MCCA’S FIFTH ANNUAL CLE CONFERENCE
TRADEMARK AND COPYRIGHT
YEAR IN REVIEW
Jeanne Hamburg
Attorneys at Law
“Fair Use” of Trademarks:
KP Permanent Makeup v. Lasting Impression I, Inc.
125 S.Ct. 542 (2004)
The alleged infringer, KP, began using a logo for permanent makeup for the
logo depicted immediately below:
The trademark owner, Lasting, owned a registration for the following logo:
Permanent makeup is commonly referred to as “micropigmentation”.
Attorneys at Law
“Fair Use” of Trademarks:
KP Permanent Makeup v. Lasting Impression I, Inc.
The parties had been using the marks “MICROCOLOR”
and “MICROCOLORS” concurrently for over one
decade.
Litigation was prompted when KP changed its brochure
to stylize MICROCOLORS in the fashion set forth above;
KP brought DJ action after Lasting and its licensee
demanded discontinuation of the stylized logo.
Summary judgment was granted in KP’s favor and then
reversed by Ninth Circuit on the grounds that fact issues
as to likely confusion precluded fair use.
Attorneys at Law
“Fair Use” of Trademarks:
KP Permanent Makeup v. Lasting Impression I, Inc.
Question Presented: “the significance of
likely confusion for a fair use defense to a
trademark infringement claim, and the
obligation of a party defending on that
ground to show that its use is unlikely to
cause consumer confusion.”
The Circuits had split on the issue.
Attorneys at Law
“Fair Use” of Trademarks:
KP Permanent Makeup v. Lasting Impression I, Inc.
Held: Trademark owner who demonstrates that
the alleged infringer’s use of a trademark is
likely to cause consumer confusion may
nonetheless fail to establish trademark
infringement. Rather, if the fair use proponent
shows that it used the designation not as a
trademark identifying its products, but, instead,
in a purely descriptive way—to wit, a fair use—it
can escape liability.
Attorneys at Law
“Fair Use” of Trademarks:
KP Permanent Makeup v. Lasting Impression I, Inc.
Court’s rationale:
– Lanham Act Definition: “Use of the name,
term, or device charged to be an
infringement is use, otherwise than as a
mark, …. Of a term or device which is
descriptive of and used fairly and in good
faith only to describe the goods or services
of such party, or their geographic origin” 15
U.S.C. § 1115(b)(4).
Attorneys at Law
“Fair Use” of Trademarks:
KP Permanent Makeup v. Lasting Impression I, Inc.
Court strictly construed the language of the
defense, which does not include an absence of
likely confusion.
Also applied some common sense reasoning:
since it’s the trademark owner’s burden to
establish likelihood of confusion, the defense
isn’t even applicable unless there is confusion.
To rule the defense isn’t applicable in the only
situation in which it becomes relevant, makes
little sense.
Attorneys at Law
Implications of Decision
KP Permanent Makeup v. Lasting Impression I, Inc.
Wider invocation of fair use defense even where
confusion is likely, even inevitable
Rejection of judicial activism embodied by Ninth
Circuit approach. Nominative fair use v. Classic
fair use.
– Nominative fair use=description of trademark owner’s product
using trademark owner’s mark even if ultimately alleged infringer
is describing its own goods/services. Example: “we sell
Volkswagen® cars.” Consumer confusion irrelevant per 9th Cir.
– “Classic fair use” = the fair use proponent’s description of its
own products using another’s mark or one substantially similar to
it, as in this case. Consumer confusion precludes per 9th Cir.
Attorneys at Law
Implications of Decision:
KP Permanent Makeup v. Lasting Impression I, Inc.
Likely confusion still plays a role in
determining if fair use is established.
Commercial need for use will also be
considered, as well as the fame of the
trademark owner’s mark.
Any application to arbitrary/fanciful marks?
Attorneys at Law
Use of Trademarks as Keywords by
Internet Search Engines
Playboy Communications, Inc. v. Netscape Communications Corp.,
354 F.3d 1020 (9th Cir. 2004)
– Playboy sued Netscape and Excite because both offered search
engines which allowed advertisers to purchase keywords
including “playboy” and “playmate” and purchase links and
banner ads which were displayed when these keywords were
entered. The banner ads themselves did not show the
keywords/marks.
