Intellectual Property Law Institute 2016

Transcription

1 INTELLECTUAL PROPERTY Course Handbook Series Number G-1288 Intellectual Property Law Institute 2016 Co-Chairs David Bender Robert P. Taylor To order this book, call (800) 260-4PLI or fax us at (800) Ask our Customer Service Department for PLI Order Number , Dept. BAV5. Practising Law Institute 1177 Avenue of the Americas New York, New York 10036

2 3 Trademark Hot Topics Siegrun D. Kane Kane Advisors LLP Kathleen McCarthy King & Spalding LLP 2016 Siegrun D. Kane and Kathleen McCarthy With special thanks to: Giancarlo Cullaro, Pace University School of Law, J.D If you find this article helpful, you can learn more about the subject by going to to view the on demand program or segment for which it was written. 169

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4 Table of Contents OVERVIEW I. IS THE LANHAM ACT PROHIBITION AGAINST REGISTRATION OF DISPARAGING MARKS CONSTITUTIONAL? THE DEEPENING DIVIDE... 6 A. The Redskins Saga: Twenty Plus Years Before the TTAB and the Federal Courts The TTAB Decision Finding Disparagement at the Time of Registration Pro-Football s Appeal to the Eastern District of Virginia The New Standards on Appeal Judge Lee s July 8, 2015, Decision Judge Lee s Reliance on the Supreme Court Walker v. Texas Case Pro- Football s Appeal to the Fourth Circuit... 9 B. The SLANTS Come Marching In The TTAB 2013 Decision The Federal Circuit s Initial 2015 Affirmance The Federal Circuit Sides with The Slants A Comparison of the Majority, Concurring and Dissenting Opinions C. The Constitutionality of the Disparagement Statute is headed for the Supreme Court- Will Immoral and Scandalous Be Next? II. DO ARTICLE III COURTS TRUMP ARTICLE II COURTS? A. The PTO Protests The District Court Order to Vacate B. The PTO s Appeal to the Eleventh Circuit III. FLANAX: WHAT DOES A TRADEMARK OWNER NEED TO ESTABLISH STANDING UNDER SECTION 43(a)? IV. DILUTION GONE AWRY? THE JUDICIARY S PROBLEM WITH DILUTION: JUDGE POSNER SPEAKS IN LAND O LAKES A. What is Dilution? B. The Judicial Attitude Towards Dilution C. Land O Lakes Dairy Not Diluted by Land O Lakes Fishing Tackle Background The Fishing Tackle Company s Appeal to the Seventh Circuit D. Can Surveys Improve Your Chances? Surveys Directed to Blurring Surveys Directed to Tarnishment Faulty Survey Procedures

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6 OVERVIEW 2016 brought forth a number of significant trademark disputes: 1. The Slants/ Washington Redskins: Is the Lanham Act prohibition against registering disparaging marks unconstitutional? Does inability to register impact Free Speech? Will scandalous and immoral marks be next? What will the Supreme Court have to say? 2. Houndstooth Mafia: Do Article III courts trump Article II courts? Can a federal district court, without reviewing the record, order the TTAB to vacate its precedential decision based on the parties settlement agreement? Should private parties be able to buy their way out of an adverse decision? 3. Flanax: What does a trademark owner need to show to establish standing under 43(a)? Is use in commerce required for standing under the Supreme Court Lexmark decision? What does the Fourth Circuit say about the Lanham Act s statutory intent? 4. Dilution, Dilution- Wherefore Art thou Dilution? 10 years after enactment of the Trademark Dilution Revision Act, the concept of extending protection to products that are far afield from plaintiffs continues to trouble the judiciary. Judge Posner speaks in Land O Lakes. How can surveys improve your chances? 5 173

