572 UNIT FIVE Property and Its Protection
and can include either all or part of the total image or
overall impression created by a product or its packaging.
I EXAMPLE 29.7 The distinctive decor, menu, lay-
out, and style of service of a particular restaurant may be
regarded as trade dress. Trade dress can also include the
layout and appearance of a catalogue, the use of a light-
house as part of the design of a golf hole, the fish shape
of a cracker, or the G-shaped design of a Gucci watch. I
Basically, trade dress is subject to the same protection
as trademarks. In cases involving trade dress infringe-
ment, as in trademark infringement cases, a major con-
sideration is whether consumers are likely to be confused
by the allegedly infringing use.
used in the commission of the crime. The defendant must
also pay restitution to the trademark holder or victim in
an amount equal to the victim's actual loss.
I CASE IN POINT 29.8 Charles Anthony Jones
pleaded guilty to trafficking of counterfeit prescription
erectile dysfunction drugs. The court sentenced Jones to
thirty-seven months in prison and ordered him to pay
$633,019 in restitution. Jones appealed, arguing that
the amount awarded was more than the pharmaceutical
companies' actual losses. The court agreed. The pharma-
ceutical companies were entitled only to their lost net
profits rather than the retail price of the genuine drugs.12
29-1g Counterfeit Goods
Counterfeit goods copy or otherwise imitate trade-
marked goods, but they are not the genuine trademarked
goods. The importation of goods that bear counterfeit
(fake) trademarks poses a growing problem for U.S.
businesses, consumers, and law enforcement. In addi-
tion to the negative financial effects on legitimate busi-
nesses, certain counterfeit goods, such as pharmaceuticals
and nutritional supplements, can present serious public
health risks.
Combating Foreign counterfeiters Although
Congress has enacted statutes against counterfeit goods,
the United States cannot prosecute foreign counterfeit-
ers because our national laws do not apply to them. One
effective tool that U.S. officials have used to combat
online sales of counterfeit goods is to obtain a court order
to close down the domain names of Web sites that sell
such goods. For instance, U.S. agents have shut down
hundreds of domain names on the Monday after Thanks-
giving ("Cyber Monday"). Shutting down the Web sites,
particularly on key shopping days, prevents some coun-
terfeit goods from entering the United States. Europol, an
international organization, has also used this tactic.
The Stop Counterfeiting in Manufactured
Goods Act The Stop Counterfeiting in Manufactured
Goods Act" (SCMGA) was enacted to combat counter-
feit goods. The act makes it a crime to traffic intentionally
in or attempt to traffic in counterfeit goods or services, or
to knowingly use a counterfeit mark on or in connection
with goods or services.
Before this act, the law did not prohibit the creation
or shipment of counterfeit labels that were not attached
to any product. Therefore, counterfeiters would make
labels and packaging bearing another's trademark, ship
the labels to another location, and then affix them to an
inferior product to deceive buyers. The SCMGA closed
this loophole by making it a crime to knowingly traf-
fic in counterfeit labels, stickers, packaging, and the like,
regardless of whether the items are attached to any goods.
29-1h Trade Names
Trademarks apply to products
. A trade name indicates
part or all of a business's name, whether the business is a
sole proprietorship, a partnership, or a corporation. Gen-
erally, a trade name is directly related to a business and
its goodwill.
A trade name may be protected as a trademark if the
trade name is also the name of the company's trade-
marked product-for example, Coca-Cola. Unless it is
also used as a trademark or service mark, a trade name
cannot be registered with the federal government. Trade
names are protected under the common law, but only if
they are unusual or fancifully used. The word Safeway
,
for example, was sufficiently fanciful to obtain protection
as a trade name for a grocery chain.
Penalties for Counterfeiting Persons found guilty
of violating the SCMGA may be fined up to $2 million or
imprisoned for up to ten years (or more if they are repeat
offenders). If a court finds that the statute was violated, it
must order the defendant to forfeit the counterfeit prod-
ucts (which are then destroyed), as well as any property
29-1i Licensing
One way to avoid litigation and still make use of anoth-
er's trademark or other form of intellectual property is
to obtain a license to do so. A license in this context
11 PLIN109 181 2000 which mended 18 USC Si
CHAPTER 29 Intellectual Property 571
Health System, began rebranding itself (changing its
name and marketing) as Unity Point Health. When the
company expanded into Wisconsin, where Unity Health
already had an established presence, Unity Health filed a
trademark infringement suit in federal court.
