Trademark and Unfair Competition Kirsch Summer 2012
I. Overview of trademark law
a. Rights are based on use, the use is critical as to whether trademark rights are used, which is different from Europe where filing is required.
b. Purpose of the Lanham Act: allows public to recognize a product as being from a particular source thus encouraging owners of marks to establish positive reputations among the public
c. Key Take-Aways:
i. US Trademark Law is common law based upon use, statutes are solely procedural; the greater the use the stronger the right.
ii. There is no absolute property right in a Trademark that precludes all uses, there must be deception or fraud or passing off of some sort to prevent another’s use
d. Registration System – 2 Reasons: (uspto.gov)
i. Confers procedural advantages (pp. 177-9) intended to encourage people to use the system to file federally
ii. Allows users to see if others have claim to a brand based on an earlier filing dat
e. Intent-to-Use Applications: allows individuals to reserve trademarks for a limited period before they must actually use the mark
i. Constructive Use commences on the day of filing – rights will be protected from that date against all other claims (inchoate right)
f. Why unfair competition? Generally because our economy is based on freedom to compete where as trademark is based on the ability of one individual to take away the freedom of other individuals.
II. Concepts of Trademarks and Unfair Competition
a. Competition →Restatement 3d, Unfair Competition: one who causes harm to the commercial relations of another by engaging in abusiness or trade is not subject to liability to the other for such harm unless:
i. The harm results from acts or practives of the actor actionable by the other under the rules of this restatement relating to:
1. Deceptive marketing
2. Infringement of trademarks and other indicia of indentification
3. Appropriation of intangible trade values including trade secrets and the right of publicity (§4); or from other acts or practice of the actor determined to be actionable as an unfair method of competition, taking into account the nature of the conduct and its likely effect on both the person seeking relief and the public; or
ii. The acts or practices of the actor are actionable by the other under the federal or state statutes, international agreements, or general principles of common law apart from those considered
iii. Freedom to compete for patronage is a fundamental premise of the free enterprise system
1. It creates incentive to provide quality goods at reasonable prices and promotes efficient allocation of economic resources
2. Competition will necessarily harm the commercial relations of others
b. Cases (Compeition)
i. Top Tobacco v. North Atlantic Operating Company, Inc → P initiated suit when a company utilized the word “top” on their packaging.
1. The Court found in favor of the defendant in that there was little likelihood of confusion based on the simple use of a word.
2. Famous Brands and issue of dilution → it must be a famous brand to the “general public” and not one to a set of individuals (i.e. user of loose tobacco).
ii. INS v. Assoc. Press (1918) → AP was releasing news on the east coast through slower process to the west coast, while the D used there news and faster process to get information to the west coast. Supreme Court created the claim of misappropriation to provide a remedy for this type of act: granted exclusive reproduction rights for the very brief time of brief commercial value.
1. Policy → one party should not benefit solely from the investment of another’s resources, this practice eliminates motivation to make such investments
2. A very narrow holding by the SC, and was hard to later replicate.
iii. Chaney Bros. v. Doris Silk Corp. – the D had copied a seasonal clothin design pattern and undercut the P’s price after the P invested resources to discover the best-selling patter – the court denied the plaintiff relief because there was no existing common law or statute protecting their interest in the pattern
1. Policy – job of legislation and patent office to determine what constitutes an invention that should be protected.
iv. Sears, Roebuck & Co. v. Stiffel Co. – P created a lamp design and began selling it, D began selling an identical design with their own label at a cheaper rate and P sued for damages and injunction, the state court ruled in favor of the P, but the federal courts overturned on several grounds:
1. Federal law is supreme on the subject of copyrights and patents, so states are precluded from preventing the reproduction of non-patented articles that the federal system does not recognize as patented or copyrighted.
