TRADEMARKS/UNFAIR COMPETITION
Prof. Margreth Barrett, Fall 2011
INTRODUCTION
Purpose: permits consumers to identify the source of goods and services and to ensure that consumers are able to rely on marks in exercising their preferences
Philosophy:
Benefit for consumers – Enables consumers to efficiently identify, distinguish and infer certain information about goods/services (e.g. quality consistency). It lowers consumers’ search costs. It encourages business to invest in quality and allows consumers to assign blame for poor quality while rewarding good quality through repeat patronage.
Benefit for businesses – TM helps create and protect business good will (the business’s image, good reputation, and expectation of repeat patronage). It also creates a COA for TM infringement.
Protection for: 1) the purchasing public 2) the TM owner – who has spent money, time, energy in presenting to the public the product; protection from pirates and cheats
Hanover Star Milling Co.—TMs are meant to protect business goodwill. Business goodwill exists when consumers associate a particular product with a particular source. Once the mark ceases to be used as a source indicator or if the public ceases to identify it as such, the mark owner loses its protection. TM is not the subject of property except in connection with an existing business
No real difference between TM and unfair competition. Unfair competition is an umbrella term that encompasses several related legal doctrines all aimed at prohibiting improper conduct in the marketplace
LANHAM ACT builds upon CL of unfair competition:
i. Provides system of registry for marks – Registering a mark expands the scope of protection. It provides rights in broader geographical areas and gives a legal presumptions of trademark validity
ii. Provides a federal cause of action for infringement of unregistered TMs. LA §43(a)
1. It does not preempt state CL causes of action. (Both can be brought in fed court)
2. But federal remedies tend to be more generous than state ones
iii. Federal circuits do not have exclusive jxn over TMs
iv. Only those indications of origin used in interstate commerce are eligible to receive LA benefits and protections (b/c Congress relied on commerce power when enacting LA)
TM’s Relationship to Copyrights and Patents
Patents protect new and useful inventions
Sears v. Stiffel—Sears copied Stiffel’s pole lamp design, whose patent had expired. b/c the pole lamp was no longer protected under a patent, the court held that others could not be barred from copying it. (Had the court prohibited the copying of the lamp under unfair competition laws, the court would have been interfering with Congress’s intended regulatory scheme for patents)
Compco v. Day-Bright Lighting—Others can copy unpatented and un-TMed goods, but they must label and package them so as to clearly identify its source
Copyrights protect original literary and artistic expression
Trademarks are not monopolistic grants
Prestonettes v. Coty—If you are not causing consumer confusion and thereby destroying the owner’s goodwill, you can copy the essence of a product
Similarity: All aim to protect against free-riding. Specifically in TM law, a mark owner will invest $ in creating consumer goodwill. If someone misappropriates the mark and causes consumer confusion, it could potentially destroy that investment or diminish any incentive to make future investments
INS v. AP—General CL rule is that a person may copy a product that is not protected by a patent or copyright. A narrow exception, however, exists when a company 100% free-rides off the investment of another. In this case, INS would simply copy AP’s field reports, without sending any reporters themselves, to write their own news stories. SCOTUS was irked by this “unfair competition” practice of free-riding and asserted a quasi-property right in the dissemination of noncopyrightable information (news stories). SCOTUS granted AP protection against INS during the period of initial dissemination of the field reports. Once the reports were written up as news stories and published, it was free for all to copy. Very narrow holding and specific to facts of INS
SPECTRUM OF “INDICATIONS OF ORIGIN”
A. MARKS
1. 4 Types of Marks
a. Trademarks
a. Any word, name, symbol or device, or combination there of which is used to identify or distinguish one person’s goods from another’s and to indicate the source of the goods. LA §45.
