Protecting Well-Known Marks Against Bad Faith Trademark Filings: National Solutions to a Global Problem
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1 Protecting Well-Known Marks Against Bad Faith Trademark Filings: National Solutions to a Global Problem Nancy Omelko, Attorney Advisor (Trademarks) Office of the Administrator for Policy and External Affairs United States Patent and Trademark Office
2 All famous marks are well known - but not all well-known marks are famous In determining whether a mark is WELL KNOWN, TRIPS Articles 16 requires Members to take account of the knowledge of the trademark in the relevant sector of the public, including knowledge in the Member concerned which has been obtained as a result of the promotion of the trademark. In determining whether a mark is FAMOUS, U.S. law requires a showing that the mark is widely recognized by the general consuming public of the United States as a designation of source of the mark s owner. 2
3 Fame as an element in a likelihood of confusion claim When present, the fame of the mark is "a dominant factor in the likelihood of confusion analysis for a famous mark, independent of the consideration of the relatedness of the goods." However, the fame of a mark may be considered only if there is relevant evidence of record. 3
4 Why is a higher level of protection needed for FAMOUS marks? "Famous marks are most likely to be harmed by reduced distinctiveness. They are enormously valuable but fragile assets, susceptible to irreversible injury from promiscuous use." Trademark Review Commission (Unlike traditional infringement law, prohibition against dilution is not driven by any interest in protecting the consumer.) 4
5 How does the U.S. Protect FAMOUS MARKS? Trademark Dilution Revision Act of 1996 (TDRA) Trademark Act Sections 13, 14 and 43(c) -provides for remedies in inter partes administrative and court proceedings for owners of Famous, Distinctive (inherent of acquired) marks against dilution by tarnishment and blurring even with no likelihood of confusion. 5
6 Evolution of Trademark Dilution Revision Act of 1996 (TDRA) Many U.S. states already had anti-dilution laws available. (The TDRA does not preempt those state laws.) Federal Trademark Dilution Act 1995 (FTDA) U.S. Supreme Court said, among other things, proof of actual dilution required under FTDA. Trademark Dilution Revision Act of 1996 enacted to correct problems. 6
7 TDRA clarifications - likelihood of dilution, not just actual dilution, actionable; dilution by tarnishment explicitly actionable in addition to dilution by blurring; marks with either inherent or acquired distinctiveness eligible for protection; and marks that are famous only in a niche market (well-known marks) would not be eligible for protection. 7
8 Elements of a dilution claim (1) plaintiff s mark is famous and distinctive; (2) defendant's use of its mark is commercial; (3) defendant has used its mark in commerce; (4) defendant's use began after plaintiff's mark became famous; (5) defendant's mark is likely to cause dilution of the mark's distinctive quality through blurring or tarnishment. For monetary damages, must also show defendant willfully intended to trade on the plaintiff's reputation or willfully intended to dilute plaintiff's famous mark. 8
9 Factors for determining whether mark is widely recognized by the general US public duration, extent and geographic reach of advertising and publicity for the mark, amount, volume and geographic extent of sales of goods or services connected to the mark, extent of actual recognition of the mark, and whether the mark is federally registered. 9
10 Dilution by Tarnishment harms the reputation of the famous mark when it is linked to products of shoddy quality, or is portrayed in an unwholesome or unsavory context, with the result that the public will associate the lack of quality or lack of prestige in the defendant's goods with the plaintiff's unrelated goods. defendants' use of VICTOR'S LITTLE SECRET for a store selling adult products was likely to tarnish the famous VICTORIA'S SECRET mark as a matter of law
11 Some factors for determining whether there is dilution by blurring (i) The degree of similarity between the mark or trade name and the famous mark. (ii) The degree of inherent or acquired distinctiveness of the famous mark. (iii) The extent to which the owner of the famous mark is engaging in substantially exclusive use of the mark. (iv) The degree of recognition of the famous mark. (v) Whether the user of the mark or trade name intended to create an association with the famous mark. (vi) Any actual association between the mark or trade name and the famous mark. 11
