U. S. PROTECTION OF WELL KNOWN AND FAMOUS MARKS
Prepared by: William T. Fryer, III
Professor, University of Baltimore School of Law
Baltimore, Maryland, U.S.A.
September 23, 1998
Introduction. This paper is submitted for the September 25-26, 1998, meeting of the Indonesian Intellectual Property Society (IIPS) in Bandung, Indonesia. The IIPS has expressed a special interest in learning about U.S. developments concerning protection of well known marks, a phrase in the U.S. most commonly used to describe famous marks. This author has had the honor of visiting Indonesia in 1996 and 1997, to participate in programs organized by Professor Gambiro, at the University of Indonesia, and co- sponsored by the Indonesian government and the World Intellectual Property Organization.
There has been very significant, recent improvements in U.S. protection of famous marks. The Antidilution statute, enacted in 1996 is responsible for a major part of this improvement.(1) This paper will review the history of U.S. famous mark protection, the operation of the new statute and several recent cases.
This document is an introduction to the topic of famous mark protection. There are many specific points that cannot be addressed due to time and space limitation, that will have to be presented on another occasion. U.S. law on this topic is developing rapidly, making a regular update a very useful step.
U.S. Treaty Obligations. The U.S. is a member of the Paris Convention for the Protection of Industrial Property. It must comply with section 6bis of that treaty on well known marks.(2) This provision requires only that likelihood of confusion must be prevented. The U.S. provides this protection by state and federal laws. The provision does not require a member of the treaty to prevent dilution of a well know mark, where a mark is used in ways that does not create customer product or service confusion. Most countries provide protection against likelihood of confusion, and several countries also prevent dilution.
U.S. Mark Protection Against Likelihood of Confusion. There are U.S. regional (state) laws to protect both trademarks, service marks and trade names against likelihood of confusion. These laws provide protection against use by a third party of a mark in the geographic area where, essentially, the first user has, or is likely to have, customers. There can be separate use of the same mark for the same goods, if there is no likelihood of customer confusion in the respective geographic areas. Some describe the effect of state mark protection laws as creating a patch work, or zones of rights, and clearly this situation is undesirable for a business to become a national operation.
The most effective U.S. protection of a mark against likelihood of confusion is by federal law, under the Lanham Act.(3) This protection can take two forms, based on use in interstate commerce (between states). In the unregistered approach, mark rights are limited to the geographic area where customers are served, essentially creating the zones of protection situation mentioned for state laws.(4) The other approach is by federal registration, providing national protection, clearly the best way to proceed.(5) A convenient process is available for submitting a registration application based on a bona fide intent to use the mark in interstate commerce, but interstate use is required before that application will be registered.(6) An infringement of either the unregistered or registered federal right requires proof that there is likelihood of confusion.
A problem for famous marks, is that merely stopping likelihood of confusion use is not enough. There must be a way to prevent injury to the reputation of a mark or the use of a mark's wide recognition by a third party, even when there is no competition occurring with the mark owner. A new U.S. law was needed to prevent such inappropriate situations, and the U.S. now has the Federal Antidilution Act for that purpose.
U.S. State Antidilution Laws. The initial U.S. protection against dilution was in regional (state) laws. Many states adopted antidilution laws based on a Model Act, so the laws were very similar. A significant number of state court decisions have applied these statutes. Generally, the courts have found that dilution existed under these statutes when there was "blurring" of a famous mark's significance, or there was "tarnishment" of the mark. Tarnishment of a mark under state dilution statues occurred when a third party used the mark in a way to bring discredit or disrespect on the reputation of the mark. The blurring situation was illustrated by the case involving Hyatt Hotels and Hyatt Legal Services.(7) On the facts, it was held here was no likelihood of confusion for customers of the hotel, regarding whether the hotel was providing Hyatt Legal Services. The court found there was dilution under the state of Illinois dilution statute, because of the strong Hyatt mark recognition for hotel services in Illinois. The famous reputation of the Hyatt mark was blurred in the minds of the public, now that Hyatt Legal Services was benefiting from using that widely known mark. No competition between these parties using the mark was needed to create a violation of the state dilution statute.
