I. Introduction
In KP Permanent Make-Up, Inc., v. Lasting Impression I, Inc., the U.S. Supreme Court held that a defendant asserting the affirmative defense of fair use in response to a claim of trademark infringement does not have to shoulder the burden of proving there was no likelihood of confusion as a result of their fair use. [1] The Supreme Court granted KP Permanent's petition for certiorari in this matter to resolve a split among six of the federal courts of appeal. [2]
This article will first consider both the common law and statutory history underlying the fair use doctrine of trademark law. The article will then consider the KP Permanent case and its procedural history, taking into account the shortcomings of the Supreme Court's holding, not only with respect to the decision, but also to the possible ripple effects of that decision. Finally, a test will be suggested that would offer some protection for business owners of incontestable descriptive marks whose rights have been somewhat diminished after KP Permanent.
II. Statutory Basis for the "Fair Use" Doctrine in Trademark Law
A. Trademark Background and the Likelihood of Confusion
Trademarks are "any word, name, symbol, or device, or any combination thereof . . . used by a person . . . to identify and distinguish his or her goods . . . from those manufactured and sold by others and to indicate the source of the goods, even if that source is unknown." [3] The federal trademark statute, 15 U.S.C. (popularly known as the Lanham Act), allows a trademark owner to register their mark with the U.S. Patent and Trademark Office. [4] Federal registration entitles the owner of a trademark to bring a civil action of infringement against someone using a mark imitative of the registered mark. [5]
Allegations of trademark infringement force the plaintiff to prove: (1) that his mark is valid according to the statute; (2) that he owns the mark; and (3) that the allegedly infringing mark is so similar to the plaintiff's mark that the defendant's use of the mark might tend to confuse consumers as to the source of the good attached to the mark. [6] Actual evidence of consumer confusion is very difficult to produce, even for the most diligent plaintiff.
Since it is hard to prove actual confusion, the court will consider whether the mark fulfills the test for "likelihood of confusion," as first described in Polaroid Corporation v. Polarad Electronics Corporation. [7] This test is a non-exhaustive list of eight factors, which include: "the strength of [a prior owner's] mark, the degree of similarity between the two marks, the proximity of the products, the likelihood that the prior owner will bridge the gap, actual confusion, and the reciprocal of defendant's good faith in adopting its own mark, the quality of defendant's product, and the sophistication of the buyers." [8] If the court, after consideration of all eight factors, decides that the defendant's use of its mark is likely to confuse consumers as to the source of the good attached to the mark, it may find that the defendant infringed the plaintiff's trademark. [9]
The policy behind prohibiting the use of confusingly similar marks is manifold. First, the public needs to be protected from the deceptive or misleading use of marks in the marketplace. [10] Second, mark owners need to have some recourse against infringers who are unjustly enriched by advancing their business interests on the basis of the mark owner's reputation. [11] Finally, mark owners need to protect the initial investment that they made in developing the mark and the subsequent good will that is later associated with it. [12]
B. Incontestability of a Federally Registered Trademark
In response to a claim of infringement, a defendant may attempt to invalidate the plaintiff's mark. The doctrine of incontestability, codified in 15 U.S.C. § 1065, allows a plaintiff to readily respond to such accusations. It allows a mark that has been used continuously in commerce for five years to become incontestable, if other conditions are met. [13] "Subject to certain limited exceptions, an incontestable registration constitutes conclusive evidence of the registrant's exclusive right to use of the mark and provides an infringer with only limited grounds upon which to attack the mark's validity." [14] Generic marks, i.e. marks that identify the product but not its source, are ineligible for incontestable status, because they are unregistrable. [15]
An important benefit of incontestability status is that mark holders may enjoin infringement by another mark, and this injunction may not be defended by a claim that the mark at issue is merely descriptive. [16] Incontestability also prevents the invalidation of a mark because it lacks secondary meaning. [17] In other words, courts do not allow those who would contest an incontestable mark to do so by any means other than what is listed as defenses within 15 U.S.C. § 1115(b). [18] The Third Circuit, in Weil Ceramic & Glass, Inc. v. Dash, has even held that a mark's incontestable status could be used offensively, to establish a right of enforcement against an imitative mark. [19] Incontestability and the advantages it brings to a mark holder are meant to allow the mark registrant to "quiet title in the ownership of his mark" by "encourag[ing] producers to cultivate the goodwill associated with a particular mark." [20] Incontestability was also meant to encourage the federal registration of trademarks by acting as a "statute of limitations." [21]
C. Defenses to Incontestability and the "Fair Use" Doctrine
Defenses to a mark's incontestable status are found in 15 U.S.C. § 1115(b). There are nine listed, but the most important one for purposes of this discussion is (b)(4), the so-called fair use defense to incontestability. Under 15 U.S.C. § 1115(b)(4), a mark's incontestable status shall be subject to an alleged infringer's defense
[t]hat the use of the name, term, or device charged to be an infringement is a use, otherwise than as a mark, of the party's individual name in his own business, or of the individual name of anyone in privity with such party, or of a term or device which is descriptive of and used fairly and in good faith only to describe the goods or services of such party, or their geographic origin;
The fair use doctrine is somewhat analogous to the fair use doctrine of copyright law, which considers whether a defendant's use of copyrighted material is reasonable despite not having the copyright owner's permission to use the work, or is at least unlikely to negatively affect the copyright owner's economic interest in his copyright. [22] As well stated by the Fifth Circuit Court of Appeals, "the 'fair use' defense [of trademark law] … forbids a trademark registrant to appropriate a descriptive term for his exclusive use and so prevent others from accurately describing a characteristic of their goods" [23] The fair use defense "[allows] a junior user … to use a descriptive term in good faith in its primary, descriptive sense other than as a trademark." [24] In these cases, the court must distinguish between the use of a trademark in a strictly descriptive or informative sense from its use in an infringing sense.
