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Texas Trademark Infringement

©2015 Mark Courtois

A prima facie trademark infringement case is made out by proof of two elements: 1) that the plaintiff owns a legally protected mark; and 2) there is a likelihood of confusion between plaintiff's mark and the defendant's mark.(1) Most trademark infringement cases are brought in federal court under the Lanham Act., but Texas also has causes of action for trademark infringement which borrow from the considerable historical case law developed under the Lanham Act. The Lanham Act provides a cause of action for infringement where one uses 1) any reproduction, counterfeit, copy, or colorable imitation of a mark; 2) without the registrant's consent; 3) in commerce; 4) in connection with the sale, offering for sale, distribution, or advertising of any goods; 5) where such use is likely to cause confusion, or to cause mistake or to deceive.(2)  The Lanham Act defines the word "commerce" to mean "all commerce which may lawfully be regulated by Congress," and states that "a mark shall be deemed to be in use in commerce" on goods when "the goods are sold or transported in commerce."(3)  For services, a mark is in "use in commerce" when it is "used or displayed in the sale or advertising of services and the services are rendered in commerce."(4)

The Lanham Act (5) was intended to make actionable the deceptive and misleading use of marks, and to protect persons engaged in commerce against unfair competition.(6)   A Trademark is defined as including "any word, name, symbol, or device or any combination thereof" used by any person "to identify and distinguish his or her goods, including a unique product, from those manufactured or sold by others and to indicate the source of the goods, even if that source is unknown."(7) In order to be registered, the mark must be capable of distinguishing the applicant's goods from those of others.(8) Marks are often classified in categories of increasing distinctiveness as: 1) generic; 2) descriptive; 3) suggestive; 4) arbitrary; or 5) fanciful.(9) Suggestive, arbitrary, and fanciful marks, because of their intrinsic nature, serve to identify a particular source of the product and are deemed inherently distinctive, and therefore, entitled to protection.(10) Generic marks are not capable of trademark protection.(11) Descriptive marks are not capable of trademark protection, unless they acquire a distinctiveness which would allow them to be protected under the Act, such as when it "has become distinctive of applicant's goods in commerce."(12) This acquired distinctiveness is commonly referred to as its "secondary meaning."(13)

Secondary meaning is established when a manufacturer shows that in the mind of the public, the primary significance of a product feature or term is to identify the source of the product rather than the product itself.(14) Secondary meaning can be established "through direct consumer testimony, consumer surveys, length and manner of use, amount and manner of advertising, volume of sales, place in the market and proof of intentional copying."(15) An identifying mark is distinctive and capable of being protected if it either is inherently distinctive; or has acquired distinctiveness through secondary meaning.(16)

There are separate provisions in the Lanham Act protecting registered and unregistered marks,(17) but the broader of the Lanham Act provisions (Section 43(a) of the Lanham Act, codified at 15 U.S.C. § 1125(a)), provides in part:

Any person who, on or in connection with any goods or services, or any container for goods, uses in commerce any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which--

(A) is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person, or

(B) in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person's goods, services, or commercial activities,

shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act.(18)

15 U.S.C.A. § 1125(a), set forth above, protects qualifying unregistered marks, and the general principles qualifying a mark for protection as a registered mark under the Lanham Act, are for the most part applicable in determining whether an unregistered mark is entitled to protection.(19)  As for registered marks, any person who uses, in commerce, an imitation of a registered mark, without the registrant's consent and in a way that is likely to cause confusion, is liable for trademark infringement.(20)  Likelihood of confusion is the touchstone of trademark infringement.(21) In the Fifth Circuit, likelihood of confusion is determined by considering eight factors, none of which alone are necessary or sufficient to be determinative: 1) strength of the plaintiff's mark; 2) similarity of design between the marks; 3) similarity of the products; 4) identity of retail outlets and purchasers; 5) similarity of advertising media used; 6) the defendant's intent; 7) actual confusion; and 8) degree of care exercised by potential purchasers.(22)

