trademark infringement victor h. bouganim wcl, american university

Trademark InfringementTrademark Infringement

Victor H. Bouganim

WCL, American University

Victor H. Bouganim, WCL, American University, Spring 2001

InfringementInfringementLikelihood of Consumer ConfusionLikelihood of Consumer Confusion

When goods produced by an alleged infringer compete for sales with those of a TM owner, infringement usually will be found if the marks are sufficiently similar to cause consumer confusion.

When the goods are related, but not competitive, several other factors are added to the analysis.

When the goods are totally unrelated, there can be no infringement because confusion is unlikely.


Likelihood of Confusion AnalysisLikelihood of Confusion Analysis

similarity of the marks

proximity of the goods

evidence of actual confusion

strength of the mark

type of goods and degree of care used by consumer

intent in selecting mark

likelihood of expansion of product lines


CounterfeitingCounterfeiting Counterfeit

– an imitation intended to pass for an original and is therefore false

Counterfeit Mark– A mark which is identical

or substantially identical to the registered trademark


Combating CounterfeitingCombating Counterfeiting Trademark Counterfeiting

Act 1984– Established counterfeiting

as a crime– Damages and/or profits and

attorney’s fees may be recovered in a civil action

– Ex parte seizure orders may be issued by federal courts

– Gray market goods, parallel goods are expressly excluded from coverage

The Anti-counterfeiting Consumer Protection Act 1996– Trafficking in counterfeit goods is an

offense under the Act– Importers must disclose the identity

of any trademark on imported merchandise

– Ex parte seizure of counterfeit goods are largely authorized

– Damages and penalties were increased

– Custom’s officials no longer have the authority to return goods to their source


Trademark Act - Lanham ActTrademark Act - Lanham Act 15 U.S.C. §112415 U.S.C. §1124

Importation of goods bearing infringing marks or names is forbidden.

“… no article of imported merchandise which shall copy or simulate the name of any domestic manufacture … or which shall copy or simulate a trademark registered in accordance with the provisions of this Act … shall be admitted to entry at any customhouse of the United States…”


Parallel Import - Gray MarketParallel Import - Gray Market

Parallel Import Where products

manufactured by the trademark owner or his licensees for sale in other countries are imported into the U.S.

Gray Market Goods lawfully

bearing trademarks which originate abroad and which compete without permission in domestic markets


Tariff Act 1930, Sec. 526Tariff Act 1930, Sec. 526 Prohibit the importation of any merchandise bearing valid US

trademarks, unless written consent of such marks is produced at the time of making entry.

Prohibited merchandise shall be subject to seizure and forfeiture.

Civil actions may be brought by the trademark owners for injunctions and damages.

Exemption: Articles accompanying any person arriving in the US, when such articles are

for personal use and not for sale and are within set limits.


Sec. 526 - Customs RegulationsSec. 526 - Customs Regulations19 C.F.R. § 133.21(c)19 C.F.R. § 133.21(c)

The restrictions set forth … do not apply to imported articles when:– (1) Both the foreign and the US trademark or trade name are

owned by the same person or business entity;

– (2) The foreign and domestic trademark or trade name are parent and subsidiary companies or are otherwise subject to common ownership or control…

– (3) The articles of foreign manufacture bear a recorded trademark or trade name applied under the authorization of the U.S. owner...


K Mart Corp. v Cartier, Inc.K Mart Corp. v Cartier, Inc.S. Ct. 1988S. Ct. 1988

Case involves the court’s analysis of the typical parallel import scenarios and whether gray market goods are legal.

Review the validity of the Customs regulations. Court concludes that the exceptions set forth in

clauses (1) & (2) are reasonable and valid, whereas clause (3) is invalid.

Result: importation of gray market goods is allowed subject to the Affiliation Test.


Gray Market ScenariosGray Market Scenarios (1) A domestic firm purchases from an independent

foreign firm the rights to register and use the foreign TM as a U.S. TM and to sell its foreign-manufactured products here.

(2) A domestic firm registers a U.S. TM for goods that are manufactured abroad by an affiliated manufacturer.

(3) The domestic holder of a U.S. TM authorizes an independent foreign manufacturer to use it

In all of the above, third-parties import genuinely trademarked product, which compete with the authorized products.


K-Mart Decision ResultsK-Mart Decision Results

Independent licensee Not allowed to import gray market goods even if they are genuine.

3. Licensor to independent licensee

Commonly controlledAllowed to import gray market goods.

2c. Commonly controlled

ParentAllowed to import gray market goods.

2b. Parent of foreign subsidiary

SubsidiaryAllowed to import gray market goods.

2a. Subsidiary of foreign parent

Seller of US trademarkNot allowed to import gray market goods even if they are genuine.

1. Independent Buyer of U.S. trademark

Foreign Manufacturer

526 Tariff ActUnited States


Gray Market ControversiesGray Market Controversies

Parallel importers ‘free-ride’ on the investment in building domestic reputation of the trademark.

Gray market products may erode that reputation.

Universal versus territorial nature of the trademark.

Exhaustion of rights versus control by the TM owners.

Using TM laws to preserve market segmentation and price discrimination.


Lever Bros. Co. v United StatesLever Bros. Co. v United StatesDC Cir. 1993DC Cir. 1993

This case involves the unauthorized import of British goods by a British subsidiary bearing a trademark identical to a valid U.S. trademark

U.S. company claims that the imports create consumer confusion

Court held that– Section 42 of the Lanham Act, 15 U.S.C. § 1124 bars the

importation of physically different foreign goods bearing a trademark identical to a valid U.S. trademark

– It is so regardless of the trademark’s genuine character abroad or affiliation between the producing firms


The Materiality TestThe Materiality Test Parallel importation is prohibited when the gray market goods

are physically and materially different from their U.S. counterparts.

However, importation of the suspect goods will still be possible as long as the gray market products bear a label stating “This product is not a product authorized by the United States Trademark owner for importation and is physically and materially different from the authorized product.”

Following the Lever Case ruling as implemented in new Customs regulation (1999).


Reverse ConfusionReverse Confusion Sometimes a larger company will adopt

the mark of a smaller TM owner. The risk is that the public will come to

associate the mark not with its true owner, but with the infringer (the larger company).

Reverse confusion does constitute trademark infringement.

An analysis similar to that for regular confusion is conducted to determine reverse confusion.


False AdvertisingFalse AdvertisingLanham Act Sec. 43(a)Lanham Act Sec. 43(a)

Any person who, on or in connection with any goods or services, … used in commerce any word, term, name, symbol, ... or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which…

… in commercial advertising or promotion, misrepresents the nature, …of his or her or another person’s goods, ….

shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act.


Contributory InfringementContributory Infringement

A party may be found liable for trademark infringement done by others. Examples -

Inducing infringement– intentionally suggesting either directly or impliedly

that the other party infringe the TM and the other does infringe.

Knowingly aiding or not preventing infringement– A landlord who knew that a commercial tenant was

engaging in selling counterfeit goods Relevant in the context of Cyberspace


TrafFix Devices v. Marketing DisplaysTrafFix Devices v. Marketing DisplaysU.S. Supreme Court, 2001U.S. Supreme Court, 2001

Marketing Displays holds expired utility patents for a dual-spring design used to keep temporary road signs upright in windy conditions.

After the patents expired, TrafFix sold similar stands. The Court reversed the Sixth Circuit, and held that respondent’s

dual-spring road sign design, the subject of an expired utility patent, was not eligible for trade dress protection under the Lanham Act due to its functional feature.

The Court thus resolved the issue of how much weight an expired utility patent should be given in determining the functionality of a claimed trade dress in a product’s design.


DefensesDefensesGenericness

Functionality

AbandonmentParody

Fair Use


RemediesRemedies Damages Injunction (complete or in

certain geographical area) Corrective Advertising Recall of Infringing Goods Destruction of Infringing

Goods Disclaimer Labels on Infringing Goods

to Cure Infringement

trademark infringement victor h. bouganim wcl, american university

Documents

f gray market f goods

f importation of goods

coverage f

f exemption

mark f type of goods

consumer f intent

marks f proximity

f civil actions