Nabisco product with exclamation point

Case Analysis _Toys “R” Us, Inc. V. Canarsie Kiddie Shop, Inc.

Chapter Fourteen Intellectual Property
Introduction to Intellectual Property
Intellectual property consists of the fruits of one’s mind. The laws of intellectual property protect property that is primarily the result of mental creativity rather than physical effort. This category includes trademarks, patents, trade secrets, and copyrights, which are discussed in that order in this chapter.

Trademarks
A trademark is a distinctive mark, word, design, picture, or arrangement used by a seller in conjunction with a product that tends to cause the consumer to identify the product with the producer. Even the shape of a product or package may be a trademark if it is nonfunctional.

trademark

A distinctive mark, word, design, picture, or arrangement used by the producer of a product that tends to cause consumers to identify the product with the producer.

Critical Thinking About The Law
1. In Chapter 13 you studied real and personal property. Why might the legal rules for intellectual property be different in any fashion from the rules for real and personal property?

Clue: Consider the different attitudes we might have toward the results from thinking and the output from physical exertion.

2. Some argue that intellectual property should be available for everyone once it is produced by someone’s mind. What ethical norm underlies this attitude toward sharing mental output?

Clue: Should a person benefit because her mind creates an idea that other minds, for some reason, did not produce?

3. If an idea becomes a legal source of great wealth for a person, what information about the “discovery” would cause you to be more supportive of protecting the property right to the fruits of the discovery?

Clue: The play and movie Amadeus suggest that Mozart’s brilliant compositions resulted more from his genius than from any hard work on his part.

Table 14-1 Types of Marks Protected Under The Lanham Act
1. Product trademarks: marks affixed to a good, its packaging, or its labeling.

2. Service marks: marks used in conjunction with a service.

3. Collective marks: marks identifying the producers as belonging to a larger group, such as a trade union.

4. Certification marks: marks licensed by a group that has established certain criteria for use of the mark, such as “UL Tested” or “Good Housekeeping Seal of Approval.”

Even though the description of a trademark is very broad, there has still been substantial litigation over precisely what features can and cannot serve as a trademark. A sound (NBC’s three chimes and Metro-Goldwyn-Mayer Corporation’s roaring lion), a scent (plumeria blossoms on sewing thread and yarns), and even a color (green-gold of Qualitex dry-cleaning press pads) have all been found to constitute trademarks, because they distinguish the goods as unique and serve to identify their source.

Even phrases can be trademarked. For example, in 2014, Seattle Seahawks running back Marshawn Lynch filed a trademark for the phrase, “I’m just here so I won’t get fined,” the phrase he used to answer over 20 questions on Super Bowl XLIX media day. He trademarked the phrase to use on items in his Beast Mode apparel line. In 2013, he had trademarked the phrase “About that action BOSS,” a phrase from his only Superbowl XLVII interview, to be used for a similar purpose.

A trademark used intrastate is protected under state common law. To be protected in interstate use, the trademark must be registered with the U.S. Patent Office under the Lanham Act of 1947. Several types of marks, listed in Table 14-1 , are protected under this act.

If a mark is registered, the holder of the mark may recover damages from an infringer who uses that mark to pass off its own goods as those of the mark holder. The mark owner may also obtain an injunction prohibiting the infringer from using the mark. Only the latter remedy is available for an unregistered mark.

To register a mark with the Patent Office, one must submit a drawing of the mark and indicate when it was first used in interstate commerce and how it is used. The Patent Office conducts an investigation to verify these facts and will register a trademark as long as it is not generic, descriptive, immoral, deceptive, the name of a person whose permission has not been obtained, or substantially similar to another’s trademark.

It is sometimes difficult to determine whether a trademark will be protected, and once the trademark is issued, it is not always easy to predict when a similar mark will be found to infringe upon the registered trademark. The following case demonstrates a typical analysis used in a trademark-infringement suit.

Case 14-1 Toys “R” Us, Inc. v. Canarsie Kiddie Shop, Inc.
District Court of the Eastern District of New York 559 F. Supp. 1189 (1983)

Beginning in 1960, Plaintiff Toys “R” Us, Inc., sold children’s clothes in stores across the country. The firm obtained a registered trademark and service mark for Toys “R” Us in 1961 and aggressively advertised and promoted its products using these marks. In the late 1970s, Defendant Canarsie Kiddie Shop, Inc., opened two children’s clothing stores within two miles of a Toys “R” Us shop and contemplated opening a third. The owner of Canarsie Kiddie Shop, Inc., called the stores Kids “r” Us. He never attempted to register the name. Toys “R” Us sued for trademark infringement in the federal district court.

