequential or de minimis when compared to Converse,

and, thus, could not materially impact relevant consumer perception of the CMT.

A. Determining a Marks Exclusivity of Use Must Account for

Consumer Perception Within the Marketplace Context
Because secondary meaning turns on consumer perception, alleged third-

party use evidence must be viewed through the eyes of a consumer. See Hana

Fin., 135 S. Ct. at 910. The mere existence of third-party usesunlike the mere

existence of invalidating prior art in a patent casedoes not defeat secondary

meaning of a trademark. See, e.g., McCarthy 6:8; Dastar Corp. v. Twentieth

Century Fox Film Corp., 539 U.S. 23, 34 (2003) (Federal trademark law has no

necessary relation to invention or discovery. (citations and quotations omitted)).

What matters is whether third-party use made an impression on the minds of

consumers, such that they would not associate the CMT with a single source. See

McCarthy 16:34.

It is thus imperative to gauge the extent of alleged third-party use, and its

actual effect, if any, on the relevant consumer group. This is done by assessing the

marketplace context within which the alleged third-party use occurred, including,

for example, evidence of sales, distribution, advertising, and consumer impression

of the third-party use compared to the trademark owners use of the mark. Palm

Bay Imports, Inc. v. Veuve Clicquot Ponsardin Maison Fondee En 1772, 396 F.3d
40
1369, 1373-74 (Fed. Cir. 2005). Thus, this Court in Palm Bay considered the

probative value of alleged third-party uses appearing in the Beverage Media

Guide publication. This Court found the third-party use evidence insufficient,

explaining:

Absent evidence of the consuming publics awareness,

however, the Beverage Media Guide standing alone does
not suffice. As this court has previously recognized
where the record includes no evidence about the extent
of [third-party] uses . . . [t]he probative value of this
evidence is thus minimal.

Id. at 1373-74 (quoting Han Beauty, Inc. v. AlbertoCulver Co., 236 F.3d 1333,

1338 (Fed. Cir. 2001) (emphasis added in Palm Bay)); see also Longshore v. Retail

Royalty Co., 589 F. Appx 963, 967, 2014 WL 4494770 (Fed. Cir. 2014) (unpub.)

(finding no error where TTAB discounted third-party use because it had limited

probative value when there was no evidence showing the extent of its usage or the

publics awareness of its existence).

When it relied on alleged third-party use evidence similar to that rejected in

Palm Bay, the Commission cited to this Courts decision in Levi Strauss & Co. v.

Genesco, Inc., 742 F.2d 1401 (Fed. Cir. 1984), and a Seventh Circuit decision,

Echo Travel, Inc. v. Travel Assocs., Inc., 870 F.2d 1264 (7th Cir. 1989). However,

the plaintiff in Levi used its mark for only one year, admitted its use was

inconsistent, and further that there was widespread and common use of a tab . . .

before [its] . . . claimed date of first use. 742 F.2d at 1401, 140305; see also
41
Echo, 870 F.2d at 126769 (the plaintiff used the asserted mark for only one

season before the defendants use and thousands of third-party uses were

distributed before the plaintiffs adoption of the mark). In contrast, here, there is

no dispute that Converse alone has continuously and consistently used the CMT

for nearly a century, selling over one billion pairs of shoes worldwide, and there is

no evidence that sporadic alleged third-party uses were commercially material

relative to Converses uses, as discussed further below.

Like this Court, other courts consider the impact, vel non, that alleged third-

party use makes on relevant consumers as compared to the trademark owners use.

See, e.g., Scarves by Vera, Inc. v. Todo Imports, Ltd., 544 F.2d 1167, 1173 (2d Cir.

1976) (discounting third-party use evidence where there was no evidence it

impacted secondary meaning); Robarb, Inc. v. Pool Builders Supply of Carolinas

Inc., No. 87- 2012, 1991 WL 335811, at *11 (N.D. Ga. Oct. 31, 1991) (same),

affd, 996 F.2d 1231 (11th Cir. 1993); Levi Strauss & Co v. Blue Bell, Inc., No. 70-

930, 1978 WL 21731, at *13 (N.D. Cal. July 14, 1978) (same), affd, 632 F.2d 817

(9th Cir. 1980); Audemars Piguet Holding S.A. v. Swiss Watch Intl, Inc., 46 F.

Supp. 3d 255, 278 (S.D.N.Y. 2014) (same), revd in part on other grounds on

reconsideration, 2015 WL 150756 (Jan. 12, 2015); Royal Crown Company, Inc. et

42
al. v. The Coca-Cola Company, No. 91178927, at 29-30 (TTAB, May 23, 2016)

(Appx050016050051) (same).8

The Commission never questioned the commercial impact on relevant

consumers caused by alleged third-party uses. Instead, the Commission ignored

Palm Bay and other cases to commit the same reversible error discussed in Scarves

by Vera.

B. The Commission Erroneously Credited Third-Party Use Evidence

Divorced From Marketplace Context
Intervenors introduced shoe images (largely from decades-old, out-of-

circulation catalogs) to argue that toe cap designs, toe bumper designs, and midsole

striping designs, generally, have not been used exclusively, and thus, purportedly,

the existence of these design elements prevented the CMT from acquiring

secondary meaning. The Commission accepted Intervenors third-party use

evidence as though it were dispositive prior art, while ignoring substantial record

evidence of marketplace context that the alleged third-party uses had no

commercial impact on relevant consumers. (Appx000027000035.)

8
The TTABs decision in Royal Crown is currently on appeal to this Court,
No. 16-2375. Like the present appeal, the issues raised by the appellants in Royal
Crown relate to the relevance of marketplace contextual evidence of alleged third-
party uses (see No. 16-2375, Brief for Appellants, Doc. 20). However, unlike the
Commission here, the TTAB in Royal Crown considered marketplace contextual
evidence in finding that the overall use of the term ZERO by third parties
appears to be relatively minor in comparison to [the trademark applicant]. Royal
Crown, No. 91178927, at 29-30.
43
 Here, the CALJs detailed analysis is instructive because it is consistent with

the law of this Court, the TTAB, and other courts. The CALJ asked: Does the

evidence of third-party use of the mark diminish the consumers association of the

mark with only one company? (Appx000093.) To analyze this question, the

CALJ determined:

the earliest infringement of the CMT by a Respondent occurred in 2003; and

the age of the average consumer for All Star shoes skews young, with the

upper age range being a recent college graduate, and noting data showing

relevant consumers are 1530 years old.

(Appx000093.)

Because the evidence showed that even in 2003, it is doubtful that the

average consumer would have a detailed understanding of the history prior to the

1980s, and possibly the 1990s, the ID separately addressed historic third party

use (i.e., older than approximately the 1980s) and more recent third party use

(i.e., from approximately the 1980s and later). (Appx000093; Appx000095.)

After examining the record, the CALJ found there is no evidence that either the

alleged historic third-party uses or the alleged more recent third-party uses

impacted perceptions of the relevant consumer. (Appx000094; Appx000096.)

In contrast, the Commission engaged in a cursory analysis that ignored

undisputed evidence contradicting its conclusion and focused on evidence the

44
CALJ considered but discounted as unreliable, not probative, or insufficient. (See

Appx000027000035.) Indeed, at times, the Commission contradicts itself and/or

the evidence it relies upon.

Because the Commission reached a different conclusion from the impartial,

experienced examiner who has observed the witnesses and lived with the case [i.e.,

the CALJ], Universal Camera, 340 U.S. at 496, the Commissions conclusions

are reviewed with a more searching scrutiny, OKeefe, 318 F.3d at 1313.

The following discussion highlights some of the Commissions legal errors

and some of its factual errors flowing from those legal errors.

The Commission Failed to Assess the Extent of Alleged Third-Party

Uses as Compared to Converses Use of the CMT: The Commission never

placed Intervenors sporadic third-party use evidence in context by comparing it to

Converses extensive, continuous, and consistent use of the CMT as this Courts

precedent demands. (See Appx000027000035.) See, e.g., Palm Bay, 396 F.3d at

1373-74; Yamaha, 840 F.2d at 1583. Had it done so, the Commission would have

found there is no evidence the alleged third-party uses had any commercial impact

on the relevant consumer group. Here, The CALJ entered factual findings

ignored by the Commissionthat detailed the lack of marketplace contextual

evidence. (See, e.g., Appx000094 ([T]here is no evidence that the third party use

had an impact on the relevant consumers consciousness. The sales data . . . only

45
shows that consumers in the past were aware of these third-party uses.);

Appx000095 ([T]here is insufficient evidence that the average consumer would

be familiar with these J.C. Penney advertisements.); Appx000096 (Without

more, this evidence does not establish that this third party use had an impact on the

mind of the consumer.).)

By Any Measure, the Commission Failed to Consider the Relevant

Consumer Group: The Commission failed to identify the relevant consumer

group from whose viewpoint secondary meaning should be assessed. (See

Appx000026000035.) And, even if it adopted the IDs identification of the

relevant consumer group (Appx000093), the Commission ignored that most of the

relevant consumers were not even alive at the time most of Intervenors alleged

third-party use evidence would have been in circulation, such as catalogs or

newspaper ads from the 1930s to the 1970s. (See Appx000093.) Cf. Am. Assn for

Advancement of Sci. v. Hearst Corp., 498 F. Supp. 244, 257 (D.D.C. 1980) (The

question is not whether the general public, but the relevant buyer class associates a

[mark] with a product or its source.).

The Commission Relied on Alleged Third-Party Uses That Do Not Use

the CMT: The Commission cited images of alleged third-party shoes

(Appx000027000029), but most of the pictured shoes do not use the CMT or the

images are of such poor resolution that the products configuration is

46
indeterminate. (See Appx030311030314 at A9, A12, A15, A19; Appx030320

030322 at A42A48; Appx030326030327 at A55A65; Appx015079015089.)

Third-party shoes relied upon by the Commission have essentially any toe cap

design, any toe bumper design, and any midsole striping design (see examples

below). There is no evidence that any of these third-party shoes having various

individual elements could diminish the distinctiveness of the CMT. See, e.g.,

AmBrit, Inc. v. Kraft, Inc., 812 F.2d 1531, 1537 (11th Cir. 1986) (Isolated or

piecemeal third party uses of various elements of the [asserted] trade dress do not

detract from the distinctiveness of the overall impression conveyed.); cf.

Princeton Vanguard, 786 F.3d at 967 ([T]his court has reiterated that, [a]n

inquiry into the publics understanding of a mark requires consideration of the

mark as a whole.).

47
Illustration 9: Comparison of CMT and Alleged Third-Party Uses

CMT as Depicted and Described in 753 Registration

the design of the two

stripes on the midsole of
the shoe, the design of
the toe cap, the design
of the multi-layered toe
bumper featuring
diamonds and line
patterns, and the relative
position of these
elements to each other

Examples of Third-Party Shoes Cited by Commission

Appx040928 Appx040970 Appx042009

Appx042091

Appx041736 Appx041761

48
 The Commission Credited Testimony the CALJ Found Unreliable or

Not Probative: The Commission credited the testimony of Intervenors four

expert witnesses notwithstanding the CALJs criticisms of their testimony, two of

whom appeared live at trial. (Appx000096 (finding Dr. Golders live testimony

merely speculative); Appx000096 (finding Mr. Maeders live testimony failed to

establish that pictures of alleged third-party uses had an impact on the mind of the

consumer); Appx000095 n.20 (finding the weight of Mr. Walfords written

testimony related to post-1970s footwear diminished); Appx000095 (finding Mr.

Hanssens written testimony of J.C. Penney catalog circulation data to be

insufficient evidence that the average consumer would be familiar with [the] J.C.

Penney advertisements).9

The Commission Overstated the Evidence and Contradicted Itself

When Attempting to Support Its Conclusion: Because the alleged third-party

use evidence was mostly images of shoes excerpted from decades-old catalogs, it

was incumbent on the Commission to demand evidence that the asserted images

actually impacted relevant consumers. Instead, the Commission patched together

9
Converses expert, Dr. Pham, also testified to numerous examples where
the analyses of Intervenors experts are inconsistent with one another. (See, e.g.,
Appx030321030322 at A45A48.) The Commission ignored Dr. Phams
testimony.

49
evidence in ways that highlight the dearth of marketplace context for alleged third-

party use:

The Commission cited circulation data for three catalog retailers

from various years (Appx000027000028), however, there is no nexus between the

alleged billions of dollars in net annual sales of everything promoted in the

approximately thousand-page catalogs, and the commercial impression created by

a single shoe image, on a single page, in a single catalog (Appx030314030316 at

A20, A28A29).

The Commission cited alleged sales of PF Flyers shoes from the

1940s to the present (Appx000029), however, Intervenor New Balance (the

current owner of PF Flyers) admits the PF Flyers brand lay dormant during at

least a blackout period from 1975-2000. (Appx032232; see also Appx032217.)

Notably, the Commission elsewhere acknowledged PF Flyers shoes were not sold

from the 1940s to the present when noting the brand purportedly re-entered the

market in the 1990s.10 (Appx000029.)

The Commission cited alleged sales by Keds from the 1970s to the

present (Appx000027000028), and relied on an agreement between Converse and

10
To the extent any amount of PF Flyers shoes were sold during the
admitted blackout period, the CALJ found that Respondents . . . did not
establish that these shoes . . . use the CMT. (Appx000093.)

50
Collective Brands, Inc. (CBI) (then-owner of Keds). However, Keds since

discontinued sales of the shoes at issue in the agreement (Appx010244 at ll. 18

25), and there is no evidence of sales volume in the agreement or elsewhere

(Appx000097000098 (Respondents did not introduce evidence of sales of Keds

shoes.)). The agreement relied upon by the Commission evidences Converses

successful enforcement of trademark rights in its midsole designs that include the

CMT, and Converse expressly reserved its rights to enforce against Keds shoes.

(Appx032872032919; Appx010244 at ll. 2125; see also Appx000097000098.)

The Commission cited a 2005 internal Converse document with a

slide depicting a Converse shoe surrounded by other shoe brands and elsewhere

referenced various market share data for the footwear market. (Appx000031

000032.) However, the majority of shoes depicted in the slide do not use the CMT

and instead are examples of athleisure type footwear and legitimate competitors of

Converse, not knockoffs. (Appx000031000032.) Additionally, the market share

data discussed by the Commission relates to a footwear market category within

which ostensibly all Converse products competed at that time, i.e., it was not

limited to shoes that use the CMT, or even shoes that bear other toe caps, toe

bumpers, or midsole striping. (Appx026267).

The Commission cited an alleged private label shoe called the

Winner, however, Intervenors concede the Winner shoe is not a private label

51
shoe (Appx006819),11 and, regardless, there is no evidence consumers today would

be familiar with the Winner shoe, sold decades ago (Appx000099). Even if

Converse had engaged in extensive private labeling, which it did not, that still

would not destroy secondary meaning. Tone Bros, 28 F.3d at 120304 (explaining

that extensive private labeling does not foreclose secondary meaning).

The Commission claimed Converse permitted its shoes to be sold

alongside competitor shoes that allegedly used the CMT (Appx000034), however,

of the shoes the Commission identified being sold alongside Converse, the

evidence shows that one, Airwalk, was not permitted by Converse, but rather

that Converse enforced its rights against Airwalk (Appx032877032879); the

second, NIKE, does not actually use the CMT (Appx041736) (see Illustration 9

above); and the third, Gamebuster, occurred in 1976well before the relevant time

period (Appx000100).

The Commission cited to the 2000 edition of The Complete

Footwear Dictionary and a TSA instructional sign (Appx000100-000101).

However, neither is a trademark use, 15 U.S.C. 1127, and, thus, neither creates

a commercial impression that affects the relevant consumers ability to associate

the CMT with Converse, Specialty Brands, Inc. v. Coffee Bean Distrib., Inc., 748

11
Indeed, the Winner shoe included Converse on the heel and in
advertisements. (Appx037757037760; Appx040851; Appx029391; Appx039948
at 92:1293:2.)
52
F.2d 669, 675 (Fed. Cir. 1984). Tellingly, Intervenors did not introduce any

evidence as to the distribution, popularity, or circulation of these alleged uses from

which to assess whether they made a commercial impact. (Appx040543 at A31;

Appx046010046011 at A89; see also Appx000094 n.19 ([T]he inclusion of a

Keds sneaker using the CMT in the Dictionary is not evidence that consumers

associate the CMT with Keds or other third parties).)

* * *

Untethered to marketplace context or commercial impression in the minds of

relevant consumers, the Commissions patent-like prior art analysis is precisely the

kind of reasoning that this Court, other courts, and the CALJ in the first instance

below, reject when assessing secondary meaning.

C. The Commission Failed to Consider the Entire Record, Including

Marketplace Contextual Evidence of Secondary Meaning
The Commission failed to consider, or even acknowledge, evidence

demonstrating alleged third-party uses did not have a commercial impact on

consumers and, thus, did not diminish secondary meaning in the CMT. Thus, the

Commission erred not only as a matter of substantive trademark law, but also as a

procedural matter by disregarding evidence without explanation. See Princeton

Vanguard, 786 F.3d at 970 (an agency must explain its decisions with sufficient

precision and may not short-cut its consideration of the factual record before

it.); State Farm, 463 U.S. at 43.

53
 Extensive Analysis by Converses Expert That Alleged Third-Party

Uses Had No Material Marketplace Impact: The evidence the Commission

ignored includes an extensive analysis conducted by Converses expert, Dr. Michel

Pham. Unlike Intervenors experts (see, e.g., Appx010082010083,

Appx010085010086; Appx010147 at ll. 1921), Dr. Pham considered alleged

third-party use evidence in context to assess its commercial impact, if any,

compared to Converses continuous, consistent, and extensive use of the CMT.

(Appx016780016781 at A135.)

As part of his analysis, Dr. Pham analyzed historically significant shoes, as

well as shoes recently sold by leading sneaker manufacturers in the United States,

to assess the ubiquity or uniqueness of the CMTs particular configuration.12

(Appx016780016784 at A135A158 (citing Appx014057014062, Appx015033

12
Dr. Pham focused on shoes that others found to be historically significant,
as opposed to limited edition shoes, for example, because he wanted to objectively
capture shoes with a broader commercial audience (Appx016782 at A148), which
is consistent with assessing whether third-party uses have prevented a mark from
acquiring secondary meaning. Likewise, as to more recent shoes, Dr. Pham
focused on leading shoe manufacturers because it would be impossible to review
all shoes marketed by every single manufacturer on the market, and, if the design
elements of the CMT were common, one would expect those elements to
frequently appear on shoes marketed by leading manufacturers. (Appx016785 at
A162.)

54
015041; Appx030172030197) (historical shoes); Appx016785016787 at A161

A176, (citing Appx015042015051) (more recent shoes).)

Based on analysis within marketplace context, Dr. Pham opined that

Converses use of the CMT has been substantially exclusive because the individual

elements of the CMT have not been common across other brands or models in

comparison to the volume and duration of Converses use of the mark.

(Appx016762016764 at A30A37; Appx016783016784 at A156.) Of the

historically significant shoes, no brand other than Converse has used the overall

appearance of the CMT. (Id.) Of the historically significant shoes that used some

variation of the elements of the CMT, either (1) their commercial presence, if any,

was sporadic or inconsequential compared to Converse, (2) they have been out of

the market for many decades, or (3) Converse enforced its rights against them.

(Appx016788 at A178.) Likewise, as to Dr. Phams assessment of more recent

shoes, Converse is the only brand using the combination of elements that comprise

the CMT, with the exception of Ralph Lauren and Skechersboth of which were

Respondents in the Investigation. (Appx016787 at A175A176.)

Dr. Pham continued his analysis of marketplace contextual evidence by

considering Converses use, sales, and advertising of the CMT, as well as

unsolicited publicity and consumer impression data. See, e.g., Robarb, 1991 WL

335811, at *11 (comparing alleged third-party use to trademark owners use);

55
Audemars, 46 F. Supp. 3d at 278 (same). (Appx016788016799 at A179A244.)

Dr. Pham observed that Converses sales of shoes featuring the CMT compare

favorably with the reported sales of, for example, the adidas Superstar shoe, whose

design has been enforced as famous and described by various independent sources

as iconic. (Appx016790 at A193A194.)

Evidence of Converses Enforcement Efforts Against Third-Party Uses

to Protect the Iconic CMT: The Commissions analysis of this factor also failed

to consider Converses enforcement history for the CMT, which is critical to

placing alleged third-party use evidence in context. See, e.g., Roederer v. J.

Garcia Carrion, S.A., 732 F. Supp. 2d 836, 86869 (D. Minn. 2010) (finding a lack

of evidence as to the extent of alleged third-party uses and considering successful

enforcement efforts to find the asserted mark commercially strong).

Converses brand protection evidence indicated that, until around 2010,

infringing uses of the CMT in the U.S. market appeared only sporadically, and

mostly at individual boutique stores. (Appx017265017266 at A32, A34.) This is

consistent with Dr. Phams analysis, as well as the sporadic alleged third-party use

evidence cited by the Commission. It was not until after Converse celebrated its

100th Anniversary in 2008when the All Star shoe and CMT received additional

publicitythat Converse observed an increasing number of infringing shoes (id.),

at which time Converses enforcement efforts grew in response (Appx017266

56
017267 at A34A37). (See also Statement of the Facts Section III.) Notably, a

trademark owner is not required to police against every conceivable infringer.

Engineered Mech. Servs., Inc. v. Applied Mech. Tech., Inc., 584 F. Supp. 1149,

1160 (M.D. La. 1984).

Converse entered into dozens of settlement agreements in which infringers

admit the CMT is valid and enforceable. (Appx017270 at A52.) Likewise,

Converse prevailed in its district court actions. (Appx017270 at A53.) For

example, in Autonomie Project, 1:13-cv-12220 (D. Mass.), the defendant entered

into a consent judgment and admitted that the trademarks at issue, including the

CMT, are distinctive and non-functional, well known, famous and associated

with Converse. (Appx022588022589; see also Appx017270 at A53.)

* * *

The Commissions consideration of this factor fundamentally fails to grapple

with this evidence. That is itself reversible error. Sang-Su Lee, 277 F.3d at 1343

45; State Farm, 463 U.S. at 43. Regardless, the Commissions decision is not

supported by substantial evidence. It should be reversed and the Commissions

common law findings should be vacated.

57
IV. The Commission Legally Erred in Assessing Factor 7, Evidence of
Actual Association, by Giving Disproportionate Consideration to
Intervenors Survey While Ignoring That It Actually Supports
Secondary Meaning

The Commission legally erred in its consideration of factor 7evidence that

actual purchasers associate the CMT with Conversefor three independent

reasons. First, the Commission gave disproportionate weight to Intervenors

survey evidence, contrary to well-settled trademark law, including this Courts

precedent. Second, the Commissions legal error is amplified because Intervenors

survey, in fact, evidences secondary meaning in the CMT. Third, the Commission

legally and procedurally erred by limiting its assessment of factor 7 to litigation

surveys and ignoring additional actual association evidence.

A. The Commission Improperly Weighed Survey Evidence as Nearly

Dispositive
The Commission legally erred by giving undue weight to a single, flawed

survey. (Appx000021; Appx000026; Appx000035.) While some courts have held

that a reliable, well-constructed secondary meaning survey is the most direct and

persuasive evidence of secondary meaning, Co-Rect Prod., Inc. v. Marvy! Adver.

Photography, Inc., 780 F.2d 1324, 1333 n.9 (8th Cir. 1985), this Court has never

adopted that approach.13

13
The Federal Circuit has twice applied this approach when dictated by the
law from regional circuits where appeals arose: once from the Eighth Circuit,
58
 The more well-reasoned articulation of the rule is that consumer surveys, if

available, would be considered as an additional factor, rather than the only or main

factor, in determining whether a mark has acquired secondary meaning.

Heartland Bank v. Heartland Home Fin., Inc., 335 F.3d 810, 820 (8th Cir. 2003)

(clarifying its earlier ruling in Co-Rect Prod., 780 F.2d at 1333 n.9) (emphasis

added). In other words, while survey evidence, when available and reliable, may

be the most persuasive evidence of secondary meaning in a given case, the factor

should not be weighed as the most important factor, in all cases.

For example, the weight applied to a survey may vary depending on the

demonstrated level of consumer association. Compare McCarthy 32:190

(figures over 50% are regarded as clearly sufficient to prove secondary meaning)

with Centaur Commcns, Ltd. v. A/S/M Commcns, Inc., 652 F. Supp. 1105, 1111

(S.D.N.Y. 1987), affd, 830 F.2d 1217 (2d Cir. 1987) (holding 22% association

tends to support, rather than negate, plaintiffs claim of secondary meaning) and

Citizens Banking Corp. v. Citizens Fin. Grp., Inc., No. 07-11514, 2008 WL

Tone Bros., 28 F.3d at 1204 (applying an approach described in Co-Rect Prod.,

780 F.2d at 1333 n.9, which the Eighth Circuit notably revised and clarified in a
subsequent opinion, Heartland, 335 F.3d at 820), and once from the Fifth Circuit,
Hartco Engg, Inc. v. Wangs Intl, Inc., 142 F. Appx 455, 460, 2005 WL
1724688 (Fed. Cir. 2005) (citing Sugar Busters LLC v. Brennan, 177 F.3d 258, 269
(5th Cir.1999)).

59
1995104, at *5 (E.D. Mich. May 6, 2008), affd, 320 F. Appx 341 (6th Cir. 2009)

(finding survey showing 8% consumer association, alone, deemed insufficient to

demonstrate secondary meaning).

Likewise, survey evidence may be given less weight when a survey is

discounted due to flaws in its design or implementation, see, e.g., Vision Sports,

Inc. v. Melville Corp., 888 F.2d 609, 615 (9th Cir. 1989), or when the record is

devoid of any reliable surveys that recreate the marketplace, see, e.g., Yamaha

Intl, 840 F.2d at 1583; Grupo Gigante SA De CV v. Dallo & Co., 391 F.3d 1088,

1107 n.1 (9th Cir. 2004).

Setting aside what Intervenors survey results actually mean, both its net

level of association and its design flaws militated against the near-dispositive

weight the Commission gave Intervenors survey here.

B. Intervenors Survey, Despite Its Flaws, Supports Secondary

Meaning, Yet the Commission Erroneously Reached the Opposite
Conclusion
The dangers of over-weighing survey evidence are magnified in this case

because the parties submitted a total of ten different surveys relating to consumer

associations in the CMT and the Commission criticized all of them for various

reasons. The Commission disregarded all of Converses CMT secondary meaning

surveys, and disregarded all of Intervenors secondary meaning surveys except for

one part of a two-part survey.

60
 The part of the survey considered by the Commission, the CBSC Only

survey, was conducted by Intervenors expert, Ms. Sarah Butler, who admitted her

survey was a conservative test of the CMTs secondary meaning. (Appx009867

at ll. 68.) In other words, Ms. Butlers CBSC Only survey was admittedly

skewed against finding secondary meaning in the CMT. Nevertheless, the power

of the CMTs distinctiveness showed through. See Tone Bros., 28 F.3d at 120304

(finding a survey prepared for defendants and that purportedly showed a lack of

secondary meaning actually supported the opposite conclusion).

Ms. Butlers CBSC Only survey tested a drawing of an incomplete CMT,

floating in space, and divorced from any context that would indicate to the viewer

it is the midsole of a shoe, i.e., an artificial stimulus that a consumer would never

see in the marketplace. (See Appx000085.) The test and control stimuli used in

the CBSC Only survey follow.

Illustration 10: Ms. Butlers CBSC Only Test and Control Stimuli

Test Control

Even with the artificial stimulus, the CBSC Only survey reported a 46%

gross recognition rate, i.e., 46% of survey participants that viewed the isolated

61
CMT test stimulus recognized the design as coming from Converse or a sole but

anonymous source. (Appx040303 at A34-A36.) After accounting for the control

stimuli, the CBSC Only survey still reported a 21.5% net recognition rate. (Id.)

Consumer association levels as low as 20% have been found to support secondary

meaning. See, e.g., Ferrari S.p.A. Esercizio Fabbriche Automobili e Corse v.

McBurnie, No. 86-1812, 1989 WL 298658, at *4 (S.D. Cal. June 1, 1989) (where

plaintiff and defendant submitted surveys with net recognition rates of 73% and

20%, respectively, the court found the percentages of recognition in both the

plaintiffs and the defendants surveys, although flawed . . . [is] thorough and

convincing [evidence] that the Ferrari DAYTONA SPYDER design has achieved a

strong secondary meaning).14

But the CBSC Only surveys net recognition rate is, in fact, higher, at

approximately 30%, because most of the participants Ms. Butler surveyed fall

outside the relevant universe of consumers. See Hearst Corp., 498 F. Supp. at 257

14
While the ID relied on Zippo Mfg. Co. v. Rogers Imports, Inc., 216 F.
Supp. 670 (S.D.N.Y. 1963), for the proposition that some courts have even held
that survey evidence of 25% was insufficient (ID at 36), the ID ignores the fact
that Zippo found 25% recognition insufficient only because the evidence showed
that a remarkably high percentage of survey participants (24.1%) incorrectly
identified the test lighter with another, well-known source. Zippo, 216 F. Supp.
at 689. Unlike in Zippo, evidence relied upon by the ID shows that relevant
consumers do not appreciably equate any brand other than Converse with the
CMT. (Appx000094.)

62
(The question is not whether the general public, but the relevant buyer class

associates a [mark] with a product or its source.). The ID found that the average

age of consumers of All Star shoes skews young, noting data showing most

consumers are 15 to 30 years old. (Appx000093.) Yet, approximately two-thirds

of participants in Ms. Butlers results were outside that range, aged 35 and older.

(Appx040331 at A141.) As Converse explained to the Commission, this caused

Ms. Butler to significantly underreport the surveys recognition levels.

(Appx012231.) Nevertheless, the Commission disregarded this critical error. See

Centaur, 652 F. Supp. at 1111 (because the defendant improperly defined the

universe . . . [to be] much larger than the relevant universe, defendants finding

that 22 percent of those surveyed recognized the mark . . . actually tends to

support, not negate, plaintiffs claim of secondary meaning).

Ms. Butlers attempts to artificially depress her survey results do not end

with an over-inclusive universe. Ms. Butler departed from accepted secondary

meaning protocol (and her own prior and subsequent practice) by asking survey

participants whether they recognize the test image, rather than the widely-

accepted question of whether survey participants associate the test image with a

source. (Appx009874009875 (Ms. Butler testifying that, in prior cases, she did

not use the word recognize).) adidas Am., Inc. v. Skechers USA, Inc., 149 F.

Supp. 3d 1222, 1237, 1251 (D. Or. 2016) (citing Ms. Butlers declaration (Dkt.

63
51), Ex. 1 at 10 (Nov. 11, 2015));15 see also In re GIE Media, Inc., No. 85253450,

2013 WL 5407245, *7 (T.T.A.B. May 10, 2013) (non-precedential) (rejecting

surveys in-part because the [survey] questions do not measure acquired

distinctiveness, . . . A proper question for measuring acquired distinctiveness is do

you associate the term . . . with one company, more than one company, or no

company? (emphasis added)).

By asking survey participants whether they recognize (i.e., recall

previously observing) the test image, Ms. Butler artificially depressed the results of

the CBSC Only survey because no survey participant could have ever seen the

litigation-created test stimuli of a partial, isolated CMT floating in space.

(Appx030278030280 at A55A57; cf. Appx015130015132 (the 753

Registration expressly states the CMT is used with a shoe).) Ms. Butler provided

no explanation for using the recognize question in this Investigation

(Appx000080-000081), and acknowledged the recognition question is typically

used to measure whether a mark is famous: a higher and more difficult standard

than secondary meaning. (Appx009876 at ll. 1123; Appx035696035697;

Appx035699035700.)

15
In adidas v. Skechers, Ms. Butler conducted a secondary meaning survey
for a footwear trade dress and used the proper associate language rather than the
recognize language. 149 F. Supp. 3d at 1237, 1251 (citing Butler (ECF No. 51),
Ex. 1 at 10 (Nov. 11, 2015)).
64
 Ms. Butler further diminished the survey results by using an unnecessary

control. (Appx000085). The ID acknowledged a controls central purpose is to

identify and account for noise (Appx000072), i.e., results created by factors

other than what were trying to test (Appx000069 n.17 (citing Appx009896 at ll.

5-9)). Ms. Butlers use of a control was unnecessary because she ostensibly tested

the CMT itself, isolated from any marketplace context or other features that might

have created survey noise or false positives. The ID acknowledged there was no

opportunity for noise: [Ms. Butlers CBSC Only] survey asked if respondents

recognized the design elements at issue in this case . . . [and, thus] there is no

evidence of noise to cue the survey participants away from Converse.

(Appx000086.) See also adidas v. Skechers, 149 F. Supp. 3d at 1237 (holding that

another Butler surveyasserted to show that footwear trade dress lacked

secondary meaningused an improper control that artificially inflate[d] the so-

called one brand survey responses to the control shoe).

The Commissions reliance on the flawed and depressed results of the CBSC

Only survey is even more troubling when contrasted with how it handled the

survey conducted by Converses expert, the late Dr. Gerald Ford. Dr. Fords

survey used the test and control stimuli below. (Appx016591 at A71;

Appx016597016598 at A108A110; Appx016616016617 at A182A186.)

65
 Illustration 11: Dr. Fords Test and Control Stimuli

Test Control

Dr. Ford, unlike Ms. Butler, used the accepted language whether survey

respondents associate the appearance of the shoe with any particular brand.

(Appx016602016604 at A136A150.) Dr. Fords survey found that a net of

60.65% of respondents associated the test shoe with Converse. (Appx016614 at

A177A178; Appx016617 at A186 (73.15% (net) minus 12.50% (control)).)16

Yet, Dr. Fords survey was completely disregarded because his control was

determined to be too different from the test image.17 The idea that Dr. Fords

survey should be given no weight, despite its strong results and use of accepted

16
Dr. Ford conducted four different surveys evidencing the strength of the
CMT. (Appx016583 at A3; Appx016589016591 at A58A71.) The survey
discussed here specifically tested the CMT.
17
The ID misunderstands the purpose of a control when disregarding Dr.
Fords survey. For example, the ID deviates from fundamental survey principles
in its calculation of survey noise. Survey noise is measured as the number of
survey participants who identified the control image with Converse. Mike
Rappeport, Design Issues for Controls, in TRADEMARK AND DECEPTIVE
ADVERTISING SURVEYS: LAW, SCIENCE, AND DESIGN 217, 226-227
(Shari Seidman Diamond and Jerre B Swann, 2012). The ID, however, calculated
as noise the number of survey participants who identified the control image with
specific brands other than Converse. (Appx000075000076, n.14.)

66
survey questions, while one part of Ms. Butlers otherwise discredited two-part

survey, which manifestly asked the wrong recognized question, would be treated

as effectively dispositive, highlights the import of correcting the Commissions

legal errors.

C. The Commission Ignored Non-Litigation Survey Evidence of

Consumers Actual Association of the CMT
The Commission also legally erred by limiting its assessment of factor 7 to

litigation surveys and ignoring other actual association evidence. 18 Again, the

Commission disregarded such evidence without explanation, contrary to its

obligation to engage in reasoned decisionmaking under the APA. Sang-Su Lee,

277 F.3d at 134345; Princeton Vanguard, 786 F.3d at 970 (an agency must

explain its decisions with sufficient precision).

The evidence the Commission ignored shows not only that consumers

resoundingly associate the CMT with a single source, but that they associate the

In addition to surveys, consumer commentary is widely recognized as an

18

additional form of actual evidence of consumer association between the trademark

and a single source. Thomas & Betts Corp. v. Panduit Corp., 138 F.3d 277, 291
(7th Cir. 1998); Innovation Ventures, LLC v. N2G Distrib., Inc., 779 F. Supp. 2d
671, 676 (E.D. Mich. 2011); see also 4 Callmann on Unfair Comp., Tr. & Mono.
20:22 (4th Ed. 2016).

67
CMT with Converse.19 This evidence also underscores that third-party shoes cited

in the Commission Opinion did not diminish secondary meaning in the CMT; that

is, had the alleged third-party shoes actually left a commercial impression on

consumers, one would expect consumers to associate the CMT with those other

shoes/brands. The evidence, however, shows the oppositemost relevant

consumers are not even aware of the alleged third-party shoes. (See also

Appx030299 at A136 (observing that results of consumer responses certainly do

not suggest that consumers are associating elements of the [CMT] with other

brands).)

The evidence the Commission ignored includes:

Intervenors Documents: Intervenors documents show that even they

associate the CMT with Converse, and that they are aware consumers do too. For

example, websites for Intervenors Skechers and Walmart employed search terms

such as Converse, Chucks, and Chuck Taylor to return Accused Products in

search results. (Appx015138015142 (Skechers); Appx032202032208

(Walmart).) Likewise, internal documents reveal intent to copy Converse when

designing Accused Products. (See, e.g., Appx017466017499; Appx017512

19
Consumers do not have to know the name of the source to establish
secondary meaning; rather, it is sufficient that consumers associate the mark with a
single, albeit anonymous source. McCarthy 15:1.
68
017540; Appx017543017564; Appx017729; Appx028978; Appx028993029005;

Appx033798; Appx031184.)

Converses Market Research: When asked to draw whatever comes to

mind when they hear the word Converse, people sketched a silhouette of a shoe

that includes a toe cap, toe bumper, and sometimes one or two stripes.

(Appx017445 at A128A132.)

Brand Tracking Study: A 2008 brand tracking study conducted in the

ordinary course of Converses business showed survey participants an image of All

Star shoes featuring the CMT and asked (among other questions): Have you seen

this sneaker before? and Regardless of what you just entered, what do you think

is the brand of this sneaker? (Appx016802 at A258A259; Appx027790.) When

asked to name the brand, more than 90% of the respondents attributed the

appearance [] to [the] Converse family of products. (Appx016802016803 at

A261A262; see Appx027790.)

Flickr Analysis: Dr. Pham analyzed evidence of an inverse association

of the CMT with Converse from an analysis of Flickr, a photo sharing site that

allows users to upload photographs along with a description or digital tag for each

photo. (Appx016812016815 at A308A326; see also, e.g., Appx014770014777;

Appx014845014848.) Dr. Phams analysis of photos uploaded by Flickr users

whose description or tag contains the word Converse reveals that the

69
overwhelming majority of the images that Flickr users associate with Converse

feature the CMT. (Appx016813 at A316.) Examples of the images are shown

below (see e.g., Appx014770014777; Appx014845014848).

Illustration 12: Exemplary Flickr Images Featuring the CMT Showing an

Association With Converse

* * *

Once again, the Commission failed to address this voluminous evidence in

its consideration of this factor. The APA requires more. Indeed, had the

Commission grappled with this evidence, it would have been forced to come to the

conclusionas this Court now shouldthat substantial evidence does not support

the challenge to Converses iconic CMT.

70
 CONCLUSION

The Commission Opinion invalidating the registered CMT should be

reversed and its common law findings vacated.

Dated: February 1, 2017 Respectfully submitted,

/s/ Christopher J. Renk

Christopher J. Renk
Erik S. Maurer
Michael J. Harris
Audra C. Eidem Heinze
Aaron P. Bowling
BANNER & WITCOFF, LTD.
Ten South Wacker Drive, Suite 3000
Chicago, IL 60606
Telephone: (312) 463-5000
Email: crenk@bannerwitcoff.com
emaurer@bannerwitcoff.com
mharris@bannerwitcoff.com
aheinze@bannerwitcoff.com
abowling@bannerwitcoff.com

Dale Cendali, P.C.

KIRKLAND & ELLIS LLP
601 Lexington Avenue
New York, NY 10022
Telephone: (212) 446-4800
Email: dale.cendali@kirkland.com
John C. OQuinn
KIRKLAND & ELLIS LLP
655 15th St., NW
Washington, DC 20005
Telephone: (202) 879-5000
Email: john.oquinn@kirkland.com

Attorneys for Appellant Converse Inc.

71


ADDENDUM
 Addendum Index

Appx No. Document

Appx000001 Notice of Final Determination in ITC Investigation No. 337-
TA-936 (June 23, 2016)
Appx000008 Commission Opinion in ITC Investigation No. 337-TA-936
(June 23, 2016)
Appx000046 Initial Determination in ITC Investigation No. 337-TA-936
(November 17, 2015)

 UNITED STATES INTERNATIONAL TRADE COMMISSION
: " : Washington, D.C.

In the Matter of
Investigation No. 337-TA-936
CERTAIN FOOTWEAR PRODUCTS

NOTICE OF A COMMISSION DECISION TO AFFIRM-IN-PART, REVERSE,IN-PART,

AND VACATE CERTAIN PORTIONS OF A FINAL INITIAL DETERMINATION
FINDING A VIOLATION OF SECTION 337; ISSUANCE OF GENERAL EXCLUSION
ORDER; TERMINATION OF THE INVESTIGATION

AGENCY: U.S. International Trade Commission.

ACTION: Notice.

SUMMARY: Notice is hereby given that the U.S. International Trade Commission has
determined to affirm-in-part, reverse-in-part, and vacate certain portions of a final initial
determination ("ID") of the presiding administrative law judge ("ALJ") finding a violation of
section 337 in the above-captioned investigation, and has issued a general exclusion order directed
against infringing footwear products. The Commission has terminated the investigation.

FOR FURTHER INFORMATION CONTACT: Clint Gerdine, Esq., Office of the General
Counsel, U.S. International Trade Commission, 500 E Street, S.W., Washington, D.C. 20436,
telephone (202) 708-2310. Copies of non-confidential documents filed in connection with this
investigation are or will be available for inspection during official business hours (8:45 a.m. to
5:15 p.m.) in the Office of the Secretary, U.S: International Trade Commission, 500 E Street, S.W.,
Washington, D.C. 20436, telephone (202) 205-2000. General information concerning the
Commission may also be obtained by accessing its Internet server at http://www, usitc, gov. The
public.record for this investigation may be viewed on the Commissions electronic.docket (EDIS)
at http://edis, usitc, gov. Hearing-impaired persons are advised that information on this matter can
be obtained by contacting the Commission=s TDD terminal on (202) 205-1810.

SUPPLEMENTARY INFORMATION: The Commission instituted this investigation on

November 17, 2014, based on a complaint filed on behalf of Converse Inc. of North Andover,
Massachusetts.. 79 Fed. Reg. 68482-83. The complaint alleges violations of section 337 of the
TariffAct of 1930, as amended, 19 U.S.C. 1337, by reason of infringement of certain U.S.
Trademark Registration Nos.: 4,398,753 ("the 753 trademark"); 3,258,103 ("the 103
trademark"); and 1,588,960 ("the 960 trademark"). The complaint further alleges violations of
section 337 based upon unfair competition!false designation of origin, common law trademark
infringement and unfair competition, and trademark dilution, the threat or effect of which is to
destroy or substantially injure an industry in the United States. The Commissions notice of

AppxO00001
investigation named numerous respondents including Wal-Mart Stores, Inc. of Bentonville,
Arkansas; Skechers U.S.A., Inc. of Manhattan Beach, California; and Highline United LLC d/b/a
Ash Footwear USA of New York City, .New York. The Office of Unfair Import Investigations
("OUII") is also a party to the investigation. Id. New Balance Athletic Shoe, Inc. ("New
Balance") of Boston, Massachusetts was subsequently added as a respondent-intervenor. See
Order No. 36 (unreviewed, Commn Notice Feb. 19, 2015). Only these four respondents remain
active in the investigation. All other respondents, as detailed below, have been found in default or
have been terminated from the investigation based on good cause or settlement and/or consent
order stipulation.

On February 10, 2015, the Commission determined not to review an ID (Order No. 32)
granting a joint motion of complainant and Skeanie Shoes, Inc. ("Skeanie") of New South Wales,
Australia terminating the investigation as to Skeanie Shoes based on settlement and consent order
stipulation. On the same date, the Commission determined not to review an ID (Order No. 33)
granting a joint motion of complainant and PW Shoes, Inc. ("PW Shoes") of Maspeth, New York
terminating the investigation as to PW Shoes based on settlement and consent order stipulation.
Also on the same date, the Commission determined not to review an ID (Order No. 34) granting a
joint motion of complainant and Ositos Shoes, Inc. ("Ositos Shoes") of South E1 Monte, California
terminating the investigation as to Ositos Shoes based on settlement agreement and consent order
stipulation. On March 4, 2015, the Commission determined not to review an ID (Order No. 52)
granting a j oint motion of complainant and Ralph Lauren Corporation ("Ralph Lauren") of New
York City, New York terminating the investigation as to Ralph Lauren based on settlement
agreement and consent order stipulation. On March 12, 2015, the Commission determined not to
review an ID (Order No. 55) granting a joint motion of complainant and OPPO Original Corp.
("OPPO") of City of Industry, California terminating the investigation as to OPPO based on
settlement agreement and consent order stipulation. On the same date, the Commission
determined not to review an ID (Order No. 57) granting a joint motion of complainant and H & M
Hennes & Mauritz LP ("H & M") of New York City, New York terminating the investigation as to
H & M based on settlement agreement and consent order stipulation. On March 24, 2015, the
Commission determined not to review an ID (Order No. 59) granting a joint motion of
complainant and Zulily, Inc. ("Zulily") of Seattle, Washington terminating the investigation as to
Zulily based on settlement agreement and consent order stipulation. On March 30, 2015, the
Commission determined not to review an ID (Order No. 65) granting a joint motion of
complainant and Nowhere Co. Ltd. d/b/a Bape ("Nowhere") of Tokyo, Japan terminating the
investigation as to Nowhere based on settlement agreement and consent order stipulation. On the
same date, the Commission determined not to review an ID (Order No. 67) granting a joint motion
of complainant and The Aldo Group ("Aldo") of Montreal, Canada terminating the investigation
as to Aldo based on settlement agreement and consent order stipulation.

