Cases by Issue - Trademark

KP Permanent Make-Up, Inc. v. Lasting Impression, Inc. - Oral Argument

Fri, 09 Jan 2009 14:49:04 +0000

Case:

KP Permanent Make-Up, Inc. v. Lasting Impression, Inc.

Media File:

03-409_20041005-argument.mp3

Related Transcript:

transcript.xml

Transcript:

Argument of Michael Machat

Chief Justice Rehnquist: We'll hear argument now on No. 03-409, KP Permanent Make-Up, Inc. versus Lasting Impression, Inc.--

Mr. Machat?

Mr. Machat: Thank you, Mr. Chief Justice, and may it please the Court:

This case concerns whether or not a defendant in a trademark case who fulfills the statutory requirements of the fair-use defense must also demonstrate an absence of likelihood of confusion in order to avail himself of that affirmative defense.

Now, here are four reasons why that should not be the case.

In the first place, if that is the case it would render the defense useless, because if there is no likelihood of confusion, then there's no trademark infringement to begin with, so why should someone try to prove an affirmative defense when there's no trademark infringement?

Second--

Chief Justice Rehnquist: You agree with Judge Niemeyer's comment in the Fourth Circuit case, I take it.

Mr. Machat: --Yes.

Secondly, what it does is, is it shifts the burden of proof from the plaintiff to the defendant.

There's no reason ever to... there's no reason ever to prove an absence of likelihood of confusion if you're a defendant.

And then, also... there's no reason to prove the fair-use defense if you have to also prove an absence of likelihood of confusion, because it's just much more of a burden.

You have to prove, first of all--

Justice O'Connor: In this case, did the plaintiff offer any evidence of confusion, consumer confusion?

Mr. Machat: --This was a motion for summary judgement.

Justice O'Connor: And was there anything in the affidavits or attachments that have to do with consumer confusion on behalf of the plaintiff?

Mr. Machat: Yeah, actually, the record does contain some references to confusion.

The... in this case, the respondent, they were claiming that they did have some people that actually were confused.

And when that happens, you need to look at what is causing the confusion.

And essentially--

Justice O'Connor: Well, it might make it necessary for a defendant in such a situation, in order to avoid some kind of summary judgement, to also offer evidence on consumer confusion to try to show there wasn't any.

Mr. Machat: --Well, but that's shifting the issue, then, to whether or not there's likelihood of confusion.

However, even if there... what I'm saying is even if there is confusion, if you meet the elements of the fair-use defense, it doesn't matter if there's any resulting confusion.

Justice O'Connor: Well, is it possible that showing consumer confusion could be considered by the court on the issue of what's the fair use?

What's fair?

Mr. Machat: Well, the thing is, a lot of times when there is confusion, that is evidence that the term or the word being used is not being used as a mark, so the confusion illustrates that... one of the elements of the fair-use defense, whether or not the term is being used descriptively or as a mark, whether or not those elements are being met.

The confusion does not go to the likelihood of confusion issue; rather, it goes to the individual elements of the fair-use--

Justice Kennedy: Well, but I'm interested in Justice O'Connor's point.

Suppose it's a close case as to whether or not the use is in good faith and it's only discretion.

With reference to good faith, suppose there's very substantial confusion that's caused by the allegedly infringing mark.

Does that at least bear on a good-faith assessment?

In other words, suppose that it were shown that the owner of the non-registered mark, the alleged infringing mark, used the phrase... not the mark, but used the phrase... deliberately in order to cause confusion.

Would that--

Mr. Machat: --Yes... well, that would show an absence of good faith, and good faith is one of the elements of the fair-use defense.

Justice Kennedy: --Well, so that if you know that there's going to be confusion, there is no good faith?

You wouldn't go that far.

Mr. Machat: No, I wouldn't go that far.

It's a balancing sentence where it says "fairly and in good faith", and you have to look at how descriptive the word is, in particular.

For instance, if you're using the word "best"... as in "best buy" or "best foods"... I mean, best is an extremely descriptive word.

So you could go a lot further in claiming,

"Hey, I have the best... I have the best food. "

or, you know,

"Come to my store. "

"I have the best buy. "

And, yes, there could be confusion, but that is one of the risks that--

Justice O'Connor: Well, is it your position that subjective good faith is always a defense, no matter how unreasonable it is or how much confusion results?

Is that your position?

Mr. Machat: --No, I wouldn't go that far, because you also have to look at the objective use.

Justice O'Connor: I would have thought that consumer confusion is one factor in determining fairness; perhaps not subjective good faith, but certainly on the issue of fairness.

Some of the amici take that position, do they not?

Mr. Machat: Well, I think... I was reading the amici brief last night.

I think the issue of confusion, as the amicus brief points out, you have to look at whether the confusion is illustrative of whether or not the term is being used as a mark or not.

The same evidence that shows confusion can be used to show a likelihood of confusion on the plaintiff's side of the case, and that same evidence can also be used to... in the case of determining whether or not the elements of a fair-use defense have been... have been met.

Chief Justice Rehnquist: What did... what did the district court do here?

Did it grant summary judgement or deny summary judgement?

Mr. Machat: The... well, the district court granted summary judgement on a fair-use defense.

It found that, in this case, the mark was being used... sorry, that my client's words were being used not as a mark, only to describe, and that the use was done fairly and in good faith.

The Ninth Circuit--

Justice Ginsburg: But the district court... the district court... this way--

[Laughter]

--seemed to focus on the use of the word "micro color", just the word.

It didn't bring up what was new in 1999.

That is, a brochure appears where "micro color" is not simply a word, but it appears in a logo-like fashion.

And as I understand it, the district court said you could use 1991.

It didn't refer to the stylized 1999 new appearance.

So--

Mr. Machat: --Yes, that is correct.

The district court, in its opinion, did not specifically refer to that use in 1999.

Justice Ginsburg: --And it might not have been confusion just by using the word.

But when you're using it in the logo-like appearance, maybe that's different.

Mr. Machat: Well, in the abstract case, it could be.

I would argue, though, in this case it's not, because that was one use on a... you have a ten-page brochure, and it's one use on a ten-page brochure.

And you... on that same page of the brochure, at the very bottom, it said my client's name, KP Permanent Makeup.

So--

Justice Scalia: Well, that wouldn't relate to the question presented here, anyway.

It wouldn't relate to the reason for which we took this case.

Mr. Machat: --Correct.

Justice Scalia: I mean, maybe the district court misinterpreted or misapplied "fairly and in good faith" if it didn't consider the logo-like use.

But, as I understand it, the only question we have before us is whether the "fairly and in good faith" provision is an exception even when there is confusion.

Mr. Machat: Yes, I would agree.

Justice Breyer: Is that... I'm... and I'm mixed up.

I thought that the issue is whether you, on your side, have to present evidence of no confusion.

Mr. Machat: Yes, I think--

Justice Breyer: So as far as--

Mr. Machat: --I think we're both saying the same thing--

Justice Breyer: --So as far as Justice O'Connor's question is concerned, I thought your answer would be, if they want to go and present evidence that there is confusion, to the point where it's so obviously unfair, it's ridiculous, they can do it.

I mean, do you object to that?

Mr. Machat: --No, I agree.

Justice Breyer: No.

So your answer to her question is, of course it could be relevant.

Let the other side come in and show that it's relevant.

You don't have to show that there is no confusion.

Mr. Machat: Absolutely.

Justice Breyer: That's where we are, is that right?

Mr. Machat: That's exactly--

Justice Breyer: Okay.

Mr. Machat: --where we are.

Justice Scalia: Could you give us a... I'd be much more sympathetic to your case if I could readily envision a situation where there is confusion but, nonetheless, the use is fair and in good faith.

Give me a clear example.

Mr. Machat: In my particular case?

This--

Justice Scalia: No.

I mean, make up one--

Mr. Machat: --Okay.

Justice Scalia: --that's really clear.

Mr. Machat: Let's use the words "best buy".

Best Buy is a famous consumer electronics store, and somebody opens up a shop, say Mark's, that says,

"Mark's, he has the best buy. "

He wants to advertise on radio,

"Come down to Mark's Electronics for the best buy... for the best buy in consumer electronics, go to Mark's. "

and he keeps using those words "best buy".

Justice Scalia: I don't think there's any likelihood of confusion there, do you?

I mean--

Mr. Machat: Well--

Justice Scalia: --what if he just takes out an ad that says, "Best Buy", exclamation point?

That would be closer.

Mr. Machat: --Okay, in that case there would be confusion, but Mark, in that case, would be using "best buy" as a trademark, not only to describe; and, therefore, he would not fulfill the statutory requirements of a fair-use defense.

Because a lot of times when confusion comes up, it comes up in the case that--

Justice Scalia: I didn't mean to make it that in my hypothetical.

You're just putting it in bold type at the beginning of the piece, "Best Buy", exclamation point.

That means it's a trademark?

Mr. Machat: --Well, it would be evidence that it is a trademark.

You have to... it depends how big the words "best buy" were in relation to the word "Mark's Electronics".

Chief Justice Rehnquist: Well, but if you had a... if you had a headline at the head of an ad, "Great Sale", that surely is not a trademark, just because you have it in boldfaced print.

Mr. Machat: I agree, it's not necessarily a trademark.

You have to look at the totality of the ad, and you have to look at what the person is trying to use to help consumers to identify and distinguish the products, or, in this case, the store.

Justice Kennedy: I suppose if you have a sign that says "Park 'n Fly" and an arrow, with a capital "P" and a capital "F", then it's arguably being used as a trademark.

Mr. Machat: Well--

Justice Kennedy: Whereas, if you say in a brochure,

"Rent a car from us, and park and fly. "

then that's okay.

Is that the distinction?

Mr. Machat: --Yes, but I'd go even further and say that the... if you had a big sign that said "Park 'n Fly", and it's next to an airport, that would not necessarily be a trademark.

I mean, if it said, like,

"Jerry's Airport Parking, Park and Fly. "

I would say that's being a descriptive use.

But some people may argue differently in that case.

Justice Ginsburg: The Ninth... the Ninth Circuit, as I understand it, did put an initial burden on the trademark-holder to prove confusion.

If you look at the petition for cert, 6a, in its opinion, it seems to recognize that the trademark-holder must show that the alleged infringer's use of the mark is likely to cause confusion or to cause mistake or to deceive.

So this opinion starts out by saying,

"Yes, we know that under the Lanham Act the trademark-holder is obliged to show likelihood of confusion. "

Mr. Machat: They do it.

But then on... if you look on page 17a of my cert petition, the same opinion, the Ninth Circuit later on go on to say, in the middle paragraph,

"As expressed in Kahn's, the fair-use analysis only complements the likelihood of confusion... likelihood of customer confusion analysis. "

And then they quote from Transgo, and they say... explain that

"anyone is free to use the term in its primary descriptive sense as long as such use does not result in consumer confusion as to the source of goods. "

In effect, what they're doing is, they're expanding the rights of trademark-holders of descriptive words.

Essentially what they're saying is--

Chief Justice Rehnquist: Well, they go further in that same paragraph, and the last couple of lines refer to a Lindy Pen case, according to... the way they described, explaining that the fair-use defense is not available if likelihood of confusion has been shown.

Mr. Machat: --Right, and that's... that's where they're negating what they said in the beginning of their opinion.

Justice Ginsburg: They do have one authority for that proposition.

They cite McCarthy, and I think they're right about that.

Mr. Machat: Well, they do cite McCarthy, but I would submit that McCarthy is incorrect, in this case.

Justice Ginsburg: But there is a treatise writer who does take the position that if there's confusion, there's no fair-use defense.

Mr. Machat: Well, there are other treatise writers... Kane, for example, takes the contrary position and says that fair use will always be a defense, even if--

--even if there is likelihood of confusion.

Justice Ginsburg: So does the... what is it... the unfair competition restatement?

Mr. Machat: Yes, that takes a similar position, as well, that there can be confusion and fair use at the same time.

Again, you have to look at what's causing the confusion.

And most often the problem is the confusion is being caused because the person with the words in question is using it as a mark, and that's causing the confusion.

If... there's certain... there's certain... there's certain terms and words that Congress has said never get trademark protection.

Descriptive words, of course, is one of them, in the sense that they can never get trademark protection in their primary descriptive sense; they only get trademark protection in their... in their secondary-meaning sense if they can actually prove secondary meaning.

Justice Ginsburg: But I thought we're dealing with an incontestable mark here, and the secondary meaning would be assumed.

Mr. Machat: Yes.

In the case of an incontestable mark, secondary meaning is presumed; however, that still does not take away the burden of the holder of an incontestable mark of proving likelihood of confusion.

And, second, the trademark protection attaches only to the secondary meaning of the mark, never to the primary, descriptive meaning of the words in question.

And one other quick example.

The laws say you cannot obtain a trademark in the U.S. flag.

Now, we have 12 ice-cream manufacturers, they each put the flag on their ice cream.

There will be confusion there.

Someone will say,

"I want the ice cream with the flag on it. "

But they all have a flag on it.

That's another example where Congress said, "We will tolerate confusion".

Sometimes we tolerate confusion so we can free up descriptive words so business owners are free to describe their goods to consumers.

And, if I may, I'd like to reserve the balance of my time.

Argument of Patricia A. Millett

Chief Justice Rehnquist: Very well, Mr. Machat.

Now, Ms. Millett, we'll hear from you.

Ms Millett: Mr. Chief Justice, and may it please the Court:

Justice Scalia, you asked for an example of a case where there might be confusion, but there would still be a fair use.

This Court's decision in William Warner versus Eli Lilly, which was a common-law case cited on page 27 of our brief, gives an example of that.

You had Coco-quinine, and Quin-coco being sold.

And this Court held, as a matter of the common law fair-use doctrine, that the descriptive... fair, truthful, descriptive use of a term to describe a product will be permitted even if consumer mistakes result.

There are other cases cited in the brief.

Howe Scale is cited in our brief.

The Canal Company versus Farr case.

The fair-use defense that's at issue here takes its... has its roots in that common law precedent, and that common law precedent, in origin, speaks directly, Justice O'Connor, to your... and Justice Kennedy... to your questions about, what does a fairness component of this test in the statute mean.

There is not a general requirement that the... say, the defendant here; the parties were reversed, but the non-trademark holder acts fairly.

That's not what Congress said.

It says the term... and I'm... and you can see, on page 9a of the statutory appendix to our brief--

--the term has to be used fairly and in good faith... putting that aside, used fairly only to describe the product.

That is not some sort of general equitable receptacle for fairness concerns.

That focuses on what the defendant did and how they acted in describing.

That's not a test of how the public reacted.

How did the defendant behave?

Which is exactly what William Warner, Canal Company, and Howe Scale also looked at.

In common parlance, in a common dictionary meaning, when you talk about fairly describing something, that's not general equity.

That is, is it a legitimate, reasonable, proper, objectively apt, and fair way to describe a product.

One could reasonably--

Justice O'Connor: Well, does... does consumer--

--if substantial consumer confusion is shown by the plaintiff, is that enough to defeat a fair-use defense?

Ms Millett: --Not by itself, no, Justice O'Connor.

Congress told us what will defeat the defense, and that is a... that is a conclusion that the term is being used as a mark.

Consumer confusion might be, if you could explain that that demonstrates that it's being used as a mark.

It might show that you're not objectively, reasonably, accurately describing your product.

If I describe Twinkies as a sugary snack, that's a... I can fairly describe Twinkies as a sugary snack.

I can't fairly describe Twinkies as a healthy food.

Justice Kennedy: Suppose, in the Coco-quinine case, the non... the non-holder is doing just fine without using the particular term, and then he decides,

"you know, I'm going to cut into that market, and I'm going to use the term Coco-quinine. "

"And I'm going to do that just in order to get more customers away from the trademark-holder. "

Is that good faith?

Ms Millett: Yes, because there's nothing, in the marketplace, with wanting to increase your business and to do better and to use descriptive terms descriptively to do that.

The good-faith--

Justice Scalia: But what--

Ms Millett: --continued here--

Justice Scalia: --what if he intends to increase his market share precisely by causing the confusion?

That would eliminate the good-faith element, wouldn't it?

Ms Millett: --The good-faith element is, do I intend... it depends on what you mean by "causing confusion".

If I intend to freeload or ride or exploit the secondary--

Justice Scalia: Yeah.

Ms Millett: --meaning of the term--

Justice Scalia: Right.

Ms Millett: --that's what good faith means in trademark law, generally.

It has an established component.

Justice Scalia: Right.

Ms Millett: If I intend to do that.

But just showing that consumer confusion could result, or that I hope consumers will pause and think about, you know,

"what... what's in the... what am I now being offered in the marketplace? "

But I have to... if I intend to avail myself of the secondary meaning that you've established of the goodwill that you've generated, that's what good faith goes to.

But to use fairly to describe is not a general means of just saying--

Justice Stevens: May I ask you--

Ms Millett: --if there's confusion, that's a bad--

Justice Stevens: --What does the term "micro color" describe?

Ms Millett: --The term "micro color" describes--

--this is not my area of expertise, but... describes, as I understand it, the inks that are used for this permanent make-up process.

And the reason it's called "micro color"--

Justice Stevens: Does it have a meaning in any context other than describing the... one party's product in this case?

Ms Millett: --I wouldn't begin to know whether other professions or occupations use the term "micro color".

But my understanding, from the record, is that the color is obvious.

That's... it's different color inks.

And the reason that they use the term 98 of the first volume of the joint appendix, is that the molecular size of these inks is very, very fine.

It's going into the skin.

It's micron-size.

And so that's, I think, the... as suggested by petitioner's client... that that's the origin of the term "micro color".

Now, "micro" is a common term that's... common descriptive term in its own right.

It appears in many contexts.

Obviously, computers is one that we're all familiar with.

Medical devices often will refer to "micro".

But "micro color"--

Justice Ginsburg: Wasn't there... wasn't there something to the effect that "micro pigmentation" is a synonym in the trade for permanent make-up?

It's another name for permanent make-up, and it's... it has "micro" in it, "micro pigmentation".

Ms Millett: --That's my understanding, yes.

Justice Ginsburg: "Micro pigmentation" sounds awfully close to "micro color".

Ms Millett: "Micro color", yeah.

That's my understanding.

Again, I don't really want to weigh in on one side of the dispute or the other on the merits of whether "micro color" is a generic or a--

Justice Scalia: Well, you have to weigh in on it.

I mean, you have to show that the... it seems to me, if you think that side should win, that the words are being used in a descriptive sense.

And if "micro color" doesn't mean a blessed thing to anybody unless they associate it with the trademark, then, it seems to me, you lose.

Ms Millett: --But, Justice Scalia, the problem here is that the Ninth Circuit said that what makes them lose is not that they didn't use this fairly to describe their product, or not that they failed to act in good faith, or not that they were using this as a trademark, but that it was a--

Justice Scalia: You're right, that's not the issue in the case.

Ms Millett: --Right.

Right.

And my understanding... again, the record shows that, in fact, the descriptive use of this was conceded in this case, and that's on page 29a of the petition appendix, and also in the joint appendix on 152.

Justice Scalia: You're right.

Ms Millett: But, again, our concern is that this statute has to be read with the terms Congress enacted.

Congress drew a balance here.

Congress struck the balance between allowing... giving unprecedented protection that this Court recognized in "Park 'n Fly" two descriptive terms, but policing the line between the secondary meaning that attaches to descriptive terms and the... reserving for the marketplace, for competition, the availability of descriptive terms in their original descriptive sense.

Justice Scalia: In other words, if you choose to use a descriptive term as your logo, you take your chances--

Ms Millett: Exactly.

Justice Scalia: --that that descriptive term will be used fairly and in good faith by somebody else and cause confusion.

Ms Millett: Exactly.

Justice Scalia: And if you don't want confusion, pick a term that isn't descriptive.

Ms Millett: That's exactly right.

There's a tradeoff.

When you pick a descriptive term, you get right up front, right up front, the immediate appeal and resonance of a term to the... to the consumers.

"Best buy".

Who wouldn't want the best buy?

I want the best buy.

"Chunky" candy bars.

It's going to be easier to break into the marketplace with "Chunky" candy bars or "Almond Joy" candy bars, because consumers will have a sense of what they're getting, than if you come in with a--

Justice Scalia: "Schwartz", "Schwartz" candy bars.

Ms Millett: --"Schwartz" candy bar, "Kodak", I don't know--

Justice Scalia: It doesn't do anything for you.

[Laughter]

Ms Millett: --I don't know why that is, and why would I want to eat it.

They're going to have to do more work.

But the downside, the tradeoff, is, as you said, Justice Scalia, that you do not get to take those terms out of usage.

Trademark law protects usage, not words.

And if the usage is descriptive, and it's fair, in the sense that it's reasonable, apt, and accurate, as this Court said in William Warner, Canal Company, Howe Scale, in the unfair-competition sense; and the Kellogg versus National Biscuit Company, the Shredded Wheat case, if it's apt and accurate, that's what "used fairly" means.

And if its satisfies that objective test, and if it satisfies the subjective good-faith test, and it's not used as a mark, we will tolerate that confusion, because that--

Justice Ginsburg: How do you tell whether it's used as a mark?

I mean, is that... that certainly seems to be central.

Is it used as a mark?

And if it's used as a mark, then there is a violation.

Ms Millett: --The fair-use defense is unavailable if it's used as a mark.

There are other--

Justice Ginsburg: Right.

Ms Millett: --defenses that are available, but the fair-use defense is, by definition, unavailable.

That's correct.

The way you prove whether something is used as a mark... there's, sort of, two ways of getting to that end.

When something is used as a mark, that means it is signifying to the origin or source of those goods in the marketplace.

It's not just describing it, it's telling you who is making it or who is putting it out on the market.

Justice Ginsburg: So let's go back to the use on the brochure of a logo-like... I mean, as long as they're using just the word "micro color", I see your position entirely, it's used descriptively, not as a mark.

But what about when they use something that looks like a mark?

Ms Millett: Well, there's... there's going to be difficult questions of proof.

Our position is that, by taking a descriptive term, you don't get to consign everybody else to ten point Times New Roman font, and that they can do some colorful display, but not a mark.

Argument of Beth S. Brinkmann

Chief Justice Rehnquist: Thank you, Ms. Millett.

Ms. Brinkmann, we'll hear from you.

Mr. Brinkmann: Mr. Chief Justice, and may it please the Court:

Defendant's... Petitioner's absolute defense is contrary to the text, purpose, structure and history of the fair-use defense of the Lanham Act.

In response to Justice Scalia's question about this is the risk that someone takes when they choose a descriptive term, this defense does not apply only to descriptive terms.

Under Petitioner's view, this defense would be available to users of arbitrary, fanciful and suggestive marks so long as they were used descriptively and not as a mark.

Indeed, our mark here is not--

Justice Scalia: How can you use a fanciful term descriptively?

I mean, I think that's the definition of an arbitrary or fanciful term, that it doesn't mean anything.

Mr. Brinkmann: --Well, it may mean something in a different context, I think an example you could use would be the arbitrary trademark of "Apple" for computers.

There could be advertising for Computer Electronics, Incorporated in the fall, when there's the back to school rush, using the term "Apple" in a descriptive sense: "Apples for Teachers", you know, the beginning of the year, "Come to our store".

So, in reliance on that, you drive two hours because you're the school district director who needs to buy ten new computers to hook into the system.

You get there, it turns out they're not Apple Computers.

Justice Stevens: No, but do they use the apple as clearly a descriptive term with secondary meaning, that's what gives it protection.

But if you have an arbitrary term, as Justice Scalia says, how could that be, how could the defense have any relevance to a fanciful or arbitrary term.

And I thought the defense only was relevant when you... everybody agrees you're talking about descriptive terms?

Mr. Brinkmann: No, Your Honor, the Solicitor General does not take that position either, in their brief they recognize that this applies to all level of mark.

Justice Kennedy: No, but that, all we need to decide this case is to assume that it's descriptive.

Mr. Brinkmann: Well, Your Honor, the Ninth Circuit's holding was that it was inherently distinctive, or descriptive, and we maintain that it is suggestive, as was pointed out earlier, this isn't a word that can be found in the English language anywhere, it doesn't describe the pigment or the ink, what it does is suggests the small nature and the fine lines that are ultimately used when this is applied.

Justice Kennedy: Let's assume that it was descriptive, would the Ninth Circuit test still apply?

That you would have to show absence of confusion before you raised the good faith defense?

Mr. Brinkmann: We don't believe that's what the Ninth Circuit test does, this was a summary judgment entered against us when we had introduced--

Justice Kennedy: Well, would you agree, then, that in a case where the mark is descriptive, the non-trademark holder, the defendant in the case, can raise the fair-use defense without having to show that there's no confusion?

Mr. Brinkmann: --Yes, we believe it's the plaintiff's burden, it's clear it's the plaintiff's burden to show likelihood of confusion.

The point is, under the district court's absolute rule, notwithstanding evidence in this case of actual confusion, indeed, summary judgment was entered against us because the district court took Petitioner's absolute view that there was no relevance whatsoever to likelihood of confusion to the determination of fair use, that's the rule in the Ninth Circuit overruled, and that's what needs to be affirmed.

Justice Breyer: Now, I'm confused. I thought the question you're supposed to answer, which is in the blue brief, is whether they have to show an absence of confusion.

And I guess now you agree the answer to that question is "no".

Is that right, you agree with that?

Mr. Brinkmann: Yes.

Justice Breyer: Now, that's the end of this case, isn't it?

That's what we took it to decide, and that's... you agree with it and they agree with it, so everybody's happy.

We don't even have to write an opinion, we can just--

Mr. Brinkmann: I believe the Petitioner came up with that formulation because they had taken on the burden because they were the movant on summary judgment.

That's where that misnomer came from.

Justice Scalia: Did you object to the formulation of the question presented?

Here's the question, does the classic fair-use defense to trademark infringement require the party asserting the defense to demonstrate an absence of likelihood of confusion?

That's the question.

And you say, "no".

Mr. Brinkmann: We agree that the plaintiff, it's clear that under... in the Ninth Circuit... the Ninth Circuit pointed out that, Justice Ginsburg quoted before, made clear that the plaintiff does bear the burden of establishing likelihood of confusion.

Justice Breyer: --Now, suppose you establish it, maybe we can find some differences here, would you also agree that simply establishing confusion is not enough to overcome the fair-use defense, you'd have to also show that the confusion, along with possibly other things are such that it shows unfairness, or what's the other word, unfairness, or lack of good faith?

Mr. Brinkmann: We believe that when Congress--

Justice Breyer: You agree with that, or not?

