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University of North Carolina School of Law
Gerhardt, Deborah R.

Trademark – Spring 2014 – Deborah Gerhardt
Competition: Fair and Unfair –
–       What is a “trademark”? –
o    Includes any word, name, symbol, or device, or any combination thereof—
§  (1) Used by a person, or
§  (2) Which a person has a bona fide intention to use in commerce and applies to register on the principal register established by this chapter,
·         To identify and distinguish his or her goods, including a unique product, from those manufactured or sold by others and to indicate the source of the goods, even if that source is unknown. [15 USC § 1127] o    Oldest form of intellectual property (outdates written language) – e.g. symbols branded onto animal to show ownership.
o    Has economic power – e.g. Red Cross – gives credibility, encouraging people to donate money.
–       Two Different Positions Regarding Issue of Competition and Trademark –
o    (1) Copying or imitation, and the resulting competition that they generate, is fair, legal and permissible EXCEPT when there is “misrepresentation” and causes public confusion.
o     (2) Copying or imitation is unfair and illegal under most circumstances because it allows wrongdoers to reap what they didn’t sow.
–       Why is Trademark Protection Necessary? –
o    (1) Informs the general public (protects consumers from confusion) as to the quality and source of the product by stopping “counterfeiting”/”misrepresentation“/”palming off” (selling an imitation as if it were the original) à reduces customer search costs resulting from trademark’s ability to quickly and efficiently signal product-specific information.
§  [Dastar v. Fox] – (majority view) (Utilitarian view – balancing good v. harm to the public)
·         Court interprets “origin” of the Lanham Act to mean producer of the tangible goods. Dastar made and edited the original version and repackaged the material. There isn’t likely going to be any harm to the general public, as the public isn’t likely going to be confused as to the source of the tangible good.
·         Relied on statutory law (Lanham Act) to assess liability.
o    (2) Protects the brand owner’s investment in the product by preventing “misappropriation”/”reverse palming off”/”plagiarism” (selling another’s product as if it were your own; reaping what you didn’t sow – Locklean View)
§  [International News Service v. The Associated Press] – (minority view) (Locklean view)
·         The underlying facts were not protected and in public domain. Therefore, what INS did isn’t technically wrong and does no harm to the general public. However, the court makes an exception by focusing on the relationship between INS and AP (competitor v. competitor) and holds that INS’s conduct is unfair competition.
·         Decided not based on any statutory law but rather on law of equity (fairness).
Constitutional Basis of Federal Trademark Protection –
–       3rd Cl. Sect. 8 of Art. I – “Commerce Clause” –
o    “Congress shall have power to regulate commerce with foreign nations, and among the several States, and with the Indian Tribes.”
§  [The Trade-Mark Cases] ·         Court recognizes the value of trademark protection, but holds that Congress can only regulate only certain types of commerce under the Constitution (e.g. interstate commerce).
o    Trademark Act of 1946 (current version – Lanham Act) –
§  Allows registration of trademarks, which are used in commerce (“all commerce which may lawfully be regulated by Congress”).
·         Scope of Congress’s Commerce Clause greatly expanded by SCOTUS as a result of the Great Depression.
The Traditional Use Requirement –
–       Why is Trademark Usage Important? –
o    (1) Trademark rights come from usage and helps determine the scope of the mark/brand.
§  The use must be tied to a specific product or service and there must be “likelihood of confusion” as to the source of the product for trademark infringement (consumer perception critical).
·         Example: “Delta airlines” v. “Delta faucet” – NOT confusing because the general public can clearly tell what the brand represents. However, if someone wanted to use “Delta” for a line of water filter, it may be considered as infringement because of the similarity between faucets and water filters.
o    (2) Must actively use for continued protection and therefore, it tells the general public when the trademark protection ends.
§  Example: Pan Am airline – No longer in business. Therefore, if someone else wanted to start an airline called “Pan Am,” they could do so since the mark has not been used for a certain period of time.
–       Test to Determine Whether Usage Adequate to Show Ownership (different from registration of mark) (and thus, Trademark Protection) – “Ownership of a mark requires a combination of both appropriation and use in trade.” (48)
o    (1) Adoption; AND
o    (2) Use in a way 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. [Blue Bell Inc. v. Farah Mfg. Co. (5th Cir. 1975)] (holding that shipment of marked goods to regional managers was not sufficiently public to constitute as bona fide use for trademark ownership purposes).
§  The use must be bona fide use and not a token use as an attempt to reserve the mark for the future. [Blue Bell Inc. v. Farah Mfg. Co. (5th Cir. 1975)] (holding that Blue Bell’s placement of its mark on a line of clothing did not constitute as valid use when Blue Bell intended to use the mark on a completely different line of clothing).
§  Sales are highly persuasive (most trademark lawyers normally start with any evidence of sales), but it is NOT absolutely necessary, as long as there is other market use that informs the public. [Zazu Designs v. L’Oreal SA (7th Cir. 1992)] (holding that a few bottles sold over the counter in one locale, and a few more mailed to friends in Texas and Florida INSUFFICIENT to satisfy the use requirement under common law).
·         “Federal registration modifies this system slightly, allowing slight sales plus

ished in Official Gazette (for 3rd party inspection/objection)
§  (5) Registration approval.
o    “ITU” Application – (1B)
§  (1) Filing of application
§  (2) USPTO reviews application
§  (3) Client addresses whatever issues raised by the examiner
§  (4) Published in Official Gazette (for 3rd party inspection/objection)
§  (5) Notice of Allowance issued (no actual rights as of yet)
§  (6) Submit statement of use
·         Must show PTO evidence of first use in commerce as described in application by submitting a sample of specimen (e.g. invoice or other some visual evidence).
o    As long as an ITU applicant’s privilege has not expired, a court may NOT enjoin the applicant from making the use necessary for registration on the grounds that another party has used the mark subsequent to the filing of the ITU application. [Warnervision Entertainment, Inc. v. Empire of Carolina, Inc. (2nd Cir. 1996)] (holding that because Empire had earlier filed an ITU application and the application had not yet expired, Warner could not prevent Empire from converting the ITU into a use application based on earlier actual use).
§  For an injunction to apply, the third party would have to show use PRIOR to filing of ITU application or some other grounds to challenge validity of the mark (e.g. fraud).
The Common Law Approach –
–       General Rule: As between conflicting claimants to the right to use the same mark within the same geographic area, priority of appropriation determines the question (senior user generally wins).
o    Exception: Where the claimants are using the same mark (1) in good faith (e.g. junior user unaware of senior user’s prior use or junior user did NOT choose mark to deprive senior user of some benefit) and (2) in different markets separate and remote from each other, the general rule does NOT apply—the claimants may both use the mark, but the use is restricted to each claimant’s locale as to avoid public confusion. [United Drug Co. v. Theodore Rectanus Co. (US 1918)] (holding that because United Drug had confined use of its trademark to the Northeast for nearly 40 years and Rectanus had begun use of the mark in Kentucky in good faith, both parties are allowed to concurrently use the mark but in their separate locale).
§  Rationale = Unlike with copyright or patents, trademark right comes from actual use in connection with a particular product or service.