## Facts

- Converse manufactured athletic footwear and owned registered trademarks featuring five-pointed stars used on shoes.
- Starter designed and sold athletic apparel and owned three principal marks: “Starter,” an “S-and-Star” design, and a composite; it had not meaningfully sold shoes bearing its star design marks, aside from limited, atypical examples.
- In 1988, Starter sought to register its star design marks for apparel and shoes; Converse opposed based on likely confusion with Converse’s star marks on footwear.
- In January 1990, the parties executed an agreement resolving the opposition:
  - Starter agreed to amend its application to delete “shoes and sneakers,” stated as “without prejudice.”
  - Converse withdrew its opposition and consented to certain Starter registrations, including consents tied to excluding footwear for the star design mark.
- Years later, Starter planned to use its star design marks on athletic footwear; Converse asserted such use would infringe and indicated it would sue if Starter proceeded.
- Starter filed a declaratory judgment action seeking a ruling that it could lawfully use its marks on athletic footwear; on remand after an earlier appellate decision finding an actual controversy, Converse pursued counterclaims for infringement, breach of the 1990 agreement, and equitable estoppel.
- A jury found for Converse on infringement, breach of contract, and equitable estoppel; the district court entered declaratory relief for Converse and permanently enjoined Starter from using its star design marks on shoes.

## Issues

1. Whether the 1990 agreement barred Starter from using its star design marks on footwear (as opposed to only limiting registration in the specific application).
2. Whether Starter was equitably estopped from using its star design marks on footwear due to its representations and conduct in resolving the trademark opposition.
3. Whether Starter’s proposed use of its star design marks on footwear created a likelihood of confusion with Converse’s star marks.
4. Whether trial management decisions in the declaratory judgment posture (including realignment and presentation order) improperly shifted burdens or prejudiced Starter.

## Decision

- The Second Circuit affirmed the judgment and permanent injunction for Converse.
- The court upheld the verdict finding Starter breached the 1990 agreement as construed in light of the agreement’s structure and negotiation context.
- The court upheld the verdict finding equitable estoppel, based on Starter’s inducement of Converse’s withdrawal of opposition and Converse’s reliance.
- The court sustained the jury’s likelihood-of-confusion determination supporting infringement and injunctive relief.
- The court rejected challenges to trial management and burden allocation, concluding the approach did not improperly prejudice Starter.

## Legal Principles

- A negotiated settlement of a trademark opposition may limit later trademark use where the agreement’s text, structure, and surrounding circumstances show an intent to allocate product categories and restrict use.
- Equitable estoppel may bar a party from asserting trademark rights where it (1) made representations or engaged in conduct inducing reliance, (2) the other party reasonably relied, and (3) the relying party would suffer unfair prejudice if the first party were allowed to change position.
- Likelihood of confusion between marks used on closely related goods is a fact question for the jury; a verdict will be sustained where the record permits a reasonable finding under standard confusion factors.
- In a declaratory judgment action, the district court has discretion to manage party alignment and trial presentation so long as substantive burdens of proof and fairness are maintained.

## Conclusion

The court affirmed a permanent injunction preventing Starter from using its star design marks on footwear, holding that the parties’ prior opposition-settlement agreement and equitable estoppel barred Starter’s attempted expansion into shoes and that the jury permissibly found a likelihood of confusion with Converse’s star marks.


Starter Corp. v. Converse, Inc., 170 F.3d 286 (2d Cir. 1999)