On April 1, 2015, the Commission determined not to review an ID (Order No. 69) granting
a joint motion ot~complainant and Gina Group, LLC (".Gina Group") of New York City, New York
terminating the investigation asto Gina Group based on settlement agreement and consent order
stipulation. On the same date, the Commission determined not to review an ID (Order No. 70)
granting a joint motion of complainant and Tory Burch LLC ("Tory Burch") of New York City,

Appx000002
New York terminating the investigation as to Tory Burch based on settlement agreement and
consent order stipulation. On April 24, 2015, the Commission determined not to review an ID
(Order No. 73) granting a joint motion of complainant and Brian Lichtenberg, LLC ("Brian
Lichtenbcrg") of Los Angeles, California terminating the investigation as to Brian Lichtenberg
based on settlement agreement and consent order stipulation. On the same date, the Commission
determined not to review an ID (Order No. 80) granting a joint motion of complainant and Fila
U.S.A., Inc. ("Fila") of Sparks, Maryland terminating the investigation as to Fila based on
settlement agreement and consent order stipulation. On May 4, 2015, the Commission
determined not to review an ID (Order No. 86) granting a joint motion of complainant and Mamiye
Imports LLC d/b/a Lilly of New York located in Brooklyn, New York and Shoe Shox of Seattle,
Washington (collectively, "Mamiye Imports") terminating the investigation as to Mamiye Imports
based on settlement agreement and consent order stipulation.

On May 6, 2015, the Commission determined not to review an ID (Order No. 83) granting
New Balances motion to terminate the investigation as to New Balances accused CPT Hi and
CPT Lo model sneakers based on a consent order stipulation. On May 13,2015, the Commission
determined not to review an ID (Order No. 93) granting a joint motion of complainant and Iconix
Brand Group, Inc. ("Iconix") of New York City, New York terminating the investigation as to
Iconix based on settlement agreement and consent order stipulation. On June 4, 2015, the
Commission determined not to review an ID (Order No. 108) granting a joint motion of
complainant and A-List, Inc. d/b/a Kitson ("Kitson") of Los Angeles, California terminating the
investigation as to Kitson based on settlement agreement and consent order stipulation. On June
12, 2015, the Commission determined not to review an ID (Order No. 114) granting a joint motion
of complainant and Esquire Footwear LLC ("Esquire") of New York City, New York terminating
the investigation as to Esquire based on settlement agreement, consent order stipulation, and
consent order. On July 15, 2015, the Commission determined not to review an ID (Order No.
128) granting a joint motion of complainant and Fortune Dynamic, Inc. ("Fortune Dynamic") of
City of Industry, California terminating the investigation as to Fortune Dynamic based on
settlement agreement and consent order stipulation. On August 12, 2015, the Commission
determined not to review an ID (Order No. 154) granting a j oint motion of complainant and
CMerit USA, Inc. ("CMerit") of Chino, California terminating the investigation as to CMerit
based on settlement agreement and consent order stipulation. On August 14, 2015, the
Commission determined not to review an ID (Order No. 155) granting a joint motion of
complainant and Kmart Corporation ("Kmart") of Hoffman Estates, Illinois terminating the
investigation as to Kmart based on settlement agreement and consent order stipulation.

Also, on March 12, 2015, the Commission determined not to review an ID (Order No. 58)
finding Dioniso SRL of Perugia, Italy; Shenzhen Foreversun Industrial Co., Ltd. (a/k/a Shenzhen
Foreversun Shoes Co., Ltd.) ("Foreversun") of Shenzhen, China; and Fujian Xinya I&E Trading
Co. Ltd. of Jinjiang, China in default. Similarly, on June 2, 2015, the Commission determined not
to review an ID (Order No. 106) finding Zhejiang Ouhai International Trade Co. Ltd..and.
Wenzhou Cereals Oils & Foodstuffs Foreign Trade Co. Ltd., both of Wenzhou, China, in default.
Further, on March 25, 2015, the Commission determined not to review an ID (Order No. 68)
granting the motion of Orange Clubwear, Inc. of Westminster, California to terminate the

Appx000003
investigation as to itself based on a consent order stipulation. On May 12, 2015, the Commission
determined not to review an ID terminating the investigation as to Edamame Kids, Inc. of Alberta,
Canada for good cause and without prejudice.

The ALJ issued his final ID on November 17, 2015, finding a violation of section 337 as to
certain accused products of each active respondent and as to all accused products of each
defaulting respondent. Specifically, the ALJ found that the 753 trademark is not invalid and that
certain accused products of each active respondent, and all accused products of each defaulting
respondent, infringe the 753 trademark. The ALJ also found that: (1) Converse satisfied both
the economic and technical prongs of the domestic industry requirement with respect to all
asserted trademarks; (2) certain accused products of defaulting respondent Foreversun infringe
both the 103 and 960 trademarks; and (3) a violation of section 337 with respect to the 103 and
960 trademarks by Foreversun. The ALJ also found no dilution of the 753 trademark. The
ALJ also issued his recommendation on remedy and bonding during the period of Presidential
review. He recommended a general exclusion order directed to footwear products that infringe
the asserted trademarks, and recommended cease and desist orders directed against each active,
remaining respondent found to infringe. On December 4, 2015, complainant, respondents, and
the Commission investigative attorney ("IA") each filed a timely petition for review of the final
ID. On December 14, 2015, each of these parties filed responses to the other petitions for review.

On February 3, 2016, the Commission issued notice of its determination to review: (1) the
IDs finding of no invalidity of the 753 trademark; (2) the IDs findings regarding infringement of
the 753 trademark; (3) the IDs finding of invalidity of thecommon law rights asserted in the
design depicted in the 753 trademark; and (4) the IDs finding of no violation of section 337 with
respect to the common law rights asserted in the designs depicted in the 103 and 960 trademarks.
The Commission also determined not to review the remainder of the final ID. The determinations
made in the ALJs final ID that were not reviewed became final determinations of the Commission
by operation of rule. See 19 C.F.R. 210.43(h)(2). The Commission also requested the parties
to respond to certain questions concerning the issues under review and requested written
submissions on the issues of remedy, tile public interest, and bonding from the parties and
interested non-parties. 81 Fed. Reg. 6886-89 (Feb. 9, 2016).

On February 17 and 24, 2016, respectively, complainant, respondents, and the IA each
filed a brief and a reply brief on all issues for which the Commission requested written
submissions. Respondents reply brief included a request for a Commission hearing to present oral
argument under Commission rule 210.45(a). On February 29 and March 3, 2016, respectively,
both Converse and the IA each filed a response to respondents request, with each accompanied by
a motion for leave to file a sur-reply to the request for oral argument. On March 1, 2016,
respondents filed a motion for leave to submit a sur-reply to their request for oral argument. The
Commission has determined to grant all motions for leave to file sur-replies submitted by the
parties, and to deny respondents request for a Commission hearing to present oral argument...

Having reviewed the record in this investigation, including the ALJs final ID and the
parties" written submissions, the Commission has determined to affirm-in-part, reverse-in-part,

Appx000004
and vacate certain portions of the final IDs findings under review. Specifically, the Commission
has reversed the ALJs finding that the 753 trademark is not invalid, and instead has foundthe
trademark invalid based on lack of secondary meaning. The Commission has also affirmed the
ALJs finding that there is. a likelihood of confusion with respect to the 753 trademark for specifiC
accused footwear products if the trademark was not invalid. " The Commission has also affirmed
the ALJs finding that there is no likelihood of confusion with respect to the 753 trademark for
specific accused footwear products regardless of invalidity. Further, the Commission has
affirmed the ALJs finding that the asserted common law rights in the 753 trademark are invalid.
Accordingly, the Cormnission has determined that there is no violation of section 337 with respect
to the 753 trademark. The Commission has vacated the ALJs finding that the asserted common
la~v rights in the designs depicted in the 103 and .960 trademarks are invalid. The Commission
has determined that this finding with respectto these common law rights is moot in view of the
Commissions finding of a violation with respect to the federally-registered rights in the 103 and
960 trademarks Since the scope of the common law and federally-registered rights in these
trademarks is co-extensive. See Commn Notice (Feb. 3, 2016); ID at 107-08, 121-26, 128-29,
131-32.

Having found a violation of section 337 as to the 103 and 960 federally-registered
trademarks, the Commission has made its determination on the issues of remedy, the public
interest, and bonding. The Commission has determined that the appropriate form of relief is a
general exclusion order prohibiting the unlicensed entry of footwear products that infringe the
103 or 960 trademarks.

The Commission further determined that the public interest factors enumerated in section
337(d)(1) (19 U.S.C. 1337(d)(1)) do not preclude issuance of the general exclusion order.
Finally, the Commission determined that a bond of 100 percent of the entered value (per pair) of
the covered products is required to permit temporary importation during the period of Presidential
review (19 U.S.C. 1337(j)). The Commission has also issued an opinion explaining the basis
for the Commissions action. The Commissions order and opinion were delivered to the
President and to the United States Trade Representative on the day of their issuance. The
investigation is terminated.

The:authority for the Commissions determination is contained in section 337 of the Tariff
Act of 1930, as amended, 19 U.S.C. 1337, and in Part 210 of the Commission s Rules of Practice
and Procedure, 19 C.F.R. Part 210.

By order of the Commission.

Lisa R. Barton ..
Secretary to the Commission

Issued: June 23, 2016

Appx000005
CERTAIN FOOTWEAR PRODUCTS Inv. No. 337-TA-936

PUBLIC CERTIFICATE OF SERVICE

I, Lisa R. Barton, hereby certify that the attached NOTICE has been served by hand
upon the Commission Investigative Attorney, Sarah J. Sladic, Esq., and the following parties as
indicated, on June 23, 2016.

Lisa R. Barton, Secretary

U.S. International Trade Commission
500 E Street, SW, Room 112
Washington, DC 20436

On Behalf of Complainant Converse Inc.:

V. James Adduci, II, Esq. [] Via Hand Delivery

ADDUCI, MASTRIANI & SCHAUMBERG, LLP [] Via Express Delivery
1133 Connecticut Avenue, N.W., 12th Floor [] Via First Class Mail
Washington, DC 20036
[] Other:

On Behalf of Respondent WaI-Mart Stores~ Inc.:

Mareesa A. Frederick, Esq. [] Via Hand Delivery

FINNEGAN, HENDERSON, FARABOW, [] Via Express Delivery
GARRETT & DUNNER LLP [] Via First Class Mail
901 New York Avenue, NW
[] Other:
Washington, DC 20001

On Behalf of Respondent Skechers U.S.A., Inc.:

Barbara A. Murphy, Esq. [] Via Hand Delivery

FOSTER, MURPHY, ALTMAN & NICKEL, PC [] Via Express Delivery
1899 L Street, NW, Suite 1150 " [] Via First Class Mail
Washington, DC 20036
[] Other:

Appx000006
CERTAIN FOOTWEAR PRODUCTS Inv. No. 337-TA-936

Certificate of Service - Page 2

On Behalf of Respondent Highline United LLC d/b/a Ash

Footwear USA:

Gerard P. Norton, Esq. [] Via Hand Delivery

FOX ROTHSCHILD LLP [] Via Express Delivery
Princeton Pike Corporate Center [] Via First Class Mail
997 Lennox Drive, Building 3
[] Other:
Lawrenceville, NJ 08648-2311

On Behalf of Respondent New Balance

Thomas S. Fusco, Esq. [] Via Hand Delivery

FISH & RICHARDSON P.C. [] Via Express Delivery
1425 K Street, NW, 11th Floor [] Via First Class Mail
Washington, D.C. 20005
[] Other:

Appx000007
 PUBLIC VERSION

UNITED STATES INTERNATIONAL TRADE COMMISSION

Washington, D.C.

In the Matter of
Investigation N0. 337-TA-936
CERTAIN FOOTWEAR PRODUCTS

COMMISSION OPINION

Appx000008
 PUBLIC VERSION

TABLE OF CONTENTS '

I. INTRODUCTION ................................................................................................................ .. 3
II. BACKGROUND .................................................................................................................. .. 3
A. Trademarks Asserted ........................................................................................................ .. 6
B. The C0mmissi0ns Determination of N0 Violation with Respect to the 753 Trademark 10
III. DISCUSSION AND FINDINGS ....................................................................... ............. 11
A. The ALJs Finding of N0 Invalidity of the 753 Trademark With Respect to Secondary
Meaning .................................................. 12
I. Relevant Law ............................................................................................................ .. 12
2. The ID ....................................................................................................................... .. 15
3. Analysis..................................................................................................................... .. I6
B. The ALJs Findings of Infringement .............................................................................. .. 28
IV. CONCLUSION ON VIOLATION ...................... .. 28
V. REMEDY, PUBLIC INTEREST, AND BONDING ......................................................... .. 29
A. Remedy ........................................................................................................................... .. 29
I. Circumvention Of An LEO........................................................................................ .. 31
2. Pattern Of Violation Of Section 337 Where It Is Dzicult To Identil Source Of
Ininging Products ............................................................................................................. .. 32
B. Public interest.................................................................................................................. .. 33
C. Bonding ............... .. 34
VI. CONCLUSION ............................................................................................................... .. 35

Appx000009
 PUBLIC VERSION

I. INTRODUCTION

On November 17, 2015, the presiding administrative law judge (ALJ) issued his nal

initial determination (ID) nding a violation of section 337 as to certain accused products of

each active respondent and as to all accused products of each defaulting respondent. On February

3, 2016, the Commission determined to review the nal ID in part. 81 Fed. Reg. 6886-89 (Feb. 9,

2016). The Commission now terminates the investigation and issues a general exclusion order

with respect to U.S. Trademark Registration Nos. 3,258,103 (the 103 trademark) and 1,588,960

(the 96Otrademark).

ll. BACKGROUND

, The Commission instituted this investigation on November 17, 2014, based on a complaint

led on behalf of Converse lnc. (Converse) of North Andover, Massachusetts. 79 Fed Reg.

68482-83. The complaint alleged violations of section 337 of the Tariff Act of 1930, as amended,

19 U.S.C. 1337, by reason of infringement of certain registered trademarks: U.S. Trademark

Registration No. 4,398,753 (the 753 trademark) and the l03 and 960 trademarks. The

complaint further alleged violations of section 337 based upon unfair competition/false

designation of origin, common law trademark infringement and unfair competition, and trademark

dilution, the threat or effect of which is to destroy or substantially injure an industry in the United

States. "TheCommissions notice of investigation named numerous respondents including

Wal-Mart Stores, Inc. (Walmart) of Bentonville, Arkansas; Skechers U.S.A., Inc. (Skechers)

of Manhattan Beach, California; and Highline United LLC d/b/a Ash Footwear USA (Highline)

Appx000010
 PUBLIC VERSION

of New York City, New York. The Ofce of Unfair Import Investigations (OUII) was also

named as a party to the investigation. Id.

New Balance Athletic Shoe, Inc. (New Balance) of Boston, Massachusetts was

subsequently added as a respondent-intervenor. See Order No. 36 (unreviewed, Commn Notice

Feb. 19, 2015). Two models of New Balances accused footwear, i.e., the CPT Hi and CPT Lo

sneakers, were terminated from the investigation. See Order N0. 83 (April 9, 2015; unreviewed,

Commn Notice May 6, 2015). Only Walmart, Skechers, Highline, and New Balance remain

active in the investigation. The following ve respondents were found in default: Shenzhen

Foreversun Industrial Co., Ltd. (a/k/a Shenzhen Foreversun Shoes Co., Ltd.) (Foreversun) of

Shenzhen, China; Dioniso SRL of Perugia, Italy; Fujian Xinya I&E Trading Co. Ltd. of Jinjiang,

China; and Zhejiang Ouhai International Trade Co. Ltd. and Wenzhou Cereals Oils & Foodstuffs

Foreign Trade Co. Ltd., both of Wenzhou, China. See Order Nos. 58, 106 (Feb. 24 and May 8,

2015); Commn Notices (Mar. 12 and June 2, 2015). All other respondents have been terminated

from the investigation based on settlement, consent order, or good cause. Complete details of the

procedural history can be found in the nal ID. See ID at 1-4.

The ALJ issued his nal ID on November 17, 2015, nding a violation of section 337.

Specically, the AL] found that the 753 trademark is not invalid or diluted and that certain

accused products of each active respondent, and all accused products of each defaulting

respondent, infringe the 753 trademark. See ID at 130-32. He also found that certain accused

products of defaulting respondent Foreversun infringe both the I03 and 96Oregistered

Appx000011
 PUBLIC VERSION

trademarks and that Converse satised both the economic and technical prongs of the domestic

industry requirement with respect to all asserted registered trademarks. Id. The ALJ issued his

recommended determination (RD) on remedy and bonding during the period of Presidential

review on the same date. His recommended remedy included a general exclusion order directed

to footwear products that infringe the asserted registered trademarks and cease and desist orders

directed against each active, remaining respondent found to infringe the 753 trademark. See RD

at 133-42. ~

On December 4, 2015, complainant, respondents, and the Commission investigative

attorney (IA) each led a petition for review of the nal ID. On December 14, 2015, each of

these parties led responses to the other petitions for review.

On February 3, 2016, the Commission determined to review the nal ID and to request

submissions from the parties on the issues under review. 81 Fed. Reg. 6886-89. The

Commission also requested written submissions on the issues of remedy, the public interest, and

bonding from the parties, interested govermnent agencies, and other interested non-parties. Id.

On February 17 and 24, 2016, respectively, Converse, respondents, and the IA each led a brief

and a reply brief on all issues for which the Commission requested written submissions}

1 See Complainant Converse Inc.s Written Submission to the Commission Regarding the Issues
Under Review; Complainants Submission on Remedy, Bonding, & Public Interest (Converses
Remedy Resp); Complainant Converse Inc.s Reply Submission to the Commission Regarding
the Issues Under Review; Complainants Reply to Respondents Response to the Commission
Determination to Review the Final Initial Delennination In Part and Written Submission on
Remedy, Public Interest, and Bond; Respondents Response to Request for Written Submissions
Regarding Issues Under Review; Respondents Response to the Commission Determination to

Appx000012
 PUBLIC VERSION

Respondents reply briefincluded a request for a Commission hearing to present oral argument

under Commission rule 2l0.45(a). On February 29 and March 3, 2016, respectively, both

Converse and the IA led responses to respondents request, along with a motion for leave to le a

sur-reply to the request for oral argument. On March 1, 2016, respondents led a motion for

leave to submit a sur-reply to their request for oral argument.2 The Commission grants all

motions for leave to le sur-replies, and denies respondents request for a Commission hearing to

present oral argument.

A. Trademarks Asserted

Generally, the anatomy of a shoe is divided into three parts: (1) the upper portion,

which is the material portion that more or less surrounds and covers the top of the foot; (2) the

midsole portion between the upper and the bottom portion of the shoe that can provide

cushioning and/or support structure to the shoe; and (3) the outsole portion which refers to the

tread or bottom portion of the shoe ordinarily in contact with the ground. See ID at 10 (citing

Review the Final Initial Determination In Part and Written Submission on Remedy, Public
Interest, and Bonding; Respondents Response to Written Submissions by Converse and OUII
Regarding Issues Under Review; Respondents Reply Written Submission on the Issues of
Remedy, Public Interest, and Bonding; Response of the Ofce of Unfair Import Investigations to
the Commissions Request for Written Submissions Regarding the Issues Under Review and
Remedy, Bonding, and the Public Interest (IAs Resp.); Reply Submission of the Ofce of
Unfair Import Investigations to the Private Parties Written Submissions Regarding the Issues
Under Review and Remedy, Bonding, and the Public Interest.

2 See Complainant Converse Inc.s Sur-Reply to Respondents Request for Oral Argument;
Response of the Ofce of Unfair Import Investigations to Respondents Request for Oral
Argument; Respondents Response to Converse Inc.s Motion for Leave to Submit a Sur-Reply to
Respondents Request for Oral Argument. t " "

Appx000013
 PUBLIC VERSION

CX-1 at 1]8 n.1).

The 753 Federally-Registered Trademark (Converse Midsole Trademark)3

On August 6, 2012, Converse led an application to register its midsole design with the

U.S. Patent & Trademark Ofce (PTO). Id. (citing CX-226.0015). The PTO issued the 753

trademark for the midsole design on September l0, 2013. Converse asserts that its

federally-registered rights, as well as its common law trademark rights, cover the combination of

the toe cap, multi-textured toe bumper, and two midsole stripes that Converse commonly uses in

connection with its Chuck Taylor All Star (CTAS) high-top shoes, i.e., [the Converse Midsole

Trademark ]the CMT. Id. (citing Converses Post-Hearing Br. at 6). The CMT as depicted

in the 753 trademark, Converses depiction of the CMT from its complaint (see complaint at t

10), and representative CTAS shoes bearing the CMT are depicted below in Figure 1. The

asserted federally-registered and common law trademarks are co-extensive, i.e., one and the same.

The CTAS high-top shoes bearing some form of the CMT, have been marketed and sold by

Converse for basketball/athletic use since the 1930s, and a low-top version of these CTAS shoes

was introduced in the 1950s. See Complaint at 1111

ll-12, 18; CX-242C at QQ. 49-59; CX-243C at

QQ. 51-102; CX-237C at QQ. 112-34.

3 The terms "753 trademark, Converse Midsole Trademark, midsole trademark, CMT,
and midsole design are used synonymously herein. - - a V ~ -

Appx000014
 PUBLIC VERSION <

Figure 1

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Appx000015
 PUBLIC VERSION

The 103and 960 Federally-Registered Trademarks (Converse Outsole Trademark)

Converse also asserts its federally-registered and common law trademark rights with

respect to its outsole design. Converse asserts that these rights cover a distinct diamond pattern

outsole used in connection with the CTAS shoes. The asserted federally-registered and common

law trademarks are co-extensive. Converse holds two federally-registered trademarks related to

the Converse Outsole Trademark, i.e., the COT the 103 and _9_60
registrations. These

registrations, along with representative CTAS shoes bearing the COT, are depicted below in

Figure 2. The PTO issued the 103 and 960 trademarks for the outsole design on March 27, 1990

and July 3, 2007, respectively. Therefore, both trademarks have become incontestable. ID at 12;

see 15 U.S.C. 1065 (a registered mark becomes incontestablc after 5 consecutive years of

continuous use). - _

Figure 2

103 Registration

iris;

Appx000016
 PUBLIC VERSION

960 Registration

W
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:= >1EV;

B. The C0mmissi0ns Determination of N0 Violation with Respect to the 753

Trademark

On February 3, 2016, the Commission determined to review: (1) the IDs nding that the

753 trademark is not invalid; (2) the IDs ndings regarding infringement of the 753 trademark;

(3) the IDs nding that the common law trademark asserted in the design depicted in the 753

trademark is invalid; and (4) the lDs nding that there is no violation of section 337 with respect to

the common law trademarks asserted in the designs depicted in the 103 and 960 trademarks. The

Commission requested written submissions from the parties on a number of issues. The

Commission did not review the remainder of the nal ID. See 81 Fed. Reg. 6886-89 (Feb. 9,

2016). On review, the Commission reverses the IDs contrary nding and determines that the 753

10

Appx000017
 -_ PUBLIC VERSION

trademark is invalid based on lack of secondary meaning, and afrms the IDs nding that the

common law trademark depicted in the 753 trademark is invalid. The Commission has also

afrmed the lDs nding that there is a likelihood of confusion with respect to the 753 trademark

for specic accused footwear products if this trademark is not invalid, and has afrmed the IDs

nding that there is no likelihood of confusion with respect to the 753 trademark for other specic

accused footwear regardless of invalidity. Accordingly, the Commission has determined there is

no violation of section 337 with respect to the 753 trademark.

The Commission has further determined to vacate the IDs nding of no violation of section

337 with respect to the common law trademarks asserted in the designs depicted in the 103 and

96Otrademarks. The IDs nding of no violation with respect to these common law rights is moot

in view of the IDs nding (tmreviewed) of a violation with respect to the federally-registered rights

in the l03 and 960 trademarks and the fact that the scope of the common law and

federally-registered rights in these trademarks is co-extensive.

III. DISCUSSION AND FINDINGS

For the reasons set forth below, the Commission has detennined to afrm-in-part,

reverse-in-part, and vacate certain portions of the IDs ndings that were under review. We adopt

the IDs ndings on the issues that are not inconsistent with this opinion.4 The Commission nds

4 The determinations made in the ALJs nal ID that were not reviewed became nal
determinations of the Commission by operation of rule. See 19 C.F.R. 2_1O.42(h)(2). The IDs
ndings that the Commission adopts which are not inconsistent with this opinion include, but are
-not -limitedto, the IDs nding that the 753 trademarkis not invalid due to functionality or
genericness. See ID at 57-64.

ll

Appx000018
 . PUBLIC VERSION .

no violation with respect to the 753 trademark and restates that there is a violation with respect to

the federally-registered rights associated with the 103 and 96Otrademarks by defaulting

respondent Foreversun due to this previously unreviewed nding in the nal ID. See 81 Fed.

Reg. 6886-89 (Feb. 9, 2016). This opinion provides, inter alia, the Commissions analysis and

reasoning for both its determination of no violation with respect to the 753 trademark and its

determination on remedy, the public interest, and bonding for violation with respect to the 103

and 960 trademarks.

A. The ALJs Finding of N0 Invalidity of the 753 Trademark With Respect

to Secondary Meaning
1. RelevantLaw I

This case involves the assertion of a registered trademark on a specic trade dress, i.e., the

midsole design of the Converse shoe. The Lanham Act (U.S. Code, Title 15, Chapter 22,

Trademarks) extends protection not only to traditional trademarks, e.g., Wordsand symbols, but

also to trade dress, dened as the design and appearance of a product together with the elements

making up the overall image that serves to identify the product presented to the consumer. See

Yankee Candle C0., Inc. v. Bridgewa/er Candle C0., LLC, 259 F.3d 25, 37-38 (lsl Cir. 2001)

(citing Chrysler Corp. v. Silva, 118 F.3d 56, 58 (lg Cir. 1997) (quoting F unDamental T00, Ltd. v.

Gemmy Indus. C0rp., 111 F.3d 993, 999 (2d Cir. l997))). The primary purpose of trade dress

protection is to protect that which identies a product's source. l.P. Lund Trading ApS v. Kohler

C0., 163 F.3d 27, 35 (1st Cir. 1998). Courts recognize trade dress claims based both on product

packaging and on product design/conguration. See, e.g., Wal-Mart Stores v. Samara Bros,

12

Appx000019
 " PUBLIC VERSION

Inc., 529 U.S. 205, 213-14 (2000). While trade dress historically referred to product packaging

and labeling, modern denitions encompass the shape and design of a product itself, i.e., product

design or conguration. See Elmer v. ICC Fabricating, Inc., 67 F.3d 1571, 1578 (Fed. Cir. 1995)

(citing John H. Harland C0. v. Clarke Checks, 1116.,711 F.2d 966, 980, 219 USPQ 515, 528 (11111

Cir. 1983)). . _

. In order for a trademark to be valid, it must be non-functional and distinctive (i.e., has

acquired secondary meaning). To establish a cause of action for trade dress infringement

involving product conguration, which is the case here, the relevant trade dress must have

acquired distinctiveness or secondary meaning. See 15 U.S.C. l052(t) (Sect. 2) (except as

expressly excluded . . . nothing herein shall prevent the registration of a mark used by the applicant

which has become distinctive of the app1icants goods in commerce.); Wal-Mart Stores, 529 U.S.

205 at 216 (in an action for infringement of unregistered trade dress . . . a products design is

distinctive, and therefore protect[a]ble, only upon a showing of secondary meaning); see also Tie

Tech, Inc. v. Kinedyne Corp, 296 F.3d 778, 783 (9hCir. 2002) ([T]here can be no infringement

of an invalid mark). _

Secondary meaning occurs when in the minds of the public, the primary signicance of a

[mark or trade dress] is to identify the source of the product rather than the product itself. See

Certain Ink Markers & Packaging Thereof (Ink Markers), Inv. No. 337-TA-522, Order No. 30 at

26-27 (July 25, 2005) (unreviewed) (quoting Wal-Mart Stores, 529 U.S. at 216). Secondary

meaning also requires a showing that there is a mental recognition in buyers and potential ,

13

Appx000020
 PUBLIC VERSION

buyers minds that products connected with the mark are associated with the same

source. Adidas-Salomon AG v. Target Corp., 228 F.Supp.2d 1192, 1195 (D. Oregon 2002)

(quoting Japan Telecom, Inc. v. Japan Telecom America, Inc., 287 F.3d 866, 873 (9thCir. 2002)).

Whether or not a trademark has acquired secondary meaning is a question of fact. See _G.H

Mumm & Cie v. Desnoes and Geddes, Ltd, 917 F.2d 1292, 1294 (Fed. Cir. 1990).

Relevant Law Regarding Secondary Meaning Factors

The Commission considers evidence pertaining to seven factors to assess whether a mark

or trade dress has acquired secondary meaning. One factor, consumer surveys, provides direct

evidence of secondary meaning; the remaining six factors provide circumstantial evidence.

These factors are: (1) the degree and manner of use; (2) the exclusivity of use; (3)_thelength of

use; (4) the degree and manner of sales, advertising, and promotional activities; (5) the

effectiveness of the effort to create secondary meaning; (6) deliberate copying; and (7) association

of the trade dress with a particular source by actual purchasers (typically measured by consumer

surveys). See Certain Digital Multimeters, and Products with Multimeter Functionality (Digital
Multimeters), Inv. No. 337-TA-588, Order No. 22 at 8 (Feb. 4, 2008) (unreviewed); see also

Thompson Medical C0., Inc. v. Pzer Inc, 753 F.2d 208, 217 (2d Cir. 1985). These factors are

not weighed equally, but rather the strongest and most relevant evidence regarding whether a

mark has acquired secondary meaning. . . is evidence by a public opinion survey or poll [i.e.,

factor (7)]. Ink Markers, Order No. 30 at 27; see also Yankee Candle, 259 F.3d at 43; Echo

Travel, Inc. v. Travel Associates, Inc., 870 F.2d 1264, 1269 (Th Cir. 1989).

14

Appx000021
 __ PUBLIC VERSION

2. The [D

The ID found that the 753 registered trademarks (the CMTs) presumption of validity

was the deciding factor to conclude that the midsole design possessed secondary meaning where

four of the seven factors were in favor of secondary meaning even though the strongest factor,

sun/ey evidence, weighed against nding secondary meaning. ID at 56. Both respondents and

the IA contend that the presumption is inapplicable here because Converse is asserting ~

infringement against products that were in use prior to the ClVITsregistration. IAs Pet. at 10;

Respondents Pet. at 6-7 (citing Aromatique, Inc. v. Gold Seal, Inc., 28 F.3d 836, 870 (8th Cir.

1994) (holding that the trademark owner was not entitled to the presumption that its registered

trade dress had acquired secondary meaningbecause the owner alleged that infringement had

begun three years prior to registration)). Based on Aromalique, respondents and the IA both

asserted that the burden of proving secondary meaning by a preponderance of the evidence shifted

to Converse, which failed to carry this burden.

The ID noted that Converse asserted both the common law and federally-registered rights

in the CMT, which are co-extensive in scope. ID at 10, l4. The ID found that the only

difference in the secondary meaning analysis, as applied to both rights, was the presumption of

validity which applied to the registered midsole design only. Id. at l4 (citing Wal-Mart, 529 U.S.

at 216). With the presumption of validity invmind,the ID then considered all seven factors

regarding whether the CMT possessed secondary meaning. Id. at 14-56.

15

Appx000022
 PUBLIC VERSION

The ID found that four factors weigh in favor of secondary meaning: factor (1) (degree

and manner of use), factor (3) (length of use), factor (4) (degree and manner of sales, advertising,

and promotional activities), and factor (6) (deliberate copying); one factor weighs against, factor

(7) (survey evidence); and two factors are neutral, factor (2) (exclusivity of use) and factor (5)

(effectiveness of efforts to create secondary meaning). Because the evidence concerning factor 7

(survey evidence) that weighs against secondary meaning provides the strongest and most

relevant evidence, the ID found that the outcome here is a close call. Id. at 56. The ID

ultimately determined that because the presumption of validity applies with respect to the

registered 753 trademark, respondents and the IA did not meet their burden in overcoming this

presumption by a preponderance of the evidence. The ID foundtherefore that the _registeredCMT

possesses secondary meaning. Id.

- However, with respect to the asserted common law rights associated with the design

depicted in the 753 trademark, the ID determined that there was no secondary meaning possessed

by the common law mark because there is no presumption of validity for such an unregistered

mark and Converse did not meet its burden to overcome the lack of sufcient survey evidence.

Id. at 56-57 (citing Flynn v'.Peters, 377 F.3d 13, 19 (lsl Cir. 2004)); see also Wal-Mart, 529 U.S. at

216.

3. Analysis

The Commission has determined that the 753 trademark is invalid as not distinctive based

on the totality of the record evidence on secondary meaning. The Commission nds that the

16

Appx000023
 - PUBLIC VERSION

registration of the 753 trademark provides primafacie evidence of the validity of the 753 mark

under Section 33(a) of the Lanham Act regardless of when infringement rst began. Thc

Commission afnns the IDs analysis as to factors 1 and 3-7. However, the Commission nds

that the ID erred in concluding that factor 2 (exclusivity of use) is neutral in view of at least the

substantial record evidence of longstanding, concurrent use of the CMT design by third parties.

Based on the record evidence as a whole, the Commission reverses the lDs ultimate nding that

the federally-registered 753 trademark had acquired secondary meaning, which is inconsistent

with the IDs correct nding that the common law rights asserted in this mark had not acquired

secondary meaning.

Parties Respective Burdens Regarding Secondary Meaning _

The Commission agrees with the ID that pursuant to Section 33(a) of the Lanham Act, the

registration of the CMT design provides primafacie evidence of the validity of registered 753

mark, including secondary meaning, regardless of when infringement rst began. Under the

Lanham Act, federal registration is primafacie evidence of the validity of the registered

trademark... 15 U.S.C. 1115(a) (Sect. 33(a))'. See also Certain Handbags, Luggage,

Accessories, & Packaging Thereof, Inv. No. 337-TA-754, Order No. 16 at 6 (March 5, 2012)

(unreviewed). This statutory primafacie evidence of validity has three facets, namely that the

registered trademark: (1) possesses secondary meaning; (2) is not functional; and (3) is not

generic. See In re Cordua Restaurants, Inc., --- F.3d ---, 2016 WL 2786364 at *3 (May 13, 2016)

(citing B,&B Hardware, Inc. v. Hargis Industries, Ina, 135 S.Ct. 1293, 13.00(2015)). .

17

Appx000024
 PUBLIC VERSION .

The parties dispute whether the primafacie evidence language of Section 33(a) of the

Lanham Act shifts the burden of production and/or the burden of persuasion to the respondents.5

The Commission recognizes that the law remains unsettled as to the burden-shifting effect of the

primafacie evidence language of Section 33(a).6 The Commission need not resolve this legal

issue because regardless of whether the primafacie evidence language shifts to the challenger

the burden of persuasion or the burden of production, the record as a whole here warrants a nding

that the asserted 753 trademark has not acquired secondary meaning.7

See lAs Petition for Review at 5-13; Respondents Petition for Review at 4-12; Converses
Response to Petitions for Review at 16-18; lAs Response to the Commissions Request for
Written Submissions Regarding the Issues Under Review at 7-13; Respondents Response to the
Commissions Request for Written Submissions Regarding the Issues Under Review at 1-22;
Converses Response to the Commissions Request for Written Submissions Regarding the Issues
Under Review at 13-18.

6 See, e.g., 6 McCarthy on Trademarks and Unfair Competition 32:138 (4thed.) (noting that the
federal circuit courts are divided as to the burden-shifting effect of the primafacie evidence
language of Section 33(a) of the Lanham Act). Compare Apple Inc. v. Samsung Elecs. C0. Ltd.,
786 F.3d 983, 995 (Fed. Cir. 2015) (noting that the prirnafacie evidence effect is to shift the
burden of production to the defendant); Amazing Spaces, Inc. v. Metro Mini Storage, 608 F.3d
225, 239 (SmCir. 2010) (The presumption of validity owing from trademark registration has a
burden-shifting effect, requiring the party challenging a registered mark to produce sufcient
evidence to establish that the mark is [non-distinctive] by a preponderance of evidence) (citing
Retail Servs. Inc. v. Freebies Publ g, 364 F.3d 535, 542 (4th Cir. 2004)) with Aluminum
Fabricating C0. of Pittsburg v. Season-All Window C0rp., 259 F.2d 314, 316 (2d Cir. 1958)
(there is a strong presumption of validity so that the party claiming invalidity has the burden of
proof and in order to prevail it must put something more into the scales than the registrant).

7 Conversely, this primafacie effect derived from registration does not apply to asserted common
law rights, e,g., unregistered trademarks, and therefore the owner at common law bears the burden
of establishing that its common law marks have secondary meaning and are not functional. See
Wal-Mart Stores, 529 U.S. at 216; 15 U.S.C. 1125(a)(3) (Sect. 43).

18

Appx000025
 _ PUBLIC VERSION

Secondary Meaning and Validity of the CMT Design

As stated supra, the ID correctly found, in consideration of the evidentiary record, that the

asserted common law trademark in the design depicted in the federally-registered 753 trademark

is invalid based on lack of secondary meaning. See ID at 56-57. The Commission also nds that

the ID, consistent with this invalidity nding regarding the common law trademark, also should

have found, in consideration of the totality of the evidentiary record, that the federally-registered

753 trademark is invalid based on lack of secondary meaning. See, e.g., Mine SazlyAppliances

C0. v. Electric Storage Battery C0., 405 F.2d 901, 904 (C.C.P.A. 1969) (It is our understanding of

the Lanham Act that it is for the registration, not the creation, of trademarks. Its terminology

indeed, the history of federal trademark statutes presupposes the preexistence of a trademark to

be registered); La Societe Anonyme alesParjfums le Galion v. Jean Patou, Inc., 495 F.2d 1265,

1270 n.5 (2d Cir. 1974) (The Lanham Act does not create the trademark right; it only recognizes

the right acquired through use).

Specically, the ID correctly found that factor 7 (survey evidence), which provides the

strongest and most relevant evidence, weighs against a nding of secondary meaning. See ID

at 16-36; Ink Markers, Order No. 30 at 27; see also Yankee Candle, 259 F.3d at 43 ([survey

evidence] is a valuable method of showing secondary meaning); Echo Travel, 870 F.2d at 1269

(the court teaching that a likelihood of success in establishing secondary meaning can be shown

solely based on strong consumer survey evidence, newspaper advertising, and distribution of

19

Appx000026
 PUBLIC VERSION

40,000 advertising posters in initial 10-month period of poster advertisement) (citing Paramount

Pictures Corp. v. Worldwide Entertainment Corp, _1977WL 25613 (S.D.N.Y.l977)).

As to secondary meaning factor 2 (exclusivity of use), however, the ID erred in concluding

that the evidence ofthird-party use and its effect on secondary meaning was neutral to Converse.

See ID at 37-46. The Commission nds that the totality of the evidence as to this factor

contradicts Converses assertion that its use of the_CMTdesign has been substantially exclusive.

Rather, the evidence shows multiple third parties simultaneously used the CMT design nationally

on the same types of footwear products promoted to the same consumer class. Accordingly, the

Commission nds that factor 2 is negative to Converse (i.e., weighs against a nding of secondary

meaning) and, in combination with at least the ALJs correct nding that factor 7 (survey

evidence) was negative to Converse, weighs heavily against a nding of secondary meaning for

the CMT. i ' '

V We nd that substantial record evidence of use of the CMT by multiple third.parties from

the 1920s to the present provides strong circumstantial proof that at least a signicant percentage

of the average consumers of CTAS shoes associated the midsole design with multiple sources

other than (or in addition to) Converse.

The record evidence includes numerous examples of signicant third-party use including,

but not limited to, the following:

_ (a) Respondents experts in a plurality of related elds (fashion/dress, shoes, and marketing),

Dr. Golder, Mr. Maeder, Dr. Hanssens, and Mr. Walford, provided abundant testimonial

20

Appx000027
 PUBLIC VERSION

and record evidence of third-pany use of the CMT from the 1930s to the present by a

number of brands (e.g., Skips, Pro Skips, Toughskins, Jcepers, Garnebusters, LA Gear, PF

Flyers, Keds, Fortune Dynamics (in Fortune Dynamic Catalog), Calvin Klein, Guess,

KangaRoos Rippers, McKids, etc.) including, but not limited to, as shown by yearly

advertisements in three major catalog retailers (Sears, J.C. Penney, and Montgomery

Ward) with circulation in the hundreds of millions and catalog and retail sales in the

billions of dollars. See RX-3C (Golder WS) at QQ. 38, 51, 64, 74-94, 102-114;

RX-202.002; RX-29.001; RX-2087C (Walford WS) at QQ. 16, 18, 23, 31-60, 80-115;

RX-7698C (Maeder WS) at QQ. 19-27, 49-89; ; RX-2091C (Hanssens WS) at QQ. 29-46,

48-77, 81; RX-2208; RX-2479C.004, .008-.010; RX-0539; RX-2205; RX-2209; RX-2212;

RX-2416-18; RX-9240.025, .030, .042; RX-9996C 10001C;RX-2170;JX-426C.0037 at

124-25; JX-413C at 145-46, 166-67; RX-2307.003; RX-2474.016; RX-10042.01 1;

RX-9827; RX-2217; RX-2390; RX-7881; RX-7883; RX-2213 at SKECHJTC00026349;

RX-10099; RX-2184; RX-2404; RX-2236; RX-23; RX-2212; RX-2195; RX-2324.001;

RX-2409; RX-2393; RX-2416; RX-2221; RX-2235; RX-2209; RX-2168; RX-2170;

RX-2339; RX-2526; RX-2340-41; RX-2273; RX-2277-78; RX-2299; RX-2314;

RX-2331.

b) Separate advertisements showing Keds, Spalding, and PF Flyers shoes (shown in the Sept.

1958 and May and June 1959 Coach & Athlete, respectively) as well as La Crosse and Bata

shoes all bearing the CMT. See RX-2302; RX-8202; RX-8545.003, .005, .013.

21

Appx000028
 PUBLIC VERSION

(C) In the 1988 Fall/Winter J.C. Penney catalog, which had a circulation of over 12 million

copies and annual sales over 4 billion dollars, Converses shoes were marketed

immediately above an advertisement for Airwalk-branded sneakers bearing the CMT; and

in that same year s Spring/Summer catalog, which also had similar circulation gures, J.C.

Penney advertised CTAS shoes on the very same page as Nike-branded canvas sneakers

bearing the CMT. See RX-2305.005; Tr. at 975-79; RX-2307.003; RX-2091C at Q.

64-69; RX-8815.

(d) PF Flyers shoes, bearing a combination of a toe cap, toe bumper, and midsole stripe, have

been sold and advertised since at least the 1940s to the present; Converse itself owned this

brand and sold and advertised these shoes in the 1970s until it was forced to divest PF

Flyers due to antitrust concerns. PF Flyers re-entered the market in the early 1990s, after

being acquired by Leif J. Ostberg Inc. (L10). See RX-7698C at Q. 66; RX-1C at QQ.

