Civil litigationi Forums
Civil actions for trademark infringement and unfair competition in the nature of trademark infringement (akin to passing off) may be brought either in state courts or in federal district courts.
The advantages of filing in the federal courts include the ability to secure nationwide relief, access to broad subpoena power to secure testimony, and a substantial body of precedent. The advantages of filing in the state courts include (1) greater familiarity with state statutes that may provide an ancillary basis for recovery (state unfair trade practice acts may provide a competitor with a cause of action); (2) state dilution statutes will not require the same degree of fame as is required for a plaintiff to prevail on a federal dilution claim under the Lanham Act 15 USC Section 1125(c); and (3) greater familiarity with the local market and other conditions, which might make confusion more likely or might result in a particular understanding of a term in issue.ii Pre-action conduct
Prior to commencement of an action for trademark infringement, there are a number of steps the potential claimant may take. Diligence is always advisable, to confirm priority and to ascertain the strength of the claim, potential weaknesses and counterclaims. Where there is some doubt as to the strength of the claim, a pre-litigation survey may be undertaken to ascertain whether it may be advisable to pursue a course other than litigation.
Once the decision has been made to proceed, it is usual, but not mandatory, for a cease and desist letter to be sent to the appropriate party on the other side. The cease and desist letter should be drafted with care and sent only when the client is committed to litigate if an amicable resolution cannot be achieved. One benefit of a cease and desist letter is that it can open up a dialogue. It can also bring out issues and facts not previously ascertained that affect the determination of how best to proceed.
Before litigation begins, the parties can agree to take steps to resolve a dispute, including the informal exchange of information and documents that otherwise would not be available until the formal discovery process has begun. The parties may agree to a settlement conference or even mediation. Such discussions have the possible outcome of a business resolution that addresses the needs of both parties.iii Causes of action
In civil litigation, the actions typically brought in federal court are for trademark infringement under the Lanham Act 15 USC Section 1114 if the mark is registered, and under 15 USC Section 1125(a) whether or not the mark is registered. Section 1125(a) of the Act provides a federal cause of action for unfair competition in the nature of trademark infringement. The unfair competition claim is essentially a claim for passing off. While only the owner of the registration can bring a claim for infringement based on registration, an exclusive licensee can bring a claim under Section 1125(a) for violation of rights.
The test for violation of the statute is essentially the same, whichever provision is invoked: is there a likelihood (that is, a probability and not a mere possibility) of confusion as to source or sponsorship or affiliation? The determination of infringement or passing off is based on consideration of various factors, most particularly the degree of relationship between the goods and services and the degree of similarity between the marks. Also of importance are any evidence of actual confusion where such confusion might be expected to have come to the parties’ attention, the conditions in which purchase decisions are made, overlap in trade channels and classes of customers, the strength of the senior user’s mark, and the intent of the junior user.
The benefit of being able to invoke a registration on the Principal Register are the evidentiary presumptions of ownership and the exclusive right to use of the mark for the goods or services identified in the certificate of registration. Those presumptions are rebuttable for only the first five years after the date of issue of the registration. If the plaintiff’s mark has nationwide fame, a claim for dilution may also be brought under Section 1125(c).
Disputes as to trade or business names may be resolved in federal court under the same provision of the statute as protects unregistered marks.
Trademark and trade or business name disputes may also be resolved in state courts on essentially the same basis.
Claims for cybersquatting may be brought in appropriate cases in federal court under Section 1125(d) of the Lanham Act, as well as under the various dispute resolution procedures established under ICANN.
Disputes that relate to use of company names that do not involve trademark or trade name-type use are resolved at the state level, and the procedures vary from state to state.iv Conduct of proceedings
In civil actions for trademark infringement or unfair competition in the nature of trademark infringement, the proceeding is commenced by the filing and service of a complaint in accord with 15 USC Sections 1114 and 1121. The plaintiff may or may not ask for preliminary injunctive relief.
The defendant may respond by filing a motion to dismiss on a number of grounds, including lack of jurisdiction and failure to state a claim on which relief may be granted. The defendant may answer and file and serve counterclaims for a declaratory judgment of non-infringement, or for infringement if the defendant believes it can establish priority, or for cancellation of the plaintiff’s registration on any of the grounds on which a cancellation petition might be filed in the Trademark Office. If there has been a prior opposition or cancellation proceeding between the same parties involving the same marks and issues, relitigation may be barred in the federal courts under the doctrine of issue preclusion.