Mr. Brinkmann: --No, Your Honor, we agree that when Congress wrote the test in 1946, it used the terms "used fairly" to refer to the common law, which included not only the common law of technical trademark, but the common law of unfair competition.

Justice Breyer: Good, so now we have something I can disagree with you about.

Now, the question would be, why, it's the words are unfair, why, if you just show there's some confusion, which normally there would be, or quite often there would be, why is that enough to overcome their defense that they put here?

Mr. Brinkmann: Your Honor, the time that those words were used, the common law, and we respectfully disagree with the Solicitor General's office on the reading of Warner, we'd urge the Court to read that.

The reason the Court allowed the use of the term in that case is because they quite clearly said it did not have a secondary meaning.

There is no trademark protection for descriptive words with secondary meaning, we are in complete agreement with that.

We're dealing with the secondary meaning.

Justice Breyer: All right, so now, if we're going to go back into what the Court did, I would say that I was a little disturbed reading this as to why you get protection at all, because I was thinking "micro color", well, that describes very well what it is, it's a tiny, teeny, weenie, weenie bit of color.

And when I think of "micro pigment", I think of a farm animal, I think... I don't know what I think, it's confusing me.

So, for an average person, the word "micro color", I thought,

"Gee, that's very descriptive of just what it is, a teeny weenie bit of color. "

Mr. Brinkmann: Well, Your Honor, I would urge you to look at joint appendix pages 137 to 139 where it lists twenty other competitors that sell this very product, they have no cause to use that word.

It is not used in the industry as a descriptive term, they're called "pigment", they're called "ink", they're not called "micro colors", that is my client's trademark.

Justice Ginsburg: What's the difference between pigment and color, especially when it's not just "micro color", don't they advertise "micro color red", "micro color grey", so pigment--

Mr. Brinkmann: The typical suggestive term, it was created to associate the high quality that my client markets in this product with that term, I want the "micro color" pigments, not the other pigments that are sold by--

Justice Ginsburg: --But, what about the word, is it... am I wrong in what I suggested before, that the word, "micro pigmentation" is used in the trade as a synonym for permanent makeup?

Mr. Brinkmann: --That's correct, and oftentimes, trademarks are shortened versions of other terminology.

The fact is it is suggestive because "micro colors" is the protected trademark here.

Justice Souter: But there is a sense of color in which color is synonymous with pigment.

And I assume that's what was accepted here, which leads me to my question, I don't understand why we're having this discussion.

Justice Scalia: Exactly.

Justice Souter: Because I thought it was agreed that for purposes of the defense, this was a descriptive use, is that incorrect?

Mr. Brinkmann: Yes, Your Honor, for purposes of the defense, it's the other party that has to be using the term descriptively.

Justice Souter: Well, could you just point to me... I'm not asking so much about the "why", I just want to know what this case is.

Is there someplace in the materials that we've got that indicate that, in fact, you dispute that there is a descriptive use here?

Mr. Brinkmann: Yes, footnote 3 of the red brief explains that this purported concession that they discuss about the use of this mark had to do because Justice Ginsburg was distinguishing before, early uses on a bottle, and a flyer, which we dispute occurred, but assuming they occurred, those were descriptive.

In 1998 and 1999, Petitioner started using it on their marketing brochures in a very different manner.

Justice Scalia: Excuse me, this still goes to the merits of the defense and not to the question presented.

The question presented is, descriptive or not descriptive, do you have a defense if it's, if there is consumer confusion?

And your position, if you're opposing the question presented, is that if there is consumer confusion, there is no defense.

And it's... I thought that was the only question you were going to discuss here, not in fact whether, if there is such a defense, it has been made out in this case, because these words were or were not descriptive.

I mean, that's a--

Mr. Brinkmann: Thank you, Your Honor, I'd be happy to discuss that.

As I pointed out, it's contrary to the textual language used by the Congress in 1946.

They meant "used fairly" to mean what the common law meant.

The common law prohibited confusing uses of both technical trademarks and trade names.

Moreover, Petitioner's interpretation is contrary to the clear focus of the Lanham Act, which is to prevent customer confusion.

The whole point is so that you can walk into a store--

Justice Ginsburg: Ms. Brinkmann, may I stop you there, because I thought you have conceded, as I think you must, I thought you conceded quite clearly, I wrote down that you said, it is the plaintiff's burden to show likelihood of confusion.

So, if it's the plaintiff's burden to show likelihood of confusion, how can it be the defendant's burden to show unlikelihood of confusion?

Mr. Brinkmann: --We don't believe it's the defendant's burden, we believe we... the district court was correctly reversed the Ninth Circuit in entering summary judgment against us, notwithstanding the fact that there was dispute regarding likelihood of confusion.

And the district court did that, because as I said it was absolutely irrelevant to their determination of used fairly.

Chief Justice Rehnquist: I think this is really quite confusing, Ms. Brinkmann.

The question presented, as several people have pointed out, whether the Lanham Act's fair-use defense to trademark infringement requires a party asserting the defense to demonstrate the absence of a likelihood it could confuse... consumer confusion.

Now, do you agree or disagree with that?

Mr. Brinkmann: We--

Chief Justice Rehnquist: You can surely answer that, "we agree", or "we don't agree".

Mr. Brinkmann: --We don't agree.

We believe that likelihood of confusion defeats the fair-use defense.

Chief Justice Rehnquist: Okay, okay.

Mr. Brinkmann: And we would point out that as a textual argument and the purpose argument--

Justice Stevens: May I ask, may I just interrupt, but when would one ever be able to use the defense if the plaintiff makes out a prima facie case, prima facie case, I assume, includes the burden of establishing likelihood of confusion.

So, is there any room for the defense at all?

Mr. Brinkmann: --As we point out in our brief, Your Honor, we do believe that since the amendment in 1988, this has ultimately become a redundancy, but the plaintiff's burden of showing likelihood of confusion--

Justice Stevens: So the answer is no.

Mr. Brinkmann: --It remains as a Congressional emphasis that even if, in a trademark situation, a use that is not likely to confuse is allowed.

That is what, this was a--

Justice Stevens: It's allowed without the affirmative defense.

Mr. Brinkmann: --To understand why this came in, it's important to understand in 1946 this defense applied only to incontestable marks.

It did not apply to other registered marks.

At that time, incontestable mark holders did not have to prove likelihood of confusion.

That incontestable mark was a conclusive evidence of the mark holder's exclusive right to use that mark on the same goods.

Same mark, on the same goods that were set forth in the affidavit with the PTO.

That was akin to early common law.

At that point, the plaintiff could go into court with their incontestable mark, and it was conclusive evidence.

So there had to be a safety valve for defendants to be able to say,

"Okay, I know this is an incontestable mark, I know that, and I know I'm using it on the same goods, but notwithstanding, I can use it because I'm using it fairly, I'm not confusing consumers with this. "

"That's what the purpose was. "

"In 19-- "

Justice Stevens: But are you suggesting, I want to be sure I follow your thinking, are you saying that in, back in those days, somebody with an incontestable mark did not have to prove likelihood of confusion?

Mr. Brinkmann: --It was presumed by the weight of that, that was the conclusive evidence.

Justice Stevens: Because otherwise, wouldn't that defeat the defense, too, then?

Mr. Brinkmann: Because the way Congress structured 1115(b), it was conclusive evidence except subject to the seven specific defenses, this was the fourth one.

Justice Souter: No, but you're saying, isn't your answer to Justice Stevens is that it was a rebuttable presumption?

Mr. Brinkmann: Yes.

Justice Souter: Yes.

Mr. Brinkmann: Yes, I'm sorry, yes.

Yes, Your Honor.

I would also point out that when Congress amended in 1988, there's absolutely no evidence whatsoever that they intended to change this and that's what's so fundamental about the position... the district court position.

This is a gaping hole in the core purpose of the Lanham Act.

Justice Breyer: But suppose IBM had used the word "computers" when they were the only company for ten or fifteen years to mark their product.

Now, another company comes along and they produce the same thing, they want to use the word "computer".

You're saying that that would be the end of it, they couldn't do it?

Mr. Brinkmann: Not at all, Your Honor.

Justice Breyer: People would be confused.

For a while they'll think that IBM, there would be confusion, but it's the best word to describe the product, in fact, at least a very good one.

Mr. Brinkmann: Your Honor, if that were the case, it was more than likely, almost certainly be a generic term with no protection.

Justice Breyer: Well, at the very beginning, IBM was the only one to do it, they didn't have to call it computer, they could have called it a word processor, they could have called it a "think faster".

I don't know what they could have called it, but I mean, you know, they chose the word computer.

Mr. Brinkmann: And Congress took that explicitly into account when it allowed any mark to be canceled at any time for genericism.

Escalator, aspirin are all examples of your situation.

That's exactly what happened, and when they came a generic term, that trademark was canceled and it became used as generic.

Congress--

Justice Breyer: So what is this fair-use defense for, since you're normally going to show confusion to show the infringement, what's it for, in your opinion?

Mr. Brinkmann: --Since 1988 it's a vestigial reminder of what Congress wanted to make sure was understood in 1946.

Even for the strongest, incontestable mark on the same goods, we are still going to always allow uses that are not likely to confuse.

Justice Scalia: --But we don't usually interpret statutes that way.

I mean, you tell us what Congress had in mind, but our best indication of what Congress had in mind is the words of the statute.

And the words of the statute make no sense if they say you have to prove confusion and the only... however, there's a special defense which you have, which turns out to be there's no confusion, that's not a special defense.

Mr. Brinkmann: Two points, Your Honor--

Justice Scalia: Makes it a meaningless statute, really.

Mr. Brinkmann: --Two points.

Petitioner gives no meaning to words "used fairly".

So if a worst statutory construction--

Justice Ginsburg: I thought they did when they outlined to us what it means is you're using it descriptively, and not as a mark.

Mr. Brinkmann: --Your Honor, those are other terms that are used in the statute, those are separate requirements.

There are four requirements in the provision, used not as a mark, used descriptively, used in good faith, and used fairly.

They read "used fairly" right out of the language.

Justice Ginsburg: Ms. Brinkmann, am I right that several cases say, the key here is, are you using it as a mark.

Because that suggests you're trying to pawn off your goods as another's.

Are you using it as a mark?

Or, are you using it, merely descriptively?

I thought use as a mark was the key, you're using it as a mark, you're not using it in good faith.

Mr. Brinkmann: No, that is one of the factors in likelihood of confusion, that you can take into account, that there can be non-trademark uses that are confusing, but the common law cases we talk about are full of examples of that.

I would like to make one other response to Justice Scalia's point, if I could.

Justice Scalia, to the extent that you hold that the fair-use defense no longer prohibits, all uses are likely to confuse as unfair, we would look to the suggestion made by the amici that there is a middle ground that likely to confusion, in any event, cannot be completely irrelevant to the used fairly determination, as Petitioner in the district court would have it.

We discuss on page 15 of our brief, for example, the Restatement's position, which we would urge the Court to look to, which is akin to what the amici suggests.

Justice Scalia: That may well be, but I don't think that's the question presented here.

I mean, we could agree with that, that it's relevant to deciding the defense, and still answer the question presented the way that the Petitioner wants.

Mr. Brinkmann: The district court's entry of summary judgment must be reversed, the Ninth Circuit did that because of its total disregard for likely to confusion--

Justice Souter: Well, that may be, but the issue here is whether the Ninth Circuit simply went too far in the other direction and required too much.

And all we have to determine is whether there is a per se obligation to prove non-confusion.

If we do so, that doesn't necessarily reinstate the district court's position, it simply says that the Ninth Circuit went too far, isn't that correct?

I mean, that is what is... that is the issue before us?

Mr. Brinkmann: --I think the ruling from this Court would have to be that it's not an absolute defense against likelihood of confusion.

Justice Ginsburg: How about if the ruling were a defendant who uses a descriptive term fairly and in good faith to describe its goods or services is not liable for infringement, even if some residual confusion is likely.

That's what the Restatement that you've just been applauding says.

Mr. Brinkmann: Yes, and that discussion explains a couple of things.

It explains that if there is a likelihood of substantial confusion, that would be the outer limit, ordinarily that would not be a fair use.

It also points out that likelihood of confusion is relevant to that determination that Your Honor just described.

Yes, we would win under that position, Your Honor, that's absolutely correct, that's the middle ground of the Restatement--

Justice Ginsburg: Well, you would win--

Justice O'Connor: You'd still have to vacate the judgment below, which seemed to go too far in saying that if there is any consumer confusion, that's the end of it.

Mr. Brinkmann: --Well, Your Honor, we would actually urge the Court to affirm the judgment below, in support of we cite cases in our brief, the Meritor case and the Yakima case, in which the judgment of the Ninth Circuit reversing the district court should be affirmed, and there are other holdings of the Ninth Circuit also that are not before the Court that should be affirmed.

Chief Justice Rehnquist: Well, you're urging then that the Ninth Circuit be affirmed on alternate grounds.

Mr. Brinkmann: Yes, Your Honor, that's--

Chief Justice Rehnquist: We rarely do that.

Mr. Brinkmann: --Yes, Your Honor, I understand that, but in this particular situation--

Justice O'Connor: Why wouldn't we just vacate it, and you have other grounds that the court below didn't address, but why wouldn't, at the very least, we vacate the judgment and send it back?

Mr. Brinkmann: --We certainly would agree, Your Honor, that if we are then given an opportunity on remand to go back to summary judgment and carry our burden of establishing a likelihood of confusion, but not have it held against us.

For example, in the middle ground, to determine what used fairly is, in addition to likelihood of confusion, we would suggest that there are other factors that the Restatement puts forth.

For example, whether there is commercial justification for the use.

Did we point out, there is no commercial justification, there are twenty other competitors that don't use this terminology.

Justice Scalia: They might have been afraid that you'd sue them.

Mr. Brinkmann: That's quite a strong mark, Your Honor.

Justice Ginsburg: --Ms. Brinkmann, am I right that they were, KP, they were in fact using the word "micro color" before you registered your trademark?

Mr. Brinkmann: No, we dispute that, Your Honor, they've never produced one bottle from that period.

In fact, we introduced four bottles of their--

Justice Ginsburg: But that would be... that would be a disputed issue of fact.

Mr. Brinkmann: --Yes, Your Honor.

Justice Ginsburg: And are we making any differentiation at all between the mini color red or whatever, and this logo that appears?

Mr. Brinkmann: Yes, all the difference in the world, Your Honor.

We maintain that that is a mark use.

I mean, the district court rejected that as well, but that is one of the issues where you suggested that courts have resolved these on whether something is used as a mark or not, that is not an easy answer, and that is why it's always part and parcel of the likelihood of confusion.

That's the purpose of the Lanham Act, to ensure that when you go into a store, you can buy the products you want.

For example, in the health and safety area here, you may be willing to buy a product that costs more money because you know of the quality of them.

At the same time, you want to be assured when you go in, because you don't want to buy the one that's recalled all the time, or that has ingredients that cause allergies for you, that's what the Lanham Act is to protect.

And it encourages the economic efficiency of the market--

Justice Stevens: Your customers are pretty sophisticated people, I guess, they're specialists in an unusual trade, so they're not just like a person walking off the street that doesn't know what it is, they probably know this market pretty well.

Mr. Brinkmann: --That's directly relevant to the likelihood of confusion, Your Honor.

In fact, the typical way of proving that when it ultimately goes to trial is through consumer survey.

And the law is clear that that survey would not be of the person on the street, it would be of the appropriate purchasers, who are more sophisticated clinicians and cosmetologists.

But, Your Honor, even on that situation in this record, we have direct evidence of confusion.

It's at joint appendix page 170, Your Honor, it's the declaration of Gloria Torres, where about 1998, 1999, she was one of the people who did sales, and she started getting calls from people wanting products, and it confused her because they weren't on my client's customer list, and also they were citing different prices.

It didn't mean anything to her at the time, it turns out this was the confusion because they were actually seeing this new usage on the marketing brochure by KP Permanent.

Justice Stevens: Just out of curiosity, it has nothing to do with the case, do they market this product with color charts, just like paint companies do?

Mr. Brinkmann: They do, Your Honor, that's absolutely right, color wheels, color... and also in the micro pigmentation history, it's very important, because even though it's like tattooing, the purpose is absolutely the opposite, it's to hide the color.

So mixing of the colors is a critical component of that industry.

I want to make another point about the economic efficiency that is furthered by the trademark laws and not allowing likelihood of confusing uses, which is what Congress intended.

By allowing purchasers to know that they're getting the product that they want, they're a lot, able to be more efficient in the market--

Justice Breyer: I also... it's very efficient to allow people to communicate, in English.

Mr. Brinkmann: --Your Honor, there's nothing to prevent that.

Justice Breyer: Well, I guess that's the question, because sometimes people... I have no doubt--

Mr. Brinkmann: Your Honor, I don't think there's anything... the way that Petitioner passed the Lanham Act grossly overstates it.

I mean, I would just submit the following list.

The only thing that the Lanham... the Lanham Act does not allow registration of generic brands, as we mentioned before.

It allows cancellation of any mark if it becomes generic.

It applies only to commercial uses, not usage in ordinary English language, only in connection with the mark.

It can only have a valid trademark when it's actively being used, any mark can be canceled or abandoned after three years.

It also, of course, only applies when there's likelihood of confusion.

Also there is an expert agency that reviews and goes through a process in which there can be oppositions, objections, all of this could be brought up at that point.

And also Congress directly addressed anticompetitive interests when it enacted the statute.

It, in 1946, enacted B(7) as a defense for antitrust violations.

It also reinforced the Justice Department, and the FTC maintains its enforcement authority, and it also had a particular provision that allowed the FTC to go in and cancel registration.

I'd also point out--

Chief Justice Rehnquist: What would be a really expert agency, which you referred to as represented by the government here, and it takes the position quite different from yours.

Mr. Brinkmann: --At this point in time, Your Honor.

I would also point out economic efficiency--

Chief Justice Rehnquist: Why are you saying at this point in time?

Are you suggesting they'll take a different position some other time?

Mr. Brinkmann: --Your Honor, in this case, it... this mark has been put through becoming to... but went through all of the procedures that the PTO required.

There's no question that this is a valid mark.

Justice Ginsburg: They're not assailing the validity of the mark.

Chief Justice Rehnquist: Nobody is challenging it, it's the fair-use defense.

Mr. Brinkmann: Your Honor, no, what I... the government's position is the same position that, in fact, it urged before Congress in 1946.

The Court's opinion in Park 'n Fly makes this clear.

They did not want descriptive terms at all protected, even with secondary meaning.

And as the Park 'n Fly opinion makes clear, Congress rejected that and struck the balance this way and included all of these other safeguards, not allowing registration of generic marks, always prohibiting uses that are likely to confuse.

We would also point out that that encourages economic efficiencies for businesses as well.

By being able to benefit from the reputation of your mark, the business invests more.

As soon as confusion is allowed, there is a free rider problem, and that competitor is free riding on that investment.

And it's a disincentive for further investment and it undermines the quality of the goods, because the only way--

Justice O'Connor: Certainly the Restatement and the view of some of the amici is contrary to yours on this.

Mr. Brinkmann: --We believe that the Restatement and the amici are very consistent in rejecting Petitioner's position and the district court's position that likelihood of confusion is completely irrelevant.

We embrace that, I think that's a consistent position, and that would be the bottom line, I would urge, on this Court, because Petitioner's position in the district court wreaks havoc, truly, with the statutory framework that Congress set up and intended.

We believe as a matter of strict statutory construction, that indeed it is now a vestigial provision, the fair-use defense, after the 1988 changes to the inconstestability provision.

But if the Court is not going to hold that that fair-use defense prohibits uses that are likely to confuse, we would urge the Court to adopt the Restatement position, that the totality of the circumstances, likelihood of confusion is relevant, we think factors that it's confusing in relationship to a health and safety issue would be relevant, the investment by the mark holder could be relevant.

And to the extent the competitor had a commercial justification for it, because it was a term that everyone needed to use, but "micro colors" is just not that kind of terminology as the record in this case demonstrates.

If there are no further questions, Your Honor.

Rebuttal of Michael Machat

Chief Justice Rehnquist: Thank you, Ms. Brinkmann.

Mr. Machat, you have three minutes remaining.

Mr. Machat: Thank you.

I'd like to point out that Ms. Brinkmann's reference to the legislative history is incorrect, and I'd just like to refer the Court's attention to my reply brief, pages 14 to 17 where basically it shows that prior to 1988, courts were required to find a likelihood of confusion before finding for the plaintiff on a trademark case.

I'd also like to point out that in this particular case, the trademark is not for the word "micro color", the trademark is for the logo mark, and here's some of the confusion.

The Respondents were able to obtain a trademark registration for the logo itself, and the strength in the logo itself is not being copied, we're just using the descriptive words within the logo itself.

And Congress always intended for descriptive words to be free for everybody to use in their primary descriptive sense, so long as the person, the subsequent user, is not using those descriptive words in the secondary meaning sense, and that's the distinction.

The confusion is only an issue to determine whether or not the elements of the fair-use defense is being met, but that confusion should be distinguished from likelihood of confusion.

Confusion is a factual determination, likelihood of confusion is a legal determination.

So you can use whether or not there is actual confusion to determine whether or not the word is being used as a mark.

Justice Scalia: I forget your position, if you've taken it, do you agree that the degree of confusion that is predictable or that is likely is one of the elements that can be used to determine whether the use is a fair one?

Do you agree or disagree with that?

Mr. Machat: I would agree, the degree of confusion, but that comes into whether or not--

Justice Scalia: All right, that's all I wanted to know.

Mr. Machat: --In this case, "used fairly" means, it does mean something, we're saying used fairly refers to whether or not the use is a truthful or reasonably accurate description of the mark.

And it always... truthful is something that the common law always looked at to see, that was a term used, in fact, by this Court in the Warner decision, basically, to quote briefly from that decision, it said

"the use of similar names by another to truthfully describe the same product does not constitute legal or moral wrong. "

So I would maintain that "used fairly" means truthful, or can determine whether or not it's exactly true, reasonably accurate.

And that would be the meaning of "used fairly".

And of course, good faith refers to the intent, and there you have the elements of the fair-use defense.

Also, I'd just like to point out once again the Ninth Circuit opinion, it says on the bottom of page 17a, it says,

"KP can only benefit from the fair-use defense if there is no likelihood of confusion between KP's use of the term'micro color', and Lasting's mark. "

And then they go on to say,

"as discussed above, because in this case they can be no fair use.... "

Chief Justice Rehnquist: Thank you, Mr. Machat, the case is submitted.

Attribution:

The Oyez Project

Featured:

Dastar Corp. v. Twentieth Century Fox Film Corp. - Oral Argument

Fri, 09 Jan 2009 14:50:37 +0000

Case:

Dastar Corp. v. Twentieth Century Fox Film Corp.

Media File:

02-428_20030402-argument.mp3

Related Transcript:

transcript.xml

Transcript:

Argument of David A. Gerber

Chief Justice Rehnquist: We'll hear argument now in Number 02-428, Dastar Corporation versus Twentieth Century Fox Film Corporation.

Mr. Gerber.

Mr. Gerber: Thank you, Mr. Chief Justice, and may it please the Court:

Dastar discovered that an old TV show made by Time Inc. was in the public domain because Fox neglected to renew the copyright.

Dastar adapted the public domain show at considerable expense to make it into a war narrative as opposed to Eisenhower's story.

Dastar's product did not refer to Time Inc. Dastar's product also did not refer to respondents who had their own competitive video of the same TV show.

Chief Justice Rehnquist: Of the same what?

Mr. Gerber: TV show.

Because of the latter, that is, the omission of credits to respondents, and the finding that Dastar acted willfully in omitting those credits, the lower court awarded $1.6 million, substantially in excess of the $850,000 total gross of Dastar, in order to deter it.

The lower courts departed from the Lanham Act in a very expansionary way in our view in six separate dimensions.

Justice Ginsburg: Can we go back to your statement?

As I... as I understood it, it wasn't the omission of Fox, but the addition of your people.

In other words, it wasn't the failure to give credit to respondents, but it was petitioner's taking credit for it that was what the lower courts thought was wrong.

Mr. Gerber: Taking the lower courts in ascending order, on page 53a of the cert petition, the language is that the court finds that defendant's failure to identify the television series and the book is misleading to the public.

And then at the Ninth Circuit level, on page 3a of the petition, the language is that Dastar copied, et cetera, and marketed it without attribution to Fox.

Neither court, Justice Ginsburg, examined Dastar's credits, affirmative credits, for accuracy, for whether they registered with the consumers, for misleadingness or falsity in any way.

I would suggest that the record indeed is that it was the omission of credits for their competitors that was, in fact, the basis for the double award.

Chief Justice Rehnquist: This is a failure... this is a failure to attribute case then?

Mr. Gerber: Yes, it is, Your Honor.

Our first and most sweeping point--

Justice Stevens: But may I just point out on 3a, it... the quote... you left out the first clause I think.

They... they labeled the... the resulting product with a different name and marketed it without attribution.

Mr. Gerber: --Oh, yes.

That's a reference to changing the title of the work.

The entire phrase... and pardon my truncation of it... on page 3a is that Dastar copied substantially the entire Crusade in Europe series created by Twentieth Century Fox, labeled the resulting product with a different name, and marketed it without attribution.

The name Dastar put on it, instead of Crusade in Europe, was World War II Campaigns in Europe.

And you will, I believe, see that in neither opinion does either court take a look at the credits on Dastar's product and conclude that they were in any way misleading, nor does the court examine them at all.

Our first--

Justice O'Connor: Counsel, would... would the new Dastar video qualify as a derivative work that would deserve copyright protection on its own?

Mr. Gerber: --Yes, yes.

The--

Justice O'Connor: And is that issue being litigated?

Mr. Gerber: --No, it isn't.

Justice O'Connor: No.

Thank you.

Mr. Gerber: Our... our most sweeping statutory point is, while not necessary for this opinion certainly... this case, certainly would dispose of it, that the current version of the governing statute, Lanham Act 43(a)(1)(A), does not recognize reverse passing off at all.

The judicial interpretations of the Lanham Act, under which this claim was born, were under a prior version that was substantially amended in 1988, and while no court has construed the '88 language, we think that the natural and plain meaning of it is that it encompasses only forward passing off.

Chief Justice Rehnquist: Only what kind of passing?

Mr. Gerber: Forward passing off.

Chief Justice Rehnquist: What is forward passing off?

It sounds like a football game.

Mr. Gerber: It's not football, Your Honor.

[Laughter]

It is the standard type of trademark or trade dress infringement in which the wrongdoer... let's call it Brand X... utilizes the mark Rolex... of usually a well-recognized company and puts that mark on its product.

