## Facts

- Freedom Card, Inc. and Urban Television Network, Inc. (UTN) held federal registrations for the “FREEDOM CARD” mark for credit cards/credit card services.
- UTN launched the FREEDOM CARD in 2000 with CompuCredit, marketing a high-fee, high-interest Visa card to sub-prime consumers; new account issuance ended in 2001, and the portfolio peaked at about 28,193 accounts.
- Chase developed a gasoline-rewards credit card usable at any gas station after its Shell co-branded program ended, and named it “CHASE FREEDOM” to convey consumer choice.
- The CHASE FREEDOM program largely converted about 1.5 million existing Shell accounts and added fewer than 10,000 new accounts after its January 2003 launch; it targeted higher-credit-score consumers with more favorable terms than UTN’s card.
- After UTN objected to national CHASE FREEDOM advertising, Chase paused advertising and new customer acquisition while the dispute proceeded.
- UTN also claimed Chase’s conduct violated a 1999 mutual confidentiality agreement arising from earlier business discussions.

## Issues

1. Whether Chase’s use of “CHASE FREEDOM” created a likelihood of confusion under a Lanham Act reverse-confusion theory as to affiliation, sponsorship, or source regarding UTN/Freedom Card’s “FREEDOM CARD” mark.
2. Whether the likelihood-of-confusion analysis under the Third Circuit’s Lapp factors, applied in a reverse-confusion setting, supported summary judgment for Chase.
3. Whether Chase breached the 1999 mutual confidentiality agreement (and related state-law theories) by using allegedly confidential information connected to UTN’s mark or business concept.

## Decision

- The Third Circuit affirmed summary judgment for Chase on all claims.
- The court held there was no likelihood of confusion, including no reverse confusion, between FREEDOM CARD and CHASE FREEDOM as used in the marketplace.
- The court also affirmed rejection of the confidentiality-agreement and related state-law claims for lack of evidence that Chase used specific confidential information obtained from UTN.

## Legal Principles

- Reverse confusion is actionable when a larger, later user’s marketing causes consumers to believe the senior user’s product is affiliated with or sponsored by the junior user; it is analyzed using the Lapp likelihood-of-confusion factors, applied with attention to market saturation by the junior user.
- A senior mark’s weak conceptual strength, especially where it relies on common or laudatory industry terminology, weighs against likely confusion.
- Prominent, consistent use of a junior user’s house mark can reduce overall similarity and confusion even when the marks share a common word.
- Differences in target consumers, pricing/terms, and product features may substantially reduce confusion in the credit-card context, where consumers are expected to exercise meaningful care.
- Minimal evidence of actual confusion can strongly support summary judgment where the junior user operates at large scale and confusion would likely surface if it were probable.
- Contract liability based on a confidentiality agreement requires identification of specific confidential information misused by the defendant, not merely overlap in general marketing terms or concepts.

## Conclusion

The Third Circuit concluded that UTN/Freedom Card could not show a likelihood of reverse confusion between “FREEDOM CARD” and “CHASE FREEDOM” under the Lapp factors, and that UTN likewise failed to prove misuse of identifiable confidential information under the parties’ confidentiality agreement; summary judgment for Chase was therefore affirmed.


Freedom Card, Inc. v. JPMorgan Chase & Co., 432 F.3d 463 (3d Cir. 2005)