INTRODUCTION TO TRADEMARKS & UNFAIR COMPETITION:

Law, Cases, Essays, Discussions

Also includes Intellectual Property Disputes in Reproductive Health CareAlso includes Intellectual Property Disputes in Reproductive Health Care

Naira Roland Matevosyan, MD, PhD, JSMNaira Roland Matevosyan, MD, PhD, JSMMedical Doctor, Jurist, Scientist, Author, Musician, MotherMedical Doctor, Jurist, Scientist, Author, Musician, Mother

April 16, 2016April 16, 2016

CONTENTSOverview of Trademark Law – 3 Trade-mark, Trade-name, Trade-dress – 4 - 7 Singularities and Overlaps in Laws Governing Trademarks, Patents,

Copyright, and Domains – 8 - 16 Trademark Capacity, Distinctiveness, Secondary Meaning,

Reverse Passing Off - 17 – 19 Inherent and Acquired Distinctiveness; Collective Marks – 18 - 20 Abercrombie Factors - 21 Product Packaging v. Trade-dress - 22 – 23 Trademark Dilution, Blurring, Tarnishment, Cybersquatting,

Disparagement - 24- 29 Infringement Suits, Polaroid Factors - 30 - 35 Defense Strategies, Lapp Factors, Calculating Remedies - 36 - 46 Unusual Marks, “Doctrine of Functionality” - 47 - 53 Extraterritorial Rights, Gray Market, Parallel Importation - 54 - 60

Essay & Analysis – 61- 65

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Overview of Trademark LawTrademarks are the most failure forms of intellectual property. In the United States, trademark laws are governed by the Trademark Act of 1946 or the Lanham Act [1], that defines the marks as including words, names, symbols, or combinations thereof that a person (or a company) uses or intends to use in commerce to distinguish his/her/its goods from those made or sold by another.

Trademarks establish the company's identity, the relationship with the government, and the consumers (potential or active). They create association in consumers' minds through linking them to three things:

(1) the mark(2) the product or service(3) the source of the product or service.

[1] 15 U.S.C.A. § 1051 et seq

Trade-mark & Trade-name Trademark - identifies or distinguishes goods or services and sources of those good or services [2].

Trade-name – a word or symbol used to distinguish businesses, company, or partnership.

What is then “The Corner Bookstore,” a name or a mark? Because it's more typical to a business name,we treat it as a trade-name rather than a trade-mark.

Core differences of regulations:● Trade-name is recommended but not required;● Trade-name is registered only at the state level; trademark

registration can occur at both state and federal levels and eventually, vigorous trademarks may acquire a federal protection.

[2] 15 U.S. Code § 1127 - Construction and Definitions: Trademarks 4

Trade-nameAlderman v. Iditarod Properties. Inc. [3]

- The dispute was about a name, "Fourth Avenue Theatre," which the Supreme Court of Alaska held as a trade-name (referring to a company, not to a service the company provides). In his disposition Justice Carpeneti defined the following identity in trade-mark and trade-name protection:

“Whether the name of a corporation is to be regarded as a trade-mark or a trade-name or both, is not entirely clear... To some extent the two terms overlap, but there is a difference, more or less definitely recognized, which is that the former is applicable to the vendible commodity to which it is affixed, and the latter to a business and its good will. A corporate name seems to fall more appropriately into the latter class.” [3]

[3] Alderman v. Iditarod Props., 32 P.3d 373, 380 (Alaska, 2001)5

Trade-dress Trade-dress is the "look and feel" of a product or service. It deals with combination of colors, shapes, images, odors, sounds. In the United States, trade-dress is protected under the common-law rights (acquired through the use in commerce) or by registration with the United States Patent & Trademark office (USPTO).

Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763 (1992)

- The issue was whether the trade-dress of a restaurant is protected under § 43 (a) of the Trademark Act (or the Lanham Act of 1946) - 60 Stat. 441, 15 U. S. C. § 1125(a) - based on a finding of inherent distinctiveness – without proof that the trade-dress has secondary meaning. Following the 5th Circuit's, and deviating from the 2nd Circuit's decisions, the U.S. Supreme Court held that “an inherently distinctive trade-dress is protectible under § 43 of the Lanham Act, even without a showing that it has acquired secondary meaning..”

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Seminal Trade-dress Disputes (continued)● Wal-Mart Stores, Inc. v. Samara Brothers, Inc., 529 US 205 (2000)

PRIMARY INQUIRY: under what circumstances a product's design is distinctive, therefore protectible, in an action for infringement of unregistered trade dress under § 43(a) of the Trademark Act of 1946. HOLDING: Reversing the 2nd Circuit's decision, the U.S. Supreme Court held that “in an action for infringement of unregistered trade dress under § 43(a) of the Lanham Act, a product's design is distinctive, and therefore protectible, only upon a showing of secondary meaning.”

● Qualitex Co. v. Jacobson Products Co., 514 US 159 (1995)

ISSUE: whether the Trademark Act of 1946, 15 U. S. C. §§ 1051-1127 (1988 ed. and Supp. V), permits the registration of a trademark that consists, purely and simply, of a color. HOLDING: Reversing the 9th Circuit's decision, the U.S. Supreme Court held that “sometimes, a color will meet ordinary legal trademark requirements. And, when it does so, no special legal rule prevents color alone from serving as a trademark.”

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Very briefly: Differences between Trademarks, Patents, Copyright, and Domains

- Unlike the patent, trademark does not show the functionality/function of a business, good, or service. A trademark (TM) can be acquired with non innovative input from the owner whatsoever.- Unlike the copyright, TM refers only to the commerce. Both TM and copyright may refer to expressive works. TM, however, does not protect creation or inventiveness at all. - For using a TM as a domain name (website), the owner must purchase domain registration from an ICANN-accredited registrar. In certain instances, a TM owner may have dual-benefit. When a new top-level domain (TLD) or country code top-level domain (ccTLD) is launched, there will be a “sunrise period” which allows TM owners apply for domain names that correspond with their registered TMs - before domain name registration opens up to the general public. Both TM and domain-name expire over time and are renewable [4].

[4] Ghosh S, Gruner R, Kesan J, Reis R (2010). Intellectual Property: Private Rights, The Public Interest, and the Regulation of Creative Activity (Thomson West 2nd Ed) 8

Overlaps in Patent Law and Trademark Law Commonly, patent and trademark laws do not overlap. Yet, when it comes to a product design (of a musical instrument or sportswear), it may be possible to obtain a design-patent on the ornamental aspects of the device (as distinguished from the utility-patent for the invention itself), while invoking trademark law to protect the design as a product identifier. For example, a surfboard manufacturer may win a design-patent for a surfboard appearance. So, if the design is intended to be (and actually is) used to distinguish the particular type of surfboard in marketplace, TM law may kick-in to protect the appearance of the board.

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Key Differences in Trademark and Patent Laws

● Coverage: Patent law covers functional aspects of the product. Trademark law covers non-functional aspects that identify source of the product.

● Protection: Both are federal laws. A trademark, however, can go beyond the national borders, obtaining international coverage and protection.

● Functionality Defense: Trademark cannot be made over the subject matter that had been patented. A trademark claim can't be based on functional aspects of sign protected by the patent [5].

[5] TrafFix Devices, Inc. v. Marketing Displays, Inc., 532 U.S. 23 (2001)

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Drawing Boundaries between Trademark & Patent Laws

TrafFix Devices, Inc. v. Marketing Displays, Inc., 532 U.S. 23 (2001)

Inventor R. Sarkisian designed a dual-spring mechanism to attach to temporary road signs for high-wind resistance, and obtained two utility patents for his design. Marketing Displays, Inc. (plaintiff) obtained the patents and ran successful business thereafter. Once the patents expired, TrafFix Devices, Inc. (defendant) began selling road signs that incorporated a similar dual-spring mechanism. Plaintiff filed for trade-dress infringement. The District Court found for defendant and the Court of Appeals reversed. The U.S. Supreme Court granted certiorari.

