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A common fallacy among trademark owners is that they possess the absolute right to control all uses of their marks. Trademark law prescribes certain boundaries regarding the nature and scope of a trademark owner’s rights. In certain instances, an entity legally may use a trademark owned by a third party to refer to the mark as a source identifier without authorization from the trademark owner. The issue is the extent to which one may use a third-party mark in this manner without permission from the trademark owner. Consider, for example, the following situations: A new cosmetic company publicizes that its founder formerly created clothing designs for a well-known fashion designer. Another company produces a fabric pattern that incorporates trademark logos of various candy bars, each owned by a different entity. Finally, a company is the subject of an unflattering parody that uses the company’s marks. Can a trademark owner prevent such unauthorized uses of its mark? What impact, if any, does a disclaimer have on the unauthorized use of a third-party mark? This article discusses recent developments regarding unauthorized uses of third-party marks and provides guidelines to assist the practitioner when advising clients in this uncertain legal area. NOMINATIVE FAIR USE The 9th U.S. Circuit Court of Appeals in New Kids on the Block v. News America Publ’g Inc., 971 F.2d 302 (9th Cir. 1992), created the doctrine of “nominative fair use” to identify certain circumstances in which one may use a third-party mark without permission from the trademark owner. The case involved the use of a musical group’s trademarked name in connection with newspaper popularity polls. The New Kids court developed the following three-prong test that a party must satisfy to benefit from the safe harbor created by the nominative fair use doctrine, namely: The goods or services must not be readily identifiable without use of the trademark. Only so much of the mark may be used as is reasonably necessary to identify the goods or services. The user must do nothing that would, in conjunction with the mark, suggest sponsorship or endorsement by the trademark holder. Applying this test, the court concluded that the use of the name was nominative only and not an infringement. The 9th Circuit’s test remains the leading measure by which courts distinguish lawful commercial use of another’s trademark from an actionable infringing use. What if someone wants to use a third-party’s mark to describe an affiliation or association with the third party? For example, an investment bank hires a consulting firm for a project, and 10 years after the project is completed, and without authorization, the consulting firm includes the investment bank’s name and logo on its brochure under the heading “Previous Clients.” A New York Times article on June 4, 2003, addressed a similar scenario. The founder of the grocery delivery service “FreshDirect” publicized that he also was co-founder of a branch of the “Fairway” specialty food market. The owners of Fairway objected to the characterization, emphasizing that there was no relationship between Fairway and FreshDirect. Are such uses of a third-party mark permissible pursuant to the nominative fair use doctrine? The 9th Circuit evaluated a similar situation in Playboy Enters. Inc. v. Terri Welles, 279 F.3d 796 (9th Cir. 2002). Terri Welles, who was a Playboy Playmate of the Year, operated a Web site that prominently described herself as “Playmate of the Year 1981″ in the Web site’s headlines, banner advertisements and metatags. In addition, the wallpaper, or background, of the Web site made repeated use of the designation “PMOY ’81″ to form a decorative pattern. The Welles court concluded that the doctrine of nominative fair use permitted Welles to use the mark “Playmate of the Year” in the headlines, banner advertisements and metatags, finding that such use of the mark was the most practical way for Welles to identify herself to the public. Furthermore, the 9th Circuit noted that Welles’ reference to the fact that she was “Playmate of the Year” in 1981 weighed in favor of nominative fair use because it did not imply Playboy’s current sponsorship or endorsement of the site. The Welles court, however, held that the nominative fair use doctrine prohibited Welles from the repeated use of the mark “PMOY” on the Web site’s wallpaper, finding that Welles used more of the mark than was reasonably necessary to identify herself. Similar to the Welles case, in Nicholas Kassbaum v. Steppenwolf Prods. Inc., 236 F.3d 487 (9th Cir. 2000), cert. denied, 534 U.S. 815 (2001), the 9th Circuit held that the doctrine of nominative fair use permitted Nicholas Kassbaum to promote himself as an “Original Founding Member of Steppenwolf.” After conducting a thorough examination of the manner in which Kassbaum used the mark “Steppenwolf,” the 9th Circuit determined that Kassbaum did not use more of the mark than was reasonably