Breyer says no, b/c the manufacturing costs and the value of being 1st in the mkt makes up the difference.
FIRST MOVER ADVANTAGE: customer loyalty and initial revenues and quality.
Others say protection is needed b/c w/technology costs don't exist and little difference in time b/w 1st producer and copier. Need ip to insure creations will occur -- promise creator he'll receive profit.
CONSTITUTIONAL UNDERPINNINGS and basic framework of law:
Article I, sec 8 cl 8-- Constl rt for Congress to create rules-- only refers to patents and copyrts not trademark.
Commerce Clause upholds trademark today.
State laws are PREEMPTED by fedl:
LANDHAM ACT: trademark fedl statute
COPYRT ACT OF 1976
INTERNATIONAL TREATIES due to world market:
BERNE CONVENTION: Copyright
b. PARIS CONVENTION: Trademark & patent
Intellectual v. Real and Personal Property:
Real property MUST have only 1 owner--only one person can posess the book b/c of tragedy of the commons.
Intellectual property is control over ideas and intangibles, it can be owned by many; should we create EXCLUSIVITY?
Real property's VALUE is easy to determine; w/o granting rights to Intellectual prop. it's value is unknown.
There is a large difference b/w tangibles and intang:
exclusivity at higher social cost for intang.
exclusivity at higher economic loss for intang.
enforcement of intang is harder--difficult of find infringers.
remedy is more of a problem for intang.
difficult to evaluate economic loss for intang.
locus of concern--there's no physical location for intang. is it on creator, infringer, every infringing product?
The NEED for EXCLUSIVITY--Tuttle v. Buck
FACTS: banker doesn't like barber so hires a rival to be a barber in the town; generally comp'n is good. The rival barber is paid by banker to be cheaper than 1st barber; b/c of bad motives and concern about ruinous comp'n ct enjoined banker.
ECONOMICS: RUINOUS COMPETITION drives everyone out of the business. In intellectual property, runious comp'n is a real possibility b/c of the relative costs of doing business 1st and 2nd.
ECONOMICS: IP grants exclusive rts to ENSURE PRIVATE INVESTMENT IN PRODUCTION.
The 2nd comer costs are much lower (no DEVELOPMENT COSTS) so can charge a lot less. If same product 1st guy goes out of business and has no incentive to open something else.
Ct's consider: how impt is the service/good produced? and Would another person (#3) enter the mkt? In tuttle if barber #1 goes out of business will barber #3 come, or will everyone go around wioth long hair.
MORAL RIGHT: social obligation to reward creator; reputational interests.
ALTERNATIVES TO EXCLUSIVITY:
the problem with these is who decides who's good is best, increase gov't involvement, and decrease the mkt forces.
TRADEMARK: In general to maintain tm, mk must be in use and must be distinctive.
WHAT A TM IS:
A tm establishes exclusive rts to use mks that distinguish one mfr or service provider's g or s from those of others.
a tm is usually a wd or group of wds but can be any device that distinguishes goods or services. Designs, color patterns, scent, pkging, even a good's non-functional design are potential mks
' 43(a) unfair compn re trade dress
TM doesn't include: names, portraits or signatures w/o approval; govt insignia; immoral or scandalous material; deceptive matter.
at C law, tm protects goodwill; Lanham act protects the mk -- likelihood of confusion, now both also see mk as indpt property which broadens ct's looking at mk and protects more (ie 43 claims and dilution)
TM allows identification of goods by consumers
TM identifies source of goods or service as a badge of their quality
TM are advertising mks.
TM fosters these ints:
consumer int in not being confused abt origin or sponsorship of good or service
consumer and potl competitor int in free compn in entering or expanding into mkts
pub int in fair and efft legal system 5. IS TRADEMARK NEEDED AT ALL? no one wants to confuse customer b/c wont buy your product then.
STATE LAW DOCTRINE OF UNFAIR COMP'N: st law protects "goodwill"/protects investment
PASSING OFF: one person sells his goods as those of another -- deceptive act causing loss of sales to a compr. SIMILARITY B/W NAMES OF PRODUCTS: William Warner v. Eli Lilly
FACTS: WW makes coco-quinine and 2nd company makes Quin-coco. Pharmacists SUBSTITUTE the product 1 for the product 2.