12 CHARBUCKS v. STARBUCKS The Second Circuit rejected requirement of "substantial similarity" and declared that "some--but not substantial--similarity between the subject marks may be sufficient in some cases to demonstrate a likelihood of dilution by blurring." TDRA defined dilution by blurring as an "association arising from the similarity between a mark... and a famous mark," but did not mention "very" or "substantial" in connection with "similarity." 12
13 Abercrombie design dilutes Levi Strauss pocket stitching The "identical or nearly identical" standard applied under the FTDA did not survive the TDRA. Congress's decision to make 'degree of similarity' one consideration in a multi-factor list strongly suggests that it did not want 'degree of similarity' to be the necessarily controlling factor. Since 1873, Levi Strauss has been designing denim blue jeans with its distinctive "Arcuate" stitching pattern on the back pocket and registered the design with the USPTO in (9 th Circuit 2010) 13
14 CRAYOLA box design famous Survey evidence of fame is very powerful and courts may comment unfavorably on its absence in dilution cases. The yellow and green trade dress of CRAYOLA crayons was found to be famous and diluted by use of a similar trade dress. Consumer surveys were successfully used, the plaintiff proved that ninety-two percent of the primary purchasers of its products recognized its trademark, CRAYOLA, "virtually universal recognition. (Eastern Dist. of PA 2001) 14
15 Trademark Trial and Appeal Board findings of dilution The TTAB found the registered mark NASDAQ for securities trading services likely to be diluted by the mark NASDAQ & griffon design for various clothing and sporting goods items. (TTAB 2004) Board has found the mark THE OTHER RED MEAT for "fresh and frozen salmon" to be dilutive of the registered mark THE OTHER WHITE MEAT for "association services namely, promoting the interests of members of the pork industry." A "well-designed" telephone survey demonstrated an association between the marks, and played a crucial role in the Board's decision. (TTAB 2010) The Board sustained opposition to the mark MOTOWN METAL for toy vehicles and accessories, finding it likely to cause confusion with, and likely to dilute by blurring, the famous mark MOTOWN for musical entertainment and musical recordings. (TTAB 2011) Mattel, Inc. has since brought a civil action in the U.S. District Court for Central District of California, seeking review of the TTAB's decision. 15
16 How can countries guard against registration of famous and well-known marks by bad faith filers? The U.S. Model
17 U.S. System for Addressing Bad Faith Trademark Applications In addition to priority of use, the United States incorporates elements of unfair competition to regulate bad behavior. Penalties for fraudulent statements by applicant Criminal prosecution for perjury Cancelling class of goods/services affected by fraud Sanctioning attorneys/agents (discipline proceedings) Recent case law is adjusting the standards for fraud (more than negligence needed). Requirement for Bona Fide Intention to Use the Mark Supported by objective evidence such as business plans, preparations to use. Lack of evidence of bona fide intent to use is ground for refusing or cancelling the registration. Recent case law defines bona fide intent to use. The U.S. still has some problems of bad faith or inaccurate filings, but we are working to address them. 17
18 Useful Concepts from Unfair Competition In first-to-file systems, one does not have the ability to rely on use requirements to determine the objective good faith of a trademark applicant. The ability to prove priority of use generally allows the true owner to defeat the bad faith claims of those who would exploit the goodwill of the trademark owner. If priority of use is not a feature of a trademark system, then we have to look at broader principles of unfair competition in order to find useful analogies that could be applied to address bad faith filings. Although, even use requirements don t solve all bad faith problems Unfair competition is systemic in all legal systems it regulates fundamental fairness in business dealings and has been an international obligation for Paris Union members for decades. 18
19 Best Practices For Addressing Bad Faith in the Application Fraud applicant must attest that the facts recited in the application are accurate. An applicant that knowingly makes a false, material representation with the intent to deceive the PTO has committed fraud. Ownership or Entitlement to Use: The verified statement must allege that the verifier believes the applicant to be the owner of the mark and that no one else, to the best of his or her knowledge and belief, has the right to use the mark in commerce, either in the identical form or in such near resemblance as to be likely, when applied to the goods or services of the other person, to cause confusion or mistake, or to deceive. 19
