In the
United States Court of Appeals
For the Seventh Circuit

No. 00-3538

CAE, INCORPORATED,

Plaintiff-Appellee,

v.

CLEAN AIR ENGINEERING, INCORPORATED,

Defendant-Appellant.

Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 97 C 3264--Warren K. Urbom, Senior Judge./1

ARGUED MAY 9, 2001--DECIDED October 2, 2001


  Before RIPPLE, MANION and KANNE, Circuit
Judges.

  RIPPLE, Circuit Judge. Appellee CAE,
Inc. is a large, Canadian conglomerate
whose operating subsidiary companies
manufacture, among other things, aircraft
simulators, air traffic control systems,
medical equipment, and data acquisition
systems for various industries. Appellant
Clean Air Engineering, Inc. ("Clean Air")
is an Illinois corporation whose core
business is technical environmental
consulting and air emissions testing.
CAE, Inc. claims that Clean Air’s use of
the initials "CAE" infringes CAE, Inc.’s
federally registered "CAE" trademark.

  After a hearing on CAE, Inc.’s
opposition to Clean Air’s application to
register the CAE mark, the Trademark
Trial and Appeal Board ("TTAB") found
that, despite CAE, Inc.’s use of the CAE
mark since the early 1950s and its
federal trademark registration since
1972, Clean Air’s use of a "virtually
identical" mark was not likely to cause
confusion among consumers. R.34, Ex.4 at
5. The district court disagreed; it found
that consumers were likely to be
confused. The court entered judgment in
favor of CAE, Inc. and enjoined Clean Air
from future use of the initials absent a
disclaimer of any association with CAE,
Inc. Clean Air appeals. For the reasons
set forth in the following opinion, we
affirm the judgment of the district
court.

I

BACKGROUND

A.    CAE, Inc.

  CAE, Inc. was formed in 1947 as Canadian
Aviation Electronics, Ltd. The company
began using the CAE mark in the early
1950s and officially changed its name to
CAE, Inc. in 1993. Now a holding and
management company, CAE, Inc. owns and
controls approximately twenty subsidiary
companies, eight of which are
headquartered in the United States, and
it employs nearly 6,000 people. In the
1980s, CAE, Inc.’s export sales to the
United States averaged over $100 million
(Canadian), which comprised approximately
twenty-five percent of CAE, Inc.’s gross
revenue. In the 1990s, this figure rose
to $430 million (Canadian), which was
forty percent of CAE, Inc.’s gross
revenue.

  Since the 1950s, CAE, Inc., through its
subsidiaries, has designed, produced and
sold a variety of testing and measuring
equipment in the United States under the
CAE name and mark. During the 1960s, CAE,
Inc. began to design and to manufacture
testing and measuring equipment,
including hydrological sampling
equipment, portable grain temperature
probes and moisture meters. With the
purchase of the Link Simulation and
Training Systems Division of the Singer
Company in 1988, CAE, Inc. became the
world leader in simulation training. CAE,
Inc. sold the assets of its simulation
training operations in 1995.


    1. CAE, Inc.’s Registered Trademarks

  CAE, Inc. has been using the letters
"CAE" as a trade name and service mark
since the early 1950s and owns six
registered trademarks containing "CAE."
The first two trademarks, registered in
1972, are for goods described as
"[e]lectronic apparatus and equipment--
namely, simulators, visual display
systems and motion systems for use with
simulators; supervisory control and data
logging equipment and systems; and
magnetometers and magnetic anomaly
detection equipment." R.34, Ex.4 at 4.
One of these trademarks, registration no.
939,840, depicts the following letters
without stylization or design: CAE.
Registration no. 939,841 depicts the
letters CAE within a design. In 1980,
CAE, Inc. registered a third trademark,
no. 1,135,602, which depicts the letters
CAE within a design, for use in
connection with "[n]uclear power station
training simulators and air traffic
control radar data processing and display
equipment--namely input receivers,
processors, interface units, displays,
control stations, line printers, and
flight plan entry consoles." Id. at 4-
5./2 CAE, Inc. holds three additional
trademarks: no. 877,750, registered in
1969 for "DATAPATH CAE," R.38-1, Race
Dec., Ex.7; serial no. 74-407,272,
registered in 1993 for "CAE SELECT," id.
Ex.6; and no. 2,106,086, registered in
1997, which depicts CAE inside a new
design, see id. Ex.5. CAE, Inc. features
the CAE mark in the names of all twenty
of its subsidiaries and divisions,
including those headquartered in the
United States: CAE Electronics, Inc.; CAE
Screenplates, Inc.; CAE McGehee, Inc.;
CAE Ransohoff, Inc.; CAE Blackstance,
Inc.; CAE Ney, Inc.; CAE Alpheus, Inc.;
and CAE Vanguard, Inc./3 Those entities
owned by CAE, Inc., but without CAE in
their names, feature on their stationery
and product literature a reference to
their association with CAE, Inc. CAE,
Inc. never has sold or assigned any
rights in the CAE mark as a trademark,
service mark, trade name or otherwise.


  2. CAE Electronics, Ltd.
  CAE Electronics, Ltd. ("CAE
Electronics"), the largest of CAE, Inc.’s
subsidiaries, is a world leader in the
design of advanced technology products
and systems. It is comprised of four
divisions: commercial flight simulation,
military simulation systems, marine
control systems, and energy control
systems. CAE Electronics’ core products
include supervisory control and data
acquisition ("SCADA") systems. SCADA
systems are mechanical and
electricalsystems used to automate
processes and to provide operators with
continuous real-time monitoring
information. Using sensors, monitoring
equipment and control devices, these
systems optimize operator and system
efficiency, allow users to evaluate
processes and maximize use of resources
to reduce operating costs and to increase
profits of SCADA customers. CAE
Electronics customizes each SCADAsystem
to meet the customer’s needs and the
requirements of the particular industry
and process in which it is used. CAE
Electronics prints the CAE mark on each
SCADA system component and its packaging.

  Since the 1960s, CAE Electronics has
developed, manufactured, and sold its
SCADA products and systems for
applications in the telecommunications,
oil and gas, and hydro-electric power
industries. In 1973, CAE Electronics
adapted its SCADA technology for the New
Brunswick Electric Power Commission to
monitor and control an oil-fired thermal
generating plant. The SCADA system
designed by CAE Electronics for this
utility gathered, processed, and
displayed data from three generating
units, and it monitored more than 2,000
parameters of generator performance,
including emissions. Also in the 1970s,
CAE Electronics adapted its SCADA
technology to monitor and control nuclear
power generating systems, to
monitorenvironmental variables in arctic
environments, and to assist air traffic
control systems. In the 1980s, CAE
Electronics introduced marine control
systems for naval vessels, using SCADA
technology to monitor air quality; to
detect dangerous conditions, such as
smoke, ionization, and explosive gases;
and to optimize vessel fuel usage. CAE,
Inc. maintains that CAE Electronics’
SCADA systems are capable of monitoring
and controlling environmental variables
such as smokestack emissions and other
gaseous or aqueous emissions. At this
time, however, CAE Electronics does not
manufacture or market its SCADA systems
for use in air emissions testing.


  3.   CAE Fibreglass Products, Ltd.

  CAE Fibreglass Products, Ltd. ("CAE
Fibreglass") designs, engineers, and
manufactures various fiberglass products,
including storage tanks, tank covers,
washer hoods, air ducts and chimney
stacks for use in the pulp and paper,
chemical, oil and gas, and mining
industries. Between the late 1960s and
the 1980s, CAE Fibreglass designed and
manufactured large-diameter fiberglass-
reinforced plastic ("FRP") pipe for
companies in the pulp and paper and elec
tric power industries, including Kimberly
Clark, Weyerhauser, International Paper,
and Niagara Mohawk Power. In 1979, CAE
Fibreglass designed FRP pipe for the
Jacksonville Electrical Authority to
address the environmental problems
created by underwater discharge of heated
water. In 1980, CAE Fibreglass entered
into a joint venture with Construction
International Limited ("CIL") to promote
stack analysis, system engineering,
installation, scrubber and dust design,
fabrication, and quality control. The
CIL/ CAE joint venture characterized its
business as "TOTAL TECHNOLOGY IN
POLLUTION CONTROL" and actively marketed
its products and services through product
literature, client meetings, conferences
and trade shows. R.38-1, Lothamer Dec.,
Ex.1 at 3. The CIL and CAE logos appeared
on all joint venture materials such as
stationery, envelopes, business cards and
invoices. The joint venture resulted in
several contracts in the United States,
including contracts with Onyx Chemicals
in Illinois, SeaWorld Marine Park in
Florida, Leaf River Forest Products in
Mississippi, and Texas Utilities
Services. CAE, Inc. and CIL terminated
the venture by mutual agreement in 1983.


  4.   CAE Screenplates, Inc.

  CAE Screenplates, Inc. ("CAE
Screenplates"), a wholly owned subsidiary
of CAE, Inc., designs, manufactures, and
sells screenplates, screen cylinders, and
screen media used in the pulp and paper,
chemical, food processing, petroleum and
mining industries. The company’s
precision-engineered screenplates are
important components in machinery used in
the production of pulp and paper. Its
high-strength drilled screenplates are
also critical components in "closed"
washing and bleaching machinery, which
reduces air and water emissions in the
pulp-washing and pulp-bleaching process
and thus assists pulp and paper
manufacturers in complying with
environmental regulations. The CAE mark
appears on CAE Screenplates’ products and
packaging, advertising materials, and
brochures, and it is displayed at trade
shows and exhibits where CAE Screenplates
appears.
  One of the principal trade groups
serving the pulp and paper industry is
the Trade Association for Pulp and Paper
Industries ("TAPPI"). TAPPI sponsors
trade shows, which CAE Screenplates has
attended since 1988 to exhibit its
products and services. TAPPI also
publishes the TAPPI Journal, to which
most of CAE Screenplates’ customers
subscribe and in which CAE Screenplates
often is listed as a trade show
exhibitor./4


  5. CAE, Inc.’s Advertising and Trade
Shows

  CAE, Inc. and its subsidiaries promote
their goods and services in a number of
ways. For instance, the company
advertises in trade publications such as
the TAPPI Journal and Pulp & Paper,
distributes informational brochures,
sends direct mail, makes personal
presentations, responds to requests for
proposals ("RFPs"), attends trade shows
and conferences such as the TAPPI shows,
and posts information on its Internet
website.