ISSUE: Whether an expired utility patent, determined to serve functional purposes only, is entitled to trademark protection?

HOLDING: An expired utility patent, determined to serve functional purposes only, is not entitled to trademark protection (continued).

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TrafFix Devices, Inc. v. Marketing Displays, Inc (continued)

Honorable Justice Kennedy noted, that under trade-dress law, a “design or packaging of a product may acquire a distinctiveness which serves to identify the product with its manufacturer or source; and a design or package which acquires this secondary meaning is a trade-dress, which may not be used in a manner likely to cause confusion as to the source or goods.”

In this case, the patent had expired. Thus, the person who sought to reestablish the patent might convince that the feature of the patent in question was not only functional by showing that “it was merely an ornamental, incidental, or arbitrary aspect of the device.” Theoretically, a trademark claim is possible on an expired patent. Yet, the main purpose of Sarkisian's dual-spring design was to keep the traffic sign standing upright in heavy winds. Therefore, the design was decidedly functional. Due to its functionality, competitors did not need to significantly alter or hide the dual-spring design. As such, this expired patent, determined to serve functional purposes only, was not entitled for TM protection. 12

Drawing Boundaries between Trademark & Copyright Laws

Dastar Corp. v. Twentieth Century Fox Film Corp., 539 U.S. 23 (2003)

Twentieth Century Fox owned a copyright of a movie based on President (then General) Dwight Eisenhower's book about WW2, entitled “Crusade in Europe” and published in 1948 by Doubleday. Dastar used video footage from a public domain to create a slightly different video of his own, and then sold it without giving credit to Fox. 20th Century Fox sued Dastar for copyright and “reverse trademark infringement” or “reversed passing off ” under the Lanham Act.

Traditional passing off is when counterfeit products are sold under a recognized trademark. Example: selling cheap watches under Rolex TM.

Reversed passing off (rare)is when a producer misrepresents other's services as his own, or sells actual product under another company's trademark. Under the Lanham Act, the owner can prevent reverse passing off if there is likelihood of consumer confusion as to the origin of product or service (continued). 13

Dastar v. Fox (continued)PROCEDURAL SUMMARY: The District Court granted summary judgment for plaintiff (20th Century Fox). The 9th Circuit reversed the copyright claim and remanded it, but upheld the "reverse passing off" ruling. The U.S. Supreme Court granted certiorari regarding the Lanham Act claim.

ISSUE: whether plaintiff had a copyright in the underlying work, i.e. Eisenhower's book “Crusade in Europe.”

HOLDING: Section 43(a) of the Lanham Act does not prevent the unaccredited copying of an uncopyrighted work.

REASONING: Dastar was the “origin” of the physical product that it sold. Dastar took the material from public domain, modified it, and sold the resulting product. Fox claimed that Dastar's actions constituted “false misrepresentation” as to the “origin,” thus, were “reverse passing off.” The Court reasoned that the meaning of the word “origin” in the statute rests solely on the manufacturer of the goods, not to the creator of the work. Because Dastar did manufacture the videotape, there was no passing off.

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Could We Incorporate Trademarks into Domain Names, and How?

Domain-name is a website address that moves the user to a particular page. It also is an internal identifier that allows server to find particular websites at request. Names are managed by private registries (subject to national laws and international treaties).

A domain name can qualify as a trademark (TM) when it's used in connection with a website that offers services (sites that conduct e-commerce, or provide web-services such as avvo.com, doctorbase.com, ixl.com). However, only some types of commercial domain names qualify for TM protection. For instance, while domain names that use descriptive terms (like healthanswers.com) may work well to load visitors, they usually don't qualify for TM protection. Put differently, by using common terms that are generic names for a service (like, dictionary.com) or by using words that merely describe service or some aspects of it (like returnbuy.com), the owner of the name will have less TM rights against the users of similar domain names than she would if her domain name was distinctive. 15

Domain & Trademark (continued) Lamparello v. Falwell, 420, F. 3d 309 (4th Cir. 2005) At issue was the likelihood of consumers' confusion when a critique registers a domain name to establish a website under his target's name. Reverend J. Falwell had trademarks for “Jerry Falwell” and “Falwell,” and also operated a website, www.falwell.com. Lamparello registered a domain name www.fallwell.com, to operate a website that criticized the teaching and ideology of Rev. Falwell. Lamparello neither sold goods or services from his website, nor he sought payments from Falwell for his rights to the domain name, www.fallwell.com. Lamparello filed for declaratory judgment. Falwell counter-sued for TM infringement and violation of the Anti-cybersquatting Consumer Protection Act (ACPA). The District Court granted a summary judgment for Falwell. On appeal, the 4th Circuit reversed, by holding that “consumer was not confused by the domain name. There was a parody quality from avoided likelihood of confusion and therefore, Rev. Falwell had no TM infringement case.” 16

Trademark Capacity & Distinctiveness Trademark law requires originality, which means that the new symbol, name, or word would create the least likelihood of consumer's confusion. Accordingly, a trademark can be registered as long as it has "distinctive capacity." Tradename too, is required to have distinctive capacity. The concept of distinctiveness has two components:

● intrinsic capacity - the mark's ability to identify when considered in itself (originality);

● extrinsic capacity - the mark's distinguishability from other existing marks (almost like novelty).

There are four possibilities:

- fanciful -arbitrary -suggestive -descriptive - generic. 17

Note: Generic marks or names are not protected under the Lanham Act.

TM Distinctiveness (continued) Trademark distinctiveness can be inherent or acquired, the core concept in governing laws. The essential function of a trademark is to exclusively identify the commercial source or origin of products and services, indicating the source or serving as a badge of origin. The inherently distinctive TM is a strong mark. A TM with no distinctive character (not inherently distinctive) is prima facie unregistrable. However, most jurisdictions may allow such marks to be registered if the owner can demonstrate - by referring to evidence of use - that consumers in marketplace exclusively associate the mark, as used on the identified goods or in connection with the identified services, with a particular commercial origin/source (acquired distinctiveness).

So, if a proposed TMis not inherently distinctive, it may be registered on the Principal Register only upon proof of acquired distinctiveness, or “secondary meaning,” that is, proof that it has become distinctive as applied to the applicant’s goods or services in commerce [6].

[6] §2(f) of the Trademark Act, 15 U.S.C. §1052(f). 18

Acquired DistinctivenessThree basic types of evidence may be used to establish acquired distinctiveness under §2(f) for a trademark or service mark:

(1) Prior Registrations: A claim of ownership of one or more active prior registrations on the Principal Register of the same mark for goods or services that are sufficiently similar to those identified in the pending application (37 C.F.R. §2.41(a)(1); also see TMEP §§1212.04–1212.04(e));

(2) Five Years’ Use: A verified statement that the mark has become distinctive of the applicant’s goods or services by reason of the applicant's substantially exclusive and continuous use of the mark in commerce for the five years before the date on which the claim of distinctiveness is made (37 C.F.R. §2.41(a)(2); also see TMEP §§1212.05–1212.05(d));

(3) Other Evidence: Other appropriate facts of acquired distinctiveness (37 C.F.R. §2.41(a)(3); also see TMEP §§1212.06–1212.06(e)(iv)). 19

Collective TrademarksThe three basic types of evidence (discussed in former slide) apply similarly to collective trademarks, collective service marks, and collective membership marks (together “collective marks”), and certification marks, with slight modifications regarding the type of evidence required due to:

(1) the different function and purpose of collective and certification marks;

(2) the fact that these types of marks are used by someone other than the applicant [7].