Judge Glasser
In assessing the likelihood of confusion and in balancing the equities, this Court must consider the now classic factors.

1. Strength of the Senior User’s Mark

“[T]he term ‘strength’ as applied to trademarks refers to the distinctiveness of the mark, or more precisely, its tendency to identify goods sold under the mark as emanating from the particular, although possibly anonymous, source.” A mark can fall into one of four general categories, which, in order of ascending strength, are: (1) generic; (2) descriptive; (3) suggestive; and (4) arbitrary or fanciful. The strength of a mark is generally dependent both on its place upon the scale and on whether it has acquired secondary meaning.

A generic term “refers, or has come to be understood as referring to the genus of which the particular product is a species.” A generic term is entitled to no trademark protection whatsoever, since any manufacturer or seller has the right to call a product by its name.

A descriptive mark identifies a significant characteristic of the product, but is not the common name of the product. A mark is descriptive if it “informs the purchasing public of the characteristics, quality, functions, uses, ingredients, components, or other properties of a product, or conveys comparable information about a service.” To achieve trademark protection a descriptive term must have attained secondary meaning, that is, it must have “become distinctive of the applicant’s goods in commerce.”

A suggestive mark is one that “requires imagination, thought, and perception to reach a conclusion as to the nature of the goods.” These marks fall short of directly describing the qualities or functions of a particular product or service, but merely suggest such qualities. If a term is suggestive, it is entitled to protection without proof of secondary meaning.

Arbitrary or fanciful marks require no extended definition. They are marks which in no way describe or suggest the qualities of the product.

The Toys “R” Us mark is difficult to categorize.

The strength of the plaintiff’s mark must be evaluated by examining the mark in its entirety. . . . I agree that the Toys “R” Us mark serves to describe the business of the plaintiff, and in this sense is merely descriptive. This descriptive quality, however, does require some “imagination, thought, and perception” on the part of the consumer since the plaintiff’s mark, read quite literally, conveys the message, “we are toys,” rather than “we sell toys.”

Whether the “leap of imagination” required here is sufficient to render the mark suggestive rather than descriptive is a question with no clear-cut answer. Such an absolute categorization is not essential, however, since the defendants concede that through the plaintiff’s marketing and advertising efforts the Toys “R” Us mark has acquired secondary meaning in the minds of the public, at least in relation to its sale of toys. Such secondary meaning assures that the plaintiff’s mark is entitled to protection even if it is viewed as merely descriptive. Because I find that through the plaintiff’s advertising and marketing efforts the plaintiff’s mark has developed strong secondary meaning as a source of children’s products, it is sufficient for purposes of this decision to note merely that the plaintiff’s mark is one of medium strength, clearly entitled to protection, but falling short of the protection afforded an arbitrary or fanciful mark.

2. Degree of Similarity between the Two Marks

[T]he key inquiry is . . . whether a similarity exists which is likely to cause confusion. This test must be applied from the perspective of prospective purchasers. Thus, it must be determined whether “the impression which the infringing [mark] makes upon the consumer is such that he is likely to believe the product is from the same source as the one he knows under the trademark.” In making this determination, it is the overall impression of the mark as a whole that must be considered.

Turning to the two marks involved here, various similarities and differences are readily apparent. The patent similarity between the marks is that they both employ the phrase, “R” Us. Further, both marks employ the letter “R” in place of the word “are,” although the plaintiff’s mark uses an inverted capitalized “R,” while the defendants generally use a non-inverted lower case “r” for their mark.

The most glaring difference between the marks is that in one the phrase “R” Us is preceded by the word “Toys,” while in the other it is preceded by the word “Kids.” Other differences include the following: plaintiff’s mark ends with an exclamation point, plaintiff frequently utilizes the image of a giraffe alongside its mark, plaintiff’s mark is set forth in stylized lettering, usually multi-colored, and plaintiff frequently utilizes the words, “a children’s bargain basement” under the logo in its advertising.

