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Intellectual Property
University of North Carolina School of Law
Chin, Andrew

Intellectual Property- UNC Law- Chin – Spring 2013                                                                          
·         Goal of trademark law is to reduce search costs for the consumer—source identifying function
·         Trade dress is the design and packaging of the materials and can be protected under trademark law if secondary meaning.
·         A mark acquires secondary meaning when in the minds of the public, the primary significance of the mark is to identify the source of the product rather than the product itself
·         Deceptively misdescriptive marks may also be protected if they acquire secondary meaning (Ex: Solid Gold Apples)
o    Merely deceptive marks will not be given trademark protection
·         Trademarks do not protect functional matter (three ways that a feature can be deemed functional)
o    1) It is essential to the use or purpose of the device;
o    2) It affects the cost or quality of the device;
o    3) Its exclusive use by one seller would put competitors at a significant nonreputation-related disadvantage
·         Need a use to have a trademark infringement
·         Dilution only protects famous marks: Mark is famous if it is widely recognized by the public as a designation of the source
·         For trade secret, the Restatement requires use by for the protection and the UTSA does not
·         Trade secret must have value to be protected
o    One’s subjective belief of a secret’s existence suggests that the secret exists.
·         Trade secret still has to a have a modicum of originality (even if not the most original—pretty similar to patent theory)
·         PHOSITA: Person having ordinary skill in the art (essentially like the reasonable inventor standard—knows everything there is)
·         102(a) in patents: Can be barred if the method was used in the US, or published in the US or a foreign country
o    Use in a foreign county alone does not bar patentability (loop hole to get a patent)
o    Can still get patent if use in US was a secret use (that would open the door for a trade secret argument like in DuPont)
·         Record keeping is pretty important to indicate whether it is a bona fide experiment under patent law (wood road case)
o    Improvement over prior art is an important factor as well
·         Patent law: Oddity of 102(g)(2): In regards to reasonable diligence, the time that is considered is when the opposing inventor reduced their invention to practice, not when the first inventor filed for patent and when they reduced to practice
·         Cannot patent abstract ideas (or things naturally occurring…unless you alter them slightly)
·         If the publication had occurred before the invention of the subject matter by the applicant, section 102(a) would apply.  102(b) applies if the publication occurred more than one year before the applicant filed for a patent
·         Even though the AIA will go into effect in 2013, the 1952 law will still have an impact for many more years
o    This system is really like first to file or publicly disclose
·         2 elements must be proven to prove copyright infringement: (1) ownership of a valid copyright, and (2) copying of constituent elements of the work that are original.
o    How to make facts original: 1) Selection and 2) arrangement of the facts
·         Copyright grants protection of your rights, and patents grant you the opportunity to protect your rights
·         Copyright originality does not require novelty
·         The fixation requirement in copyright requires that the work be intentionally fixed at the time the fixation occurs
·         An author has a copyright in his work simply by fixing it in tangible form, but in patent law, an inventor who puts his invention in tangible form has no patent until he submits a patent application and PTO allows his claim—which requires a lot to prove
o    But copyright requires copying to have an infringement; patents are not like that—don’t need intent to copy to infringe
·         When considering claim interpretation (patent), think about ambiguous language in contracts—it can be found or at least argued
·         Facts are never copyrightable by themselves…and can be copied without fear
·         Copyrights are not granted to ideas—they are too valuable to be copyrighted and must be shared without repercussions
o    Original expression can be (like the writing it came from) but not the ideas themselves
·         Harper & Row squarely points out that copyright law is always at a tension with the first amendment—one cannot speak with the words of another because that would infringe on their copyright protection (protection goes to first speaker though)
·         So, product packaging design is inherently distinctive in trademark and product design needs secondary meaning
·         Keep this in mind for reading IP statutes: Read statute as a whole in order to determine how valuable the info was intended to be
·         TWINKIES—there is a lot to be learned from them
Trademarks (as described by the Lanham Act) (§1127)
o   The term trademark includes any word, name, symbol, or device, or any combination—
§  (1) used by a person, or
§  (2) which a person has a bona fide intention to use in commerce and applies to register
·         Trademark protection does not depend upon novelty or originality like other areas of IP law, but is awarded merely to those who were the first to use a distinctive mark in commerce
o   In trademark law, a senior user of a mark may prevent junior users from employing the same or similar mark where there is a likelihood of confusion between the two marks (even if not the same mark)
