Pat Concannon and John Loughnane, partners in Nutter’s Intellectual Property and Corporate and Transactions Departments, respectively, analyzed the significance of the upcoming oral arguments in the Supreme Court case Mission Product Holdings, Inc. v. Tempnology, LLC.
In the Q&A, “Mission Product Holdings, Inc. v. Tempnology, LLC: Will the Supreme Court Clarify the Rights of Trademark Licensees Upon Rejection?,” Pat and John discussed why there is such great uncertainty on this issue, leading to widely different results among the lower courts; how licensees can protect themselves if a licensor files for bankruptcy; and what they predict will happen in the Tempnology case. According to Pat and John, when licensing trademark rights, you need to think about a host of issues at the outset including the impact of a licensor declaring bankruptcy.
Key Takeaway: Key business considerations relevant for choosing between patents and trade secrets include: (1) Need for transfer of IP rights; (2) Life cycle of the product or service; (3) Cost of IP protection; and (4) Other business considerations.
There are occasions where displaying another company’s trademark is desirable. Whether that type of trademark use is lawful generally is a subjective, fact-specific determination under both United States and European Union law. A recent United Kingdom appeals court decision is instructive.
U.K. Court Ruling
The decision stemmed from a trademark infringement lawsuit brought by BMW against a London auto repair shop. The U.K. appeals court, applying E.U. law, handed BMW a victory. The appeals court, overruling a High Court of Justice decision, held that the shop’s use of the phrase “Technosport - BMW” infringed BMW’s European word mark “BMW.” Not at issue on appeal was the lower court’s finding that Technosport’s use of BMW’s famous “Roundel” logo “would lead the average consumer to believe that [Technosport] was an authorized dealer.” The appeal instead focused on Technosport’s use of the BMW acronym in plain text immediately after its trade name, in particular on the top portion of the back of its service trucks, as shown in the image below.
Technosport had successfully argued before the lower court that its use of “BMW” was merely descriptive of the fact that it had experience servicing BMW cars, and thus non-infringing.
The appeals court, however, found that “putting BMW immediately after the shop’s name isn’t merely a description of the business’s services.” The appeals court expounded on the distinction between permissible descriptive use and impermissible infringing use under E.U. law through examples: Suggesting or implying “my business provides a service which repairs BMWs” is permissible. In contrast, suggesting or implying “my repairing service is commercially connected with BMW” is not. Once a use crosses the line to suggest a connection with the trademark holder, the use is no longer a non-infringing descriptive use.
The U.K. appeals court ultimately found that Technosport’s use of BMW infringed because it would likely lead the average consumer to believe that the shop has a commercial connection with BMW, despite no evidence of actual consumer confusion. Technosport’s use was therefore not merely “informative.” Indeed, one of the reasons the appeals court overturned the lower court’s finding of non-infringement was the lower court’s undue focus in its decision on the lack of actual evidence of consumer confusion.
How Can One Use Another’s TM in the U.S. without “Crossing the Line?”
While the case above was decided in the United Kingdom under E.U. law, the principle applied is similar to that applied in determining the “fairness” of use of another’s mark in the United States. The concept, labeled “informative use” under E.U. law, is known as “referential use” or “nominative fair use” under U.S. law.
A leading case under U.S. law for determining whether a given use of another’s trademark merely refers to another’s mark in a “fair” way or, instead, crosses the line and suggests affiliation or sponsorship is New Kids on the Block. That decision established a three pronged test for determining if a use is fair, namely:
Nominative fair use is available as a defense to trademark infringement where the defendant uses a trademark to describe the trademark holder’s product or service and (1) the product or service in question is not readily identifiable without use of the trademark, (2) only so much of the mark or marks may be used as is reasonably necessary to identify the product or service, and (3) the defendant does nothing that would, in conjunction with the mark, suggest sponsorship or endorsement by the trademark holder.
Introducing the three prong test, the 9th Circuit in New Kids affirmed a lower court’s finding that a publisher’s use of the NEW KIDS ON THE BLOCK band trademark was a non-infringing, fair use. The publisher had displayed the mark in conjunction with a phone-in poll (callers were charged a fee to participate) asking readers to chime in with opinions about the group.
It is important to note that use of another’s logo, as opposed to a plain text mark, is more likely to be deemed to suggest sponsorship or affiliation with the trademark holder under the test.
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It can be entirely lawful to use another’s mark within marketing materials, for example, in the comparative advertising context, etc. At the end of the day, however, the three prong legal inquiry into whether a use qualifies as fair requires a subjective determination that is best assessed from the perspective of an experienced trademark attorney.
 See Bayerische Motoren Weke AG v. Technosport London Ltd.  EWCA Civ 779, No. A3 2016 1801.
 Id. at 308.
The author would like to thank legal intern Liza Hadley for her assistance with this blog entry.
Recently the Ninth Circuit ruled that Google’s trademark for search engines has not become generic and is still enforceable as to search engines. As Bayer learned with its previously-existing trademark aspirin, when a court determines a trademark to be generic, the mark is no longer protectable. In effect, a generic (no longer a) trademark is re-appropriated by the public such that the mark is no longer a source-identifier for the related goods and services. A generic (no longer a) trademark tells the public what the good and services are rather than who makes and/or sells the goods or services. Additional examples of trademarks that courts held to be generic include cellophane, thermos, and trampoline.
Professional service firms at times seem to focus on protecting the names of their service offerings or platforms at the expense of their house marks. Pat Concannon, a partner in Nutter’s Intellectual Property and Business Departments, with over 20 years of experience devoted to helping businesses establish and protect their brands, analyzes why professional service firms need to safeguard their house marks in Nutter Insights.
Maximizing the protection and value of intellectual property assets is often the cornerstone of a business's success and even survival. In this blog, Nutter's Intellectual Property attorneys provide news updates and practical tips in patent portfolio development, IP litigation, trademarks, copyrights, trade secrets and licensing.