The. Trademark Reporter. The Law Journal of the International Trademark Association. Celebrating. January February, 2011 Vol. 101 No.

Transcription

1 The Trademark Reporter The Law Journal of the International Trademark Association Celebrating January February, 2011 Vol. 101 No. 1

2 Vol. 101 TMR 113 A CENTURY OF SUPREME COURT TRADEMARK LAW By Edward Vassallo and Kristin B. Hogan I. INTRODUCTION Over the past century, the Supreme Court has decided, by our count, approximately 40 cases that are substantively focused on trademark law. In this article, we provide a brief history of the past century of the Court s consideration of trademark issues. We first examine the Court s treatment of descriptive and deceptive trademarks; we then move on to trade dress, and then infringement, with all its surrounding questions; and finally we conclude with brief notes on dilution and on the special issues surrounding Olympic trademarks. II. THE EVOLUTION OF SUPREME COURT TRADEMARK LAW A. Descriptiveness and Deceptiveness 1. Descriptiveness and Secondary Meaning The tension between the doctrines of descriptiveness and acquired distinctiveness is one of the most frequently considered issues in Supreme Court trademark law over the past century. In considering the following cases, we will see how trademark law evolved so that descriptive terms that acquired distinctiveness came to be treated as trademarks entitled to protection. In the 1911 case of Standard Paint Co. v. Trinidad Asphalt Manufacturing Co., 1 Standard sold roofing materials under the registered trademark RUBEROID and sued Trinidad for trademark infringement and unfair competition based on its sale of competing roofing materials under the name Rubbero. Standard alleged that it had used the Ruberoid term for more than twelve years, had advertised its products extensively under the Ruberoid Senior Partner, Fitzpatrick, Cella, Harper & Scinto, Associate Member, International Trademark Association. Associate, Fitzpatrick, Cella, Harper & Scinto, Associate Member, International Trademark Association U.S. 446 (1911).

3 114 Vol. 101 TMR name, and had built up a large and valuable trade under Ruberoid in the United States and internationally. 2 Despite these facts, the Court held that Ruberoid was technically not a valid trademark because it was a descriptive term. 3 A descriptive term should be available for use by all competitors to describe their products, and only a distinctive term that indicates source qualifies as a trademark. 4 In making this determination, the Court looked to the dictionary, which defined the word rubberoid as a name for an imitation of hard rubber. 5 Although Standard s roofing materials contained no rubber, the Court found that the term was nonetheless descriptive rather than suggestive, insofar as it connoted rubber-like properties, such as water impermeability, that characterized the roofing materials. 6 Moreover, misspelling the word rubberoid as Ruberoid did not change its descriptive nature and thereby render it a valid trademark. 7 As such, Ruberoid was not a technical trademark under the Trademark Act of (which protected only purely fanciful and arbitrary marks). 9 On the issue of unfair competition, the Court agreed with the Eighth Circuit that there was none, as there was no similarity in the arrangement, color, design, or general appearance of the packages of the two products (aside from the use of the word rubbero ), and, therefore, there was no suggestion that Trinidad had deliberately attempted to misrepresent the origin or ownership of its product. 10 The 1924 case of William R. Warner & Co. v. Eli Lilly & Co. 11 treated the descriptiveness issue in much the same way as in the Standard Paint case. Eli Lilly, the owner of the alleged mark Coco-Quinine, sued Warner to enjoin the manufacture and sale of Quin-Coco products. Eli Lilly s Coco-Quinine was a 2. Id. at Id. at 455, Id. at 455, Id. at Id. at Id. 8. Act of Feb. 20, 1905, 15 U.S.C.A J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition 5.3 (4th ed.). 10. Id. at U.S. 526 (1924).

4 Vol. 101 TMR 115 pharmaceutical preparation containing quinine and chocolate while Warner s Quin-Coco product was substantially the same. 12 Despite Eli Lilly s use of Coco-Quinine for 25 years, the Court found that the Coco-Quinine term was descriptive and not a valid trademark, and therefore there was no trademark to enforce. 13 As in Standard Paint, the possibility of acquired secondary meaning was not even mentioned in the decision. However, unlike in the Standard Paint case, the Court did find unfair competition, as Warner intentionally marketed Quin-Coco as a lower-priced version of Coco-Quinine, and it even induced retailers and druggists into substituting Quin-Coco for Coco- Quinine when the higher-priced drug was prescribed at times unbeknownst to consumers. 14 Therefore, the Court found that Warner had committed fraud and induced others to commit fraud. 15 It ordered that Quin-Coco be clearly labeled to distinguish it from Coco-Quinine, and that the label state that Quin-Coco may not be used as a substitute for Coco-Quinine. 16 In the 1938 case of Kellogg Co. v. National Biscuit Co., 17 both Nabisco and Kellogg, by different manufacturing processes, made breakfast food called Shredded Wheat in the form of pillowshaped biscuits. Nabisco had owned a patent on shredded wheat that had expired, and it sued Kellogg to enjoin trademark infringement and unfair competition by the manufacture and sale of pillow-shaped shredded wheat under the Shredded Wheat name. The Court held that once the patent had expired, both the name and the pillow-shape had passed into the public domain, and therefore Nabisco did not have exclusive rights to either. 18 Further, the Court viewed Shredded Wheat as a descriptive and even a generic term. 19 To find otherwise would have essentially created a post-patent-expiration monopoly on the sale of shredded wheat, 20 as denying Kellogg the right to describe its product would presumably have made selling it very difficult. 12. Id. at Id. at Id. at Id. at Id. at U.S. 111 (1938). 18. Id. at Id. at Id. at 118.