7 I. IS THE LANHAM ACT PROHIBITION AGAINST REGISTRATION OF DISPARAGING MARKS CONSTITUTIONAL? THE DEEPENING DIVIDE A. The Redskins Saga: Twenty Plus Years Before the TTAB and the Federal Courts The most publicized trademark case hit the press in June 2014, when the TTAB rendered its decision in the dispute between Native Americans and the Washington Redskins football team. 1. The TTAB Decision Finding Disparagement at the Time of Registration In a twenty-nine-page opinion, a majority of the three-member TTAB held: [T]hese [six] registrations must be cancelled because they were disparaging to Native Americans at the respective times they were registered [between ], in violation of Section 2(a) of the Trademark Act of 1946, 15 U.S.C. 1052(a). 1 The disparagement claim pertained only to the term REDSKINS and not to the Native American imagery used with three of the six registrations in issue. The Disparagement Statute: Section 2(a) prohibits, inter alia, registration of marks that may disparage or falsely suggest a connection with persons, institutions, beliefs, or national symbols. As it pertains to disparagement, the statute provides: 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 (a) Consists of or comprises immoral, deceptive, or scandalous matter; or matter which may disparage or falsely suggest a connection with persons, living or dead, institutions, beliefs, or national symbols, or bring them into contempt, or disrepute Blackhorse v. Pro-Football, Inc., 111 U.S.P.Q.2d 1080, 1081, 2014 WL (T.T.A.B. 2014) (precedential) U.S.C. 1052(a)

8 TTAB Test for Disparagement: In ruling on disparagement, the Board applied this two-part test: a. What is the meaning of the matter in question, as it appears in the marks and as those marks are used in connection with the goods and services identified in the registrations? b. Is the meaning of the marks one that may disparage Native Americans? 3 The Evidence: The new petitioners resubmitted most of the same evidence that was introduced in the 1999 Harjo case that began the controversy. The material included dictionary definitions, reference books, newspaper articles, personal letters, and a 1993 Resolution of the National Congress of American Indians, as well as expert testimony. 4 The Dissent: Administrative Judge Bergsman disagreed with the majority, concluding that petitioners failed to carry their burden of proving that the term REDSKINS was disparaging at the time the registrations issued. He labeled the majority s dictionary evidence inconclusive and noted there was no evidence regarding the Native American population during the relevant time frame. He also pointed to the lack of evidence of disparagement in connection with footballrelated services Pro-Football s Appeal to the Eastern District of Virginia The New Standards on Appeal On appeal, (1) the team was free to introduce new evidence; (2) the TTAB decision was given no deference; (3) the presiding Judge, Gerald Bruce Lee, would review both new evidence and the record before the TTAB de novo. 6 The Constitutionality Issue: Pro-Football s arguments focused on the constitutionality of the disparagement statute, asserting: The statute is an unconstitutional restriction on free speech that violates the First Amendment and deprives the team of its long-held intellectual property rights. The ACLU amicus brief supported 3. Blackhorse, 2014 WL , at *4. 4. See Harjo v. Pro-Football, Inc., 50 U.S.P.Q.2d 1705 (T.T.A.B. 1999). 5. See Blackhorse, 2014 WL at * Kappos v. Hyatt, 132 S. Ct. 1690, 1701 (2012); Swatch AG v. Beehive Wholesale LLC, 739 F.3d 150, 155 (4 th Cir. 2014)

9 Pro-Football s position and the government weighed in on the side of the Native Americans. 3. Judge Lee s July 8, 2015, Decision In summary, Judge Lee in the Eastern District of Virginia: found the term REDSKINS disparaging and affirmed the cancellation of Pro-Football s six registrations that included the term REDSKINS; denied Pro-Football s motion for partial summary judgment on laches (Claim VII); and denied Pro-Football s claim that Section 2(a) was unconstitutional (Claims I and II). Judge Lee explained: Nothing about Section 2(a) impedes the ability of members of society to discuss a trademark that was not registered by the PTO. Simply put, the Court holds that cancelling the registrations of the Redskins Marks under Section 2(a) of the Lanham Act does not implicate the First Amendment as the cancellations do not burden, restrict, or prohibit PFI s ability to use the marks Judge Lee s Reliance on the Supreme Court Walker v. Texas Case Judge Lee heavily relied on the 2015 Supreme Court opinion in Walker v. Texas. In a 5-4 decision, the Court held that license plates issued by the state of Texas bearing the Confederate flag are government speech. 8 Justice Breyer, writing for the Walker majority, stated: [A]s a general matter, when the government speaks it is entitled to promote a program, to espouse a policy or to take a position. 9 People use specialty license plates to suggest that the government endorses the messages they bear, otherwise people could simply display the message in question in large letters on a bumper sticker right next to the plate Pro-Football, Inc. v. Blackhorse, 112 F.Supp.3d 439, 455 (E.D. Va. 2015). 8. Walker v. Texas Div., Sons of Confederate Veterans, Inc., 135 S. Ct (2015). 9. Id. at Id. at

