-------- Original Message --------
Subject: Trademark bill threatens right to criticize companies
Date: Thu, 25 Aug 2005 18:19:31 -0400
From: Paul Levy <[EMAIL PROTECTED]>
To: <declan@well.com>
An insidious attack on free speech is making its way through Congress,
in the form of a series of technical amendments to the trademark laws.
One version has already passed the House, and a related version is, I am
told, under very active consideration in the Senate.
Our concern is about the anti-speech implications of HR 683, the
Trademark Dilution Revision Act, which passed the House last spring.
http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=109_cong_bills&docid=f:h683rfs.txt.pdf
The original, stated objective of HR 683 was to overrule the Supreme
Court's 2003 decision in the Victoria Secrets case. The Supreme Court
decided that, in order to establish a claim for "dilution" of a famous
trademark, the plaintiff must show not just that dilution is "likely,"
but that it has already begun to occur. Owners of famous trademarks
have expressed concern both because it has been hard to meet that
standard of proof, and because, with the purpose of anti-dilution law
being to protect against dilution, the case cannot even be brought until
the mark owner has suffered the very loss against which the law was
intended to protect. Or, at least, that is what they say.
Along with that revision, HR 683 makes some other reasonable changes to
the Lanham Act's rules on dilution (such as limiting its application to
truly famous marks) and some changes that may be less desirable (such as
expressly covering tarnishment, eliminating doubts raised by the
Victoria Secret decision that federal dilution law might be limited to
blurring). One might also wonder whether, overall, the technical
changes made to the dilution laws are ones that tend to favor major
corporations and to harm small businesses. Under the new definition of
famousness * which is limited to marks whose fame "is widely recognized
by the general consuming public of the United States" * it is largely
the very major national companies that are most likely to be the
plaintiffs, while adversely affecting smaller businesses which, after
all, are most likely to be the defendants rather than plaintiffs in most
dilution cases. In the circumstances, I find it mystifying that the
small business community is not up in arms about this bill.
But it is the bill's revisions to the "exclusions" section, which are
paragraph (4) of the existing statute, and are now paragraph (3) of the
bill, as well as its impact outside the area of dilution, that are of
most concern to me. It is not at all clear to me that anybody has
focused on the implications of some of the more technical changes that
the bill makes to the current anti-dilution statute. Checking the
written remarks of the four witnesses who testified before the IP
subcommittee of the House Judiciary Committee, NOBODY took note of this
change, which makes me wonder whether this issue has just been under the
radar.
Under current law, section 43(c)(4) of the Lanham Act contains three
exceptions which, under the language of the statute, apply to "this
section": fair use, noncommercial use, and news reporting and
commentary. We have had some success in arguing that the language "this
section" means that subsection (a) (common law infringement and
comparative advertising) are also subject to these provisos. But under
the bill, the exceptions would expressly be limited to dilution by
blurring and dilution by tarnishment "under this subsection." Thus,
the protections for fair use and non-commercial use would no longer
extend to suits for infringement of unregistered trademarks.
In this regard, it should be noted that although the Lanham Act has a
separate subsection that allows a defense of fair use, section 33(b)(4),
that section is expressly limited to defenses against claimed
infringement of REGISTERED trademarks (which can be pursued under
section 32 of the Act). Courts have generally assumed that the fair use
defense applies to both registered and unregistered marks, but given the
increasing emphasis on literal reading of statutes, I see some danger
that this could change if the fair use exception in 43(c)(4) no longer
applies to "this section."
It is hard to figure out why fair use and news reporting and truly
noncommercial use ought NOT be excluded from the trademark laws, and
especially for trademarks that the owners have never bothered to
register. When the trademark laws were amended in 1988 and 1996,
Congress was acutely aware of the constitutional problems (under the
First Amendment) that would arise if the Lanham Act were extended to
noncommercial speech. And in our litigation in defense of consumers who
criticize companies online, the non-commercial use exception has
provided an inexpensive and clear way out of what otherwise might be a
lengthy and expensive trademark proceeding.
Although I am most familiar with the issue as it arises in the context
of Internet trademark litigation, it would similarly come up in the
context of an ordinary political leaflet or campaign, where the
plaintiff threatens a consumer or a citizen's group with expensive
trademark litigation on the ground that merely using the plaintiff's
name or logo on leaflets about the company violates its trademark. Some
suggestive cases are: Tax Cap Committee v. Save Our Everglades, 933 F.
