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Trademarks and Unfair Competition
University of Illinois School of Law
Maggs, Peter B.

 
Trademarks & Unfair Competition – Peter Maggs (Fall 2013)
 
 
 
1.      Policy of unfair competition
a.      Freedom of entry into markets
                                                              i.      Good for the consumer/public, bad for established firms
                                                            ii.      Schoolmaster case (1410)
1.      New school established, and made less profit
2.      New school intentionally inflicted harm
a.       This is good though; policy is for societal good, lower prices
b.      Can’t use illegal means to gain advantage i.e. beat up, divert water
                                                          iii.      Tuttle v. Beck (1909)
1.      New barbershop; P alleges D maliciously tried to take business from him
2.      Ct: intent doesn’t matter, so long as using fair methods
a.       Ct says competition is good
b.      Can’t run business at a loss with sole goal of putting other out of business; no unfair methods like slander
3.      Here, only evidence is D was merely conducting ordinary business transactions
b.      Interference with Contractual relationships
                                                              i.      Birt v. Wells Fargo (2003)
1.      Bank strings Birt along, induces them to sign building contract then says loan denied, making them breach building contract to contractor
2.      §766 intentional interference with performance of contract by 3rd person:
a.       One who intentionally and improperly interferes between another and a third person by causing the third person not to perform contract, is liable to the other
3.      §766A intentional interference with another’s performance of his own contract:
a.       One who intentionally and improperly interferes between another and a third person by causing the other not to perform, is liable to the other
4.      §766B intentional interference with prospective contractual relationship:
a.       One who intentionally and inproperly interferes with another’s prospective contract is liable to the other , whether interference consists of: 1) causing third person not to enter relationship; or 2) preventing other from forming relationship
5.      Here, to show §766 and Birts to collect, they must show bank’s act induced the contractor (3rd party) not to perform; to show 766A must show actions prevented Birt’s performance
6.      “Improper” factors: look to fair play, and normal business ethics
a.       Competition not an excuse to cause breach, like if another contractor offers to do it for less money
                                                            ii.      Doliner v. Brown (1986)
1.      Doliner tries to get financing from Brown for condo, about to make a deal but Brown swoops in and buys before Doliner
a.       Allege interference with potential contract
2.      Ct: Brown is legit competitor because seeking own commercial advantage; still not okay to use wrongful means, but this is legit
3.      If existing contract, can’t outbid another and claim competition. But, if no contract yet, outbidding is okay, societal benefit (so long as not improper, like Brown)
a.       No bribery or fraud
b.      Another problem: when does potential becoming existin contract?
                                                          iii.      Negligence is NOT actionable if it causes another to breach; only intentional and improper
2.      Acquiring TM Rights
a.       TM rights acquired either through state CL (actionable under 43a or Lanham Act, fed question+supplemental, or diversity of citz) or through federal registration
                                                              i.      State and fed law usually congruent, but remember they are distinct
b.      CL rights to TM
c.       Blue Bell v. Farah (1975)
                                                              i.      Fed diversity jurisd, using Texas TM statute because not registered
                                                            ii.      Need to see who first “used” the TM
1.      Conception of a mark nor just advertising can establish CL TM; secret and internal shipments not okay either
2.      Sometimes advertisement combined with other non-sales activity is enough though
                                                          iii.      Must be used in connection with specified good; doesn’t have to be widespread; single use followed by continuous commercial use okay
                                                          iv.      Ct: must be “open use”; use in a way sufficiently public to identify or distinguish the marked goods in an appropriate segment of the public mind as to those of the adopter of such mark
                                                            v.      Bona fide use in trade: must be continuous use of mark in commerce; can’t use once, then stop just to reserve mark
d.      Zazu v. loreal (1992)
                                                              i.      Pre-1988, Lanham didn’t say how unregistered mark became protected; look to state law and “use”
                                                            ii.      Ct: use must be public and active, so as to put people on notice of product
1.      Registration modifies by saying slight sales along with reg is okay
2.      Rationale for slight use is because registration puts people on notice; non-reg a substantial amount of sales must do that
                                                          iii.      Zazu’s slight over counter sales and few shipments to friends not enough for unregistered “use”; if they had registered first, it may have been enough
                                                          iv.      Intended use not enough to show “use in commerce” and unregistered protection
                                                            v.      Here, ZAZU was valid TM in regard to hairstyling services, but not enough use to show associated with shampoo
e.       Federal registration meant to protect companies like BlueBell and Zazu who can’t move as fast to bring items to market; under CL, they’re at a disadvantage and lose cases, even though they act in good faith because they’re too slow to “use in commerce”
3.      TM Rights by Federal Registration
a.       Two ways to get fed registration: 1) based on use in commerce, then send in app to get federal registration; or 2) ITU application followed by proof of actual use
                                                              i.      Intent to Use (ITU): can file an app for registration if can show a “bona fide intent to use mark in commerce”
                                                            ii.      Registration still doesn’t issue until use in commerce, ITU merely holds a place in line
                                                          iii.      6 month grace period bet

ew characteristic different from established product class, and uses a common descriptive term to describe the characteristic, the new product name becomes its own genus, and new term becomes generic if no other words to describe it”
3.      Important to pinpoint class: if wheat cereal is class, the shredded wheat is a brand; but since pillow shaped wheat shreds was decided to be the class, then shredded wheat was descriptive
a.       FRAMING!
4.      Old- chocolate soda, new- chocolate fudge soda
a.       Choc fudge is now genus bc it is characteristic that differentiates it; no one can describe new qualities w/o use of “fudge”, so it’s generic
5.      See what genus of product is, then see if term is generic
                                                            v.      Otokoyama (1999) pg 89
1.      TM generic in Japan; in US too?
2.      Doctrine of foreign equivalents: generic foreign words are ineligible for US trademark
a.       Many foreigners and visitors in US, so they’d be confused
b.      But what about obscure languages?
c.       Can be used for generic, descriptive, etc
3.      If decision of foreign official decision is evidence of relevant fact, it can be used (here, Japanese term is generic in Japanese)
                                                          vi.      Generic vs. Descriptive
                                                        vii.      Boston Beer (1999) pg96
1.      TM “the best beer in America”?
2.      Self-laudatory and puffery are considered descriptive
3.      Must show secondary meaning (acquired distinctiveness), people associate descriptive marks with only one brand
a.       Here, many people get these awards and use it; no evidence of secondary meaning; common laudatory description
b.      Even high amounts of advertising only evidence, not dispositive
                                                      viii.      Echo (1989) pg100
1.      Picture on travel brochure descriptive, need to show association with one source (secondary meaning)
2.      Evidence of secondary meaning:
a.       Direct- consumer testimony, consumer surveys (must be relevant class)
b.      Indirect- exclusivity and length of use, amount of advertising and its effectiveness, amount of sales and customers, established place in market, proof of intentional copying
                                                          ix.      Secondary meaning: exists only if significant number of prospective buyers understand term to come from particular, even if anonymous, entity
                                                            x.      Statutory incontestability: for five years after registration, substantially exclusive and continuous use are prima facie evidence of secondary meaning