PASSING OFF. Passing off, or sometimes referred to as "palming off" is a type of trademark infringement, which occurs when a producer misrepresents his own goods or services as someone else's. "Reverse passing off," is the opposite, such as when a producer misrepresents someone else's goods or services as his own. Both forms of passing off are actionable under the Lanham Act. Section 43(a) of the Lanham Act, from which passing off actions emanate, requires proof that a defendant used a "false designation of origin" of "goods or services."(23)

DAMAGES. The Lanham Act allows, upon a showing of infringement, recovery of: 1) defendant's profits; 2) plaintiff's damages; and 3) costs of the action, including attorney's fees.(24) Although, courts have generally required a showing of willful infringement before awarding defendant's profits.(25)

DEFENSES. A Defendant may escape liability if it can establish an equitable defense such as laches or acquiescence. Laches is an inexcusable delay that results in prejudice to the defendant and has three elements: 1) delay in asserting one's trademark rights, 2) lack of excuse for the delay, and 3) undue prejudice to the alleged infringer caused by the delay.(26) Under this defense, undue prejudice may be found where an unlicensed user, in reliance on the trademark owner's unexcused delay in filing suit, makes major business investments or expansions that depend on the use of the marks; these investments and expansions would suffer appreciable loss if the marks were enforced; and this loss would not have been incurred had the trademark owner enforced his rights earlier.

The acquiescence defense requires the defendant to establish three elements: 1) implicit or explicit assurances by the plaintiff that the defendant could use the mark; 2) reliance by the defendant upon those representations; and 3) undue prejudice.(27) Undue prejudice means that the defendant has taken steps such as making significant investment decisions or building the bulk of its business based on the reasonable assumption that it had permission to use the plaintiff's marks, and that such investment or capital would be lost if the defendant could no longer use the mark.(28)

Because these defenses are equitable in nature, they are not available for a defendant with unclean hands.(29) Unclean hands may be found where the defendant intentionally infringes a trademark with the bad faith intent to capitalize on the markholder's good, and therefore, lacks the clean hands necessary to assert an equitable defense.(30) Unclean hands may be found only where the unlicensed defendant "subjectively and knowingly" intended to cause mistake or to confuse or deceive buyers.(31) Mere awareness of a trademark owner's claim to the same mark does not amount to having unclean hands nor establishes bad intent necessary to preclude laches and acquiescence defenses.(32)

TRADE DRESS INFRINGEMENT is analyzed just like a trademark infringement case, but refers to the packaging, general presentation, total image, or overall appearance of a product or business.(33) It involves the total image of the product and may include features such as size, shape, color combinations, texture, graphics, or even sales techniques.(34) In trade dress infringement suits where the dress inheres in a product configuration, the primary factors to be considered in assessing likelihood of confusion are the product's labeling, packaging, and advertisements.(35) The same test is applied to determine if false designation has occurred which is the "likelihood of confusion" test using the same factors discussed above.