I attach no great significance to the minor lettering differences between the marks, or to the images or slogans usually accompanying the plaintiff’s mark. . . . While the marks are clearly distinguishable when placed side by side, there are sufficiently strong similarities to create the possibility that some consumers might believe that the two marks emanated from the same source. The similarities in sound and association also create the possibility that some consumers might mistake one mark for the other when seeing or hearing the mark alone. The extent to which these possibilities are “likely” must be determined in the context of all the factors present here.

3. Proximity of the Products

Where the products in question are competitive, the likelihood of consumer confusion increases. . . . [B]oth plaintiff and defendants sell children’s clothing; . . . the plaintiff and defendants currently are direct product competitors.

4. The Likelihood That Plaintiff Will “Bridge the Gap” 

“[B]ridging the gap” refers to two distinct possibilities: first, that the senior user presently intends to expand his sales efforts to compete directly with the junior user, thus creating the likelihood that the two products will be directly competitive; second, that while there is no present intention to bridge the gap, consumers will assume otherwise and conclude, in this era of corporate diversification, that the parties are related companies. . . . I find both possibilities present here.

5. Evidence of Actual Confusion 

Evidence of actual confusion is a strong indication that there is a likelihood of confusion. It is not, however, a prerequisite for the plaintiff to recover.

6. Junior User’s Good Faith 

The state of mind of the junior user is an important factor in striking the balance of the equities. In the instant case, Mr. Pomeranc asserted at trial that he did not recall whether he was aware of the plaintiff’s mark when he chose to name his store Kids “r” Us in 1977.

I do not find this testimony to be credible. In view of the proximity of the stores, the overlapping of their products, and the strong advertising and marketing effort conducted by the plaintiff for a considerable amount of time prior to the defendants’ adoption of the name Kids “r” Us, it is difficult to believe that the defendants were unaware of the plaintiff’s use of the Toys “R” Us mark.

The defendants adopted the Kids “r” Us mark with knowledge of plaintiff’s mark. A lack of good faith is relevant not only in balancing the equities, but also is a factor supporting a finding of a likelihood of confusion.

7. Quality of the Junior User’s Product 

If the junior user’s product is of a low quality, the senior user’s interest in avoiding any confusion is heightened. In the instant case, there is no suggestion that the defendants’ products are inferior, and this factor therefore is not relevant.

8. Sophistication of the Purchasers 

The level of sophistication of the average purchaser also bears on the likelihood of confusion. Every product, because of the type of buyer that it attracts, has its own distinct threshold for confusion of the source or origin.

The goods sold by both plaintiff and defendants are moderately priced clothing articles, which are not major expenditures for most purchasers. Consumers of such goods, therefore, do not exercise the same degree of care in buying as when purchasing more expensive items. Further, it may be that the consumers purchasing from the plaintiff and defendants are influenced in part by the desires of their children, for whom the products offered by plaintiff and defendants are meant.

9. Junior User’s Goodwill 

[A] powerful equitable argument against finding infringement is created when the junior user, through concurrent use of an identical trademark, develops goodwill in their [sic] mark. Defendants have not expended large sums advertising their store or promoting its name. Further, it appears that most of the defendants’ customers are local “repeat shoppers,” who come to the Kids “r” Us store primarily because of their own past experiences with it. In light of this lack of development of goodwill, I find that the defendants do not have a strong equitable interest in retaining the Kids “r” Us mark.

Conclusion on Likelihood of Confusion
[T]he defendants’ use of the Kids “r” Us mark does create a likelihood of confusion for an appreciable number of consumers.

In reaching this determination, I place primary importance on the strong secondary meaning that the plaintiff has developed in its mark, the directly competitive nature of the products offered by the plaintiff and defendants, the plaintiff’s substantially developed plans to open stores similar in format to those of the defendants’, the lack of sophistication of the purchasers, the similarities between the marks, the defendants’ lack of good faith in adopting the mark, and the limited goodwill the defendants have developed in their mark. *

Judgment for the Plaintiff, Toys “R” Us.

Critical Thinking About The Law
Legal reasoning and decision making almost always entail a reliance on tradition. In Case 14-1, the court’s deference to tradition is especially strong. In applying the “classic factors” to the case, the court judges the present case on the basis of the way in which an allegedly similar earlier case was judged.

