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Suppose a plaintiff, who uses “Tart” as a trademark for lemons, sues a competitor who advertises that his brand of lemons tastes “tart.” What result? In trademark law, the statutory “fair use” defense, 15 U.S.C. 1115(b)(4), excuses a defendant’s good-faith use of a term that happens to be the plaintiff’s trademark, so long as the term is used to describe the defendant’s goods or services, rather than as a trademark. It seems sensible that the law would allow the competitor to call his lemons “tart.” But what if the lemon-consuming public was confused about whether the plaintiff grew the defendant’s “tart”-tasting lemons? In KP Permanent Make-Up Inc. v. Lasting Impression I Inc., No. 03-409, 2004 WL 2804921 (Dec. 8, 2004), the U.S. Supreme Court recently addressed the issue of whether a defendant can successfully assert the fair use defense even if consumer confusion-the key element of trademark infringement-is likely to occur. The litigants, Lasting Impressions I Inc. and KP Permanent Make-Up Inc., both sell permanent makeup, a liquid and pigment mixture that is injected under the skin for cosmetic and medical purposes, such as to create permanent eyeliner or eye shadow, or to hide a scar. This cosmetic process is called micropigmentation. In 1993, Lasting received a U.S. trademark registration for “Micro Colors” for its color pigments. KP also used the terms “micro color” and “microcolor” on its pigment bottles and in advertising. In a lawsuit, Lasting claimed that KP infringed its federally registered “Micro Colors” mark. KP denied that it used the terms as trademarks, but asserted that it used them merely to describe its product: It said “micro color” and “microcolor” were descriptive terms for the pigments used in micropigmentation. A federal district court granted summary judgment to KP, agreeing with KP that it used the terms “micro color” and “microcolor” only descriptively, and so satisfied the statutory fair use defense. Because KP satisfied the fair use defense, the district court believed it wasn’t required to reach the issue of likelihood of confusion. On appeal, however, the 9th U.S. Circuit Court of Appeals held that the fair use defense “requires that there not be a likelihood of confusion,” and since it found that KP had not proven that confusion was unlikely, it reversed KP’s victory on the statutory fair use defense. 328 F.3d 1061, 1073 (9th Cir. 2003). Supreme Court sought to resolve a circuit split The Supreme Court took the case because several circuits disagreed on how the statutory fair use defense fit together with the likelihood-of-confusion inquiry. For example, the 9th Circuit and the 6th Circuit believed that a likelihood of confusion precluded the statutory fair use defense. In the 2d, 4th and 7th circuits, however, a likelihood of consumer confusion does not automatically scotch the statutory fair use defense. The Supreme Court, in a unanimous decision, began its analysis with the language of the relevant portions of the Lanham Act. It started first with the language of � 32(1) of the act, 15 U.S.C. 1114(1), which prohibits use of a mark similar to a registered mark if “such use is likely to cause confusion, or to cause mistake, or to deceive.” The court noted that this places the burden to prove likelihood of confusion on the plaintiff. 2004 WL 2804921, at 5. The Supreme Court next looked to the text of the provision that authorizes the statutory fair use defense. Lasting had used its registered mark for more than five consecutive years, so its registration was considered “incontestable” under � 33(b) of the act. “Incontestability” is a bit of a misnomer, however, because � 33(b) qualifies it in two ways. First, it provides that the right to assert an incontestable registration against the user of a similar mark “is subject to proof of infringement as defined in section 32 [15 U.S.C. 1114].” Second, � 33(b) also lists several defenses in subsections (1)-(9) to which an incontestable registration may be subject. One of these is the statutory fair use defense. Subsection 33(b)(4) provides a defense to an accused infringer when the use of an accused term “is a use, otherwise than as a mark . . . of a term . . . which is descriptive of and used fairly and in good faith only to describe the goods or services” of the accused infringer. Defendant not required to disprove likely confusion Reading these textual provisions together, the Supreme Court noted that it “takes a long stretch to claim that a defense of fair use entails any burden to negate confusion.” 