INTERNET CYBERPIRACY is also an area that is now addressed by Federal law.  A person may be held liable in a civil action if that person: 1) registers, uses, or traffics in a domain name that is identical to or confusingly similar to a registered or famous mark; and 2) the person has a bad faith intent to profit from that mark. (15 U.S.C. § 1125(d)(1)(A)). Factors that are considered when determining bad faith intent are: 1) the trademark or other intellectual property rights of the person, if any, in the domain name; 2) the extent to which the domain name consists of the legal name of the person or a name that is otherwise commonly used to identify that person; 3) the person’s prior use, if any, of the domain name in connection with the bona fide offering of any goods or services; 4) the person’s bona fide noncommercial or fair use of the mark in a site accessible under the domain name; 5) the person’s intent to divert consumers from the mark owner’s online location to a site accessible under the domain name that could harm the goodwill represented by the mark, either for commercial gain or with the intent to tarnish or disparage the mark, by creating a likelihood of confusion as to the source, sponsorship, affiliation, or endorsement of the site; 6) the person’s offer to transfer, sell, or otherwise assign the domain name to the mark owner or any third party for financial gain without having used, or having an intent to use, the domain name in the bona fide offering of any goods or services, or the person’s prior conduct indicating a pattern of such conduct; 7) the person’s provision of material and misleading false contact information when applying for the registration of the domain name, the person’s intentional failure to maintain accurate contact information, or the person’s prior conduct indicating a pattern of such conduct; 8) the person’s registration or acquisition of multiple domain names which the person knows are identical or confusingly similar to marks of others that are distinctive at the time of registration of such domain names, or dilutive of famous marks of others that are famous at the time of registration of such domain names, without regard to the goods or services of the parties; and 9) the extent to which the mark incorporated in the person’s domain name registration is or is not distinctive and famous within the meaning of the statute.  (15 U.S.C. § 1125(d)(1)(B)).  Injunctive relief and actual damages are recoverable.  For cyberpiracy, as defined in the statute, a plaintiff may also elect, at any time before the final judgment, to recover statutory damages instead of actual damages, in an amount fo between $1,000 and $100,000 per domain name as the court considers just.  (15 U.S.C. § 1117(d)).

 

TEXAS TRADEMARK INFRINGEMENT.

In 2011, the Texas Legislature overhauled the Texas' trademark infringement statute with the intent to provide a system of trademark registration and protection in Texas that is consistent with the federal system of trademark registration and protection under the Lanham Act.(36) Accordingly, the enabling legislation provided that case law decisions regarding the Lanham Act should be examined as persuasive authority for interpreting and construing the new Texas statute.(37) The Act provides for a system of mark registration in Texas, and for enforcement of mark infringements, for both registered marks and unregistered famous marks.(38)

Texas Registered marks. With respect to registered marks, a person commits an infringement if without the registrant's consent, 1) uses anywhere in this state a reproduction, counterfeit, copy, or colorable imitation of a mark in connection with selling, distributing, offering for sale, or advertising goods or services when the use is likely to deceive or cause confusion or mistake as to the source or origin of the goods or services; or 2) when the person reproduces, counterfeits, copies, or colorably imitates a registered mark and applies the reproduction, counterfeit, copy, or colorable imitation to a label, sign, print, package, wrapper, receptacle, or advertisement intended to be used in selling or distributing, or in connection with the sale or distribution of, goods or services in this state.(39) The registrant may sue for damages and an injunction to prevent further infringement.(40) If the court determines that an infringement has occurred, the court can enjoin the act of infringement as well as order all infringing counterfeits be destroyed.(41) If the violator is found to have acted with intent to cause confusion or mistake or to deceive,(42) the court may also require the defendant to pay the registrant all profits or damages resulting from the infringement.(43) If the court finds that the violator acted with actual knowledge of the registrant's mark or in bad faith, with intent to cause confusion or mistake or to deceive, the court may award registrant an amount not to exceed three times the amount of profits and damages and reasonable attorney's fees.(44)

Unregistered marks. The owner of a mark that is famous and distinctive, inherently or through acquired distinctiveness, is entitled to enjoin another person's commercial use of a mark or trade name that begins after the mark has become famous if use of the mark or trade name is likely to cause the dilution of the famous mark.(45)  A mark is considered to be famous if the mark is widely recognized by the public throughout Texas or in a geographic area of Texas as a designation of source of the goods or services of the mark's owner.(46) To determine whether a mark is famous, the court may consider factors such as: 1) the duration, extent, and geographic reach of the advertisement and publicity of the mark in this state, regardless of whether the mark is advertised or publicized by the owner or a third party; 2) the amount, volume, and geographic extent of sales of goods or services offered under the mark in this state; 3) the extent of actual recognition of the mark in this state; and 4) whether the mark is registered in this state or in the United States Patent and Trademark Office.(47)  If an infringement is found, the owner of a famous mark is entitled to injunctive relief throughout the geographic area in which the mark is found to have become famous before the use of the other mark.(48)  If the court finds that the person against whom the injunctive relief is sought wilfully intended to cause the dilution of the famous mark, the owner shall also be entitled to money damages not to exceed three times the amount of profits and damages, and reasonable attorneys fees, subject to the court's discretion and the principles of equity.(49) No claims are allowed for a non-commercial use of the mark, any form of news reporting or commentary about the mark, or for a fair or nominative use of the mark.(50)

