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Which courts are empowered to hear trademark disputes?
Trademark disputes alleging violations of federal law can be heard in federal or state court.
Federal courts have original jurisdiction over federal trademark disputes. However, state courts also have jurisdiction over federal trademark disputes.
Trademark disputes alleging violations of state law can be heard in state court in every instance and in federal courts in only some instances. For a federal court to exercise jurisdiction over a trademark dispute based on state law, there must be some other jurisdictional basis for it to do so. Usually, a trademark plaintiff will assert claims under federal and state law. In these instances, the federal court can hear the state law claims by exercising supplemental jurisdiction. If no federal cause of action can be attached to a state trademark claim, diversity between the parties is necessary for a federal court to hear it. Without supplemental or diversity jurisdiction, a trademark dispute based on state law can be heard only in state court.
Regardless of the court in which the claims are heard, federal law will apply to the federal claims and state law will apply to the state claims.
What actions can be taken against trademark infringement (eg, civil, criminal, administrative), and what are the key features and requirements of each?
The primary action against trademark infringement is a civil suit for trademark infringement in federal or state court. To bring suit, a plaintiff must have standing (see “Who can file a trademark infringement action?” below), prepare a complaint making out a prima facie case for infringement and file the complaint with the requisite filing fee. The complaint should allege the following:
- The plaintiff owns valid and protectable trademark rights;
- The defendant’s mark is used in connection with the sale, offering for sale, distribution or advertising of goods or services;
- Consumers are likely to be confused by the parties’ marks; and
- The confusion caused by the defendant’s mark harms or is likely to harm to the plaintiff.
To prevail on the merits, the plaintiff must establish that there is a likelihood of confusion. Different courts have different – but substantially similar – multi-factor tests for evaluating whether confusion is likely. For example, the Second Circuit refers to the ‘Polaroid 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 plaintiff’s and defendant’s marks;
- the competitive proximity of the products sold under the marks;
- the likelihood that the plaintiff will bridge the gap;
- actual confusion;
- the defendant’s good faith, or lack thereof, in adopting its mark;
- the quality of the defendant’s product; and
- the sophistication of the plaintiff’s customers.
Not all factors must be met in a given case and some may have more weight than others, depending on the circumstances.
Remedies typically sought for trademark infringement 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 and corrective advertising. Once infringement has been proven, monetary relief may also be trebled by the court under the Trademark (Lanham) Act. Punitive damages may also be available under state law. Reasonable attorneys’ fees are also available in exceptional cases.
There are no criminal statutes protecting against trademark infringement in the United States, but counterfeiting has been criminalised at the state and federal level. Addressing counterfeiters at the criminal level requires the involvement of law enforcement.
For some forms of online trademark infringement, administrative action is available through the Uniform Domain Name Dispute Resolution Policy.
Who can file a trademark infringement action?
There are two statutory bases for trademark infringement claims under the Lanham Act: Section 32 and Section 43(a).
A plaintiff has standing to sue for trademark infringement under the act when:
- the person is within the ‘zone of interest’; and
- the person can show that the alleged infringement was the proximate cause of the plaintiff’s injury.
Only the registrant of a federally registered mark has standing to sue for infringement under Section 32. The same is true for a counterfeiting claim. The term ‘registrant’ includes legal representatives, predecessors, successors and assignees, but generally not licensees.
Unlike the limitation to registrants found in Section 32(1), Section 43(a) stipulates that a suit can be brought “by any person who believes that he or she is or is likely to be damaged” by the infringement. The general rule is that only an owner of a mark has standing to sue for infringement.
What is the statute of limitations for filing infringement actions?
Infringement actions based on 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’s delay in bringing suit has prejudiced the defendant for purposes of the equitable defences of laches and acquiescence.
What is the usual timeframe for infringement actions?
The timeframe for an infringement action through trial can take anywhere from six months to several years. Nonetheless, judicial relief can be afforded much faster by obtaining a preliminary injunction. Preliminary injunctions move on a much faster track and can be obtained within a matter of weeks or months. In more extreme cases involving urgent situations, a temporary restraining order can be obtained extremely quickly, with hearings often being scheduled within days of filing the papers.
What rules and procedures govern the issuance of injunctions to prevent imminent or further infringement?
Remedies sought for trademark infringement typically include injunctive and monetary relief, with injunctive relief being the most common. Permanent injunctions are awarded after a plaintiff successfully proves its case on the merits. A plaintiff seeking permanent injunctive relief therefore must establish that:
- it has suffered an irreparable injury;
- remedies such as monetary damages are inadequate to compensate for that injury;
- a balancing of the parties’ respective hardships favours the plaintiff; and
- a permanent injunction will not be contrary to the public interest.
A plaintiff also can seek a preliminary injunction simultaneously while filing the complaint or very shortly thereafter. To obtain preliminary injunctive relief, a plaintiff must satisfy the same four-factor test provided above for permanent injunctions and also establish a likelihood of success on the merits. A plaintiff pursuing a preliminary injunction should be prepared to post a bond to make the defendant whole for its damages if the defendant ultimately prevails on the merits of the case.
A plaintiff may also seek an ex parte temporary restraining order, which can issue without allowing the defendant to be heard. Temporary restraining orders are awarded only in the most urgent circumstances and expire within 14 days, unless they are converted into preliminary injunctions.