19-22, 25, 29, 42-163; RX-52-59; RX-61; RX-474; JX-81; RX-829C at 115-19, 124-25;

RX-476-82; RX-523-27; RX-538-42; RX-655; RX-1352; RX-2301; RX-2785;

RX-2890-91; RX-2893-95; RX-7862; RX-8292-94; RX-9910; RX-10036. Also,

specically, LJO represented to New Balance when it sold them the brand in 2001 that no

other party has property interests in the PF Flyers and that property interestspreviously

held by any other party have been effectively transferred to LJO (RX-495).

re) Expert testimony and catalog evidence of Keds sneakers bearing the CMT throughout the

1990s (RX-2091 at Q. 81; RX-2479C (Fall 1993 Keds catalog); RX-9240 (Fall 1995

22

Appx000029
This Page Contains Confidential Information That Has Been Redacted
PUBLIC VERSION

Keds catalog)). The ID discounted this evidence since it did not directly indicate sales

(see ID at 45); however, there was at least circumstantial evidence of substantial

promotion, advertisement, and sales of Keds sneakers bearing the CMT from this time

period based on the alongside advertisement in the 1988 J.C. Penney Fall/Winter catalog

(RX-2305) and the 2011 agreement between Converse and Collective Brands, Inc. (CB

owner of Keds) warranting that CB exclusively advertised, promoted, distributed, and

sold shoes bearing the CMT. See JX-72C at 2 (11I.A.2) Accordingly the evidentiary

record indicates at least 23 years of promotion, sales, and advertisement of Keds sneakers

between 1988 and 2011; starting 24 years prior to Converses application for PTO

registration of the CMT in 2012. _

The 2011 agreement between Converse and CB resulted from [[ i

]]. See ID at 45-46; JX-72C at 2. The agreement also

included a provision that [[

]]. See JX-72C at

4-5 (1{11.B.1), 6-8 (1111.13). [[

1* ]]. Id. at 4-5 (1 I1.B.1).

Also, this Historic Kicks Designs bearing the CMT (JX-72 at Exhibit B) included the

Airwalk line of shoes shown in the alongside advertising in the 1988 J.C. Penney

23

Appx000030
 PUBLIC VERSION

Fall/Winter catalog (RX-2305). i

) In 2001, Skechers introduced a slip-on retro-basketball sneaker bearing the CMT

(RX-6601; RX-2092C at QQ. 50-56). The record evidence contains associated

circulation and sales numbers for these shoes and advertisements (RX-2896C). Mr. Clark,

Skechers Vice President of Sourcing, testified that 36 different companies have made 1

shoes bearing some form of the midsole design going back to the 1890s. See CX-1555C

(Clark Dep. Tr.) at 235-240; CX-801.

(h) A 2005 internal Converse document/chart (see Figure 3 below) depicts a CTAS shoe

surrounded by 16 competitive shoes, nearly all of which bear a combination of a toe cap,

toe bumper, and midsole stripes including at least some of which bear the CMT. The

subtitle reads: The competition is aggressive and on the attack at all price points, and

the bottom of the document says Imitation is the sincerest form of wishing we had a

design patent! The chart describes Converse as the leader in a fragmented

marketplace, and indicates that it has just 11.7% market share, followed by Skechers

(9.1%), Tommy Hilger (8.4%), Nike (7.3%), and Keds (7%). See CX-40320034, .0064;

RX-7698C at Q. 71.

24

Appx000031
 PUBLIC VERSION

Figure 3

mans snowm. PRODUCT

THE PRETENDERS Fw'm
ADJACENUE5 s EXTENSIONS *
j Thecampel/I/an is aggressiv
V e and on the attack al allprice paints
Pa ul Sml Ih
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sewJJ .$1;
1- 3 h _ VivianWestwood

TVEIOTO
Tommy Bahama
$93
mgg3 a ama
)_-G $ Megan
5 Pol
$200+

Puma
Trelorn " $60
$13 * <4

g; @ '- _ cnnvsrzse Pony

$58
Pro Keds
0 0 ' \
I
$62

PF
ggfr$ Duane Peker
$50
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KanaR Kanga Run
$40 Pony $65
$45
Imitation is the sincere st form of wishing we had a desi gn patent!
ircunvense

* Converse is the leader in a fragmented ma rket place

Keds Co hV9lSE

Nike

Skechers
Tommy Hilfiger

irccmvense

In addition, the evidence shows that the midsole design trade dres s is commonplace in the

25

Appx000032
 . PUBLIC VERSION

market: (1) the 2000 edition of The Complete Footwear Dictionary illustrated, as the

exemplary denition of a sneaker, a classic Keds sneaker bearing the CMT (See RX-2478.005);

and (2) the Transportation Security Administration uses an advertisement showing a generic

sneaker bearing the CMT to educate travelers that children l2 years old and younger do not have to

take off their shoes for the security screening at the airport. See RX7698Cat Q. 89 (citing

RX-8629). 0

Based on the foregoing evidence of extensive use by multiple third-parties of the CMT for

the last eighty years, the Commission nds that the average consumer prior to the rst alleged

infringement in 2003 was likely aware of this third-party use, which would lead them to associate

the CMT design with multiple sources, and therefore substantially diminishes any secondary

meaning in Converses mark. Of particular note, Figure 3 above shows a market saturated with

shoes bearing the CMT from multiple sources. ~

Similar to the facts of Echo Travel, the record evidence here does not just show random,

irrelevant third-party use, but third-party use of the same mark to promote the same goods to the

same consumer class. See Echo Travel, 870 F.2d at 1269 (third-party use of a substantially

similar mark to promote the same goods or services to the same consumer class weighs against a

nding that the consumer class associates the mark with one source); see also Levi Strauss & C0.

v. Genesco, Ina, 742 F.2d 1401, 1403 (Fed. Cir. 1984) (When the record shows that purchasers

are confronted with more than one (let alone numerous) independent users of a term or device, . . .

distinctiveness on which purchasers may rely is lacking under such circumstances); Mana

26

Appx000033
 . - ~ PUBLIC VERSION V ~

Products, Inc. v. Columbia Cosmetics Mamgfacturing, Inc., 65 F.3d 1063, 1071 (2d

Cir.-1995)(holding that the color black does not identify the plaintiff as the source of the cosmetics

because countless numbers of cosmetics companies sell black compacts). When consumers

of CTAS shoes have been inundated with images of third-party shoes bearing the CMT over at

least the last eighty years as shown here by the record evidence, these consumers may well

associate the CMT with more than one source as the CBSC Only survey indicates. See

RX-1667 at QQ; 34-39. _

Moreover, the Commission nds that the ID erroneously discounted the record evidence

concerning all subfactors of factor 2 (exclusivity of use) including subfactors private label and

sales of shoes alongside competitors. See ID at 47-48. Since evidence ofthird-party use from

the 1980s and earlier is relevant to the date of rst infringement in 2003 due to the longstanding,

concurrent use by third parties here, we nd relevant the record evidence that Converse in the

1970s and 1980s knowingly (1) made The Winner shoes bearing the CMT exclusively for Sears;

and (2) permitted its CTAS shoes to be sold alongside third-party shoes bearing the CMT. See

RX-2087C at Q. 109; RX-2091C at Q. 37; RX-2208 (1976 J.C. Penney Spring/Summer Catalog

showing The Winner shoes bearing the CMT); RX-2274; RX-2784; RX-2305.005; RX-8815;

RX-2307.003 (Nike shoes bearing the CMT alongside Converse advertisement); RX-2208;

RX-2305; RX-2307;-RX-2087 at Q. 109-10). The Winner shoes were promoted alongside

advertisements for non-Converse shoes, i.e., the Gamebuster, bearing the CMT. See

RX-2091C at Q. 37; RX-2208. The record evidence also indicates that these private label and

27

Appx000034
 PUBLIC VERSION

comparison ads were widespread across the country. Id. Thus any consumer seeing these

private label and comparison images would likely associate the CMT with more than one source.

Based on the totality of record evidence, particularly with respect to secondary meaning

factors 2 and 7, the Commission concludes that the 753 trademark is invalid.8 The Commission

therefore reverses the IDs conclusion and determines that the 753 trademark is invalid based on

lack of secondary meaning as proven by a preponderance of the evidence. As a result of this

action, the Commission detennines that there is no violation of section 337 with respect to the both

the common law and registered CMT design.

B. The ALJs Findings of Infringement

The Commission afrms the IDs nding that there is a likelihood of confusion with

respect to the CMT for specic accused footwear products if the CMT is not invalid, and afnns

that there is no likelihood of confusion with respect to the CMT for other specic accused

footwear products, as set forth in the ID, regardless of invalidity. See ID at 64-104;

IV. CONCLUSION ON VIOLATION

For the reasons discussed herein, the Commission determines to reverse-in-part the ALJs

nal ID such that the 753 trademark is invalid based on lack of secondary meaning. The

Commission also afrms the IDs nding that the asserted common law rights associated with the

federally-registered ~753trademark are invalid. The Commission also afnns the IDs nding I

8 The Commission affords no weight to any survey evidence the ID found to be awed and
unreliable. See ID at 16-36. Accordingly, to the extent that the ALJ relied upon surveys that he
discredited (ID at 46), the Commission gives those surveys no weight in determining whether there
was exclusivity of use of the CMT design.

28

Appx000035
 PUBLIC VERSION

that specic accused footwear products infringe the 753 trademark if the trademark is not invalid,

and afrrns the IDs nding that other specic accused footwear products do not infringe the 753

trademark regardless of invalidity. These actions result in a nding of no violation of section 337

with respect to the 753 trademark. '

With respect to the COT marks, the Commission vacates the IDs nding that there is no

violation of section 337 as to the asserted common law rights associated with the designs depicted

in the federally-registered 103 and 96Otrademarks due to invalidity. See ID at 129-32. The ID

correctly found infringement as to the 1O3and 96Otrademarks, and previously granted summary

determination of validity and enforceability of both the asserted common law and

federally-registered rights in the designs depicted in the 1O3and-96Otrademarks. See Order No.

130, at 1 n.l (July 15, 2015). The IDs nding of no violation with respect to these common law

rights is moot, however, in view of the IDs nding (tmreviewed) of a violation with respect to the

federally-registered"rights in the 103 and 96Otrademarks by defaulting respondent Foreversun

since the scope of the common law and federally-registered rights in these trademarks is

co-extensive.

V. REMEDY, PUBLIC INTEREST, AND BONDING

A. Remedy

In a section 337 proceeding, the Commission has broad discretion in selecting the form,

scope, and extent of the remedy. Viscofan, S.A. v. United States In1l Trade Comm n, 787 F.2d

544, 548 (Fed. Cir. 1986). Based on the record in this investigation, and for the reasons detailed

29

Appx000036
 PUBLIC VERSION ' .

below, the Commission has determined to issue a general exclusion order (GEO) pursuant to .19

U.S.C. 1337(d)(2), prohibiting the unlicensed importation of certain footwear products covered

by one or more of the 103 and 96Otrademarks. We also nd that this remedial order is not

contrary to the public interest.

Under section 337, the Commission is authorized to issue a GEO excluding all infringing

goods regardless of the source when the conditions of section 337(d)(2) or (g)(2) are met. See 19

U.S.C. 1337 (d)(2), (g)(2). In the present investigation, some respondents appeared before

the Commission to contest the allegations in the complaint, but other respondents failed to

appear and therefore defaulted. ID at 1-10. Under these circumstances, section 337(d)(2) is

the appropriate statutory provision governing issuance of a GEO. See Certain Sildenal or Any

Pharmaceutically Acceptable Salt Thereof such as Sildenal Citrate, and Products Containing

Same, Inv. No. 337-TA-489, Commn Op. at 4 (July 23, 2004) (nding that the issuance of a_

GEO under section 337(d)(2), rather than 337(g)(2), was appropriate when not all respondents

failed to appear to contest the investigation); see also Certain Energy Drink Products, Inv. No.

337-TA-678, USITC Pub. No. 4286, C0mmn Op. at 4-7 (Nov. 2011); Certain Toner

Cartridges and Components Thereof, Inv. No. 337-TA-740, USITC Pub. No. 4376, Commn

Op. at 24 (Feb. 2013). '

Accordingly, under section 337(d)(2):

The authority of the Commission to issue an exclusion from entry of articles shall be
limited to persons determined by the Commission to be violating this section unless the
1 Commission detennines thati-- ' ' ' ' '

30

Appx000037
 PUBLIC VERSION

(A) a general exclusion from entry of articles is necessary to prevent circumvention

of an exclusion order limited to products of named persons; or

(B) there is a pattern of violation of this section and it is difficult to identify the _
source of infringing products.

19 U.S.C. 1337(d)(2). In determining whether either criterion is satised, the Commission

may look not only to the activities of active respondents, but also to those of non-respondents as

well as respondents who have defaulted or been terminated from an investigation. See Certain

Electronic Paper Towel Dispensing Devices and Components Thereo Inv. No. 337-TA-718,

Comrnn Op. at 13-14, 16 (Dcc. 1, 2011); Certain Coaxial Cable Connectors and Components

Thereof and Products" Containing Same, Inv. No. 337-TA-650, Commn Op. at 59 (April 14,

2010).

As detailed below, the record in the present investigation warrants the issuance of a GEO

under both subparagraph (A) and subparagraph (B) of subsection 337(d)(2). See 19 U.S.C.

1337(d)(2).

1. Circumvention Of An LEO '

The record shows a high likelihood that defaulting respondent Foreversun would

circumvent an LEO, with respect to the 103 and 960 trademarks, by employing various

practices, including selling and importing the infringing products using large

business-to-business internet portals that enable third-party vendors and foreign agents or

trading companies to operate as intermediaries between such a foreign manufacturer of knockoff

31

Appx000038
 This Page Contains Confidential Information That Has Been Redacted
. PUBLIC VERSION

products and U.S. distributors and retailers. RD at 135. For example, the record shows that

the various trading companies that sell the infringing products are mostly selling agents or shell

companies with a mail drop under ctitious names, emails, and phone numbers. Id.

Therefore, the record shows that absent a GEO, defaulting respondent Forcversun could easily

circumvent an LEO by shipping products to their customers from various third-party

manufacturers and intermediaries using ctitious contact information. Therefore, the

requirement of subsection 19 U.S.C. 1337(d)(2)(A) is satised here. ' I

2. Pattern Of Violation Of Section 33 7 Where It Is Dgicult To Identz Source

Of IrzingingProducts

The record in this investigation shows that there is a widespread pattern of importation

and sale of infringing footwear products throughout the United States. Converses complaint

named thirty proposed respondents in this investigation. ID at 1-2. Moreover, the record

shows that there are numerous potentially infringing footwear products manufactured and/or

sold by third-parties not named as respondents. RD at 135-36 (citing CX-229C at QQ.

182-95, 26-1-89; CX-245C at QQ. 18-116); see also Complaint at 1111

758-63, Exhibits 220-24.

This record evidence also shows that the sources of the imported products are difficult to

identify. Specically, Converses Senior Director of Brand Protection, Mr. Foley, described

Converses enforcement efforts as [[ I

]] Id. (citing CX-245C at Q. 58). Further,

evidence of this nature indicating _numerousonline sales of infringing imported goods can

32

Appx000039
 - PUBLIC VERSION _ .

constitute a Widespreadpattern of violation of section 337. Id.; see also Certain Loom Kitsfor

Creating LinkedArticles, Inv. No. 337-TA-923, Commn Op. at 14 (June 26, 2015). I 2

l In sum, the record shows that a pattern of violation exists and that it is difcult to identify

the source of infringing products, thus satisfying the requirements of 19 U.S.C. 1337(d)(2)(B).

B. Public interest

Before issuing a remedy for a violation of section 337, the Commission must consider the

effect of the remedy on certain public interest considerations: (1) the public health and welfare;

(2) competitive conditions in the U.S. ec0nomy;' (3) the U.S. production of articles that are like

or directly competitive with those which are the subject of the investigation; and (4) U.S.

consumers. 19 U.S.C. 1337(d), (f), (g); Certain Ink Jet Print Cartridges and Components

' Thereof Inv. No. 337-TA-446,Commn Op. at l4 (October 2002). Both the IA and Converse

submit that the public interest factors do not weigh against the ALJs recommended remedy in

this investigation. _

We nd that the evidentiary record in this investigation does not indicate that any of the

above-referenced factors raises public interest concerns that would preclude issuance of the

remedial orders in this investigation. The record does not support a finding of any specic harm"

to the public health, safety, or Welfare sufficient to preclude issuance of the proposed remedial

order. As Converse points out, the subject products consist of casual shoes, bearing designs

that cause consumer confusion with genuine Converse products bearing the COT designs.

Converses Remedy Resp. at 33. Furthennore, the competitive conditions are robust in the

33

Appx000040
 PUBLIC VERSION

United States economy for footwear products. . Based on the record, Converse and other

third-parties in the United States appear to be able to replace the products at issue with their own

like or directly competitive, non-infringing articles within a cornrnercially reasonable time after

the exclusion orders go into effect. Id. at 35. Therefore, U.S. consumers would have access to

competitive products from at least Converse and these third-parties, and any exclusion order

would have minimal impact on competitive conditions in the United States economy and the

production of like or directly competitive articles in the United States.

Based on the foregoing, we nd that entry of the remedial order sought by Converse

would notbe contrary to the public interest in this investigation.

C. Bonding

Upon the entry of the remedial orders, a respondent may continue to import and sell its

products during the sixty (60) day period of Presidential review subject to posting a bond. 19

U.S.C. 1337(j)(3). The amount of the bond is determined by the Commission and must be

sufficient to protect a complainant from any injury. Id.; 19 C.F.R. 210.50(a)(3). Both the IA

and Converse agree that, given the state of the evidentiary record, the bond amount should be set

at 100 percent of the entered value of the accused products as no reliable price differential can be

determined for the defaulting respondent. See Converses Remedy Resp. at 33; IAs Resp. at 45.

A 100 percent bond is often assigned when reliable pricing information is unavailable

in the case of a defaulting respondent, which is the case here since Foreversun did not

participate in discovery. See Certain Oscillating Sprinklers, Sprinkler Components, and

34

Appx000041
 - . PUBLIC VERSION

Nozzles, Inv. No. 337-TA-448, Limited Exclusion Order at 4-6 (Mar. 4, 2002), Certain Energy

Drink Products, Inv. No; 337-TA-678, Commn Op. at 9-10 (Sept. 8, 2010); Certain Radio

Control Hobby Transmitters and Receivers and Products, Inv. No. 337-TA-763, Commn

Notice (Sept. 30, 2011), Certain Birthing Simulators and Associated Systems, Inv. No.

337-TA-759,_Commn Notice (Aug. 29, 2011); Certain Automotive Vehicles and Designs

Therefor, Inv. N0. 337-TA-722, Commn Notice (Mar. 10, 201 1); H. REP. 100-40, Pts. 1-6. pp.

161-162 (1987). Accordingly, the ALJ recommended a bond of 100 percent of the entered

value (per pair) of their accused footwear products during the 60-day period of Presidential

review. RD at 142. ~

We agree that the record in the present investigation lacks sufficient pricing evidence with

respect to accused footwear products bearingthe COT designs because so many respondents

settled or defaulted without providing such evidence. Accordingly, we have determined to set

the bond at 100 percent of the entered value (per pair) of the infringing footwear products during

the period of Presidential review. '

VI. CONCLUSION

The Commission has determined that there has been a violation of section 337. Having

considered the ALJs recommended determination, the parties submissions, and the evidentiary

record, the Commission has determined to issue a general exclusion order prohibiting the

unlicensed entry of footwear products that infringe the 103 or 960 trademarks. The

Commission furtherlhas determined that the public interest factors enumerated in section l

35

Appx000042
 K _ PUBLIC VERSION . V

33'7(d)(l) (19 U.S.C. l337(d)(l)) do not preclude the issuance of the general exclusion order.

Finally, the Commission has determined that there should he a bond in the amount of 100

percent of the entered value (per pair) of the covered products during the period of Presidential

review.

By order of the Commission.

Lisa R. Barton
Secretary to the Commission

Issued: July 6, 2016

36

Appx000043
CERTAIN FOOTWEAR PRODUCTS Inv. N0. 337-TA-936

. PUBLIC CERTIFICATE OF SERVICE

I, Lisa R. Barton, hereby certify that the attached COMMISSION OPINION has been
served by hand upon the Commission Investigative Attorney, Sarah J. Sladic, Esq., and the
following parties as indicated, on July 7, 2016.

Lisa R. Barton, Secretary

U.S. International Trade Commission
500 E Street, SW, Room 112
Washington, DC 20436

On Behalf of Complainant Converse Inc.:

\

V. James Adduci, II, Esq. U Via Hand Delivery

ADDUCI, MASTRIANI & SCHAUMBERG, LLP U Via Express Delivery
1133 Connecticut Avenue, N.W., 12mFloor X Via First Class Mail
Washington, DC 20036 Cl Other:

On Behalf of Respondent Wal-Mart Stores. Inc.:

Mareesa A. Frederick, Esq. El Via Hand Delivery

FINNEGAN, HENDERSON, FARABOW, |:l Via Express Delivery
GARRETT & DUNNER LLP Via First Class Mail
901 New York Avenue, NW III Other:
Washington, DC 20001

On Behalf of Respondent Skechers U.S.A..Inc.:

Barbara A. Murphy, Esq. U Via Hand Delivery

FOSTER, MURPHY, ALTMAN & NICKEL, PC El Via Express Delivery
1899 L Street, NW, Suite 1150 IXIVia First Class Mail
Washington, DC 20036 I1 Other:

Appx000044
CERTAIN FOOTWEAR PRODUCTS Inv. No. 337-TA-936

Certicate of Service Page 2

On Behalf of Respondent Highline United LLC d/b/a Ash

Footwear USA:

Gerard P. Norton, Esq. II] Via Hand Delivery

FOX ROTHSCHILD LLP III Via Express Delivery
Princeton Pike Corporate Center IE Via First Class Mail
997 Lennox Drive, Building 3 U Other:
Lawrenceville, NJ 08648-231 1

On Behalf of Respondent New Balance

Thomas S. Fusco, Esq. III Via Hand Delivery

FISH & RICHARDSON P.C. U Via Express Delivery
1425 K Street, NW, 11*Floor Q Via First Class Mail
Washington, D.C. 20005 U Other:

Appx000045
 PUBLIC VERSION

UNITED
' STATES INTERNATIONAL TRADE COMMISSION \

Washington, D.C.

In the Matter of

CERTAIN FOOTWEAR PRODUCTS ]nv_ N0_337_TA_936

INITIAL DETERMINATION ON VIOLATION OF SECTION 337 AND

RECOMMENDED DETERMINATION ON REMEDY AND BOND

Chief Administrative Law Judge Charles E. Bullock

(N;/einl;eri17, 2015)

Appearances:

For the Complainant Converse Inc.

Jonathan Engler, Esq.; Evan Langdon, Esq.; and Asha Allam, Esq. of Adduci, Mastriani &
Schaumberg, L.L.P. from Washington, DC

Erik Maurer, Esq. of Banner & Witcoff, Ltd. from Chicago, IL

John Quinn, Esq. of Kirkland & Ellis LLP from Washington, DC

For Respondent Wal-Mart Stores, Inc.

Mareesa Frederick, Esq. of Finnegan, Henderson, Farabow, Garrett & Dunner from Washington,
DC .

For Respondent Skechers U.S.A.Inc.

Barbara Murphy, Esq. of Foster, Murphy, Altman & Nickel, PC from Washington, DC

Lindsay Kelly, Esq.; Samuel Lu, Esq.; and Melissa Rabbani, Esq. of Irell & Manella LLP from
Los Angeles, CA

For Respondent Highline United LLC d/b/a ASH F oorwear USA

Jeff Schwartz, Esq. and Austen Endersby, Esq. of Fox Rothschild LLP from Washington, DC

Appx000046
For Respondent New Balance Athletic Shoe, Inc.

Thomas Monty Fusco, Esq. of Fish & Richardson, P.C. from Washington, DC

For the Commission Investigative Staff

Margaret Macdonald, Esq., Director; David Lloyd, Esq., Supervisory Attomey; and Sarah Sladic,
Esq., Investigative Attomey of the Ofce of Unfair Import Investigations, U.S. Intemational
Trade Commission from Washington, DC

Appx000047
 [Due to Apparent Clerical Error, Table of
Contents Omitted from Public Version of Initial
Determination (EDIS No. 570837)]

Appx000048
 [Due to Apparent Clerical Error, Table of
Contents Omitted from Public Version of Initial
Determination (EDIS No. 570837)]

Appx000049
 [Due to Apparent Clerical Error, Table of
Contents Omitted from Public Version of Initial
Determination (EDIS No. 570837)]

Appx000050
 PUBLIC VERSION

LIST OF ABBREVIATIONS

The following abbreviations may be used in this Initial Determination

CDX Complainanfs demonstrative exhibit

CPX Complainanfs physical exhibit
CX Comp1ainants exhibit
CIB Complainants initial post-hearing brief
CRB Complainants reply post-hearing brief
CPHB Comp1ainants pre-hearing brief
Dep Deposition
JX Joint Exhibit
RDX Respondents" demonstrative exhibit
RPX Respondents physical exhibit
RX Respondents exhibit
RIB Respondents initial post-hearing brief
RRB Respondents reply post-hearing brief
RPHB Respondents V
pre-hearing brief
RX Respondents exhibit .
SIB Staffs initial post-hearing brief
SRB Staffs reply post-hearing brief
SPHB Staffs pre-hearing brief
Tr. Transcript

iv

Appx000051
 PUBLIC VERSION

UNITED STATES INTERNATIONAL TRADE COMMISSION

Washington, D.C.

In the Matter of

CERTAIN FOOTWEAR PRODUCTS Inv. No. 337-TA-936

INITIAL DETERMINATION ON VIOLATION OF SECTION 337 AND

RECOMMENDED DETERMINATION ON REMEDY AND BOND

Chief Administrative Law Judge Charles E. Bullock

(November 17, 2015) V

Pursuant to the Notice of Investigation, this is the Initial Determination in the matter of

Certain Footwear Products, Investigation No. 337-TA-936.

For the reasons stated herein, the undersigned has determined that a violation of section

337 of the Tariff Act of 1930, as amended, has been found in the importation into the United

States, the sale for importation, or the sale within the United States after importation of certain

footwear products with respect to U.S. Trademark Registration Nos. 3,258,103; 1,588,960; and

4,398,753, but not as to the asserted common law trademarks.

Appx000052
 PUBLIC VERSION

I. INTRODUCTION

A. Procedural History

On October 14, 2014, Complainant Converse Inc. (Converse) led a complaint alleging

violations of section 337 based upon the importation into the United States, the sale for

importation, and the sale within the United States after importation of certain footwear products.

See 79 Fed. Reg. 68,482-483 (Nov. 17, 2014). Converse led the complaint on October 14,

2014. Id _

On November 17, 2014, the Commission instituted this Investigation. Id. Specically, the

Commission instituted this Investigation to determine:

[W]hether there is a violation of subsection (a)(l)(C) ofsection 337 in the

importation into the United States, the sale for importation, or the sale within the
United States after importation of certain footwear products by reason of
infringement of one or more of the 7531, lO32, and the 9603 trademarks,-and
whether an industry in the United States exists as required by subsection (a)(2) of
section 337; and

whether there is a violation of subsection (a)(1)(A) of section 337 in the

importation into the United States, the sale for importation, or the sale within the
United States after importation of certain footwear products by reason of unfair
competition/false designation of origin, common law trademark infringement and
V unfair competition, or trademark dilution, the threat or effect of which is to
destroy or substantially injure an industry in the United States.

Id. _

The Notice of Investigation named A-List, Inc. d/b/a Kitson (A-List); Aldo Group

(Aldo); Brian Lichtenberg, LLC (Brian Lichtenberg); Cmerit USA, Inc., d/b/a Gotta Flurt

(CMerit); Dioniso SRL (Dioniso); Edamame Kids, Inc. (Edamame); Esquire Footwear,

LLC (Esquire); FILA U.S.A., Inc. (Fila); Fortune Dynamic, Inc. (Forttme Dynamic");

Fujian Xinya I&E Trading Co. Ltd. (Xinya); Gina Group, LLC (Gina Group); H&M Hennes

1U.S. Trademark Registration No. 4,398,753 (the 753 Registration).

2U.S. Trademark Registration No. 3,258,103 (the 103 Registration).
3U.S. Trademark Registration No. 1,588,960 (the 960 Registration).
-1

Appx000053
 PUBLIC VERSION

& Mauritz LP (H&M); Highline United LLC d/b/a Ash Footwear USA (Highline); Hitch

Enterprises Pty Ltd d/b/a Skeanie (Skeanie); leonix Brand Group, Inc. d/b/a Ed Hardy

(Iconix); Kmart Corporation (Kmart); Mamiye Imports LLC d/b/a Lilly of New York

(Mamiye); Nowhere Co., Ltd. d/b/a Bape (Nowhere); OPPO Original Corp. (OPPO);

Orange Clubwear, Inc. (Orange Clubwear); Ositos Shoes, Inc. d/b/a CollectionO (Ositos);

PW Shoes Inc. (PW Shoes); Ralph Lauren Corporation (Ralph Lauren); Shenzhen

Foreverstm Industrial Co., Ltd. a/k/a Shenzhen Foreversun Shoes Co., Ltd. (Foreversun); Shoe

Shox, Skechers U.S.A. Inc. (Skechers); Tory Burch LLC (Tory Burch); Wal-Mart Stores,

Inc. (Walmart); Wenzhou Cereals Oils & Foodstuffs Foreign Trade Co. Ltd. (Wenzhou);

Zhejiang Ouhai International Trade Co. Ltd. (Ouhai); and Zulily, Inc. (Zulily) as

Respondents. Id.

On January 12, 2015, 2015, New Balance Athletic Shoe, Inc. (New Balance) moved to

intervene as a Respondent. On January 27, 2015, the undersigned issued an initial determination

granting New Balances motion. (See Order No. 36.) The Commission determined not to review

this initial determination. See 80 Fed. Reg. 9748 (Feb. 24, 2015).

During the course of this Investigation, a number of the respondents settled,4 were found

in defaults, or were terminated from the Investigation.67 On February 23, 2015, the undersigned

4 Converse reached settlement agreements with twenty-one Respondents. (See Order No. 32, Initial Determination
Granting Joint Mot. to Teminate Investigation as to Skeanie Shoes, Inc. Based on Settlement Agreement and
Consent Order (Jan. 20, 2015); Order No. 33, Initial Determination Granting Joint Mot. to Terminate Investigation
as to PW Shoes, Inc. Based on Settlement Agreement and Consent Order (Jan. 22, 2015); Order No. 34, Initial
Detennination Granting Joint Mot. to Terminate Investigation as to Ositos Shoes, lnc. Based on Settlement
Agreement and Consent Order (Jan. 22, 2015); Order No. 52, Initial Determination Granting Joint Mot. to Terminate
Investigation as to Ralph Lauren Corporation Based on Settlement Agreement and Consent Order (Feb. 3, 2015);
Order No. 55, Initial Detemlination Granting Joint Mot. to Terminate Investigation as to OPPO Original Corp.
Based on Settlement Agreement and Consent Order (Feb. 13, 2015); Order No. 57, Initial Determination Granting
Joint Mot. to Teminate Investigation as to I-I& M Hennes & Mauritz LP Based on Settlement Agreement (Feb. 23,
2015); Order No. 59, Initial Determination Granting Joint Mot. to Terminate Investigation as to Zulily, Inc. Based
on Settlement Agreement and Consent Order (Mar. 3, 2015); Order No. 65, Initial Determination Granting Joint
Mot. to Terminate Investigation as to Nowhere Co. Ltd. d/b/a/ Bape Based on Settlement Agreement and Consent
Order (Mar. 10, 2015); Order No. 67, Initial Determination Granting Joint Mot. to Terminate Investigation as to The
-2

Appx000054
 PUBLIC VERSION

Aldo Group Based on Settlement Agreement and Consent Order (Mar. 10, 2015); Order No. 69, Initial
Determination Granting Joint Mot. to Terminate Investigation as to Gina Group, LLC Based on Settlement
Agreement and Consent Order (Mar. 12, 2015); Order No. 70, Initial Determination Granting Joint Mot. to
Terminate Investigation as to Tory Burch LLC Based on Settlement Agreement and Consent Order (Mar. I3, 2015);
Order No. 73, Initial Determination Granting Joint Mot. to Terminate Investigation as to Brian Lichtenberg, LLC
Based on Settlement Agreement and Consent Order (Mar. 30, 2015); Order No. 80, Initial Determination Granting
Joint Mot. to Terminate Investigation as to Fila U.S.A., Inc. Based on Settlement Agreement and Consent Order
(Apr. 7, 2015); Order No. 86, Initial Determination Granting Joint Mot. to Terminate Investigation as to Mamiye
Imports LLC d/b/a Lilly of New York and Shoe Shox Based on Settlement Agreement and Consent Order (Apr. IO,
2015); Order No. 93, Initial Determination Granting Joint Mot. to Terminate Investigation as to Iconix Brand Group,
Inc. Based on Settlement Agreement and Consent Order (Apr. 20, 2015); Order No. 108, Initial Determination
Granting Joint Mot. to Terminate Investigation as to A-List, Inc. d/b/a Kitson Based on Settlement Agreement and
Consent Order (May I2, 2015); Order No. II4, Initial Determination Granting Joint Mot. to Terminate Investigation
as to Esquire Footwear Based on Settlement Agreement and Consent Order (June 2, 2015); Order No. 128, Initial
Detemination Granting Joint Mot. to Terminate Investigation as to Fortune Dynamic, Inc. Based on Settlement
Agreement and Consent Order (June 29, 2015); Order No. 154, Initial Determination Granting Joint Mot. to
Terminate Investigation as to CMerit USA, Inc. Based on Settlement Agreement and Consent Order (July 23, 2015);
Order No. I55, Initial Determination Granting Joint Mot. to Tenninate Investigation as to Kmart Corporation Based
on Settlement Agreement and Consent Order (July 29, 2015).) The Cormnission did not review any of these initial
determinations. (See Notice of a Commn Determination Not to Review an Initial Determination Terminating the
Investigation as to Respondent Skeanie Shoes, Inc. Based on a Consent Order Stip. and Consent Order (Feb. 10,
2015); Notice of a Commn Determination Not to Review an Initial Determination Tenninating the Investigation as
to Respondent Ositos Shoes, Inc. Based on a Consent Order Stip. and Consent Order (Feb. 10, 2015); Notice of a
Commn Determination Not to Review an Initial Determination Terminating the Investigation as to Respondent PW
Shoes, Inc. Based on a Consent Order Stip. and Consent Order (Feb. I0, 2015); Notice of a Commn Determination
Not to Review an Initial Determination Tenninating the Investigation as to Respondent Ralph Lauren Corporation
Based on a Consent Order Stip. and Consent Order (Mar. 4, 2015); Notice of a Commn Determination Not to
Review an Initial Determination Terminating the Investigation as to Respondent OPPO Original Corp. Based on a
Consent Order Stip., Consent Order, and Settlement Agreement (Mar. 12, 2015); Notice of a Commn
Determination Not to Review an Initial Determination Terminating the Investigation as to Respondent I-I & M
Hennes & Mauritz LP Based on a Settlement Agreement (Mar. 12, 2015); Notice of a Commn Determination Not
to Review an Initial Determination Terminating the Investigation as to Respondent Zulily, Inc. Based on a Consent
Order Stip., Consent Order, and Settlement Agreement (Mar. 24, 2015); Notice of a Commn Detennination Not to
Review an Initial Determination Terminating the Investigation as to Respondent Aldo Group Inc. Based on a
Consent Order Stip., Consent Order, and Settlement Agreement (Mar. 30, 2015); Notice of a Commn
Determination Not to Review an Initial Determination Terminating the Investigation as to Respondent Nowhere Co.
Ltd. Based on a Consent Order Stip., Consent Order, and Settlement Agreement (Mar. 30, 2015); Notice of a
Commn Determination Not to Review an Initial Determination Terminating the Investigation as to Respondent
Tory Burch LLC Based on a Consent Order Stip., Consent Order, and Settlement Agreement (Apr. 1, 2015); Notice
of a Commn Determination Not to Review an Initial Determination Terminating the Investigation as to Respondent
Gina Group, LLC Based on a Consent Order Stip., Consent Order, and Settlement Agreement (Apr. 1, 2015); Notice
of a Commn Determination Not to Review an Initial Determination Terminating the Investigation as to Respondent
Brian Lichtenberg, LLC Based on a Consent Order Stip., Consent Order, and Settlement Agreement (Apr. 24,
2015); Notice of a Commn Determination Not to Review an Initial Detennination Tenninating the Investigation as
to Respondent FLLAU.S.A., Inc. Based on a Consent Order Stip., Consent Order, and Settlement Agreement (Apr.
24, 2015); Notice of a Commn Determination Not to Review an Initial Determination Terminating the Investigation
as to Respondents Mamiye Imports LLC, d/b/a Lilly of New York and Shoe Shox Based on a Consent Order Stip.,
Consent Order, and Settlement Agreement (May 4, 2015); Notice of a Commn Determination Not to Review an
Initial Determination Terminating the Investigation as to Respondent Iconix Brand Group, Inc. Based on a Consent
Order Stip., Consent Order, and Settlement Agreement (May 13, 2015); Notice of a Commn Determination Not to
Review an Initial Determination Terminating the Investigation as to Respondent A-List, Inc., d/b/a Kitson Based on
a Consent Order Stip., Consent Order, and Settlement Agreement (June 4, 2015); Notice of a Commn
Determination Not to Review an Initial Determination Terminating the Investigation as to Respondent Esquire
Footwear LLC Based on a Consent Order Stip., Consent Order, and Settlement Agreement (June l2, 2015); Notice
of a Commn Determination Not to Review an Initial Determination Terminating the Investigation as to Respondent
-3

Appx000055
 PUBLIC VERSION

found Respondents Dioniso, Foreversun, and Xinya in defaults (See Order No. 58.) On May 8,

2015, the undersigned found Ouhai and Wenzhou in default.9 (See Order N0. 106.) None of the

Defaulting Respondents have contested Converses allegations that they have violated and

continue to violate section 337. Skechers, Walmart, Highline, and New Balance are the only

respondents who remain active in this Investigation.

The evidentiary hearing was held August 4-10, 20.15.

B. The Parties

1. Converse

Converse is a Delaware corporation with its headquarters and principal place of business

located in North Andover, Massachusetts. (CX-00001 at 1] 45.) Converse designs, develops,

markets, and sells footwear, namely performance and lifestyle footwear. (Id. at W 47-48.)

Fortune Dynamic, Inc. Based on a Consent Order Stip., Consent Order, and Settlement Agreement (July 15, 2015);
Notice of a Co1nmn Determination Not to Review an Initial Determination Tenninating the Investigation as to
Respondent CMerit USA, Inc. Based on a Consent Order Stip., Consent Order, and Settlement Agreement (Aug. 12,
2015); Notice of a Commn Determination Not to Review an Initial Determination Terminating the Investigation as
to Respondent Kmart Corporation Based on a Consent Order Stip., Consent Order, and Settlement Agreement (Aug.
14, 2015).)
5 Those respondents found in default are referred to herein as the Defaulting Respondents.
6 Orange Clubwear moved to terminate the Investigation as to itself based on a consent order stipulation and
proposed consent order. The undersigned granted the motion on March 10, 2015. (See Order No. 68.) The
Commission did not review this initial determination. (See Notice of Commn Determination Not to Review an
Initial Determination Terminating the Investigation as to Respondent Orange Clubwear, Inc. Based on a Consent
Order Stipulation and Consent Order (Mar. 25, 20 I5).) .
7 Respondent Edamame Kids, Inc. was terminated for good cause pursuant to Commission Rule 2lO.2l(a)(|). (See
Order No. 91, Initial Determination Granting Mot. to Tenninate the Investigation for Good Cause as to Respondent
Edamame Kids, Inc. Without Prejudice (Apr. l7, 2015).) The Commission did not review this initial determination.
(See Notice of a Commn Decision Not to Review an Initial Determination Terminating the Investigation as to
Respondent Edamame Kids, Inc. for Good Cause and Without Prejudice (May 12, 2015).) '
8 The Commission determined not to review this initial determination. (See Notice of Commn Determination Not to
Review an Initial Detennination Finding Certain Respondents in Default (Mar. I2, 2015).)
9 The Commission determined not to review this initial determination. (See Notice of a Commn Determination Not
to Review an Initial Determination Finding Respondents Zhejiang Ouhai Int. Trade Co. Ltd. and Wenzhou Cereals
Oils & Foodstuffs Foreign Trade C0. Ltd. in Default (June 2, 2015).)
-4_

Appx000056
 PUBLIC VERSION

2. Active Respondents

a) Skechers

Skechers is a Delaware corporation with its principal place of business located in

Manhattan Beach, Califomia. (CIB at 10; RIB at 7; see also CX-00001 at 1l 67.) Skechers

Accused Products include shoes sold under the product lines identied as Bobs, Twinkle

Toes," Daddy$ Money, and HyDee HyTop. (CIB at 10.) Examples of the Accused Products

are set forth below:

1
_ Shoe .\lod_l Name _ d ml|ia;;;T5~l'-uiie ___S$_uct\Iod-l'I\i:me_ lgcnfshoz K
'\
lit

' l llydccllylup _ :1 a 1 ',=

, , 1
Bob's Utopia Low
_ Y Gimme Starry Skies _- Q A/__
s "

K
Bub! Utopia Skyline
Q. DmldyS Mu My
3;
lligh Gimme Lone Star

-M
,1; ;. .
D:\ddy'S Mu My
Twinkle Toes Shufes > ~
H, ml "4>""'
Gimme Muchn .
Streerfect (Rina) Dinc m
->:*:L-'2-;'i:~l'~'-"" -

Twinkle foes Shulcs

Wild$p||rk

:>.,_,-. ,.

(CDX-00240.040.)

-5

Appx000057
 PUBLIC VERSION

b) Walmart

Walmart 1s a Delaware corporation headquartered in Bentonvrlle, Arkansas (RIB at 7

see also CX-00001 at 1]93.) Walmarfs Accused Products include shoes sold under the Faded

\4\
Glory and Kltch product lines. (CIB at 11.) Examples of the Accused Products are set forth

.
.\hae\I00<\av 1

E-Mag:-vy-.\|m
' """
,

-
J7Fmu

shoen-m.\'um

ihruimsk Todd!"
EM.um
.\nr4l-rt hbIhr 4:-p
I

i
1"$' 0|\l0e

*
(

,..-_.-_.-.-._.-__-.
['14:-4!Glory - IN):
Faded Glory - Fin: Capra; u<<~lp
hurl:
Snckiw 8

ham Ginry. (um \ky'uL'lnvasL9<

Star Daze Lp(.!au1<$m:\Mc 5

rum: cw, QPolk! Gnvmimah Tnldlw

(Im Mid (uh iv Snaker

l.$ |oIn.\ssn
Kilch Tnyisnfr Wnh WdsluckIn Mm:
Welt Si-m Slre 9 Med: (mun

mm Gm; ~aura
ilniku Show

[ad-i
L\\n\'ulu Cap Alpcml Glrh lliglu
Sncalcr TM!Slut: Snulur

(CDX-00240 060 )

_6_

Appx000058
 PUBLIC VERSION

) Highline

Hlghllne 1s a Delaware limited liability company headquartered 1n Hyde Park,

Massachusetts (RIB at 7.) Highlines Accused Products 1nclude shoes sold under the Ash

product hne (CIB at ll ) Examples of the Accused Products are set forth below

I same Nan | Impdm ll samshaaxau I imauofilnr

Engk Wm

fun \
\'m|k.1

Gngrr Xck-an

\ nun \'aka1|e
..L"*J-___._.
A

1'

: .
\ uanhx: \ uh
gt-z1.<
A/.._
~.. .._,, 42. V.

Vie}; Y0!

(CDX-00240 O87 )

-7

Appx000059
 . PUBLIC VERSION

d) New Balance l

New Balance is a Massachusetts. corporation with its principal place of business located

in Boston, Massachusetts. (RIB at 7; CIB at 12.) New Balances Accused Products) include

shoes sold under the PF Flyers Center, PF Flyers Bob Cousy, and PF Flyers Smnfun

product line. (CIB at 12.) Examples of the Accused Products are set forth below:

I suwalvaiixami 1 Innge0fShve l I S!:oe)Iod:lNamc | lnlzlufoe I

;., ,_A".\\
;
Q _ it fgeg
J *_.
Ceuterlii
Y, _ BobCousylp
\_$4,)
L , (~7,}*'\..~
,,_- v M ___ WJ1

Q Q. .

cmm Lo SumFun as
.a_""'-':.".__ . _ K

8obCn'~\<}'Hi . smrun. Q, " . ~

~._____ I

\\-____'"__,,_Z

(CDX-00240.1 14.)

3. Defaulting Respondents

a) Dioniso

Dioniso is an Italian corporation with its principal place of business located at Via

Pievaiola 166-f2, 06132 Perugia, Italy. (CX-00001 at 1] 182.) Dionisos Accused Products

include Black Vintage Swarovski Converse footwear products. (Id. at H184.)

1 The Accused Products originally included the CPT Hi and CPT Lo model sneakers (CPT footwear). New
Balance moved to terminate the Investigation as to the CPT footwear based on a consent order stipulation. The
undersigned granted the motion on April 9, 2015. (See Order No. 83.) The Commission detennined not to review the
initial determination and issued the consent order. (See Notice of a Cornmn Determination Not to Review an Initial
Determination Terminating the Investigation as to Certain Accused Prods. of Respondent New Balance Athletic
Shoe, Inc. Based on a Consent Order Stipulation and Consent Order; Issuance of Consent Order (May 6, 2015).)
-8

Appx000060
 - PUBLIC VERSION .

