Ip in General Origins


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Gianni De Stefano Fall 2005

IP Survey Professor Rochelle Dreyfuss

IP In General

  1. Origins

    1. Patents began in Venice

    2. © began in England - Publisher competition

    3. TMs - Guild System would mark the bottom of product so that people would know from whom they were purchasing

  1. Federal Authority

    1. ©/Patent Authority Article I Sec.1 cl. 8

      1. “Progress of science and useful arts”

        1. Science is ©, and useful arts is patents

        2. In the days of the Constitution means “knowledge.”

      2. Utilitarian clause – not based on the moral rights

      3. Most protection is pretty much on federal level.

      4. Certain States with particular businesses adopted their own laws, which Congress eventually incorporated into federal law (e.g. CA sound recording)

    1. TMs Commerce power – basis for federal system

      1. Prevents consumer confusion and protects information assets – tells people who is making the goods

      2. Historically, there was only state TM law, but people starting producing things in different states causing consumer confusion

      3. Most TM cases are not federal courts

    1. 2 Issues

      1. First Amendment problems – ©s infringe on freedom of speech

        1. How can Congress balance the interests?
        2. How far can states go in adopting common law or legislative solutions?

      2. Federalism there are common law and state protections that interact with federal laws. Does this disrupt the federalist balance

    2. International Agreements

      1. TRIPS, WIPO, Madrid Protocol

      2. What was once a national issue has become worldwide

  1. IP vs. Real Property

Similarities IP law and property law:

  1. fundamental tension b/w desires of property owners versus desires of other people.

  • See fair use defense in © law

  • Isaac Newton “If I have seen further it is by standing on the shoulders of giants”. Principles and products of nature in the public domain. Protection only for applications of these principles and refinements of these products.

  1. legal interests

  • © Act Section 106 secures for © owners the sole rights to (i) reproduce and (ii) distribute the protected work, to (iii) publicly perform and (iv) display it, to (v) publicly perform sound recordings digitally as well as the right to (vi) prepare derivative works.

Differences IP law and property law:

  1. Common law v. statutory law.

  2. Duration: IP is not perpetual: specific duration for © and patent and TM right exists only as long as the owner actually uses the TM.

  3. Private v. public. Tangible law is considered a private good, whereas patents and © can be considered public goods in that their possession is nonrivalrous.
  4. Goals: tragedy of commons for tangible property => need to conserve it. Tragedy of anti-commons for IP law: IP law is aimed at encouraging development and dissemination of new ideas and the need for authorization can slow flow of info and lead to negotiation standoffs. .

    1. Protection for Real Property – 5th Amendment

      1. Amend V says congress can’t deprive people of property

      2. Real property is ex ante, IP is a creation of the Constitution

    2. IP is a public good, but Real property is excludable

      1. Tragedy of the anti-commons – Supply of ideas is not fixed: if everybody owns a little piece of knowledge then putting it all together will become impossible

      2. Tragedy of the Commons – Supply of tangible property is fixed: need individual rights to utilize it efficiently

    3. NOTE: IP creates transaction costs

    4. Reasons for IP

      1. Compensation for risks/investment:

        1. second comer has few risks

        2. First Mover Advantage: Period of exclusivity creates Sticky-ness  eBay, Microsoft Windows (consumers invest heavily in an operating system)

      2. Combat Free rider effect

    5. Argument Against IP: Monopoly creates deadweight social cost.

  1. Alternatives to IP

    1. Prizes - Ex post compensation, gets government involved

    2. Liability Rule - Pay a fee for use (relates to patent reform)

    3. Government Regulation – does this fit our economic system?

    4. Trade Secrecy

      1. Arrow’s disclosure paradox – nobody wants to buy a secret if they don’t know what it is, but once they know there’s no need to buy it

      2. Trade Secrets  tell people on a need to know basis, but people are liable of they steal
      3. Advantages:  Lower transaction costs; no application fees

      4. Disadvantages:

        1. Requires loyal employees, bankers, etc.

        2. People might independently invent the secret

        3. Most secrets eventually become public

    5. Commissions – people should commission products (e.g. textbooks). Problem: insufficient incentive on private side

Part I – TMs
TMs are available for words, symbols, devices, or other designations that serve to identify the source of goods or services, assuming a bona fide intent to use in commerce.

  1. Registration gives you remedy of Section 1114 for passing off. See benefits of federal registration at page 69 (© page 215)

  2. 43(a) Lanham Act (Section 1125) protects marks that have acquired TM status absent federal registration

  • same standard of likelihood of confusion (1) how identical the marks must be to create likelihood of confusion and (2) how identical the products must be to create likelihood of confusion

  1. 43(c) Dilution when value of a mark is undermined by uses that do not cause consumer confusion

  2. 43(d) Cyber piracy

  3. Contributory infringement: those who reproduce

  4. See also State law infringement claims and contractual law infringement claims

  1. Purposes/Policy Consumer oriented

    1. Prevent consumer confusion help consumers identify the source of goods, ↓ shopping costs.
    2. Good Will Give producers an incentive to produce high quality goods by preventing free-riding on owner’s reputation

    3. Efficiency vesting right in author reduces the number of lawsuits by concentrating all claims into one lawsuit

    4. Downsides – people buy goods they cannot afford for name brand – violent theft

  1. Requirements for Protection (Common Law) – You need not register. However, protection can be had only after active use of the mark in commerce in connection w/ the product or service. If two persons come up w/ the same mark, whoever made sufficient use of the mark first will get it and will be able to exclude the other.

    1. The mark must be directed at the goods or services for which protection is sought. No longer an affixation standard. As long as you associate the mark w/ the goods in a way that will reasonably let consumers understand the association (advertisement, display, etc.) it’s enough.

    1. While advertising alone, without actual use, can serve to gain protection, it must (1) be of sufficient clarity and repetition to create the required identification, and (2) it must have reached a substantial portion of the public that might be expected to purchase the good or service.

    1. The type and scope of the use must be substantial and in the ordinary course of trade. Sham transactions can’t serve as use, while token transaction can.

Microstrategy Inc. v. Motorola Inc. (“Intelligence Everywhere”) – Microstrategy could not show that IE was used as an identifying mark. Had to look too closely to find IE on documents. “Limited, sporadic, and inconsistent use.” Dissent: Irreparable harm to MS if injunction not given. Mark featured on all of the business cards! Could be suggestive.

