Federal Trademark Protection Limited
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The Supreme Court yesterday limited the scope of federal trademark protection, saying rival companies in some cases can use proprietary terms even when customers might be confused.
The justices unanimously broadened the applicability of the “fair-use” defense to infringement lawsuits, saying defendants need not show a lack of customer confusion. The fair-use doctrine lets competing companies use trademarked terms for descriptive purposes.
“Some possibility of consumer confusion must be compatible with fair use,” Justice David H. Souter wrote for the court in Washington.
The decision is a setback for Lasting Impression I Incorporated, a maker of liquid pigments that permanently change skin color to cover up scars and mask pigmentary disorders. The company, which sells its product under the name Micro Colors, is suing competitor KP Permanent Make-up Incorporated for using the word microcolors on product bottles and flyers.
KP argued that its use of the word predates Lasting Impression’s 1993 trademark registration, and that the term is widely used in the industry to describe color selection. KP also contended that Lasting Impression’s trademark only covered a Micro Colors logo, not the term itself.
A federal trial judge threw out Lasting Impression’s trademark suit, saying KP was making fair use of the term. The San Francisco-based 9th Circuit Court of Appeals reversed that ruling, saying the fair-use defense wouldn’t apply if consumers were likely to be confused by KP’s use of “microcolors.”
Mr. Souter wrote that, while customer confusion was a factor in the analysis, KP wasn’t required to show the absence of confusion to win on fair use.
“The burden of proving likelihood of confusion rests with the plaintiff, and the fair-use defendant has no freestanding need to show confusion is unlikely,” Mr. Souter said.
The ruling set aside the 9th Circuit ruling and sent the case back to lower court for additional proceedings. Lasting Impression and its marketer, MCN International, argued that their customers expressed confusion about KP’s use of the term.
The case is KP Permanent Make-up v. Lasting Impression I, 03- 409.
