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American Bar Association

Intellectual Property Litigation Committee

Trademark Rights in a Global Economy

By Lisa M. Tittemore – March 8, 2013

 

In developing a trademark-litigation strategy, it is necessary to evaluate the mark owner’s business goals and to consider the impact that litigation in one jurisdiction could have on rights in other jurisdictions. Depending on business goals, it can be critical to assess whether the assertion of claims in one jurisdiction might have an effect on potential rights elsewhere. This is particularly true for well-known or famous marks, and it is true whether the issues are analyzed from the perspective of the mark owner or a new entrant into the market.


In the United States, well-known marks may be protected and enforced through the application of several legal theories—the standard infringement (likelihood of confusion) analysis, the law of dilution (for “famous” marks), and the “well-known marks doctrine” (addressing rights based on reputation in the United States developed through use in other jurisdictions). This article focuses on recent developments in U.S. federal dilution law and the well-known marks doctrine.


Evolution of Dilution: Protecting Famous Marks in the United States
Famous marks used or registered in the United States are protected against both infringement and dilution. The owner of a famous mark can bring an action against any use of that mark that dilutes the distinctive quality of that mark, either through “blurring” or “tarnishment.” Blurring weakens the power of the mark through its identification with a third-party’s goods, even when those goods are dissimilar and there is no likelihood of confusion. Tarnishment is found when the mark is cast in a negative light, typically through its association with inferior or sordid products or services.


Federal dilution law has evolved significantly in recent years. The U.S. Federal Trademark Dilution Act (FTDA) went into effect in January 1996. The Trademark Dilution Revision Act (TDRA), implemented in October 2006, made assertion of dilution claims harder, including by tightening the standard for what it means to be a famous mark. State law dilution statutes are typically far less strict than the federal statute in this regard. Under federal dilution law, to determine fame, courts will look at factors like the mark’s degree of inherent or acquired distinctiveness, the duration and extent of its use and related advertising and publicity, and use of similar marks by third parties. See 15 U.S.C. § 1125(c). The standard for fame sometimes boils down to one question: Is the mark a household name?


A number of recent opinions serve as case studies for how difficult it can be to prove a claim under the TDRA.


The TTAB Takes on the TDRA
The U.S. Patent and Trademark Office’s Trademark Trial and Appeal Board (TTAB) in particular has been busy with a number of high-profile decisions involving dilution claims.


“Famous” Coach mark not famous? In Coach Services, Inc. v. Triumph Learning LLC, 668 F.3d 1356, 2012 WL 540069 (Fed. Cir. Feb. 21, 2012), the owner of the COACH brand for luxury products such as handbags, wallets, luggage, and related products must have been surprised to learn that its mark did not meet the standard for “fame” under the facts of that case. Coach had opposed Triumph’s application for registration of the mark COACH for educational materials used to prepare students for standardized tests. The TTAB held that Coach had failed to submit sufficient evidence to prove that its mark had become a “household name.” Some of the evidence submitted by Coach (e.g., evidence of sales and advertising figures, including evidence that sales had exceeded over $10 billion in the relevant time frame) had been excluded on technical grounds; for example, the failure to comply with the TTAB’s highly specific Notice of Reliance procedures was a factor.


On appeal, the Federal Circuit noted that “it is well-established that dilution fame is difficult to prove” and that courts apply “a rigorous standard.” Id. at *13. Fame for dilution purposes “requires widespread recognition by the general public,” and an opposer “must show that, when the general public encounters the mark ‘in almost any context, it associates the term, at least initially, with the mark’s owner.” Id. at *14 (citing Toro Co. v. ToroHead Inc., 61 U.S.P.Q.2d 1164 (TTAB 2001)). Despite the submission of evidence describing Coach as “a must-have American icon” and the like, the Federal Circuit found that Coach had failed to meet its burden. Id. at *15.


Both the TTAB and the Federal Circuit were influenced also by the fact that Triumph’s COACH mark had a distinct commercial impression of its own. The Federal Circuit found that “substantial evidence supports the Board’s determination that Triumph’s COACH mark, when applied to educational materials, brings to mind someone who instructs students, while CSI’s COACH mark, when used in connection with luxury leather goods, including handbags, suitcases, and other travel items, brings to mind traveling by carriage.” Id. at *10.


