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Three Important Trademark Rulings in December

Three Important Trademark Rulings in December

U.S. Supreme Court Rules on Trademark Fair Use Defense
When a company adopts a descriptive word as a trademark, it accepts the risk that competitors may use the word descriptively and in a way that creates some consumer confusion. The U.S. Supreme Court clarified and strengthened this concept in its December 8 ruling in KP Permanent Make-Up, Inc. v. Lasting Impression I, Inc., No. 03-403. Specifically, the Court ruled that a party raising the statutory “fair use” affirmative defense need not show its use is unlikely to cause
consumer confusion. The Court also opined that “some possibility of consumer confusion” is compatible with fair use.

The case involved the term “micro color” which was used by both parties to promote permanent makeup. KP Permanent Make-Up (“KP”) claimed to have used the term “microcolor” descriptively since 1990 or 1991; Lasting Impression registered the term “Micro Colors” as a trademark in 1993. When Lasting Impression demanded that KP stop using the term in its marketing materials, KP sued for a declaratory judgment based on fair use, and Lasting Impression countersued for trademark infringement.

The district court granted summary judgment to KP on its fair use defense. The Ninth Circuit reversed, holding that the district court had erred by not considering the issue of confusion. The Ninth Circuit explained that the fair use defense could not be successful if there were consumer confusion, and the court appeared to place the burden of showing an absence of consumer confusion on KP.

The Supreme Court vacated the Ninth Circuit’s judgment. Justice Souter’s opinion for a unanimous Court explained that consumer confusion is not mentioned in the statutory language defining fair use (15 U.S.C. A71115 (B)(4)) and that “it takes a long stretch to claim that a defense of fair use entails any burden to negate confusion.” Souter went on to explain that such a result would be incoherent since it is precisely when a plaintiff has made a prima facie case of likely confusion that a defendant needs the defense.

As a corollary, the Court opined that since the defense must be available when a prima facie case has been made, some possibility of consumer confusion is consistent with fair use. However, Justice Souter declined to state how much confusion may be tolerated and added that the Court’s decision “does not foreclose the relevance of the extent of any likely consumer confusion in assessing whether a defendant’s use is objectively fair.”

Second Circuit Rules Using Identical Famous Mark is Per Se Dilution
on Motion for Summary Judgment
In what is likely to become a significant precedent in future dilution litigation, the 2nd Circuit ruled that use of a mark identical to a famous mark is per se dilutive: “We interpret Moseley to mean that where a plaintiff who owns a famous senior mark can show the commercial use of an identical junior mark, such a showing constitutes the circumstantial evidence of the actual-dilution element of an FTDA claim.” Savin Corporation v. The Savin Group, No. 03-9266 (2d Cir. Dec. 10, 2004).

The plaintiff, Savin Corporation, markets high-end business equipment and copy machines and has used the mark SAVIN since 1959. Defendants, The Savin Group, Savin Engineers, Savin Consultants and JMOA Engineers are civil engineers and registered the domain name Plaintiff sued for trademark dilution and infringement. In granting summary judgment to defendants, the district court held that the plaintiff failed to produce any evidence of actual dilution other than showing that the defendants used a junior mark that is identical to plaintiff’s senior mark. The Second Circuit reversed, relying on its interpretation of Moseley v. V. Secret Catalogue, Inc., 537 U.S. 418 (2003). The Second Circuit also provided a detailed discussion of what “identical” means in this context, and emphasized the fame and distinctiveness requirements of the FTDA, which narrows the set of marks eligible for such sweeping protection. The case was sent back to the district court for, among other things, consideration of whether the parties’ marks are identical as defined by the Second Circuit.

Bench Ruling Says Google’s Use of Trademarks to Trigger Sponsored Links Is Not Infringement
On December 15, U.S. District Judge Leonie Brinkema ruled from the bench during trial that GEICO failed to prove that Google’s AdWords program infringed GEICO’s trademarks.  The AdWords program lets advertisers purchase or bid on keywords – including trademarks – that will trigger the display of a “Sponsored Link” on a Google search results page.  GEICO had argued that allowing competitors to key their ads to the GEICO trademark constituted infringement.  The judge rejected Geico’s theory and reportedly explained that “there is no evidence that that activity alone causes confusion.”  Judge Brinkema urged the parties to settle the suit and said she would put the ruling in writing.  She did not rule on GEICO’s claim that Google is indirectly liable for trademark infringement when competitors’ ads display GEICO’s trademarks on Google.  Government Employees Insurance Co. v. Google Inc., No.1:04CV507 (E.D. Va. Dec. 15, 2004).   We will report on the written decision when issued and any other developments.

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