Injunctive relief can take many forms, depending on the circumstances of the case. A court may order:
- the sale of infringing goods to cease immediately or after some reasonable sell-off period;
- recall of the infringing goods;
- some form of corrective advertising by the defendant; or
- any number of other things as equity may require.
Preliminary injunctive relief is usually limited to cessation of the infringing activity, with more extreme forms – such as recalls – being reserved until after a full trial.
What remedies are available to owners of infringed marks? Are punitive damages allowed?
In addition to injunctive relief, remedies available to prevailing plaintiffs include certain forms of monetary relief. The court has broad discretion to determine the availability and amount of the relief. If the court decides to grant a trademark owner monetary relief, federal law also permits the doubling or trebling of the relief and, in exceptional cases, attorneys’ fees.
In the case of a non-competing trademark owner and accused infringer, the court may deny a successful plaintiff actual damages if there is no evidence that the infringement diverted trade or caused economic injury to the plaintiff. However, a court may grant a successful plaintiff an accounting of the defendant’s profits if:
- the defendant was unjustly enriched;
- the trademark owner sustained damage from the infringement; or
- the accounting is necessary as a deterrent to future infringement.
If the trademark owner and the accused infringer are competitors, the court may award actual damages in the form of its lost revenue as a result of the infringement. A successful plaintiff also may pursue an accounting of the defendant’s profits. In such an accounting, the plaintiff must demonstrate the defendant’s gross revenues. The burden then shifts to the defendant to apportion those revenues between infringing and non-infringing sources and to prove any deductible expenses.
The Lanham Act also allows for the ex parte seizure of goods bearing counterfeit imitations of registered marks. Trebled awards of damages and accountings of profits are mandatory in counterfeiting cases, except in extenuating circumstances.
The Lanham Act does not permit the award of punitive damages, but these are often available under state law.
A court may also grant attorneys’ fees to a prevailing party, but only in exceptional cases. Courts are increasingly holding that an exceptional case is simply one that stands out from others with respect to the substantive strength of a party’s litigating position or the unreasonable manner in which the case was litigated.
What customs enforcement measures are available to halt the import or export of infringing goods?
Customs enforcement is available to owners of registered marks. Generally, Customs will seize or detain goods that copy or simulate a trademark only if the mark is registered and the registration has been recorded with US Customs and Border Protection.
If Customs declines to act, trademark owners can bring a private action of trademark infringement against the importer or bring a proceeding before the International Trade Commission. If infringement is found, the remedial action is submitted to the president, who has 60 days to veto the action. If a veto is not submitted, the defendant importer may appeal the decision to the Federal Court of Appeals.
Although Customs generally focuses on issues of infringing imported goods, it has similar authority for the purpose of preventing the export of infringing goods.
What defences are available to infringers?
Laches is an equitable defence to injunctive relief, as well as to monetary relief. A defendant claiming laches must prove an unreasonable delay by the plaintiff in bringing the suit and that such delay caused prejudice (evidentiary or economic). If laches is found, it can bar the plaintiff from bringing the claim altogether or, alternatively, prevent awards of monetary relief.
For injunctive relief, a plaintiff’s delay in moving for a preliminary injunction can negate the need to grant an injunction.
Similarly, acquiescence occurs if a plaintiff affirmatively communicated its consent to the defendant’s conduct and then unreasonably delayed in challenging that conduct. As with laches, a showing of acquiescence requires proof that the plaintiff’s delay prejudiced the defendant’s interests in some way.
Unclean hands Unclean hands is an equitable defence that may bar relief. It also may bar other equitable defences, such as laches and acquiescence. To prove unclean hands, a defendant must demonstrate that the plaintiff intentionally acted inequitably or illegally. The underlying claim of an unclean hands defence must directly relate to the trademark at issue in the suit. A plaintiff’s general misconduct will generally not suffice for an unclean hands claim. Unclean hands is infrequently pleaded and succeeds only in the most egregious circumstances.
Fair use There are two types of fair use that a defendant may assert: classic fair use and nominative fair use.
Classic fair use is an affirmative defence that may be asserted if the use of words making up a plaintiff’s trademark is non-trademark in nature and merely for purposes of describing 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 owner’s trademark to identify the plaintiff’s goods or services rather than the defendant’s goods or services. To assert this defence, the defendant must demonstrate that:
- the goods or services cannot be identified without the use of the plaintiff’s mark;
- the use of the plaintiff’s mark is limited to what is necessary; and
- the defendant’s use does not suggest the plaintiff’s sponsorship or endorsement of the defendant’s goods or services.
Courts are currently split on whether nominative fair use is an affirmative defence to be proven by the defendant or, alternatively, whether it is something to be overcome by the plaintiff.
First Amendment free speech The constitutional guarantee of free speech is not an affirmative defence, but rather serves as an alternative argument against a finding of a likelihood of confusion. Free speech defences include parody and expressive works with any measure of artistic relevance.
What is the appeal procedure for infringement decisions?
If a trademark owner appeals a grant of motion for summary judgment, the appellate court will review the decision de novo, assessing all facts and inferences in a light most favourable to the non-moving party.
In an appeal following the trial of an infringement action, most US appellate courts will apply a deferential standard of review. Specifically, they will affirm the finding below, unless it is unsupported by substantial evidence.
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