2004 WL 2804921, at 5. The court then determined that its older precedents concerning the common law term of art “used fairly” did not evidence a contrary understanding that the defendant had to negate confusion when arguing that it used the alleged trademark in its descriptive sense. Id. The observation that resonated most with the court was that it made no sense to read the statutory fair use defense to require the defendant also to disprove a likelihood of confusion, when disproving a likelihood of confusion would necessarily mean that the defendant wins regardless of whether the use was a fair use or not. Id. at 6. The court thus believed that reading a requirement to disprove likelihood of confusion into � 33(b)(4) rendered that provision superfluous. Id. Having determined that the statutory fair use defense does not require the defendant to disprove the likelihood of confusion, the court next turned to the question of how much confusion the statutory fair use defense could tolerate. It first noted that the Lanham Act-and the common law before that-did not envision that a company adopting a descriptive word as a trademark would thereby be able to monopolize the use of the word in its area of business. Id. The court therefore deduced that, at minimum, “fair use can occur along with some degree of confusion.” Id. at 7. The court also pointed out, however, that the extent of likely confusion may be relevant “in assessing whether a defendant’s use is objectively fair.” Id. Given the limited record before it, however, the court chose not to elaborate on how much confusion the statutory fair use defense can stand. The high court noted in closing, however, that in deciding the question of whether an alleged descriptive use is objectively fair, courts may find it useful to look at such factors as the accuracy of the description, the commercial justification for using the descriptive term and the strength of the plaintiff’s trademark. The Supreme Court then vacated the 9th Circuit’s judgment and remanded the case for proper assessment of the statutory fair use defense. The Supreme Court’s narrow decision in KP Permanent Make-Up leaves open many questions about the scope and contours of the statutory fair use defense. These issues include the following: Whether a claimed fair use isn’t, in fact, fair because the degree of confusion is too great. Whether a claimed fair use isn’t fair when the plaintiff’s trademark, though used in a technically descriptive way by the defendant, is so strong that it calls into question the defendant’s good faith or the defendant’s assertion that it was using the term descriptively. That is, was the defendant hoping to benefit from the good will of the plaintiff’s well-known mark? Whether a claimed fair use isn’t fair when the defendant doesn’t just use the word in text, but does so in a manner where it stands out from other words, such as by copying the plaintiff’s unique typeface, by using relatively large fonts or distinctive graphics or by repeating the term needlessly. ‘Nominative fair use’ defense is major open issue Perhaps the most significant open issue is the status of the “nominative fair use” defense. While the statutory, or “descriptive,” fair use defense concerns use of a term in its accepted descriptive sense (“tart” for lemons), courts have generally accepted a nominative fair use defense in which the defendant fairly uses the plaintiff’s trademark to refer to the plaintiff. The nominative fair use defense is especially important for companies that specialize in servicing or providing replacement parts for products made by others. An example is the case of an independent car repair shop that specialized in Volkswagen and Porsche cars and called itself “Independent Volkswagen Porsche Service.” In that case, the court held that the defendant needed to refer to the plaintiff’s trademarks to inform the public about his business, and that the prominence of the word “Independent” in the name, together with the fact that the defendant did not use the familiar VW circle logo, was enough to avoid confusion. Volkswagenwerk A.G. v. Church, 411 F.2d 350, 352 (9th Cir. 1969). In deciding the KP Permanent Make-Up case, the Supreme Court expressly declined to address the nominative fair use defense. 2004 WL 2804921, at 4, n.3. By not addressing this issue, the Supreme Court left open even the most basic question concerning the nominative fair use defense: Is it grounded in the same statute as the descriptive fair use defense, 15 U.S.C. 1115(b)(4), or does it simply reflect a situation in which a challenged use of a trademark is unlikely to cause confusion as required by 15 U.S.C. 1114(1)? In sum, while the relationship between the descriptive fair use defense and the issue of likelihood of confusion is now clearer, the precise contours of the defense, as well as the status of the nominative fair use defense, will have to await further development in the case law. Thomas L. Casagrande ([email protected]) is a partner in the Houston office of Washington-based Howrey Simon Arnold & White. He practices trademark, trade dress, unfair competition and copyright law.

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