Ct enjoins Co. 2, b/c evident that CONSUMER MEANT TO BUY PLTFFS PRODUCT yet went home with defs.
Ct will protect INVESTMENT, GOODWILL, REPUTL INT. but only when SHOW CONSUMER'S INTENT-- here it was easily shown thru druggist who switches.
In Amn Washboard (Al washbd called Al and def. selling zinc washbd called "al", def. still allowed to use wd "Al." even though consumer is decieved) and in Mosler Safe (safe w/band that has bomb and 2nd safe w/band and no bomb, consumer decieved yet pltff lost) b/c pltffs could not prove consumer's intent to buy its product. THESE CASES WOULD COME OUT DIFFERENTLY UNDER SEC. 43 OF LANHAM ACT
Amn Washbd failed to educate consumers and ct what a better washbd Al is than Zn. W/o this, there is no investment to protect.
CONSUMER DECEPTION is not enuf for st law claim, rather must show INTENT to buy pltffs product b/c of goodwill and reputational interest.
NOTE: RELIEF in case is only change of label so aware that coco-quinine and Quin-coco are not the same product or producer. Dreyfuss questions if this is enuf to stop diversion--maybe it's good middle ground to allow competition yet maintain an informed consumer.
USE of the Name is required in order to protect it under unfair compn law Galt House:
FACTS: pltf incorporated co. w/term Galt House to be used as a hotel, but never used it. Def. blt hotel and used term.
Ct finds: If NO USE OF MARK, NO PROTECTION, incorporation alone does not confer a prop. rt in the name. To make people rely on them, it must be used before its protected.
Why have such an inflexible law that requires using a trademark:
ZONE OF EXPANSION: GEOGRAPHY AND ACTUAL PRODUCT must be analyzed before protection will be granted--IS IT POSSIBLE THAT REASONABLE CONSUMER WILL BE CONFUSED? Sample Inc v. Porrath
FACTS: Sample Shop and Sample of Buffalo argue over use of term Sample. One primarily in Buffalo since 1929 other in Niagra Falls since 1946. Evidence of studies of what consumers think show that a majority of potential customers of both parties are more likely to associate the word Sample with a store operated by Buffalo rather than Niagara Falls.
Ct found that there were 2 separate and distinct mkt areas, the name of both parties had acquired secondary menaning in their particular area.
No proof that the 2 using the same name deceives the public or dilutes the distinctive quality of the name. NO CONSUMER DIVERSION EXISTED.
TRADEMKS HAVE A TERRITORIAL DIMENSION -- if not the same area, then no comp'n. The possibility of business expansion may or may not lead to confusion. here ct found no confusion.
a prior user can preempt the right to use its name and symbols in territories that would probably be reached by the prior user in the natural expansion of his trade. NOTE: contrast w/fedl rule Dawn Donuts. Hanover Star Milling Co. Some cts limit doctrine to where 2nd user adopted name in bad faith. Purposely taking mk to use reputation of first user or to deceive public.
good faith 2nd user can acquire rts in remote mkt area.
DILUTION: beyond likelihood of confusion std to likelihood of dilution of distinctive quality of mk, even w/o compn or confusion re: source of goods. RATIONALE: to provide incentives for cos to invest in goodwill. Fear is consumers buy jr user for name and won't buy sr user's products) Mead Data v. Toyota
FACTS: use of name Lexus for car dilutes use of term Lexis for legal research.
DEFN OF DILUTION: preventing the whittling away of an established tm's selling power and value thru its unauthorized use by others upon dissimilar products.
The similarity must be substl before the doctrine of dilution may be applied. (substl to general public when advertising)
NOTE: fear that tm goes from coined to generic -- a regular wd in the vocabulary.
NOTE: fear of a non-competitive prod. exploiting good will and reputn of another mk.
In this case, ct found NO COMPETITIVE INJURY, Dreyfuss thinks it's a bogus case.
NOTE: ct said mk of Lexis in not widely known to GENERAL PUBLIC rather limited comm'l area (attys). Thus, strength and distinctiveness of Lexis is limited to its elite mkt. Ct relys on small number of people who could be confused AND sophistication of attys to say no dilution.