b. Under CL, TM only applied to inherently distinctive (arbitrary, fanciful) terms. Under LA, Congress got rid of all the distinctions and defined the term TM to encompass all distinctive marks that were used to identify or distinguish goods
b. Service marks
a. Essentially same as TM, but are used to identify services instead of products
i. e.g. Greyhound
b. Service is usually construed broadly as “the performance of labor for the benefit of another”
c. A seller of goods is not engaged in a separately recognizable service when it engages in actions that are expected or routine in connection with the sale of its own goods. (i.e. cannot be in service of promoting, selling, or advertising of own goods, must be in service of promoting goods for others)
i. Test: is the service normally expected and routinely rendered in furtherance of the sale of goods? If yes, insufficient to support registration of a service mark
c. Certification marks
a. Word name symbol, device used by person other than the owner to certify region, mode of manufacture, quality, accuracy or some other characteristic of such person’s goods. Can also be used to certify that a member of a certain union or organization performed the labor on the good
b. Does not indicate the source of the goods. This sort of mark is owned by one person and used by others to certify that the goods/services have specified characteristics and qualities
a. LA §4 provides that CM are registerable in the same manner and with the same effect as trademarks.
c. LA §14 imposes stringent requirements on CM: Owner must exercise control over other’s use of the mark, refrain from using on the mark in connection with any of its own goods, prohibits use of mark for purposes other than certification, and must not discriminately refuse to certify goods that meet levels for certification. Failure to comply leads to cancellation.
d. Collective marks
a. TM or SM used by members of cooperative, association or other collective group or organization. It is a mark used to indicate membership in union, assn, etc.
i. Collective TM: used by members to mark their products to distinguish from non-members
ii. Collective membership mark: mark used for indicating membership. Neither the organization nor its members use the mark to identify and distinguish goods/services (e.g. sorority)
2. Composition of Marks
a. Mark must be used in a way that creates a separate
icate source, concerns about anticompetitive effects of making LA protection for product features readily available
iii. When is a design inherently distinctive? Wal-Mart v. Samara Brothers
1. Product packaging trade dress v. product feature/design trade dress
a. Product packaging trade dress – like a TM, it is a source identifier
b. Product design trade dress – renders the product itself more useful or aesthetically appealing. In cases where the purchase implicates a utilitarian or aesthetic purpose, rather than a source identifying function, it is appropriate to require proof of acquired distinctiveness
i. Color will always need secondary meaning (Qualitex)
c. When in doubt as to whether something is product packaging or product feature, it will be assumed to be product feature
iv. Must be able to articulate the design elements that comprise an alleged trade dress to bring a product design trade dress claim (obvi – Hammerton v. Heisterman)
v. Paddington – common industry designs are not protectable. Design will be deemed generic. Descriptive trade dress designs are also not protectable sans secondary meaning. But, if overall trade dress is arbitrary, fanciful, or suggestive, it is inherently distinctive despite the incorporation of descriptive or generic elements
vi. Example: soda can = common industry design. Coke glass bottle = distinctive
The features of the trade dress are non-functional. TrafFix. (Functionality Doctrine)
Functionality Doctrine
Functional features of products / trade dress cannot be protected
Functionality doctrine tries to balance the federal right to copy v. interest in avoiding consumer confusion. It also exists b/c patent law, and not TM, is the principle means of providing exclusive rights in useful product features
To overcome presumption of product features being functional, person claiming trade dress rights in these patented product features has the burden of showing that the feature is not functional – e.g. by showing that it is merely an ornamental, incidental, or arbitrary aspect of the device (or show that secondary meaning hasn’t been acquired a la Walmart)
2-Part Test for functionality
i. Is the feature (or set of feathers) essential to the use or purpose of the article, OR does it affect the cost or quality of the article? Inwood Labs
1. If yes, then product feature is functional and cannot be the subject of trade dress protection.
2. If no, then court must apply the Qualitex “competitive necessity” standard
ii. Would the exclusive use of the feature put competitors at a significant non-reputation related disadvantage?
1. If so, then there is “aesthetic functionality,” and again, the feature may not be protected
iii. Inwood’s standard for essential