2. The mere inability of the public to tell two identical articles apart is not enough to support an injunction against copying or an award of damages for copying that which the federal patent laws permitted to be copied.
v. Compco Corp. v. Day-Brite Lighting, Inc. – adjacent SC ruling to Sears but made reference to Trademark in which product traits/configuration have acquired a secondary meaning and can be protected by state law
1. Where the public relies upon an original manufacturers reputation for quality and integrity state law can prevent parties from deceptively selling their copies as originals, but not from producing and selling copies
a. Statutory or decisional law must exist in order to require copiers to label or take precaution to prevent confusion or customers as to the source of the goods
vi. Bonito Boats v. Thunder Craft Boats – π sought to enjoin Δ from using “direct molding process” to duplicate unpatented boat hulls under a state statute that prevented such duplication without written permission
1. Supreme Court once more ruled that state unfair competition laws cannot conflict with federal patent principles and laws
a. State statutes must not inhibit the public’s ability to exploit ideas that the patent system mandates shall be free for all to use
b. Copyright laws passed by Congress can extend limited protection to industrial designs
2. Unfair Competition: rooted in law tort of deceit, purpose is to protect consumers from confusion as to the source of a good, not to protect producers to incentivize product innovation
a. Non-functional aspects that have acquired secondary meaning as to the source of their production are protected
3. Subsequent to this decision Congress passed DMCA provision: Vessel Hull Design Federal Statute was passed accomplishing the same as the plug-mold statutes
vii. NBA v. Motorola – D was providing a service that gave basketball scores, NBA sued for misappropriation of based on INS – Court established factors for a claim of misappropriation:
1. π generates or gathers information at a cost
2. the information is time-sensitive
3. the Δ use of the information constitutes free-riding on the π’s effort
4. the Δ is in direct competition with a product or service offered by the π
5. the ability of other parties to free-ride on the efforts of the π would so reduce incentive to produce the product or service that its existence or quality would be substantially threatened
viii. AP v. All headline News Corp. – the ct. found for the P because the D was simply taking the news taken right off the plaintiff’s website and then disseminating the news.
III. Trademarks – the common-law right to adopt and use a symbol or a device to distinguish the goods or property made or sold by the person whose mart it is to the exclusion of use by all other persons
a. Trademarks: Protect indicia of origin (logo, trade dress, product configuration, designs) used by a manufacturer or merchant to identify their goods and distinguish them from others; sounds in Tort of Fraud
See p. 20 for Table
Patents protect new and useful inventions for a specified period of time; challenging criteria:
1. Novel: not pre
2. The copier need not exercise the right to copy a product and label it with the generic term in any specific time frame, the public is free to do so at any time after a patent expires
3. Where a patent protected the form in which something was made and distributed to the public the expiration of the patent makes that products form free to public reproduction
a. The copier’s only burden is to use every reasonable means to prevent confusion
ii. Functional aspects of a product cannot be protected by trademark, if changing the shape of a product would increase its cost and decrease its quality, that shape is not protected
iii. Coca-Cola Co. v. Koke Co. of America – a party is not entitled to legal protection a device they use to swindle the public but this is a very narrow exception not applicable to another party’s ability to then swindle that party.
1. Where the product has acquired a secondary meaning in which the product is more emphasized than the producer the producer is entitled to the benefits derived from the secondary meaning.
iv. Slogans, even if descriptive, can acquire secondary meaning through extensive, continuous and substantially exclusive use, and may achieve the secondary meaning requisite to protectable status
v. Peaceable Planet v. Ty, Inc. – A personal name can be trademarked only when it has acquired secondary meaning to the public, courts are hesitant to do so because:
1. May prevent a person from using their own name for their personal business
2. Common names (i.e. Smith, Jones, Steve) associated with two different products are not likely to confuse the public as to their origin
3. Preventing a person from using their names to denote a product may deprive the public of useful information
a. A personal name can be trademarked where it will not prevent people from using it for their own business, is not a commonly used name, and will not deprive customers of valuable information
4. The personal name need not achieve secondary meaning to be protected it must only be a suggestive mark as with all trademark law
vi. Stayart v. Yahoo! Inc – the court notes that in order to bring a claim under the Lanham Act an activity or trademark name of an individual must be for commercial purposes before they have standing to bring the claim.
1. The P did not have standing because her name was not related to a commercial activity.
vii. Service Marks – service is understood as the performance of labor for the benefit of another.
1. Use is exercised by display in advertisement, sale or offering
2. First use for purposes of securing registration must be in connection with the offering rather than the announcement of the services; must be rendered in commerce.
viii. Collective and Certification Marks
1. Collective Marks: symbol used by members of an organization to identify and distinguish their services
a. i.e. Oceanspray – multiple farms work together under one mark
2. Certification Mark: a symbol of guarantee or certification that the goods or services bearing the mark meet certain criteria or conditions
a. i.e. Certified Fair Trade
b. Designation of Origin – informs consumers that a product is from a specific place