Should The Trademark "Fair Use" Defense Be Feared?

Intellectual Property
Should The Trademark "Fair Use" Defense Be Feared?
By Howard J. Schartz and Michael J. Gilleece

A trademark owner cannot deprive competitors of the use of a term in a descriptive sense, even though that term has become its protected mark. The "fair use" defense protects the use of a trademarked term or phrase in certain descriptive ways. By way of example, Company A's "Naturally" trademark for organically grown frozen vegetables is a descriptive mark, as it describes the nature or characteristics of Company A's product. See Restatement 3d Unfair Competition §28, n. 1.. Company B's use of the term "naturally" in its description "naturally grown" on its package of lima beans, however, could qualify as a fair use, despite Company A's "Naturally" trademark. See id.

Although Circuit Courts of Appeal have differed as to whether a defendant asserting the defense of fair use against a claim of trademark infringement is required to demonstrate that consumers are not likely to be confused as to the origin of its goods, the United States Supreme Court has resolved the dispute. In KP Permanent Make-Up, Inc. v. Lasting Impression I, Inc., the Court held that a party raising the defense of fair use to a claim of trademark infringement need not negate any likelihood that its use will confuse customers about the origin of the goods or services affected. 125 S. Ct. 542 (2004). Although companies will have more opportunity to describe their products using a descriptive mark of a competitor, holders of descriptive marks have an increased risk that the public will confuse a competitor's product as its own.

The Basis for the Court's Holding
The Court based its holding, in part, upon both the legislative history of the Lanham Act and upon the burden of proof placed upon a plaintiff charging trademark infringement. First, the Court noted that Congress included the phrase "likely to cause confusion, or to cause mistake, or to deceive" in the provision of the statute addressing infringement, but chose not to include that phrase within the provision of the statute which provides for the defense of fair use. The Court reasoned that the omission signified the intention of Congress that the fair use defense should have no requirement of negating consumer confusion. Second, the Court found that plaintiffs burden of affirmatively proving a likelihood of confusion in order to establish an infringement precluded the imposition of a burden upon a defendant asserting fair use to prove precisely the opposite. The Court explained that, "it would make no sense to give the defendant a defense of showing affirmatively that the plaintiff cannot succeed in proving some element (like confusion); all the defendant needs to do is to leave the factfinder unpersuaded that the plaintiff has carried its own burden on that point." KP Permanent, 125 S. Ct. at 549.

An Open Door For Greater Application of "Fair Use"
As a result of the Court's clarification that a defendant asserting fair use need not affirmatively demonstrate that no likelihood of confusion exists, the defense has become more accessible to alleged infringers of descriptive marks. By holding that no requirement exists, the Court has allowed fair use as a defense to infringement claims even under circumstances in which a mark holder is most likely to be harmed - when it has been established that consumer confusion is likely. The fair use defense is available to a party whose "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 .. .." Id. at 548, quoting 15 U.S.C. §1l15(b)(4) (emphasis added). As the defense applies to a defendant's use of a term to describe its own goods, the more descriptive plaintiffs mark, the more vulnerable it will be to a "fair use" which, in reality, might be virtually identical to that use made by plaintiff of the mark itself. From the opposite perspective, however, competitors may now have greater freedom to utilize descriptive terms which more easily convey to the consumer the characteristics of their products, even though such terms may be trademarks of others - and without concern for the potential for consumer confusion as to the product's source.

Recommendations for Trademark Owners
In light of the above, the following suggestions are worthy of consideration:

When choosing a mark, a company should select an arbitrary or fanciful term or phrase rather than a descriptive one. Arbitrary and fanciful terms and phrases do not describe any aspects or characteristics of the goods or services, and thus need not be used by competitors to describe their own products. What might be lost in the way of being able to instantly convey attributes of a product, can be gained in the way of greater trademark protection and exclusivity of use.

If faced with the defense of fair use, a trademark owner should argue additional factors which could serve as obstacles to fair use - namely, the lack of commercial justification for the use and the strength of the mark at issue. The Court has suggested that such factors may be appropriately considered in the fair use evaluation. See KP Permanent, 125 S. Ct. at 551.

Howard J. Schwartz hschwartz@wolffsamson.com is a partner in and co-chair of the Intellectual Property Group at Wolff & Samson PC. and practices in all aspects of intellectual property law, including patents, trademarks, copyrights and trade secrets. Michael J. Gilleece is Senior Counsel, Americas Ansell Limited (Legal Department).

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