## Facts

- Century 21 Real Estate Corp., Coldwell Banker Real Estate Corp., and ERA Franchise Systems, Inc. (CCE) owned federally protected trademarks used in real estate franchising.
- LendingTree, Inc. operated an internet-based referral service connecting consumers with real estate agents and mortgage providers, including franchisees affiliated with CCE brands.
- In marketing its service on its website and related materials, LendingTree used the Century 21, Coldwell Banker, and ERA marks to refer to those brands and associated services.
- CCE demanded that LendingTree stop using the marks; negotiations failed.
- CCE sued in the District of New Jersey under the Lanham Act for trademark infringement and unfair competition.
- The district court granted a preliminary injunction restricting LendingTree’s use of CCE’s marks.
- LendingTree appealed; it also argued the case was moot because it changed aspects of its website after litigation began.

## Issues

1. How should likelihood of confusion be analyzed when the defendant asserts nominative fair use (use of the plaintiff’s mark to refer to the plaintiff’s own goods or services)?
2. In a nominative fair use case, does the plaintiff retain the burden to prove likelihood of confusion, or must the defendant negate confusion as part of its defense?
3. Did the district court apply the proper legal framework in granting a preliminary injunction, and was the appeal moot due to LendingTree’s post-suit changes?

## Decision

- The Third Circuit held that, even in nominative fair use cases, the plaintiff bears the burden of proving likelihood of confusion; the defendant does not have to negate confusion.
- The court adopted a two-step structure:
  - First, the plaintiff must prove likelihood of confusion using an analysis tailored to nominative use.
  - Second, if confusion is shown, the defendant may establish nominative fair use by showing the use was fair under specific factors.
- The court vacated the preliminary injunction and remanded for reconsideration under the clarified framework.
- The court rejected mootness, holding LendingTree’s voluntary website changes did not eliminate the live controversy.

## Legal Principles

- Lanham Act infringement requires proof of a likelihood of consumer confusion; nominative fair use does not remove that element.
- In nominative use settings, traditional multifactor confusion tests designed for competing marks may require modification, with emphasis on likely confusion about affiliation, sponsorship, or endorsement.
- Nominative fair use is evaluated after confusion is shown, using factors including:
  - whether use of the mark was necessary to identify the plaintiff’s goods or services (and to describe the defendant’s offering in context);
  - whether the defendant used no more of the mark than reasonably necessary; and
  - whether the defendant’s presentation suggested sponsorship or endorsement or otherwise misstated the parties’ relationship.
- Voluntary cessation of challenged conduct (such as changing a website) does not, by itself, moot a trademark dispute.

## Conclusion

The Third Circuit vacated a preliminary injunction because the district court misapplied nominative fair use and burden-allocation rules, holding that plaintiffs must prove likely confusion even when nominative fair use is asserted, and that defendants may then attempt to justify the use as nominatively fair under a structured fairness inquiry.


Century 21 Real Estate Corp. v. LendingTree, Inc., 425 F.3d 211 (3d Cir. 2005)