IP P®OSPE©TIVE

This post will be a break from the usual report or opinion regarding the IP market. I have encountered a rarely used but potentially case-changing doctrine in trademark law with a lot of bite - should it ever be adopted by the U.S. Supreme Court, or codified.  I thought the issue could use some exposure. This piece will read a little bit more like a law review article (I apologize), but bear with me - this is important and interesting stuff!

Fair use is not a stranger to trademark practice.  After all, it is codified in the Lanham Act under § 33(b)(4), 15 U.S.C. § 1115(b)(4):

Statutory Fair Use

” . . . 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. . . .

Statutory fair use is generally coined classic fair use.  It is not available if a mark has been coined by the trademark owner, without a separate descriptive meaning.  “The 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.”  See Zatarains, Inc. v. Oak Grove Smokehouse, Inc., 698 F.2d 786, 791 (5th Cir. 1983)(citing Soweco, Inc. v. Shell Oil Co., 617 F.2d 1178, 1185 (5th Cir. 1980). 

The nominative fair use doctrine, however, is an arcane element of trademark law that was fashioned by one federal court of appeals, has been acknowledged by 4 other federal circuits, but only adopted in part by one of those federal circuits.  To this date, it exists as a sparsely used judge-initiated affirmative defense to a claim of trademark infringement whose application in most federal circuits remains to be determined.

Nominative Fair Use    

The nominative fair use doctrine in trademark law is best summarized by the following statement by the Court of Appeals for the Ninth Circuit in New Kids on the Block v. News America Publishing, Inc., 971 F.2d 302 (9^th Cir. 1992):

“With many well-known trademarks, such as Jell-O, Scotch tape and Kleenex, there are equally informative non-trademark words describing the products (gelatin, cellophane tape and facial tissue).  But sometimes there is no descriptive substitute, and a problem closely related to genericity and descriptiveness is presented when many goods and services are effectively identifiable only by their trademarks.  For example, one might refer to “the two-time world champions” or “the professional basketball team from Chicago,” but it’s far simpler (and more likely to be understood) to refer to the Chicago Bulls.  In such cases, use of the trademark does not imply sponsorship or endorsement of the product because the mark is used only to describe the thing, rather than to identify its source.”

Id., at 306.

New Kids on the Block v. News America Publishing, Inc.

This Ninth Circuit case was the first to recognize the nominative fair use doctrine as a separate consideration from a classic fair use defense.  In New Kids on the Block, a string of newspapers took polls on the teen-aged pop-band’s popularity.  Specifically, the newspapers used the band’s name, trademark, and a picture of the band in an effort to solicit readers to call a 900-number to vote for their favorite member of the band.  The newspapers received a portion of the fee (50 cents to 95 cents) for each call.  The band sued the newspapers for trademark infringement, false advertising, and false designation of origin under the Lanham Act, among other claims, in a federal district court in California.  Id., at 304-305.  While the District Court granted summary judgment to the newspapers on First Amendment grounds, on appeal the Ninth Circuit affirmed the decision but decided to promulgate an entirely new doctrine: the nominative fair use exemption from federal trademark laws.  The doctrine, as it was fashioned by the court in New Kids, could be labeled an exemption, rather than an exception, because the court stated that “[c]ases 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 . . . [s]uch 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 . . .”  Id., at 307-308.  The court held that the newspapers’ use of the New Kids on the Block name and trademark was a fair use of the mark “[b]ecause it does not implicate the source-identification function that is the purpose of trademark . . .”  Id., at 308. 

The court in New Kids delineated a completely new test for nominative fair use, distinguishing it from “classic” fair use.  Classic fair use arises when a defendant uses the plaintiff’s trademark to refer to the defendant’s product, while nominative fair use arises when a defendant uses the plaintiff’s trademark to describe the plaintiff’s product.  Id., at 308.  To establish a classic fair use defense, a defendant must prove the following three elements: “1. Defendant’s use of the term is not as a trademark or service mark; 2. Defendant uses the term ‘fairly and in good faith’; and 3. [Defendant uses the term] ‘[o]nly to describe’ its goods or services.”  See McCarthy on Trademark and Unfair Competition § 1149 (4^th ed.2001).  However, according to the court in New Kids, “where a 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;

[S]econd, only so much of the mark or marks may be used as is reasonably necessary to identify the product or service; and

[T]hird, the user must do nothing that would, in conjunction with the mark, suggest sponsorship or endorsement by the trademark holder.”

New Kids, at 308(emphasis added).

With regard to the first prong, the court held that it was satisfied because “[i]t is no more reasonably possible . . . to refer to the New Kids as an entity than it is to refer to the Chicago Bulls, Volkswagens or the Boston Marathon without using the trademark.”  Id.  With regard to the second prong, the court added some color, stating that “a soft drink competitor would be entitled to compare its product to Coca-Cola or Coke, but would not be entitled to use Coca-Cola’s distinctive lettering.”  Id.   In this, it can be inferred that the use of a design mark (Coca-Cola’s lettering), where only the word mark (the name Coca-Cola) is necessary, would violate the second prong.  Because the newspapers only used the New Kids’ name and a picture of the band, the court held this was no more than was reasonably necessary to identify the band.  Finally, because no indication of endorsement or sponsorship was present, the court held the third prong was also satisfied, and the newspapers were entitled to a nominative fair use defense.

