Supreme Court Rules on Fair Use in Trademark Case
December 8, 2004. The Supreme Court issued its opinion [15 pages in PDF] in KP Permanent Makeup v. Lasting Impressions, a trademark case. The Court held that "a plaintiff claiming infringement of an incontestable mark must show likelihood of consumer confusion as part of the prima facie case, 15 U. S. C. § 1115(b), while the defendant has no independent burden to negate the likelihood of any confusion in raising the affirmative defense that a term is used descriptively, not as a mark, fairly, and in good faith". It vacated the judgment of the Court of Appeals.
The opinion, which is unanimous, except as to a few footnotes, is based upon statutory interpretation of the relevant statute, 15 U.S.C. § 1115(b)(4).
Facts. KP Permanent Make-Up and Lasting Impressions are competitors in the permanent make-up business. Permanent make-up involves injecting pigment into the skin. Lasting Impressions registered a trademark with the U.S. Patent and Trademark Office (USPTO) that consists of the term "micro colors" set in white within a black box.
Lasting applied to the USPTO in 1992 for a registration, pursuant to 15 U.S.C. § 1051. The USPTO registered the mark to Lasting in 1993, and in 1999 the registration became incontestable, under 15 U.S.C. § 1065. This is Registration No. 1,769,592.
However, KP also uses the term "micro colors" on its products and brochures. The Supreme Court assumed as true KP's claim that its use went back to 1990.
District Court. KP filed a complaint in U.S. District Court (CDCal) against Lasting Impressions seeking a declaratory judgment that it did not infringe Lasting's rights. Lasting Impressions counterclaimed alleging trademark infringement.
The District Court concluded that the term "micro colors" is generic, or if not generic, descriptive. It further held that neither party had acquired secondary meaning in the term "micro color." Finally, it held that that KP's use was protected under the "fair use" defense, 15 U.S.C. § 1115(b)(4).
Court of Appeals. On April 30, 2003, the U.S. Court of Appeals (9thCir) issued its opinion [20 pages in PDF] reversing and remanding. It is reported at 328 F. 3d 1061.
On the genericness issue, the Appeals Court held that "A reasonably minded jury could not conclude from the evidence produced that ``micro colors´´ is a generic term" and "KP's motion for summary judgment cannot be upheld on this ground. Furthermore, Lasting's motion for summary adjudication on the issue of genericness should be granted."
On the issue of descriptiveness, the Appeals Court held that "Lasting's incontestable registration is conclusive evidence that the mark is non-descriptive or has acquired secondary meaning, and there is no need to require a showing of secondary meaning in the term ``micro colors´´ apart from the mark. Therefore, KP’s motion for summary judgment cannot be upheld on this ground."
Finally, on the fair use issued, the Appeals Court held that "the fair use defense claimed by KP is a classic fair use defense that requires that there not be a likelihood of confusion. Because there are genuine issues of material fact concerning the likelihood of confusion, KP's motion for summary judgment cannot be upheld on this ground." It reversed the District Court on the fair use issue.
Statute. 15 U.S.C. § 1115(b)(4) provides, in part, that "To the extent that the right to use the registered mark has become incontestable under section 1065 of this title, the registration shall be conclusive evidence of the validity of the registered mark and of the registration of the mark, of the registrant’s ownership of the mark, and of the registrant’s exclusive right to use the registered mark in commerce."
However, it continues that "Such conclusive evidence of the right to use the registered mark ... shall be subject to the following defenses or defects ... (4) That the use of the name, term, or device charged to be an infringement is a use, otherwise than as a mark, of the party's individual name in his own business, or of the individual name of anyone in privity with such party, or of a term or device which is descriptive of and used fairly and in good faith only to describe the goods or services of such party, or their geographic origin."
Supreme Court. The Supreme Court granted certiorari. It addressed only one issue, "whether a party raising the statutory affirmative defense of fair use to a claim of trademark infringement, 15 U. S. C. §1115(b)(4), has a burden to negate any likelihood that the practice complained of will confuse consumers about the origin of the goods or services affected." It held held that the party raising the fair use defense does not. And hence, it vacated the judgment of the Court of Appeals, and remanded. (The Supreme Court did not consider the Appeals Court holdings with respect to genericness and descriptiveness.)
The Supreme Court reasoned that "Two points are evident. Section 1115(b) places a burden of proving likelihood of confusion (that is, infringement) on the party charging infringement even when relying on an incontestable registration. And Congress said nothing about likelihood of confusion in setting out the elements of the fair use defense in §1115(b)(4)."
It continued that "Starting from these textual fixed points, it takes a long stretch to claim that a defense of fair use entails any burden to negate confusion. It is just not plausible that Congress would have used the descriptive phrase ``likely to cause confusion, or to cause mistake, or to deceive´´ in § 1114 to describe the requirement that a markholder show likelihood of consumer confusion, but would have relied on the phrase ``used fairly´´ in §1115(b)(4) in a fit of terse drafting meant to place a defendant under a burden to negate confusion."
The Court also pointed out that "Since the burden of proving likelihood of confusion rests with the plaintiff, and the fair use defendant has no freestanding need to show confusion unlikely, it follows (contrary to the Court of Appeals’s view) that some possibility of consumer confusion must be compatible with fair use, and so it is." (Parentheses in original.)
It added that "The common law's tolerance of a certain degree of confusion on the part of consumers followed from the very fact that in cases like this one an originally descriptive term was selected to be used as a mark, not to mention the undesirability of allowing anyone to obtain a complete monopoly on use of a descriptive term simply by grabbing it first." And, "The Lanham Act adopts a similar leniency ..."
The Court also limited the scope of its opinion. It wrote that "While we thus recognize that mere risk of confusion will not rule out fair use, we think it would be improvident to go further in this case, for deciding anything more would take us beyond the Ninth Circuit's consideration of the subject. It suffices to realize that our holding that fair use can occur along with some degree of confusion does not foreclose the relevance of the extent of any likely consumer confusion in assessing whether a defendant’s use is objectively fair."
It also wrote that "Since we do not rule out the pertinence of the degree of consumer confusion under the fair use defense, we likewise do not pass upon the position of the United States, as amicus, that the ``used fairly´´ requirement in § 1115(b)(4) demands only that the descriptive term describe the goods accurately. ... Accuracy of course has to be a consideration in assessing fair use, but the proceedings in this case so far raise no occasion to evaluate some other concerns that courts might pick as relevant, quite apart from attention to confusion. The Restatement raises possibilities like commercial justification and the strength of the plaintiff’s mark. Restatement §28. As to them, it is enough to say here that the door is not closed."
Justice Souter wrote the opinion of the Court. It was essentially unanimous. Justice Scalia joined in all of the opinion excepts two footnotes that reference legislative history, which he considers irrelevant. Justice Breyer joined in all of the opinion except another footnote.
This case is KP Permanent Make-Up, Inc. v. Lasting Impressions, Inc. et al,
Supreme Court No. 03-409, on petition for writ of certiorari to the U.S. Court
of Appeals for the 9th Circuit, App. Ct. No. 01-56055. The District Court case is CV