Summer 2011 – Prof. Politano
Trademark & Unfair Competition
Class 1: Use is key to trademark protection!
Overview –
Important in mass produced goods that are fungible and produced cheaply, serves to distinguish amongst like goods
Sounds in the tort of Fraud as opposed to patent and copyright which sound in trespass and are constitutionally protected
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
Key Take-Aways:
* US Trademark Law is common law based upon use, statutes are solely procedural; the greater the use the stronger the right.
* 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
Registration System – 2 Reasons: (uspto.gov)
1. Confers procedural advantages (pp. 177-9) intended to encourage people to use the system to file federally
2. Allows users to see if others have claim to a brand based on an earlier filing date
Intent-to-Use Applications: allows individuals to reserve trademarks for a limited period before they must actually use the mark
* Constructive Use commences on the day of filing – rights will be protected from that date against all other claims (inchoate right)
Ch. 1 Concepts of Trademarks and Unfair Competition
A. Privilege to Compete – Restatement 3d, Unfair Competition: One who causes harm to the commercial relations of another by engaging in a business or trade is not subject to liability to the other for such harm unless:
a. The harm results from acts or practices of the actor actionable by the other under the rules of this restatement relating to:
1. Deceptive marketing (§2)
2. Infringement of trademarks and other indicia of identification (§3)
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
b. 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
c. 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
1. INS v. Assoc. Press (1918) – Δ was benefitting from the work and investment of another – the 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
a. Policy – one party should not benefit solely from the investment of another’s resources, this practice eliminates motivation to make such investments
2. Chaney Bros. v. Doris Silk Corp. (1930) – the Δ had copied a seasonal clothing design pattern and undercut the π’s price after the π invested resources to discover the best-selling pattern – the court denied the π relief because there was no existing common law or statute protecting their interest in the pattern
a. Policy – job of legislature and patent office to determine what constitutes an invention that should be protected
3. Sears & Roebuck v. Stiffel (1964)- π created a lamp design and began selling it, Δ began selling an identical design with their own label at a cheaper rate and π sued for damages and injunction, the state court ruled in favor of the π, but the federal courts overturned on several grounds:
a. 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
b. 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
4. 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
a. 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
1. 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
5. Bonito Boats v. Thunder Craft Boats (1989) – 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
a. Supreme Court once more ruled that state unfair competition laws cannot conflict with federal patent principles and laws
1. State statutes must not inhibit the public’s ability to exploit ideas that the patent system mandates shall be free for all to use
2. Copyright laws passed by Congress can extend limited protection to industrial designs
b. 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
1. Non-functional aspects that have acquired secondary meaning as to the source of their production are protected
c. Subsequent to this decision Congress passed DMCA provision: Vessel Hull Design Federal Statute was passed accomplishing the same as the plug-mold statutes
6. p. 11 n. 2 – TrafFix – functional things cannot be trademarked only patented, trademarks are indefinite and easily obtained so allowing them to protect functional things stifles competition
7. p. 11 n. 2 Dastar – Designation of Origin refers to goods not intellectual or intangible property
8. NBA v. Motorola (1997) – Motorola was providing a service that gave basketball scores, NBA sued for misappropriation based on INS – Court established factors for a claim of Misappropriation:
a. π generates or gathers information at a cost
b. the information is time-sensitive
c. the Δ use of the information constitutes free-riding on the π’s effort
d. the Δ is in direct competition with a product or service offered by the π
e. 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
B. 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
1. 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
a.
See p. 20 for Table
Patents protect new and useful inventions for a specified period of time; challenging criteria:
1. Novel: not previously known to others, not in use by the public, and not described in print by publication or patent
2. Non-Obvious: a person having ordinary skill in the relevant art would not have known it
3. Utility: must have a useful purpose, not be frivolous or immoral, and must actually work
b. Copyrights protect original literacy and artistic expression, protects expression of ideas, not the ideas themselves
c. Trade Secrets protect valuable secret information
d. Multiple forms of protection can apply to a thing
2. Prior to the Lanham Act (1946) trademark protection was a common law doctrine that was acquired only by use, so if a company labeled their good something and sold it under that label the label would be protected where that good was sold
3. Trademark Cases (1879) – The property right of trademarks is a common law doctrine which Congress has no power to regulate because it is not granted in the Constitution or Commerce Clause (congress is authorized regulate interstate and foreign commerce)
4. Hanover Star Milling Co. v. Metcalf (1916) – Common law of trademarks is a part of unfair competition law, it is a property right in the sense that a man’s right to the continued enjoyment of his trade reputation and the goodwill that flows from it is protected from unwarranted interference by others
a. To warrant protection a mark must have been appropriated to a particular species of goods and those goods must have been circulated with the mark upon them
5. Stork Restaurant, Inc. v. Sahati et al. (1948) – the π operated a NYC night club named The Stork Club since 1934 that had achieved international notoriety through large monetary investments and was depicted in pop culture and frequented by celebrities and press, Δ purchased a bar by the same name in San Fran in 1945 (in operation since ’43) with very different type of experience, π sued for trade name infringement
a. Dilution of Goodwill Doctrine – where there is no direct competition between the parties confusion of source may be defined as a misleading of the public by the imitation of an attractive reputable trademark bot for the purpose of diverting trade but rather for the purpose of securing for the imitator’s goods some of the goodwill, advertising, and trade stimulation of the trademark