 

Notes
1. Am. Rice, Inc. v. Producers Rice Mill, Inc., 518 F.3d 321, 329 (5th Cir. 2008).
2. Id; see also 15 U.S.C. § 1114.
3. 15 U.S.C. § 1127.
4. Id.
5. 15 U.S.C. §§ 1051-1128.
6. Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 112 S. Ct. 2753, 120 L. Ed. 2d 615 (1992).
7. 15 U.S.C. § 1127.
8. 15 U.S.C. § 1052 .
9. Two Pesos, at 768.
10. Id.
11. Id.
12. Id.(citing 15 U.S.C. § 1052(e)).
13. Id.
14. Qualitex Co. v. Jacobson Prods. Co., 514 U.S. 159, 163, 115 S. Ct. 1300, 131 L. Ed. 2d 248 (1995) (quoting Inwood Labs., Inc. v. Ives Labs., Inc., 456 U.S. 844, 851 n.11, 102 S. Ct. 2182, 72 L. Ed. 2d 606 (1982)).
15. Spraying Sys. Co. v. Delavan, Inc., 975 F.2d 387, 393 (7th Cir.1992).
16. Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. at 769.
17. 15 U.S.C. § 1114; 15 U.S.C. § 1125.
18. 15 U.S.C. § 1125(a).
19. Two Pesos, Inc. v. Taco Cabana, 505 U.S. 763.
20. 15 U.S.C. § 1114(1).
21. Society of Fin. Examiners v. Nat'l Ass'n of Certified Fraud Examiners, Inc., 41 F.3d 223, 225 (5th Cir.), cert. denied, 515 U.S. 1103, 115 S. Ct. 2247, 132 L. Ed. 2d 255 (1995).
22. Am. Rice, Inc. v. Producers Rice Mill, Inc., 518 F.3d 321, 329 (5th Cir. 2008).
23. 15 U.S.C. § 1125(a)(1).
24. 15 U.S.C.A. § 1117(a)(West 1997).
25. Neles-Jamesbury, Inc. v. Bill's Valves, 974 F. Supp. 979, 995 (S.D. Tex. 1997).
26. Abraham v. Alpha Chi Omega, 708 F.3d 614, 622 (5th Cir. 2013).
27. Abraham v. Alpha Chi Omega, 708 F.3d 614, 624 (5th Cir. 2013).
28. Pennziol-Quaker State Co. v. Miller Oil and Gas Operations, ___ F.3d_____ (5th Cir. 2015).
29. Abraham v. Alpha Chi Omega, 708 F.3d 614, 620 (5th Cir. 2013).
30. Id.
31. Id. at 621.
32. Id.
33. Id. n.1.
34. Id.
35. Versa Prods. Co., Inc. v. Bifold Co. (Mfg) Ltd., 50 F.3d 189, 203 (3d Cir.), cert. denied, 516 U.S. 808, 116 S. Ct. 54, 133 L. Ed. 2d 19 (1995).
36. Act approved June 17, 2011, 82 Leg. R.S., ch 563, § 3, 2011 Tex. Gen. Laws 563.
37. Id.
38. Tex. Bus. & Com. Code §16.001 et seq.
39. Id. § 16.102(a).
40. Id. § 16.102(b).
41. Id. § 16.102(c).
42. Id. § 16.102(e).
43. Id. § 16.102(c).
44. Id. § 16.102(d).
45. Id. § 16.103(a).
46. Id. § 16.103(b).
47. Id.
48. Id. § 16.103(c).
49. Id. § 16.103(c); §16.104.
50. Id. § 16.103(d).