10 Justice Alito s dissent charged the majority with misreading his opinion in Pleasant Grove v Summum and establishing a precedent that threatens private speech that the government finds displeasing Pro- Football s Appeal to the Fourth Circuit As expected, Pro-Football appealed Judge Lee s decision to the Fourth Circuit. And, as expected, the ACLU supported Pro- Football s position and the government backed the Native Americans. The arguments lined up like this: Pro-Football s Opening Brief: 1) 2(a) is unconstitutionally vague; 2) The statute applies only to identifiable individuals or juristic persons - not groups as a whole like blondes, lawyers, vegetarians, an issue Pro-Football admittedly did not raise below; 3) The Native Americans waited too long to bring their action a claim of laches twice rejected in earlier proceedings; 12 and 4) The PTO has registered other offensive marks, listing 11 examples including: SlutsSeeker dating services. The ACLU s Amicus Brief: 1) 2(a) mandates viewpoint discrimination by curtailing expression of a particular point of view; 2) The First Amendment is not limited to circumstances where a speaker is literally silenced; and 3) The subjectivity of 2(a) s language produces arbitrary and capricious results. The Native Americans Response: The evidence supports the district court s decision and its conclusion that 2(a) is constitutional. The Native Americans Amicus Briefs: About 45 Native American organizations, including the Navajo Nation and various Native American Bar Associations, argued: REDSKINS is disparaging, psychologically damaging and dehumanizing to indigenous peoples. Pro-Football s Reply Brief: The Team 1) echoed the majority In re Tam opinion finding 2(a) unconstitutional; 2) argued that cancellation of the six REDSKINS registrations issued over a twentythree year period violates due process; and 3) asserted the Native 11. Pleasant Grove City v. Summum, 555 U.S. 460, 467 (2009). 12. See Pro-Football, Inc. v. Harjo, 567 F.Supp.2d 46 (D.D.C. 2008); Pro-Football, Inc. v. Harjo, 565 F.3d 880 (D.C. Cir. 2009)

11 Americans delay (laches) deprived the Team of the millions of dollars invested in its brand. B. The SLANTS Come Marching In While Pro-Football and the Native Americans were duking it out in the Fourth Circuit, the Federal Circuit sitting en banc rendered its decision in THE SLANTS case. By a 9-3 majority, the court held the disparagement portion of 2(a) unconstitutional. The court left to future panels consideration of the immoral and scandalous provisions of 2(a). 13 Background: In 2006, Simon Tam named his Asian-American rock band THE SLANTS to reclaim and take ownership of Asian stereotypes embodied in the racial slur slants. 1. The TTAB 2013 Decision The Board rejected Tam s application for THE SLANTS on the grounds that: (1) The mark would be understood as an ethnic slur regardless of applicant s intent; (2) The registration was not refused solely on the basis of applicant s race; and (3) There was no violation of applicant s First Amendment rights because the refusal to register did not prevent continued use of THE SLANTS mark, citing the precedential 1981 Federal Circuit McGinley case The Federal Circuit s Initial 2015 Affirmance The Federal Circuit held that THE SLANTS (1) likely refers to people of Asian descent; and (2) is likely offensive to a substantial composite of people of Asian descent. 15 The Constitutionality Issue: In the panel s view, the First Amendment argument was foreclosed by the McGinley holding that: [T]he PTO s refusal to register appellant s mark does not affect his right to use it. No conduct is proscribed, and no tangible form of expression is 13. In re Tam, 808 F.3d 1321, 1382 (Fed. Cir. 2015). 14. In re Tam, 108 U.S.P.Q.2d 1305 (T.T.A.B. 2013), citing In re McGinley, 660 F.2d 481, 484 (C.C.P.A. 1981). 15. In re Tam, 785 F.3d 567 (Fed. Cir. 2015)

