Trademarks- Perzanowski- Winter 2012
1. Concepts of Trademarks and Unfair Competition
i. Competitors want to be able to easily convey what a product is. Trademark protection is limited because competitors must be able to communicate what their product is using certain words and phrases. Concerns:
1. Consumers must have enough information to make decisions in the market.
2. The market allows competition but this must be balances with the rights of a TM holder because a TM is a valuable asset.
ii. Restatement of Unfair Competition: One who causes harm to the commercial relations of another by engaging in a business or trade is not subject to liability to the other for such harm unless:
1. Deceptive marketing;
2. Infringement of TMs and other indicia of identification
3. Appropriation of intangible trade values including trade secrets and the right of publicity;
4. Other acts or practices determined to be actionable as an unfair method of competition
iii. International News Service v. Associated Press (US 1918): INS takes AP’s information and uses it in their own newspaper. This case set forth the “hot news misappropriation doctrine” which is a tort- the court is worried that INS will put AP out of business and people will not have access to news. There isn’t really liability under any realm of intellectual property here. Justice Holmes concurs stating that is false labeling (passing off information as its own) which seems like TM law.
iv. Sears, Roebuck & Co. v. Stiffel Co. (US 1964): Sears commissioned somebody to make a knock of a special patented pole lamp. TM law is not as concerned with two objects being next to each other and consumers being confused- it is more concerned about confusion over the source of the product. The court says Sears must identify they are the source of the good and manufacturer.
i. Broad information may be conveyed just by the use of an image. Trademarks are a linguistic shorthand which communicate the source of a product. Trademarks may be words, symbols, designs, or colors. Wordmarks are more powerful than stylized marks because it gives TM protection for any particular expression of the mark.
ii. Trademark rights are acquired through using the mark in commerce and in connection to a good or service out in the marketplace.
1. Intent to use: An intent to use a mark may be stated before the mark is in actual use. This provides an earlier priority date for TM rights.
2. Use-based rights acquired through selling goods in the marketplace are limited geographically to where the commerce is occurring and to the goods which they apply.
3. There is no requirement to register a TM. If one registers a mark, nationwide protection is achieved (rather than just local protection).
4. There is no fixed duration for a TM- it lasts as long as the mark indicates the source of the product. If there is a registration, the mark must be renewed every 10 years.
1. This is based on consumer confusion related to the source, sponsorship, or endorsement of a product.
2. There may be confusion at the time of a sale, before a sale, or after a sale.
3. Also, there is not dilution to protect famous marks, which doesn’t care about confusion.
iv. Sources of Law
1. Initially, TM law was state common law. Old English common law rules were used before US was formed- there were variations from state to state.
2. In 1870, Congress implemented TM law on a federal level, but this was challenged on Constitutional grounds. Potential sources of power: Art. 1, Sec. 8, Cl. 8- source for patents and copyrights; or Art. 1, Sec. 8, Cl. 3- commerce clause.
3. Because TMs don’t have to be new, creative, or inventive, they cannot be treated in the same way as copyrights and patents.
4. Lanham Act of 1946: This defines the registration process, discusses infringement, describes how to evaluate TM claims, defines dilution and false advertising protection. Common law, however, remains the most important source of TM law. State statutes may also be somewhat important because states have their own state registries.
v. Hanover Star Milling Co. v. Metcalf: An element of a TM claim is direct competition between two entities, but changes in the market have made it so that a famous mark may not even be used on a different product.
vi. Stork Restaurant, Inc. v. Sahati et al: A famous nightclub had the same name as a dive-bar. They are probably not in direct competition for the same customers. Court is concerned about free-riding and goodwill. Goodwill is the intangible value of a name and is difficult to calculate. Free-riding is that another company is going to profit off of another company’s investment into goodwill. The court is also concerned about expansion of new locations. There may also be confusion here- this is a hard balance because there are varying smarts among consumers in the marketplace.
vii. Champion Spark Plug Co. v. Sanders: Champion makes sparkplugs which Sanders repairs but leaves the Champion name on. The court says there is a right to describe the actual original source of the product so long as it does not cause confusion.
viii. TM Functions:
1. To help merchants fool people
2. To stop merchants from fooling people
3. To reduce search costs (this is the dominant theory because it may lead the economy to run more efficiently as a whole)
4. To incentivize quality
5. To protect goodwill/property interests- The focus of TM law has changed to protecting the rights of TM holders. Anything that has monetary value should be protected by a legal right.
ix. Brown theory: TMs allow social waste in the form of advertising which may lead to increased operating costs that are not beneficial to anybody. Generally, however, people aren’t too worried about advertising.
x. Litman theory: In balancing the interests of consumers and TM owners, TMs are valuable assets because the value comes from consumers.
