Ted Davis

RECENT DEVELOPMENTS IN TRADEMARK AND UNFAIR COMPETITION LAW: 

RECENT DEVELOPMENTS IN TRADEMARK AND UNFAIR COMPETITION LAW Ted Davis Kilpatrick Stockton LLP

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The Trademark Dilution Revision Act of 2006, Pub. L. No. 109-312, 120 Stat. 1730 Proposed Procedural Rulemaking by the T.T.A.B., 70 Fed. Reg. 50,739 (Jan. 17, 2006)

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provides for the imposition of criminal liability for the trafficking in labels bearing spurious copies of marks that are intended for affixation to goods without the consent of the marks’ owners; requires the destruction of counterfeit goods; and requires the payment of restitution to victims of counterfeiting Stop Counterfeiting in Manufactured Goods Act, Pub. L. No. 109-181, 120 Stat. 285

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would codify the salient provisions of the Lanham Act into Title 35 of the U.S. Code; but, at the same time would address various inconsistencies and ambiguities in the current statute perceived by the Office of Legislative Revision Counsel Codification of the Lanham Act into Positive Law

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continued judicial preoccupation with the concept of use in commerce; judicial skepticism toward the aesthetic functionality doctrine; increased judicial willingness to find claimed marks generic; Significant Themes Reflected in Recent Trademark and Unfair Competition Case Law:

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increasing judicial disagreement over the value of a registration that has not yet become incontestable; further development of the doctrine governing claims of fraudulent procurement of registrations; and the emergence of applications of eBay Inc. v. MercExchange, LLC, 126 S. Ct. 1837 (2006) in trademark litigation Significant Themes Reflected in Recent Trademark and Unfair Competition Case Law:

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Can a foreign owner of a famous mark acquire protectable U.S. rights absent use in the U.S.? Yes, “significant prudential considerations augur in favor of recognizing” the “famous marks” exception to the territoriality doctrine. See De Beers LV Trademark Ltd. v. DeBeers Diamond Syndicate Inc., 440 F. Supp. 2d 249 (S.D.N.Y. 2006).

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• Can the decision of a foreign court awarding rights to a litigant in that country trump rights accruing from actual use in the U.S.? No, plaintiffs seeking to establish rights to their marks in the U.S. must do so under U.S. law. See Fed. Treasury Enter. Sojuzplodoimport v. Spirits Int’l N.V., 425 F. Supp. 2d 458 (S.D.N.Y. 2006).

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• Is lawful use of a mark in commerce a prerequisite for the affirmative establishment of protectable rights?

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• Is lawful use of a mark in commerce a prerequisite for the affirmative establishment of protectable rights? Yes, use of a mark in violation of federal labeling requirements therefore cannot be the basis for a claim of priority. See CreAgri, Inc. v. USANA Health Servs., Inc., 474 F.3d 626 (9th Cir. 2007).

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• Can a plaintiff with no actual use of its mark in interstate commerce nevertheless establish protectable rights through a licensee’s use of the mark? Yes, section 5 of the Lanham Act, 15 U.S.C. §1065, expressly contemplates this basis for protectable rights. See Haw.-Pac. Apparel Group, Inc. v. Cleveland Browns Football Co., 418 F. Supp. 2d 501 (S.D.N.Y. 2006).

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Is “tacking,” or the inquiry into whether a new version of a mark creates the same commercial impression as an old version for priority purposes, a question of fact or of law? A question of fact. See Quiksilver, Inc. v. Kymsta Corp., 466 F.3d 749 (9th Cir. 2006).

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Is the purchase of a plaintiff’s mark as a keyword to trigger sponsored advertising a use in commerce under the Lanham Act’s statutory causes of action?

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Is the purchase of a plaintiff’s mark as a keyword to trigger sponsored advertising a use in commerce under the Lanham Act’s statutory causes of action? Yes. See Int’l Profit Assocs. v. Paisola, 461 F. Supp. 2d 672 (N.D. Ill. 2006); Buying for the Home, LLC v. Humble Abode, LLC, 459 F. Supp. 2d 310 (D.N.J. 2006); Edina Realty, Inc. v. TheMLSonline.com, 80 U.S.P.Q.2d 1039 (D. Minn. 2006).

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Does the purchase of a plaintiff’s mark as a keyword to trigger sponsored Internet advertising constitute a use in commerce under the Lanham Act’s statutory causes of action? No. See Merck & Co. v. Mediplan Health Consulting, Inc., 425 F. Supp. 2d 402 (S.D.N.Y. 2006).

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What burden does a defendant bear in challenging the distinctiveness of a mark covered by a registration that is not incontestable? The defendant bears the ultimate burden of proof. See Conversive Inc. v. Conversagent Inc., 433 F. Supp. 2d 1079 (C.D. Cal. 2006); Van Well Nursery, Inc. v. MONY Life Ins. Co., 421 F. Supp. 2d 1321 (E.D. Wash. 2006).