  6.   CAE, Inc.’s Competitors

  CAE Electronics’ chief competitors in
the area of designing and manufacturing
SCADA systems for energy control are ABB
and Siemens. In addition to power plant
control systems and power network
management systems, which directly
compete with CAE Electronics’ SCADA
systems, ABB also sells air quality
control services, including air quality
monitoring and engineering, emissions,
inventory, air quality permitting and
coordination services, and environmental
services in connection with power and co-
generation. Siemens sells power
transmission and distribution systems for
energy control that compete with the
SCADA systems designed by CAE
Electronics. Siemens also sells systems
for monitoring air quality and air
purification. At present, however, CAE,
Inc. does not perform environmental
testing or consulting services.

B.   Clean Air

  Clean Air is an Illinois corporation
that employs 115 people. In the 1990s,
Clean Air generated annual sales between
$11.6 million and $18.7 million. Since
the mid-1970s, Clean Air has used the CAE
mark in various type styles, including
plain capital letters without
punctuation. On some materials, Clean Air
prints "Clean Air Engineering" along with
the letters "CAE," but it features only
the initials "CAE" in the names of its
several departments: CAE Analytical, CAE
Diagnostic Services, CAE Process, CAE
Source Testing, CAE Express, CAE VOC, and
CAE Instrument Rentals.

  Clean Air’s core business is "source
testing," which involves visiting the
client’s place of business and running
tests to determine whether the client’s
processes comply with federal, state, and
local laws concerning air pollution.
Clean Air’s services also include
technical consultation, research and
engineering in the field of environmental
processes. Clean Air’s clients usually
are companies engaged in industrial
processes such as combustion,
manufacturing or spraying. Over the
years, Clean Air has expanded the number
of industries it serves to include the
electric power generation, natural gas
processing and petroleum refining, pulp
and paper manufacturing, semiconductor,
pharmaceutical, surface coating, chemical
manufacturing and fuel combustion
industries. It also manufactures and
rents source-testing equipment, including
data acquisition systems.

  In addition, Clean Air offers "process
engineering" services, which include
designing control equipment, improving
the efficiency of existing control
equipment, and providing flow modeling.
Clean Air’s flow models have been used to
investigate temperature mixing, pressure
loss, and gas velocity uniformity for
ovens, boilers, fabric filter systems,
stacks, scrubbers and other components.
Recently, in conjunction with Pegasus
Technologies, Ltd. ("Pegasus"), Clean Air
has begun selling components of
SCADAsystems. In its promotional
materials, Clean Air offers to provide
knowledge and assistance in setting up
and maintaining continuous emissions
monitoring systems. Using Pegasus’
NeuSIGHT product, which enhances the
calculations of combustion control
systems, data acquisition systems, and
plant performance, Clean Air offers to
help its clients refine their industrial
processes to minimize emissions while
maximizing "throughput." R.48, Ex.D at 3.
Clean Air markets this technology for use
with furnaces, boilers, incinerators,
oxidizers, and pollution control
equipment such as electrostatic
precipitators and scrubbers.


  1.   Clean Air’s Departments

  Clean Air is comprised of several
departments. CAE Analytical is a
laboratory that conducts chemical and
physical analysis of air samples to
detect pollutants. CAE Combustion assists
companies engaged in combustion processes
in optimizing pollution control
equipment, reducing emissions, and
complying with environmental regulations.
CAE Diagnostics analyzes airflow using
modeling and laboratory resistivity
testing. CAE Analytical, CAE Combustion,
and CAE Diagnostics have been reorganized
to form Clean Air’s CAE Source Testing
Department. Clean Air’s remaining
departments are: CAE Process, which
designs and manufactures pollution
control equipment; CAE Express, which
manufactures pollution sampling and
measuring equipment; CAE VOC, which
provides services for volatile organic
processes; and CAE Instrument Rentals,
which provides equipment used in source
testing.


  2.   Clean Air’s Advertising

  In the 1990s, Clean Air expended between
$116,000 to $287,000 annually on
advertising. Clean Air advertises in
trade association publications and
journals, including the TAPPI Journal and
Pulp & Paper; distributes product
information through direct mailings;
responds to RFPs; makes personal visits;
and posts information about its products,
services and catalogs on the Internet.
Representatives of Clean Air have
attended conferences and trade shows, in
cluding the Federation of Environmental
Technologists; Electric Power Research
Institute; The Joint Power Conferences;
Polytec, Iron and Steel Show; and the
Emerging Technology Conference. Clean Air
also regularly advertises in Pollution
Engineering, Environment Today, AWMA
Journal, Environmental Protection,
Pollution Equipment News, The Thomas
Register, regional Yellow Pages, Food
Processing, Environment Canada,
HydroCarbon Processing and Environment
Technology.

C.   CAE, Inc. Discovers Clean Air

  In early 1991, CAE, Inc. first learned
that Clean Air was using the letters CAE
as a trade name and service mark. Counsel
for CAE, Inc. wrote to Clean Air,
alerting Clean Air of CAE, Inc.’s
registered trademarks and its intent to
defend them vigorously.

D. Clean Air’s Application for
Registration and the TTAB Proceedings

  On November 22, 1991, Clean Air filed an
application to register its CAE mark
pursuant to 15 U.S.C. sec. 1051(a)(1)(A),
claiming a first-use date of December 15,
1975. Clean Air did not request a
stylized design or include "Clean Air
Engineering" in the proposed mark, but
applied to register its mark as follows:
CAE. Clean Air sought registration of the
mark for use in relation to "technical
consultation, testing, research and
engineering in the field of environmental
processes." R.34, Ex.4 at 6.

  In January 1993, CAE, Inc. filed a
notice of opposition to Clean Air’s
application pursuant to 15 U.S.C. sec.
1063(a). It asserted that: (1) Clean
Air’s CAE mark is confusingly and
deceptively similar to CAE, Inc.’s
previously used and registered mark; (2)
Clean Air’s CAE mark is confusingly and
deceptively similar to CAE, Inc.’s
previously used trade names; and (3)
Clean Air’s CAE mark falsely suggests
that Clean Air is associated with,
sponsored by, or otherwise related to
CAE, Inc.

  In November 1995, the TTAB held a
hearing at which both parties appeared
and presented evidence concerning the
likelihood of confusion./5 See 15
U.S.C. sec. 1067 (requiring the TTAB "to
determine and decide the respective
rights of registration" when an
opposition to registration has been
filed). In its written decision, the TTAB
acknowledged that Clean Air’s proposed
mark is "virtually identical" to the
trade name and mark first used by CAE,
Inc. in the 1950s and registered in 1972.
R.34, Ex.4 at 5. Despite this visual
similarity, however, the TTAB concluded
that there was no likelihood of confusion
because: (1) the parties’ goods and
services were dissimilar; (2) the
parties’ customers were sophisticated
purchasers of expensive and
individualized goods and services; and
(3) there was no evidence of actual
confusion. Accordingly, the TTAB
dismissed CAE, Inc.’s opposition to Clean
Air’s registration of the CAE mark.

E.   District Court Proceedings

  As provided in 15 U.S.C. sec.
1071(b)(1), CAE, Inc. appealed the TTAB’s
decision to the district court ("Count
V") and also asserted claims against
Clean Air for trademark infringement
("Count I"), see 15 U.S.C. sec. 1114(1),
unfair competition ("Count II"), see 15
U.S.C. sec. 1125(a), and dilution under
federal and state law ("Counts III and
IV"), see 15 U.S.C. sec. 1125(c)(1) & 765
ILCS 1035/15. Clean Air counterclaimed
for a declaratory judgment affirming the
TTAB’s decision ("Counterclaim I") and
also asserted common law claims for
unfair and predatory trademark use and
tortious interference with prospective
advantage ("Counterclaims II and III").

  In addition to presenting the
evidentiary record from the TTAB
proceeding, the parties submitted a
substantial amount of new evidence to the
district court./6 Clean Air’s new
evidence provided an updated description
of its products and services and
reiterated that there was no evidence of
any incidents of actual confusion. In
contrast, the new evidence proffered by
CAE, Inc. set out in greater detail the
overlap, and potential overlap, between
the two companies’ products and services.
For example, CAE, Inc. pointed to Clean
Air’s website materials, in which Clean
Air stated:

Our objective in working with our
customers is to enhance both
environmental and financial performance.
How do we do this? Many who are
unfamiliar with CAE may look at a list of
our services and try to fit us into a
predetermined niche. We hear this all the
time--"Oh, you guys are the instrument
rental company" or "Don’t you do scrubber
optimizations?" or "I know you. You’re a
stack testing company." The truth is that
we do all these things and a lot more.
But our strength, our uniqueness, lies
not in our pieces but in the synergy that
comes from bringing these pieces together
into an integrated whole.

R.38-2, Dale Dec., Ex.6 at 2 (emphasis in
original). In addition, Clean Air
publicizes on its website a "NEW ONLINE
STORE" that gives customers access to
products ranging in price from $1.75 to
$11,150. Id. at 4. Clean Air also
proffered recent issues of the TAPPI
Journal and Pulp & Paper. The 1998 Pulp &
Paper Buyer’s Guide lists CAE Machinery,
Ltd. and CAE Screenplates (both
subsidiaries of CAE, Inc.) directly below
Clean Air’s listing and also lists
CAEExpress, a department of Clean Air.

