Articles

Trademark Parody, Statutory and Nominative Fair Use Under the Lanham Act

By Baila Celedonia

Mar. 28, 2007

Contents

STATUTORY FAIR USE

Statutory Fair Use: A True Defense?

Is Prominent Use Fair?

Can Trade Dress Be the Subject of Fair Use?

NOMINATIVE USE AS FAIR USE

STATUTORY OR NOMINATIVE FAIR USE, DOES IT MATTER?

WILL THE LOGIC OF PERMANENT MAKE-UP APPLY TO NOMINATIVE FAIR USE CASES?

COMPARATIVE ADVERTISING AS FAIR USE

PARODY AS FAIR USE

A True Defense

Keep It Clean

The Medium Matters

Successful Parodies Attack Icons

CONCLUSION

The concept of fair use in copyright law is well known to intellectual property practitioners. An analogous concept exists in trademark law, where the use of another’s mark is deemed “fair”. As in copyright law, the public benefit of allowing the use is perceived to override any alleged detriment to the trademark owner, and is thus deemed to be a fair use.

The Lanham Act contains a statutory fair use provision, § 33(b)(4), 15 U.S.C. § 1115(b)(4). However, because of the narrow scope of the statutory provision, three additional, judge-made categories have arisen in which use of another’s trademark may be considered non-infringing. These are: (1) nominative fair use; (2) comparative advertising as fair use; and (3) parody as fair use. This paper focuses on statutory fair use and the related nominative fair use defense.

  STATUTORY FAIR USE

Pursuant to § 33(b)(4) of the Lanham Act, a defense to a claim of trademark infringement exists where:

the use of the name, term, or device charged to be an infringement is a use, otherwise than as a mark . . . or of a term or device which is descriptive of and used fairly and in good faith only to describe the goods or services of such party, or their geographic origin. . . .

15 U.S.C. § 1115(b)(4) (emphasis added).¹

While this fair use defense is specified as one of the limited number of defenses available to a defendant against a claim of infringement of an incontestable registration, it is also regularly used as a defense against any trademark infringement claim, including a non-incontestable registrations and a § 43(a) infringement claim. The elements of the statutory fair use defense have also been applied to alleged common law infringements.

In general terms, the statutory fair use defense prevents a trademark owner from monopolizing or appropriating a descriptive word or phrase. In a leading case on this defense, Zatarains, Inc. v. Oak Grove Smokehouse, Inc., 698 F.2d 786 (5th Cir. 1983), the court noted that “[t]he defense is available only in actions involving descriptive terms and only when the term is used in its descriptive sense rather than its trademark sense.” 698 F.2d at 791 (citing Soweco, Inc. v. Shell Oil Co., 617 F.2d 1178, 1185 (5th Cir. 1980).

Generally, if a term was coined by the trademark owner and thus exists only as a trademark, with no independent descriptive meaning, it cannot be used “fairly” under the statutory test. Horphag Research Ltd. v. Pellegrini, 337 F.3d 1036 (9th Cir. 2003) (Defendant using “Pycnogenol” in metatags was not eligible for classic fair use defense since word at issue had no meaning other than as plaintiff’s trademark). Likewise, the statutory defense is only available if the term is used by the defendant descriptively. Brother Records, Inc. v. Jardine, 318 F.3d 900 (9th Cir. 2003) (statutory fair use did not protect defendant because he was not using BEACH BOYS in dictionary sense of “boys who frequent a stretch of sand beside the sea” but rather, he was referring to secondary meaning of term, i.e. the musical group that recorded Good Vibrations).²

The purpose of the statutory fair use defense is to allow third parties to accurately describe their goods.³ Because the use is “otherwise than as a mark,” the “fair use” of someone else’s trademark in this manner should not be likely to cause confusion. But we know now that the fair use defense remains available even in the face of some likelihood of confusion.

[A]nyone is free to use the term in its primary, descriptive sense so long as such use does not lead to customer confusion as to the source of the goods or services.

In Zatarains, the plaintiff had a federal trademark registration for the mark FISH-FRI for a corn flour product used to batter fish for frying purposes. The district court found that while the mark was descriptive, it had acquired the necessary secondary meaning. However, the defendant’s use of “Fish Fry” was deemed a fair use of the term under the statute.

In affirming, the Fifth Circuit highlighted the defendant’s good faith, in that it had not used the term in a trademark sense, and had never attempted to register the words as a trademark. Of particular importance to the court was that defendant had consciously packaged their goods in such a way that any potential confusion was minimized. It noted that the “[t]he dissimilarity of trade dress of these products prompted the district court to observe that confusion at the point of purchase -- the grocery shelves -- would be virtually impossible.” 698 F.2d at 796.

   Statutory Fair Use: A True Defense?

Until recently, there was a split between those Courts of Appeals that held that a likelihood of confusion bars the statutory fair use defense and those which held that it did not. On December 8, 2004, the U.S. Supreme Court held that a finding of likelihood of confusion is not necessarily a bar to the statutory fair use defense⁴ and that the burden is on the plaintiff to prove a likelihood of confusion and not on a defendant pleading the fair use defense to negate such likelihood confusion. KP Permanent Make-Up, Inc. v. Lasting Impression I, Inc., 543 U.S. 111 (2004).

Both parties sold permanent makeup that was injected under the skin. Plaintiff owned an incontestable federal trademark registration for the mark “MICRO COLORS” in white letters separated by a green bar all contained within a black box. Defendant used the term “microcolor” on advertising material and pigment bottles. Plaintiff sued, alleging that defendant was infringing its Micro Colors trademark. The district court granted defendant’s motion for summary judgment on the statutory fair use affirmative defense. The court based its holding on the findings that (i) plaintiff had conceded that defendant had used “microcolor” only to describe its goods and not as a mark, and (ii) defendant had acted fairly and in good faith. In reaching its decision, the district court did not examine whether defendant’s use of “microcolor” was likely to cause confusion.

The Ninth Circuit reversed, finding that the district court had erred in considering the fair use defense without also considering whether consumers would be confused by defendant’s use of “microcolor” for the same goods as plaintiff used its MICRO-COLORS mark. The Ninth Circuit took the position that the use of a term could not possibly be fair if there is a likelihood of consumer confusion arising from such use.