A defendant asserting the fair use affirmative defense need only prove that he is not using the term as a mark, but rather as a fair and good faith description of the good attached to it. [25] In order to support this argument, a defendant may offer testimony and tangible evidence that shows the fair use of the term. The fair use defense implicates six competing interests: three in favor of trademark protection, and three in favor of the fair use defense.
First, the public has an interest in not being deceived about the goods or services available in the marketplace. Second, the public also has an interest in encouraging the production of quality goods in a competitive market. Third, mark-owners have an interest in preserving the integrity of their marks and not allowing others to trade upon their good will. Fourth, the defendant has an interest in being able to describe accurately his product in order to compete effectively in the marketplace. Fifth, the public has an interest in receiving accurate information about products and services available for purchase. And sixth, the public also has an interest in not allowing individuals to create monopolies or other barriers to competition by improperly using trademark law to remove words, symbols, or product features from general use. [26]
The Ninth Circuit recognizes two types of fair use: classic fair use and nominative fair use. [27] Classic fair use is where the defendant uses the plaintiff's mark to describe the defendant's mark. [28] Nominative fair use, by contrast, is where the defendant uses the plaintiff's mark to describe the plaintiff's mark. [29] The purpose of nominative fair use is "generally for the 'purposes of comparison, criticism or point of reference.'" [30] Nominative fair use was first recognized in New Kids on the Block v. New America Publishing, Inc., where the Ninth Circuit held that the defendants' use of the plaintiffs' trademarked band name, "New Kids on the Block," in their public opinion poll was nominative fair use. [31]
The distinction between classic and nominative fair use is important because each requires a different analysis and because "the classic fair use analysis only complements the likelihood of customer confusion analysis …." [32] By contrast, the nominative fair use analysis essentially replaces a likelihood of confusion analysis. [33] The nominative fair use analysis is appropriate "where a defendant has used the plaintiff's mark to describe the plaintiff's product, even if the defendant's ultimate goal is to describe his own product." [34] The three elements of "nominative fair use" are the following:
First, the [plaintiff's] product or service in question must be one not readily identifiable without use of the trademark; second, only so much of the mark or marks may be used as is reasonably necessary to identify the plaintiff's product or service; and third, the user must do nothing that would, in conjunction with the mark, suggest sponsorship or endorsement by the trademark holder. [35]
Classic fair use, on the other hand, necessitates a different analysis. To assert a classic fair use defense, a defendant must prove the following: "[First], defendant's use of the term is not as a trademark or service mark; [second, the] defendant uses the term 'fairly and in good faith'; and [third, the defendant uses the term] 'only to describe' its goods or services." [36]
The defendant who successfully asserts a fair use defense may ultimately be allowed to use the mark, regardless of whether or not the defendant is a competitor of the plaintiff. As a result, the possibility of a likelihood of confusion between the two products exists. The federal circuits have split on how to resolve this problem.
III. Case Law History Preceding the KP Permanent Decision
The case law background for the KP Permanent decision illustrates how the divide between the federal circuits became prominent enough to warrant intervention by the Supreme Court. It also illustrates how often the fair use defense is asserted by defendants who are also direct business competitors of the plaintiff and would have something to gain through the claimed fair use of the plaintiff's mark.
A. Circuits Precluding Fair Use Defense if a Likelihood of Confusion Existed
In Zatarains, Inc. v. Oak Grove Smokehouse, Inc., the Fifth Circuit addressed the issue of whether a likelihood of confusion precluded the use of the fair use defense in trademark infringement cases. [37] Both Zatarain's and Oak Grove sold competing fish seasoning products. [38] Zatarain's product was called "Fish-Fri" and Oak Grove's product was called "fish fry." [39] Zatarain's had registered "Fish-Fri" in 1962, and the term had acquired a secondary meaning in New Orleans. [40] In response to Zatarain's charge of trademark infringement, Oak Grove asserted the fair use defense, claiming that its use of "fish fry" to describe its product was merely functional. [41] Both parties appealed the trial court's decision that Oak Grove could use the fair use defense. [42] On appeal, the Fifth Circuit Court of Appeals held that the defendants could continue to use the term "fish fry" "in [its] ordinary, descriptive sense, so long as such use will not tend to confuse customers as to the source of the goods." [43]
In PACCAR Inc. v. TeleScan Technologies, L.L.C., the Sixth Circuit Court of Appeals affirmed its ruling in Rock and Roll Hall of Fame and Museum, Inc. v. Gentile Productions [44] with respect to the fair use defense in a trademark infringement suit. [45] The defendant, TeleScan, ran websites that had domain names incorporating the plaintiffs' "Peterbilt" and "Kenworth" trademarks. [46] The Sixth Circuit held in both PACCAR and Rock and Roll that a defendant could fairly use another's mark descriptively and not "otherwise as a mark" as stated in 15 U.S.C. §1115(b)(4). [47] The determination of whether the defendant's use of the term was as a mark would depend on whether consumers thought the term at issue was merely a description or an indicator of the product's source. [48] The court further stated, "As always, the touchstone will be the likelihood of consumer confusion." [49] As such, "a finding of a likelihood of confusion forecloses a fair use defense." [50] The court then cited J. Thomas McCarthy's view of fair use and its relation to a likelihood of consumer confusion: "'Fair use' should be viewed as merely one type of use which is not likely to cause confusion and hence is a 'defense' only in that sense. Because the paramount goal of the law of trademarks is to prevent likely confusion, a showing of likely confusion should trump a 'fair use.'" (Emphasis added). [51]