  The new evidence before the district
court further described CAE, Inc.’s
forays into the field of environmental
engineering. CAE, Inc. provided the
district court with evidence that, in
1973, it had adapted its SCADA technology
to monitor stack emissions for the New
Brunswick Electric Power Commission and
that, in the early 1980s, the CIL/CAE
joint venture offered "TOTAL TECHNOLOGY
IN POLLUTION CONTROL," including stack
analysis, system engineering,
installation, scrubber and dust design,
fabrication, and quality control, each of
which were services similar, if not
identical, to those offered by Clean Air.
The new evidence also revealed that the
parties offer, or have offered, other
similar services, including: emissions
testing; process engineering; flow
modeling; optimization; and design,
production, programming, and installation
of SCADA systems.

  Also newly before the district court was
an updated list of the industries to
which both Clean Air and CAE, Inc. market
and supply their products and services
using the CAE mark; this list included
the electric power generation, natural
gas processing and petroleum refining,
pulp and paper manufacturing,
semiconductor, pharmaceutical and surface
coating industries. CAE, Inc. provided
the district court with a list of
customers common to both companies, which
included Northern States Power Company,
Jacksonville Electric Authority, the
United States Navy and Georgia Pacific
Corporation. In addition, while CAE, Inc.
acknowledged that none of its
subsidiaries directly competed at that
time with Clean Air in the measurement of
smokestack emissions for regulatory
compliance, CAE, Inc. informed the
district court that its SCADA products
and systems were fully capable of
monitoring and controlling environmental
variables such as smokestack emissions.
CAE, Inc. also informed the court that it
might easily begin to offer these
services by adding appropriate monitoring
and control equipment to existing SCADA
systems.

  On the parties’ cross-motions for
summary judgment as to Counts I, II and V
of CAE, Inc.’s amended complaint, the
district court discerned the main
question with respect to all three counts
to be whether there was a likelihood of
confusion if Clean Air used a CAE mark
similar to the CAE mark for which CAE,
Inc. had federal trademark registration.
Finding that a likelihood of confusion
did exist, the district court granted
summary judgment to CAE, Inc. on Counts
I, II and V and on Counterclaim I,
thereby reversing the TTAB’s decision and
cancelling Clean Air’s registration of
the CAE mark. The court also enjoined
Clean Air from any future use of the CAE
mark./7

  Clean Air moved for reconsideration. The
district court adhered to its previous
order, with the exception of entering
judgment for CAE, Inc. on Clean Air’s
Counterclaims II and III and modifying
the injunction to permit Clean Air to use
a CAE mark only when accompanied by a
disclaimer of any affiliation with CAE,
Inc. The court also ordered Clean Air to
deliver to CAE, Inc. for destruction "any
and all stationery, circulars, labels,
advertising, packaging materials, plates,
or other materials in its possession or
under its control that contain" the CAE
mark without the required disclaimer.
R.60 at 2.

  On September 15, 2000, the district
court denied Clean Air’s additional
motions for post-judgment relief pursuant
to Federal Rules of Civil Procedure 59(e)
and 60(b)(2). In a separate order, also
dated September 15, 2000, the district
court granted Clean Air’s motion for a
stay pending appeal only with respect to
that part of the judgment requiring Clean
Air to deliver to CAE, Inc. for
destruction all materials containing the
CAE mark without the required disclaimer.
It denied Clean Air’s motions in all
other respects. Clean Air filed a timely
notice of appeal from the final judgment
entered on August 4, 2000, and from the
denial of post-judgment relief./8

II

DISCUSSION

  On appeal, Clean Air first contends that
the district court reweighed all of the
evidence in the record and thus applied
the incorrect standard in reviewing the
decision of the TTAB; Clean Air suggests
that the district court should have
applied de novo review only to the new
evidence not presented to the TTAB.
Second, Clean Air argues that the
evidence does not support the district
court’s finding that a likelihood of
confusion exists.

  In response, CAE, Inc. maintains that,
in light of the extensive new evidence
introduced in the district court
proceedings, the court applied the
correct legal standard in reviewing the
TTAB’s decision and the cross-motions for
summary judgment. CAE, Inc. also argues
that the undisputed facts support the
district court’s likelihood-of-confusion
determination.

A.   The Lanham Act

  Congress passed the Lanham Act in 1946
to "federalize" existing common law
protection of trademarks used in
interstate commerce. Peaches Enter. Corp.
v. Repertoire Assocs., Inc., 62 F.3d 690,
692 (5th Cir. 1995). It established a
federal right of action for trademark
infringement to protect both consumer
confidence in the quality and source of
goods and businesses’ goodwill in their
products. See generally id. (discussing
the Lanham Act’s purposes and basic
scheme). The Lanham Act protects
registered marks from interference by
state legislation, prevents unfair
competition and protects against
fraudulent "use of reproductions, copies,
counterfeits, or colorable imitations of
registered marks." 15 U.S.C. sec. 1127;
see also Eli Lilly & Co. v. Natural
Answers, Inc., 233 F.3d 456, 461 (7th
Cir. 2000). The Act created a federal
register, which provided a public record
of every registered trademark, service
mark, collective mark and certification
mark. See 15 U.S.C. sec.sec. 1051
(registration application procedure),
1052 (describing registerable
trademarks); 3 J. Thomas McCarthy,
Trademarks and Unfair Competition sec.
19:2, at 19-11 (4th ed. 2001)
(hereinafter "McCarthy"). Registration
under the Act affords the registrant a
rebuttable presumption of validity:

[A] mark registered on the principal
register . . . shall be prima facie
evidence of the validity of the
registered mark . . . and of the
registrant’s exclusive right to use the
registered mark in commerce on or in
connection with the goods or services
specified in the registration subject to
any conditions or limitations stated
therein, but shall not preclude another
person from proving any legal or
equitable defense or defect . . . which
might have been asserted if such mark had
not been registered.
15 U.S.C. sec. 1115(a); see also 3
McCarthy sec. 19:9, at 19-24.

  In order to be registered, a mark must
be capable of distinguishing the
applicant’s goods or services from those
of others, see 15 U.S.C. sec. 1052, and
must have been used in interstate
commerce, see 15 U.S.C. sec.sec.
1051(a)(1)(A) & 1127; see also Peaches
Enter. Corp., 62 F.3d at 692 (noting that
the Lanham Act protects trademarks used
in interstate commerce). See generally 3
McCarthy sec. 19:123, at 19-281 to 19-283
(discussing the "in commerce"
requirement). To obtain registration, the
applicant must present certain facts in a
verified written application to the
United States Patent and Trademark Office
("PTO") and must pay a statutory filing
fee. See 15 U.S.C. sec. 1051(a)(1). If,
on review by a trademark examiner, it
appears that the applicant is entitled to
registration, the Commissioner of Patents
and Trademarks publishes the mark in the
PTO’s Official Gazette. See 15 U.S.C.
sec. 1062(a). Upon publication, "[a]ny
person who believes that he would be
damaged by the registration" may file,
within thirty days (along with the
required fee), an opposition to the
registration. 15 U.S.C. sec. 1063(a). If
no successful opposition is made, the
mark is registered and notice of the
registration is published. See 15 U.S.C.
sec. 1063(b)(1).

  If an opposition is filed, however, the
parties are notified of a hearing before
the TTAB, which determines and decides
"the respective rights of registration."
15 U.S.C. sec. 1067. Any party
dissatisfied with the TTAB’s decision may
appeal either to the United States Court
of Appeals for the Federal Circuit or to
a federal district court. See 15 U.S.C.
sec. 1071; Am. Legion v. Matthew, 144
F.3d 498, 499 (7th Cir. 1998); 3 McCarthy
sec. 21:20, at 21-25 to 21-26. In an
appeal to the Federal Circuit, the case
proceeds on the closed administrative
record and no new evidence is permitted.
See 15 U.S.C. sec. 1071(a)(4). In
contrast, an appeal to the district court
is both an appeal and a new action, which
allows the parties to request additional
relief and to submit new evidence. See
Spraying Sys. Co. v. Delavan, Inc., 975
F.2d 387, 390 (7th Cir. 1992); 3 McCarthy
sec. 21:20, at 21-26. The courts of
appeals, other than the Federal Circuit,
have appellate jurisdiction to review the
district court’s decision. See 15 U.S.C.
sec. 1121(a).

  Under the Lanham Act, a party may assert
claims for, inter alia, trademark
infringement, see 15 U.S.C. sec. 1114(1)
(in this case, Count I), or unfair
competition, see 15 U.S.C. sec. 1125(a)
(in this case, Count II). To prevail on
either claim, a plaintiff must establish
that (1) its mark is protectable and (2)
the defendant’s use of the mark is likely
to cause confusion among consumers. See
Eli Lilly, 233 F.3d at 461; Smith
Fiberglass Prod., Inc. v. Ameron, Inc., 7
F.3d 1327, 1329 (7th Cir. 1993).
Likelihood of confusion is also the
central factual issue in reviewing a
decision by the TTAB to sustain or
dismiss opposition to a trademark
registration. See Spraying Sys., 975 F.2d
at 392.

B.   Standard of Review

  The district court’s decision involved
both the entry of summary judgment and
review of an agency decision: TTAB’s
dismissal of CAE, Inc.’s opposition to
Clean Air’s registration of CAE as a
trademark. Thus, we first must determine
which standard of review the district
court should have applied to the TTAB’s
decision.


  1. District Court’s Review of TTAB’s
Decision

  We first determine which standard of
review applies to a district court’s
review of a TTAB decision, and we then
evaluate whether the district court
applied that standard in this case. As
described above, the Lanham Act provides
two avenues for review of TTAB decisions:
review by the Federal Circuit on the
closed record of the TTAB proceedings,
see 15 U.S.C. sec. 1071(a)(4); or review
by the district court with the option of
presenting additional evidence and
raising additional claims, see 15 U.S.C.
sec. 1071(b)(1); see also Spraying Sys.,
975 F.2d at 390; 3 McCarthy sec. 21:20,
at 21-25 to 21-26. In the latter
scenario, the district court sits in a
dual capacity. It is an appellate
reviewer of facts found by the TTAB and
is also a fact-finder based on new
evidence introduced to the court. See 3
McCarthy, sec. 21:20, at 21-26. Although
the district court’s review of the TTAB’s
decision is considered de novo when the
parties present new evidence and assert
additional claims, the district court
also must afford deference to the fact
findings of the TTAB. See Spraying Sys.,
975 F.2d at 391; 3 McCarthy sec. 21:21,
at 21-27 to 21-28.

