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Trademarks and Unfair Competition
Wayne State University Law School
Perzanowski, Aaron

Trademark and Unfair Competition

Professor Aaron Perzanowski, 2010

TOP TOBACCO V. NORTH ATLANTIC

· Competing company had a “Fresh Top” seal. Different everyday meaning. Context and how consuming public views it is very important.

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:

o Deceptive marketing;

o Infringement of trademarks and other indicia of identification;

o Appropriation of intangible trade values including trade secrets and the right of publicity;

§ Black Friday price list may be a trade secret

o Other acts or practices … determined to be actionable as an unfair method of competition.

COMPETITION

INS V. AP(page 2)

· “We need spend no time, however, upon the general question of property in news matter at common law, or the application of the copyright act, since it seems to us the case must turn upon the question of unfair competition in business…. The parties are competitors in this field; and … each party is under a duty so to conduct its own business as not unnecessarily or unfairly to injure that of the other.”

· Tort of misappropriation, “reaping where you haven’t sown.”

o There is a general common law property right against “misappropriation” of commercial value.

Cheney Bros. v. Doris Silk (3)

· Fabric company copied successful fabrics.

· Judge Hand said if you can’t get a patent or copyright, too bad. TM will not act as a security blanket.

o Hand did not like INS, though he didn’t explicitly overturn/overrule it.

NBA V. MOTOROLA (12)

Relied on the “misappropriation” idea of INS. Here there was no direct competition, no threat to product or service. Hand doctrine used in this case.

· INS “hot news” claim requires:

o (i) plaintiff generates information at a cost

o (ii) the time-sensitive value of factual information,

o (iii) the free-riding by a defendant,

o (iv) direct competition,

· (v) the threat to the very existence of the product or service provided by the plaintiff.”

SEARS V. STIFFEL (5)

Pole lamp case. Had a design patent. Stiffel claimed that confusion was created because people would think the lamps were the same. Court said source is extremely important. Must put name on box.

A State’s unfair competition law cannot impose liability for or prohibit the copying of an article which is protected by neither a federal patent nor a copyright.

Trademarks are words or symbols that designate the source of goods or services.

Oversimplification

HOW ACQUIRED?

· Trademark rights are acquired through use in commerce.

o Again, oversimplification

· Intent to use application

· Use-based rights are limited to particular classes of goods or services with which the mark is associated and the geographic region in which it is used.

o i.e. A gardener in Detroit can’t enjoin an Alabama company from using the same name.

FORMALITIES

· None are required, but registration with the TM office is important.

· Gets you certain evidentiary presumptions and provides for nationwide, rather than local, protection against infringement.

o After a period of time mark can become incontestable.

INFRINGEMENT

· Any use of a mark that causes a likelihood of consumer confusion is infringing.

o Yet another oversimplification.

· Dilution.

o Stop others from “watering down” the mark.

DURATION

· Trademarks, unlike patents and copyrights, have no fixed duration. They have the potential to last forever.

· Registrations must be renewed periodically, but registration isn’t necessary for protection.

· Protection hinges on use.

Sources

ART. I, § 8, CL. 8

The Congress shall have power …

To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries

ART. I, § 8, CL. 3

The Congress shall have power …

To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes.

Trade-Mark Cases (13)

The Court did not exclude all possibility of Congress regulating trademarks. Congress, however, read the decision very strictly and in a new trademark law e

f trade need not be shown to warrant an injunction

Consumer confusion of the gullible consumer is standard for infringement.

· “It may well be true that a prudent and worldly-wise passerby would not be so deceived. The law, however, protects not only the intelligent, the experienced, and the astute. It safeguards from deception also the ignorant, the inexperienced, and the gullible.”

CHAMPION V. SANDERS (27)

Spark plug case. Guy reconditions spark plugs that still have the Champion mark.

Court said can leave the name but must make clear it’s used. If the character of the good was totally changed, may have been different.

Reconditioned sparkplugs must be clearly and distinctly sold as such. The reseller can get some advantage from the trademark provided the manufacturer is not identified with inferior qualities of product.

TM FUNCTIONS

· To help merchants fool people

· To stop merchants from fooling people

· To reduce search costs

o Posner

· To incentivize quality

· To protect goodwill/property interests

SUBJECT MATTER

Secondary Meaning

· Thing you are claiming as a TM stands as a source of product or service. Develops over time. Some marks, particularly descriptive, require secondary meaning (beyond the descriptive aspect.)

KELLOGG V. NATL BISCUIT (44)

Nabisco had patent on shredded wheat process. Patent expired but alleged that pillow shape and name are protected. Some claimed it is a generic term.

If a term is generic, the original maker of a product acquires no exclusive right to use it, particularly if it is the subject of an expired patent. A particular manufacturer cannot assert exclusive rights in a particular form of a product. A generic name and form must be used in a fair way.