B. Circuits Allowing the Fair Use Defense Even if a Likelihood of Confusion Existed
In Cosmetically Sealed Industries, Inc. v. Chesebrough-Pond's USA Co., the Second Circuit Court of Appeals affirmed the district court's grant of summary judgment to defendant Chesebrough-Pond's USA ("Chesebrough"). [52] Cosmetically Sealed Industries ("CSI") marketed a lip-gloss with the registered mark "SEALED WITH A KISS." [53] The company also made other products marketed with the word "Sealed." [54] Chesebrough, while marketing its own line of lipstick, initiated a promotional campaign where it invited consumers to take one of their postcards, apply their lipstick, kiss the postcard, and send it to someone special. [55] A sign exhorting customers to "Seal it with a kiss!!" was prominently associated with this display. [56]
The Second Circuit affirmed the district court's ruling, holding that Chesebrough could use the fair use defense because the term "Seal it with a kiss!" was not used as a mark, but rather as an invitation to consumers to try its product. [57] Furthermore, the court stated that the fair use defense may succeed even if a likelihood of confusion exists: "[Defendants validly claiming the fair use defense will] incur no liability simply because the materials containing the descriptive phrase are so widely disseminated as to form some degree of association in the public's mind between the phrase and the product. That too is a risk the plaintiff took in selecting as its mark a phrase that was not only descriptive but readily recognized by consumers." [58]
In Shakespeare Co. v. Silstar Corp. of America, the Fourth Circuit Court of Appeals considered alleged trademark infringement based not on the actual mark, but on the product that the mark represented. [59] Shakespeare Co. ("Shakespeare") was a leading manufacturer of fishing rods. [60] It made a graphite/fiberglass composite fishing rod, which, due to its uncharacteristic appearance, was named the "Ugly Stik." [61] Shakespeare registered this mark, and it became incontestable in 1989. [62] Silstar marketed its own graphite/fiberglass composite fishing rod called the "Power Tip Crystal" rod. [63] Silstar invoked the fair use defense in response to Shakespeare's infringement claim, arguing that it made its rod in good faith and did not intend for its unique appearance to stand as a mark. [64] Shakespeare contended that it established a likelihood of confusion between the fishing rods that should have precluded Silstar's use of the fair use defense. [65] The Fourth Circuit disagreed and stated that "a finding of a likelihood of confusion per se [does not] preclud[e] consideration of the fair-use defense." [66]
Finally, in Sunmark, Inc. v. Ocean Spray Cranberries, Inc., the Seventh Circuit Court of Appeals considered whether Ocean Spray's sporadic use of the term "sweet-tart" to describe its juices infringed on the registered "SweeTART" candy mark. [67] Ocean Spray claimed that it fairly used the term "sweet-tart" to describe its juices in its ad campaigns. [68] Upon considering whether the existence of a likelihood of confusion precluded a fair use defense, the court quoted William R. Warner & Co. v. Eli Lilly & Co., [69] a 1924 Supreme Court case in which Justice Sutherland wrote that "[t]he use of a similar name by another to truthfully describe his own product does not constitute a legal or moral wrong, even if its effect be to cause the public to mistake the origin of its product." [70] As result, the court affirmed the denial of Ocean Spray's preliminary injunction against Sunmark. [71]
With these cases as prologue, we next consider the history of the KP Permanent case leading up to its culmination at the Supreme Court.
IV. Analysis of the KP Permanent v. Lasting Impression Decision
A. Facts
Both KP Permanent and Lasting Impressions were competitors in the permanent makeup industry and produced inks that a user would injected beneath their skin. [72] Essentially, this form of permanent makeup (also known as "micropigmentation") was tattooing. [73] These products were used for both cosmetic purposes (typically as permanent eye liner) and medical uses (for scar concealment). [74] Both KP Permanent and Lasting Impression sold their products to the same types of clients-beauty salons and others in the professional cosmetic industry. [75]
KP Permanent began using the phrase "micro color" on its product flyers in 1990 and had printed "MICROCOLOR" along with a specific pigment color on its bottles since 1991. [76] Lasting Impression began using the phrase "micro colors" commercially as a trademark for its pigment products in April 1992. [77] It registered the mark with the USPTO on May 11, 1993. [78] Lasting Impression's mark consisted of a solid black rectangle with the words "micro" and "colors" in white. [79] The word "micro" appeared directly over the word "colors," and a green horizontal bar separated the words. [80] Lasting Impression's mark became incontestable in 1999. [81]
In 1999, KP Permanent began using its term "micro color" in its marketing brochures, while also continuing to use the term on its products. [82] Instead of using the basic "MICROCOLOR" format on its marketing brochures, KP Permanent used a more stylized format, consisting of the words "micro color" placed directly over the words "pigment" and "chart." [83] A picture of a vial with pigment flowing out of it was also visible. [84] The term "micro color" appeared in a larger font than "pigment" and "chart," thus making the term much more prominent and noticeable by comparison. [85] The brochure in which this new image appeared contained a chart showing all of the pigment colors sold by KP Permanent. [86]
B. District Court Decision
Lasting Impression sent a cease and desist letter to KP Permanent upon discovering their new use of the phrase "micro color". [87] KP Permanent sought declaratory relief against Lasting Impression in the U.S. District Court for the Central District of California. [88] Lasting Impression counterclaimed, alleging that KP Permanent's use "micro color" infringed on their incontestable "micro colors" mark. [89] KP Permanent moved for summary judgment, contending: (1) that Lasting Impression's combination mark (picture and text) did not give them an exclusive right to the term "micro color" separate from the picture; (2) that the term "micro color" was generic; (3) that KP Permanent could use its term "micro color" under the fair use doctrine; (4) that neither term had a secondary meaning; (5) that Lasting Impression was estopped from arguing that "micro color" is not generic because it had used it generically; (6) that Lasting Impression could not prove a likelihood of confusion; and (7) that KP Permanent's continuous (albeit unregistered) use of "micro color" overrode Lasting Impression's claim to exclusivity. [90] Lasting Impression moved for summary adjudication with respect to KP Permanent's first, second, and seventh assertions. [91]