[7] 37 C.F.R. §2.41(b)-(d).

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TM Distinctiveness (continued)Distinctiveness may refer to the TM color, shape, odor, hint, or fashion. Abercrombie & Fitch, Co [8] established the spectrum of TM distinctiveness, breaking trademarks into classes with different degrees of protection, known as "Abercrombie factors":Fanciful marks: show inherently distinctive and entirely invented or "fanciful" sign. Example: "Exxon" had no meaning before it was generated as a TM in relation to goods, whether photographic goods .

Arbitrary marks: consist of words or images which have some dictionary meaning before being adopted as TMs, but which are used in connection with products/services unrelated to that dictionary meaning. “Apple” computer industry is an example.

Suggestive marks: indicate the nature, quality, or characteristics of products or services in relation to which they are used, but do not describe this characteristics and require imagination on the part of the consumer to identify them. Example: “Clouds” technology of high-capacity data storage.

Descriptive marks: products or services directly related to that meaning. Not registrable unless shown that distinctive character has been established in the term through extensive use in the marketplace. Example: “Cheetos”- cheese powdered crackers or anchovies.

Generic terms: a common name for the products/services in connection with which it is used, such as "salt" when used in connection with sodium chloride. Incapable of serving the essential TM function.

[8] Abercrombie & Fitch Co. v. Hunting World 537 F.2d 4 (2nd Cir. 1976) 21

Is product packaging a trade-dress? Is it distinctive? Can it be treated like a trademark?

Yes. Product packaging is treated like any other trademark. Product design is subject to a special rule requiring a showing of acquired distinctiveness.

The Yankee Candle. v. The Bridgewater Candle., 259 F. 3d 2 (1st Cir. 2001)

Yankee Candle Co., a leading manufacturer of scented candles, sued Bridgewater Candle Co. on counts of copyright infringement (for 9 labels of candle fragrances),trade dress infringement (under Lanham Act 43[a]), tortious interference, and deceptive trade practices under state laws. The District Court granted summary judgment for defendant on all claims except of tortious interference and deception. The 1st Circuit affirmed.

In order for a trade-dress be protected under 43(a), plaintiff must prove that the dress: (1) is used in commerce; (2) is non-functional; and (iii) is distinctive (at least acquires a "secondary meaning" whereby the public views its primary significance as identifying the source of the product rather than the product itself). It must not be descriptive or functional.22

Yankee's Trade-dress Claims

The District Court identified (and the 1st

Circuit affirmed) three ways of alleged trade-dress infringement: (a) by copying Yankee's method of shelving and displaying candles in stores or "Vertical Display System"; (b) by copying the overall "look and feel" of Yankee's Housewarmer line of candles; and (c) by copying the design of Yankee's catalog. The Court held that the Vertical Display System was "manifestly functional," thus, Yankee could not invoke the Lanham Act to appropriate such a conventional method of presenting its wares. Next, both claims for "look and feel" of candle-lines and for the layout of Yankee's merchandise catalog alleged trade dress infringement of a product design/configuration, rather than infringement of a product packaging. Thus, neither aspect of Yankee's trade dress could be inherently distinctive (see Wal-Mart, 529 U.S. at 213-14). The Court concluded that Yankee had fallen short of a "vigorous evidentiary standard” for showing secondary meaning in a product design or configuration case. 23

Trademark Infringement & DilutionTrademark Infringement & Dilution

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Under the Federal Trademark Dilution Act (FTDA),[9] trademark dilution is “the lessening of capacity of a famous mark to identify and distinguish goods or services, regardless of the presence or absence of (1) competition between the owner of the famous mark and other parties, or (2) likelihood of confusion, mistake, or deception.” Dilution, as a basis of TM infringement, only applies to famous marks. Dilution differs from infringement with that: - dilution claim requires showing the likelihood that the mark has been or will be tarnished or blurred in some what; - infringement claim requires showing the likelihood of confusion as to the source of the product or service; - dilution is not restricted to similar products or services; - infringement claims can only be brought against close competitors.

[9] 15 USC 15 §1125

Trademark TarnishmentTarnishment is a flavor of dilution. Trademark is tarnished when an infringing mark portrays the infringed mark in a negative light - usually in the context of obscenity, cruelty, sex, crime, etc. It also applies when the infringer offers low quality goods.

Thus, tarnishing threatens to destroy the commercial value of a mark because consumers may associate the lack of quality of the infringer's goods with the suffered mark's unrelated goods, or because the infringer's use reduces the trademark's reputation as a wholesome identifier of the owner's products or services.

Dilution by blurring slowly whittles away at the trademark's distinctiveness, whereas dilution by tarnishment is an attack on the reputation and positive image of a mark.

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Moseley v. V. Secret Catalogue, Inc., 537 U.S. 418 (2003) Moseley was a notable case of trademark dilution through blurring, that established that trademark dilution requires actual dilution. In 1988, “Victoria's Secret,” a registered famous trademark owned by V. Secret Catalogue, Inc., marketed moderately priced high quality lingerie designed to look like a woman's bedroom lingerie. In 1998, “Victor's Secret,” a Kentucky based adult novelty store owned by the Moseleycouple, sold similar lingerie. Due to consumers' confusion and complaints, the store changed its name to “Victor's Little Secret.” Victoria's Secret filed for tarnishment. The District Court held that the Victor's Secret mark diluted the Victoria's Secret mark through its tarnishing effect as “a famous mark is tarnished when its mark is semantically associated with a new mark that is used to sell sex-related products,” and prohibited Moseleys from using the “Victor's Little Secret” name. On appeals, the 6th Sixth Circuit upheld the injunction, using the newly adopted standards for determining dilution under the FTDA [9] (continued).[9] 15 USC 15 §1125

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Such standards were based on the 2nd Circuit's test [10], and were in conflict with the 4th Circuit's holding that proof of actual economic damages was necessary for a TM dilution claim to prevail under the FTDA [11]. Because of the differences between the circuits , the Supreme Court granted certiorari to resolve the conflict.

The Court noted, that under the FTDA the owner of a TM may obtain an injunction if another person's commercial use of a mark or trade name "causes dilution of the distinctive quality" of the famous mark. The FTDA defined dilution as "lessening of the capacity of the famous mark" and "likelihood of confusion, mistake, or deception." Thus, proof of actual dilution was required. However, this proof did not necessarily include actual loss of sales or profit - as the 4th Circuit had held. Instead, the owner of the TM could use surveys or other circumstantial evidence of dilution. As Victoria's Secret did not provide evidence of actual dilution, the judgment of the circuit court was reversed and remanded.

AFRERMATH: Following the remand, in 2006 Congress passed the FTDRA, which eventually overturned the Supreme Court's Moseley decision.[10] Nabisco, Inc. v. PF Brands, Inc., 191 F.3d 208 (2nd Cir. 1999)[12] Ringling Bros.-Barnum & Bailey Combined Shows, Inc. v. Utah Div. of Travel Dev., 170 F.3d 449 (4th Cir. 1999)

Moseley v. V. Secret Catalogue, Inc (continued)27

Disparagement Under the Lanham Act, disparagement is a statutory cause of action that permits a party to petition the Trademark Trial and Appeal Board (TTAB) of the USPTO to cancel a trademark registration that "may disparage or falsely suggest a connection with persons, living or dead, institutions, beliefs, or national symbols, or bring them into contempt or disrepute." [12] Unlike the TM validity claims, a disparagement claim can be brought at any time, subject to equitable defenses.

The USPTO uses a two-step test to determine whether a TM is disparaging to a group of people [13]:

● Would the mark be understood in its context as referring to an identifiable group of people?

● May that reference be perceived as disparaging to a substantial composite of that group?