The court found that Unity Health was a descriptive
mark, and thus not inherently distinctive. But the court
also held that the Unity Health mark had acquired a sec-
ondary meaning, largely because it had been used for so
long and so exclusively by one health insurer in Wiscon-
sin. It made no difference to the court that only one part
of the mark (Unity) was common to both trademarks. To
allow lowa Health Systems to use the mark UnityPoint
Health in Wisconsin would likely create confusion for
consumers. Therefore, the court issued an injunction and
blocked Iowa Health from using the trademark Unity-
Point Health.7.
Once a secondary meaning is attached to a term or
name, a trademark is considered distinctive and is pro-
tected. Even a color can qualify for trademark protection,
did the color schemes used by some state university
sports teams, including Ohio State University and Loui-
siana State University.
1 CASE IN POINT 29.4 Federal Express Corporation
(FedEx) provides transportation and delivery services
worldwide using the logo FedEx in a specific color com-
bination. FedEx sued a competitor, JetEx Management
Services, Inc., for using the same color combination and
a similar name and logo. JetEx also mimicked FedEx's
trademarked slogan ("The World on Time" for FedEx,
and “Keeping the World on Time" for JetEx). FedEx
alleged trademark infringement and dilution, among
other claims. A federal district court in New York granted
a permanent injunction to block JetEx from using the
infringing mark in FedEx colors.'
A trademark does not become generic simply because
it is commonly used, however. I CASE IN POINT 29.5 In
2014, David Elliot and Chris Gillespie sought to register
numerous domain names, including "googledisney.com"
and "googlenewstvs.com.” (A domain name is part of
an Internet address, such as "cengage.com.") They were
unable to register the names because all of them used the
word google, a trademark of Google, Inc.
Elliot and Gillespie brought an action in federal court
to have the Google trademark cancelled because it had
become a generic term. They argued that because most
people now use google as a verb ("to google") when refer-
ring to searching the Internet with any search engine (not
just Google), the term should no longer be protected.
The court held that even if people do use the word google
as a verb, it is still a protected trademark if consumers
associate the noun with one company. The court con-
cluded that the primary significance of the word google
to a majority of the public who utilize Internet search
engines is a designation of the Google search engine."
29-1e Service, Certification,
and Collective Marks
A service mark is essentially a trademark that is used to
distinguish the services (rather than the products) of one
person or company from those of another. For instance,
each airline has a particular mark or symbol associated
with its name. Titles and character names used in radio
and television are frequently registered as service marks.
Other marks protected by law include certification
marks and collective marks. A certification mark is
used by one or more persons, other than the owner, to
certify the region, materials, mode of manufacture, qual-
ity, or other characteristic of specific goods or services.
Certification marks include "Good Housekeeping Seal of
Approval" and "UL Tested."
When used by members of a cooperative, association,
or other organization, a certification mark is referred to
as a collective mark. I EXAMPLE 29.6 Collective marks
appear at the ends of motion picture credits to indicate
the various associations and organizations that partici-
pated in the making of the films. The union marks found
the tags of certain products are also collective marks. I
Generic Terms Generic terms that refer to an entire
class of products, such as bicycle and computer, receive
no protection, even if they acquire secondary meanings.
A particularly thorny problem arises when a trademark
acquires generic use. For instance, aspirin and thermos
were originally the names of trademarked products, but
today the words are used generically. Other trademarks
that have acquired generic use are escalator, trampoline,
raisin bran, dry ice, lanolin, linoleum, nylon, and cornflakes.
7. Unity Health Plans Insurance Co u lowd Health System, 995 ESupp.2d
874 (W.D.Wis. 2014).
8. Board of Supervisors of Louisiana State University - Smack Apparel Co.,
438 ESupp.2d 653 (E.D.La. 2006). See also Abraham v. Alpha Chi
Omega, 781 ESupp.2d 396 (N.D.Tex. 2011).
9. Federal Express Corp. u. JetEx Management Services, Inc., 2014 WL
4628983 (E.D.N.Y. 2014).