5 116 Vol. 101 TMR Here, unlike in the Standard Paint and Warner cases, the Court acknowledged the possibility of secondary meaning in the Shredded Wheat term, but it found none existed. Despite Nabisco s use of Shredded Wheat for an extended period of time, the Court noted that for many years there had been no attempt on Nabisco s part to use it as a trademark, 21 and then when its predecessor applied to register the term it was denied registration. Nabisco failed to show that the primary significance of the term in the minds of consumers was the producer, Nabisco, and not the product. 22 As to the unfair competition claim, none was found, as Kellogg s packaging and labeling differed significantly from Nabisco s, and its biscuit had a different size and shape. Aside from use of the term Shredded Wheat, there were no similarities between the two packages or labels or even products that would suggest unfair competition. 23 However, only three weeks after its decision in the Kellogg case, the Court decided Armstrong Paint & Varnish Works v. Nu- Enamel Corp., 24 where it found that the Nu-Enamel term had acquired secondary meaning and was entitled to trademark protection even though descriptive. Nu-Enamel Corp. had registered Nu-Enamel for mixed paints, paint enamels, and other similar goods 25 and sued Armstrong to enjoin the use of Nu- Beauty Enamel on paints and similar goods. 26 The Court stated that the term Nu-Enamel was a valid and infringed trademark because it had come to indicate that the goods in connection with which it was used were those of Nu-Enamel Corp., which was entitled to be free from the competitive use of these words as a trademark or trade name. 27 The Court did not address the argument (and district court s finding) that the term was generic. Today, the distinction between technical trademarks and descriptive terms with secondary meaning is not made, as the latter are viewed as trademarks. 28 This view was codified in Section 2(f) of the U.S. Trademark (Lanham) Act of Id. at Id. at Id. at U.S. 315 (1938). 25. Id. at Id. 27. Id. at McCarthy, supra note 9, U.S.C

6 Vol. 101 TMR Geographical Descriptiveness In the early part of the twentieth century, the Court considered the question of whether the marks at issue were geographically descriptive. Both marks were found to be valid trademarks, for entirely different reasons. In the 1911 case Baglin v. Cusenier Co., 30 the Court had to determine whether the term Chartreuse, a region in France, was a valid trademark for liqueur produced by monks. The Order of Carthusian Monks had for many years occupied the Monastery of the Grande Chartreuse in France, and there they made wine by a secret process that had, for decades, been called Chartreuse. This term was registered in the United States. In 1903, the monastic order was dissolved and possession of its property was taken by a liquidator, but they moved to Spain and continued to manufacture the liqueur under the same term. 31 When the liquidator began to make a Chartreuse liqueur in identical bottles 32 the monks sought an injunction. The Court found that the term Chartreuse was a valid trademark and that the French liquidator had infringed the monks rights therein. The liquidator had argued that Chartreuse was a regional name and that even as used in connection with the monks liqueur, it was still a description of place. 33 However, the Court found that the word Chartreuse was the particular designation of the monastery, not the region in France in which it was established, and that as applied to the liqueur that the monks had made and sold for generations, it could not be properly regarded as a geographical name. It referred exclusively to the monks, their monastery, and their liqueur. 34 This appears to have been a very fact-specific determination. In essence, it appears that the Court s reasoning was not that Chartreuse was a geographical name that had acquired secondary meaning, but rather that as used by the monks it was not really a geographical name at all. It was the name associated with the monastery, and the region was known as such only because the monastery was there. 35 Under these circumstances, U.S. 580 (1911). 31. Id. at Id. at Id. at Id. at Id.

7 118 Vol. 101 TMR the mark was a valid trademark, and could not be geographically descriptive. Five years later, in 1916, the Court again considered the issue of geographical descriptiveness in Hamilton-Brown Shoe Co. v. Wolf Bros. & Co. 36 In this case, the owner of the mark THE AMERICAN GIRL for shoes sought to enjoin the use of the mark THE AMERICAN LADY for the same goods. The appeals court had found that the THE AMERICAN GIRL mark was geographically descriptive as it applied to women s shoes, and that therefore recovery would have to be under the theory of unfair competition, not trademark infringement. 37 However, the Court found that the defendant was liable for both trademark infringement and unfair competition, as THE AMERICAN GIRL was not descriptive. It held (without much explanation) that THE AMERICAN GIRL did not signify that the shoes were manufactured, sold, or used in America, or otherwise indicate the quality or characteristics of the shoes, or even that the goods were shoes. Instead, it was a fanciful designation. 38 The Court pointed out that the mark was not American Shoes, and that THE AMERICAN GIRL would be as descriptive of almost any article of manufacture as of shoes, that is to say, not descriptive at all Surnames In the 1914 case of Thaddeus Davids Co. v. Davids Manufacturing Co., 40 Thaddeus Davids manufactured inks under his surname DAVIDS and sued Davids Manufacturing for infringement based upon its C.I. DAVIDS label for inks, which was similarly placed and styled. The Court found that the DAVIDS surname was a valid and infringed trademark. Although surnames were not ordinarily registrable trademarks, the Trademark Act of 1905 specified that they could be registered if in actual and exclusive use for ten years immediately preceding the Act, and the mark at issue met these criteria. 41 However, the Court stated that it did not believe Congress intended to prevent a junior user from using his/her own name in U.S. 251 (1916). 37. Id. at Id. at Id. at U.S. 461 (1914). 41. Id. at 468.