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What burden does a defendant bear in challenging the distinctiveness of a mark covered by a registration that is not incontestable? The defendant bears the burden of proof and must introduce “significantly probative evidence” of descriptiveness, at which point the burden shifts back to the registrant. See Borinquen Biscuit Corp. v. M.V. Trading Corp., 443 F.3d 112 (1st Cir. 2006).

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What burden does a defendant bear in challenging the distinctiveness of a mark covered by a registration that is not incontestable? “[T]he presumption of validity that registration creates is easily rebuttable, since it merely shifts the burden of production to the alleged infringer.” See Custom Vehicles, Inc. v. Forest River, Inc., No. 06-2009, Slip op. at 9 (7th Cir. Feb. 7, 2007) (emphasis added).

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“deshedding” for various pet grooming products, see FURminator, Inc. v. Ontel Prods. Corp., 429 F. Supp. 2d 1153 (E.D. Mo. 2006) “ward one democrats” for a political organization active in the District of Columbia’s Ward One, see Ward One Democrats, Inc. v. Woodland, 898 A.2d 356 (D.C. 2006) Recent Findings of Genericness:

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“scarlet spur” and “smoothee” for varieties of apple trees, see Van Well Nursery, Inc. v. MONY Life Ins. Co., 421 F. Supp. 2d 1321 (E.D. Wash. 2006) “brick oven” for pizza, see Schwan’s IP, LLC v. Kraft Pizza Co., 460 F.3d 971 (8th Cir. 2006) Recent Findings of Genericness:

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Recent Findings of Genericness: for ceramic tile, see Walker & Zanger, Inc. v. Paragon Indus., 2006 WL 3490975 (N.D. Cal. 2006)

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Cases addressing product design suggest that the term “genericness” covers three situations: (1) if the definition of a product design is overbroad or too generalized; (2) if a product design is the basic form of a type of product; or (3) if the product design is so common in the industry that it cannot be said to identify a particular source. Walker & Zanger, 2006 WL 3490975, at *4.

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Is the promotion of non-inherently distinctive trade dress probative evidence of secondary meaning in the absence of “look-for” advertising? No, otherwise, protection would extend to any trade dress advertised on a national basis. See Walker & Zanger, Inc. v. Paragon Indus., 2006 WL 3490975 (N.D. Cal. 2006).

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• What is the significance of a federal registration on the Principal Register to the functionality inquiry? The registration creates a presumption of nonfunctionality, which disappears once a challenger to the mark’s validity introduces evidence of functionality. See Berlin Packaging, LLC v. Stull Techs., Inc., 381 F. Supp. 2d 792 (N.D. Ill. 2005).

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What is the significance of a design patent to the functionality inquiry?

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What is the significance of a design patent to the functionality inquiry? A design patent bearing on a design claimed to be protectable trade dress creates a presumption of nonfunctionality, which can be rebutted by a challenger. See Fuji Kogyo Co. v. Pac. Bay Int’l, Inc., 461 F.3d 675 (6th Cir. 2006).

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Is a mark aesthetically functional if it constitutes the actual benefit consumers wish to purchase?

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Is a mark aesthetically functional if it constitutes the actual benefit consumers wish to purchase? No. See Au-Tomotive Gold, Inc. v. Volkswagen of Am., 457 F.3d 1062 (9th Cir. 2006).

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Accepting [the defendant’s] position would be the death knell for trademark protection. It would mean that simply because a consumer likes a trademark, or finds it aesthetically pleasing, a competitor could adopt and use the mark on its own products. Au-Tomotive Gold, 457 F.3d at 1064.

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Are colors used by colleges aesthetically functional if purchasers of goods featuring the colors wish to show their allegiance to the colleges?

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Are colors used by colleges aesthetically functional if purchasers of goods featuring the colors wish to show their allegiance to the colleges? No, the doctrine has no applicability where the challenged design has no demonstrated value other than its significance as a trademark. See Bd. of Supervisors of La. State Univ. v. Smack Apparel Co., 438 F. Supp. 653 (E.D. La. 2006).

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Can the likelihood of confusion between marks be determined through a side-by-side comparison?

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Can the likelihood of confusion between marks be determined through a side-by-side comparison? No, it’s the overall context in in which the marks are used that matters. See Louis Vuitton Malletier v. Dooney & Bourke Inc., 454 F.3d 108 (2d Cir. 2006).

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Can a plaintiff challenge allegedly materially differing goods bearing its trademark if the plaintiff itself sells goods identical to those being challenged? No. See Bourdeau Bros. v. Int’l Trade Comm’n, 444 F.3d 1317 (Fed. Cir. 2006); SKF USA, Inc. v. Int’l Trade Comm’n, 423 F.3d 1307 (Fed. Cir. 2005).

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SKF USA Bourdeaux Bros.

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Can a holding of no likelihood of confusion in a Trademark Trial and Appeal Board proceeding have preclusive effect in later district court litigation? Yes, collateral estoppel principles can apply even if the Board’s holding was technically not necessary to its disposition of the earlier litigation. See Jean Alexander Cosmetics Inc. v. L’Oreal, 458 F.3d 244 (3d Cir. 2006).

