Wednesday, October 23, 2019

Schwimmer and Welch: "U.S. Law Inches Towards Protecting Trademark Reputation Without Use"

Marty Schwimmer and Yours Truly co-authored an article in the Autumn 2019 issue of World Trademark Review, entitled "U.S. Law Inches Towards Protecting Trademark Reputation Without Use." [pdf here].

Trademark reputation without use is a jurisprudential paradox. Because of the international flow of information, use of a trademark in one country may give rise to a commercially valuable reputation in another where that trademark has not yet been used (at least not by the first owner). The goodwill arising from that reputation could be exploited by another party and consumers could be confused or deceived. This suggests that the reputation should be protected. However, such a proposition is antithetical to the conventional view (under US practice, at least), which defines ‘trademark reputation’ as the propensity of consumers to continue doing business with a merchant based on favourable prior experiences. In short: no trade, no trademark.

Two US Court of Appeals opinions have created the possibility that a plaintiff could bring a passing-off action based on use of its trademark outside of the United States only – a powerful new tool for challenging infringers that are first to use the trademark in the United States

Following the Supreme Court’s 2014 decision in Lexmark International, Inc v Static Control Components, Inc (572 US ___, 134 S Ct 1377 (2014)), interpreting the Lanham Act in a false advertising case, two recent US Court of Appeals opinions – both involving the alleged misappropriation of well-known Mexican trademarks by US companies – have interpreted the unfair competition provision of the Lanham Act in a new way, opening up the possibility that a plaintiff may be able to bring a passing-off action, alleging use of its trademark only outside the United States coupled with a reputation within the United States. Although the discussion of potential damages in the two cases is problematic (as we explain here), it may mean that non-US trademark owners have a powerful new tool with which to challenge infringers that are first to use the foreign owner’s mark in the United States.

Schwimmer (left), Welch (right)

Read comments and post your comment here.

TTABlog comment: Marty and I represented Belmora at the district court and through the first Fourth Circuit appeal, and we represented Paleteria La Michoacana, Inc. at the D.C. Circuit.

Text Copyright John L. Welch 2019.


At 8:16 AM, Anonymous Joe Dreitler said...

Sorry to beat a dead horse I have been riding for 20 years, but it’s obvious that the Lanham Act needs to be revised. Significantly. 31 years since we thought the Trademark Law Revision Act would modernize trademark law (and it did). Since then there has been a patchwork of amendments, but they fail to address the fact that trademark law, since the internet became commercial, does not cover most of the important issues in trademark law enforcement. Or lack thereof. Having courts try to figure out a way to stretch the law is not the way to have a consistent approach and results for advising clients.

At 8:17 AM, Blogger IT JUST DOESN'T MATTER said...

Three words - "use in commerce."

While first-to-file countries should adopt your extra-territoriality proposition; the US and other "use-based" trademark jurisdictions should not. A trademark savvy company should use Section 44(e) or 66A to protect a foreign-only mark in the U.S.

Apple, Amazon and others all file outside the US first now - which the Lanham Act should be amended to allow this only when the "primary" jurisdiction is outside the U.S.

John - I deeply appreciate all the hard work you put into TTABLOG. It is a significant asset to anybody's trademark practice. And I love your snarky comments thrown in - add MORE.

At 10:25 AM, Anonymous Anonymous said...

The only exception is am aware of GENERAL INTER-AMERICAN CONVENTION FOR TRADE MARK AND COMMERCIAL PROTECTION Article 7 states, "Any owner of a mark protected in one of the Contracting States in accordance with its domestic law, who may know that some other person is using or applying to register or deposit an interfering mark in any other of the Contracting States shall have the right to oppose such use, registration or deposit and shall have the right to employ all legal means, procedure or recourse provided in the country in which such interfering mark is being used or where its registration or deposit is being sought, and upon proof that the person who is using such mark or applying to register or deposit it, had knowledge of the existence and continuous use in any of the Contracting States of the mark on which opposition is based upon goods of the same class, the opposer may claim for himself the preferential right to use such mark in the country where the opposition is made or priority to register or deposit it in such country, upon compliance with the requirements established by the domestic legislation in such country and by this Convention."

At 2:26 PM, Anonymous Anonymous said...

A common aspect of these cases is reputation in an immigrant community in the US, based on use in the home country. What surprises me is that we haven't seen more cases addressing reputation in a broader consumer group in the US, based on use online accessed by consumers in the US.

Kudos to John and Marty for providing us with this thoughtful parsing and path through a sticky thicket, as well as making a persuasive case for the direction of evolving law, and generously concluding with some useful, practical tips. (Not that I expect anything less thoughtful, persuasive or generous from either of them.)


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