  1. Federal Lanham Registration

    1. 3 ways to establish entitlement: Use (in interstate commerce), Bona fide intent to sue, foreign registration

    2. Benefits of Registration

      1. §1115(a)  prima facie evidence of a valid trade mark and ownership

      2. Federal Jurisdiction

      3. Constructive notice

      4. basis for registration in foreign countries

      5. Registering with Customs

      6. use of symbol ®

    1. Use-based application per § 1051(a) – bona-fide use in the course of business. The use must be a use in interstate commerce. Process takes 9 months – 1 year

      1. File with PTO: identify goods/services on which mark will be used. Include:

        1. date of first interstate use, manner of use (clothing, etc.), specimens

        2. drawings

        3. Declaration that mark doesn’t resemble any other marks currently in use

      2. Filing Fee – currently $245

      3. Examination by PTO to verify that complies with §1052 (a)-(f) requirements

      4. If application approved, published in Official Gazette

      5. Can oppose w/in 30 days of publication Time for opposition or concurrent use proceeding

      6. If no opposition, will issue certificate of registration in 3 months

      7. If rejected, can appeal to TTAB

    1. Bona fide intent to use application per § 1051(b) – (1988 Amend. in response to Paris convention) applicant may file for protection provided he has a bona fide intent to use the mark in the future. Bona fide means a fair, objective determination of the applicant’s intent based on all the circumstances. Process:

      1. File with PTO: identify goods/services on which mark will be used,

      2. Initial Examination by PTO and publish for opposition

      3. Can oppose w/in 30 days of publication

      4. Issue Notice of Allowance

      5. 6 months to begin actual use, but can get extension up to 30 months

      6. Must file Statement of Use once you’ve begun actual use (or risk abandonment)

      7. PTO examines again for §1052 a-f violations, ® registered, and constructive notice kicks in.

    1. Supplemental Register If don’t qualify for Principal Register, may be registered on Supplemental, if mark is capable of acquiring secondary meaning.

      1. Advantages

        1. Use of federal courts w/ respect to state rights

        2. Limited benefits under TM treaties

        3. Actual notice  can use ® symbol

        4. After 5 years, mark may be transferred to Principal Register §1052(f)

      2. Down sides: No constructive notice, No right to stop imports of infringing goods, No injunctions

    1. Maintenance

      1. §1058 – During the sixth year of registration, must file an affidavit stating that the ® is still in use. Failure to do so = cancellation.

      2. §1059 – Must renew every 10 years thereafter or risk cancellation

    1. Opposition

      1. 30 day window for opposition once application is published

      2. TTAB in PTO handles opposition

      3. TTAB cases can be appealed to Federal Circuit (CAFC)

    1. Incontestability After five years cannot challenge mark for lack of distinctiveness, confusingly similar

      1. Other challenges still stick: generic, functionality, discriminatory treatment, fraud

      2. Problems with incontestability: Mark may be put on supplemental register under theory it was capable of acquiring secondary, moved to principle register and become incontestable, make other marks infringing.

    1. Defending marks in Practice

      1. 9/10 cases of denied registration are about fact that mark is in use by somebody else. §1052(d)  “mark which sole resembles mark which was previously registered or previously used.”

      2. IP cases are litigated quickly  harm is often assumed; case turns on merits.

        1. Interlocutory appeal; injunction decides case

        2. Information products can’t be squeezed back into the tube. Game over once product reaches public.

      1. Routes of appeal  Goes to PTO  appeals to TTAB  Appeals to Federal Circuit Court of Appeals

      2. Alternative Route  start case de novo in District Court and appeal to regional circuit. Can introduce new evidence, but Slower and more expensive

    1. Establishing Secondary meaning in Court
  1. Consumer surveys: methodological problems, expensive, whose opinion matters?

  2. Dictionaries  if it’s in dictionary, it could be generic

  3. Trade Journals

  1. Foreign Treaties

    1. Under §1126 of the LA, foreign applicants may, relying on their home country registration, register in the US, notwithstanding their lack of use of the ® anywhere in the world.

    1. Paris Convention formed in 1883, adopted by US in 1887, implemented through domestic legislation in 1903

      1. Substantive protection against unauthorized marks/false designation of origin

      2. Article II: National Treatment, Universal treatment Extends the national TM protection

      3. Article IV: Priority Rule

        1. A filing applicant may use the same date when filing in another Paris Convention country as long as second filing occurs within 6 months at the first filing; and the first filing matures to registration (NOTE: European countries don’t require use  intent to use applications)

      4. Article VI: Reserving marks that become internationally known for the producers who made them famous.

    1. GATT (TRIPS - 1994)

      1. Mirrors national treatment and priority system of Paris Convention

      2. Most Favor Nation (MFN) treatment

      3. Universal minimum standards  Increase protection for geographic indications, particularly with respect to wines and spirits

      4. Problem  expenses of worldwide filing

    1. Madrid Agreement (1891)

      1. Home registration followed by second international registration that applies in all 70 countries, International bureau, Twenty year renewal

      2. Central Attack” to home country registration will cause other country registrations to fail

      3. Paperwork in French with fees (single fee, extra fee for more than 3 registrations, complimentary fee for extensions of application)

      4. Problems: non-use registration, central attack makes US based marks weaker (more grounds for cancellation in US) administrative difficulties

        1. 12 months waiting period not long enough for USPTO to review foreign marks

        2. Fees wouldn’t cover workload

    1. Madrid Protocol (1989 – US joins in 2002)

      1. Basic application + intent to use = faster international application

      2. English as acceptable language for communication, Individual country fees

      3. US still paying same amount as other applications for registration with limited protection.

      4. Central attack still valid, but not fatal

        1. If home country mark invalidated, 3 months to convert application into a series of national applications, each retaining original priority date

  1. Types of Marks

    1. TMs – To distinguish / indicate source of goods
    2. Service Marks – To distinguish / indicate source of services. Must demonstrate that source of service is sufficiently separate from the sale of goods (Greyhound Bus Service, Lexis, Westlaw).

    3. Collective Marks

      1. Collective Membership Marks -- Adopted for the purpose of indicating membership in an organization such as a union or professional society. No goods or services. (ABA, Girl Scouts).