[12] 15 U.S.C. § 1052

[13] Harjo v. Pro-Football, Inc., 50 U.S.P.Q.2d (BNA) 1705 (TTAB 1999). 28

Disparagement (continued) Whether a mark involves an identifiable group, needs consideration of the:

● Dictionary definition of the term● Relationship of the term and other elements of the mark● Type of product upon which the mark appears ● Appearance of the mark in the marketplace [13].

EXAMPLES: (1) A depiction of Buddha style for beachwear; (2) use of a Muslim group name as a wine brand name (when in fact, Muslims do not drink wine); (3) an image consisting of a large "X" over the hammer and sickle – the national symbol of the former Soviet Union. Self-disparaging TMs have been allowed where the applicant has shown that the mark as-used is not considered by the relevant group to be disparaging. An example of a registered mark with a self-disparaging term is Dykes on Bikes, a chartered lesbian motorcycle club [14].

[14] Todd A (2006). Self-Disparaging Trademarks and Social Change: Factoring the Reappropriation of Slurs into Section 2(a) of the Lanham Act. Columbia Law Review; 106: 338

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Trademark Infringement & Remedies

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At the theory level, there is no infringement law for unregistered marks under the Lanham Act. In practice, though, the courts may hold that unregistered marks may also be protected under Sec. 1125 (a) of the Act. This is called the federal anti-competition cause of action. Remedies for TM infringement may include: (a) an injunction to stop the infringing use, (b) monetary damages for the wrongful use of the trademark, and rarely (c) awards of the attorney fees. Monetary awards and attorney fees are issued only when an ill-intent is established by jury (dilution by blurring, cyber-squatting).

REGISTERED MARKS UNREGISTERED MARKS

Infringement15 USC 1114

Likelihood of Confusion N/A

Unfair Competition 15 USC 1125 (a)

Likelihood of confusion as to the source or association

Likelihood of confusion as to the source or association

Cybersquating15 USC 1125 (d)

Domain name that is identical or continuingly similar to TM, or dilutive to a famous mark.

Domain name that is identical or continuingly similar to TM, or dilutive to a famous mark.

Trademark Infringement (continued)

Trademark infringement cause of action can be brought in both federal and state jurisdictions. Usually, state claims or business tort claims are backups to the federal TM infringement claims.

The purpose of such cause of action is to protect the brand identity associated with trademark, like in Rolex case [15]. The point is, that the consumer pays high cost anticipating a high quality of product and may be confused, misled, and over-charged. Thus, a TM registration creates a presumption of ownership and validity of the mark. If the TM is used for 5 years continuously, it can be challenged only if: - it has become generic - there was fraud in its registration. Practically speaking, courts treat TM infringement for unregistered and registered marks under the same standard (see Table, p. 30).

[15] Rolex Watch USA, Inc. v. Robert Meece; No. 97-10991 (1998)31

The TM Infringement Suit● FOR PLAINTIFF: In order to succeed in a TM infringement claim, the TM owner must show: (1) ownership of a valid mark; (2) likelihood of consumers' confusion. ● FOR DEFENDANT: In responding to the claim, defendant must show that a majority (> 5) of the following eight factors weigh in his favor (also known as Polaroid factors) [16]:

1) Strength of the mark (consumer's strong association)

2) Degree of similarity between the marks

3) Competitive proximity of the products

4) Actual confusion

5) Likelihood the plaintiff will bridge the gap

6) Defendant's good faith in adopting the mark

7) Quality of the defendant's products

8) Sophistication of the purchaser.● Actual confusion is not required. Bad faith use (intent) by defendant is a strong and unfavorable factor.[16] Polaroid Corp. v. Polarad Elecs. Corp., 287 F.2d 492 (2d Cir. 1961) 32

Infringement Suits: Strength of the Mark Brennan's Inc v. Brennan's Restaurant, LLC , 360 F3d 125 (2nd Cir. 2004)

● Brennan's, Inc. (plaintiff) owned and operated a restaurantin New Orleans, LA under a registered TM name, “Brennan's.” Plaintiff operated another restaurant in Memphis, TN, named “Owen Brennan's Restaurant.”

● Terrance Brennan (defendant) was a reputable New York City chef who owned two restaurants in NYC; among those “Terrance Brennan's Seafood & Chop House” in Manhattan. The forename “Terrance” was added later, in the middle of controversy.

● Brennan from New Orleans sought a preliminary injunctionon the grounds that the name Terrance Brennan's Seafood &Chop House infringed his rights in the name Brennan's and waslikely to cause consumer confusion.

● The Court denied the motion for preliminary injunction. In Brennan's case, the only factors that weighed in favor of plaintiff were strength (quality) of the mark and similarity. Validity wasn't at issue. At core was the likelihood of consumer confusion. Here, the actual confusion was not required for plaintiff to succeed. Bad-faith use by defendant was a sufficient factor of infringement.

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Infringement Suits: False AdvertisingTumbleBus Inc. v. Cranmer, 399 F. 3d 754 (6th Cir. 2005)Tumble bus is a full-sized school bus converted into a mobile gymnasium, for provision of instructional gymnastic and physical education services.15 USC Sec 1125 (a) forbids false designations of origin, false descriptions, dilution, false advertising that are likely to cause confusion. Under this claim, the TM owner has to prove that TM is valid as it:

● has been used in interstate commerce● is distinctive● is not barred by the statute.

If the TM is registered, the owner can rely on the registration as evidence of validity and ownership. The legal standard of showing the likelihood of confusion is the same.Brenda Scharlow (plaintiff) owned Tumblebus, Inc., for operating in limited areas of Kentucky. Pate purchased a retrofitted bus, then advertised and sold it to Cranmer (defendant) for operating it in expanded area of Kentucky, and under the name "Tumblebus.” Tumblebus Inc. filed suit accusing Cranmer of TM and trade-dress infringement and false advertising in violation of § 43 of 15 U.S.C. § 1125(a), as well as unfair competition under Kentucky common law. Cranmer illustrated two defenses: (1) abandonment through naked licensing; and (2) first sale (infringement doesn't apply if the seller alters and resells the product).The lower court entered for plaintiff. The Appeals reversed and remanded, holding that not all aspects of the trade dress were infringed: “Dilution claims can only be raised for famous marks- that is, ones that have a strong reputation and are recognized by consumers broadly.” 34

Infringement Suits: Blurring of a Famous Mark

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Starbucks Corp. v. Wolfe's Borough Coffee, Inc., 588 F.3d 97 (2nd Cir. 2013)The famous Starbucks Co. (headquartered in WA) operates since 1971. In 1997, Wolfe's Borough Coffee d/b/a Black Bear (headquartered in NH) began roasting a dark blend called and labeled as "Charbucks.” Both roasted coffees conferred to the high quality standards.

Starbucks filed suit against Black Bear for trademark dilution under the Federal Trademark Dilution Act (FTDA), 15 U.S.C. 1125(c), 1127. The District Court denied the claim, holding that Starbucks failed to prove that Black Bear's "Charbucks" marks were likely to dilute Starbuck's famous "Starbucks" marks. The Appeals held that there was no dilution but closeness to the likelihood of confusion, a minimal degree of similarity between the Starbucks marks and the Charbucks marks, and that Starbucks demonstrated only a weak association between the marks. Accordingly, judgment of the lower court was affirmed.

In 2006, Congress amended the Lanham Act to clarify that the legal standard in dilution disputes must be likelihood of dilution, not actual dilution as the Supreme Court had previously ruled (see Moseley v. V. Secret Catalogue, Inc, 2003). Likelihood of dilution can be shown through either: (1) likelihood of blurring, or (2) likelihood of tarnishment. Key factors in such rulings are: (a) fame and strength of the mark, (b) similar channels of trade, and (c) similar types of products.

