Tubby-Tonic in Titanic Trademark Tussle

I’m almost starting to like the EFF. They just filed a lawsuit in California seeking a ruling that an independent online newsletter called AccompliaReport.com devoted to reporting news about Accomplia, a Sanofi-Aventis drug intended to combat obesity and smoking addiction, can continue to use the trademark in its domain name as a fair use and not a trademark infringement.

AccompliaReport.com is published by Medical Week News. Here’s the blurb from the EFF press release:

“Reporters, critics, and commentators all need to use trademarks in order to discuss and report on trademarked products and services,” said EFF Senior Staff Attorney Fred von Lohmann. “Trademark law has always recognized that as a fair use when books and magazines do it. Publishers should enjoy the same fair use rights on the World Wide Web.”

Well, he’s right. But domain name cases have been all over the lot on the topic of fair use — just ask former Kerry campaign volunteer and would-be New Jersey hillbilly Bruce Springsteen, whose claim to shut down a fansite was denied when a a WIPO panel recognized, correctly if not surprisingly, that a name and a domain name can be the same and still not result in likelihood of confusion — whereas in another ruling known to all practitioners in this area, another WIPO panel decided that the English word “crew” is the “property” of the company that puts out what Doonesebury used to parody as the “J. Pretentious catalog.”

And how complicated are Internet-related trademark issues? Well, the I-Newsire page featuring this press release includes twoGoogle AdSense plugs for an on-line pharmacy using the very trademark in question as a key word to sell you the stuff at discount — a fact pattern quite similar to one this firm is very involved with in a New York litigation matter involving a somewhat more prosaic product. End result: The EFF’s press release, itself making nominative fair use of the trademark, triggers the AdSense “buy” of the drug brand name — which is arguably also a nominative fair use — which in turn leads consumers to a non-confusing website accurately describing that it sells that (trademark-protected) product — and very possibly strengthening the trademark, if not the marketing / distribution scheme of its owner (they’re not the same thing!) in the process.
Here’s an adaptation of part of the brief we just filed on the topic of discount sales of branded merchandise on the Internet:

It’s axiomatic that given the prevalence and high visibility of trademarks in our society, it’s often essential to use someone else’s trademark to refer legitimately to that person’s goods. For example, website proprietors frequently use third parties’ trademarks on the Internet to identify the various brands they offer for sale. This practice is called nominative use of trademarks — nominative because the mark is being used to name another party. The prevailing approach to nominative use is the one formulated in the Ninth Circuit by Judge Kozinski in New Kids on the Block v. News America Pub., Inc., 971 F.2d 302 (9th Cir. 1992). In that case, the court adopted the following test for nominative use:

First, the product or service in question must be one not readily identifiable without use of the trademark; second, only so much of the mark or marks may be used as is reasonably necessary to identify the product or service; and third, the user must do nothing that would, in conjunction with the mark, suggest sponsorship or endorsement by the trademark holder.

Id. at 308 (footnote omitted). The New Kids court noted in its opinion that a commercial use may be a nominative use. Id. at 309.

Similarly, in Playboy Enterprises, Inc. v. Welles, 279 F.3d 796 (9th Cir. 2002), the defendant, a former Playmate of the Year, made use in metatags and online content of the term PLAYMATE OF THE YEAR, which is a trademark of Playboy. The Ninth Circuit concluded that the defendant had satisfied all three prongs of the New Kids test in using the trademarks in both the banner advertisements and in the metatags and that the complaint, therefore, should be dismissed. Regarding the metatags, the court observed:

There is simply no descriptive substitute for the trademarks used in Welles’ metatags. Precluding their use would have the unwanted effect of hindering the free flow of information on the internet, something which is certainly not a goal of trademark law.

Welles, 279 F.3d at 804.

For these reasons, sales of a manufactuer’s products on the Internet, utilizing their trademarks in a non-deceptive manner, not only is supported, protected, and legitimized by the law, but represents an area of commerce that is not even within the contemplation of trademark law.

Claims of trademark dilution are similarly unavailing. Trademark dilution occurs when a famous mark is used by a third party in such a way as to dilute the distinctive quality of the mark. The Ninth Circuit in Welles also addressed Playboy’s assertion that Welles’s uses of its marks constituted trademark dilution, which is also claimed by defendant here. In finding that Welles had engaged in nominative fair use, the court explained, there could be no dilution, because nominative fair use “by definition, do[es] not dilute trademarks.” Id. at 805 (emphasis added). The court went on to write:

Uses that do not create an improper association between a mark and a new product but merely identify the trademark holder’s products should be excepted from the reach of the anti-dilution statute. Such uses cause no harm . . . [W]e conclude that nominative uses are also excepted [from anti-dilution law]. A nominative use, by definition, refers to the trademark holder’’s product. It does not create an improper association in consumers’ minds between a new product and the trademark holder’s mark . . . So long as a use is nominative . . . trademark law is unavailing.

Id. at 806 (emphasis supplied).

Logically, the only way for a discount retailer to describe the products manufactured by a trademark owner that it is selling is by referring to them — truthfully, accurately — as defendant’s products (as long as they are indeed the same exact products, and not, for example, patent-protected grey market goods which may differ in specifications or quality). Such a reference, by definition, is nominative fair use, for which “trademark law is unavailing,” id., and which, far from diluting them, actually strengthens the manufacturer’s marks by accurately associating with them with the authentic goods with which they are associated.

Indeed, Congress never intended the powerful antidilution provisions of the Lanham Act to be used to deprive an independent dealer of legitimate use of the mark of products in which he deals. In Ty Inc. v. Perryman, 306 F.3d 509 (7th Cir. 2002), cert. denied, 538 U.S. 971 (2003), Judge Posner, writing for the Seventh Circuit Court of Appeals, explained that the owner of the mark BEANIE BABIES for beanbag stuffed animal toys could not prevent defendant Perryman, a dealer, from using the trademark in her business of selling second-hand toys to collectors:

You can’t sell a branded product without using its brand name, that is, its trademark . . . Perryman’s principal merchandise is Beanie Babies, so that to forbid it to use “Beanies” in its business name and advertising (Web or otherwise) is like forbidding a used car dealer who specializes in selling Chevrolets to mention the name in his advertising . . . We do not think that by virtue of trademark law producers own their aftermarkets and can impede sellers in the aftermarket from marketing the trademarked product.

Id. at 512, 513 (emphasis supplied).

In sum, the law permitting an Internet discounter to sell a manufacturer’s products, and to advertise that it is doing so, is clear, unequivocal, settled, and well-known and is “beyond the reach of trademark law.” Taylor Made Golf Company, 265 F. Supp.2d 732.

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Author:Ron Coleman

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