In the global economy, there exist a variety of trademarks that have achieved a high level of recognition within their target markets and have become, therefore, closely identified with the global standard for their specific sector. This is at the core of the qualities of a trademark that are meant to be protected under trademark laws such as the Lanham Act in the U.S. That protection safeguards both the investment borne by the trademark owner and the public interest, by limiting opportunities for confusion and false associations.
KPMG
In the world of accounting, auditing, and tax advice for major organizations worldwide, KPMG has arguably evolved to be one of the global “Big Four.” Tracing its roots back to 1870 when the first of the constituent firms, the W. B. Peat firm in London (the “P” in KPMG), was formed, KPMG LLP operates 87 offices with over 23,000 employees and partners throughout the U.S. for a total of 140,000 professionals working in 146 countries [Source].
The KPMG v. KBMG Case
Earlier this month, KPMG filed a trademark infringement suit against NY accounting firm KBMG after reportedly being unable to amicably resolve the issue of the latter’s use of the allegedly confusingly similar trade name [Case: 11-cv-01583 SDNY]. The case seems, at first reading, a classic trademark case in that the marks are very close to being identical and the parties operate in the same market. Typically, intellectual property cases like this have relied on the thirty year old test of the likelihood of confusion set out in the AMF v Sleekcraft Boats case (9th Circuit 1979); the famous eight Sleekcraft Factors:
- Strength of the mark
- Proximity of the goods/services
- Similarity of the marks
- Evidence of actual confusion
- Marketing channels used
- Type of goods and the degree of care likely to be exercised by the purchaser
- Defendant’s intent in selecting the mark
- Likelihood of expansion of the product lines
Although it is very early in the case, the apparent simplicity of the facts of the case lends itself to a quick preliminary analysis of what one might expect will be the core point of debate in court.
Relative Strength of the Marks
This factor would likely favor KPMG since the relevant consuming public, corporate executives, very likely recognize the plaintiff’s trademark as an indication of the source of the (accounting) services and, consequently could be confused about the source of the defendant’s services if the defendant uses a similar mark such as KBMG.
Proximity of the Services
Again, this factor would likely favor KPMG since the accounting services rendered are, by their very nature, substantially similar if not identical to each other. The parties are not likely to agree as to the quality or thoroughness of their respective offerings.
Similarity of the Marks
Both marks at issue consist of three of the same letters, in upper case, and in the same order plus a different but equally hard consonant (P,B), it is likely that the expert testimony that could be preferred would find it hard to distinguish between the marks as such, although used in different types of logos (one is straight edged and the other places the letters along a wavy line). Bringing in the respective websites, the Plaintiffs are arguing that the overall impression created by the defendant’s trademark is similar to their own, so that a higher likelihood of confusion may also tip the balance of this factor in favor of the plaintiff.
Actual Confusion
In the complaint, no mention is made of actual instances of confusion in the market, so this factor weighs in favor of the defendant.
Marketing Channels Used
As in most professional services segments, the primary marketing channels are the World Wide Web, personal networking and referrals. They are the same for both firms, but it may make a difference to the trier of fact that KPMG does this on a global scale and has done so for a longer time. At a certain level of abstraction, the channels are the same, but the scope of the respective websites, the breadth of the personal networks of the accountants, and their respective client lists are likely to be very different if examined with heightened granularity. Nevertheless, this factor could favor the plaintiff.
Type of Services and Degree of Care
This is likely to be the weakest point for the Plaintiff’s case. In making the decision to hire an accounting firm for advice or for an audit, corporate management or, if applicable, boards of directors, generally have a duty to be well informed about potential vendors and, thus, reduce or eliminate the likelihood of confusion. Perhaps the only area of confusion would be in the users of financial reports signed by KBMG, which may easily be confused as to whether the auditors are really from KPMG. This factor may, in fact, fall in favor of the defendants.
Defendant’s Intent
In this regard, there is very little basis to form an opinion at this point. From the facts that are known, the initial of three of the defendant’s members are KB and G (Krant, Bialick, and Gitliz), but the inclusion of the “M” cannot be traced to a fourth member’s last name. Thus, it remains to be seen if there is evidence of the “intent” to use an extraneous “M” to create the requisite confusion with the famous mark.
Likelihood of Expansion
Since both firms are already working in the same market, albeit the Plaintiff has a global presence and the defendant seems to focus in NYC, this factor is not necessarily relevant to this case.
Preliminary Conclusions
At first blush, it would seem that on balance (Four factors for the plaintiff, one for the defendant, another requiring evidence, and an eighth not relevant) there is a likelihood of confusion in this case. The determination of actual damages and the precise degree of precision in defining the relevant market segment will remain to be the subject of discovered and expert analysis. Perhaps all will come to a stop with a quick settlement, or perhaps an injunction requiring a name change; we shall continue to monitor the case.