At trial, the court granted KP Permanent's motion for summary judgment and denied Lasting Impression's motion for summary adjudication. [92] The court held that Lasting Impression's term "micro colors" was generic, and if not generic, descriptive. [93] Ultimately, the court held that KP Permanent could continue to use its term "micro color" as it had since 1991, and Lasting Impression could continue to use its trademarked term "micro colors" with its products. [94] The court also held that KP Permanent's use of "micro color" was protected under the fair use defense, 15 U.S.C. §1115(b)(4). [95] Not surprisingly, Lasting Impression appealed the District Court's grant of summary judgment to the Ninth Circuit Court of Appeals. [96]
C. Ninth Circuit Court of Appeals Decision
The Ninth Circuit reversed and remanded the district court's grant of summary judgment. [97] The court held that the district court should have considered whether consumer confusion as to the source of the marks existed, stating that "'summary judgment is inappropriate when a jury could reasonably conclude that there is a likelihood of confusion.'" [98] Furthermore, the court placed the burden of disproving the prima facie assumption of trademark validity on the defendant KP. [99]
The court held that KP's use of the term "micro color" was an example of classic fair use [100], because KP was using "micro color" to describe its own products, not Lasting Impression's products. [101] As such, KP could only assert the fair use defense if there was no likelihood of confusion between KP's use of "micro color" and Lasting Impression's mark. [102] Therefore, the district court erred in granting summary judgment when a question of fact still existed, i.e. whether a likelihood of confusion existed. [103]
D. Supreme Court Decision
The Supreme Court vacated and remanded the decision of the Ninth Circuit Court of Appeals, thus continuing its penchant for reversing Ninth Circuit decisions. [104] In its unanimous opinion, [105] written by Justice Souter, the Court found that a defendant in a trademark infringement case may assert the fair use defense of 15 U.S.C. §1115(b)(4) without having to bear the burden of negating a likelihood of confusion. [106] Instead, the burden of proving a likelihood of confusion remains on the plaintiff. [107] To reach this decision, the Court engaged in some detailed statutory interpretation.
The Court first considered the elements that a party claiming trademark infringement must prove. [108] The plaintiff must prove that due to the defendant's infringement, there exists a likelihood of confusion to consumers. [109] However, 15 U.S.C. §1115(b)(4) does not explicitly require that a defendant asserting the fair use defense bear the burden of negating a likelihood of confusion. [110] "Congress said nothing about likelihood of confusion in setting out the elements of the fair use defense in §1115(b)(4)." [111] Furthermore, to read into the fair use statute a requirement of negating a likelihood of confusion would be nonsensical: "Starting from these textual fixed points, it takes a long stretch to claim that a defense of fair use entails any burden to negate confusion." [112] Additionally, the Court reasoned that because 15 U.S.C. §1114 refers to a likelihood of confusion and 15 U.S.C. §1115(b)(4) does not , Congress did not intend that a defendant must prove that there was no likelihood of confusion when invoking the fair use defense. [113]
The Court also noted that the common law of unfair competition recognized that some degree of consumer confusion may stem from a defendant's descriptive use of the plaintiff's mark, stating that "'[t]he use of a similar name by another to truthfully describe his own product does not constitute a legal or moral wrong, even if its effect be to cause the public to mistake the origin or ownership of the product.'" [114]
Lastly, the Court criticized Lasting Impression for its circular reasoning with respect to its theory of the fair use defense. According to Lasting Impression, an alleged trademark infringer could not assert the fair use defense once a plaintiff has established the likelihood of consumer confusion. [115] The Court disagreed, saying, "'[I]t defies logic to argue that a defense may not be asserted in the only situation where it even becomes relevant.'" [116]
V. After-Effects of the KP Permanent Decision
Based on the statutory history of the Lanham Act and the importance of the fair use defense in trademark law, the Supreme Court made the right decision in KP Permanent. [117] As with all its holdings, there will be ripple effects, both positive and negative.
A. Positive Outcomes of the KP Permanent Decision
1. Trademark Holders Will Be Further Encouraged to Use Terms as Marks that are Not Generic or Even Descriptive
On the continuum of protection afforded to trademarks, generic and descriptive marks receive the lowest level of protection under federal trademark law. [118] Generic marks are not entitled to federal trademark protection at all, and marks that are shown to have become generic may be canceled at any time. [119] Merely descriptive marks cannot be registered unless the plaintiff can prove the mark has acquired distinctiveness through secondary meaning, a high bar to reach. [120] Courts have historically been unsympathetic towards plaintiffs who claim infringement of descriptive marks. [121] However, fanciful or arbitrary terms are considered strong marks for purposes of trademark protection. [122]
After KP Permanent, descriptive marks may now be appropriated by a junior user or competitor pleading fair use, regardless of their trademark status. [123] As a result, mark holders will be coerced in the right direction-towards conceiving and registering more fanciful marks that will be much less likely to be infringed upon. This benefits the mark holder, who will have to worry less about litigation over infringement owing to the strength of his mark, and the consumer, who will be able to rely more fully on marks as source identifiers.