FACTORS to determine if dilution exists:
SIMILARITY OF THE MARKS--distinctiveness of mark; generally dilution only if strong mark
SIMILARITY OF PRODUCTS covered by the mark; closeness of business--the closer the product the more likely the consumer will bridge the gap.
SOPHISTICATION OF CONSUMERS
PREDATORY INTENT--question if this really should be considered--if jr user used mark and created confusion, intent is irrelevant. But, Intent helps in that if prove intent, believe that the products and marks are similar and confusing b/c that was the intent.
RENOWN OF THE SENIOR MARK/ renown of jr mark -- this relates to quality. In general if quality is really really different thatn no one would expect same producer so likelihood of reputation harm low so allow -- Lutece the restauant and perfume.
thus, dilution occurs where sr user's ads and mkting have established assocns for its prod. among a particular consumer group, but jr mk's later renown causes sr user's consumers to draw assns identified with jr users. (loss of goodwill)
POLICY: underlying all dilution decisions is the ? whether 1 party should have rts in a product or service mkt that it has not yet entered.
NOTE: Toyota relied on atty who said no dilution before naming car, thus no bad faith existed.
MISAPPROPRIATION: consumer knowingly buys sr user's product from jr user. Bd of Trade v. Dow Jones
FACTS: bd of trade makes a future index taking the Dow Jones Ind. Avg. and selling. WSJ created the Dow Jones and wants to enjoin the Bd of Trade from using it. Note: consumers in index are not confused, they don't think they are getting the D.Jones. Rather, claim by WSJ is that Chic. Bd of Trade exploited WSJ's work.
Ct rules in favor of WSJ not allowing Chic. Bd of Trade to profit off of WSJ's work. Further, fear that WSJ will stop creating index, and that index will be misused.
NOTE: need not be direct competition b/w 2 parties to find misapprn. Dow Jones still has proprietary int in its product.
General notion is that one co. is unfairly competing and must be stopped. Ap v. INS Shouldn't undermine one's business--see textbook sold w/?s and then answer key sold, no one will buy textbook thus competitive injury needs to be stopped. APPLY MISAPPRN IF COMPETITIVE INJURY RESULTS.
ct's are especially likely to use misapprn when ENTRY BARRIERS see tape opera perfs and then sell tapes, CBS tapes then decrease their sales, so CBS decreses $ it gives to the Met, so Met can't afford to operate.
UM can stop others from selling UM shirts on this theory; prop. int in their products.
concept that co. is exploiting reputation w/o compensating goodwill --"using" 1 product.
NOTE: many cts require a competitive relationship b/w pltf and def for misappropriation to be found
POLICY: There is an INHERENT VALUE in a trademark; tm as property itself.
TM gives a RIGHT TO CONTROL the way people think and talk abt a product. Eg. Liz Taylor wanted a TM on her name, controlling the use of her name similarly OJ TM but this is AGT the FREE SPEECH doctrine.
Disney and other cos believe that tms INCREASE QUALITY b/c often when price decreases so does quality.
COUNTER: Dreyfuss says that free mkt is better than granting people exclusive rts (does Michigan need to control the use of its name and get royalties on its tshirts)
UNFAIR COMPN PROTECTS:
the 1ST TO USE a name or other symbol connected w/the sale of goods or services AGAINST a COMPETITOR whose subsequent use of the symbol CONFUSES or is likely to confuse consumers into believing the 1st user, rather than the compr is the sourse of the goods or services. Protects I of 1st user; protects goodwill of 1st user; protects reputl ints of 1st user.
LIMITS TO STATE RTS OF ACTIONS:
PREEMPTION of st law by fed law
passing off is not meant to be preempted by fed law, can coexist.
dilution and misappropriation are like property, granting a rt to prevent or use or copy mark. Cong. has an authority to do whatever it wanted when it wrote copyrt and patent so it decides WHERE PROTECTED AND WHERE IS THE PUBLIC DOMAIN.
San Francisco gay athletes v. USOC--the termolympics for "gay olympics" could not be used. NO consumer confusion, but USOC sells the rts to use the term olympics and these people reduce the value of the licenses. REAPING WHERE THEY HADN'T SEWN. (misappropriation)
FIRST AMENDMENT: can't use mark only in a non- signaling sense.