The implications of relying on tradition in legal reasoning are quite significant. The questions that follow will help you to consider this significance more deeply.

1. To demonstrate your ability to recognize reasoning by analogy, identify the implicit analogy that pervades the court’s reasoning in Case 14-1.

Clue: Consider the source of the “classic factors.”

2. What important piece of missing information hinders your ability to make a sound critical judgment about the appropriateness of the court’s reasoning?

Clue: Refer to your answer to Question 1; it is directly related to this question.

The potential for consumer confusion seems to be a very important consideration in a trademark-infringement case. In the Dentyne Ice chewing gum case, the court ruled that there was little possibility for consumer confusion between “Dentyne Ice” and “Icebreakers” because Dentyne was a common household name; thus, Dentyne did not infringe on Nabisco’s trademark.

Applying the law to the facts . .
Your roommate cannot find a summer job. He decides that he is going to make money instead by selling silkscreened T-shirts that have a picture of an upside down “swoosh” underneath the words “JUST DONE IT.” He asked your opinion of his proposed business venture. What do you tell him?

Trade Dress
The term trade dress refers to the overall appearance and image of a product. Trade dress is entitled to the same protection as a trademark. To succeed on a claim of trade-dress infringement, a party must prove three elements: (1) the trade dress is primarily nonfunctional; (2) the trade dress is inherently distinctive or has acquired a secondary meaning; and (3) the alleged infringement creates a likelihood of confusion.

trade dress

The overall appearance and image of a product that has acquired secondary meaning.

The main focus of a case of trade-dress infringement is usually on whether or not there is likely to be consumer confusion. For example, in a 1996 case, Tour 18, Limited, a golf course, copied golf holes from famous golf courses without permission of the course owners. 1 In copying a hole from one of the most famous courses in the country, Harbour Town Hole 19, the defendant even copied the Harbour Town Lighthouse, which is the distinctive feature of that hole. In its advertising, Tour 18 prominently featured pictures of this hole, including the lighthouse. The operator of the Harbour Town course sued Tour 18 for trade-dress infringement. The court found that there was infringement and made Tour 18 remove the lighthouse and disclaim in its advertising any affiliation with the owner of the Harbour Town course.

1 Pebble Beach Co. v. Tour 18, Ltd. 942 F. Supp. 1513 (S.D. Tex. 1996).

Trade-dress violations occur over a wide range of products. Two very different examples of trade-dress infringement include Bubba’s Bar-B-Q Oven v. Holland Co., 2 and Two Pesos v. Taco Cabana. 3 In the first case, Bubba’s had almost exactly copied the physical appearance of Holland Company’s very successful gas-fired barbecue grill, which the court found to be trade-dress infringement. In the second case, the court found that Taco Cabana’s trade dress consisted of “a festive eating atmosphere having interior dining and patio areas decorated with artifacts, bright colors, paintings and murals”; “a patio that has interior and exterior areas with the interior patio capable of being sealed off from the outside patio by overhead garage doors”; a stepped exterior of the building that has “a festive and vivid color scheme using top border paint and neon stripes”; and “bright awnings and umbrellas.” * When Two Pesos opened a series of competing Mexican restaurants that mimicked those features almost exactly, the court found Two Pesos guilty of trade-dress infringement.

2 175 F.3d 1013; Docket No. 98-1029 (4th Cir. 1999).

3 112 S. Ct. 2753 (1994).

A claim of trade-dress infringement is often accompanied by a claim of trademark infringement. For example, the Chippendale’s name is protected as a trademark, and their dancers’ costume—cuffs and a collar—is protected as trade dress. Chippendale’s sued a European gaming machine manufacturer who had made and distributed “Chickendale’s” slot machines featuring dancing chickens wearing cuffs and collars. The case settled in 2010 with Chippendale’s receiving a cash settlement and the transfer of the mark Chickendale’s to them. 4

4 Chippendales USA, LLC v. Atronic Americas, LLC, Civ. No. 03-904 (D.N.J.), as reported at Chippendale’s website. Accessed April 20, 2010 at http://www.chippendales.com/company/victories.php.

Technology and the Legal Environment Trademarks and Domain Names
If a business has a very strong trademark, what better domain name to have than that trademark? Unfortunately, the same trademark may be owned by two companies selling noncompeting goods, yet there can be only one user of any single domain name.