2. The Consumer's Right to an Accurate Description of the Goods Attached to the Mark is Protected
The KP Permanent holding's validation of the fair use defense will insure that consumers will see accurate descriptions of the goods that are attached to related marks. [124] It will also prevent mark holders from attaining what are essentially monopolies on descriptive marks. [125] Congress and the courts have placed great weight on both these considerations when drafting the Lanham Act and rendering judicial opinions. [126]
Congress has taken steps to lessen the potential for monopolies on descriptive terms as marks by: allowing opponents of a mark five years from registration to oppose the mark before it becomes incontestable; preventing generic terms from becoming incontestable; and the "fair use" doctrine. [127] The courts, meanwhile, have noted the importance of "protect[ing] the right of society at large to use words or images in their primary descriptive sense…." [128]
B. Negative Outcomes of the KP Permanent Decision
1. The Decision Disregards the Foundational Tenet of Trademark Law-Marks That Cause Consumer Confusion are Illegal
J. Thomas McCarthy succinctly stated that "'[f]air use' should be viewed as merely one type of use which is not likely to cause confusion and hence is a 'defense' only in that sense. Because the paramount goal of the law of trademarks is to prevent likely confusion, a showing of likely confusion should trump a 'fair use.'" [129] In KP Permanent, the Court acknowledged that defendants in infringement cases might be able to assert the fair use defense even if consumer confusion is present. [130] The Court refused to consider this issue further, saying, "deciding anything more would take us beyond the Ninth Circuit's consideration of the subject." [131] "As to [concerns about the Court's holding], it is enough to say here that the door is not closed." [132]
2. How Much Consumer Confusion Creates Unfair Use?
In its decision, the Court left unresolved two rather important questions. First, if the fair use defense may be expected to bring along with it some degree of consumer confusion, then how much, if any, consumer confusion will preclude the fair use defense? Furthermore, how will courts determine the degree of consumer confusion present in a given set of facts?
These issues are important because, in the wake of KP Permanent, defendants may use "descriptive use" as a guise to take more liberties with the use of a bigger competitor's marks. This problem becomes more profound when the marks at issue are less descriptive and more similar to fanciful and arbitrary terms. A good example of this problem might be Ivory soap, which is arguably both descriptive (because of the color of the soap) and suggestive (of how it will clean your skin). After KP Permanent, a defendant could market "ivory white cleaner" and claim fair use of the term ivory as descriptive. [133]
C. The KP Permanent Holding will Weaken the Right of Incontestability
The right of incontestability after five years of continuous use is an important privilege that the PTO grants to trademark users. [134] Should incontestability have been held in higher regard in the Court's analysis? In their separate analyses, the courts of appeal were unclear why fair use should essentially trump the right of incontestability and vice versa.
Admittedly, many defenses exist to the incontestability status. [135] However, there are important policy reasons behind incontestability that should not be ignored. Incontestability allows the owner of a mark to not only respond to challenges of his mark's validity quickly; more importantly, it allows the mark owner time to build an association in the minds of consumers between his product and its mark. [136] As the owners of marks like Coca-Cola can testify, this can be an extremely valuable association.
VI. What Could be Done Legislatively to Address the Problems Created by KP Permanent?
The Supreme Court has spoken: a defendant asserting the fair use defense to an incontestable mark has no burden of negating a likelihood of confusion in a trademark infringement case. [137] It is pretty much an absolute defense to trademark infringement. Therefore, it is now falls upon Congress and the judiciary to either craft or interpret legislation that will address the biggest potential problems wrought by the KP Permanent decision.
The most significant concern after KP Permanent is that businesses may use the fair use defense against other competing businesses with descriptive but incontestable marks that have acquired secondary meaning or have become famous. Despite the courts' "c'est la vie" attitude towards the complaints of descriptive mark owners, [138] these parties need to receive some protection for their valuable marks. To not do so would go against the important policies that trademark law provides for producers of goods - the opportunity to invest time and money in a mark until it acquires secondary meaning as representing the producer's goods. [139]
Any legislative or judicial solutions to this problem need to single out commercial uses of marks that are "descriptive" and establish a slightly higher standard for proving fair use of these marks. An effort should be made to insure that the descriptive term at issue is indeed being used to accurately describe the defendant's product because the public's interest in receiving accurate descriptions of products must also be considered.
To this end, a multi-factor test similar to the likelihood of confusion test from
Polaroid would be extremely useful. [140] Instead of incorporating factors that help dissect whether the two marks might be confusingly similar, this proposed test would utilize factors that examine the relationship between the marks and verify that the junior mark does not receive an economic benefit at the expense of the senior mark.
This proposed test is designed to consider economic factors; consequently, it draws from the fair use doctrine of copyright law, codified in 17 U.S.C. § 107. The fair use analysis in copyright law considers four factors: "(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes; (2) the nature of the copyrighted work; (3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and (4) the effect of the use upon the potential market for or value of the copyrighted work." [141] Clearly, the fair use analysis in copyright law places a greater emphasis on economic factors than does the fair use defense in trademark law, which is ironic given the substantial economic value of trademarks. [142]
Since this proposed test also incorporates some common questions from the likelihood of confusion and fair use tests of trademark law, it could be administered in infringement cases where it is known that the fair use defense will be asserted. The results of this analysis would be considered along with the likelihood of confusion and fair use analyses, because its application infers that the defendant claiming fair use is actually doing so in bad faith in order to gain a commercial advantage over his competitor.
