TRADEMARKS
THE COMPETITIVE MARKET SYSTEM AND THE RIGHT TO COMPETE
A. The Law of Trademarks
1) Historically, considered part of a larger subset of law – Unfair Competition.
a) Free Competition: private companies engage in a rivalry for patronage, based on price, quality of service, innovation, combination thereof, etc.
b) Rationale:greatest benefit to the consumer à lowest prices and greatest motivation for innovation.
c) Direction: left to its own devices, competition in the market would probably not accomplish the greatest benefit to the consumer because it would mutate based on destructive impulses within the system.
i) Anti-Trust Law: guards against collusion and the creation of monopolies à elimination of rivalry on the sly by the competitors themselves.
ii) Unfair Competition Law: competition becomes too rigorous and competitors engage in overly aggressive behavior à misrepresentation to the public, bribery, even physical violence, in order to promote theirs products.
(1) Mostly concerned with behavior that hugs the line between competition on the merits and overly aggressive behavior. [Some behavior falls into the criminal category (hiring someone to kill a competitor’s CEO) and we will not cover that.]
(a) Competition in harmful in nature: every time you gain a customer, you take him away from someone else. (See Schoolmasters’ Case)
(b) Competition is permissible even though it is harmful.
[Too passive] —[Competition on the Merits] —[Too “aggressive”] Anti-Trust——– Legal —————Unfair Competition Domain
UNFAIR COMPETITION INFRINGEMENT OF REGISTERED TMS
15 USC 1114
FALSE DESIGNATION OF ORIGIN
15 USC 1125(a)
2) TM protection can be gained by: (Dual System of protection)
a) Federal Registration
b) Common law/state TM rights
c) Both
3) What is the main purpose of TM law?
a) Right of a consumer to identify a particular good/service
4) Length of a TM monopoly:
a) forever as long as it is being used;
i) why?
(1) Continuous/consistent identification of a product/service
5) 2 major functions of TMs:
a) Reduce the costs that consumers will have for searching for products of quality
b) Encourage quality control [standardization of quality]
B. The Right to Enter Markets and To Compete Fairly
· Malicious competition is hurtful to the consumer, because once T is out of business, B will likely shut down the barber shop and the town of Howard Lake will be left barberless altogether.
o Though there is a benefit from price competition in the short term, the long term deprivation of town residents of a barber will be detrimental.
· Restatement §1: an improper motive does not make competition impermissible. There is too much risk that we will deprive the consumer of important benefits if we look at the motive behind the action.
· “Fair” competition
(1) competition on the merits benefits consumers
(2) As long as there’s some reasonable modicum of personal advancement, will allow
C. Interference with Contractual Relationships and the Right to Compete
1) Intentional Inducement of Breach of Contract
a) An action for tortuous interference w/ a K requires an actual breach, failure to perform or termination of the K
2) Restatement §766
a) Interference w/a K is actionable only when it is “improper”
3) Restatement §767 “Improper” Interference:Consider the following factors to determine whether an interference has been proper or not à
a) The nature of an actor’s conduct – is there physical violence, etc.
b) The actor’s motive – political, malice, racial animus, greed
c) The interests of the other with which the actor’s conduct interferes – usually economic in contracts
d) The interests sought to be advanced by the actor
e) The social interests in protecting the freedom of action of the actor and the contractual interests of the other
f) The proximity or remoteness of the actor’s conduct to the interference
g) The relations between the parties.
4) Restatement § 768(2)à The fact that one is a competitor of another for the business of a third person does not prevent his causing a breach of an existing contract with the other from being an improper interference.
5) Intentional Interference with Prospective Contractual Relation:
a) A competitor may interfere with another’s contractual expectancy by picking the deal off for himself as long as he does not use wrongful means. The fact that Brown was seeking his own profit, and not simply to injury Doliner, is sufficient. [Doliner v. Brown]
b) A competitor may be liable for inducing breach of an existing K even though the means used may primarily be persuasion by offering a better economic bargain w/knowledge of the existing K
i) Where theres no existing K but merely the reasonable expectancy of a K, public interest weighs in favor of effective competition
(1) In this situation, truthful pers
1) Possible Defenses:
a) Abandonment: a trademark is only good as long as you use it à if a party can demonstrate that another party has abandoned use of the mark, they may be able to get rights to it.
b) Just Advertising: Δ company can claim that Π was just advertising the product whereas they, Δ, were making actual commercial use. However, use in advertising can survive this challenged if sufficiently detailed and maybe if there’s a temporal link. {I.e., watch for our movie coming out June 1st.} (See also comment to Restatement §18).
2) Policy Considerations
a) Investmentà Companies invest a lot into the branding of a product before the product ever hits the market.
b) Noticeà without notice of who else is working with the same mark, companies stand to lose money on their investments à disincentive to business.
c) Registration à Trademark Law promotes registration so as to prevent loss of investment due to lack of notice.
d) Timingà the user who quickly gets products to consumers justifies his ownership right by not sitting on the mark.
3) Traditional Common Law TM Principles
a) TM = symbol adapted and used by a merchant to identify goods and distinguish from articles produced by others
b) Ownership
i) Requires combo of appropriation AND use in trade
ii) Neither conception nor advertising alone establish TM rights at common law
iii) Ownership accrues when goods bearing the mark are place on mkt
iv) 4 prong test to establish ownership:
(1) bona fide use
(2) of the mark
(3) in connection w/the actual goods that will be sold using this TM
(4) to the public/consumers in commerce
4) “Use”
a) The question of use adequate to establish appropriation remains one to be decided on the facts of each case
b) Use must be sufficiently public to identify or distinguish the marked goods in an appropriate segment of the public mind as those of the adopter of the mark
c) 2 components of USE:
