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Trademark Law: A Year in Review

Friday, December 23, 2011

In 2011, a variety of trademark and related issues were decided by the federal courts and the Trademark Trial and Appeal Board ("TTAB"). Those decisions included determinations regarding how similar trademarks must be in order for there to be dilution by blurring, the Ninth Circuit's abandonment of the Brookfieldstandard when evaluating confusion in trademark keyword cases, as well decisions involving color marks, Cuban products, and whether to apply the Lanham Act outside this country's borders.

Ninth Circuit and TTAB Decide Similarity of Marks for Dilution by Blurring

In 2011, both the U.S. Court of Appeals for the Ninth Circuit and TTAB faced the question of how similar marks must be for a plaintiff to state a successful claim of dilution by blurring. In Levi Strauss & Co. v. Abercrombie & Fitch Trading Co.,1 the Ninth Circuit clarified the similarity standard under the Trademark Dilution Revision Act of 2006 ("TDRA").2 Courts in the Ninth Circuit previously had applied an "identical or nearly identical" standard when analyzing dilution under the Federal Trademark Dilution Act ("FTDA"), the law in effect before the enactment of the TDRA. Plaintiff Levi Strauss & Company argued that the plain language of the TDRA did not require a heightened standard, and that the district court erred when it applied the old standard in the instant case. After analyzing the history of the FTDA and the TDRA, the Ninth Circuit held that the district court applied the wrong standard, by applying the FTDA, and the error was not harmless. The court reversed and remanded the case finding that for cases of alleged dilution, a court must determine "the degree of similarity" between the marks.3 The Ninth Circuit determined that the marks do not need to be identical or substantially similar under the TDRA.4 In Rolex Watch U.S.A., Inc. v. AFP Imaging Corp.,5 the TTAB agreed with the Ninth Circuit and found that the identical or nearly identical standard did not apply under the TDRA. "With this guidance in mind, the test we employ is the degree of similarity or dissimilarity of the marks in their entireties as to appearance, sound, connotation and commercial impression."6

Ninth Circuit Clarifies Confusion Test for Keyword Advertising

In Network Automation, Inc. v. Advanced Systems Concepts, Inc.,7 the Ninth Circuit clarified the standard for determining likelihood of confusion when a mark of another is used as an Internet search engine keyword. In clarifying the standard, the court expressly abandoned strict reliance on the test provided inBrookfield Communications, Inc. v. West Coast Entertainment Corp.8 Below, the district court had found that there was a likelihood of confusion and granted injunctive relief based on evaluation of the eight factors established in AMF Inc. v. Sleekcraft Boats,9 emphasizing that in cases involving the Internet, the three most important factors were the similarity of the marks, the relatedness of the goods, and the marketing channel used. In Network Automation, the Ninth Circuit stated that it never intended Brookfield to enshrine these three factors referenced by the district court as the most important factors in every Internet dispute. Although Brookfield was the first case to address initial interest confusion, the court recognized that the Internet was in its infancy at the time of the decision and the facts of each case may cause different factors of the Sleekcraft analysis to be more or less relevant, depending on the specific facts of each case. 10

Color Marks Have Not Fared Well in 2011

Owners of color marks have not been successful in registering their marks and pursuing claims in 2011. In In re Lorillard Licensing Company,11 which involved an application to register orange text on a green background, the TTAB described the burden of proving the acquired distinctiveness of a color mark as "heavy." To support its claim, the applicant submitted two declarations from Lorillard’s brand director claiming that from 1984 to 2006, Lorillard sold over half a trillion cigarettes in connection with its color scheme. The declarations also stated that from 1997 to 2006, Lorillard spent $165 million advertising the cigarettes in connection with the color scheme and that Lorillard claimed to use the scheme in outdoor and point of sale advertising and in magazines. As further evidence, Lorillard had submitted over 10,000 declarations from customers and dealers regarding the recognition of the color scheme. Even with this evidence, the TTAB did not find that the proposed mark had acquired distinctiveness and affirmed the refusal to register.12 In Christian Louboutin S.A. v. Yves Saint Laurent America, Inc.,13 shoe designer Louboutin sought a preliminary injunction motion to prevent Yves Saint Laurent from selling shoes with a red sole similar to those sold by Louboutin, but the U.S. District Court for the Southern District of New York denied injunctive relief. More troubling for Louboutin, the court explained that should Yves Saint Laurent bring a motion to cancel Louboutin’s federal registration in a red sole for luxury footwear, the court would be inclined to grant that motion, even where there was extensive evidence of customer recognition. The court likened using color in high fashion to a painter being able to paint with whatever color he or she chose to use.14

Cuban Products and Trademarks Had Mixed Results in 2011

The U.S. Court of Appeals for the D.C. Circuit decided that a Cuban company could not renew its trademark in Empresa Cubana v. U.S. Department of Treasury.15 Pursuant to the Trading with the Enemy Act,16 and President Kennedy's subsequent directive, the Department of the Treasury issued the Cuban Assets Control Regulations,17 which prohibits most transactions between Americans and Cubans. Although there are some exceptions to these regulations, the exceptions "may be amended, modified, or revoked at any time."18 One such exception permitted Cubans to register and renew trademarks. Under that exception, Empresa Cubana Exportadora de Alimentos y Productos Varios, doing business as Cubaexport, registered the HAVANA CLUB trademark for rum, and that registration was renewed in 1996. In 1998, Congress enacted the Omnibus Consolidated and Emergency Supplemental Appropriations Act,19 which prohibited certain trademarks, including Cubaexport's, from being renewed. Thus, Cubaexport was unable to renew its trademark in 2006 and was informed by the Department of the Treasury's Office of Foreign Assets Control, "that the company was legally barred from paying the fee required to renew the trademark."20Cubaexport instituted a federal action on the grounds that the 1998 Act should not have been applied retroactively, should have only barred new trademark applications, and if it did bar the renewal of its trademark, then the 1998 Act violated substantive due process. The U.S. Court of Appeals for the D.C. Circuit disagreed: "Because the Cuban Assets Control Regulations stated that exceptions were revocable at any time, Cubaexport had no vested right to perpetual renewal of the trademark."21 In a separate case, the TTAB decided that a Cuban company had standing to pursue a cancellation proceeding. In Corporacion Habanos, S.A. v. Rodriguez,22petitioners Corporacion Habanos, S.A. and Empresa Cubana del Tabaco sought to cancel a registration on the ground that the PINAR DEL R

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