DefenseThe U.S. Trademark Law (15 U.S. Code § 1125) protects the rights of companies who have developed words, logos, and other brands that create associations for consumer with specific products and services. Defense under the Lanham Act includes: - Fair use- First amendment - Special defenses to dilution- First sale doctrine.Key remedies for TM infringement include: - compensating TM owner for the economic damage from the infringement - preventing future use of the mark - as formerly discussed, some types of infringement with ill-intent (blurring, squatting) may also be subject for the attorney fee compensation. 36

Defense StrategiesFAIR USE DEFENSE

1) Descriptive Fair use - allows a person to use a TM to describe the TM owner's product. Note: this defense protects the use of TM as ordinary work either to describe or to refer to a company, product or service by name. This types of defense is rare, and mainly applies to fanciful or arbitrary marks.

2) Nominative Fair Use - allows a person to use a TM as a name to refer to a product or service.

Descriptive Fair use Case: KP Permanent Make-up, Inc.v Lasting Impressions, Inc. 343 U.S. 111 (2003)KP was using the word "Microcolor" to describe to the owner's product rather than to brand its own product. The District Court entered summary judgment on KP's descriptive defense. The 9th Circuit reversed ordering defendant to show that there was no likelihood of consumer confusion for descriptive fair use. Such a decision was in conflict with other circuits and the case was furthered. The Supreme Court reversed, holding that defendant did not have the burden of showing a lack of confusion when raising a defense of descriptive fair use. It opined, that a fair descriptive use is inherently unlikely to cause confusion for the purpose of defrauding. 37

Fair Use Defense (continued)Nominal Fair Use Defense Case: Century 21 real Estate Corp.v. Lending Tree, Inc.s 425 F.3d 211 (3rd Cir. 2005)

Lending Tree operated a website offering referrals to, and opportunity to do business with, lenders, real estate brokers, auto insurers and other fin-service companies. Plaintiffs permitted their franchisees to utilize their TMs in operating the real estate brokerage businesses. However, such use of TM (Century 21, ERA and Coldwell Banker) should be done in conjunction with the franchisee's d/b/a name. Thus, the Smith brokerage could only be called Century 21 Smith Realty, instead of Century 21 Realty.

The dispute was about plaintiffs' TMs on Lending Tree's website and in other marketing materials. Among other things, plaintiffs objected to statements like “Lending Tree is represented by large independent real estate companies,” or “Lending Tree is affiliated with more than 700 certified brokers.”

The District Court rejected defendant's nominative fair use defense. On appeal, the 3rd Circuit reversed and remanded in light of the new test adopted by the majority for determination of the propriety of a defendant's nominative fair use of other's TM.

The Appellate Court found that the use of marks in this case satisfied the nominal use defense. The burden was on TM owner to show that the 3 out of 4 factors (developed by the 9th Circuit in New Kids on the Block v. News America Pub., Inc., 971 F.2d 302 (9th Cir. 1992) were not met (see in the next slide). 38

Factors of Nominal Fair Use As held in Century 21's court, the mark holder cannot rely on ten factors commonly examined by the 3rd Circuit (known as the Lapp Factors, established in Interpace Corp. v. Lapp Inc., 1983) to determine likelihood of consumers' confusion. Instead, the two of those factors (degree of similarity between the owner's mark, and the strength of the owner's mark) can be ignored altogether. The 3rd Circuit advised that the courts must focus primarily on the following four out of remaining eight factors:

(1) the price of the goods and other factors indicative of the care and attention that may be expected of consumers when making a purchase,

(2) evidence of actual confusion,

(3) the length of time defendant has used the mark without actual confusion, and

(4) the intent of defendant in utilizing the mark.

The remaining Lapp factors that courts may consider are:

(1) whether the parties' goods are marketed through the same channels and advertised through the same media; (2) the extent to which the targets of the parties' sales efforts are the same; (3) the relationship of the parties' respective goods in the mind of the consumer because of a similarity of function, and (4) facts suggesting the consuming public may expect the mark owner to expand into the defendant's market.

In its decision, the 3rd Circuit held that (1) the use TM was necessary to refer to plaintiff's or defendant's product or service; (2) defendant used only so much of the TM as necessary to make the reference; and (3) defendant did not represent the relationship of TM or plaintiff's product or service with his product or service.39

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Differences Between Descriptive and Nominative Fair Use Defense

Classic fair use is a statutory defense in which the TM term is descriptive and is used by defendant to describe its own products. An example was the KP Permanent Make-Up [slides 37-38]. As a statutory fair use, it's a common defense against any TM infringement claim, including a non-incontestable registrations and §43(a) infringement claims. Finding of likelihood of confusion is not necessarily a bar to the statutory fair use defense.

Nominative fair use is a commonlaw (judge-made) defense, which applies when defendant uses the TM to describe the plaintiff's goods or services, like in comparative advertising. Nominative use does not require acknowledging of the TM ownership. An example, New Kids case [16].

Key difference between these two is in their procedural onset. Put variously, the critical difference is where and when these two tests bring the inquiry into nominative fair use defense. The issue in nominative fair use cases is whether the term used was the only term reasonably available, while in statutory fair use defense defendant needs to establish that the term was used descriptively and not as a TM, even if there were other succinct and descriptive terms available.

[16] New Kids, 971 F.2d at 308-09; Century 21, 425 F.3d at 228-31 40

Similarities in Descriptive & Nominative Fair Use Defense Often, these two types of fair use defense can overlap in the assessment of the likelihood of consumers' confusion. The Lanham Act places on plaintiff the burden of establishing a likelihood of confusion as a critical element of its prima facie showing. The fair use language on the other hand, makes no mention of likelihood of confusion. Even absent in the statutory defense, defendant could prevail if plaintiff fails in satisfying its burden in proving likelihood of confusion. For example, in Zatarains is Sands case [17] the Quaker Oat's use of the term "thirst aid" was descriptive, but it did not pass the remainder of the statutory test.

Multi-message cases are even harder to try. In Brookfield Communications [18], for example, defendant used a TM MOVIEBUFF in its metatags. Although the Court recognized that "movie buff" is a descriptive term, it held that defendant's elimination of the space between the words "movie" and "buff" was "pivotal" and enjoined defendant's using "MovieBuff" while allowing to use "Movie Buff."

[17] Zatarains is Sands, Taylor & Wood Co. v. Quaker Oats Co., 978 F.2d 947 (7th Cir. 1992)

[18] Brookfield Communications, Inc. v. West Coast Entertainment Corp., 174 F.3d 1036 (9th Cir. 1999)

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First Amendment Defense1st amendment protections include:

- political speech

- commercial speech

- comparative advertising.

Bosley Medical Institute, Inc. v. Kremer, 403 F. 3d 672 (9th Cir. 2005)

Bosley Medical Institute (plaintiff) was the owner of several TMs: Bosley, Bosley Medical, Bosley Healthy Hair, etc. Mr. M.S. Kremer (defendant), a former patient of Bosley, was dissatisfied with his experience. Kremer registered a domain name and a website, www.BosleyMedical.com, www.BosleyMedicalViolations.com linking to each other and to other complaint sites. He informed Bosley about that in writing. Kremer neither earned any revenue from the website, nor did he sell any goods or services through the webs. Bosley filed against Kremer for trademark infringement, dilution, unfair competition, and libel. District Court entered summary judgment for defendant on federal claims and dismissed the state law claims under California's anti-SLAPP law. The Court also held that there was no dilution of TM as not profit was sought. The 9th Circuit reversed partly and remanded, holding that defendant could not be held liable for TM infringement or dilution for using Bosley's name in creating a website that was critical of the company's business practices. 42

Special Defenses on Dilution and Comparative Advertising

As discussed in Starbucks v. Charbucks [slide 35], in comparative advertising defense cases defendant does not have to make a TM statement to a critical commentary. Critical commentary cases can be viewed under the dilution claims. Here, in Starbucks case, defendant did not have to alter the TM to make his point. He could simply mis-state that "Starbucks over-roasts its coffee beans...", for example. Some like over-roasted coffee, others like under-roasted coffee. Thus, such mixed messages are hard to try for ill-intent.