necessary to describe himself. In reaching its decision, the court noted that Kassbaum did not highlight the “Steppenwolf” mark in promotional materials by using a different font or type style apart from the rest of the phrase “Original Founding Member of Steppenwolf” and that he never used the “Steppenwolf” mark by itself. The Welles and Kassbaum decisions indicate that use of a third-party mark in a truthful manner to describe oneself is permissible, so long as one satisfies each prong of the nominative fair use test and particularly does not go “too far” in exploiting the third-party mark. ORNAMENTAL USE To what extent can an entity use another’s mark for arguably aesthetic purposes? For example, a wallpaper manufacturer creates a design depicting a scene from the 1950s that portrays a gas station bearing a Mobil logo, a Ford Thunderbird car and an advertisement for a Coca-Cola soft drink. Are such arguably ornamental uses of third-party marks permissible? Ornamental uses of a trademark depict well-known trademarks for their ostensibly aesthetic value, as demonstrated by the wallpaper example above, rather than for the marks to serve as source identifiers. Courts have struggled to determine whether trademark protection extends to the unauthorized use of a mark in an arguably ornamental manner. Some courts have granted a broad scope of protection, allowing trademark owners to enjoin many unauthorized uses of their marks for their aesthetic value. For example, in Boston Prof’l Hockey Ass’n v. Dallas Cap & Emblem Mfg., 510 F.2d 1004 (5th Cir. 1975), the 5th U.S. Circuit Court of Appeals enjoined the unauthorized sale of emblem patches bearing the insignias of various professional hockey teams. The Boston Hockey court reasoned that consumers likely would incorrectly assume that the emblems originated from the National Hockey League and its member teams. In contrast, other courts have been reluctant to expand the scope of trademark protection to cover instances of arguably ornamental use of a third-party mark, asserting that trademark law does not provide monopolistic rights in a trademark. For example, in Int’l Order of Job’s Daughters v. Lindeburg & Co., 633 F.2d 912 (9th Cir. 1980), the 9th Circuit held that the unauthorized use of a fraternal organization’s insignia on jewelry did not infringe the trademark owner’s rights, because consumers were unlikely to infer sponsorship from a decorative use of a famous mark on jewelry. Despite the passing of time since the Boston Hockey and Job’s Daughters decisions, this area of trademark law remains unsettled. Accordingly, whether trademark owners can prevent the unauthorized use of their trademarks in a solely ornamental manner remains uncertain. USE IN A PARODY What recourse, if any, does a trademark owner have against the unauthorized use of its mark in a parody? If a parody is intended to provide commentary on societal values, courts are hesitant to quash freedom of expression, even if the parody is for commercial gain. Courts do acknowledge, however, that it is a harder decision when the parody or joke merely pokes fun at the product or trademark itself and primarily is for the purpose of commercial gain. Nevertheless, courts are reluctant to permit the public interest in avoiding consumer confusion or the trademark owner’s claim of dilution to outweigh the competing public interest in free speech. In Mattel Inc. v. MCA Records Inc., 296 F.3d 894 (9th Cir. 2002), Mattel objected to a Danish rock band’s hit song, “Barbie Girl,” which mocked the societal values embodied in the “Barbie” doll. Acknowledging that the song was a parody, the Mattel court held that the song was an artistic expression protected by the First Amendment. Furthermore, the court held that such use of the “Barbie” mark did not violate trademark law because consumer confusion was not likely nor did the “Barbie Girl” song dilute the mark. The Mattel court noted that although “Barbie Girl” was undoubtedly recorded for commercial gain, trademark law did not justify enjoining non-competing forms of expression that are consistent with First Amendment principles. Another recent case presented a more difficult fact pattern. In Tommy Hilfiger Licensing Inc. v. Nature Labs, LLC, 221 F.Supp.2d 410 (S.D.N.Y. 2002), fashion designer Tommy Hilfiger objected to Nature Labs’ “Timmy Holedigger” canine cologne, which incorporated a word mark that resembled the “Tommy Hilfger” mark and used a flag design similar to the Hilfiger logo. Hilfiger argued that Nature Labs’ product was not a parody because it provided no commentary on Hilfiger. In addition, Hilfiger asserted that Nature Labs’ use of the marks as a source identifier constituted a trademark use of the marks and should be enjoined on grounds of likelihood of confusion, dilution and unfair competition. Conceding that the pet perfume technically may not qualify as a parody, the district court nevertheless concluded that Nature Labs’ product was “at least a pun or comical expression” and, therefore, was