      2. Collective TMs and services marks – Adopted by a collective organization to distinguish goods or services from those of non-members. No goods or services, but may advertise or promote. (Dairy Co-Op; Florida Orange Growers)

    4. Certification Marks – To certify that goods and services of others have certain characteristics. Must maintain control over mark, and may not discriminate, refuse to certify qualified appicants. (Kosher mark)

  1. Physical requirements

    1. Affixation – main requirement under Federal and state law

      1. Associated with the goods in such a way that it is a signal to consumers, who know what it signifies

      2. § 1127 defines use of commerce and has affixation requirement

    2. Use  § 1127

      1. Old rules required Actual Use in interstate commerce, developed practice of Symbolic Use

      2. TM must be used as a signal (See Motorola v. Microstrategyty)

        1. repetitively

        2. distinctive pattern or design

        3. Apparent

        4. Enable consumers to identify

  1. Cognitive Requirement Distinctiveness

    1. the chief requirement to qualify as a mark. When classifying the mark, look at it in relation to the product (Apple is arbitrary for computers, but not for fruit.)

    1. Arbitrary and fanciful terms – automatically recognized as inherently distinctive. A brand new word that has no other meaning except as an identifying mark (Xerox, Exxon). No obvious connection b/w Tm and product/service.

    1. Suggestive terms – automatically recognized as inherently distinctive. Title does not directly invoke the image of the product in the mid of the consumer – requires thought/imagination to make connection. (Coppertone, Roach Motel – get it?)

    1. Descriptive terms (including surnames and geographically descriptive marks) – not recognized as inherently distinctive, but can be protected if the user of the mark demonstrates that the mark has achieved secondary meaning.

      1. Secondary meaning – Exists if in the minds of the public the primary significance of the symbol is to identify the source of the product rather than identifying the product itself. Shown usually by consumer surveys, length and manner of use, advertising expenditures, or volume of sales. Continuous use for five years will do it.

      2. Family names can be used, but only if they have acquired secondary meaning. Note that some names might have a harder time b/c they are descriptive words (i.e. Baker, Carpenter, etc.)

    1. Generic terms – unprotectable. The name of things (potato chips, cola, etc.) If a TM becomes the name for the thing and no longer identifies its source, it becomes generic and is cancelled via 1064(3). Examples: escalator, yo-yo. More in Infringement Defenses section.

    1. G. Heileman Brewing Co. v. Anheuser-Busch (LA [low alcohol] Beer) – Presumption that initials mean the words they represent. Not going to let AB pre-empt the law alcohol beer market. LA is merely descriptive and unprotectable. Surveys should focus on average potential customer, not the uninformed public.

  1. Protected Subject Matter

    1. Word Marks (Coca-Cola)

    2. Trade Dress Trade Dress -- the overall image of good or services (e.g. the look and feel of McDonald’s).

      1. The Two Pesos/Walmart Test for Protectable Trade Dress

        1. Distinctive (only for product packaging like Two Pesos!) OR acquired secondary meaning; AND

        2. Feature is non-functional;


        1. Consumers are likely to confuse the P’s product with the D’s product

      1. Policy ideas Want to protect businesses that are unique, but don’t want to over-protect. Don’t want to put too much burden on starter companies.

        1. Some types of trade dress could be functional as well as aesthetic. See Trafix Devices v. Marketing Displays; Road signs Dual Spring Design can’t be trade dress, b/c it’s functional (Expired patents are dispositive)

        2. Tests for functionality lead to different results:

          1. Does it put a competitor at a distinct disadvantage, b/c feature is “essential”

          2. Does it effect the cost or quality?

        3. Solutions to trade dress problem

          1. Pre-emption Most trade dress was protected under state law instead of federal

          2. Limit IP protection

            1. You either get a TM or ©, or Patent,  See TraFix

            2. Doesn’t work in every case – Lots of functional designs are never patented  Vornado Fans and crescent wrenches
        4. Protecting packaging: How do we tell difference b/w configuration and packaging? (Tiffany Box?)

        5. Design protection creates problems for the following:

          1. Auto Parts Makers: They say that if Ford or Chevy gets design protection for the grill on your car, you won’t be able to buy a generic grill.

          2. Insurance companies: more expensive to buy parts from Chevy than other companies

          3. Appliance companies  need to have dishwasher that fits into same slot for old dishwasher

          4. Consumer interests

    1. Trade Dress Cases:

      1. Two Pesos v. Taco Cabana (restaurant décor) – Restaurant trade dress was inherently distinctive; no need to show secondary meaning. Don’t want start-up businesses to create cool trade dress, only to have it stolen by a competitor. Distinctiveness and non-functionality is all you need!

      2. Qualitex v. Jacobson Products (Color green-gold dry-cleaning press pads) – USSC said that a color may satisfy TM requirements if it acquires secondary meaning. “It is the source distinguishing ability of a mark, not it ontological status as color, shape, fragrance, word, or sign that permits it to serve these purposes.” Feature will not qualify for protection if functional (blue fertilizer in Nor-Am Chemical, black outboard motors in Deere & Co. v. Farmhand). Policy issue color depletion; thus a stricter standard
      3. Wal-mart Stores, Inc. v. Samara Brothers, Inc. (Samara sued Wal-Mart and its supplier for “knocking off” Samara’s dress designs - 1-piece seersucker jumpsuit) – Product design, (like color) can never be inherently distinctive, and requires showing of secondary meaning. Product packaging can be inherently distinctive. Distinguished from Two Pesos b/c restaurant décor is more like product packaging.

      4. Mosler Safe v. Eli Norris safe had metal band with small bomb behind it, would explode if jimmied open. Issue: Is the band functional or aesthetic. Who are we trying to reach, consumer or thief

    1. Slogans – Registrable on Supplemental Register, 23(c). The longer the slogan, the harder it is to understand when read casually, thereby diminishing the uniqueness and distinctiveness of the phrase which are essential to its identifying function. Must be distinctive or have acquired 2nd meaning.

    1. Surnames -- Registrable on Supplemental Register, 23(c). Note that 1052(e)(4) prohibits registrations of Tms that are primarily a surname, but that’s not an absolute bar.

      1. If surname acquires secondary meaning and registered, then second user with same last name acts in GF, his use will likely be granted. In order to prevent customer confusion, may have to modify name a bit – add initial or something.