Domain names are important because they are the way people and businesses are located on the Web. A domain name is made up of a series of domains separated by periods. Most websites have two domains. The first-level domain, the one that the address ends with, generally identifies the type of site. For example, if it is a government site, it will end in gov. An educational site will end in edu, a network site in net, an organization in org, and a business in com or biz. These top-level domain names are the same worldwide.

Until recently, these top-level domain names had to be in Latin language script. However, as of mid-2010, four countries (Egypt, the Russian Federation, Saudi Arabia, and the United Arab Emirates) have been authorized to use their own non-Latin language scripts in the top-level domain portion of their Internet address names.

The second-level domain is usually the name of whoever maintains the site. For a college, for example, it would be an abbreviation of the college, as in bgsu. Businesses generally use their firm name or some other trademark associated with their product, because that name will obviously make it easier for their customers to find them.

So, how does a firm go about securing a domain name that reflects its trademark? The Internet Corporation for Assigned Names and Numbers (ICANN) is the nonprofit corporation that is responsible for coordinating technical Internet functions, including the management of the domain name system. ICANN has accredited a number of companies, called registrars, to issue domain names to the public and place their owners’ information on the registry. Network Solutions, Inc. (NSI), which is funded by the National Science Foundation, was the first registrar, but has now been joined by several other firms. A list of ICANN-accredited registrars can be found at http://www.icann.org/en/registrars /accredited-list.html.

Anyone seeking to register a domain name should contact one of these registrars and provide the necessary contact information so that a domain name can be issued. A registrant must now state in its application that the name will not infringe on anyone else’s intellectual property rights, that the name is not being registered for an unlawful purpose, that statements in the registration agreement are complete and accurate, and that the domain name will not be knowingly used in violation of any law. Registrars have the flexibility to offer initial and renewal registrations in 1-year increments, for up to 10 years.

Domain names may be cancelled or transferred when a complaint is filed with ICANN and the dispute is resolved against a registrant in an administrative proceeding held in accordance with the Uniform Domain Name Dispute Resolution Policy. Claims subject to dispute resolution include allegations that your domain name is confusingly similar to a trademark or service mark in which the complainant has rights and that your domain name has been registered and is being used in bad faith. 5

5 ICANN Uniform Domain Name Dispute Resolution Policy, available at www.icann.org/udrp /udrp-policy-24oct99.htm.

Some firms have tried to get the domain name they desire by going to another country. That alternative is certainly a possibility. Many countries, however, require that a firm be incorporated within their borders before it can gain the right to the domain name there. Also, an additional problem is that trademark law relating to domain names is even more unclear abroad.

For the new entrepreneur, the best advice is to try to simultaneously apply for federal trademark protection and register the domain name; for those not yet on the Web, the sooner you get your domain name, the more likely you are to get the name you want. Moreover, if you feel that your mark is being violated by another’s domain name, you may want to sue them for infringement, because the unauthorized use of another’s trademark in a domain name has been found to be illegal. You may, however, be in for quite a fight, because this is a new area of the law.

Federal Trademark Dilution Act of 1995
Under the Lanham Act, trademark owners were protected from the unauthorized use of their marks on only competing goods or related goods where the use might lead to consumer confusion. Consequently, a mark might be used without permission on completely unrelated goods, thereby potentially diminishing the value of the mark. In response to this problem, a number of states passed trademark dilution laws, which prohibited the use of “distinctive” or “famous” trademarks, such as McDonald’s, even without a showing of consumer confusion.

In 1995, Congress made similar protections available at the federal level with the Federal Trademark Dilution Act (FTDA). Trademark dilution occurs through either “blurring” or “tarnishment.” Blurring occurs when the distinctiveness of the famous mark is reduced by its association with a similar mark. For example, in 2011, the Trademark Trial and Appeal Board found that the use of the mark “JUST JESU IT” would cause dilution by blurring of Nike’s “JUST DO IT” mark. Tarnishment occurs when someone uses a mark in a way that causes the famous mark to be linked with an inferior quality product or an unwholesome category of products. For example, using candyland.com for a child pornography site constituted dilution by tarnishment of Hasbro’s trademarked “Candyland” for its children’s board game. 6

6 Hasbro Inc. v. Internet Entm’t. Grp., Ltd.

In one of the first cases decided under the FTDA, the court said that the protection available under this act extended not just to identical marks but also to similar marks. In that case, Ringling Brothers–Barnum & Bailey challenged Utah’s use of the slogan “The Greatest Snow on Earth” as diluting its famous slogan, “The Greatest Show on Earth.” In denying Utah’s motion to dismiss because the slogans were not identical, the court said that the marks need not be identical to dilute a famous mark. In the case below the plaintiff alleged both trademark infringement and trademark dilution.

