Foundations and Purposes of Trademark & Unfair Competition Law pp. 3―40
Why protect brands?
· Brand reputation is diminished if we allow people to wrongfully use a trademark without permission
· Illegitimate products can harm a company’s reputation
· Consumer protection: the danger to consumers is they may be reliant on a particular brand and there would be no continuity.
v Brand image:
Ø Brands conjure images
· Overlap of brand names: DELTA: power tools, airplanes, faucets
· Trademark names are not plenary and can be reused if there is no potential for confusion between the products.
v Government intervention:
Ø If other any manufacturers could use brand names at will, there could be a race to the bottom and the consumer would suffer.
II. Course Mechanics
Ø What limitations should trademark holders have?
Ø The law tries to protect the signals that trigger consumer recognition of a particular brand.
Ø Confusion test:
Ø Trademark infringement 70% of class
III. Justification for Trademark Protection
IV. ELVIS: Likelihood of Confusion (5th Circuit)
When we evaluate the test for likelihood of confusion, when viewed in light of a parody, they have to make sure that the use of the mark is necessary of the parody.
Elvis Presley Enterprises, Inc. v. Capece27
Court: (S.D. Tex. 1996), rev’d (5th Circ. 1998)
Π (Elvis Presley Enterprises)
· A TN corporation formed in 1981
· EPE is the assignee and registrant of all trademarks, copyrights, and publicity rights of Presley estate
· None of the marks are service marks for the restaurant and tavern business
· EPE runs a mail order business, two restaurants and an ice cream parlor
· EPE announced to open an Elvis Presley night club in 1997
· April 1991 Capece opened nightclub called Velvet Elvis
· The name was meant to be associated with lava lamps, velvet paintings, and kitsch
· 1992 PTO issued Capece a federal trademark for the service mark Velvet Elvis
¨ In 07/1994 EPE sent Capece a cease and desist letter threatening legal action over the use of Elvis in the name
¨ The new bar opened in 08/1994 which did not focus completely upon Elvis
¨ Pictures and references to Elvis Presley were used in ad’s promoting the establishment in 1995, with phrases such as the “King Lives, Viva la Elvis, Elvis has not left the bldg.”
¨ the focal point of the bar is Elvis
¨ EPE has the right to license the commercial use of Elvis Presley’s name, image, and likeness
¨ π filed suit against Δ for i) unfair competition, ii) trademark infringement, and ii) dilution under the common law and the Lanham act, and for iii) infringements of its common law and statutory right of publicity
¨ maintain the π is a victim of suspicious minds and argue the use of its service mark will not cause confusion of the identity of the bar’s owners, sponsors, or affiliates
¨ they claim confusion will be quashed by the customer’s appreciation of the parody
1) Unfair Competition and Trademark Infringement
§ Issue: Has the Δ used “The Velvet Elvis” service mark and the image, likeness, and other indicia in a manner that would cause confusion in the mind of the ordinary customer as to the source, affiliation, or sponsorship of their bar.
§ Does the Δ use of a mark and image create a “likelihood that an appreciable number of ordinary prudent purchasers are likely to be misled, or confused as to the source of the goods in questions.”
§ rule: The governing standard for common law trademark infringement and unfair competition is the same “likelihood of confusion” test applied to claims brought under the Lanham Act. The 5th Circ. uses the following factors to determine if the mark or image causes a likelihood of confusion. (The factors are not dispositive)
¨ the type of trademark alleged to have been infringed
¨ the similarity of design between the two marks
¨ the similarity of the products or services
¨ the identity of the retail outlets and purchasers
¨ the defendant’s intent
¨ evidence of actual confusion
Application to Bar and Decor:
· The type of trademark alleged to have been infringed: Elvis is a strong mark, but Velvet Elvis means something different than Elvis in the minds of the consumer. Velvet connotes tackiness, cheesiness and parody
· The similarity of design between the two marks: A subsequent user may not avoid likely confusion by appropriating another’s mark and adding descriptive or non-descriptive matter to it. There is an exception when the rules convey two entirely different meanings. There is no connection between Elvis nor the image the bar portrays.