The Hyatt Corporation had many hotels in states across the country. While it won this case, it would have had to bring similar actions in the other states where there were dilution statutes, at considerable expense. Since many states did not have dilution statutes, nationwide protection from dilution could not be obtain. The logical answer to the problem would have been a federal antidilution law. In 1996 such a law was enacted and significant litigation has occurred using under this new law.
Federal Antidilution Statute. The 1996 enactment of the Lanham Act antidilution law (hereinafter Federal Antidilution Act, or Act) was a major achievement.(8) A copy of the statutory provision, is in Appendix I. This provision took almost ten years to complete the legislative process, even thought it was recommended from the start by a major U.S. trademark attorneys group,(9) and other organizations.
The U.S. is now in the stage of learning how this new law will operate. There are several federal district court cases and only a few federal circuit court cases involving the new law. The U.S. Supreme Court has not decided any cases involving this law. A significant number of cases have involved situations with the use of domain names on the Internet, a topic that is addressed separately below.
In basic terms, the Federal Antidilution Act provided only the right to an injunction, to stop the diluting use of a famous mark. Damages and attorney fees could be obtained only if there was willful conduct, usually requiring prior knowledge of the rights of the famous mark and an intentional act to benefit from the mark's reputation. Only famous marks were protected, and this term was defined by listing a number of factors that should be used to determine if a mark was famous.(10) Case law so far appears to take a liberal view of what is famous, granting protection in many cases.
The Federal Antidilution Act does not define what is "dilution". Consequently, courts have been relying to some extent on earlier state antidilution law cases for guidance. As mentioned below in connection with the Panavision case, the federal courts have accepted, usually, that at least blurring and tarnishment are specific situations prevented by the Federal Antidilution Act. Another requirement of the Act is that the dilution must occur in a commercial situation. Private (non-commercial) activities using a famous mark are not under the Act. Also, there are two other exceptions provided in the Act where there can be no dilution: news reporting use and comparative advertizing.(11)
An example from the Internet cases will be used to illustrated operation under the Federal Dilution Act and its flexibility to address new situations.
Internet Situation. In one of the few Federal Circuit Court cases on the Federal Dilution Act, the court addressed the Internet problem of "cybersquatting", the act of taking control of a domain name that is the trademark of another person. A person, not the owner of the famous mark Panavision, registered the domain name "panavision.com", preventing the owner of the famous mark from having a domain name that included its mark.(12) This person used the same procedure to acquire the domain name rights to 123 other well established marks. After offering the domain name registration to the owner of the Panavision mark for a price, the trademark owner sued and won under the Act. The Circuit Court held that there was dilution. It found that the acquisition of the domain name for the purpose of selling it was a commercial scheme falling within the Act. The Court's stated that the acquisition of the domain name "diminished the capacity of the Panavision marks to identify and distinquish Panavasions's goods and services on the Internet."(13)
The Panavision case reviews development of the Federal Dilution Act, identifying the case law that relied on dilution and tarnishment as two forms of dilution. The willingness of the Court to adapt the Act to the unique situation of a cybersquatter is a good sign that the law will be very flexible and useful.
Conclusions. U.S. protection has improved for marks that have reached a high level of recognition. Both state and federal laws now exist for protecting a mark against dilution. The federal Antidilution Act provides the most effective protection, since it provides rights for the entire nation. As indicated in the Panavision case, the Act provides considerable flexibility in meeting new situations, such as the use of famous marks on the Internet. A major increase in litigation under the Act can be expect.
Comments, Questions and Reproduction of this Paper. It is planned that this paper will be available for review on the author's web site: http://www.fryer.com.(14) Comments and questions on this paper can be sent to:
William T. Fryer, III using e-mail: firstname.lastname@example.org, or faxed to (410) 837-4560, or mailed to: William T. Fryer, III, Professor, University of Baltimore School of Law, 1420 North Charles Street, Baltimore, Maryland, 21201, U.S.A.
Appendix I - U.S. Federal Antidilution Act - 15 U.S.C.A. § 1125(c) (1998).