  The degree of deference that the
district court must afford the TTAB’s
findings of fact is a matter that
recently has come under scrutiny. Before
1999, a majority of courts, including
this one, followed the thorough
conviction standard established in Morgan
v. Daniels, 153 U.S. 120, 125 (1894).
Under that standard, the TTAB’s
determination "’must be accepted as
controlling upon a finding of fact about
confusing similarity of trademarks,
unless the contrary is established by
testimony which in character and amount
carries thorough conviction.’" Spraying
Sys., 975 F.2d at 391 (quoting Fleetwood
Co. v. Hazel Bishop, Inc., 352 F.2d 841,
844 (7th Cir. 1965)); see also Material
Supply Int’l, Inc. v. Sunmatch Indus.
Co., 146 F.3d 983, 990 (D.C. Cir. 1998)
(holding that the thorough conviction
standard applies to review of the TTAB’s
resolution of disputed issues of fact);
Coach House Rest., Inc. v. Coach & Six
Rest., Inc., 934 F.2d 1551, 1557 (11th
Cir. 1991) (same); Wells Fargo & Co. v.
Stagecoach Prop., Inc., 685 F.2d 302, 306
(9th Cir. 1982) (same); Aloe Creme Lab.,
Inc. v. Tex. Pharmacal Co., 335 F.2d 72,
74 (5th Cir. 1964) (same); Wilson Jones
Co. v. Gilbert & Bennett Mfg. Co., 332
F.2d 216, 218 (2d Cir. 1964) (same);
Century Distilling Co. v. Continental
Distilling Co., 106 F.2d 486, 489 (3d
Cir. 1939) (same); 3 McCarthy sec. 21:22,
at 21-29 to 21-30 (noting that, before
1999, most courts used Morgan’s "thorough
conviction" standard); but cf. On-Line
Careline, Inc. v. Am. Online, Inc., 229
F.3d 1080, 1084 (Fed. Cir. 2000) (noting
that, in the Federal Circuit before 1999,
TTAB questions of fact were reviewed for
clear error). Under the majority rule,
the district court reviewed de novo any
new evidence presented, but it weighed
that evidence against the TTAB’s findings
under the "thorough conviction" standard.
Spraying Sys., 975 F.2d at 391.

  In 1999, however, the Supreme Court held
in Dickinson v. Zurko, 527 U.S. 150
(1999), that the proper standard of judi
cial review of findings of fact made by
the PTO is not the stricter "clearly
erroneous" standard but rather the
slightly more deferential standard of the
Administrative Procedure Act ("APA"), 5
U.S.C. sec. 706./9 Zurko, 527 U.S. at
165. Section 706 of the APA sets forth
the standards governing the scope of
judicial review of agency factfinding:

The reviewing court shall--

. . .

(2) hold unlawful and set aside agency .
. . findings . . . found to be--

(A) arbitrary, capricious, [or] an abuse
of discretion, or . . .

. . .

(E) unsupported by substantial evidence
in a case subject to sections 556 and 557
of this title or otherwise reviewed on
the record of an agency hearing provided
by statute . . . .

In making the foregoing determinations,
the court shall review the whole record
or those parts of it cited by a party. .
. .
5 U.S.C. sec. 706. Although the Court
left open the question of which APA
standard applied--"arbitrary, capricious,
or abuse of discretion" under sec.
706(2)(A) or "substantial evidence" under
sec. 706(2)(E)--the Federal Circuit has
concluded that, after Zurko, it will
review TTAB findings of fact for
substantial evidence. See On-Line
Careline, 229 F.3d at 1085. "Substantial
evidence is more than a mere scintilla.
It means such relevant evidence as a
reasonable mind might accept as adequate
to support a conclusion." Consol. Edison
Co. v. NLRB, 305 U.S. 197, 229 (1938).

  This court has yet to interpret and to
apply Zurko, which went unnoticed by the
district court and the parties in this
case. Clean Air contends, however, that,
in the absence of "credible . . .
material factual evidence" that the
TTAB’s findings were clearly erroneous,
the district court erred in "reweighing"
the evidence in the administrative
record. Appellant’s Br. at 7 & 8. On the
other hand, CAE, Inc. maintains that, in
light of the "extensive new evidence"
presented in the district court
proceedings, the court correctly applied
the thorough conviction standard to the
TTAB’s factfinding. Appellee’s Br. at 15.
We cannot accept either of these
contentions. After Zurko, it is clear
that neither the clearly erroneous nor
the thorough conviction standard apply;
instead, Zurko instructs that we must
apply the APA when reviewing agency
factfinding. See Zurko, 527 U.S. at 165.

  In addition, we agree with the Federal
Circuit’s resolution of the question left
open in Zurko as to which prong of sec.
706(2) applies. When a court’s review of
an agency’s factfinding is circumscribed
by the agency record, as the Federal
Circuit explained, the substantial
evidence standard in sec. 706(2)(E)
applies. See In re Gartside, 203 F.3d
1305, 1312-15 (Fed. Cir. 2000); see also
Zurko, 527 U.S. at 164 (noting that if an
agency’s decision is "bound up with a
record-based factual conclusion," the
reviewing court applies the substantial
evidence standard); On-Line Careline, 229
F.3d at 1085 (reviewing TTAB factfinding
for substantial evidence); Recot, Inc. v.
M.C. Becton, 214 F.3d 1322, 1327 (Fed.
Cir. 2000) (same). Cf. 6 West Ltd. Corp.
v. NLRB, 237 F.3d 767, 777 (7th Cir.
2001) (applying the substantial evidence
standard to finding of fact made by the
National Labor Relations Board); Powers
v. Apfel, 207 F.3d 431, 434 (7th Cir.
2000) (Social Security Administration);
Malek v. INS, 198 F.3d 1016, 1021 (7th
Cir. 2000) (Board of Immigration
Appeals); Hoffman Homes, Inc. v.
Administrator, U.S. EPA, 999 F.2d 256,
261 (7th Cir. 1993) (Environmental
Protection Agency); Kraft, Inc. v. FTC,
970 F.2d 311, 316-18 (7th Cir. 1992)
(Federal Trade Commission); Stanley v.
Bd. of Governors of Fed. Reserve Sys.,
940 F.2d 267, 272 (7th Cir. 1991)
(Federal Reserve Board). We see no need
to depart from that rule here.
Accordingly, we conclude that findings of
fact by the TTAB properly are reviewed
under the substantial evidence standard
set forth in sec. 706(2)(E) of the APA.
Accord On-Line Careline, 229 F.3d at
1085.

  The district court did not have the
benefit of this clarification at the time
it rendered its decision; therefore, we
must determine whether, in substance, the
district court’s review of the TTAB’s
decision was consistent with Zurko. At
the beginning of its analysis, the
district court recognized that its review
of the newly presented evidence was de
novo, but it also acknowledged that the
TTAB’s factfinding was controlling
"’unless the contrary is established by
testimony which in character and amount
carries thorough conviction.’" R.49 at 16
(quoting Spraying Sys., 975 F.2d at 391).
The court first outlined the newly
presented evidence and then, with
reference to the TTAB’s findings,
discussed how that evidence required a
different conclusion than that reached by
the TTAB. In conclusion, the court stated
that it had "given deference to the
[TTAB’s] decision and [was] still left
with a firm, thorough conviction that the
[TTAB’s] decision was incorrect." R.49 at
25. Thus, the district court did not
apply the clearly erroneous standard
rejected by the Supreme Court in Zurko,
but rather applied the "meaningful
review" required by the APA. Zurko, 527
U.S. at 162. The district acted as a
fact-finder with respect to the new
evidence and factors not discussed by the
TTAB, see id. at 164, while also
affording deference to the TTAB’s
findings. Therefore, although the
district court did not formally apply the
substantial evidence standard now
required by Zurko, the court applied that
standard in substance, and it did not
commit reversible error with respect to
the standard of review./10


  2. Appellate Review of the District
Court’s Decision

  This court reviews de novo the district
court’s decision to grant summary
judgment. See Albiero v. City of
Kankakee, 246 F.3d 927, 931 (7th Cir.
2001). Summary judgment is appropriate
when the "pleadings, depositions, answers
to interrogatories, and admissions on
file, together with the affidavits, if
any, show that there is no genuine issue
as to any material fact and that the
moving party is entitled to a judgment as
a matter of law." Fed. R. Civ. P. 56(c).
"Factual disputes are ’genuine’ only ’if
the evidence is such that a reasonable
jury could return a verdict for the
[nonmovant],’" and are "’material’ only
when they ’might affect the outcome of
the suit under the governing law.’" Oest
v. Ill. Dep’t of Corrections, 240 F.3d
605, 610 (7th Cir. 2001) (quoting
Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 248 (1986)). Thus, in ruling on a
summary judgment motion, the district
court "must decide ’whether the evidence
presents a sufficient disagreement to
require submission to a jury or whether
it is so one-sided that one party must
prevail as a matter of law.’" Id.
(quoting Liberty Lobby, 477 U.S. at 251-
52).

  In reviewing the district court’s
decision, "we must construe all facts in
the light most favorable to the non-
moving party and draw all reasonable and
justifiable inferences in favor of that
party." Bellaver v. Quanex Corp., 200
F.3d 485, 491-92 (7th Cir. 2000). The
nonmovant may not rest on the pleadings
but must adduce evidence "set[ting] forth
specific facts showing that there is a
genuine issue for trial." Fed. R. Civ. P.
56(e). The nonmovant must create more
than mere doubt as to the material facts
and will not prevail by relying on a mere
scintilla of evidence to support its
position. See Liberty Lobby, 477 U.S. at
252; Albiero, 246 F.3d at 932.