Comparative advertising permits a competitor to use TM owner's mark to make comparative statements. The difficult line not to cross is to avoid making statements that tarnish TM owner's mark. Often, it is unwise to rely on special dilution defense based on comparative advertising.

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First Sale Defense● The resell of merchandise online is a growing industry. People who used to sell

secondhand goods at garage or yard sales are now able to sell them on a much larger scale-marketplace like eBay, Amazon.com, or Bigproductstore.com.

● Under the first-sale doctrine, individuals who buy a product may resell, lease, barter, or give away that same product without the TM owner's permission. As discussed in Tumblebus Inc. v. Cranmer [slide 34], a person may resell a TM product purchased legitimately, if the product was not altered in any way.

● There are limitations, however. Sellers may not give the impression like they are authorized by the TM owner. The seller also may not alter the goods or sell “materially different” goods [18]. Often, it's inept relying on this doctrine in a TM infringement defense.

● A few terms are helpful to know:

Initial-interest confusion : Using a third party's trademark to lure consumers to your own products or services, even though consumers will not be confused about the source of the goods when they actually make a purchase.

Keywords or keyword advertising: Purchasing search terms from a search engine's advertising service that will lead search-engine users to your own website.

[18] Sebastian Int'l v. Longs Drug Stores Corp., 53 F.3d 1073, 1074 (9th Cir. 1995)

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Calculating Remedies In calculating damage(s), plaintiff has the burden of showing the revenues earned by defendant. Defendant has the burden of showing costs that are subtracted from the revenues to establish profits. Recovery of TM infringement damages include: (1) injunctive relief (under USC 15 §1114 (a), §1125 (a) (2) monetary award, (3) rarely, attorney fees.

● Money damages in TM actions are commonly awarded under three legal theories: actual damages, profits, and statutory damages. Monetary award for damages is only issued if it exceeds the amount of profits lost by the TM owner (actual damages) as a result of infringement.

● Injunctive relief remedy includes: equitable relief (under §1116, 1114(a), 1125 (a)), destruction of infringing article (under §1118), forfeiture or cancellation of domain (under §1125(d), §1125 (d)(1)(C)).

● Attorney fees are available under § 1117 (dilution) - where intent matters.45

RemediesREMEDIES INJUNCTIVE RELIEF MONETARY COMPENSATION

§1114(a) and §1125 (a)

● Equitable relief is available under §1116.

● Destruction of infringing article is available under §1118.

● Under §1117.● Profits can be enhanced or

diminished by the judge. Damages can be trebled.

● Attorney fee in exceptional cases.

● Statutory damages for counterfeit marks.

1125 (c)Dilution

● Injunctive relief is the primary remedy under §1125 (c)(2).

● In dilution is willful, destruc-tion of infringing article is available under §1118.

● If dilution is willful, then profits, damages, and attorney fees are computed under §1117.

§1125 (d)Cybersquatting

● Forfeiture or cancellation of the domain name under §1125 (7)(1)(C).

● Actual damages, profits, and statutory damages under §1117 (d). No damages for in-rem action under §1125 (d)(2) 46

Unusual Marks: Functionality DoctrineSound, voice, smell, texture can also serve as trademarks (non-conventional marks), especially in perfume or pharmaceutical industries. Commonly, colors reflect the chemical features and sounds reflect both chemical and mechanical features of a product. In addition, they create safety features for the consumer, so the latter will not confuse the product or service with the generic one.

The chemical composition of a product is associated with the latter's quality, safety, and physical properties (texture, color, hue, temperature, weight). The mechanical features of a product are associated with the product's functionality, utility, and safety. Sound is a longitudinal wave originated from vibrations that move the air in a medium (air, liquid, solid) which then reaches our ear drums. Thus, sound can be associated with both-mechanical features (functionality) of its generator - confounded by the product's (generator's) chemical properties.

However, TM law (the Lanham Act) is not concerned about the safety features. It only covers the products, marks, and the source. Tastes as safety alerts (for french fries, for example, reflecting the chemical features of the product), or sounds as safety alerts (for specific motorcycles, for example, reflecting the mechanical features of the product), are covered under the Patent Law [19], not the Trademark Law [20]. Patent Law and Trademark Law are distinct areas of the law and patents are granted for limited time only. [19] 35 U.S. C.; [20] 15 U.S. C.

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Under the Lanham Act [15 USC], there is no trademark infringement case if the issue is about the product functionality. Such cases are tried under the Patent Law [35 USC].

Dippin' Dots, Inc. v. Frosty Bites Distribution, LLC, 369 F. 3rd 1197 (11th Cir, 2004)“Trade-dress claims rest on the doctrine of functionality which serves to limit the mark protection under the Trademark Law.” The court also held: “ Pellet shape is determined by the freezing and production process; thus, it is functional. Color and taste serve as essential ingredients of the product; thus, they are functional.”

Qualitex Co. v. Jacobson Products Co., Inc, 514 U.S. 159 (1995) Defendant argued that color alone cannot be a trademark, and that colors can serve as trademarks only if they have secondary meaning or acquired distinctiveness. The Court rejected the first argument but accepted the second. It held that the color alone can present a trade-dress, and the trademark functionality doctrine can place limit on certain color use, as well: “... When a color serves as a mark, normally alternative colors will likely be available for similar use by others... Moreover, if a color depletion or color scarcity problem does arise -- the trademark doctrine of functionality normally would seem available to prevent the anti-competitive consequences that Jacobson's argument posits, thereby minimizing that arguments' practical force."

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Functionality Doctrine

Qualitex Co. v. Jacobson Products Co., Inc (continued)

COLOR In its famous Qualitex decision, the Court held that color alone may serve as a trademark after it has acquired secondary meaning; and therefore color alone may identify and distinguish a particular brand without functionality:

● whether something may be a trademark depends on its source-distinguishing ability, not its ontological status as color, shape, fragrance, word, or sign;

● product feature which is essential to the use or purpose of the article or affects cost or quality of the article so that exclusive use of the feature would put competitors at significant non-reputation related disadvantage, cannot serve as a trademark;

● only color not essential to product can be a trademark (therefore answering potential color scarcity or color depletion problems).

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COLOR AS A MARK (continued)Ives Laboratories, Inc., v. Darby Drug Co., Inc., 601 F. 2d 631 (1979)

This was a case of contributory TM infringement. In the patented period, the Cyclospasmol capsules were blue and weighed 200-mg each. After the patent expiration, the capsules were manufactured in blue and red, with typical imitations of the original. Ives sued both the manufacturer and the pharmacy distributor for TM infringement. Defendants argued that the red and blue colors were functional and therefore, were not protected by the Trademark Law. The Federal District Court entered for plaintiff, holding that if the mark is functional, it can't be protected under the TM Law. The Second Circuit reversed: "if the particular feature is an important ingredient in the commercial success of a product, the interest in free competition permits its imitation in the absence of a patent or a copyright." The 2nd Circuit established that the unfair competition claim was separate from the TM claim. In 1982, the Supreme Court reversed and remanded the Appeal's decision in its certiori. 50

Doctrine of Functionality (continued)SOUND: According to USPTO trademark examination protocol: “A sound mark identifies or distinguishes a product or service through audio rather than visual means. Examples of sound marks include: (1) a series of tones or musical notes with or without words, and (2) wording accompanied by music.”

