World Champ Tech LLC v. Peloton Interactive, Inc.

Background

World Champ Tech offered mobile fitness apps called “Bike+” and owned a federal trademark registration for that name. Its original app, released in 2014, tracked cycling information and could be used for indoor and outdoor riding. World Champ Tech did not update that app after 2016, although it remained available for download. The company developed a new version over several years and launched it in January 2021.

Peloton Interactive offered connected-fitness products, including stationary bikes. In September 2020, it launched a higher-end model called “Peloton Bike+.” Peloton’s marketing materials displayed “Bike+” with the Peloton name, and the company used the plus sign to identify a premium version of a product.

World Champ Tech asserted six claims based on Peloton’s alleged unauthorized use of its trademark: federal trademark infringement, federal unfair competition, California unfair competition, California false advertising, common-law trademark infringement, and common-law unfair competition. The parties stipulated that the claims were limited to reverse confusion, meaning confusion in which consumers familiar with the more prominent newer user believe the older, less-known user is the same company or affiliated with it.

Motions and legal standard

Both parties moved for summary judgment. Peloton argued that consumers were not likely to be confused and that World Champ Tech could not establish damages. World Champ Tech argued that Peloton’s affirmative defenses and trademark-cancellation counterclaims were not viable.

The court explained that summary judgment is proper when there is no genuine dispute about a material fact and the moving party is entitled to judgment as a matter of law. For the trademark claims, the key question was whether Peloton’s use was likely to cause consumer confusion. The court applied the eight-factor likelihood-of-confusion test used in the Ninth Circuit, considering the strength of the marks, the relatedness of the goods, similarity of the marks, actual confusion, marketing channels, consumer care, intent, and likely expansion of the product lines.

Analysis

The court first rejected Peloton’s argument that the 2021 app was not a genuine commercial use of the mark. Although the app had no reported in-app sales, limited marketing, a possibly nonfunctional coaching feature, and no update after January 2022, the court found a genuine dispute about whether it was a bona fide commercial use. The app had been in development before and after Peloton’s product launch and could be viewed as an update to World Champ Tech’s existing use of “Bike+.”

The court then evaluated the likelihood-of-confusion factors. It held that “Bike+” was descriptive because consumers needed no imagination to understand that it referred to an app for enhancing biking. The mark was also weakened by similar names used for other cycling apps. The strength-of-the-mark factor favored Peloton because World Champ Tech’s mark had little commercial strength for Peloton’s product to overtake.

The relatedness-of-goods factor favored World Champ Tech because Peloton’s bike and World Champ Tech’s app were complementary, and there was at least a genuine dispute about whether they were sold to overlapping customers and served similar functions. The similarity factor also favored World Champ Tech because, in the reverse-confusion context, Peloton’s use of its house mark alongside “Bike+” could support a finding that the marks were similar.

The absence of evidence of actual confusion favored Peloton. The products had coexisted since September 2020, but no evidence of actual confusion had been offered. The marketing-channel factor also favored Peloton, significantly, because Peloton sold through its website, showrooms, and retail stores, while World Champ Tech had done little marketing during the period when the products coexisted. The consumer-care factor favored Peloton because purchasers of connected-fitness products could be expected to exercise greater care when browsing the Apple App Store.

The intent factor was neutral or very slightly favored World Champ Tech. Peloton’s in-house counsel knew of the trademark before launch, but the court found that Peloton’s choice of a descriptive product name mitigated the significance of that knowledge. The expansion factor was neutral or very slightly favorable to World Champ Tech, but the court found it less significant because the parties’ products were complementary.

Disposition

The court concluded that, considering all the circumstances, World Champ Tech’s mark had too little strength for Peloton’s product to overtake it. The court emphasized the mark’s descriptive nature, limited marketing, declining and insubstantial subscriber and download numbers, the lack of actual confusion, and the limited commercial activity surrounding the 2021 app. It held that confusion was possible but not probable.

Judge Laurel Beeler granted Peloton’s motion for summary judgment. Because the likelihood-of-confusion issue resolved all of World Champ Tech’s claims, the court denied World Champ Tech’s motion for summary judgment as moot. The court stated that it would separately enter judgment and that the order disposed of ECF Nos. 134 and 135.