  In a trademark infringement case,
whether consumers are likely to be
confused about the origin of a company’s
products is a question of fact, and,
ordinarily, we would review the district
court’s finding of fact for clear error.
See Smith Fiberglass Prod., 7 F.3d at
1329; 3 McCarthy sec. 23:73, at 23-189.
Although disputed questions of fact may
prevent summary judgment in certain
instances, the question of whether
likelihood of confusion exists may be
resolved on summary judgment "if the
evidence is so one-sided that there can
be no doubt about how the question should
be answered." Door Sys., Inc. v. Pro-Line
Door Sys., Inc., 83 F.3d 169, 173 (7th
Cir. 1996) (affirming summary judgment
for the defendant when there was "no
reasonable likelihood that any
significant number of consumers could
mistake the defendant for the
plaintiff"). Thus, the district court’s
grant of summary judgment for CAE, Inc.
constitutes a finding that, even
resolving all factual disputes in favor
of Clean Air, there is a likelihood of
confusion as a matter of law. We review
this legal conclusion de novo. See Kohler
Co. v. Moen, Inc., 12 F.3d 632, 633-34
(7th Cir. 1993); Sands, Taylor & Wood Co.
v. Quaker Oats Co., 978 F.2d 947, 951-52
(7th Cir. 1992). In addition, this court
reviews the district court’s application
of the likelihood of confusion analysis
to determine if it "’was infected with
legal error, i.e., an erroneous general
principle about the way the test should
be applied.’" Dorr-Oliver, Inc. v. Fluid-
Quip, Inc., 94 F.3d 376, 380 (7th Cir.
1996) (quoting Forum Corp. of N. Am. v.
Forum, Ltd., 903 F.2d 434, 438 (7th Cir.
1990)). With these standards of review in
mind, we turn to the merits of the
parties’ claims.

B.   Likelihood of Confusion/11

  Seven factors comprise the likelihood of
confusion analysis: (1) similarity
between the marks in appearance and
suggestion; (2) similarity of the
products; (3) the area and manner of
concurrent use; (4) the degree of care
likely to be exercised by consumers; (5)
the strength of the plaintiff’s mark; (6)
whether actual confusion exists; and (7)
whether the defendant intended to "palm
off" his product as that of the
plaintiff. Ty, Inc. v. Jones Group, Inc.,
237 F.3d 891, 897-98 (7th Cir. 2001); see
also Barbecue Marx, Inc. v. 551 Ogden,
Inc., 235 F.3d 1041, 1043-44 (7th Cir.
2000). "The likelihood of confusion test
is an equitable balancing test." Barbecue
Marx, 235 F.2d at 1044. No single factor
is dispositive and courts may assign
varying weights to each of the factors
depending on the facts presented. See id.
In many cases, however, three of the
factors are likely to be particularly
important: the similarity of the marks,
the defendant’s intent, and actual
confusion. See id.


  1.   Similarity of the Marks

  As both the TTAB and the district court
found, the CAE mark that Clean Air sought
to register is indistinguishable from the
block-letter CAE mark that has been
registered by CAE, Inc. since 1972. Both
parties use the CAE mark in connection
with the products and services they
offer. Indeed, Clean Air itself concedes
that the marks are "virtually identical."
Appellant’s Br. at 17. Accordingly, there
is no genuine issue of material fact
about the similarity of the marks, and
this factor weighs in favor of finding a
likelihood of confusion.


  2.   Similarity of the Products

  The second factor is the similarity of
the products bearing the CAE mark. The
TTAB found that the products and services
for which Clean Air sought registration
were "quite distinct" from the products
and services specified in CAE, Inc.’s
trademark registrations. R.34, Ex.4 at 5.
The TTAB relied heavily on its findings
that CAE, Inc. never provided the
services for which Clean Air sought
registration, i.e., "technical
consultation, testing, research and
engineering in the field of environmental
processes," and that CAE, Inc. presently
does not offer environmental engineering
services or environmental consulting
services to its customers. Id. at 6.
  The district court disagreed with the
TTAB’s assessment. It found that the
parties’ products and services do overlap
at least insofar as "both parties offer,
under the CAE name, process engineering
and data acquisition systems, equipment,
and services to companies involved in
industrial processes." R.49 at 18. It
found further that this overlap was
likely to confuse consumers. The district
court also believed that the diverse
nature of CAE, Inc.’s businesses made "it
likely that consumers might reasonably
expect CAE, Inc. to expand its business
to offer the same products and services
offered by Clean Air." Id. at 19.

  On appeal, Clean Air emphasizes certain
of its products and services, specific to
the field of environmental consulting and
engineering, that differ from those
offered by CAE, Inc., and it asserts that
the parties are not, and never have been,
in direct competition. Thus, Clean Air
maintains, the district court erred in
finding an overlap among the parties’
products and services because there was
"overwhelming" evidence to support the
TTAB’s finding of an absence of overlap.
Appellant’s Br. at 18. CAE, Inc. contends
that the district court correctly found
similarity, in particular between the
parties’ products and services related to
process engineering, and a likelihood
that CAE, Inc. could and would expand
into additional services currently
offered by Clean Air.

  Although, as the district court noted,
many of the products and services offered
by the parties are "quite different,"
R.49 at 18, this dissimilarity is not
dispositive of the likelihood of
confusion inquiry. A likelihood of
confusion may exist even if the parties
are not in direct competition, see Forum
Corp., 903 F.2d at 442, or their products
and services are not identical, see
McGraw-Edison Co. v. Walt Disney Prod.,
787 F.2d 1163, 1169 (7th Cir. 1986).
Rather, because the rights of an owner of
a registered trademark extend to any
goods that might be, in the minds of
consumers, "related," i.e., put out by a
single producer, the more accurate
inquiry is whether the public is likely
to attribute the products and services to
a single source. See McGraw-Edison, 787
F.2d at 1169. "Closely related" products
are those that "would reasonably be
thought by the buying public to come from
the same source, or thought to be
affiliated with, connected with, or
sponsored by, the trademark owner."
Sands, Taylor & Wood, 978 F.2d at 958
(internal citations and quotation marks
omitted); see also Int’l Kennel Club of
Chicago, Inc. v. Mighty Star, Inc., 846
F.2d 1079, 1089 (7th Cir. 1988) (holding
that a likelihood of confusion existed
when the products were not identical but
were sufficiently related to create an
inference in consumers’ minds that the
products came from the same source).


   a.   Current Goods and Services

  To support its argument that no overlap
exists between the parties’ products and
services, Clean Air relies heavily on the
admissions of several of CAE, Inc.’s
employees that, at present, CAE, Inc.
does not provide technical consultation,
testing, research or engineering in the
field of environmental processes, for
which Clean Air sought registration, nor
does it provide equipment for air
pollution testing and monitoring. As the
district court found based on the newly
presented evidence, however, the
undisputed facts show that the parties do
offer some of the same products and
services. Both offer, under the CAE name,
process engineering and data acquisition
systems, equipment, and services to
companies with industrial processes.
Process engineering includes SCADA
systems, which both parties market to
their customers (many of whom are the
same) for the purpose of making existing
equipment work more efficiently and
making operators perform more
efficiently, thereby increasing profits.
Both companies’ process engineering
technologies have applications in the
same industries: pulp and paper, electric
power, natural gas processing and
petroleum refining, semiconductor,
pharmaceutical and surface coating. In
addition, Clean Air markets software that
can be used as an add-on or upgrade for
a SCADA system, including those SCADA
systems designed and built by CAE, Inc.
Thus, the district court correctly
concluded that the undisputed facts
demonstrated that Clean Air’s use of a
mark identical to that registered by CAE,
Inc. in connection with closely related
products and services is likely to cause
confusion. See Sands, Taylor & Wood, 978
F.2d at 958-61 (holding that the
defendant’s use of the plaintiff’s mark
to market a similar isotonic beverage was
likely to cause confusion); Scandia Down
Corp. v. Euroquilt, Inc., 772 F.2d 1423,
1431 (7th Cir. 1985) (holding that
Euroquilt’s use of a similar mark in
connection with similar products-- down
bedding--was likely to cause confusion).

  Even taking as true Clean Air’s
assertion that it offers different
process engineering services for
different purposes, this would not refute
the district court’s finding that
consumers are likely to be confused by
Clean Air’s use of the CAE mark. In
McGraw-Edison, for example, we held that
the district court should have considered
the question of whether the purchasing
public might believe that a single source
produced both McGraw Edison’s electronic
fuses and Disney’s video games. See
McGraw-Edison, 787 F.2d at 1169. Because
McGraw-Edison’s fuses were "compatible
and consistent" with the electrical and
electronic products marketed by Disney,
the products were not entirely unrelated
and consumers reasonably could attribute
the fuses and the video games to the same
source. Id.

  As in McGraw-Edison, the likelihood of
confusion about the source in this case
arises from the relatedness of the
products and services. For example, one
of the products listed in CAE, Inc.’s
trademark registration is "supervisory
control, test and data logging equipment
and systems," R.34, Ex.4 at 4; among the
services Clean Air markets to its
customers under the CAE mark are
designing and building data acquisition
systems and control equipment and making
existing equipment work more efficiently.
In addition to these general
similarities, specific similarities exist
as well. Clean Air markets its SCADA
systems for monitoring air quality and
emissions. CAE, Inc. designed a SCADA
system in 1973 for the New Brunswick
Power Commission’s stack emissions
monitoring operation, and it advertised
stack emissions testing services in
connection with its CIL/CAE venture in
the early 1980s. Moreover, Clean Air’s
development and marketing of SCADA
software and components that are
complementary to CAE, Inc.’s SCADA
products increase the likelihood of
confusion. See Fuji Photo Film Co. v.
Shinohara Shoji Kabushiki Kaisha, 754
F.2d 591, 598 (5th Cir. 1985) (explaining
that complementary products in particular
are susceptible to confusion). None of
this evidence was before the TTAB when it
found that no likelihood of confusion
existed.