In a typical infringement litigation where the defendant has invoked the fair use defense, this test would require the gathering of a little more evidence besides what is already required for the likelihood of confusion and fair use tests. The test would consider the following factors, taking into account the fact that no single factor should be considered dispositive by itself:
1. The proximity in the market of the products attached to the marks - This element reasons that the descriptive use of a mark between competing products is more likely to lead to confusion than between non-competing products. Furthermore, the proximity of the products would be suggestive of a competitive incentive to appropriate another's mark under the guise of fair use.
2. Any change in the economic position of the junior user that could be directly attributable to the use (or denial of the use) of the mark - This element could be shown through simple balance sheets, other accounting information, or surveys (as an adjunct to determining actual confusion, below), while acknowledging that correlation does not equal causation. In other words, if the court found a change in economic position, it would not treat it as dispositive, but merely suggestive of the junior user's descriptive use of the mark causing this improvement. However, if no financial difference was found, the court would have to hold that this suggested that no economic advantage could be attributed to the potentially infringing use of the senior mark. Alternatively, the court should take into consideration any data which shows that the defendant would be potentially injured if denied the right to use the mark descriptively for his product.
3. Strength of the mark - This element would address the inherent requirement of the fair use defense that the mark at issue be descriptive in nature. Without the existence of a descriptive mark, the fair use defense would be inapplicable.
4. Actual confusion - This element would be an adjunct to test number 2 above, tending to show that the defendant's purported fair use actually gave them an unfair advantage through confusing consumers as to the source of a good. This could be accomplished through the administration of consumer surveys and other means to gauge the public's opinion.
5. Quantity and quality of descriptive use of the mark by the junior user - This element would be helpful in suggesting whether the junior user's descriptive use merely cloaks a competitive use. If the junior user only uses the mark in a very limited way (in terms of advertising or marketing), this might suggest a true, good faith descriptive use of the mark.
6. Public interest considerations - This element would consider the public's interest in having access to accurate descriptions of the products in question. This also indirectly acknowledges the primary weakness of the KP Permanent ruling - its seeming disregard for the fact that trademark law illegalizes the use of confusingly similar marks because trademarks are first and foremost source identifiers.
This balancing test could help protect the rights of businesses who have invested significant time and money in creating a positive association between their mark and their products. It also considers the public's interest in having accurate descriptions of products, while adhering to the KP Permanent ruling that the fair use defense does not impose a need on the defendant to negate a likelihood of confusion.
VII. Conclusion
The recent KP Permanent ruling explained that the burden of negating a likelihood of confusion lies on the plaintiff. This ruling is certainly in accord with the text and history of the Lanham Act and aligns with unfair competition case law as well. However, this decision goes against the fundamental idea of trademarks as source identifiers, and it puts holders of descriptive marks at a potential disadvantage against unscrupulous business competitors. These competitors now have a great advantage, for they can use the fair use defense as a highly effective shield to allegations of infringement involving incontestable descriptive marks.
This paper recommends the implementation of a simple test, which could be done in conjunction with a likelihood of confusion analysis, to help flush out infringement cases where a defendant might be claiming fair use unfairly, i.e. for an unfair business advantage. It carefully balances the legitimate commercial interests of the owner of a senior incontestable descriptive mark with the value of preserving the fair use defense and the right of the public to have access to descriptive terms used appropriately in association with various products. Most importantly, this proposed test balances both the aforementioned interests, the KP Permanent ruling, and the issue of consumer confusion better than the rather one-sided KP Permanent ruling does by itself.
[a1] J.D. University of Baltimore Law School, M.S. in Pharmacology and Experimental Therapeutics, University of Maryland at Baltimore, B.S. in Biology, Tulane University.
[1] 125 S. Ct. 542, 547-48 (2004).
[2] Id. at 547.
[3] 15 U.S.C. § 1127.
[4] 15 U.S.C. § 1051.
[5] 15 U.S.C. § 1114(1).
[6] Id.; see Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 780 (1992).
[7] 287 F.2d 492, 495 (2nd Cir. 1962). Even though this test began its life in the Second Circuit, most other circuits have adopted it. See, e.g., ETW Corp. v. Jireh Publ'g, Inc., 332 F.3d 915, 939-40 (6th Cir. 2003); Imagineering, Inc., v. Van Klassens, Inc., 53 F.3d 1260, 1264 (Fed. Cir. 1995); DeCosta v. Viacom Int'l, Inc., 981 F.2d 602, 606 (1st Cir. 1992); Basile, S.p.A. v. Basile, 899 F.2d 35, 37 (D.C. Cir. 1990); Perini Corp. v. Perini Constr., Inc., 915 F.2d 121, 127 (4th Cir. 1990); General Mills, Inc. v. Kellogg Co., 824 F.2d 622, 626 (8th Cir. 1987); Interpace Corp. v. Lapp, Inc., 721 F.2d 460, 463 (3rd Cir. 1983); Chesebrough-Pond's, Inc. v. Faberge, Incorporated, 666 F.2d 393, 398-99 (9th Cir. 1982); Helene Curtis Industries, Inc. v. Church & Dwight Co., 560 F.2d 1325, 1330 (7th Cir. 1977).
[8] Polaroid Corp. F.2d at 495.
[9] See id.
[10] See Michael G. Frey, Comment, Is it Fair to Confuse? An Examination of Trademark Protection, the Fair Use Defense, and the First Amendment, 65 U. Cin. L. Rev. 1255, 1260-61 (Summer, 1997) (discussing the policy justifications of trademark law).