Justice O'Connor: Is it some kind of affirmative misrepresentation?

Mr. Gerber: In forward passing off?

Justice O'Connor: Mm-hmm.

Mr. Gerber: I... I--

Justice O'Connor: To... to get some kind of liability under the Lanham Act under a reverse passing off theory.

Mr. Gerber: --If I may first distinguish reverse passing off and then come back to Your Honor's question.

Justice O'Connor: Yes.

Mr. Gerber: Reverse passing off, in contrast, is where Brand X for some reason... the commercial motivation is often hard to discern... gets a legitimate Rolex, removes the Rolex name and puts the Brand X name on it.

Instead of passing its goods off as Rolex, it's passing Rolex's goods off as its own.

I'm sorry, Justice O'Connor, I--

Justice O'Connor: Well, it's... it's related to this.

This is a so-called reverse passing off theory that the Ninth Circuit is relying on.

Right?

Mr. Gerber: --Yes.

Justice O'Connor: And do you say there is no such thing at all or do you acknowledge that there could be some Lanham Act violation if there were some kind of affirmative misrepresentation?

Mr. Gerber: Both.

Our... our most ambitious argument is none at all, and we do have as a less ambitious argument the second.

Justice O'Connor: Indeed, the Solicitor General would urge that we... we not take the broader view.

Right?

Mr. Gerber: I don't believe so, from the Solicitor General's brief.

And let me--

Justice O'Connor: Okay.

Well, we'll find out in a minute.

Unknown Speaker: [Laughter]

Mr. Gerber: --Yes.

I... our view, which I believe is shared by the Solicitor General, is that under the particular statute in issue in this case, subsection (a)(1)(A), reverse passing off is a no.

Justice Scalia: Where... where is that?

Let's... let's look at the statute and talk about it.

Mr. Gerber: It's on... it's on page 2 of the cert petition.

Justice Scalia: Okay.

Mr. Gerber: And if I may present our most sweeping argument, the language in particular in (a)(1)(A) requires a designation as to the origin, sponsorship, or approval of Dastar's goods by another person.

So that would naturally cover the situation in which Dastar's goods had the name of another person such as Fox on them, but it would not cover the situation in which Dastar's goods had its own name on them because of the by another person language.

When Fox's name is on Dastar's goods... and that is the normal passing off, forward passing off... there is a designation that Fox sponsored Dastar's goods or approved it or was the origin of it.

But you can--

Justice Scalia: Now, I mean, that's... that's one reading of that.

I mean, you could say... and maybe... maybe it's the more natural reading... that as to the origin by another person means that some other person originated it.

But it could mean as to the origin by another person, if I represent that I originated it, okay, when in fact another person originated it, I would be making a misrepresentation as to the origin by another person because I'm denying that that other person originated it.

I'm saying that I did.

Wouldn't that be a misrepresentation as to the origin by another person?

Mr. Gerber: --I don't think... the... the latter principle that Your Honor stated I think would be correct, but I would suggest that it's not illustrated by the example.

I think Your Honor is perhaps looking at the as to language here.

And in our view what that means is that a representation by Dastar that Fox did sponsor Dastar's work or that Fox did not sponsor Dastar's work would be covered.

Justice Scalia: Yes, either it did or did not.

Either it did or did not.

Mr. Gerber: But neither of... both of those are in contrast to reverse passing off in which the offending party is putting its own name on the work.

So that doesn't help.

And the... the other argument... the other construction, which is the only competitor on the table here by respondents to--

Justice Scalia: Well, excuse me.

Before you get on--

Mr. Gerber: --Excuse me, Your Honor.

Justice Scalia: --When... when you put your own name on it, aren't you denying that it was originated by somebody else?

Mr. Gerber: You're not stating that it was originated by another person, and that is the statutory requirement.

Justice Scalia: You're... you're stating that it was not.

You're saying that it was not originated by another person.

And that seems to me it could be interpreted as being a misrepresentation as to the origin by another person.

Mr. Gerber: Well, I--

Justice Scalia: If you put your name on it, you're saying I did it.

Nobody else did it.

You... you made a... well--

Mr. Gerber: --Pardon me.

I... I would rely on the statutory distinction.

It's one thing to make a representation that the wrongdoer is the originator, with whatever implications that may have, and another to make a misrepresentation which... which seems down the middle of the alley of the statutory language, that another person, Fox, originated the work.

Justice O'Connor: --Well, and is this affected at all by the fact that the copyright had expired?

This was in the public domain.

Mr. Gerber: Well--

Justice O'Connor: Is there some... how does that affect it?

Can you put your own name on something that's now in the public domain?

Mr. Gerber: --That, separate and apart from the most sweeping argument we have, really goes to a number of other attacks on what the lower court did.

The short answer is you can if it is not likely--

Justice Ginsburg: Mr. Gerber, I'd like to go back to what the lower court did because I don't think that you were accurate when you said in the view of the lower court, this was a non-attribution case.

I'm looking at page 53, and the court indeed does start out by saying that defendants failed to identify the series, but then there's a semicolon, and it goes on to say--

Justice Scalia: --Excuse me.

Where... where is this?

Chief Justice Rehnquist: At what page... what page are we on?

Justice Ginsburg: 53... 53a of the petition.

I'm questioning Mr. Gerber's characterization that this case is simply a non-attribution one because after the semicolon, it says why that was a problem.

It's... it gives the false impression that the series contains only the work of those listed in the credits.

So that was the problem that was central for the district court, not simply a non-attribution, but an incorrect attribution.

And I don't see how you can ignore that clear statement by the district court.

Mr. Gerber: --Well, in the district court, if one is talking about the... the wheat and the chaff, on page 31a in which the district court introduces its lengthy discussion, the statement is that the lawsuit is based on defendant's distribution of a video series, which plaintiffs claim is an infringement of the protected material found in the book, and is an appropriation of the television series, Crusade in Europe, without proper credit.

Now, the reason I think that is the correct interpretation of what the district court was doing--

Justice Ginsburg: Without proper credit could mean improper credit, but when the court is developing that point in full, it says there are two things.

It was the failure to identify.

Why was that a violation of the Lanham Act in the court's view?

Because it gave the false impression that only those listed--

Mr. Gerber: --Yes.

I would suggest that without proper credit means what it says.

It doesn't mean improper credit.

It means that the proper credits were not affixed.

And then, of course, when you look at the Ninth Circuit... Circuit--

Justice Ginsburg: --It was an improper attribution case, not simply a non-attribution case.

I'm simply questioning your original characterization which I do not think pays attention to what the district court, in fact, said.

Mr. Gerber: --I understand, Justice Ginsburg, but again I would urge that without proper credit, that phrase, is not a statement that there were improper credits.

It's a statement that the proper credits were absent.

And I would add that whatever ambiguity may lurk in the district court's findings, it's quite clear that at the Ninth Circuit level, which, of course, is what this Court is reviewing, the case is a non-attribution case.

Justice Ginsburg: The Ninth Circuit had a rather quick, unpublished opinion--

Mr. Gerber: Correct.

Justice Ginsburg: --in this case.

Mr. Gerber: We agree with that.

Justice Ginsburg: So it didn't tell us very much.

Unknown Speaker: [Laughter]

Mr. Gerber: If... if I may turn just for a moment to some of the... to the question 2, the remedies issue.

Here we would urge that the statutory language and legislative intent, to the extent that it is pertinent, coalesce.

Subject to the principles of equity, means subject to the principles of equity.

This Court, while the Lanham Act was being debated, applied equitable principles in an intellectual property case to define the circumstances under which profits may be disgorged.

That's the Sheldon case.

And it said equitable disgorgement of profits is permissible only for restitutionary purposes, only to restore to plaintiff something that he has lost.

That by definition precludes a purely deterrent award which is not restitutionary in the slightest.

If the Court has no further questions, I would like to reserve my remaining time.

Argument of Gregory G. Garre

Chief Justice Rehnquist: Very well, Mr. Gerber.

Mr. Garre, we'll hear from you.

Mr. Garre: Thank you, Mr. Chief Justice, and may it please the Court:

The petitioner in this case did not make any false designation as to the origin of its good, a videotaped series on World War II, when it put its own label on that good.

Petitioner manufactured the good at issue in this case, the video series.

It produced it and it and it distributed it to consumers.

Under this Court's decisions interpreting the Lanham Act and under the Lanham Act itself, petitioner is, therefore, the origin of the good at issue at this case and is the source of that good in the way that this Court has used that term.

In 1990, Congress addressed the question of artistic attribution and it addressed it in the... in the context of the copyright laws.

And it--

Justice Scalia: Excuse me.

Before you go on, suppose... suppose they hadn't edited the... the prior Crusade in Europe thing at all.

They had not done anything to it, didn't have a... a new introduction, didn't have the little snippets of addition that they had.

However, they did, indeed, make the copies and they... they made the... the plastic cassette in which it was inserted and so forth.

Would you take the position that... that they were the origin of that... of that product and therefore could represent that it was their product?

Mr. Garre: --We... we would take that position, Justice Scalia, and I think that... that would be consistent with the way this Court has consistently interpreted the term origin, if you look at the Wal-Mart case, the Qualitex case, and going back to the concurring decisions in the Two Pesos, which is to refer to the source of production or manufacture.

Justice Scalia: Production not in the Hollywood sense of production.

Mr. Garre: Absolutely, and--

Justice Scalia: Production in the sense of I made this... this physical article.

Mr. Garre: --That's correct, Justice Scalia.

And that's... of course, we encourage the intellectual property laws, and this Court's decisions encourage firms to go out and copy goods that come into the public domain.

In the Court's recent TrafFix case--

Justice O'Connor: That's what this was, in the public domain, was it not?

Mr. Garre: --That's correct.

The television--

Justice O'Connor: Do you think that this Dastar product could have been copyrightable as a derivative work on its own?

Mr. Garre: --We do think that it could be copyrightable as a derivative work to the extent that it's not subject to copyright protection.

Of course, the... the original television series was subject to a copyright, but that copyright expired in 1977 because respondent, Twentieth Century Fox, failed to renew it.

And of course, if... if the respondent had renew it, one suspects that we wouldn't be here today arguing about the... an expansive interpretation of the Lanham Act.

Now, Congress has addressed the... the question of artistic rights of attribution.

It did so in the context of the copyright laws, and it did so very carefully.

It limited... it recognized specific rights of artistic attribution in 1990, but it limited those rights to a small class of visual arts, made them personal to the author of those works, and limited the duration of the life... limited the duration of the... the rights to the life of the author.

In this case, the Ninth Circuit recognized a general right of artistic attribution that is not limited in time, that applies to a work, an audiovisual work, that Congress specifically exempted from the scope of its 1990 legislation and that is not personal to the author of the work, which in this case was Time Inc. who initially produced the television series.

Justice Scalia: Now, is there... is there no... I understand you're saying I say I produced this, all it means is I produced this physical object.

But suppose in addition the person says I produced this... this physical object and, moreover, I... I produced the show that is on this physical object.

That is, I'm using produced in the Hollywood sense now.

Is there... is there... when in fact I didn't.

I just did a little bit and most of it was done by Fox.

Mr. Garre: Well--

Justice Scalia: Is there no remedy for that?

Because that's what they say occurred here.

They... they wouldn't mind your just saying, you know, I... I am the maker of this cassette or of this disk.

They wouldn't mind that.

But... but what happened was that on the disk it said I am the artistic producer of this thing.

That's what they're complaining about.

Now, is there no remedy for that when they weren't?

Mr. Garre: --Two responses.

First, when they labeled a good that they manufactured and produced as their own good, they didn't make any false designation of origin within the meaning of section (a)(1)(A) of the Lanham Act.

Now, as we've discussed in our brief, section (a)(1)(B) of the Lanham Act, which the respondents in this case have never invoked and the courts below didn't address, isn't limited to false designations of origin.

It applies to false designations that misrepresent the nature or qualities or characteristics of a good.

So the second type of description that Your Honor characterized conceivably could fall within the scope of section (a)(1)(B), but of course section (a)(1)(B) was not raised in this case and it's also limited to the context of commercial advertising and protection.

The purpose of the Lanham Act and the trademark laws... and this is made clear in the definition of trademark that appears at 15 U.S.C. 1127, is to ensure that firms identify and distinguish their goods in order to prevent consumer confusion as to the source of goods.

Justice Scalia: There isn't any general Federal anti-lying law--

Mr. Garre: Well--

Justice Scalia: --that you could these people--

Unknown Speaker: [Laughter]

Mr. Garre: --No.

There's... there's another source, Justice Scalia, and we've mentioned in note 7 of our brief, the Federal Trade Commission Act gives the Federal Trade Commission authority to go out and address deceptive or unfair trade practices.

But that statute too isn't limited to false designations of origin.

Origin doesn't even appear in that... in that statute.

Origin has--

Justice Kennedy: If I... if I just read the... the label on the videotape and it says Campaigns in Europe and it's identical to Crusades in Europe, and I want to sue under (B) because I've just bought something that duplicated what I bought last week, does the label constitute commercial advertising or promotion?

Mr. Garre: --We haven't addressed that issue, Justice Kennedy, and... and there is some varying case law on that.

I think most courts would probably answer that question in the negative.

Most courts have interpreted section (a)(1)(B) to refer to advertising in the print ad--

Justice Kennedy: Well, then (B) doesn't... doesn't help and if... if--

Mr. Garre: --Well, of course--

Justice Kennedy: --in the case I put, the... the hope you hold out for us under (B) isn't... isn't very promising unless you're talking about sitting and reading what comes on in... in--

Mr. Garre: --Of course, advertising is often--

Justice Kennedy: --in the credits which no one ever reads.

Unknown Speaker: [Laughter]

Mr. Garre: --Advertising is often associated with the sale of products, but more importantly, (a)(1)(A) is addressed... it's intended to ensure that consumers can look at a product and identify the source of that product so if they do have complaints about the product, they can go to that person.

And notably, in this case, no consumer who has ever purchased petitioner's videos has registered any complaint along the lines that Your Honor is suggesting.

And if--

Justice Kennedy: Well, I'm... I'm supposing a case, and I thought you had indicated that (B) might cover it, but there has to be some advertising other than what's on... on the label.

Mr. Garre: --Under section (a)(1)(B), that's correct, but I think that the important distinction between (a)(1)(B) and (a)(1)(A) in this case with respect to origin is that... is that (a)(1)(A) is limited to false designations of origin or as to sponsorship or approval, and... and the latter two elements, sponsorship or approval, aren't addressed in... in this case.

(a)(1)(B) is much broader and... and would include the types of other representations that Your Honor is concerned about.

And of course, all this we think goes back to the notion that respondents seek artistic attribution for their product.

Justice Souter: May I... on that score, may I go back to your answer to Justice O'Connor's question about the... the possibility of copyright as derivative work?

Would that copyright cover not only the new material, but all the original material that they incorporated in?

Mr. Garre: I believe the... the copyright would cover the new material.

And of course, the--

Justice Souter: So... so that if they... if they did that, if they got that copyright, they then couldn't turn around and sue for copyright infringement when the original Crusade in Europe was... was marketed by the others.

Mr. Garre: --I... I think that's right.

We haven't addressed that--

Justice Souter: Okay.

Okay.

Mr. Garre: --question in detail in our brief.

Justice Souter: But your... in that case your... your understanding is that it's only the new material that would be subject to copyright.

Mr. Garre: Under the derivative work.

Justice Souter: Yes.

Mr. Garre: I believe that that's true.

But we think it's also important that when a consumer buys the product in this case, a video... a package of videotapes on World War II, the consumer doesn't purchase the intellectual property on those tapes.

And that's the purpose of the FBI warning that appears at the very beginning of... of the tape.

The consumer purchases a videotape series package and a copy of that which it can view at home.

Nothing in the Lanham Act, which is not an artistic credit statute, required the petitioner in this case to provide any attribution to the true creator of the television series that petitioner initially copied.

Justice Scalia: Or prevented him from... prevented them from making a misattribution.

You have to add that.

Mr. Garre: Well, we... we think that... that's true with respect to authorship because we don't think authorship or... or the concept of invention is covered by (a)(1)(A).

And, of course, the notion of attribution that respondents would urge this Court to adopt this case would have to apply to other types of goods like the sign stand in the TrafFix case.

No one in TrafFix suggested that petitioner could go out and reverse engineer and copy the sign stand which had entered the public domain, but that when it did that, it had to go and give credit to Marketing Displays, the firm that initially had the... the patent on that, or to the original inventor himself, Robert Sarkisian.

Now--

Justice Ginsburg: Mr. Garre, before you finish, there was a reference in your brief that I didn't follow.

It cropped up in another brief too, and it had... it was a reference to the Berne Convention.

Could you... what is the relevance of that international treaty to this... to this case?

Mr. Garre: --May I answer that question?

Chief Justice Rehnquist: Briefly.

Mr. Garre: It is relevant in that it's an international convention that... that covers copyrights, but we explain our brief it... we don't think that it affects the analysis in this case because it... as... as the Berne Convention Implementation Act states, it doesn't expand or reduce existing rights under... under domestic law.

Chief Justice Rehnquist: Thank you, Mr. Garre.

Mr. Garre: Thank you.

Chief Justice Rehnquist: Ms. Cendali, we'll hear from you.

Justice Scalia: It's still too high.

Unknown Speaker: [Laughter]

Argument of Dale M. Cendali

Mr. Cendali: Italians.

Mr. Chief Justice, and may it please the Court:

This is not a case about copying.

It's a case about deception.

No one is disputing that someone has the right to copy works when they're no longer protected by copyright or patent, but as this Court has long recognized in decisions like Bonita Boats, Sears, and Compco, that doesn't give you the right to create consumer confusion in how you label such works.

This, I should correct, is not a case about a work that's actually in the public domain.

Since the Ninth Circuit decision, as we've explained in our brief, we retried the work for hire issue.

The district court once again affirmed her previous summary judgment decision that the work was work for hire.

So the underlying book by General Eisenhower is, in fact, still protected by copyright, though they intend to appeal.

In any case, here Dastar violated the Lanham Act by advertising, packaging, titling, and crediting Crusade in Europe in a manner intentionally designed to give the false impression that it was an original product originally created by it.

And Dastar knew, moreover, that consumer confusion was likely.

Norman Andersen, Dastar's President, admitted that a consumer would not be happy to have purchased a copy of Campaigns if he or she already had a copy of Crusade.

Justice Scalia: But the... the issue is whether the Lanham Act creates a cause of action with respect to that particular unhappiness.

What do you respond to the contention that the word origin in this provision simply means who manufactured it, not whose... whose idea it was?

And to put it in... it applies in a patent context as... as well.

You know these... these vise grips that you can have a pliers that will hold on automatically until you release it.

Suppose the patent has... has expired on that, and I produce an identical copy of... of the vise grip and I sell it and I say, you know, manufactured by Scalia.

Do I have to say, oh, but it's not my idea?

I want you to know that, you know, Mr. Vise Grip is the guy that... that originally did it.

Unknown Speaker: [Laughter]

Justice Scalia: I don't have to say that, do I?

Mr. Cendali: Absolutely not, Your Honor, and we're not urging that, but--

Justice Scalia: And what if I say, and moreover it was my original idea?

Would there be a cause of action under the Lanham Act?

Mr. Cendali: --Yes, that would--

Justice Scalia: It would be.

Mr. Cendali: --If... if you hold yourself out falsely--

Justice Scalia: Oh, my.

Unknown Speaker: [Laughter]

Mr. Cendali: --If you hold yourself out falsely as the inventor of a product when you are not, that creates liability under the Lanham Act.

Justice Scalia: Why?

What does... what does that have to do with... all right.

I don't see it.

Justice Souter: Why is it... I mean, why is it Lanham Act rather than Copyright Act?

Mr. Cendali: Well, the Copyright Act just deals with copying, people making copies of something and selling it.

The Lanham Act deals with deception, and that's what... that's what this is.

It's not just that they made the copies, but by crediting themselves as the creator of Campaigns in Europe, they were able to jump start their video business and to be able to then get all the good will associated with that product and say, look, we can make these videos--

Justice Souter: No.

I... I realize that, but you say, well, the Copyright Act is concerned with copying.

It's... it's concerned basically with... with copying a certain intellectual content.

That's what's... that's what they're trying to protect.

Mr. Cendali: --That's right.

Justice Souter: The Lanham Act, I thought, was not trying to protect intellectual content.

It doesn't have to.

There's another statute there.

The Lanham Act, I thought, wanted to make it clear... wanted producers to make it clear who is at fault if somebody buys the product and doesn't like it.

There's no deception here about that, is there?

They know they're going to go to Dastar and raise the devil if... if they don't like it.

Isn't that the point of the Lanham Act?

Mr. Cendali: No, Your Honor.

For one thing, if they don't like the content and they go to Dastar, they'll have no one to talk to.

With regard to the purposes of the Lanham Act, as this Court has made clear in Inwood and in Qualitex--

Justice Souter: No, but they will have somebody to talk to.

Dastar will say... I'm assuming they are honest people, and they will say, well, yes, we did that.

You--

Mr. Cendali: --But--

Justice Souter: --you don't like the fact that we copied this other stuff and said it was ours?

We're the ones to blame.

Mr. Cendali: --But the purposes of the Lanham Act, as this Court has made clear numerous occasions, most... very recently in Qualitex, is to let consumers be able to know when they're getting a product, if they want to get... if they like it, they want to get other things from that product... from that supplier, they can.

Justice Souter: Dastar knows who to plagiarize.

Unknown Speaker: [Laughter]

Justice Souter: When... when I see the Dastar name, I'm getting good stuff.

Unknown Speaker: [Laughter]

Mr. Cendali: Well... well, Your Honor, you just don't know whether the next person they plagiarize is going to be as good as Twentieth Century Fox--

Justice Souter: That's why I'm relying... yes, but I'm relying on them.

Unknown Speaker: [Laughter]

They... they knew who to copy the first time.

Justice Souter: It seems to me that is just as much a... a guarantee that they'll know who to copy the next time, as if they had made it themselves.

Mr. Cendali: --Well, the other problem with it, beyond the fact that they are deprived, because you have no idea whether the next time they copy will be as good as the first time, you're also depriving the consumer of the ability to end up buying two of the same product, a very real possibility that they would recognize.

Justice Souter: That's right, and they... and they can go to... and they can go to Dastar and raise the devil.

They said, you didn't tell us that you copied that other thing.

We'll never buy Dastar again.

But they know exactly who to blame.

Mr. Cendali: They don't know who to blame because if someone buys Campaigns and Crusade, they will not know who cheated them.

They will not be able to tell.

The products are lodged with the Court.

The Court can look at them.

If you bought them both, if I bought my dad one for Christmas and another one for him for his birthday, he's not going to be happy to find he has 2 hours of the same... two copies of the same 7-hour videotape.

And in page 205 of the record, it's clear that there are 7 hours of content in that.

Justice Kennedy: But the same point.

Why can't he sue or you sue Dastar?

Mr. Cendali: You wouldn't know who to sue.

And maybe he also would think--

Justice Kennedy: You sue the person you bought it from.

Mr. Cendali: --But it could have been Fox.

He wouldn't have known who was the one telling the truth.

Moreover, he also wouldn't know... maybe he would think, you know what?

Justice Kennedy: Well, he can sue... he can sue them both and find out.

Unknown Speaker: [Laughter]

Mr. Cendali: I don't know if that's... that's the... the best way the law should deal with it.

Going back to Justice Scalia's question, though, about origin, there's nothing in the Lanham Act to suggest that Congress wanted to limit the word origin to just the manufacture of a product.

Now, in Justice Stevens' concurring opinion in Two Pesos, he specifically noted that the term origin has expanded over time from its original roots as denoting geographic origin, a concept that's now in (a)(1)(B) of the Lanham Act, to encompass origin of both source and manufacture.

So just by this Court's own opinion, source is something different from manufacture.

What is source?

Going back to Justice O'Connor writing for the Court in Feist, in talking about origin, originator, author, the common reading of what--

Justice Stevens: Yes, but there is... there is a sort of an ambiguity or at least a debate over what the source is.

I think your Traficante... the... the sign that stood up well in the wind... what obligation did the... did the second manufacturer have to say the idea was somebody else's?

Mr. Cendali: --Absolutely none.

They could--

Justice Stevens: Why not?

Why isn't it the same case?

Mr. Cendali: --It's not at all the same case.

But when you're... because you're simply selling a physical product... if all Dastar did here was sell Crusade in Europe as Crusade in Europe, it would be a totally different case.

But what they did here is they held themselves out as the maker of it, as the creator of it.

Justice Stevens: No, but they didn't hold themselves out as the people who took all the pictures.

A lot of them were secondhand pictures, you know, taken by news photographers and all sorts of people.

Mr. Cendali: They held themselves out by putting their names and only their names on the credits, by... by having a special thanks to the National Archives right before their names, when they admitted they had no contact... contact with the National Archives with regard to creating these products, by putting only a '95 copyright notice on it, by... by listing only themselves as producers.

The only conclusion one can reach--

Justice Stevens: I don't... I don't readily see the difference between that and the sign situation.

The sign manufacturer wants everybody to think what a brilliant builder of signs he is.

He has a lot of other models in his catalog.

Mr. Cendali: --But the sign manufacturer... when we deal with products, we don't normally think, when you have a product, that someone is saying I invented this.

We're accustomed to lots of people selling similar products.

The commercial context is very different.

Justice Kennedy: Is what you're... is what you're saying that when you buy the books or the videotape, you're buying it because you think it's going to be different and you're disappointed when you find out that it isn't.

With... with TrafFix you know if it's a sign that stands in the wind that--

Mr. Cendali: Well, you're right, Your Honor.

Justice Kennedy: --But that goes again to what I... Justice Souter's initial line of questioning.

I... I really think it's the major problem in the case for me.

Justice Souter: Yes, and--

Justice Kennedy: --What you do is you sue the seller Dastar... Dastar... for misrepresenting.

Mr. Cendali: But--

Justice Kennedy: And... and that Fox is not the injured person.

Mr. Cendali: --I maybe can help you on that, Your Honor--

Justice Kennedy: And that's critical in the case for me.

Mr. Cendali: --because... because the Lanham Act does not provide a cause of action for consumers.

So if you... if you posit the idea that consumers need to... can sue Dastar if they're disgruntled, they cannot do that under the Lanham Act.

The Lanham Act provides... it's been well recognized that there's only... there's no cause of action for consumers.

The only people then who can sue--

Justice Kennedy: There's no cause of action if a commercial advertising misrepresents the nature of the... of the goods?

Mr. Cendali: --No, Your Honor.

There's been... if you can look in McCarthy, there's well-established case law.

Justice Souter: No.