8 Vol. 101 TMR 119 trade 42 in connection with his/her own business, even if dealing in similar goods, unless the name was used in a manner tending to mislead (seemingly, the same rule as for infringement of trademarks in general.) 43 Nevertheless, the Court enjoined both use of Davids Manufacturing Company and any placement of the word Davids at the top of the defendant s labels, where Thaddeus Davids placed the same name. 44 Later that same year, in Waterman Pen Co. v. Modern Pen Co., 45 in which the plaintiff alleged infringement of registered trademarks and unfair competition, the Court indicated that surnames that had acquired secondary meaning should be enforceable even as against someone with the same name where a likelihood of confusion was present. The junior user would be required to take reasonable precautions to guard against confusion, such as a disclaimer. 46 The Court seemed to suggest, more so than in the Davids case, that while some protection for the plaintiff was necessary it did not want to deprive [the defendant] of all rights in his name. 47 It is now recognized that there is no absolute right to use one s personal name as a mark when someone else has used it first and achieved consumer recognition through secondary meaning Registration of Descriptive Marks The Court has considered at least two cases relating to specific issues surrounding the registration of descriptive trademarks. In the 1920 case Estate of P.D. Beckwith, Inc. v. Commissioner of Patents, 49 the Court held that the inclusion of descriptive terms (in this case, Moistair Heating System ) in a mark does not preclude registration as long as the applicant disclaims exclusive rights to the descriptive terms apart from the mark as shown, which in this case also included a design and the words Round Oak. This is still the rule today. Previously, removal of descriptive matter was required before a mark could be registered. 50 The 42. Id. at Id. at Id. at U.S. 88 (1914). 46. Id. at Id. at McCarthy, supra note 9, U.S. 538 (1920). 50. Id. at 541.

9 120 Vol. 101 TMR rationale for the Court s decision was that the public would not be harmed and no one would be deceived as to the scope of the mark, and the registrant would be precluded by its disclaimer from claiming exclusive rights to the descriptive term(s). In this regard, the Court restated the general principle that marks should be considered in their entireties and stated that forcing mark owners to delete parts of their marks would significantly affect the marks value. 51 In the 1985 case of Park N Fly, Inc. v. Dollar Park and Fly, Inc., 52 the Court considered whether an action to enjoin infringement based upon an incontestable mark could be defended by attacking the mark as merely descriptive. It held that it could not (although an incontestable mark that is or becomes generic may be cancelled; the Court agreed with the lower courts here that the PARK N FLY mark was not generic.) The PARK N FLY mark had been registered for 14 years and had become incontestable pursuant to Section 15 of the Lanham Act. The Court s reasoning was that the plain language of Lanham Act Section 33(b) did not distinguish between offensive and defensive uses of an incontestable mark, and the language also did not provide for an incontestable mark to be challenged as merely descriptive. 53 Furthermore, the legislative history indicated that incontestable status was intended to permit the owner to enforce its exclusive right to use the mark, and this right would be frustrated if others could argue that the incontestable mark should not have been registered. 54 The legislative history clearly showed that the choice not to include descriptiveness among the grounds upon which an incontestable registration could be challenged was a deliberate one Deceptive Trademarks A term that is deceptive can never be protectable as a trademark, and may even be subject to an injunction to prevent its use. A term is deceptive when it suggests a quality or degree of quality that the product does not actually have and that would be 51. Id. at U.S. 189 (1985). 53. Id. at Id. at Id. at 201.

10 Vol. 101 TMR 121 material, meaning it would likely influence a purchaser s decision about whether to purchase the goods in question. 56 In the 1919 case Brougham v. Blanton Manufacturing Co., 57 Blanton sold oleomargarine under the trade name Creamo. At one time, the product had contained 30% cream, but it did not contain any cream at the time of the suit. The Court found that the use of the word Creamo was not permissible. However, in doing so, it actually relied upon meat inspection laws, not trademark laws. The mark had been registered as a trademark since 1908 and had been used since 1904; the case was considered in 1919, by which time the product contained no cream. The Department of Agriculture took action to prevent further use of the mark and the Court upheld that action, agreeing with the government that the use of the word Creamo is deceptive and induces the belief that cream is a substantial ingredient of the oleomargarine. 58 The following year, in Coca-Cola Co. v. Koke Co. of America, 59 the Court considered a similar issue from a more directly trademark-related standpoint, and found that the asserted trademark was not deceptive. Coca-Cola had sued Koke Co. for trademark infringement and unfair competition, seeking an injunction to restrain use of the words Koke and Dope in descriptions of Koke s beverage. The Court found that the word Koke infringed (although the word Dope did not), and also found that the COCA-COLA trademark was not void or fraudulent as a result of suggesting cocaine and other ingredients that were not present in the beverage. In making the latter determination, the Court noted that Coca-Cola had originally referred to coca leaves and cola nuts in the beverage and that a picture of such leaves and nuts still existed on the label. Coca-Cola had long ago eliminated cocaine from its beverage and had advertised this fact before the suit began. Coca leaves and cola nuts were still used, but the coca leaves were treated to remove their characteristic substance, and cola nuts were used only in small amounts. The Court noted that we are dealing here with a popular drink, not with a medicine, and reasoned that the general public knew Coca- Cola was the name of the beverage and did not associate it with the presence of coca leaves and cola nuts. In other words, the mark McCarthy, supra note 9, U.S. 495 (1919). 58. Id. at U.S. 143 (1920).