– Lower court granted sj in favor of search engines. Ninth Circuit
reversed because of the likelihood of “initial interest confusion”.
The consumer might not immediately realize that Playboy was
not associated with the links and ads which appeared on
entering the search terms. Therefore defs might be liable on a
theory of direct/contributory tm infringement.
Attorneys at Law
Use of Trademarks as Keywords by
Internet Search Engines
Government Employees Insurance Co. v. Google (E.D. Va.)
http://www.patentlyobviousblog.com/files/geico1215.txt
– GEICO sued Google and Overture, both search engines, challenging
their policy of selling “sponsored links” or links which advertisers
purchased, to appear when GEICO’s name was entered into the search
engine by an Internet user. During trial, at the close of plaintiff’s case,
Google brought a motion for judgment as a matter of law.
– The court found, in a bench ruling in December of last year which is
supposed to be, but as yet has not been reduced to a written opinion,
that the search engines could be held liable for sponsored links in which
the GEICO mark appeared, but not those unadorned by the mark. The
court found confusion likely only when the mark actually appeared in the
linked ad.
Attorneys at Law
Use of Trademarks as Keywords by
Internet Search Engines
Open issues:
– Significance of “initial interest confusion”
How does a survey properly measure such
confusion?
Rejection of GEICO survey which relied for
evidence of confusion on consumers’ view of web
pages which contained both sponsored links
adorned by the mark, and those which did not.
– How is the fair use defense applied (if at all) to use of
a mark as a key word?
Attorneys at Law
Copyright: P2P File Sharing
Metro-Goldwyn Mayer Studios Inc. v. Grokster,
380 F.3d 1154 (9th Cir. 2004), certiorari granted. Argument on 3/29.
– Grokster and Streamcast a/k/a musiccity.com are distributors of
software (including Grokster and Kazaa) enabling P2P sharing of
digitized files of sound recording, motion pictures and text.
– Unlike Napster, the programs do not use a central file server;
users deal directly with each other.
– Group of copyright owners representing movie studios, record
labels and authors with copyrights in much of the material being
exchanged over P2P networks sued for copyright infringement.
– District court granted summary judgment in favor of the
distributors dismissing the copyright claims.
Attorneys at Law
Copyright: P2P File Sharing
Issue: Should the distributors be liable on a theory of
contributory and/or vicarious copyright infringement?
Ninth Circuit held no.
Elements of contributory infringement: (1) direct
infringement by a primary infringer, (2) knowledge of the
infringement, and (3) material contribution to the
infringement.
Elements of vicarious infringement: (1) direct infringement
by a primary party, (2) a direct financial benefit to the
defendant, and (3) the right and ability to supervise the
infringers.
Attorneys at Law
Copyright: P2P File Sharing
Distributors’ Knowledge of Infringing Activity and Purpose of
Software
– Notices of infringement by copyright owners to infringers do not
show knowledge required to establish contributory infringement
because they occurred after infringement had been
accomplished.
– Software had commercially significant non-infringing uses
(sharing public domain material and material made available with
permission). If software did not, then only constructive
knowledge would be required--knowledge could be imputed from
infringing uses.
Attorneys at Law
Copyright: P2P File Sharing
Relationship of Distributor to Infringers:
– Distributors also did not make material contribution to
infringement (necessary for contributory infringement)
because files not stored centrally, but by users and
therefore distributor could not “shut down” access to the
files upon discovering infringement.
– No liability for vicarious copyright infringement because
distributors had no right and ability to supervise the
infringers even if they “turned a blind eye” to the infringer
and were profiting from infringement.
Attorneys at Law
Copyright: Punitive Damages
Issue within 2nd Cir and nationally: are punitive
damages available (1) at all; (2) in statutory damage
cases? Ripe for appellate review.
Statutory damages must be elected, as an alternative to
actual damages, prior to trial. Statutory damages are
only available when a registration issues PRIOR to the
commencement of an infringement.
NO provision for punitive damages in Copyright Act.
Only punitive measures explicitly set forth: award of
statutory damages up to 150K due to willful infringement;
attorneys’ fees.
