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Significant 2018 Trademark Decisions

This year the Supreme Court, United States Court of Appeals for the Federal Circuit, and the Circuit Courts penned a number of opinions impacting trademark law.  Here are some key takeaways from the past year:

  1. The Federal Circuit clarified the standards for genericness and acquired distinctiveness in a 15-year battle between Coca-Cola Co. and Royal Crown Co.

In Royal Crown Co. v. Coca-Cola Co., the Federal Circuit vacated and remanded TTAB’s decision that upheld Coca-Cola’s trademark on ZERO. Royal Crown Co. v. Coca-Cola Co., 892 F.3d 1358 (Fed. Cir. 2018).  The TTAB made two fatal errors: first, it did not consider whether ZERO could be generic among the sub-category of diet sodas, failing to assess whether consumers understood ZERO when used in combination with a beverage mark to refer to a diet soda.  Second, the TTAB did not consider whether ZERO was highly descriptive of sodas.  Since highly descriptive marks require more evidence of secondary meaning, the TTAB failed to assess whether Coke had enough evidence to support its registration based on acquired distinctiveness.  Despite this decades long battle, Coca-Cola recently abandoned “ZERO” and began using “ZERO Sugar,” a more descriptive mark.

  1. Registration for a trade dress has a presumption of “secondary meaning” from the start of the registration date and going forward. But this presumption cannot be used for allegedly infringing use that began prior to the registration.

In Converse Inc. v. ITC, the Federal Circuit held that a trademark registration provides a presumption of “secondary meaning” as of the registration date and does not go backwards in time.  Converse Inc. v. ITC, 2018 U.S. App. LEXIS 30649 (Fed. Cir. Oct. 30, 2018).  As a result, Converse could not rely on this presumption in its suit against Skechers and New Balance because Skechers and New Balance began selling their allegedly infringing shoes prior to Converse’s registration in 2013.  The Federal Circuit remanded the case for the ITC to determine whether Converse had established secondary meaning in its shoes prior to the alleged infringements.

  1. A name that is primarily used as a surname, and not an identifiable name, can be registered as a trademark, so long as there is evidence that name has acquired distinctiveness in association with the goods or services.

In Schlafly v. St. Louis Brewery, the Federal Circuit affirmed TTAB’s decision that the nephew of conservative activist, Phyllis Schlafly, could register their surname, Schlafly, as a trademark for its beer.  Schlafly v. St. Louis Brewery, LLC, 2018 U.S. App. LEXIS 33093 (Fed. Cir. Nov. 26, 2018).  As the Federal Circuit noted, “[n]o law or precedent suggests that surnames cannot be registered as trademarks if they have acquired distinctiveness in trademark use.  The Board found that the SCHLAFLY mark for beers had acquired secondary meaning, and nothing in Section 1052(e)(4) barred the registration.”  The Federal Circuit based its ruling on the board’s finding that SCHLAFLY acquired distinctiveness in association with beer based on more than twenty-five years of continuous use of the name, evidence of seventy-five million beers sold during a recent five-year time period, and media coverage in USA Today, the Washington Post and The Wall Street Journal.

  1. The Sixth Circuit affirms its “eccentric and peculiar” threshold trademark use test in Sazerac Brands, Ltd. Liab. Co. v. Peristyle, Ltd. Liab. Co., but defends it on the grounds that it achieves the same result as the traditional confusion test

In Sazerac Brands, Ltd. Liab. Co. v. Peristyle, Ltd. Liab. Co., the Sixth Circuit affirmed a lower court’s ruling that Peristyle LLC’s use of Sazerac Brand’s mark “Old Taylor” was fair use.  Sazerac Brands, Ltd. Liab. Co. v. Peristyle, Ltd. Liab. Co., 892 F.3d 853 (6th Cir. 2018). Here, Peristyle LLC bought the historic Old Taylor Distillery to resume bourbon production.  During the renovations and before the property was open to the public, Peristyle referred to the property as “Old Taylor,” which is Sazerac’s mark.  Peristyle also retained “Old Taylor Distillery” signs on the property.  The Sixth Circuit permitted Peristyle LLC’s conduct as fair use because Peristyle LLC “used the Old Taylor name in a descriptive and geographic manner” and did not market under the mark.  Moreover, plaintiff was not able to meet its threshold burden under the trademark threshold test that the defendants were using “Old Taylor” in a “trademark way” to identify the source of their goods.  The Sixth Circuit noted that its trademark threshold test has been criticized because it shifts the burden from the defendant to the plaintiff to prove no statutory fair use, but countered that a use that does not meet the “trademark use” test likely is a descriptive use that is expressly protected by the Lanham Act as fair use.

  1. The Fifth Circuit held that elements of a television show, for instance, the fictional Krusty Krab restaurant, can receive common law trademark protection.

In Viacom Int’l, Inc. v. IJR Capital Invs., L.L.C., the Fifth Circuit affirmed a lower court’s ruling that IJR Capital Investments infringed Viacom’s common law trademark, “Krusty Krab,” by taking steps to open a seafood restaurant named “Krusty Krab.”  Viacom Int’l, Inc. v. IJR Capital Invs., L.L.C., 891 F.3d 178 (5th Cir. 2018).  The court held that elements within a specific television show can receive trademark protection, if the element has a prominent role in the television series and the mark is distinctive.

  1. The Ninth Circuit recent ruling regarding preliminary injunctions gave guidance on the elusive question of how much confusion is necessary to prove irreparable harm – here, a consumer survey showing 20% of the public was confused was sufficient

In Adidas Am., Inc. v. Skechers USA, Inc., the Ninth Circuit affirmed in part and reversed in part the district court’s grant for injunctive relief in favor of Adidas’s shoe, Stan Smith, and not on its Three-Stripe-mark.  Adidas Am., Inc. v. Skechers USA, Inc., 890 F.3d 747 (9th Cir. 2018).  Adidas failed to provide evidence to demonstrate that Skecher’s Cross Court shoe would irreparably harm Adidas.  Adidas had argued that Skecher’s Cross Court shoe, which used an allegedly similar three-stripe design, would cause Adidas irreparable harm on the grounds that consumers would “associate the allegedly lesser-quality Cross Courts with Adidas and its Three-Stripe mark,” post-sale.  In addition to the differing price points between Adidas and Skechers shoes, Adidas failed to provide specific evidence that suggested that Skechers was lesser-quality or had a less favorable reputation in order to cement its “harm” argument.  The Ninth Circuit did find, however, that Adidas had demonstrated irreparable harm with respect to its Stan Smith shoe based on consumer surveys showing that 20% of consumers were confused, its extensive marketing efforts and Adidas’s control of its supply in order to protect the reputation of its Stan Smith shoes.

Stay tuned in 2019 for continuing coverage of important developments in trademark law.

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Michael R. Graif is an intellectual property lawyer who advises on trademark and copyright enforcement, technology and licensing transactions, and patent and trademark portfolio management as well as IP issues arising in business deals. Michael has been interviewed on television and quoted in national media on file-sharing and copyright issues.