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Michael Welles and Associates, Inc. V. Edwell, Inc.
Michael Welles and Associates, Inc. appealed a district court’s decision that Edwell, Inc. is not liable for trademark infringement. The marks at issue belong to Welles which uses the mark EDWEL and Edwell which uses the mark EDWELL. The magistrate judge found that consumers were unlikely to be confused by the marks because Edwell never intended to copy Welles’ mark, the parties operate in different markets, consumers are likely to exercise a high degree of care in selecting the parties’ services and there is almost no evidence of actual confusion.
On appeal, Michael Welles and Associates, Inc. argued that the magistrate judge applied an inaccurate legal standard in analyzing likelihood of confusion. Michael Welles and Associates, Inc. also urged the court to adopt a presumption of confusion for cases like this one, when entities use similar marks online in related fields, and contended that the magistrate judge clearly miscalculated in finding no likelihood of confusion.
Since 1992, Michael Welles and Associates, Inc. has provided classes, seminars and certification workshops mostly in the project management professional space. It targets professionals across a range of industries, including information technology, healthcare, education and the military. Before the boom of the internet, Michael Welles and Associates, Inc. marketed its programs through mass mailings and written advertisements. It now advertises extensively on social media, Google and via email.
Michael Welles and Associates, Inc. operates under the brand name EDWEL, which is derived from both the phrase “education done well” and the names of its two founders: James Edwards and Michael Welles. Welles established several domain names in 1998: Edwel.com, Edwel.net, Edwelprograms.com, Edwel.org and Edwel.co. In 2003, Welles secured the additional domain names Edwell.com, Edwell.net, Edwellprograms.com and Edwell.co.
The mark EDWEL was officially registered in 2016 for “[t]raining, mentoring, and tutoring services in the fields of project management and product management; Educational services, namely, conducting classes, seminars, workshops in the fields of project management and product management.”
Edwell Inc. is a nonprofit organization dedicated to improving schoolwide mental health and well-being. It began during the COVID-19 pandemic when one of Edwell’s founders learned of the need for emotional support services among school teachers. Edwell adopted the mark EDWELL for its services, which means “to be an educator and be well.” Edwell operates virtually by partnering with schools and providing coaching to teachers to support their mental health. Edwell currently has partnerships with 10 K-12 public schools. Edwell uses the domain name Edwell.org.
Michael Welles and Associates, Inc. learned about Edwell in late July 2021 when Michael Welles received a call from a potential customer asking about classes at Denver North High School. Since the company does not offer services to any Denver public school, Michael Welles did a Google search to see why this potential customer may have called. This research led to Michael Welles discovering Edwell, which appeared to be the company partnered with Denver North High School.
Michael Welles and Associates, Inc. issued a cease-and-desist letter to Edwell in October 2021 after discovering its website. After a short stint in rebranding, Edwell soon transitioned back to its previous mark and domain name. Michael Welles and Associates, Inc. filed suit against Edwell on December 13, 2021, alleging trademark infringement and unfair competition under the Lanham Act.
On March 24, 2022, Michael Welles and Associates, Inc. filed an amended complaint with additional facts and sought a preliminary injunction. The magistrate judge then held a hearing where representative witnesses of both parties testified. After this hearing, the judge denied the preliminary injunction. The parties thereafter consented to consolidate the preliminary injunction hearing into a trial on the merits pursuant to the Federal Rules of Civil Procedure.
After the district court ruled in Edwell’s favor, Michael Welles and Associates, Inc. appealed to the 10th Circuit Court of Appeals.
The 10th Circuit upheld the lower court’s ruling and found the magistrate judge applied the correct standard for likelihood of confusion; there is no presumption of infringement for two similar marks used online; and the magistrate judge did not clearly err in finding no likelihood of consumer confusion.
On the first point, the 10th Circuit found the lower court applied the correct legal standards. The magistrate judge cited the 10th Circuit’s ruling in Beer Nuts Inc., v. Clover Club: that “very similar marks may not generate confusion as to the source of the products where the products are very different or relatively expensive.” Welles pointed to three instances where the magistrate judge’s analysis allegedly went astray: in the discussion of the consumers’ degree of care, the similarity or dissimilarity of the parties’ services and evidence of actual confusion. The majority of the panel concluded that none of these instances demonstrated an erroneous application of the legal standard.
Welles and Associates also argued that the court should adopt a “presumption of likelihood of confusion” when two entities “use nearly identical marks online and web addresses in generally related fields.” But the 10th Circuit found the company cited no case where a court had ever adopted that presumption. The panel instead cited a longstanding rule that “[t]he party alleging infringement has the burden of proving likelihood of confusion.”
For the final plain error appeal, The 10th Circuit considered each of the six likelihood of confusion factors and concluded that the magistrate judge did not clearly err in any of its findings. The factors are the degree of similarity between the marks; strength or weakness of the plaintiff’s mark; intent of the alleged infringer; similarities and differences of the goods, services, and marketing; degree of care exercised by purchasers; and evidence of actual confusion.
As such, Welles and Associates, Inc. failed to show that any of the magistrate judge’s findings were clearly erroneous. According to the 10th Circuit, only two of the six factors favored a finding of confusion. In this case, these two factors were not enough to demonstrate clear error in the magistrate judge’s ultimate finding of no likelihood of confusion.
10th Circuit Judge Timothy Tymkovich dissented. In his view, the district court misapplied the likelihood of confusion factors: the similarity of the services, the intent of the alleged infringer in adopting the mark and the degree of care likely to be exercised by the purchasers. According to Tymkovich, this misapplication infected the overall weighing of the rest of the factors.
“Businesses like Edwel and Edwell heavily invest in building and maintaining their brand. In some cases, the brand becomes a business’s most important asset. Courts create unnecessary confusion and waste in the marketplace by allowing infringers like Edwell to expropriate the investment and longevity of brands like Edwel. And here, the result is the unfair dilution of Edwel’s brand. Edwell, meanwhile, enjoys the favorable association with a brand—Edwel—that took decades to develop,” Tymkovich wrote.