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Precedents in Trademark Case Law

written by: William Busse•edited by: Michele McDonough•updated: 5/19/2011

Although they have no tangible value, in many instances a trademark can be the most valuable asset a company possesses. This article explores the history of trademark law and examines several important examples of trademark litigation that helped shape legal precedent.

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    Understanding Trademarks

    The primary purpose of a trademark is to distinguish and authenticate a company or its products from other manufacturers and their similar competing products. According to the U.S Patent and Trademark Office, a trademark is “a word, name, symbol or device that is used in trade with goods to indicate the source of the goods and to distinguish them from the goods of others." This can include the shape of the goods, their packaging, sounds and even distinctive smells.

    Trademarks are not designed to prevent others from making or selling comparable goods or products. Instead, they serve as protection to the owner of the trademark so that competitors can not intentionally misrepresent their own goods to be the same or largely similar.

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    Origins of Trademark Law

    The original U.S trademark law was enacted after the Civil War, and came as a result of the rapid growth of trade that followed the Reconstruction period. Manufacturers quickly recognized the need for protection from theft of trade identity and infringement. As a result, the first federal trademark law was passed in 1870 and amended in 1878.factory 

    It was subsequently struck down in the “Trade-Mark Cases," of 1879, where the Supreme Court ruled that the laws exceeded the powers granted to the patent and copyright clauses of the Constitution. As a result, Congress passed the Trademark Act of 1881 which established a trademark law that applied to the interstate commerce clause in the Constitution. The law underwent further revision in 1905 to accommodate the developing economy. The Lanham Act of 1946 completed the transformation of trademark law to include not only the intention of the trademark, but its actual use as well.

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    Trademark Case Law and Precedent

    There are numerous precedents that have been established through extensive adjudication of court cases involving trademarks. Some of these cases have served to establish the guidelines which govern the parameters and the scope of trademark protection.

    In Zatarains, Inc. v. Oak Grove Smokehouse, Inc., the Fifth Circuit Court of Appeals dealt with the issue of whether potential confusion preempted the application of the fair use defense in trademark infringement.

    Oak Grove and Zatarain’s both sold similar fish seasoning products. Zatarain’s product was called, “Fish Fri" while Oak Groves product was named, “fish fry." Zatarain had registered their product name in 1962, and it was a well known common name in the New Orleans community.

    Oak Grove claimed the fair use defense, asserting that their application of the term “fish fry" was merely functional. On appeal, the Fifth Circuit ruled that indeed Oak Grove could use the term “fish fry" in the descriptive sense as long as they purposely did not intend to confuse customers as to the source of the goods.

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    Important Corporate Trademark Decisions

    Microsoft has had a rich history of trademark and patent litigation. In Microsoft Inc. v. Lindows Inc., Microsoft filed suit claiming the “Lindows" mark and name was strikingly similar to the Windows mark which utilizes the universally recognized four colored banner. In this instance the court rejected Microsoft’s claim and raised its own questions concerning the generic nature of Microsoft’s trademark.

    Rather than appeal, Microsoft settled with Lindows for 24 million, fearing the court might find their trademark deserved a loss of building and globe status. As part of the settlement, Lindows Inc. changed their name to “Linspire."

    Another interesting case is that of Burger King of Florida v. Gene and Betty Hoots of Matoon, IL. The Hoots had remodeled a parking garage and turned it into a restaurant specializing in hamburgers, calling it, “Burger King." They registered Burger King with the state of Illinois as a trademark, only to learn later that Burger King was a federally registered trademark of Burger King of Florida. Unable to reach an agreement, the case went to federal court.

    In a highly anticipated decision, the federal 7th Circuit Court of Appeals ruled that since Burger King of Florida had a federal registration, they had rights to the trademark anywhere in the United States except the area of Mattoon, where the Hoots had maintained previous authentic use. Therefore, the Hoots were allowed to continue use of the mark "Burger King" only in Mattoon, but Burger King of Florida retained the right to use the Burger King mark everywhere else.

    Finally, in Wal-Mart Stores, Inc. v. Samara Brothers, Inc., the trademark law under the Lanham Act was tested. This provision of the law protects the physical appearance, packaging and distinctive smell of a product.

    Samara Brothers Inc. designed and produced a line of children’s clothing. Wal-Mart entered into an agreement with one of its vendors to manufacture a clothing product that was similar to the line that Samara Brothers produced. The clothes that Wal-Mart sold in its stores had only minor differences from 16 specific designs Samara Brothers offered. Wal-Mart marketed their own clothes as “knock offs."

    Samara Brothers sent a cease and desist letter to Wal-Mart that had no effect and so a complaint was subsequently filed against Wal-Mart in the U.S District Court for the Southern District of New York.

    The court ultimately ruled in favor of Samara Brothers Inc., and found Wal-Mart to be in violation of several provisions within the trademark statutes. The court concluded that there was sufficient evidence to support Samara’s assertion that their clothing designs could be legally protected under trademark law.

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    The Real Value of a Trademark

    In examining numerous examples of court cases involving trademarks, it becomes clear why the President of Coca Cola once remarked that even if the company lost all its buildings, vehicles, factories and equipment, Coca-Cola Inc. would endure and rebuild itself as long as the trademark survived.