Supp. 1077 (S.D. Fla. 1996); Brach Van Houten Holding v. Save Brach's
Coalition for Chicago, 856 F. Supp. 472 (N.D. Ill. 1994); and MGM-Pathe
Communications v Pink Panther Patrol, 774 F. Supp 869 (S.D.N.Y. 1991).
I am also quite concerned that, in the course of House Committee
hearings, the old exception for "non-commercial use" was been eliminated
altogether and replaced by a second "fair use" requirement, which,
although written with free speech considerations in mind, is actually
WORSE from the perspective of any ordinary citizen who must face the
realities of litigation. We have had a fair amount of success in
getting critics of trademark holders out of litigation quickly, and
cheaply, by raising the non-commercial use defense. Fair use, by
contrast, tends to require application of a multi-factor test that is
heavily dependent on context. Making the defense rest on a complicated
fair use analysis may make dismissal harder to obtain at the motion to
dismiss or summary judgment stage. Citizen and consumer critics at
least as likely to be worn down by the expense of litigation as they are
by actual losses in court -- and trademark cases are notoriously
expensive. Critics are much less likely to be able to afford to defend
themselves under this new language (not to speak of the years of
litigation that it will take to define it -- the courts had finally
settled in on a construction of the old exceptions). And thinking of
the cases that are attractive to lawyers who might consider taking cases
pro bono, if the case looks to be fact-intensive and might swallow up
substantial out-of-pocket expenses as well as time, the cases become a
much less attractive proposition.
Now, there is other language in various sections of the Lanham Act on
which critics can rely to support something of an exception for
non-commercial speech * the definition of "use in commerce" and the
requirement that use be "in connection with the sale, distribution or
advertising of goods and services" (worded differently in different
sections) * but those statutory arguments are more complicated.
Moreover, trademark owners are certianly going to argue that the
decision to strip section 43 of the "non-commercial use" exception
implies that Congress intended to expand the trademark laws to limit
non-commercial speech.
Finally, the re-written fair use defense would require that the
allegedly diluted mark have been used to comment on the holder of the
famous trademark. Many trademark parodies, however, do not necessarily
comment on the trademark holder, and so would not be protected. For
example, in the famous "Mutant of Omaha" case, Mutual of Omaha Ins. Co.
v. Novak, 836 F.2d 397 (8th Cir. 1987), although admittedly not decided
as a dilution case, it is not clear that the defendant intended to
criticize the insurance company Mutual of Omaha, but was using a play on
their name to talk about the dangers of nuclear war. Similarly, and in
the more recent "Taft-quack" case, the defendant was not intending to
say anything about AFLAC but was using their famous duck quack to make
fun of Bob Taft. American Family Life Ins. Co. v. Hagan, 266 F.
Supp.2d 682 (N. D. Ohio 2002). Or, in the suit by MasterCard against
Ralph Nader for his television commercial describing "finding out the
truth" as being "priceless," the Nader campaign did not invoke the
famous "Priceless" campaign theme to comment on MasterCard so much as to
comment on other politicians. MasterCard Int'l v. Nader 2000 Primary
Committee, 70 U.S.P.Q.2d 1046 (S.D.N.Y. 2004). But the bill would
eliminate the protection that the current federal dilution law, as
commonly construed, would provide to these defendants.
Indeed, Walter Mondale's put-down of Gary Hart during the 1984
primaries, using the Wendy's slogan "Where's the Beef", would be
actionable as dilution under the bill as passed by the House. It is
quite likely that the slogan would be a famous trademark even under the
new definition of famousness; a strong case could be made for likelihood
of blurring; and although the use is non-commercial, that alone would
not be a protection from the dilution cause of action. The phrase was
used to comment, to be sure, but not to comment on Wendy's; Mondale just
borrowed the phrase to comment on Hart. Thus, it would not be protected
by revised exception (B).
So, whatever Congress does with the remainder of section 43(c) of the
Lanham Act, it ought to leave the text of section 43(c)(4) alone,
leaving it applicable to "this section" and leaving the existing
protection for "non-commercial use" intact.
Paul Alan Levy
Public Citizen Litigation Group
1600 - 20th Street, N.W.
Washington, D.C. 20009
(202) 588-1000
http://www.citizen.org/litigation
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