Once the answer and any counterclaims are lodged and responded to, the district court will schedule a conference with the parties to set the timetable and particular rules for the proceeding.
Prior to beginning discovery, the parties will make initial disclosures to each other, identifying those persons believed to have knowledge of the matters at issue and the location of the documents relevant to those issues.
Discovery will typically include written interrogatories, requests for production of documents and requests for admissions. The grounds for objection to discovery directed to matters at issue in the proceeding are limited; however, recently, the courts have been more willing to limit the extent of discovery when the burden and expense of production is not warranted by the value of the case.
After fact discovery concludes, there is generally a period for expert discovery. Typical expert testimony comes from industry experts who can opine about what is standard or customary or not in the industry, technical experts who can address whether or not a product configuration or package design is functional, survey experts who can testify to consumer or purchaser perception based on research they have done, and damages experts. Other types of experts called upon may testify as to the genesis or meaning of terms, as linguists.
At the close of discovery, and assuming the matter is not resolved on the basis of a summary judgment motion where the court determines that there is no material issue of fact, a trial on the merits is not required, and the outcome can be determined as a matter of law, there is a trial that may be conducted with or without a jury, depending on the nature of the relief sought (where only injunctive relief is sought, there is no entitlement to trial by jury) and whether or not a jury demand has been timely made by either party.
At trial, the parties have the opportunity to introduce evidence and present argument.
Appeals from jury verdicts are limited. In an appeal from a decision made by the court, the findings of fact are upheld if supported by substantial evidence. The conclusions of law are not accorded such deference. Whether the determination of likelihood of confusion is a finding of fact or of law, or a mixed question of law and fact, will depend on the circuit in which the trial has been held.
Proceedings before the TTAB follow a similar pattern, and the same evidentiary and procedural rules generally apply, although there are some notable variations. There is no live testimony in a TTAB proceeding; however, either party in an inter partes proceeding can request oral argument. The resolution is restricted to the question of registrability of the mark as shown in the application or registration at issue and to the goods and services as set out in the identification of goods and services. That is, the real-world marketplace context may not be considered if the subject mark is presented in block letter ‘standard format’ rather than in the logo form actually used, or with other distinguishing matter that is actually used, and differences between the precise channels of trade used by the parties may also not be considered if the application or registration contains no restriction on trade channels and the goods and services are such that move through other or broader channels of trade.v Remedies
There is a broad range of remedies that may be granted by the courts once infringement or unfair competition is found.
The statutes provide for injunctive relief. Injunctions may be mandatory as well as prohibitory. That is, a court can order a recall of goods bearing the infringing marks. A court may order that corrective advertising be undertaken or disclaimers of affiliation be added to materials to be published or otherwise made available.
More commonly, injunctive relief is prohibitory. The defendant is ordered to stop the conduct that is the basis of the complaint. There may or may not be a period of time within which the defendant must comply, such as 30 days from the effective date of the order. The prohibited conduct may be described in more or less detail.
The statutes also provide for monetary relief. The recovery can take the form of disgorgement of the profits the plaintiff would have made but for the infringement, particularly when the market is comprised only of the two parties. The recovery can take the form of the profits the defendant accrued that were attributable to the infringement. Recovery can also take the form of whatever other damages the plaintiff can establish with some specificity, such as the amount spent on corrective advertising to remedy the misunderstanding and confusion. Enhanced damages are available in limited circumstances, such as counterfeiting or in the case of a repeat offender.
While the federal statute provides for attorneys’ fees to be awarded to the successful party, such remedy is granted in ‘exceptional circumstances’, such as when the losing party has, through the course of the litigation, demonstrated bad faith, raised frivolous arguments, or otherwise engaged in misconduct offensive to the court.
Other enforcement proceedings
There are a number of other venues and measures for approaching violations of trademark rights.
While the Lanham Act provides for enhanced damages and statutory damages for use of counterfeits of registered marks on and in connection with the goods and services identified in the certificate of registration, use of counterfeit marks is also a criminal offence.
US Customs and Border Control also has a role in blocking importation of infringing goods. One of the benefits of federal registration on the Principal Register is the right to record the registration with Customs, and Customs may prohibit entry into the US of infringing goods, and order the recall of infringing goods inadvertently allowed into the country. As with criminal measures, the more information that the rights holder can provide to the enforcement authorities, the more likely it is that effective action may be taken.
The rights holder receives no monetary recovery from the criminal procedure or from a seizure of goods by Customs, but the rights holder likewise incurs no direct expense of the prosecution.