But who has the cause of action?

The cause of action is the other company.

Mr. Cendali: The... that's right.

The people who can sue are people such as... as respondents--

Justice Souter: All right.

Mr. Cendali: --who are... who are... who have had some other company come along, steal the--

Justice Souter: No, I... I--

Mr. Cendali: --good will of this product and--

Justice Souter: --I realize.

Justice O'Connor: Well, you know, I... I... this just totally ignores the fact that it was in the public domain.

I mean, of course, they had a right to copy it.

Why didn't Fox renew the copyright if they wanted to do that?

Mr. Cendali: --Your Honor, they had--

Justice Scalia: You wouldn't have all this trouble if they had renewed the copyright.

Mr. Cendali: --There's... there's no issue if they simply copied it as Crusade in Europe and sold it as Crusade in Europe.

There... we would not be here on a Lanham Act cause of action.

Our problem is, as we said in our complaint at... at paragraphs 12 and 22 I believe, what they did was that they held themselves out as the producers.

Justice Scalia: No, but isn't the--

Justice O'Connor: --Does someone have a right to go in and take part of a previous work that's now in the public domain and add original work to it and reissue it under their name and get a derivative copyright for at least the new part?

Now, is it authorized?

Mr. Cendali: Yes, they absolutely can do that--

Justice O'Connor: Yes.

Mr. Cendali: --but when you have a case like this which is two courts have found it was a bodily appropriation.

The only things they changed were to--

Justice O'Connor: --the State court, we're talking about the district court and the court of appeals in a--

Mr. Cendali: --That's right.

Justice O'Connor: --a jurisdiction that has taken a rather extreme view of what the Lanham Act protects.

That's what we're reviewing.

I mean, there... it... it's a means, it seems to me, of expanding copyright protection.

Mr. Cendali: Your Honor, I... I really don't think so because, again, they could have copied.

The problem isn't with the copying.

The problem was the taking credit for themselves.

Going back to the misattribution point on page 21 of the cert petition and Justice... Judge Cooper's description of her own summary judgment decision, she says, by bodily appropriating the Crusade series and falsely identifying themselves as producers of Campaigns--

Chief Justice Rehnquist: How does the phrase, bodily appropriation, fit into the Lanham Act?

Mr. Cendali: --I think it's designed as a... as a tool in reverse passing off cases where you're dealing with products to help assess how similar those... those products are.

To go back to--

Chief Justice Rehnquist: Certainly there's nothing like that in the Lanham Act itself.

Mr. Cendali: --No, but... but what it's trying to do is to find a way of getting at the reverse passing off problem.

The Lanham Act doesn't provide a particular way of establishing confusion, deception, or--

Justice O'Connor: But what it... what the Ninth Circuit theory seems to me to do is to equate the likelihood of consumer confusion with bodily appropriation.

Now, in... in the case of the traffic sign, once there was no more protection under law for that, some other manufacturer can come in and sell it and produce it and that's a bodily appropriation, all right, but it wasn't treated as producing consumer confusion.

Why should this?

Mr. Cendali: --I don't think it... there would be liability for TrafFix under the Ninth Circuit test because it's not just bodily appropriation, but it's misattribution.

And as I say, when you're just simply saying I manufactured the product, you're not misattributing it.

If Dastar said, Dastar... I manufactured and distributed this product, that would not be reverse passing off.

They are allowed to credit themselves for what they did.

They just cannot credit themselves for what they didn't do.

Justice Scalia: What... Ms. Cendali, how far back do you go?

I mean, my problem with your interpretation of the word origin... it seems to me a very good cut-off point means origin means who's selling it, who... who produced the physical thing.

Now, you... you don't want to limit it to that.

You want to say it also includes what the physical thing contains if it's a... if it's an intellectual matter.

But why do you cut it off at the last copyright owner?

I mean, suppose the cassette contained Carmen Jones.

Okay?

Why... why... would I have to identify not only whoever was the author of the derivative work, Carmen Jones, Harry Belafonte... I don't know who did it.

Would I also have to identify Bizet as... as the, you know, the... the author of the original idea, plus the unknown Frenchman who wrote the novel from whom Bizet got the... got the idea?

Mr. Cendali: Absolutely not, Your Honor.

There--

Justice Scalia: Why not?

Mr. Cendali: --Because--

Justice Scalia: Why... why do you arbitrarily say, you know, you go back to the last copyright owner?

Mr. Cendali: --It has nothing to do with who is the copyright owner or not.

It's distinct from copyright.

The issue is and the only issue a court needs to decide in these cases is does the person claiming a credit for themselves--

Justice Scalia: Right.

Mr. Cendali: --was that accurate.

So if the person--

Justice Scalia: Okay.

Justice Stevens: But may I ask what difference would it make if the person claiming the credit, instead of claiming for himself, said, developed by an unknown genius--

Unknown Speaker: [Laughter]

Justice Stevens: --when he knows it was developed by you?

That would be equally misleading.

And would it be covered?

Mr. Cendali: --I'm... I'm sorry.

If--

Justice Stevens: The representation is not I developed it.

Mr. Cendali: --Right.

Justice Stevens: I know you developed it.

What I... what I represent is it was developed by a brilliant third party whose name I'm not going to disclose.

Would that be also actionable?

Mr. Cendali: I don't think so, Your Honor.

Justice Stevens: Why not?

It's the same... it's the same impact on you.

It fails to give you credit for what you did.

Mr. Cendali: But again, the issue isn't giving us credit.

The... the danger here is them taking the credit, them taking it--

Justice Stevens: Well, but what does it matter whether they take the credit for themselves or... or for Thomas Edison or some third party that everybody assumes really is the genius here?

It's false in both cases.

Mr. Cendali: --You're... you're right.

If... if I understand what you're saying is if someone mislabels a product in a false way as to what the origin of that product is--

Justice Stevens: Yes.

Mr. Cendali: --that is... that I believe is actionable under the Lanham Act, and I think it should be.

Justice Scalia: Even you didn't have a copyright.

And that would apply even if you had no copyright on the product, just... just--

Mr. Cendali: Copyright really has nothing to do with... with this case.

They're separate causes of action for separate purposes--

Justice Stevens: --Does it have to be a deliberate or could be a mistake?

Suppose the person thought the third party did it and he was wrong.

He said this was really written by William Shakespeare and it was written by Joe Smith.

Would that also be actionable?

Mr. Cendali: --If it was... if it was a mistake, it may be false or misleading, but there wouldn't be any... the damage is likely to be very different if there was a mistake.

Justice Stevens: Why wouldn't the damage be exactly the same?

You didn't get credit for something you developed.

Mr. Cendali: But again, it's not the... to go back, Your Honor, it's not the giving us credit.

It's simply the injury lies from someone taking the credit for themselves, for a company such as Dastar with no experience in the video business to suddenly in 3 months, at the investment of $4,000, be able to produce a 7-hour video tape that it can represent to the world and use to jump start its video business and sell 150 other boxed sets in competition with our client.

Justice Souter: Well, that's certainly... it may be unfair competition, but I'm not sure that it has anything to do with confusion.

Let me... may I ask you a different kind of question?

I thought, in answer to a question I put to you earlier, that you might be suggesting... you did not come out and say it, but I thought you might be suggesting that there would be a different kind of analysis, depending on whether we were talking about an object like the sign on the two springs, on the one hand, and an object with intellectual content on the other.

You said to me... I... I said, you know, they... if they don't like what they get, they will know that Dastar is to blame.

And your answer was, no, they won't because they won't know whether Dastar copied or Fox or Fox copied Dastar.

And therefore Fox will suffer because there is confusion and Fox will get hurt.

And... and that seems to be a distinction based on the fact that you're buying intellectual content as opposed simply to buying a sign that either stays up or it doesn't stay up.

Is... is that an argument that... that you would make?

Mr. Cendali: Well, yes, in part, in the sense that certainly when someone buys a creative work knowing the author is important to the person.

If you like a Tom Clancy novel, you'll buy another Tom Clancy novel.

Justice Souter: No, but I mean, that's important to me, but I thought your argument was that the original producer is... is, in fact, going to be hurt by the confusion because maybe the original producer will be blamed for the fact that there are these two identical intellectual products on the market.

Mr. Cendali: Yes.

That's exactly right.

Justice Souter: All right.

Now, what happens in the case... what would happen in the case in... in which we... we start out with... with Fox marketing its... its series and they call it Crusade in Europe, just... just as they... they labeled the original TV program, and Dastar comes out with a... with a series which is identical to it, again, copyright has expired?

Dastar comes out with a series that is identical to it and calls it War and simply says at the bottom of... of the cassette, cassette manufactured by Dastar.

Is there a Lanham Act violation then?

There is no claim that Dastar produced anything.

Is there a Lanham Act violation then?

Mr. Cendali: There would not be a false designation of origin claim under (a)(1)(A).

It's... because... because Dastar is not representing itself to be the... the creator.

It's accurately just simply listing itself--

Justice Souter: But the consumer would be just as mad and... I suppose, and there would be a danger even in the second case of Fox being blamed for the identity of these two products.

Mr. Cendali: --But there might... there would be, however, I believe in that scenario a claim under (a)(1)(B) of the Lanham Act for falsely describing the nature of the product.

As... as the cases cited in our brief--

Justice Souter: No, but in my second example, they didn't falsely describe it.

They just said, cassette produced by Dastar.

Mr. Cendali: --Only... that was true from the purposes of origin, and I'm saying there wouldn't be an origin claim.

Justice Souter: Yes.

Mr. Cendali: But with regard to the title, for the reasons discussed in the Second Circuit cases, the new American Library cases, when someone comes up with a creative work, and puts a title on it, inherent in that use is the idea that... that this--

Justice Souter: Any change in title is therefore a deception.

Mr. Cendali: --It... it... that's what those cases said, so to the--

Justice Souter: It's a deception in the sense that it's an implicit denial of the identity.

Mr. Cendali: --That's right--

Justice Souter: Yes, okay.

Mr. Cendali: --and so therefore, I think that would be a separate issue.

And that's why as consumers, we all know when we look at a book and we check to see, you know, if it was the same Agatha Christie book published under a different title.

And that's an example where disclaimers are not very difficult for people to deal with in... in reality, and something that consumers all can expect.

Justice Ginsburg: Ms. Cendali, could you describe to us precisely what it is that Dastar could represent?

It has this cassette that it's selling, and you said that they can't say produced by Dastar and not say Fox.

What exactly could they say?

You don't question that they could copy word for word what's in the public domain.

In packaging it, what could they say?

Mr. Cendali: Probably the easiest thing for them to have done would have been to have copied it down to the last iota of the frame and simply called it and said, manufactured and distributed by Dastar.

That would not have been a problem under the Lanham Act or the... or the Copyright Act if... but for the fact that the work is not truly in public domain.

If they had want... they could have also said, new credits created by Dastar.

They could have accurately credited themselves for that.

They could have chosen not to credit anybody.

There's no requirement of credit.

Or they could have given credit to everyone.

They could have listed the original creditors and they could have... creators, and they could have added their name on it.

All of these things they could have done which would have protected the consumer.

The consumer would have known what he or she was getting and also not usurped for themselves unjustly in an unjust enrichment way the good will to which they do not deserve.

This is--

Justice Ginsburg: You haven't had time to address the damages aspect of it, and if you're right that what went wrong here was not the copying... they were free to copy--

Mr. Cendali: --Absolutely, Your Honor.

Justice Ginsburg: --Then... and the only thing that was wrong was that they... the attribution of creator.

Mr. Cendali: The misattribution, yes, Your Honor.

Justice Ginsburg: Why should they get the profits of Dastar when... when all they did wrong... I mean, did... copying the pages, copying the cassettes was fine.

It seems to me to... to have that large disgorgement of damages is a misfit.

Mr. Cendali: For several reasons, Your Honor.

First, the... what they... the disgorgement is the normal remedy in cases like this because it's very difficult to establish actual damages of... of any type.

The statute is premised and works this way.

You... you establish your entitlement to profits.

In other words, the plaintiff just simply, once they show liability, needs to show what their... that they are... what the sales were, and then the burden is on Dastar to come forward and establish what... what deductions should be from that.

Deductions have included the ability to argue apportionment, that only some of the sales should be attributed to the infringement, for example.

Justice Stevens: Yes, but can I interrupt with... with... you got double profits in this case, didn't you?

Mr. Cendali: Yes, we did.

The court had--

Justice Stevens: And wasn't the theory of that to deter new violations, which I find strange when there's an injunction against new violations.

Mr. Cendali: --No, but... but the issue here is the... they... this was undisputed.

This was the first of 150 videos.

And as Judge Posner in the Louis Vuitton opinion, discussed in our brief, discusses the enhanced damages, and, in fact, damages of any type, are particularly proper in cases such as this where there's a risk of surreptitious infringement.

And it's not easy to detect reverse passing off.

You could have easily have a situation where someone would rather... a rational, economic actor would rather lose the profits on a particular item if... if they can get their entire stream of... of business going forward.

This is just such a case because this was their first video.

They... they were able to use this to get instant legitimacy in the video business, and get... the injury to us isn't just with regard to this product, but the injury for us is the entire future diversion of sales that they've been able to get by suddenly using Twentieth Century Fox's work to march into the video business and get profits time immemorial.

That is why Congress has enacted the kind of damages provisions it has under the Lanham Act which I think are singularly suited for just this type of case where it's difficult to show actual damages in any given way.

I'll note, though, that the court in our case did specifically find that we did suffer actual damages and they did not appeal from that.

The... the record is... is clear and they're bound with it, that we lost sales and that we also lost good will.

They have not appealed from that.

The court did not quantify that in any way, but the court then went on to award us profits and, in her discretion, to award us double profits.

She was using her discretion.

She could have awarded treble profits, but she chose in the... in the principles of equity to make a rational decision as befitting the facts of this case.

And I... she also had the opportunity, after a damages trial, to see the demeanor in each of everyone of the witnesses and to assess the credibility of their various statements, and I'm sure she factored that into her analysis as well.

And I think that the award should be upheld and we hope that the Court will affirm summary judgment.

I note that even though the Ninth Circuit opinion was... was short, given the fact it was a summary unpublished opinion, my understanding is that this Court has de novo review and has the ability, if it so chooses, to affirm the district court's opinion on any fact in the record.

We think that the record amply supports the fact that there was reverse passing off here.

It is a cause of action.

I'm not aware of any court to ever suggest a reading of the Lanham Act that reads reverse passing off out of the Lanham Act the way that the Solicitor General and Dastar urges here.

I'm not aware of a single court to ever make that suggestion.

It just doesn't make sense in light of the plain language of the Lanham Act.

It doesn't make sense in light of the fact that, as this Court again has recognized in Two Pesos, the '88 amendments were only designed to codify existing law.

They weren't entitled... intended to make any change, and there was absolutely no suggestion anywhere that anyone ever thought that reverse passing off should be eliminated.

It's--

Justice Kennedy: Did the disclaimer or the acknowledgement have to be on the package or just in the forewords... or on the film, just in the screen credits?

Mr. Cendali: --The disclaimer... I'm sorry, Your Honor.

Justice Kennedy: If... if Dastar had done what you say they're required to do, would it have sufficed if they put the information just on the screen credits, or does it have to be on the package that the consumer buys?

Mr. Cendali: Well, I think it... probably on the package the consumer buys it should have said, manufactured and distributed by Dastar.

Justice Kennedy: But... and if it's not on the package, then there's--

Mr. Cendali: And--

Justice Kennedy: --then there's a cause of action even if it's on the screen credits?

Mr. Cendali: --No.

I think that if the credits... if our credits are on the inside and not on the outside, they wouldn't need to put a disclaimer probably on the... on the outside.

In other words--

Justice Kennedy: But the buyer doesn't... the buyer has already bought it by the... I mean, the screen credits, you know, you're going to the refrigerator or reading cert petitions or something.

Unknown Speaker: [Laughter]

Justice Kennedy: No one... no one looks at--

Mr. Cendali: --Well, that... well, that's why the outer packaging has to be correct.

All I'm saying is that if they simply put on the outer packaging manufactured and distributed by Dastar, they wouldn't need to have a disclaimer.

If on... if on the inside they were doing something different, or if they--

Justice Kennedy: --Again, I... I'm bothered.

It doesn't seem to me this is for the protection of the consumer at all.

I... I understand what you're telling me about the act.

Mr. Cendali: --Well, again, you know, as this Court in Qualitex and other decisions have said, a consumer... and Colgate-Palmolive... has the right to know when they buy something, even if it's a capricious reason, you know, who they're getting it from and they should have the right to base their future purchasing decisions based on accurate information.

Here Dastar took that right from the consumer.

A consumer, if they liked Campaigns in Europe, they may go out--

Justice Stevens: Yes, but if that's right, there's a duty to disclose the true producer then.

That's your position.

Mr. Cendali: --No.

You would think it could be, but it doesn't have to be.

Justice Stevens: Well, if you're saying they have a right to know that, there must be a duty to disclose.

Mr. Cendali: No.

Only that they had the right not to know what's false.

In other words, the law could go so far--

Justice Stevens: Well, that's a very lesser right than the one you were just describing--

Mr. Cendali: --I appreciate that, but... but at... at a minimum a consumer should not have false information.

And again, as I come back to where I started, that's what this is about.

These videos have been lodged with the Court.

I invite the Court to... to look at them.

And you will see how deceptive they are on the inside and on the outside and how going back to the... my... the father getting the... the Christmas and birthday presents that are identical, which is a very real possibility, that is not a happy situation for the consumer.

Congress put in the competitor the... the private attorney general role to stop it.

And I note, moreover, that this was very targeted act... misconduct on their part.

Before they released Campaigns in Europe, they saw in a video catalog that Crusade in Europe in a boxed set was for sale.

They didn't care.

They targeted the competition and they continued.

Thank you.

Rebuttal of David A. Gerber

Chief Justice Rehnquist: --Thank you, Ms. Cendali.

Mr. Gerber, you have 5 minutes remaining.

Mr. Gerber: I have two short points.

Number one, Ms. Cendali contends that there is no textual support in the section of the Lanham Act at issue, 41(a)(1)(A), supporting our and the SG's interpretation of origin and excluding the authorship concept.

I would suggest that she's wrong.

The textual support is the word origin.

Unlike the Copyright Act, which uses the word author, the Patent Act, which uses the word inventor, the Lanham Act uses a different word and the word is origin.

And that is completely in accord with this Court's jurisprudence.

I think perhaps as Justice Souter had suggested, the... the purpose from a policy perspective is to render efficient purchasing decisions, as this Court stated in Qualitex.

Justice Scalia: And you... you would stand by that for forward--

Mr. Gerber: Absolutely.

Justice Scalia: --causes of action--

Mr. Gerber: Yes.

Justice Scalia: --as well as... as well as reverse.

Mr. Gerber: Yes.

Justice Scalia: So that if I sold a cassette that I physically manufactured and I advertised it as being Carmen Jones, the original MGM production, and in fact it was The Capitol Steps, there wouldn't be any... there wouldn't be any Lanham Act cause of action.

Mr. Gerber: I think that is forward passing off.

I may be--

Justice Scalia: That's what I'm saying.

That's forward passing off, and you would say that since origin means what you say it means, I've manufactured the piece of plastic, there's no... there's no cause of action under the Lanham Act.

Mr. Gerber: --Oh, excuse me.

Yes.

Justice Scalia: I mean, he who says A must say B, right?

Mr. Gerber: The... the answer under the specific, myopic section we're looking at that it is correct.

That would not be assertable.

It would be redressable under, arguably, subsection (B) and we may differ from the SG with respect to commercial advertising and promotion and whether a point of sale labeling qualifies.

And under a lot of consumer protection statutes in the States as well as the Federal Trade Act, the... the second point that I promised responds, I believe, to Justice O'Connor.

I wanted to add to the answer to the question yes, this would be a copyrightable derivative work, the observation that the copyright defines proper credits for derivative works.

It tells owners of derivative works who may be designated as the copyright proprietor, and the law there is that the owner of a derivative work, such as Dastar, may use its name.

It doesn't have to refer to the names of owners of preexisting works.

So what we have with the suggestion of respondents is a kind of dual series of credits, proper credits under the Copyright Act, and then authorial credits.

I... I would suggest another example in response to Justice Scalia's question, it can become quite burdensome.

You know, for a very highly complex, iterative product like a car, you might have 300 pages of credits in the owner's manual before you even get to how do you turn on the key under the alternative universe of credits that is completely different from the derivative work credits required by the Copyright Act.

Unless the Court has further questions, then--

Justice Souter: Well, if you have a minute, would you address Ms. Cendali's argument that there is significance when a product has intellectual content and there is duplication because then the confusion may very well, indeed, redound to the... to the original... to the originator of the product?

The consumer doesn't know who to blame, so the originator of the product may well be hurt.

What is your response to that argument?

Mr. Gerber: --I'm not sure I... I'm recalling the example completely.

If I get it, the consumer does know who to blame.

It has the--

Justice Souter: No.

Her... her point is you got... you got two sets of videos out.

One has got Dastar on it saying, in effect, it's ours.

The other one has got Crusade in Europe saying Fox.

The consumer is mad because the consumer has both.

The consumer doesn't know who to blame, so the consumer blames both.

What's the response to that argument?

Mr. Gerber: --I'm not sure I will buy into that consequence.

Where both parties state their names as manufacturer, the consumer could be quite happy.

He could say Dastar's cost one-fifth of what Fox's did and recommend it to all of his friends.

So while there might be confusion in the literal sense, it might actually be salutary.

And the efficiency of that type of consumer decision is really what putting the name of the manufacturer on enables the consumer to do.

It renders the transactions efficient.

Chief Justice Rehnquist: Thank you, Mr. Gerber.

The case is submitted.

Attribution:

The Oyez Project

Featured:

Moseley v. V Secret Catalogue, Inc. - Oral Argument

Fri, 09 Jan 2009 14:50:37 +0000

Case:

Moseley v. V Secret Catalogue, Inc.

Media File:

01-1015_20021112-argument.mp3

Related Transcript:

transcript.xml

Transcript:

Argument of James R. Higgins, Jr.

Chief Justice Rehnquist: We'll hear argument next in Number 01-1015, Victor Moseley and Cathy Moseley doing business as Victor's Little Secret versus V. Secret Catalogue, Inc.--

Mr. Higgins.

Mr. Higgins: Mr. Chief Justice and may it please the Court, counsel:

We are here today to obtain a construction of the Federal Trademark Dilution Act, FTDA, that will keep Federal trademark law in its proper bounds.

We submit that can be accomplished by choosing objective proof over supposition and inference to guide future FTDA cases.

This case from the Sixth Circuit involves a nonidentical, nonconfusing trademark operating in the remote reaches of the economy that was nevertheless enjoined under the FTDA, and demonstrates the dangers of an unchecked FTDA.

Justice Kennedy: You mean Tennessee is remote, or this particular business is?

Unknown Speaker: [Laughter]

Justice Ginsburg: Kentucky.

Mr. Higgins: Your Honor, this case actually came from Kentucky, and--

Justice Kennedy: Oh, well, Kentucky--

Mr. Higgins: --I suppose that's even more remote than Tennessee in some cases.

[Laughter]

Justice Kennedy: --Was there a Victoria's Secret in this town?

Mr. Higgins: There was not at the beginning of this case.

The closest one was 60 miles away.

We say that the result--

Justice Kennedy: In Tennessee?

Unknown Speaker: [Laughter]

Mr. Higgins: --We say that the result below is contrary to the actual words that Congress used in the FTDA, namely the plain words, causes dilution.

If this result stands, the FTDA threatens to usher in an anticompetitive expansion of trademark law into patent-like realm.

Perhaps the best example of that is the Second Circuit's Nabisco decision, urged in part here by respondents, which involved a goldfish-shaped cracker, and it... the court there applied the FTDA to grant exclusionary rights in an unpatented, uncopyrighted design of a product to enjoin a product that they said diluted.

That is contrary to this Court's two most recent decisions involving Federal trademark law, the Wal-Mart decision and the TrafFix Devices decision.

Justice Breyer: Before you... just would you spend one minute... it would help me a lot if you explained to me what dilution is, and I'll be specific.

It seems to me what you have here is a case of what's called tarnishment, and what tarnishment... what I think of is this, is it like this, that... that... imagine some small shop wants to start a bug spray business.

It's a funny example, but it comes from an actual case, and they decide to call themselves Bugwiser Bug Spray, and their slogan is, Where there's life, there's bugs, all right.

Unknown Speaker: [Laughter]

Justice Breyer: Now, Budweiser is not going to enter the bug spray business.

Nobody thinks Budweiser, in fact, is the source of the bug spray, but Budweiser has an interest because the people who see this ad are going to think Budweiser, Yuck, and they don't want people to think that.

Now, is dilution encompassed?

Does dilution encompass that, and my reason for thinking maybe it doesn't is, the words of the statute refer to distinctiveness of mark.

They don't refer to tarnishment.

But... is it... so I want some explanation of what dilution here refers to.

Mr. Higgins: There's a lot of people who want explanation of what dilution is, and their tarnishment aspect of dilution is part of the legislative history.

It is not expressed in the words that Congress used to define dilution.

Congress defined dilution as the lessening of the capacity of a famous mark to identify and distinguish the goods or services to which the famous mark--

Justice Breyer: But you believe--

Justice Scalia: --Which wouldn't include tarnishment.

Which wouldn't include tarnishment.

I mean, it can still identify Budweiser beer very, very well.

Mr. Higgins: --Well, it could identify Budweiser beer, but the... the... our point about this case is that there needs to be objective evidence that consumers, in fact, identify the accused mark with the famous mark.

In other words, we say that section 43(c)(1) of the FTDA in its words causes dilution, imposes a causal connection between the accused mark and the beneficiary.

Justice Breyer: All right, excuse me, before you go back to cause, which is your main point which I want to hear, I do... I'm assuming now that for purposes of this case anyway, you concede that tarnishment is part.

If you don't concede that, or even if you do, will you please explain as well what this... what it is, what the injury is where you're talking about a lessening of capacity to identify and distinguish, what injury is that, if it is not tarnishment?

Mr. Higgins: Okay.

The injury in a dilution case is focused, the courts agree, on the selling power of the famous mark and the way that the cases go is that everyone agrees that that selling power is the hook that the famous mark--

Justice Breyer: Okay, then please explain, putting tarnishment to the side... there is no tarnishment, assume... how does the fact that you have a tiny, totally separate product with the same name ever, ever hurt the selling power of the big famous name?

Mr. Higgins: --The question becomes, again, one of consumer protection.

All of that is tied up into the gist of the FTDA.