1. Prevented because the good or ill repute of the one type of good is likely to be visited upon the other.
2. Disparity in the size of the respective businesses will not bar relief under this doctrine and geographical distance does prevent confusion
3. Actual loss of trade or damage to reputation need not be shown to warrant injunctive relief
6. Champion Spark Plug Co. v. Sanders (1947) – π was a manufacturer of spark plugs and Δ was engaged in refurbishing and selling the π’s sparkplugs without relabeling them beyond a stamp that denoted ‘renewed’, π sued for injunction under tradem
come to identify and distinguish the goods; to indicate their source much in the way that descriptive words on a product can come to indicate a product’s origin.
b. Functionality Doctrine: prevents producers from controlling a useful product feature without a patent
1. So long as the color is not functional, is not essential to the use or purpose of the product or affect its cost or quality, it may be a trademark
9. Trademark Trial and Appeal Board (TTAB)
a. To receive a trademark must file an application of Intent to Use or Use for protection
b. After initial review the application is published and members of the public have 30 days to oppose registration of the mark (Notice of Opposition)
c. Applicant then has 30 days to reply and once they do so they have 6 months to submit an answer to the court
d. Opposing party then has 2 months to answer and the process continues
e. Process can last a year and a half or more prior to either settlement or TTAB ruling
f. Appeals go to the Federal Circuit Courts, or to a District Court where it is heard de novo
B. Distinctiveness – the public’s recognition that a mark identifies a single source of the product
1. Abercrombie & Fitch Co. v. Hunting World, Inc. (1976) – Terms in trademark are typically placed into four categories:
a.
Increasing Scale of trademark-ability
Terms can move amongst the 4 categories based on their use
Generic – never trademarked
b. Descriptive – a term that conveys an immediate idea of the ingredients, qualities, or characteristics of the good – very rarely trademarked if a description has acquired secondary meaning it (can become distinctive)
c. Suggestive – a term that requires imagination, thought and perception to reach a conclusion as to the nature of the goods – typically trademarked (always distinctive)
d. Arbitrary/Fanciful – invented for use as trademark or applied in an unfamiliar way – always trademarked (always distinctive)
2. Arbitrary Fanciful or Suggestive Terms are often referred to as technical trademarks requiring no secondary meaning
3. Automatic Trademark Status for Technical Trademark Terms lies for 3 reasons:
a. The nature of the term indicates that the public will inevitably perceive it as a trademark
b. One provider’s appropriation of a non-descriptive term for use as a trademark does not disable competitors from describing their goods or services
c. First users, and potential competitors, require certainty regarding the trademark status of the term. Requiring a certain level of recognition in consumers of a brand would create uncertainty in manufacturers because the point of achievement would be hard to show.
4. In The Matter of the Application of Quik-Print Copy Shops, Inc. (1980) – Descriptive terms are desirable to all producers for use in explaining their good or product; this is often demonstrated by multiple parties in the same industry using the same terms, etc.
5. in re Chippendales USA (2009) – Test for distinctiveness:
a. when the mark was first adopted was it a common basic shape or design
b. was the mark unique or unusual in the particular field of use
c. was the mark a mere refinement of a commonly-adopted and well-known form of ornamentation for a particular class of goods or services viewed by the public as a dress or ornamentation for the goods or services
6. in re Vertex Group, LLC (2009) – where consumers are not predisposed to equate a sound with the source of the product that emits them the sound cannot be inherently distinctive
7. Lahoti v. VeriCheck (2009) – a mark may lack distinctiveness even where it does not immediately describe the gods or services in connection with which it is used
a. Whether, when the mark is seen on the goods or services, it immediately conveys information about their nature
b. Evaluation must be within the industry context, not in the abstract
c. Composite parts should be viewed separately before determining how consumers will view the mark as a whole