20 Circumstantial Evidence Defining Bad Faith: Circumstantial Evidence Sufficient Since direct evidence of intent is almost never available, circumstantial evidence is usually the evidentiary basis for proving fraudulent intent of the defendant. Since improper motive is rarely, if ever, admitted the court can only infer bad intent from the facts and circumstances in evidence. Jellibeans, Inc. v. Skating Clubs of Georgia, Inc., 212 USPQ 170 (N.D. Ga. 1981) aff d, 716 F.2d 833, 222 U.S.P.Q. 10 (11 th Cir. 1983). 20
21 Proving Bad Faith Defining Bad Faith Continued: Bad faith is exploiting the goodwill or recognition previously established by another party. What level of use or recognition in country is needed in order to allow a finding of bad faith? Case scenario: A trademark owner has not made direct sales in Russia but does have recognition here via indirect third party sales in Russia, internet news and blogs, and spillover advertising from other countries. 21
22 Best Practices For Addressing Bad Faith Applications? Proving Bad Faith Defining Bad Faith Continued: The Value of Flexibility Principles of territoriality remain. In an increasingly global economy, where there is easy access to information through the Internet and other media, should trademark systems be flexible enough to handle cases of obvious bad faith where there is circumstantial evidence of consumer recognition of the mark, even without traditional use or direct sales? In the case of a bad actor who copies the distinctive English wording, font, and logo, and even copies the website of a foreign party, it is clear that this bad actor is trying to exploit the goodwill or make a connection with a foreign company. Otherwise, why this level of copying? By analogy, the U.S. system has shown flexibility in determining what constitutes use for priority purposes, allowing companies to challenge improper use or registration by another. 22
23 Best Practices For Addressing Bad Faith Applications? Proving Bad Faith and Circumstantial Evidence U.S. Case Example: Circumstantial Evidence Sufficient ( TELMEX case) Applicant) filed for the mark AUDITORIO TELMEX for arena services and entertainment services. Telefonos de Mexico (opposer) challenged the application based on likelihood of confusion with common law TELMEX mark for telecommunication services. NO PROOF OF PRIOR REPUTATION/FAME IN THE US. Opposer s mark in use but no significant market share. Applicant claimed it made up the mark. HOWEVER: Opposer has used TELMEX mark for over 60 years in Mexico for telecommunication services. Applicant lived in Mexico for nearly 30 years, and lived within 10 miles of the AUDITORIO TELMEX arena sponsored by Opposer. Circumstances lead to inescapable conclusion that applicant filed in bad faith. Telefonos de Mexico, S.A.B. de C.V. v. Andres Gutierrez Estrada, Opposition No (June 30, 2010) [not precedential]. 23
24 Concepts From Cybersquatting Cybersquatting is considered wrong because a person can reap windfall profits by laying claim to a domain name that he has no legitimate interest in or relationship to. Harrods Ltd. v Sixty Internet Domain Names, 302 F.3d. 214 (4 th Cir. 2002) Same rationale for addressing bad faith trademark registrations! Anticybersquatting Consumer Protection Act (ACPA) Elements: 1. The defendant has registered, trafficked in or used a domain name. 2. Which is identical to or confusingly similar to a mark owned by the plaintiff; 3. The mark was distinctive at the time of the defendant s registration of the domain name; 4. The defendant has committed the acts with a bad faith intent to profit from the plaintiff s mark. Bad faith intent to profit potential standard for bad faith trademark registrations. 24
25 Bad Faith in Practice Some Types of Bad Faith Situations: Application filed by a party not intending to use the mark, simply to gain financially or block Application filed intending to do business and trade off the goodwill of another company Application filed later in time but in different classes Applications filed for translations/transliterations of the mark with the intent to trade off the goodwill 25
26 Bad Faith in Practice - Considerations What must opposer prove to establish bad faith? Is direct evidence of intent needed? What if there is no mechanism for opposer to compel Applicant to provide relevant information? How would an opposer then obtain direct information on intent? Is the burden too high on the opposer? What other factors can be weighed to establish bad faith? With so many variations of possible bad faith scenarios, couldn t a variety of factors be considered? Can bad faith be inferred depending on the circumstances of each case? 26
