Snapshot: trademark enforcement in USA

Enforcement

What types of legal or administrative proceedings are available to enforce the rights of a trademark owner against an alleged infringer or dilutive use of a mark, apart from previously discussed opposition and cancellation actions? Are there specialised courts or other tribunals? Is there any provision in the criminal law regarding trademark infringement or an equivalent offence?

The primary action against trademark violations is a civil suit in federal or state court. To bring suit, a plaintiff must have standing and must file a complaint alleging liability accompanied by the required filing fee. The complaint should allege the following:

• the plaintiff owns valid and protectable rights;
• the defendant’s mark is used in commerce;
• the defendant has violated the plaintiff’s rights; and
• that likely confusion harms or is likely to harm the plaintiff.

To prevail, a plaintiff asserting infringement must establish that confusion is likely between the parties’ marks. Different courts have different – but substantially similar – multi-factor tests for evaluating whether confusion is likely. For example, the Second Circuit refers to factors first articulated in Polaroid v Polarad Elecs Corp (287 F2d 492 (2d Cir 1961)). These include:

• the strength of the plaintiff’s mark;
• the degree of similarity between the parties’ marks;
• the competitive proximity of the goods or services sold under the marks;
• the likelihood of either party bridging the gap between the parties’ goods or services;
• actual confusion;
• the defendant’s intent when adopting its mark;
• the quality of the defendant’s goods or services; and
• the sophistication of the parties’ customers.

Not all factors must be met and some may receive more weight than others.

A plaintiff asserting a dilution-based claim must demonstrate that its mark is famous and that the defendant’s mark will likely blur or tarnish the distinctiveness of the plaintiff’s mark.

Remedies for infringement can include injunctive and monetary relief, with injunctive relief being the most common. Monetary relief can take many forms, including (but not limited to) the plaintiff’s actual losses, the defendant’s profits, corrective advertising and statutory damages determined by the court. In some circumstances, the court may treble monetary relief. Damages and profits are available in dilution-based actions only if the defendant acted wilfully. Punitive damages may be available under state law. Attorneys’ fees are available in exceptional cases.

Federal and state criminal statutes protect only against counterfeiting and are enforceable only by criminal prosecutors. For some forms of online trademark infringement, administrative action is available through the Uniform Domain Name Dispute Resolution Policy.

What is the format of the infringement proceeding?

The time required to resolve lawsuits varies greatly depending on the facts of particular cases and the litigiousness of the parties. Discovery and live testimony from fact and expert witnesses are permissible. Liability, actual damages and certain defences may be decided by either a jury or a judge. The availability of injunctive relief, the disgorgement of a defendant’s profits and certain defences are decided by a judge. The government must initiate criminal prosecutions for counterfeiting.

What is the burden of proof to establish infringement or dilution?

The plaintiff must prove liability by a preponderance of the evidence and testimony. If it does so, the defendant must prove affirmative defences under the same standard.

Who may seek a remedy for an alleged trademark violation and under what conditions? Who has standing to bring a criminal complaint?

Statutory bases for claims under the Lanham Act include sections 32, 43(a), 43(c) and 43(d).

Only mark owners have standing to bring actions under sections 32, 43(c) and 43(d), and section 32 additionally requires mark owners claiming its protection to have registrations. The term ‘registrant’ includes legal representatives, predecessors, successors and assignees, but generally not licensees. Other parties, such as licensees, may have standing to bring actions under section 43(a) if:

• they are within the ‘zone of interest’ protected by the Lanham Act; and
• they can show the alleged misconduct proximately injured them.

This same two-factor test determines whether a plaintiff is entitled to bring a statutory cause of action in an action before the Trademark Trial and Appeal Board.

What border enforcement measures are available to halt the import and export of infringing goods? Can activities that take place outside the country of registration support a charge of infringement or dilution?

Customs enforcement is available to owners of registered marks. Generally, the customs authorities will seize or detain goods copying or simulating a registered trademark only if the registration has been recorded with US Customs and Border Protection.

If the customs authorities decline to act, a mark owner can bring a private action against the importer or bring a proceeding before the International Trade Commission. If liability is found, the remedial action is submitted to the President of the United States, who has 60 days to disapprove of the action. If there is no veto, the defendant importer may appeal to the Federal Circuit Court of Appeals.

Although customs authorities generally focus on the importation of goods bearing infringing or counterfeit marks, they have similar authority to prevent the export of those goods.

What discovery or disclosure devices are permitted for obtaining evidence from an adverse party, from third parties, or from parties outside the country?

US law provides for certain mandatory disclosures and permits the parties to engage in discovery to frame the issues for trial. Discovery can include interrogatories, document requests, requests for admissions and depositions of witnesses. These mechanisms can be effective, but they also can require considerable investments of time and money. A party failing to disclose information or documents during discovery may be precluded from relying upon them at trial.

What is the typical time frame for an infringement or dilution, or related action, at the preliminary injunction and trial levels, and on appeal?

The time frame can vary greatly depending on the complexity of the case and the deadlines set by the court. Motions for preliminary injunctive relief can be resolved as early as two months after filing, while litigation of a dispute through a full trial and the appeal process can take years.

What is the limitation period for filing an infringement action?

Infringement actions under state law are subject to the relevant state statute of limitations. Federal law does not provide a statute of limitations, but courts typically refer to state statutes of limitations when determining whether a plaintiff has unreasonably delayed proceedings for the purposes of the equitable defences of laches and acquiescence.