The Supreme Court granted defendant’s petition for certiorari to address the split among the circuits as reflected in the following decisions cited by the Court: KP Permanent Make-Up, Inc. v. Lasting Impression I, Inc., 328 F.3d at 1072 (9th Cir. 2003) (likelihood of confusion bars the fair use defense); PACCAR Inc. v. TeleScan Technologies, L.L.C., 319 F.3d 243, 256 (6th Cir. 2003) (“[A] finding of a likelihood of confusion forecloses a fair use defense”); and Zatarains, Inc. v. Oak Grove Smokehouse, 698 F.2d 786, 796 (5th Cir. 1983) (alleged infringers were free to use words contained in a trademark “in their ordinary, descriptive sense, so long as such use [did] not tend to confuse customers as to the source of the goods”), versus Cosmetically Sealed Industries, Inc. v. Chesebrough-Pond’s USA Co., 125 F.3d 28, 30-31 (2nd Cir. 1997) (the fair use defense may succeed even if there is likelihood of confusion); Shakespeare Co. v. Silstar Corp. of Am., 110 F.3d 234, 243 (4th Cir. 1997) (“[A] determination of likely confusion [does not] preclud[e] considering the fairness of use”); Sunmark, Inc. v. Ocean Spray Cranberries, Inc., 64 F.3d 1055, 1059 (7th Cir. 1995) (finding that likelihood of confusion did not preclude the fair use defense). See KP Permanent Make-Up, Inc., 543 U.S. at 116-117.

In vacating the Ninth Circuit judgment, the Court first examined the language of the Lanham Act provision that creates a statutory cause of action for infringement of registered trademarks, 15 U.S.C. § 1114. That section requires the plaintiff to show that defendant’s actions are likely to confuse consumers as to the source or origin of the goods or services at issue. The Court then examined the statutory fair use defense language of 15 U.S.C. § 1115(b)(4). It recognized that the Lanham Act places on plaintiff the burden of establishing a likelihood of confusion as a critical element of its prima facie case. The fair use language on the other hand, makes no mention of likelihood of confusion. The Court concluded that, as a drafting matter, it was not the intent of Congress to place on the defendant the burden of negating confusion when pleading the fair use defense.

Moreover, the Court recognized that, as a practical matter, even absent the statutory defense, a defendant could prevail if the plaintiff had failed to satisfy its burden proving likelihood of confusion. The Court noted that “it is only when a plaintiff has shown likely confusion by a preponderance of the evidence that a defendant could have any need of an affirmative defense.” ⁵ Thus, to be of any use at all, the statutory fair use defense would have to be available despite a finding of a likelihood of confusion.

That, however, does not mean that likelihood of confusion is irrelevant in determining whether a particular use is a fair use. The Supreme Court left the door open to such consideration by saying that its holding does not preclude a court from considering the extent of any likelihood of confusion in assessing whether a defendant’s use was objectively fair. Therefore, a defendant arguing that its use is a fair use may still have to show that any likelihood of confusion is not significant.

On remand, the Ninth Circuit Court of Appeals accepted Supreme Court’s invitation and held that “the degree of customer confusion remains a factor in evaluating fair use.” KP Permanent Make-Up, Inc. v. Lasting Impression I, Inc., 408 F.3d 596, 609 (2005). Since likelihood of confusion will apparently continue to be a factor in measuring fair use, and since “determining whether a likelihood of confusion exists at the summary judgment stage is generally disfavored,” id. at 608, the value of the statutory fair use defense as a tool for early disposal of trademark claims may be limited.⁶ The Ninth Circuit made this clear when it held that summary judgment on the fair use defense was improper and specifically listed the degree of likely confusion among the genuine issues of material fact. Id. at 609.

   Is Prominent Use Fair?

Since the Zatarains court based its decision, in part, on the manner in which the defendant used Fish Fry on its packaging, it should come as no surprise that claims of fair use often turn on whether a defendant uses a mark too prominently on its product or in its advertising. In sharp contrast to the successful invocation of the statutory fair use defense in Zatarains is Sands, Taylor & Wood Co. v. Quaker Oats Co., 978 F.2d 947 (7th Cir. 1992). In Sands, the owner of several incontestable registrations for the mark THIRST-AID for a variety of beverage products and syrups, sued Quaker Oats for its use of the phrase “Gatorade is Thirst Aid for That Deep Down Body Thirst” in advertising and promotion. ⁷

The Seventh Circuit agreed with Quaker Oats that “thirst aid” was descriptive for the purposes of §33(b)(4).⁸

While Quaker Oats’s use of the term “thirst aid” was descriptive, it did not pass the remainder of the statutory test. Defendant argued that “Thirst Aid” was not used as a trademark because it was always used in conjunction with the famous GATORADE mark. The court rejected this argument. Rather, the court found that Quaker Oats used THIRST-AID as an “attention-getting symbol,” which often appeared more prominently and in larger type than the obvious trademark GATORADE. ⁹ The Sands court cited Louis Rich, Inc. v. Horace W. Longacre, Inc., 423 F. Supp. 1327 (E.D. Pa. 1976), for the proposition that “use meant to foster identification with defendant and its product is not a fair use.” 978 F.2d at 954.¹⁰

However, prominent use does not always preclude fair use. Fair use was found in Wonder Labs, Inc. v. Proctor & Gamble Co., 728 F. Supp. 1058 (S.D.N.Y. 1990), involving the term DENTIST’S CHOICE for toothbrushes. There, the court held that even though the term was prominently displayed in the defendant’s advertisements, simply drawing attention to the phrase was not enough -- attention had to be drawn to the words as a source of the product.