_ b) Foreversun ' '

Foreversun is a Chinese company with its principal place of business located at Room

1109-1112, F11, Yousong Science & Technology Building, lst Road of Donghuan, Longhua

Baoan, Shenzhen City, 518109 Guangdong, China. (CX-00001 at 1]482.) Foreversuns Accused

Products include its Blue footwear products. (Id. at 11484.)

c) Ouhai

Ouhai is a diversied enterprise group engaged in the import and export of products,

including footwear products, through its partner factories with an address at Building B, Jinzhou

Building, Wenzhou Avenue, Wenzhou, Zhejiang, China. (CX-00001 at 11560.) Ouhai is a

subsidiary of Wenzhou Jinzhou Group Co Ltd, located at Jinzhou Industrial Park, Caodai

Village, Guoxi Town, Ouhai, Wenzhou, Zhejiang Province, China. (Id). Ouhai has imported

and/or sold for importation the accused footwear products of at least Respondents Aldo and

OPPO, including Aldos Sprenkle and OPPOs Neo footwear products. (CX-00001 at 1111
66,

561-562.)

d) Wenzhou

Wenzhou is a foreign trade company involved in the export of footwear and apparel.

(CX-00001 at 11573.) Wenzhou is located at 24/F, Wenzhou International Trade Centre, 8

Liming West Road, Wenzhou 325003,_ Zhejiang, China. (Id.) Wenzhou is a subsidiary of

Wenzhou Intemational Trade Group Co., Ltd., located at I3/F, Wenzhou International Trade

Center, 236 West Liming Road, Wenzhou City, Zhejiang Province, and does business as

Whenzhou King-Footwear C0., Ltd. (Id).Wenzhou has imported and/or sold for importation the

accused footwear products of at least Respondent Ositos, including Ositioss Mens Low-Top

footwear products. (Id. at 1111

66, 575-576.)

_ 9 _

Appx000061
 PUBLIC VERSION

e) Xinya I

Xinya specializes in design, development, ecommerce, import and export trade,

warehousing logistics and manufacturing, with an address at Floor 4, Building A, China Shoes

Capital, ChendaiTown, Jinjiang, Fujian 62211, China. (CX-00001 at 1]545.) Xinya has imported

and/or sold for importation the accused footwear products of at least Respondent Fila, including

Filas Original Canvas footwear products. (Id. at 1111

66, 548-549.)

C. The Asserted Trademarks

I Generally, the anatomy of a shoe is divided into three parts: (1) the upper, which is

the material portion that more or less surrounds and covers the top of the foot; (2) the midsole

portion between the upper and the outsole that can provide cushioning and/or support structure to

the shoe; and (3) the outsole, which refers to the tread or bottom portion of the shoe ordinarily

in contact with the ground. (CX-00001 at 118, n. 1.) In this Investigation, Converse asserts

common law and federally registered trademark rights in the midsole and outsole designs of

Converses' Chuck Taylor All-Star shoes. (Id. at 111]

2, 4, 8.)

1. Converse Midsole Trademark (CMT)

Converse asserts that its registered trademark and common law trademark rights cover

the combination of the toe cap, multi-textured toe bumper, and two midsole stripes that

Converse commonly uses in connection with All Star shoes (i.e., the CMT). (CIB at 6.) ' "

On August 6, 2012, Converse led an application to register the midsole design. At that

time, Converse described its midsole trademark as consisting of the design of the two stripes on

the midsole of the shoe, the design of the toe cap, the design of the multi-layered toe bumper

featuring diamonds and line pattems, and the relative position of these elements to each other.

(CXOO226.0015.)The U.S. Patent and Trademark Ofce (USPTO) issued the 753

-10

Appx000062
 PUBLIC VERSION

Registration on the Principal Register on September 10, 2013. (CX-00002.0002.)

The undersigned believes the asserted trademark rights in the CMT should be dened in

accordance (with the depiction (see below) and description of the mark found in the 753

Registration, which states that the mark consists of the design of the two stripes on the midsole

of the shoe, the design of the toe cap, the design of the multi-layered toe bumper featuring

diamonds and line patterns, and the relative position of these elements to each other. (Id; see

also CX-001226.001 5 .)

\ \ 1'1" .-'~"
\ -*=~>-
ex-ee'~
,
(CX-002260023; CX-000020002.)

2. Converse Outsole Trademark (COT)

Converse also asserts protectable rights in the outsole design, which is at issue only with

respect to the Defaulting Respondents. (CIB at 8.) Converse claims that these rights cover a

distinct diamond pattem outsole used in connection with the Chuck Taylor All Star shoes, as

shown below. (Id.)

cmwsi it T Gyms;

(CPX-0035; CPX-0036.)

- 11

Appx000063
 PUBLIC VERSION .

Converse holds two federally registered trademarks related to the COT the 960 and

l03 Registrations. (CX-00003; CX-00004.) The USPTO issued the 96ORegistration on March

27, 1990 and the lO3 Registration on July 3, 2007. (CX-0004; CX-00228; CX-10371; CX

00003; CX-00227; CX-10372.) The designs depicted in the 960 and l03 Registrations are

shown below:

. - 'f"""v

~,,::, 2 \
~-::,@|:::->@z'/.,;~ ~7/ ~-- i:#
*
-.:1,'_:;':g;,_,'rx * " ,

960 Registration (CX-4)

11-}I_\/
WQ12?-M.
ii
gxvu IP14

103 Registration (CX-3)

(CX-00004; CX-00003.) Both registrations are incontestable. (CX-00001 at 111]

39, 41.)

II. IMPORTATION OR SALE

Section 337(a)(l) prohibits, inter alia, [t]he importation into the United States, the sale

for importation, or the sale within the United States after importation by the owner, importer, or

consignee, of articles that infringe a valid and enforceable United States trademark registered

under the Trademark Act, if an industry in the United States relating to the articles protected by

the trademark exists or is in the process of being established. 19 U.S.C. l337(a)(l)(C), (a)(2).

Section 337 of the Tariff Act also prohibits unfair methods of competition and unfair acts in the

importation of articles into the United States, or in the sale of such articles by the owner,

importer, or consignee, the threat or effect of which is to destroy or substantially injure an

industry in the United States. l9 U.S.C. l337(a)(1)(A).

_ 12 _

Appx000064
 PUBLIC VERSION .

Skechers, Walmart, New Balance, and Highline have all entered into stipulations

regarding importation, wherein they concede that the importation requirement of section 337 is

satised. (CX-04l57C (Walmart); CX-04159C (New Balance); CX-O9309C (Skechers); CX

1l259C (Highline).) As to the Defaulting Respondents, the evidence demonstrates that the

importation requirement is also satised. (See, e.g., CX-00001 at 1111

625, 643,647-650; CX

OOO41(Dioniso); CX-00190 (Foreversun); CX-00l8lC (Xinya); CX-00184C (Ouhai); CX

O0188C (Wenzhou).)

Accordingly, the undersigned hereby nds that the importation requirement of section

337 is satised with respect to Skechers, Walmart, Highline, New Balance and the Defaulting

Respondents.

III. JURISDICTION

A. Subject Matter Jurisdiction _

Section 337 confers subject matter jurisdiction on the Commission to investigate, and if

appropriate, to provide a remedy for, unfair acts and unfair methods of competition in the

importation, the sale for importation, or the sale aer importation of articles into the United

States. See 19 U.S.C. 1337(a)(1)(A), (a)(l)(C) and (a)(2). Converse led a complaint alleging

a violation of this subsection. Accordingly, the Commission has subject matter jurisdiction over

this Investigation under section 337 of the Tariff Act of 1930. Amgen, Inc. v. U.S. Int l Trade

Comm n, 902 F.2d 1532, 1536 (Fed. Cir. 1990). *

B. Personal Jurisdiction

Skechers, Walmart, Highline and New Balance all have participated in this Investigation.

The Commission therefore has personal jurisdiction over them. See, e.g., Certain Optical Disk

Controller Chips & Chipsets & Prods. Containing Same, Including DVD Players & PC Optical

_13_

Appx000065
 PUBLIC VERSION . .

Storage Devices, Inv. No. 337-TA-506, Initial Determination at 4-5 (May 16, 2005) (tmreviewed

in relevant part). By defaulting, the Defaulting Respondents have waived their right to contest

that in personam jurisdiction exists. See Certain Protective Cases and Components Thereof Inv.

No. 337TA-780,Initial Determination at 46 (June 29, 2012) (Protective Cases).

C. In Rem Jurisdiction

As discussed above, Skechers, Walmart, Highline and New Balance do not dispute that

the importation requirement of section 337 is satised. See Section II, supra. The Commission

therefore has in rem jurisdiction over the Accused Products by virtue of the fact that accused

footwear products have been imported into the United States. See Sealed Air Corp. v. U S. Intl

Trade Comm n, 645 F.2d 976, 985 (C.C.P.A. 1981).

IV. VALIDITY OF THE CMT

In order for a trademark to be valid, it must be nonfunctional and distinctive (i.e., has

acquired secondary meaning). Certain Ink Markers & Packaging Thereo Inv. No. 337-TA

522, Order No. 30 at 26 (July 25, 2005) (Ink Markers). Under the Lanham Act, federal

registration is prima facie evidence of validity. 15 U.S.C. 1057(b); Certain Handbags,

Luggage, Accessories, & Packaging Thereof; Inv. No. 337-TA-754, Order No. 16 at 6 (Mar. 5,

2012) (Handbags). This presumption shift[s] the burden of production to the defendant.

Apple Inc. v. Samsung Elecs. C0., 786 F.3d 983, 995 (Fed. Cir. 2015). Accordingly, in order to

establish that the trademark is not valid, it is Respondents burden to establish, by a

preponderance of evidence, that the trademark is not distinctive and/or that it is functional.

This presumption does not apply to the asserted common law trademarks, however.

Converse therefore bears the burden of establishing that the common law trademarks have

secondary meaning and are not functional. Wal-Mart Stores Inc. v. Samara Brothers Inc, 529

-14

Appx000066
 PUBLIC VERSION

U.S. 205, 216 (2000). The evidence shows that the common law and federally registered rights

are co-extensive in:scope. (CX-O0247C at Q/A 22-24.) Thus, the burden is the only difference in

the validity analysis.

A." Secondary Meaning

To establish that trade dressu is distinctive, the evidence must show that the trade dress

has acquired secondary meaning. Ink Markers, Order No. 30 at 27. Secondary meaning occurs

when in the minds of the public, the primary signicance of a [mark] is to identify the source of

the product rather than the product itself. Id. (quoting Wal-Mart Stores, Inc. v. Samara Bros.,

Inc., 529 U.S. 205, 216 (2000)).

The ITC considers direct and circumstantial evidence to assess secondary meaning,

including: (1) the degree and manner of use; (2) the exclusivity of use; (3) the length of use; (4)

the degree and manner of sales, advertising and promotional activities; (5) the effectiveness of

the effort to create secondary meaning; (6) the evidence of deliberate copying; and (7) the

evidence that actual purchasers associate the trade dress with a particular source. Certain Digital

Mullimeters, and Products with Multimeter Functionality, Inv. No. 337-TA-588, Order No. 22 at

8 (Feb. 4, 2008) (unreviewed) (Digital Multimeters). These factors are not weighed equally.

Rather, the strongest and most relevant evidence regarding whether a mark has acquired

secondary meaning . . . is evidence by a public opinion survey or poll. Ink Markers, Order No.

30 at 27. Thus, the undersigned will analyze the last factor rst.

11 Respondents led a motion in limine with respect to the burden. In that motion, Respondents argued that
[b]ecause all Respondents began selling their Accused Products prior to the date of Converses trademark
registration, Converse does not benet from any evidentiary presumptions. (Respondents Motion in Limine No. 8
to Conrm the Burden of Proof at 2.). The undersigned denied this motion.
12For this section, trade dress refers to the asserted federally registered and common law trademarks. .
" -15

Appx000067
 PUBLIC VERSION

1. Evidence that Actual Purchasers Associate the Trade Dress with a

Particular Source '

The Commission relies upon eight factors in determining the credibility and reliability of

surveys:

(1) Examination of the proper universe;

(2) A representative sample drawn from the proper universe;
(3) A correct mode of questioning interviewees;
(4) Recognized experts conducting the survey;
(5) Accurate reporting of data gathered;
(6) Sample design, questionnaire, andinterviewing in accordance with generally
accepted standards of objective procedures and statistics in the eld of
surveys
(7) Sample design and interviews conducted independently of the attorneys; and
(8) The interviewers, trained in this eld, have no knowledge of the litigation or
the purpose for which the survey is to be used.

Ink Markers at 27-28.

In support of their claim that the CMT has acquired secondary meaning, Converse

introduced the testimony of two experts, Dr. Ford and Dr. McDonald, each of whom performed

surveys which they claim support a nding of secondary meaning. Respondents, in turn,

introduced the testimony of two different experts, Ms. Butler and Dr. Stewart, whose results

Respondents claim weigh against such a nding. Staff argues that Ms. Butlers surveys are the

most credible and reliable evidence [of secondary meaning] and should be given the greatest

weight. (SIB at 25.) The specics of each of these surveys are discussed in further detail below.

a) Design of Test and Control Shoes

One of the key disputes between the parties with respect to the reliability of the surveys

involves the design of the control and test shoes used in each of the surveys. Respondents

contend that the test and control shoe should be as similar as possible, with the only difference

being that the design elements here, the CMT are removed in the control shoe, but present in

the test shoe. (See, e.g., RIB at 21.) Converse, on the other hand, insists that the design of the

_15_

Appx000068
 PUBLIC VERSION t

control shoe must be selected in order to reduce noise,13while not being so far removed as to

drive association away from Converse. (See, e.g., CIB at 35-36). Resolution of this dispute will

determine the weight that the undersigned should give to the survey results of Dr. Stewart and

certain surveys of Dr. Ford and Ms. Butler.

i. Dr. Stewarts Survey

Dr. Stewart conducted two surveys: an Adult Shoe Survey, consisting of female

customers who reported that they either had purchased sneakers within the past six months or

planned to purchase sneakers in the next six months (RX-2090 at Q/A 36); and (2) a Childrens

Shoe Study, which consisted of parents of female children who reported that they had purchased

sneakers for their daughters (ages 3-10 years) in the past six months or that they planned to do so

within the next six months. (1d.) Dr. Stewarts survey used a test image of a [Chuck Taylor All

Star] sneaker with the three design elements and a control image of the same [Chuck Taylor All

Star] sneaker without those three design features. (RIB at 28 (citing RX-2090.002-.0l4).)

According to Respondents, [t]he only differences between the test and control images were the

product design elements of the asserted trade dress. (Id) Below are depictions of the control

and test shoes used by Dr. Stewart:

'3 Noise typically encompasses results that are unintentionally created either by the design of the survey or the
participation in the survey or the result of extraneous results, or factors other than what were trying to test. (Butler,
Tr. at 623:5-9.)
-17

Appx000069
 PUBLIC VERSION

Control Test

.=\( ,\
s
a._' , \
5 n.
V qr . s. a
W Q.
xi
M n"X
Adult C"0nh'ol AlulgTgg

1 ...> . . _

I I1 \ I \
' X l.

p J - .1
'5 '- 5- '
i 1 s, .
3 "*

Kids Control Kids Test

(Id-)

Respondents explain that Dr. Stewa1ts survey reported only 12% and 15% net mentions

of Converse in the adult survey and child survey, respectively. (Id. (citing RX-2090.002-016).)

Respondents contend that, when the survey respondents did mention Converse, it was for reasons

other than the CMT, and the survey respondents rarely mentioned any of the three claimed

design elements in their responses. (Id (citing RX-2090.002-0.19).)

Converse asserts that Dr. Stewarts results are actually consistent with a nding that the

CMT has secondary meaning. (CIB at 40). Converse notes that Dr. Stewarts survey found that

' -18

Appx000070
 PUBLIC VERSION

52% and 67% of test respondents associated [the Converse high-top sneaker bearing the CMT]

with Converse._(Id. (citing RX-2090 at Q/A 52.).) Converse also contends, however, that Dr.

Stewarts surveys suffer from two aws. First, Converse asserts that Dr. Stewarts control shoes

were improper. (CIB at 40; CRB at 19). Converse explains that the control was designed to cue

survey respondents to think of Converse, thereby articially elevating the noise and lowering

the net results. (CRB at 19 (citing CX-10843C at Q/A 94, 97; CX-11044 at .003, .012-.Ol3).)

Converse also asserts that the control looks almost identical to an All Star shoe with an all

white CMT. (Id (citing RDX-32C at .003-.004; CDX-4.0011).) Finally, Converse argues that

the survey universe was under-inclusive, as Dr. Stewart excluded men altogether in one sample

and, in the other, excluded parents who purchased sneakers for their sons. (Id. at 20 (citing'CX

10843C at Q/A 112-124; Stewart, Tr. at 699114-701111-14).) '

Staff agrees that Dr. Stewarts survey fails to satisfy the rst of the Commission_sSurvey

Factors. (SIB at 34). Specically, Staff asserts that the universes selected for the surveys are

under-inclusive and do not represent all the actual and prospective purchasers of Converses

Chuck Taylor All Starishoes. (Id. (citing CX-10843 at Q/A 112-124).)

Respondents argue that the survey universe was proper. Respondents assert that Dr.

Stewart-offered unrebutted testimony that there is a negligible difference between the survey

responses of men compared to women in his surveys, and no appreciable difference in results by

gender in Dr. Fords and Dr. McDonalds surveys. (RIB at 29 (citing Stewart, Tr. at 732:25

733:19).) They assert that there is no evidence that Dr. Stewarts survey results would have

been any different had Dr. Stewart included more men in his study. (RRB at 20-21 (citing IX

O416C at 287:1-1 1, 306:3307:2).)

_ 19

Appx000071
 PUBLIC VERSION

Respondents also contend that the control shoes wcre appropriate. They assert that the

controls were carefully designed to measure secondary meaning of the alleged midsole

trademark. (RIB at 29). Respondents insist that the failure of Converses experts to adopt this

approach renders their surveys unreliable. (Id. (citing RX-lO266C at Q/A 7).) _

The undersigned agrees with Converse that the most appropriate control is one that aims

to reduce noise and thus Dr. Stewarts selections were improper. The evidence shows that visual

cues in the control shoes used in Dr. Stewarts surveys primed survey respondents to associate

the control stimulus with a Converse brand sneaker. (CX-10843 at Q/A 127.) Specically, the

evidence shows thatthe control stimulus contained other design elements of the Chuck Taylor

All Star high-top sneaker that were highly recognizable and reminded consumers of Converse

including the shape and silhouette of the high-top neck, the brushed metal eyestay grommets, and

the stitching on the upper part of the shoe. (Id. at Q/A 128.) This conclusion is bolstered by the

fact that some of the design elements in the control shoe are part of other trade dress rights

registered by Converse and which are not involved in this Investigation. (CX-10843 at Q/A

129-130; CX-00861.) Because a trademark registration is presumed to be valid, it is therefore

also presumed that these designelements have acquired secondary meaning. As such, it is

presumed that the presence of these design elements in the control shoe would make it likely that

a survey respondent would associate the shoes with one brand ~ Converse.

The evidence conrms:this is the case. Comments from the survey respondents supported

the idea that these respondents did, in fact, associate the high-top design with Converse. (CX

10843 at Q/A 132.) Additional evidence that-the control stimulus created high rates of noise is

found in the fact that 43% of survey respondents in the Adult Shoe Survey and 60% in the

Childrens Shoe Survey sample associated the control stimulus with either Converse or a single

_2Q_

Appx000072
 PUBLIC VERSION

source. (Id. at Q/A 134-135.) The evidence shows that these results are unusually high. (Id. at

Q/A 134.) Indeed, the Respondents other surveys contained signicantly less noise in their

controls. (RX-0l667C at Q/A 28, 34 (indicating the noise in Ms. But1ers surveys was 18.5%

and 24.5%).) '

The undersigned also agrees with Converse and Staff that Dr. Stewarts universe was

under-inclusive. The evidence shows that the proper universe in this Investigation would include

men and parents of male children. (CX-10843 at Q/A 113-124; Butler, Tr. at 612:2-24).)

Accordingly, the undersigned nds that the results of Dr. Stewarts surveys should be

disregarded.

ii. Dr. F0rds Survey

Dr. Ford conducted four separate surveys. The parties dispute whether the control and

test shoes were proper in Survey IV.

Converse explains that Survey IV specically measured secondary meaning of the

CMT. (CIB at 35.) Converse asserts that Dr. Ford isolated the CMT by showing an image of it

on a plain, non-distinctive canvas sneaker upper, which depicted no other potentially distinctive

features that ordinarily appear on the upper of All Star shoes, While the control shoe came as

close as possible to the test stimulus without itself being infringing or misleading. (Id. (citing

CX-00230C at Q/A 71. 131; CX-05017C).) According to Converse, Survey IV shows that

60.65% of consumers (net using 2012 supplemental control; 54.17% using 2012 original control)

associated the CMT with Converse, or with a sole yet anonymous source. (Id. (citing CX

00230C at Q/A 177, 179, 181, 186; CX-5017C at .0014, .0020, .0078, .0084).) Below are

depictions of the control and test shoes used by Dr. Ford:

_ 21 _

Appx000073
 PUBLIC VERSION

~ Control ' ~ Test

--,.

H e
0 Y0 4 It Q _ if "T},,}:p\ g
. - * w. 4/kt

(CDX-0230C.OO4, .018.)

Respondents dispute only the sixth factor that Dr. Ford did not choose a proper sample

design for his surveys. Specically, Respondents assert that Dr. Ford selected an improper

control which did not isolate whether the asserted trade dress is the driver of secondary

meaning. (RIB at 23 (citing Johnson, Tr. at 545:2-8; RX-10274 at Q/A 58-62; RX-l0266C at

Q/A 41-46).) This complaint is grounded in the notion that the general nlle in selecting a

control is that it should share as many characteristics as possible with the test stimulus with the

exception of the characteristics being measured. (Id. (citing Ford, Tr. at 264:7-16).)

Respondents allege that Dr. Fords control shoe differed considerably by using a different color

sole, a different overall shape, a different shoe tongue, a greater number of laces, a different

opening for the foot, and many other differences. (Id. at 24 (citing Johnson, Tr. at 536:l2

545:1).) Respondents also note that, on the other hand, the test image included numerous design

elements beyond the claimed elements (including the overall shape, the extended tongue, the foot

opening, and the laces) . . . each of which is in fact a potentially distinctive feature of [the

Chuck Taylor All Star] brand shoes. (RRB at 18 (citing Ford, Tr. at 296:6-304:6).)

-22

Appx000074
 . PUBLIC VERSION

Staff agrees that the control used by Dr. Ford was improper. (SIB at 33.) Staff notes that

more than 50% of the respondents who saw the control stimuli associated it with a brand other

than Converse, such as Airwalk, Vans, Keds, etc. (Id. (citing CX-230C at Q/A 179).)

In response, Converse contends that [a]ny differences between the uppers are negligible

and there is no evidence that they drove association toward or away from Converse. (CIB at 36

(citing Butler, Tr. at 628:1-630123; 632:6-633:8; 633:20-23; Stewart, Tr. at 722:ll-18: 724110

13; 724:18-725:18; 726114-728122).) Converse also asserts that a commonsense comparison

shows that there is nothing materially different between them other than the CMT. (CRB at 21

(citing cx-230c at Q/A 110, 183).)

l The undersigned nds that the Dr. Fords study was awed due to the use of an improper

control shoe. The evidence shows that there are design elements in the control shoe that may

have primed survey respondents to name other brands. (RX-10266C at Q/A 45 (testimony from

Dr. Stewart indicting that the differences in the control show minimize association with

Converse).) For example, the control shoe contained a black midsole. While Dr. Ford testified

that he did not believe that a black midsole would lead survey respondents away from Converse,

he did not offer any survey data to support this belief. (Ford, Tr. at 324:24-325:5.) Additionally,

although he designed a supplemental control to test Whether the color of the laces affect the

response, he did not do the same to test sole color. (Id. at 321:11-16.) The results of the survey

conrm that design elements present only in the control shoe cued survey respondents away

from Converse. The evidence shows that 50.46% of survey respondents associated the control

shoe with another brand such as Airwalk, Vans, or Keds, while only 9.26% associated the test

shoe with these brands. (CX-0023OC at Q/A 177-179.) Viewing the evidence in this 1I12lIl11I',
it is

-23

Appx000075
 PUBLIC VERSION

clear that the noise from Survey IV is also unusually high. (See CX-10843C at Q/A 134

(indicating that noise levels of 43% and 60% were unusually high).)14

The evidence is, however, inconclusive as to whether the differences in the test shoe may

have articially elevated noise and cued survey respondents to think. of Converse. The

evidence shows that Dr. Fords test shoe had a different color sole, tongue, and foot opening than

the control shoe. (Ford, Tr. at 302:4-304:6.) There is no evidence in the record, however, that

shows that survey respondents necessarily associate these design elements with Converse. With

respect to sole color, Dr. Ford explained that Converse makes shoes with both a white and black

sole, many other companies make shoes with a white sole, and the responses in Dr. Stewart and

Ms. Butlers survey showed that few respondents associated a shoe with Converse because of the

color of the sole. (Id at 324:24-326:1.) Dr. Ford also testified that, viewing the results of Surveys

1 through IV as a whole, one can conclude that the upper of the test shoe did not inuence the

association of the survey respondents. (Id at 335:1-12.) Dr. Ford further explained that the

results of Sun/eys I through III allowed him to conclude that what was driving the secondary

meaning [was] not other aspects of the Converse trade dress but the Converse midsole

trademark. (Id. at 331:17-332:2l.) Further, Respondents failed to introduce their own evidence

demonstrating that these design elements did, in fact, prime survey respondents to select

Converse. (Id. at 326:6-328:3.)

Accordingly, the undersigned does not nd the results of Dr. Fords surveys persuasive.

MDr. Lutz opined that the noise in Dr. Fords surveys averaged just over 19%. (CX-10843C at Q/A 139-140.) This
number actually represents the amount of survey respondents who associated the control sneaker with Converse,
Chuck Taylor, or All Star not the number who associated the control shoe with one brand. (CX-00230C at Q/A
179.) .

-24

Appx000076
 PUBLIC VERSION

iii. Ms. Butlers CBSC and Upper Survey

Ms. Butler conducted two surveys to determine Whether the CMT had acquired

secondary meaning. In the rst survey ~ designated as the CBSC and Upper Survey Ms.

Butler used a test image of a sneaker with Velcro straps that was made of leather material onto

which she placed the CMT. (RIB at 26 (citing RX-1667 at Q/A 49-57).) Below are depictions of

the control and test shoes used by Ms. Butler in this survey:

1 _ Control I ' Test p

/i\/ .
i .w*"'i ,/ .. \

i ~. at" = I " . 4..

I '11 I ;vf::,- r_ I 3 2.3;. ._._y_ , 1- I
. WW3 -
i [__:;~:~_ _ WM

According to Respondents, Ms. Butler used a control image that was identical to the test image

but for the toe cap, toe bumper, and midsole stripes. (Id. (citing RX-1667 at Q/A 63).)

Respondents contend that more survey respondents indicated that they recognized the control

shoe, without the design elements of Converse's asserted trade dress, as the design of a single

brand. (Id. at 27 (citing RX-1667 at Q/A 125-126).) As such, Respondents contend that the

specic design elements that make up Converses asserted trade dress do not have secondary

meaning. (Id. (citing RX-1667 at Q/A 139).) '

Staff explains that the CBSC and Upper Survey tested Converses assertion that the

CMT acts as a source identier when combined with any style or upper of a shoe. (SIB at 26

(citing RX-1667 at Q/A 47).) Staff notes that in response to the CBSC and Upper Survey, 17%

_25

Appx000077
 _. PUBLIC VERSION .

of respondents from the test group and 18.5% of respondents from the control group indicated

that they recognized the design as one brand, for a net of -1.5%, and in an open ended response,

7.0% of respondents from the test group and 0% of respondents from the control group named

Converse, for a net of only 7%. (Id. at 27 (citing RX-1667 at Q/A 30, 33, 125-126, 135-136).)

Based on the results of this survey, Staff believes the evidence with respect to the CBSC and

Upper Survey shows that when the alleged trademark is attached to a sneaker upper design that

does not have any other indicia of a typical Converse All Star shoe (held constant over test and

control), consmners do not recognize the design elements at issue as a design of a single brand of

sneaker. (Id. (citing RX-1667 at Q/A 129, 139).)

Converse asserts that the results of the CBSC and Upper survey should be disregarded.

Converse_notes that Ms. Butler chose an orthopedic, Medicare-approved Oasis shoe as the

base for her control and test shoes. (CRB at 19 (citing Butler, Tr. at 584:1-9; CDX-3.000l

.00O2).) Converse explains that this shoe was not a blank canvas but rather a mash-up of

Oasis and CMT? that looked odd and signaled that the shoe was not Converse. (Id. (citing

Butler, Tr. at 607:7-608.1; cox-3.0004; RX-1667 at Q/A 57).)

Converse further contends that Ms. Butlers use of the word recognize in her survey

questions was improper. (CIB at 39 n. 15.) Converse explains that when Ms. Butler asked survey

respondents if they recognized (i.e., remember based on having seen it before) the image as

the design of one brand, . . . [t]he objectively correct answer to this question is no because [the

survey] respondents could not have possibly seen it previously. (Id. (citing RX-1667 at Q/A 50

51, 57; Butler, Tr. at 588223-5905, 606:15, 607:725; CX-10843C at Q/A 56).) Converse

explains: .In fact, 60% of respondents said they did not recognize the stimulus as the design of

any particular brand of sneakers. (Id. (citing Butler, Tr. at 606: 1-5).)

-26

Appx000078
 . PUBLIC VERSION

Respondents claim that Converses critiques of Ms. Butlers surveys are me1itless.

(RIB at 27.) Respondents assert that Ms. Butlers control and test shoes Werecarefully designed

to measure whether the asserted trade dress in and of itself has secondary meaning. (Id.) They

also contend that Ms. Butlers questions were proper. (Id. (citing RX-1667.024-.027; RX-1808;

JX-04l0C at 121:4-16).)

Staff agrees that [s]econdary meaning surveys do not require the use of the word

associate, and Ms. Butlers use of recognize was not improper. (SIB at 30 (citing McCarthy at

l5:l).)
The undersigned nds that Ms. Butlers use of the Oasis shoe as the basis for designing

her control and test shoes was improper. In a webinar given prior to the hearing, Ms. Butler

explained that, when designing a control, it is possible to create a product that is so Lmusualor

so different from whats existing in the marketplace that it can cause problems for your control

condition. (Butler, Tr. at 624: 2-7 (quoting from CX-872).) The evidence shows that this is what

occurred here.

Specically, the evidence shows that the features on the Oasis shoe made it more likely

that survey respondents would not associate the brand with Converse. This is most evident when

one compares the results of Ms. Butlers CBSC Only survey with the results of her CBSC and

Upper survey. In the CBSC Only survey, a net of 21.5% survey respondents recognized the

CMT as the design of Converse. (RX-1667 at Q/A 34-36.) Yet, when this same design was

placed on an Oasis shoe, a net of negative 1.5% of survey respondents recognized this design as

Converse. (Id at Q/A 28-30.) A comparison of these results shows that there is something about

the application of the CMT to the Oasis shoe that deterred survey respondents from associating

the shoe with Converse. (CX-lO843C at Q/A 84.) This conclusion is bolstered by the fact that the

-27

Appx000079
 PUBLIC VERSION

results of Ms. Butlers CBSC and Upper survey were far lower from every other secondary

meaning survey submitted in the case. (RX-2090C at Q/A 52 (Dr. Stewarts results nding a net

of 12% in the Adult survey and 15% in the Parents survey); CX-0023OC at Q/A 180-181

(Dr. Fords results in Survey IV nding a net association of 54.17%); CX-00235C at Q/A 88

(Dr. McDonalds results nding a net association of 49%).)

The problems with Ms. Butlers choice of control are compounded by the fact that Ms.

Butler asked whether the survey respondents recognized the shoe. The parties dispute whether

it is appropriate to use the word recognize rather than associate when conducting a

secondary meaning survey. Both Converse and Respondents point to excerpts from the well

respected treatise, McCarthy on Trademarks and Unfair Competition, in support of their

arguments. This treatise explains:

The prime element of secondary meaning is a mental association in buyers minds

between the alleged mark and the single source of the product. It is the word
association which appears most often in judicial denitions of secondary
meaning by both federal and state courts. The Ninth Circuit Court of Appeals
observed that: Secondary meaning has been dened as association, nothing
more.

MCCARTHY ON TRADEMARKS AND UNFAIR COMPETITION (4th Ed.) 15:5 (hereinafter,

McCarthy). Thus, one can conclude from McCarthy that most surveys will use the word

associate. McCarthy does not specically state that it is improper to use the word recognize,

however, and the Ninth Circuit case cited may even provide support that this word is appropriate.

Levi Strauss &-C0. v. Blue Bell, Ina, 632 F.2d 817, 820 (9th Cir. 1980) (The basic element of

secondary meaning is a mental recognition in buyers and potential buyers minds that products

connected with the symbol or device emanate from or are associated with the same source).

The use of the word recognize is not therefore improper per se, but must be evaluated

in the context of the survey. McCarthy demonstrates, however, that the nonn is to use the word

' -28

Appx000080
 PUBLIC VERSION

associate. The other experts in this case conrm this, as well as Ms. Butlers own Writings.

(RX-2090C at Q/A 48 (Dr. SteWarts use of the Word associate); CX-0023OC at Q/A 140 (Dr.

Fords use of the word associate); Butler, Tr. at 596:6-597110 (citing CX-858) (testimony from

Ms. Butler regarding the use of the word recognize); see also Stewart, Tr. at 691:8-16

(testimony from Dr. Stewart indicating he would not use the word recognize in the context of

his survey); id. at 692224-693:1O (testimony from Dr. Stewart that he would not use the term

recognize to get at the question of secondary meaning, because people can recognize things for

many reasons).) In order to determine whether it is appropriate in this case to deviate from the

norm, one must understand the reason another word was chosen. Yet, Ms. Butler does not offer

any explanation for using the word recognize in lieu of associate.l5 (RX-1667 at Q/A 100

110.) It can be assumed that every choice that an expert makes in formulating a survey is

deliberate and the lack of explanation may be telling. Indeed, Ms. Butler admits that word choice

is important as she testified that asking survey respondents if they recall a stimuli would be

improper. (Butler, Tr. at 600:12-15.) It is also noteworthy that Ms. Butler is silent as to her

selection, even in the face of criticism levied against her by Dr. Lutz.16(CX-10843C at Q/A 55.)

The evidence further shows that survey respondents were, in fact, confused by the use of

the word recognize. Specically, three survey respondents indicated that they recognize the

test shoe as the design of more than one brand of sneaker, yet noted it looked like a Converse

shoe. (Id. at Q/A 78.) For example, one survey responded stated: The bottom of the sneaker

looks in line with a converse [sic] brand sneaker but the Velcro makes it look very odd in

relation to the converse [sic] brand of sneakers. (Id.; see also CDX-10843C.005). The other two

'5 Even Respondents admit that when an expert diverge[s] from [a] well-established practice [she] has used in the
past, the expert is expected to offer a credible reason for doing so. (RIB at 22.)
1During redirect, Ms. Butler was asked why she chose the word recognize, but her answer did not provide any
explanation. (Butler, Tr. at 644113-23.) She only testied that she believe it was appropriate to use the word. (Id. at
644:24-645:2.)
-39

Appx000081
 PUBLIC VERSION . .

survey respondents provided similar comments. (Id) While only a small number of survey

respondents articulated this problem, these comments provide support for the proposition that the

use of the word recognize was problematic in this context."

For these reasons, the undersigned nds that the results of Ms. Butlers CBSC and Upper

Survey should be disregarded. I

b) Other Surveys

i. Dr. McD0nalds survey

Converse asserts that the survey results of Dr. McDonald confirms the CMT has strong

secondary meaning as used in connection with high-top All Star shoes. (CIB at 37 (citing CX

235C at Q/A 25; CX-5185-92C).) Converse explains that a net result of 49% of the survey

respondents identied the test sneaker as Converse. (Id. at 38 (citing CX-235C at Q/A 88; CX

5189C-92C).)

Respondents contend that Dr. McDonalds survey results should be disregarded as her

survey was designed to measure secondary meaning in_the overall appearance of the Chuck

Taylor All Star shoe and not in the asserted design elements. (RIB at 22 (citing CX-0O235C.2,

5; JX-0410C at 167:3-16824).)

Staff agrees with Respondents that Dr. McDonalds survey did not specically test the

CMT. (SIB at 31 (citing CX-00235 at Q/A 35).) Staff also contends that Dr. McDonalds control

was improper and that her test shoe biased the results in favor of Converse. (Id. at 31-32.)

The undersigned agrees with Staff and Respondents that Dr. McDonalds survey results

should not be considered. The survey was designed to test the overall product conguration of

'7 It is worth noting that the evidence shows that survey respondents often have a difficult time explaining why they
do or do not associate a stimulus with a certain brand. (Poret, Tr. at 225:3-17; CX-O0235C at Q/A 70, 91.) Thus, it
may be that the problem was far more widespread but that the survey respondents were unable to articulate why they
did not associate the shoe with Converse.
-30

Appx000082
 PUBLIC VERSION

All Star high top shoes.- (CX-O0235C at Q/A 25; JX-0410C at 167:3-168:4.) Accordingly, in

order for the results to be relevant, there would need to be evidence that the survey respondents

specically identiedthe CMT as the reason why they associated the shoe with Converse. In

this case, the only such evidence is comments provided by survey respondents. A review of this

evidence shows that even these comments do not support Converses view of the survey. While

Converse notes that 43% [of respondents] identied style/design/general appearance as the

reason they associated the shoe with Converse, the evidence shows that design elements not

associated with the CMT ~ such asthe shape of the shoe fall into this category. (CX-OO235Cat

Q/A 91; CX-05189C-92C; RX-l0266C at Q/A 25).) Additionally, 43% of survey respondents

referenced the circle patch as the reason for identifying the test shoe with Converse suggesting

that something other than the CMT caused the association. (CX-00235C at Q/A 91.) As Staff

explained: In the past, the Commission has given no weight to surveys where only a small

number of respondents who associated the product with complainant identied elements of the

asserted trade dress. (SIB at 32 (citing Certain Luggage Prods, Inv. No. 337-TA-243, USITC

Pub. 1969, 1987 WL 450863, at 9-10 (Mar. 27, l987)).)

Accordingly, the undersigned nds that the results of Dr. McDonalds survey should be

disregarded.

ii. Dr. F0rds Surveys I through III

Converse asserts that Surveys I through III evidence the strength of the CMT because

they show consumers strongly associate it with Converse even when features are added . . . or

omitted. (CIB at 36 (citing CX-0023OC at Q/A 162, 169, 175).) Converse explains that Survey I

18The evidence shows that when features are present that are not part of the trade dress, the features may prime
survey respondents to identify the brand for reasons that are not related to the trade dress at issue. (See RX-10266C
at Q/A 12.) Even Dr. McDonald acknowledged that there is no Wayto determine 'om her survey how many survey
respondents identied her stimulus with Converse because of the CMT. (RX-10274 at Q/A 34.)
-3]

Appx000083
 ' PUBLIC VERSION

tested the overall design of the Converse All Star oxford shoe and resulted in net results of

42% association with Converse or a sole yet anonymous source. (Id. at 36-37. (citing CX

00230C at Q/A 68, 99-101, 161; CX-05014C; CDX-O0230C.0010).) In Surveys II and III, one of

the two stripes was removed, resulting in 50.46% and 58.80% association . with Converse or

a sole yet anonymous source, respectively. (Id. at 37 (citing CX-00230C at Q/A 167-169, 171

173, 175, 177, 186; CX-05015C; CX-05016C; CDX-00230C.0014, .0016).)

Respondents argue that Surveys I through III do not, in fact, test the CMT and the results

should therefore be disregarded. (RIB at 25.) Staff agrees. (SIB at 32-33.)

The undersigned nds that Surveys I, II, and III do not establish that the CMT has

acquired secondary meaning. First, Dr. Ford used the same control in Surveys II and III, as he

did for Survey IV. (CX-00230C at Q/A 119-121.) These surveys therefore suffer from the same

problem as Survey IV, and must be disregarded. (See, supra, I.A.1.a.ii.) .

Second, Converse admits that Survey I was designed to test the overall appearance of the

shoe _and not the CMT. (CIB at 36 (citing CX-00230C at Q/A 68, 99-101); see also RX

10266C at Q/A 50.) As with Dr. McDonalds survey, there is nothing in the record to establish

that it was the CMT and not the other design elements, such as the box stitching, grommets, heel

tag, or tongue patch which led the survey respondents to associate the shoe with Converse.

Accordingly, the undersigned will not consider the results of these surveys. See Luggage Prods,

1987 WL 450863, at 9-10 (explaining that record does not establish how mere recognition,

without knowing if the alleged recognition is because of the trademark, is indicative of

secondary meaning). ~

_32

Appx000084
 PUBLIC VERSION

iii. Ms. Butlers CBSC Only Survey

In Ms. Butlers second survey, she used an image depicting only the toe cap, toe bumper,

and two stripes with no sole or upper as her test image. (RIB at 27 (citing RX-01667 at Q/A 65

67).) Her control image was the same as the test, except without the stripes or pattemed toe

bumper and with an altered toe cap. (Id. (citing RX-01667 at Q/A 73).) Below are depictions

of the control and test images used by Ms. Butler: I

Control Test

. V I P O

(Id.) Respondents report that only a net 21.5% of respondents believed the design came from

one brand. (Id. (citing RX-01667 at Q/A 153, 162-164).)

Staff agrees with Respondents that the CBSC Only survey demonstrated that the CMT

does not have secondary meaning. Staff believes the evidence with respect to the CBSC Only

Survey shows that when the alleged trademark in seen in isolation, only a net 21.5 percent

believe the design comes from one brand, and when examined closely, the data reveals that far

fewer name Converse as the brand . . . Indeed, only a net 15% of respondents in this survey

identied the design as coming from one brand and named Converse as that brand. (SIB at 29

30 (citing RX-01667 at Q/A 161).)

Converse argues that Ms. Butlers survey results actually support a nding of secondary

meaning. Converse explains that 46% of survey respondents recognized the CMT as the design

of one brand of sneaker. (CIB at 39 (citing Butler, Tr. at 594:2-5; RDX-5.011).) Converse

-33

Appx000085
 PUBLIC VERSION

asserts that it is improper to rely on the net results of the CBSC survey, as a control is

unnecessary. (Id. at 39 n. 16; CRB at 17.) Converse further asserts that the control image looked

too similar to the CMT and thus articially elevated the control results, thereby depressing the

net. (Id. (citing CX-10843 at Q/A 93-97).)

Converse also argues, however, that there are several problems with Ms. Butlers survey.

Converse asserts that, as with the CBSC and Upper survey, the use of the word recognize

was problematic. (Id. at 39-40.)

The undersigned nds that, unlike with the rst survey, the use of the word recognize

was proper here. Although, once again, Ms. Butler does not provide an explanation for her word

choice with respect to this study, there is no evidence that this survey suffers from the same

problems as the CBSC and Upper survey. (RX-01667 at Q/A 80-'83, 100-110; CX-10843C at

Q/A 63_.)Here, the survey was not asking respondents whether they recognized a_ctitious

shoe; rather, the survey asked if respondents recognized the design elements at issue in this case.

(RX-01667 at Q/A 148.) Unlike the CBSC and Upper survey, there is no evidence of noise to

cue survey respondents away from Converse. (Id. at Q/A 70-71; RDX-O0OO5.006.)Additionally,

there is no evidence of actual confusion based on the use of this word, as there was with the

CBSC and Upper survey.

The undersigned will not consider Converses other arguments with respect to Ms.

Butlers survey. These arguments were not properly raised in-the pre-hearing brief. (See

Converse Pre-Hearing Br. 84 n. 9). Ground Rule 8.2 provides that [a]ny contentions not set

forth in detail in the pre-hearing brief shall be deemed abandoned or withdrawn. (Ground

Rule 8.2). Consequently, -Converse has abandoned these arguments. For these reasons, the

undersigned will consider the results of Ms. Butlers CBSC only survey.

-34

Appx000086
 PUBLIC VERSION

iv. Totality of Surveys . .

