Beacon Mut. Ins. Co. v. OneBeacon Ins. Group, 376 F.3d 8 (2004] 7'1 U_S_P.Q.2d1641 376 F.3d 8 United States Court of Appeals. First Circuit. The BEACON MUTUAL INSURANCE COMPANY, Plaintiff. Appellant. V". ONEBEACON INSURANCE GROUP, Defendant. Appellee. No, 0326311, I Heard June 8. 2001. I Decided July 12. 200-1. Synopsis Background: Insurance company sued competitor for trademark infringement and dilution. The United States District Court for the District of Rhode Island, William E. Smith, J ., 290 F.Supp.2d 241, granted summary judgment for competitor, and company appealed. Holdings: The Court of Appeals, Lynch, Circuit Judge, held that: evidence of actual confusion among non-purchasing third- parties was commercially relevant; fact issue existed as to whether consumers were likely to be ennlserl hv similaritv between narties' marks' and Before SELYA, Circuit Judge, PORHLIO,*Senior Circuit Judge, and LYNCH, Circuit Judge. Opinion LYNCH, Circuit Judge. This is a case of rst impression for this circuit on several issues under the Lanham Act, 15 U.S.C. 1051 et seq. The plainti", formerly known as the State Compensation Insurance Fund, was chartered in 1990 by the Rhode Island legislature as the workers' compensation insurer of last resort in the state. In 1992, it adopted the name The Beacon Mutual Insurance Company (\"Beacon Mutual\") and, since then, has sold workers' compensation insurance in Rhode Island under the marks \"The Beacon Munlal Insurance Company,\" "Beacon Insurance," and "The Beacon,\" with an accompanying lighthouse logo. The name change was brought about by increased competition following the resolution of a crisis in the state workers' compensation market. In June 2001, the defendant OneBeacon Insurance Group (\"'OneBeacon\"), which sells various forms of commercial insurance nationwide, switched to its current name and adopted a lighthouse logo as *10 well, albeit in a different font and arrangement. The name change resulted om the sale of the company, then called CGU Corporation, to another company; the terms of the sale required CGU to change its name. OneBeacon is a direct competitor of Beacon Mutual in the Rhode Island market for workers compensation insurance. confused by similarity between parties marks, and Beacon Mutual brought suit one month after OneBeacon's name change, alleging violations of the Lanham Act, 15 showing of likelihood of confusion was sufficient to establish U.S.C. $ 1125(a), and state trademark laws. On November injury element of Rhode Island trademark dilution statute. 14, 2003, the district court granted summary judgment in favor of OneBeacon on all counts on the ground that Beacon Reversed and remanded. Mutual had not demonstrated a substantial likelihood of confusion. Beacon Mut. Ins. Co. v. OneBeacon Ins. Group 290 F.Supp.2d 241, 252 (D.R.I.2003). Beacon Mutual now Attorneys and Law Firms appeals. *9 Steven E. Snow, with whom Michael A. Gamboli, Robert For likelihood of confusion to be actionable, the "confusion K. Taylor, and Partridge Snow & Hahn LLP were on brief, has to exist in the mind of a relevant person." Astra Pharm. for appellant. Prods., Inc. v. Beckman Instruments, Inc., 718 F.2d 1201, 1207 (1st Cir. 1983). The primary issue in this appeal is the Dalila Argaez Wendlandt, with whom Steven A. Kaufman relevance of evidence submitted by Beacon Mutual showing and Ropes & Gray were on brief, for appellee. WESTLAW @ 2022 Thomson Reuters. No claim to original U.S. Government Works. Beacon Mut. Ins. Co. v. OneBeacon Ins. Group, 376 F.3d 8 (2004) 71 U.S.P.Q.2d 1641 249 instances of confusion between the two companies in application of trademark law and as to the drawing of the sixteen months following OneBeacon's adoption of its inferences on summary judgment, we reverse the grant of current name. Most of the confusion involved misdirected summary judgment and remand for proceedings consistent premium checks, claim forms, medical records, and legal with this opinion. correspondence. OneBeacon argues that those incidents do not demonstrate confusion among relevant persons because the confused persons were not those who made purchasing I. decisions and there was no evidence that their confusion caused Beacon Mutual to lose sales. OneBeacon's argument The following facts are described in the light most favorable impermissibly narrows the scope of the court's inquiry into to Beacon Mutual, the non-moving party. Zyla v. Wadsworth, both the harm suffered by the plaintiff and the persons among 360 F.3d 243, 246 (1st Cir.2004).We hold that the type of commercial injury actionable under 43(a) ofthe Lanham Act, 15 L'.S.C. 1125ija), isnot restricted to the loss of sales to actual and prospective buyers of the product in question. Conision is relevant when it exists in the minds of persons in a position to inuence the purchasing decision or persons whose confusion presents a signicant risk to the sales, goodwill, or reputation of the trademark owner. This holding is consistent with our existing case law, under which post-sale confusion is actionable. See 1P. Land Trading, ApS r. Knitter Cu. 163 F. 3 d 2?,4-11j1st Cir. 1998;]. We also hold that relevant commercial injury includes not only loss of sales but also harm to the trademark holder's goodwill and reputation. See 3. McCarthy on Trademarks and Unfair Competition 25 :5 (4th ed. 1996} [hereinaften McCarthy]. On summary judgment, all reasonable inferences must be drawn in favor of the non-moving party, Beacon Mutual. Here, a factfinder could reasonably infer that the misdirected communications (1) showed confusion among purchasing companies, their covered employees, consulting physicians and other health care proxiders, third-party insurers. attorneys for claimant employees, and courts handling such claims, and (2) had caused commercial injury to Beacon Mutual in the form of, inter alia, delays in claims processing, mistaken cancellations of coverage for failure to pay premiums, delayed reimbursements of health care providers, improper disclosure of condential medical records, and risk of potential legal penalties for purchasers, covered workers, and providers. Reasonable inferences could be drawn that these problems had damaged Beacon Mutual's goodwill and reputation. Reasonable inferences could also be drawn that these problems had led or would lead to lost sales, although the drawing of such inferences is not necessary to survive summary *11 judgment in light of the other forms of commercial injury present in this case. Because inappropriate legal standards were employed both as to the substantive Beacon Mutual is the largest writer of workers' compensation insurance in Rhode Island, collecting over $118 million in premiums in 2001. It has used its marks and lighthouse logo since June 2-4, 1992, but never registered them. Over the years, Beacon Mutual has steadily increased its advertising and promotional expnditures to build its brand, spending close to SL4 million in 2001. Beacon Mutual says that these promotional activities, most of which involve displaying its marks, are necessary to maintain its position in an increasingly competitive market. According to a consumer survey submitted by Beacon Mutual on summary judgment, many Rhode Island consumers now associate the mark \"The Beacon\" with Beacon Mutual. Beacon Mutual oers its workers' compensation insurance through agents as well as through direct sales. OneBeacon, formerly known as CGU Insurance, began using its current name and lighthouse logo nationally in early June 2001. A Boston-based corporation that sells commercial insurance nationwide, OneBeacon offers workers' compensation insurance in Rhode Island on a much smaller scale than Beacon Mutual, collecting around St million in workers' compensation premiums in 2001. OneBeacon says that workers' compensation insurance is not a protable line of business for it in Rhode Island and that it offers the product only as a convenience to its existing customers. The workers' compensation coverage offered by OneBeacon is comparable to that offered by Beacon Mutual and is sold at rates that are the same or higher than Beacon Mutual's. Beacon Mutual and OneBeacon share addresses that sound similar. Beacon Mutual is located at One Beacon Center, Warwick, Rhode Island, and OneBeacon is located at One Beacon Street, Boston, Massachusetts. Counsel for OneBeacon informed us at oral argument that Beacon Mutual was already located at its current address when her client began using the name \"OneBeacon\" in June 2001. On July 5, 2001, Beacon Mutual brought a four-count trademark infringement action against OneBeacon in the Rhode Island Superior Court. Count I alleged unfair competition under the Lanham Act, 1'3 