Of course, some cases are more difficult to explain. In Packman v. Chicago Tribune Company, 267 F.3d. 628 (7th Cir. 2001), the Chicago Tribune placed its THE JOY OF SIX headline, referring to the sixth basketball championship won by the Chicago Bulls, prominently on merchandise related to its news coverage of the team, despite plaintiff’s federally registered trademark for THE JOY OF SIX. The Court found the classic fair use defense despite the prominence of use and even though the mark, as used by defendant, was not descriptive of defendant’s goods, but rather of a newsworthy event. Perhaps it was because plaintiff was using the term in question in connection with its newspaper that the court did not take issue with the prominence of the term and that the use in connection with merchandise was not descriptive. ¹¹

In some cases, the key issue is not the prominence of defendant’s use of plaintiff’s mark, but rather the form of its use. Fair use is less likely to be a successful defense if the defendant is not using the term in Standard English form. In Brookfield Communications, Inc. v. West Coast Entertainment Corp., 174 F.3d 1036 (9th Cir. 1999) Brookfield sued West Coast for its use of its trademark MOVIEBUFF in West Coast’s metatags. Although the court recognized that “movie buff” is a descriptive term, it held that defendant’s elimination of the space between the words “movie” and “buff” was “pivotal” and enjoined defendant’s use of “MovieBuff” while noting it was free to use “Movie Buff” The court further observed that West Coast was free to use MovieBuff on its website if such use of the latter amounted to comparative or nominative fair use, i.e., “Why pay for MovieBuff when you can get the same thing here for FREE?” ¹²

Whether because of prominence, format, or more accurately, context, the manufacturer of hockey sticks in Hillerich & Bradsby Co. v. Christian Brothers, Inc., 943 F. Supp. 1136 (D. Minn. 1996) suffered for placing hockey star Mark Messier’s name alone on the blade of its hockey sticks. The plaintiff, also a hockey stick company, held the exclusive license to use Messier’s name on hockey sticks. The court granted a preliminary injunction and, in doing so, rejected defendant’s fair use defense whereby it claimed that it should be permitted to inform the public that the blade design featured on its hockey stick was the same shape as that used by Messier. The court held that while the defendant was free to advertise the similarity between its hockey stick and the stick used by Messier, it was not free to simply print the name “Messier” on its product.

In addition to prominence, format and context, some courts have rejected the statutory fair use defense because the defendant simply used the term too many times. RainForest Cafe©, Inc. v. Amazon, Inc., 86 F. Supp. 2d 886 (D. Minn. 1999) (alleged infringer’s prominent use of “Amazon” seven times on its restaurant menus raised genuine issue of fact as to whether term was employed to attract customers’ attention); but see, Playboy Enterprises, Inc. v. Terri Welles, Inc., 78 F. Supp. 2d 1066 (S.D. Cal. 1999) (applying both nominative and statutory fair use tests, court held that defendant’s repeated use of plaintiff’s marks on defendant’s website was fair even to the extent her use constituted a “repetitious commercial theme.”)

   Can Trade Dress Be the Subject of Fair Use?

In 1995 the Second Circuit held that the statutory fair use defense can be successfully invoked by a defendant accused of trade dress infringement, specifically, infringement of product configuration trade dress. Car Freshener Corp. v. S.C. Johnson & Son, Inc., 70 F.3d 267 (2d Cir. 1995). S.C. Johnson marketed a pine-tree-shaped air freshener called “Holiday Pine Potpourri.” The plaintiff sued, claiming Johnson’s product infringed its trade dress in pine-tree shaped air fresheners which are typically hung from the rear view mirrors of cars. The court held Johnson’s use to be statutory fair use since it was descriptive of characteristics of defendant’s goods, i.e., a pine scent and a Christmas theme. ¹³

   NOMINATIVE USE AS FAIR USE

Unlike most statutory fair use cases, nominative fair use involves the descriptive use of the plaintiff’s mark to describe or identify the plaintiff’s goods or services. While decided as a statutory and/or common law fair use case, WCVB-TV v. Boston Athletic Ass’n., 926 F.2d 42 (1st Cir. 1991), is more logically a nominative fair use case, although decided before the Ninth articulated the defense and coined the term. This case involved the use of the registered trademark BOSTON MARATHON by a television station in connection with its coverage of the running event. WCVB-TV had displayed the words “Boston Marathon” on the screen before, during, and after their coverage of the actual marathon. The First Circuit found that the fair use defense was properly asserted, reasoning that the trademark was used primarily in a descriptive manner. Because of the “timing, meaning, context, intent, and surrounding circumstances,” there was no likelihood of confusion. The court concluded that without allowing others to use the term “Boston Marathon,” it would be virtually impossible to describe the Boston Marathon. ¹⁴

[T]he words “Boston Marathon” . . . do more than call attention to Channel 5’s program; they also describe the event that Channel 5 will broadcast. Common sense suggests (consistent with the record here) that a viewer who sees those words flash upon the screen will believe simply that Channel 5 will show, or is showing, or has shown, the marathon, not that Channel 5 has some special approval from the [trademark holder] to do so. In technical trademark jargon, the use of words for descriptive purposes is called a “fair use,” and the law usually permits it even if the words themselves also constitute a trademark.

926 F.2d at 46.

In 1992, the Court of Appeals for the Ninth Circuit gave a name to this type of fair use defense to trademark infringement. New Kids on the Block v. News America Publishing, Inc., 971 F.2d 302 (9th Cir. 1992). The Ninth Circuit, in a typically articulate opinion by Judge Kozinski, described those circumstances in which the use of another’s trademark is allowed, even when not directly covered by the statutory fair use defense of the Lanham Act:

[W]here the defendant uses a trademark to describe the plaintiff’s product, rather than its own, we hold that a commercial user is entitled to a nominative fair use defense provided he meets the following three requirements: First, the product or service in question must be one not readily identifiable without use of the trademark; second, only so much of the mark or marks may be used as is reasonably necessary to identify the product or service; and third, the use must do nothing that would, in conjunction with the mark, suggest sponsorship or endorsement by the trademark holder.

Id. at 308.

New Kids involved a balancing of the plaintiffs’ rights in the name of their pop group, and the rights of the defendants to use that name to identify the group as the subjects of public opinion polls. The defendants, two newspapers, separately ran polls on their readers’ favorite “New Kid” or which “New Kid” they thought was sexiest, with voting done via a “900” phone numbers. The newspapers advertised these polls using a picture of the “New Kids on the Block,” and THE NEW KIDS ON THE BLOCK trademark.