. Converse argues that, [w]hile Respondents attempt to explain away each individual

survey, they cannot explain away the totality and consistency of survey evidence establishing

secondary meaning in the CMT. (CIB at 32.) Converse argues that, when viewed together, these

surveys shows that the CMT has acquired secondary meaning. (Id)

Respondents argue that Converses claim is an outright falsehood. (RRB at l7.) They

state: Converses summaries of the surveys are an attempt to filibuster past reality. (Id. at 18.)

Respondents contend that Converses surveys used consistently awed methodology and

obtained consistently awed results. (ld.)

Staff explains that Converses assertion that the surveys of Ms. Butler and Dr. Stewart

actually support a nding of secondary meaning is an entirely new position. (SRB at 20.) Staff

notes that, even if not Waived, Converses argument is factually incorrect. (Id.) _

The undersigned agrees with Staff that Converses argmnents were waived. The

undersigned further agrees that Converses argument is based on misleading data. In support of

its argument, Converse improperly relies on the test gures and not the net. For example, Dr.

Converse explains that, in Dr. Stewarts survey, 52% and 67% of test respondents associated it

with Converse. (CIB at 40 (citing RX-02090 at Q/A 52; RX-lOOO6C.002; RX-1(_)007C.002).)

Even Converses experts, however, acknowledge that [t]he percentage of participants who

associate the elements with a sole source is determined by subtracting the percentage of

participants who associate the control stimulus with a sole source from the percentage who

associate the test stimulus with a sole source. (CX-00230C at Q/A 60.) Accordingly, the

undersigned does not agree that the surveys, when viewed as whole, support a nding of

secondary meaning. ~

_35

Appx000087
 PUBLIC VERSION

v. Overall Conclusion

Given the various aws of the studies, the undersigned nds that the only survey to be

considered is Ms. Butlers CBSC Only survey. In this survey, Ms. Butler found that a net of

21.5% of respondents believed the design came from one brand. (RX-01667 at Q/A 153, 162

164).) The question becomes: How does one view these results?

In explaining how many survey respondents need to associate a product with one brand

for a nding of secondary meaning, McCa1thy notes: Courts have been vague and uncertain in

dening what is the minimum acceptable percentage of persons who have a secondary meaning

in their minds. McCarthy at 15:45; see id. at 32.190. McCarthy also explains, however:

Clearly, small percentage results at or less than 10% are not sufficient. Id. at 15:45. Some

courts have even held that survey evidence of 25% was insufficient. Id. at 32.190 (citing Zippo

Mfg. C0. v. Rogers Imports, Inc, 216 F. Supp. 670 (S.D.N.Y. 1963)); see also CIB at 33 n. 10

(setting forth cases in which the lowest number cited as probative of secondary meaning is 30%.)

Given this, the undersigned nds that 21% is insufficient to establish secondary meaning.

Thus, this factor weighs against Converse.

2. The Degree and Manner of Use ~

Converse asserts that it has consistently and extensively used the CMT since 1932.

(CIB at 18 (citing CX-00242C at Q/A 49, 54-55, 97; CX-00237C at Q/A 109, 123, 128-129, 134,

158, 177; CX-00243C at Q/A 55-57, 60, 187).) Converse notes that the CMT is a prominent

mark that is visible at virtually any angle. (id. (citing CX-00242C at Q/A 64; CX-0O243C at

Q/A 56-57).) Converse explains that, while there are different variations of the All Star shoe, the

CMT is a constant xture that remains unchanged. (Id. (citing CX-00242C at Q/A62-63, 65-66,

68, 70, 74-75, 77; CX-00237C at Q/A 123, 125, 136; CX-0O243C at Q/A 55, 177-87).)

-35

Appx000088
 PUBLIC VERSION ;

Converse also states that Converse has sold All Star shoes to a wide range of people, across

multiple channels. (Id. (citing CX-00242C at Q/A 86; CX-O0243C at Q/A 62, 80-81; C_X

00244C at Q/A 22-38, 82).) .

Respondents and Staff do not contest Converses evidence of its degree and manner of

use of the mark. The undersigned therefore nds that this factor weighs in favor of a nding

secondary meaning. '

3. The Exclusivity of Use

There are three disputes between the parties related to the exclusivity of use factor.

Specically, the parties disagree as to whether the following serve as barriers for achieving

secondary meaning: (1) use of the CMT by third parties; (2) private label sales of shoes bearing

the CMT; and (3) the appearance of Converse shoes alongside third party shoes bearing the

CMT.

a) Third Party Use

Respondents argue that there is no secondary meaning because Converse is not and

never has been the substantially exclusive user of the claimed design elements. (RIB at 14.)

Respondents contend that U.S. footwear companies have sold sneakers with toe caps, toe

bumpers, and midsole stripes since the 1920s. (Id. at 15.) Respondents state that they have

identied hundreds of instances of third party uses of the classic cap-toe sneaker shoes style

from the 1920s to the present day. (Id) In fact, Respondents assert that by the 1940s, the

market for shoes bearing the claimed design elements was dominated by parties other than

Converse Keds, PF Flyers, and Spalding. (Id. at 16 (citing RX-07698C at Q/A 45-46; Golder,

Tr. at 833:l4-83427).) According to Respondents, shoes bearing the CMT continued to be sold

throughout the following decades. (Id. at 16-17). "

_37_

Appx000089
 PUBLIC VERSION

Respondents also argue that there is evidence of more current third party use.

Respondents state that third party sales of shoes with the CMT continued throughout the 1990s

and 20005. (Id at 17-18.) Respondents further argue that [t]he Accused Products at issue in this

Investigation also constitute signicant third party use of the claimed design elements. (Id at

18.) Respondents note that, for example, Skechers has sold more than 700 unique styles of

shoes bearing the claimed design elements since 1998. (Id. (citing RX-02092C at Q/A 50-56;

RDX-0036).) _

Staff believes the evidence demonstrates that for more than half a century there has been

extensive third party use of the CMT. (SIB at 46.) Staff notes that Respondents expert, Mr.

Maeder found over 900 examples [of] shoes with the elements of toe caps, toe bumpers, and

midsole stripes. (SIB at 35 (citing Maeder, Tr. at 883:18-885:18).) Staff also noted that Mr.

Walford analyzed thousands of footwear in various publications and concluded that, since the

late 1920s, there has never been a signicant period of time when shoes with a toe cap, toe

bumper, and an upper and/or lower stripe were not widely available for sale by numerous

companies in the United States. (Id. at 35-36 (citing RX-02087C at Q/A 16, 18, 23, 35-38, 80

81, 83, 90-94, 96, 99-113).) Staff explained that such use continues through the present and that

Converse has acknowledged this competition. (Id. at 42 (citing CX-04032; RX-07698 at Q/A

71)-) I I i

. Converse, in turn, asserts that it has enjoyed substantially exclusive use of the CMT in

connection with its All Star shoes for decades. (CIB at 20.) Converse argues that although

others may have used some elements of the CMT at various points in time, Converse alone has

been consistently and continuously using this same designifor the better part of a century. (Id.

(citing CX-OO242Cat Q/A 55).")Converse further argues that evidence of historical third party

-33

Appx000090
 . PUBLIC VERSION

use has little relevance. Converse asserts that Respondents failed to introduce credible or

material evidence of the sales of the third-party shoes on which they rely, or the commercial

impact if any those shoes might have made on consumers. (Id. at 22 (citing Longshore v.

Retail Royalty Co., 589 Fed. Appx 963, 967 (Fed. Cir. 2014) (third-party use had limited

probative value when there was no evidence showing the extent of its usage or the publics

awareness of its existence).) Converse contends that such evidence is critical -. . . because

consumer perception is the touchstone of secondary meaning. Without that critical showing,

third-party use evidence does nothing to undermine Converses strong evidence of secondary

meaning. (CRB at 12.)

With respect to more current third-party use, Converse contends that among leading

brands available in the U.S. market, Converse is the only brand using the combination of

elements that comprise the CMT, with the exception of Ralph Lauren and Skechers, both of

whom were respondents in this Investigation. (CIB at 21 (citing CX-0023 7C at Q/A 175-76).)

In response, Respondents explain that sales data is no longer available because Converse

waited decades to claim that it has rights in the claimed design elements. (RIB at 18 (citing RX

02087C at Q/A 59, 61).) Respondents contend that the majority of their evidence '

advertisements in periodicals and catalogs - shows the actual use of third-party shoes in

commerce. (Id. at 19.) Specically, the evidence consists of advertisements published by one of

the four major catalog retailers in the U.S. during the twentieth century: Sears, Montgomery

Ward, J.C. Penney, and Spiegel. (Id. (citing RX-02087C at Q/A 35).) Respondents introduced

testimony that these catalogs enjoyed wide distribution and generated signicant sales and that

catalog shopping was ubiquitous in American culture during this time period. (RIB at 18; RRB

at 12.)

-39

Appx000091
 PUBLIC VERSION

Staff asserts that it is not surprising that sales records no longer exist, given the age of

the third-party uses. (SIB at 43.) Staff contends: Nevertheless, there is ample evidence in the

record that the sales of the advertised shoes were not insubstantial. (Id. (citing RX-02087 at

Q/A 35-76, 114; RX-02091C at Q/A 33-82; RX-07698 at Q/A 51-52, 55-56, 73-79; Maeder, Tr.

at 831:6-834:7, 890:7-891 :7).)

The undersigned nds that this factor does not weigh against a nding of secondary

meaning. First, the undersigned notes that the mere fact that there is historic third party use of the

mark by others does not defeat a claim of secondary meaning. Palm Bay Imports, Inc. v. Veuve

Clicquot Ponsardin Maison Fondee En 1772, 396 F.3d 1369, 1373 (Fed. Cir. 2005) (Absent

evidence of the consuming publics awareness, [the third-party use] standing alone does not

sufce.). There may be historical uses of a mark by third-parties that become irrelevant as one

specic party begins to substantially and continuously use that mark. Indeed, under the Lanham

Act, one need only ve years of substantial and exclusive use of the mark for trademark

registration. 15 U.S.C. l052(i). History should not unnecessarily restrain a mark such thatany

use by third parties bars subsequent registration of that mark in perpetuity.

Historical third-party use of a mark is, however, relevant to the question of whether a

mark has gained secondary meaning. It may well be that a mark could be substantially or even

exclusively used by a company in the ve years prior to the claim of distinctiveness, but yet

still lack secondary meaning due to consumers continued association of the mark with other

third-party historical uses. Just as historical use of a mark alone does not prevent subsequent

secondary meaning of the mark, nor does more recent substantial use of the mark by one

company erase history in the minds of consumers. Rather, the rationale behind examining third

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party use should not be lost. The proper inquiry should be: Does this historic third-party use of

the mark diminish the consumers association of the mark with only one company?

In order to evaluate what constitutes historical third-party use, the undersigned takes into

account two considerations. First, the undersigned considers when infringement first began, as

Converse must establish secondary meaning before this time. Braun, Inc. v. Dynamic Corp. of

Am., 975 F.2d 815, 826 (Fed. Cir. 1992). Although Respondents introduced evidence that the PF

Flyers and certain Skechers shoes were sold in the 1990s, they did not establish that these shoes

are Accused Products or that they use the CMT. (RX-O2092C at Q/A 50; RX-03296.0019

(indicating that a platform version of shoe with a toe cap and bumper was introduced in 1998).)

Instead, the evidence shows that the rst Accused Product was sold in 2003. (RX-00001C at Q/A

173-205; see RIB at 34.) Second, the undersigned considers the average consumer of the All

Star. The core consumer of the All Star shoe skews young, with the upper age range being a

recent college graduate. (CX-0O243C at Q/A 61-62; see also CX-00230C at Q/A 86-91

(indicating that data from NPD group indicated that [ ] of past purchasers and potential

purchasers of Converse shoes would be between 15 and 30 years old.) Thus, even in 2003, it is

doubtful that the average consumer would have a detailed understanding of the history prior to

the 1980s, and possibly the 1990s. For these reasons, use from the 1920s through the 1980s will

be referred to as historic third-party use. .

Respondents produced a wealth of evidence regarding historical third-party use. (RX

07698C at Q/A 34-62; RX-02087C at Q/A 18, 98-111.) The undersigned agrees that sales data is

not a prerequisite to consideration of this evidence, as Respondents have demonstrated that shoes

bearing the CMT were continuously sold in catalogs with vast consumer bases. As Mr. Maeder

tcstied, shoes bearing the CMT obviously must have sold or they would notihave been

_41

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included year after year after year, decade after decade after decade in these catalogs. (Maeder,

Tr. at 887:21-888:8.) The undersigned further nds that there is sufcient evidence that these

catalogs enjoyed wide circulation and were used by the general public. (RX-02091C at Q/A 38

46, 51-60, 64-71; RX-09996C - RX-10001C; RX-O2087C at Q/A 41-42, 45-46, 51-S6, 57.) '

The undersigned nds, however, that there is insufcient evidence that this historic third

party use diminishes the relevant consumers association of the mark with Converse. Third-party

use even when extensive cannot serve as indicia of a consumers likelihood to associate the

trade dress with more than one brand when there is no evidence that the third-party use had an

impact on the relevant consurners consciousness. The sales data introduced by Respondents

only shows that consumers in the past were aware of these third-party uses.

While there is evidence that experts in fashion history are aware of the historic third-party

use, Respondents did not introduce evidence that a consumer of shoes bearing the CMT in 2003

would be familiar with these past uses of the CMT. It is irrelevant, for example, if the CMT was

associated with Keds in the past if the relevant consumer is unaware of that fact. See, e.g.,

Lexington Mgmt. Corp. v. Lexington Capital Partners, 10 F. Supp. 2d 271, 281 (S.D.N.Y. 1998)

(explaining that extensive third-party use does not contradict a nding of secondary meaning

where there is no evidence of recognition by consumers). In fact, the evidence in the record

shows that present-day consumers are likely unaware of shoes such as Randy Athletes, Beta

Bullets, or PF Flyers. (RX-10009; RX-10010 (indicating that no respondent who viewed the test

shoe in Ms. Butler or Dr. SteWarts surveys named these shoes as the source of the CMT, while

only 10 of approximately 700 named Keds).)

19Likewise, the inclusion of a Keds sneaker using the CMT in the Dictionary is not evidence that consumers
associate the CMT with Keds or other third parties. (RX-024723.005.) There is no evidence that the average
consumer would be familiar with this dictionary.
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Next, the undersigned considers the evidence regarding more recent third party use.

After reviewing the evidence submitted by Respondents, the undersigned nds that there is

insufcient evidence that Converse was not the substantial user of the mark in recent decades.

Respondents introduced the testimony of Mr. Walford who testied that the use of a toe

cap, a toe bumper, and/or stripes was found on shoes throughout the 19905.20(RX-02087 at Q/A

112.) In support, Mr. Walford cited to 36 exhibits. (Id.) The majority of these exhibits were

either pictures from J.C. Penney catalogs (RX-O2323- RX-02325; RX-02327; RX-02509; RX

02813- RX-02818; RX-02819) or pictures from a publication called Footwear News. (RX

02256; RX-02544; RX-02828; RX-02830-RX-02833; RX-02835-RX-02836).

To be relevant, Respondents needed to demonstrate that consumers were familiar with

both J.C. Penney and Footwear News. Respondents failed to do so. Although Mr. Hanssens

explained that circulation of the J.C. Penney catalog exceeded 10 million in the -1990s, (RX

0209lC at Q/A 64-69; RX-IOOOOC;RX-1000lC), he also testied that only lO% of households

in the United States received the J.C. Penney fall catalog. (Id. at Q/A 70.) Thus, there is

insufcient evidence that the average consumer would be familiar with these J.C. Penney

advertisements. Furthermore, Respondents did not introduce specic evidence as to the number

of shoes bearing the _CMTthat appeared in the J.C. Pemiey catalog during this timeframe, other

than to say that such shoes appeared .consistently. (Id. at Q/A 63.) There is also no data in the

record with respect to the circulation of Footwear News. Given this, the record does not support

a nding that there was extensive third party use of the mark during the 1990s.

Respondents also introduced the testimony of fashion history expert Mr. Maeder. Mr.

Maeder testied that, in the 1990s, shoes bearing the CMT were sold by J.C. Penney, P.F. Flyers,

2Mr. Wolfords testimony with respect to the 19805 through the present is viewed with the caveat that Mr. Wolford
testified that he is not as comfortable with the history of footwear occurring after the 1970s. (RX-02087C at Q/A
I0.) Thus, the weight given to this testimony is diminished. .
. _43_

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Nike, Guess Athletics, Keds, Anaconda, and Fortune Dynamic. (RX-07698 at Q/A 64.) While

Mr. Maeder included pictures of representative shoes by these brands, he did not set forth any

evidence by which one could inter the relative sales of these shoes. (Id.) Mr. Maeder similarly

testied that various brands sold shoes in the 2000s, but, again, failed to provide any evidence

with respect to sales of these shoes. (Id. at Q/A 65 (testifying that Disney, Limited Too, Keds,

and Vans sold shoes bearing the CMT).) Without more, this evidence does not establish that this

third party use had an impact on the mind of the consumer. I

Mr. Walford further testied [a] toe cap, a toe bumper, and an upper and/or lower stripe

conguration was present in many other shoes throughout the 2000s and 2010s. (RX-02087C at

Q/A 113.) In support, Mr. Walford cited to dozens of exhibits. (Id.) These exhibits do not

support a nding that shoes bearing the CMT were prevalent during this timeframe, however.

Several of the exhibits cited by Mr. Walford were from catalogs and advertisements from stores

such as Disney and Limited Too, for which no information on sales or catalog circulation was

provided. (See, e.g., RX-02841 (Footsmart); RX-02238, RX-02844-RX-02848 (Limited Too);

RX-02842 - RX-02843 (Disney); RX-02850 (Eastbay); RX-02851 (Esprit); RX-02258, RX

O2852, RX-02854 RX-02855 (Footwear News); RX-O2259, RX-02856 RX-02857

(Journeys).) Without more infonnation, these documents cannot support a nding that there was

extensive third party use. Other exhibits to which Mr. Walford cited were pictures of shoes sold

on eBay. (RX-02861 ~ RX-02870, RX-02548 RX-02551, RX-02872 RX-02873, RX-02552.)

Even if the eBay user identied the shoe as being from this timeframe which was rarely the

case such a statement does not qualify as proof that the shoe was actually sold during this time.

Still other exhibits in the list were pictures of shoes, with no context such as date offered for sale

or brand. (RX-02874 ~ RX-02880, RX-02569 RX-02573, RX-02881 RX-02883, RX-02576

. -44

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RX-02580; RX-02888.) Without additional information, these pictures camiot serve as proof that

these shoes were actually sold in that timeframe or even that these shoes were sold by third

parties. Some other exhibits were images of shoes cLu*rentlyoffered for sale from websites such

as Yoox.com, without accompanying sales data or circulation, or even proof that these shoes

were sold in the United States. (See, e.g., RX-02885, RX-02887 (depiction of a UK-based

website).) One series of exhibits actually supports the idea that other shoes bearing the mark

were not very popular and thus may not have diminished the association of the mark with

Converse. (See RX-02890 RX-02895 (images of PF Flyers Shoes Archive Collection from

2009 2014 indicated that the popularity of this line of shoes is low).)

Mr. Hanssens also testified that Keds sold shoes bearing the CMT from the l970s to the

present. (RX-0209lC at Q/A 81.) Yet, Respondents did not introduce evidence of sales of Keds

shoes. (RX-02087C at Q/A S9, 76) (testimony from Mr. Walford indicating that he could not

nd sales data for Keds).) Nor did they introduce circulation numbers of advertisements or

catalogs featuring Keds. Indeed, although Mr. Hanssens testified that [it] appears that Keds has

continued to sell retro basketball shoes for many decades, the exhibits he cited are presented

without additional explanation. (RX-02091C at Q/A 81 (citing RX-02479C.O08-016; RX

09240.01l-042; RX-0248lC.008-O22; RX-02482C.015-O17; RX-024830019; RX-02480C.O16

019; RX-02484C.001-003; RX-02485C.00l-011; RX-02486C.Ol7; RX-O2487C.003; RX

O2488C.OO6-008).)A mere reference to advertisements and excerpts from the Keds website

does not provide sufcient evidence to demonstrate that the presence of Keds shoes in the

marketplace impacts Converses ability to establish secondary meaning.

The undersigned is likewise not persuaded by an alleged admission that Keds sold a large

number of shoes. While, in an agreement between Converse and Kids, Converse noted that Keds

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Continuously and exclusively advertised, promoted, distributed and sold shoes bearing the

CMT, this does not provide any infonnation about the volume of sales. (JX-O0072C.)

There is also evidence in the record that, despite the alleged pervasiveness of third parties

using the CMT, survey respondents who associated the shoe with one brand were far more likely

to name this brandas Converse than any other brand. For example, in Dr. Stewarts survey of

adults, 9l% of those who associated the test shoe with only one company or brand named

Converse, Chuck Taylor, or All Star, while no other brand received more than 4% of the

mentions. (CX-10843C at Q/A 136). In the survey of the parents, 95% of those associating the

test stimulus with a single brand or company named one of those three; no other brand received

more than 2% of the mentions. (Id) As Dr. Lutz opined, [t]hese results certainly do not

suggest that consumers are associating elements of the Converse Midsole Trademark with other

brands, regardless of how long those brands may have been on the market. (Id.)

Finally, the undersigned is not persuaded that Respondents sales of the Accused

Products Weigh against a nding of secondary meaning. As noted above, the rst sale of an

Accused Product occurred in 2003. (RX-00001C at Q/A 173-205; RIB at 34.) Respondents did

not introduce sufcient evidence that the sale of these shoes was sufcient to overcome the

presumption that the mark has acquired secondary meaning.

For these reasons, the undersigned nds that Respondents have not introduced sufcient

evidence of third party use. This factor does not weigh against a nding of secondary meaning.

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b) Private Label

Respondents "arguethat Converses use of private labelling weighs against a nding of

secondary meaning. Respondents explain: When a product shape or design is sold by the

authority of plaintiff under several different word marks (e.g., by private labeling for others), it

is more difcult for plaintiff to prove acquisition of secondary meaning. (RIB at 20 (quoting

McCarthy at 8:14).) Respondents introduced evidence that Converse supplied shoes with the

CMT to prisons in the 1990s under the brand name Anaconda. (Id. at 20 (citing RX-0l57lC at

Q/A 62-63; RX-01655; RPX-0007).) Staff agrees and also notes that Converse sold shoes under

the WINNER brand name. (SIB at 46.)

In response, Converse explains that [t]here is no reason to believe and Respondents

cite none that shoes sold exclusively to prisons or other institutions would have any

cormnercial impact on the relevant consuming public. (CRB at 10 n. 5.)

The undersigned nds that Converses private labeling does not Weigh against a nding

of secondary meaning. Although the evidence shows that Converse sold prison shoes in the

1990s under the brand name Anaconda, (RX-0l57lC at Q/A 62-63; RX-01655; RPX-OOO7),

there is no evidence that a consumer would be familiar with this third-party use. (CX-lO845C at

Q/A 50.) Indeed, presumably, one would only know of the Anaconda line of shoes if one was in

prison, Worked at a prison, or regularly visited a prison which supplied their inmates with these

shoes. It is likely that this affects a relatively small percentage of Converses consumers.

Similarly, the evidence shows that Converse made The Winner shoes exclusively for Sears in

the 1970s, but the evidence does not show that todays consiuner would be familiar with that

private label brand. (RX-02087C at Q/A 109.) Without any such evidence, Respondents have

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failed to meet their burden. Accordingly, this factor does not weigh against a nding of

secondary meaning.

c) Sale of Shoes Alongside Competitors

Respondents explain that Converse pennitted its shoes to be sold alongside identical or

very similar shoes being sold under competitors brands names, including house brands. (RIB at

20.) Staff agrees. (SIB at 47-48.)

The undersigned nds that this factor does not weigh against a nding of secondary

meaning. The advertisements cited by Respondents and Staff are from the 1970s and 80s, as are

the advertisements cited by Mr. Walford in his testimony. (RIB at 20-21 (citing RX-02208.05;

RX-02305005; RX-08815; RX-02307003); SIB at 47-48 (citing RX-02208; RX-02305; RX

O2307); RX-02087 at Q/A 109-110).) The evidence does not show that todays consumer would

view Converses shoes alongside third-party shoes bearing the CMT. In fact, the evidence shows

that Converse takes actions to prevent this from occurring. (RX-O2l06C.004) (2013 cease and

desist letter to The Gap, Inc. indicating that Gaps intentional juxtaposition of authentic and

infringing design is highly likely to lead to consumer confusion and to create dilutive

associations with Converses trademarks).) '

4. The Length of Use

Converse asserts that it has continuously used the CMT on its All Star shoes

[ ] of its total business - for over eighty years. (CIB at 23 (citing CX-OO242C

at Q/A 49; CX-0O243C at Q/A 55, 189; CX-O0237C at Q/A 112).) Converse believes that [t]his

is powerful evidence of secondary meaning as the ITC and courts have found secondary

meaning based, in part, on use of a mark for far shorter periods of time. (Id)

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Respondents and Staff do not contest these facts. Although there is no set length of time

for which a trademark must be used, it is clear that the continuous use of a trademark for over 80

years is evidence of secondary meaning. The undersigned therefore nds that this factor weighs

in favor of a nding of secondary meaning.

5. The Degree and Manner of Sales, Advertising and Promotional

Activities

Converse argues that its sales, advertising efforts, and promotional activities weigh in

favor of a nding that the CMT has acquired secondary meaning. First, Converse notes that

shoes bearing the CMT are reported to be the best-selling shoe of all time, with more than [ ]

[ ] pairs sold worldwide. (CIB at 24 (citing CX-00242C at Q/A 6; CX-0()243C at Q/A 21;

CX-00237C at Q/A 182, 188-189, CX-10552; CX-05245C; CX-O5280C-81C; CX-10768)).)

Converse also asserts that it has extensively advertised its All Star shoes with images featuring

the CMT the most prominent and consistent aspect of the shoe. (Id. (citing CX-00237C at

Q/A 124, 126, 201-22)).) Converse further explains that it has featured the CMT in promotional

activities, including a Basketball Yearbook published from 1922 to 1983. (Id. at 26.) Converse

extensively markets All Star shoes on the Internet and through social media, including through

its Facebook page, which has received forty million likes. (Id. at 27.) According to Converse, it

has spent [ ] of dollars advertising and marketing All Star shoes featuring the

CMT. (Id.) For these reasons, Converse contends its sales, advertising, and promotion of All

Star shoes bearing the CMT dwarf those the ITC and courts routinely find sufficient to establish

secondary meaning. (1d.)

Respondents argue that information regarding Converses sales and marketing of the All

Star shoes is irrelevant, as Converse did not direct marketing or advertising toward the claimed

combination of design elements. (RIB at 29-30.) Respondents state that a party is required to

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show a specic lir1kbetween the sales and marketing and the claimed design elements. (Id. at 29

n. ll.) In support of their argument, Respondents introduced the testimony of Dr. Golder who

concluded that the asserted trade dress did not obtain secondary meaning because: (1) Converse

faced signicant marketplace barriers to establishing secondary meaning in the claimed design

elements; (2) Converse did nothing to overcome those barriers; and (3) an analysis of third-party

media shows no association of the design with Converse. (Id. at 30.)

Staff notes that Converse has been selling the Chuck Taylor All Stars since at least the

1930s and in that time has sold over [ ] pairs, which admittedly weighs in Converses

favor. (SIB at 46.) On the other hand, Staff argues that Converses evidence of overall sales,

publicity, and advertisements relating to the Chucks as a whole is not particularly informative

about whether the CMT on its own has secondary meaning. (SRB at 16.) Staff also argues that

the advertisement of Converse shoes along shoes bearing very similar midsole designs weighs

against secondary meaning. (SIB at 47 (citing RX-02087C at Q/A 109; RX-02208; RX-02305;

RX-02307; Fogaity, Tr. at 978:lO-979:l7).) Staff also agrees with Respondents that Converses

failure to engage in look for advertising weighs against secondary meaning. (Id. at 49.) Staff

asserts that, especially due to the high barriers Converse faced, some form of look for

advertising is critica1. (Id. (quoting RX-00O03C at Q/A 193, 197).)

Converse contends that look for advertising is not required to establish secondary

meaning and that courts have favorably considered the types of ads used by Converse in

secondary meaning analyses. (CIB at 26; CRB at 13.) Converse notes that even Dr. Golder

concedes that secondary meaning can develop absent [lookfor] advertising. (CRB at 13 (citing

Tr. at 31523-25).)

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The undersigned nds that this factor weighs in favor of a nding of secondary meaning.

The parties do not dispute that [ ] of pairs of Converse All Star shoes are sold worldwide.

(CX-00242C at Q/A 6; CX-00243C at Q/A 21; CX-0O237C at Q/A 182, 188-189, CX-10552;

CX-O5245C; CX-0528OC-81C; CX-10768). Thus, the sales of shoes featuring the CMT weigh in

favor of secondary meaning. .

The undersigned disagrees that there are marketplace barriers which diminish Converses

ability to achieve secondary meaning. Respondents rst contend that the primary meaning of

at least two of the design elements is functional. (RIB at 30.) This argument is premised on

consumer understanding, yet Respondents did not introduce evidence as to how the consumer

views these design elements. While Dr. Golder testied that customers may associate the design

features of the CMT with functionality or aesthetics, he does not cite to anything, other than a

single comment from the .trademarks prosecution history in support. (RX-00003C_at_'Q/A63.)

Additionally, Dr. Golder testied that that he did not conduct consumer surveys, interview

consumers, or consider any secondary meaning surveys. (Golder, Tr. at 748:21-749211.) Without

such evidence, Dr. Golders testimony is merely speculative.

Respondents nextcontend that Converse and third parties advertised the design elements

as functional and that [t]he toe cap, toe bumper, and midsole stripes were commonly used by

Converses competitors. (RIB at 30-31.) Dr. Golder cited to numerous advertisements in his

testimony, but these advertisementswere from the 1950s 1980s. (RX-0OOO3Cat Q/A 67-95!.)

For the same reasons that the undersigned does not nd historic third-party use relevant when

there is no evidence that todays consumer is aware of such use, the undersigned is not persuaded

by evidence of historic advertisements when there is no evidence that such advertisementsare

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part of the present-day consumer consciousness. The same is true with respect to alleged use of

the CMT by Converses competitors. -

For the nal two barriers, Dr. Golder opined that third-party representations of the CMT

on products other than footwear and depictions of the CMT in numerous trademark registrations

pose barriers to establishing that the CMT is associated with a single source. (Id. at Q/A 117,

132.) While the evidence shows that there are various depictions of shoes bearing the CMT

throughout pop culture, such as on books and in photos, there is insufcient evidence that these

third-party representations harm Converses ability to establish secondary meaning. It is

possible, for example, that a consumer viewing these depictions would simply assume that these

are depictions of a Converse shoe. (See, e.g., CX-l0845C at Q/A 82, 89 (testifying that

consumers may perceive these third party images as iconic, rather than generic); see also Golder,

Tr. at 814:5-11 (testimony from Dr. Golder admitting that it is possible individuals chose the

images because they specically wanted to depict the All Star shoe).) Without any evidence as to

the effect of these third-party depictions in the marketplace, the undersigned carmotconclude

that they diminish Converses ability to achieve secondary meaning.

The undersigned nds that because Respondents did not establish that Converse faced

significant barriers, Respondents arguments with respect to Converses actions in light of these

barriers need not be addressed. _ _

S .

The parties also dispute whether Converses advertising and promotional efforts can

support a finding of secondary meaning. Respondents and Staff contend that look for

advertising - advertising that calls out specic product design features and draws a clear link

between those design features and a single source is necessary. (See RIB at 31 11.12.)

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The undersigned nds that look for advertising is not required to achieve secondary

meaning. See, e.g., Yamaha Intern. Corp. v. Hoshino Gakki C0., Ltd., 840 F.2d 1572, 1583 (Fed.

Cir. 1988) (nding that, [a]lthough the peg head designs were not the sole or primary focus of

the advertising . . . the constant promotional display of the product pictures did contribute to the

recognition of the peg head design as source indicators). Specically requiring that an

advertisement include language that draws attention to the trade dress elevates form over

substance, particularly given the changing nature of advertising in the modem world. A constant

and consistent depiction of the asserted trade dress is sufficient. This is evident when considering

the rationale behind the consideration of advertisement in determining Whether secondary

meaning has been achieved: Is it more likely that a consumer will associate the asserted mark

with one company? _Consistent advertising of a design element in association with a brands

name would make a consumer likely to draw such a connection, particularly when the design

element is a highly visible one that is often featured prominently. McCarthy at 15.52 (If the

seller has featured the designation as a prominent symbol in advertising that has reached many

potential customers, it could be a logical inference that buyers and viewers of the advertising

came to associate the symbol with that seller.)

Here, the evidence is undisputed that [i]n eighty years of Converse advertisements, the

CMT is in just about all of them. (CX-00243C at Q/A 55; see also CX-00237C at Q/A 124,

126.) The evidence also shows that Converse spent [ ] on ads featuring the CMT in the

ve years leading up to the trademark application. (CX-00248C at Q/A 45.) The evidence

likewise shows that the CMT was prominently featured in many of these ads. (CDX

0O243C.0OO1.) While the CMT does not cover the entire shoe, it covers a large portion of the

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shoe. It is not an insignicant detail which is likely to be missed by the consumer. Thus,

Converses advertisement and promotional efforts support a nding of secondary meaning.

6. The Effectiveness of the Effort to Create Secondary Meaning

Converse contends that its efforts to create secondary meaning have resulted in

widespread association of the CMT with Converse. (CIB at 28.) Specically, Converse asserts

that [s]hoes bearing the CMT have enjoyed unprecedented unsolicited publicity. (Id)

Converse states that All Star shoes bearing the CMT have been wom by athletes, celebrities, and

musicians. (Id.) Converse further explains that shoes featuring the CMT have been pictured in

numerous movies and telephone shoes, as well as print media. (Id) Converse notes: [

I ] (Id (citing CX-00243C at Q/A 169-76).) ~

; Respondents argue that the media has not, in fact, recognized the CMT as associated with

Converse. (RIB at 33.) Respondents assert that the unrefuted testimony shows that [t]here were

no media mentions whatsoever of the alleged midsole trademark between 2012 and 2013. (Id.

(citing RX-OOOO3C.O079-0085).Respondents state that none of the many images Converse cites

to in any way call out the claimed design elements. (Id. (citing RX-0OO03C.081-89; RDX

OOO()3C.42-43;RX-O9908C); see also RRB at 16-17).)

The undersigned nds that this factor is neutral. While there is no doubt that the

Converse All Star shoe is popular, [s]econdary meaning is not necessarily the same as

popularity. McCarthy at 15:47. 'To make popularity relevant as evidence, causation between

the trademark and the popularity must be proved. Id. The evidence does not demonstrate the

popularity of the All Star shoe is due to the CMT. Additionally, the evidence does not establish

that buyers associate the shoe depicted in the media, such as TV shows and movies, with only

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one brand. Consumers ofthismedia may believe that the shoes are from different brands, thus

actually disproving secondary meaning. Without additional evidence, this factor is not useful in

determining secondary meaning. '

7. The Evidence of Deliberate Copying

Converse asserts that Respondents and non-parties have copied the CMT. [

] Converse also states that [s]earching

for terms such as Converse, Chucks, and Chuck Taylor on Respondents websites results in

listings for the Accused Products. (Id. (citing CX-00023, CX-00751-52, JX-00005, CX

lO509).) Finally, Converse explains that the CMT has been the subject of counterfeiting, close

copying, and other violations, forcing Converse to spend [ ] to add various

tells to its shoes and engage in an enforcement strategy of sending cease and desist letters and

ling multiple lawsuits. (Id. at 30-31 (citing CX-00245 at Q/A 17, 22, 24, 28, 3253;CX

0s667c).) t

Respondents disagree that there is any evidence that Respondents copied the CMT.

(RRB at 17.)[

]_Respondents also assert that Converses discussion of

counterfeits and incorporation of tclls to distinguish genuine shoes, are inapposite. (Id. at 17

n. 21.) ' ,

Staff does not address this factor as it pertains to secondary meaning.

The undersigned finds that this factor weighs in favor of a nding of secondary meaning.

[ .

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. l

The undersigned likewise nd that the widespread copying by non-parties weighs in

favor of a nding of secondary meaning. The evidence shows that the CMT has been the subject

of counterfeiting and close copying, particularly since 2001. (CX-OO245Cat Q/A 17, 22, 24, 28,

32-53.) The fact that numerous non-parties have deliberately copied the Converse shoe

including the CMT is evidence that it has acquired secondary meaning. See Certain Cube

Puzzles, Inv. No. 337-TA-112, 1982 WL 212672, at *l8 (Sept. 27, 1982) (If [companies]

thought an advantage could be gained by copying [complainants] trademark and packaging

throughout the United States, it is likely that the public was aware of the trademark.).

Respondents arguments that such evidence is irrelevant are unpersuasive.

8. Conclusion

As explained above, the undersigned nds that four factors weigh in favor of secondary

meaning, one factor Weighs against, and two are neutral. Because the factor that weighs against

secondary meaning provides the strongest and most relevant evidence, the outcome here is a

close call. With respect to the 753 registration, however, it is presumed that the trademark is

valid. The undersigned nds that Respondents have not met their burden in proving that it is not.

The common law trade dress is not afforded such a presumption, however. Rather, the

burden rests on Converse to establish secondary meaning. McCarthy at 15:32; see also Flynn v.

-55

Appx000108
 . PUBLIC VERSION

Peters, 377 F.3d 13, 19 (1st Cir. 2004). The undersigned finds that Converse has not done so

here. Specically, Converse cannot overcome the strongest and most relevant evidence from

Ms. Butler that the common law trade dress had not acquired secondary meaning.

B. Functionality

For a mark to be valid, it must also be nonfunctional. Ink Markers, Order No, 30 at 26.

Due to the presumption afforded to the registered trademark, it is Respondents burden to show

that the mark is, in fact, functional. 15 U.S.C. ll15(a); McAirlaids, Inc. v. Kimberly-Clark

C0rp., 756 F.3d 307, 312 (4th Cir. 2014). The same analysis applies to the common law

trademark, but Converse carries the burden.

1. Utilitarian Functionality

There are two types of functionality, defacto a.nddujure:

The former being the use of functional in the lay sense, indicating that although
the design of a product, a container, or a feature of either is directed to
performance of a function, it may be legally recognized as an indication of source.
De jure functionality, of course, would be used to indicate the opposite - such a
design may not be protected as a trademark.

In re Morton-Norwich, 671 F.2d 1332, 1337 (C.C.P.A. 1982).

To assess whether a mark is de jure functional, the Commission applies the Morton

Norwich factors: whether (1) the designs utilitarian advantages are touted in ads; (2) the design

results from a comparatively simple or cheap manufacturing method; (3) utility patents disclose

the designs utilitarian advantage; and (4) commercial alternatives are available. Ink Markers,

Order N0. 30 at 26-27 (citing In re Morton-Norwich, 671 F.2d 1332, 1337 (C.C.P.A. 1982).)

Respondents argue that each element of the CMT is ftmctional from a utilitarian

perspective. (RIB at 42-45.) Specically, they argue that toe caps and bumpers reduce abrasion

and provide structure. (Id. at 42 (citing RX-02086C at Q/A 47-59, 61-81).) Respondents also

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Appx000109
 PUBLIC VERSION .

argue that toe caps and toe bumpers protect toes, and that diamond-and-line texturing on toe

bumpers reduces abrasion. (Id. at 44 (citing RX-O2086C at Q/A 47-59, 61-81).) As to the

midsole stripes, Respondents argue that the stripes designate shoes as suitable for athletic use

and minimize the apparent size of the midsole. (Id. at 44-45 (citing RX-02086C at Q/A 84-88).)

Respondents do not specically address the Morton-Norwich factors.

Converse argues that the Morton-Norwich factors weigh against such a nding. (CIB at

46-49.) Converse emphasizes, in particular, that Respondents have failed to show that

Converses iconic mark, as a whole, somehow is . . . dejure functional. (Id. at 46.) Staff agrees

with Converse that the CMT is nonfunctional. (SIB at 56.)

Va. Advertisements

Respondents assert that decades Worth of Converse and Nike advertisements tout the

functional benefits of the design elements of the CMT. (RIB at 4_3,44.) Converse argues that

these ads focus on individual elements, and not the alleged functionality of the CMT as a whole.

(CIB at 48.) Converse also notes that almost all of the ads are from before 1982, and thus pre

date Converses repositioning of All Star shoes from perfonnance athletic to casual lifestyle

shoes, which rendered irrelevant any supposed performance advantages. (Id) Staff agrees that

these advertisements do not tout utilitarian advantages specic to the design of the CMT, but

instead merely describe some de facto benefits of toe caps and toe bumpers generally. (SIB at

57.) - '

The undersigned nds that this factor weighs in favor of finding the CMT nonfunctional.

The evidence shows that the advertisements on which Respondents rely are from decades ago.

(CX-lO842C at Q/A 75-79.) Additionally, since that time, the evidence shows that Converse has

repositioned its shoes from performance basketball shoes to casual shoes. (CX-00242C at Q/A

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Appx000110
 PUBLIC VERSION

23-33; CX-00243C at Q/A 45-47; CX-00241C at Q/A 18; CX-00234 at Q/A 48-54.) As such,

even if Converse did, at one point, advertise the design elements of the CMT as functional, the

evidence does not show-that it currently does so. See Adidas-Am, Inc. v. Payless Shoesource,

Inc., 546 F. Supp.2d 1029, 1084-85 (D. Or. 2008) (noting that product features once deemed

wholly functional can be transformed over time to non-functional, source-indicating features).

Additionally, the evidence shows that these advertisements tout only certain design elements,

and not the CMT as a Whole. (CX-00241C at Q/A 47-55; C_X-00235 at Q/A 14]-145; CX

10842C at Q/A 74-105).) Functionality determinations should be based on the superiority of the

design as a whole, rather than on whether each design feature is useful or serves a utilitarian

purpose? Textron, Inc. v. ITC, 753 F.2d 1019, 1026 (Fed. Cir. 1985).

b. Manufacturing Method

Respondents assert that it has produced compelling evidence that the CMT affects the

cost of manufacturing the goods. (RRB at 24.)

Converse asserts that the inclusion of the CMT on All Star shoes adds both complexity

and cost to the shoes manufacture. (CIB at 48-49 (citing CX-00247C at Q/A 67, 85-87; CX

53l8C).) Staff argues that this factor is neutral. (SIB at 58.)

The undersigned agrees with Staff that this factor is neutral. The evidence shows that,

although the application of the CMT to shoes may add costs to the process, other methods of

increasing durability would likewise add costs. (CX-00234 at Q/_A149-52; RX-02086 at Q/A 60,

76-78, 82-83).)

_59_

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 PUBLIC VERSION

- c. Utility Patents

Respondents argue that [n]umerous patents owned by both Converse and Nike . . .

describe the functional benets of toe caps and bumpers in preventing wear and increasing

durability. (RIB at 43, 44.)

Converse asserts that none of these patents reect any utilitarian advantage from the

design or appearance of the CMT, as a while or of any of its elements. (CIB at 49 (citing CX

00234 at Q/A 115-140).)

Staff argues that this factor weighs in favor of nding that the CMT is nonfunctional.

(SIB at 57.) Staff explains that the evidence on this factor fails to refer to the specic claimed

trade dress and only refers to the de zcto utility of toe bumpers and toe caps generally. (Id.

(citing CX-00234 at Q/A 139; CX-10842C at Q/A 48-55, 58, 66).)

The undersigned also nds that the utility patent factor Weights in favor of nding the

CMT nonfunctional. The evidence shows that the utility patents cited to by Respondents address

only two of the design elements, and not the CMT as a whole. (CX-00234 at Q/A 115-140; CX

10842C at Q/A 48-55, 58, 63-66, 106-107).) The evidence shows that, even Respondents expert,

admits that the shoes depicted in these patents do not have the same design elements as the CMT.

(Holden, Tr. at 901223-905122.)

d. Commercial Alternatives

Respondents argue that this factor is irrelevant [w]here a design is essential to the use or

purpose of the device of affects the cost or quality of the device. (RRB at 24 (citing TrafFix

Devices, Inc. v. Marketing Displays, Ina, 532 U.S. 23, 33 (2001).)

_ 69 _

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 PUBLIC VERSION

Converse notes the existence of numerous commercial alternatives to Converses CMT

design. (CIB at 49 (citing CX-00234 at Q/A 62-114; CX-l0842C at 43-45, 60, 71-73).) Staff

agrees. (SIB at 57-58.)