11 122 Vol. 101 TMR was not deceptive because it had acquired secondary meaning and because both coca and cola were still present in the drink. 60 In 1922, in Federal Trade Commission v. Winsted Hosiery Co., 61 the Court considered whether the labels Natural Merino, Natural Wool, Natural Worsted, Australian Wool and the like were deceptive when the underwear upon which they appeared contained only a small percentage of wool, and whether Winsted could use those terms. The FTC had filed a complaint under Section 5 of the Act of September 26, 1914, 62 against the company and, after appropriate proceedings, issued an order directing the company to cease and desist from use of the labels. The Second Circuit reversed, finding the use of such terms as outside the reach of Section 5, in part because members of the trade were not deceived. The Court reversed, noting that the FTC found as fact that the labels were literally false. The Court rejected the defendant s contention that the misrepresentation of knit underwear was so common in the underwear trade that most retailers knew that Merino Wool did not imply 100% wool. The fact that it was an industry accepted practice did not make it any less an unfair method of competition, and the question was whether the public would be deceived. Because the labels were deceptive to the public, their use was not permitted. 63 B. Trade Dress Our discussion of the Court s trade dress cases centers on four cases decided in a nine-year period, from 1992 to (Later we discuss Inwood Laboratories v. Ives Laboratories, which addressed a trade dress claim involving the color of cyclandelate capsules, separately in our infringement discussion.) As explained below, the cases started with broad statements as to the protectability of trade dress, but the brakes were applied in two cases involving trade dress based on product configuration. The 1992 case of Two Pesos, Inc. v. Taco Cabana 64 resolved a conflict among the Circuits by holding that inherently distinctive trade dress like other trademarks is protectable without a showing that it has acquired secondary meaning. The Court reasoned that trade dress is an accepted form of trademark, that 60. Id. at U.S. 483 (1922) Stat. 717, 719, c. 311 (Comp. St. 8836e) U.S. at U.S. 763 (1992).

12 Vol. 101 TMR 123 trademarks are protectable if they have either inherent or acquired distinctiveness, and that there was no reason to apply a different analysis to trade dress. 65 The Two Pesos case dealt with the unregistered trade dress of a Mexican restaurant. The Court noted that the jury had been instructed that the trade dress is the total image of the business. Taco Cabana s trade dress may include the shape and general appearance of the exterior of the restaurant, the identifying sign, the interior kitchen floor plan, the décor, the menu, the equipment used to serve food, the servers uniforms, and other features reflecting on the total image of the restaurant. 66 The jury answered the verdict form by fact findings that Taco Cabana has a trade dress; taken as a whole, the trade dress is nonfunctional; the trade dress is inherently distinctive; the trade dress has not acquired a secondary meaning in the Texas market; and the alleged infringement creates a likelihood of confusion on the part of ordinary customers as to the source or association of the restaurant s goods or services. 67 Thus a violation of Section 43(a) was found. The Court never addresses the question of whether the trade dress at issue was packaging or product design, but in footnote 1, it noted that the Court of Appeals defined trade dress of a product. 68 The Court stated that both courts below ruled that Taco Cabana s trade dress was not descriptive (but rather inherently distinctive), and not functional, but neither ruling was before it. 69 In the 1995 case of Qualitex Co. v. Jacobson Products Co., 70 the question for the Court was whether the Lanham Act permits the registration of a trademark that consists purely and simply, of a color. The Court concludes 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. 71 Since the 1950s, Qualitex had been manufacturing and selling press pads that were a specific shade of green-gold to dry cleaning 65. Id. at Id. at 765, n Id. at Id. at Id. at 770. The Court declined to grant certiorari on the question of whether the court of appeals erred by accepting the jury s finding that the trade dress was not functional. Id. at 767, n U.S. 159 (1995). 71. Id. at 160.