NON-DECEPTIVE REFERENCES: ad of perfumes all for $1 and smell like Chanel;chanel#5
COMPARITIVE ADS: MCI saying cheaper than AT&T is ok as long as true.
POLICY: Protection of public domain is key,thus non confusing true claims must be allowed to be said. Public domain is valuable for competition is good.
FUNCTIONALITY: Can't tm functional parts of product.
blue color of ice cream container can't be tm b/c blue represents cold; crescent shape of wrench can't be tm.
Names: Levitt v. Levitt--levittown complex blt by Mr. Levitt; who sold co. which was called Levitt, tm on his name b/c of REPUTATIONAL INTEREST. But ct said although it seems that names are generics, can't create value in it, as a general rule can sell name as a tm. Here ct sold bus. w/tm of his name.
FEDERAL LAW: LANHAM ACT:
tm requires USE: ' 1127: "THE TERM TM INCLUDES ANY WORD, NAME, SYMBOL, OR DEVICE, OR ANY COMBO THEREOF--USED BY A PERSON OR WHICH A PERSON HAS A BONA FIDE INTENTION TO USE IN COMMERCE AND APPLIES TO REGISTER ON THE PRINCIPAL REGISTER, to identify and distinguish his or her goods, including a unique product, form those mfred or sold by others and to indicate the source or the goods, even if that source is unknown.
USE IS USED BY PUBLIC/CUSTOMERS: Bluebell v. Farah: 2 cos conceive of same tm "timeout" w/hourglass shape. who had prior rt? ct goes thru all happenings, conceived logo, adopted, presented sample label, made tags, internal sales, sale of product with previous and last label (Dreyfuss says not accepted b/c ct fears foul play), and presented to customers. FIRST TO PRESENT TO CUSTOMERS IS USER.
NOTE: Dreyfuss thinks industrial espionage, generally sale w/2 tms is perfectly ok, and draconian remedy here--complete enjoinment is rare.
cts distinguish b/w sham transaction which is not enuf for reg'n and a token use which is enuf for reg'n
NOTE: 1988 Act abolished token use by allowing intent to use.
POLICY: use is so impt b/c:
only protect if you're doing what customers like/want.
protect public domain--don't take out of pub domain unless you earn it.
warehousing -- some marks so wonderful someone should get to use it (galt house)
don't get competitive advantage without earning it--ie terms cyberspace
test: If the mark's use has been discontinued w/the intention not to resume use w/i the forseeable future, then abandon. CBS v. Silverman: CBS had rts to Amos n Andy tv show but hadn't used since 1966. ct allowed them to keep this rt but Dreyfuss ?s this. Ct said they have reason for not using b/c offensive. In general, if abandon mark, no rt to it.
Dreyfuss says since not using and not likely to use soon should lose mk.
foreigners still can get into sys w/o use, so intent at least give US a little more room.
BONA FIDE USE: not defined; lrev article says several FACTORS that cts weigh in favor of finding commerical use: quantity and continuity of sale; consumer purchases; business of mark owner; quality control; distinguishing mark; profit or loss; adverstising; and test mkt.
PROBLEMS WITH USE DOCTRINE:
EXPENSIVE: to get final sale to public lots of stuff to do first and risk that you'll be 2nd.
TOKEN USE was allowed by cts -- sweater bee GM abandons the mark and within 24 hrs 2 cos use it. token use is problematic b/c favors sophisticated, rich owner over new poor one. In this case, b/c only 1 day difference and certainly no intent to harm, ct allows both to use just clear labeling differences b/w the 2 products.
NOTE: w/ INTENT TO USE no longer ever allow token use.
INTERNATIONALLY use is not required so biggest problm is that foreign products treated better than US products.
' 1051 must REGISTER TMS: file in patent and tm office (PTO) a written application VERIFIED by applicant specifiying DISTINCTIVENESS info re: applicant and mark and product w/drawings etc. tm must be intended to use. W/INTENT TO USE get notice of allowance and then 6 mos til user provides verified stmt that product is used in commerce specifying date of first use. (able to get up to 11/2 yrs extention from after 6 mos period) NATIONAL REGISTRY. (verfied appl'n to say no one is using this before you). To get into the registration system:
new: intent to use (1051b)--6 mons allowed b/w notice of allowance and time of reg'n
traditional: use based (1051a)
Paris convention back door (1126)--must file w/i 6 months of filing abroad (No use requrmt)
' 1063: When filing for reg'n published in Official Gazette and anyone can file opposition in pTO w/i 30 days after publication.
