What is Fair is Fair, Even Though it May be Confusing

In an opinion issued in December, 2004, the United States Supreme Court reversed the Ninth Circuit Court of Appeals and held that it is fair for one company to describe its products with words that another company has the incontestable legal right to use as the principal component of its trademark. ⁽¹⁾ It held that such a marketing practice may be deemed a “fair use” even though it may cause consumers to be confused about which company's products are being advertised. This opinion thus appears to affirm the value of free competition in the marketplace and place a greater burden than before on a trademark owner to prove that another company is illegally infringing on its trademark ownership rights.

Lasting Impression I, Inc. (“Lasting Impression”), a manufacturer of permanent cosmetic make-up, had demanded that one of its competitors, KP Permanent Make-up, Inc. (“KP”) stop using the word “microcolor” in its advertising, claiming that such use infringed Lasting Impression's federally-registered trademark. In 1992, Lasting Impression submitted an application to the United States Patent and Trademark Office to register a trademark that includes the words “Micro Colors.” ⁽²⁾ In 1999, five years after the certificate of registration was issued, the registration became “incontestable.” ⁽³⁾ An incontestable registration is conclusive evidence in any infringement lawsuit of the registrant's right to use the mark. As the Lasting Impression Supreme Court decision illustrates, however, an incontestable registration does not necessarily preclude competitors from using the only words comprising that registered trademark to advertise their own products.

KP sued Lasting Impression for a declaratory judgment that the use of “micro color” (as one word or two, in the singular or plural) did not infringe Lasting Impression's trademark. Lasting Impression counterclaimed, alleging that it did. KP then responded by asserting the affirmative defense of “fair use.” ⁽⁴⁾ It was undisputed by the parties to the litigation that KP had used the word “microcolor,” and variations of it, only to describe its products, not as a trademark, and that it had done so continuously before Lasting Impression had adopted its registered trademark. Lasting Impression argued that, even under these circumstances, KP had to prove that its use of words to describe its products did not confuse consumers regarding the origin of its products, i.e., that consumers did not think KP's products were manufactured by Lasting Impression. The Ninth Circuit agreed with Lasting Impression and held that KP had the burden of showing there was no likelihood of consumer confusion in order to prove its fair use affirmative defense.

The Supreme Court disagreed. It observed that even though “likelihood of consumer confusion” is the litmus test that any claim of trademark infringement must pass, even when a mark is incontestable, that does not place a reciprocal burden on a party defending an infringement claim to show lack of consumer confusion. ⁽⁵⁾ Because the burden of showing confusion is on the plaintiff, it makes no sense to shift the burden of proving no confusion to the defendant. ⁽⁶⁾ All the defendant needs to do is show that the plaintiff has not carried its burden, whether the defendant was acting in good faith or not. ⁽⁷⁾ Although the extent of possible consumer confusion is one factor to consider when determining whether marketing one's products with the words that comprise a competitor's trademark is a “fair use” or not, other factors also have to be weighed, such as commercial justification and the strength of the plaintiff's mark. ⁽⁸⁾ In other words, if a marketing tactic is fair, then it is fair-even if it may be confusing.

Endnotes:

1. KP Permanent Make-Up, Inc. v. Lasting Impression I, Inc., ­­__ U.S.__, 125 S.Ct. 542, __ L.Ed.2d __ (2004) (the “Lasting Impression” case).

2. The trademark consisted of the words “Micro Colors” in white letters separated by a green bar within a black square.

3. See 15 U.S.C. §§ 1065 & 1121.

4. See 15 U.S.C. § 1115(b)(4).

5. 125 S.Ct. at 547-551.

6. Id.

7. Id.

8. Id.

This Article is published for general information, not to provide specific legal advice. The application of any matter discussed in this article to anyone's particular situation requires knowledge and analysis of the specific facts involved.

Copyright © 2005, Fairfield and Woods, P.C.,
ALL RIGHTS RESERVED.

Comments or inquiries may be directed to:
John A. Leonard