    1. Sound – Can be granted protection if distinctive, not merely functional. (Intel Inside or NBC chimes)

      1. EMI Catalouge Partnership v. Hill (musical composition) – Granting a music composition ® status “would stretch the definition” of a TM and extend TM law into an area already protect by ©. Cf. Oliveira v. Frito-Lay (same court said that a musical composition could act as a TM even though protected by a ©, but a performer cannot get a ® signifying herself in a recording or her own famous performance.)

    1. Scent -- Can be granted protection if distinctive, not merely functional like a perfume.

    1. Composite Marks – Can be registered even if not all elements could be granted protection individually. Evaluated as a whole

      1. In re Dial-A-Mattreee Operation Corporation court allows Dial-a-mattress wanted to register 1-888-MATTRESS. Althought PTO doesn’t allow registration of numbers, regards entire unit in evaluating status.

  1. Subject Matter Not Protected

    1. Generic Marks – does not distinguish origin (aspirin, thermos, etc.). More in Defenses Section.

    2. Immoral or Scandalous Marks – §1052(a)

      1. Scandalous

        1. Look at seriousness of purpose (message conveyed)

        2. No vulgarity, swear words, feces, or naked body parts.

        3. In re Old Glory Condom (condom that looked like an American flag denied protection as scandalous and likely to offend.); In re Mavety Media Group (“Black Tail”) – Not scandalous. Must evaluate based on composite of general public, context of relevant marketplace, and/or contemporary attitudes.

      2. Improper Associations with persons, institutions, etc.

        1. False Connection Test

          1. Mark is the same or a close approximation of the person’s previously used name or ID

          2. Would be recognized as such

          3. Person in question is not connected with the goods or services of the applicant

          4. Name of sufficient fame that connection likely to be made by potential purchaser

    3. Deceptive (§1052(a)) and Deceptively Misdescriptive (§1052(e))

      1. Distinguigh

        1. Deceptive – Leads the consumer to think the product is what it is not. Complete bar.

        2. Deceptively Misdescriptive – Product misdescribed, but does not influence buying decision and does not hurt market. Not barred if can show secondary meaning. (Turtle Wax).

      2. Test

        1. Is the term misdescriptive of the character/function/composition/use of goods?

        2. If so, are prospective purchasers likely to believe the misdescription?

        3. Is the misdescription likely to influence purchase (inducement)?

        4. Gold Seal v. Weeks (“Glass Wax”) – Deceptively misdescriptive b/c consumer might think product contains wax, but this will not deceive consumers to purchase. Must show 2nd meaning for registration.

    4. Geographic Terms:

      1. Primarily Geographically Descriptive: product connotes geographic origin and goods actually come from that location. Registerable only with 2nd meaning. §1052(e)(2).

      2. Deceptively Misdescriptive: If goods do NOT come from that location, but people reasonably believe that they do (goods-place link), only registerable if 2nd meaning obtained prior to 12/8/1993. If deceptive, never registerable.

      3. Notes: TRIPS & Wine

        1. Congress never amended 1052(e) to comport with TRIPS.
        2. However, 1052(a) has been amended to provide special wine protection. It now bars registration of all wine and spirit ® that contain a geographic term, which is not representative of the product’s origin, even if the designation is not misleading.

    5. Confusion §1052(d) – not protected. More later.

    6. Prior Use § 1052(d) -- marks may not be registered if confusingly similar to another Tm that is in use and has not been abandoned. More later.

    7. Functionality – Do not want to give Tm protection where patent law is denied

      1. Tests of Functionality

        1. Do competitors need to copy the feature in order to compete effectively -- either b/c the feature is functionally superior or more economical?

        2. Is the feature utilitarian or merely ornamental?

      2. TrafFix Devices v. Marketing Displays (After MDI’s patent for wind-resistant standing street sign expired, Traffix started to sell similar ones) – For trade dress to be protected under 1125(a)(3) the party must establish that the element of the trade dress are non-functional (non-essential/does not impact quality or cost). Court said that prior patent was critical evidence of utility. Dual-spring feature was functional – end of the inquiry. Feature is functional if it: (1) affects cost and/or quality, (2) puts competitors at a significant non-reputation related disadvantage

      3. Crescent Tool Co. v. Kilborn & Bishop (crescent wrench) – Wrench shape was essential to the proper operation of a wrench in tight place, and thus functional and unprotectable.

      4. AOL v. AT & T Corp 4th Circuit upheld Dist court ruling that AOL could not TM phrase “You Have Mail.”
      5. Also see Owens Corning (pink insulation) – Color served no utilitarian purpose and did not deprive competitors of any reasonable right or competitive need. Black engine parts might be another story. Whether color is functional hinges on availability of reasonable alternative colors in order to avoid fettering of competition.

    8. Foreign Words PTO will translate foreign words to English to determine where they fit on the meaning spectrum. See Weiss Noodle Co v. Golden Cracknel Specialty Co. (denied TM “Ha-Lusk-Ka,” which literally means noodles in Hungarian. Rationale: Usually targeted to ethnic audiences that know the meaning -- it’s generic to them! And larger society may acquire the culture (e.g. tortilla, not corn pancake).

    9. Other (random) Bars to Registration:

      1. Goods consisting of the flags or coat of arms of the US, states or foreign nation. §1052(b)

      2. Mark which consists of the name, portrait, or signature of living individual without the individuals consent, or in the name, signature, or portrait of a deceased President during the life of his widow, unless she has given consent. §1052(c)

  1. TM Rights

    1. Ownership of Marks Refresher Timing (first to use; creation has nothing to do with it!), Bona fide usage, Exhibit control over TM. Use has to be open. If not trying to enter market, won’t get protection.

    2. General Lanham Act Rights/Benefits

      1. Prima facie evidence of the registered mark’s validity

      2. Nationwide constructive notice (§1072) of the mark

      3. Registration can be used as a basis for obtaining rights in other countries.

      4. Protection against the importation of offending goods and against counterfeit goods

      5. Only federally registered marks may use “®”.

      6. Incontestability after five years
    3. Geographic Limitations – The TM doesn’t confer rights outside the market in which it is actually used. GF junior users in remote locations (like Hart’s Foods) may use the mark subject to ® holder’s proper showing of an intent to use in that region.

      1. Limited Area Defense -- 1115(b)(5):

          1. Prior User w/ Continuous Use – ® holder cannot acquire rights over merchants who used the mark prior to the other party’s federal registration.

          2. Rights Frozen – Registration will freeze the prior user’s rights, confining him to the location where he was using the mark at the time it was registered + a modest zone of expansion.