U.S.C. 11251: a); Count II alleged unfair competition under Rhode Island common law; Count III alleged service mark infringement under Rhode Island common law; and Count 1T alleged trademark dilution under RI. Gen. Laws 6212. OneBeacon removed the case to federal court and then moved for summary judgment, arguing that all four counts should be dismissed because there was no likelihood of confusion.1 OneBeacon relied *12 principally on the fact that it sells workers' compensation insurance exclusively through licensed independent insurance agents. OneBeacon submitted a telephone survey showing that those agents understand the difference between the two companies and that those agents typically guide consumers, whom the agents said do not ordinarily express a preference for a particular brand of workers' compensation insurance, through the purchasing process. OneBeacon argued that if its agents are not confused, purchasers guided by those agents are unlikely to be conised either. Moreover, OneBeacon argued that to the extent that confusion exists among non-purchasers or potential purchasers before the point of sale, such confusion is not actionable because \"it cannot possibly cause the harm that the trademark laws are meant to prevent: economic harm to Beacon Mutual in the form of lost sales.\" Beacon Mutual opposed summary judgment, arguing that, contrary to OneBeacon's assertion, confusion need not be tied specically to lost sales or to the state of mind of purchasers at the point of sale to be actionable. Comion, Beacon Mutual argued, is relevant where it adversely affects the trademark owner's commercial interests. Here, Beacon Mutual melted. at a minimum. the goodwill and renutatinn that detailed 249 instances of confusion between Beacon Mutual and OneBeacon between June 2001 and November 2002, based on Lynch's own personal knowledge and information in Beacon Mutual's business records. The Confusion Matrix documented, inter alia, confusion among four main groups: (1) Rhode Island employers (24 instances): mostly, premium checks sent to Beacon Mutual instead of OneBeacon or (in at least one instance) vice versa. 2) Health care providers (95 instances): mostly, insurance claim forms or patient medical records sent to Beacon Mutual instead of OneBeacon or vice versa. (3) Third-party insurance companies (18 instances): mostly, Beacon Mutual was contacted to resolve claims instead of OneBeacon or vice versa. (4) Courts or attorneys {7'2 instances): mostly, summonses, complaints, or legal correspondence sent to Beacon Mutual instead of OneBeacon or vice versa. Lynch stated in his affidavit that these instances of confusion had led to claims processing being delayed or not accomplished, both companies being potentially subjected to legal action for breach of contract or individual's privacy rights, injured workers not being timely compensated or notied of court hearings, employers not being notied of court proceedings, providers not being paid in a timely manner, and insureds not being credited for premium payments (and then having their coverage lapse or cancelled, resulting in their being *13 in violation of the state workers' compensation laws). Lynch also attached to his aidavit an August 29, 2001 letter om the Chief Judge of the Rhode Island Workers' Compensation Court to Beacon Mutual complaining about delays caused by confusion between the two companies: of Beacon Mutual were harmed by actual confusion among Rhode Island employers, workers, health care providers, third-party insurance companies, attorneys, and courts. Beacon Mutual submitted an adavit by Michael Lynch, Vice president of legal services for Beacon Mutual, stating that shortly after OneBeacon's name change, Beacon Mutual began receiving misdirected e-mails, telephone calls, checks, and letters intended for OneBeacon. Attorney Lynch attached to his afdavit an exhibit, entitled the \"Confusion Matrix," The Workers' Compensation Court is concerned as a result of recent confusion arising om the similarity of names between The Beacon Mutual Insurance Company and OneBeacon Insurance Group (formerly CGU Insurance Group}... The court has been made aware that sen-ice of process and notices that are intended for OneBeacon are unintentionally being sent to The Beacon Mutual Insurance Company's ofce in Warwick. This confusion impacts our workers