13 124 Vol. 101 TMR stores. In 1989, a rival, Jacobson Products, created and began selling pads that were a similar green-gold color. 72 Qualitex sued based on Section 43(a), and then added a Section 32 claim once the green-gold color pad issued as Registration No. 1,633,711. Here is the subject matter of that registration covering machine parts: namely, press pads and covers for press pads for commercial and industrial presses : The district court ruled in favor of Qualitex on the infringement claim, but because the court of appeals believed that color was not a registrable trademark under the Lanham Act, it set aside the judgment. 73 The Court stated that as shape, sound, and fragrance can act as symbols designating source, so could color. However, color is not inherently distinctive, in that it is not fanciful, arbitrary, or suggestive. 74 But over time, customers may come to treat a particular color on a product or packaging as signifying a brand. 75 The Court then addressed the functionality doctrine, which prevents treatment of the functional features of a product as a trademark, on the theory that such functional features are the province of patent law, not trademark law. 76 The Court concluded that while sometimes color plays an important role in making a product more desirable, sometimes as with Qualitex s green-gold pad it does not. When color is not essential to a product s use or purpose and does not affect cost or quality, the doctrine of functionality does not create an absolute bar to use of color alone as a mark Id. 73. Id. at Id. at Id. at Id. at Id. at

14 Vol. 101 TMR 125 These two cases convinced some practitioners that trade dress claims could be asserted broadly. The next two cases changed that, at least as to product design. In the 2000 case of Wal-Mart v. Samara Bros., Inc., 78 the question was under what circumstances a product s design was distinctive and therefore protectable as an unregistered trade dress under Section 43(a). The Court held that product design is never inherently distinctive, so that it is protectable as a trademark only when it has acquired distinctiveness. Samara designed and made children s clothing. Some attributes of that clothing were protected by copyright, but that issue was not before the Court. 79 Wal-Mart sent pictures of Samara s clothing to a supplier, who made knockoffs with only minor modifications. 80 The district court found a violation of Section 43(a). 81 Wal-Mart then brought a motion for judgment as a matter of law, claiming, inter alia, that there was insufficient evidence to conclude that Samara s designs could be protected under Section 43(a) as trade dress. 82 Wal-Mart s motion was denied and Samara was awarded damages and injunctive relief. 83 The Second Circuit affirmed. 84 The Court indicated that trade dress is a type of symbol or device and that product design, a form of trade dress, has been found by many courts to be a type of mark. 85 The Court explained that although Section 43(a) does not give much guidance as to when trade dress is protected and does not explicitly require a producer to show that its trade dress is distinctive, the courts have imposed this requirement. 86 A mark is distinctive if it is inherently distinctive, when its intrinsic nature serves to identify a particular source, or if it has acquired distinctiveness, when in the minds of the public, the primary significance of a mark is to identify the source of the product rather than the product itself. 87 In analyzing Qualitex, the Court indicated that product design is U.S. 205 (2000). 79. Id. at Id. 81. Id. at Id. 83. Id. 84. Id. at Id. at Id. at Id.

15 126 Vol. 101 TMR similar to color in that it is not inherently distinctive. 88 As with color, consumers are not predisposed to equate the feature with the source. 89 The fact that product design almost invariably serves purposes other than source identification not only renders inherent distinctiveness problematic; it also renders application of an inherent-distinctiveness principle more harmful to other consumer interests. 90 The Court further stated that while Two Pesos established that trade dress can be inherently distinctive, it did not establish that product design trade dress can be inherently distinctive: [U]nquestionably [Two Pesos] establishes the legal principle that trade dress can be inherently distinct, see, e.g., 505 U.S. at 773, but it does not establish that product-design trade dress can be. Two Pesos is inapposite to our holding here because the trade dress at issue, the décor of a restaurant, seems to us not to constitute product design. It was either product packaging which, as we have discussed, normally is taken by the consumer to indicate origin or else some tertium quid that is akin to product packaging and has no bearing on the present case. 91 Moreover, the Court went further, stating that whether trade dress is considered product design or product packaging, the courts should err on the side of caution and classify ambiguous trade dress as product design, thereby requiring secondary meaning. 92 (Under this rule, the outcome of the Two Pesos case would have been different if the restaurant s trade dress had been deemed to be product design rather that packaging, as the jury found no secondary meaning in Taco Cabanas trade dress.) Thus, the Court ruled that product design should never be considered inherently distinctive. Consumers should not be deprived of the benefits of competition with regard to the utilitarian and esthetic purposes that product design ordinarily serves. By having a clear rule that product design is not to be treated as inherently distinctive, this rule should discourage plausible threats of suit against new entrants based on alleged inherent distinctiveness Id. at Id. at Id. 91. Id. at Id. at Id. at 213.

