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Trademark
University of Illinois School of Law
Maggs, Peter B.

THE COMPETITIVE MARKET SYSTEM AND THE RIGHT TO COMPETE
1. Role of Laws on Unfair Trade Practices and Consumer Protection in the Econ System
a. The Right to Enter Markets and To Compete Fairly
i. Existing Concern Viewpoint
1. The new entrant seems guilty of “unfair” competition particularly if he cuts prices to gain entry
ii. Consumer, Public Interest, and New Entrant Viewpoint
1. Its just fair competition
2. Step 1: Entering into a market is a fair tactic
a. The Schoolmaster’s Case(1410)— D opened a new school in town and undercut P’s prices
i. Held: The new entrant benefits the people so his action is not punishable
1. If case goes the other wayàMonopoly
2. MonopolyàReduced Production and Social Polarization
3. Step 2: Was there an intent to injure?
a. Schoolmaster’s Case – okay
b. Tuttle v. Buck(MN 1909)—Case outdated—D, a rich banker, started a barber shop for the sole purpose of putting P out of business, undercut prices by not charging rent and made false and malicious accusations about P
i. Held :Motive is material even if the act alone is lawful
1. Use of one’s property for needs and desires is subject to limitations
a. Must abstain from willful injury
b. Must respect property of others
c. Must use due diligence to avoid causing harm to others
2. Maggs – incorrect decision
4. Step 3: Is the injurious activity in furtherance of a commercial activity?
a. Keeble v. Hickeringill(1706)—Unfair Tactic—D fired guns to scare off wild fowl and deprive P of profit—Lawful business is entitled to freedom from unjustified and unwarranted interference by another
i. A competitor would be entitled to shoot guns; even if it caused injury
ii. What about animal lovers?
b. Restatement (Third) of Unfair Competition § 1 Comment C
i. Distinguishes “good faith” competition from “simulated” competition – the distinction is not practicable.
ii. Courts are quick to find a commercial motive even when there is genuine ill will
1. B/c public benefits are derived from competition despite ill will
iii. Liability is determined by analysis of business methods employed by the actor not by the actor’s motivation – evidence of ill will may justify close scrutiny of actor’s methods
5. Step 4: Is the act an interference with a contractual relationship?
a. Elements of intentional interference with contract (WY)
i. Existence of a Contract
ii. Defendant’s knowledge of such
iii. Intentional and improper interference inducing or causing a breach
iv. Damages
v. § 766A—“One who intentionally and improperly interferes with the performance of a K (except a K to marry) b/w another and a 3rd person, by preventing the other from performing the K or causing performance to be more expensive or burdensome, is subject to liability…
1. Maggs – read in “substantially more”
2. De minimis non curat lex: the law does not care for trifles
3. Animal protestors would be okay – 1st amendment rights; competition okay
b. Intentionally causing a 3rd person not to K or continue an existing terminable at will K is OK if:
i. The relation concerns a matter involved in competition; (must be a competitor)
ii. No wrongful means employed;
iii. It doesn’t create or continue unlawful restraint on trade; and
iv. The purpose is at least partly to advance his interest in competing
1. Maggs says this part is on its way out
v. § 768
c. One who intentionally causes a 3rd person not to K with another in order to influence the other’s business policy is not liable if:
i. Actor has economic interest in matter he wants to influence;
ii. The desired policy does not unlawfully restrain trade or violate public policy; and
iii. The means employed are not wrongful
iv. § 771
d. Competitor may be liable for inducing breach of known existing K even though the inducement may be a better deal if intentional and improper means are employed
i. §766
ii. Lumley v. Gye(1853)—D induced opera singer to breach K w/ P by offering her more money, K contained an exclusive performance—P wins
1. Correct under § 766 b/c §766 doesn’t insulate competitors
iii. Hannigan v. Sears(7th Cir 1969)—P, a distributor, had a K with a manufacturer, D knew of K, but threatened not to buy anything from manufacturer if he didn’t sell directly to D, cutting out P, P and manufacturer modified the K and both got less
1. D wrongfully and intentionally interfered
2. It didn’t matter that the K was modified and not breached b/c the effect was the same
3. Maggs doesn’t like it – opens up a huge can of worms
e. Intentionally and improperly interfering w/ prospective K is subject to liability whether the interference is
i. Inducing or causing 3rd person not to or continue in prospective relation or
ii. Preventing the other from acquiring or continuing the prospective relation
iii. § 766B
iv. Doliner v. Brown(MA Appeals Ct 1986)—Doliner found property to buy, agreed on purchase price and terms, he sought out Brown for financing, while he was waiting for financing, the owners broke off negotiations and sold to Brown under the same terms
1. Competi

to fruition – gamble
ii. Attack an intent to use by saying they never intended to use or that they used the mark before the ITU was filed
1. Commodore Electronics v. CBM (TM App Bd 1993)
a. No documentary evidence – should have adopted a business plan
iii. When the ITU mark is examined, it might be to early to tell if the mark will be descriptive – §2(e) TM Act
1. One case said you had to wait and see how it was used another said it would be improper (SPLIT)
3. Step 3: What protections does the Act give a TM holder?
a. Registration gives the exclusive right to use – 1115(a) & (b)
b. Under the Latham Act, D’s have constructive notice of P’s mark – §1072
i. No good faith and lack of knowledge defense
4. Step 4: Is the mark being used concurrently in the same geographic market? (SPLIT)
a. Marks may be used concurrently in the same location if:
i. Dawn Donut v. Hart (2nd 1959) (majority)
1. There is no confusion as to the parties – §1114
2. Senior TM user has no imminent plans to expand into area
a. Normal only in the likely course of business
3. Not treating just like a property right
ii. Circuit City v. Carmax (6th 1999)
1. Likelihood of entry into a geographic market is just one of 8-factors to be considered when trying to assess the likelihood of confusion
a. Strength of the senior mark; relatedness of the goods or services; similarity of the marks; evidence of actual confusion; marketing channels used; likely degree of purchaser care; the intent of defendant in selecting the mark; and likelihood of expansion of the product lines.
1. Maggs like this – Holiday Inns case in Virgin Islands works against Dawn – no plans to enter
2. Indian restaurant allowed in SF and Chicago
b. P’s failure to exploit the mark in that D’s area does not constitute abandonment in the area
i. 15 USCA §1127, which provides for abandonment in certain cases of nonuse, applies only when the registrant fails to use his mark, within the meaning of §1127, anywhere in this nation
D in either case is on borrowed time