  Because the new evidence demonstrated
that Clean Air and CAE, Inc. offer some
closely-related, if not substantially
similar, products and services under the
CAE mark, the district court correctly
found that consumers reasonably could
conclude that Clean Air’s products and
services are affiliated or associated
with CAE, Inc. See Ty, Inc., 237 F.3d at
900 (holding that similarities between
the defendant’s "Beanie Racers" and Ty,
Inc.’s "Beanie Babies" could cause the
public to believe that the defendant’s
products were affiliated or associated
with Ty, Inc.); Int’l Kennel Club, 846
F.2d at 1089 (holding that the
similarities between the parties’
products were significant enough that the
public might attribute both products to a
single source).


   b. Expansion Into Other Products and
Services

  Clean Air also objects to the district
court’s finding that "the diverse nature
of CAE, Inc.’s businesses makes it likely
that consumers might reasonably expect
CAE, Inc. to expand its business to offer
the same products and services offered by
Clean Air" in the air pollution control
business. R.49 at 19. The court based its
finding on undisputed evidence that: (1)
CAE, Inc. is a large, multinational
conglomerate that currently offers
products and services related to data
acquisition, flow modeling, and process
engineering to industrial companies; (2)
two of CAE, Inc.’s major competitors, ABB
and Siemens, currently offer air quality
services that overlap with some of Clean
Air’s products and services; and (3) CAE,
Inc. has been involved in the air
pollution control business, in particular
through the CIL/CAE joint venture that
offered "TOTAL TECHNOLOGY IN POLLUTION
CONTROL" in the 1980s. No evidence of ei
ther (2) or (3) was introduced in the
TTAB proceeding.
  Courts have recognized that an important
reason to protect trademark owners
against the use of similar marks on
closely related products is "to protect
the owner’s ability to enter product
markets in which it does not now trade
but into which it might reasonably be
expected to expand in the future." Sands,
Taylor & Wood, 978 F.2d at 958. The
Lanham Act aims to protect "the trademark
owner’s interest in capitalizing on the
good will associated with its mark by
moving into new markets." Id. This
protection is warranted here, where CAE,
Inc. has been involved in the air
pollution control business, currently
markets its products and services to
companies and industries subject to
environmental regulations, and competes
with two companies who offer air
pollution services similar to Clean Air.
These circumstances demonstrate the
convergence of the technologies of CAE,
Inc. and Clean Air as well as an
industrial affinity between their
products and services that is likely to
increase consumer confusion if both
parties market their products and
services in connection with the same CAE
mark. See Int’l Kennel Club, 846 F.2d at
1089 (concluding that it would be logical
for consumers to conclude that the
plaintiff kennel club would branch out
into marketing "pedigree" toy dogs).

  In analyzing the similarity of products
and services, the district court gave
"due deference" to the TTAB’s finding of
dissimilarity. R.49 at 19. But, the
district court had before it new evidence
that CAE, Inc.: (1) had past experience
in the air pollution business through the
CIL/CAE joint venture and in connection
with the New Brunswick Power Authority
Project; (2) had been involved in other
areas of pollution control through its
FRP pipe businesses; (3) possessed the
ability to configure its current products
for application in the pollution control
business; (4) marketed its products and
services to the same companies that Clean
Air marketed its environmental
engineering services; and (5) competed
with two companies that offered products
and services substantially similar to
those offered by Clean Air. All of this
new evidence was subject to the district
court’s de novo review, and it supported
the court’s conclusion that the
similarity of the parties’ products and
services weighed in favor of a finding of
likelihood of confusion.


  3.   Area and Manner of Concurrent Use

  The third factor in the likelihood of
confusion analysis assesses "whether
there is a relationship in use,
promotion, distribution, or sales between
the goods or services of the parties."
Forum, 903 F.2d at 442. Although the TTAB
did not address this factor in its
decision, the district court found that
the parties use the CAE mark in the same
manner and display the CAE mark in the
same channels of commerce. The undisputed
evidence supports the district court’s
conclusion that this factor weighs in
favor of a finding that a likelihood of
confusion exists.

  First, it is undisputed that the manner
in which the parties use the CAE mark is
similar because both parties use CAE as
the first component of the names of their
subsidiaries and departments: CAE
Machinery, CAE Express, CAE Screenplates,
CAE Diagnostics, CAE Instrument Rentals,
CAE Source Testing, CAE Combustion, etc.
Without prior knowledge, it is virtually
impossible for consumers to distinguish
which names are attributable to CAE, Inc.
and which are attributable to Clean Air.

  Second, Clean Air does not dispute that
it has displayed and continues to display
the CAE mark in the same channels of
commerce as CAE, Inc. CAE, Inc. and Clean
Air agree that they have targeted the
same general audience (companies with
industrial processes) and some of the
same specific industries, such as pulp
and paper, electric power, natural gas
processing, petroleum refining,
semiconductor, pharmaceutical and surface
coating. See Ty, Inc., 237 F.3d at 901
(holding that the area of concurrent use
overlapped when the parties sold their
products in the same stores, advertised
in the same magazines, and targeted the
same general audience). In fact, as seen
in the new evidence not presented to the
TTAB, CAE, Inc. and Clean Air have
marketed and sold their goods and
services to dozens of the same companies
and entities, including Gaylord
Container, Westvaco, Georgia Pacific,
Dupont, Owens Corning, Phillip Morris and
Weyerhauser. The parties employ similar
marketing procedures, including personal
meetings with a direct sales force,
direct mailings, advertisements in trade
journals and exhibitions, and appearances
at trade shows and conferences. See
Forum, 903 F.2d at 441-42 (holding that
concurrent use existed when both parties
marketed and sold products through a
direct sales force, direct mailings, and
attendance at the same trade show). In
particular, both CAE, Inc. and Clean Air
regularly have attended the TAPPI trade
show for the pulp and paper industry and
have advertised in the TAPPI Journal and
Pulp & Paper. See Ty, Inc., 237 F.3d at
901. The advertiser index of Pulp & Paper
has listed "CAE Clean Air Engineering"
directly above the listing for "CAE
Screenplates" and directly below the
listing for "CAE Machinery, Ltd.," both
of which are subsidiaries of CAE, Inc.
and are entirely unrelated to Clean Air.
The manufacturers and suppliers directory
for the 1998 Pulp and Paper Buyer’s Guide
also listed CAE Machinery, Ltd. and CAE
Screenplates directly below the listing
for Clean Air. In light of the
substantial new evidence before the
district court relating to the parties’
promotional and advertising efforts and
the TTAB’s failure to make a finding as
to this factor, the district court was
entitled to review this evidence de novo
and to conclude, correctly we believe,
that the undisputed facts demonstrate
that Clean Air and CAE, Inc. sell and
market their products and services
through many of the same channels.
Therefore, this factor weighs in favor of
a finding of likelihood of confusion.

  4. Degree of Care Likely to Be Exercised
by Consumers

  To assess properly the degree of
consumer care, the court must consider
both parties’ potential consumers,
because even those consumers who buy only
CAE, Inc.’s products and services could
be confused as to the source of those
products or services. See Forum, 903 F.2d
at 442; Fuji Photo Film, 754 F.2d at 596
(explaining that the Lanham Act’s
prohibition of trademark infringement
"clearly encompasses confusion on the
part of purchasers of either (or both)
party’s products") (emphasis in
original). The TTAB held that this factor
weighed against a finding of likelihood
of confusion because both parties’
products and services were "quite
expensive" and were "offered only to
sophisticated commercial buyers (as
opposed to ordinary consumers), usually
after extensive negotiations." R.34, Ex.4
at 9. Notwithstanding the sophistication
of many of the parties’ customers, the
district court found, based on additional
new evidence, that there was a real
likelihood of confusion because Clean Air
sold products ranging in price from $1.75
to $11,150 via the internet, telephone
and catalogues.

  The district court did not err in
concluding that the nature and
sophistication of the parties’ customers
increased the likelihood of confusion.
First, although many of the parties’
customers are sophisticated and decide to
buy only after extensive negotiations,
these customers’ technical sophistication
about their particular industry does not
equate to trademark sophistication. See
Fuji Photo Film, 754 F.2d at 595
(explaining that, even though consumers
of printing presses were sophisticated
and did not buy on impulse, those factors
were not determinative). As the
undisputed facts show, the parties’
products and services already overlap,
particularly with respect to process
engineering and SCADA systems, and will
overlap to an even greater degree if they
expand to offer new products, as Clean
Air recently has done by developing
software for SCADA systems and as CAE,
Inc. is capable of doing by adapting its
current technology for further use in the
pollution control field. This convergence
of the parties’ technologies makes it
more likely that even an informed and
sophisticated consumer will mistakenly
attribute the parties’ products and
services to a common source. The
potential for such mistakes is heightened
by the difficulty of determining which
CAE entity belongs to which party without
some prior knowledge of each party’s
corporate structure.

  Second, the district court gave
appropriate weight to new evidence that
demonstrated that Clean Air offers a wide
variety of low-priced goods through its
catalogue and on the Internet. The more
widely accessible and inexpensive the
products and services, the more likely
that consumers will exercise a lesser
degree of care and discrimination in
their purchases. See id. at 596 (stating
that the simplicity and negligible cost
of Fuji’s goods and its extensive
advertising increased the likelihood of
confusion about the source of the goods).