12 suppressed. Consequently, appellant s First Amendment rights would not be abridged by the refusal to register his mark. 16 Judge Moore s Additional Views : Judge Moore authored the panel opinion based on the precedential McGinley decision. However, she submitted a twenty-four-page section of Additional Views urging that McGinley be revisited because of its chilling effect on speech. En Banc Review: Seven days later, the CAFC vacated the panel opinion sua sponte and ordered the case to be heard en banc. 17 The briefs were strictly limited to one issue: Does the bar on registration of disparaging marks in 15 U.S.C. 1052(a) violate the First Amendment? 3. The Federal Circuit Sides with The Slants 9-3 The opinion by Judge Moore, joined by Chief Judge Prost, Circuit Judges Newman, O Malley, Wallach, Taranto, Chen, Hughes and Stoll, held: The disparagement portion of Section 2(a) is unconstitutional A Comparison of the Majority, Concurring and Dissenting Opinions Concurrence: Judges O Malley and Wallach: While agreeing with the majority opinion, both Judges also found 2(a) unconstitutionally vague. 19 Concurring in Part and Dissenting in Part: Judge Dyk: 2(a) is unconstitutional as applied to THE SLANTS, but constitutional as applied to purely commercial speech. 20 Comparison of Majority/Dissenting Opinions: Some differences that emerged from the 110 pages of judicial opinions are: What Is the Purpose of the Lanham Act? Majority: 1) To protect the public so it gets the product it wants; 2) To ensure markholder can protect his investment In re McGinley, 660 F.2d 481, 484 (C.C.P.A. 1981). 17. In re Tam, 600 Fed. Appx. 775 (Fed. Cir. 2015). 18. In re Tam, 808 F.3d 1321 (Fed. Cir. 2015). 19. Id. at 1358 (O Malley and Wallach, JJ., concurring). 20. Id. at 1363 (Dyk, J., concurring and dissenting in part)

13 Dissent: To regulate the orderly flow of commerce, citing 15 U.S.C (Lourie, J.) 22 Does 2(a) Impose Restrictions On Speech? Majority: The government adopted the statute prohibiting registration of disparaging marks because it disagrees with the message conveyed. 23 Dissent: [T]he standard is not based on the government's disagreement with anything. Rather, it is based on an objective, neutral assessment of a non-government perspective in this case, a substantial composite of the referenced group. (Dyk, J.) 24 Is Protection for Disparaging Marks Available Under Common Law? Majority: Whether user of an unregisterable, disparaging mark has any enforceable common law rights is at best unclear. 25 Dissent: A markholder still has rights under the Lanham Act in addition to common law rights. (Lourie, J.) 26 Is Refusal to Register Disparaging Marks Government Speech Immune from 1 st Amendment Scrutiny? Majority: A mark s purpose to identify the source of goods is antithetical to the notion that a trademark is tied to the government. Walker v. Texas is distinguishable e.g., because: Texas dictates the manner in which drivers may dispose of unused plates. 27 Dissent: The government issuance of a registration stamped with the indication of government oversight and bearing the indicates that the government in some sense has approved the mark.... While a trademark alone, as a word placed on private property, is not government speech, once it claims that 21. Id. at Id. at In re Tam, 808 F.3d at Id. at Id. at Id. at In re Tam, 808 F.3d at

14 federally registered status, it becomes more than the private owner s speech. (Lourie, J.) 28 Are Trademarks Commercial Speech? Majority: Trademark registrations are not commercial speech since it is always a mark s expressive character, not its ability to serve as a source identifier, that is the basis for the disparagement exclusion from registration. 29 Dissent: Trademarks, and in particular those registered for exclusive use in interstate commerce, are necessarily tools of commerce used with an economic motive. (Reyna, J.) 30 The Subsidy Issue: The Government argued: Congress has at least as much discretion to determine which terms and symbols should be registered and published by a federal agency as it would to determine which private entities should receive federal funds. 31 The Majority rejected the government s claim as contrary to the long established unconstitutional conditions doctrine, citing Perry v. Sindermann, 408 U.S. 593, 597 (1972). The denial of registration has a major chilling effect on private speech because the mark owner is denied the significant benefits of registration. 32 Errata Sheet to THE SLANTS Decision: The majority stated that a benefit of registration is the ability to prevent cybersquatters from misappropriating the domain name under 15 U.S.C. 1125(d). In fact, federal registration is not required to bring a cybersquatting action Id. at In re Tam, 808 F.3d at , Id. at In re Tam, 808 F.3d at Id. 33. Errata sheet deleting statement from majority decision issued February 11,