Thus, if a sound is associated with the source of a product or service in consumers' minds, it can potentially serve as a TM. To be protected, sound marks must be a distinctive source identifier – as in, when you hear the DING! - you know it’s Southwest Airlines. The U.S. Trademark Trial and Appeal Board (TTAB) defines a spectrum as the distinction between “unique or distinctive” sounds and “commonplace” sounds. Yet, no consistent distinction is made by the courts.

In re General Electric Broadcasting (T.T.A.B. 1978)“ Secondary meaning for sounds is, whether consumers recognize and associate the sound with the offered services - exclusively with a single, albeit anonymous, source.” The Court held that maritime bells telling the time as service mark for radio broadcasting shall be refused a registration. Unlike graphic trademark that creates visual and lasting impression, “sound mark depends upon aural perception of listener unless the sound is so inherently different or distinctive that it attaches to subliminal mind of listener to be associated with the source commonplace sounds or those to which listeners have been exposed under different circumstances must be supported by evidence to show that listeners do recognize and associate the sound exclusively with single source, i.e., show secondary meaning.” 51

Doctrine of Functionality (continued)SOUND (continued): Oliveira v. Frito-Lay, Inc., 251 F. 3rd 56 (2d. Cir. 2001)Plaintiff claimed that defendants’ use of “Ipanema” copyrighted tune violated her right of publicity under New York state law, and her TM rights under federal law. The Court held that the song did not promote any product, and therefore, the likelihood of consumer's confusion theory was weak. The Court did not contest that a sound or a song could serve a TM and reminded the similarity between the NBC and Windows rainbow marks. It also indirectly addressed the relationship between TM and copyright, explaining that the line between the TM and copyright is harder to draw as compared to that in copyright and patent.

TEXTURE: In re Verte Hosiery Mills, Inc. 45 F. 2d 259 (1930)Here, the USTPO rejected the stocking's texture to be a trademark on the grounds of functionality. The court held that “the quality (texture) of the product is not about the functionality and it is beyond the consumer's associations to the product's mark.”

DESIGN: TrafFix Devices, Inc. v. Marketing Displays, Inc., 532 U.S. 23 (2001)

Justice Kennedy reasoned that “there can be no trademark protection for something that is functional because that would work as a detriment to competitors based on something other than reputation, which is the key consideration in trademark law.” [see slides 11-12].

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Doctrine of Functionality: SUMMARY● Doctrine of functionality (DOF) draws lines between trademarks and patents, not

between trademarks and copyright, as both trademark and copyright are expressive. DOF alone is not a tool for judgment (see below, in the outlined case).

● The tools that the Courts use to limit TM rights associated to unusual marks are: (1) secondary meaning; (2) likelihood of consumers' confusion; (3) trademark use, and (4) functionality.

● DOF is flexible and mordantly case-specific; thus the court outcomes are almost unpredictable.

● DOF deals with countless overlaps. For example, a monastery bell, designed to ring (its main function), rings if it's composed of metal, stone, or glass. The bell cannot ring if it is from acrylic, gypsum, or wood. Thus, chemical composition of the bell determines its functionality (matter and utility). An acrylic bell has a high quality and nice looks, but it is dysfunctional as a bell. So, will the acrylic matter of the bell serve as a TM against a patent? No, because that “look and feel” does not link the consumers' minds to the source or service. Nor it can serve as a patent (see my other presentations).

Oliveira v. Frito-Lay, Inc., 251 F. 3rd 56 (2d. Cir. 2001)● “The likelihood of consumer confusion standard helps draw lines between the

trademarks and copyright – if both are expressive.” 53

Extraterritorial Trademarks Trademark laws are territorial. A the theory level, for the global marketing, a company or business needs to obtain TM license for the country where it exports its goods or services. Of course, no one does that and not every country has trademark laws. Extraterritorial trademark disputes are case-specific, depending on the nature and caliber of the commerce. Territoriality has four aspects:

● Reach of the US trademark jurisprudence;● Extraterritoriality: When can a TM owner use the U.S law to litigate

infringement in other countries? What U.S. trademark right can be obtained from overseas marks?

● Internet and international transactions : Does the Internet create global trademark rights?

● Gray markets or parallel importation: Branded purchase in one country and resell in another. 54

International TM LawsIn cross-border trademark infringement cases, the conduct is subject to treaties and foreign laws. For instance, a claimant from one country might have to invoke the Bern or Paris Convention, or the TRIPs Agreement to justify a claim under the trademark law of another country. In most European countries outside the British and Scandinavian traditions, the provisions of an intellectual property treaty may be largely self-executing and form the basis for a foreigner's claim as if the provisions were part and parcel of domestic law. [21, 22]

The U.S. federal courts have been reluctant to take jurisdiction over an international case, because such a treaty is invoked, even though federal jurisdiction lies for a case arising under a U.S. treaty in which the federal courts do have special expertise and concerns. Jurisdictional and conflict analyses differ abroad: notably, the Brussels or Lugano Convention, applied in most European cases [23], may affect the availability of injunctions enforceable in the forum country or across European borders, as well as jurisdiction to award damages arising in the forum country or in other European countries.[21] 28 U.S.C. § 1331 (2000)[22] Peter Starr Production Co. v. Twin Continental Films, 783 F.2d 1440, 1443 n.3 (9th Cir. 1986)[23] Shevill v. Presse Alliance S.A., E.C. Court of Justice, March 7, 1995, Case C-68/93

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When can U.S. Trademark law be used against acts of infringement that occur outside the borders of the United States?

Section 44 of the Lanham Act implements international treaty obligations for priority of marks arising from international registrations and recording of the TM registrations from outside of the USA. Under the Lanham Act, foreign infringement of a U.S. trademark does not have a place within the U.S. jurisdiction. In American Circuit Breaker, for example, the Court held that “TM extraterritorial infringement occurs when a company buys a product with distinct TM in one country (a Coca-Cola beverage, for example), then resells it in another country under the identical TM and resells for the price difference.” [24]

Thus, TM infringement conducts occur when the material difference between the TM bought and sold in various countries is not established.

[24] American Circuit Breaker Corp. v.. Oregon Breakers Inc, 406 F 3d 577 (9th Cir. 2005)

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Extraterritorial DisputesSteele v. Bulova Watch Co., 344 US 280 (1952)

Steele was a U.S. citizen from Tennessee, selling watches under the brand Bulova in Mexico, a TM registered in Mexico. The Mexican government canceled the trademark. Steele continued selling watches in the United States. The Bulova Watch Company sued Steele in the U.S. Courts for infringing a Mexican brand in the U.S. The District Court held that the U.S. had jurisdiction over the case despite Steele's argument such litigation interfered with Mexico's sovereignty. On appeals, both courts (Appeals and Supreme) affirmed, that the case belonged to the U.S. jurisdiction and it did not oppose to Mexico's sovereignty. This case reassured, that the Lanham Act can apply extraterritorially. Such an opinion meant that Congress can create extraterritorial property jurisdiction regardless of other countries' sovereignty.

Vanity Fair Mills, Inc. v. T. Eaton Co., 235 F. 2d 633 (2nd Cir. 1956)In 1914 Vanity Fair, a U.S. based company, was selling a U.S. registered TM in Canada with non-merchandise arrangement. in 1915, Eaton registered the same mark for identical product in Canada and marketed it in Canada. In 1948, Eaton ceased using the mark and agreed with Vanity Fair to sell the brand in Canada. However, in 1953 Eaton resumed using the TM in Canada and sought to limit there Vanity Fair's distribution. Vanity Fair sued Eaton under the Lanham Act. The District Court and the 2nd Circuit held that extraterritoriality did not apply under Steele's reasoning. The 2nd Circuit set a three-factor test for extraterritorial application of 15 USC: 1) defendant's conduct has substantial effect on the U.S. commerce 2) defendant is a U.S. citizen 3) there is no conflict with TM rights under the foreign law.The 2nd Circuit found that only the first factor was shown by Vanity Fair. 57

Issues that can arise when a U.S. company acquires a non - U.S. owned trademark used in the United States.