  Third, in addition to point-of-sale
confusion about the source of products
and services, we have recognized that the
Lanham Act’s protections also extend to
post-sale confusion of potential
customers. Dorr-Oliver, 94 F.3d at 381-82
(explaining post-sale confusion and
quoting Lois Sportswear, U.S.A., Inc. v.
Levi Strauss & Co., 799 F.2d 867, 872-73
(2d Cir. 1986)). Post-sale confusion
refers to a situation in which, for
example, a potential customer sees a
product bearing the label "CAE Rental
Equipment" without reference to Clean Air
and, consistent with the customer’s
familiarity with CAE, Inc., mistakenly
attributes the products to CAE, Inc.,
thereby influencing his buying decision,
either positively or negatively. See id.
at 381-82. That association constitutes
infringement of CAE, Inc.’s registered
trademark. See id.; see also Lois
Sportswear, 799 F.2d at 872-73
(explaining that, although product labels
informed actual buyers in the store about
the source of the plaintiff’s jeans,
similarity in the stitching patterns
could cause prospective buyers who saw
the jeans outside the store to associate
the defendant’s jeans with the plaintiff,
thereby influencing their buying
decision).

  Finally, the district court correctly
distinguished on their facts the two
cases relied on by the TTAB. In Dynamics
Research Corp. v. Langenau Manufacturing
Co., 704 F.2d 1575 (Fed. Cir. 1983), the
court affirmed the TTAB’s finding that
there was no likelihood of confusion
because, although the parties both used
the mark "DRC," they sold entirely
different products (appellant sold gauges
for press brakes and appellee sold sheet
metal fabric) to different companies in
different industries. Dynamics Res., 704
F.2d at 1576-78. In contrast, the
undisputed evidence here shows that CAE,
Inc. and Clean Air offer some of the same
basic technology and, in some instances,
serve the same companies and the same
industries; therefore, Dynamics is not
persuasive. Likewise, the Federal
Circuit’s determination that confusion
was unlikely in Electronic Design &
Sales, Inc. v. Electronic Data Systems
Corp., 954 F.2d 713 (Fed. Cir. 1992),
rested on the TTAB’s failure to consider
all seven factors in the likelihood of
confusion analysis and on
significantdifferences between the
parties’ products. The plaintiff used the
"EDS" mark to advertise its power
supplies and battery chargers, whereas
the defendant used the "EDS" mark in
connection with its computer services.
Electronic Design & Sales, 954 F.2d at
717-19. Thus, the lack of an overlap
between the parties’ products and
services in Electronic Design & Sales
renders its holding unpersuasive in this
case as well.

  The district court, although affording
deference to the TTAB’s finding as to
consumer sophistication, also looked at
newly presented evidence of the broad
availability of Clean Air’s products,
some of which are inexpensive. The court
reviewed evidence of an overlap in the
companies that currently consume both
parties’ products and services. The court
also considered evidence of the parties’
converging technologies, which increases
the potential for further overlap in the
future as the parties expand their
businesses. This application of the
fourth factor of the likelihood of
confusion analysis was a correct
application of the law. The undisputed
evidence in the record supports the
court’s factual finding that consumer
sophistication did not diminish the
likelihood of confusion.


  5.   The Strength of CAE, Inc.’s Mark

  The "strength" of a trademark refers to
the mark’s distinctiveness, meaning its
propensity to identify the products or
services sold as emanating from a
particular source. See Eli Lilly, 233
F.3d at 464; Sands, Taylor & Wood, 978
F.2d at 959 (quoting McGregor-Doniger,
Inc. v. Drizzle, Inc., 599 F.2d 1126,
1131 (2d Cir. 1979)). The TTAB did not
address the relative strength of CAE,
Inc.’s registered CAE mark, but the
district court concluded that CAE, Inc.
has a "strong, distinctive mark." R.49 at
23.
  Trademark law recognizes five categories
of trademarks, in ascending order of
distinctiveness: generic, descriptive,
suggestive, arbitrary and fanciful. See
Two Pesos, Inc. v. Taco Cabana, Inc., 505
U.S. 763, 768 (1992) (adopting Judge
Friendly’s formulation in Abercrombie &
Fitch Co. v. Hunting World, Inc., 537
F.2d 4, 9-11 (2d Cir. 1976)). The CAE
mark is an unpronounceable set of letters
and thus falls into the category of
letter marks generally accorded broader
trademark protection because "it is more
difficult to remember a series of
arbitrarily arranged letters than it is
to remember words, figures, phrases, or
syllables." 3 McCarthy sec. 23:33, at 23-
97; see also Edison Bros. Stores, Inc. v.
Brutting E.B. Sport-Int’l GmbH, 230
U.S.P.Q. 530, 533 (TTAB 1986) (referring
to the "well-established principle" of
trademark law that confusion is more
likely between "arbitrarily arranged
letters" than other categories of marks).
This principle is particularly applicable
here because the letters CAE appear
without reference to the underlying words
from which they were originally derived--
Canadian Aviation Electronics. See Weiss
Assoc., Inc. v. HRL Assoc., Inc., 902
F.2d 1546, 1548 (Fed. Cir. 1990)
(invoking this principle and finding a
likelihood of confusion between TMS and
TMM for competitive specialized computer
software).

  In addition to the fact that the CAE
mark is an unpronounceable set of
letters, the district court based its
finding of the strength of CAE, Inc.’s
mark on the company’s: (1) 40-year use of
the mark in the United States; (2)
hundreds of millions of dollars of annual
sales in the United States; (3) extensive
expenditures to promote its products and
services in connection with the CAE mark;
(4) use of the letters in the names of
its subsidiaries and divisions; and (5)
registration of several federal
trademarks that feature the letter
combination. Clean Air disputes the
district court’s conclusion, pointing to
seven registrations of the CAE mark by
companies other than CAE, Inc., and
arguing that CAE, Inc. is attempting to
"monopolize" the CAE mark for all
purposes. Appellant’s Br. at 22. As CAE,
Inc. points out, however, six of these
registrations are cancelled and thus are
not evidence of third party use that
would weaken CAE, Inc.’s mark. See
McGraw-Edison, 787 F.2d at 1171
(explaining that third parties’ trademark
registrations are material to the
strength of mark "only to the extent that
the similar marks are promoted by their
owners or recognized by the consuming
public"). As to the remaining
registration, Clean Air introduced no
evidence that the mark was in use, and
the registrant’s website confirmed that
the mark was not being used. Other than
these cancelled or inactive
registrations, Clean Air did not
introduce any evidence of actual use of
the CAE mark by third parties nor did it
introduce evidence that the third
parties’ marks were well-promoted or that
they were recognized by consumers. See
id.

  In contrast, CAE, Inc. has long used its
CAE mark in the marketplace. Since the
1950s, CAE, Inc. has used the CAE mark to
identify itself and its products and
services. Today, CAE, Inc. is a
diversified, multinational company with
thousands of employees and twenty
subsidiaries. It has millions of dollars
in annual sales and expends tens of
thousands of dollars each year to promote
its business using the CAE mark, which
demonstrates that CAE, Inc. has built,
and continues to build, a reputation for
the quality of its products and services.
See Barbecue Marx, 235 F.3d at 1045
(stating that the length of use of the
mark and the popularity and reputation of
the goods demonstrated the strength of
the mark). Thus, in the absence of
evidence that third parties actually have
used the CAE mark or that the CAE mark
has been promoted and recognized by
consumers, there is no genuine issue of
material fact regarding the strength of
CAE, Inc.’s mark, and the district court
correctly concluded that the mark is
strong and distinctive. See McGraw-
Edison, 787 F.2d at 1171 (finding no
genuine issue of material fact as to
strength when the record lacked evidence
of third parties’ use or consumer
recognition of a similar trademark).


  6.   Actual Confusion

  Although evidence of actual confusion,
if available, is entitled to substantial
weight in the likelihood of confusion
analysis, see Int’l Kennel Club, 846 F.2d
at 1090; McGraw-Edison, 787 F.2d at 1172-
73, this evidence is not required to
prove that a likelihood of confusion
exists, see Barbecue Marx, 235 F.3d at
1045; Eli Lilly, 233 F.3d at 465. The
TTAB viewed the absence of a "clear
instance" of actual confusion during the
course of the parties’ twenty-year
coexistence as "indicative" that little
likelihood of confusion existed. R.34,
Ex.4 at 12. The district court
acknowledged the lack of evidence of
actual confusion; it found that this
factor weighed "only slightly in favor"
of a finding that no likelihood of
confusion existed. R.49 at 25.

  The one instance of actual confusion in
the record appears in the testimony of
Frey Frejborg, an employee of CAE, Inc.,
who stated that one of CAE, Inc.’s
suppliers had asked him "if there is a
connection between C.A.E. Clean
Engineering and CAE ScreenPlates [a CAE,
Inc. subsidiary]." R.46, Ex.A, Tab 2 at
5. This testimony, absent the identity of
the speaker and the time-frame in which
it was said, is not entitled to great
weight, particularly because the speaker
was not a customer of CAE, Inc. but
rather a supplier. See Smith Fiberglass
Prod., 7 F.3d at 1330-31 (finding that
the district court did not err in
discounting an employee’s testimony about
an instance of actual confusion that
lacked the exact quote and identity of
the speaker).

  One instance of actual confusion has
been deemed sufficient to weigh in favor
of finding a likelihood of confusion. See
Wesley-Jessen Div. of Schering Corp. v.
Bausch & Lomb, Inc., 698 F.2d 862, 867
(7th Cir. 1983). Discounting Mr.
Frejborg’s testimony, however, does not
preclude a finding of likelihood of
confusion. See Sands, Taylor & Wood, 978
F.2d at 960 ("As we have stated many
times . . . the plaintiff need not show
actual confusion in order to establish
likelihood of confusion." (emphasis in
original)). Because, as the district
court noted, instances of actual
confusion may be difficult to discover,
the most that the absence of evidence of
actual confusion can be said to indicate
is that the record does not contain any
evidence of actual confusion known to the
parties. See 3 McCarthy sec. 23:18, at
23-62. Other than its reliance on a
twenty-five-year history without reported
incidents of actual confusion, Clean Air
has not come forward with hard evidence
to demonstrate a genuine issue of
material fact that consumers are not
likely to be confused by the parties’
simultaneous use of the CAE mark in
connection with their businesses. See
McGraw-Edison, 787 F.2d at 1173 (noting
that the defendant failed to counter the
plaintiff’s evidence of actual
confusion). In light of the paucity of
evidence either way, the district court
properly treated this factor as weighing
only slightly in favor of a conclusion
that no likelihood of confusion exists.