15 C. The Constitutionality of the Disparagement Statute is headed for the Supreme Court- Will Immoral and Scandalous Be Next? The Government s Petition for Cert.: The government filed its petition for cert. on April 20, The question presented is: Whether the disparagement provision in 15 U.S.C. 1052(a) is facially invalid under the Free Speech Clause of the First Amendment. Traditionally, the Supreme Court grants cert. where a federal statute is declared to be unconstitutional. Pro-Football s Petition for Cert.: Five days later, even before the Fourth Circuit had a chance to render its decision on appeal, the Team also petitioned for cert. The Team argued that the cases are companion because they involve the identical constitutional issue and should be heard together. 35 Suspension of Actions under 2(a): In the meantime, the PTO suspended action on applications involving potential refusals under 2(a), issuing only advisory refusals pending resolution of court action. 36 As the PTO explained, suspension avoids wasteful proceedings if the decision is overturned. 37 Timetable for Supreme Court Action: Do not expect the Supreme Court to rule on the petitions for cert. in The Slants and Pro-Football cases anytime soon. Some months will elapse while the parties file their briefs and oral argument is held. FUCT Is Not Scandalous or Immoral- for Now: THE SLANTS majority made it clear that its decision did not address the constitutionality of 2(a) s prohibition against registration of immoral or scandalous marks. 38 However, according to the government in the 34. In re Tam, 808 F.3d 1321 (Fed. Cir. 2015), petition for cert. filed (U.S. Apr. 20, 2016) ( ). 35. Pro-Football, Inc. v. Blackhorse, 112 F.Supp.3d 439, petition for cert. filed (Apr. 25, 2016)(No ). 36. See C.F.R. 2.67; TMEP The Slants efforts to mandamus the PTO to issue the registration were unsuccessful. In re Tam, No (Fed. Cir. Mar. 30, 2016). 38. In re Tam, 808 F.3d 1321, 1382 (Fed. Cir. 2015)

16 FUCT case, immoral or scandalous marks would also be unconstitutional under the majority s broad ranging decision. 39 II. DO ARTICLE III COURTS TRUMP ARTICLE II COURTS? In an unprecedented dispute between the TTAB and a federal district court, the Northern District of Alabama ordered the TTAB to vacate its precedential decision in the Houndstooth Mafia case. These are the designs in issue: In dismissing the University of Alabama s opposition to Houndstooth Mafia, the TTAB held: The University of Alabama had no common law trademark rights in the houndstooth pattern. The parties then reached a consent agreement providing for assignment of HOUND- STOOTH MAFIA to Alabama and stating: The houndstooth pattern had become a well-known source identifier for the university. A. The PTO Protests The District Court Order to Vacate The PTO protested vacatur on the grounds that: 1) The precedential decision provided guidance to practitioners; 2) The consent agreement did not point to any error in the Board s opinion; and 3) Judge Proctor acknowledged that he had not reviewed the record before issuing his order. Judge Proctor denied the PTO s motion to intervene as untimely and berated the Board for ignoring the court s final judgment: 39. In re Brunetti, No (Fed. Cir. Jan. 21, 2016) (remanding to the TTAB for further proceedings). For article criticizing In re Tam as calling into question nearly every other ground for refusal in 2, see Rebecca Tushnet, The First Amendment Walks into a Bar: Trademark Registration and Free Speech, NOTRE DAME L. REV. (Mar. 8, 2016) (forthcoming)