' 1059: term of reg'n cut from 20 to 10 years, every 10 yrs must say "I'm still using it".
Once on principal register:
UNCONTESTABLE 1065, but must refile verified stmtof use w/fees due every 10 yrs; prevents people from warehousing
PROPERTY RT: language of park n fly implies incontestablity provn means "QUIETING TITLE" to mark. TM as actual property!
CONSTRUCTIVE NOTICE 1072: United Drug v. Rectanus Rx trademark for drugstore. at common law 1st user has rt to its area, and 2nd user has rt to its area, and new area is given to 1st who gets there -- COLONIZATION RT.
Dawn Donut v. Hartz Food pltf is 1st user and regd then def uses. pltf can prevent def from using only WHEN pltf starts to use mark in defs region. b/c: its a use based system which has no confusion now. Changing equities, pre-Lanham Act no one's wrong all in good faith. Lanham act def is bad guy b/c he must check register. Before Lanham (com. law) couldn't determine who bad guy was.
PROBLEMS: hard to know when ct will decide pltf close enuf to enjoin def., makes planning difficult; and unknown when def. stops can he advertise "formerly Dawn donuts"
Not all cts follow dawn donuts, some say when pltf 1st entered, no constructive notice so when def began using mark not a bad guy, or bakery is a very localized bus. Sterling Brewery enjoined def at once even though pltfs zone of potenial expansion cannot reasonably extend into def's area.
A uses; B uses; A registers-- B not a bad guy so B remains in business but denied rt to expand. Equitable b/c B could have reg'd himself (or opposed reg'n of A). A gets rt only out of his terr. thus look all over to ensure no one even locally is using that mark.
A uses; B uses; B registers--in theory B cant register mark b/c affidavit of reg'n "I was the 1st to use mark", but most cts allow regn b/c helps create ordinary mkt and encourage reg'n.
A applies, B uses, A uses, A registers--A can enjoin B from using this mark completely. A's regn relatesback to A's applic, see effect of intent to use.
B uses; A applies; A uses; A registers. as if B pre-notice can remain but not after expansion. Goldstein says expansio of B is ok til A registers (notice begins on regn thus B doesnt know of mark til A const. use). Dreyfuss says expansion only ok til Notice of Allowance (encourage use of register).
CANCELLATION 1064 admin proceeding if infringement, fraud, or stopped use; or generic--there's no incontestable rt in a mark which is generic or which at anytime becomes generic.
Park n Fly: obviously descriptive term but put on principal register, can't cancel even though silly name-- no fraud, etc. thus, dollar park n fly must change its name. Ct finds INTREST IN STABILITY AND RELIANCE OF CO. IS GREATER THAN ADMITTING DESCRIPTIVE TERM.
Generic term is contestable but descriptive term after 5 yrs is not.
Burger King: pltf opened 1st BK in Fl in 1957; 7/61 pltf opened BK in Ill; 10/61 obtained L. Act registration for TM, in 1966 had exclusive rts. But, in 1959, def opened BK in Mattoon and reg'd in Ill. Thus, ct gives pltf can enjoin def agt use of term in every place except Mattoon. (after 10/61 BK had constructive notice)
To get on principle rgister need: DISTINCTIVENESS: ' 1052:
no tm on fedl register if immoral, deceptive or scandalous, or disparging to living or dead, institutions or beliefs, or national symbols,
no tm if they're flags of sts; or
no tm unless written consent, a name, signature or portrait of Pres during life of his widow,
no tm if looks like another mark already reg'd so that would cause confusion or deceive.
no tm if it consists of a mark which: when used on or in connection w/the goods of the applicant is merely DESCRIPTIVE OR DECEPTIVELY MISDESCRIPTIVE; when used in connection w/goods of applicant is GEOGRAPHICALLY DESCRIPTIVE; or when used in connection with goods is geog. deceptively misdescriptive or is primarily merely a surname. BUT IF 2NDARY MEANING can get reg'd. (gain 2ndary meaning by being on suppl register for 5 yrs--1092)