What is being protected is the selling power of the famous mark... which the Fourth Circuit in Ringling Brothers referred to as the economic value of a trademark... and I would agree with you, Justice Breyer, that if there is no injury there should be--

Justice Breyer: No, I don't understand conceptually how there ever could be an injury.

I've got to understand that first, and the reason is, I can imagine an injury through tarnishment.

I can imagine an injury where the big product, Kodak, intends to enter the small area, the Kodak... whatever, monkey wrench... and it is intending to enter and draw on the selling power of, everyone thinks Kodak is good, so I can think of those two things, but where they don't intend to enter, where there's no tarnishment, what, in principle, is the harm that you say we have to show really exists?

Unless I know what that is in principle, I can't tell if you're right.

Mr. Higgins: --It... it would show whether or not consumers would now identify a single mark with two different sources, and... and that is the essence of what trademark dilution by the circuit court--

Justice Breyer: All right, and that is harmed because?

Mr. Higgins: --The theory is... with which we don't totally agree... the theory is that consumers are used to seeing only one Kodak, and now they see two, and the theory is that that is the... among a number of metaphors, that is the first of a thousand cuts that will lead to harm.

Now, our difficulty with that is that not every, even identical use of the same trademark ultimately leads to the dilution--

Justice O'Connor: Well, do you say that actual confusion is relevant to the dilution analysis?

Mr. Higgins: --Actual confusion is primarily a... a Lanham Act infringement concept.

Justice O'Connor: So it's not, in your view, relevant to the dilution?

Mr. Higgins: If there were actual confusion, it might be relevant, but this case--

Justice O'Connor: In this case, the other... the Lanham Act was thrown out, in effect.

Mr. Higgins: --That's the main point of this case, is that the Court has ruled as a matter of law that these accused marks by our clients are not going to lead to confusion.

It is--

Justice O'Connor: And you say that actual confusion doesn't matter, then, for purposes of this statute, the dilution statute, or it could?

Mr. Higgins: --I say that it could in some circumstances.

It's not involved in this case at all.

Justice O'Connor: All right, now--

Justice Kennedy: --You... you... go ahead.

Justice O'Connor: Then what about actual economic harm?

Is that a requirement, in your view, under this statute--

Mr. Higgins: We think that--

Justice O'Connor: --for the plaintiff?

Mr. Higgins: --We think that the plaintiff in a dilution case needs to show objective proof of dilution, and that necessarily has an economic component with it.

Justice O'Connor: Well, but the statute does not, in defining dilution, speak in terms of economic harm, does it?

Mr. Higgins: The statute does not mention economic harm per se, but it does say, the lessening of the capacity of the famous mark to identify and distinguish and, focusing on the selling power of the mark, we say the best evidence that would be adduced in a case of dilution is surveys of consumer perceptions of the impact of--

Justice Ginsburg: That's the best evidence.

That's the best evidence, but let's go back to what is... causes dilution?

One can distinguish what the Patent and Trademark Office does.

That is, it considers marks before they're in use, so one might say, oh, the distinction between causes dilution and likely to cause is, likely, you're looking at the thing before it's ever used.

Once it's used, you're into the causes territory.

That would be a nice clean line to say that all that it means, all that the difference in phraseology, causes dilution as opposed to likely to cause, is, did it have... a causation case, you have to have a junior mark that's in use, so why isn't that a satisfactory line between what's... what causes dilution as opposed to what is likely to cause dilution?

Mr. Higgins: --We think that is not a completely satisfactory distinction because of the language of the statute that authorizes the Patent and Trademark Office to look at a mark before it begins.

Justice Ginsburg: Yes, well, that's likely to.

They can't judge it, because it's not... it's not in use.

Mr. Higgins: And the statute actually says that.

Section--

Justice Ginsburg: But I'm asking you, getting out of that territory, it can look at things before they're in use, and now that... now the junior mark is in use, why isn't that enough to satisfy the dilution act?

Mr. Higgins: --Well, we would agree that the mark, the junior mark has to be in use, but we would not agree that just by merely using a mark that is semantically similar to the famous mark, that dilution will inevitably result, which is the position of the respondents here.

Justice Souter: But the one thing I think you're asking for beyond Justice Ginsburg's example is, to take the Kodak wrench and the Kodak camera, you're asking for some proof that somebody heard the word Kodak and said, was it the camera or the wrench +/?

and if that proof exists you've got your objective proof, and why do you have to go to the point of saying that... proving that Kodak lost a sale as a result?

Mr. Higgins: We don't suggest that we have to prove that Kodak lost sales.

Justice Souter: But you're... you're asking for proof of some kind of--

--That's the point of this, for heaven's sake.

Unknown Speaker: --of economic consequence, and--

Mr. Higgins: We think--

Justice Souter: --I... that's the point that I don't see.

If I understand it, the dilution occurs when... or that dilution is the process of lessening the capacity of Kodak to identify the camera rather than to identify the wrench.

If... if it is shown that that process has begun... that it is occurring... why do you... what is the point of your argument that it has got to be carried forward to the point of an economic loss of some sort?

Mr. Higgins: --Well, first of all we believe that consumer surveys do have evidence of economic impact, and we don't say that economic damage is required.

That takes our position too far.

The actual question that is certified is whether the plaintiff must show objective evidence of harm to the economic value of the famous mark, not that it must show economic harm per se.

I realize that's subtle distinction--

Justice Souter: Well, isn't there... under the terms of the statute, isn't that shown simply by the fact that the consumer stops for a second and says, is it the camera, or is it the wrench when the consumer hears the word, Kodak?

Mr. Higgins: --I don't--

Justice Souter: What further proof of loss of... what further economic proof is required to come within the statute?

Mr. Higgins: --That is not a complete economic proof.

What we say is that not every, even identical use leads to dilution in the minds of consumers.

Think of... as we put in our brief... Delta Airlines, Delta Faucets.

Think of Apple Records, Apple Computers.

Justice Ginsburg: Maybe because those are names that are generic, like apple.

Mr. Higgins: Well then, how about Ford Motor Company and Ford Modeling Agency?

You know, that's the same result.

Unknown Speaker: How about Kodak Pianos?

Mr. Higgins: Kodak Pianos is in the legislative history as--

Justice Ginsburg: Or Dupont Shoes, or Buick Aspirin?

Mr. Higgins: --All of those are identical marks, and we say that this case presents a nonidentical mark.

There are semantic differences and there are gender differences.

Justice Ginsburg: Well, there is evidence... or, at least, how did this all get started?

Someone sees Victor's Secret and writes to Victoria's Secret and says, you want to stop these people, so we know that one consumer, although he wasn't confused, said, they're diluting your mark.

Now, suppose you had 12 of those who said, yeah, I passed this shop, Victor's Secret, and I thought immediately of Victoria's Secret.

Would that proof be sufficient and if not, why not?

Mr. Higgins: We say it is not sufficient, because the... but that is essentially the analysis that the Sixth Circuit put in there.

The Sixth Circuit said at page 27a of the petition, the appendix to the petition, that they are focusing on what a consumer is, quote, "likely automatically to think", unquote, and then link that to the famous mark.

Justice Scalia: And what's your answer?

What's your--

Mr. Higgins: What our position is, that that requires a court to guess whether the association that the consumer thinks of is--

Justice Scalia: --What do you want?

What do you want in place of that?

Mr. Higgins: --What we would like--

Justice Scalia: What do you want the plaintiff to show?

Mr. Higgins: --We want the plaintiff to show that there is objective proof of consumer perceptions that it causes dilution, exactly what the statute says.

Justice Scalia: I don't know... what does that mean, of consumer perceptions that causes dilution?

Objective proof that a particular consumer, when he saw Victoria's Little Secret... or Victor's Little Secret... had in mind, gee, you know, that's like Victoria's Secret.

Is that enough?

Mr. Higgins: No, that's not enough.

That's--

Justice Scalia: What is enough?

What is enough?

What does dilution consist of?

Mr. Higgins: --Dilution consists of a consumer's... the... general consumers, not a single consumer, but general consumer perception that there used to be one Victoria's Secret and now, in their minds, there are at least two.

Chief Justice Rehnquist: Well, how many consumers do you need?

You say one isn't enough, and you say general consumer perception.

I mean, if you had 20 people would that be enough?

Mr. Higgins: Well, the... the record and the briefs reveal some articles by trademark scholars who discussed--

Chief Justice Rehnquist: Yes, but I was asking you a particular question.

Would 20 be enough?

Mr. Higgins: --I don't think so, Your Honor.

You know, this... we live in an age when consumer surveys, voter surveys, public opinion surveys are done over a weekend, and in this situation that is the kind of survey that we would suggest.

Chief Justice Rehnquist: And what do you ask these consumers?

How many Kodaks are there?

Is that what you want to ask them?

Mr. Higgins: No, Your Honor.

Chief Justice Rehnquist: What?

Mr. Higgins: You ask them the scientifically designed question.

Chief Justice Rehnquist: Which is?

Mr. Higgins: Which is, you know, do you think of another famous mark, and do you believe... as the law review article suggests... do you believe such things as whether or not the new entrant had to get permission from the famous mark in order to market this product.

Chief Justice Rehnquist: Well, that... most consumers wouldn't even understand that question.

Unknown Speaker: [Laughter]

Mr. Higgins: And that's... that's part of our point, Your Honor.

If--

Chief Justice Rehnquist: This sounds like a lawyer's dream.

Unknown Speaker: [Laughter]

Justice Kennedy: But it seems to me that the owner of the senior mark is entitled to more protection than that.

I... I just want to make clear, you do not contest that tarnishment is a... a basis for the respondent to prevail in this case?

Mr. Higgins: --We do not.

Justice Kennedy: All right.

Mr. Higgins: As... per se.

What we say is that there is--

Justice Kennedy: I... I don't know why you need sophisticated, so-called sophisticated polls to determine whether there's tarnishment.

Mr. Higgins: --Because, remember, this case is a statute that is wholly different than the common law.

It has no common law antecedent.

It is granting property rights through Congress' action under the alleged use of the Commerce Clause, and we say those property rights that are being granted by this statute create rights that go well beyond any trade area--

Justice Breyer: It's not just beyond, I would have thought that... you don't make a point of it, so I might be wrong... there's a pretty significant speech interest on... on your side of the case.

That is, if this statute gets out of hand, advertising is part of... whether we like it or not... our children's, anyway, daily communications, and all of a sudden, if there's no real harm you're going to cut off what people can say in commercial contexts.

Now, you don't make much a point of that, so don't let me put words in your mouth.

Explain it to me.

Unknown Speaker: [Laughter]

Mr. Higgins: --We did mention that in our briefs, but the primary people who are positing that position here are the amici, who represent the public interest, and the main point about this FTDA is that, other than bumping up against the First Amendment, there really isn't a public interest that is being expressed or applied here.

Chief Justice Rehnquist: Well, why... why isn't there a public interest in not having some organization like yours simply copy another person's name?

Mr. Higgins: Well, we... if there is that situation, then that would be a case of trademark infringement or copyright infringement.

This case does not involve... this case does not involve--

Chief Justice Rehnquist: No, Congress has gone further here and said you can't simply copy someone else's name.

Now, you say there's no... maybe Congress shouldn't have done it, maybe it hasn't done it, but to say there's no public interest at all on that side doesn't make much sense to me.

I mean, you... you don't come... your client doesn't come off well in this case.

Mr. Higgins: --Well, there is a public interest, but that is addressed primarily on the free speech aspect of things.

We would agree with that.

The problem with this case is that it requires courts to speculate whether the beginning of a semantically similar mark is going to inevitably lead to dilution, and that's contrary to the words that Congress used.

Justice Scalia: You started off saying dilution, you... to show dilution, you had to show economic harm.

That I can understand.

You produce evidence that... of some harm.

That is now not your position.

I don't understand what your position is.

If it is not a showing of economic harm, you know, the... the mark is worth so much less than it was, what precisely do you want to show?

I truly don't understand.

Mr. Higgins: We do say there is an economic component, through the proof that we suggest be required under the causal relationship that is necessary, and the... we don't abandon the economic--

Justice Scalia: Okay, fine, what else do you demand?

What is it that you do demand.

This--

Mr. Higgins: --We--

Justice Scalia: --I don't understand what it is that you do demand.

What?

Mr. Higgins: --We do demand that the plaintiffs show that our mark is harming theirs in a dilution way, that it does lessen the capacity of that mark to identify and distinguish its goods or services, and that's best done by consumer surveys.

Your Honor, if I may reserve the balance of my time.

Argument of Lawrence G. Wallace

Chief Justice Rehnquist: Very well.

Very well, Mr. Higgins.

Mr. Wallace, we'll hear from you.

Mr. Wallace, our records reflect that this is your 157th argument before the Court in the 34 years you have been an attorney in the Office of the Solicitor General.

Some years ago, you eclipsed the 20th Century record of 140 arguments.

I understand that you will soon retire from Government service, so on behalf of the Court I extend to you our appreciation for your many years of quality advocacy and dedicated service in the Solicitor's Office... Solicitor General's Office... on behalf of the United States.

That doesn't mean we're going to rule in your favor.

Unknown Speaker: [Laughter]

Mr. Wallace: Thank you very much, Mr. Chief Justice, and may it please the Court:

What constitutes dilution, other than the abstraction of the statutory definition perhaps is reflected a bit in the examples we've given of consumer surveys that might be used to produce evidence in a case of this nature.

If consumers were asked what products do you associate with the name Victoria's Secret, and those who were aware of Victor's Little Secret answered it substantially differently and included items found only in that store and not in Victoria's Secret stores, or what attributes do you associate with Victoria's Secret, and those aware of Victor's Secret were more apt to say tasteless rather than tasteful, which would... might be the response from those familiar with Victoria's Secret.

Justice Souter: What if the answer was simply, I'm not sure any more?

Would that show that dilution had occurred?

Mr. Wallace: It... it might.

All of these... I mean, we don't take the position that a consumer survey is necessary in order to prove a case in the first place, but I think the way a survey would be designed and what the answers would show is illustrative of what constitutes dilution.

Justice Scalia: But you... you would get that answer from a consumer if you asked them about the word, Delta, what products do you associate with the word, delta, and the consumer would say, airplanes, or air... you know, air travel and faucets, and there wouldn't be any dilution there, would there?

Mr. Wallace: Not unless their... a conclusion could be drawn based on other factors that--

Justice Scalia: Right.

Mr. Wallace: --a mark had established a certain distinctiveness that is associated only with the particular mark, and now that is being blurred.

Justice Scalia: Well, I believe... are you saying that the Delta example is only good now, and that when the person who made Delta Faucets first came out with a faucet that he called Delta, or Delta Airline... I don't know who came first... the chicken or the egg, the airline or the faucet.

Whoever had the name first, are you saying that when somebody used the name Delta that the senior user of Delta could have excluded the faucet-maker from... from Delta?

Mr. Wallace: Only under the Federal dilution statute of '95 if the mark is a famous mark, and in the Toro case that we cite, the--

Justice Scalia: So I can't even have Delta Peanuts?

Once Delta is famous, just for air travel, I can't use Delta for anything else?

That would automatically violate the Federal statute?

Mr. Wallace: --Well, not automatically, but if--

Justice Scalia: All you have to do is find a consumer who knows of Delta Peanuts and says, you know, what do you associate the name Delta with, and he says, airlines and peanuts?

Mr. Wallace: --Well, that would involve an exact replication of the mark, which are the only examples given in the House report or in the legislative history, such as Kodak Pianos.

Most of the cases, however, are about similar marks rather than exact replications, and those are much more problematical to ascertain whether there is the kind of effect we're... the act is concerned with.

Justice Stevens: Mr. Wallace, at least in some of the circuits, I'm not sure in the cases of this Court, correct me if I'm wrong, I thought that in trademark infringement cases, that the circuit court said that they have certain de novo authority.

Historical facts are clearly erroneous, but the conclusions that you draw from the historical facts give them certain powers of de novo review.

That's the prevailing rule in many of the circuits, is it not--

Mr. Wallace: Yes.

Justice Stevens: --in infringement cases, and shouldn't that same rule be applied here?

I mean, judges have the capacity in the trademark area, I should think, to know what dilution is or is not if we have certain historical facts.

I don't know why you need to survey.

The Bugwiser-Budweiser example.

I mean, you don't have to be too tricky a judge to figure out that this is very harmful.

Mr. Wallace: It is very difficult.

We don't say that a survey is needed.

There are other factors that are looked to, including--

Justice Ginsburg: Mr. Wallace, may I ask you something to clarify the Government's position on this?

As I've been listening to the argument, Mr. Higgins says you look to see, he said, if before you thought there was one Victoria's Secret, now you thought there were two.

He's suggesting that the association... it's not what you think of when you see Victor's Secret.

When you see Victor's Secret, of course you're going to think of Victoria's, but what counts is, when you think of Victoria's Secret, do you think of Victor's.

That's... that's what dilution is, and if it's the latter, then it's... those are two very different things, aren't they?

Mr. Wallace: --Yes.

Dilution is about dilution of the famous mark and its capacity to distinguish the particular goods or services, but we think the court of appeals was wrong in saying that mere mental association of the two marks by consumers automatically results in dilution.

Justice Ginsburg: But the court of appeals was going on, when you think of Victor's you think of Victoria's.

I'm asking you, is the right question... is the necessary question of the customers... when you think of Victoria's, do you think of Victor?

Mr. Wallace: I think the... the question is not do you think of Victor's, but when you think of Victoria's, do you think of more than what Victoria's Secret--

Justice Ginsburg: Right.

Mr. Wallace: --itself has as its merchandise and image.

Is their name now associated with a different type of product that may change their renown or cachet with customers.

Justice Breyer: Is there... what is the extra... I'm not... if you're finished with that question, I'd like to... which I think there's a lot to.

Is... what is particularly the harm?

Is it just that the customer thinks... either customer... thinks of the other even if there's no specific tarnishment, and there's no general tarnishment?

That is, people associate Buick with a good car, and we can measure whether that's identical before and identical after, and it is, so there's no general tarnishment, there's no bug example tarnishment, there's nothing but the fact that on Justice Ginsburg's question, both sides say yes.

Now, is that harm under this statute?

Is that dilution, or isn't it?

Mr. Wallace: We don't believe that in itself constitutes dilution if there is none of the damage to the ability of the mark.

The--

Justice Breyer: All right, so... so the ability of the mark consists either of my bug example, or some general weakening of the goodness that inheres in the name.

Anything else?

Mr. Wallace: --Well, yes... no, I think--

Justice Breyer: No, okay--

Mr. Wallace: --I think the Fourth--

Justice Breyer: --The answer's no.

Mr. Wallace: --The Fourth Circuit case of Ringling Brothers was very illustrative.

People might associate Utah's use of Greatest Snow on Earth with Ringling Brothers' use of Greatest Show on Earth, but if they keep the two distinct in their minds, even though they recognize that it's a play on the same words, but they think the trademarks refer to different products and services, then there... no harm is done to Ringling Brothers as the Fourth Circuit held, and the Fourth Circuit even suggested that perhaps they even benefit from having people think additionally of their mark.

That's a question on which the Patent and Trademark Office has not taken a view, but the harm has to be that consumers are... are diminished in their capacity to recognize the mark that is the famous mark that's being protected.

Justice Scalia: That's... but that's confusion.

I mean, if... if there's confusion, you don't need this new law.

I thought that it was the case that if you come out with a Kodak Piano, even if nobody in the world thinks that Kodak, the photography company has anything to do with Kodak Piano, the mark has nonetheless been diminished.

Isn't that right?

Mr. Wallace: That's true, at least when it's an identical mark, or one that's so confusingly similar--

Justice Scalia: But that goes to the very point you've just been talking about, and contradicts what you've said.

It doesn't matter whether there's any confusion or not, you can't use Kodak.

Mr. Wallace: --There... there has to be confusion as to the mark, rather than as to the source of the product.

Argument of Walter E. Dellinger, III

Chief Justice Rehnquist: Thank you, Mr. Wallace.

We'll hear argument from you now, Mr. Dellinger.

Mr. Dellinger: Mr. Chief Justice, and may it please the Court:

The question on which the Court granted certiorari was whether the plaintiff must demonstrate that it has already suffered economic injury as a precondition to any and all relief under the 1996 act.

The text of the act answers that question, and answers it no.

There's simply no such requirement included in the statute.

Justice Scalia: Well, it... I mean, that's to some extent a play on words.

It depends on what you mean, has actually suffered economic injury.

What your opposing counsel says now is that all he means by, has actually suffered economic injury, is, has suffered dilution, has actually suffered dilution of the mark, which, of course, entails economic injury.

If the mark is diluted, the mark was worth a lot, and it's now diluted, there's economic injury.

Now--

Mr. Dellinger: Justice Scalia, we agree that the act requires a showing of actual, present dilution, and that such a showing was, in fact, made below.

What is dilution?

A number of you have asked that question.

It's best understood in light of the fact that this is a very narrow statute that only protects a few very famous marks.

I do not think, for example, Justice Scalia, that Delta would qualify as a famous mark because it has been used so often in other third party uses.

The--

Justice Souter: --But what about the first time it was used either for... what is it, the airline, and what's... faucets?

Whichever came first.

What about the first time it was used for the second product?

Mr. Dellinger: --Then it would not suffer the disqualification that would come as to what is present--

Justice Souter: Yes.

Mr. Dellinger: --about proliferating uses.

Whether it would otherwise satisfy that would remain to be seen.

I think that the Court can, and the courts can narrow the application of this statute by taking very seriously the requirement that it has to be a truly famous mark that has.

Take the example that was given to the House--

Justice Souter: Well, let's... and keep it so I can understand it.

Let's assume the first use was Delta Airlines.

Everybody recognizes Delta Airlines.

Somebody starts advertising Delta Faucets.

Was Delta Airlines famous enough--

Mr. Dellinger: --I don't know--

Justice Souter: --on your criterion?

Mr. Dellinger: --on those facts.

I'd have to know whether, if... as it is today, yes, I would think if it--

Justice Souter: All right.

Let's assume it's famous enough.

The ads start going out in the magazines for Delta Faucets.

There is no proof that Delta Airlines has suffered any tangible damage at this point, but there is proof, let's assume from a survey of magazine readers, that when they see the word, Delta, standing by itself, they're not sure who the source of the product is.

Is that dilution?

Mr. Dellinger: --If they're not sure who's the source of the product, it may be infringement, and the reason I resist the use of Delta is that a lot goes into a determination of whether... as it did in this case... as to whether a mark has those special qualities that mean that the second or junior user and the third, fourth, and fifth are lessening its capacity to communicate these very distinctive ideas.

The example used in the House report was Tiffany's, for example.

We all know that if another jewelry store starts as Tiffany's you've got an infringement claim, because consumers would be confused, but as the House was told, what about a Tiffany's Restaurant, and that means that Tiffany's used to stand for one thing, it now stands for two, but here's the absolute heart of the matter, where the FDA comes into play.

Justice Scalia: That was bad?

I mean, you see, I am so far behind understanding you that I don't know whether you have just asserted that that's obviously bad.

I think you have.

Tiffany's Restaurant is bad.

Mr. Dellinger: Yes.

Justice Scalia: Okay.

Mr. Dellinger: I have, and--

[Laughter]

Justice Souter: And the difference between Tiffany's Restaurants and Delta Faucets is what?

Mr. Dellinger: There may be no difference.

I'm assuming that both... if you assume that both Delta and Tiffany's are famous marks.

Justice Souter: Okay.

Mr. Dellinger: But here's why Delta Faucets and Tiffany's... if the original marks are famous... both constitute the harm of dilution.

Dilution--

Justice O'Connor: You mean, just using the name?

Mr. Dellinger: --Just using the name--

Justice O'Connor: Is likelihood of dilution enough?

Mr. Dellinger: --No, not under the act, and... and nor is just using the name enough, nor is just semantic similarity.

You have to make out the statutory proof that it actually--

Justice O'Connor: That it causes dilution for everybody--

Mr. Dellinger: --It causes dilution, and dilution--

--Is expressed--

--It's creating a mental association.

Similarity is not enough.

But take an example that shows how critically important stopping the first use is.

If you can have a Tiffany's Restaurant, then you can also have a Tiffany Shoe Store, a Tiffany Pet Store.

Very soon Tiffany's no longer--

Justice Scalia: --Where will it all end?

Mr. Dellinger: --Where will it all end?

[Laughter]

That is exactly--

Justice Breyer: Well, so what?

So what?

I mean, I don't say so what facetiously.

I say so what to get you to identify the harm specifically that that's likely to bring about to the first owner.

Mr. Dellinger: --Exactly.

The... what Congress saw as the harm, Justice Breyer, for truly famous marks, to quote from the House report itself, is that dilution applies when the unauthorized use of the famous mark reduces the public's perception that the mark signifies something unique, singular, or particular, so that Rolls-Royce, which once stood for one thing, once it's on 100 products or 1,000 products no longer identifies and distinguishes--

Justice Breyer: No longer identifies one thing.

It now identifies a thousand things, and that, of course, is true by definition, and what I'm trying to get at is, why is that bad?

--Congress determined that that was bad because--

Just automatically?

Oh, no, go ahead.

Why?

Mr. Dellinger: --Congress determined that that was bad to the extent that the mark no longer stood for something singular or particular, no longer conveyed--

Justice Breyer: Then again, that's just another way of repeating the same thing, and the reason that I think it's important is, perhaps we can survive with only having one Tiffany's, but let's think of some slogans out of my youth, you know.

It floats.

99 and 44/100th percent pure.

The beforehand lotion, whatever that meant.

I'm just repeating slogans from old radio programs, and the reason that I'm doing it is because I want you to see immediately, as soon as you depart from a word like Tiffany's, which is totally arbitrary or fanciful, and you get into actual advertising slogans, you will tie up free speech in lawsuits like mad, and that's what's worrying me.

Mr. Dellinger: --No, I do not... it is not at all the case.

Congress made it clear that safe harbors were to extend a wide--

Justice Breyer: Yes, the safe harbor is fair use.

Mr. Dellinger: --And it--

Justice Breyer: Fair use, and that's what's again worrying me, because those two words, fair use to me spell lawyers, lawsuits, uncertainty and confusion.

Mr. Dellinger: --If you lose distinctiveness, what you lose is the selling power of the mark.

Rolls-Royce stands for something important.

It conveys something that consumers... it signals to consumers.

Rolls-Royce is very careful about what products it allows to--

Justice Scalia: Chevrolet doesn't matter.

You can use Chevrolet, because that's--

Unknown Speaker: [Laughter]

Justice Scalia: Is that right?

Or Edsel, even easier... yes.