The undersigned nds that this factor Weighs in favor of nding the CMT nonfunctional;

The evidence shows that numerous commercial alternatives exist. (CX-00234 at Q/A 62-114;

CX-l0842C at Q/A 40-41, 43-47, 60-61, 71-73).) Additionally, as Staff notes, there is no

evidence, other than conclusory and unsupported expert testimony . . . that these and the other

proposed alternative designs would not offer the same de facto advantages of the CMT. (SIB at

58 (citing (RX-10265 at Q/A 24-30).) I " "

e. Conclusion

For the reasons set forth above, the undersigned nds that three of the Morton-Norwich

factors weigh in favor of nding that the CMT is. nonfunctional, While one is neutral.

Accordingly, the undersigned nds that the CMT has notbeen shown to be invalid due to de

jlurei functionality. - '

I I 2. Aesthetic Functionality

Under the theory of aesthetic functionality many visually attractive and aesthetically

pleasing designs are categorized as functional and hence free for all to copy and imitate.

McCarthy at 7.79. The Supreme Court, in dictum, noted that a functional feature is: one the

exclusive use of which would put competitors at signicant non-reputation-related

disadvantage. TrafF ix Devices, Inc. v. Marketing Displays, Inc., 532 U.S. 23, 33 (20071).Many

courts have rejected the theory of aesthetic functionality. McCarthy at 7.80. '

Respondents contendthat the CMT is aesthetically functional because all features of the

asserted trade dress are needed to evoke a classic style that is valued by consumers. (RIB at 45

-6]

Appx000113
 PUBLIC VERSION .

(citing RX-O2086C at Q/A 90-01; RX-02362 at 1:18-25).) They assert that removing the

combination of the toe cap, the toe bumper, and midsole stripes from the public domain would

place Respondents at a signicant competitive disadvantage. (Id. (citing RX-02362 at 1-:18-25).)

Converse notes that many courts have rejected the theory of aesthetic functionality. (CIB

at 50.) Converse contends that, even if the C0[I1lTl1SS101'l

does not reject it, Respondents failed to

meet their burden. (Id.) Specically, Converse argues that Respondents offer only unsupported,

unsubstantiated options from Mr. Holden, who admittedly has not conducted any consumer

surveys. (Id. at 50 (citing Holden, Tr. at 897117-23).) Converse further notes that Respondents

argument hinges oni an admittedly unsupported proposition that the CMT is the only way to

design a classic-style shoe. (CRB at 31.)

Staff agrees that Respondents fai1 to provide evidence that the specic design and

placement of the elements in the CMT is necessary to compete in the relevant market and that

not being able to use the specic design of the CMT would place Respondents at a

disadvantage. (SIB at 58.) _

The undersigned nds that Respondents have not demonstrated that the CMT is

aesthetically functional. It is telling that, although Respondents assert that there is considerable

evidence that the alleged midsole trademark is, in fact, ftmctional from an aesthetic perspective

(RRB at 24), they cite to only two questions from the direct examination of their expert and a

statement by Converse in a patent regarding the All Stars popularity due to its aesthetically

pleasing appearance. (See RIB at 45 (citing RX-02086C at Q/A 90-91; RX-02362 at 1:18-25).)

The cited testimony is conclusory and does not provide any basis for the eXperts opinions. (RX

02086C at Q/A 90-91.) Additionally, a statement that the mark is aesthetically pleasing is not

evidence that it is aesthetically functional, nor is a statement that a style is very popular

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Appx000114
 PUBLIC VERSION

evidence that removing the CMT from the public domain would place Respondents at a

significant competitive disadvantage. Such meager evidence is insufcient for Respondents to

overcome the presumption that the federally registered CMT is valid. Similarly, this evidence

does not demonstrate invalidity of the common law trademark.

C. Genericness

A trademark is invalid if it is generic. A generic tenn is the common descriptive name of

a class of goods of services. Princeton Vanguard, LLC v. Frito-Lay N. Am., 1nc., 786 F.3d 960,

965 (Fed. Cir. 2015). Because generic terms are, by denition incapable of indicating a

particular source of the goods or sen/ices, they cannot be registered as trademarks. Ia. In

detennining whether a mark is generic, courts follow a two-step inquiry; First, what is the genus

of goods or services at issue? Second, is the term sought to be registered or retained on the

register understood by the relevant public primarily to refer to that genus of goods or services?

Id.

With respect to the rst step, Respondents assert that the CMT is generic for sneaker.

(RIB at 47.) In support, Respondents cite to The Complete Footwear Dictionary which depicts a

shoe bearing the CMT as a sneaker. (Ia.)

Converse asserts that Respondents have been unable to dene the genus and that even its

own experts cannot agree on the denition. (CIB at 45; CRB at 26-27.) Staff agrees. (SIB at 53.)

The undersigned nds that the CMT is not generic. Respondents have not met their

burden in establishing that the rst step of the two-step inquiry is satised. Although

Respondents assert in their brief that the genus is sneaker, their experts disagree. (RX-07698 at

Q/A 88 (canvas cap-toe oxford sneaker); RX-02087 at Q/A 97, 109 (vulcanized canvas

shoes, basketball shoes, and gym shoes); RX-O209lC at Q/A 34 (retro basketball shoes);

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 . I PUBLIC VERSION

RX-OOOOSCat Q/A 116 (sneakers).) Additionally, the dictionary cited by Respondents does

not support their argument because, as Staff notes, it is merely an example of a sneaker, and the

denition itself makes no mention of the CMT. (SIB at 53 (citing RX-02478).) Because the

evidence does not show that the CMT is generic for any particular genus of goods, the

undersigned nds that the CMT is not invalid as generic. I

V. INFRINGEMENT

Trademark infringement is analyzed under a two prong test: First, we look to see whether

the mark merits protection, and second, whether the respondents use of a similar mark is likely

to cause consumer confusion. Handbags, Order No. 16 at 6. The undersigned has previously

determined thatthe 703 registration is valid. See, supra, IV.A.6. Thus, for this trademark, the

only remaining analysis for infringement is whether there is a likelihood of consumer confusion.

The undersigned determined that the common law trade dress was invalid. See, supra,

IV.A.6. Thus, for this mark, there can be no infringement. If this trade dress were to be found

valid, however, the same infringement analysis would apply. See Digital Multimeters at 13 (As

the 480 mark is very similar to and is encompassed within the breath of Fluckes trade dress, in

considering likelihood of confusion, it was only necessary for the undersigned to conduct a

single infringement analysis). . '1

To determine consumer confusion, the Commission applies the following factors: (1) the

degree of similarity between the designation and the trademark in appearance, the pronunciation

of Wordsused, verbal translation of pictures or designs involved, and suggestion; (2) the intent of

the actor in adopting the designation; (3) the relation in use and manner of marketing between

the goods and services marked by the actor and those by the other; and (4) the degree of care

likely to be exercised by-purchasers. Ink Markers, Order No. 30 at 36. The Corrunission may

_ 64

Appx000116
 PUBLIC VERSION

also consider additional factors, such as the strength of the mark or actual confusion. All factors

must be evaluated in the context of the ultimate question of likelihood of confusion as to the

source or sponsorship of the product. Handbags, Order No. 16 at 9.

Throughout the parties arguments with respect to infringement, there is a dispute as to

whether Converse can rely on evidence of post-sale confusion, or whether it must be limited to

evidence of point-of-sale confusion. Respondents insist that evidence of post-sale confusion is

irrelevant and cite to the 1983 decision of Certain Braiding Machines, 337-TA-130, USITC Pub.

1435 (1983), in support. In that case, the Commission concluded:

A review of the applicable precedent and commentaries indicates that the relevant
question generally in a detennination of likelihood of confusion is whether a
purchaser was confused or likely to be confused at the time he acquired his
interest and considered the purchase . . . Consequently, evidence concerning the
post-sale scenario is of limited value for the purposes of this analysis.

Id. at 72-73. Since that time, however, most courts that have analyzed the issue have concluded

that post-sale confusion is relevant. See, e.g., Payless Shoesource, Inc. v. Reebok Infl, Ltd, 998

F.2d 985 (1993) (explaining that the First, Second, Fourth, Fifth, Ninth, and Eleventh Circuits

consider evidence of post-sale confusion and that the Tenth Circuit likely would if it considered

the issue head-on). '

The undersigned agrees with the majority of the courts and nds that post-sale confusion

can be relevant in a likelihoodof confusion analysis. This is particularly true in this case: With

sneaker labels, where the impressed words can only be read a few feet away from the eyes,

post-consumer confusion is quite relevant. Keds Corp. v. Renee Inll Trading C0rp., 888 F.2d

215, 222 (lst Cir. 1989). Thus, in evaluating the infringement factors, the undersigned agrees

that post-sale confusion is the most appropriate framework for assessing likelihood of confusion

in this Investigation.

_ 65 _

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 . PUBLIC VERSION

The parties also disagree as to whether consumer comments should be evidence of

confusion. Respondents assert that such comments are unreliable and should be given no

Weight. (RIB at 57 (citing QVC Inc. v. Your Vitamins, Inc., 439 Fed. AppX 165, 168-69 (3d Cir.

2011).) They assert that Dr. Winer did not take steps to conrm the legitimacy of these

comments. (Id (citing JX-004l2C at 164:1-14, 177:l8-179:3, 520:4-20).) Respondents further

assert that to be probative, anecdotal evidence of confusion must be more than de minimis.

(Id. at 58 (citing Medici Classics Prods, LLC v. Medici Grp, LLC, 683 F.Supp.2d 304, 312

(S.D.N.Y. 2010); KendallJacks0n Winery, Ltd. v. E. & J'. Gallo Winery, 150 F.3d 1042, 1052

(9th Cir. 1998).) Respondents explain that the comments introduced into evidence amount to

0.0000026471% of shoes sold. (Id. (citing CX-00240C.8O at Q:/A533; CDX-00240.0l8)'.)

Staff agrees that Respondents raise valid questions about the reliability of these

comments. (SIB at 62.) Staff notes that Mr. Winer acknowledged that nothing was done to

verify the commenters identities, their presence in the U.S., or whether they are in fact

purchasers of the Accused Products. (Id. (citing JX-004l2C ).) I

Converse asserts that [c]0nsumer comments suggesting an affiliation or relationship are

frequently considered as probative and strong evidence of confusion. (CRB at 37 (citing Conn.

Cmly. Bank v. Bank of Greenwich, 578 F. Suppj.2d 405, 419 (D. Conn. 2008), Victoria Secret

Catalogue, Inc. v. Moseley, 558 F.Supp.2d 734, 748 (W.D. Ky. 2008).) Converse explains that

[t]he online evidence at issue here is particularly relevant because the digital marketplace is a

signicant source of confusion and hann to Converse and because the parties promote, market,

and sell their footwear online. (Id. at 38.)

The undersigned agrees that the evidence regarding consumer comments should carry

little weight in this Investigation. The evidence shows that the amount of comments pales in

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Appx000118
 PUBLIC VERSION

comparison to the salesof the shoes. (CX-O0240C.8Oat Q/A 473; CDX-00240018.) Thus, even

if the undersignedwere to nd that these comments were credible, there is still very little

evidence that consumers are actually conlsed by the sale of Respondents Accused Products.

Thus, the undersigned does not nd that the evidence of consumer comments favors a nding of

likelihood of confusion.

A. Skechers ~

Converse accuses several of Skechers product lines of infringement, including BOBS,

Twinkle Toes, Daddy$ Money, and HyDee HyTop. (CIB at 10 (citing CX-00021).)

1. ' Degree of Similarity

Converse asserts that the midsole of the Skechers Accused Products is nearly identical to

the CMT. (CIB at 56 (citing CX-OO24OCat Q/A 783-94; CDX-OO240.0041; CX-OO242C at Q/A

110-12; CDX-O0242.0001.)

Skechers argues that its products feature a unique look and are easily distinguishable

from Converse products and the asserted trade dress. (RIB at 64.) Skechers specically points

to the differences in the Twinkle Toes line of shoes, including its fabric cap with embellishments

and prominent branding. (Id. at 64-65 (citing RX-O2092C at Q/A 23-25, 38 101; RX-05076; RX

05114; RX-05293; RX-04978; RX-04983; RX-05067; RX-05058; RX-05062); RRB at 30.)

Skechers also argues that the representative shoes are not actually representative of the

products accused of infringement. (RRB at 31.) _

Staff asserts that the tevidence shows that Skechers Daddy$ Money and HyDee HyTop

lines of shoes have midsole designs that are identical, or nearly identical to the CMT. (SIB at

63-64.) Staff believes that the BOBS Utopia and Twinkle Toes line of shoes include signicant

differences. (Id. at 64-66 (citing RX-03985; RX-05966; RPX-0258; RPX-0259; RPX-0260;

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Appx000119
 PUBLIC VERSION

RPX-0261; RXO2092Cat Q/A 85, 90).) Staff disagrees that the examples of the Skechers

products . . . are representative of the more than 700 different styles of Skechers Accused

Products. (SRB at 5-6.) .

The undersigned agrees with Skechers and Staff that the shoes selected by Converse are

not, in fact, representative of the Accused Products. For example, Converse relies On the

following as a representative Twinkle Toes shoe:

(CPX-199; CX-000210003.) As seen in the image, this particular shoe lacks branding on the toe

bumper. (Id) In contrast, the evidence shows that Skechers often adds colorful branding to the

toe bumper of its shoes. (RX-02091 at Q/A 94; RX-02092C at Q/A 38, 100-101; RX-04978; RX

04983; RX-05058; RX-05062; RX-05067; RX-05078; RX-05082; RX-05114; RX-05173; RX

05293.) While, the presence of a brand name on a product does not alone insulate an infringer,

the label can serve as additional indicia that there is no likelihood of confusion. Certain Steel Toy

Vehicles, No. 337-TA-31, USITC Pub. 880, at *3} (1978); McCarthy at 23.53 (explaining that

[t]he majority view is that labeling or use of a word mark does not avoid what would otherwise

be an infringing trade dress). In the case of Skechers, the logos oen appear in bright colors and

are thus noticeable, even from a distance. (RX-02091 at Q/A 94-95; RX-04978; RX-04983; RX

O5058; RX-05062; RX-05067; RX-05078; RX-05082; RX-05114; RX-05173; RX-05293.)

-53

Appx000120
 PUBLIC VERSION

Because it appears that at least some of the Accused Products are not similar to the CMT, the

tmdersigned cannot accept Converses assertion that the products it selects are representative of

the Accused Product. The undersigned accordingly limits Converse to the following products:

the shoes appearing in CPX-199, CX-21, and CDX-O0240.04O.2l

a) Twinkle Toes

The undersigned nds that this factor weighs against a nding of likelihood of confusion

for the Twinkle Toes shoes. These shoes contain embellishments on the toe-cap that light up

when a consumer walks in them:

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(CX-00021; CDX-00240040; RX-02091C at Q/A 93; RX-O2092C at Q/A 25 (explaining that

[m]ost styles in the Twinkle Toes line right now have lights built into the shoe, which light up

with each step); id. at Q/A 30.) These design features create enough differences that the shoes

bearing them cannot be said to be similar to the CMT. Even Converse admits that the presence of

embellishments on the Twinkle Toes shoes, skew[s] the appearance of the shoe. (CX-O0240C

at Q/A 906.)

2' It appears that Converse cannot actually identify what products are representative. Dr. Winer and Mr. Calhoun cite
to different representative products in their testimony. (CX-O0240C at Q/A 784; CDX-00240040; CX-O0242C at
Q/A 110-12.) These products are different than those Converse identies in its brief. (CIB at 10 (indicating that
[r]epresentative images of Skechers Accused Products are shown in CX-21, and the Skechers Toes Shules
Streetfeet is shown in Figure I.4.).)
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Appx000121
 PUBLIC VERSION

b) BOBS Utopia

The undersigned nds that this factor weighs against a nding of likelihood of confusion

with respect to the BOBS Utopia line of shoes. While the overall look of the shoe is similar, (see,

e.g., CX-00240C at Q/A 788-89), the BOBS shoe contains a prominent logo on the heel.

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(CX-00021.) As with the Twinkle Toes logo, these logos are highly visible and serve to dispel

confusion.

c) Daddy$ Money and HyDee HyTop

The undersigned nds that this factor weighs in favor of a nding of likelihood of

confusion for the Daddy$ money and HyDee HyTop line of shoes. The evidence shows that the

Daddy$ Money and HyDee HyTop shoes have midsole designs that are identical or nearly

identical to the CMT:

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Appx000122
 PUBLIC VERSION

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(CDX-00240.040; CDX-002400041; CX-0O240Cat Q/A 784-785, 788-89) Although Skechers

asserts that these shoes are different because they contain a hidden wedge heel (RX-O2092C at

Q/A 111, 120), this feature by denition is not visible to observers Thus, 1n a post-sale

context it would not decrease the likelihood of confusion. Additionally, Skechers does not set

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Appx000123
 This Page Contains Confidential Information That Has Been Redacted
PUBLIC VERSION

forth any evidence that the toe cap, bumper, and midsole differ_significantly, other than that they

have a distressed nish. (RX-02092C at Q/A 111.) Given that the purpose of the distressed

nish is to create a worn look, an observer may just assume that the shoes have been

frequently worn and thus not likely to be confused.

2. Intent

] Converse further notes that Skechers displays

the Accused Products when a consumer searches Chuck Taylor, Chucks, and/or Converse

on skechers.com. (Id. (citing CX-00242C at Q/A 113-114; CX-00023; CX-00438-CX-00439).)

Skechers asserts that there is no evidence that Skechers intended to confuse consumers

or to trade upon Converses reputation. (RIB at 66.) Skechers also explains that its branding

practices preclude a nding of any intent to confuse consumers. (Id.)

StaffbelieVes that this factor weighs slightly in favor of nding likelihood of conision,

particularly because of the Website return results. (SIB at 68.)

The undersigned nds that this factor weighs in favor of nding a likelihood of

confusion. In contrast to Skechers assertion that it did not intend to confuse consmners, the

evidence shows that Skechers intentionally displayed"the Accused Products when a consumer

searched Chuck Taylor, Chucks, and/or Converse on skechers.com. (CX00242Cat Q/A

114; CX-00023; CX-00438-CX-00439).)

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 PUBLIC VERSION

3. Relation in Use and Manner of Marketing

Converse argues that [t]here is considerable overlap between the distribution and

marketing channels for Skechers Accused Products and All Star shoes, as Skechers Accused

Products are sold in many of the same retail locations as All Star shoes, both online . . . and in

brick-and-mortar stores. (CIB at 57 (citing CX-O0240C at Q/A 863-68, 878; CX-O0244C at Q/A

23, 35-37, 103, 113; CX-00242C at Q/A 115-117.) Converse further asserts that the shoes are

marketed and/or advertised through similar channels, including in some of the same

publications. (Id. (citing CX-0024OC at Q/A 888-96; CX-O0242C at Q/A 115-117; CX-08072;

CX-08073; CX-09794C).)

Skechers asserts that it has its own website, retail stores, and concept stores that sell

only Skechers products. (RIB at 68 (citing RX-02092C at Q/A 15-16, 82; RX-02091C at Q/A

95).) They further assert that [f]or third party retail stores, Skechers invests in signicant Point

of Purchase branding. (Id. (citing RX-02091C at Q/A 95; RX-02092C at Q/A 39-40, 88-89",98

99; R.DX-00029C.011-O12, O15;RPX-0263-RPX-0266; RPX-0258-261).)

Staff believes that this factor weighs against a nding of confusion given the evidence

of Skechers signicant efforts to build its own brand identity through branding and marketing

its products, particularly the Twinkle Toes products. (SIB at 68.) Staff explains that Skechers

spends more than $100 million per year on advertising, created an animated movie based on

Twinkle Toes, and has partnered to make a line of Twinkle Toes Cabbage Patch Kids Dolls. (Id.

(citing RX-O2092C at Q/A 29, 41, 90, 100, 11, 120; RX-O2091C at Q/A 45, 94-96; RX

U2519.064).) _ .

The undersigned nds that this factor weighs against a nding of likelihood of confusion.

While the evidence shows that distribution and marketing channels for the Skechers Accused

_ 73 _

Appx000125
 PUBLIC VERSION '

Products and the All Star shoes overlap, the evidence also shows that Skechers makes

considerable efforts to distinguish this line of products. (RX-02092C at Q/A 29, 41, 88, 100, lll,

120; RX-O2091C at Q/A 94; RPX-0263-RPX-0266; RPX-0258-261).) These efforts decrease the

likelihood that a consumer will be confused by the marketing and distribution of the Skechers

Accused Products.

4. Degree of Care

Converse contends that [a]t prices between $35 and $50, consumers of shoes like

Skechers Accused Products are unlikely to exercise great care in resolving confusion. (CIB at

58 (citing CX-00243C at Q/A 209).) '

Skechers asserts that most Converse customers have already decided to purchase a

Converse shoe before they head to the store. (RIB at 69 (citing RX-00l94C.056).)

Accordingly, Skechers argues these purchasers are likely to exercise a high degree of care.

(Id.) Skechers further asserts that, due to Skechers extensive brand identity and marketing

practices, Skechers consumers also are likely to exercise a high degree of care. (lal)

Staff believes that the degree of care exercised by purchasers is neutral with respect to

Skechers, especially due to the relatively similar price point of the products and the signicant

branding present on both products. (SIB at 69 (citing CX-O0244C at Q/A 57, 103).)

The undersigned nds that this factor weighs in favor of a nding of likelihood of

confusion. Purchasers of relatively inexpensive athletic and sportswear are not likely to

exercise a great deal of care in distinguishing between trademarks when purchasing the goods.

Adidas, 546 F. Supp.2d at 1060. While it may be true, as Skechers suggests, that certain

purchasers decide that they would like to either purchase"Converse or Skechers shoes prior to

shopping, there is no evidence that undecided consumers would exercise such care. Given the

_ 74 _

Appx000126
 u PUBLIC VERSION

relatively low price point of these shoes, consumers may be confused at the point of sale. This is

especially true, given that Skechers displays the Accused Products when consumers search

Chuck Taylor, Chucks, and/or Converse on skechers.com. (CX-00242C at Q/A 113; CX

00023; CX-00438-CX-00439).)

5. Survey Evidence

In support of its claim of consumer confusion, Converse introduced survey results from

two experts. The rst, Dr. Isaacson, tested for confusion related to Skechers Daddy$ Money

shoes and reported 36% net confusion for the Gimme Mucho Dinero shoe, and 21.7% net

confusion for the Gimme Lone Star shoe. (CIB at 60 (citing CX-00231 at Q/A l, 4, 10, 28-30,

40, 65, 80, 133-34, 142.) Dr. Parikh tested for confusion with respect to BOBS, Twinkle Toes,

and HyDee HyTop and reported adjusted likelihood of confusion rates, ranging from 30.8%

47.4% for models of these shoes. (Id at 60-61 (citing CX-O0236C at Q/A 2-3, 8-10, 50, 52, 60

61).) I .

Skechers asserts that Dr. Parikhs results are awed and unreliable, as, among other

things, she measured association caused by other aspects of the test shoes due to a failure to

isolate the claimed elements. (RIB at 70.) Skechers also introduced its own survey evidence

from Dr. Stewart, who it claims demonstrated that the accused designelements on the shoes

accounted for a net rate of association of zero or approximately zero. (Id. at 70-71 (citing RX

02090C at Q/A 76-82, 85-91).) ~ '

Staff agrees that Dr. Paril<hs survey design and methodology is awed and the results

should be disregarded. (SIB at 61.) Specically, [t]he most notable aw is that the [Parikh]

surveys tested the overall look and appearance of the shoes, and not whether there was any

confusion as a result of the CMT. (Id.) Additionally, Dr. Paril<hs selection of controls that

-75

Appx000127
 s PUBLIC VERSION

have numerous differences from the test shoe and do not isolate the elements of the asserted

midsole trademark renders [her] results of little value for purposes of determining the level of

confusion associated with the asserted trademark. (Id. (citing Skechers U.S.A. v. Vans, Ina, No.

O7-0173, 2007 WL 418677, at *9 (C.D. Cal. Nov. 20, 2007).)

In response, Converse explains that Dr. Stewarts survey results are flawed. Specically,

Skechers contends that Dr. Stewart used improper controls, included a brand name on the test

shoe but not the control shoe and asked the wrong questions. (CRB at 39-40 (citing Stewart,

Tr. at 662:13-664:2, 665:6-668212; CX-0O236C at Q/A 200; RX-10140 at .0044-.O045).)

The undersigned nds that the survey results of Dr. Parikh are unreliable. The evidence

shows Dr. Parikhs surveys tested the overall look and appearance of the shoe and not the CMT.

(CX-00236 at Q/A 115, 193; RX-02089 at Q/A 62,- 65; JX-00425 at 47:22-48:14.) Without

evidence that it was the design elements at issue and not something else that caused

confusion, the survey results are unhelpful. (RX-10136 at Q/A 40, 51; RX-10278C at Q/A 40.)

The evidence also shows that Dr. Parikhs control shoes were substantially different than

the test shoes. (CX-05196 CX-05198; RX-02089 at Q/A 62, 65, 67-73.) One example of Dr.

Parikhs control and test shoes is depicted below:

Bossowpmrpwtbprnsrsnon | G0umkIbmmmcCONTROLSHOE

" ~- 1
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1,. . . I_ ,1}
,_A;?)
1 ,

"S .: 1'-- 4. _ '

(CX-05196.) The general rule in selecting a control is that it should share as many characteristics

as possible with the test stimulus with the exception of the characteristics being measured. (RX

_75_

Appx000128
 . . PUBLIC VERSION

O2089C at Q/A 64; Ford, Tr. at 262:l6-263:6, 264:7-l6; RX-10136 at Q/A 46; RX-lO278C at

Q/A 42-43.) Dr. Parikhs selection of a control with signicant differences likely affected her

results. (RX-02089C at Q/A 63-73; RX-10136 at Q/A 48.) '

The undersigned nds that the results of Dr. Stewarts surveys are reliable. Dr. Stewarts

surveys related-to the Twinkle Toes and BOBS Utopia shoes. (RDX-0O32C.0Ol5 -.0029.) First,

Converse complains that Dr. Stewa1ts controls themselves were sources of confusion . . .

because certain controls included toe caps and others included elements that otherwise are source

identies of Converse. (CRB at 39-40.) Dr. Stewart explained, however, that he chose to run

two controls: one to measure noise when all three claimed elements of the asserted design [were

removed], and the second to measure the noise when the shoes retained their toe caps. (RX

O2090C at Q/A 79.) Converse does not effectively demonstrate why this approach was incorrect.

(See CX-00236C at Q/A 200.) The undersigned additionally nds that Converse did not

demonstrate Why Dr. SteWarts decision to display a brand name on the test shoe but not the

control shoe was incorrect. (RX-O209OC at Q/A 81.) Finally, the undersigned nds that

Converse did not introduce sufficient evidence as to why Dr. SteWartsquestions were awed.

The undersigned nds Dr. Isaacsons results reliable. Sketchers criticisms are

unpersuasive. Dr. Isaacson testied that the images in his survey were shown on a computer
screen in a high resolution and that he selected views of the shoes used by Skechers and which

prominently displayed branding. (CX-00231 at Q/A 57, 63-65, 100-103, 138-41.) Dr. Isaacson

also explained that his sun/ey was designed to measure shoes in a post-sale context. (Id.) For

example, he testied that he used one shoe in his survey as a means to replicate[] the situation

Where someone encounters the sneakers outside the store, perhaps on someones feet... (Id. at

Q/A 65.)

_ 77 _

Appx000129
 ~ PUBLIC VERSION

For the reasons explained above, the undersigned nds: (l) the survey evidence weighs in

favor of a nding of likelihood of confusion with respect to Daddy$ Money shoes; (2) the

survey evidence weighs -against a nding of likelihood of confusion with respect to BOBs

Utopia and Twinkle Toes; and (3) the survey evidence is neutral with respect to HyDee HyTop.

6. Conclusion

For the reasons stated above, four of the ve factors are in favor of or are neutral to

likelihood of confusion with respect to Skechers Daddy$ Money and HyDee HyTop.

Accordingly, the undersigned nds that these shoes infringe the CMT. - '

With respect to the Twinkle Toes and BOBS Utopia, two factors weigh in favor of a

nding of likelihood of confusion, but three do not. Of particular importance, the undersigned

found that the shoes were not similar to the CMT and that the survey evidence concluded that

there was not a likelihood of confusion. Accordingly, the undersigned nds that these shoes do

not infringe the CMT. "

B. Walmart

Converse accuses Walmarts Faded Glory and Kitch lines of shoes of infringement. (CIB

at 11.)

1. Degree of Similarity

Converse asserts that Walmarts Accused Products are highly similar to the CMT. (CIB

at 61-62 (citing CDX-002400061; CX-00240C at Q/A 949-60; CX-00242C at Q/A 123-127;

CPX-217; CPX-219; CX-01492).) Converse asserts that the Faded Glory Stinson Oxford is

nearly indistinguishable from [All Star] shoes, even when viewed closely. (Id. at 61 (citing

cx-oo242c at Q/A 126).) ' _

-73

Appx000130
 PUBLIC VERSION

Walmart asserts that there are differences in the designs between its shoes and the CMT.

(RIB at 72-73.) Specically, Walmart explains that the Faded Glory Mens Stinson shoe has a

different bumper and outsole, contrast stitching in the back, a tab on the back of the heel, and

lacks the triangle stitching design on the toe cap that the All Star has. (Id. (citing RX-0769lC at

Q/A 61-63).) Walmart also contends that the Kitch shoe looks nothing like the All Star. (RRB

at 33 (citing RX-07759; RDX-0040-3).)

Staff believes that this factor weighs in favor of likelihood of confusion for all Accused

Products, other than the Kitch model. (SIB at 69.) Staff explains that the midsoles of several of

the Faded Glory line are nearly identical to the CMT. (Id. (citing CX-00240 at Q/A 952-953).)

Although Staff notes that there are some differences, Staff also notes that these are not

necessarily apparent from a distance and may require close inspection of the shoes. (Id. at 70

(citing RX-07691 at Q/A 110).)

The undersigned nds that this factor weighs in favor of a' nding of likelihood of

confusion with respect to the Faded Glory line of shoes. The evidence shows that the overall

commercial impression of these shoes is very similar to the CMT:

(CX-00030; see also CX-OO240Cat Q/A 951-52). The midsoles feature a toe cap, a toe bumper,

and two stripes. (Id) The evidence further shows that, although there are differences in some of

-79

Appx000131
 PUBLIC VERSION

the bumpers of the Faded Glory models, it is difcult to see these differences from a distance.

(RX-0769lC at Q/A 110.) Additionally, the evidence shows that the presence of branding on the

Accused Products is unlikely to dispel contusion. The branding is placed on the outsole"and the

insole of the shoe:

(RX-07724; RDX-0040.) Accordingly, it would be difficult in a post-sale context to notice the

branding.

The undersigned is not persuaded that the presence of embellishments in some of the

Faded Glory shoes renders the shoes dissimilar. While the evidence shows that some of the

Accused Products contain embellishments on the toe cap and/or toe bumper, (see RX-07706C),

the evidence also shows that these embellishments are unlikely to dispel confusion. Unlike the

Twinkle Toe products whose light-up embellishments serve to identify the product as a

Skechers shoe the embellishments on the Faded Glory shoes do not lead a consumer to

associate the brand with Walmart. This is because Converse sells nearly identical shoes:

_ g() _

Appx000132
 PUBLIC VERSION

Exemplary WalmartCPX-Z19)
(CPX-217; AccusedProducts Exemplaryjonverse
(CX-1492 at .All Star Shoes l l
0045)
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(CPX-217; CPX-219; CX-1492 at .0045.) Accordingly, the undersigned nds that the overall

commercial impression of these shoes remains similar to the CMT.

The undersigned nds that this factor weighs against a nding of likelihood of confusion

with respect to the Kitch shoe. The evidence shows that this shoe does not contain stripes and the

toe cap is not easily visible, as it is the same color as the upper of the shoe:

_g1

Appx000133
 PUBLIC VERSION

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(RX-07759.) The overall commercial impression of the Kitch shoe is different than the CMT.

2. Intent

Converse contends that Walmarts intent to copy the CMT is evident from its internal

documents, as well as the fact that Walmart displays the Accused Products when a shopper

searches Converse on Walmartcom. (CIB at 63 (citing CX-OO606C CX-OO609C; CX

00614C CX-OO615C;CX-08089; CX-01564; CX-00240C at Q/A 582, 981-84; JX-00004; CX

10627; CX-00244C at Q/A 93-94; CX-00242C at Q/A 124-25; CX-O1551C).) Converse also

asserts that the near identical similarity of Walmarts Accused Products to the CMT . . . is

evidence of Walmarts intent to copy the CMT. (Id. at 63-64 (citing CX-00240C at Q/A 957

58).)
_ 32 _

Appx000134
 This Page Contains Confidential Information That Has Been Redacted
PUBLIC VERSION . .

In response, Walmart argues that its search results merely reect the fact that Converse

is synonymous with canvas sneaker? (RRB at 35 (citing RX-10135C at Q/A 15; CX-O155_1C_

at -131:19-l34:l3).) Walmart further asserts that the fact that it offers a similar type of product is

irrelevant. (Id. (citing Water Pik, Inc. v. Med-Systems, Inc., 726 F.3d 1136, 1157 (10th Cir.

2013).) _

Staff asserts that [ i

] (sn-3 at 71

(citingcx-00606c - cx-006090; cx-006140 - cx-006150; cx-08089; cx-002400 at Q/A

582).) Staff also notes that there is evidence that shoppers searching for Converse or All Star

on Walmartcom were directed to Walmart Accused Products. (Id. (citing CX-0024OC at Q/A

983-88; CX-0O242C at Q/A 124-125; CX-00244C at Q/A 93-94; CX-00032; CX-00846; CX

10627).) Staff concludes: This factor, therefore, weighs strongly in favor of nding confusion.

(14) . . ' . ~

The undersigned nds that this factor weighs in favor of a finding of likelihood of

confusion with respect to the Faded Glory line of shoes. The evidence shows that Walmart

intentionally displays these products on its website when a user searches for Converse or All

Star. (CX-00240C at Q/A 982-984; CX-00242C at Q/A 124-125; CX-00244C at Q/A 93; CX

10509; cx-10627; JX-00004.) [ '

] (CX-00240C at Q/A 582-583; CX-00606C; CX00609C;CX-08089.) As

such, the evidence demonstrates intent by Walmart to confuse consumers.

~ The undersigned nds that this factor weighs against a nding of likelihood of confusion

with respect to the Kitch shoes. The evidence regarding the website results is limited to the

_g3_

Appx000135
 V PUBLIC VERSION

Faded Glory shoes. (CX-00240C at Q/A 982-984.) There is no evidence that Walmart displays

the Kitch shoes in such search results.

3. Relation in Use and Manner of Marketing

Converse asserts that there is overlap between the distribution and marketing channels

for the All Star shoes and Walma1ts Accused Products, as Walmart sells genuine All Star

shoes on its website walmartcom. (CIB at 62 (citing CX-0024OC at Q/A 979-89; CX-O0244C

at Q/A 23, 31-34, 107-08; CX-O0242C at Q/A 130-31).)

' Walmart asserts that it does not advertise the Accused Products and that there is no

overlap in distribution, as it does not sell Converse shoes at its brick and mortar stores. (RIB at

73-74 (citing RX-0769lC at Q/A 163-64; RX-O7691C at Q/A 169).) Walmart also asserts that

the Kitch shoe operates in a separate channel of commerce. (Id. at 74 (citing RX-07691C at Q/A

149).)

Staff asserts that this factor Weighs slightly against nding confusion. (SIB at 71.)

Staff notes that there is no overlap in distribution channels or marketing and asserts that no

Converse shoes are sold in Walmarts stores or through its website. (Id. at 71-72 (citing RX

07691 at Q/A 163-166).)

The undersigned nds that this factor weighs in favor of a nding of likelihood of

confusion. The evidence shows that Walmart sells both Converse shoes and the Accused

Products on its Website. (CX-O0240C at Q/A 980; CX-O0242C at Q/A 130; CX-10509.) Thus,

there is an overlap in this distribution channel. See Roederer v. J Garcia Carrion, S.A., 732

F.Supp.2d 836, 868 (D. Mimi. 2010) (factor favors likelihood of confusion where the products

are sold through overlapping distribution chamiels). Additionally, Walmart displays the Accused

_g4_

Appx000136
 PUBLIC VERSION ~

Products as search results for Converse and All Star, thus compounding the problem. (CX

OO24OCat Q/A 981.) '

4. Degree of Care l -

Converse asserts that consumers of the Walmart Accused Products are unlikely to

exercise great care, as the cost of the Accused Products is low; (CIB at 63 (citing CX-00243C at

Q/A 217-18).) Converse also contends that individuals observing the Accused Products are likely

to experience post-sale confusion. (Id. (citing CX-07956 at .0001-3).) .

Walmait asserts that its shoes are purchased with care and that its shoppers know

whether they are buying the cheaper copies or the expensive originals. (RIB at 77 (citing RX

O7691C at Q/A 199).) .,

Staff contends that this factor weighs in favor of a nding of likelihood of confusion,

given that the Walmart Accused Products are low cost items. -(SIB at 72 (CX-00240 at Q/A

1008; CX-00244C at Q/A 107).) " "

The undersigned nds that this factor weighs in favor of a nding of likelihood

confusion. The evidence shows that the Accused Products are relatively inexpensive.

Purchasers of relatively inexpensive athletic and sportswear are not likely to exercise a great

deal of care in distinguishing between trademarks when purchasing the goods. Adidas-Am., 546

F. Supp.2d at 1060.) While Walmart contends that purchasers in discount stores are sufciently

sophisticated . . . to knowfwhether they are buying the cheaper copies or the expensive

originals, it does not introduce any evidence in support of this contention. Instead, Walmart

cites only to the testimony of Walmarts Senior Buyer of Mens Shoes who stated that this-was

his belief. (RX-07691 at Q/A 198-199.) This is not enough to overcome the general rule that

[W]hen products are relatively low-priced and subject to impulse buying, the risk of likelihood

_g5_

Appx000137
 PUBLIC VERSION

of confusion is increased because purchasers of such products are held to a lesser standard of

purchasing care. Recot, Inc. v. Becton, 214 F.3d 1322, 1329 (Fed. Cir. 2000).

5. Survey Evidence _'

In support of its claim of consumer confusion, Converse introduced the testimony of Mr.

Johnson, who reported an adjusted net result of 64.8% confusion for Walrnarts Faded Glory

Mens Stinson Shoes. (CIB at 64 (citing CX-00233C at Q/A 1-3, 9, 88, 93-96, 103-04, 212,

221).) .

Walmart argues that Mr. Johnsons study is awed, but does not produce any survey

evidence of its own. (RIB at 76 (citing RX-10136 at Q/A 96-97, 123).)

Staff asserts that Mr. Johnsons surveys are flawed and are unreliable under the

Commissions sun/ey factors. (SIB at 61.)

The undersigned nds that the survey results of Mr. Johnson are unreliable. The evidence

shows that Mr. Johnsons surveys tested the overall look and appearance of the shoe and not the

CMT. (Johnson, Tr. at 521:l3-522:8, 523:5-16, 527:l5-528:1, 528:21-529:24, 530216-533:3,

545:2-8, 552223-553:4; CX-00233C at Q/A 43, 48; RX-10136 at Q/A 37-51; RX-10278 at Q/A

36-61.) The evidence also shows that Mr. Johnsons control shoes were substantially different

than the test shoes. (RX-10136 at Q/A 46-48; RX-l0278C at Q/A 41.) As discussed supra,

V.A.5, these aws render the survey results unreliable. Accordingly, the undersigned nds that

this factor is neutral. '

6. Conclusion

For the reasons stated above, all the factors are in favor of or are neutral to a nding of

likelihood of confusion with respect to the Faded Glory shoes. Accordingly, the undersigned

nds that these shoes infringe the CMT. -

-36

Appx000138
 PUBLIC VERSION

With respect to the Kitch, two factors weigh against a nding of likelihood of confusion,

while two weigh in favor. Because the similarity of the marks is the most determinative and

because this factor weighs against confusion, the undersigned nds that the Kitch shoes do not

infringe the CMT.

C. Highline

Converse accuses 80 models of shoes of infringement. (CIB at 11-12 (citing CX-08052C

and CX-00102.) It asserts that the Ash Vincent, Glen, Vicky, Gossip, Eagle, Fanta, Ginger,

Venus, Veronbis, Virgo, Vodka, Volcan, Volcano, Volt, and Vox are representative models of

shoes. (CX-00240C at Q/A 1141; CDX-0024000086; CDX-0024000087).

1. Degree of Similarity

Converse asserts that I-Iigh1inesAccused Products make nearly identical use of the

CMT compared to Converses CMT. (CIB at 65 (citing CDX-002400088-0089; CX-0024OC at

Q/A 1140-51; CX-O0242C at Q/A 157-59).) '

Highline asserts that [t]he_unique, edgy Highline Accused Products give a radically

different commercial impression than the All Star. (RIB at 77 (citing RX-1Ol22C at Q/A-63).)

Specically, Highline asserts that the midsole is sleeker and more tapered, the pyramids on the

bumpers are more pronounced, and several versions of the shoe lack stripes or a toe cap. (Id. at

78 (citing RX-01571C at Q/A 144-149, 152-154, 169).) Highline also notes that ASH shoe

uppers have distinguishing features, e.g., buckles, zippers, and other stylish details and many

versions are high-heel or wedge-heel shoes. (Id at 78.)

Staff asserts that there are noticeable differences in the midsole designs of the Ash

shoes, including a different midsole prole, toe bumper, and the lack of a toe cap and/or stripes

on some models. (SIB at 72 (citing Johnson, Tr. at 538:13-539:13; RX-0l57lC at Q/A 169).)

_ 37 _

Appx000139
 PUBLIC VERSION

Staff also asserts that the products chosen by Converse are not representative of the

Accused Products. (SRB at 7.) The undersigned agrees. The evidence shows that the Vanna and

Virginia models of the shoe lack a toe cap. (RX-01571C at Q/A 146-149; RPX-0248; RPX

O249.) The evidence further shows that the Vertige, Vespa, Virgin Ter, and Virus Bis shoes lack

stripes. (RX-0157lC at Q/A 152-154; RX-1524; RX-1529). Each of these shoes lack one of the

three elements of the CMT, and thus are not similar to the CMT. Because it is clear that the

selected products are not representative, the undersigned nds that Converse has not met its

burden in establishing that any of the Highline Accused Products not specically included in Dr.

Winers testimony infringe the trademark. Converse is therefore limited to the Ash Vincent,

Glen, Vicky, Gossip, Eagle, Fanta, Ginger, Venus, Veronbis, Virgo, Vodka, Volcan, Volcano,

Volt, and Vox models.

The undersigned nds that this factor weighs slightly against confusion with respect to

the Vincent model. The evidence shows that, while the Vincent contains a toe cap, a toe bumper,

and stripes, it also contains buckles:

(CDX-00240.088.) Dr. Winer testified that the presence of different embellishments does not

reduce customer confusion and association in many cases. (CX-0024OC at Q/A ll54.)

Implicit in this statement is that, in some cases, the presence of different embellishments does

-33

Appx000140
 PUBLIC VERSION

reduce confusion. Dr. Winer went on to explain: [W]hile some Ash shoes have buckles and

zippers, some have laces. Converse also sells CTAS with zippers. (Id.) Thus, Dr. Winer does

not specically address how the presence of buckles does not reduce confusion. Finally; Dr.

Winer testied that [s]o long as Ash shoes bear the CMT, there is a high likelihood of consumer

conasion and association. (Id) The evidence shows, however, that the presence of a different

upper can impact whether a consumer will recognize a shoe as Converse. As Dr. Lutz explained,

the presence of an upper which is atypical of a Converse shoe signal[s] to [consumers] that [the

shoe] came from a different brand. (CX-l0843C at Q/A 77.)

The evidence further shows that the Vodka, Volcano (Vulcano), and Vox models contain

buckles and a tonal toe cap:

~ C * i\l(,li'\"l

,__ Vodka

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Volcano

-39

Appx000141
 PUBLIC VERSION

' Vox

(CDX-00240087; see also RX-0l57lC at Q/A 30; RX-01532; RPX-00229; RPX-0193; RPX

02l3; RPX-0219.) For the reasons explained above, the undersigned nds that this factor weighs

against a nding of likelihood of confusion with respect to these models.

Next, the evidence shows that the Glen, Gossip, Fanta, Eagle, Ginger, and Volt models of

the Ash shoe contain a wedge heel and/or buckles:

.1 1- K
1 '\\ \ ,

s i. :1 .
' ."_,,r _ 1
1-..........,-.I&_

t Eagle

-90

Appx000142
 PUBLIC VERSION

' 7%_%___

, tanta
an _<@'-v--
2,5,
- ,

1'5; r ' 5

Ginger '
, 1*-gt
~/ . r
l
A

I "LI!/__-7j i

. Volt

(CDX-00240086; CDX-00240087.) The presence of a wedge heel creates a much different

midsole prole. (RX-10l2lC at Q/A 108-109; RDX-0022C; Johnson, Tr. at 538:1-1-539114.)