The New Kids on the Block filed suit and alleged trademark infringement by the newspapers for using the New Kids trademark in association with the advertisements for the polls. The district court had granted summary judgment to defendants on First Amendment grounds. On appeal, however, the Ninth Circuit found it unnecessary to reach the constitutional issue, but articulated (and named) the nominative fair use defense.

Much as the statutory fair use defense of the Lanham Act is aimed at protecting a competitor’s ability to simply describe its own product, the nominative fair use defense allows a third party fairly to describe another’s product without resorting to “absurd turns of phrase to avoid use of the mark.” Id. at 306-307. ¹⁵ As Judge Kozinski notes, if a law suit resulted every time someone’s trademark was referred to, then a valuable social and commercial means of communication would be lost.

Such nominative use of a mark -- where the only word reasonably available to describe a particular thing is pressed into service -- lies outside the strictures of trademark law: Because it does not implicate the source-identification function that is the purpose of trademark, it does not constitute unfair competition; such use is fair because it does not imply sponsorship or endorsement by the trademark holder.

Id. at 308 (emphasis added).

The New Kids opinion states that the “classic fair use case where the defendant has used the plaintiff’s mark to describe the defendant’s own product” was not applicable. Id. However, it noted that courts had often found fair use in just such situations, citing WCVB-TV (Boston Marathon), discussed above; Volkswagenwerk Aktiengesellschaft v. Church, 411 F.2d 350 (9th Cir. 1969) (automobile repair shop could use VOLKSWAGEN mark to communicate the kind of cars it repairs, so long as it did not suggest authorization or sponsorship); and Universal City Studios, Inc. v. Ideal Publishing Corp., 195 U.S.P.Q. 761 (S.D.N.Y. 1977) (magazine could use television program’s trademark HARDY BOYS in association with a photograph of the show’s stars).

Cases like these are best understood as involving a non-trademark use of a mark -- a use to which the infringement laws simply do not apply, just as videotaping television shows for private home use does not implicate the copyright holder’s exclusive right to reproduction.

971 F.2d at 307.

As the Ninth Circuit concluded, rather than being a truly new defense, “nominative use” is really a consolidation of the rationale of these previous cases, which dealt with use of a plaintiff’s mark to describe the plaintiff.

The Ninth Circuit revisited its nominative fair use defense in the context of the use of a personal name, Abdul-Jabbar v. General Motors Corp., 85 F.3d 407 (9th Cir. 1996). GMC had produced a television commercial which asked the question:

Who holds the record for being voted the most outstanding player of [the NCAA] tournament? Lew Alcindor, UCLA, ‘67, ‘68, ‘69.

The commercial continued by stating that the Oldsmobile Eighty-Eight won an “award” three years in a row, and like the star, the car is a “champ” and a “first round pick”.

The defendant had met the first two prongs of the nominative use test: that Lew Alcindor could not be referenced without using his name; and that GMC used the name only to the extent necessary to identify him. The Ninth Circuit reversed the district court’s grant of summary judgment, however, on the third prong of the test. Because celebrity endorsements have become an established means of doing business, a jury could reasonably find that the use of Lew Alcindor’s name in the commercial implied endorsement. Id. at 413.

The vast majority of nominative fair use cases have been in the Ninth Circuit. Elsewhere, the nominative fair use defense has been used sparingly, but has gained acceptance in recent years in other Circuits.¹⁶ Since it was first enunciated, the requirements for successfully invoking this defense have also been fleshed-out.

We now know that, just as the defendant who seeks the protection of the statutory fair use defense will enjoy greater success if it does not use the mark too prominently, restraint in use of the mark in issue favors the nominative fair use defendant as well.¹⁷ We also know that disclaimers can help a defendant pleading nominative fair use,¹⁸ those who don’t disclaim or clarify may lose ¹⁹ and that some re-sellers of a mark owner’s goods have successfully invoked the nominative fair use defense.²⁰

It remains unclear however, whether the nominative fair use defense is a substitute for a multi-pronged likelihood of confusion test, ²¹ or whether the New Kids three-part test actually incorporates the traditional likelihood of confusion test. ²²

The Third Circuit recently issued an opinion in which it created a two-step approach to the nominative fair use analysis whereby the plaintiff must first establish that confusion is likely through the application of an abbreviated likelihood of confusion test, and then the defendant would have the opportunity to establish nominative fair use based on a variation on the New Kids three-part test. Century 21 Real Estate Corp. v. LendingTree, Inc., 425 F.3d 211 (3rd Cir. 2005).²³ The majority held that nominative fair use cases call for a likelihood of confusion test that excludes those prongs which would invariably favor plaintiff in the nominative use context. ²⁴ For example, the court noted that consideration of the degree of similarity between the parties’ marks is not helpful since it would “automatically lead to the conclusion that the use is likely to confuse simply because the mark is not merely similar, it is identical.” Id. at 225. Likewise, the court noted that consideration of the strength of plaintiff’s mark would lead to an inappropriate conclusion since purported nominative fair users “feel they need to use the actual mark to describe the plaintiff’s product because of its very strength and what it has come to represent.” Id. The court advised that other prongs of the likelihood of confusion test could be ignored if the facts before the court rendered those elements irrelevant or inappropriate in light of the specific nominative use at issue.

Under the Third Circuit test, if a likelihood of confusion were found under its abbreviated likelihood of confusion test, the court would then apply its modified New Kids test to determine whether, notwithstanding a likelihood of confusion, defendant’s use of plaintiff’s mark is fair and non-actionable. Under the Third Circuit nominative fair use test, the court is to consider:²⁵

1. Is the use of plaintiff’s mark necessary to describe (1) plaintiff’s product or service and (2) defendant’s product or service?
2. Is only so much of the plaintiff’s mark used as is necessary to describe plaintiff’s products or services?
3. Does the defendant’s conduct or language reflect the true and accurate relationship between plaintiff and defendant’s products or services?

Id. at 228.

