Defenses & Remedies

Intro IP – Prof Merges

4.2.2012

Agenda

• Genericide

• Functionality

• Abandonment

• Parody/Nominative Use

• Remedies

http://www.murphybedcompany.com/index.php

William L. Murphy, who was born in Columbia, California, near Stockton on January 1, 1876, moved to San Francisco at the turn of the century. He lived in a one-room apartment that had a standard bed taking up most of the floor space. Because he wanted to entertain, he began experimenting with a folding bed, and applied for his first patent around 1900.

The "Murphy Wall Bed Company" of California came into being that year.

The first of the folding beds were manufactured in San Francisco. In 1918, William Murphy invented the pivot bed that pivoted on a doorjamb of a dressing closet, and then lowered into a sleeping position - some of which are still in use today.

During the 1920's and 1930's, the popularity of the Murphy Bed was at its peak and in 1925 the company moved its corporate headquarters to New York City and became the Murphy Door Bed Company, Inc. In the 50's and 60's, the beds were sold primarily as a specialty item for builders. William K. Murphy, son of the founder, took over as president. In the 70's this attitude changed dramatically…, focusing attention once more on the problem which William L. Murphy wrestled with in 1900 - how to make the most of limited space.

Genericide doctrine

• Marks “born generic” (e.g., Video Buyer’s Guide) vs. those that become generic (Thermos, cellophane)

• Difference in burden of proving genericness

– Burden on defendant/accused TM infringer in cases of “genericide by common usage”

Evidence of genericness

• PTO decisions

• Dictionary listings

• Examples of newspaper and magazine usage

– Websites, blogs, etc. – the next frontier

K twist to the case

• Defendant enjoined from using “Murphy Bed” because of contract that prohibited it

• Why is defendant situated differently than a third party?

The Shredded Wheat case

• Genericide standard (“primary significance” test)

• Relationship to expired patent on machinery for making the product

– Watch out for overstatements in the Brandeis opinion!

Antimonopoly case/revision

• “Buyer motivation” standard

• Rejected by Congress, see Lanham Act sec. 14, 15 USC 1064

Policing Costs

• Why necessary? (To prevent genericide, if possible – see Xerox)

• Always wasted?

– Maybe not; may create an “alternative standard”, e.g., “copier” instead of Xerox

Merges, “Locke for the Masses: Property Rights and the Products of Collective Creativity,” 36 Hofstra L. Rev. 1179 (2008)

Functionality

• What is the (asserted) TM?

• Why did district court deny injunction for TM holder?

District court

• No TM protection (injunction) here because:

– (1) No “secondary meaning” for dual spring design

– (2) This design is “functional”

Circuit split

• Role of expired patent

– Eliminates chance for TD protection (Vornado)

– Does not (other cases)

WalMart v. Samara Bros.

Sup Ct

• “A prior patent … has vital significance in resolving the trade dress claim” – p. 799

• Strong evidence of functionality

• Heavy burden to show it is merely ornamental or arbitrary

Functionality generally

• “essential to use or purpose of article”

• “affects cost or quality of article”

• P. 801

• Aesthetic functionality: “significant non-reputation related disadvantage”

Supervision of licensees – Dawn Donut

• Definition of abandonment: 15 USC 1127

• Quality control rationale: p. 817

• Relate to merchandising industry . . .

What is the issue?

[U]nless the licensor exercises supervision and control over the operations of its licensees the risk that the public will be unwittingly deceived will be increased and this is precisely what the [Lanham] Act is in part designed to prevent.

[T]he Lanham Act places an affirmative duty upon a licensor of a registered trademark to take reasonable measures to detect and prevent misleading uses of his mark by his licensees or suffer cancellation of his federal registration. The Act, 15 U.S.C.A. §1064, provides that a trademark registration may be cancelled because the trademark has been “abandoned.” – IPNTA 5th at 919

Definition of “abandoned”

And ‘‘abandoned’’ is defined in 15 U.S.C.A. §1127 to include any act or omission by the registrant which causes the trademark to lose its significance as an indication of origin.

“Control or supervision” standard

• Quality control rationale

• Relate to merchandising industry . . .

Assignments in Gross

• Even clearer case of lack of supervision – assignment (all rights transferred) versus license (some rights transferred)

• Controversy over how much “extra” beyond TM itself must be assigned to avoid a charge of “abandonment”

What is the primary issue discussed in the opinion?

• Nontrademark (Nominative) use of a trademarked term

• “Once imbued with expressive value, the trademark becomes a word in our language and assumes a role outside the bounds of TM law.” – IPNTA 5th at 931

Why is the band’s use of “Barbie” a non-trademark use?

• Describes subject/content of song, NOT an indication of source

• Title describes work, not source of work

Target/Weapon distinction

• Compare “The Cat NOT in the Hat,” IPNTA 5th p. 931

• Held: Use of cat in the hat character and style to critique OJ Simpson trial was not parody

• Used Seuss book as a “weapon” to attack other issues; not attack on book itself

Examples of Nominative uses/Parodies

• Ginger and Fred film

• “Mercedes Benz” in Joplin song

• Campbell’s soup painting

Trademark Dilution case of action

• Finding: Barbie Girl song “blurs” Barbie TM

• BUT: Use of Barbie TM “falls within the noncommercial use exception” of the FTDA. IPNTA 5th at 936

New Kids on the Block – p. 938

Related issues (see if you can distinguish …)

• First amendment/parody

• Genericide

Lindy Pen Co. v. Bic Pen Co.

Preliminary issue

• “Reverse confusion”

• Large-market competitor adopts mark of smaller, less well known TM owner (senior user)

• Actionable under Lanham Act

Remedies

• Section 35(a) Lanham Act

• 15 USC 1117(a)

[Plaintinff can] recover (1) defendant’s profits, (2) any damages sustained by the plaintiff, and (3) the costs of the action. . . . In assessing profits the plaintiff shall be required to prove defendant’s sales only; defendant must prove all elements of cost or deduction claimed. In assessing damages the court may enter judgment . . . for any sum above the amount found as actual damages, not exceeding three times such amount.

Lindy Pen

• Equitable Accounting: only for willful infringement, cases that meet equitable standard (disgorgement of Bic’s profits)

Other damages

• Lindy’s lost profits

• Bic’s actual profits

Both theories possible

• But plaintiff must establish them in either case

• Here: Lindy failed to show (1) its own lost profits (did not break out phone sales from all sales); and (2) Bic’s profits (same).