18th Class

1
18th Class

• Distribute
• Sign-in sheet
• Slide handouts
• Next assignment to be posted tonight
• Voice Recorder on
• Agenda
• Trademark
• Genericness
• Theory
• Trade dress distinctiveness
• Functionality
• Acquisition and Priority

2
Review I

• Distinctiveness
• Arbitrary, fanciful, and suggestive marks are
  inherently distinctive
• Descriptive marks require proof of secondary
  meaning
• Generic marks denote product category
• Never valid
• Mark may be valid to start with and then become
  generic
• When cases talk about source identification
  function of trademark
• They dont mean that trademark identifies company
  which makes product
• But rather that trademark identifies a source
  which is distinct from other sources, even if the
  corporate identify of the source is unknown
• Sufficient that Lexus identifies a source
  distinct from other car manufacturers
• Not necessary that Lexus identifies Toyota

3
Confusion about Zatarains Survey

• The telephone survey also included this question
  When you mentioned fish fry, did you have a
  specific product in mind or did you use that term
  to mean any kind of coating used to fry fish?
  To this inartfully worded question, 77 of the
  New Orleans respondents answered specific
  product and 23 answered any kind of coating.
  Unfortunately, Rosenzweig did not ask the
  logical follow-up question that seemingly would
  have ended the inquiry conclusively Who makes
  the specific product you have in mind? Had he
  but done so, our task would have been much
  simpler.
• Who makes specific product is not helpful
  question because
• Knowing the mfg is not necessary for secondary
  meaning (anonymous source rule)
• Answering Zatarains is not sufficient to prove
  secondary meaning, because a survey respondent
  might have said she had a specific product in
  mind, because she preferred Zatarains fish fry to
  other brands of fish fry.
• If so, the follow-up question wouldnt prove that
  fish fry had secondary meaning, but only that
  the respondent knew who made her preferred brand
  of fish fry
• Knowing the name of the mfg would only help prove
  secondary meaning if it was already clear that
  there was only one legitimate mfg of fish fry
• And if that was clear, secondary meaning would
  already have been proven

4
Teflon Survey

• DuPont had patent, trademark, and certification
  mark on Teflon
• After patent expired, YKK, made Eflon
• Nylon zipper that slid easily
• DuPont sued YKK
• YKK argued teflon generic
• Dupon introduced survey
• I'm going to read 8 names to you and you get to
  tell me whether you think it is a brand name or a
  common name by brand name I mean a word like
  Chevrolet by common name, I mean a word like
  automobile, which is made by a number of
  companies
• STP, Thermos, margarine, Teflon, Jello,
  Refrigerator, Aspirin, Coke
• Consumers said brand name
• STP 90, Thermos 51, margarine 9, Teflon 68,
  Jello 75, Refrigerator 6, Aspirin 13, Coke 76
• Note
• Some survey participants clearly confused
• What do you infer from fact that 51 thought
  Thermos was brand?
• If you represented Eflon, how would criticize
  this survey?

5
Teflon Survey for 2ndary Meaning

• I'm going to read 8 phrases to you and you get to
  tell me whether you think they are a brand name
  or a common name by brand name I mean a phrase
  like Best Mayonnaise by common name, I mean a
  phrase like All-Natural Mayonnaise, which may
  describe many products
• Soy Sauce, Wheat Thins, Garden Burger, Wheat
  Bread, Fish Fry, Mountain Spring Water, Premium
  Pasta Sauce, Gold Medal Flour.
• Problems?

6
Trademark Theory

• Trademark law is primarily consumer protection
• Allows consumers to make informed product
  decisions by relying on firm reputations
• Gives firms incentive to develop and maintain
  good reputation
• Purpose of trademark law is NOT to give firms
  incentives to develop innovative or creative
  trademarks or products
• Theory of dilution is less clear
• To protect product images and associations
  created through advertising?

7
Trademark Theory

• Suppose initially 2 manufacturers of lightbulbs
• GE high quality, high cost (1 per bulb)
• Sylvania low quality , low cost (50 cents per
  bulb)
• Some consumers prefer GE, some Sylvania
• Pantron also makes lower quality bulb, costs only
  50 cents to make
• If no trademark protection,
• Pantron might label is bulbs "GE lightbulb" and
  sell for 1
• Consumers can't tell difference in store
• At first, they continue to buy lightbulb's
  identified as GE at full price
• After a while, they become unwilling to pay high
  price
• Better to buy Sylvania at 50 cents
• GE cannot cut price without losing money
• Needs either to reduce quality or stop making
  lightbulbs
• Result is that quality goes down
• Even though consumers willing to pay more for
  quality

8
Trademark Theory

• If trademarks protected
• GE can stop others from saying their lightbults
  are GE lightbulbs
• Thus preserving consumers ability to buy quality
  goods
• Protecting producers investment in quality
  production
• Costs
• As with all IP, there are costs
• depletion of available words, symbols
• costs of enforcement
• monopolies
• but very limited
• anyone can enter lightbulb business and compete
  against GE
• just can't mislabel
• Rationale for TM protection implies very limited
  protection
• TM does not give exclusive right to use word
• No problem with use in news, ordinary
  conversation, comparative advertising by
  competitors
• only right to prevent other uses which are likely
  to confuse consumers
• But see dilution

