Infringement & Diulution

 
 

Trademark infringement occurs when a defendant uses a mark in commerce in a way that is likely to result in consumer confusion. Trademark dilution occurs when a defendant uses a mark in commerce in a way that is likely to weaken the source-identifying strength of the mark.

For infringement or dilution to occur, a defendant must have used the mark owner’s mark in commerce.  The meaning of "use in commerce" is the same for establishing infringement of a mark as it is for establishing rights in the mark.  Merely profiting from existing confusion about a mark does not imply a use of that mark in commerce.

Use in Commerce
Likelihood of Confusion

Courts employ a balancing test to determine whether confusion is likely.  Factors that courts consider include:


1. strength of the mark (inherent distinctiveness and acquired distinctiveness;
 

2. degree of similarity (sight, sound, and meaning);
 

3. proximity of products and distribution channels;
 

4. likelihood of bridging the gap (consumer perception that mark owner might enter market defendantt);
 

5. degree of customer care (more expensive goods implies more customer care, implies less likely confusion);
 

6. actual confusion;
 

7. bad faith & quality of defendant’s product (this factor matters little if no bad faith or if not bad quality).

Balancing Test
 

Likelihood of confusion exists where consumers are likely to be confused as to the source, sponsorship, affiliation, or endorsement of a good or service.  

Contributory infringement occurs where manufacturers or distributors intentionally induce another to infringe a trademark, or where manufacturers or distributors continue to supply a product to one whom it knows (or has reason to know) is committing trademark infringement. There must be an underlying act of direct infringement for there to be contributory infringement.

Contributory Infringement
Post Sale

Post sale confusion occurs subsequent to the point of sale: a defendant uses the mark owner’s mark in a way that is likely to cause members of the public—who are not yet actual purchasers of the defendant’s good—to mistakenly believe that the mark owner is the source of the defendant’s good

Initial interest confusion occurs prior to the point of sale: a defendant uses the mark owner’s mark in a way that is likely to lure consumers into exploring more about the defendant’s good. Consumers are likely to initially believe that the mark owner is the source of the defendant’s good.

Initial Interest

Reverse confusion occurs when consumers mistakenly believe that a mark owner’s good derives from the defendant, as opposed to forward confusion (the normal case) where consumers mistakenly believe that a defendant’s good derives from the mark owner. Reverse confusion usually occurs where a defendant (junior user) is so large that its market share causes consumers to believe that it is the mark owner (senior user).

Reverse

Vicarious infringement occurs where an agent actor directly infringes a trademark on behalf of a principal.

Vicarious Infringement

The normal case of consumer confusion occurs at the point of sale, where a consumer incorrectly believes that the source of the good that he is purchasing is the mark owner, when in fact the source is the defendant. There are other situations, however, where consumer confusion arises: initial interest confusion; post sale confusion; and reverse confusion.

Types of Confusion
 
 
 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Question 1

Apple Orchards Inc. (Apple Orchards) and Better Tasting Apples Co. (Better Tasting) are competitors in the apple business. Each has a trademark on their respective company names. In an internal corporate memorandum, Apple Orchards analyzes the business practices of Better Tasting. Apple Orchards uses the name BETTER TASTING throughout the memorandum.
 

Question: Is Apple Orchard’s use of BETTER TASTING an infringement?

Question 2

Eric opens a parcel delivery service under the name of SUNFLOWER MAILINGS. He uses this mark in commerce sufficient to establish trademark rights. A year later, Heidi opens a hardware store, using the mark SUNFLOWER NAILINGS as her store name. Heidi’s store operates in the same geographic area as Eric’s business.
 

Question: Has Heidi infringed on Eric’s trademark right by creating a likelihood of consumer confusion?

Question 3

Molly makes expensive jewelry. Molly sells her jewelry under the name of TOO COSTLY JEWELRY. She has built up significant customer recognition of her brand name. Katie sells jewelry boxes. Katie has recently begun selling the boxes under the name TOO EXPENSIVE JEWELY BOXES.
 

Question: What factors suggest that there is a likelihood of confusion? What factors suggest that there is not?

Question 4

Frank and Fannie are competitors. They both sell vacuum cleaners. Frank sells WHIRLWIND vacuums, which are extremely expensive. Fannie sells RESTFUL vacuums, which are very cheap. To attract customers who may not want to spend a lot of money, Frank places a sign in his store that says:

“We sell both WHIRLWIND and RESTFUL vacuums!” In fact, Frank does not sell any RESTFUL vacuums.
 

Question: Have either Frank or Fannie infringed?

Question 5

Marcus sells counterfeit goods on the street. Most commonly, he sells fake Gucci handbags.  His customers immediately recognize that the handbags he sells are not genuine Gucci handbags because they are priced so far below market price.


Question: What type of consumer confusion does Marcus commit?

Question 6

Big Tool Inc. (BTI) is a large vendor of tools. Rick owns a small business that also sells tools. Rick’s business name is THE LITTLE TOOL SHOP. Without knowing about Rick’s business, BTI decides to create a department in its store called THE LITTLE TOOL SHOP, which gives one-on-one assistance to customers who have questions about tools. Thus far, no customers have been confused that BTI’s THE LITTLE TOOL SHOP is in any way sponsored by Rick’s THE LITTLE TOOL SHOP.