This, combined with the presence of buckles in some cases, leads to the conclusion that this

factor weighs against a nding of likelihood of confusion.

Finally, the evidence shows that the Venus, Veronbis, Vicky, Virgo, and Volcan models

of the Ash shoe feature similar toe bumpers, toe caps, and stripes to the CMT:

- 91 _

Appx000143
 PUBLIC VERSION

VQIIIIIS .

mm I
Veroubis
V
-

'

7
Q
'
-17-

." :3 C
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-92_

Appx000144
. _ Virgo \ PUBLIC VERSION

*--inn-an-P-

Vulcan

(CDX-00240.087.) The commercial impact of these shoes is similar to the CMT. Thus, the

undersigned nds that, for these models, this factor weighs in favor of a nding of likelihood of

confusion.

2. Intent

Converse asserts that the near identical similarity of Highlines Accused Products to the

CMT . . . is evidence of Highlines intent to copy the CMT. (CIB at 66.)

Highline contends that Converse lacks any evidence that Highline intended to infringe

any trademarks or trade off of Converses goodvvill. (RIB at 82.) Highline specically notes the

lack of emails reecting an intent to copy. (Id.)

Staff contends that this factor weighs against nding confusion, as the evidence from

Converse consists of email communications from Converses customers not Highline. (SIB at

74 (citing CX-00294C; CX-0O295C; CX-00296C).) Staff explains that these emails do not

speak to Highlines intent in adopting .its designs. (Id.)

_ 93 _

Appx000145
 This Page Contains Confidential Information That Has Been Redacted
I PUBLIC VERSION

The undersigned nds that this factor weighs against a nding of likelihood of confusion.

There is no evidence that Highline intended to deceive or confuse consumers.

-' 3. Relation in Use and Manner of Marketing

- Converse asserts that Highlines Accused Products are sold in many of the same retail

locations as All Star shoes, including online . . . and brick-and-mortar stores. (CIB at 65 (citing

CX-00240C at Q/A 1177-80; CX-00244C at Q/A 23, 37-39, 49-50, 67-69, 102, 114-115; CX

00242 at Q/A 160-65).)

Highline asserts that the Ash and All Star shoes are marketed to very different

consumers. (RIB at 79.) Highline also contends that the All Star and Ash shoes are sold at

vastly different price points and thus are not competitive. (Id. (citing CX-00244C at. Q/A 57;

JX-004l2C at 476:4-14; RX-O2031C at 251119-22; RX-0l30l.O03).) Highline notes that the

higher-priced All Star shoes in collaboration with John Varvatos are marketed to men and are

therefore not in competition with the Ash shoes, which are mainly marketed to women. (Id. at 81

(citing RX-l0l22C at Q/A 57, 138, 139, 212-228, 299, 300; RDX-0023C; RX-0l57lC at Q/A

208-211; RDX-0019C; RX-lO12OC at Q/A 3-11;vJX-O04l2C at 504:9).) Highline further

contends that any overlap in distribution is negated by the level of sophistication of the

consumers. (Id. at 80.) V_

' Staff agrees that there is generally very little overlap in the distribution channels, as the

Converse shoes are typically displayed separately from Ash shoes and in different departments.

(Id. at 74 (citing RX-0l57lC at Q/A 159.) Staff also notes that the price differential is likely to

mitigate against any confusion caused by the overlap in channels. (Id.)

H In response, Converse notes that it has sold [ ] of pairs of All Star shoes

priced at $100 or more in 2014, (CIB at 65 (citing CX-00242C at Q/A 162).) Converse further

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PUBLIC VERSION

explains that, through its collaborations with various designers, All Star shoes are sold at the

same price points and through the same channels as Highlines Accused Products. (Id. at 65-66

(citing CX-OO244Cat Q/A 37-39, 50-72, 114-115).)

" The undersigned nds that this factor weighs against a nding of likelihood of confusion.

Ash shoes are marketed to different consumers than All Stars. The evidence shows that Ash

shoes are marketed as exclusive while Converse markets the All Star as democratic and

inclusive. (RX-01571C at Q/A 135; CX-01565C at 150211-25; RX-10122C at Q/A 209; CX

OO242Cat Q/A 82, 84.) The evidence further shows that, While there is a degree of overlap in the

places that sell Ash shoes and the core All Star shoes, the price point of the Ash shoes is

signicantly higher and thus the shoes are not directly competing with each other in that space.

(CX-0024OC at Q/A 1178-1180; CX-OO244Cat Q/A 57; JX-00412C at 476:4-14; RX-02031C at

251:19-22; RX-01303003; RX-O1571C at Q/A 113-115.) Although Converse argues that it has

sold [ _ ] of pairs of All Star shoes priced at $100 or more in 2014, (CIB at 65

(citing CX-OO242Cat Q/A 162), the evidence shows that these higher priced shoes are marketed

to-men while Ash shoes are marketed to women. (RX-l0l22C at Q/A 57, 138-139, 214; CX

00240C at Q/A 1187; CX-OO244Cat Q/A 68.) Thus, there is little overlap in the marketing and

distribution of these shoes.

4. Degree of Care _

Converse asserts that consumers are unlikely to exercise a great degree of care because

consumers would not expect premium retail channels to sell knockoff shoes._(CIB at 66 (citing

CX-00242C_at Q/A 169).) '

-95

Appx000147
 PUBLIC VERSION

Highline explains that its consumers are sophisticated and very unlikely to confuse ASH

products With All Stars. (RIB at 83 (citing RX-O1571C at Q/A 212; RX-l0l22C at Q/A 156;

RX-00833C at 409:5-17).)

Staff nds that this factor weighs against likelihood of confusion. (SIB at 74.) Staff notes

that Highlines products are signicantly more expensive and that its consumers are more

sophisticated shoppers, unlikely to confuse High1ines products with those of Converse. (Id.

(citing RX-l0l22C at Q/A 152-156; RX-01571C at Q/A 21, 29-31,133-134, 137-138, 141-143,

159, 191-192, 194-197, 203-207, 212).)

The undersigned agrees with Highline and Staff that this factor weighs against a nding

of likelihood of confusion. The evidence shows that the Ash shoes are luxury items and that

High1ines consumers are sophisticated. (RX-10122C at Q/A 152-156; RX-O1571C at Q/A 21,

135,137-138,141-143).) V '

5. Survey Evidence .

Converse asserts that Mr. Johnson reported an adjusted net result of 40.8% confusion for

Highlines Ash Vincent shoes. (CIB at 67 (citing CX-00233C at Q/A 1-3, 9, 88, 93-96, 103-04,

130, 134, 221).) _

Highline introduced evidence from Dr. Ericksen, who conducted a point-of-sale test.

(RIB at 85.) This survey yielded a net confusion rate of 9.6, indicating no likelihood of

confusion." (Id. (citing RX-10121C at Q/A 134-135, 139, 147, 158).)

Converse argues that Dr. Ericksens study is awed. (CRB at 41.) It further argues that

Dr. Ericksens survey did not measure post-sale confusion and thus has no bearing on Mr.

Johnsons results. (Id. (citing CX-00233C at Q/A 231-232).)

-96

Appx000148
 PUBLIC VERSION . .

The undersigned nds that this factor is neutral. First, for the reasons set forth supra in

Section V.B.5, the undersigned nds that Mr. Johnsons survey results are unreliable.

Additionally, Mr. Johnson tested only the Vincent, and therefore there is no survey evidence in

the record with respect to any of the other representative shoes. (Johnson, Tr. at 538:7-10,

540:4-8.)

The undersigned nds that Dr. Ericksens study results are reliable, but agrees with

Converse that the survey does not measure post-sale confusion. (CX-0O233C at Q/A 231.) Thus,

the results have little relevance in a,scenario in which post-sale confusion is at issue.

6. Conclusion - "

For the reasons stated above, all the factors are against a nding of likelihood of

confusion with respect to the Vincent, Vodka, Volcano (Vulcano), Vox, Glen, Gossip, Eagle,

Fanta, Volt, and Ginger line of shoes. Accordingly, the undersigned nds that these shoes do not

infringe the CMT.

- With respect to the Venus, Veronbis, Vicky, Virgo, and Volcan shoes, the majority of the

factors weigh against a nding of likelihood of confusion, but the rst factor does not. The

similarity of the marks is the most detemiinative of the factors. McCarthy at 23:20.50. Here,

the shoes are very similar to the CMT. The toe cap, toe bumper, and stripes offer a near identical

commercial impact. Given this, the undersigned nds that Converse has met its burden with

respect to infringement. The evidence with respect to the other factors is not sufcient to

overcome Converses evidence as to the rst factor. Accordingly, the undersigned nds that

these shoes infringe the CMT. - _

-97

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 - PUBLIC VERSION

. D. New Balance .

. Converse accuses three models _ofthe -PFFlyers of infringement: the Center, Bob Cousy,

and Sum Fun. (CIB at 12.) - -

1. Degree of Similarity _

Converse asserts that New Balances Accused Products make nearly identical use of the

CMT. (CIB at 68 (citing CDX-240.0115; CX-00240C at Q/A 1340-44; CX-O0242C at Q/A

192).)

New- Balance acknowledges that the Accused Products bear the combination of a toe

cap, toe bumper, and midsole stripes, but assert that the evidence shows that the uses are

readily distinguishable. (RIB at 86.) l

Staff agrees with New Balance. (SIB at 75.) Staff explains that [t]he shoes have very

different toe bumper designs, including being shaped differently and omitting the diamond and

line design of the CMT. (Id.) Staff also contends that to the extentthe New Balance midsoles

have striping, they are positioned differently relative to the other elements. (ld.)

The undersigned nds that this factor weighs in favor of a nding of likelihood of

confusion with respect to the Center and Bob Cousy shoes. In assessing this factor, it is useful to

remember that [e]xact similitude is not required. McCarthy at 23.20. Rather, the most

successil form of copying is to employ enough points of similarity to confuse the public with

enough points of difference to confuse the court. (Id. (citing Baker v. Master Printers Union, 34

F. Supp. 808, 811 (D. N.J. 1940).) Additionally,'[w]here the goods and services are directly

competitive, the degree of similarity required to prove a likelihood of confusion is less than in

the case of dissimilar products. Id. at 23.20.50.

_9g

Appx000150
 PUBLIC VERSION

_ The evidence shows that the overall commercial impression of these models of shoes is

similar to the CMT:

'7 . Sh0e.\nde1Narm ' I Image nfShoVeW I | SlmeM0ddNnme I Imageo1Slxoe ' l

.. ..,\

"' ' "" 1* ,,

Center Hi _ " Bob Cons)?L0 " v;,;""_"-~

i__..............._..._._. ._____i_.._................ 1
Q
\ x _V

, a re _, ..
K . .3, ~l-.=>,.
Center Lo my 1Sum Yuni """5i.~:.
_ _ ..
k\\,:f~_,, y ,1 -

~ ~?I*;~ . .
Bob Cousy Hi Sum fun Lo '* \.

- _._______i___._
"*~-.._ _,, /

(CDX-OO24O.114;see also CX-0_024OCat Q/A 1340-1343, CDX-00240.1 15.) The differences in

these shoe models are not drastic enough to overcome the similarities. Additionally, New

Balance admits that its shoes compete with Converse. (RIB at 88.) As such, less similarity is

required for this factor to favor confusion.

The undersigned nds, however, that this factor weighs against a nding of likelihood of

confusion with respect to the Sum Fun model of shoes. Although these shoes have a toe cap and

toe bumper, they lack a stripe. (CDX-OO240.114;CDX-00240115.) Thus, they are missing one

of the three design elements of the CMT. '

_ 99 _

Appx000151
 PUBLIC VERSION

2. Intent

Converse asserts that New Balances intent is evidenced by its introduction of virtually

identical copies of the CMT and that its emails and other internal documents support this. (CIB

at 69 (citing CX-242C at Q/A 175-79, 186-87; CX-0719-22).) Converse further notes that New

Balance displays the Accused Products when a consumer searches Converse or Chuck

Taylor on pfyerscom. (Id. at 70 (citing CX-0024OC at Q/A 1362-64; CX-00242C at Q/A 189;

cx-00747 at .0008; CX-00748 at .0019; cx-00749 at .0013; cx-00750-00752; cx-10631; CX

015700).)

New Balance asserts that it has not tried to confuse consumers and that its products are

not designed to look like the [Chuck Taylor All Star] ~ they are designed to look like PF Flyers.

(RIB at 89.)

Staff asserts that this factor is a closer call, but nds that it weighs against a nding a

likelihood of confusion. Staff explains that the internal communications do not specically refer

to the midsole design. (SIB at 76.) Staff further notes that it is common practice among

companies to return their own products when customers search for Converse or Chuck

Taylors. (Id. (citing RX-10102C at Q/A 28-29).) '

The undersigned nds that this factor weighs in favor of a nding of likelihood of

confusion. In contrast to New Ba1ances assertion that it did_not intend to confuse consumers, the

evidence shows that New Balance intentionally displayed the Accused Products when a

consumer searched Chuck Taylor, and/or Converse on pfyers.com. (CX-00240C at Q/A

1362-64; CX-00242C at Q/A 189; CX-00747 at .0008; CX00748at .0019; CX-00749 at .0013;

CX-00751-00752; CX-10631).) The fact that a New Balance employee testified that other

companies used competitors brands to return search results for their products is not evidence to

' -100

Appx000152
 PUBLIC VERSION .

the contrary. (RX-0001C at Q/A 29.) Something may be common practice in an industry yet still

demonstrate an intent to confuse consumers into thinking that they are purchasing a product

associated with another brand.

3. Relation in Use and Manner of Marketing

Converse argues that New Balances distribution and marketing efforts overlap with the

All Star. (CIB at 68-69 (citing CX-0024OC at Q/A 197-99, 1337, 1376-79; CX-00244C at Q/A

23, 35-36, 104; CX-00242C at Q/A 192; CX-10287; CX-00742).)

_ New Balance notes that the evidence shows that the PF Flyers and [Chuck Taylor All

Star] products compete, but are competitive alternatives. (RIB at 88.) Staff agrees. (SIB at 76

(citing RX-OOOOICat Q/A 208-210).) 1

' The undersigned nds that this factor weighs in favor of a nding of likelihood of

confusion. New Balance does not dispute that its shoes are sold at the same online and brick and

mortar stores as the All Star. (RIB at 89-90.) Nor does it dispute that its marketing efforts

overlap. (Id.) Instead, New Balance rests on the testimony of its employee who opined that PF

Flyers has its own brand identity. (RX-00001C at Q/A 208-210.) This testimony is not supported

by any evidence and is therefore not sufficient to overcome the evidence introduced by

Converse.

4. Degree of Care I

Converse contends that [a]t prices between $45 and $55, consumers of shoes like New

Balances Accused Products are unlikely to exercise great care in resolving confusion. (CIB at

69 (citing CDX-00240.0124).) ' '

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 PUBLIC VERSION

~New Balance insists that its customers are specically looking for a shoe that is a

heritage shoe that is specically not the Chuck Taylor. (RIB at 92 (citing RX-OOOOICat Q/A.

210.) Staff agrees. (SIB at 76 (citing RX-00001 at Q/A 208-210).)

The undersigned nds that this factor weighs in favor of a nding of likelihood of

confusion. The evidence that the typical PF Flyers consumer is discerning and specically

looking for PF Flyers shoes comes from the testimony of an employee of New Balance, who

acknowledges that this opinion is based only upon his experience. (RX-0000lC at Q/A 209.)

Such biased testimony does not overcome a general presumption that consumers of low-cost

shoes are unlikely to exercise a great deal of care. Additionally, there is no evidence that

undecided consumers would exercise such care. Given the relatively low price point of these

shoes, consumers are more likely to be confused. This is especially true, given that New Balance

displays the Accused Products when consumers search Chuck_Taylor, and/or Converse on

pfyers.com. (CX-0O240C at Q/A 1362-64; CX-00242C at Q/A 189; CX-00747 at .0008; CX

OO748at .0019; CX-00749 at .0013; CX-00751-00752; CX-10631).)

5. Survey Evidence

Converse introduced survey results by Mr. Johnson in support of likelihood of confusion,

who reported adjusted net results of confusion . . . of 39.3%-63%. (CIB at 70 (citing CX

00233C at Q/A 1-3, 9, 88, 93-96,103-103,130,134, 212, 221).) .

New Balance contends that Mr.Johnsons survey results are fatally awed. (RIB at 91.)

New Balance introduced survey results of its ovm by Robert Klein with respect to the Centers Hi

and Bob Cousy. (ld.) New Balance reports that [t]he results of Mr. Kleins surveys demonstrate

unequivocally that the incorporation of a toe cap, toe bumper, and midsole stripes on the PF

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Appx000154
 PUBLIC VERSION

Flyers shoes has no material impact on consumers perceptions of the source of the PF Flyers

shoes. (Id.) _

In response, Converse asserts that Mr. Kleins methodology was awed. (CRB at 41.)

Converse also notesthat Mr. Kleins survey did not measure post-sale confusion. (Id. (citing CX

00233C at Q/A 233).)

The undersigned nds that this factor is neutral. As stated, supra, V.B.6, the

undersigned previously found that Mr. Johnsons survey results were unreliable. Additionally,

the Lmdersigned agrees with Converse that Mr. Kleins survey does not measure post-sale

confusion. (CX-00233C at Q/A 233.) Thus, the results have little relevance in a scenario in

which post-sale confusion is at issue.

6. Conclusion

I For the reasons stated above, all the factors are in favor of or are neutral to a nding of

likelihood of confusion Withrespect to the Bob Cousy and Center models of shoes. Accordingly,

the undersigned nds that these shoes infringe the CMT.

With respect to Sum Fun, all of the factors Weighin favor of or are neutral to a nding of

likelihood of confusion, but the rst one. Because this factor is the most determinative, the

undersigned nds that, overall, the factors weigh against a nding of likelihood of confusion.

Accordingly, the undersigned nds that the Sum Fun shoes do not infringe the CMT.

E. Defaulting Respondents _;

Converse asserts that the Defaulting Respondents Accused Products are confusingly

similar. (CIB at 71.) Converse further explains that [t]he facts alleged in the Complaint as to the

Defaulting Respondents are presumed true and support a determination by the ALJ that they

infringe the CMT. (Id.(citing 19 C.F.R. 2l0.16(c)(1)).)

-103

Appx000155
 PUBLIC VERSION

Staff agrees that the evidence offered by Converse shows a likelihood of confusion with

respect to the Defaulting Respondents and their associated Accused Products. (SIB at 77.)

The undersigned nds that Converse has established that the Defaulting Respondents

Accused Products infringe the CMT. In the Complaint, Converse asserted that each of the parties

and their products infringe. (CX-00001 at 111]187-98; 1111

487-96; 1111551-59, 1111564-72, 1111578

86.) Converse also offered evidence that the Accused Products are likely to confuse consumers.

(CX-O(_)245C at Q/A 88, 106, 110-112; CX-00064-CX-00066; CX-OO162CX-00166; CX

00179-CX-001 82C; CX-0O183CCX-OO185C; CX-00186CX-00189C.) Thus, Converse

satised its burden of demonstrating infringement. Additionally, the undersigned is not aware of

any evidence to the contrary with respect to infringement by the Defaulting Respondents.

Accordingly, the undersigned nds that the Defaulting Respondents Accused Products infringe

the CMT.

VI. DILUTION

Dilution by blurring is an association arising from the similarity between a mark or

trade name and a famous mark that impairs the distinctiveness of the famous mark. 15 U.S.C.

1125(c)(2)(B). The owner of a famous mark shall be entitled to an injunction due to dilution by

blurring regardless of the presence or absence of actual or likely confusion, of competition, or

ofactual economic injury. 15 U.S.C. 1125(c)(1).

The threshold question for dilution by blurring is whether the mark is famous. A mark is

famous if it is widely recognized by the general consuming public of the United States as a

designation of source of the goods or services of the marks owner. 15 U.S.C. 1125(c)(2)(A).

The widely recognized requirement of the statute is a rigorous and demanding test, and

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 This Page Contains Confidential Information That Has Been Redacted
3 PUBLIC VERSION

should require a minimum threshold survey response . . . in the range of 75% of the general

consuming public of the United States. McCarthy at 24:106. ~

In assessing the fame of a mark the following factors may be considered:

(i) The duration, extent, and geographic reach of advertising and publicity of
the mark, whether advertised or publicized by the owner or third parties.

(ii) The amount, volume, and geographic extent of sales of goods or services
offered under the mark.

(iii) The extent of actual recognition of the mark.

(iv) Whether the mark was registered under the Act of March 3, 1881, or the
Act of February 20, 1905, or on the principal register.

15 U.S.C. 1l25(c)(2)(A). ' ''

Converse argues that the CMT acquired fame by at least the 1990s. (CIB at 73 (citing

CX-00237C at Q/A 3, 109, 128).) Converse explains that the CMT has been the subject of an

enormous amount of advertising and publicity for decades and that it has advertised shoes

bearing the CMT for over 80 years. (Id. (citing CX-00243C at Q/A 60, 106).) Converse asserts

that [a]s a result of its widespread advertising and publicity Converse has enjoyed

unprecedented sales of the All Star Shoes . . . selling [ ] of pairs. (Id. (citing

CX-00243C at Q/A 189-191).) _

Converse also claims that survey evidence conrms that the CMT is famous. (CIB at 74

75.) In support, it introduced the testimony of Hal Poret, who found that almost 70% of survey

respondents recognized the CMT as coming from one brand. (Id. at 75 (citing CX-00238 at Q/A

128).) ' .

Respondents argue that Converse failed to establish that the CMT is famous. (RIB at 40

41.) Theyexplain that Dr. Porets survey failed to isolate the CMT. (Id. at 40 (citing Poret, Tr. at

-105

Appx000157
 . . PUBLIC VERSION

234:5-235:7).) They also explain that Dr. Porets results should be disregarded because he used

the same control image as Dr. Ford. (Id. (citing Poret, Tr. at 221 :7-223119).)

Staff agrees that Converse has not proven that the mark is famous. (SIB at 51-52.) Staff

explains that Dr. Porets survey suffers from serious aws, including the fact that Dr. Poret

tested the fame of the overall shoe and used an improper control. (Id. at 51 (citing CX-00238 at

Q/A 92-98; RX-10274 at Q/A 70, 79, 83; RX-l0266C at Q/A 56, 58-60).) Staff also explains that

Converses advertising efforts do not support its claim that the CMT is famous. (Id. at 50.)

The undersigned nds that Converse has not established that the CMT is famous.

Specically, while the rst two factors Weigh in favor of a nding that the mark is famous,

Converse failed to establish the third factor: The extent of actual recognition of the mark. Dr.

Porets survey is unreliable, as he used the same improper control shoe as Dr. Ford. (CX-00238

at Q/A 92-98; RX-10274 at Q/A 79, 83; RX-l0266C at Q/A 59).) The undersigned further nds

that Dr. Porets study is awed due to the fact that the survey was designed to test the overall

shoe and not the CMT specifically. (RX-10274 at Q/A 70, 83; RX-l0266C at Q/A 58; Poret,

Tr. at 233122-235:22.) Without evidence of the extent of the actual recognition of the mark, the

undersigned is unable to conclude that the CMT is famous. Accordingly, the undersigned nds

that Converse has not proven a claim of dilution of the CMT.

22The undersigned concludes that this factor weighs in favor of fame for the same reasons set forth in Sections
IV.A.2, IV.A.4, & lV.A.5. The evidence shows that the duration and extent of the advertising and publicity of the
mark, as well as the amount and volume of sales offered under the mark weigh in favor of fame.
-106

Appx000158
 . . . PUBLIC VERSION

VII. INFRINGEMENT OF THE COT . .'

Converse asserts Foreversun infringes the Converse Outsole Trademark. (CIB at 92). As

explained, supra, V, to prove infringement, Converse must establish that the COT merits

protection and that the respondents use of a similar mark is likely to cause consumer confusion.

Handbags, Order No. 16 at 6. In support of the rst prong of the analysis, Converse notes that

the undersigned issued an Initial Determination nding the COT valid, which the Commission

determined not to review. (Order No. 130 (July 15, 2015); Notice of Commn Determination Not

to Review Two Initial Determinations Granting Unopposed Mots. for Summary Determination

that the Importation Req. is Satised as to Respondent CMerit and that the Converse Outsolc

Trademark is Valid (July 28, 2015).) In support of the second prong, Converse asserts that the

factors considered by the Commission weigh in favor of a likelihood of confusion. (CIB at 92

94.)

With respect to the similarity factor, Converse explains that Foreversuns Accused

Products include a near identical copy of the COT. (CIB at 92 (citing CX-00190 at .0014,

.0017, .0019, .0020; CX-00003; CX-00004; CPX-00036).) Converse notes that the undersigned

previously denied summary determination of infringement by Foreversun because the image

provided in support of the motion included a sticker placed on the heel portion of the outsole by

Foreversun. (CIB at 92 n. 34.) At the hearing stage of the Investigation, Converse introduced

additional images [which] conrm the upper and heel portions of the outsole include the

diamond pattern covered by the COT. ([d.)

-Staff agrees that this factor favors confusion. (SIB at 84.) Staff notes: Given that there is

no contrary evidence and given that the shoes are extremely similar to the mark . . . the Staff

believes that Converse has satised its burden of proof. (Id. at 84-85.)

-107

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 PUBLIC VERSION

The undersigned nds that Converse has met its burden in establishing that this factor

favors a nding of likelihood of confusion. The evidence shows that the outsole of Foreversuns

shoe is identical to the 960 and the l03 registrations:

Foreversun Accused Products Converse Outsole Trademark

=11

96ORegistration (CX-4)
(CX-190 at -0014) (cx-190 at .0017)

/"'~"
\.lv:L:/1/*""--v.,,;e

I03 Registration (CX-3)

(CX-190 at .0020) (CX-190 at .0019)

Together, the pictures show the entire outsole of this line of shoes. Additionally, there is no

evidence in the record that contradicts this nding.

The undersigned also nds that the other factors weigh in favor of a nding of likelihood

of confusion. The undersigned nds that Foreversuns use of the COT evidences an attempt to

deceive consumers into thinking they are buying genuine Converse shoes. Certain Digital

Multimeters, Commn Op. at 12-13. The evidence also shows that Foreversun promotes and sells

its Accused Products at retail stores in the U.S. and internet. (CX-00162-00165.) Finally, the

undersigned nds that, because the Accused Products bear a near identical copy of the COT,

even customers that exercise a high degree of eare are likely to be confused or deceived. In re

Cook Med. Techns. LLC, 105 USPQ2d 1377, 1383 (T.T.A.B. 2012 (It is settled . . . that even

sophisticated purchasers are not immune from source confusion, especially in cases such as the

instant one involving similar marks and closely related goods). "

Accordingly, for these reasons, the undersigned nds that Foreversuns Blue line of shoes

infringe the COT.

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VIII. DEFENSES

A. Fraud

Respondents allege that Converse procured the 753 Registration by fraud on the

USPTO. (RIB at 100-104; RRB at 43-45.) Specically, Respondents assert that during

prosecution, Converses former Vice President of Global Footwear, Mr. Wayne Patrick Seehafer,

submitted a declaration to the USPTO wherein he knowingly made a false statement attesting to

Converses substantially exclusive use of the CMT. (RIB _at 100-102; RRB at 43-44.)

Respondents claim that the evidence shows that Mr. Seehafer had the intent to deceive the

USPTOand that his false statement was material. (RIB at 102-104 (arguing that Converse sought

the 753 Registration with the intent to shut down sales of Skechers Twinkle Toes shoes and

that the USPTO would not have issued the registration had it known about third party use of the

mark); RRB at 44-45.)

" Converse asserts that Respondents have failed to carry their heavy burden of proving

this defense, as there is no evidence that (1) the Declaration was false, (2) Mr. Seehafer

intended to deceive the PTO, or (3) the allegedly false statement was material. (CIB at 82; see

also CRB at 45-47.) Staff agrees with Converse that Respondents have not carried their burden

of proof to show by clear and convincing evidence an intent to deceive the PTO. (SIB at 85-86.)

The Federal Circuit has held that a trademark is obtained fraudulently under the Lanham

Act only if the applicant or registrant knowingly makes a false, material representation with the

intent to deceive the PTO. In re Bose Corp, 580 F.3d 1240, 1245 (Fed. Cir. 2009). A party

seeking to invalidate a mark on the basis of fraudulent procurement bears a heavy burden oi

proof. Id. at 1243. Moreover, the very nature of the charge of fraud requires that it be proven

to the hilt with clear and convincing evidence, and [t]here is no room for speculation,

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inference or surmise and, obviously, any doubt must be resolved against the charging party. Id.

(internal citations omitted). [B]ecause direct evidence of deceptive intent is rarely available,

such intent can be inferred from indirect and circumstantial evidence. Id. at 1245 (quoting Star

Scientific, Inc. v. R.J. Reynolds Tobacco C0, 537 F.3d 1357, 1366 (Fed. Cir. 2008)).

- The undersigned nds that Respondents have failed to prove their fraud defense by clear

and convincing evidence. First, Respondents have not established that Mr. Seehafer knew any

information in the declaration was false or that he submitted the declaration with deceptive

intent. The only evidence Respondents cite to prove that Mr. Seehafer was personally aware of

other shoes with similar designs were reports of sales of the Skechers products now accused of

infringement. (See, e.g., RIB at 100-102.) However, alleged knowledge of sales by one

competitor is insufcient evidence that Mr. Seehafer knew (or believed) that Converse was not

the substantially exclusive user of the CMT. Indeed, Mr. Seehafer testied that he didand still

doesbelieve that Converses use of the CMT was substantially exclusive. (CX-00248C at Q/A

51-54, 56, Seehafer, Tr. at 151:l5-152117; 158:24-159114, 195:5-12.)'Mr. Seehafer further

testied that Converse led the application because it [

] (CX-00248C at Q/A 38.) Moreover, the

express language of l5.U.S.C. 1052(f) does not require that use be absolutely exclusive. See

1052(1)(The Director may accept as prima facie evidence that the mark has become distinctive,

as used on or in connection with the applicant's goods in commerce, proof of substantially

exclusive and continuous use thereof as a mark by the applicant in commerce for the ve years

before the date on which the claim of distinctiveness is made). As Mr. Seehafer testied, his

investigation prior to signing the declaration revealed no third-party uses that were substantial

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or signicant at the time as any such sales were inconsequential in comparison to the sales

volumes, the market penetration, consumer awareness, equity and goodwill in the marketp1_ace

for the Converse trademark. (Seehafer, Tr. at 161215-162:9, 196:6-17; see also CX-00248C at

Q/A 55.) l

~1 Second, Respondents failed to establish that the allegedly false statement was material.

For product conguration cases, ve years use on its own is not sufficient to show acquired

distinctiveness. (CX-10846C at Q/A 123.) An applicant must present additional evidence that

the applied-for design is perceived as a mark. (Id.; see also TMEP l212.05(a), 1202.02(b)(i).)

The USPTO would therefore not have relied solely on Mr. Seehafers declaration and instead

would have examined and relied on additional evidence such as Converses sales, advertising

and use ofthe CMT. (Id. at Q/A 85, 122-123.)

B. Laches . I

Respondents assert that Converses claims are barred by laches. Respondents contend

that they sold the Accused Products for years before Converse initiated this Investigation or

otherwise suggested that the Accused Products infringed its trademark rights. (RIB at 104-113;

RRB at 47-50.) Respondents claim that Converses unreasonable delay has caused them

signicant prejudice for they each have invested signicant resources in developing, marketing,

and selling the Accused Products. (RIB at 104-113; see also RRB at 46-47.) _

Converse disputes Respondents allegations for four reasons. First, Converse argues that

laches is inapplicable since it does not bar prospective injunctive relief. (CIB at 84.) Second,

Converse asserts that Respondents infringed and laches is not a defense against injunctive relief

when the defendant intended the infringement. (Id.) Third, Converse __claimsthat strong

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evidence of likelihood of confusion trumps laches. (Id) Lastly, Converse contends that

Respondents have failed to establish the elements oflaches. (CIB at 84-90; CRB at 47-51.) _

Staff is of the view that none of the Respondents have established a laches defense. (SIB

at 86-89.) Staff does not believe Walmart or Highline has been prejudiced by any delay. (Id at

87-88.) As to New Balance, Staff believes the evidence shows that any delay by Converse was

reasonable. (Id) While Staff submits that it is a closer question with respect to Skechers, Staff

ultimately does not believe the evidence supports a laches defense. (Id at 89.)

As the parties are aware, laches is the neglect or delay in bringing suit to remedy an

alleged wrong, which taken together with lapse of time and other circumstances, causes

prejudice to the adverse party and operates as an equitable bar. A.C. Aukerman C0. v. R.L.

Chaides Constr. Co.,, 960 F.2d 1020, 1028-1029 (Fed. Cir. 1992). To establish laches,

Respondents must prove (1) [Converse] delayed ling suit for an unreasonable and inexcusable

length of time from the time [Converse] knew or reasonably should have known of its claim

against [Respondents]; and (2) the delay operated to the prejudice or injury of [Respondents].

Id. at 1032.

The undersigned agrees with Converse and Staff that Respondents have failed to carry

their burden of proof. In particular, the undersigned nds that Walmart and Highline have not

been prejudiced by any delay. These parties cannot establish that any growth in their Accused

Products lines was a result of Converses delay as opposed to an increase in market demand.

There is also evidence that the Accused Products are only a small portion of Walmart and

Highlines income and thus, harm if any would not be material. (CX-Ol543C at 92:25-93:7

(Ms. Wraight testifying that the Accused Products are not top-selling Highline shoes); RX-7705;

CX-0024OC at Q/A 946, 951; RX-1571C at Q/A 70, 74, 88; RX-7691C at Q/A 72-84.) '

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With respect to New Balance, the undersigned nds that there was no unreasonable

delay. The evidence shows total net PF Flyers sales (including some non-accused shoes) were

less than[ ]

[ ] (CX-00726C; see also RX-0001C at Q/A 150 (showing [ ] in sales of PF Flyers

over 12 years).) By contrast, New Balance had approximately [ ] in annual sales in 2013

alone. (RX-0001C at Q/A 150.) Given such de minimis sales, Converse need not sue

immediately, thereby making its delay in bringing suit reasonable. See Oriental Fin. Grp., Inc. v.

Cooperativa de Ahorro y Credito Oriental, 698 F.3d 9, 24 (lst. Cir. 2012) (We agree that the

progressive encroachment doctrine allows an infringement plaintiff to tolerate de minimis or

low-level infringements prior to bringing suit.).)

As to Skechers, Converse does not appear to dispute that it was aware of Skechers

alleged infringement in 2007. (CIB at 86; see also RX-0O154C; RX-00239C; RX-0O243C; RX

0O254C; RX-00255C; RX-O0256C; RX-OOSOOC;RX-01055C.) Converse therefore delayed at

least seven years before ling its Complaint in this Investigation.23 During this delay, Skechers

signicantly invested in the advertising and promoting of its Accused Products, including but not

limited to print, television, and celebrity endorsements. (RX-2092C at Q/A 41 (testifying that

Skechers spends more than $100 million per year on advertising).) In fact, Skechers investment

has helped grow its Twinkle Toe line of shoes into the number one shoe line for young girls. (Id.

at Q/A 45 (discussing the various cross-promotional activities for the Twinkle Toes line).)

Nonetheless, laches generally bars prospective relief only in egregious cases with plus factors,

such as a grossly long period of delay. See McCarthy 31:7 (dening gross delay as a delay

on the order of 20 to 25 years, 25 to 30 years or 30 or longer). Here, Skechers has not presented

23Skechers argues that the relevant laches period for a trademark infringement claim brought against a defendant in
California is four years. (RIB at 105.) While this may indeed be true, it is not clear that use of the statute of
limitations as a benchmark is appropriate for trademark in-ingement claims. See McCarthy 31:23.
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evidence of such gross delay by Converse that it would warrant denying relief by the

Commission. _ _

Accordingly, for these reasons, the undersigned nds that Respondents have failed to

prove Converses claims are barred by laches.

C. Estoppel .

New Balance contends that Converses claims are barred by equitable estoppel,

arguing that Converse never indicated that it believed the PF Plyers footwear infringed its

claimed trademark. (RIB at 113; RRB at 50-51.) For example, New Balance alleges that:

0 Converse knew B.F. Goodrich sold PF Flyers prior to the 1970s and never objected.

Converse acquired PF Flyers and sold shoes using the same brand and same designs.

0 Converse sold PF Flyers knowing that the purchaser would sell the same footwear.

0 Converse gave a purchaser a waiver and quitclaim to permit it to sell the footwear.

I New Balance acquired the PF FLYERS brand in 2001 and began selling the
footwear in early 2003. Converse was actually aware of the acquisition in 2002.

0 Converse gave notice of a potential claim against the New Balance brand CPT model
shoe in 2013, but the notice said nothing about the PF FLYERS brand.

0 Converse led its Complaint in this Investigation against 31 Respondents, but it_did
not include New Balance and its PF FLYERS brand.

(RIB at ll3-114.) New Balance asserts that [g]iven these facts, any reasonable actor would

believe that Converse was not going to assert a claim against it. (Id. at 1114.)New Balance

further claims that it relied on Converses conduct (e.g., afrmative acts and silence related to

the brand) when it made the decision to purchase PF Flyers. (Id.) New Balance insists it has

been materially prejudiced by Converses conduct, arguing that it would not have spent

Z4New Balance is the only Respondent to assert an equitable cstoppcl defense.

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 PUBLIC VERSION

$75Q,OOOto acquire the PF Flyers brand had it known it would be prevented from selling the

footwear. (Id.) .

Converse argues that New Balances only evidence of alleged misleading conduct is

Converses silence, but silence alone is insufficient. (CIB at 90; CRB at 51.) Converse also

argues that to show reliance, New Balance must have had a relationship or communication with

Converse which lulled New Balance into a sense of security, yet [n]o such relationship or

cormnunication exists here. (CIB at 91; CRB at 51.) Lastly, Converse contends that New

Balance has not shown any material prejudice. (Id)

Staff also does not believe New Balance has proven equitable estoppel. (SIB at 91-92.) In

Staffs view, New Balance is unable to establish reliance because it carmot show that Converse

and New Balance had a relationship or communication which lulled New Balance into a sense of

security. (Id.) ~_ ~

The undersigned agrees with Converse and Staff -that New Balance has not proven

equitable estoppel. To establish the afrmative defense of estoppel, an alleged infringer must

demonstrate: (l) misleading conduct, which may include not only statements and action but

silence and inaction, leading another to reasonably infer that rights will not be asserted against it;

(2) reliance upon this conduct; and (3) due to this reliance, material prejudice if the delayed

assertion of such rights is permitted. Certain Bearings and Packagings Thereo Initial

Determination at 28 (Apr. 10, 2003) (internal citations omitted). Reliance is not the sa.me as

prejudice or harm, although frequently confused . . . [t]o show reliance, the infringer must have

had a relationship or communication with the plaintiff which lulls the infringer into a sense of

security. Id. (internal citations omitted).

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Here, nearly all the evidence New Balance relies upon are Converses actions with

respect to others, not New Balance. (See, e.g., RIB at 113-114.) Equitable defenses are

personal defenses, based upon the trademark 0wners conduct [in relation to] the defendant.

Pandora Jewelers J 995, Inc. v. Pandora Jewelry, LLC, No. O9-614.90,2010 WL 5393265, at *3

(S.D. Fla. Dec. 21, 2010) (citing Exxon Corp. v. Oxford Clothes, Inc., 109 F.3d 1070, 1078 n. 11

(5th Cir. 1997).) Converses actions or inactions with respect to other entities are not sufficient to

show that Converse and New Balance had a relationship or communication which lulled New

Balance into a sense of security. New Balance has therefore failed to establish the requisite

reliance. V '

- Accordingly, the undersigned nds that New Balance has not met its burden of proving

equitable estoppel.

D. Abandonment _

Respondents claim Converse abandoned the CMT long ago by-failing to police third

party use and now cannot enforce any rights based on the claimed mark. (RIB at 11-115; RRB at

51.)

Converse disputes Respondents assertion, arguing that [t]he CMT is not, and has never

been generic. (CIB at 91.) In fact, Converse claims that Respondents own secondary meaning

survey shows that the CMT serves as a source-identier for Converse. (Id.) Converse further

notes that failure to police a mark does not in itself indicate that a mark has lost signicance.

(cms at 51-52.)

. Staff submits that because the evidence does not show that the CMT is generic,

Respondents abandonment defense must fail. (SIB at 92.)

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A mark shall be deemed to be abandoned . . . [w]hen any course of conduct of the

owner, including acts of omission as well as commission, causes the mark to become the generic

name for the goods or services on or in connection with which it is used or otherwise to lose its

signicance as a mark. 15 U.S.C. 1127 (emphasis added). The undersigned has found

hercinabove that the CMT is not generic. Accordingly, for the reasons set forth in Section IV.C.,

the undersigned nds that Respondents have failed to prove their abandonment defense.

IX. DOMESTIC INDUSTRY

A. Legal Standard

A violation of section 337 can be found only if an industry in the United States, with

respect to the articles protected by the . . . trademark . . . concerned, exists or is in the process of

being established. 19 U.S.C. 1337(a)(2). Under Commission precedent, this domestic

industry requirement of section 337 consists of an economic prong and a technical prong.

Certain Stringed Musical Instruments and Components Thereo/,Inv. No. 337-TA-5 86, Commn

Op. at 12-l4 (May 16, 2008) (Stringed Instruments). The complainant bears the burden of

establishing that the domestic industry requirement is satised. See Certain Multimedia Display

and Navigation Devices and Systems, Components Thereof and Prods. Containing Same, Inv.

No. 337-TA-694, C0mmn Op. at 5 (July 22, 2011).

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1. Economic Prong

Section 337(a)(3) setsforth the following economic criteria for determining the existence

of a domestic industry:

(3) For purposes of paragraph (2), an industry in the United States shall be
considered to exist if there is in the United States, with respect to the articles
protected by the patent, copyright, trademark, mask work, or design concerned

(A) signicant investment in plant and equipment;

(B) signicant employment of labor or capital; or

(C) substantial investment in its exploitation, including

engineering, research and development, or licensing.

19 U.S.C. 1337(a)(3). Given that these criteria are listed in the disjunctive, satisfaction of any

one of them will be sufcient to meet the economic prong of the domestic industry requirement.

Certain Integrated Circuit Chipsets and Prods. Containing Same, Inv. No. 337-TA-428, Order

No. 10, Initial Determination (unreviewed) (May 4, 2000).

Pursuant to Section 337(a)(3)(A) and (B), a complainants investment in plant and

equipment or employment of labor or capital must be shown to be signicant in relation to the

articles protected bythe intellectual property right concerned. Certain Printing and Imaging

Devices and Components Thereoj, Inv. No. 337-TA-690, Commn Op. at 26 (Feb. 17, 2011).

The Commission has emphasized that what is considered signicant within the meaning of the

statute is not evaluated according to any rigid mathematical formula. Id. at 27; see also Certain

Kinesiolherapy Devices and Components Thereo Inv. No. 337-TA-823, Commn Op. at 33 (July

12, 2013). Instead, the determination is made by an examination of the facts in each

investigation, the article of commerce, and the realities of the marketplace. Certain Male

Prophylactic Devices, Inv. No. 337-TA-546, Commn Op. at 39 (Aug. 1, 2007).

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Section 337(a)(3)(C) provides for domestic industry based on substantial investment in

the enumerated activities. See Certain Digital Processors and Digital Processing Systems,

Components Thereof and Prods. Containing Same, Inv. No. 337-TA-559, Initial Determination

at 88 (May ll, 2007). Whether an investment in domestic industry is substantial is a fact

dependent inquiry for which the complainant bears the burden of proof. Stringed Instruments at

14. There is no minimum monetary expenditure that a complainant must demonstrate to qualify

under the substantial investment requirement of this section. Id. at 25. [T]here is [also] no

need to dene or quantify the industry itself in absolute mathematical terms. Id. at 26.

2. Technical Prong

In orderito satisfy the technical prong of the domestic industry requirement, Converse

must establish that the articles relating to the domestic industry are protected by the intellectual

property at issue in the investigation. Certain Energy Drink Prods, Inv. No. 337-TA-678, Order

No. 34 at 12 (Mar. 30, 2010). Where registered trademark rights are asserted, [t]he test for

determining whether the technical prong is met through the practice of a trademark is plain use

of the trademark on products and packaging. Protective Cases, Inv. No. 337-TA-780, Initial

Determination at 90.