· Similarity of the products or services: The parody of the Nightclub distinguishes it from any establishment EPE currently operates or has plans to operate in the future to prevent confusion as to the bar’s source or origin.
· Defendant’s intent: Capece only intended to make a parody, not infringe
· Actual confusion: DECIDING FACTOR- EPE has some evidence, once fans went inside of night club, they realized it was not affiliated with EPE.
· There is a fundamental difference between trademark infringement and unfair competition
· Trademark law is based on narrow principal compared to unfair competition, which seeks to provide the holder of a trademark the exclusive right to use a phrase, word, symbol, image, or device to identify and distinguish his product.
· One can be guilty of competing unfairly without having infringed
Application to Advertisements:
§ The court held that the ads clearly lacked a recognizable connection with the Δ parodic purpose.
§ Pictures and images of Elvis leave the distinct impression that the bar’s purpose is to pay tribute to Elvis Presley or to promote the sale of EPE related products.
§ The style of advertising did confuse consumers as to the bar’s sponsorship.
§ The Court concluded that the Δ’s ad’s published between 1992-1995 were confusing and misleading.
Rule: the lessening of the capacity of a famous mark to identify and distinguish goods or services, regardless of the presence or absence of (1) competition between the owner of the famous mark and other parties, or (2) the likelihood of confusion, mistake, or deception
§ Blurring (the gradual whittling away or dispersion of the identity and hold upon the public mind of the mark or name by its use upon non competing goods) or tarnishment. Blurring did not occur.ie. barnum, and baileys, slogan “the greatest show on earth”sued Utah, “The greatest snow on earth”
§ Tarnishment (the mark becomes associated with unsavory things). People are not confused, buy tricked out at the way the mark is used.
¨ The Court found that parody is only relevant when it is essential to the joke, the unsavory décor would be ass
mark infringement claim first in combination with an unfair competition claim (this is good if it is determined by the Court of Equity and you can appeal to the courts sense of fairness).
How to make out a claim for trademark infringement:
· There are two ways to sue for trademark infringement: sue for infringement of a registered trademark or sue for infringement of an unregistered mark.
If you make a claim for unfair competition:
It must not conflict with copyright laws
It must not be in the public domain (ex. One cannot sue someone for using Beethoven because it is in the public domain).
It cannot be something that has been around for a long time
Descriptive terms need secondary meaning.
Color – the Supreme Court held that anytime there is a color there has to be secondary meaning because colors are too valuable.
Fanciful terms do not need secondary meaning because they are unique enough to the manufacturer ex. Orbitz.
Certain marks are not allowed to be registered if they are scandalous – the moral component of trademarks and unfair competition.
Section 2 of the Lanham Act describes provisions where trademark protection may be denied
Section 14 of the Lanham Act describes provisions where trademark protection may be cancelled
CONSTITUTIONAL BASIS FOR TRADEMARK LAW
The Supreme Court found that congress did not specify its actions well enough for trademarks to fall under the commerce clause and held its use in trademark laws unconstitutional.
The government has two constitutional bases to regulate trademarks:
At the time the 1870 SC said that congress cannot regulate interstate. That may be more lenient today.
Intellectual Property clause
The 1870 SC said it does not fit the test. p.5 – it must not be a sudden invention. Has to be creative and intellectual discovery ex. Light bulb inventor and not like Paris Hilton’s THAT’S HOT trademark.
The SC said the trademark act of 1870 was unconstitutional.
Read the two clauses and see if trademark falls under them. Should the court have read them more broadly?
We want to give people legal protection, but not too much – to promote competition.
Ex. Music, generic form or patent drugs, parody or satire, to promote social good (providing valuable service or information to the public).
Definition – the strength of a mark – sets in the consumers mind a certain association with a particular business or person that produced that mark.
Types of trademark
1. Arbitrary or fanciful – ex. Kodak – fanciful / Apple – arbitrary.
2. Suggestive – Coppertone – suggest rather than describe – requires a little imagination to think what the product is.
3. Descriptive – identify a characteristic or quality of the product ex. Aloe or vision center.
4. Generic – whole wheat
Explanation of factors
· 1 and 2 do not require secondary meaning; 3 requires secondary meaning.