Cairns v. Franklin Mint Company

Ten years after New Kids was decided, the Ninth Circuit in Cairns v. Franklin Mint Company, 292 F.3d 1139 (9^th Cir. 2002) reaffirmed the nominative fair use defense, exercising an application of the New Kids’ test that remains the protocol in the Ninth Circuit today, although this protocol is in doubt after a 2004 US Supreme Court case that is discussed below. 

In Cairns, the Franklin Mint Company had produced collectibles bearing the name and likeness of Princess Diana for 16 years before her death, including dolls, plates, and jewelry.  The dolls and collectibles used the name “Diana, Princess of Wales” on the product and in advertising for the product, and used Princess Diana’s likeness by adorning the dolls in identifiable Princess Diana clothing.  Princess Diana never objected to these products, nor to others produced by other companies.  After her death, a charity fund created by her estate (the “Fund”) licensed at least 20 companies to produce such products, but not Franklin Mint.  Cairns, at 1144.  The Fund then brought claims against Franklin Mint in a federal district court in California for false endorsement, false advertising, and dilution of trademark under the Lanham Act, among other state claims.  The district court granted summary judgment to Franklin Mint on the Lanham Act claims because the use of Princess Diana’s name and likeness “did not implicate the source-identification purpose of trademark protection”, but the court stopped short of considering whether it was a nominative fair use.  Id., at 1149. The estate appealed.  

The Ninth Court considered the facts appropriate for consideration under the nominative fair use doctrine, stating that “New Kids’ “threshold consideration” applies in the present case . . .” Id., at 1150.  The court solidified the distinction between classic fair use and nominative fair use, stating the following:

“The distinction between classic and nominative fair use is important for two reasons: (1) classic and nominative fair use are governed by different analyses; and (2) the classic fair use analysis only complements the likelihood of customer confusion analysis set forth in Sleekcraft,[1] whereas the nominative fair use analysis replaces the Sleekcraft analysis.”

Id.(emphasis included).  Therefore, under Cairns, the likelihood of confusion and nominative fair use analyses are mutually exclusive. 

The Cairns court acknowledged the New Kids‘ nominative fair use doctrine, and then pledged its allegiance, stating that the nominative fair use analysis “is appropriate where a defendant has used the plaintiff’s mark to describe the plaintiff’s product, even if the defendant’s ultimate goal is to describe his own product.”  Id., at 1151 (emphasis included).  Therefore, the classic fair use analysis is only appropriate when the defendant uses plaintiff’s mark only to describe his own mark directly. 

In determining whether the nominative fair use analysis was applicable to the Princess Diana products produced by Franklin Mint, the court stated that “Princess Diana is the [plaintiff's] “product” and Princess Diana’s name and likeness are the [plaintiff's] marks.”  Id., at 1152.  The court went on to decide that Franklin Mint used the Princess Diana mark to describe Princess Diana, “even though Franklin Mint’s ultimate goal was to describe its own products.”  Id., at 1153.  Therefore, the nominative fair use analysis was appropriate. 

With regard to the first element (the product must be one not readily identifiable without use of the trademark), the court stated that “one might refer to ‘the English princess who died in a car crash in 1997′, but it is far simpler (and more likely to be understood) to refer to ‘Princess Diana.’”  Id.  Thus, the court reasoned that Princess Diana’s person is not readily identifiable without use of her name.  With respect to Princess Diana’s likeness, the court embarked on a similar analysis, stating that “it is far simpler (and more likely to be understood) to juxtapose - as Franklin Mint also did - a picture of the doll and a photograph of Princes Diana wearing the same suit and carrying the same purse . . .”  Id.  Thus, the court reasoned that Princess Diana’s physical appearance is not readily identifiable without the use of her likeness, and therefore the first element was satisfied.

With regard to the second element (only so much of the mark or marks may be used as is reasonably necessary to identify the product), the court acknowledged the same example of using the Coca-Cola lettering as going beyond that which is reasonably necessary.  Because Franklin Mint did not “use[] any ‘distinctive lettering’ or any particular image of Princess Diana intimately associated with the Fund”, it did not cross any unauthorized boundaries. 

“[A] caption reading ‘Diana’ is reasonably necessary to identify Princess Diana.  Similarly, a photograph showing Princess Diana wearing her royal tiara and bolero jacket is reasonably necessary to identify these accessories of Princess Diana.  In a nutshell, Franklin Mint had to ensure that its customers understood the references to Princess Diana, and it did what was reasonably necessary for this purpose.  Thus, the second element of the . . . nominative fair use test is also met.”  Id.