          3. Thrifty Rent-a-Car System v. Thrift Cars (Thrift opens rental business after Thrifty applied, but before registration. NOTE: Thrift not protect by Lanham b/c no federal register and not involved in interstate commerce) – Thrift entitled to remain, but cannot expand business. Limited advertising outside area not deemed sufficient to establish market presence. Mere desire to expand not enough. Thrifty estopped from entering Thrift’s market.

          4. Dawn Donuts v. Hart’s Food (Hart foods using Dawn’ registered mark on baked goods; selling 60 miles apart) – Dawn only allowed to enjoin concurrent uses which are likely to create confusion. There was infringement, but b/c uses confined to separate trading areas (60 miles apart & people likely to buy baked goods close to home), there was no confusion and no need for injunction or damages. Hart Foods allowed to use ® until Dawn Donut begins use or shows concrete plans to expand to region. Dissent (within majority opinion): Dissent would remand to see if adequate policing of ®. How regular/thorough were the inspections? Was the inspector trained to perform the task? Limited cancellation possible via §1119 (“in whole or in part”).

  1. Infringement §1114 & §1125

    1. Basic elements

      1. Use in commerce of…

      2. a reproduction/counterfeit/copy of a registered mark that…

      3. is likely to cause confusion, or cause mistake to deceive.

    1. Two Kinds of Infringement

      1. Diversion of sales -- D’s use of ® causes consumers to buy D’s goods when they meant to buy P’s

      2. Damage to goodwill – non-competing goods, but D’s has a confusingly similar mark that suggests an affiliation where there is none

    1. Likelihood of Confusion Test (The Polaroid Factors)

      1. Strength of P’s TM  The stronger the mark, the more likely that consumer’s seeing the allegedly similar mark will be confused

      2. Degree of similarity b/w P’s and D’s mark

        1. Similarity of Appearance – overall appearance

        2. Similarity of Sound – sounds of words, for example S.O. and Esso

        3. Similarity of Meaning – Mental image evoked by TM may overpower any differences b/w them (e.g. Cyclone vs. Tornado; Cat vs. Gato)

      3. Proximity of goods or services Goods likely to be sold in the same or same kind of store/area

      4. Likelihood that P will bridge the gap  How likely P is to begin selling the stuff that D is trying to sell. Even if no immediate plans, the court might still consider P’s right to reserve that option in the future.

      5. Actual confusion  Not necessary, but highly persuasive.

      6. D’s good faith in adopting the TM  Did D intentionally copy just to cash in on P’s goodwill?
      7. Quality of D’s product or services / channels  If use their ®s in same or related services, then there is a greater likelihood of confusion.

      8. Sophistication of the buyers The more sophisticated, and the more costly the services, the more careful and exacting the purchasers will be, and less likely to be confused.

Lois Sportswear v. Levi Strauss & Co. (Lois imports virtually identical jeans from Spain) – Uses Polaroid Factors. Levi’s very strong mark. Virtually identical within ¾”. Both jeans. Protect Levi’s interests to enter high-end jean market. Limited harm in US so far, but Ct. not willing to penalizing Levi’s for acting to protect brand. Lois didn’t do it on purpose, but intent doesn’t matter. Lois is a good quality product, but that might actually confuse consumers more!! Sophisticated buyers likely to be affected in the post-sale context – more affected by sight of stitching pattern.
McDonald’s v. Druck and Gerner, DDS. (McDental) – McDonald’s owns very strong family of marks. 30% of those surveyed were confused, and that’s substantial. Similarity “obvious.” Proximity b/w eating and dentistry, but McDonalds did not bridge the gap. Bad Faith dentists trying to capitalize on McDonald’s fame.

    1. Initial interest Confusion (metatags) Brookfield Communications v. West Coast Entertainment ( WC used Brook’s TM “Movie Buff” as a metatag for movie site) – There is no source confusion – the sites are very clear – but by diverting customers like that, WC improperly benefits from Brook’s goodwill. Issue of search costs on the Internet.

      1. Disclaimers – sign/statement stating that the site is not associated with the TM (Welles – dilution)
        1. Courts tend to disfavor them b/c they don’t believe that customers read/understand them.

        2. Seen as too late to dissipate initial interest confusion

        3. However, might be the only solution sometimes (e.g. two Budweiser beers)

    1. Secondary Confusion/Post-Sale consumer knows he’s buying a fake, but those who see the goods in the consumer’s possession are confused about their source. Could lead to injury of producer’s goodwill. We care about subsequent viewers b/c they are potential buyers (Lois Sportswear)

      1. Ferrari v. Roberts (body shells in the shape of the Dodge Spyder) -- Buyers knew it was just a shell, but observers had no idea.

    2. Reverse Confusion public assumes that the senior user’s products are really the junior user’s or that the former user has become somehow associated to the latter.

Banff Ltd v. Federated Dept Stores (Banff’s “Bee Wear” vs. Bloomie’s “B Wear”) – Court found reverse confusion b/c although Banff was the senior user, Bloomie’s was the bigger entity. Consumers who were initially aware of Bloomie’s may believe that Banff’s Bee Wear is infringing Bloomie’s B Wear. Bloomie’s use of the ® deprives Banff of fair competition/reputation.

    1. Contributory Infringement – Vicarious liability if

      1. Induced Infringement.  Coke distributor tells restaurant manager to give his customers Coke every time they order Pepsi without telling them. Manager is infringer. Distributor is contributory

      2. Knowingly aided infringement distributor continues to supply raw materials to someone he knows is going to use them for infringement purposes.