Question: Assuming that Rick has trademark protection in THE LITTLE TOOL SHOP mark, has BTI infringed that mark?

Question 7

Harper Inc. manufactures computers for a large retail store, All Stuff Co. (ASC) In an attempt to increase its orders from ASC, Harper Inc. suggests that ASC should sell the computers as genuine IBM computers—even going so far as to offer ASC a 5% discount if ASC were to misrepresent the source of the computers as being IBM rather than Harper computers. ASC executives decline to do so.
 

Question: Has Harper Inc. infringed IBM’s mark?

Blurring occurs where a defendant uses the mark in a way that is likely to result in a mental association by the consumer between the defendant’s goods and the mark owner.

Exclusions
Blurring

The following uses of a mark are not actionable as dilution:
 

(1) a fair use in connection with comparative advertising or with parodying, criticizing, commenting, or identifying the famous mark owner;
 

(2) news reporting and news commentary; and
 

(3) non-commercial use.

Tarnishment occurs where the defendant uses another’s mark in a way that degrades positive associations that consumers have with the famous mark.

Tarnishment

The dilution right applies only to famous marks.  To be famous, the mark must be widely recognized by the general consuming public of the United States.

Fame

The dilution right provides owners of famous marks a right to prevent anyone from using their marks in commerce in a way that would dilute the source-identifying strength of the marks. 

 

Dilution occurs when a defendant’s use either impairs the distinctiveness of the mark or harms the reputation of the mark. These two forms of dilution—impairing the distinctiveness and harming the reputation—are known as blurring and tarnishment.

Dilution

Answer to Question 8

Likely yes. The following factors indicate dilution:


(1) Although the marks are not the same, there is a significant degree of similarity because both marks use NIKE. The fact that SPEEDY NIKE CARS is distinct does not preclude a finding of dilution.
 

(2) NIKE is inherently distinct as a source-indicator of shoes.
 

(3) The shoe company seems to be the exclusive user of the NIKE mark.
 

(4) NIKE is highly recognized as a famous mark.
The dispositive question is whether consumers might associate the word NIKE in SPEEDY NIKE CARS with the NIKE associated with the shoe company. Given the high recognition of NIKE and the use of that exact name within the toy-car mark, it appears likely that consumers will associate Curtis’s use of NIKE with the shoe company. This is an example of dilution by blurring.

Question 8

Curtis owns a small business that sells small toy cars. He sells the cars under the name of SPEEDY NIKE CARS. He includes an express disclaimer on the box that informs any potential purchaser that the cars are not affiliated in any way with the NIKE shoe company.
 

Question: Does SPEEDY NIKE CARS dilute the NIKE mark of the shoe company? Why or why not?

Practice Problems
Answers

Answer to Question 1

No. Apple Orchard has not committed a use in commerce of the BETTER TASTING mark. The internal memorandum that employed the mark does not constitute a bona fide use in the ordinary course of trade. Apple Orchard’s use of the BETTER TASTING mark is one that is not attached to a good or advertising a service.

Answer to Question 2

Not likely. The hardware products that Heidi sells is not at all proximate to the parcel delivery service that Eric operates. Given the disparity between the good and the service, it seems unlikely that a consumer would believe that Eric would enter the hardware-store market. These considerations appear dispositive, despite the strong similarity between the marks and the inherently distinctive strength (i.e., arbitrary) of Eric’s mark.

Answer to Question 4

Yes. Frank has created a likelihood of initial interest confusion. By representing to customers that he sells RESTFUL vacuums, Frank creates a likelihood that consumers will develop an initial interest in his goods based Fannie’s mark.  Although Frank’s customers will eventually know that they are not purchasing a RESTFUL vacuum, the initial interest in the WHIRLWIND vacuums derives from confusion of source.

Answer to Question 3

The factors that suggest a likelihood of confusion are the following: (1) Molly’s mark has acquired distinctiveness in the customer recognition of her name; (2) there is a high degree of similarity between the marks because of the similar meanings of COSTLY and EXPENSIVE; (3) the respective products are very proximate in that jewelry and jewelry boxes are usually sold in the same store; (4) consumers would believe that Molly would likely enter the jewelry-box market given that she is already in the jewelry market.
 

The factors that suggest against a likelihood of confusion are the following: (1) Molly’s mark is not inherently distinct (merely descriptive); (2) customers exercise a high degree of care in assessing the source of jewelry because jewelry is expensive.

Answer to Question 5

Post sale confusion. The confusion is not at the point of sale. Rather, potential consumers might see the counterfeit handbags and believe that they are genuine. This mistaken belief results in post sale confusion.

Answer to Question 6

Likely yes. BTI has created a likelihood of reverse confusion. Consumers are likely to believe that the junior user of THE LITTLE TOOL SHOP mark, BTI, is the source of Rick’s business. This results from the fact that BTI is much larger than Rick, so consumers are more likely to associate THE LITTLE TOOL SHOP with the larger business, BTI.

Answer to Question 7

No. Although Harper Inc. attempts to induce ASC to infringe, ASC never does infringe. Without an act of direct infringement by ASC, Harper cannot be liable for contributory infringement.