This Vynamic Case Is a Good Introduction to the Law of Trademark Infringement

The Tao of Trademark, Man

The judge in Vynamic, LLC v. Diebold Nixdorf, Inc., starts his opinion with a little trademark zen:

Just how similar is “VYNAMIC” to “VYNAMIC”? That is the question posed in this trademark infringement case.

It might surprise you to learn that this question is so difficult that the judge didn’t answer it.

Perhaps it would be helpful to know what the parties do for a living. The plaintiff, Vynamic, LLC, “offers digital engagement services that help clients improve their marketing and customer services capabilities. Its focus is in the healthcare realm.” You might already be familiar with the defendant, Diebold Nixdorf, or at least with the “Diebold” part. In this case, we’re primarily concerned with its ATM and POS machines. When Diebold was looking for a new brand for its “suite of banking software,” Diebold’s consultants somehow came up with the exact same name as Vynamic’s mark. After all but choosing the new name but before using it, Diebold found out about Vynamic’s VYNAMIC. Diebold evidently felt Vynamic’s VYNAMIC posed no legal problem and went forward with the new name.

Would it also help if you knew what the trademarks looked like “in the wild”? Here you go:

You already know from your own experience that ownership of a trademark doesn’t give you exclusive rights to the use of the trademark. You know this because you’ve flown on DELTA Airlines, have brushed your teeth using water from a DELTA faucet, perhaps after being told to brush more by a DELTA dentist. And from that example, you already know what sort of things can permit this state of affairs: the products are really different, and the trademarks look different “in the wild.” In fact, if you think about it, you instinctively know that this state of affairs should be kind of common. It’s a rare trademark that can completely occupy all the possible products out there.

So, you already know that it’s not impossible for VYNAMIC to coexist with VYNAMIC. And Vynamic and Diebold plan to use their marks on different products. But are they different enough? It’s one thing to say airlines ≠ faucets ≠ dentistry. But “digital engagement” ≠ banking software? Obviously, there has to be enough “room” between the different sets of products. If Vynamic used VYNAMIC on, say, “social engagement software,” that would be too close, right? Is it that big a step from software that performs a service to the services themselves—in the minds of consumers?

Are you bothered by what seems like an awful coincidence that two companies could’ve hit upon the same nonsense word as a brand? DELTA, at least, has meaning beyond its use as a mark. But VYNAMIC can only mean a brand, or perhaps the name of an Overwatch character. (It took me a while, but it’s dynamic but with a V.¹I kept trying to pronounce it VYE-nuh-mik for some reason. But why a V? Simply that every other letter results in something dumb?²Consider: bynamic (buy buy buy!), fynamic (fie on thee!), gynamic (when you’re exiled in Guyville?), hynamic (hello!), jynamic (??), lynamic (but I’m telling the truth!)….) That’s the thing with “fanciful” trademarks: consumers assume that uses are not coincidental and are, thus, more likely to see a connection between the two uses. Put in more trademarky terms, they’ll be more likely to assume that whoever is behind³The “source,” and the trademark is thus the “source-indicator.” the healthcare VYNAMIC must also behind the banking VYNAMIC, even it doesn’t make complete sense.

Diebold has a ready response to that argument. The same consumers aren’t being exposed to the two different uses of VYNAMIC, so they can’t make the assumption. Vynamic’s customers are effectively siloed, per Diebold. VYNAMIC might be the cat’s pajamas in the healthcare industry, but bankers don’t know about it. Oh, and bankers and healthcare professionals don’t interact enough for VYNAMIC to cross-pollenate. It’s not as though they aren’t members of the same country clubs. It’s just that, when they to interact, they aren’t likely to say to each other, “Say, old fellow, let me tell you about this most excellent digital engagement service provider/banking software suite called VYNAMIC.”

Perhaps you are now a little more sympathetic with the judge’s position, when both parties filed motions for summary judgment. Summary judgment should only be granted to a party when, based on undisputed facts, there’s no way a jury could reach any conclusion other than judgment in favor of the moving party. The judge denied both motions. His reason: it’s too close a question with too many moving parts. In other words, there are too many disputed facts, and depending on how a jury viewed those disputed facts, the jury might find for either party.

So, it’s to trial for these fine folks! Only, not really, probably. This case will probably settle.

The Dynamics of Consumer Protection

We’ve identified three main factors for determining infringement: (1) how similar the trademarks are, (2) how similar the products⁴Er, “good and services.” are, and (3) how distinctive⁵Or “strong.” the trademark is⁶Usually, we’re interested in the distinctiveness of the “senior user’s” trademark, i.e., the trademark of the party that used it before the other party, but… Well, let’s not get started on “reverse confusion.” More important, we see that these factors must be approached and applied holistically and with common sense. You can’t just say: well, five points for distinctiveness, ten for similarity of marks but only three points for similarity of products; and that adds to eighteen, so no infringement for you!

We also see that these factors suggest other factors. When Vynamic argued that its mark was highly distinctive, Diebold countered with an argument about, essentially, market segments and how much they overlap. That’s another factor, but it also flows naturally from Vynamic’s argument.

There’s a reason for all this: the main point of trademark law is to protect consumers. A trademark is short-hand for everything associated with a product: how good it is, how expensive it is, how convenient it is, etc. Consumers use this short-hand to make purchasing decisions. Consumers can’t be expected to do research in advance of every purchase. And wise businesses are careful to choose distinctive marks and start associating them with good things.

That leads to a factor we haven’t discussed but flows naturally from this idea: consumer purchasing care, which measures how much a consumer leans on a trademark to make his or her purchasing decision. When we buy ordinary items, we lean heavily on the trademark. We are thus more likely make wrong assumptions about similar-looking marks and be confused. But, in this case, Vynamic’s and Diebold’s customers were making fairly major purchasing decisions. If you’re spending a lot of money on something, or if that something is important to your business, you’re going to be making an independent assessment of the product. You probably know that just because CUISINEART makes great food processors doesn’t necessarily mean that CUISINEART toasters are worth a dang.

That also leads to why the case will likely settle. Trademark cases like this⁷I.e., not obvious enough to be decided on summary judgment. are very fact-intensive and, thus, very expensive and, also, very uncertain. They’re also more easily settled. Since infringement isn’t obvious or even inevitable, there are steps that Diebold could take to avoid infringement but which wouldn’t cramp Diebold’s style very much. And which would beat the expense, bother and uncertainty of trial. From Vynamic’s point of view, trial is uncertain enough, and defeat would be a pretty bad result, since Diebold would be free to expand its VYNAMIC-related products an unknown amount—and yet, it wouldn’t be much of a victory for Diebold, since it wouldn’t know either.

Thanks for reading!

Rick Sanders

Rick is currently General Counsel for Software Freedom Conservancy. Previously, he has been practicing law as an intellectual-property litigator since 2000.