In trademark litigation‚ a frequent issue is whether or not a likelihood of confusion exists between two trademarks. Many factors are considered in this determination‚ but the two primary factors are the similarity of the trademarks and the similarity of the goods or services. If a typical consumer is confused between the two uses‚ then a likelihood of confusion exists. It is the Plaintiff’s burden to prove that a likelihood of confusion exists. Generally, the Plaintiff must also prove ownership and prior use. For these issues‚ a trademark registration can create presumptive rights. If the Plaintiff is successful in proving prior use and a likelihood of confusion‚ the Court may issue an injunction against the Defendant. Other damages potentially available in trademark litigation matters apart from an injunction include costs of litigation‚ damages‚ Plaintiff’s loss of profits, the Defendant infringer’s profits‚ treble damages‚ and Attorney’s fees.
In some cases the likelihood of confusion is not present, but there is still damage done to a recognized mark by a second seller’s unfair use of it. If the mark makes the public think there are two different sources for the same mark, even though there is no confusion. This type of perception injures the brand. The mark is weakened because it is identified with dissimilar goods. Therefore, the mark can be charged as diluting another mark.
An action for trademark dilution can be brought under either Federal or State law. However, under Federal law there is a strong standard to have an existing mark to be diluted – the mark must be “famous” and well-known.
To determine if a mark is “famous,” the Court will weigh factors:
(1) Degree of inherent or acquired distinctiveness;
(2) Duration and extent of use;
(3) Amount of advertising and publicity;
(4) Geographic market;
(5) Channels of trade;
(6) Recognition in trading areas;
(7) Use of similar marks by third parties; and
(8) Whether the mark was registered
Under State law, the mark does not need to be famous. Rather, an action for trademark dilution exists if: (1) the mark has “selling power” or distinctive quality; and (2) the two marks are substantially similar.
Another related cause of action is trademark tarnishment. A trademark is tarnished when an infringing mark portrays the infringed mark in a negative unflattering light – usually in the context of sex, drugs, or crime. Tarnishment can also happen if the infringer is offering low quality goods. The rationale is that through the association of inferior products or services, the mark’s commercial value and quality is diminished.
Unfair Competition, both the Common Law tort and the Federal statute, attempts to enforce a certain level of “honest practices in industrial or commercial matters.”
A State law cause of action for Unfair Competition consists of: passing off, contributory passing off, reverse passing off, and misappropriation. Passing off involves the Defendant “passing off” the product as if it is coming from the Defendant. Contributory passing off involves the Defendant assisting or inducing another, such as a retailer, to pass off a product as if it is coming from another source. Reverse passing off involves the Defendant trying to pass off the Plaintiff’s product as if it is Defendant’s own product, for example by putting on a different label on Plaintiff’s product.
An injured party brings Federal Unfair Competition claims under section 43(a) of the Lanham Act. Because the Lanham Act is a Federal statute, there must be some degree of interstate commerce involved. Unlike trademark infringement claims under the Lanham Act, Unfair Competition claims do not require any Federal registered marks. As a result, section 43(a) involves all Federal trademark infringement claims and extends further to cover other unfair business practices. Section 43(a) claims break down into two categories: likelihood of confusion and false advertising.
As in Federal trademark infringement analysis, a likelihood of confusion exists when there is confusion as to the source, sponsorship, or association between goods or services.
The elements to prove a section 43(a) Unfair Competition claim based on likelihood of confusion are:
(1) One uses any word, term, name, symbol, device, or combination,
(2) In interstate commerce, and
(3) Which is likely to cause confusion as to source, sponsorship, or association.
The elements for a section 43(a) claim of likelihood of confusion are comparable to trademark infringement except one does not need a Federal registered trademark.
One seller unfairly competes with another seller by adopting and using a trademark that is confusingly similar to the prior adopted and used trademark of the first seller. It is easy to see why this type of practice is prohibited by the law. If it were otherwise, consumers would be confused as to the origin of a certain product and, thus, could not rely on receiving consistent quality. In addition, there is something inherently unfair in letting an infringer get the benefit of the first seller’s time, money, and effort in building good will for the trademark.