ATTACHMENT I - 15 U.S.C. § 1125. (§ 43) False designations of origin, false descriptions and dilution forbidden (As of September 23, 1998)
* * *
(c) Remedies for dilution of famous marks. (1) The owner of a famous mark shall be entitled, subject to the principles of equity and upon such terms as the court deems reasonable, to an injunction against another person's commercial use in commerce of a mark or trade name, if such use begins after the mark has become famous and causes dilution of the distinctive quality of the mark, and to obtain such other relief as is provided in this subsection. In determining whether a mark is distinctive and famous, a court may consider factors such as, but not limited to --
(A) the degree of inherent or acquired distinctiveness of the mark;
(B) the duration and extent of use of the mark in connection with the goods or services with which the mark is used;
(C) the duration and extent of advertising and publicity of the mark;
(D) the geographical extent of the trading area in which the mark is used;
(E) the channels of trade for the goods or services with which the mark is used;
(F) the degree of recognition of the mark in the trading areas and channels of trade used by the marks' owner and the person against whom the injunction is sought;
(G) the nature and extent of use of the same or similar marks by third parties; and
(H) whether the mark was registered under the Act of March 3, 1881, or the At of February 20, 1905, or on the principal register.
(2) In an action brought under this subsection, the owner of the famous mark shall be entitled only to injunctive relief unless the person against whom the injunction is sought willfully intended to trade on the owner's reputation or to cause dilution of the famous mark. If such willful intent is proven, the owner of the famous mark shall also be entitled to the remedies set forth in sections 1117(a) and 1118 of this title, subject to the discretion of the court and the principles of equity.
(3) The ownership by a person of a valid registration under the Act of March 3, 1881, or the Act of February 20, 1905, or on the principal register shall be a complete bar to an action against that person, with respect to that mark, that is brought by another person under the common law or a statute of a State and that seeks to prevent dilution of the distinctiveness of a mark, label, or form of advertisement.
(4) The following shall not be actionable under this section:
(A) Fair use of a famous mark by another person in comparative commercial advertising or promotion to identify the competing goods or services of the owner of the famous mark.
(B) Noncommercial use of a mark.
(C) All forms of news reporting and news commentary.
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1. . 15 U.S.C. § 1125(c) (1998).
2. . 13 U.S.T. 1, TIAS 4931 (1962); text available at Internet web site: http://www.wipo/org/eng/main.htm --.] Section 6bis states: "(1) The countries of the Union undertake, ex officio if their legislation so permits, or at the request of an interested party, to refuse or to cancel registration, and to prohibit the use of a trademark which constitutes a reproduction, an imitation, or a translation, liable to create confusion, of a mark considered by the competent authority of the country already the mark of a person entitled to benefits of this Convention when the essential part of the mark constitutes a reproduction of any such well-known mark or an imitation liable to create confusion therewith."
3. . 15 U.S.C. §§ 1051-1127 (1998).
4. . 15 U.S.C.A. § 1125(a) (1998).
5. . 15 U.S.C.A. § 1051 (1998).
6. . 15 U.S.C.A. § 1051(b) (1998).
7. . Hyatt Corporation v. Hyatt Legal Services et al, 736 F.2d 1153, 222 U.S.P.Q. 669
( 7th Cir. 1984).
8. . 15 U.S.C.A. § 1125(c) (1998).
9. . U.S. Trademark Association (now the International Trademark Association). See Trademark Review Commission Report, published in 77 Trademark Reporter 5 (1987).
10. . 15 U.S.C.A. § 1125(c)(1)(A-H) (1998).
11. . 15 U.S.C.A. § 1125(c)(4) (1998).
12. . Panavision Int'l, L. P. v. Toeppen, 141 F.3d 1316, 46 U.S.P.Q.2d (BNA) 1511 (9th Cir. 1998).
13. . Id. at 141 F.3d 1326.
14. . Permission is granted to the Indonesia Intellectual Property Society, the Indonesian government, and their authorized persons or organizations, to copy, or translate and publish this paper, with the understanding that authorship will be identified. © Copyright 1998, W. T. Fryer, III.
This file was last updated on October 9, 1998.
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