The following article appears in the journal JOM, 48 (10) (1996), pp. 69. JOM is a publication of The Minerals, Metals & Materials Society

Trademark Infringement and Dilution Aspects of Unfair Competition Law

Although it is said that "all is fair in love and war," the same is not universally true when it comes to business. There are certain business practices that society, as reflected in the law, has said are not fair in a business setting. Unfair competition law is one body of law that is used to assure that competition among firms is fair; one aspect of this law is the law of trademarks.

A trademark is a word, name, symbol, or device or any combination thereof adopted and used by a seller to identify his goods and distinguish them from those sold by another. Technically, trademarks are used on both goods and services, with the latter marks often being referred to as "service marks." For example, the trademark "Coca-Cola^®" is used to identify a soft drink (goods), whereas, the service mark "Holiday Inn^®" is used to identify a hotel (a service). For the purposes of this article, the term trademarks refers to both trademarks and service marks.

Rights in trademarks are acquired through the use of the trademark; by using the trademark in a geographic area, one acquires certain rights under common law. A trademark can be federally registered with the U.S. Patent and Trademark Office if the mark is used in commerce between or among the states. Federal registration gives the owner of the trademark certain enhanced rights. One can also apply for a trademark even before it is used, as long as one has a bona fide intention to use the mark in commerce. State registration of trademarks is also available, but the rights are limited to the state in which the mark is registered.

One seller unfairly competes with another seller by adopting and using a trademark that is confusingly similar to the prior adopted and used trademark of the first seller. It is easy to see why this type of practice is prohibited by the law. If it were otherwise, consumers would be confused as to the origin of a certain product and, thus, could not rely on receiving consistent quality. In addition, there is something inherently unfair in letting an infringer get the benefit of the first seller's time, money, and effort in building good will for the trademark.

The touchstone of any trademark infringement case is the likelihood of confusion—that is, the alleged infringer will be prohibited from using a trademark on a competing product if that use causes a likelihood of confusion in the mind of a relevant purchaser. Courts have set forth a number of factors for determining the likelihood of confusion, such as the closeness of the appearance, sound, and meaning of the conflicting marks; the relatedness of the goods on which the marks are used; the channels of commerce in which the marks are sold; and the sophistication of the relevant purchasers of the goods. Thus, in analyzing any trademark infringement situation, all of these factors as well as other relevant factors not mentioned must be considered.

A trademark owner has several remedies if trademark infringement is found. First, the trademark owner can obtain a permanent injunction prohibiting the infringer from using the infringing mark or any other mark that is confusingly similar to the trademark owner's mark. Second, monetary damages to compensate the trademark owner for the infringement can be awarded. These damages can be increased up to three times if the trademark infringement is deemed to be willful. Third, the court has the discretion to award to the trademark owner its attorney's fees for bringing the action.

Another main area of unfair competition law is trademark dilution. As mentioned, the touchstone of trademark infringement is the likelihood of confusion. However, in some cases the likelihood of confusion is not present, but there is still damage done to a recognized mark by a second seller's unfair use of it.

This damage can occur in two different ways. The first is a blurring of the distinctiveness of the mark. If consumers see the mark being used on a number of different goods and services not controlled by the original owner, the original owner's mark will lose "cachet" or distinctiveness. The second damage to the mark is by tarnishment. In this case, the original mark is used in such a way that the consumer knows, because of the context or the usage, that there is no connection between the owners of the respective marks. However, use of the mark by the other party brings the trademark owner's mark into disrepute or shows the trademark in a bad light. One example of this was a case involving the slogan "Enjoy Coca-Cola," owned by the Coca-Cola Company. A poster showing a bag of cocaine with the slogan "Enjoy Cocaine" was marketed by an unauthorized seller. Anyone seeing that poster would realize that the Coca-Cola Company was not associated with the poster; thus, there was no likelihood of confusion. However, the court, under a theory of dilution of the Coca-Cola mark, stopped the sale and distribution of the poster.

In summary, the law of unfair competition is a broad and wide-ranging area of the law that basically prohibits practices that society deems to be unfair. Two of the aspects of this body of law are trademark infringement and trademark dilution. Our legal system encourages hard, but fair, and honest competition in business. Those who cross the line can be stopped, and damages can be awarded to the rightful owner of the trademark.

For more information, contact A.B. Silverman at Eckert Seamans Cherin & Mellott, 600 Grant Street, 42nd Floor, Pittsburgh, Pennsylvania 15219; (412) 566-6000; fax (412) 566-6099; e-mail ARNIE@TELERAMA.LM.COM.