While the Third Circuit’s test appears on its face to be more stringent, in that it asks whether use of plaintiff’s mark is “necessary” the Century 21 court tempered this requirement when it wrote “the court need not find that the use of the mark is indispensable in order to find this factor fulfilled. For, as we have stated before, the Lanham Act does not compel a competitor to resort to second-best communication.” Id. at 229 (internal quotation marks omitted).

The greatest difference between the two tests rests in the third prongs of each. While the New Kids test questions whether the defendant did anything beyond mere use of the mark that would suggest sponsorship or endorsement by the plaintiff, the Third Circuit test asks whether the defendant’s conduct and language reflect the true and accurate relationship between plaintiff and defendants’ product or services. Whether the difference in the test would result in a court reaching a different conclusion in a particular case, however, is doubtful.

Some of the nominative fair use cases decided in the past thirteen years have been factually straight forward; that is, the defendant uses plaintiff’s mark to refer to plaintiff and only plaintiff.²⁶ In other cases, however, the defendant uses plaintiff’s mark to refer not only to plaintiff’s goods or services, but also to describe a characteristic of defendant’s own goods or services. ²⁷

The best known of the “dual reference” nominative fair use cases involved a resume of sorts, Playboy Enterprises, Inc. v. Terri Welles, Inc., 78 F. Supp. 2d 1066 (S.D. Cal. 1999), aff’d, 279 F.3d 796 (9th Cir. 2002).²⁸ In Welles, the owners of various PLAYBOY marks sued Welles, a former PLAYMATE OF THE YEAR claiming her website and meta tags infringed various marks owned by Playboy. The district court held that both statutory and nominative fair use protected: (1) defendant’s use of  ”Terri Welles -- Playmate of the Year 1981” as the website heading and title of the link page; (2) use of “PMOY --81”  ”an acronym for “Playmate of the Year” as a repeating watermark on web pages,²⁹ (3) use of PLAYBOY and PLAYMATE in meta tags; and (4) defendant’s use of PLAYBOY and PLAYMATE in advertising banners on her web site and the web sites of others. The Ninth Circuit’s ruling extended the nominative fair use defense to a situation where the defendant used plaintiff’s mark not only to refer to plaintiff’s goods, but also to refer to defendant and her credentials. “The court has found that Ms. Welles’ use of the terms “PLAYBOY PLAYMATE of the Year 1981,” “PLAYMATE of the Year 1981,” and “PMOY “81” “constitute identification of herself: a nominative fair use.” 78 F. Supp. 2d at 1096.

The court found this use fair even though defendant’s use of the contested terms amounted to a “repetitious commercial theme.” The court explained,

[a]lthough an infringing use can be evidenced by the employment of a challenged term as an “attention-getting symbol,” the emphasis of a descriptive term on a label, packaging, or advertising does not necessarily mean that the term is being used in a trademark sense.

Id. at 1087.

In so holding, the court noted that the lettering of the plaintiff’s name, “Terri Welles,” was larger than the lettering of “PLAYBOY PLAYMATE OF THE YEAR 1981”on the homepage and advertising banners.

In another, unrelated, Playboy case, the court found that the defendant was using “playboy” in its dictionary sense, yet claimed to be applying the nominative fair use test. Playboy Enterprises, Inc. v. Netscape Communications Corp., 55 F. Supp. 2d 1070 (C.D. Cal. 1999). In this case, Playboy sued to enjoin Netscape from using plaintiff’s marks in connection with their search engines and internet banner advertisements. Netscape sells search terms (including third-party trademarks) to advertisers so that the advertisers could target their most promising audiences. Specifically, Netscape had programmed its search engine so certain ads would appear in response to plaintiff’s PLAYBOY and PLAYMATE marks. The court found that Netscape’s use of PLAYBOY and PLAYMATE was protected fair use, using the nominative fair use test. However, the court also found that Netscape was using the words “playboy” and “playmate” as “words in the English language and not as trademarks to identify a product or service,” id. at 1086, which would be a classic, statutory fair use.

   STATUTORY OR NOMINATIVE FAIR USE, DOES IT MATTER?

Some courts have held that “[i]f the defendant’s use of the plaintiff’s trademark refers to something other than the plaintiff’s product, the traditional fair use inquiry governs.” Toho Co., Ltd. v. William Morrow and Co., Inc., 33 F. Supp. 2d 1206 (C.D. Cal. 1998). Following this rule, the court in Trans Union LLC v. Credit Research, Inc., 142 F. Supp. 2d 1029 (N.D. Ill. 2001) held that where the defendant’s credit reports incorporated information gathered from plaintiff’s database of credit information and defendant used plaintiff’s TRANS UNION mark in metatags, the defendant’s activity was protected by statutory fair use. The lesson of Trans Union seems to be that even if defendant uses a term to refer to plaintiff’s goods or services, if that term also, or ultimately, refers to defendant’s goods or services, the statutory fair use defense could be used. Under the Toho and Trans Union analysis, it may not matter whether the term in question is used in its dictionary sense for its descriptive qualities or its trademark, source-identifying qualities. What seems to matter is to whom or what the defendant is referring when employing the term.

On the other hand, the court in Cairns v. Franklin Mint Company, 292 F.3d 1139 (9th Cir. 2002), explained the distinction between classic and nominative fair use by considering the nominative fair use analysis appropriate when a “defendant has used the plaintiff’s mark to describe the plaintiff’s product, even if the defendant’s ultimate goal was to describe his own product. Conversely, the classic fair use analysis applies “where the defendant has used the plaintiff’s mark only to describe his own product, and not at all to describe the plaintiff’s product.” Id. at 1152; see also, Brother Records, Inc. v. Jardine, 318 F.3d 900 (9th Cir. 2003). ³⁰

In Brother Records, the defendant was a former member of the Beach Boys musical group and was sued for his use of the BEACH BOYS trademark. Ultimately, the court abandoned the clear-line test that it and the Cairns court had articulated and recognized that where a defendant uses his or her own title, PLAYMATE OF THE YEAR or member of the BEACH BOYS, the distinction between a use that refers to the defendant and a use that refers to the trademark holder can be more confusing than helpful. Accordingly, the court analyzed the case under both tests and held that the nominative fair use defense did not save defendant. Although defendant Al Jardine satisfied the first two prongs of the New Kids test, he failed to satisfy the third prong because he emphasized BEACH BOYS when promoting his concerts and in so doing, created actual confusion.

