Second Circuit’s “narrowness” embarasses the Great One

Michael Atkins reports that the towering colossus of American trademark law, J.T. McCarthy, is embarrassed by the narrow thinking of the Second Circuit Court of Appeals. What did one of the world’s most prestigious appellate courts do to cause such red-facedness in the redoubtable Professor M?

It involved the rejection of something called the “famous marks doctrine” in a decision called ITC Limited v. Punchgini, Inc., 482 F.3d 135 (2nd Cir. 2007). In the decision, the Circuit describes the doctrine as follows:

Although the term “famous marks” is often used to describe marks that qualify for protection under the federal anti-dilution statute, see 15 U.S.C. § 1125(c), the “famous mark” doctrine is, in fact, a different and distinct “legal concept under which a trademark or service mark is protected within a nation if it is well known in that nation even though the mark is not actually used or registered in that nation,” 4 J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition, § 29.2, at 29-164 (4th ed. 2002). Thus, the famous marks doctrine might more aptly be described as the famous foreign marks doctrine. It is in this latter sense that we reference the famous marks doctrine on this appeal.

The Circuit went on, however, to rule that ripping off a restaurant’s trade dress — “logos, decor, staff uniforms, wood-slab menus, and red-checkered customer bib” — while well established as a violation of the Lanham Act when the other restaurant holds U.S. trademark rights, is not one when the trademark holder is half a world away and has no firm trademark rights. Indeed, here, by all the traditional standards of trademark law, the plaintiff actually had abandoned bona fide rights it did have (even according to McCarthy’s standards, as the Circuit notes in citing him) on these shores, but insisted that as a “famous foreign mark,” it was free to do so and to assert its trademark right against all comers, presumably forever.

In doing so, the Second Circuit rejected the view of that most-reversed of Circuit courts, the Ninth Circuit, which has held to the contrary.

When InsideCounsel asked Prof. J. Thomas McCarthy about the decision, he did not hold back. “They were wrong,” he said. “There was a way to [implicitly] incorporate the [famous marks] doctrine into the federal trademark statute. But the 2nd Circuit wanted to see explicit words saying the doctrine is enforceable. They gave a narrow reading to the statute.”

Prof. McCarthy warned that the decision has international implications. “This decision can be used as a club to beat our trade negotiators, with foreign governments saying, “Who are you to criticize us? You are not living up to your treaty obligations.”

As he told InsideCounsel, the decision is “a great embarrassment for the U.S.”

Now, wait a minute here. Here is what the Second Circuit had to say about the application of the famous marks doctrine in this case:

In applying this principle to this case, however, we identify a significant concern: nowhere in the three cited rulings does the Trademark Board state that its recognition of the famous marks doctrine derives from any provision of the Lanham Act or other federal law. Indeed, the federal basis for the Trademark Board’s recognition of the famous marks doctrine is never expressly stated. Its reliance on Vaudable [v. Montmartre, Inc., 20 Misc. 2d 757, 193 N.Y.S.2d 332 (N.Y. Sup. Ct. 1959)],suggests that recognition derives from state common law….

We are mindful that Congress has not hesitated to amend the Lanham Act to effect its intent with respect to trademark protection, having done so almost thirty times since the statute took effect in 1947. See 1 McCarthy, supra, §§ 5:5-11, at 5-13-22.27. In light of these legislative efforts, the absence of any statutory provision expressly incorporating the famous marks doctrine or Articles 6bis and 16(2) is all the more significant. Before we construe the Lanham Act to include such a significant departure from the principle of territoriality [requiring U.S. use of a mark], we will wait for Congress to express its intent more clearly.

Sounds like good judging to me.

But Professor McCarthy does not, indeed, like “narrow readings” of the Lanham Act. He is the same McCarthy, after all, who invented (or at least became its patron saint of) the preposterous doctrine  of “initial interest confusion.”  This was the new standard which removed the small matter of “harm” from the tort of trademark infringement and made every online use of a trademark a virtual per se infringement.

So yes:  McCarthy likes “broad readings” of the Lanham Act in the sense that he likes “plaintiff readings” of the Lanham Act.

Let Prof. McCarthy’s and the International Trademark Association’s pet legislators — who revise the Lanham Act and the Copyright Act at the periodic behest of Hollywood and Wall Street, no matter the irrationality of the policies involved — be the ones to stick up for “treaty obligations.”

Yes, “there was a way” to jam the famous marks doctrine into the Lanham Act. It’s the same “way” the courts have jammed initial interest confusion and innumerable other plaintiff-friendly “readings” into the ever-broadening Lanham Act, even as IP law chokes the life out of creativity and innovation and makes everyone so scared of his shadow he dare not utter the words “Super Bowl Party” without a costly license from the NFL. Now, says Professor McCarthy, not only corporate America, but corporate Asia and, of course, Europe are also to be afforded a presumption of trademark rights in gross, unattached to any domestic usage even in the face of black-letter abandonment.

J.T. McCarthy is “embarrassed” among his one-world-law friends at INTA and elsewhere. For me, I’ll take the Second Circuit, without any shame, and leave it to Congress if it wants to internationalize American law so trademark lawyers can grow their global “brand management” practices and otherwise enjoy international relations with their foreign colleagues. Absent that policy decision, we like judges that are committed to the principles that the state exists to preserve freedom, that the separation of governmental powers is central to our Constitution, and that it is emphatically the province and duty of the judiciary to say what the law is, not what it should be.

Originally posted 2007-07-22 21:28:08. Republished by Blog Post Promoter