entitled to First Amendment protection. As illustrated by the Mattel and Tommy Hilfiger decisions, courts grant wide latitude to parody and similar situations under the principle of freedom of expression. Generally, courts are hesitant to appear to place the rights of a trademark owner ahead of the First Amendment rights of a parodist, particularly when the trademark owner cannot prove a likelihood of confusion as to source or sponsorship and the primary purpose of the parody is not commercial gain. IMPACT OF A DISCLAIMER What if someone uses a disclaimer in connection with a third-party mark stating that the product is not associated with or sponsored by the trademark owner? Courts generally have found such disclaimers insufficient to defeat a claim of trademark infringement. In Chambers v. Time Warner, No. 00 Civ. 2839, 2003 WL 749422 (S.D.N.Y. March 5, 2003), a music Web site featured a conspicuous disclaimer, which clearly stated that use of a recording artist’s trademark did not imply the endorsement or sponsorship of the Web site’s goods or services by the artists whose music was featured on the site. Nevertheless, the Chambers court concluded that the unambiguous disclaimer was insufficient to support defendant’s motion to dismiss plaintiffs’ claim of trademark infringement. A disclaimer may be even less effective when someone uses a third-party mark in a domain name because of the possibility of “initial interest confusion” by the consumer. In Paccar Inc. v. TeleScan Techs., L.L.C., 319 F.3d 243 (6th Cir. 2003), defendant TeleScan incorporated plaintiff Paccar’s “Peterbilt” and “Kenworth” marks in domain names for TeleScan’s used truck Web sites (e.g., peterbiltusedtrucks.com and kenworthtruckdealers.com). The 6th U.S. Circuit Court of Appeals found that TeleScan’s use of Paccar’s marks in its domain names created initial interest confusion by distracting and misdirecting consumers interested in locating the official Web site featuring Paccar’s products. Once misdirected to TeleScan’s sites, consumers encountered a disclaimer similar to the one used in Chambers — it disavowed any affiliation or association with Paccar. Although consumers immediately could elect to leave TeleScan’s site upon reading the disclaimer, the Paccar court concluded that such a disclaimer did not effectively mitigate the damage already caused to Paccar. Thus, even in cases of prominent, unambiguous disclaimers, courts are skeptical of a disclaimer’s ability to rectify consumer confusion, even if such confusion lasts for a short period of time. ADVISING CLIENTS Courts generally will allow truthful identification of an association through use of a third-party mark, provided that the use does not go “too far” by using more of the third-party mark than is reasonably necessary. If a client wants to identify its association with a third party, the client should consider not using a third party’s logo to identify the association, but rather, using the third party’s word mark and in a manner that does not overemphasize the third-party mark. Also, providing information about the association, for example, the year of the association or the history of the association, should help deflect any inaccurate impression regarding the association or affiliation between the parties. If a client sells a product that bears a third-party mark in a manner that appears to be purely ornamental, such as in the wallpaper hypothetical discussed above, the trademark owner likely would have difficulty proving a likelihood of confusion or dilution, particularly if the mark used is an older version of the mark that is no longer in the marketplace. If a client uses a third-party mark in a style currently used by the trademark owner and on a product that the trademark owner could conceivably place its mark, for example, on shoelaces or clothing, it becomes more difficult to defeat likelihood of confusion and dilution claims in today’s marketplace of trademark expansion and licensing. If a client’s mark becomes the subject of a parody or if a client would like to parody a third-party mark, such use generally is permissible, particularly if the parody contains satirical or humorous commentary on societal values. In the Southern District of New York, the Tommy Hilfiger decision offers even greater rights to a parodist or for an entity simply to “poke fun” at a third-party mark for commercial gain, even without providing critical commentary via a traditional parody. Finally, although a disclaimer may satisfy some trademark owners if it is sufficiently prominent, courts are unlikely to be persuaded that even a conspicuous disclaimer is sufficient to render confusion unlikely under many fact patterns. Thus, clients should understand that adding a disclaimer does not automatically absolve them from liability against an infringement claim. If you are interested in submitting an article to law.com, please click here for our submission guidelines.

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