Case 14-2 Victor Moseley and Cathy Moseley et al., dba Victor’s Little Secret v. V Secret Catalogue, Inc. et al.
Supreme Court of the United States 537 U.S. 418, 123 S. Ct. 1115 (2003)

Petitioners, Victor and Cathy Moseley, own and operate an adult novelty store named “Victor’s Secret” in a strip mall in Elizabethtown, Kentucky. An army colonel saw an advertisement for the store and thought petitioners were using a reputable trademark to promote unwholesome merchandise, so he sent a copy of the advertisement to respondents, the corporations that own the Victoria’s Secret trademarks. These corporations operate more than 750 Victoria’s Secret stores and spent more than $55 million advertising their brand in 1998.

Respondents asked petitioners to discontinue using the name, and they responded by changing the store’s name to “Victor’s Little Secret.” Respondents then filed a lawsuit containing four separate claims for (1) trademark infringement, alleging that petitioners’ use of their trade name was “likely to cause confusion and/or mistake”; (2) unfair competition, alleging misrepresentation; (3) “federal dilution” in violation of the FTDA; and (4) trademark infringement and unfair competition in violation of the common law of Kentucky. The dilution count was premised on the claim that petitioners’ conduct was “likely to blur and erode the distinctiveness” and “tarnish the reputation” of the Victoria’s Secret trademark.

Finding that the record contained no evidence of actual confusion between the parties’ marks, the district court concluded that “no likelihood of confusion exists as a matter of law” and entered summary judgment for the Moseleys on the infringement and unfair competition claims. With respect to the FTDA claim, however, the court ruled for V Secret Catalogue, and the Moseleys appealed. The Sixth Circuit affirmed, finding that respondents’ mark was “distinctive” and that the evidence established “dilution” even though no actual harm had been proved.

Justice Stevens
The Victoria’s Secret mark is unquestionably valuable and petitioners have not challenged the conclusion that it qualifies as a “famous mark” within the meaning of the statute. Moreover, as we understand their submission, petitioners do not contend that the statutory protection is confined to identical uses of famous marks, or that the statute should be construed more narrowly in a case such as this.

The District Court’s decision in this case rested on the conclusion that the name of petitioners’ store “tarnished” the reputation of respondents’ mark, and the Court of Appeals relied on both “tarnishment” and “blurring” to support its affirmance. Petitioners have not disputed the relevance of tarnishment, presumably because that concept was prominent in litigation brought under state antidilution statutes and because it was mentioned in the legislative history. . . . Indeed, the contrast between the state statutes, which expressly refer to both “injury to business reputation” and to “dilution of the distinctive quality of a trade name or trademark,” and the federal statute which refers only to the latter, arguably supports a narrower reading of the FTDA.

The relevant text of the FTDA provides that “the owner of a famous mark” is entitled to injunctive relief against another person’s commercial use of a mark or trade name if that use “causes dilution of the distinctive quality” of the famous mark. This text unambiguously requires a showing of actual dilution, rather than a likelihood of dilution.

This conclusion is fortified by the definition of the term “dilution” itself. That definition provides:

“The term ‘dilution’ means the lessening of the capacity of a famous mark to identify and distinguish goods or services, regardless of the presence or absence of—

“(1) competition between the owner of the famous mark and other parties, or

“(2) likelihood of confusion, mistake, or deception.”

The contrast between the initial reference to an actual “lessening of the capacity” of the mark, and the later reference to a “likelihood of confusion, mistake, or deception” in the second caveat confirms the conclusion that actual dilution must be established.