Unknown Speaker: [Laughter]

Mr. Dellinger: --Justice Scalia, it is... when you look at whether a mark is famous... and in this case, it's simply not contested.

This is a mark that comes in behind Levi's and ahead of Rolex on the... on the list, but when you contest that, you do look at a number of factors, so you can't stand here and pick out any one, and that's a... that's an important gatekeeping function to narrow this statute.

Now--

Justice Scalia: When you say it signifies something distinctive, you don't mean that Buick signifies cars, you don't mean that Tiffany's signifies jewelry, you don't mean that Rolls-Royce signifies sedans, right?

Mr. Dellinger: --Not just that, but a certain mark and quality and kind of product is exemplified, and that's what makes a mark famous.

It gives it this.

Now, if... we know that these marks have value.

When... when companies are acquired, often as much as four-fifths of the value may go to use that name.

That is something quite valuable, Justice Breyer, and its value is going to be lost--

Justice Breyer: Fine.

Why not--

Mr. Dellinger: --if there are a thousand different ones.

Justice Breyer: --Why not require some proof of that?

That is, some proof that this mark... which not only identifies a wonderful car, but now has come to stand for wonderfulness in general... some proof that because somebody's using it on a tricycle, that people think it's a little less wonderful.

Now, that's not... that's hard to prove one way or the other, but not... I mean, requires some reason for thinking that.

Justice Scalia: So Pepsodent would lose, or, you know, just some... some product--

Mr. Dellinger: Yes.

Yes.

Justice Scalia: --That's just a... you know, it's an ordinary product.

How can you have an absolutely wonderful toothpaste?

Justice Breyer: Oh, no, you can.

Justice Scalia: You can.

There's no Tiffany of toothpastes, right?

Unknown Speaker: [Laughter]

Mr. Dellinger: There is no--

Justice Scalia: So we're only talking about Tiffany's, Rolls-Royce, a couple of other really, really quality names.

Is that what the statute was directed at?

Mr. Dellinger: --I believe that is the case, Justice Scalia, that--

Justice Ginsburg: But you don't differentiate between Cadillac and Chevrolet, do you?

Chevrolet would have just much cachet--

Mr. Dellinger: --No, I think they would be on similar footing, and Chevrolet has its own kind of appeal.

It appeals to... for those of us who live in NASCAR country, there is sometimes a more appealing image to Chevrolet than to Cadillac.

I don't mean to make value judgments.

Justice O'Connor: --Well, Mr. Dellinger, why isn't it useful to think in terms of whether there's proof of some diminution of value of the mark?

Mr. Dellinger: That is a very good question, and that is Justice Breyer's question for--

Justice O'Connor: Yes.

Mr. Dellinger: --We believe that obviously the mark does suffer in value if you make out the finding of dilution.

The Fourth Circuit would require you show actual--

Justice O'Connor: Well, you... you wouldn't think we should just presume a diminution in value, would you, because the mark is similar?

Mr. Dellinger: --No, but what you... what you presume is that the economic injury that you're talking of may not be identifiable... often would not be identifiable... until it's too late to rectify the harm that has been done.

If you think of... we usually use as examples where there is one other competing user.

What faces the sort of in-house intellectual property counsel for a company with a famous mark is that there are users popping up all over the country all of the time, so that if the first user, say Victor's Little Secret, exists in Elizabethtown, Kentucky, and if you can't show that that alone produces the kind of harm you're looking... or that your question would imply one might be looking for... how can you stop the second, the third, the 500th use?

At what point... there's no privilege for the first user, so that by the... here's what would happen.

By the time you could show economic damage to the harm, first of all as a matter of law you might have lost the status as a famous mark because there are all those users out there.

Secondly, the... it is not clear why you would prohibit the 500th user of the mark, the 500th different kind of store when you allowed the first 499 to go on, so that... you ask the question of whether, at present, this use lessens the capacity of that mark to identify and distinguish.

Justice Kennedy: Focusing on the present, suppose I'm a trial judge, and this case comes to me in the pretrial conference stage, and I say, you know, it does seem to me that this second... this junior user is going to tarnish the image of... of the senior user.

Is that all I need to say, and then I... what do I put down when I write an opinion so that the circuit court can review my thinking?

I mean, what... what do I put down?

Mr. Dellinger: Well, I think this case is a very good example, because you have a court which goes through a list of factors to reach a conclusion.

The opinion is rather short, but that's because the conclusion in this case is so close to being a core example of the statute.

They... they mention the fact that it's a very distinctive mark, the degree of similarity, the proximity of the product lines helping to create that association, the shared customers... 39,000 catalogues distributed in Elizabethtown.

The suggestion is there are some--

Chief Justice Rehnquist: 39,000 in Elizabethtown?

Mr. Dellinger: --Yes.

There are 39,000 Victoria's Secret catalogues distributed in Elizabethtown, Kentucky in 1998.

Chief Justice Rehnquist: What's the population of Elizabethtown?

Unknown Speaker: [Laughter]

Mr. Dellinger: That is a good question, but I... four, he says, but I think that's his guess.

We don't know.

I--

[Laughter]

I... I... think it is substantial.

Now, once you have these other uses out there, particularly if it's a--

Justice Souter: So what do I... would this be appropriate for a summary... would you urge me to take this on summary judgment?

Unknown Speaker: I--

Mr. Dellinger: --Absolutely, just as I think you could, Justice Kennedy--

Justice Kennedy: --All I need to know is the number of catalogues, how well-known the mark is, and that's it?

Mr. Dellinger: --What you have to--

Justice Kennedy: And then my own judgment as to what tarnishment is?

Mr. Dellinger: --No, because here you have... here you have an actual association.

What you have in this case, for example, that the judge relies upon, is not a survey.

It's proved by actual consumers.

Justice Breyer: Well, but suppose right here, to take this case, that the people who go to Victor's who have ever heard of it honestly do not believe the less in any respect whatsoever of Victoria's Little Secret, and the people who use Victoria's Little... I mean, why should they +/?

and the people who use... go to Victoria's Little Secret have never heard of Victor's, so you... why... why suppose they come in and show that?

Justice Scalia: You're confusing the marks.

Justice Breyer: Now, why... I understand you're confusing the marks.

No, you're not confusing the marks.

No.

I'm... he's saying I'm confusing the marks.

Unknown Speaker: [Laughter]

Justice Breyer: But I... did I have it backwards?

Justice Scalia: Yes, you did.

Justice Souter: Not Little... all right.

Justice Breyer: The people who go... no, the customers of Victor's do associate Victor's with Victoria, but they think nonetheless of Victoria.

They might even think more of Victoria.

I don't know what they think, but it's not negative in any respect, and the people who go to Victoria's, to use Justice Ginsburg's example, don't care, or don't know, or they've never heard of Victor's, so although there is... in a subset of people... an association of the name, there is no harm of any sort whatsoever, and they will prove that.

Should they not have the opportunity to prove it?

Mr. Dellinger: Justice Breyer, Congress simply did not agree that no harm has been done when the famous mark loses its singularity, and remember, if there can be one store under Victoria's... under Victor's Little Secret in Elizabethtown, Kentucky, there can be a thousand opening the Monday after Superbowl Sunday.

Justice Breyer: So then in your view, anyone who starts going around for a commercial reason and using the two words, it floats... it floats... where they want people to think of Ivory Soap, they are open to a lawsuit, and they have to rely on a fair use defense, or are there other defenses?

Mr. Dellinger: The--

Justice Breyer: Is my example wrong?

Mr. Dellinger: --Well, it's... your example is that there is a... you're suggesting a mere mental association.

I'm not sure your--

Justice Breyer: Well, in a commercial context... in a commercial context where people are polled--

Mr. Dellinger: --Secondly, I am not... by no means... it would take a lot to persuade me that it floats is a truly famous mark deserving of this protection, but Congress believed that the harm is that if you have a mark, and Congress identified marks like Buick Aspirin, but if you... the very harm Congress sought to prevent is, when a mark stands for one thing... this narrow set of truly famous marks... and you have replicating uses, it is no longer going to stand for anything in your mind, and Congress believed, and the market reflects, that that is a true loss.

Now, if you wait to try to... to where you could show, as the Fourth Circuit would require, an actual revenue loss, you can't unring the bell, particularly with tarnishment.

If someone opened up--

Justice Ginsburg: --Mr. Dellinger, can I just clarify, then, it doesn't make any difference that this particular shop happens to sell sex toys.

It could just as well... Victor's Secret could sell men's underwear and your argument would still be the same, am I right?

So we get out the tawdriness or the disparagement or the tarnishment.

It's just... it's a store, it sells underwear, men's underwear, and it's got the label, Victor's Secret.

Mr. Dellinger: --Justice Ginsburg, I don't entirely agree with that.

We do believe that the dilution of the Victoria's Secret name through blurring would be sufficient, but in this case, you don't have to rely upon that, because the court below did find that there was tarnishment when a name not only ceases to stand for one thing, but is associated--

Justice Stevens: But how does tarnishment fit the language of the statute?

That's what--

--Yes, I'd like to know that, too.

I don't see how tarnishment... you know--

--Does that lessen the capacity of the mark to identify--

Mr. Dellinger: --Yes, it does, and the--

Justice Stevens: --I thought it just changed the reaction to the mark, rather than lessening... I mean, you know, you have an unfavorable reaction, rather than not knowing what you're talking about.

Mr. Dellinger: --Let me just quote you from the treatise, one sentence from the McCarthy treatise.

One of the classic functions of a trademark is to signify that all goods and services sold under the mark are of equal quality, or of a special quality.

That is part of identifying and distinguishing a mark.

It... the capacity is lessened.

It lessens the capacity to identify and distinguish a particular mark when that mark is tarnished by what the trial court found some customers would find to be an unsavory association.

Justice Scalia: I don't understand... you can say it, but I don't understand it.

I can still identify and distinguish Victoria's Secret, but I just think less of it.

Mr. Dellinger: Well,--

Justice Scalia: It... it doesn't... any... it isn't any less identifiable.

Mr. Dellinger: --Justice Scalia, I think you're misstating the statute.

Justice Scalia: Okay.

Mr. Dellinger: It's not whether you can identify and distinguish.

It's whether the mark's--

Justice Scalia: Yes.

Mr. Dellinger: --capacity to identify and distinguish is lessened, and if it no longer stands in one's mind--

Justice Scalia: I'll take that.

Mr. Dellinger: --If it no longer stands in one's mind, or in the mind and the public perception for the same connotation of quality as it did before the association with the unsavory image, its capacity to identify and distinguish that quality has lessened, but moreover--

Justice Stevens: But you have to add the word quality to the statute.

Yes.

The statute doesn't contain that word.

Mr. Dellinger: --The statute uses dilution, Justice Stevens, as a term of art, and nothing could be clearer than that Congress thought that term of art, dilution, encompassed both blurring and tarnishment, as I think--

Justice Stevens: Well--

Mr. Dellinger: --I may not persuade Justice Scalia--

Justice Scalia: --Nothing could be clearer than that Congress adopted a definition of what... of what dilution consists of and, to my mind, that definition does not at all cover disparaging the other product.

Mr. Dellinger: --Well, it... Congress thought otherwise.

The House report says that the definition--

Justice Scalia: The House committee thought otherwise.

Mr. Dellinger: --Yes.

Justice Scalia: What Congress thought was the definition that Congress adopted.

Mr. Dellinger: And the definition of lessening the capacity encompasses that, but in any event, since blurring is still present, this is thought to be an easy case by the courts below, for... for good reason.

If you imagine hundreds of different users of the Victor's Little Secret mark, the uniqueness, the quality, the public's perception is going to be lessened.

Congress further... to go back to a question asked by Justice Breyer... made it absolutely clear that it wanted the safe harbors read as broadly as possible to ensure that there was no restriction on First Amendment rights, so the courts are warmly invited to create as large a safe harbor for parody.

This is a case in which we have blurring, we have tarnishment, which is a near subset of blurring, but the courts below looked at the direct customer testimony.

Colonel Baker, the Judge Advocate... Staff Judge Advocate at Fort Knox... looks at a Victor's Little Secret ad in the base newspaper and writes off to Victoria's Secret and says, they're using your name in an unfavorable way.

His... his deposition testimony remarks--

Justice Stevens: Well, he was concerned about the tarnishment aspect, and I still have to... I would like you to comment on the... on Justice Ginsburg's example, too, Would it diminish the capacity of the Victoria's Secret mark to identify its line of goods if some... somebody thought they also sold men's pajamas?

Mr. Dellinger: --Yes.

Someone else, I think you well... you begin to have the elements of the proof of dilution when you show that someone is using the same... or a name which reaches mental association because of a number of factors.

You have the elements of dilution.

You might not yet have, as you have proof in this case, of a really lessened capacity to identify and distinguish.

Now, another... the... nobody sought to introduce a survey in this case.

I would trust Federal judges more than sociology graduate students to make this kind of determination, and nobody sought to bring before this Court a fact-bound determination of whether all of the judges below were correct when they found that there was a strong association, and beyond that, that the use of the Victor's Little Secret mark to sell the kinds of goods it sells, which some customers find unsavory, and which Mr. Moseley himself testified some members of the public find... at least... extremely offensive, that that has the effect of lessening the capacity of a Victoria's Secret mark to identify and distinguish those famous goods and... and products, and that's--

Justice Souter: But the blurring, then, that you're describing now has no quality component to it?

That only comes when you get to the subset?

Mr. Dellinger: --That is correct.

Justice Souter: Okay.

Mr. Dellinger: It... it only affects the fact that it doesn't... no longer singularly stands for anything, that if Rolls-Royce were on 100 different products, it would no longer... it would no longer mean anything, and would no longer... they might as well call their car a Yugo if it's used on products hither and yon.

Tarnishment is a particular good example of why the lessening itself needs to be remedied, because once you've tarnished a product, it's hard to unring that bell in the public's mind, if someone had a national program.

Justice Souter: Of course, if you're dealing with Rolls-Royce, I suppose virtually any blurring is also going to be tarnishment, which you don't necessarily have even in other famous marks.

Mr. Dellinger: Tarnishment has generally been restricted so far in the case law to more unsavory associations, sex, drugs, and matters of that kind.

This is an act which is more limited than its critics suggest.

They... of course, whether it was a bad policy was a matter that should have been addressed to Congress, but it can be limited to a few very famous marks.

A safe harbor is read broadly.

People can use the term, Victoria's Secret, for any purpose they want in parody and commentary, on the steps of the courthouse.

They just can't make this one use of it, that is a commercial use in commerce that lessens the capacity of that mark to carry out its function that Congress so clearly had in mind when it passed the Federal Trademark Dilution Act.

That's why I think the courts below saw this, like Buick Aspirin and Kodak Shoes, as a core paradigm example of precisely what the statute was designed to prohibit, and why none of the--

Justice Kennedy: So, Mr. Dellinger--

Mr. Dellinger: --None of the most interesting questions arise.

Justice Kennedy: --is proof, then, submission?

If you've got a very famous, distinctive mark, and you've got a... a very similar use.

You have those two things, and then you get a few colonels to say yes, when they think of the junior mark they think of the senior, is that enough proof?

Mr. Dellinger: It is in this case, Justice Ginsburg, where the sufficiency of that I think was really not challenged.

Rebuttal of James R. Higgins, Jr.

Chief Justice Rehnquist: Thank you, Mr. Dellinger.

Mr. Higgins, you have 2 minutes remaining.

Mr. Higgins: Mr. Justice, and may it please the Court:

There's no evidence in this case that Colonel Baker was ever in petitioner's store, and his particular affidavit was challenged and disregarded by the trial court.

What we have here is a choice between two standards to interpret the FTDA.

Our choice is grounded in the actual use, words that Congress used, and the respondent's position is grounded in the academic theory of dilution which we say is way ahead of the law.

Our standard is objective and predictable.

Theirs is subjective, unpredictable, invites the courts to substitute its own judgment for consumer perceptions.

It's consistent with almost nothing.

Our standard focuses on measurable consumer perception.

Theirs focuses at the beginning on semantic similarity, and a presumption that dilution follows from that.

Our standard merely puts the famous mark owner to their proof to show that Congress' words, the lessening of the capacity, has been established as a matter of proof.

They should not get a national injunction without that.

Our standard keeps trademark law in its proper bounds.

Their standard merely rewards the achievement of fame.

Our standard, if applied in this case, should result in this Court reversing the injunction and directing that the petitioners be allowed to use Victor's given name in their business.

Thank you.

Chief Justice Rehnquist: Thank you, Mr. Higgins.

The case is submitted.

Attribution:

The Oyez Project

Featured:

Wal-Mart Stores Inc. v. Samara Bros. Inc. - Oral Argument

Fri, 09 Jan 2009 14:50:19 +0000

Case:

Wal-Mart Stores Inc. v. Samara Bros. Inc.

Media File:

99-150_20000119-argument.mp3

Related Transcript:

1999_99_150_argument.xml

Transcript:

Argument of William D. Coston

Chief Justice Rehnquist: We'll hear argument next in No. 99-150, Wal-Mart Stores, Inc....

Mr. Coston.

Mr. Coston: Mr. Chief Justice, and may it please the Court:

This case raises the legal question of when a product design is inherently distinctive under the Lanham Act, but it also raises the more practical question of how high will we raise a trademark barrier to competition.

The affluent consumer, the middle class consumer, and the low income consumer all want to wear clothes that are popular and stylish.

Here, $ 25 seersucker dress sold under the Samara label was also sold with a noticeably different quality by Wal-Mart for $ 3.88 under different labels, Cuties by Judy and Small Steps.

The effect of the court's injunction here is to deny consumers the opportunity to buy any seersucker dress with appliques which may or may not be found in the collar.

Because of the tension in this case between trademark law and competition law, we submit there is a need for a new standard to measure when trade dress and product configuration is inherently distinctive.

Justice O'Connor: Now, there were rather lengthy instructions given to the jury in this case.

I think if I were a juror reading them, I'd be a little confused.

But there... apparently Wal-Mart didn't object to those instructions, and we're not here being asked to find that the instructions that were given were faulty.

And so, it's... it's... I don't think that the test that you propose would necessarily fit within the instructions that were given, and yet that's what went to the jury.

And I wonder if we... we don't just say, well, okay...

Mr. Coston: Well, Justice O'Connor...

Justice O'Connor: let it stand.

Mr. Coston: In... in this case, we, Wal-Mart, contended from day one that the trade dress was not inherently distinctive.

We've never waived that point.

Justice O'Connor: Right, but you submitted that question to the jury, and the jury, for whatever reason, has come back thinking it was inherently distinct.

Mr. Coston: The case...

Justice O'Connor: I mean, that's how it...

Mr. Coston: The case was submitted to the jury...

Justice O'Connor: came out.

Mr. Coston: under instructions that we suggest do not properly state the law.

Justice O'Connor: Well...

Mr. Coston: They... they were instruction on Abercrombie...

Justice O'Connor: But you didn't preserve any objection on that.

We're not up here arguing about the validity of the instructions.

Mr. Coston: As this Court held in the Preponik case, Justice O'Connor, a rule 50 challenge to a judgment is tantamount to a challenge to the instructions.

And in that case, there were many facts very similar to this case.

A changing landscape that... and I use the word landscape pointedly.

Chief Justice Rehnquist: Well, now, are you suggesting that if you simply challenge a judgment under rule 50, even though you made no objections to the instructions, that brings about a change... that brings about a challenge to each instruction?

Mr. Coston: No, I wouldn't go that far, Your Honor.

Chief Justice Rehnquist: Well, then what do you mean?

Mr. Coston: In this case the legal landscape of the protectability of trade dress, particularly in product configuration, has been shifting since Two Pesos.

Every case produces a different result, and we submit that it... it is unfair to litigants in that climate to have to predict with certainty what the standard would be.

We tried at the district court level and the Second Circuit level to confine ourselves to Second Circuit law.

Justice O'Connor: Well, it just... it's hard to know how to define inherently distinctive.

It's... it's sort of like pornography: I know it when I see it

How... how are we supposed to define that term?

Mr. Coston: Well, we submit, Justice O'Connor, that on closer inspection of the statute, that Congress has given us the answer to that, that Congress has said for product configuration trade dress, the old-fashioned rule works best.

Go to secondary meaning.

Rather than trying to predict how a consumer will view a new product design, let's wait for the market to determine if that design has earned any...

Justice O'Connor: Where... where did Congress say that we had to find that secondary...

Mr. Coston: In 1946, Congress adopted section 23(c) of the Lanham Act, which lists, among a whole litany of possible marks, configuration of goods.

That's the only spot in the Lanham Act that the term configuration of goods is found.

And what is its significance?

What...

Justice Scalia: Mr. Coston, before you get into that, I'm not completely clear on... on this first question about the instructions below.

I had thought that what you're arguing here... and correct me if I'm wrong... is not that the instructions were wrong, but simply that there was not enough evidence under a proper criterion to go to the jury and that you were entitled to judgment as a matter of law...

Mr. Coston: That is correct, Justice Scalia.

Justice Scalia: regardless of your... you're not complaining about the instructions.

You're just saying in this case, there was not enough evidence to go to the jury.

Mr. Coston: That is correct, Justice Scalia.

Justice Scalia: So, we not only have to agree with you about the standard, but we also have to agree that if we apply that standard, no reasonable jury could have come out finding your... your client liable.

Mr. Coston: Or... or it should be remanded to the Second Circuit for that evaluation.

We also believe that part of the reason the importance of taking a case like this is given the different standards in the various courts of appeals, there is a need for some certainty so that juries can be properly instructed.

And that is what we submit should be an outcome here, that this jury was instructed on Abercrombie.

It was instructed on partial Seabrook.

It was instructed on partial Knitwaves.

It was a very confusing set of instructions because, we submit, the law was very confusing at that time.

Justice O'Connor: Well, this Court in that Two Pesos case basically said that we don't apply to a trade dress claim a general requirement of secondary meaning.

I... I thought we crossed that bridge.

And yet, you're here arguing that we have to go back and change that.

I think your position would require us to basically review and... and reverse Two Pesos.

That was a trade dress case.

Mr. Coston: Yes.

I... I submit not, Justice O'Connor.

The holding of Two Pesos was simply that not all trade dress requires proof of secondary meaning.

The Court allowed the possibility that some trade dress might require secondary meaning.

Indeed, this Court in the Qualitex case held just that, that color as a form of trade dress always requires secondary meaning.

We're submitting that the shape of a product is like color, never arbitrary, never inherently distinctive, but always requires secondary meaning.

Justice Breyer: Well, why should it always?

I mean, you could have a weird situation.

Imagine you made a hair brush in the shape of a grape, you know, and they continuously... that was it.

It's called the grape hairbrush, and that's it.

I mean, that's so weird that I guess that people would pick it up.

Mr. Coston: I submit, Justice Breyer, that... that unless it had bristles, it wouldn't be...

Justice Breyer: It does.

I mean, you know, that's not the point.

Mr. Coston: Right.

If it has...

Justice Breyer: The point is why couldn't you... since we said you could in Two Pesos, why isn't Two Pesos basically right that it may require something special and rather unusual, but not impossible?

Mr. Coston: The... the grape brush I submit says nothing to the consumer about source.

Justice Breyer: Oh, yes, it does after a while.

Mr. Coston: After a while.

Justice Breyer: I mean, sure... no, no, no.

All the products are grape.

I mean, you know, you wonder what's it... going on here with this grape, et cetera.

I mean...

Mr. Coston: Well, I... I agree...

Justice Breyer: It was like the...

Mr. Coston: that after a while the market would acknowledge that the grape hairbrush came from a certain company, but that's the point of secondary meaning, that it has to show to the consumer...

Justice Breyer: It's a whole line.

It's a grape hairbrush, a grape comb, a grape hair curler, and a grape... you know, et cetera.

And so, almost instantly when you see it there, you get the idea.

Mr. Coston: Well, without fighting the hypothetical, my assumption would be that there would be some packaging that would accompany it and probably a brand name that no one would launch a new product without any other indicia of source.

Justice Breyer: I'm really saying I don't... I don't see why we have to... why should we overrule Two Pesos?

It isn't really what you want us to... to narrow it to make sure that it really is an arbitrary kind of situation where source is pretty readily indicated.

Mr. Coston: I think... I think the lower courts and certainly all trademark advocates are asking this Court to clarify Two Pesos.

We are not asking that you overrule it, but we do think that... that 23(c) is some evidence that Congress felt that a configuration of goods was different than...

Justice Ginsburg: that you're making that we should... we should confine Two Pesos to the packaging and... trade dress, as I understand it, covers both the... the package that the product comes in and the product itself.

You are conceding that the product itself could have acquired distinctiveness.

Mr. Coston: That is correct, Justice Ginsberg.

Justice Ginsburg: But Two Pesos doesn't seem to make a distinction between the packaging and the product.

Do we even know what the decor of the rest are?

Whether... whether that was... where that fit?

Mr. Coston: Different courts have interpreted Two Pesos in different ways.

I think the majority view is that Two Pesos was more of a packaging case, that it was a way of packaging restaurant services, a servicemark if you will, and restaurant food.

We are asking you to... to clarify Two Pesos and to resolve a question really that wasn't resolved in that case.

The court assumed, without deciding, that the dress was inherently distinctive.

It was stipulated when it was presented...

Justice Ginsburg: Well, is the qualification that you're asking to confine Two Pesos to packaging cases as opposed to product cases?

Mr. Coston: That is correct, Justice Ginsburg, to non-product configuration trade dress.

Justice O'Connor: But it's very...

Justice Souter: You say that no...

Justice O'Connor: it's very difficult, frankly, to know whether it's product packaging or product configuration in many cases.

Which was it in the restaurant?

Mr. Coston: In the restaurant, I submit it was a... it was a package.

Justice O'Connor: Well, it's not all that clear, and I think there are many cases where it wouldn't be clear.

It sounds like... you... you know, you can say the words, but I think they blur at the margins...

Mr. Coston: I...

Justice O'Connor: in knowing which is which.

Mr. Coston: I agree, Justice O'Connor, there are cases at the margin when you're not sure if it's a package or a product, but in that case you look at how it's being presented to the consumer.

If the principal presentation to the consumer is this is a product, then secondary meaning would be required.

If the principal presentation is don't look at the contents here, look at this good itself as a package, then the fact finder should find that it's a package.

And even then it may not be inherently distinctive.

Chief Justice Rehnquist: Well, but another way of avoiding the difficulty is to say don't try to separate them, that trade dress... that trade... the product and trade dress go the same way...

Mr. Coston: And...

Chief Justice Rehnquist: and that Two Pesos would regulate both.

Mr. Coston: And, Mr. Chief Justice, our alternative argument does just that, as do most of the amicus briefs.