Given the different connotations of the marks and the very different nature of the goods and services, Coach’s claims regarding likelihood of confusion, which it pursued along with its dilution claim, may have damaged the credibility of its dilution claim as well.


Rolex is famous, but still no dilution. In Rolex Watch U.S.A., Inc. v. AFP Imaging Corp., 101 U.S.P.Q.2d 1188, 2011 WL 6780738 (T.T.A.B. Dec. 5, 2011), Rolex was able to adduce sufficient evidence to prove its mark was famous for purposes of dilution analysis, but it still could not prove a likelihood of dilution. AFP filed an application to register the mark ROLL-X for an X-ray table for medical and dental use. Rolex opposed on the grounds of likelihood of confusion and likelihood of dilution.


The TTAB held that Rolex had established fame through advertising, sales, promotion, and news articles. The TTAB also said that ROLEX was a “coined and fanciful term with no other meaning other than its significance as a trademark.” Id. at *6. The TTAB specifically contrasted these facts with those in the Coach case, observing that Coach had advertised “almost exclusively in print fashion media targeted to young women” and that Coach is “an ordinary word with multiple meanings.” Id.


The TTAB also concluded that “[b]ecause of the hyphen between ROLL and X, consumers are likely to view the mark as consisting of the English word ROLL, which has various meanings …” and the letter “X,” which is likely in context to be perceived as suggesting the term “X-ray.” Id. at *8. Further, the board was swayed by the fact that AFP was already using a similar mark, DENT-X, for its dental X-ray business; thus, the ROLL-X mark was consistent with an extension of its product line. Id. at *11.


Although Rolex’s survey showed that 42 percent of respondents said that Rolex watches came to mind when they heard the name ROLL-X, this did not prove an association between the marks, and even if there were an association, it did not prove that the distinctiveness of the ROLEX mark would be impaired. Id. at *10. Thus, without a showing that the ROLEX mark would likely be harmed by any association between the marks, the TTAB concluded that there was no likelihood of dilution.


Dilution! BlackBerry is famous and addictive, and CrackBerry is not a parody. While trademark owners have had difficulty proving their dilution cases in light of heightened standards for fame and a failure to show sufficient harm, defendants who have sought to avoid liability under the dilution statute using a parody defense have faced a difficult road of their own.


In Research in Motion Ltd. v. Defining Presence Marketing Group, Inc., 102 U.S.P.Q.2d 1187, 2012 WL 893481 (T.T.A.B. Feb. 27, 2012), RIM, owner of the BLACKBERRY mark, brought claims of both trademark infringement and dilution. Defining Presence had used the CRACKBERRY mark in connection with a website dedicated to discussing RIM’s products, through which it also sold BlackBerry accessories. The TTAB agreed that the BLACKBERRY mark was famous for dilution purposes. Id. at*9. The TTAB also found that Defining Presence had deliberately set out to create an association with the BLACKBERRY mark.


In its defense, Defining Presence argued that its use of the CRACKBERRY mark was permissible as a fair use parody. Defining Presence’s own website, however, “significantly undercut” its claim of parody. Under the TDRA’s plain language, “parodying a famous mark is protected by the fair use defense only if the parody is not ‘a designation of source for the person’s own goods or services.’” Id. at *13.


In addition, the TTAB found that the term was not created by Defining Presence as part of a permissible parody, but that “the public at large initially adopted the term ‘CrackBerry,’ as a nickname for opposer’s goods, alluding to the widely-held view that users of BLACKBERRY wireless handheld devices often appear to be addicted to their devices.” Id. at *5. Thus, the TTAB held, Defining Presence’s use of the CRACKBERRY mark was not fair use and would blur the distinctiveness of RIM’s mark.


Federal District Court Developments in Dilution Law
In the federal district courts, several cases of recent vintage also merit attention.


The Charbucks case: no harm, no foul. In one of the most closely watched dilution cases in recent years, Starbucks learned the hard way how difficult it can be to prove dilution under the TDRA. After the case had traveled to the Second Circuit and back, the district court on remand found that Starbucks had failed to carry its burden of demonstrating dilution.


