INTELLECTUAL PROPERTY Prof. Tyler Ochoa Summer Semester 2013 SOME U.S. TRADEMARK LAW BASICS I. Subject Matter of Trademark Protection A. A trademark is any word, name, symbol or device that is distinctive of a person s goods or services, and is used in a manner that identifies those goods and services and distinguishes them from the goods or services of others. B. A trademark [or service mark] is any word, name, symbol or device that is used by a person to identify and distinguish his or her goods [or services] from those of others, and to indicate the source of those goods [or services]. [ 45] 1. Can include word marks, slogans, logos, characters, sounds, colors, and trade dress (e.g., product packaging or product configuration). C. Distinctiveness: Word marks are classified into five categories. The first three categories are considered inherently distinctive marks that may be protected or registered without any evidence of public perception. 1. Fanciful marks (made-up words) receive the strongest protection. 2. Arbitrary marks (use of an existing word in an unfamiliar context). 3. Suggestive marks are words that are suggestive of some attribute of the product, but that require imagination, thought or perception to reach a conclusion as to the nature of the goods. 4. Descriptive marks are words that describe some attribute of the product. A descriptive term is not inherently distinctive, and may be registered only upon a showing that it has acquired distinctiveness (secondary meaning), i.e., that in the minds of the public, the term is perceived to identify the source of the product rather than the product itself. 5. Generic words (the type of product, not the source) cannot be protected. D. For product packaging, trade dress may also be classified as inherently distinctive or requiring acquired distinctiveness; but product designs, and color alone, are never considered inherently distinctive, and may be protected as marks only if they are non-functional and have acquired distinctiveness (secondary meaning). 1
II. Acquisition of Trademark Rights A. Under the common law of unfair competition, a trademark is protected only when it is used to identify the source of goods or services. Use means a bona fide use in the ordinary course of trade, and not made merely to reserve a right in a mark. 1. To register a mark under the Lanham Act, the mark must be used in commerce, meaning all commerce which may be regulated by Congress under the Constitution [has a substantial effect on interstate commerce]. 2. After 1988 amendments, an application to register a mark may be made on the basis of a bona fide intent to use the mark in interstate commerce. The mark is examined and allowed, but the registration is not completed until a statement of use is filed [within 6 months, may be extended to 36 months]. B. Under the common law of unfair competition, a trademark was protected only in the geographical area in which the mark was actually being used, and within the natural zone of expansion outside of that area. 1. Contingent on issuance of registration, filing an application to register a mark shall constitute constructive use of the mark, conferring a right of priority, nationwide in effect, on or in connection with the goods and services specified in the registration. [ 7(c)] 2. If a mark was adopted without knowledge of the registrant s prior use, and has been continuously used since, then the junior user may continue to use the mark, but only in the geographic area in which it was using the mark prior to the date of registrant s constructive use under 7(c). [ 33(b)(5)] 3. Dawn Donut: Even if junior user adopts the mark after registration, there may be no likelihood of confusion if use is confined to a geographically distinct area and there is no present prospect that the registrant is likely to expand into that area. No injunction until expansion becomes likely. III. Registration of Trademarks A. Advantages of Registration: Constructive use and nationwide priority [ 7(c)]. Certificate of registration is prima facie evidence of the validity of the mark, registrant s ownership of the mark, and registrant s exclusive right to use the mark in commerce on or in connection with goods or services specified. [ 7(b)] 1. If a mark is registered and continuously for five consecutive years without a successful or pending challenge to validity, it becomes inconstestable, which precludes challenges based on lack of secondary meaning. Other challenges to validity and defenses are still allowed. [ 15, 33(b)] 2
B. Grounds for Refusal of Registration [ 2] 1. 2(a): Immoral, deceptive, scandalous matter; matter which may disparage or falsely suggest a connection with persons, living or dead, institutions, beliefs, or national symbols, or bring them into contempt or disrepute; or geographical indication which, when used with wines or spirits, identifies a place other than the place of origin of the goods [first used after WTO]. a. Determined as of time registration issued. Must determine whether it is immoral or scandalous to a substantial composite of the general public, or whether it would be perceived as disparaging by a substantial composite of the referenced group. 2. 2(b): Flag or coat of arms or other insignia of U.S., state, city or nation. 3. 2(c): Name, portrait or signature of a living individual without consent; or name, signature or portrait of deceased President during life of widow. [Note that most states protect right of publicity for a period post-mortem.] 4. 2(d): Mark is confusingly similar to another registered mark, or to any mark or trade name previously used in U.S. by another and not abandoned. [Factors are the same as those for infringement (likelihood of confusion)] C. 2(e): Five grounds for refusal of registration. Categories (3) and (5) cannot be registered; other three can be registered with a showing of secondary meaning. 1. merely descriptive or deceptively misdescriptive of goods. If the term is misdescriptive, are purchasers likely to believe the misdescription? [ 2(e)(1)] If so, is it likely to affect the decision to purchase? [ 2(a)] 2. primarily geographically descriptive. 3. primarily geographically deceptively misdecriptive. Is the primary significance a generally recognized geographic location? Are consumers likely to mistakenly believe that the goods or services have their origin in that location? If so, would it be a material factor in the consumer s decision? 4. primarily merely a surname. 5. comprises any matter that, as a whole, is functional. a. A product feature is functional, and cannot serve as a trademark, if it is essential to the use or purpose of the article or affects the cost or quality of the article; or if exclusive use of feature would put competitors at a significant non-reputation related disadvantage. 3
