Business Law Newsletter

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• Intellectual Property Insurance Protects Intangible Assets
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• Arbitration of International Commercial Disputes
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• Section 179: Deduction for Business Furniture & Equipment
  Under certain circumstances, you may be able to take a one-time deduction for certain business furniture and equipment purchased during a particular tax year. This is commonly referred to as a Section 179 deduction. Why... Read more.

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Business Disputes Involving Trademarks: Infringement & Unfair Competition

Trademarks are important tools used to protect both consumers and sellers of goods or services. Trademarks identify the origin or source of a good or service, allowing consumers to make informed decisions regarding quality. Trademarks also establish goodwill of businesses that are able to associate the quality of their good or service with their mark. In addition, trademarks ease the marketing and advertising processes as consumers learn to recognize certain trademarks in connection with the related good or service. Validly established trademarks are strongly protected by laws against infringement.

Protection of Registered and Unregistered Trademarks

In general, registered trademarks receive the most protection and are more likely to receive monetary awards for infringement. However, trademarks do not have to be officially “registered” to be protected. The Lanham Act is the federal law on trademarks which offers protection to trademark owners against the false commercial exploitation of their trademarks by competitors.

Under the Lanham Act, federally registered trademark holders can take advantage of the traditional infringement action, while any valid trademark owner may have a federal claim for unfair competition. Regardless of whether the trademark is federally registered, a party claiming the infringement must be able to establish that they have developed a protected interest in a trademark.

Trademark Infringement of Federally Registered Trademarks

The owner of a trademark effectively has a property interest in that mark, and anyone who misuses that mark is “infringing” upon their protected trademark rights. Section 1114 of the Lanham Act provides registered owners of a trademark with an action against anyone, without consent of the registered owner, who:

1. Uses a reproduction, counterfeit, copy or colorable imitation of a registered mark;
2. In connection with the sale, offering for sale, distribution or advertising of goods or services;
3. In interstate commerce;
4. In such a way that is likely to cause confusion, mistake or to deceive (consumers).

False Designations of Origin, False Descriptions and Dilution of Trademarks

Similar to an action for federally registered trademark infringement, section 1125 of the Lanham Act provides valid trademark owners with a civil action against anyone who:

1. Uses any word, term, name, symbol or device or any combination thereof, or any false designation of origin or false or misleading representation of fact;
2. In connection with the commercial advertising and promotion of goods or services;
3. In interstate commerce;
4. In such a way that is likely to cause confusion, mistake or to deceive or which misrepresents the nature, characteristics, qualities, or geographic origin of goods or services.

However, a claim for goods which are marketed in violation of this section does not require the trademark to be federally registered. This section of the Lanham Act generally provides the broader federal claim against unfair business practices.

Likelihood of Confusion

Regardless of whether the trademark is federally registered, it is well established that a plaintiff claiming trademark infringement (or federal unfair competition) must demonstrate that the infringement caused a “likelihood of confusion.” In other words, trademark owners must show that the consuming public would be confused, misled or deceived as to the origin of the defendant’s goods or services caused by the use of their trademark (or a confusingly similar mark).

Factors that courts typically consider in determining whether there is a likelihood of confusion include:

1. The degree of similarity between the marks and of the goods and services;
2. The strength (or distinctiveness) of the plaintiff’s mark;
3. Any evidence of actual confusion by consumers;
4. The intent of the defendant in adopting its mark;
5. The physical proximity of the goods or services in the retail marketplace;
6. The degree of care likely to be exercised by the consumer; and
7. The likelihood of expansion of the product lines.

Remedies

Since the Lanham Act is primarily remedial in nature, the most frequent remedy awarded to a successful complainant is an injunction. An injunction is a court order which prevents the defendant from engaging in further infringement. Injunctions are the only available remedy in cases where the infringement is found to have been innocent.

In addition, successful plaintiffs may also be entitled to recover monetary damages in the form of profits made by the defendant on the infringement, actual damages sustained by the plaintiff and the plaintiff’s court costs. The court may also award treble damages (up to three times the amount of actual damages) and attorneys’ fees if the trademark was federally registered or the defendant intentionally used a counterfeit mark.

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