With regard to the third and final element (the user must do nothing that would, in conjunction with the mark, suggest sponsorship or endorsement by the trademark holder), the court emphasized the fact that, while some of Franklin Mint’s advertisements for other celebrity-related products stated that they were “authorized” by a trademark holder, none of its Princess Diana products did.  Therefore, “the absence of similar statements in Franklin Mint’s advertisements for its Diana-related products suggests that they are not sponsored or endorsed by the Fund.”  Id., at 1155.  Therefore, the third and last element was met, and the court held that a nominative fair use defense was appropriate under the circumstances.

The Nominative Fair Use Doctrine Remains a Ninth Circuit Doctrine, and Its Adoption By Other Circuits Has Been Negligible

As of today, only the First, Second, Third, Fifth, and Sixth Circuits have referenced the nominative fair use defense by name, and none have adopted the defense in whole.  The First, Second, and Fifth Circuits have only referenced it to refer to what district courts had done with the issue.  See Universal Communication Systems v. Lycos, Inc., 478 F.3d 413 (1^st Cir.2007)(stating that “[t]his court has not previously decided whether to endorse the Ninth Circuit’s test for nominative fair uses, and we have no occasion to do so here); see also Chambers v. Time Warner, Inc., 282 F.3d 147, 156 (2^nd Cir.2002)(noting that the district court had applied the standard for nominative fair use as articulated by the Ninth Circuit, but finding that the court had erred in its application); see also Pebble Beach Co. v. Tour 18 I Ltd., 155 F.3d 526, 546 n.13 (5^th Cir.1998)(acknowledging the Ninth Circuit’s nominative fair use test); see also Interactive Products Corp. v. a2z Mobile Office Solutions, Inc., 326 F.3d 687, 698 n.6 (6^th Cir.2003)(footnoting why a district court case involving the nominative fair use defense was distinguishable from the case before it).  The Third Circuit adopted the defense, but modified the test, such that the nominative fair use analysis does not replace the likelihood of confusion test, but instead follows the likelihood of confusion test, and only after a plaintiff proves a likelihood of confusion is the nominative fair use test triggered.  See Century 21 Real Estate Corporation v. Lendingtree, Inc., 425 F.3d 211 (3^rd Cir. 2005).

Significantly, the Sixth Circuit is the only circuit to expressly reject the application of the nominative fair use defense under facts where it might have been appropriately applied.  In PACCAR, Inc. v. Telescan Technologies, LLC, 319 F.3d 243, the defendant claimed a nominative fair use defense for using the names of “Peterbilt” and “Kenworth”, two recognizable trademarks, in the domain name of its website and on its web page to describe products of those companies.  The court referred to the defense as “a defense allowed by the Ninth Circuit in cases where the defendant uses a trademark to describe the plaintiff’s product rather than its own.”  Id., at 256 (citing New Kids on the Block).  The court, however, declined to follow the Ninth Circuit’s test, stating that “[t]his circuit has never followed the nominative fair use analysis, always having applied the Frische’s Restaurants test.[2]  We are not inclined to adopt the Ninth Circuit’s analysis here.”  PACCAR, Inc. was overruled by the U.S. Supreme Court in KP Permanent Make-Up, Inc. v. Lasting Impression I, Inc., 543 U.S. 111 (2004), on other grounds tangential to the classic fair use defense, but, as discussed below, the Supreme Court did not adopt, nor refer to, the nominative fair use test or its appropriate application for the circuit courts of appeal to follow.  Therefore, the nominative fair use defense remains primarily a Ninth Circuit doctrine, yet to be established as “law” of the mandatory nature by way of stare decisis in the Sixth Circuit.  

In KP Permanent Make-Up, the Supreme Court muddied the waters a bit for the Ninth Circuit nominative fair use test under Cairns by holding that, “[since the burden of proving likelihood of confusion rests with the plaintiff, and the fair use defendants has no free-standing need to show confusion unlikely . . . it follows that some possibility of consumer confusion must be compatible with fair use . . ." Id., at 121.  Under this holding, a showing of likelihood of confusion does not negate a fair use defense, as was the decision in PACCAR, Inc.  Therefore, consumer confusion and fair use are not mutually exclusive, and instead the latter will in essence rebut or excuse the former so that the use is permissible.  This holding led to the Third Circuit's adoption of the two part test in Century 21 Real Estate, where a likelihood of confusion is first analyzed, and only if such is proven is the nominative fair use test applied.  Under Cairns, remember, the nominative fair use analysis replaced the likelihood of confusion test, and vice versa.  In essence, this disadvantages the defendant, because confusion, the bedrock of trademark law, becomes an all but foregone conclusion. Therefore, after KP Permanent Make-Up, the two-part test under Century 21 Real Estate seems to be the direction most circuits will head, if they adopt the nominative fair use defense at all. 

[2] The referenced “Frische’s Restaurants test” is the 8-factor likelihood of confusion test used in the Sixth Circuit in trademark infringement cases.