The court focused on the fact that there was “no evidence that Charbucks is ever used as a standalone term.” Starbucks Corp. v. Wolfe’s Borough Coffee, Inc., 2011 WL 6747431, at *3 (S.D.N.Y. Dec. 23, 2011). Instead, the record evidence showed that the term was preceded or followed by the terms “Mister,” “Mr.,” or “Blend” and used in conjunction with the defendant’s Black Bear logo or other mark. The court distinguished the cases relied on by Starbucks, noting that in those cases, the marks were used on their own, without contextual features.


Although Starbucks’ survey evidence showed some association in the minds of potential consumers (30.5 percent of respondents said that they associated the term “Charbucks” with “Starbucks”), “the survey did not measure how consumers would react to the Charbucks marks as they are actually packaged and presented.” Id. at *4. Starbucks had demonstrated that there was some association, but it was not significant enough to be likely to impair the distinctiveness of Starbucks’ famous mark. Id. at *5.


Louis Vuitton makes its mark on federal dilution law. Louis Vuitton Malletier S.A. v. Hyundai Motor America, 2012 WL 1022247 (S.D.N.Y. Mar. 22, 2012), is one of a number of recent cases involving the well-known Louis Vuitton trademarks. This case involved Louis Vuitton’s objection to a 30-second television commercial in which Hyundai used brief vignettes showing classic luxury items (caviar, lobster, large yachts, chandeliers, and red carpet) juxtaposed with everyday themes (blue-collar workers eating lunch, policemen sitting in their cruisers), including an inner-city basketball game played on a “lavish marble court with a gold hoop” and “a basketball bearing marks similar, but not identical, to the Louis Vuitton marks.” Id. at *1.


Hyundai argued that it did not dilute the marks because it made fair use of them. According to Hyundai, the ad was intended as a parody that would poke fun at “the silliness of luxury-as-exclusivity.” Id. at *2. Unfortunately for Hyundai, deposition testimony severely undermined Hyundai’s legal arguments. A former Hyundai executive testified to “definitely laddering and borrowing equity from Louis Vuitton.” Id. at *2–3.


The court concluded that Hyundai had itself admitted to not intending to parody or comment on Louis Vuitton, but instead to make “a broader social comment. . . .” Id. at *17. Louis Vuitton also submitted evidence of messages from Twitter in which users wrote “I think a Louis Vuitton football or basketball would be gangsta”; “Dyd yall See tht Louis Vuitton Basketball” Lols iWant,”  and similar messages, which seemed to influence the court’s decision. Id. at 11.


On summary judgment, the court held that the fair use defense was inapplicable. The court contrasted its decision with the Fourth Circuit’s controversial decision in Louis Vuitton Malletier S.A. v. Haute Diggity Dog, LLC, 507 F.3d 252, 260–261 (4th Cir. 2007), in which the Louis Vuitton trade dress and marks were parodied by “Chewy Vuitton” dog chew toys, noting that the Hyundai advertisement was not an “over-the-top, unmistakable parody of the original.” Id. *20. In Haute Diggity Dog, the court found that the parody had been able to “convey two simultaneous—and contradictory—messages: that it is the original, but also that it is not the original and is instead a parody.” 507 F.3d at 260. The court’s decision was criticized because many commentators felt that the Louis Vuitton marks had been unfairly used by the defendant to promote its own goods and was not a true parody.  


Taking stock of the changes in federal dilution law. Dilution, we have seen, has become harder to prove, at least at the federal level. The standard for showing that a mark is famous is strict. The requirement of association between the famous mark and the junior user’s mark and the requirement of likelihood that the famous mark will be harmed by such association are also being strictly applied.


Courts do not appear to be amenable to arguments that a lower level of association between a famous mark and junior user’s mark could cause dilution if multiple junior users are permitted (a “death by a thousand cuts” argument). Instead, courts are requiring owners of famous marks to prove harm with respect to use by each individual junior user. On the other side of the ledger, once fame and potential harm are shown, defendants seeking to avoid liability by presenting a parody defense are likewise facing a high hurdle.


The Well-Known Marks Doctrine
The well-known marks doctrine is sometimes referred to as the “famous marks doctrine.” However, to avoid confusion with “fame” as used the dilution statute, I refer to the doctrine as “the well-known marks doctrine.” Although all famous marks are likely to be “well known” under the strict definition of fame set forth in the TDRA discussed above, not every well-known mark is famous. The terminology becomes even more confusing when considering this issue in a global context, as the term “well-known mark” carries its own meaning in international treaties and the statutes of other jurisdictions. Care must be taken.


