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Friday, 1 June 2012

The Dirty Little (Or Not So Little) Secret Of Trade Mark Law

Maybe it is because we are getting to close to the weekend, but this Kat's thoughts are all in the direction of "the dirty little secret". Before Mrs Kat begins to fret about whether mid-life crisis is driving me to thoughts about reruns of Sex and the City and Desperate Housewives, I can assure everyone that my intentions are noble. I am referring to the dirty little secret" of trade mark law, namely, the law's tolerance for the likelihood of confusion, such as under the mantle of consent agreements, co-existence agreements and the like.

We have all been brought up on the knee of trade mark law to believe that the fundamental underpinning of trade mark protection is that it protects against likelihood of confusion. Not just protection against actual confusion. mind you (which would have rendered trade mark law narrow and uninteresting, except with respect to counterfeiting), but protection against the much broader, if elusive, situation where there is merely "a likelihood of confusion". That seems simple enough conceptually, even if responsible minds might differ as to what constitutes likelihood of confusion in a given circumstance. Whatever the scope of likelihood of confusion, once that determination is made, the parties are reasonably certain as to whether the third-party use of a mark does, or does not, infringe, the trade mark at issue. At its most basic level, trade mark practice is worshipping at the altar of "likelihood of confusion".

However, all of that apparent certainty about the Gibraltar-like status of likelihood of confusion comes crashing down the moment that one begins to think about consents and co-existence (we will use the two terms as interchangeable in their underlying meaning). At first glance, it may not be obvious why this is so. After all, as Professor McCarthy has written, "[a] license integrates, while a consent differentiates". If so, there should be no problem here; the purpose of a consent is to make certain that there is no likelihood of confusion with respect to the marks at issue.

Matters, however, are not so simple. Let's begin with the very concept of trade mark co-existence. There is no conceptual analog to co-existence in either patent or copyright law. For sure, there can be identical copyright works, provided that each work is the result of independent creation. If that is the case, however, the parties do not need to enter into the copyright equivalent of a co-existence agreement. "Co-existence" is ensured from the fact that the works were independently created. Extending that logic to trade marks, one might have thought there is no need to enter into an agreement simply to declare that there is no likelihood of confusion. Either there is,or there is not.

A two-point rejoinder can be made. First, one can argue that the agreement is not really necessary with respect to the present, but it is a form of insurance policy against likelihood of confusion in the future. For the present, there is indeed no likelihood of confusion. Going forward, as long as the parties undertake not to do, e.g., "a", "b" or "c", the status quo, i.e., no likelihood of confusion, is maintained. The problem with this view is that likelihood of confusion is at its heart a matter of infringement, not breach of contract. If the future conduct of the other party results in a likelihood of confusion, I will be liable to take action for infringement. At the most, the agreement provides me with an alternative quiverful of arrows with which to challenge the other party, namely a claim of breach of contract. With, or without the agreement, however, future infringing activity is first and foremost the violation of an IP, not a contractual right. This is "dirty little secret no. 1"

The second form of rejoinder is that co-existence and consent agreements are often the result of the settlement of a litigation action. In such a case, the parties are more or less duty-bound to bring the action to a conclusion through an agreement. The problem here is that, not infrequently, settlement of an action in this manner in fact results in the parties agreeing to tolerate a current likelihood of confusion, contrary to what we claim is the bedrock principle of trade mark law. As one U.S. court reasoned, a "bit" of likelihood of confusion is tolerated for instance when the parties had no "intent" to deceive the public and that as a matter of public policy private contracts should be enforced (T&T Mfg. C. v. A.T. Cross Co., 197 U.S.P.Q., affirmed 201 U.S.P.Q. 561 (1st Cir.), cert. denied 441 US 60 (1978) here. Stated otherwise, other considerations with respect to the trade mark relationship between two parties's marks may override a simple calculus based on "likelihood of confusion". The real possibility that a settlement agreement based on co-existence may in fact sanction a present likelihood of confusion is "dirty little secret no. 2".

This Kat wishes to draw the reader's attention to one last variation of this theme, found in an unlikely source, namely an article that appeared in the May 7, 2012 issue of Bloomberg Business Week about the alleged rigidity of French work rules ("Stop! Don't Hire That 50th Worker!") In the article, there is this seemingly innocuous (from a trade mark perspective) sentence: "Tired of delays in getting orders filled, Pierrick Haan, CEO of DuPont Medical (not to be confused with the chemical company DuPont), decided last last year to return production of some wheelchairs and medical equipment to France."

What do make of the disclaimer--"not to be confused with the chemical company DuPont"? It is assumed that the editors believed that, without the disclaimer, the reader might be confused by the identity of the names of the two companies. And certainly, DuPont poses a special challenge, being a family name and a particularly strong mark used not only by the chemical company but also by, e.g., a well-known watch company, S.T. Dupont here. But the upshot of the disclaimer is a recognition that there is reasonable likelihood of confusion with respect to multiple uses of the name DuPont. It cannot be the case that DuPont Medical itself provides a similar disclaimer every time that it refers to its company name. The disclaimer in the article is surely the exception, not the rule. As a result, more or less, there is a constant likelihood of confusion with respect to the name DuPont.

Well, there it is--the dirty little secret of trade mark law. Sarah Jessica Parker and Eva Longoria--eat your heart out.

4 comments:

Eric said...

Not to forget those cases where a trade mark has two different owners (in two erstwhile different markets) owing to historical developments:
Osram, Persil and Daimler are ones that spring most readily to mind ...

Anonymous said...

In the days when GEC was major electrical company in the UK, reference was often made in literature on the lines of

"Not to be confused with an American company of a similar name"

Pamela Chestek said...

I agree completely with your second dirty little secret and see it far too often, particularly fostered by those who think that a trademark is just a piece of paper. In these cases, though, the premise eventually becomes the reality, as with Burlington Coat Factory and and Burlington Industries - do you remember the disclaimer at end of the commercial?

I think there's one more point on dirty little secret one. While failure to comply creates infringement, if we have a contract my hope and belief is (or I wouldn't have entered into the contract) that you will be a good citizen and diligently try to avoid confusion now that we've gone to the trouble of defining what we think causes it. So the contract is also a mechanism for encouraging behavior, not simply to be the basis for a claim in the breach.

Pamela Chestek said...

Another thought - when I see co-existence agreements, I sometimes see them phrased in terms of "the Mark," i.e., a single mark. But the whole premise of a co-existence agreement is that the two trademarks can happily co-exist, so it seems to me the agreement itself is a concession that there really must be confusion (there's only one mark, after all) and the parties are just deciding to tolerate it. So the agreement itself is a dead giveaway to what's really going on.

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