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Does the appearance of a domain name registrant in an in rem action against the domain name destroy subject matter jurisdiction? Yes. See Graham & Buffet Ltd. v. www.vicabamba.com, 80 U.S.P.Q.2d 1218 (W.D. Wash. 2006).

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Can the alteration of a good to which a genuine mark is attached render the mark counterfeit?

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Can the alteration of a good to which a genuine mark is attached render the mark counterfeit? Yes. See Cartier v. Aaron Faber Inc., 77 U.S.P.Q.2d 1572 (S.D.N.Y. 2006).

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The alteration of the Cartier watches is so extensive as to have significantly changed the design of the original product and to have compromised the core functions of the watch. Cartier, 77 U.S.P.Q.2d at 1575.

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Does the seizure of goods bearing counterfeit marks under federal tariff laws constitute a “public use” of that property that rises to the level of a taking under the Fifth Amendment? No, such deprivations are not “takings” for which the owner is entitled to compensation. See Acadia Tech. Inc. v. United States, 458 F.3d 1327 (Fed. Cir. 2006).

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Can the mere promotion of a product with an allegedly infringing trade dress constitute false advertising? No, the truthful advertising of an infringing product does not in and of itself constitute false advertising. See Walker & Zanger, Inc. v. Paragon Indus., 2006 WL 3490975 (N.D. Cal. Dec. 6, 2006).

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Is it a nominative fair use for a defendant to use another’s mark in hidden Internet links, hidden website text, and as a keyword for sponsored Internet advertising? Not if there are alternative words available to describe the defendant’s goods or services. See Edina Realty Inc. v. TheMLSonline.com, 80 U.S.P.Q.2d 1039 (D. Minn. 2006).

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• Can the exhaustion of branded inventory stave off a finding of abandonment? Yes. See Electro Source LLC v. Brandess-Kalt-Aetna Group, 458 F.3d 931 (9th Cir. 2006).

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• Can political concerns sufficiently justify the nonuse of a mark as to preclude a finding of abandonment?

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• Can political concerns sufficiently justify the nonuse of a mark as to preclude a finding of abandonment? Apparently so. See Cash Processing Servs. v. Ambient Entm’t, 418 F. Supp. 2d 1227 (D. Nev. 2006); Burgess v. Gilman, 78 U.S.P.Q.2d 1772 (D. Nev. 2006).

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• Can the encouragement of illegal activity constitute unclean hands that bars equitable relief? Yes. See First Global Commc’ns, Inc. v. Bond, 413 F. Supp. 2d 1150 (W.D. Wash. 2006).

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• Is the Supreme Court’s decision in eBay Inc. v. MercExchange, LLC, 126 S. Ct. 1837 (2006), relevant to trademark litigation? Apparently yes. See Audi AG v. D’Amato, 469 F.3d 534 (6th Cir. 2006) (affirming entry of permanent injunction); Reno Air Racing Ass’n v. McCord, 452 F.3d 1126 (9th Cir. 2006) (affirming permanent injunction); MyGym, LLC v. Engle, 2006 WL 3524474 (D. Utah Dec. 6, 2006) (denying preliminary injunction).

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the failure to disclose the deceptive or primarily geographically deceptively misdescriptive nature of the applied-for mark, see Daesing Corp. v. Rhee Bros., 77 U.S.P.Q.2d 1753 (D. Md. 2006) What Exposes a Registration to Cancellation for Fraud on the PTO?

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the recitation of an inaccurate date of first use, so long as the actual date of first use preceded the filing date of the application, see Lewis v. Microsoft Corp., 410 F. Supp. 2d 432 (E.D.N.C. 2006) the good faith failure to disclose prior users of similar marks, see Quiksilver, Inc. v. Kymsta Corp., 466 F.3d 749 (9th Cir. 2006); 3M Co. v. Intertape Polymer Group, Inc., 423 F. Supp. 2d 958 (D. Minn. 2006) What Does Not Expose a Registration to Cancellation for Fraud on the PTO?

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statements concerning an applicant’s goods not relied upon by the PTO in issuing a registration, see DeBeers LV Trademark Ltd. v. DeBeers Diamond Syndicate Inc., 440 F. Supp. 2d 249 (S.D.N.Y. 2006) the recordal of an allegedly inaccurate change to the chain of title to a registration, see Fed. Treasury Enter. Sojuzplodoimport v. Spirits Int’l N.V., 425 F. Supp. 2d 458 (S.D.N.Y. 2006) What Does Not Expose a Registration to Cancellation for Fraud on the PTO?

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the filing of an inaccurate section 15 incontestability declaration, see Fed. Treasury Enter. Sojuzplodoimport v. Spirits Int’l N.V., 425 F. Supp. 2d 458 (S.D.N.Y. 2006) What Does Not Expose a Registration to Cancellation for Fraud on the PTO?

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Can Congress restrict the registration of particular marks through the appropriations process? No, special interest spending bills cannot be used to circumvent the express provisions of the Lanham Act or any other legislation. See Last Best Beef, LLC v. Dudas, 455 F. Supp. 2d 496 (E.D. Va. 2006).

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THANK YOU Ted Davis Kilpatrick Stockton LLP TDavis@KilpatrickStockton.com