2. What is a Trademark
a. Subject Mattter
i. Restatement of Unfair Competition: A TM is a word, name, symbol, device, or other designation…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.
ii. In modern TM law, there is a distinction between inherently distinctive marks and descriptive marks.
iii. Kellogg Co. v. National Biscuit Co.: D wants to use TM law to lessen competition by making it more difficult to advertise and market Kellogg’s “Shredded Wheat” cereal. The court says the name is generic (i.e. a product category), not the name of a particular product made by a particular source. Evidence provided included that D’s patent used the term “shredded wheat” to describe the product. There may be a question of free-riding here by Kellogg’s because it is taking away from Nabisco’s investment and development in shredded wheat.
1. NOTE: TMs may include shape if the shape acts as a symbol of the source. The court here found that the shape of the shredded wheat was functional so it was not entitled to protection.
iv. Secondary Meaning: Even if a term is purely descriptive, secondary meaning may be acquired over time which will allow it TM protection. This is the difference between descriptive marks and generic marks. Secondary meaning comes from 2(f) of the Lanham Act.
1. Secondary meaning may be proven by how long a mark has been used, how much advertising has been done, how many sales have been completed, exclusive use, etc.
v. Coca Cola Co. v. Koke Co. of America: Initially Coca-Cola was not a strong mark because it was descriptive, but it developed secondary meaning. D argues that the Coke name causes customer confusion because there is no cocaine in the product but the court finds that people are not confused by this. The court focuses on the first half of the Coke name and finds there is consumer confusion due to the market value of Coke products. Geographically, this case may have come out differently in the south where all soft drinks are called “Coke”- D may have won in that region.
vi. Personal names: Personal names are generally treated as descriptive marks which require secondary meaning. Courts don’t want people to be unable to use their own name to describe their product.
1. Peaceable Planet v. Ty, Inc.: The issue is over the name of a stuffed animal. The court says the personal name rule doesn’t apply because it is not a person here.
vii. Service marks are used in connection to a service that must actually be being offered. Collective marks are used by a group to indicate membership in groups (e.g. unions). Certification marks are used as a signifier of quality
of services; and
b. The services are rendered in commerce
iii. Larry Harmon Pictures Corp. v. Williams Restaurant Corp.: Bozo the clown was suing a restaurant for using the name Bozo for restaurant services. The issue was whether the services were rendered in commerce. The court says anything which constitutionally counts as interstate commerce is interstate commerce- the test is whether there is substantial effect on interstate commerce.
iv. Central Mfg. Inc. v. Brett: Brett is in business of selling sports equipment and other various items under the name “stealth”. Central files for the mark “stealth” on baseball bats and also claims the mark for baseballs. Central never actually used the name on baseballs and there was no evidence that they actually sold the product to anyone. This is a case of no use.
c. Analogous Use
i. Analogous use isn’t quite “use in commerce” but nonetheless can be sufficient to establish priority over a subsequent user. This is halfway between no use and bona fide use.
ii. Best Seller v. Fame Jeans: P makes expensive jeans sold in Europe and Asia and is planning to expand to North America. The court looks for whether there products are being moved and whether the public is on notice that there’s a connection between a mark and source. The court found even though P hadn’t launched their store, a US citizen could still buy the jeans, but they could not receive TM rights until they started selling in the US.
d. Extraterritorial Use
i. International Bancorp, LLC v. Société des Bains de Mer et du Cercle des Etrangers à Monaco: There was a Monte Carlo gambling website which was not linked to the real Monte Carlo. The question was whether services outside of the US counted as interstate commerce. The court found there were advertisements to determine there was interstate commerce here. Under the commerce clause, US can regulate foreign trade and the Lanham Act regulates all use in commerce which Congress is entitled to regulate. The dissent said the use must be in the US because extending TM law to extraterritorial activity will affect foreign interests.
i. Blue Bell, Inc. v. Farah Manufacturing Co.: Two clothing manufacturers independently came up with the same name for their product. The court looked to what use in commerce was significant enough to trigger TM use. Generally, internal shipments do not count, but a lease of a product may count. There were issues with labeling already existing products with the new labels which the court determined was confusing. The court found that when the real product is shipped to real people, this counts as use in commerce.
ii. Intent to Use: This problem could have been avoided by the intent to use registration process which allows up to 6 months for a producer to produce the product. The intent to use process favors larger companies because they can afford it. It also is contrary to the concept of disallowing companies from holding a claim to a TM without actually selling a product. There may not be a great solution to this- there will always be a risk that a smaller company will go through the expense of using a mark and find out it cannot use the mark.
iii. City of New York v. Tavern on the Green: A former employee of a New York restaurant applied for the registration of the name “Tavern on the Green”. LeRoy, employee, demonstrate that they have incontestable TM registrations, but the city argues that there is fraud because he lied to the TM office, claiming they were the first to use the mark in commerce.