      3. No duty to look for infringing activities, but once known, affirmative duty to correct/prevent

      4. Inwood Laboratories v. Ives Labs (generic drug maker vicariously liable for pharmacists dispensing drug); Lockheed Martin v. Network Solutions (NSI lacked the requisite control over the means of infringement)

  1. Other §43(a) Claims

    1. False Endorsements – look-alikes (Woody Allen, Vanna White robot) or sound-alikes (Waits)

    2. Reverse Passing Off – when D sells P’s goods, representing their source as from D (plagiarism-ish). Test for passing off varies from “bodily appropriation” to mere “consumer confusion” depending on the Circuit

    3. False Representations in Advertising – representations that D’s goods have qualities that they do not have.

      1. Elements for a §43(a)(1)(B) claim (injunctive relief only)

        1. D uses false or misleading statements of fact in advertising about its own product

        2. Statement actually deceived or had the capacity to deceive a substantial segment of the target audience

        3. Deception was material in that it was likely to influence the purchasing decision

        4. D caused its goods to enter interstate commerce

        5. P has been or is likely to be injured as a result

      2. Falsity and Materiality

        1. Must demonstrate either

          1. advertisement is literally false; or

          2. advertisement, though literally true, is likely to mislead and confuse

        2. Unnecessary to demonstrate intent

      3. Burden of Proof is costly

        1. If D simply claims its products are superior to P: P must show D’s product = or inferior
        2. If D claims tests or studies indicate its products are superior, P satisfies burden simply by showing that tests did not establish the proposition for which they were cited

Avon Products v. S.C. Johnson & Son (Johnson ran ad that said Off! Skintastic was 100x better than Skin-So-Soft; 4 out of 5 users preferred Off!) – Avon could not disprove the “4 out of 5” language, and the “100x” language was dismissed as Puffery Round numbers are understood as exaggeration. Avon needed to show surveys proving confusion but did not.

  1. Defenses to Infringement

    1. Genericty

      1. Association b/w goods and category. Look to see if the primary significance of the TM to the public is the common name of the product or service. Does everyone need to use the word to compete?

      2. Factors:

        1. Competitor’s use of the mark

        2. Plaintiff’s use of the mark

        3. Dictionary definitions

        4. Media usage

        5. Testimony or persons in the trade

        6. Consumer surveys  Look at how many people identify TM vs. how many of those folks can identify the source (or at least know that it’s from one source)

      3. A finding of genericty isn’t necessarily the end of the line. Might still have a passing off claim! May be subject to labeling remedies.

In re Dial–A–Mattress Operating Corp. (1-888-Mattress, and derivatives) – The Ginn two-part test: 1) Genus of the word & 2) Public understanding. For compound words (e.g. “Screenwipe”), can evaluate each of root words individually. But with a phrase (like the compound letters/numbers here), must look at meaning as a whole. Shoppers do not refer to class as “1-888-Mattres”; not generic. Competition still free to use other pneumonics and can still use the word mattress in other respects.

America Online Inc. v. AT&T Corp. (AOL’s “You’ve Got Mail” and “Buddy List” marks) -- Declared generic and functional too! Repeated use of ordinary words functioning within their ordinary meaning. Cannot give AOL rights to those words even if association develops.

Quality Inns International, Inc. v. McDonald’s (McSleep Inns; an economy hotel concept) –Genericity. Linguist’s analysis considered. Mc + word is coined & novel to each article; always an allusion to McDonald’s, and no single independent meaning of “Mc”. The prefix “Mc” has not become part of the English language nor is it beyond McDonald’s control. Abandonment. No evidence that signaling strength of McD’s family of marks has diminished b/c of 3rd party uses. No abandonment b/c of delay or lack of enforcement of ® in this case.

    1. Abandonment §1127Mark is assumed abandoned if not use for 3 years.

      1. Discontinued Use – with no intent to resume. 3 year hiatus = prima facie abandonment. TM holder can rebut presumption by offering evidence of intent to resume.

Silverman v. CBS, Inc. (Silverman wanted to make Amos and Andy play) – Court said A&A TM was abandoned: CBS had not used since 1966. Although CBS had good reason for keeping it off the air (racism), must intend to resume within “reasonably foreseeable future” (to prevent warehousing of marks). CBS’ bare assertion of possible future use is not enough.

Ferrari v. McBurnie Coachcraft (model of Ferrari had not been made in 13 years) -- No abandonment even though Ferrari had no intention of resuming production. Ferrari showed goodwill associated with the vehicle and “evidence of ongoing parts support for vehicle”.

    1. Loss of Distinctiveness – protects public b/c it assures that marks send consistent messages

      1. Naked Licensing (without goodwill attached) License TM without adequate supervision no assurances that product/services will retain original characteristics, and risk consumer confusion. To protect against this, assignor must make routine inspections or have some other quality control system in place. Dawn Donut.

        1. Use of mark by related companies (where original mark holder exerts some control) is OK. §1055.

        2. Unlike ©, TMs require an ongoing enterprise. So, if buyer of bankrupt business decides not to continue it, anyone is free to use TM. This rule reduces value of marks as instruments for raising capital.

    1. Laches Π knew ∆ was using the mark but didn’t do anything about it. This created reliance interests

    1. Fair use / Nominative Use – use of a mark that is used fairly and in good faith only to describe the goods or services of the owner of the mark. Often found in Parody, Comparative Advertisement, etc.

      1. The 3 Factor Test - § 1115(b)(4) . ∆ must prove

        1. Used in non-TM capacity

        2. Descriptive of goods or services

        3. Fairly and in good faith only

Prestonettes, Inc. v. Coty (scented face powders; used TMs of the perfumes used on its labels) – As long as it’s not used to deceive the public, such use of TMs was OK!

Playboy v. Welles (Terri Welles, PMOY) – Can use TM simply to ID as long as no implication of sponsorship. Welles’ use of PEI’s TMs were all nominative uses (Except for use of PEI’s mark in the wallpaper of her site). Should would be unable to ID herself as a past “Playmate of the Year” if she couldn’t use the phrase. Simply descriptive of past sponsorship, not current. And she had a disclaimer on there. Nominative uses do not dilute.

KP Permanent Makeup ∆ claimed need to use term “microcolor” to describe make-up products.

      1. The NKOTB Nominative Use Test:

        1. The product/service in question must be one not readily identifiable without the use of the TM

        2. Only so much of the TM may be used as is reasonably necessary to ID the good/service

        3. The user must do nothing that would suggest sponsorship or endorsement.

    1. First Sale Doctrine  Authorized initial sale exhausts right to maintain control over resale, and thus exhausts protections of the Lanham Act. Origin has not changed, and customers should not be confused.

      1. Policy consumer will benefit by lower pricing.

      2. Material Difference Exception. unauthorized sale of a materially different product constitutes infringement. Material difference is one that consumers consider relevant to the decision to buy. Low threshold. Theory grounded in customer confusion.

Davidoff & Cie, S.A v. PLD International Corp. (Cool Water fragrance batch codes removed and sold to discount US retailers) – Obvious etching degrade the appearance of the bottle and may lead the consumer to think that the bottle has been tampered with. THE MATH: Alternation affects goodwill → Creates confusion → Satisfies Material Diff Exception = TM Infringment. Contrast to the hair care cases where court did not find removal of codes would affect buying decision. Unlike hair care, the fragrance bottle is a big part of the “experience” you are buying.