  7.   Clean Air’s Intent

  The final factor for consideration is
Clean Air’s intent. The parties do not
contest the district court’s finding
that, because Clean Air did not intend to
palm off its products and services as
those of CAE, Inc., this factor was
irrelevant to the likelihood of confusion
analysis. See Sands, Taylor & Wood, 978
F.2d at 961 (stating that intent is
relevant only if the defendant intended
to palm off its goods as those of the
plaintiff); Fuji Photo Film, 754 F.2d at
598 (holding that intent is immaterial
when the undisputed evidence shows that
the defendant acted in good faith); 3
McCarthy sec. 23:107, at 23-248 to 23-251
(explaining that proof of intent to
deceive or to confuse is not necessary to
prove trademark infringement).
Accordingly, we find no error in the
district court’s treatment of this
factor.


  8.   Weighing the Factors

  Although we have recognized that the
similarity of the marks, evidence of
actual confusion, and the defendant’s
intent are the three "most important"
factors in the likelihood of confusion
analysis, Eli Lilly, 233 F.3d at 462,
there is "no hard and fast requirement"
that all three of these factors must
weigh in the plaintiff’s favor in order
to find that a likelihood of confusion
exists, Ty, Inc., 237 F.3d at 902.
Rather, the district court must give
appropriate weight to the factors that
are particularly important based on the
facts of each case. See Ty, Inc., 237
F.3d at 901-02 (holding that the
magistrate judge did not err in placing
greater weight on the similarity of
marks, the similarity of products, and
the area and manner of concurrent use);
Barbecue Marx, 235 F.3d at 1046 (stating
that the key factors in the likelihood of
confusion analysis in that case were the
defendant’s intent, actual confusion, and
the degree of care exercised by
customers).

  Presented with the administrative record
as well as a substantial amount of new
evidence, the district court placed
greater weight on the identical
appearance of the CAE marks, the
similarity of the products and services
bearing the CAE mark, the identical
manner and channels of commerce in which
the parties used the CAE mark, the
strength of the CAE mark registered by
CAE, Inc., and, to a lesser extent, the
degree of care likely to be exercised by
consumers. The court based its findings
on a record of undisputed facts and
analyzed the importance of each factor in
the context of this particular case and
with appropriate deference to the
findings of the TTAB. Clean Air failed to
demonstrate a genuine issue of material
fact as to any of the factors; therefore,
the district court correctly concluded
that a likelihood of confusion existed as
a matter of law. We conclude that the
district court correctly balanced all
seven factors. Accordingly, the district
court correctly entered summary judgment
in favor of CAE, Inc. and against Clean
Air based on a finding that consumers
were likely to be confused by the
parties’ contemporaneous use of the CAE
mark in connection with their goods and
services. See Door Sys., 83 F.3d at 173
(affirming summary judgment when there
was no genuine issue of material fact as
to likelihood of confusion).

Conclusion

  The district court’s conclusion that
consumers are likely to be confused by
the parties’ simultaneous use of the CAE
mark was correct and is conclusive as to
all claims. Accordingly, we affirm the
judgment of the district court in all
respects.
AFFIRMED

FOOTNOTES

/1 The Hon. Warren K. Urbom, Senior United States
District Judge for the District of Nebraska,
sitting by designation.

/2 This trademark was cancelled on May 28, 2001, and
is no longer active.

/3 CAE, Inc. also has featured the CAE mark in the
names of most of its former subsidiaries and
divisions: CAE International, Ltd.; CAE Fibre-
glass Products, Ltd.; CAE MetalTest, Ltd.; CAE
Aircraft, Ltd.; CAE Metals, Ltd.; CAE Webster,
Ltd.; CAE Accurcast, Ltd.; CAE-Morse, Ltd.; CAE
Metal Abrasive, Ltd.; CAE-Montupet Diecast, Ltd.;
CAE Magnesium Products Division; CAE-Link Corp.;
and CAE Aviation, Ltd.

/4 CAE Machinery, Ltd., another CAE, Inc. subsidiary
that designs, manufactures, and sells equipment
to the pulp and paper industry and offers repair
and servicing of that equipment under the CAE
name, also advertises in publications for the
pulp and paper industry, including TAPPI Journal.

/5 In the TTAB proceeding, CAE, Inc. produced the
following evidence: Answers to Interrogatories;
Response to First Request for Admissions; Re-
sponses to Clean Air’s Discovery Requests; Depo-
sition of David L. Adams; Deposition of Frey
Frejborg; Deposition of Robert Kemerer; Deposi-
tion of Alexander T. Wilson; Testimony of David
L. Adams; Testimony of Frey Frejborg; Testimony
of Robert Kemerer; Testimony of Alexander T.
Wilson; Testimony of James W. Best; Testimony of
James S. Herz; Testimony of Robert Aimonetti; and
CAE, Inc.’s Notice of Reliance, which contained
published advertisements of CAE, Inc. and Clean
Air.

  Clean Air produced the following evidence in
this proceeding: Answers to Interrogatories;
Responses to Request to Admit; Responses to CAE,
Inc.’s Discovery Requests; Deposition of Frank S.
Kilvinger; Deposition of William I. Walker;
Testimony of Frank S. Kilvinger; Testimony of
William I. Walker; Testimony of Steven Rees;
articles from Pollution Engineering, Chicago
Daily Law Bulletin and the Wall Street Journal;
CAE, Inc.’s trademark renewal file materials; and
results of "CAE" trademark name searches and
registrations.

  Although the record is not entirely clear, it
appears that all of this evidence also was pre-
sented to the district court, with the exception
of CAE, Inc.’s trademark renewal file materials
and the articles from Pollution Engineering,
Chicago Daily Law Bulletin and the Wall Street
Journal.

/6 The new evidence before the district court in-
cluded: Affidavit of Frank Kilvinger dated Apr.
21, 1999; CAE, Inc. Response to Clean Air’s First
Set of Interrogatories; CAE, Inc. Supplemental
Response to Clean Air’s First Set of Interrogato-
ries; Declaration of Mary M. Dale dated Apr. 15,
1999; Declaration of Meher Kapadia dated Apr. 15,
1999; Materials from Clean Air’s website; Materi-
als from ABB’s website; Materials from Siemens’
website; Declaration of David Race dated Apr. 15,
1999; Declaration of Kenneth E. Lothamer dated
Apr. 5,1999; CIL-CAE joint venture brochures;
Brown & Root request for quotation, received by
CIL-CAE Sept. 13, 1982; CAE Fibreglass Products
work release authorization for Leaf River Forest
Products dated Jan. 5, 1983; CAE Fibreglass
Products work release authorization for FRP pipe,
SeaWorld, Orlando, Florida dated Feb. 11, 1983;
Letter from Texas Utility Serv., Inc. to CAE
Fibreglass Products dated Dec. 28, 1982; Declara-
tion of Peter Shackley dated Apr. 15, 1999;
Declaration of Frey Frejborg dated Apr. 15, 1999;
USP Industries (CAE, Inc. subsidiary) letterhead;
TAPPI Journal, Jan. 1996 and Feb. 1999 issues;
Pulp & Paper, Mar. 1994, Jul. 1994, Aug. 1994 and
Nov. 1998 issues; 1998 Pulp & Paper Buyer’s
Guide; Materials from CAE, Inc. website; Clean
Air’s Answers to Plaintiff’s First Set of Inter
rogatories; and Clean Air’s Supplemental Answers
to Plaintiff’s First Set of Interrogatories.

/7 After CAE, Inc. advised the court that it would
not pursue its dilution claims in light of the
decision in Nike, Inc. v. Nike Securities L.P.,
50 U.S.P.Q.2d 1202 (N.D. Ill. Feb. 18, 1999), the
district court entered judgment in favor of Clean
Air on Counts III and IV. This ruling is not at
issue on appeal.
/8 We denied Clean Air’s motion for a stay pending
appeal.

/9 Although Zurko involved the Federal Circuit’s
review of a decision of the PTO, the Court’s
holding also has been applied to findings of fact
made by the TTAB. See, e.g., On-Line Careline,
229 F.3d at 1085. Furthermore, whether the ag-
grieved party elects direct review by the Federal
Circuit or initiates a new action in the district
court, both courts should apply the APA standard
of review to the TTAB’s factfinding. See Zurko,
527 U.S. at 164 (rejecting the argument that the
"two paths" for review would create "an anomaly"
in the standard of review).

/10 The Supreme Court recognized that the difference
between the clearly erroneous standard and the
substantial evidence standard "is a subtle one--
so fine that (apart from the present case) we
have failed to uncover a single instance in which
a reviewing court conceded that use of one stan-
dard rather than the other would in fact have
produced a different outcome." Zurko, 527 U.S. at
162-63; see also 3 McCarthy sec. 21:22.1, at 21-
32 ("It is hard to see more than a subtle differ-
ence between the old and new standards of appel-
late review of facts.").

/11 The first element of a Lanham Act claim, whether
CAE, Inc.’s marks are protectable, is not at
issue here. As the district court noted, it is
undisputed that CAE, Inc. registered the block
letters "CAE" and that Clean Air advertised
products and services using the block letters
"CAE" without permission from CAE, Inc. R.49 at
15. Therefore, the only issue is whether Clean
Air’s use of the CAE mark is likely to cause
confusion. See Eli Lilly, 233 F.3d at 461; Smith
Fiberglass Prod., 7 F.3d at 1329; Spraying Sys.,
975 F.2d at 390.
