Trademarks and Unfair Competition Outline

Trademarks & Unfair Competition – Spring 2007

Competitive Market System & Right to Compete
A. Ultimate goal: to facilitate free but fair marketplace competition for the benefit of the public
B. Origin: protecting business goodwill from deceptive competitor’s behavior

Goodwill = reputation, consumer loyalty
Modern: protect consumers

C. Trademark – any word, name, symbol, device, or combo thereof that identifies the source of a business’s tangible goods

an indication of source of origin.
allows consumers to make certain assumptions about the product in order to make meaningful choices – Posner says TMs lower consumer costs by providing a reliable guide to quality
rewards producers of quality products
consumer confusionà

i. injury to goodwill
ii. injured/misled consumer
iii. injury to free competition (no effective exercise of consumer choice)

TM rights : to prevent others from using similar mark that causes likelihood of consumer confusion as to the source of the products

i. Remedy: injunction

CAN BE:

i. Descriptive (crunchy, Texas, easy)
ii. Arbitrary – (Diamond Nuts)
iii. Fanciful (Xerox)

CAN TAKE FORM OF:

i. Words
ii. Drawings
iii. Scents
iv. Sounds
v. Packaging
vi. See Lanham § 45

See Lanham § 45 for definitions of different marks
Tradename – name of company or business, sometimes the same as the mark

i. Cannot be registered, but may still be protected under §43(a)

Tradedress – viewed differently than trademark; can be the packaging or the effect of the packaging

i. overall impact, non-functional aspects of a product
ii. i.e. restaurant : combination of décor, servers’ uniforms, etc.

Service Marks – same as trademark, but for intangible services (insurance, restaurant, transportation)
Certification Marks – marks owned by one party and used by others to certify that their goods/services have some particular quality or characteristic (Good Housekeeping seal of approval, union marks applied to products by union members, states – i.e. Florida orange juice

i. Different from trade/service marks where:
1. Owners prohibited from using on own goods/services
2. Purpose is not to indicate source, but quality
3. Tight rules on use of mark when federally registered (Lanham § 14(5))

Collective Marks – same as trade/service mark, but owned by a collective (coop, association, organization)

i. Identifies source as a group rather than as an individual (i.e. sorority)
D. Lanham Act – Congress built on C/L concepts

Commerce Clause – Congress enacted Lanham Act pursuant to commerce power, so only applies to those marks used in interstate commerce (this is pretty easy to show)
Registration § 32(a) – provides owner with benefits; expands those at C/L

i. US Patent & Trademark Office (PTO) runs the principal register
1. examiner gets an application and decides one way or the other
2. there can be an appeal to the Trial & Appeal Board and then can be taken to appeals in Washington D.C. Circuit Court

Unregistered § 43(a) – gets cause of action; not as broad protection as for registered, but provides a federal forum for enforcement and remedies

Acquiring Trademark Rights
A. Jurisdiction
a. U.S. has a “dual” system of TM law rights under both federal law (Lanham Act) and state common law/statute
i. Jurisdiction:
1. most suits brought in fed ct
a. Registered mark: in fed ct pursuant to Lanham
b. Unregistered: only state C/L rights, but may bring action in 3 ways:
i. Lanham – forbids use of false designation of origin
ii. supplemental jx
iii. diversity jx
2. state ct
a. statute
b. common law
c. Lanham
B. Common Law Trademark Obtainment & Protection
a. Both ownership and federal registration are based on use in trade
i. Rationale: do not want people to accumulate names w/out using them to the exclusion of businesses that would use them in productive ways
1. otherwise larger companies could accumulate names without use and create barriers to entry; the idea that limited number of words
2. protecting associations with the word/symbol: there is no reason to protect the consumer association with the mark and source until the mark is actually used
ii. Most countries will register a mark and recognize ownership in that mark based on registration, but we require USE!
b. C/L “First in time, first priority”: For inherently distinctive marks, ownership results from use in trade where the first party to use the mark in trade has first priority
i. Example: Blue Bell (5th Cir. 1975) – “token use” of mark (i.e. shipment to managers) is not sufficient. Need to sell to public (intended ultimate consumers) to demonstrate use – gives the public the chance to associate the mark with the product.
1. internal shipments not enough
ii. Use in commerce = bona fide use of mark in ordinary course of trade, not merely to reserve a mark.
1. Affixation requirement – use requires mark to be placed in items (or documents, if impracticable). For services, mark is used when mark used in sale/advertising or services and the services are rendered in commerce in more than one state.
iii. Ongoing/Continuous – use must be ongoing and continuous
1. use need not have gained wide public recognition, Blue Bell
2. In Allard, the use enough where it was continuous but low in volume (6th Cir. 1998, held that using in solicitations of business in order to complete genuine business transactions was sufficient)
a. Compare to Lucent (3rd Cir. 2000), where facts similar, but 3rd Cir. said insufficient. Promotional efforts were not sufficient. Lucent 4-part test:
i. Volume of sales
ii. Growth trends in the area
iii. Number of people actually purchasing versus potential customers, and
i