The fundamental operative principle behind the “well-known marks doctrine” is that some marks are so famous or well known that their reputation crosses jurisdictional boundaries. Under this doctrine, trademarks may be protected, even without use or registration in the United States, if the mark is so well known in the United States due to use outside the country that consumer confusion would result from another’s use of the mark in the United States.


However, territoriality, that long-standing bedrock of U.S. trademark law, holds that trademark rights depend on priority of actual use within a particular geographic area. There is an inherent tension between the well-known marks doctrine and the territoriality principle.


A split in the circuits: when courts disagree. Implementation of the well-known marks doctrine in the United States has been inconsistent, and how the law will eventually unfold is unclear. Most recently, in ITC Ltd. v. Punchgini, 482 F.3d 135 (2d Cir. 2007), the Second Circuit Court of Appeals refused to recognize the doctrine, thereby creating a split with the Ninth Circuit, which had explicitly recognized the doctrine in Grupo Gigante S.A. De C.V. v. Dallo & Co., 391 F.3d 1088 (9th Cir. 2004).


In Punchgini, an Indian corporation that operated the Bukhara restaurant in New Delhi, filed a lawsuit against Punchgini, the owner of Bukhara Grill in New York City, asserting claims under the Lanham Act and unfair competition claims under New York common law, based in part on the well-known marks doctrine. ITC asserted that use of the name “Bukhara Grill” was likely to cause confusion with the Bukhara restaurant in New Delhi.


The District Court for the Southern District of New York granted Punchgini’s summary judgment motion relating to the plaintiff’s trademark infringement claims, concluding that ITC had abandoned its BUKHARA mark for restaurant services in the United States, and further granted Punchgini summary judgment on ITC’s unfair competition claim because it depended on the well-known marks doctrine, which was not supported in U.S. law. The Second Circuit affirmed the district court, concluding that Congress had not incorporated the well-known marks doctrine into U.S. trademark law.


The Ninth Circuit is the only federal appeals court to have explicitly recognized the well-known marks doctrine as an exception to the territoriality principle. Grupo Gigante was a dispute between a large chain of grocery stores in Mexico called “Gigante,” which was well known among Mexican Americans in Southern California, and a competing chain of “Gigante” grocery stores in Los Angeles.


The Ninth Circuit concluded that “[a]n absolute territorial rule without a famous marks exception would promote customer confusion and fraud. Commerce crosses borders. In this nation of immigrants, so do people.” 391 F.3d at 1094. The Ninth Circuit held that “where the mark has not been before used in the American market, the court must be satisfied, by a preponderance of the evidence, that a substantial percentage of consumers in the relevant American market are familiar with the foreign mark.” Id. at 1098. Thus, the Ninth Circuit concluded that there is a well-known marks exception to the territoriality principle of U.S. trademark law.


In declining to follow the Ninth Circuit’s lead, the Second Circuit expressly declined to apply the well-known marks doctrine absent express congressional recognition. ITC Ltd., 482 F.3d at 165 (“[W]e conclude that Congress has not yet incorporated that doctrine into federal trademark law.”).


Implications for treaty obligations? Although protection of well-known marks, whether registered or not, is a familiar and comfortable concept in U.S. law through the historical protection of common-law rights and the evolving law of dilution, the Punchgini decision shows that the enforcement of such rights based on trans-border reputation poses challenges to the long-standing principle of territoriality in U.S. law.


Many commentators felt that the decision was inconsistent with the United States’ obligations pursuant to Article 6bis of the Paris Convention for the Protection of Industrial Property and the TRIPS Agreement (Agreement on Trade Related Aspects of Intellectual Property Rights of the World Trade Organization). Article 16 of TRIPS extends the scope of protection of well-known marks beyond that of the convention. Although the Second Circuit’s decision was criticized by many commentators as contrary to the United States’ treaty obligations, the analysis in the Punchgini case was more complex than some initial reports suggested.