   WILL THE LOGIC OF PERMANENT MAKE-UP APPLY TO NOMINATIVE FAIR USE CASES?

There are some situations in which the distinction between nominative and classic fair use may make a difference. For example, the dispositive question in nominative fair use case is often whether the term used was the only term reasonably available, while under the statutory fair use defense, the defendant needs simply establish that the term was used descriptively and not as a mark, even if there were other, equally succinct, descriptive terms available.

Another important difference between the two defenses is that the statutory fair use defense may be unavailable to a defendant using a coined term, while a defendant invoking the nominative fair use defense encounters no such hurdle. Note, however, that while a plaintiff’s trademark may technically be a “coined term,” sometimes its constituent parts are descriptive, which may allow use of the statutory defense. (FISH-FRI is arguably a coined term, but “fish fry” is descriptive).

Lastly, Permanent Make-up made the statutory fair use defense available even when there is some likelihood of confusion. In contrast, at least one nominative fair use case, decided before Permanent Make-up, held that the multi-pronged likelihood of confusion test was to be incorporated into the third prong of the New Kids test, implying that if likelihood of confusion were found, the defense would be unavailable. ³¹

The interesting question is whether circuit courts, and particularly those which had previously rejected the statutory defense if there was a likelihood of confusion, will follow the logic of Permanent Make-up when considering nominative fair use. So far, two courts have considered this question and both extended the Supreme Court’s Permanent Make-Up decision to the nominative fair use defense. In Century 21 Real Estate Corp. v. LendingTree, Inc., 425 F.3d 211, 222-223 (3d Cir. 2005) the Third Circuit wrote “[a]fter [the Permanent Make-Up] decision, it seems to us that neither classic or nominative fair use should rise and fall based on a finding of likelihood of confusion.” Similarly the court in Ty, Inc. v. Publications Int”l, Ltd., 2005 U.S. Dist. Lexis 23420 at *19 (N.D. Ill. February 25, 2005) wrote “[w]hile the Supreme Court specifically declined to address the nominative fair use defense, I am persuaded that its logic applies with similar force to defendants pursuing the defense of nominative fair use despite the almost certain likelihood of confusion regarding the source of the mark.”

    COMPARATIVE ADVERTISING AS FAIR USE

 As in the nominative fair use cases discussed above, comparative advertising involves a situation where a trademark of a competitor is used to refer to a competitor's goods.  Because comparative advertising is generally an obvious comparison of competing products (for example, "8 out of 10 doctors surveyed prefer Acme creme to Widget creme"), there is little likelihood of confusion as to the source of the ad. ³²

Because there would be no likelihood of confusion, comparative advertising, in and of itself, is generally not actionable.³³  However, when such advertising is false, or results in the disparagement, dilution or tarnishment of another's trademark, it is actionable. Such causes of action are beyond the scope of this paper. A brief discussion of satirical comparative advertising cases is warranted, however, because of their relationship to the parody defense discussed below.

Wendy's International, Inc. v. Big Bite, Inc., 576 F. Supp. 816 (S.D. Ohio 1983), was a § 43(a) action in what was labeled the "burger wars." Big Bite, a small competitor trying to compete with the national chains, ran "rather clever" television commercials which parodied some of the larger chains. In one, "Little Wendy", a pigtailed, frecklefaced young girl -- and Wendys trademark -- orders a Big Bite sandwich and exclaims, "Ain't no reason to go any place but Big Bite."³⁴ The "Little Wendy" character was mimicked almost exactly by Big Bite. Wendys alleged that the commercial violated § 43(a) of the Lanham Act because it insinuated that "Little Wendy" (and therefore Wendy's International, Inc.) endorsed, or was otherwise associated with, Big Bite.

“Although it is fairly well established that an advertiser such as Big Bite may lawfully use a competitor's trademark for the purpose of comparing its wares directly to those of the competitor, no uniform rule exists where, as here, the advertiser compares his goods to those of another implicitly or indirectly by using the other's mark in a satirical or humorous manner. In fact, the courts facing this issue have reached widely different results for widely different reasons.” 576 F. Supp. at 820 (citations omitted).

The court in this case found the commercials to be inoffensive, entertaining and light-hearted spoofs which did not misrepresent or make false statements about the competing products. However, the court grudgingly issued a preliminary injunction, because Wendy's had met its burden of "showing that the disputed advertisement 'tend[s] to create a false impression.'" Id. at 822. Given Big Bite's motives, "a strong inference of probable confusion arises, and all doubts are resolved against the defendant." Id.  As discussed in the last section of this paper, a different result would likely have occurred if Big Bite was not a competitor.

Similar fair use issues arise in the dilution context. In Deere & Co. v. MTD Products, Inc., 41 F.3d 39 (2d Cir. 1994), MTD ran a commercial which, instead of simply using the famous trademark of Deere and Company, a two-dimensional silhouette of a leaping male deer in profile, it used an altered form of the trademark. The deer in the MTD commercials was animated and hopped around the television screen, pursued by a YARD-MAN lawn tractor and a barking dog.

Deere's trademark infringement claim was rejected, but it succeeded on its dilution claim. The Second Circuit found that the alteration of the Deere logo constituted dilution. However, the court stressed that not all alterations of another's trademark would constituted dilution:

“Whether the use of the mark is to identify a competing product in an informative comparative ad, to make a comment, or to spoof the mark to enliven the advertisement for a noncompeting or a competing product, the scope of protection under a dilution statute must take into account the degree to which the mark is altered and the nature of the alteration. Not every alteration will constitute dilution, and more leeway for alterations is appropriate in the context of satiric expression and humorous ads for noncompeting products. But some alterations have the potential to so lessen the selling power of a distinctive mark that they are appropriately proscribed by a dilution statute. Dilution of this sort is more likely to be found when the alterations are made by a competitor with both an incentive to diminish the favorable attributes of the mark and an ample opportunity to promote its products in ways that make no significant alteration.” 