[11] See id. at 1261-62.
[12] See id at 1262.
[13] 15 U.S.C. § 1065. These conditions include: "[T]here has no decision adverse to the registrant's claim of ownership of the mark, the right to register, or the right to keep it on the register." KP Permanent Make-Up, Inc. v. Lasting Impression I, Inc., 328 F.3d 1061, 1067, vacated by 543 U.S. 111 (2004).
[14] Joan L. Dillon, The Effect of "Incontestability" in Trademark Litigation, 68 Denver U. L. Rev. 277, 277 (1991) (discussing the rights granted to the holders of incontestable marks).
[15] KP Permanent, 328 F.3d at 1067.
[16] Park 'N Fly v. Dollar Park and Fly, 469 U.S. 189, 205 (1985).
[17] Miss Universe, Inc. v. Miss Teen, U.S.A. Inc., 209 U.S.P.Q. 698, 704-05 (N.D. Ga. 1980).
[18] Id.
[19] 878 F.2d 659, 673-4 (3rd Cir. 1989).
[20] Park 'N Fly, 469 U.S. at 198.
[21] See Dillon, supra note 14, at 278.
[22] See 17 U.S.C. § 107; Campbell v. Acuff-Rose Music, 510 U.S. 569, 576-77 (1994).
[23] Soweco, Inc. v. Shell Oil Co., 617 F.2d 1178, 1185 (5th Cir. 1980).
[24] 2 J. THOMAS MCCARTHY, MCCARTHY ON TRADEMARK AND UNFAIR COMPETITION § 11:45 (4th ed. 2001).
[25] 15 U.S.C. § 1115(b)(4)
[26]Frey, supra note 10, at 1282-83 (Summer, 1997).
[27] Cairns v. Franklin Mint Co., 292 F.3d 1139, 1150 (9th Cir. 2002).
[28] Id.
[29] Id.
[30] Mattel Inc. v. Walking Mt. Prods., 353 F.3d 792, 809 (9th Cir. 2003) (quoting New Kids on the Block v. New Am. Publ'g, Inc., 971 F.2d 302, 306 (9th Cir. 1992)).
[31] New Kids, 971 F.2d at 308.
[32] Cairns, 292 F.3d at 1150.
[33] See Playboy Enters., Inc. v. Welles, 279 F.3d 796, 801 (9th Cir. 2002).
[34] Cairns, 292 F.3d at 1151.
[35] New Kids, 971 F.2d at 308.
[36]MCCARTHY, supra note 24, § 11:49 (discussing 15 U.S.C. §1115(b)).
[37] Zatarains, Inc. v. Oak Grove Smokehouse, Inc., 698 F.2d 786, 796 (5th Cir. 1983).
[38] Zatarains, 698 F.2d at 788.
[39] Id.
[40] Id.
[41] Id. at 788-89.
[42] Id. at 788.
[43] Id. at 796.
[44] 134 F.3d 749, 756 (6th Cir. 1998).
[45] 319 F.3d 243, 255-56 (6th Cir. 2003).
[46] Id. at 247-48. Examples of the allegedly infringing domain names that Telescan registered include: www.peterbiltnewtrucks.com; www.peterbiltusedtrucks.com; www.peterbilttruckdealers.com; www.kenworthnewtrucks.com; www.kenworthusedtrucks.com; and www.kenworthtruckdealers.com. Id. at 247.
[47] PACCAR, 319 F.3d at 255-56; Rock and Roll, 134 F.3d at 756.
[48] PACCAR, 319 F.3d at 255.
[49] Id. (quoting Rock and Roll, 134 F.3d at 756).
[50] PACCAR, 319 F.3d at 256.
[51] See id. (quoting MCCARTHY, supra note 24, §11:47); see also Cairns v. Franklin Mint Co., 292 F.3d 1139, 1150-51 (9th Cir. 2002) (holding that the fair use defense is not allowed if a likelihood of confusion exists); Transgo, Inc. v. Ajac Transmission Parts Corp., 911 F.2d 363, 366 n.2 (9th Cir. 1990) (implying that consumer confusion is inconsistent with the fair use defense); Lindy Pen Co. v. Bic Pen Corp., 725 F.2d 1240, 1243 (9th Cir. 1984) (finding that a likelihood of confusion precludes the fair use defense).
[52] 125 F.3d 28, 31 (2nd Cir. 1997).
[53] Cosmetically Sealed, 125 F.3d. at 29.
[54] Id.
[55] Id.
[56] Id.
[57] Id. at 30-31.
[58] Id. at 31.
[59] 110 F.3d 234, 236-37 (4th Cir. 1997).
[60] Id. at 236.
[61] Id.
[62] Id.
[63] Id. at 236-37.
[64] See id. at 238.
[65] Shakespeare, 110 F.2d at 242.
[66] Id. at 243.
[67] 64 F.3d 1055, 1057 (7th Cir. 1995).
[68] Sunmark, 64 F.3d at 1058.
[69] 265 U.S. 526 (1924).
[70] Sunmark, 64 F.3d at 1059 (quoting William R. Warner, 265 U.S. at 528).
[71] Id. at 1061.
[72] KP Permanent Make-Up, Inc. v. Lasting Impression I, Inc., 328 F.3d 1061, 1065 (9th Cir. 2003), vacated by 543 U.S. 111 (2004).
[73] Id.
[74] Id.
[75] Id.
[76] Id.
[77] Id.
[78] KP Permanent, 328 F.3d at 1065
[79] Id.
