United States: Absolutely Fair? U.S. Supreme Court Agrees to Hear Fair-Use Case

A version of this article was published in Trademark World, April 2004

On January 9, 2004, the Supreme Court of the United States granted a Petition for Writ of Certiorari in the case of KP Permanent Make-Up, Inc. v. Lasting Impression, Inc.¹ The issue the Court will decide is whether the descriptive fair-use defense is an absolute defense to a claim of trademark infringement, even if the descriptive fair use is likely to cause consumer confusion.

The United States federal trademark statute, the Lanham Act,² establishes a statutory defense of descriptive fair use to a claim of trademark infringement.³ Section 33(b)(4) of the Act codifies the common-law "descriptive fair-use" or "classic fair-use" defense. Descriptive fair use is an affirmative defense, and the accused infringer bears the burden of proving it.⁴ The defense is available against all registered and common-law trademarks asserted in litigation under the Lanham Act, under state statute, or common law.⁵

To establish a descriptive fair-use defense, an accused infringer must prove the following three elements: the disputed term is not used as a trademark or service mark; the term is used "fairly and in good faith"; and the term is used "only to describe" the accused infringer’s goods or services.⁶

The defense is available where an accused infringer’s use of a term literally describes a feature of a product, such as the use of the term "sweet-tart" to describe the taste of a juice drink.⁷ And it also protects a competitor’s use of common language in an ordinary nontrademark manner to promote its product. For example, a defendant’s use of the phrase "The dentists’ choice for fighting cavities" in connection with the promotion of its toothpaste was deemed a descriptive fair use sufficient to defeat the trademark owner’s claim for infringement of its DENTISTS CHOICE mark for toothbrushes.⁸

The purpose of the fair-use defense is to ensure that descriptive terms that may be protectable as trademarks nevertheless remain free for competitors to use in their ordinary descriptive sense.⁹ Thus, the defense balances the fair-competition rights of trademark owners with the free-competition rights of competitors.¹⁰

In KP Permanent Make-up v. Lasting Impression,¹¹ the U.S. Court of Appeals for the Ninth Circuit held that the descriptive fair-use defense is available only where there is a finding that the descriptive fair use of a term is not likely to cause confusion.

In KP Permanent Make-up, both parties sold micropigmentation colors, which are pigments used in the application of permanent makeup.¹² Lasting Impression owned an incontestable federal trademark registration for the MICRO COLORS and design mark for color pigments.¹³ KP, the accused infringer, used the term "micro color" in connection with the sale and marketing of its permanent makeup pigments. For example, KP displayed its range of micropigmentation colors on a "Microcolor Pigment Chart."¹⁴

In January 2000, Lasting Impression sent KP a cease-and-desist letter demanding that it cease using the term "micro color" in connection with the sale and promotion of its micropigmentation colors. In response, in March 2000, KP filed a civil action in the U.S. District Court for the Central District of California requesting a declaratory judgment that its use of "micro color" did not infringe Lasting Impression’s trademark.

In support of its declaratory-judgment action, KP claimed that its use of "micro color" constituted a fair descriptive use, because it used the term "micro color" only as a description of its micropigmentation colors and not as a source identifier or trademark, and because its use of "micro color" predated Lasting Impression’s use and registration of its MICRO COLORS mark. Alternatively, KP claimed that the term MICRO COLORS was unprotectable as a trademark because it was a generic term for pigments used in the micropigmentation process.

On cross-motions for summary judgment, the district court found that KP’s use of "micro color" constituted a descriptive fair use under the Lanham Act. And adopting the view that descriptive fair use constitutes an absolute defense to a claim of trademark infringement, the district court granted summary judgment in KP’s favor without considering whether KP’s descriptive fair use of "micro color" was likely to cause confusion with Lasting Impression’s federally registered MICRO COLORS mark.¹⁵

On appeal, the Ninth Circuit reversed the district court’s grant of summary judgment in KP’s favor, because, in the view of the court, descriptive fair use does not constitute an absolute defense to a claim of trademark infringement. Rather, the appellate court observed that "KP can only benefit from the fair-use defense if there is no likelihood of confusion between KP’s use of the term ‘micro color’ and Lasting [Impression]’s mark," because "there can be no fair use if there is a likelihood of confusion."¹⁶

The Ninth Circuit therefore held that the district court’s failure to consider whether KP’s descriptive use of the term "micro color" was likely to cause confusion with Lasting Impression’s MICRO COLORS mark constituted legal error, and it remanded the case to the district court for trial on the issue of likelihood of confusion.¹⁷