16 Vol. 101 TMR 127 In TrafFix Devices, Inc. v. Marketing Displays, Inc., 94 the Court granted certiorari to resolve a conflict among the circuits on the issue whether the existence of an expired utility patent forecloses the possibility of the patentee s claiming trade dress protection in the product s design. 95 The Court did not provide a yes or no answer to this question, but concluded that a prior utility patent has vital significance in resolving the trade dress claim, and is strong evidence that the features therein claimed are functional, and they are not protectable as trade dress, whether or not secondary meaning is shown. Market Displays ( MDI ) held two utility patents for a dualspring that kept temporary road signs and other outdoor signs upright during windy conditions. MDI manufactured and sold sign stands, called the WindMaster, that used this dual-spring design. 96 After the two patents expired, TrafFix reverse engineered MDI s product and began to sell its own look alike sign stands, the Wind Buster, which had a dual spring mechanism that was visibly similar to MDI s. 97 MDI sued TrafFix for trademark infringement because of the similar names, for trade dress infringement because of the same dual-spring design, and for unfair competition. 98 The Court considered only the trade dress claim. The district court granted summary judgment in favor of TrafFix because MDI could not demonstrate that consumers associated the dual-spring design s look with MDI, and therefore, the trade dress had no secondary meaning. 99 Additionally, summary judgment was granted because the dual-spring design was functional. 100 The district court explained that MDI had the burden to prove its trade dress was nonfunctional and that TrafFix did not have the burden to demonstrate it was functional. 101 The trade dress ruling was reversed by the court of appeals, which, in part, relied on the Qualitex discussion of the functionality doctrine. 102 The circuit court reasoned that only little U.S. 23 (2001). 95. Id. at Id. 97. Id. at Id. 99. Id Id Id. at Id.

17 128 Vol. 101 TMR imagination was required to conceive of a hidden dual-spring mechanism that would have avoided infringing the trade dress. 103 The Court reversed. It concluded that a prior patent is very significant when resolving the trade dress claim and that when there is a utility patent, there is strong evidence that what it claims is functional. 104 The party seeking trade dress protection has the burden of demonstrating that what is claimed is not functional, for instance by showing that it is merely an ornamental, incidental, or arbitrary aspect of the device. 105 In this case, the dual-spring design was claimed in the expired utility patents and was the essential feature of the trade dress that MDI was trying to establish and protect. 106 Because the dualspring design is functional, it is unnecessary for competitors to explore designs to hide those springs, as the court of appeals deemed appropriate. 107 MDI could not succeed on its trade dress claim because MDI did not and could not carry the burden of overcoming the strong evidentiary inference of functionality based on the disclosure of the dual-spring design in the claims of the expired patents. 108 Citing Qualitex and Inwood, it noted that a feature need not be a competitive necessity to be functional; it was functional when it is essential to the use or purpose of the device or when it affects the cost or quality of the device or if the exclusive use of the feature would put competitors at a significant non reputation-related disadvantage. 109 As a result of these cases, it appears that trade dress consisting of product design is never inherently distinctive; that any doubt as to whether the trade dress is that of product design or packaging should be resolved on the side of caution and determined to be product design; and a competitor s readily available ability to conceal a product design s trade dress is not a defense when that design is functional Id. at Id. at Id. at Id Id. at Id Id. at

18 Vol. 101 TMR 129 C. Infringement and Misappropriation 1. Trademark Infringement Cases The Court, not surprisingly, has decided many cases over the past century relating directly to whether one trademark infringes another. The following half-dozen or so cases offer a look at how the Court has dealt with the contours of this basic question in varying circumstances. In the 1919 case of Joseph Schlitz Brewing Co. v. Houston Ice & Brewing Co., 110 both parties sold beer with brown labels in brown bottles, but the Court found that there was no trademark infringement because the trademarked elements of the labels were not similar. In particular, the shapes of the labels were different, the script was different in meaning and font, and the labels were attached differently. 111 This was a very brief opinion by Justice Holmes, but it does serve as a useful reminder that trademark infringement must be based on a claim that something unique to the plaintiff is infringed. Here, the only similarities were the brown labels and brown bottles, which the plaintiff grudgingly conceded could not be claimed as its own source identifiers. 112 The following year the Court decided Coca-Cola Co. v. Koke Co. of America, 113 discussed above in the context of deceptive marks. Once the Court found that Coca-Cola functioned as a trademark and was not deceptive, it seemed to have little difficulty in finding that Koke was chosen to reap the benefits of Coca- Cola s substantial goodwill in the COCA-COLA trademark, and therefore infringed. 114 However, Dope was found to be a featureless word that did not infringe. 115 Having dispensed with these two fairly straightforward infringement issues, in the later 1920s the Court moved on to a pair of cases that were slightly more complex and involved issues of similarities or differences between goods (and other factors) as well as similarities or differences between marks. In American Steel Foundries v. Robertson, Commissioner of Patents, et al., 116 the Commissioner had refused to register the trademark SIMPLEX for brake rigging and other brake-related goods, even though the U.S Id. at Id. at Supra note Id. at Id. at U.S. 372 (1926).