29-1f Trade Dress
The term trade dress refers to the image and overall
appearance of a product. Trade dress is a broad concept
10. Elliot u Google, 45 ESupp.3d 1156 (D.Ariz. 2014).
CHAPTER 29 Intellectual Property 569
the infringer acted intentionally or that the trademark received from the unauthorized use of the mark. A court
was registered (although registration does provide proof can also order the destruction of any goods bearing the
of the date of inception of the trademark's use).
unauthorized trademark. In some situations, the trade-
The most commonly granted remedy for trademark mark owner may also be able to recover attorneys' fees.
infringement is an injunction to prevent further infringe- At the center of the following case was an injunction
ment. Under the Lanham Act, a trademark owner that granted in an earlier dispute between two brothers pro-
successfully proves infringement can recover actual hibiting one of them from using trademarks owned by the
damages, plus the profits that the infringer wrongfully other, including a mark featuring their shared last name.
29-1d Distinctiveness of the Mark
A trademark must be sufficiently distinctive to enable
consumers to identify the manufacturer of the goods eas-
ily and to distinguish between those goods and compet-
ing products.
“similar enough that a consumer might well confuse
them.” Therefore, Quicksilver could continue its claim
for trademark infringement."
Strong Marks Fanciful, arbitrary, or suggestive trade-
marks are generally considered to be the most distinctive
(strongest) trademarks. These marks receive automatic
protection because they serve to identify a particular prod-
uct's source, as opposed to describing the product itself.
Suggestive Trademarks. Suggestive trademarks indicate
something about a product's nature, quality, or charac-
teristics, without describing the product directly. These
marks require imagination on the part of the consumer to
identify the characteristic.
“Dairy Queen,” for instance, suggests an association
between its products and milk, but it does not directly
describe ice cream. “Blu-ray” is a suggestive mark that
is associated with the high-quality, high-definition video
contained on a particular type of optical data storage
disc. Although blue-violet lasers are used to read blu-ray
discs, the term blu-ray does not directly describe the disc.
Fanciful and Arbitrary Trademarks. Fanciful trade-
marks use invented words, such as "Xerox” for one
manufacturer's copiers and “Google” for a search engine.
Arbitrary trademarks use common words in an uncom-
mon way that is not descriptive of the product, such as
“Dutch Boy" as a name for paint.
Even a single letter used in a particular style can be an
arbitrary trademark. I CASE IN POINT 29.2 Sports enter-
tainment company ESPN sued Quiksilver, Inc., a maker
of youth-oriented clothing, alleging trademark infringe-
ment. ESPN claimed that Quiksilver's clothing used the
stylized “X” mark that ESPN uses in connection with the
"X Games” (“extreme” sports competitions).
Quiksilver filed counterclaims for trademark infringe-
ment and dilution, arguing that it had a long history of
using the stylized X on its products. ESPN had created
the X Games in the mid-1990s, and Quiksilver had been
using the X mark since 1994. ESPN asked the court to
dismiss Quiksilver's counterclaims, but the court refused,
holding that the on Quiksilver's clothing is clearly
an arbitrary mark. The court found that the two Xs are
Secondary Meaning Descriptive terms, geographic
terms, and personal names are not inherently distinctive
and do not receive protection under the law until they
acquire a secondary meaning. A secondary meaning may
arise when customers begin to associate a specific term
or phrase (such as London Fog) with specific trademarked
items (coats with “London Fog” labels) made by a par-
ticular company.
Whether a secondary meaning becomes attached to
a name usually depends on how extensively the product
is advertised, the market for the product, the number of
sales, and other factors. CASE IN POINT 29.3 Unity
Health Plans Insurance Corporation has been a health
maintenance organization (HMO) insurer in Wisconsin
since 1955. In 2013, another health care provider, Iowa
6. ESPN, Inc. v. Quiksilver, Inc., 586 F.Supp.2d 219 (S.D.N.Y. 2008).
568 UNIT FIVE Property and Its Protection
29-1a Statutory Protection of Trademarks
Statutory protection of trademarks and related property
is provided at the federal level by the Lanham Act of
1946. The Lanham Act was enacted, in part, to protect
manufacturers from losing business to rival companies
that used confusingly similar trademarks. The act incor-
porates the common law of trademarks and provides
remedies for owners of trademarks who wish to enforce
their claims in federal court. Many states also have trade-
mark statutes.
