Federal Trademark Protection and the Likelihood of Confusion Test

by J.D. Houvener on May. 27, 2016

Intellectual Property Trademark 

Summary: http://www.boldip.com/bold-blog/-federal-trademark-protection-and-the-likelihood-of-confusion-test

Trademarks registered with the U.S. Patent and Trademark Office are given a higher degree of protection in federal courts than unregistered or mere state-registered marks.  Both registered and unregistered trademarks are granted some degree of federal protection under the Lanham Act §43(a).

Things that can qualify as a trademark include:  a word, phrase, or a logo.  A slogan, a name, a scent, the shape of a product's container, or even a series of musical notes may qualify as a trademark.
The courts and the Patent and Trademark Office have authorized for use as a mark a particular shape (e.g. of a Coca-Cola bottle), a particular sound (e.g. of NBC's three chimes), and even a particular scent (e.g. of Chanel No 5 perfume).

Some trademarks afford more potent rights than others.  The closer the relationship between the mark and the goods, the weaker the mark.

Once acquired, trademark rights may be registered with the USPTO.  The Lanham Act gives a seller or producer the exclusive right to register a trademark, 15 U.S.C. § 1052, and to prevent his or her competitors from using that trademark, § 1114(1).

Both registered and non-registered trademarks are both eligible for protection under the Lanham Act.  However, federal registration affords several advantages:
  • Nationwide trademark rights
  • A registered mark is presumed to be a valid trademark
  • The owner listed on the registration is presumed to be the true owner of the trademark rights
  • Presumption that the mark has not been "abandoned" through non-use
  • Access to Federal Courts for litigating trademark infringement
  • "Incontestability." After five years of unopposed registration, a trademark is eligible to become "incontestable." An incontestable mark cannot be attacked on the grounds that it is "merely descriptive."
  • Constructive notice - that is, infringers cannot claim that they were unaware of a registered trademark
  • Enhanced remedies for infringement, including the possibility of triple damages and criminal penalties for counterfeiting (note that counterfeiting is a more culpable type of infringement)
  • Right to have the U.S. Customs Service prevent others from importing goods bearing infringing marks
Trademarks may be registered online.  The USPTO charges a $275 fee per international class, for online trademark applications.  The process takes about 6 months from initial application to final registration.  It is a general practice to hire a trademark lawyer to file the application on behalf of the future owner.
When an application is allowed, it moves on to publication in the Trademark Official Gazette.  Once published, there is a 30-day opportunity for other companies to appeal the registration. If no appeal is filed, the registration is finally issued.

An application for registration may be based upon "actual use" in commerce (a §1(a) registration) or upon a bona fide intent to use ("ITU") the mark in commerce (§1(b) registration).  An ITU application is a placeholder.  It will not be allowed to register until the applicant actually begins using the mark in interstate commerce.  The value of ITU is in establishing priority—that is, determining which business first acquired the trademark rights.
 
Infringement:  The Likelihood of Confusion Test
Trademark infringement is measured by the Likelihood of Confusion test.  A new trademark will infringe on an existing one if the new one is so similar to the original that consumers are likely to confuse the two marks, and mistakenly purchase from the wrong company.  The likelihood of confusion test turns on several factors, including:
  • Strength of the plaintiff's trademark
  • Degree of similarity between the two marks at issue
  • Similarity of the goods and services at issue
  • Evidence of actual confusion
  • Purchaser sophistication
  • Quality of the defendant's goods or services
  • Whether the defendant's attempt to register the trademark was done in good faith.   (Polaroid Corp. v. Polaroid Electronics Corp., 287 F.2d 492).
The Likelihood of Confusion Test also controls in cases of Reverse Confusion.  Reverse confusion occurs when a larger, more powerful company uses the mark of a smaller, less powerful senior owner, and thereby causes confusion.  Typically, the defendant floods the market with advertising and therefore creates confusion as to the origin of the smaller company’s mark.  These are most often cases of recklessness or negligence, wherein the larger company does not seek to capitalize on the smaller company’s good will.  Rather, the larger company usually “rolls over” the smaller company’s identity by accident. 

In these cases, the Circuit courts have found that the Polaroid factors for Likelihood of Confusion still hold, except that no intent element is required.  In this sense, reverse confusion trademark cases follow patent infringement cases in that intent, or willful infringement, is reserved solely for damages.
 
Dilution of Domain Names:  Likelihood of Confusion Test Controls
Prior to specifically targeted laws being adopted, dilution protection was used in some U.S. jurisdictions to attack domain-name infringement of trademarks.  For example, in the 1998 case of Panavision International v. Toeppen, defendant Dennis Toeppen registered the domain name www.panavision.com, and posted aerial views of the city of Pana, Illinois on the site. The Ninth Circuit Court of Appeals found that trademark dilution occurred when potential customers of Panavision could not find its web site at panavision.com, and instead were forced to search through Toeppen’s site.  

The fact that potential customers might be discouraged from locating Panavision's legitimate website, coupled with evidence that Toeppen was in the business of registering domain names for profit, led the court to find that Toeppen's conduct "diminished the capacity of the Panavision marks to identify and distinguish Panavision's goods and services on the Internet," and thus constituted dilution.

In 2006, the Federal Trademark Dilution Revision Act was signed into law.  The new law revises the FTDA so that the plaintiff only needs to show the defendant's mark is likely to cause dilution to be actionable.  However, the revision also reduced the scope of marks falling under its protection, requiring that marks be nationally well known to qualify for protection from dilution.
 
Unlike copyright law which provides for criminal penalties as well as civil damages, trademark law in the United States is almost entirely enforced through private lawsuits. The exception is in the case of criminal counterfeiting of goods (handled by the ITC).  Otherwise, the responsibility is entirely on the mark owner to file suit in order to restrict an infringing use.  Failure to “police” a mark by stopping infringing uses may result in the loss of protection.

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