What is the typical range of costs associated with an infringement or dilution action, including trial preparation, trial and appeal?

Litigation costs and attorneys’ fees can vary widely depending on the length of the proceeding and its complexity; some cases can require investments in the millions of dollars. Unless counterfeiting is involved (in which case, an award of the prevailing plaintiff’s attorneys’ fees is virtually automatic), the prevailing party can recover its attorneys’ fees under section 35 of the Lanham Act and 15 USC section 1117(a), only if the case is an ‘exceptional’ one. That standard is high, but it can be met based on either the weakness of the losing party’s case or its conduct during the litigation, or both.

What avenues of appeal are available?

The losing party in a case brought in federal district court can appeal to an intermediate US court of appeals. It then can seek discretionary review by the US Supreme Court, but that is rarely granted.

What defences are available to a charge of infringement or dilution, or any related action?

Laches is an equitable affirmative defence. A defendant claiming laches must prove an unreasonable delay by the plaintiff in bringing suit and prejudice arising from that delay.

Similarly, acquiescence occurs if a plaintiff affirmatively consented to the defendant’s conduct and then unreasonably delayed in challenging that conduct. As with laches, acquiescence requires proof of prejudice.

Unclean hands is an equitable affirmative defence that potentially bars relief to the plaintiff and may bar other equitable defences. To prove unclean hands, a defendant must demonstrate the plaintiff intentionally acted inequitably or illegally. The claim underlying an unclean hands defence must directly relate to the trademark at issue. A plaintiff’s general misconduct will not suffice. Unclean hands succeeds only in the most egregious circumstances.

A defendant may assert two types of fair use: classic fair use and nominative fair use. The classic fair use affirmative defence applies if the defendant’s use is non-trademark in nature and merely describes the defendant’s goods or services, the source of the defendant’s goods or services, or individuals involved with the defendant’s business.

The nominative fair use doctrine applies if the defendant uses a trademark to identify the plaintiff’s goods or services rather than those of the defendant. To assert this defence, the defendant must demonstrate that:

• the goods or services cannot be identified without using the plaintiff’s mark;
• the use of the plaintiff’s mark is no more extensive than necessary; and
• the defendant’s use does not suggest the plaintiff’s sponsorship or endorsement of the defendant’s goods or services.

Courts disagree on whether nominative fair use is an affirmative defence provable by the defendant or, alternatively, whether it is something the plaintiff must overcome.

The constitutional guarantee of free speech is not an affirmative defence, but rather serves as an alternative argument against a finding of liability. Free speech protection is available for parody and expressive works.

What remedies are available to a successful party in an action for infringement or dilution, etc? What criminal remedies exist?

Remedies typically include injunctive and monetary relief, with injunctive relief being the most common. A prevailing plaintiff seeking permanent injunctive relief must establish that:

• it has suffered an irreparable injury;
• the inadequacy of other remedies, such as monetary relief;
• the balance of the parties’ respective hardships favours the plaintiff; and
• a permanent injunction will benefit the public interest.

A plaintiff seeking preliminary injunctive relief while filing the complaint or shortly thereafter must satisfy the same four-factor test provided above for permanent injunctions and also establish a likelihood of success on the merits. The plaintiff additionally must post a bond to make the defendant whole for its damages if the defendant ultimately prevails after trial. Delay in seeking a preliminary injunction usually will weigh against a claim of irreparable injury.

Preliminary injunctive relief usually mandates the discontinuance of the unlawful activity, while more extreme forms – such as recalls – are reserved until after a full trial. Nevertheless, a plaintiff may seek an ex parte temporary restraining order, which can be issued without response by the defendant. Temporary restraining orders are issued only in the most urgent circumstances and expire within 14 days unless they are converted into preliminary injunctions. Depending on the circumstances of the case, injunctive relief can take many forms, including:

• a cessation of the challenged mark’s use;
• a recall of goods bearing that mark;
• disclaimers of affiliation by the defendant; or
• such other things as equity may require.

In addition to injunctive relief, prevailing plaintiffs may pursue monetary relief. The court has broad discretion to determine the availability and amount of the relief. If the court grants monetary relief, federal law permits the doubling or trebling of the relief and, in exceptional cases, attorneys’ fees.

If the parties do not compete, the court may deny actual damages unless the infringement diverted trade or otherwise injured the plaintiff. However, a court may order disgorgement of the defendant’s profits if:

• the defendant was unjustly enriched;
• the trademark owner sustained damage; or
• the accounting is necessary to deter future misconduct.

If the parties compete, the court may award actual damages in the form of the plaintiff’s lost revenues. A successful plaintiff also may pursue the disgorgement of the defendant’s profits. In such a disgorgement, the plaintiff must demonstrate the defendant’s gross revenues. The defendant then must apportion those revenues between infringing and non-infringing sources, and also prove any deductible expenses.

The Lanham Act also authorises the ex parte seizure of goods bearing counterfeit imitations of registered marks. Trebled awards of damages and the disgorgement of profits are ordinarily mandatory in counterfeiting cases.

Punitive damages may be available under state (but not federal) law.

Are ADR techniques available, commonly used and enforceable? What are the benefits and risks?

Both mediation and arbitration are widely used. Courts generally defer to arbitrators’ decisions, which makes them difficult to challenge.