17 Appellate court orders are not merely pieces of paper that a court (much less an Article II administrative agency) may choose to disregard, even after taking a substantial period of time to mull it over. 40 As Judge Proctor colorfully put it, the Board is not allowed to say nanny nanny boo boo to a federal judge. 41 The TTAB vacated its decision, reserving the right to seek further review of the orders and opinions of the district court in this matter. 42 B. The PTO s Appeal to the Eleventh Circuit Twenty days later, spurred by over 3-dozen law professors, the PTO did appeal Judge Proctor s order to the Eleventh Circuit. 43 However, without explanation, on April 29, the PTO voluntarily dismissed its appeal. 44 III. FLANAX: WHAT DOES A TRADEMARK OWNER NEED TO ESTABLISH STANDING UNDER SECTION 43(a)? Is Trading on Reputation and Goodwill Enough?: In Belmora v. Bayer Consumer Care, the TTAB cancelled Belmora s U.S. registration of FLANAX for pain reliever. The Board found that Belmora had used FLANAX in a manner calculated to trade on the reputation and goodwill created by Bayer s use of FLANAX in Mexico. 40. Bd. of Trs. of the Univ. of Alabama v. Houndstooth Mafia Enters., 2016 WL (N.D. Ala. Feb. 23, 2016). 41. Id. 42. Bd. of Trs. of the Univ. of Alabama, Opposition No (T.T.A.B. Mar. 3, 2016) (not precedential). 43. Bd. of Trs. of the Univ. of Alabama v. Houndstooth Mafia Enters., No. 7:13-cv , appeal filed (11th Cir. Mar 23, 2016). The law professors expressed concern that the practice of settlement-related vacatur allows private parties to use decisional law as bargaining chips in settlement negotiations. 44. Bd. of Trs. Of the Univ. of Alabama v. Houndstooth Mafia Enters., No. 7:13-cv , appeal voluntarily dismissed (11th Cir. April 29, 2016)

18 Belmora s FLANAX Bayer s FLANAX: The Parties: Bayer Consumer Care AG ( BCC ) owns the trademark FLANAX in Mexico and has sold pain reliever under that mark in Mexico and other Latin American countries since the 1970s. Bayer sells its pain reliever in the U.S. under the mark ALEVE. Bayer does not use or owns a registration for the FLANAX mark in the U.S. Belmora, LLC obtained its U.S. registration for the mark FLANAX in 2005 and has used FLANAX for pain relievers in this country since The Allegation: Bayer Consumer Care AG and its U.S. sister company Bayer Health Care, LLC ( BHC ) claim that Belmora deliberately used the FLANAX mark to deceive Mexican-American consumers into thinking they were purchasing Bayer s product. The TTAB Decision: Bayer successfully petitioned the TTAB to cancel Belmora s registration for the FLANAX mark based on Belmora s deceptive use, including: (1) copying Bayer s packaging and logo; (2) identifying itself as the direct producers of FLANAX in the United States; and

19 (3) describing FLANAX as a very well-known medical product in the Latino American market. Belmora s Appeal to the E.D. of Virginia: On appeal, the district court reversed the TTAB, holding: due to Bayer s lack of use of the mark FLANAX in the U.S., Bayer did not have standing under the zone of interest and proximate cause tests established by the Supreme Court in Lexmark v. Static Control. 45 The Fourth Circuit Reverses: The Fourth Circuit held: Section 43(a) of the Lanham Act does not include a requirement that parties seeking to cancel a registration use its mark in commerce, and such a requirement cannot be read into the statute. 46 The Statutory Intent: The appeals court pointed to the purpose of the Lanham Act as expressed in 1127 Section 45. The statute states in pertinent part: The intent of this Act is to regulate commerce within the control of Congress by making actionable the deceptive and misleading use of marks in such commerce... and To protect persons engaged in such commerce against unfair competition. Plaintiff Need Not Have Used its Mark in Commerce: While defendant must have used its mark in commerce, plaintiff need only believe it is likely to be damaged by defendant s use: Defendant must have use[d] in commerce the offending word, term, name, [or] symbol, but the plaintiff need only believe[ ] that he or she is likely to be damaged by such act. The court emphasized that this is an unfair competition case not a trademark infringement case. In analyzing the issue of standing the court applied the zone of interest and proximate cause tests established by the Supreme Court in Lexmark v Static Control. Bayer pleaded proximate causation of a cognizable injury namely: Belmora s misleading association with [the Mexican] FLANAX [product] caused customers to buy the Belmora FLANAX in the U.S. instead of buying [Bayer s] FLANAX in Mexico Belmora LLC v. Bayer Consumer Care AG, 84 F.Supp.3d 490 (E.D. Va. 2015); Lexmark Int l, Inc. v. Static Control Components, Inc., 134 S. Ct (2014). 46. Belmora LLC v. Bayer Consumer Care AG, 819 F.3d 697(4th Cir. 2016). 47. Id