The U.S. courts and trademark community have been divided for some time on the issue of whether descriptive fair use constitutes an absolute defense to a claim of trademark infringement. The Ninth Circuit’s decision follows the majority rule among United States Courts of Appeals, which is that the descriptive fair-use defense is available only where there is no likelihood that the accused infringer’s use of the disputed term will cause confusion.¹⁸

Adherents to this position assert that the Lanham Act’s overriding policy of preventing consumer confusion should trump the desire of competitors to use certain words to describe their products or services. For example, noted U.S. trademark law expert, Professor Thomas McCarthy, opines that "because the paramount goal of the law of trademarks is to prevent likely confusion, a showing of likely confusion should trump a ‘fair use.’ A court should never find that a likelihood of confusion exists but refuse to enjoin it because the defendant’s use is ‘fair.’"¹⁹

Some courts have rejected this rule, adopting a "modern" view and holding that a fair use of a term should be protected, even if some confusion is likely.²⁰ Adherents to this position reason that, even if some confusion results from a descriptive use of a term, this is a risk the trademark owner accepted when it decided to select a descriptive mark for its product or service.²¹ And a trademark owner’s exclusive right to use a term should not be allowed to hinder competition by denying a competitor the right to use words of the common language to describe the qualities or features of its goods or services.

In addition, some courts have rejected as illogical the majority position that the fair-use defense is available only where the infringement claim fails. For example, the U.S. Court of Appeals for the Fourth Circuit has criticized the majority rule, asserting that

Thus, several courts have adopted the view that descriptive fair use constitutes an absolute defense to a claim of trademark infringement. And in a case decided before the Lanham Act was enacted, the Supreme Court appeared to take this view itself, stating that "[t]he use of a similar name by another to truthfully describe his own product does not constitute a legal or moral wrong, even if its effect be to cause the public to mistake the origin of the product."²³

In its August 18, 2003, Petition for a Writ of Certiorari, KP asked the Supreme Court to decide whether the Lanham Act’s descriptive fair-use defense constitutes an absolute defense to a claim for trademark infringement or whether it is a qualified defense, available only if there is a finding that confusion is not likely.

On January 9, 2004, the Supreme Court agreed to hear the case. The case has not yet been fully briefed and, therefore, the Court has not scheduled oral argument. In all likelihood, the case will not be argued and decided until some time after the Court’s October 2004 term commences.

In deciding KP Permanent Makeup, the Supreme Court may take the position that the Lanham Act’s descriptive fair-use defense constitutes an absolute defense to trademark infringement, and that once the prerequisites of the defense are proved, a court should grant summary judgment in the accused infringer’s favor without undertaking a further inquiry of whether the fair use is likely to cause confusion.

This ruling could be supported by a strict statutory construction of the Lanham Act. And perhaps more important to the Court, such a ruling logically follows from the Court’s recent decisions in the trademark field that have sought to lessen potentially anti-competitive effects of trademark and unfair-competition litigation by encouraging summary disposition of trademark and unfair-competition lawsuits.

First, the plain text of the Lanham Act can be read to support the position that descriptive fair use constitutes an absolute defense. Section 33(b) of the Act provides that the exclusive right to use a trademark is "subject to" (1) a showing of infringement, i.e., that the use of the accused term is likely to cause confusion; and (2) the defense of descriptive fair use (as well as several other enumerated defenses).²⁴

Thus, under the Act, a trademark owner is entitled to relief only where: (1) there is a likelihood of confusion caused by the accused infringer’s use of the disputed term, and (2) the accused infringer fails to prove the elements of the fair-use defense or any of the other defenses recognized by the Lanham Act. It would therefore seem to follow that, where the accused infringer proves the elements of a descriptive fair-use defense, the trademark owner is not entitled to relief because its rights are "subject to" the defense of descriptive fair use.²⁵

Thus, the language of the Act seems to indicate that descriptive fair use constitutes an absolute defense. And on this ground alone, the Supreme Court may reverse the Ninth Circuit’s decision and reinstate the district court’s grant of summary judgment in KP’s favor.

Even if a strict construction of the Lanham Act does not resolve the issue decisively, however, the Supreme Court may still hold that descriptive fair use constitutes an absolute defense. This is because such a rule would facilitate the summary disposition of more descriptive fair-use cases before trial. Under the current majority rule, even where the accused infringer can prove the elements of descriptive fair use, it must still defeat the trademark owner’s claim that confusion is likely in order to escape liability.