Original Appalachian Artworks (applying Material Diff Exception where Cabbage Patch Dolls had adoption papers in Spanish).

    1. Incontestability § 1115(b) – After five years of registration, must assure PTO of current use (§8 affadavit) and continuous use (§15 affadavit) to get incontestable status. If don’t file §8 affadavit in year 5, PTO will consider mark abandoned: Incontestability give TM presumption of validity.

      1. Challenging an Incontestable Mark

        1. Can’t get cancellation based on: lack of distinctiveness or secondary meaning, confusing similar, or functionality

        2. Available grounds for cancellation : Genericity, Abandonment, Obtained through fraud, Deceptive, scandalous, etc.

      1. Defenses to Incontestability -- § 1115(b): Fraud, Abandonment, Use of TM to misrepresent source, Fair use, Limited territory defense, Prior registration by D, Use of TM to violate antitrust laws, Equity

Park ‘N Fly v. Dollar Park & Fly, Inc.  Denied Dollar’s challenge to P&F’s TM, b/c incontestable mark cannot be challenged as descriptive. Dissent: P should not be able to enforce a TM as incontestable that should not have been a TM in the first place due to lack of 2nd meaning.

  1. The Internet and TM Law

    1. Anti-Cybersquatting Consumer Protection Act (ACPA) -- §1125(d)

      1. Allows suit if one can show:

        1. Infringer had Bad Faith intent in using TM with the hope to benefit AND

        2. The infringer registers, trafficd, or uses a domain name that:

            1. Is identical or similar to TM;

            2. Dilutes the TM; or

            3. Is a TM, word, or name protected by 18 USC 703

      2. Bad Faith Factors

        1. IP rights of the domain name (“DN”) registrant

        2. Whether the DN is the legal name of the registrant

        3. Whether the DN had prior lawful uses with goods/services

        4. Registrant’s intent to divert customers from lawful TM owner’s site

        5. Registration of multiple and identical or confusingly similar DNs

        6. Offer to sell or transfer DN for $$ without a prior use or intent to use

        7. Supplying BS information when applying for registration

      3. Available remedies: Injunctive relief, Actual damages, Statutory Damages ($1K - $100K per DN)

      4. In rem action available when ∆ cannot be found

        1. In the judicial district in which the domain name authority that registered the DN is located

        2. Remedy limited to the loss of the domain name, unless bad faith shown

    1. Internet Corporation of Assigned Names and Numbers (ICANN)

      1. Uniform Domain Name Dispute Resolution Policy (UDRP, §43(d))

        1. Commence proceedings by filing a complaint with either the WIPO, NAF, DeC, or the CPR Institute for Dispute Resolution. Must Prove:

          1. The DN at issue is identical or confusingly similar to its TM

          2. The registrant has no rights or interest in the DN

          3. Bad Faith

        2. Bad Faith Factors

          1. Acquired DN for purposes of sale of transfer

          2. Registered it to prevent someone else from using it

          3. Registered DN to disrupt competitor’s business

          4. Used domain name to intentionally cause likelihood of confusion

        3. Defenses to Bad Fait

          1. bona fide use in connection with product offering

          2. registrant is known by DN, even though it does not own TM

          3. Legitimate fair use or non-commercial use

        4. Remedies Cancelling DN or transfer of DN to claimant; NO $$ damages

        5. UDRP does not preclude litigation.

Wal-Mart Stores, inc. v. Wallmartcanadasucks.com (cybersquatting) – Uses Bally (“Bally sucks”) factors for likelihood of confusion: (1) similarity of the marks, (2) evidence of actual confusion, (3) marketing channels used, (4) degree of care likely to be exercised, and (5) D’s intent in selecting mark. ∆ allowed to keep domain name: No mistaking source  Walmart was clearly not a sponsor. Criticsim/parody, not promoting goods. Nominative use Need to mention Walmart in order to critique it. Quality of criticism is immaterial – just knowledge of parodic nature is enough. No demand for payment.

Barcelona.com v. Excelentismo Ayuntamiento De Barcelona (Under UDRP, WIPO concluded site was confusingly similar / BF effort to extort $$; ordered transfer of domain name to City. Bcom then filed action in VA seeking restoration of rights) -- Since the City Council had not registered its marks in the US, Bcom was held to have done nothing unlawful. In short, only US TM rights are protectable, even though the domain name system is international and foreign ® holders can be hailed into US Courts.

  1. Dilution -- The lessening of the capacity of a mark to identify and distinguish good or services regardless whether consumer confusion exists. Dilution is all about TM preservations, NOT about the consumer.

    1. State Law Dilution

      1. Blurring  Typically Π has very strong marks, and ∆ uses the same or highly similar mark on different goods or services. Blurs the distinctiveness of a mark by trying to disconnect association b/w product and source. Based on property law (value of association). Factors include:

        1. Similarity of the marks

        2. Similarity of the products covered by the marks

        3. Sophistication of consumers

        4. Predatory intent

        5. Renown of the senior TM

        6. Renown of the junior TM

      1. Tarnishment (Disparagement)  Creates negative image of TM through an association with unsavory, unrelated goods. No need to show confusion. May be a way to prevent people from parodying your stuff! (Debbie does Dallas, Enjoy Cocaine).

    1. Federal TM Dilution Act 1995 – created §43(c) of the Lanham Act

      1. Requirements -- Owner of a famous TM can enjoin another’s commercial use if:

        1. Use begins after TM became famous

        2. Use causes dilution to the distinctive quality of the mark (actual harm)

      2. Famous” factors -- §43(c)(1)

        1. Degree of inherent distinctiveness

        2. Duration and extent of use of TM in connection with goods/services

        3. The duration and extent of advertising and publicity

        4. Geographical extent of the trading area

        5. Channels for trade used

        6. The degree of recognition of the TM in the channels of trade

        7. Nature and extent of use of similar TM’s by 3rd parties

        8. Whether the TM was federally registered

NOTE: can bring state dilution claims against non-federally registered TM

      1. Times Mirror Magazines v. Las Vegas Sports (The Sporting News) – How “famous” is to be judged within niche market, not the general public.

