RICHMOND (CN) - The Fourth Circuit was asked Wednesday to decide whether one of the world's largest cell phone makers violated a consulting firm's trademark on 3-D rendering software by marketing a virtual reality headset with a similar name.
The case arrived at the appeals court Wednesday morning on the heels of 2016 ruling by U.S. District Judge T.S. Ellis III siding with the cell phone manufacturer, HTC Corporation.
Arguing on behalf of plaintiff Valador, Inc., Douglas Kalhe of Wolcott Rivers Gates in Virginia Beach, said HTC violated his client's trademark under the concept of "reverse confusion."
The theory is premised on the belief that a senior or smaller company's product could get lost in the market when a larger producer comes in and trademarks its products with the same or a similar name.
Kalhe told the three-judge panel that Valador trademarked the term "VIVE," an acronym for “Valador Immersive Visualization Environment,” in 2007. The product renders environments in three dimensions and was used by NASA to help it determine what went wrong in the 2003 explosion of the space shuttle Columbia.
In 2015, court documents say, HTC partnered with video game producer Valve Corporation to produce VR headsets under the name VIVE.
Valador's complaint claimed the two companies were denied the trademark “VIVE” by the US Patent Office a short time later, but that they persisted in marketing their product with the "VIVE" name and the headsets are now available online and on store shelves around the world.
But as he pressed his argument, Kahle ran into trouble with U.S. Circuit Judge Dennis Shedd, who noted that the lower court determined the audiences for the two companies' products are vastly different.
Kahle conceded the point, admitting that 90 percent of Valador's business come from government contracts. HTC sells its products directly to consumers.
“Which of your consumers are going to be confused by [these products],” Shedd asked, pointedly suggesting it is unlikely a NASA engineer wouldn’t be sophisticated enough to tell the difference between Valador’s product and HTC’s.
But Kahle pressed on, saying HTC’s use of the name could hurt his client if and when Valador decides to go into the commercial market.
HTC's lead attorney, Douglas Stewart of Bracewell LLP in Seattle, countered by arguing not only are the companies' respective products vastly different from each other, but so too is the way they make their money and render their services.
A VR headset, Stewart said, retails for $599. Meanwhile Valador earns millions through government-related consulting work.
Stewart then picked up Judge Shedd's point, telling the court that government procurement officers "are highly trained individuals who have to oversee millions in spending."
“The chance of a NASA employee being confused [is small],” Stewart said.
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