19 130 Vol. 101 TMR mark was already registered by the plaintiff for railway car bolsters and for car couplers. The Commissioner s rationale was that the trademark consisted merely of the name of the defendant, Simplex Electric Heating Company, which also owned registrations for SIMPLEX, on a wide variety of goods. 117 The Court noted that the word Simplex comprised all or part of over 60 trademarks registered by different parties with the U.S. Patent and Trademark Office (USPTO), as applied to many classes of merchandise, and that there were other corporations that had the name Simplex. Furthermore, it noted that the defendant had never manufactured or sold goods similar to those of the plaintiff. 118 It concluded that use by one party of a widely used trademark such as SIMPLEX on certain goods did not prevent the use by another party of the same mark on different goods. 119 While the plaintiff was entitled to register its SIMPLEX mark, there was no likelihood of confusion because Simplex was only part of the defendant s corporate name and because SIMPLEX was one of a large class of weak marks, such as ACME, QUEEN, and ROYAL, which had been much used for many years. 120 No one could simply monopolize one of these weak words for all conceivable goods. 121 The following year, in Beech-Nut Packing Co. v. P. Lorillard Co., 122 the plaintiff alleged that its registered BEECH-NUT trademark, under which it sold food products such as ham, bacon, gum, and peanut butter, was infringed by the defendant s use of Beechnut on its tobacco products. The parties had coexisted for decades. In an opinion by Holmes, the Court found that there was no infringement because the goods were different 123 and the plaintiff s delay in bringing suit greatly lessened any likelihood of confusion, as the defendant had established its own goodwill among tobacco-buying consumers. 124 The Court rejected the plaintiff s inconsistent arguments that its reputation would be harmed among customers who believed that the plaintiff was the supplier of the defendant s cheap chewing tobacco and that it may wish to sell such products itself Id. at Id. at Id. at Id. at Id. at U.S. 629 (1927) Id. at Id. at Id. at 631.

20 Vol. 101 TMR 131 In Inwood Laboratories v. Ives Laboratories, 126 the Court dealt with a more complex infringement issue, that of contributory infringement, and the decision still has vitality today. In Inwood, Ives manufactured and sold a drug called cyclandelate, in blue and blue-red colored capsules, under the mark CYCLOSPASMOL. After the expiration of Ives s patent on the drug, Inwood and other generic drug companies began to market cyclandelate in generic form, and intentionally copied the color and other attributes of the appearance of the branded drug. The central question was whether the generic manufacturers were vicariously liable for trademark infringement committed by pharmacists who dispensed the generic drug in place of the original (unbeknownst to consumers.) The court ruled that the manufacturers were not so liable. 127 The test set out in Inwood for contributory trademark infringement was that if one (1) intentionally induces another to infringe a trademark or (2) continues to supply its product to one whom it knows or has reason to know is engaging in trademark infringement, then that party is contributorially responsible for any harm done as a result. 128 Here, the district court found that Inwood failed to establish that the defendants intentionally induced trademark infringement by copying the appearance of Inwood s drug, nor did they implicitly suggest (by, for example, using similar colors) that pharmacists should substitute the generic drugs improperly. 129 In addition, the Court accepted the district court s finding that the copied colors were functional to patients as well as to doctors and hospitals, and that those colors had not acquired secondary meaning. 130 A very recent case on infringement has also made an important mark due to its consideration of the issue of fair use. In KP Permanent Make-Up, Inc. v. Lasting Impression I, Inc., 131 in an opinion by Justice Souter, the Court concluded that a defendant asserting the statutory affirmative defense of fair use in a trademark infringement case does not have to negate any likelihood of consumer confusion about the origin of its goods or services. In other words, the defense can still succeed even if there U.S. 844 (1982) Id. at Id. at Id. at Id. at 853. As discussed supra in connection with the trade dress Court cases, Inwood is also significant for its articulation of the test for functionality U.S. 111 (2004).

21 132 Vol. 101 TMR is some degree of likely confusion. 132 Both parties used a version of the term micro color (as a single word or two words) to market and sell permanent makeup. Lasting Impression registered the term as two words with the USPTO in 1992 and the registration became incontestable in 1999, while KP had used the term descriptively as a single word since 1990 or The Court held that KP did not have the burden to negate likelihood of confusion and vacated and remanded the case to the circuit court for further proceedings. The district court had granted KP summary judgment that its use of microcolor was fair use under Section 1115(b)(4). It found that Lasting had conceded that KP used the term only to describe its goods and not as a mark and did not consider whether the practice was likely to cause confusion. The circuit court reversed and remanded, concluding that a use could not be fair where consumer confusion was probable and appears to have placed the burden on KP to show the absence of consumer confusion. 133 The Court reversed, finding no such burden in Section 1115(b)(4). Indeed, it noted that a fair use defense is needed only when a plaintiff establishes a likelihood of confusion, and to require a fair use defendant to prove the absence of such likelihood meant that the defense cannot be asserted in the only situation where it is needed. 134 The Court stated, however, that our holding that fair use can occur along with some degree of confusion does not foreclose the relevance of the extent of any likely consumer confusion in assessing whether a defendant s use is objectively fair. 135 The Court explained that the tolerance of a certain degree of confusion was a result of the undesirability of allowing anyone to monopolize a descriptive term. It reasoned that if any confusion resulted in a case such as this one, then it would be a risk the plaintiff should have accepted when it decided to identify its product with a well-known descriptive phrase that could not be fairly appropriated for its exclusive use Id. at Id. at Id. at Id. at Id. at 122.