Sterling Drug, Inc. v. Bayer AG, 14 F.3rd 733 (2nd Cir. 1994) In late 1800s, the rights to the "Bayer" TM in the U.S. were owned by Bayer AG German company. Bayer lost those rights during World War I, when Bayer AG's subsidiary in the U.S., The Bayer Company, Inc., was seized by the United States Alien Property Custodian. In 1918, Sterling acquired rights to the "Bayer" mark by purchasing The Bayer Company from the Alien Property Custodian. That acquisition precipitated decades of controversy between Sterling and Bayer AG, and was marked by a series of lawsuits and agreements. In 1964, under an unsuccessful antitrust suit, Bayer subsidiary and Sterling agreed not to use Bayer mark for analgesics. However, the subsidiary continued using the TM and Bayer. Sterling sued and the District Court granted injunction seizing subsidiary to sell or distribute any product under Bayer TM in the USA. Subsidiary appealed that the injunction was too over-broad. It argued that the injunction should be narrowed to the products the sell of which caused significant impairment to the USA commerce. The Court of Appeals tested the territoriality factors from Vanity Fair : (1) Sterling acquired the TM rights (2) German Company was acting in a goodwill and reputation of TM under the German Law.The challenge was to balance between. The court rejected the arguments of using the Vanity Fair's three-factor test in this case. It reasoned, that extraterritoriality may apply as matter of equity and fairness even if the three-prong test is not met. The Court also rejected Sterling's argument within antitrust jurisdiction. 58

Gray Market & Parallel Imports Gray market goods or “parallel imports” are items manufactured abroad and imported into the U.S. without a consent of the foreign TM owner. Yet not counterfeits, differences may still exist between the good produced overseas and for the American sale.

Exhaustion of TM rights refers to the extent to which a TM holder controls the distribution of branded goods. According to the concept of exhaustion, once TM senior holder sells in a particular market a product to which his TM rights are attached, s/he must allow the resell of that product in that market. The TM rights covering the product is being “exhausted” by the first sell.

There are two types of exhaustion: national (regional) and international:

National Exhaustion: This regime is followed by countries and regions that allow the exhausted TMs to be resold only in the national/regional area from which the goods originate. It does not allow such goods to be sold outside that area.

International Exhaustion: This regime is followed by countries and regions that allow the exhausted TM to be resold in countries/regions other than the country/region of origin. 59

Remedies for Gray Market ExhaustionRemedies for gray market goods are country specific.

● In Canada and New Zealand, for example, trademark law allows parallel importation.

● By contrast, the U.S. Trademark Act and Tariff Act provide remedies for gray market goods.

● In Brazil, the owner of a TM can prevent third parties from importing any goods that infringe its rights by pursuing both criminal and civil measures.

American Circuit Breaker Co. v. Oregon Breakers Inc, 406 F 3d 577 (9th Cir. 2005)

The TM owner was asserting that importation of a gray market product will cause confusion among the consumers. Defendant was contending that there was no consumer confusion, as the branded product had originated from TM owner or its affiliate. The ISSUE: whether the branded product from outside the U.S. was materially different? The Court found no material difference in this case, and held for the TM owner (the gray marketer). “If the two products with the same TM are identical and unaltered, gray market goods can enter the U.S. market.” 60

Essay: A hypothetical scenario in reproductive health settingState Texas: Dr. Katz seeks trademark rights in the Principal Register for a contraceptive tablet. The entity refers to the pharmaceutical preparation of tablets containing norethynodrel, asserted to be useful as an oral contraceptive. Dr. Katz also claims exclusive rights to use the word "pill" - apart from the trademark.

ISSUE: Whether the term “pill” is registrable under the Lanham Act. Dr. Katz argues that the “pill" has become distinctive of its goods and is therefore registrable under Section 2(f) of the Trademark Act (15 U.S.C. § 1052(f)). The solicitor argues that the term is a "common descriptive name" of the product (contraceptive), and does not in fact distinguish Dr. Katz's goods from the goods of others. Analyze and predict the USCCPA' decision. Compare and contrast your conclusions with the answer provided in the next slides.

The USPTO examiner rejects the claim. The Trial Court affirms the solicitor's decision. Dr. Katz appeals to the U.S. Court of Customs & Patent Appeals (USCCPA).

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Essay AnalysisThe U.S. Court of Customs and Patent Appeals (USCCPA) will probably hold, that in order to qualify for a TM registration the asserted mark must be a "trademark" in the two-fold sense of - (a) identifying the user's goods, (b) distinguishing such goods from those of others.Such "trademark" becomes registrable on the Principal Register only as it meets the conditions of Section 2 of the Lanham Act.Sec. 2. Trademarks Registrable on the Principal Register

“No trademark by which the goods of the applicant may be distinguished from the goods of others shall be refused registration on the principal register on account of its nature unless it - (e) consists of a mark which, when applied to the goods of the applicant is merely descriptive of them (f) except as expressly excluded in paragraphs (a)-(d) of this section, nothing in this chapter shall prevent the registration of a mark used by the applicant which has become distinctive of the applicant's goods in commerce.” (also see Searle & Co)[25].

[25] Application of Searle & Co., 360 F. 2d 650 - Court of Customs and Patent Appeals (1966)

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Analysis (continued) Dr. Katz will then argue, that the term "pill" qualifies as a "trademark" under Section 45, and while it might be said to be "merely descriptive" under Section 2(e), the proof of his record shows that it has become "distinctive" of appellant's good (under Section 2(f)), and therefore it is registrable under Section 2. However, the solicitor does not concede that the term "pill" distinguishes appellant's goods from those of others, as required by Section 45 and the preamble in Section 2. The solicitor's position is that the term does not qualify as a "trademark" (under Section 45), because it is the "common descriptive name" of the product and therefore does not "identify" or "distinguish" appellant's goods from those of others (Sec 45; preamble to Sec 2). The term "common descriptive name" is found in section 14(c) (15 U. S.C. § 1064) which provides that a registered mark may be canceled "if the registered mark becomes the common descriptive name of an article or substance." Not every term can function as a trademark (also see Kohnstam, Ltd, 1960)[26].

Where the term identifies the product to public, it cannot serve to identify appellant's goods or distinguish them from those of others. When this occurs, the term is the "common descriptive name" or, if not "descriptive," the "common name" or "generic" name of the product and hence is incapable of serving as a trademark. If for such reason the term is subject to cancellation, it should not be registered.[26] Kohnstam, Ltd. v. Louis Marx and Company, 280 F. 2d 437 - Court of Customs and Patent Appeals (1960)

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Analysis (closing) Dr. Katz will then contend, that the “pill" is not a common descriptive name of an oral contraceptive, therefore, it qualifies as a "trademark" or "mark" since it includes a combination of "words" and a "symbol." He will reason that with "unitary totality of three elements" the pill confers to the term as a "trademark" or "mark" which is registrable. He will insist that the evidence of records shows public recognition of the “pill” in question as a nominative pertaining only to him, to his practice, which continues subsequent to and notwithstanding the FDA approval of other manufacturer's oral contraceptive products and the commercial marketing of such competitive products.

The Court will probably hold that there is substantial evidence of record in support of the solicitor's position that the term "pill" serves merely to identify an oral contraceptive. Therefore, most likely, the decision of the board will be affirmed.

Visit other essays and discussions from this author in:Matevosyan NR (2016). “Reproductive Health Law Survey: Essays and Multiple Choice Q & A.” ISBN: 9781530180103

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