A court’s evaluation of the likelihood of confusion usually turns on many factually sensitive issues.²⁶ Because summary judgment before trial is only appropriate where there is no genuine issue of material fact,²⁷ many courts may hesitate to grant summary judgment on the issue of likelihood of confusion. In fact, several federal appellate courts have expressly noted that summary judgment on the issue of likelihood of confusion should rarely be granted, given the factually intense nature of the determination.²⁸

Therefore, if descriptive fair use is not deemed an absolute defense, accused infringers asserting only a fair-use defense will have little chance of prevailing on a motion for summary judgment on the issue of likelihood of confusion in the early stages of litigation. Consequently, when faced with the unappealing prospect of expending significant time and financial resources to litigate a case through trial merely to preserve the right to use a term descriptively, most businesses will capitulate to the trademark owner’s demands and choose another word, even a less desirable word, to describe their products or services. And as a result, legitimate competition could suffer.

Recognizing that such disproportionate leverage on the part of trademark owners could yield anti-competitive consequences, the Supreme Court has recently attempted to restore a competitive balance between trademark owners and competitors by facilitating the summary disposition of trademark and trade-dress infringement cases. For example, in Wal-Mart Stores, Inc. v. Samara Brothers, Inc.,²⁹ the Supreme Court held that product design trade dress could never be inherently distinctive and was therefore unprotectable as a trademark without a showing of acquired distinctiveness.

The Court noted that this rule would facilitate summary disposition of more lawsuits for trade-dress infringement, which would, in turn, restore a competitive balance, observing that "[c]ompetition is deterred . . . not merely by successful suit but by the plausible threat of successful suit."³⁰ And the availability of summary judgment on the issue of protectability of the asserted trade dress would, in the Court’s view, lessen the plausible threat of anti-competitive lawsuits.

Likewise, in TrafFix Devices, Inc. v. Marketing Displays, Inc.,³¹ the Supreme Court lowered the bar for summary judgment in some suits for trade-dress infringement by holding that where an asserted product configuration was claimed in an expired utility patent, this constituted "strong evidence" that the asserted configuration was functional and, therefore, incapable of trademark protection.³² Because such forceful pronouncements by the Court carry significant weight, trial courts may rely on this ruling to dispose of lawsuits for trade-dress infringement on summary judgment before trial in cases where the asserted configuration was claimed in a utility patent.³³

Given the Supreme Court’s recent rulings that have facilitated the disposition of trademark and trade-dress infringement suits on summary judgment, it would not be surprising if the Supreme Court held that descriptive fair use constituted an absolute defense on the ground that the availability of summary judgment on this issue would promote competition.

Although it is possible that this rule could allow potentially confusing advertising or promotions to escape liability, the Court may reason that, as a practical matter, a truly descriptive fair use will rarely cause consumer confusion. For example, to qualify for a fair-use defense, the disputed term must not be used as a trademark.³⁴ Courts have significant discretion to determine whether terms are used in advertising and promotional materials as trademarks. And generally, they look to whether the disputed term is employed as "an attention getting symbol"³⁵ by examining the type style, size, placement, and overall prominence of the disputed term in the accused infringer’s advertising.³⁶

If a term is used textually, or even as a part of a heading, courts will rarely find that it is used as a trademark. And where a term is not used as a trademark, i.e., an "attention getting symbol," it is unlikely that it will be the source of consumer confusion, because consumers will not likely perceive it as a source identifier.³⁷ Conversely, as the U.S. Court of Appeals for the Seventh Circuit has observed, where a term is used in a misleading or confusing way, it is clearly used as a trademark, and the fair-use defense would not be available.³⁸

In addition to the requirement that the disputed term must not be used as a mark, the fair-use defense also requires that the accused infringer use the disputed term "only to describe" its goods or services.³⁹ And where a term is used merely to describe a product or service, it is logical to assume that consumers are likely to perceive it only as informative advertising, not as an indicator of the source or origin of the products or services.⁴⁰ The Supreme Court itself has noted that "it is not reasonable to assume consumer predisposition to take an affixed word . . . as an indicator of source where, for example, the affixed word is descriptive of the product."⁴¹

Consequently, where the use of a disputed term meets all of the requirements of the fair-use defense, it is unlikely that it would cause confusion. And as noted by the Fourth Circuit, "to the degree that confusion is likely, a use is less likely to be fair."⁴² For this reason, the somewhat semantic issue of whether descriptive fair use constitutes an absolute defense or qualified defense to a claim of trademark infringement has never been the subject of intense debate within the U.S. trademark community. For, as Professor McCarthy has noted, "in many cases, the two defenses of fair use and lack of a likelihood of confusion will blend together."⁴³

Nevertheless, the Supreme Court’s willingness to take up the issue indicates that, semantics aside, it senses a need to provide a bright-line ruling. And based on a strict interpretation of the Lanham Act, which indicates that a trademark owner’s rights are "subject to" a defense of fair use, and reasoning that providing an absolute defense could positively affect competition without harming consumers, the Court may indeed hold that where an accused infringer successfully proves the elements of the descriptive fair-use defense, it is entitled to summary judgment on the issue of infringement, even where genuine factual issues may exist regarding the likelihood of confusion.