27 Goodwill/recognition within the country Internet hits to show international renown Direct testimony by customers showing belief of connection Use or advertising in the territory Media exposure, i.e., magazines, websites, newspapers, etc. Surveys As mentioned in previous slides, the intent of the bad faith filer is to either block or exploit the goodwill of a mark owned by another party. Unfair competition principles focus on regulating behavior and less on the amount of goodwill that exists in the territory. Should we consider a sliding scale? That is, the more obvious bad faith, the less goodwill that needs to be proven? Courts should focus on the factors surrounding the adoption and use of the mark to determine whether there was good or bad faith and weigh this against the level of goodwill in the territory. Presumption of confusion from intent to deceive consumers 27
28 Close similarity of the marks and/or trade dress: mere coincidence is not credible What if a mark so resembles another mark in its appearance (for example, same or substantially similar mark, font, lettering, logo) that mere coincidence is not credible? Should exploitation of goodwill be presumed when a mark in its appearance so resembles another mark? Should the burden then shift to applicant to explain good faith? 28
29 Additional Considerations In the U.S., Opposer, as plaintiff in the opposition proceeding, bears the burden of proving, by a preponderance of the evidence, its asserted grounds... the standard is met if the proposition is more likely to be true than not true. Effectively, the standard is satisfied if there is greater than 50 percent chance that the proposition is true. When a newcomer to the market copies a competitor s trade dress, its intent must be to benefit from the goodwill of the competitor s customers by getting them to believe that the new product is either the same, or originates from the same source as the product whose trade dress was copied. Logic requires that from such intentional copying arises a presumption that the newcomer is successful and there is a likelihood of confusion. 29
30 Procedural Mechanisms to Address Bad Faith Filings? Cross Class Refusals Case scenario: Trademark registrant owns a registration in one international class. Bad faith applications for the same mark are filed in several different international classes but identify related goods/services. Cross Class Refusals U.S. Practice: The classification of goods and services has no bearing on the question of likelihood of confusion. Rather, it is the manner in which the applicant and/or registrant have identified their goods or services that is controlling. Jean Patou Inc. v. Theon Inc., 9 F.3d 971, 29 USPQ2d 1771 (Fed. Cir. 1993); National Football League v. Jasper Alliance Corp., 16 USPQ2d 1212, 1216 n.5 (TTAB 1990). Applied by examiners, the Board and courts. Examiner will conduct search and issue refusals across international classes where there is a likelihood of confusion. If the examiner s relative grounds refusal prevents registration of a mark the trademark owner would have to oppose, then the registered trademark owner has been spared that expense. 30
31 Procedural Mechanisms to Address Bad Faith Filings? Suspension of Action Case scenario: Bad faith application is filed and subsequently challenged by another party ( rightful owner ) in an opposition proceeding. Meanwhile, rightful owner files an application which is refused based upon the earlier filed bad faith application. Rightful owner is forced to appeal the refusal even though the opposition involving the bad faith application is not resolved. Suspension of Action by the U.S. Patent and Trademark Office. 37 C.F.R Action by the Patent and Trademark Office may be suspended for a reasonable time for good and sufficient cause. The fact that a proceeding is pending before the Patent and Trademark Office or a court which is relevant to the issue of registrability of the applicant s mark will be considered prima facie good and sufficient cause. The examining attorney should suspend the later-filed application until the mark in the earlier-filed application is registered or the earlier-filed application is abandoned. 37 C.F.R. 2.83(c). In re Direct Access Communications (M.C.G.) Inc., 30 USPQ2d 1393 (Comm r Pats. 1993). 31
32 Procedural Mechanisms to Address Bad Faith Filings? Default Judgment Case scenario: Bad faith application is filed and opposition is instituted. Bad faith applicant fails to file a response to the Notice of Opposition. Case languishes for years until merits of the case are decided. Default Judgment If a defendant fails to file an answer to a complaint during the time allowed, the Board may issue a notice of default. The defendant is allowed time in which to show cause why default judgment should not be entered against it. If the defendant fails to file a response to the notice, or files a response that does not show good cause, default judgment may be entered against it. TBMP
33 Thank You Nancy Omelko, Attorney Advisor (Trademarks) Office of the Administrator for Policy and External Affairs United States Patent and Trademark Office
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