Of course, that does not mean that the consequences of dilution, such as an actual loss of sales or profits, must also be proved. . . . We do agree, however, with that court’s conclusion that, at least where the marks at issue are not identical, the mere fact that consumers mentally associate the junior user’s mark with a famous mark is not sufficient to establish actionable dilution. As the facts of that case demonstrate, such mental association will not necessarily reduce the capacity of the famous mark to identify the goods of its owner, the statutory requirement for dilution under the FTDA. For even though Utah drivers may be reminded of the circus when they see a license plate referring to the “greatest snow on earth,” it by no means follows that they will associate “the greatest show on earth” with skiing or snow sports, or associate it less strongly or exclusively with the circus. “Blurring” is not a necessary consequence of mental association. (Nor, for that matter, is “tarnishing.”)

The record in this case establishes that an army officer who saw the advertisement of the opening of a store named “Victor’s Secret” did make the mental association with “Victoria’s Secret,” but it also shows that he did not therefore form any different impression of the store that his wife and daughter had patronized. There is a complete absence of evidence of any lessening of the capacity of the Victoria’s Secret mark to identify and distinguish goods or services sold in Victoria’s Secret stores or advertised in its catalogs. The officer was offended by the ad, but it did not change his conception of Victoria’s Secret. His offense was directed entirely at petitioners, not at respondents. Moreover, the expert retained by respondents had nothing to say about the impact of petitioners’ name on the strength of respondents’ mark.

Noting that consumer surveys and other means of demonstrating actual dilution are expensive and often unreliable, respondents and their amici argue that evidence of an actual “lessening of the capacity of a famous mark to identify and distinguish goods or services” may be difficult to obtain. It may well be, however, that direct evidence of dilution such as consumer surveys will not be necessary if actual dilution can reliably be proved through circumstantial evidence—the obvious case is one where the junior and senior marks are identical. Whatever difficulties of proof may be entailed, they are not an acceptable reason for dispensing with proof of an essential element of a statutory violation. The evidence in the present record is not sufficient to support the summary judgment on the dilution count, and the judgment is therefore reversed. *

Judgment reversed for Petitioners.

Applying the law to the facts . .
Louis Vuitton Malletier is a well-known producer of luxury luggage, purses, leather goods, and accessories, and has several widely recognized registered trademarks for Louis Vuitton, the monogram LV, and designs that combine the LV mark with images of stars, flowers, and circles. They also have a limited line of luxury pet accessories, such as collars and leashes, that they sell at their upper-end boutiques, at prices ranging from $200 to $1,600. They sell no dog toys. Haute Diggity Dog produces and sells a line of pet chew toys and beds with names parodying elegant, high-end products with names such as Chewy Vuitton and Dog Perignon. The chew toys are in the shape of the product they are parodying, so they sell a chewy plastic handbag with the monogram CV and the name Chewy Vuitton on it. These products are primarily sold in pet shops for around $20. If Louis Vuitton wanted to try to stop Haute Diggity Dog from selling these products, how would he attempt to do so? What defenses would Haute Diggity Dog raise? What do you think the outcome of this dispute would be?

Patents
Patents are used to protect inventions, which are defined by the patent office as including any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof; designs for an article of manufacture; asexually reproduced plants; or living material invented by a person. For patent protection to be granted, certain criteria must be satisfied ( Table 14-2 ). First, the object of the patent must be novel, or new. No one else must have previously made or published the plans for this object. The second criterion is that it be useful, unless it is a design patent. It must provide some utility to society. The final criterion is that it be nonobvious. The invention must not be one that the person of ordinary skill in the trade could have easily discovered.

patent

Grants the holder the exclusive right to produce, sell, and use a product, process, invention, machine, or asexually reproduced plant for 20 years.

Table 14-2 Criteria for a Patent
· Novel

· Useful

· Nonobvious

While the criteria for a patent may seem straightforward, it is not always easy to determine whether something is patentable. One issue that has been very controversial since the 1990s is whether business methods should be patentable. The United States Supreme Court had the opportunity to make a definitive ruling on this matter in 2010, and while in the particular case they did not allow a patent on the business method, they did not categorically find that business methods could not be patented. The uncertainty of this area is clear by the fact that when the case was decided, while all the justices agreed that the subject matter of the case was not patentable, there were three separate opinions with no single opinion garnering a majority of the justices’ support.

