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Client Alert - Supreme Court Holds Trademark Fair Use Defense Is Available Even When Confusion Is LIkely


The Trademark Act of 1946 provides an alleged trademark infringer with a statutory defense where 'the use of the name, term, or device charged to be an infringement is a use, otherwise than as a mark, ...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).

Until recently, there existed a split between the Courts of Appeals holding that a likelihood of confusion bars this defense (this group included the 5th, 6th and 9th Circuits), and those holding it does not (this group included the 2nd, 4th and 7th Circuits). On December 8, 2004, the U.S. Supreme Court held that a likelihood of confusion is no bar to the statutory fair use defense1 and that a defendant pleading the fair use defense is not required to negate a claim of likely confusion. KP Permanent Make-Up, Inc. v. Lasting Impression, Inc., No. 03-409, 2004 U.S. Lexis 8170 (December 8, 2004).

Both parties sold permanent makeup that was injected under the skin. Plaintiff owned an incontestable federal trademark registration for the terms 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 affirmative defense of fair use. The court based this holding on the findings that plaintiff had conceded that defendant used 'microcolor' only to describe its goods and not as a mark and that defendant had acted fairly and in good faith. In reaching its decision, the 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 very same goods on which plaintiff used its Micro Colors mark. The court took the position that use of a term could not possibly be fair use where 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: Permanent Make-up, 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 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] preclude 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).

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 trademarks2, 15 U.S.C. § 1114. That language calls upon plaintiff to show that defendant's actions are likely to confuse consumers as to the origin of the goods or services at issue. Next, the Court examined the language of 15 U.S.C. § 1115(b)(4).

Recognizing that the Lanham Act saddles plaintiff with the burden of establishing likelihood of confusion as an element of its prima facie case, while the fair use language 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 by simply leaving the fact finder in doubt as to whether the plaintiff had satisfied its burden to prove 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 for an affirmative defense.' Thus, to be of any relevance at all, the fair use defense would have to be available despite a likelihood of confusion. And so it is.

However, the Court left the door ajar by saying that its holding did not foreclose the relevance of the extent of any likelihood of confusion in assessing whether a defendant's use was objectively fair. So a defendant arguing for fair use may still have to show that any likelihood of confusion is not significant.


1  This decision expressly did not address nominative fair use, comparative advertising as fair use or parody as fair use.

2  The Court did not address claims brought under 43(a) of the Lanham Act for infringement of common law trademarks, but this decision may provide guidance to courts faced with a fair use defense in the 43(a) context.


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