1 124 S. Ct. 981 (2004).

2 15 U.S.C. §§ 1051-1129.

3 15 U.S.C. § 1115(a), (b)(4).

4 Sugar Busters, LLC v. Brennan, 177 F.3d 258, 271 (5th Cir. 1999).

5 2 J. Thomas McCarthy, McCarthy on Trademarks § 11:49 (4th ed. 2003) ("McCarthy").

6 15 U.S.C. § 1115(b) (4).

7 Sunmark, Inc. v. Ocean Spray Cranberries, Inc., 64 F.3d 1055, 1059-60 (7th Cir. 1995).

8 Wonder Labs, Inc. v. Procter & Gamble Co., 728 F. Supp. 1058, 1062-64 (S.D.N.Y. 1990).

9 National Fed’n for the Blind v. Loompanis Enters., Inc., 936 F. Supp. 1232, 1239 (D. Md. 1996).

10 See Blau Plumbing, Inc. v. S.O.S. Fix-It, Inc., 781 F.2d 604, 609 (7th Cir. 1986).

11 328 F.3d 1061, 1071-72 (9th Cir. 2003).

12 Permanent makeup is applied by injecting pigment into the skin, similar to the process of applying skin tattoos.

13 U.S. Reg. No. 1,769,592

14

15 The district court alternately held that the term MICRO COLORS was a generic term for pigments used in the micropigmentation process and that Lasting Impression therefore had no enforceable trademark rights in the term. On appeal, the Ninth Circuit deemed this ruling erroneous and held that, based on the evidence before the district court, no reasonable jury could find the term MICRO COLORS generic. 328 F.3d at 1070. This issue is not before the Supreme Court.

16 328 F.3d at 1072-73.

17 Id. at 1073.

18 See, e.g., Zatarains, Inc. v. Oak Grove Smokehouse, Inc., 698 F.2d 786, 791 (5th Cir. 1983).

19 2 McCarthy § 11:47.

20 3 Jerome Gilson, Trademark Protection and Practice § 11.08[3][d][i][D] (2003).

21See, e.g., 4 Rudolph Callman, Callman on Unfair Competition, Trademarks, and Monopolies § 22:30 (4th ed. 2003); Cosmetically Sealed Indus., Inc. v. Chesebrough-Pond’s USA Co., 125 F.3d 28, 31 (2d Cir. 1997); Soweco, Inc. v. Shell Oil Co., 617 F.2d 1178, 1189 (5th Cir. 1980).

22 Shakespeare Co. v. Silstar Corp. of Am., Inc., 110 F.3d 234, 243 (4th Cir. 1997).

23 William R. Warner & Co. v. Eli Lilly & Co., 265 U.S. 526, 528 (1924).

24 15 U.S.C. §§ 1115(b), 1114.

25 15 U.S.C. § 1115(b).

26 Levi Strauss & Co. v. Blue Bell, Inc., 778 F.2d 1352, 1356 (9th Cir. 1985).

27 Fed. R. Civ. P. 56.

28 See Clicks Billiards, Inc. v. Sixshooters, Inc., 251 F.3d 1252, 1264-65 (9th Cir. 2001); AHP Subsidiary Holding Co. v. Stuart Hale Co., 1 F.3d 611, 616 (7th Cir. 1993); Country Floors, Inc. v. Gepner, 930 F.2d 1056, 1062-63 (3d Cir. 1991).

29 529 U.S. 205 (2000).

30 Id. at 214.

31 532 U.S. 23 (2001).

32 Id. at 29-30.

33 See, e.g., In re Dippin’ Dots Patent Litig., 249 F. Supp. 2d 1346, 1372, 1378 (N.D. Ga. 2003).

34 15 U.S.C. § 1115(b)(4).

35 Mobil Oil Corp. v. Mobile Mechs., Inc., 192 U.S.P.Q. 744, 749 (D. Conn. 1976).

36 2 McCarthy § 11:46; Restatement (Third) of Unfair Competition § 28 comment (c) (1995).

37 See, e.g., Charles of the Ritz Group, Ltd. v. Marcon, Ltd., 635 F. Supp. 158, 160 (S.D.N.Y. 1986); see also Marcal Paper Mills, Inc. v. Scott Paper Co., 290 F. Supp. 43, 52 (D.N.J. 1968).

38 Sunmark, 64 F.3d at 1059.

39 15 U.S.C. § 1115(b)(4).

40 2 McCarthy § 11:18.

41 Wal-Mart, 529 U.S. at 212-13.

42 Shakespeare, 110 F.3d at 243.

43 2 McCarthy § 11:47.

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