§  Federal registration gives national protection
·         Giving the originator of a mark the right to police counterfeiting also serves to protect three types of investments
o   1) Investment in the creation of the mark
o   2) Investment in advertising and promoting the product in association with the mark
o   3) Product-related investments such as high-quality raw materials and production equipment
Goal of Trademarks: Trademark Theory and Economics
TC (total cost) = P (price) + SC (search charge)
·         If trademarks can reduce the search charge, then consumers are willing to pay a higher price in order to save in total cost (be it in time or peace of mind)
·         Economic behavior for spending a dollar more on a brand name is greater to consumers because the search charge of finding their desired product has been reduced (and thus effects price of the product and price spent on advertising)
Social Benefits of Trademarks
·         Distinguish product over any other
·         Reduction of search charges
·         Brand loyalty/repeat business
·         Production and Labor
o   Corporate Reputation (help bring in investors or smarter people simply based on the reputation of the product)
·         Advertising and its byproducts
Trademark Guidelines
1.      Validity of Marks – Spectrum of Distinctiveness: Guidelines for figuring out when a mark is protectable
a.       Generic (no protection) (WEAKEST)
                                                  i.      Common name of the product
                                                ii.      Becoming generic (genericide): Strong mark becomes part of the general language (Ex: Xerox)
b.      Descriptive (needs secondary meaning)
                                                  i.      Mark describes the product/service or aspect thereof
1.      Kentucky Fried Chicken; Sharp Computers; IBM; Windows
a.       Surnames start out as descriptive (McDonalds)
                                                ii.      No initial protection: Gains protection upon acquisition of secondary meaning/distinctiveness
c.       Suggestive (immediate protection)
                                                  i.      Suggestive when imagination links it to the product or the service
1.      Coppertone, Wrangler, Greyhound, Playboy
                                                ii.      Often times will be dictionary word used in a different way implying something about your business
                                              iii.      Cannot be a link between the product and your business, only suggestive of it—requires imagination
d.      Arbitrary / Fanciful (immediate protection) (STRONGEST)
                                                  i.      Ex: Apple computers; arm and hammer baking soda; camel cigarettes; shell gasoline
1.      May have ordinary meaning but no rationale for why it was used for product
                                                ii.      Or fanciful when it is essentially invented – coined words (no meaning at all) (Polaroid cameras)
Descriptive Marks and Secondary Meaning
a.       Descriptive Marks
                       i.      Presumptively unprotectable
1.      Only when secondary meaning has been acquired is it protected
2.      Thus, mark acquires secondary meaning when, in the minds of the public, the primary significance of the mark is to identify the source of the product rather than the product itself
                     ii.      Acquisition of distinctiveness is treated as a question of fact
1.      Considerations to determine meaning
a.       Advertising
b.      Sales Volume
c.       Length and manner of use
d.      Consumer surveys (Most important for secondary meaning)
2.      Lanham Act §2(f) (§1052)
a.       5 years of successful use confers secondary meaning; next 5 years means mark is fully registered
                   iii.      Imagination test is used to distinguish arbitrary/suggestive from descriptive (Zatarins—fish fri case)
1.      The “imagination test” is a second standard used by the courts to identify descriptive terms.
a.       Test seeks to measure relationship b/t actual words of mark & product to which they are applied
                                                                                               i.      Term is descriptive if standing alone it conveys info as to the characteristics of product
2.      Surnames
a.       Not inherently protected
b.      Treated as descriptive so must obtain secondary meaning. 
                       i.      Courts require harsher secondary meaning b/c don’t want people prevented from using own name
c.       David B. Findlay v. Findlay
                       i.      Brothers have closely located art galleries. They hate each other and both use their last name for the gallery.
                     ii.      Court: Can use last name but:
1.      Not when acquired secondary meaning by one of the two parties or
2.      Creates actual confusion
d.      Can’t use name, picture, or signature of living person without consent.
3.      Color, Sounds, Scents, and Other Marks
a.       Colors as trademarks
                       i.      Qualitex v. Jacobson Products
1.      P wants to trademark color of cleaning pads; D uses similar color
2.      Issue: is color – by itself –protectable?
3.      Holding: Color is a symbol—can be a trademark.
a.       Color was not precluded from registration, as long as it satisfied requisites of trademark law 
b.      Must establish secondary meaning, in effect treating the color as a descriptive mark.
c.       Thus: any symbol capable of distinguishing goods in the marketplace can serve as a mark, so long as other factors/prohibitions met.