22 Vol. 101 TMR Infringement and Geography In 1916 and 1918, the Supreme Court decided two cases that together would shape the common law on geographical trademark rights for decades to come. 137 These cases were Hanover Star Milling Co. v. Metcalf 138 and United Drug Co. v. Theodore Rectanus Co. 139 In Hanover, Hanover was charged with infringement by A&W in one case and in another charged Metcalf with infringement and unfair competition. Each used Tea Rose on flour A&W was first, in Ohio, Pennsylvania, and Massachusetts; then Hanover, in Alabama, Mississippi, Georgia, and Florida decades later without knowledge of A&W s prior use; and then Metcalf, also in Alabama. The first district court ruled against A&W, and the second against Hanover, in part because the second court concluded that Hanover had no trademark rights in view of A&W s priority. The Court agreed with the first district court but not the second. The Court held that A&W s decades of use gave it common law rights where it practiced its business, but not national rights, and it was estopped from asserting its mark in the territory where it took the risk that an innocent party, such as Hanover, would develop rights in the same mark for the same goods. 140 The Court stated that if the parties were using their marks in separate markets wholly remote from one another, and the junior user was using its mark in good faith, then the issue of priority was legally insignificant. 141 In the second case, Metcalf committed unfair competition, as Hanover over the years had developed its own trade in the southern states under the TEA ROSE mark, and Metcalf had taken advantage of Hanover s reputation by copying its packaging. The Rectanus case further affirmed this rule. The facts were similar, with the plaintiff, the senior user, making sales in New England of REX for medicinal uses and the defendant using the same mark for similar uses in Kentucky. The plaintiff had registered REX with the Patent Office under the Act of 1881, but again the defendant (junior user) had no notice of the plaintiff s use before it began using the mark. However, the plaintiff, with notice of the defendant s use of REX in Kentucky, attempted to McCarthy, supra note 9, U.S. 403 (1916) U.S. 90 (1918) Id. at Hanover, 204 U.S. at 415.

23 134 Vol. 101 TMR enter into the Kentucky market and then to enjoin the defendant from continued use of the mark in its own area. 142 The Court followed the Hanover rule in declaring that there was no basis for this. 143 In this case, this resulted in both parties using the same mark in Kentucky, as the Court could not enjoin the plaintiff (who was the junior user in that particular area) from use of the mark in Kentucky because the defendant had never requested an injunction. 144 The case of U.S. Printing & Lithograph v. Griggs, Cooper & Co., 145 also decided pre-lanham Act, follows the basic rule that marks are protected only in the markets where they are used in commerce. Here, the parties were separately using their marks in Ohio and Minnesota, and the Minnesota user, the plaintiff, had a registered trademark under the Trademark Act of The Court held that the Act did not extend trademark rights of a registered owner to markets where the owner did not do business. 147 It should be noted that the rule in these cases still applies for non-registered marks. 148 However, the Lanham Act Section 7(c) provides that, contingent on registration, the filing of an application shall constitute constructive use of the mark, conferring a right of priority, nationwide in effect, on or in connection with the goods or services specified in the registration except for a person whose mark has not been abandoned and who, prior to such filing[,] (1) has used the mark; (2) has filed an application to register the mark which is pending or has resulted in registration of the mark, or (3) has filed a foreign application to register the mark on the basis of which he or she has acquired a right of priority, and timely files an application under section 44(d) to register the mark which is pending or has resulted in registration of the mark. As a result, the registrant can enjoin a junior user in a particular local market even when the junior user is first in the local market, as long as the registrant is likely to expand into that area. On the other hand, if the local user is the senior user, its rights in that local market are preserved and the 142. Act of March 3, 1881 (21 Stat. 502, c. 138) Rectanus, 248 U.S. at Id. at U.S. 156 (1929) Act of Feb. 20, 1905, 15 U.S.C.A. 81 et seq U.S. 156 (1929) McCarthy, supra note 9, 26.4.

24 Vol. 101 TMR 135 registrant cannot enjoin it, even based upon its federal registration. 149 Finally, in a rather different treatment of the issue of territorial rights, the case of American Trading Co. v. H.E. Heacock Co. 150 dealt with a Philippine company, H.E. Heacock, which owned a Philippines trademark registration that had been used there for over 20 years. The defendant, American Trading, began importing goods into the Philippines with a similar design and mark, which the defendant had registered in the U.S. under the Trademark Act of The Court found that because the plaintiff was the senior user in the Philippines, the defendant was enjoined from selling there under the mark. The local Philippine Act 151 applied and provided protection for the plaintiff, while the federal Trademark Act of 1905 applied only to interstate commerce (i.e., between the continental United States and the Philippines). 152 The rules on territorial rights may arguably be less relevant today than they were a century ago. Major manufacturers of goods tend to market nationally, particularly with today s technology and media. However, the early Supreme Court cases are nonetheless still valuable on this point, because their common law rule still applies even now in cases where the Lanham Act does not control Resale of Trademarked Goods The Court has considered the issue of resale of trademarked goods in several different contexts. First, in the case of Prestonettes, Inc. v. Coty 154 in 1924, the Court set out what is still the definitive rule on rebottled or repackaged goods. 155 In this case, the defendant had purchased genuine Coty powder and perfumes; it added a binder and repressed the powder before repackaging and reselling, and it repackaged the perfume and sold it in smaller bottles. The compacts indicated the powder was made by Coty and independently compounded by Prestonettes and also indicated the percentage composition of Coty powder versus binder. The bottles indicated the origin of the perfume as McCarthy, supra note 9, U.S. 247 (1932) Philippine Act No. 666 of 1903, as amended in 1915 by Act No U.S. at McCarthy, supra note 9, U.S. 359 (1924) McCarthy, supra note 9,