IV. Loss of Trademark Protection A. 14(3): A petition to cancel may be filed... at any time if the registered mark becomes the generic name for the goods or services for which it is registered. 1. The primary significance of the registered mark to the relevant public, rather than purchaser motivation, shall be the test for determining whether the registered mark has become the generic name of goods or services. 2. A generic term cannot be converted into a trademark by de facto secondary meaning. A mark may become generic even if it is associated with a single source, if the producer is not using the name in a trademark fashion. B. 14(3): A petition to cancel may be filed... at any time if the registered mark... has been abandoned. V. Infringement 1. A mark shall be deemed abandoned when its use has been discontinued with intent not to resume such use [within reasonably foreseeable future]. Intent not to resume may be inferred from circumstances. Nonuse for three consecutive years shall be prima facie evidence of abandonment. 2. A mark shall be deemed to be abandoned when any course of conduct of the owner, including acts of omission, causes the mark [to become the generic name for the goods or services with which it is used, or otherwise] to lose its significance as a mark. [Assignment in gross; naked licensing] A. Infringement occurs when use of a similar mark on another s goods or services is likely to cause confusion, to cause mistake, or to deceive [as to source or origin, or sponsorship or affiliation]. Plaintiff must show that an appreciable number of ordinarily prudent purchasers are likely to confused. B. 43(a)(1)(A) prohibits infringement of unregistered marks or trade dress [which includes product packaging and product configuration]. Analysis is identical to the analysis for infringement of a registered mark: is the mark protectable, and if so, does the use create a likelihood of confusion? C. Courts consider a list of factors in determining likelihood of confusion: Strength of the mark, similarity of the marks, relatedness of the goods [including whether senior user is likely to bridge the gap ], similarity of marketing channels used, evidence of actual confusion, intent of the junior user, quality of the junior user s product, and sophistication of consumers or degree of care exercised in purchase. 4
D. Initial interest confusion may be found where a party is misleadingly enticed into considering doing business with the junior user because of confusing similarity, even if the confusion is dispelled before any purchase is made. E. Post-sale confusion may be found where a party is not confused at the point of sale, but potential customers encountering the mark post-sale may be confused. F. Reverse confusion may be found where a large, dominant entity adopts mark of a smaller, less powerful user, causing confusion as to origin of senior user s goods. G. Contributory infringement may be found if a third party intentionally induces another to infringe, or if a third party continues to supply a product to one whom it knows or has reason to know is engaging in trademark infringement. Vicarious liability may be found if third-party has ability to control infringer [a principalagent relationship] and receives a direct financial benefit from infringement. H. Defenses to registration include that the mark is functional, has become generic, or has been abandoned; fraudulent registration; violation of 2(a)-(c); mark used to misrepresent source; good faith prior user; antitrust; equitable principles; and 1. 33(b)(4): Use is a use other than as a mark, of the party s individual name in his own business, or the individual name of anyone in privity with such party, or of a term or device which is descriptive of and used fairly an din good faith only to describe the goods or services of such party. VI. Dilution A. 43(c): The owner of a famous mark that is distinctive... shall be entitled to an injunction against another... who,... after the owner s mark has become famous, commences use of a mark in commerce that is likely to cause dilution by blurring or dilution by tarnishment of a famous mark, regardless of the presence or absence of actual or likely confusion, of competition, or of actual economic injury. 1. A mark is famous if it is widely recognized by the general consuming public of the United States as a designation of source of the goods and services of the mark owner. [Niche market fame is not allowed.] 2. In considering whether mark possesses the relevant degree of recognition, court may consider: duration, extent and geographic reach of advertising and publicity; amount, volume, and geographic extent of sales of goods or services; extent of actual recognition of the mark; and federal registration. B. Dilution by tarnishment is an association arising form the similarity between a mark and a famous mark that harms the reputation of the famous mark. 5
C. Dilution by blurring is an association arising from the similarity between a mark and a famous mark that impairs the distinctiveness of the famous mark. Factors: 1. Degree of similarity of marks; degree of distinctiveness of famous mark; extent to which owner has substantially exclusive use of the famous mark; degree of recognition of famous mark; whether user intended to create an association with famous mark; any actual association between the marks. 2. Ownership of a valid federal registration is a complete bar to an action for dilution [under state law]. Defenses to federal dilution include fair use of mark in comparative advertising; noncommercial use; and news reporting. D. Anti-Cybersquatting Consumer Protection Act 1. 43(d): A person shall be liable to the owner of a mark, if that person has a bad faith intent to profit from that mark, and registers, traffics in or uses a domain name identical, confusingly similar, or dilutive of the mark. 2. Factors include trademark or other IP rights; legal name or commonly used name; prior bona fide use; bona fide noncommercial or fair use; intent to divert consumers; offer to transfer, sell or assign the name for financial gain without having used or bona fide intent to use; false or misleading registration; registration of multiple names; pattern of conduct. VII. Trademarks as Speech A. San Francisco Arts & Athletics v. United States Olympic Committee (U.S. 1987) holds statute granting exclusive rights to USOC without normal statutory defenses or requiring proof of likelihood of confusion did not violate First Amendment. (Lanham Act only prohibits unauthorized commercial uses; noncommercial use of a mark as a metaphor, to communicate ideas, is not actionable.) B. Nominative fair use of a mark to describe goods and services of mark owner is not infringing if: (1) product or service is not readily identifiable without use of the mark; (2) only so much of the mark is used as is reasonably necessary; and (3) user does nothing to suggest sponsorship or endorsement by mark owner. C. Courts take different approaches to problem of trademark parody. Some courts apply likelihood of confusion without adjustment, and consider First Amendment only after likelihood of confusion is shown. Result is usually no defense; it is well-established that false and misleading commercial speech may be enjoined. 1. Some courts hold a balancing approach is appropriate, and that likelihood of confusion factors should be adjusted to take parody into account. Some risk of confusion should be tolerated in order to further free expression. 6