They say let's start with the Seabrook test to determine what is unique trade dress with no distinction between packaging and product.

The... the distinction we offered on packaging and product is in our first argument as representing the congressional intent.

We think they drew the line.

And we also think that if this Court were to follow the Abercrombie tests, which are word descriptive analysis tests, that a product configuration under Abercrombie is always merely descriptive...

Chief Justice Rehnquist: Is that consistent with Two Pesos?

Mr. Coston: I believe it is, Mr. Chief Justice.

The Two Pesos certainly went through an Abercrombie analysis and used the... the generic, descriptive, suggestive, fanciful classification...

Justice Scalia: Mr.... Mr. Coston, whether I'm willing to accept your first argument, which is that configuration can never qualify as trade dress or... or your second one, which is... would apply a starchier test for configuration, depends for me largely upon whether aesthetics on a product, the shape of a product is pleasing, whether that is functionality or not.

If it's... if... if that is functional, then... then it... you know, it can't... it can't constitute trade dress even if the other... even if the other conditions are met.

And... and...

Mr. Coston: You are correct, Justice Scalia, that...

Justice Scalia: Do you think it's functional or not?

Mr. Coston: I... I think in this case... and we argued that the... the appearance of this good was merely aesthetically pleasing.

It had an aesthetic functionality.

Now, the... whether that doctrine exists in trademark law today is unclear.

Justice Scalia: Well, you see, I see a big difference between let's... you know, kids like to... like to have brand name basketball shoes.

And let's assume that a... a company comes out with a basketball shoe that has a big lump, just a big lump, over the big toe.

It has no function whatever and it is ugly as sin.

And... and the kids somehow... you know, they get on to this, and they... they want people to know that they are wearing that company's shoes, so they wear these shoes with the ugly, big lump on the toe.

I have no problem with that.

But I do have a problem with... with somebody who... who creates a beautiful dress and the beauty, it seems to me, may well be part of the functionality of... of the product.

And you mean just because I'm the first one to have discovered this beautiful thing, nobody else can create beautiful things like that.

That's...

Mr. Coston: Well, I agree completely with you, Justice Scalia.

Justice Scalia: I... it seems to me that if... if beauty is... is functional, then you should get a design patent for it and... and protect... protect your right to that particular beautiful thing, but only for what?

17 years, whatever.

Mr. Coston: For 14 years on a design patent.

Justice Scalia: Right.

Mr. Coston: Just a couple of observations, Justice Scalia.

The... the comment you made that our first argument says no protection for product configurations, in fact we do allow protection for product configurations on proof of secondary meaning.

And I think you'll find in the Patent and Trademark Office that there is no reported decision that we can find that has ever allowed an inherently distinctive product configuration, but there are many cases which allow a product configuration to serve as a mark on proof of secondary meaning.

With respect to the aesthetic functionality notion, we do find in the Qualitex case some notion that where color serves a function of... of beauty, that no one has the right to take that away from the marketplace and... and prohibit competition.

Justice Breyer: Color is functional, and I think... color is functionality, which I think Qualitex came pretty close to saying, doesn't it?

Mr. Coston: Yes.

Justice Breyer: Then... then shape would be too.

Mr. Coston: I agree.

Justice Breyer: I mean, there's no basis for a distinction there.

But... but then do we have to overrule Two Pesos?

I mean, I think Justice Scalia is right.

I agree with what...

Justice Scalia: Shape is not necessarily functional.

You don't say it necessarily is...

Justice Breyer: No, no, no, no.

Not...

Justice Scalia: It may be if... if its purpose is aesthetic as opposed to the lump on the toe.

And that's your position.

Mr. Coston: Yes, Justice Scalia.

Justice Souter: But isn't... do we then have the same difficulty that we have with the difference between product and packaging?

I mean, it's easy to say that whenever a... a product is purchased at least primarily for or substantially for an aesthetic reason, which is easy to say, I guess, in the case of a dress or a car, that in fact at that point the... the aesthetics really is the... the function.

But isn't that simply going to lead to a... a totally porous distinction?

You know, I... I buy the comb.

There... there are different shapes of combs.

They all have teeth.

Some have longer teeth, some have shorter teeth.

Aren't we simply going to be met with the argument, well, there was... there was an aesthetic component there?

And are we simply going to end up with a distinction which... which we can't maintain?

Mr. Coston: I think not, Justice Souter.

If we keep in mind the purpose of the Lanham Act is to protect consumers against confusion when they buy one good or another, and if there isn't that consumer protection notion in a choice between one thing of beauty and another, if they don't care who made it, but they buy it because it's beautiful, then the Lanham Act isn't even implicated.

If I could reserve a few moments, Mr. Chief Justice.

Argument of Lawrence G. Wallace

Chief Justice Rehnquist: Very well, Mr. Coston.

Mr. Wallace, we'll hear from you.

Mr. Wallace: Thank you, Mr. Chief Justice, and may it please the Court:

If this Court had held in the Qualitex case that color is an inherently distinctive source identifying characteristic of products, the Patent and Trademark Office would have been flooded with applications for color marks and we would have been well on our way to having color-coded industries.

And the expectations of consumers would, likewise, have been affected.

They would have begun thinking of color as source identifying more than they had prior to the decision.

Instead, the Court looked toward the traditional remedial role of finding that secondary meaning had been established for the use of color on a particular product in a particular industry and someone was appropriating the good will in a way that was deserving of protection.

It's possible, in other words, for the courts to get too far out in front on these issues in interpreting the law, and there can be self-fulfilling prophecies of what becomes source identifying, and industries can become regimented into each producer having his own little niche.

That... that is the danger of too receptive a standard of inherent distinctiveness.

Justice Breyer: Right.

So... so, are you saying now we should overrule Two Pesos...

Mr. Wallace: Not at all.

Justice Breyer: or that we should...

Mr. Wallace: What I was trying to lead up to is that that is the utility... the utility that has been found in applying the so-called Seabrook approach.

It's not that it provides an intellectually satisfying abstract definition.

It's very hard to come up with anything of that sort in this context, but that it... it requires the courts to ask a series of practical questions that appropriately distinguish what is a permissible protection for inherent distinctiveness without getting the courts out in front.

Justice O'Connor: I'm not sure that I know how it would apply in this very case, however.

I'm not sure that it is clarifying.

How do you trace it down here?

Mr. Wallace: This is...

Justice O'Connor: I... I look at that thing and it looks pretty amorphous to me.

Mr. Wallace: This is a very difficult case for that purpose.

In a way it's a good case for that reason, but in a way it's a hard one to address.

There... I mean, by a parity of reasoning, if the... the holding that there was inherent distinctiveness in this configuration alternately prevails, the holding of the court below, there... there would likely be some tendency of other manufacturers to come up with their own configurations of appliques to seersucker garments...

Justice Kennedy: Well, I take it you think that a properly instructed jury could rule for Samara in this case?

Mr. Wallace: Well, what... what we suggest is that there is a responsibility on the courts to determine whether applying the Seabrook factors to the evidence that was before the jury, there is a basis for a finding...

Justice Kennedy: Well, I know it's the responsibility of the courts.

Mr. Wallace: a reasonable basis.

Right.

Justice Kennedy: But I want to know your... your answer.

Do you think a properly instructed jury could find for Samara, if I'm pronouncing it right, in this case?

Mr. Wallace: Well, we haven't taken a position on that in the case...

Chief Justice Rehnquist: You haven't taken a position.

Just... I think you've answered Justice Kennedy.

You come in here and say we should adopt these factors and let the court of appeals figure out what they mean.

Well, that's just too easy a task.

I mean, it seems to me if we're going to say these are the controlling factors, we've got to be able to apply them to this case.

But you don't give us any hint as to how that should be done.

Mr. Wallace: Well, I... what... what we learned from the Patent Office in looking at this is that it would be difficult for them to conclude, in a registration process, that there was anything inherently distinctive about the individual garments that were at issue here.

They used common elements that the Seabrook inquiry would not ordinarily allow protection for.

The claim here was not a claim that any particular garment was entitled to protection or that any particular garment was infringed, but it was a claim about the... the overall appearance or look of a line of garments even though the garments held to infringe more closely resembled individual garments than they resembled this abstraction which was based on certain common characteristics that sometimes were variable and sometimes didn't even appear in certain garments.

Justice Scalia: What about the aesthetically pleasing element?

I mean, what... what if people were buying these... these knock-offs just because they... they think it's pretty, this kind of design?

Mr. Wallace: I...

Justice Scalia: If... if that is a functional element, this case is over, isn't it?

Mr. Wallace: Well, that... functionality is a separate inquiry from whether a characteristic is source identifying to consumers.

You can find that consumers actually think that a particularly pleasing item comes from a particular source.

You can prove secondary meaning, but still it could be unprotectable because...

Justice Scalia: I understand, but... but without proving secondary meaning, if it's functional, you're... you're home free.

Isn't that right?

I mean, the person who copies is home free.

Now, is... is this... is the aesthetically pleasing nature of these clothes not a... not a functional element of... of the product?

Mr. Wallace: It can... it can be if... if the ability to compete in this market is impeded by denying access to competitors to a similarly pleasing combination of very familiar elements.

Justice Scalia: Seersucker, watermelons, you know, collars, whatever.

Mr. Wallace: One could easily view this case as one where the copyright protection that was afforded from direct and duplication suffices and otherwise the industry is being too impeded here.

Justice Souter: Don't we at least have to...

Justice Ginsburg: Mr. Wallace...

Justice Souter: Don't we at least have to say that the more important the aesthetic element is in the consumer's decision, the more difficult it is to prove inherent distinctiveness, the less likely that there is inherent distinctiveness?

Mr. Wallace: I... I think that is correct, Justice Souter.

Justice Stevens: It isn't quite that, is it?

Could it not be the fact that the... a... the only thing inherently distinctive is itself functional?

Then there would be no protection I take it.

Mr. Wallace: Well, there certainly would be no protection but not because there isn't inherent distinctiveness.

Justice Stevens: Correct.

There could be some inherently distinctive feature that was a functional feature that would preclude protection without secondary meaning.

Mr. Wallace: There's also...

Justice Ginsburg: Mr. Wallace...

Justice Scalia: Let's say a modern artist who... who comes up with the idea of, you know, putting a nose where... where the ear ought to be.

You know, he's the first one to do it.

No one has ever done it before.

Now, if... if somebody else decides, gee, people like that, I'll do the same thing, I... I think even though it was totally distinctive, I don't think that would be a violation.

Mr. Wallace: I think that's right.

There... of course, there could be copyright protection for a work of art.

Justice Ginsburg: May I ask you, Mr. Wallace, because you have so little time, but... to help us with the who decides question?

You said Seabrook.

That's a good formula.

You didn't want to tell us how it would apply in this case.

But who... who applies it?

Does this case... can you tell us?

Does this case go to the jury and is Seabrook the charge that you would recommend for the jury?

Or does this case not go to the jury?

I'm really troubled.

In most of these cases, they go to a jury and the jury hasn't got a clue what that charge means.

Mr. Wallace: Well, you know, there... there is much that we... we really think there's much wisdom in Judge Newman's dissenting remarks on this issue, that you can't cede so much authority to the juries that they're deciding what the scope of the law is.

But this was a question presented in the petition that was excluded from the grant and we didn't brief it.

So, I... I can't really say much beyond that question.

We do think...

Justice Ginsburg: Well, if you ask us to... to adopt the Seabrook standard, do we adopt it as a charge for the jury or as a screen to see whether the case goes to the jury?

Mr. Wallace: I... I think that it... it really is a screen for judges, so far as... as I'm able to answer the question, although I don't know that it would be error to charge a jury.

It's just a question we have not briefed.

It was a question excluded from the grant.

We go through a process in trying to arrive at an answer to questions of this sort.

I do want to say that there is room for more skepticism about a claim of inherent distinctiveness when the inherent distinctiveness cannot be perceived in any one item, but can only be perceived by extracting characteristics from a line of items.

That doesn't mean that it's... it's impossible to find it, but...

Chief Justice Rehnquist: Thank you, Mr. Wallace.

Mr. Wallace: there's more reason for skepticism.

Argument of Stuart M. Riback

Chief Justice Rehnquist: We'll hear now from you, Mr. Riback.

Mr. Riback: Mr. Chief Justice, may it please the Court:

In terms of the legal standard that we're advocating, we have no substantive disagreement with the position of the United States in its brief about what must be shown to establish that a product's design is inherently distinctive under the Lanham Act.

In the context of product design, Seabrook gives concrete definition to the Abercrombie standard that this Court endorsed in Two Pesos, carried forward in Qualitex.

In other words, something that is commonly used on a product is associated with the product and thus descriptive, and something that is unique and unusual is not and, therefore, is inherently distinctive.

Abercrombie, as focused by Seabrook, is consistent with this Court's precedents in Two Pesos and Qualitex.

It is consistent with practice in the Patent and Trademark Office.

It is consistent with how most circuits, irrespective of how they articulate their legal standard, in actual practice have been ruling on these cases.

Justice Scalia: Well, that's because Seabrook is so vague, it's consistent with almost anything.

Unidentified Justice: [Laughter]

Justice Scalia: I mean, you know, it doesn't prove anything.

Mr. Riback: Well, no, Seabrook I believe asks some concrete questions that enable you to give content to the question of how inherently distinctive something is.

Justice Breyer: Well, in inherent... I know you're going to do that, but if it's... I just want to... Justice Scalia and the answer to my question have thrown me a little bit.

And I... I'd like you to focus, when you go through this list, on the particular thing that they brought up, which is where you have a word, it's pretty easy to think of an arbitrary or fanciful word that clearly is meant to designate source.

Mr. Riback: That's right, Justice Breyer.

Justice Breyer: So, why bother with the secondary meaning question?

Mr. Riback: Right.

Justice Breyer: But what they've suddenly got me thinking is... it's very hard to find an example of a shape or a configuration where you could say the same because of what Justice Scalia said because where you do have a weird shape or even a Coke bottle, you see, the classic, the Coke bottle... I mean, where you do have that, the natural human reaction is to think, well, they're trying to attract customers by the shape.

They're not trying to indicate source.

They're trying to... they're trying to... it's weird, a grape brush.

It's... and even the Two Pesos, you see?

So... so, if that's so, why not force people at least to prove secondary meaning so we don't get into all the rest of this case?

I mean, there we've got... and that solves the problem that he brought up.

It does force us either to change Two Pesos or to create a new, difficult distinction, the one between packaging and trade dress.

But maybe now I'm thinking those are the lesser of the evils.

So... so, I grant you those would be bad, either of those two, but maybe this... this new distinction would be the lesser evil.

So, that's what I'd like you to address.

Mr. Riback: Well, if I... if I may, Justice Breyer, I think that something that you said was inaccurate, which is if you're trying to draw customers based on the shape, then that is an indicator of source.

Justice Breyer: But what we don't want is to have the Lanham Act protecting a shape because it's an attractive shape or even a repellant shape that people would buy something because of the shape.

That's just what you don't want.

You want to give total freedom to do that and use the Copyright Act if they want to protect it.

You don't want the Lanham Act to protect that even to 1 inch.

All you want the Lanham Act to protect is the source, the fact that the customer thinks, oh, I see what that means, it's a Coke bottle.

Coke produced it.

But there was secondary meaning proved.

So, why not always force them to that proof where you're dealing with a shape?

Mr. Riback: Because there's nothing in the Lanham Act that tells you that the same feature of a product can't serve more than one purpose.

You don't want...

Justice Breyer: Yes, but that's why we want to do it.

I mean, the Lanham Act doesn't tell us this... I'm not saying they can't.

I'm just saying that... that let's at least, before we start interfering with aesthetic and other purposes, force the plaintiff to the proof that people really do think this indicates a source rather than having a judge or a jury guess it.

Mr. Riback: Well, there's a number of problems with that, if I may.

I think what's been coming out in the lower courts, in terms of the advocating a separate test for product design or saying the product design should more likely have secondary meaning, is two things.

One is this concern that was stated about protecting the item itself.

The item itself is not what's being protected.

If the item itself is what was being protected, we'd be running into the functionality doctrine.

And I think this addresses Justice Scalia's point.

What the functionality doctrine says is if you need something in order to compete, if there's something about the particular mark that's being claimed that is necessary so that competitors won't be foreclosed, then that feature is functional, and if that feature is functional, it makes no difference if it's inherently distinctive.

You can't lock it up.

That's how functionality shows up.

But that means that then the item itself is what's being protected.

We're not talking about that here.

We're talking about non-functional arrangements of features that give the product the appearance it has.

This is something that Judge Motz in the Ashley case in the Fourth Circuit pointed out.

It is not the product itself.

The other...

Justice Scalia: Non-functional arrangement that... but you assume that... that aesthetics are separate from functionality.

Mr. Riback: Aesthetics can be functional...

Justice Scalia: I mean, it is a function of a dress is to look pretty.

One of its... one of its functions is to cover the body, but certainly another function is to look pretty.

Mr. Riback: Of course, and you wouldn't want to force someone who wants to use the design of the dress to indicate its source to make it ugly in order to get it to be source indicated.

Justice Scalia: Right.

Mr. Riback: So, there's no necessary tension there.

Justice Scalia: Nor would you want to prevent other people from copying a beautiful thing that one manufacturer has created.

If... if it's beautiful, they ought to be free to copy it unless... unless it is misleading consumers into thinking that... that it's the product of somebody else.

But I don't see you can say that just because they're copying beauty that... that was first created elsewhere.

Mr. Riback: Unless it is so unique and unusual that the customer would be warranted in inferring source.

Justice Scalia: That's always going to be the case when... when the... a first person... the person first discovers a new manner of beauty such as the nose coming out of the ear, if one considers that beauty.

I mean, you know, you would say, oh my God, that's Picasso, but it turns out it wasn't Picasso because other artists copied the same thing.

Now, if Picasso wanted to, you know, copyright the nose coming out of the ear, I suppose he could have done that or maybe gotten a design patent.

But I don't see why he should have had... had protection for it under the Lanham Act.

Mr. Riback: Well, I think... I think what you might be getting at, Justice Scalia, is the concern that people don't tend to perceive a product design to be a source indicator as readily as they might perceive a package.

Okay.

And that might be true.

I don't know.

I haven't seen a study.

It may well be correct.

But if it's true, that doesn't mean the test is different.

What it means is if you apply the right test, you're going to get more negative answers on product design cases.

Justice Breyer: But if we... if we think... if we think, see, as in color, you know, that there's risks of the kind, do we do any harm by saying... of course, we might in your case.

I understand that, but in general...

Unidentified Justice: [Laughter]

Mr. Riback: Yes.

Justice Breyer: I mean, in... in general, do... do we cause a problem for the lawyers who practice in this area or others if we were to say, look, all we're saying is show secondary meaning.

That way we know that people really do associate this shape or dress with a source.

That's all.

We're just asking you don't let them go on a hunch.

Just... just bring in some evidence.

Mr. Riback: Well, first of all, I would say if we follow the Court's precedent in Two Pesos, that forecloses that because Two Pesos says that one of the things that the Lanham Act says you do not need to do is require secondary meaning of someone who has an inherently distinctive trade dress.

Justice Souter: Okay, but let's assume for the... for the sake of answering Justice Breyer...

Mr. Riback: Yes.

Justice Souter: because I want to ask the same question he wants to ask.

Assume just for the sake of that answer that maybe we... we didn't get it right in Two Pesos.

What's the right answer?

Forget Two Pesos for a minute.

Are there going to be so many negative answers that the sensible rule would be to require proof of secondary meaning in the meaning in the first place?

Then everybody knows where he stands, and the likelihood that our answer is going to... that we do finally get is simply going to be on the basis of, you know, the hunch is going to be greatly reduced.

Mr. Riback: I think that...

Justice Souter: Is that a practical suggestion?

Mr. Riback: I think the harm is this.

You can go in today on January 19th, 2000 into a store with certain perceptions about what is and is not likely to be used by consumers to identify products.

That's a secondary meaning argument.

But you... you can use January 19, 2000 as your baseline.

I don't know a month from now, a year from now, 10 years from now, what sort of products will be there, what sort of innovative methods of differentiating one product from another there will be, or...

Justice Souter: Yes, but why isn't this simply an argument to the effect that it's always... there's something ultimately time based about secondary meaning?

That's going to be true in every secondary meaning situation.

Mr. Riback: That would get rid of inherent distinctiveness altogether.

I'm not... I'm not sure, in addition to that, that there is any principled way in which you could distinguish packaging from secondary meaning.

Justice Souter: Yes, you may well be right.

Mr. Riback: You're opening up another...

Justice Souter: Let's assume... let's assume...

Mr. Riback: You're opening up another thicket with that.

Yes.

I'm sorry.

What?

Justice Souter: No.

I... I'll make that assumption that I can't make that distinction.

I don't know how to... I don't know how... frankly, I don't know how you apply it in Two Pesos.

Mr. Riback: I think in Two Pesos it would depend on whether you think the restaurant was serving food or serving a dining experience.

If the restaurant is serving food, then it's a package.

If it's serving a dining experience, then the ambiance and the layout are part of it.

Justice Souter: Right.

Mr. Riback: And it's a product design case.

And I think restaurants do serve... do serve you with a dining experience.

Justice Stevens: Yes, but I think the assumption in Two Pesos was that it was... it was not the dining experience because then it would have been part of the product, and I think it was treated as though it was part of the packaging.

Mr. Riback: Well, I...

Justice Stevens: Maybe it was wrong, but I thought that was the assumption.

Mr. Riback: I don't think the opinion bears that out because what the opinion talks about, if you look at Two Pesos, when they have the discussion of section 2, it talks about if a verbal or symbolic mark or the features of a product design may be registered under section 2.

And I think the reason that Two Pesos is addressed toward product design very heavily is because when you look at the four Second Circuit cases that were disapproved in the Two Pesos case, every last one of those is a product design case.

Now, I'm not saying that every one of the product design cases that was addressed there would necessarily be inherently distinctive, but Two Pesos says that you cannot exclude that possibility.

Justice Stevens: It seems to me that one can draw a distinction... maybe it's pretty fine... between packaging and product, though, and one can interpret Two Pesos to just relate to packaging rather than product.

And one can also, although there really is some tension in it, to say that in... in a line of clothing that appeals to the aesthetics of the... of the purchaser, that aesthetics in that context is functional and part of the... and therefore, distinctiveness would not qualify for Lanham Act protection but would qualify for copyright protection.

It seems you could fit that scheme together I think.

Maybe I'm wrong.

Mr. Riback: I... I'm not sure that's exactly right because the entire thrust of Two Pesos is that... first of all, it never mentions the word package I don't believe, other than in one of the concurrences.

But...

Justice Stevens: But that was the argument.

I can't remember exactly how it was phrased, but that the... all the Mexican features of their restaurants had nothing... was not functional at least and, therefore, was more like a packaging... more like packaging than the product itself.

Mr. Riback: Well, that only presumes that the product itself is what's being protected.

We're not talking about that.

We're talking about something that isn't necessarily part of the product where the product would still be the product even if you stripped the feature off, which would be certainly the case with what's at issue in this case.

You could strip the features off.

You could... the product would still be the product, and you could then put those features onto something else.

Obviously, it would have to be made out of cloth, but you could use it for a curtain.

You could use it, you know, for a drape or a bedspread.

Justice Scalia: Well, I don't... you think the product would be a product?

I mean, I...

Mr. Riback: Oh, sure.

Something like that happened at the trial as a matter of fact.

Justice Scalia: A piece of cloth that... that can cover your body, and... and that's... that's all that goes into a dress.

Mr. Riback: That... well, actually that happened at the trial.

At the trial, I took the collar of a dress, folded it up into the dress, and asked the Wal-Mart witness if she would buy it for Wal-Mart to put out on its shelves and sell and she said, absolutely, it's very cute.

So, the record in this case absolutely supports that.

Justice Breyer: Suppose that we take your preferred way of doing it, which is to leave the functionality question as a subsidiary question coming in at the end.

Mr. Riback: Well, no, it's... it's a preliminary question now by statute.

It used to...

Justice Breyer: All right, or the functionality question becomes a separate question.

Mr. Riback: Yes.

Justice Breyer: And say you could include aesthetic considerations as functionality.

But then that's not this question.

This question is do we get down the track by... by asking if this particular shape or design is meant to identify a source.

That's the question before us.

Right?

And the... the issue is...

Mr. Riback: That's the ultimate question.

Justice Breyer: that sometimes it could be so unique that that's what it does.

Suppose you took the Seabrook factors, those three questions, which basically say, look, if this is normal or it's just ornamentation, forget it, you're out the window.

Right?

Mr. Riback: Right.

Justice Breyer: Suppose you... could you add to that the very question we want to know?

Suppose you also said and you must say to the jury, jury, do you believe that when you look at this, it's not only unique, this shape or dress, but the very way in which it's unique in this industry is likely to indicate to a person that why they've done it is to show a source, not just beauty, not just... I mean, could you ask... I could get a better formula...

Mr. Riback: I... I think what the question... I think what you're gliding past in the question is what we're trying to ascertain here is inherent distinctiveness.

Think of what those words mean.

Justice Breyer: No, but it's different.

But inherent is...

Mr. Riback: It has to be inherent in the product and it has to distinguish it from others.

Justice Breyer: But inherent distinguish... inherent distinctiveness of the source... of the sort that would tend to identify a source, not inherent distinctiveness of the sort that would lead a person to buy something for its beauty or shape.

Mr. Riback: Well, it's... the... the presumption under the Lanham Act and the case law, including out of this Court, is that if it's inherently distinctive, then it indicates source.

That's the presumption.

Justice Breyer: But that isn't really true where you're talking about a shape or trade dress.

Indeed, dress designers make their money out of making something that is unique and beautiful.

Mr. Riback: Well, you got to ask the other questions in Seabrook then if that's the case.

There's no exclusion in the Lanham Act for clothing.

Justice Breyer: No, no.

I know.

Mr. Riback: So, there's certainly...

Justice Breyer: And Seabrook doesn't distinguish between that which is unique and... and attracts customers because it's beautiful and unique and that which attracts customers only because it is unique and thereby indicates source.

And my question to you is should this Court, in trying to list tests, take Seabrook and add to it a question that would make that very distinction?

Mr. Riback: No, I don't think so because all of the formulations that I've seen about what might be added all require measures of consumer perception which in and of itself are secondary meaning tests.

So, if you concede that you don't want to calcify the law by freezing current conceptions into place, and allow for development of the marketplace in the future with new products and new ways of differentiating them, then you have to maintain that there can be inherently distinctive anything.

The question is how you ascertain it.