    1. Other limitations -- §43(c)(1) Three uses of a mark are exempt from a dilution charge:

      1. Fair use including comparative advertisement

      2. Non-commercial use (Mattel)

      3. News reporting and commentary.

    2. Cases

      1. Ringling Brothers v. Utah Division of Travel Development (“Greatest Snow on Earth” on license plates) – To prove dilution, must show: 1) Famous mark, 2) Adoption of mark after it was famous, and 3) D diluted P’s mark by blurring it. In addition to proving mental association, court said that need to show economic harm. Ringling did not do this.

      2. Deere v. MTD Products, Inc (John Deere logo being chased by MTD’s tractor) -- Injunction granted. Competitors can use each other’s products in comparative commercials as long as it is: 1) Truthful, 2) TM is not altered, and 3) the purpose is too compare the merits of competing products.
      3. L.L. Bean, Inc. Drake Publishers (LL Beam’s Back-To-School-Sex-Catalog) – Parody privilege vs. the 1st Amendment. TM rights only extend to injurious, unauthorized commercial use. Here, use was non-commercial (editorial), parody, small part of the magazine, not on the cover (non-ID), and not promoting goods. Cf. Original Appalachian Artworks v. Topps Chewing Gum (Garbage Pail Kids).

      1. Moseley v. V Secret Catalogue, Inc (Victor’s Little Secret, which is only 5% lingerie sales!) – Purpose of §43(c) is to protect famous marks from subsequent uses that blur and tarnish, whether there’s confusion or not. Unlike Ringling, no actual loss in sales needed (shouldn’t require Π to wait until mark tarnished), but mere association is not enough. Army guy made association with Victoria’s, but no evidence of any lessening of the capacity of the Victoria TM to identify and distinguish goods. Officer may have been offended, but concept of Victoria’s did not change.

      2. Mattel, Inc. v. MCA Records, Inc. (Barbie Girl song) – A parody that involved the normative use of the name Barbie. Barbie not just a toy but a cultural icon. Used Barbie name to sell records, but song social commentary on Barbie image. Court concluded that it was not purely commercial speech, and therefore fully protected. Relief limited to injunction.

  1. Remedies

    1. Injunctions – the typical answer to preserve status quo and protect against consumer confusion. Should be no broader than necessary.

      1. 1114 (1&2) preclude monetary damages for many instances where BF not involved

      2. Remedies for dilution are restricted to injunctive relief unless willfulness

    2. Damages – possible damages listed under §1117(a). Typically, must show willful intent to trade on owner’s reputation or to cause dilution of TM (Basch (yes); Sands (no)).
      1. The actual damages suffered by the P. Must show that “but-for” infringement, he would have made specific sales that he didn’t. Hard to meet. OR

      2. The defendant’s profits. Plaintiff must only prove amount of defendant’s sales, then burden shifts to defendant to prove its costs or deductions. No double recovery – can’t get D’s profits and P’s loss of profits!

      3. Attorney’s Fees awarded only in exceptional cases. For P to get fees, must show D’s BF. For D to get fees, he must show P’s lack of merit in the case or an intent to harass.

    3. Other Options

      1. Treble damages under §1117(a) -- not exceeding 3x

      2. Cancellation/restoration of registrations

      3. Destruction of material

      4. Prejudgment Interest – Completely within court’s discretion

      5. Corrective advertising (does this ever happen?)

      6. Anti-Counterfeiting Consumer Protection Act (ACCPA) 1117(c) – Increased penalties and statutory damages available.

    4. Government Immunity

      1. §1122 nullifies the Federal government’s immunity from suit, as well as the States’ immunity via the 11th Amend.

      2. But, unclear whether states can be sued for ® infringement after Florida Prepaid.

    1. Standing

      1. Registration: Opposer must have a legitimate personal interest in the opposition, and he or she must reasonably believe in the claim of potential injury. Ritchie v. Simpson (Ritchie challenged OJ’s registration of O.J., THE JUICE, etc. b/c the “marks damaged his values.” This was enough to create standing even if lots of people shared those views.)
      2. Infringement: Some courts say §43(a) only applies to commercial parties, and thus excludes consumers. Others say competition not required, but “discernible interest” required in false advertising actions.

    2. Cases

      1. George Basch & Co. v. Blue Coral (NEVR-DULL (CAN) & EVER BRITE (USA)) -- In order to justify an award of profits, Π must establish that ∆ engaged in willful deception. Basch never showed confusion nor sales diversion. No Bad Faith. Likelihood of confusion was low, and only minimal aesthetic remedies necessary. Injunction should be no broader than necessary! Here, court required that EVER BRITE change color of the can in the US, and allowed it to sell existing stock w/out penalty. Dissent: Blue Coral intentionally copied mark with Secondary meaning, created confusion, and scored $200K. Profits are reasonable in such cases of unjust enrichment.

        1. In order to receive damages Π must prove: actual confusion OR bad faith

        2. Policy behind damages: Unjust enrichment, compensation for actual damages, deterrence

      1. Sands, Taylor & Wood v. Quaker Oats Co. (Gatorade’s use of STW’s TM “Thirst Aid” (TA)) – Quaker acted in reliance on their lawyer’s belief that TA was used descriptively, not as TM. TA was not currently used on retail products, just in advertisement. Quaker developed Thirst Aid independently, and $24M award way too much of a windfall for Π. A reasonable royalty would have been better. Remanded for award determination. NOTE: Damages OKed here even though no Bad faith Concurring: Royalty might not be enough -- emphasis on deterrence. Dissent: $24M is only 10% of profit realized. Why not? Focus on causation (of profits).

        1. Follow-up: On remand, Court awarded $20M. 2x the hypothetical base royalty. Deterrence rationale.

      1. Lever Bros. Co. v. United States (British affiliate’s soap imports; Lever wants to keep it out of the US) –No evidence that Congress wanted to let 3rd parties import “materially” different TM goods that are manufactured and sold abroad by a foreign affiliate. Mere affiliation will not cure the confusion brought on by the physically different goods. Court limits decision to just Lever’s two products b/c Lever never asked for global relief specifically. The “affiliate exemption” does not apply to imported, physically different products, bearing foreign TMs similar to U.S. TMs (NOTE: decision uses Chevron analysis)

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upload documents -> Antitrust nyu spring 2010 – Jonathan Baker Table of Contents
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upload documents -> Chapter 1 – Choosing a System of Procedure Intro to Class
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