20 Belmora s motion for reconsideration en banc was denied, and the case is remanded to the district court for further proceedings. Stay tuned. IV. DILUTION GONE AWRY? THE JUDICIARY S PROBLEM WITH DILUTION: JUDGE POSNER SPEAKS IN LAND O LAKES A. What is Dilution? Dilution law was originally the creature of state statutes. The evil that the early state dilution statutes sought to remedy was not public confusion caused by similar products or services sold by competitors, but a cancer-like growth of dissimilar products or services which feeds upon the business reputation of an established distinctive trademark or name. 48 Dilution is characterized as a whittling down of the identity or reputation of a trade name or mark. 49 Just one whittle taken from a stick destroys the possibility that the stick can ever be made whole. 50 Dilution corrodes a trademark by blurring its product identification or by damaging positive associations that have attached to it. 51 As noted by the Second Circuit, injury to a recognized trade name, rather than damage arising from confusion among consumers, lies at the heart of the wrong. 52 B. The Judicial Attitude Towards Dilution There is a natural reluctance to bestow a trademark right that extends protection to products that are far afield from plaintiffs. It took some time and the enactment of state and federal law for courts to accept that dilution was a viable claim. 48. Allied Maint. Corp. v. Allied Mech. Trades, Inc., 369 N.E.2d 1162 (N.Y. 1977) (ALLIED not distinctive in light of numerous third-party uses). 49. Mortellito v. Nina of Cal., Inc., 335 F. Supp. 1288, 1296 (S.D.N.Y. 1972) (NINA for needlepoint canvases diluted by NINA for needlepoint kits, patterns, and canvases). 50. Ringling Bros.-Barnum & Bailey Combined Shows, Inc. v. B.E. Windows Corp., 937 F. Supp. 204, 209 (S.D.N.Y. 1996) (THE GREATEST BAR ON EARTH does not dilute THE GREATEST SHOW ON EARTH). 51. Ameritech, Inc. v. Am. Info. Techs. Corp., 811 F.2d 960, 965 (6th Cir. 1987), cited in Victoria s Secret, 537 U.S. at Mushroom Makers, Inc. v. R.G. Barry Corp., 580 F.2d 44, 49 (2d Cir. 1978)

21 The Trademark Dilution Revision Act of 2006: At this point in time, the viability of a federal dilution claim is determined by the Trademark Dilution Revision Act in effect since Under the 2006 Act, plaintiff must show either (1) blurring i.e. that defendant s mark impairs the distinctiveness of plaintiff s mark 53 or (2) tarnishment i.e. association arising form the similarity between a mark or trade name and a famous mark that harms the reputation of the famous mark. 54 Despite the clear statutory standards, the concept of dilution continues to trouble the judiciary. A good example is Judge Posner s opinion in the Land O Lakes case. C. Land O Lakes Dairy Not Diluted by Land O Lakes Fishing Tackle In March 2016, the Seventh Circuit issued its opinion in the dispute between Land O Lakes Dairy and the Land O Lakes Tackle Co. (Hugunin). The opinion by Judge Posner provides a detailed summary of the parties history and their correspondence. Here is the story: 1. Background Land O Lakes Dairy Use: Land O Lakes Dairy dates back to the 1920s. The company is located in the Land O Lakes region of Minnesota. Fishing Tackle Company s Use: Land O Lakes Fishing Tackle appeared on the scene in 1997, selling fishing tackle in the northeastern town of Land O Lakes, Wisconsin U.S.C. 1125(c)(2)(B) U.S.C. 1125(c)(2)(C)

22 The region is dotted with lakes and is therefore attractive to fisherman. The Fishing Tackle company obtained registration for Land O Lakes on fishing tackle in June Land O Lakes Dairy s Notice of Infringement: In 2000, Land O Lakes Dairy sent the Fishing Tackle company a notice of infringement. During the next eight years, the parties corresponded. The Fishing Tackle Company s Action against Land O Lakes: In 2011, the Fishing Tackle Company filed its trademark infringement suit. By 2012, Land O Lakes dairy sales exceeded $4 billion, compared to the Fishing Tackle company s sales of less than $30,000. Land O Lakes Counterclaim: Land O Lakes Dairy counterclaimed for trademark dilution. Fishing Tackle s motion for summary judgment on Land O Lakes dilution claim was denied. Land O Lakes motion for summary judgment was also denied. However, Land O Lakes motion for summary judgment on Fishing Tackle s infringement claims was granted. 2. The Fishing Tackle Company s Appeal to the Seventh Circuit The Seventh Circuit dismissed Land O Lakes dilution claim and all other claims against Hugunin s use of LAND O LAKES for fishing tackle. Judge Posner, writing for the panel, stated: 55. The Fishing Tackle Company s registration lapsed in 2008 and, when it filed a new application, Land O Lakes Dairy opposed. That proceeding was suspended pending outcome of the district court case