                                                                                               i.      Source indicating function is the requirement
d.      Note: color cannot serve as functionality. (Louboutin and red heels)
                     ii.      Courts generally hold today that any “word, name, phrase, symbol or device” that is capable of distinguishing goods or services in the marketplace can be recognized as a mark.  This includes sounds, scents, colors
b.      Functionality:  Certain attributes are needed by competitors to adequately compete; can never be protectable.
                       i.      Utilitarian functionality (affecting use or manufacture, or otherwise adversely affecting ability to compete)
1.      When mark is essential to the use/purpos

    Dictionary definition is a good indicator that the product has become generic
2.      Trade Dress (think Coke bottle)
a.       Two Pesos v. Taco Cabana
                                                  i.      Facts: Two Mexican restaurants fighting; sr user said jr user stole its décor, which was alleged to be distinctive and had acquired secondary meaning.
                                                ii.      Holding: Trade dress is to be analyzed under the spectrum of distinctiveness
1.      Protected if distinctive regardless of lack of trademark—no secondary meaning needed
a.       Court said only non-functional trade dress features are eligible for TM protection
2.      Broadly defined trade dress as total image of restaurant
3.      Side note: A mark is inherently distinctive if its intrinsic nature serves to identify a particular source and that is what this trade dress did (like the Coke bottle)
                                              iii.      Practical result: 43(a) action for unregistered trade dress will be tested for distinctiveness by jury
b.      Wal-Mart Stores v. Samara Brothers à limits expansion of Trade Dress
                                                  i.      Issue: Can the “symbol” be the essence/face/shape of a garment, thus precluding knockoffs?
                                                ii.      Facts: Wal-Mart replicates dresses similar to P and sells them for less.  Samara sues
                                              iii.      Holding: Trade dress involving a product as opposed to package design was not inherently distinctive, and could be protected only upon a showing of acquired secondary meaning.
1.      Distinguishes Two Pesos on supposed differences between product and packaging design
a.       So, there is a difference b/w package and product.
2.      If a symbol is not distinctive, its use by others does not cause customer confusion as to the source, so protecting it does not serve the purpose of trademark law
                                              iv.      Note: patterns are often protected, but shape is not b/c functionality.
c.       Current State of Trade Dress
                                                  i.      Protection for the original forms of trade dress survive (packaging, such as the Coke bottle), remain essentially unchanged. 
                                                ii.      Protection for unregistered trade dress in product design now requires secondary meaning.
                                              iii.      Meanwhile, Two Pesos has been confined to its facts (Good.)
Priority and Trademark Theory
·         Priority by Contract: One company could buy the trademark from another as L’Oreal did from one of the companies in the Zazu case.  Therefore, priority of use does not mean that another company will never be able to use the mark, they just may have to pay for it.
o   If second user is in a better position to exploit the market, it would make sense for first user to give up rights
·         Priority & Prevention of TM Races: Prevents confusion by having 2 companies spend large sums to establish a TM
o   Also don’t want people to find a trademarked name and beat a person or company to the punch just so that they would have to pay you (Ex: Internet domain problem that came about during early Internet days)
·         Ordinary use doctrine prevents firms from having to spend significant sums to buy trademarks from small companies in small areas (such as in the Zazu case (this is the hair salon case—just limit the salon to the region))
Protecting Your Mark
1) Incontestability (1064):
5 years after registration, a mark will become incontestable pending four things (1065) (complete protection)
            1) Affidavit (that means you filed for a trademark)
            2) Never a lost lawsuit
            3) No pending litigation
4) Not generic (sort of analogous to functional subject matter under 1052(e)(5))
Park N Fly v Dollar Park and Fly (parking lot case)
Facts: SC held that incontestability not only barred cancellation of petitioner's mark, but allowed petitioner to utilize that status to enjoin respondent's use of its mark.
Holding: The language of §1051, also refutes any conclusion that an incontestable mark may be challenged as merely descriptive.  Mark becomes incontestable after 5 years of protection
Rationale: The opportunity to obtain incontestable status by satisfying the requirements of §1065 encourages producers to cultivate the goodwill associated with a particular mark. This function of the incontestability provisions would be utterly frustrated if the holder of an incontestable mark could not enjoin infringement by others so long as they established that the mark would not be registrable but for its incontestable status.
Defenses still exist against a trademark once it becomes incontestable…