[80] Id.
[81] Id.
[82] Id. at 1066.
[83] Id.
[84] KP Permanent, 328 F.3d at 1066.
[85] Id.
[86] Id.
[87] Id. at 1065.
[88] Id. at 1064.
[89] Id. at 1066.
[90] KP Permanent, 328 F.3d at 1066.
[91] Id.
[92] Id.
[93] Id.
[94] Id.
[95] Id.
[96] KP Permanent, 328 F.3d at 1066.
[97] Id. at 1073.
[98] Id. at 1072 (quoting Downing v. Abercrombie & Fitch, 265 F.3d 994, 1008 (9th Cir. 2001)).
[99] Id. at 1069.
[100] See supra Section II.C
[101] KP Permanent, 328 F.3d at 1072.
[102] Id.
[103] Id. at 1072-73.
[104] KP Permanent Make-Up, Inc., v. Lasting Impression I, Inc, 125 S. Ct. 542, 551 (2004); see Richard A. Posner, Is the Ninth Circuit Too Large? A Statistical Study of Judicial Quality, 29 J. Legal Stud. 711, 711 (June 2004) (discussing the high rate a reversal of Ninth Circuit decisions). To be fair to the Court, they also reversed the similar holdings of the Fifth and Sixth Circuits. See PACCAR Inc. v. TeleScan Technologies, Inc., 319 F.3d 243, 256 (6th Cir. 2003); Zatarains, Inc. v. Oak Grove Smokehouse, 698 F.2d 786, 796 (5th Cir. 1983).
[105] Justice Scalia declined to join footnotes 4 and 5, which pertained to the relevant legislative history. Justice Breyer declined to join footnote 6, which distinguished between KP Permanent's use of "micro color" on its pigment bottles and its brochures.
[106] See KP Permanent, 125 S. Ct. at 544.
[107] Id.
[108] 15 U.S.C. § 1114; KP Permanent, 125 S. Ct. at 547-48.
[109] KP Permanent, 125 S. Ct. at 547-48.
[110] Id. at 548.
[111] Id.
[112] See id. The Court also stated that it would not "make sense to provide an affirmative defense of no confusion plus good faith, when merely rebutting the plaintiff's case on confusion would entitle the defendant to judgment, good faith or not. A defendant has no need of a court's true belief when agnosticism will do." Id at 545.
[113] See id. at 548, 548 n.4 (noting that the House Subcommittee on Trademarks declined to make "unlikely to deceive the public" an element of the "fair use" defense to incontestability).
[114] See id. at 548-9 (quoting William R. Warner & Co. v. Eli Lilly & Co., 265 U.S. 526, 528 (1924)).
[115] KP Permanent, 125 S. Ct at 549.
[116] Id. (quoting Shakespeare Co. v. Silstar Corp. of Am., 110 F.3d 234, 243 (4th Cir. 1997)).
[117] See 15 U.S.C. § 1115(b)(4); KP Permanent, 125 S. Ct. at 548.
[118] See Abercrombie & Fitch Co. v. Hunting World, Inc., 537 F.2d 4, 9 (2nd Cir. 1976).
[119] Park 'N Fly v. Dollar Park and Fly, Inc., 469 U.S. 189, 194 (1985).
[120] 15 U.S.C. §1052(f).
[121] See Cosmetically Sealed Industries, Inc. v. Chesebrough-Pond's USA Co., 125 F.3d 28, 30 (2nd Cir. 1997) ("If any confusion results, that is a risk the plaintiff accepted when it decided to identify its product with a mark that uses a well known descriptive phrase.").
[122] See Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 768 (1992).
[123] See KP Permanent, 125 S. Ct. at 550-51.
[124] See KP Permanent, 125 S. Ct. at 550.
[125] See id.
[126] See 15 U.S.C. § 1115(b)(4); Canal Co. v. Clark, 80 U.S. 311, 323-24 (1871).
[127] See Park 'N Fly, 469 U.S. at 201.
[128] Car-Freshner Corp. v. S.C. Johnson & Son, Inc., 70 F.3d 267, 269 (2nd Cir. 1995).
[129] MCCARTHY, supra note 24, § 11:47.
[130] KP Permanent Make-Up, Inc., v. Lasting Impression I, Inc, 125 S. Ct. 542, 545 (2004).
[131] Id. at 550.
[132] Id. at 551.
[133] See id. at 545.
[134] See 15 U.S.C. § 1115
[135] 15 U.S.C. § 1115(b) lists nine defenses to incontestability.
[136] Park 'N Fly v. Dollar Park and Fly, Inc., 469 U.S. 189, 198 (1985).
[137] KP Permanent Make-Up, Inc., v. Lasting Impression I, Inc, 125 S. Ct. 542, 551 (2004).
[138] See Cosmetically Sealed Industries v. Chesebrough-Pond's USA Co., 125 F.3d 28, 30 (2nd. Cir. 1997) ("If any confusion results, that is a risk the plaintiff accepted when it decided to identify its product with a mark that uses a well known descriptive phrase.").
[139] Park 'N Fly, 469 U.S. at 198.
[140] See supra pp. 2-3 for the list of "likelihood of confusion" factors from Polaroid Corporation v. Polarad Electronics Corporation, 287 F.2d 492, 495 (2nd Cir. 1962).
[141] 17 U.S.C. §107; see also Campbell v. Acuff-Rose Music, 510 U.S. 569, 576-77 (1994) (the Supreme Court's most recent consideration of the fair use defense in copyright law).
[142] See 15 U.S.C. § 1115(b)(4); 17 U.S.C. § 107.