Attorneys at Law
Copyright: Punitive Damages
Blanch v. Koons,
329 F.Supp. 2d 568 (S.D.N.Y. 2004)
– Permitted amendment of complaint in copyright
infringement case to allege punitive damages.
– Punitive damages available if jury could find malice or
willful infringement when statutory damages are not
sought or are unavailable.
– Other SDNY cases adopt this approach but there is
also a later UNREPORTED decision in SDNY stating
that punitive damages are never available. Nicholls v.
Tufkenian Import/Export Ventures, No. 04 CV 2110
(WHP) (Sept. 13, 2004).
Attorneys at Law
Copyright: Punitive Damages
Lowry’s Reports Inc. v. Legg Mason Inc.,
302 F.Supp.2d 455 (D.Ct. Md. 2004)
– $20 million jury verdict in statutory and punitive damages
awarded against subscriber, and in favor of publisher, of daily
and weekly financial newsletter. Defendant subscriber
distributed the report internally, via an intranet and email, without
publisher’s permission and continued email distribution even
after publisher’s written protest. Def. moved for new trial and
judgment as a matter on grounds award excessive.
– Jury award upheld; limitations on punitive damages awards set
forth by the Supreme Court in BMW of North America v. Gore,
517 U.S. 559 (1996) do not apply to statutory damage awards
under the Copyright Act.
Attorneys at Law
Copyright: Punitive Damages
Implications of the split
– Evidence of willfulness, previously only relevant
in statutory damages cases, will, until the split is
resolved, now be relevant in every case.
– Greater potential damage awards even in cases
where actual damages are difficult to prove and
statutory damages are unavailable because a
registration did not issue.
– Strip Copyright Act of advantage of obtaining
registration?
Attorneys at Law
Fair Use of Copyright
MasterCard v. Nader Primary Committee, Inc.,
70 U.S.P.Q2d 146 (2004)
The Original MasterCard Ads
“Priceless Ad” #1 – Baseball
“Priceless Ad” #2 – High School Reunion
“Priceless Ad” #3 – Mother-Daughter Trip
“Priceless Ad” #4 – Twister
The “Copy”
Ralph Nader’s “Priceless Truth” Ad
Attorneys at Law
Analysis of Priceless Ads
Identify the copyrightable expression
– Selection and arrangement of creative expression
(NOT ideas) including:
Recitation of item colon price; and intangible that is priceless
Sequence of images
Placement and appearance of text within ad (i.e., over
image)
Use of voice over
Sound of voice over
“Look and feel”
Analyze whether the alleged infringing use is
“substantially similar” to original creative
expression in the original
Attorneys at Law
Copyright and Fair Use
Is it fair use or infringement? Sec. 107 of title 17
– Purpose of use: commercial? Not purely editorial.
Contributions increased from $5,125 to $818,000 in one month period (from
July to August, 2000 -- a 15 fold increase) after ad ran nationally. Ad
directed viewers to web sites, make contributions.
Parody? Does it comment on the original? Implications: if parody,
borrowing is justified to make comment; if satire, less justification for copying
since commentary is on society/cultural values.
– Expert testimony
What is the nature of the original work?
– Creative work at core of copyright protection
Amount/substantiality of portion taken:
– How much original expression “borrowed” from the original?
Does it displace market for the original?
Attorneys at Law
Copyright and Fair Use
District Court Decision In Nader
Took court four years to decide. Court never looked at many of the
elements that were protectable in MasterCard ads beyond the terms
“priceless” and “there are some things money can’t buy”.
Court never closely applied parody/satire distinction (did not
examine expert testimony opining ad was a satire, did not examine
Nader’s testimony which admitted that the Nader tv ad was not a
commentary on MasterCard or its Priceless ads).
Court concluded the Nader ad
– was fair use of copyright;
– was not use in commerce sufficient to give rise to trademark
infringement claim.
Attorneys at Law
Jeanne Hamburg, Esq.
Specializing in:
– all aspects of copyright
and trademark law,
– both in litigation and in
the transactional area
jhamburg@nmmlaw.com
www.nmmlaw.com
Attorneys at Law