23 Many consumers would recognize the name LAND O LAKES as referring to the dairy company, but we can t see how the company could be hurt by the use of the same name by a seller just of fishing tackle... The products of the two companies are too different... And so it is beyond unlikely that someone dissatisfied with LAND O LAKES fishing tackle would take revenge on the dairy company by not buying any of its products Note the Seventh Circuit acknowledgement that many consumers would recognize the name LAND O LAKES as referring to the dairy company. 57 Query: Is the difference of the products a basis for denying relief under the dilution statute? D. Can Surveys Improve Your Chances? Land O Lakes Dairy did not rely on survey evidence. Here are some cases where a persuasive, properly done survey carried the day: 1. Surveys Directed to Blurring National Pork Board v. Supreme Lobster: Opposer s survey showed 35% association between THE OTHER WHITE MEAT for pork industry services and THE OTHER RED MEAT for fresh and frozen salmon. The Board commented that the survey demonstrates that a sizeable segment of the target population sees the two marks as highly similar. 58 Nike v. Nikepal: Nike s survey showed 87% association between NIKE and NIKEPAL. The TTAB had initially held NIKEPAL for distributorships featuring lab instruments, paper products, and cooking appliances is not likely to blur NIKE for athletic footwear and apparel. Based in part on the survey, the Eastern District of California reversed the TTAB decision Hugunin v. Land O Lakes, Inc., 2016 WL (7th Cir. Mar. 1, 2016) (Judge Posner also noted Minnesota s catch phrase Land of 10,000 Lakes, and the disparity in size between the two companies ($4 billion vs. $30,000 in 2010)). 57. Id. 58. Nat l Pork Bd. v. Supreme Lobster & Seafood Co., 96 U.S.P.Q.2d 1479, 1497 (T.T.A.B. 2010). 59. Nike Inc. v. Nikepal Int l Inc., 84 U.S.P.Q.2d 1830, 1825 (E.D. Cal. 2007)

24 2. Surveys Directed to Tarnishment Anheuser Busch v. Balducci Publications was an early case where survey evidence was persuasive of tarnishment. The mock ad at issue featured the headline MICHELOB OILY: ONE TASTE AND YOU LL DRINK IT OILY, a parody of the slogan MICHELOB DRY: ONE TASTE AND YOU LL DRINK IT DRY. Balducci s ad, displayed on the back cover of Snicker magazine, featured a slew of Anheuser-Busch symbols: a MICHELOB beer can pouring oil on an eagle who says yuck ; the Anheuser A symbol astride the unhappy bird; and MICHELOB OILY cartons and beer bottles flanking the eagle. The ad stated at the bottom in small print: [A]t the rate it s being dumped into our oceans, lakes and rivers, you ll drink it oily sooner or later, anyway. Balducci justified the ad as a protest against water pollution, protected by the First Amendment. However, survey evidence showed that more than half the respondents believed Michelob sponsored the ad. The Eighth Circuit found tarnishment as well as likely confusion Faulty Survey Procedures Keep in mind that faulty procedures can lead to rejection of the survey. In ProMark v. GFA, the Board disregarded the survey for several reasons, including use of leading questions, failure to independently validate the results, and failure to control for noise. 61 Generally speaking, a well-done survey will improve your chances of success. However, almost any survey is subject to criticism and if a court is not persuaded of the merits of your case, its decision will point to faults in the survey. 60. Anheuser-Busch, Inc. v. Balducci Publ ns, 28 F.3d 769 (8th Cir. 1994). 61. ProMark Brands Inc. v. GFA Brands, Inc., 114 U.S.P.Q.2d 1232 (T.T.A.B. 2015) (precedential) (finding GFA s survey did not suffer from the same shortcomings as ProMark s survey)

25 CONCLUSION Tune in this September for the latest on the significant trademark issues explored in this paper. SIEGRUN D. KANE KANE ADVISORS, LLP KATHLEEN MCCARTHY KING & SPALDING Last Updated June 24,

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