Trademarks Class 24

1. Trademarks Class 24 Remedies: reverse confusion False advertising

2. STW v. Quaker “Quaker’s ads do not simply use the words ‘Thirst Aid’ in a sentence describing Gatorade, but as an ‘attention-getting symbol.’ In many of the ads, the words ‘Thirst Aid’ appear more prominently and in larger type than does the word ‘Gatorade.’ Further, given the rhyming quality of ‘Gatorade’ and ‘Thirst Aid,’ the association between the two terms created by Quaker’s ads is likely to be very strong . . . .” [725]

3. Different views on intent in reverse confusion cases • STW v. Quaker Oats: • “[T]he ‘intent’ factor of the likelihood of confusion analysis is essentially irrelevant in a reverse confusion case.” [729] • A & H Sportswear, Inc. v. Victoria’s Secret Stores: • “If such an intent to confuse does, in fact, exist in a reverse confusion case, it should weigh against the defendant in the same manner as it would in a direct confusion case.” [426]

4. When an award of profits is appropriate • “The trial court’s primary function is to make violations of the Lanham Act unprofitable to the infringing party.” • “Other than general equitable considerations, there is no express requirement that the parties be in direct competition or that the infringer wilfully infringe the trade dress to justify an award of profits.” • “Profits are awarded under different rationales including unjust enrichment,deterrence, and compensation.” [730]

5. How the district court should calculate damages “A generous approximation of the royalties Quaker would have had to pay STW for the use of the THIRST–AID mark had it recognized the validity of STW’s claims seems to us an appropriate measure of damages, although perhaps not the only one. In any event, we can conceive of no rational measure of damages that would yield $24 million.” [732]

6. Lots of disagreement among the judges “Because neither Judge Ripple nor Judge Fairchild joins [Part V] of the court’s opinion, it expresses the individual views of Judge Cudahy. To enable this issue to be decided by majority vote, . . . Judges Cudahy and Ripple agree that, in recalculating the award of damages, the district court should be guided by the following principles: (1) the court may not simply award STW a percentage of Quaker’s profits; (2) the court should use a reasonable royalty as a baseline or starting point for determining the appropriate award; (3) in determining the appropriate award, the court may take into account the possible need for deterrence, which may involve consideration of the amount of Quaker’s profits.” [not in CB]

7. U.S. v. Torkington “Courts interpreting the current version of section 1114(1) have held that the section does not require a showing that direct purchasers would be likely to be confused, mistaken or deceived. Instead, they construe section 1114(1) to require simply the likely confusion of the purchasing public—a term that includes individuals who are potential purchasersof the trademark holders goods as well as those who are potential direct purchasers of the allegedly counterfeit goods.” [738-39]

8. Post-sale confusion “Under section 1114(1) of the Lanham Act, the likely to confuse test is satisfied when potential purchasers of the trademark holder’s products would be likely to be confused should they encounter the allegedly counterfeit goods in a post-sale context—for example, in a direct purchaser’s possession.” [739]

9. Not just consumer protection “Like the Lanham Act, the Trademark Counterfeiting Act is not simply an anti-consumer fraud statute. Rather, a central policy goal of the Act is to protect trademark holders’ ability to use their marks to identify themselves to their customers and to link that identity to their reputations for quality goods and services.” [739-40]

10. Types of false advertising claims • A statement that is literally false • e.g., “Anacin cures cancer” • court can determine falsity • A statement that is literally true, but ambiguous and therefore possibly misleading • e.g., “For pain other than headache Anacin reduces the inflammation that often comes with pain. These do not.” • court determines whether statement is ambiguous • may be found false if it conveys a claim that is misleading • reaction of consumers is the criterion

11. Am. Home Prods. v. J & J “We believe that the claims of both the television commercial and the print advertisement are ambiguous. . . . A reader of or listener to these advertisements could reasonably infer that Anacin is superior to Tylenol in reducing pain generally (Claim One) and in reducing certain kinds of pain (Claim Two).” [748]

12. Determining whether a claim is false and deceptive • Step 1: Is the statement ambiguous? • if unambiguous, determine whether it is false and deceptive • if ambiguous: • Step 2: Determine what claims it conveys, using consumer survey evidence • Step 3: Determine whether the claims are false and deceptive

13. Consumer reaction survey reveals claims conveyed “[T]he ‘Your Body Knows’ television commercial produced a recollection in the selected audience of 250 members that Anacin is a superior pain reliever generally, even though the advertisement may have been phrased in terms of comparing inflammation relief.” [749]