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Trademarks and Unfair Competition
University of Michigan School of Law
Eisenberg, Rebecca S.

First Week: Definition of a Trademark, Distinctiveness
 
Definition of a TM in Restatement 3d: A trademark is a word, name, symbol, device, or other designation, or a combination of such designations, that is distinctive of a person's goods or services and that is used in a manner that identifies those goods or services and distinguishes them from the goods or services of others. A service mark is a trademark that is used in connection with services.
 
LIMITS TO THE DEFINITION OF A TRADEMARK:
o   It must be distinctive: have the capacity to indicate to consumers the source/sponsorship of products
o   Generic terms can’t be trademarked
o   Descriptive terms must gain secondary meaning to be trademarked
o   Personal names must (under Lanham) can have secondary meaning (i.e. Walmart).
o   Trademark must be USED as a source-designator. (rock and roll hall of fame), doesn't matter how distinctive your mark if you don't use it as a TM.
–          Included in this definition
o   Brand-names, symbols, slogans, features of a product, shapes of container, colors
o   Basically anything that is source-designating
–          Takeaways from cases: Use in the course of business is essential to preserve rights. If your product feature is functional, you cannot ™ it, that is patent’s domain. Use of another brand’s goodwill is “reaping where you have not sown”.  Disclosing true information (reconditioned status) is enough to protect a manufacturer from ™ infringement.
 
 
Borchard Excerpt- A trademark is a word, logo or package design, or a combination of them, used by a manufacturer or merchant to identify its good and distinguish them form others. Includes
–          Brand name identifying goods
–          And trade dress consisting of the graphics, color or shape of packing or, after sufficient use, of goods.
–          Service marks identifying services
–          Certification marks identifying foods or services meeting specified qualifications
–          Collective marks identifying goods, services or members of a collecting organization
Nature of Trademarks: commercial identifications of source such as words, designs, slogans, symbols, trade dress.
Scope: protects against creating a likelihood of confusion; or diluting a famous mark
Purpose: protects owners and public from unfair competition
How to Obtain Rights: use the mark in commerce or apply for federal registration
Principal Advantages of Registration: Nationwide priority rights; possibly conclusive evidence of validity and ownership; U.S. Customs recordation; increased anticounterfeiting remedies
Basis for Registration: (1) bona fide intention to use in commerce followed by actual use (2) Non-U.S. owner’s country of origin registration or application filed within 6 months prior to U.S. application, or extension to the U.S. of international registration, plus bona fide intention to use in commerce; or (3) actual use in commerce.
Notice Requirement:  optional “TM” OR “SM” if unregistered; r or reg. U.S. pat and tm. off. If registered.
Term of Rights: as long as used; registrations must be maintained by filing use declaration before 6th and 10th anniversary; renewal required every 10 years
Infringements Prerequisites: registration optional
Infringement Standard:  Likelihood of confusion, mistake or deception as to source or sponsorship; or dilution by blurring or tarnishment
International Protection: (1) individual countries or regions (2) community trade mark registrations (3) Madrid protocol centralized filing.
 
 
Lander and Posner Excerpt:
Approach trademark rights from the perspective of consumer search costs. Trademarks allow a customer to associate a certain set of values of the manufacturer, to the product. In turn (and arguably in a self- reinforcing way), trademark rights give mfrs an incentive to build a brand maintain quality across their entire product line. For instance, the Apple trademark would be less effective if they made great ipods but crappy macbooks. From the perspective of the consumers, trademarks displace the information gap cheaply. A consumer need not invest a lot of time learning and comparing a product line, but rather can quickly scan for marks that they associate with quality.
 
Eisenberg Says: Do trademarks always serve a consumer search function? What about consumers who buy a certain brand of clothing, principally because it sends a price signal to others (prestige) rather than any difference in quality? Lander and Posner might argue that this is still reducing consumer search costs for a desired quality (the quality of prestige). Brown might argue that this is a form of advertising that should be discouraged because its irrational from an economic point of view and creates dead weight and monopoly rents. Lander and Posner do not have a very convincing argument to counter this apart from to say that “economists” have rejected the theory that arbitrary product differentiation as irrational. It's not true that two products with the same formula are equal even to the most rational consumer since the greater assurance of quality that comes along with a mark might be desired and does cost a premium. Brown would still answer that this is irrationality and confuses public understanding of the real quality difference between products. Further, he answers that persuasive premium argument could be taken to absurdity if advertisers decided to devote half the national income on persuasive advertising… He questions whether consumers really have free choice in the face of constant advertising.
 
Litman Excerpt:
Litman argues whatever was true about trademarks in Brown&#3

        TM rights only protect public confusion over the source of the product. Since public not being deceived and the mark is being used truthfully to refer to source, this is OK.
o    Takeaway: full disclosure of the reconditioned status gives the manufacturer all the protection necessary.
 
 
Kellogg v.  Nabisco (1983 pg. 82)
Facts: Nabisco had a patent on shredded wheat machine that expired. Kellogg then brings its own shredded wheat product to the market. Nabisco sues for unfair competition and copying of pillow-shaped biscuits.
Holding: Court rejects both claims- shape is functional, and protecting functional traits is domain of patent law.
Reasoning:
o    Here a patent expired, giving new entrants a legitimate right to copy the product- court makes a great show of that.
                        – The fact that a design patent covered it, it suggests that the pillow     shape was non-functional. The court did note that there are cost advantages to manufacturing in the pillow shape. If it is functional, you can’t keep people   from copying it to use on their product.
 
o    D also makes a trade dress like claim that the pillow shape is distinctive of NB.
·         But b/c the packaging is different. The only consumers who might possible be confused are those who are served the produce in a hotel or a restaurant. Court says this makes up only 2% of sales and in any case, Kellogg’s Shredded Wheat is 2/3rds the size and different in appearance. (Factual Q).
o    When patents expire, new manufacturers must be able to use a name known to the public. In this case, “shredded wheat” is now the generic name for the product.
·         Secondary meaning doctrine not applicable in this case. To show “Secondary meaning, primary significance of the term in the minds of the consuming public is not the product but the producer.”
§  Fact that Nabisco spent a lot of money associating itself with shredded wheat is irrelevant if in the minds of consumers, shredded wheat is a product and not a producer.
·         People don't know the product by any other name.
 
**Sometimes highly descriptive terms can become associated with a product. Kentucky Fried Chicken. Reader’s Digest. But over time, we recognize that TV Guide is a brand name.