Corporation filed a dilution lawsuit, and a federal court
ruled that use of the "Sambucks" mark constituted
trademark dilution because it created confusion for
consumers. Not only was there a "high degree of simi-
larity between the marks, but also both companies pro-
vided coffee-related services and marketed their services
through "stand-alone" retail stores. Therefore, the use of
the similar mark (Sambuck's) reduced the value of the
famous mark (Starbucks).
Trademark Dilution In 1995, Congress amended the
Lanham Act by passing the Federal Trademark Dilution
Act, which allowed trademark owners to bring suits in
federal court for trademark dilution. In 2006, Congress
further amended the law on trademark dilution by pass-
ing the Trademark Dilution Revision Act (TDRA).
Under the TDRA, to state a claim for trademark dilu-
tion, a plaintiff must prove the following:
1. The plaintiff owns a famous mark that is distinctive.
2. The defendant has begun using a mark in commerce
that allegedly is diluting the famous mark.
3. The similarity between the defendant's mark and the
famous mark gives rise to an association between the
marks.
4. The association is likely to impair the distinctiveness
of the famous mark or harm its reputation.
Trademark dilution laws protect "distinctive" or
"famous” trademarks (such as Rolls Royce, McDonald's,
Starbucks, and Apple) from certain unauthorized uses.
Such a mark is protected even when the use is on non-
competing goods or is unlikely to cause confusion. More
than half of the states have also enacted trademark dilu-
tion laws.
29-1b Trademark Registration
Trademarks may be registered with the state or with the
federal government. To register for protection under fed-
eral trademark law, a person must file an application with
the U.S. Patent and Trademark Office in Washington,
D.C. Under current law, a mark can be registered (1) if
it is currently in commerce or (2) if the applicant intends
to put it into commerce within six months.
In special circumstances, the six-month period can be
extended by thirty months. Thus, the applicant would
have a total of three years from the date of notice of
trademark approval to make use of the mark and file the
required use statement. Registration is postponed until
the mark is actually used. During this waiting period, any
applicant can legally protect his or her trademark against
a third party who previously has neither used the mark
nor filed an application for it.
Registration is renewable between the fifth and sixth
years after the initial registration and every ten years
thereafter (every twenty years for those trademarks reg-
istered before 1990).
Marks Need Not Be Identical Note that a famous
mark may be diluted by the use of an identical mark or by
the use of a similar mark. A similar mark is more likely
to lessen the value of a famous mark when the companies
using the marks provide related goods or compete against
each other in the same market.
I CASE IN POINT 29.1 Samantha Lundberg opened
a business called "Sambuck's Coffeehouse," in Astoria,
Oregon, even though she knew that "Starbucks” was
one of the largest coffee chains in the nation. Starbucks
29-1c Trademark Infringement
Registration of a trademark with the U.S. Patent and
Trademark Office gives notice on a nationwide basis that
the trademark belongs exclusively to the registrant. The
registrant is also allowed to use the symbol to indi-
cate that the mark has been registered. Whenever that
trademark is copied to a substantial degree or used in
its entirety by another, intentionally or unintention-
ally, the trademark has been infringed (used without
authorization)
When a trademark has been infringed, the owner of
the mark has a cause of action against the infringer. To
succeed in a trademark infringement action, the owner
must show that the defendant's use of the mark created
a likelihood of confusion about the origin of the defen-
dant's goods or services. The owner need not prove that
1. 15 U.S.C. Sections 1051-1128.
2. 15 U.S.C. Section 1125.
3. Pub. L. No. 103-312, 120 Stat. 1730 (2006).
4. See Louis Vuitton Malletier S.A. u Haute Diggity Dog, LLC, 507 F.3d 252
(4th Cir. 2007); and Moseley V Secret Catalogue, Inc., 537 U.S. 418,
123 S.Ct. 1115, 155 L.Ed.2d 1 (2003).
5. Starbucks Corp. « Lundberg, 2005 WL 3183858 (D.Or. 2005).
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