The Second Circuit had sought input from the New York Court of Appeals as to whether New York state law recognized the well-known marks doctrine. The state court concluded as follows:


[T]o prevail against defendants on an unfair competition theory, under New York law, ITC would have to show first, as an independent prerequisite, that defendants appropriated (i.e., deliberately copied), ITC’s Bukhara mark or trade dress for their New York restaurants, and would have to establish that the relevant consumer market for New York’s Bukhara restaurant primarily associates the Bukhara mark or dress with those Bukhara restaurants owned and operated by ITC.


ITC Ltd. v. Punchgini, Inc., 9 N.Y.3d 467, 480 (N.Y. 2007).


The Second Circuit concluded that, “[l]ike the district court, we observe that ITC’s proffered evidence of goodwill derived entirely from foreign media reports and sources and was unaccompanied by any evidence that would permit an inference that such reports or sources reach the relevant consumer market in New York.” ITC Ltd. v. Punchgini, Inc., 518 F.3d 159, 163 (2d Cir. 2008). This result, with its emphasis on ITC’s failure to submit evidence supporting its arguments that its BUKHARA mark was well known in the United States, seems consistent with the United States’ treaty obligations, even if some of the court’s broader statements have given rise to concerns. See also Lee Ann W. Lockridge, “Honoring International Obligations in U.S. Trademark Law: How the Lanham Act Protects Well-Known Foreign Marks (And Why the Second Circuit Was Wrong),” 84 St. John’s L. Rev. 1347 (2010).


A legislative solution? In view of the split between the Second and Ninth Circuit decisions, Congress has considered, but not implemented to date, a legislative solution. In March 2011, the Executive Committee of the International Trademark Association’s Board of Directors recommended that the association accept a resolution that it “supports the amendment of the trademark law of the United States of America to provide an explicit statutory basis for the protection of trademarks that are determined to be well known in the United States but are not registered or used in the United States.” See Int’l Trademark Ass’n, Proposed Resolution (Mar. 27, 2011).


Other jurisdictions. This lack of clarity in U.S. law should not deter the U.S. trademark litigator from seeking protection for well-known marks in other jurisdictions. Some jurisdictions have passed trademark statutes that provide protection for well-known marks even when unregistered, and some, like India, provide explicit protection for marks that are well-known through trans-border reputation. In these jurisdictions, establishing a mark’s international reputation can be a valuable tool in the litigator’s tool kit.


Using India as an example, when a trademark has been determined to be a well-known mark in at least one relevant section of the public in India, it will be considered well known, whether or not it is registered. In Austin Nichols & Co. & Seagram India Pvt. Ltd. v. Arvind Behl, Jagatjit Industries Ltd., (2006) 32 P.T.C. 133 (Del.), the Indian court addressed the importance and weight to be given to trans-border reputation:


The Plaintiffs having come out with “Blenders Pride” whiskey first in the international market were first past the post; even though the Defendants were the first to do so in India. The fact that the product of the Plaintiffs was not manufactured or sold in India from 1973 (when it first entered the market) till 1995 when it became freely available in India, is of no consequence.


The court held that the mark “Blenders Pride” had been used in connection with whiskey in more than 50 countries and had a “tremendous” reputation in India through foreign visitors, satellite channels, and the Internet.


In many jurisdictions, however, as in the United States, the protection of marks based on trans-border reputation is a developing area of law. In others, such as China, the law does not permit enforcement of rights based on trans-border reputation, although such a reputation may be considered as a factor. In China, the higher the reputation of the trademark, the broader the protection it will enjoy. Although the Chinese courts and Chinese Trademark Office may consider evidence from outside China in evaluating the strength of the mark’s reputation, they typically will only consider it as supplementary evidence and primarily will focus on use of the mark within China.


A global trademark policing strategy should include analysis and inquiry into this issue in the jurisdictions of primary interest to the client.


Conclusion
Strategies for the protection and enforcement of well-known and famous marks require consideration of the different and developing legal theories that apply in jurisdictions around the globe. Those hoping to avoid being on the receiving end of claims from famous and well-known mark owners also need to be aware of this area of law. Building a global strategy requires consideration of how these doctrines apply in the United States and other jurisdictions, and creating a strong network of attorneys around the world.


Keywords: litigation, intellectual property, infringement, dilution, famous marks, well-known marks, global, legal doctrines


Lisa M. Tittemore is a partner at Sunstein Kann Murphy & Timbers LLP in Boston, Massachusetts.


 
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