B. Economic Prong

Converse asserts that it has expended signicant and substantial U.S. plant, equipment,

labor and capital resources for extensive production-related, engineering, research and

development, and support activities in the U.S. directed to All Star shoes. (CIB at 95-108; CRB

at 52-53.) For example, Converse claims that it has made a signicant investment in plant and

equipment for activities directed to All Star shoes through facilities space, annual plant and

equipment costs, and asset depreciation expenses across multiple facilities in the U.S. (CIB at

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100-104.) Converse also claims that it has made signicant expendituresto employ and retain a

large domestic workforce dedicated to production-related and support activities, as well as

substantial investments in engineering and research and development to create new shoe designs

that capitalize on the asserted trademarks. (Id. at 104-108.) Converse contends that these efforts

satisfy the requirements of l337(a)(3)(A), (B), and (C).

Respondents dispute that Converse has satised the economic prong. First, Respondents

argue that Converses allocation methodology is unreasonable and articially inates the size of

the claimed domestic industry. (RIB at 115-116 (arguing that there is no evidentiary basis for

Converses unit-based sales allocation methodology).) Second, Respondents assert that

Converse has failed to show signicant investments in plant and equipment or labor and capital

because Converses purported investment is over-inclusive in that it includes expenditures that

are irrelevant to a domestic industry analysis. (RIB at 116-119; RRB at 52.) Finally,

Respondents contend that Converses reliance on [ ] is improper under

subsection 337(a)(l)(C) and that the [ ] related expenditures (i.e., other research and

development-related exploitation of its trademarks) identied by Converse are not substantial.

(RIB at 119-120.) '

In Staffs view, Converse satises the economic prong of the domestic industry

requirement under section 337(a)(3)(A) and (B), but not under section (a)(3)(C). (SIB at 92-103;

SRB at 26;) Specically, Staff believes Converse has established that it has invested over [ ]

[ ] in plant and equipment and nearly [ ] in labor in the United States to design,

develop, and manage the production of its domestic industry products. (Id.)

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1. Investment in Plant and Equipment

As an initial matter, the undersigned notes that Converse offered two analyses of its

domestic industry investments.25 The rst analysis included investments in all of Converses

U.S. non-retail facilities. (See, e.g., CIB at 100-107.) The second analysis was prepared at the

request of Staff and is a more conservative analysis that only includes investments in Converses

North Andover headquarters, creative space and testing space. (Id.) The undersigned relies on the

second, more conservative analysis as Converses rst analysis includes inappropriate

investments related to two distribution centers and a New York [

] The undersigned nds that the evidence establishes that Converse has made

signicant investments in plant and equipment at its headquarters in North Andover,

Massachusetts.

Prior to April 2015, Converses headquarters was located at 1 High Street, North

Andover, Massachusetts. (CX-00246C at Q/A 106.) The headquarters was a ve-story, [ ]

square foot building, which housed Converses communications, corporate and government

affairs, corporate services, design, general management, information technology, logistics and

services, manufacturing and sourcing, marketing, merchandising, product creation, product

management, program/process excellence, retail management, sales, and strategic planning

groups. (Id. at Q/A 106, 111.) The headquarters used a [ ] square foot off-site storage space

for [ ] at 300 Canal Street, Lawrence, Massachusetts. (Id. at Q/A 112.) In April

25 As Staff notes, reasonable and appropriate allocation methodologies, such as sales based allocations, have
routinely been employed and accepted by the Commission for purposes of satisfying the economic prong. (SIB at
93; see also Certain Toner Cartridges and Components Thereof Inv. No. 337-TA-918, Order No. 22 at 3-5 (Ian. 16,
2015); Notice of a Commn Determination Not to Review Two Initial Determinations, One Granting in Part
Summary Determination that the Importation Req. is Satised, and the Other Granting Summary Determination that
Complainant Satises the Economic Prong of the Domestic Industry Req. (Feb. 18, 2015); Protective Cases, Inv.
No. 337-TA-780, Initial Determination at 105-108; Notice of the Commissions Final Detennination; Issuance of a
General Exclusion Order and Cease and Desist Orders; Termination of the Investigation (Oct. 31, 2012).)

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2015, Converse relocated its North Andover headquarters to a larger facility in Boston located at

.160 North Washington Street. (Id. _at Q/A 106, 119.) In doing so, Converses expanded its

headquarters to [ ] square feet on eleven oors. (Id) .

In connection with its headquarters, Converse incurs plant expenses such as rent, repairs,

utilities, insurance and property tax. (CX-00246C at Q/A 50.) These expenses are recorded on

Converses prot and loss statements. (CX-00246C at Q/A 50; CX-05378C; CX-05379C; CX

05380C; CX-05381C; CX-0S382C.) In its ordinary course of business, Converse does not track

or report plant expenses on a [ ] basis. (CX-00246C at Q/A 44.) Similarly,

Converse does not track its expenses on a [ ] basis. (CX-00246C at Q/A 71, 99.)

For purposes of this investigation, however, Converse utilizes a unit-based sales allocation to

determine the portion of Converses expenditures attributable to All Star shoes bearing the

asserted trademarks. (CX-00246C at Q/A 99-102.)

Applying the unit-based sales allocation, the portion of Converses headquarters, creative

space, and testing space utilized for the Converse All Star shoes for scal years 2011-2014 Was:

_.VSquare
Footage Allocated for North Andnver, MA Production-Related Activities for Converse All Star shoes
FY 2011 FY 2012 FY 2013 FY 2014 Q3
l FY2015
Square Footage for N. Andover facilities I

All Star shoes, % of total Products

Allocated Square Footage for All Star shoes i ]

(CX-00246C at Q/A 62, 82, 106-109, 112-118; CX-2740C-2758C; CX-2760C; CX-2764C

2765c.)

Between FY 2011 and Q3 FY 2015, Converses approximate investments for plant and

equipment for the North Andover facilities relating to the All Star shoes were:

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1. 3,,C0nver'se?s Investment in Plant &_~1i1quipment,tor,,N0rth

Andover,lVlA l?roduction;RelatedActivities for
r ii " l * "Convers"eIAll>Star.'sh0es (dollars in millions)? .Q , . ~ . is , '
FY2011 FY 2012 FY 2013 FY 2014 Q3
FY2015
Plant Expenses
Eqgipment Expenses '
I Depreciation Expense
1 Total Investment in Plant & Eqqipment

(CX-OO246Cat Q/A 82, 148-149, 154-159; CX-05376C; CX-05377C.) Accordingly, Converses

total investment in plant and equipment for the All Star shoes between FY 2011 and Q3 FY 2015

was approximately [ ]. (Id)

Converses [ ] investment in plant and equipment is signicant. These

investments are essential to the All Star shoe development, engineering, product testing,

marketing, and other production and support activities. (CX-OO247C at Q/A 88, 93, 150, 159

174.) These domestic investments are signicant in comparison to Converses expenses for

[ .

] (CX-OO247C. at Q/A 65-66, 184, 186;

CX-00246C at Q/A 167-168.) For example, the investments [ ]

[ ] equaled approximately [ ] of Converses [ ] plant and equipment

expenses. (CX-OO246C at Q/A 167-168; CX-O5378C; CX-05379C; CX-O5380C; CX-05381C;

CX-05382C.) Furthermore, Converses domestic investments are also signicant relative to its

income. Between FY 2001 and FY 2014, Converses plant and equipment investments in the

North Andover headquarters equaled approximately [ ] of Converses annual pre-tax income

of[ ] (CX-OO246C at Q/A 82, 148-149, 154-155, 165; CX-05377C; CX

05378C; CX-O5379C; CX-O5380C; CX-O5_381C;CX-05382C.)

Accordingly, the undersigned nds that Converse has satised the economic prong under

1337(a)(3)(A).

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2. Investment in Labor and Capital

The undersigned nds that the evidence adduced at the evidentiary hearing also shows

that Converse has made signicant investments in labor and capital relating to the domestic

industry products.

Converse has made signicant expenditures to employ a domestic workforce dedicated to

production-related and support activities. For example, between FY 2011 and Q3 FY2015,

Converse employed between [ ] individuals at its -North Andover headquarters who were

involved in production-related activities.26

Converses Employee Headcount for North Andover Production-Relatedviactivities

FY2011 FY 2012 FY2013 FY 2014 Q3
FY2015
Communications [
Corporate & Government Affairs
Corporate Services
Design
General Management
Information Technology
Logistics & Services
Manufacturing & Sourcing
Merchandising
Production Creation
Product Management
Program/Process Excellence
Strategic Planning
Technology
Total ]

(CX-00246C at Q/A 64-69, 146-147; CDX-00246.lC; CX-05443C; CX-05485C; CX-O0247C at

Q/A 131-163.) Applying the unit-based sales allocation on these headcounts, the evidence shows

that during FY 2011 through Q3 FY 2015, Converse employed [ ] full-time equivalent

26 Respondents object to Converses labor investments for improperly including employees involved in general
corporate functions and who have some sales and marketing related functions. (See RIB at 117-118.) However, as
part of its conservative analysis, Converse excluded those employees in nance, human resources, legal, marketing,
retail management, and sales. (See, e.g., CIB at 106; SIB at 99; CX-0()246C at Q/A 68, 146-147, CX-05443C; CX
O548C.) The undersigned further notes that between FY 201 1 through Q3 of FY 2015, approximately [ , ]
[ ' ] of Converses [ ] employees are in the areas of design, manufacturing and sourcing, and product
creation, which are undoubtedly production-related activities. (CX-00246C at Q/A 68, 146-147; CX-05443C; CX
05485C.)
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employees in Converse All Star shoe production-related activities. (CX-00246C at Q/A 68, 82,

146-147; CX-05443C; CX-O5485C.) Between FY 2011 and Q3 FY 2015, Converses

approximate compensation expenses for its [ ] employees engaged in production-related

activities ranged from [ ] annually. (CX-5377C; CX-5376C; CX

00246C at Q/A 148, 151, 154, 156-157.)

Converses Employee Compensation Expenses for North Andover Production-Related Activities (dollars in
, millions) , _
FY 2011 FY 2012 FY 2013 FY 2014 Q3
FY 2015
Compensation Investment for [
Production-Related Employees
All Star shoes, % of total
roducts
Compensation lnvestment for All
Star shoes l

(CX-00246C at Q/A 82, 148-149, 154-159; CX-05377C; CX-05376C; CX-5378C-5387C.) Thus,

between FY 2011 and Q3 FY 2015, Converse invested approximately [ ] for

employees engaged in All Star shoe production-related activities at its North Andover

headquarters. (Id.)

C0nverses [ ] labor investment is signicant. Converse considers its U.S.

employees to the [ ] (CX-00247C at Q/A

93, 131, 135, 139, 148-150, 162-163, 174, 184.) The high ratio of Converses labor investments

to its income also demonstrates the signicance of its employment of production-related U.S.

labor and capital. Between FY 2011 and FY 2014, Converses labor expense for North Andover

All Star shoe production-related activities equaled approximately [ ] of Converses pre-tax

income. (CX-00246C at Q/A 82, 148-149, 154-159, 165; CX-05377C; CX-05378C; CX

05379C; CX-05380C; CX-05381C; CX-O5382C.) In addition, C0nverses domestic labor

expense for All Star shoe production-related activities is signicant in comparison to [ ]

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. . PUBLIC VERSION . .

[ ] staff of[ ]. (CX-00247C at Q/A 167; CX-05378C-05381C.) Between FY 2011 and

FY 2014, [. ] total employee compensation was approximately [ ]. (CX-00246C

at Q/A 168.) Moreover, [ ] total labor expense equaled approximately [ ],

which is only about [ ] of Converses [ ] labor investment for North Andover

All Star shoe production-related activities. (CX-00246C at Q/A 82, 148-149, 154-159, 167-169;

CX-05377C; CX-05378C; CX-05379C; CX-O5380C; CX-05381C; CX-05382C.)

Accordingly, the undersigned nds that Converse has satised the economic prong under

1337(a)(3)(B). '

3. Investment in Exploitation, Including Engineering, Research and

Development, or Licensing

Converse asserts that it makes substantial U.S. investments in engineering and research

and development for new shoe designs that capitalize on the asserted trademarks. (CIB at 107.)

Converse contends that its teamsactively work on [ _

]. (Id (claiming that its project

expenses totaled [ ] between FY 2011 and FY 2014).) Converse also alleges that it has

incurred [ ] expenses totaling [ ] in furtherance of design

collaborations that seek to maximize the use and consumer impact of the asserted trademarks.

(Id. at 108.) _

Both Respondents and Staff believe that Converse has failed to show a substantial

investment in the exploitation of the asserted trademarks. (RIB at 119-120; SIB at 102-103.)

Both submit that it is improper to rely on [ - ] costs since those costs relate to the

[ l ]. (Id) Respondents and Staff also note that

27Includes expenses for all Converse products sold globally.

29Converse concedes that most of its domestic investment lies in plant, equipment and labor. (CIB at 107.)

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Converse did not quantify the specic expenditures associated with the [ ] design

projects. (Id.) _ _

The undersigned agrees with Respondents and Staff that Converse has not established it

satises the economic prong of the domestic industryrequirement under section 337(a)(3)(C).

Converse failed to quantify the investments associated with the [ ] design projects,

thereby providing no basis for the undersigned to determine whether Converses alleged

investments.in the design projects are substantial. Moreover, Converses reliance on [

i '] to support its domestic

industry claim is improper. [

] (CIB at 107 n.42.) [

] Thus, the [ ] Converse has incurred do not

constitute investments in the exploitation of the asserted trademarks. The undersigned further

notes that Converses citation to Certain Coaxial Cable Connectors and Components Thereof

and Products Containing Same, Inv. No. 337-TA-650, Commission Opinion at 49-50 (Apr. 14,

2010), is misplaced. (CIB at 108.) As Staff correctly stated, [n]othing in that opinion even

suggests that [ ] would be an

exploitation of an intellectual property right under Section 337(a)(3)(C).(SIB at 103.)

Accordingly, the undersigned nds that Converse has failed to show a domestic industry

exists under 1-337(a)(3)(C).

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4. The Industry Requirement 0f 1337(a)(1)(A) 9 I

A violation based on unfair methods of competition or unfair acts requires proof that such

acts have the threat or effect of destroy[ing] or substantially injur[ing] an industry in the United

States . . . . 19 U.S.C. l337(a)(l)(A). Where federally registered and common law trademark

rights are at issue, as they are in this Investigation, and the Complainant alleges the same

products are covered by both the registered trademark and the common law trade dress, the

domestic industry involved in the trademarks and trade dress in issue is one industry. Ink

Markers, Order No. 30 at 55-56; see also Digital Multimeters,Order No. 22 at l4 (holding that

[b]ecause the same devices are covered by Flukes registered trademark and its trade dress, one

industry exists for the purposes of Section 337.); Protective Cases, Inv. No. 337-TA-780, Initial

Determination at 10 (nding the l337(a)(l)(A) industry established by the products, activities,

and expenditures that satisfy l337(a)(3)(A)(B).) _

The undersigned has found hereinabove that a domestic industry exists under sections

337(a)(3)(A) and (a)(3)(B). See Sections IX.B.l-2, supra. Therefore, consistent with

Commission precedent, Converses showing that a domestic industry exists under section

337(a)(3)(A) and (B) also establishes that an industry exists under section 337(a)(l)(A).

C. Technical Prong .

Converse contends that it satises the teclmical prong of the domestic industry as to the

960, 103, and 753 Registrations. (CIB at 94-95 (arguing that between FY 2011 and FY 2014,

it designed, developed and offered for sale in the United States over [ ] models of All Star

shoes that use the CMT and COT).) Specically, Converse asserts that [a] comparison of All

Star shoes, in physical fOIITl

or advertising, with the CMT . . . shows an identical or substantially

similar midsole design and that [a] comparison of All Star shoes, in physical form or

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 PUBLIC VERSION

advertising, with the COT . . . shows an identical or substantially similar outsole design. (Id. at

95.) Respondents have stipulated that the technical prong of the domestic industry requirement

has been met for the CMT.29(RIB at 99.) Staff agrees that Converses domestic industry products

bear the elements of the claimed CMT and COT. (SIB at 81-83.)

As noted supra, [t]he test for determining whether the technical prong is met through the

practice of a trademark is plain use of the trademark on products and packaging. Protective

Cases, Inv. No. 337-TA-780, Initial Determination at 90. I-Iere,there is no dispute the evidence

(i.e., photographs, catalogs, physical samples, advertisements, and sales records) shows that the

All Star shoes developed and sold in the United States prominently feature the CMT. (CX

11285; CX-00002; CPX-35-36, 54-67, 72-84, 86-91; CX-05410-05415; CX-00247C at Q/A 21

51, 232-233; CX-OO242Cat Q/A 42-44.) Similarly, no one has contested that the evidence shows

that Converse utilizes the COT on All Star shoes. (CX-00003; CX-00004; CPX-35-36, 54-67,

72-84", 86-91; CX-05410-05415; CX-OO247C at Q/A 21-5-1, 228-229, 232-233; CX-00242C at

Q/A 45, 46, 49-54.) - _

Accordingly, it is the undersigneds detennination that Converse satises the technical

prong of the domestic industry requirement for the_753, 960 and 103 trademark registrations.

X. INJURY

When a complainant asserts a violation of section 337(a)(1)(A) by reason of common law

trademark infringement, false designation of origin, and/or dilution, it must establish that the

threat or effect of the alleged acts is to destroy or substantially injure an industry in the

United States. 19 U.S.C. 1337(a)(1)(A). The undersigned has found hereinabove that the

asserted common law trademarks are not valid and that Converse has not proven dilution. See

Sections IV_.A.6and V1, supra. Consequently, no violation of section 337(a)(1)(A) has occurred.

29'Resp0ndents are not accused of infringing the 960 or 103 trademark registrations.
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 PUBLIC VERSION

In light of these ndings, the undersigned need not determine whether Converses domestic

industry suffers the threat or effect of substantial injury.

XI CONCLUSIONS OF LAW

The Commission has personal jurisdiction over the parties, subject-matter

jurisdiction over the Investigation, and in rem jurisdiction over the Accused
Products.

The importation or sale requirement of section 337 is satised.

U.S. Trademark Registration No. 4,398,753 is distinctive

U.S. Trademark Registration No. 4,398,753 is not functional.

U.S. Trademark Registration No. 4,398,753 is not generic.

U.S. Trademark Registration N0. 4,398,753 is not invalid.

Skechers Daddy$ Money and HyDee HyTop shoes infringe U.S. Trademark
Registration No. 4,398,753 under 15 U.S.C. 1114(1).

Skechers Twinkle Toes and BOBS Utopia shoes do not infringe U.S. Trademark
Registration No. 4,398,753 under 15 U.S.C. 1114(1). ,

Walma1ts Faded Glory shoes infringe U.S. Trademark Registration No.

4,398,753 under 15 U.S.C. 1114(1).

Walmarts Kitch shoes do not infringe U.S. Trademark Registration No.

4,398,753 under 15 U.S.C. 1114(1).

Highlines Venus, Veronbis, Vicky, Virgo, and Volean shoes infringe U.S.
Trademark Registration No. 4,398,753 under 15 U.S.C. 1114(1).

Highlines Vincent, Vodka, Volcano (Vulcano), Vox, Glen, Gossip, Eagle, Fanta,
Volt, and Ginger shoes do not infringe U.S. Trademark Registration No.
4,398,753 under 15 U.S.C. 1114(1). _ - _

New Balances Bob Cousy and Center shoes infringe U.S. Trademark
Registration No. 4,398,753 under 15 U.S.C. 1114(1).

New Balances Sum Ftm shoes do not infringe U.S. Trademark Registration No.
4,398,753 under 15 U.S.C. 1114(1). V

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 PUBLIC VERSION

The Defaulting Respondents Accused Products infringe U,S. Trademark

Registration No. 4,398,753 under 15 U.S.C. 1114(1).

The common law trademark is not distinctive.

The common law trademark is not functional.

The common law trademark is not generic.

The common law trademark is invalid.

Respondents do not infringe the common law trademark under 15 U.S.C.

1l25(a).

U.S. Trademark Registration No. 4,398,753 is not famous.

The common law trademark is not famous.

Respondents do not dilute U.S. Trademark Registration No. 4,398,753 under 15

U.S.C. 1125(c).

Respondents do not dilute the common law trademark.

U.S. Trademark Registration No. 3,258,103 is not invalid.

U.S. Trademark Registration No. 1,588,960 is not invalid.

Foreversun infringes U.S. Trademark Registration No. 3,258,103 under 15 U.S.C.

1 1 14(1).

Foreversun infringes U.S. Trademark Registration No. 1,588,960 under 15 U.S.C.

1114(1).

Respondents failed to prove their afnnative defense of fraud on the USPTO.

Respondents failed to prove their afrmative defense of laches.

Respondents failed to prove their affirmative defense of abandonment.

New Balance failed to establish equitable estoppel.

Converse satises the economic prong under 19 U.S.C. 1337(a)(3)(A) and (B).

Converse does not satisfy the economic prong under 19 U.S.C. 1337(a)(3)(C).

Converse satises the technical prong of the domestic industry requirement.

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 PUBLIC VERSION

36. Converse satises the industry requirement under 19 U.S.C. 1337(a)(1)(A).

XII. INITIAL DETERMINATION

Based on the foregoing, it is the Initial Determination of the undersigned that there is a

violation of section 337 with respect to U.S. Trademark Registration Nos. 3,258,103; 1,588,960;

and 4,398,753, but no violation of the asserted common law trademarks. The undersigned further

determines that the domestic industry requirement has been satised.

The undersigned hereby CERTIFIES to the Commission this Initial Determination,

together with the record of the hearing in this investigation consisting of the following: the

transcript of the evidentiary hearing, and the exhibits accepted into evidence in this

Investigation.

The Secretary shall serve a public version of this Initial Detennination upon all parties of

record and the condential version upon counsel who are signatories to the Protective Order

(Order No. 1) issued in this Investigation.

Pursuant to 19 C.F.R. 2l0.42(h), this Initial Determination shall become the

determination of the Commission unless a party les a petition for review pursuant to 19 C.F.R.

210.43(a) or the Commission, pursuant to 19 C.-F.R. 21O.44, orders on its own motion a

review of the Initial Detennination or certain issues therein.

3Any arguments from the parties pre-hearing briefs incorporated by reference into the parties post-hearing briefs
are stricken, unless otherwise discussed herein, as an improper attempt to circumvent the page limits imposed for
post-hearing brieng.
3' The pleadings of the parties led with the Secretary are not certied as they are already in the Commissions
possession in accordance with Commission rules.

1 -132

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RECOMMENDED DETERMINATION ON REMEDY AND BOND

I. REMEDY AND BONDING

The Commissions Rules provide that subsequent to an initial determination on the

question of violation of section 337 of the Tariff Act of 1930, as amended, 19 U.S.C. 1337, the

administrative law judge shall issue a recommended determination concerning the appropriate

remedy in the event that the Commission nds a violation of section 337, and the amount of

bond to be posted by respondent during Presidential review of the Commission action under

section 337(j). See 19 C.F.R. 210.42(a)(1)(ii).

The Commission has broad discretion in selecting the fonn, scope and extent of the

remedy in a section 337 proceeding. Viscofan, S.A. v. Int! Trade Comm 787 F.2d 544, 548

(Fed. Cir. 1986). Under Section 337(d)(1), if the Commission determines as a result of an

investigation that there is a violation of section 337, the Commission is authorized to enter either

a limited or a general exclusion order. 19 U.S.C. 1337(d)(l). A limited exclusion order

instructs the U.S. Customs and Border Protection (CBP) to exclude from entry all articles that

are covered by the patent at issue and that originate from a named respondent in the

investigation. A general exclusion order instructs the CBP to exclude from entry all articles that

are covered by the patent at issue, Without regard to source. Certain Purple Protective Gloves,

Inv. No. 337-TA-500, Commn. Op. at 5 (Dec. 22, 2004).

A. General Exclusion Order

Section 337(d)(2) provides that a general exclusion order (GEO) may issue in cases

where (a) a general exclusion from entry of articles is necessary to prevent circumvention of an

exclusion order limited to products of named respondents; or (b) there is a widespread pattern of

violation of Section 337 and it is difcult to identify the source of infringing products. 19 U.S.C.

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 PUBLIC VERSION

1337(d)(2). 19 U.S.C. 1337(d)(2); see also Certain Airless Paint Spray Pumps and

Components Thereo Inv. No. 337-TA-90, Commn Op., at 18-19, 216 U.S.P.Q 465, 473 (Nov.

1981). The statute essentially codies Commission practice under Certain Airless Paint Spray

Pumps and Components Thereof Inv. No. 337-TA-90, Commission Opinion at 18-19, USITC

Pub. 119 (Nov. 1981) (Spray Pumps). See Certain Neodymium-Iron-Boron Magnets, Magnet

Alloys, and Articles Containing the Same, Inv. No. 337-TA-372 (Magnets), Commn Op. on

Remedy, the Public Interest and Bonding at 5 (USITC Pub. 2964 (1996)) (statutory standards

do not differ significantly from the standards set forth in Spray Pumps). In Magnets, the

Commission conrmed that there are two requirements for a general exclusion order: [1] a

widespread pattem of unauthorized use; and [2] certain business conditions from which one

might reasonably infer that foreign manufacturers other than the respondents to the investigation

may attempt to enter the U.S. market with infringing articles. Id The focus now is primarily on

the statutory language itself and not an analysis of the Spray Pump factors. Ground Fault Circuit

Interrupters and Prods. Containing Same, Inv. No. 337-TA-615, Commn Op. at 25 (Mar. 9,

2009).

Converse submits that a general exclusion order (GEO) is necessary to provide an

effective remedy. for the unfair importation of footwear products that infringe and dilute the

asserted trademarks. In particular, Converse argues that the evidence shows (1) a pattem of

violation of 337 with respect to shoes likely to infringe and/or dilute the CM1"and the COT; (2)

that sources of infringing footwear products can be difficult to identify; and (3) that a Limited

Exclusion Order (LEO) would be easily circumvented. (CIB at 125-126; see also id. at 126

138; CRB at 56-60 (responding to Respondents allegation that Converse has not satised the

ITCs requirements for issuance of a GEO).) Converse further argues that if a violation is found

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only with respect to the Defaulting Respondents, a GEO is still necessary because (l) there is

substantial, reliable, and probative evidence of a violation of 337 and (2) the other

requirements of 337(d)(2) are met. (Id. at 126; see also CRB at 60.) Staff concurs. (SIB at

108-111.) *

Respondents submit that if the Commission nds a violation, the evidence shows that

Converse has failed to carry its burden of showing that a GEO is necessary. (RIB at 127-133

(criticizing Converse for not providing any nancial or economic analysis as to why a GEO is

warranted); RRB at 56.)

The undersigned nds Converses and Staffs arguments persuasive and thus,

recommends that a GEO issue should the Commission nd a violation. As Converse detailed in

its post-hearing brieng, business conditions show a widespread pattern of violation. (CIB at

127-131; see also CX-0O229C at Q/A 165-170, 292, 297-300.) For example, Converse has

engaged in extensive enforcement activities, but despite its efforts, infringing and counterfeit

products continue to be imported into the U.S. (See, e.g., CX-00245C at Q/A 41-53; CDX

002290010-0011C; CX-11286; CX-0O229C at Q/A 212-228,.) Converse has also presented

evidence of the difficulty of identifying the source of infringing products because of the large

business-to-business Internet portals that enable third-party vendors and foreign agents or trading

companies to operate as intermediaries between the abundant foreign manufacturers of knockoff

products and U.S. distributors and retailers. (CX-0O229Cat 182-195, 261-289; CDX-229.0025;

CX-O0245C at Q/A 61 (testifying that the trading companies who sell the infringing products are

mostly selling agents or shell companies with a mail drop under ctitious names, emails, and

phone numbers).) In fact, Converses Senior Director of Brand Protection, Mr. Paul Foley,

described Converses enforcement efforts as [ ]

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[ ] (CX-OO245C at Q/A 58.) Mr.

Foley even identied one of the Defaulting Respondents as a repeat offender. (Id at Q/A 59

(testifying that [ A

]).) Not only does this evidence evince a widespread pattern of violation, but it also

suggests that a GEO is necessary to prevent the circumvention of a limited exclusion order. (See

CX-0229C at Q/A 292297,308-311.)

B. Limited Exclusion Order

Under section 337(d), the Commission may issue a limited exclusion order directed to a

respondents infringing products. 19 U.S.C. l337(d). A limited exclusion order instructs the

U.S. Customs Service to exclude from entry all articles that are covered by the patent at issue

that originate from a named respondent in the investigation. Fuji Photo Film Co. Ltd. v. Int l

Trade Comm n, 474 F.3d 1281, 1286 (2007).

Converse asserts that in the event _aviolation is found and the Commission declines to

issue a general exclusion order, a limited exclusion order should issue covering each

Respondents footwear products and colorable imitations likely to infringe or dilute the asserted

trademarks. (CIB at 139.)

Respondents submit that if oneor more parties are found in violation of section 337, the

proper remedy would be a narrowly-tailored limited exclusion order directed solely to the party

or parties found in violation. (RIB at 133-134.) Respondents also believe that any limited

exclusion order should include a certication provision as such a provision will ease the burden

both on legitimate trade and on U.S. Customs enforcement of the exclusion order. (Id. at 134.)

Should a violation be found, Staff recommends that at least a limited exclusion order

issue barring the importation of infringing footwear. (SIB at 111-1 12.)

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If the Commission decides not to issue a GEO, the undersigned recommends that the

Commission issue a limited exclusion order prohibiting the importation of Respondents

footwear products found to infringe the asserted trademarks. The imdersigned also recommends

that any limited exclusion order include a certication provision. See Certain Condensers, Ports

Thereof and Prods. Containing Same, Inv. No. 337-TA-334 (Remand), Commn Op. at 39,

(Sept. 10, 1997) (recognizing that certication provisions have been included in previous

exclusion orders where respondents imported both infringing and non-infringing products).

C. Cease and Desist Order

Under section 337(f)(1), the Commission may issue a cease and desist order in addition

to, or instead of, an exclusion order. 19 U.S.C. 1337(i)(1). The Commission generally issues a

cease and desist order directed to a domestic respondent when there is a commercially

signicant amount of infringing, imported product in the United States that could be sold,

thereby undercutting the remedy provided by an exclusion order. See Certain Crystalline

Cefadroxil Monohydrate, Inv. N0. 337-TA-293 USITC Pub. 2391, Commn Op. on Remedy, the

Public Interest and Bonding at 37-42 (June 1991); Certain Condensers, Parts Thereof and Prods.

Containing Same, Including Air Conditioners for Automobiles, Inv. No. 337-TA-334 (Remand),

Commn Op. at 26-28, 1997 WL 817767, at *11-12 (U.S.I.T.C. Sept. 10,1997).

Converse asserts that Skechers, Walmart, Highline and New Balance each maintain

substantial inventories of the Accused Products in the United States. (CIB at 140-143; CRB at

61-62.) Converse claims these inventories are commercially signicant from a volume and

value perspective, and also commercially important from a business perspective. Because

Skechers, Walmait, Highline, and New Balance maintain websites for orders, Converse requests

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 PUB LICVERSION

that any cease and desist orders expressly ban the sales, marketing, and distribution of infringing

or dilutive shoes through these Intemet sites. (CIB at 140.)

Respondents claim that Converse has failed to show that any of the Respondents

maintains a commercially significant inventory and thus, no cease and desist order should issue.

(RIB at 134-135 (arguing that the conclusions of Converses expert regarding inventory are

unreliable); RRB at 56-58.)

Staff believes that if a violation is found, cease and desist orders are warranted as to the

domestic Respondents. (SIB at 112-114.)

The undersigned recommends that cease and desist orders issue as to those Respondents

found to infringe by the Commission. The evidence adduced at the hearing show that each

Respondent maintains commercially_ signicant inventory of the Accused Products in the

United States. (See, e.g., CX-0O306C; CX-()O307C; CX-04159C; CX-0908OC; CX-OO398C; CX

04l58C; CX-0O599C; CDX-0O229.0004C; CDX-OO229.0022C; CDX-00229.0023C; JX-375C;

JX-367-371 C; RX-02896C; CX-00229C at Q/A 323-328, 366-371, 329-337, 340-345.)

D. Bond During Presidential Review

Pursuant to section 337(j)(3), the Administrative Law Judge and the Commission must

determine the amount of bond to be required of a respondent during the 60-day Presidential

review period following the issuance of permanent relief, in the event that the Commission

detennines to issue a remedy. 19 U.S.C. 1337(i)(3). The purpose of the bond is to protect the

complainant from any injury. 19 C.F.R. 210.42(a)(1)(ii), 210.50(a)(3).

When reliable price information is available, the Commission has often set the bond by

eliminating the differential between the domestic product and the imported, infringing product.

See Microsphere Adhesives, Processes for Making Same, and Prods. Containing Same,

V -138

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 PUBLIC VERSION

Including Self-Stick Repositionable Notes, Inv. No. 337-TA-366, USITC Pub. 2949, Com1nn

Op. at 24 (Dec. 8, 1995). In other cases, the Commission has turned to alternative approaches,

especially when the level of a reasonable royalty rate could be ascertained. See, e.g., Certain

Integrated Circuit Telecomm. Chips and Prods. Containing Same, Including Dialing Apparatus,

Inv. No. 337-TA-337, Cornrnn Op. at 41, 1993 WL 13033517, at *24 (U.S.I.T.C. June 22,

1993). A 100 percent bond has been required when no effective alternative existed. See, e.g.,

Certain Flash Memory Circuits and Prods. Containing Same, Inv. No. 337-TA-382, USITC_Pub.

No. 3046, Commn Op. at 26-27 (July 1997) (imposing a 100% bond when price comparison

was not practical because the parties sold products at different levels of cormnerce, and the

proposed royalty rate appeared to be de minimus and without adequate support in the record).

Converse argues that it is not practicable to calculate a clear price differential on a shoe

by-shoe basis because Respondents sell their Accused Products in different levels of

commerce and in different market segments: Wholesaler, retail, and discoturt retail. (CTB at 143

(citing CX-8668C;-CX-8121C; CX-229C at Q/A 375; RX-10273 at Q/A 626).) Converse

therefore asserts that [a] bond equal to 100% of the selling price for the infringing products

should be entered. (Id. at 144.) Converse argues that a 100% bond is also appropriate for the

Defaulting Respondents. (Id)

Alternatively, Converse asserts that the Commission should calculate a bond based on

the percentage difference between (i) the average selling price of the Converse Shoes and (ii) the

average price of the Accused Products. (Id. at 144 (citing CX-229C at Q/A 376-379).)

Respondents agree that clear, across-the board price differentials that would serve as a

reliable basis for a bond in this matter are difficult to compute. (RIB at 123 (citing RX-10273C

at Q/A 626.) Respondents therefore assert that it is appropriate to set the bond based on a

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 This Page Contains Confidential Information That Has Been Redacted
PUBLIC VERSION

reasonable royalty. (Id. at 124.) Respondents assert that the royalty information provided by

Converse shows that the Commission should set a rate of no more than [ ]. (Id.)
Staff believes the appropriate bond rate for the participating Respondents should be

based on price differential, and that the bond should be 100% of the entered value for the

Defaulting Respondents. (SIB at 115.) Staff believes that the appropriate bond for Wahnait

would be [ ] perpair of shoes and the appropriate bond for Skechers would be [ ] per pair

of shoes. (Id.) Staff believes that no bond should be imposed with respect to Highlines and New

Balances products, as these products are priced either at the same price or above the Chuck

Taylor All Star. (Id.) Staff also notes that Respondents proposed bond of [ ] is based on a

valuation of Complainants trademarks, and not on a reasonable royalty. (Id.)

The undersigned finds that a bond based on price differential is appropriate. While there

may be some variation of pricing depending on the market segment in which the shoes are sold,

neither Converse nor Respondents introduce evidence which supports this proposition.

Respondent merely relies on a conclusory expert opinion. (RX-lO273C at Q/A 626.) Converse

submits additional evidence, but this evidence is insufficient as well. First, Converse submits

CX-O8668C which it contends shows different prices for best tier lines ranging from [ ]

[ ] in retail. (CX-0229C at Q/A 162 (citing CX-08668).) The shoes included in this document

with one possible exception donot appear to feature the CMT. (CX-086680002.) This

document is therefore irrelevant. Converse explains that the second document demonstrates that

Converses shoes are sold in different market segments. (CX-00229C at Q/A 163 (citing CX

08l21C.) This document indeed identies different marketing channels for Converses shoes,

but notes that the core Chuck Taylor All Star is sold in only one of these channels. (CX

0812lC.0022.) Thus, this document may actually disprove that the price varies significantly for

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 This Page Contains Confidential Information That Has Been Redacted
PUBLIC VERSION

the core shoes. Additionally, the record includes average selling prices for the Accused Products,

which Respondents do not specically challenge. (CDAX-0229.0024C;RX-l0273C at Q/A 626.)

Accordingly, the undersigned does not have cause to deviate from the preferred method of

calculating a bond based on price differential.

The evidence shows that the average price for a Chuck Taylor All Star shoe across all

transactions is approximately [ ]. (CDX-0229.0024C.) Each of the individual Respondents

is discussed below:

1. Walmart

The evidence shows that the average price of Walmarts Accused Shoes is [ ]

(CDX-O229.002OC.)Thus, the price differential between these shoes and the Chuck Taylor All

Star shoe is [ ] Accordingly, the undersigned recommends that bond be set in the amount of

[ ] per pair of Accused Walmart shoes during the Presidential review period.

2. Skechers

Skechers is no longer selling any of the Accused Products for which the undersigned

found infringement. (RIB at 10 n. 4.) As such, a bond is minecessary, as no injury can occur. 19

U.S.C. 1337(i)(3). . I

In the event that the Commission detennines that Skechers Twinkle Toe or BOBS

Utopia shoes infringe, the evidence shows that Skechers Accused Products are priced at [ ]

(CDX-O229.0024C.) Thus, the price differential between these shoes and the Chuck Taylor All

Star shoe is [ ] Accordingly, the undersigned recommends that the bond be set in the

amount of [ ] per pair of Skechers Accused Products during the Presidential Review period.

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Appx000193
 This Page Contains Confidential Information That Has Been Redacted
PUBLIC VERSION .

3. Highline .

The evidence shows that Highlines Accused Products are priced from $150-$200. (CX

00244C at 102; CX-09845.) Converse asserts that the price of these shoes should be compared

with the price of high-end Converse shoes, rather than the core Chuck Taylor All Star shoe. (CIB

at 144.) Converse reasons that the Highline shoes and the high-end Converse shoes are sold in

many of the same retail stores, and compete head-to-head in this segment. (Id) Yet, Converse

cites to no evidence in support of this proposition. Nor does it explain why "it is improper to

compare Highlines shoes to the core Chuck Taylor All Star shoes, which the evidence shows are

also sold in the same retail stores. (CX-OO24OC at Q/A 1177-80; CX-0O244C at Q/A 160.)

Because Converse has failed to establish that using the core Chuck Taylor All Star shoe average

price is inadequate, the undersigned will use the average price of [ A ]. As such, there is no

price differential and no bond is necessary.

4. New Balance

The evidence shows that the average price of New Balances Accused Products is [ ]

(CDX-0229.0020C.) Thus, the price differential between these shoes and the Chuck Taylor All

Star shoe is [ ]. Accordingly, the undersigned recommends that bond be set in the amount of

[ ] per pair of Accused Walmart shoes during the Presidential review period.

5. Defaulting Respondents i

The undersigned nds that it is appropriate to recommend abond of 100% of entered

value for the Defaulting Respondents. Certain Video Game Systems, Accessories, & Components

Thereo Inv. No. 337-TA-473, Commn Op. at 5 (Dec. 24, 2002.) Accordingly, the undersigned

recommends that bond be set in the amount of 100% per pair of Defaulting Respondents

Accused Products shoes during the Presidential review period.

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Appx000194
 PUBLIC VERSION

Within ten days of the date of this document, the parties shall submit to the Ofce of

Administrative Law Judges a joint statement regarding whether or not they seek to have any

portion of this document deleted from the public version. Parties who submit excessive

redactions may be required to provide an additional written statement, supported by declarations

from individuals with personal knowledge, justifying each proposed redaction and specically

explaining why the information sought to be redacted meets the denition for condential

business information set forth in Corrnnission Rule 2Ol.6(a). 19 C.F.R. 20l.6(a).

The parties submission shall be made by hard copy and must include a copy of this

Initial-Determination with red brackets indicating any portion asserted to contain condential

business information to be deleted from the public version. The parties submission shall include

an index identifying the pages of this document where proposed redactions are located. The

parties submission concerning the public version of this document need not be led with the

Commission Secretary. '

so ORDERED.
Charles E. Bullock
Chief_Administrative Law Judge

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Appx000195
CERTAIN FOOTVVEARPRODUCTS Inv. No. 337-TA-936

PUBLIC CERTIFICATE OF SERVICE

I, Lisa R. Barton, hereby certify that the attached PUBLIC VERSION INITIAL
DETERMINATION ON VIOLATION OF SECTION 337 AND RECOMMENDED
DETERMINATION ON REMEDY AND BOND has been served by hand upon the
Commission Investigative Attorney, Sarah J. Sladie, Esq., and the following parties as indicated,
on December 17, 2015.

Lisa R. Barton, Secretary

U.S. International Trade Commission
500 E Street, SW, Room 112
Washington, DC 20436

On Behalf of Complainant Converse Inc.:

V. James Adduei, II, Esq.

ADDUCI, MASTRIANI & SCHAUMBERG, LLP lg/ia
Via Hand Delivery
Express Delivery
1133 Connecticut Avenue, N.W., 12"Floor U Via First Class Mail
Washington, DC 20036 U Other:

On Behalf of Respondent Wal-Mart Stores. Inc.:

Mareesa A. Frederick, Esq.

FINNEGAN, HENDERSON, FARABOW, yaVia Hand Delivery
Express Delivery
GARRETT & DUNNER LLP Cl Via First Class Mail
901 New York Avenue, NW D Other:
Washington, DC 20001

On Behalf of Respondent Skechers U.S.A.. lnc.:

Barbara A. Murphy, Esq.

FOSTER, MURPHY, ALTMAN & NICKEL, PC yaVia Hand Delivery
Express Delivery
1899 L Street, NW, Suite 1150 \:| Via First Class Mail
Washington, DC 20036 III Other:

Appx000196
CERTAIN FOOTWEAR PRODUCTS A Inv. N0. 337-TA-936

Certicate of Service Page 2

On Behalf of Respondent Highline United LLC d/b/a Ash

Footwear USA:

Gerard P. Norton, Esq. U Via Hand Delivery

FOX ROTHSCHILD LLP ErVia Express Delivery
Princeton Pike Corporate Center III Via First Class Mail
997 Lennox Drive, Building 3 Cl Other:
Lawrenceville, NJ 08648-2311

On Behalf of Respondent New Balance Athletic Shoe, Inc.:

Thomas Fusco El Via Hand Delivery

FISH & RICHARDSON, P.C. dVia ExpressDelivery
1425 K Street, NW, 11*Floor U Via First"Class Mail
Washington, DC 20005 U Other:

Appx000197
 United States Court of Appeals
for the Federal Circuit

CERTIFICATE OF SERVICE

I certify that I served a copy on counsel of record on . February 1, 2017 . by:

U.S. Mail
Fax
Hand
Electronic Means (by E-mail or CM/ECF)

Aaron P. Bowling . . /s/Aaron P. Bowling .

Name of Counsel Signature of Counsel

Law Firm: Banner & Witcoff, Ltd.

Address: 10 S. Wacker Drive, Suite 3000
City, State, Zip: Chicago, IL 60606
Telephone Number: 312.463.5000
Fax Number: 312.463.5001
E-Mail Address: abowling@bannerwitcoff.com
 United States Court of Appeals
for the Federal Circuit

CERTIFICATE OF COMPLIANCE WITH TYPE-VOLUME

LIMITATION, TYPEFACE REQUIREMENTS, AND STYLE
REQUIREMENTS

1. This brief complies with the type-volume limitation of Federal Rule of

Appellate Procedure 32(a)(7)(B).

This brief contains __13,721__ words, excluding the parts of the brief
exempted by the Federal Rule of Appellate Procedure 32(a)(7)(B)(iii), or

This brief uses a monospaced typeface and contains __________ lines of

text, excluding the parts of the brief exempted by the Federal Rule of
Appellate Procedure 32(a)(7)(B)(iii), or

2. This brief complies with the typeface requirements of the Federal Rules of
Appellate Procedure 32(a)(5) or Federal Rule of Appellate Procedure 28.1(e) and
the type style requirements of Federal Rule of Appellate Procedure 32(a)(6).

This brief has been prepared in a proportionally spaced typeface using

. Microsoft Word . in . 14pt Times New Roman font, or

This brief has been prepared in a monospaced typeface using

_____________________________ [state name and version of word processing program]
with _____________________[state number of characters per inch and name of type style].

Date
Date: February 1, 2017 /s/ Aaron P. Bowling .

Aaron P. Bowling
Counsel for Appellant Converse Inc.