9
3 Kinds of Product Attributes

• 1. Search attributes
• Attributes that consumer can verify before
  purchase by inspection
• Color and fit of clothing firmness of fruit
  appearance
• Law not very important in assuring consumers that
  get search attributes they want
• 2. Experience attributes
• Attributes that consumer can verify after use
• Taste of fruit gas mileage of car durability
• Law important
• Warranties
• Trademark
• If law protects trademarks, and consumers make
  repeat purchases, then
• Mfg has incentive to create products of
  consistent quality
• Consumers can rely on brand as indication of
  quality
• But if TM can be copied
• Copier has little incentive to maintain quality
• Consumer can not rely on brand as indication of
  quality

10
Product Attributes (cont.)

• 3. Credence attributes
• Attributes that consumer cannot verify even after
  use
• Organic kosher labor practices safety
• Law plays large role
• Government regulation
• Trademark
• Especially certification marks
• Underwriters Laboratory, U , K

11
Homework Questions

• 1) Do you think the decision in this case is good
  as a matter of policy?
• 2) Is giving clothing design trademark protection
  (assuming secondary meaning is proven) consistent
  with the consumer protection theory of trademark
  protection? If so how? If not, what theoretical
  justification might there be for such protection?
• 3) Does giving restaurant decor trademark
  protection (as the Court did in Two Pesos)
  consistent with the consumer protection theory of
  trademark protection? If so how? If not, what
  theoretical justification might there be for such
  protection?
• 4) Is the exterior shape (appearance) of a
  Ferrari protected by trademark law?

12
Nonfunctionality

• Functional features are not protected by
  trademark
• Cannot be registered
• Not protected if unregistered
• Even if can show secondary meaning
• Judicially created doctrine
• But recently incorporated into statute.
  2(e)(5),
• 43(a)(3)
• Purpose is to promote competition
• Trademark should be used to prevent confusion and
  protect commercial reputations, NOT protect ideas
  or product design
• 2 kinds of functionality
• Utlitarian functionality
• Aesthetic functionality

13
Utilitarian Functionality

• Subject of TrafFix case for next class
• Feature is functional if it is essential to use
  or purpose of article or if it affects the cost
  or quality of the article.
• Examples
• Square shape of computer monitor
• Shape of airplane exterior
• Arrangement of keys on ergonomic keyboard
• Circle shape of dial
• Orange color for reflective clothing

14
Aesthetic Functionality

• Pagliero (9th Cir. 1952)
• Wallace produced floral design plates
• Pagliero copied design exactly
• Marketed to hotels and restaurants as replacement
  plates
• Wallace sued
• Presented evidence that design had secondary
  meaning
• Pagliero defended by saying no trademark
  protection for plate design
• Design aesthetically functional
• Would trademark protection prevent consumer
  confusion?
• Would trademark protection hinder competition?
• Supreme Court in TrafFix says test for aesthetic
  functionality is whether exclusive use ... would
  put competitors at a significant non-reputational
  disadvantage." (See also Qualitex)

15
Acquisition Priority

• When does company acquire exclusive rights to use
  mark?
• Preliminary assumptions
• No registration, national market
• Basic idea is "first possession" rule
• Registration does not confer rights
• see 1, "owner of trademark ...may apply to
  register
• Priority (w/ exceptions that will discuss later)
  follows first acquisition
• sec 2d. cannot registered if confusingly
  similar to mark already in use
• even if senior mark not registered
• concurrent registration possible
• but rare
• 2 basic alternatives
• when register mark
• when use mark
• Both of these alternatives are or have been used
• Europeans use 1st
• US is/was mostly 2nd
• but recently modified
• Which better?

16
Intent to Use Registration

• new to 1988 revisions
• Applicatin files applicaton to register, 1b,
• 6 months later must file affidavit that actually
  in use, 1d
• May file for extensions, up to 3 years
• 6 months automatic, then 2 more years w/ good
  cause
• Registration is issues after affidavit of use
• BUT priority is established by date of filing,
  see 7c
• if registration granted, filing of application to
  register constitutes "constructive use"
• and use is what gives priority
• 7c is key to intent to use, it is what makes
  intent to use registration at all worthwhile
• Hypo
• June1, A files intent to use application for mark
  BRAVO on cheese
• July 1, B starts using BRAVO mark on yogurt
• Nov 1, A starts shipping cheese
• Nov 15, A files affidavit that has used in
  commerce
• Jan 1, PTO registers mark
• Feb 1, A sues B
• A has priority

17
Procedure

• Person wanting to register mark sends in
  application to Patent trademark office
• PTO reviews. awards registration if criteria met
• Part of PTO procedure is publication in Official
  Gazette
• those who think they may be injured to file an
  opposition
• If application denied, then appeal to Trademark
  Trial and Appeals Board
• then appeal on administrative record to US C of A
• or de novo review in district court
• 14. For 5 years after registration
• persons injured by registration can bring
  opposition, attempt to get cancelled
• can challenge on any ground that would have
  precluded initial registration
• 14 -15, also 14. After 5 years, can become
  "inconstestable"
• if owner files affidavit of continuous use
• Opponent or defendant can no longer argue
  descriptive and no secondary meaning
• can no longer argue that confusingly similar to
  another mark in use before registration
• BUT can still make other arguments
• generic, scandlous, abandoned

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Agenda for Next Class

• Functionality