41 F.3d at 45.  Because the parties had competing products, the Court found the satire to be unfair.

   PARODY AS FAIR USE

 "Parody is a humorous form of social commentary and literary criticism that dates back as far as Greek antiquity."  LL Bean, Inc. v. Drake Publ. Inc., 811 F.2d 26, 28 (1^st Cir.), Cert. denied, 483 U.S. 1013 (1987).  Because trademarks have become an all-pervasive element in our society, it is not surprising that they have also become a legitimate target of satirists and comedians, who seek to comment on or poke fun at aspects of our national culture.

As the Supreme Court noted in a copyright context, parody is an important form of artistic expression generally protected by the First Amendment. Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569 (1994).  However, as in copyright, a mere assertion that the complained of use is a parody, will not mean that the use is automatically fair and non-infringing. As the Wendy's Int'l and Deere & Co. cases illustrate, ultimately, the court determines if there is a likelihood of confusion or dilution, while keeping in mind the value of parody in a free society.  Therefore, when the parody defense to a trademark infringement or dilution claim is made, judicial reasoning often involves a mixed bag of traditional trademark and dilution analysis and free speech policy.

   A True Defense

A trademark defendant can rely on the concept of parody under two different theories.  First, a defendant who establishes that it has used a mark in connection with a true and successful parody which (a) targets the plaintiff or its mark and (b) conveys an expressive, as opposed to commercial, message, enjoys the protection – albeit not absolute – of the First Amendment.^{35 36}

Second, a parody that does not meet the criteria for First Amendment protection, can nonetheless be parodic enough to prevent consumer confusion, and thus still be non-actionable.³⁷  Even though the amusing use of a mark may not target the trademark owner or its products or may convey a commercial, as opposed to expressive, message, and thus not qualify for protection under First Amendment parody analysis, if the joke is clear enough to result in no likelihood of confusion, the comedic or pseudo parodic character of the work may save even commercial use of a mark from a finding of infringement. 

Some have argued that the parodic nature of the work should not be considered when weighing each of the several likelihood of confusion factors, but should instead stand as its own factor.  For example, in Lyons Partnership the court addressed plaintiff’s argument that the lower court erred by considering parody in connection with each of the likelihood of confusion factors rather than as its own separate factor.  The court found the argument “absurd.”  To illustrate the “absurdity” of evaluating any of the factors without consideration given to the parodic nature of the work, the court pointed to the first factor of the 5th Circuit test: the strength of the mark.  In standard analysis, the stronger the mark, the more likely the confusion.  But when dealing with a parody, a particularly strong mark will likely make it easier for the consumer to recognize the allegedly infringing use as a parody, something poking fun at a cultural icon.  “While it is only one factor to consider, [parody] is a factor that must be considered in conjunction with all of the other digits of confusion.”

In the Hilfiger case, the defendants Nature Labs, sold pet perfume under the mark Timmy Holedigger.  Facing a trademark infringement claim, Nature Labs argued that there was no likelihood of confusion because consumers could view Timmy Holedigger pet perfume as an obvious parody.  Nature Labs also argued that even if there was some likelihood of confusion, its product was a parody protected under the First Amendment.  Addressing the First Amendment defense, the court recognized that plaintiff’s mark and product were not necessarily the targets of defendant’s alleged parody. Nonetheless, wrote the court,  “[e]ven if not technically a parody, Nature Labs’ use is at least a pun or comical expression, ideas also held to be entitled to First Amendment protection.” Id. at 415.  But, because defendant used plaintiff’s mark “at least in part to promote a somewhat non-expressive, commercial product, the First Amendment does not extend to such use, or to the extent that it does, the balance tips in favor of allowing trademark recovery, if in fact consumers are likely to be confused.” Id. at 415-416. The Hilfiger court ultimately concluded that “the joke contained in Nature Lab’s product was clear enough to prevent confusion under the trademark likelihood of confusion analysis.”

Unfortunately, a review of the trademark parody cases gives us few bright line rules.  For the most part, the parody cases appear to be a barometer of both the presiding judge's sense of humor and sense of fairness. As Tom McCarthy puts it, "a non-infringing parody is merely amusing, not confusing.” J.T. MCCARTHY, MCCARTHY ON TRADEMARKS AND UNFAIR COMPETITION, § 31.38[1] (1995).

   Keep It Clean

What seems evident is that a parody which associate a trademark with illegal drugs³⁸  or raw pornography³⁹ will not likely be judged funny or fair. Even when a dilution theory is either not available or not raised, the harm to plaintiff caused by such negative association is evident.  Court’s generally find any first amendment concerns are overridden, and will seek to find actionable "confusion."

In enjoining the pornographic film "Debbie Does Dallas," the Second Circuit noted: “It is hard to believe that anyone who had seen defendants' sexually depraved film could ever thereafter disassociate it from plaintiff's cheerleaders. This association results in confusion which has a tendency to impugn (plaintiff's services) and injure plaintiff's business reputation.”  Dallas Cowboys Cheerleaders, Inc. v. Pussycat Cinema, Ltd., 604 F.2d at 200, 205 (2^nd Cir. 1979).  Notwithstanding the expressive, as opposed to purely commercial, context of defendant’s use of the marks, the court’s apparent disgust with defendant and its film dictated that defendant’s actions would be held to be actionable.

Based on the same concerns for a company's reputation, other courts have also stretched to find trademark confusion if the parody disparages the plaintiff's trademark. This can be the only rationale for the contrary results in Chemical Corp. of America v. Anheuser-Busch, Inc., 306 F.2d 433 (5th Cir. 1962) (finding a likelihood of confusion caused by the use of the slogan "Where There's Life . . . There's Bugs" for a floor wax insecticide product where plaintiff’s mark was “Where There’s Life There’s Bud” and Anheuser-Busch, Inc. v. Florists Ass'n of Greater Cleveland Inc., 603 F. Supp. 35 (N.D. Ohio 1984) (finding no confusion caused by a floral association's use of the slogan "This Bud's For You").  

