The U.S. Court of Appeals for the Ninth Circuit recently clarified a critical aspect of trademark law: infringement can occur even without the sale of goods or services. In a case involving two tech firms, IYO, Inc. and IO Products, Inc., the court ruled that IO’s use of the “IO” mark in connection with AI-powered devices could confuse consumers, even before any product launch.
The dispute centers on the concept of “reverse confusion,” a theory where consumers mistakenly believe the junior user (IO) is associated with the senior user (IYO). IYO argued that its brand, which markets an AI-based “audio computer,” is so well-known that IO’s similar mark could mislead buyers. IO, co-founded by Sam Altman and Jonathan Paul Ive, countered that its product had not yet been released and was not ready for market.
The court rejected IO’s argument, emphasizing that trademark law does not require actual sales to establish infringement. The Ninth Circuit noted that IO’s May 2025 launch announcement - a video designed to build anticipation - could itself qualify as an infringing advertisement. The court deemed the threat of confusion “sufficiently imminent” due to IO’s prototype, planned competition, and marketing strategy.
The court’s analysis focused on the similarity of the marks and the relatedness of the goods. The “IO” and “IYO” marks differ by a single letter and are pronounced identically, raising concerns about consumer confusion. Both companies develop AI-driven devices aimed at replacing traditional computing, further blurring the line between their offerings.
The court also highlighted the strength of IYO’s brand, which is conceptually robust, while IO’s mark benefits from media attention tied to its high-profile launch. IYO’s investors’ reactions to IO’s announcement were cited as evidence of potential consumer confusion.
The temporary restraining order (TRO) issued by the district court was upheld, but its scope remains limited. The injunction applies only to products “sufficiently similar” to IYO’s AI device, allowing IO to use the mark for unrelated goods. This distinction underscores the importance of trademark monitoring: businesses must proactively assess potential overlaps, even in the early stages of product development.
For companies navigating competitive markets, this case reinforces that trademark protection extends beyond physical sales. Confusability can arise through branding, marketing, and even pre-launch strategies. Legal clarity on these issues is essential for businesses seeking to safeguard their intellectual property in an increasingly crowded digital landscape.
IP Defender monitors national trademark databases for conflicts and infringements, helping businesses stay ahead of potential threats. With coverage in 50+ countries, including the EU, USA, and Australia, IP Defender ensures brands are protected from reverse confusability and other risks. The service’s focus on proactive monitoring aligns with the court’s emphasis on early intervention, offering a reliable tool for brands to defend their intellectual property.