Case 14-3 Bilski v. Kappos
United States Supreme Court 130 S. Ct. 3218 (2010)

Petitioners filed an application to obtain a patent for a claimed invention that explains how commodities buyers and sellers in the energy market can protect, or hedge, against the risk of price changes. The key claims were claim 1, which describes a series of steps instructing how to hedge risk, and claim 4, which places the claim 1 concept into a simple mathematical formula. The remaining claims explain how claims 1 and 4 can be applied to allow energy suppliers and consumers to minimize the risks resulting from fluctuations in market demand. The patent examiner rejected the application on the grounds that the invention was not implemented on a specific apparatus, merely manipulated an abstract idea, and solved a purely mathematical problem.

The Board of Patent Appeals and Interferences agreed and affirmed. The Federal Circuit, in turn, affirmed. The en banc court rejected its prior test for determining whether a claimed invention was a patentable “process” under the Patent Act, i.e., whether the invention produced a “useful, concrete, and tangible result,” and held instead that a claimed process is patent eligible if: (1) it is tied to a particular machine or apparatus, or (2) it transforms a particular article into a different state or thing. Concluding that this “machine-or-transformation test” is the sole test for determining patent eligibility of a “process” under § 101, the court applied the test and held that the application was not patent eligible. The U.S. Supreme Court agreed to hear the appeal.

Justice Kennedy
Section 101 specifies four independent categories of inventions or discoveries that are patent eligible: processes, machines, manufactures, and compositions of matter. In choosing such expansive terms, . . . Congress plainly contemplated that the patent laws would be given wide scope . . . Congress took this permissive approach to patent eligibility to ensure that “ ‘ingenuity should receive a liberal encouragement.’ ”

This Court’s precedents provide three specific exceptions to § 101’s broad principles: “laws of nature, physical phenomena, and abstract ideas.” While these exceptions are not required by the statutory text, these exceptions are consistent with the notion that a patentable process must be “new and useful.” . . .

The § 101 eligibility inquiry is only a threshold test. Even if a claimed invention qualifies in one of the four categories, it must also satisfy “the conditions and requirements of this title. Those requirements include that the invention be novel, nonobvious, and fully and particularly described.”

The present case involves an invention at issue that is claimed to be a “process” under § 101. Section 100(b) defines as a “process, art or method, and includes a new use of a known process, machine, manufacture, composition of matter, or material.”

Under the Court of Appeals’ formulation, an invention is a “process” only if: “(1) it is tied to a particular machine or apparatus, or (2) it transforms a particular article into a different state or thing.” . . . This Court has “more than once cautioned that courts ‘should not read into the patent laws limitations and conditions which the legislature has not expressed.’ ”

. . . Any suggestion in this Court’s case law that the Patent Act’s terms deviate from their ordinary meaning has only been an explanation for the exceptions for laws of nature, physical phenomena, and abstract ideas.

This Court has not indicated that the existence of these well-established exceptions gives the Judiciary carte blanche to impose other limitations that are inconsistent with the text and the statute’s purpose and design. Concerns about attempts to call any form of human activity a “process” can be met by making sure the claim meets the requirements of § 101.

The Court of Appeals incorrectly concluded that this Court has endorsed the machine-or-transformation test as the exclusive test. . . .

This Court’s precedents establish that the machine- or-transformation test is a useful and important clue, an investigative tool, for determining whether some claimed inventions are processes under § 101. The machine-or-transformation test is not the sole test for deciding whether an invention is a patent-eligible “process.”

It is true that patents for inventions that did not satisfy the machine-or-transformation test were rarely granted in earlier eras, especially in the Industrial Age, . . . But times change. Technology and other innovations progress in unexpected ways. For example, it was once forcefully argued that until recent times, “well-established principles of patent law probably would have prevented the issuance of a valid patent on almost any conceivable computer program.” A categorical rule denying patent protection for “inventions in areas not contemplated by Congress . . . would frustrate the purposes of the patent law.”

The machine-or-transformation test may well provide a sufficient basis for evaluating processes similar to those in the Industrial Age—for example, inventions grounded in a physical or other tangible form. But there are reasons to doubt whether the test should be the sole criterion for determining the patentability of inventions in the Information Age. As numerous amicus briefs argue, the machine-or-transformation test would create uncertainty as to the patentability of software, advanced diagnostic medicine techniques, and inventions based on linear programming, data compression, and the manipulation of digital signals.