A manufacturer of paper towels and touchless paper towel dispensers under the brand name "enMotion" could go forward with claims that a competitor engaged in contributory trademark infringement by marketing and selling to distributors an inferior paper towel product that was specifically manufactured for use in enMotion dispensers, the U.S. Court of Appeals in Richmond has decided. The manufacturer leased its dispensers to distributors, who subleased them to end-user customers. The dispensers and towels were made for away-from-home settings, such as hotels, stadiums, and restaurants. The lease agreements between the manufacturer and its distributors expressly provided that only enMotion toweling could be used in enMotion dispensers.

The evidence left no doubt that the competitor intended its paper towels to be used in enMotion dispensers and that the towels were made and sold specifically for that purpose, according to the court. The manufacturer displayed its registered marks on the outside of the dispensers. By stuffing enMotion dispensers with the competitor's towels, end-user customers used one or more of the manufacturer's marks in connection with the distribution of the competitor's goods.

Genuine issues of material fact existed with regard to the likelihood of confusion, the court said. The manufacturer could predicate its claim on a post-purchase confusion theory, that is, its assertion that restroom visitors who consumed toweling from enMotion dispensers constituted the relevant audience for purposes of the likelihood of confusion analysis. Confusion caused by the placement of the competitor's allegedly inferior toweling in the enMotion dispensers could adversely affect the manufacturer's ability to control its reputation. Three empirical studies showed that nearly half of those surveyed would expect that a paper towel dispenser and the toweling being dispensed would originate from the same source. The competitor had received complaints from distributors about the inferior quality of its toweling as compared to enMotion toweling, the court noted.

Georgia Pacific Consumer Products, L.P., 4th Cir., ¶61,661.