The most inconsistent group of cases involve parodies which are done, generally by non-competitors, and which are not (at least in the authors’ opinions) particularly disparaging or obscene.  Examples of this inconsistency include Eveready Battery Co., Inc. v. Adolph Coors Co., 765 F. Supp. 440 (N.D. Ill. 1991) (refused to enjoin, on copyright, trademark or dilution grounds, a beer commercial which parodied the "Energizer Bunny" and featured Leslie Nielsen dressed in Bunny ears, tail and feet, and banging on a drum); Gucchi Shops, Inc. v. R.H. Macy and Co., Inc., 446 F. Supp. 838 (S.D.N.Y. 1977) (enjoined a use of the words "Gucchi Goo" together with a red and green stripe on a diaper bag); Tommy Hilfiger Licensing, Inc. v. Nature Labs, LLC, 221 F.Supp.2d 410 (S.D.N.Y. 2002) (refused to enjoin use of TIMMY HOLEDIGGER for pet perfume); Girl Scouts of U.S. of America v. Personality Posters Mfg. Co., 304 F. Supp. 1228 (S.D.N.Y. 1969) (refused to enjoin a poster of an obviously pregnant young teen in a Girl Scout uniform beneath the slogan "Be Prepared"); American Express Co. v. Vibra Approved Labaratories. Corp., 10 U.S.P.Q.2d 2006 (S.D.N.Y. 1989) (based on dilution, enjoined defendant's "America Express" condom card containing a condom and the slogan "never leave home without it"); Jordache Enterprises, Inc. v. Hogg Wyld, Ltd., 828 F. 2d 1482 (10th Cir. 1987) (refused to enjoin the use of the trademark LARDASHE with a pig design for large-sized women's jeans); Mutual of Omaha Insurance Co. v. Novak, 836 F. 2d 397 (8th Cir. 1987) (enjoined the use of the words "Mutant of Omaha" and Indian Head logo on tee shirts, mugs, and other merchandise).⁴⁰

   The Medium Matters

Court's are more likely to find a parody to be a fair use, that is, non-infringing or diluting, if the parody appears in a traditional medium of protected free speech, finding such use to be "noncommercial".⁴¹  

The First Circuit reversed the district court's finding of dilution against High Society magazine's 2-page feature "L.L. Beam's Back-To-School-Sex Catalog," depicting models in sexually explicit positions, holding that the article was protected as a noncommercial, editorial or artistic parody.  ‘It offends the Constitution . . . to invoke the anti-dilution statute as a basis for enjoining the noncommercial use of a trademark by a defendant engaged in a protected form of expression.” L.L. Bean, Inc., 811 F.2d at 32.

In support of its conclusion that the defendant's use was noncommercial (and therefore entitled to a more heightened level of protection than would be afforded to commercial speech), the First Circuit pointed to use of the labels "parody" and "humor" in the magazine's table of contents; that the L.L. Bean mark and the article were not mentioned on the magazine's front or back cover; that the article took up only two pages of a hundred page issue; and that the defendant was not selling any of the products shown in the article.⁴² 

Another example of the broader scope allowed trademark parody in a noncommercial context is Cliffs Notes, Inc. v. Bantam Doubleday Dell Publishing Group, Inc., 886 F.2d. 490 (2d Cir. 1989), which involved the use by the publisher of Spy Magazine of the cover design elements of Cliffs Notes for tongue-in-cheek parody called "Spy Notes." Reversing the district courts injunction based on a likelihood of confusion, the Court stated that a greater risk of confusion must be allowed “for works such as parodies, in which expression, and not commercial exploitation…is the primary intent.” Id. at 495.

Since protest, leafleting and union activity all exist at the core of what we consider First Amendment activity, the decision in WHS Entertainment Ventures v. United Paperworkers International Union, 997 F.Supp.946 (M.D. Tenn. 1998) could have been predicted.  In that case, a restaurant sued a union for trademark infringement arising from the union’s use of a variation of plaintiff’s horse logo whereby the horse appeared emaciated and sweating as opposed to muscular and healthy.  The union had placed the design on flyers listing health code violations recorded against the plaintiff’s restaurant.  The court held that the union’s use of the horse mark on the flyers was not “use in commerce” under the Lanham Act.  Moreover, the court found there was no likelihood of confusion, in part, because the accused mark was a “parody which is not flattering” and therefore, those seeing it would not reasonably believe the restaurant had authorized the use of its mark on the flyers. Id. at 951-952.

The distinction between expressive and commercial contexts was also acknowledged by the court in Mutual of Omaha, normally cited for the proposition that a disparaging parody of a company's trademark ("Mutant of Omaha") on a commercial product such as tee-shirts should be enjoined. The same court noted that while the parody defense was not available in the context of merchandise, it could be successfully invoked to protect expressive works such as anti-nuclear pamphlets. 836 F.2d at 403 n. 8.  This dicta in Mutual of Omaha was adopted and relied upon in Bally Total Fitness Holding Corp. v. Faber, 29 F.Supp.2d 1161 (C.D. Cal. 1998).  In Bally, the defendant used plaintiff’s stylized⁴³ BALLY trademark on its BALLY SUCKS website where consumers could share complaints about plaintiff’s health clubs.  The court granted defendant’s motion for summary judgment holding that defendant’s use of the stylized Bally’s mark did not infringe or dilute the mark since it amounted to speech protected by the First Amendment.  Addressing plaintiff’s reliance on the “Enjoy Cocaine” case and “Mutant of Omaha” tee-shirt case, the court cited L.L. Bean for the proposition that “trademark owners may not quash unauthorized use of the mark by a person expressing a point of view” and distinguished “Enjoy cocaine” and “Mutant of Omaha” since, unlike the instant case, they did not involve consumer commentary.

But those using another’s mark in traditional free speech mediums will not necessarily get a free pass.  In Dr. Seuss Enterprises, LP. v. Penguin Books USA, Inc., 924 F. Supp. 1559 (S.D. Cal. 1996), aff’d., 109 F.3d 1394 (9th Cir. 1997), the defendant published a book about the O. J. Simpson

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