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Law of E Commerce
Temple University School of Law
Peirce, Richard E.

Law of E-Commerce



Trademarks (Tiffany v. eBay)

· Definition: A trademark is a word, phrase, symbol or design, or a combination thereof, that identifies and distinguishes the source of the goods of one party from those of others.

· Getting a Trademark

o Check PTO database for any registered / pending marks

o Do internet search and check for any results that use the desired mark w/in the first couple of pages

o Usually ask attorney to do a comprehensive search

§ Check PTO, state records, domain name registrations, internet references, govt name databases, business-related databases…

· Types of Trademarks—arbitrary/fanciful, suggestive, descriptive w/ secondary meaning

o Arbitrary / Fanciful [strongest]: Nothing to do with nature of goods (ex. Apple computers)

o Suggestive: suggests something about what the product is or how it functions (Timex?)

o Descriptive: identifies characteristic or quality of article/good, such as its color/odor/function/dimensions/ingredients

§ Need secondary meaning to be a valid mark: in minds of consuming public the primary significance of product feature is to identify the source of product (NOT just product itself)

§ Mark only protectable in geographic area where hit has secondary meaning

o Generic: not protectable

· Benefits of Registration:

o Public notice of your claim of ownership of the mark;

o A legal presumption of your ownership of the mark and your exclusive right to use the mark nationwide on or in connection with the goods/services listed in the registration;

o The ability to bring an action concerning the mark in federal court;

o The use of the U.S. registration as a basis to obtain registration in foreign countries;

o The ability to record the U.S. registration with the U.S. Customs and Border Protection (CBP) Service to prevent importation of infringing foreign goods;

o The right to use the federal registration symbol ® and

o Listing in the United States Patent and Trademark Office’s online databases

· Licensing a TM

o Why? To use online, domain name, ads

o Terms you want:

§ Financial Terms – $$$

§ License is non-transferrable

§ Scope – define what the mark is, how it can be used, where it can be used

§ Where products using the mark can be sold

§ Quality control over licensee – reserve a right to inspect goods, approve new products

§ Indemnification

§ Procedures for changing details of the mark

· Linking Issues

o Generally OK

o Client can get in trouble if using someone’s actual mark as the link

o Deep linking (straight to deeper pages) – can get in trouble

o Using the logo as part of the link – want to have permission, don’t want to suggest a relationship / affiliation to avoid infringement

o Don’t want likelihood of confusion as to the source of the goods à infringement

· Defenses to TM Infringement Claims (direct, contrib, dilution)

o Fair Use defenses to TM infringement— Two types:

§ The nominative fair use analysis allows a defendant to use the plaintiff’s mark to describe the plaintiff’s product so long as the goal is for the defendant to describe her own product.(e.g., computer repair shop can use “Apple” to advertise it fixed “Apple computers”)

§ Nominative use also lets a defendant use the trademark of another when no descriptive substitute exists. To constitute fair use….

(1) the product or service in question must be one not readily identifiable without use of the trademark.

(2) the D may only use as much of the mark as is reasonably necessary to identify the product or service.

(3) D must not do anything in conjunction with the mark that would suggest sponsorship or endorsement by the trademark holder.

o First Amendment defense

§ Companies will find it difficult to enjoin websites critical of their goods and services (e.g., through alleging trademark dilution)—e.g., “sucks” websites like that in Bally v. Farber are accorded First Amendment protection.

o Parody defense

§ Using mark to bring to mind the mark being parodied but different enough to avoid confusion

§ Commercial parody will be more difficult to justify than a gripe, mockery, etc

§ Practical: have to ask client if they are prepared to defend themselves in ct, bc pretty likely to be sued

· Direct Trademark Infringement (incl. unfair competition)

· Trademark Infringement under 15 USC §1114

o Deals with registered TMs

o Test (statute) A plaintiff must show: (1) it owns a valid, protectable, and nonfunctional mark, (2) is inherently distinctive or acquired secondary meaning, (3) the defendant uses, produces, counterfeits, copies, or imitates that mark in commerce without the plaintiff’s consent, and (4) the consuming public is likely to be confused with the defendant’s goods or services. 15 U.S.C. § 1114(a).

o Test (application):

§ Is it a protectable mark?

· Arb/Fanciful, Suggestive, Descriptive w/ Secondary Meaning

§ Do you have TM rights (has it been registered)?

§ Do you have priority?

· Rule: first to “use in commerce” has priority

· Cts have held that buying a keyword for your TM

edge or reason to know—Second, if the ISP “continues to supply its serves to one whom its knows or has reason to know is engaging in TM infringement.” [actual or constructive knowledge suffices, and so does willful blindness]

o Not liable for terminated listings (Tiffany), and some contemporary knowledge of which particular listings are infringing or will infringe in the future is necessary to a finding of liability (b/c Tiff failed to prove this, no liability). Tiffany.

o Not liable if video recorder/software has a substantial legitimate use (Beta Max).

· Trademark Dilution

· Federal law allows the owner of a “famous mark” to enjoin a person from using “a mark or trade name in commerce that is likely to cause dilution by blurring or dilution by tarnishment of the famous mark.” (15 USC 1225(c)(1)).

· TM must be a nationally famous mark (i.e., widely recognized by general consuming public of US)

· Dilution by blurring is “an association arising from the similarity b/t a mark or trade name AND a famous mark that impairs the distinctiveness of the famous mark.” It can occur regardless of the likelihood of confusion, of competition, or of actual economic injury. It refers to the whittling away of the established TM’s selling power. FACTORS:

o degree of similarity b/t mark or trade name AND the famous mark [similarity must be SUBSTANTIAL]

o degree of inherent or acquired distinctiveness of the famous mark

o extent to which the owner of the famous mark is engaging in substantially exclusive use of the mark

o degree of recognition of the famous mark

o whether the user of the mark or trade name intended to create an association with the famous mark; and

o any actual association b/t the mark or trade name AND the famous mark

· Dilution by tarnishment is an “association arising from the similarity b/t a mark or trade name AND a famous mark that harms the reputation of the famous mark.” This generally arises when the P’s TM is linked to products of shoddy quality, or is portrayed in an unwholesome or unsavory context likely to evoke unflattering thoughts about the owner’s product.