Seabrook doesn't ask just is it unique and unusual.

It also follows a couple of other... another couple of questions down the line.

Is it merely a refinement of what's out there, even if it is somewhat different?

Is it a commonly used shape?

It adds more than just saying is it different.

What it does is it gives content to the analysis by saying something will be descriptive for purposes of the usual Abercrombie analysis.

Something will be descriptive if it's very common because ordinarily a feature of a product wouldn't have descriptive or suggestive capability.

You would need to give content to that in this context, and I think Seabrook does that if you follow those questions down.

But you would need to follow all of it.

Justice Ginsburg: Well, why are these dresses just inherently descriptive as opposed to distinctive?

I mean, you expect to find children's clothes to be pretty, to have appliques, to be of washable material.

And so, I... why would a juror think that there's anything about this that would be indicative of a source rather than just being a nice, decorative pattern?

Mr. Riback: There was extensive evidence on that at the trial.

There were... and I'm sure you've noticed in the joint appendix... dozens of garments that were submitted.

There was evidence submitted on what Samara is trying to accomplish by using this particular look.

In terms of Seabrook, you line up the Samara dresses against what else was there, they're noticeably and markedly different.

And given that...

Justice Ginsburg: Well, Judge Newman...

Mr. Riback: I'm sorry.

Justice Ginsburg: didn't think that because didn't he suggest that the Simplicity pattern looked like the Samara dress?

Mr. Riback: Well, two things I'd like to say about that.

First of all, Judge Newman's dissent forgot one point, which is we're not saying that using a collar on clothing is inherently distinctive.

That would be silly.

We're not saying using appliques on clothing is inherently distinctive.

That's almost as silly.

What we are saying is not that any particular one of these features is unique and unusual, but the particular combination that is used is different from what is out there in the rest of the market and serves to indicate source as a result.

In terms of the Simplicity pattern, that's a function of reduced copying and basically just not looking at what the record said about it.

In terms of the Simplicity pattern, that was not a collar where the applique was made into the collar.

That was just something printed right onto the face of the dress, and the testimony in the trial brings that out.

Justice Scalia: So, the first person who comes up with a thing of beauty, a distinctive aspect of beauty, of course, since he's the first one to come up with it, he'll be identified with it.

And he gets protection for that automatically not by reason of any copyright protection or design patent protection, but just because, since he's the first one to invent it, everyone will think that something that is just as pretty in the same way must come from him.

Mr. Riback: No.

He also has to use it in commerce.

Justice Scalia: Oh, sure, sure.

Mr. Riback: Right?

Justice Scalia: The other things.

Mr. Riback: So... so, in and of itself, the commercial use distinguishes it somewhat from the other... from the other instances that you made.

But the other thing is there isn't one single standard of beauty and there are a lot of ways to make things beautiful.

One of the things that both Wal-Mart and Samara agreed on at the trial is that there is virtually infinite number of ways to make pretty or attractive, saleable children's clothing.

Justice Scalia: Well, that's fine, but the... but the purpose of the Lanham Act is not to give him dibs on... on one particular way.

Mr. Riback: The purpose...

Justice Scalia: Why shouldn't other people be able to... to use that same aspect of beauty?

Mr. Riback: Because the purpose of the Lanham Act is twofold.

It's, number one, to give consumers information so that when they see something, they recognize it.

And number two, it's to protect producers, who come up with a way to differentiate their products, in their efforts to promote it and to protect their investment...

Justice Souter: Yes, but why don't they get protected?

The... the producer who comes up with the... the first time with the nose in the ear.

Why doesn't the producer get protected with a design patent?

And if then, in the course of the... the life of the design patent, the producer can establish the... the identification of the... of the nose in the ear with him, he then will get Lanham Act protection.

That way we don't calcify product design, but we do gain a greater assurance in the conclusion that we're supposed to draw for Lanham Act purposes.

Mr. Riback: If I may, I think a design patent will look somewhere else.

With a design patent, you're talking about novelty and non-obviousness.

Unique and unusual isn't necessarily novel.

It's a different concept.

With design patents, you want to promote creativity.

You want to promote something new, not necessarily in the Lanham Act.

With the Lanham Act, it's simply the ability of whatever it is that you're using as the signifier to signify what's been...

Justice Souter: Okay, but if you're going to...

Justice O'Connor: Well, if...

Mr. Riback: what's been signified.

Justice Souter: May I ask just one more question on this?

If you're going to have the Seabrook test...

Mr. Riback: Yes.

Justice Souter: isn't the Seabrook test looking to the same kind really of novelty for purposes of differentiation which you're telling me the design patentee has got to show in order to get his design patent.

So, isn't there a consistency then?

Mr. Riback: There's... there's some overlap of subject matter.

I think the way the case law has shaken out almost unanimously in the lower courts has been that, although some of the same subject matter can be covered by both the design patent law and the Lanham Act, they are basically different inquiries, serving different... the statutes serve different functions, and aim at different things.

Justice Stevens: May I ask this question just...

Mr. Riback: Yes.

Justice Stevens: Is it essential to your case that Wal-Mart copied these designs?

Supposing they had independently come up with their line without copying but just came a little bit later than yours.

Would the result of the case had been the same?

Mr. Riback: In terms of infringement?

Justice Souter: It wouldn't have been before the jury, but would it... it legally would have been the same.

Mr. Riback: In... in terms of infringement, I think the answer probably would be yes.

The answer... the answer would be the same.

In terms of the consequences, I think the answer would be no.

Justice Stevens: May I...

Justice Kennedy: I don't understand.

Justice O'Connor: But the jury shouldn't take into consideration, should it, in deciding this case that there was an intentional copying?

Because it doesn't make any difference.

Mr. Riback: Insofar as inherent distinctiveness...

Justice O'Connor: That's not the test.

Mr. Riback: Insofar as inherent distinctiveness is concerned, I think that's probably right.

Insofar as secondary meaning is concerned, no.

Intentional copying is an indicator of secondary meaning.

Justice Kennedy: But doesn't... doesn't intent indicate that the second manufacturer recognized the distinctiveness and that's why he wanted to do it?

So, intent is... is relevant.

You wouldn't say that intent is irrelevant.

Mr. Riback: No, it's not... it's not irrelevant, but it doesn't mean that you do have an infringement with intent and don't have an infringement without it, which... which is what I understood that question to be.

Justice O'Connor: Would... could... could Wal-Mart have protected itself here by hanging a tag on every dress saying this is not a Samara dress?

Mr. Riback: No, it could not have for the same reason...

Justice O'Connor: This is a Wal-Mart dress.

Mr. Riback: It could not have, Justice O'Connor, for the same reason that Taco Cabana, by printing its name on its menus and putting a big sign on a pylon outside, couldn't have saved itself from infringing on Two Pesos' mark.

Or I have that backwards.

I'm sorry.

Justice Stevens: May I ask one other... one other... I just want to be sure of your position.

Assume no secondary meaning and assume inherent distinctiveness, but also assume that the quality that makes the product inherently distinctive is functional.

Protection or no protection?

Mr. Riback: No protection.

If it's functional... if... if it is functional, then under every authority that I'm aware of, it makes no difference whether it's inherently distinctive or not.

Justice Breyer: But then why did you respond to Justice Scalia... I think it was Justice Scalia or Justice Souter's earlier question... no, or that there would... remember?

I think their question was about somebody creates a beautiful design or a beautiful thing that does indicate the source, but it's also beautiful, and they don't take out copyright protection.

And you said, well, then there would be Lanham Act protection.

Mr. Riback: There could be Lanham Act protection.

Justice Breyer: Well, in other words... now, what would you have to show?

You'd come in and say I agree it indicates that it's a Dior dress, but he didn't get his design copyright, and so I can go copy it.

And now you... you assert now it's a Lanham Act violation, and the defendant says not at all.

He says it's... because there it's serving a functional purpose, the purpose of beauty and...

Mr. Riback: No.

I say that it can be a Lanham Act violation.

You would need to go through the analysis prescribed under Seabrook and Abercrombie in order to ascertain where this comes out in the Lanham Act analysis.

And then at a certain point, you may well be able to say that this is Lanham Act protected.

I'm not saying it necessarily would be.

Justice Breyer: I see what the... the problem is going to be showing the harm to competition, and that's going to lead to a big argument.

Mr. Riback: If you can design around it... and this is... this is basically what the predecessor of the Federal circuit... the Court of Customs and Patent Appeals said.

If you can design around it, if you need it in order to compete, then it's functional.

But if you... I'm sorry.

If you cannot design around it, if you need it in order to compete, then it's functional.

But if you can design around it, if there's no reason for you to use specifically that, then it's not functional.

There's a case in the Seventh Circuit that explains how the aesthetic functionality works, which is a cookbook case decided by Judge Posner, where he said, look, you want to have a cookbook big so that it opens up so you can read it.

You want to have big pictures and big print so you can read it while you're working at a counter.

So, of course, you're going to end up with a picture... you're going to end up with a cookbook with big pictures and print, and in order to prevent the pictures from bleeding out onto the edges, you're going to have gold... gold edging.

So, of course, the cookbooks are going to look alike.

Well, that's aesthetic functionality, but that's not what's involved in this case.

This case is quite different.

If I might go on.

There hasn't been any contention here that the jury wasn't appropriately instructed.

The district judge specifically mentioned Seabrook by name in his analysis in the judgment as a matter of law opinion.

The Second Circuit said, among other things... it said a lot of things that it didn't need to in our view, but one of the things that it said was the task of the court is to evaluate how unique and unexpected the claimed trade dress is.

It also said that the jury looked at the dozens of garments before it.

It said that at least two or three times.

In making that analysis, I submit that if you do apply the Seabrook test, you must come to the conclusion that an affirmance is necessary in this case.

If there aren't any other questions, I'll conclude.

Rebuttal of William D. Coston

Chief Justice Rehnquist: Thank you, Mr. Riback.

Mr. Coston, you have 2 minutes remaining.

Mr. Coston: Thank you, Mr. Chief Justice.

The problem with an inherently distinctive test is... is that it is predictive.

It attempts to determine in advance of the demonstration of secondary meaning what consumers would think, and we know from product configurations alone that they do not tell people source-indicating facts.

Rather, they tell consumers I'm a product.

It inherently describes the product.

In this case, application of a secondary meaning rule would work no harm.

Samara had had its products in the market for 5 or 6 years, the record evidence indicates.

And what we're seeing with the amicus briefs proposing a very rigorous Seabrook test is that the same evidentiary burden is going to be put on mark owners, albeit it calling it a Seabrook burden, as has been done in the past with the secondary meaning test.

But the Patent and Trademark Office has followed the secondary meaning test for many, many years.

They've got it down to a science.

Trademark practitioners know how to do it.

We submit that's the right outcome here, that for product configurations, require secondary meaning.

Thank you.

Chief Justice Rehnquist: Thank you, Mr. Coston.

The case is submitted.

Attribution:

The OYEZ Project

Featured:

Qualitex Co. v. Jacobson Products Co., Inc. - Oral Argument

Fri, 09 Jan 2009 14:49:56 +0000

Case:

Qualitex Co. v. Jacobson Products Co., Inc.

Related Transcript:

transcript.xml

Transcript:

ORAL ARGUMENT OF DONALD G. MULACK ON BEHALF OF THE PETITIONER

Chief Justice Rehnquist: We'll hear argument next in Number 93-1577, Qualitex Company v. Jacobson Products Company, Inc.--

Mr. Mulack.

Mr. Mulack: Mr. Chief Justice and may it please the Court:

We'd like to emphasize two points in argument this morning.

The first is that the Lanham Act does not facially or otherwise prohibit the registration of color as a trademark.

In fact, it permits any symbol or device which distinguishes goods of one manufacturer from another to function as a trademark.

The second point is that both the Patent & Trademark Office and the district court found as a factual matter that Qualitex established a trademark after 30 years of exclusive use of the green-gold color.

Unidentified Justice: Mr. Mulack... Mr. Mulack, the Lanham Act defines trademark to include any word name, symbol, or device, or any combination.

Where do you think color fits into that definition?

Mr. Mulack: Color is a symbol.

It is a symbol that has been used universally.

Indeed, it's a symbol, in the sense that people recognize it and have recognized different colors over the years as representing--

Unidentified Justice: What are the requirements, then, to get a trademark, in your view?

It has to be... color has to be nonfunctional?

Mr. Mulack: --That is correct.

You must show secondary meaning, that--

Unidentified Justice: And you have to show secondary meaning?

Mr. Mulack: --That is correct.

Unidentified Justice: What are the requirements to have protectable trade dress?

Mr. Mulack: With respect to a trade dress claim--

Unidentified Justice: Is it the same as to get a trademark, exactly the same?

Mr. Mulack: --In essence it's very close, as you must also prove secondary meaning, as we did in the--

Unidentified Justice: And it has to be nonfunctional.

Mr. Mulack: --Nonfunctional.

Unidentified Justice: So what's the difference in trade dress and the ability to get it registered for a trademark?

Mr. Mulack: Well, a trade... a trade dress comprises the overall appearance of a product.

It consists of many different items, some of which may or may not be protectable.

For instance, a trade dress is size, shape, color, the overall look of the product.

Any one of those may not be protectable.

However, a trademark is a symbol which is placed--

Unidentified Justice: Well, in these circumstances, with the ironing pad here, is there any difference in what must be established to have protectable trade dress and to get a registered trademark?

In each instance, do they not have to be... the color has to be nonfunctional, and there has to be secondary meaning?

Mr. Mulack: --That is correct.

In both instances--

Unidentified Justice: It has to be the same.

Mr. Mulack: --It must be the same.

Unidentified Justice: And yet the Ninth Circuit appeared to allow trade dress here but said it couldn't be registered as a trademark.

They kind of split the baby, didn't they?

Mr. Mulack: Yes, and that is quite baffling and quite astounding in the sense that the Lanham Act does not prohibit the registration of color.

Unidentified Justice: I thought that in the Two Pesos case we said that a trade dress could be so inherently distinctive that no secondary meaning was required.

Mr. Mulack: That is correct.

Unidentified Justice: But I thought you had just... I thought you had just answered Justice O'Connor, and these are background questions, I suppose, that a secondary meaning is required?

Mr. Mulack: Well, that's correct.

Unidentified Justice: And--

Mr. Mulack: In the case, though, that you... if you have an inherently distinctive product you do not have... in terms of a distinctive trademark you do not have to prove secondary meaning, but the point is that globally I was responding to Justice O'Connor's question about the very basic questions of proving that there is a designation of a source, that one source is particularly recognized... is the manufacturer of the product.

Unidentified Justice: --Well, let me just make sure that I understand it.

For a trade dress, per our decision in Two Pesos, there can be a trade dress that is so distinctive that no secondary meaning is required?

Mr. Mulack: Correct.

Unidentified Justice: Can the same thing happen with color?

Mr. Mulack: Well, I would have to say it's a facts-and-circumstance test, Your Honor.

One would have to prove that this color is, indeed, acting as an indicia of source, and if it doesn't so prove through the facts and circumstances of the evidence, then it would act as a trade--

Unidentified Justice: So then color can be so distinctive you can at least imagine a case in which no secondary meaning is required?

Mr. Mulack: --Well, Your Honor, that's kind of close.

In our particular case, as you know, we have a green-gold color, and that is... it is very distinctive.

It's--

Unidentified Justice: I understand that, but as part of these initial questions, I thought you said to Justice O'Connor that for all purposes of this case, and for our consideration, trade dress and color as a trademark are the same, and you also said that a secondary meaning is always required, but that is not what we said in Two Pesos, so I'm still confused.

Mr. Mulack: --Well, I'm sorry if I wasn't clear in my answers.

Clearly, inherently distinctive goods do not require secondary meaning.

I happen to think that trademarks do not require a secondary meaning.

I answered more globally.

But yes, you're absolutely correct, Justice--

Unidentified Justice: Yes, but when you're dealing with pure color, let me ask you this, isn't color part of the public domain in a way that distinctive logos and words are not?

Is it possible that for pure color to be protectable either as trade dress or for a registered mark, that there has to have been secondary meaning acquired?

Mr. Mulack: --Well, we're--

Unidentified Justice: Is that possible because of the difference?

Mr. Mulack: --Well, because of the difference, color in our particular case must have acquired secondary meaning through a long use, so it recognizes and dis--

Unidentified Justice: What does that mean in your particular case?

I mean, the question is... I still don't understand what your posi... I had understood from your brief, I certainly understand from the Government's brief, that the proposition of law you are urging upon us is that color can be protectable as a trademark only if it has acquired a secondary meaning.

Now, I gather you no longer say that, and you disagree with the Government, and you think color can be protectable even if it has not acquired a secondary meaning.

Mr. Mulack: --If color has acquired secondary meaning, then it can be... and if the color itself is--

Unidentified Justice: That's not the question.

The question is, if it has not acquired a secondary meaning, can it be protected as a trademark?

Mr. Mulack: --If it is not inherently distinctive, no, it cannot.

Unidentified Justice: Perhaps there's--

--Well, can--

--a middle step there that--

--No, don't put the "if".

I mean, you think in some situations, however, it can be protected as a trademark even if it has acquired no secondary meaning.

Is that your position?

Mr. Mulack: I am... I would say only if it is inherently distinctive, and that is a facts-and-circumstance--

Unidentified Justice: But that could exist, so there are some situations where color can be protected as a trademark without having acquired a secondary meaning.

That's your position.

Mr. Mulack: --I would say if... as the hypothetical that if it was inherently distinctive, as was earlier--

Unidentified Justice: But how can... you didn't ever answer my question.

How can pure color be inherently distinctive?

It's part of the public domain.

Color is color.

How can it be?

Mr. Mulack: --There are numerous colors and shades that have... we have shown in the trial court the human eye recognizes tens of thousands of shades and hues, and as a result--

Unidentified Justice: Mr. Mulack, may I just clarify one thing?

You're not suggesting that you could trademark a color for any and all purposes, you're talking about trademarking a color for use with a press pad, so it's color on a particular item, not color in general.

Mr. Mulack: --We are not... that's correct, Justice Ginsburg, we are not attempting to appropriate color generally across the board to apply to every product that's manufactured in this country.

We are seeking, and we did obtain a registration from the Patent & Trademark Office for this green-gold color as applied in a limited area, to press pads only.

Unidentified Justice: So isn't that... it's almost in the nature of things that you have to establish a secondary meaning.

This color on this product is identified as coming from this source.

Mr. Mulack: That's exactly, right, and we did do that in the trial court.

Unidentified Justice: No, but aren't you also saying, or aren't you at least implying, that with a sufficiently unusual color, combined with an ironing board pad, it may not be necessary to establish secondary meaning by usage?

Aren't you impliedly saying there's a difference between... if I walk into the registration office, there's a difference between trying to register the sort of bland, neutral color of some undyed ironing board pad as distinct from registering the unusual color that you've got, and if the unusual color that you've got applied to an ironing board pad is sufficiently distinctive, you don't have to acquire secondary meaning in order to register it?

Is that what you were implying before?

Mr. Mulack: Well, Your Honor, I suppose if we would extend it to that point, yes, but we have not addressed it in that particular manner in our briefs to say that it is inherently distinctive per se.

We have established--

Unidentified Justice: But you do take the position that there can be combinations of color and product that may be registered without acquiring a secondary meaning first?

Mr. Mulack: --Well, now, Your Honor, combinations of color or product, that's entirely different than a sole--

Unidentified Justice: Well, I thought that's... I thought your answer to Justice Ginsburg was that that's what we were talking about.

Mr. Mulack: --I didn't believe we were talking about combinations of colors.

These are words of art.

Unidentified Justice: What you said is that you can't trademark a color.

Green-gold can't belong to Qualitex for all purposes.

It can belong to it, if your position is right, on these press pads.

Mr. Mulack: That's correct.

Unidentified Justice: And right from the start you can walk into the register and say... you know, register... we haven't sold any trade pads at all yet, but we're thinking of selling trade pads, and we want this weird color to be our trademark--

Mr. Mulack: We have not--

Unidentified Justice: --and the registrar says, you want it, you got it.

Mr. Mulack: --We have not suggested--

Unidentified Justice: No secondary meaning at all.

Mr. Mulack: --Your Honor, we have not suggested that.

Unidentified Justice: I know you haven't suggested it, but we're asking you, is it possible?

If you wanted it, could you get it?

Mr. Mulack: That's a very unique question in the sense that if it--

Unidentified Justice: It's not unique, it's been asked about 20 times from up here and--

--We've gotten about five different answers.

--and we still don't have an answer.

Mr. Mulack: --If it is inherently distinctive in color, which we, of course, would argue that the Qualitex color is distinctive... we're not arguing it's inherently distinctive.

We established our trial court record by proving after 30 years of use that people have recognized it as a sole source.

We're not taking it that far as to say, this color is inherently distinctive.

Unidentified Justice: You don't want us to reach that issue?

Mr. Mulack: That's correct.

We've not asked that point.

Unidentified Justice: So if I happen to like lime yellow, for example, which I think is a beautiful color, you all could go around and get monopolies of it, and henceforth products wouldn't have lime yellow on them because you and other people would have tied them all up with trademarks?

At least they wouldn't have lime yellow on them if... why do you need to take all the lime yellow, anyway?

[Laughter]

I mean, if somebody copies your appearance they get a trade dress suit.

Mr. Mulack: Well, the... in the particular industry in question, the press pad industry, many different colors have been used over the course of the years.

No one has ever used this unique green-gold color that Qualitex has used.

Unidentified Justice: Would you explain the protection that you get from having a trademark of this color on this pad that you don't get from trade dress?

Mr. Mulack: Yes.

With respect to a trademark registration, certain rights are conferred by the statute, namely, incontestability of that mark after 5 years.

You have a right to constructive notice that anyone that may use this product throughout the country is put on constructive notice that it's being used and you better not infringe based upon the registration.

Thirdly, there's also an importation clause that allows us to stop at the borders the importation of counterfeit goods just by showing the registration, which is quite important to Qualitex today and other manufacturers because of the importation of knock-off goods, if you will.

So you get those three benefits, in addition to others, that you don't get in a straight trade dress case, and you also... the big benefit is to the public, in the sense that there's a central registry.

There's a registry as to this particular color or this particular trademark being used by a particular manufacturer, and the members of the public then know where to check to see if, indeed, a particular color is being used or has been trademarked.

Unidentified Justice: May I ask you--

--Doesn't trade dress give you enough protection in case somebody copies your appearance?

My real question was the problem of exhausting colors.

There are infinite numbers of beautiful designs.

I take it there are a finite number of attractive colors, and so what is the reason why it's important to industry to be able to tie up with a trademark one of what I would think would be a fairly limited number of attractive colors?

Why doesn't using a symbol, or the trade dress protection, give adequate protection for any legitimate purpose that industry might have?

Mr. Mulack: Well, as I mentioned, trademarking a particular color helps confusion in the marketplace.

Consumers know when they see this same color, or this mark, that they're getting the quality goods that they expected to obtain, and it's no monopoly whatsoever in that respect.

This case--

Unidentified Justice: But do they know that if--

Mr. Mulack: --held back in 1918 there's no monopoly to the extent--

Unidentified Justice: --Do they know that if the color appears on an entirely different product, say, a necktie?

I take it you wouldn't claim using this color for a necktie?

Mr. Mulack: --No, Justice Stevens, we have no interest in protecting this particular color against any other product, except on a press pad.

Unidentified Justice: So why is the issue phrased as broadly as it is in the questions presented?

You're not asking for a monopoly on this color.

You're asking for a monopoly on the color used on this particular ironing pad.

Why is that different from a trademark on this color in a triangle, for example?

Mr. Mulack: Well, that... that is a... that is a symbol attached to a color which may create a trademark.

It's different because our whole pad is in this one color--

Unidentified Justice: But it's--

Mr. Mulack: --and the public recognizes this color.

Unidentified Justice: --Which is always in a particular shape, is it not?

It's kind of a long, narrow--

Mr. Mulack: Yes.

Unidentified Justice: --But why us that different than if you just trademarked a triangle of this color?

I mean, neither one would preempt the use of the color on other products that don't have the triangle on them.

Mr. Mulack: Well, what Qualitex did 30 years ago, Justice Stevens--

Unidentified Justice: That's 30 years before they applied for the trademark.

Mr. Mulack: --Yes.

It--

Unidentified Justice: I understand that.

Mr. Mulack: --placed on the pad this very arbitrary color so it would identify itself as a single source.

Unidentified Justice: But why is that different from making a triangle with an arbitrary color in it, using that for 100 years on some other product, like a bottle of soft drink, to identify it?

Mr. Mulack: Well, it may or may not be different, but in terms of what is done, what the realities of the marketplace are right now is that we have sold over a million pads with this one color, so when a buyer sees that--

Unidentified Justice: Yes, but you're not claiming a monopoly on the color on other products, or on other shapes, and I don't understand why this case is different than the ordinary trademark case with the triangle.

Mr. Mulack: --Well, this case is no different in terms of the perspective of this Court deciding whether or not color alone is a trademark, that's exactly correct.

Unidentified Justice: But you're not deciding that color alone is a trademark.

You're deciding that color in this particular configuration on this particular product is a trademark.

Mr. Mulack: No, Your Honor, I don't go so far as to talk about configuration.

Configuration may be another separate element tied into trademarks, per se, that are allowed in color right now.

For instance, a configuration of the red cross, that has been trademarked over the years, and that is a configuration, so when Your Honor puts the word "configuration" into this trademark, it totally takes me into a whole different perspective as well as into different trademark law.

We're talking about just color alone applied to a product, and that product is a press pad.

Unidentified Justice: If you win your case, and I go into the publishing business and I publish all of my books with green-gold bindings, do I infringe your trademark?

Mr. Mulack: Absolutely not.

The registration certificate--

Unidentified Justice: Then I don't know why your answer to Justice Stevens isn't different.

I don't understand the different... I don't understand how you can answer me as you did, and Justice Stevens as you did.

Mr. Mulack: --One must go to the very basic trademark registration certificate that says Qualitex was granted a trademark for the green-gold color as applied to press pads.

Beyond that, we have no rights whatsoever.

Unidentified Justice: Then why isn't the press pad like the triangle.

Mr. Mulack: I'm sorry, Your Honor?

Unidentified Justice: Then why isn't the press pad like the triangle on Bass Ale?

Mr. Mulack: The press pad is a whole different concept, because it is a whole product that has a color.

It's not a consumer looking for a small, little symbol or mark as a trademark.

The trademark in this case is the entire application of an arbitrary color that was placed upon the natural white, off-yellow white cloth that comes from the manufacturer.

Unidentified Justice: Well, in any case--

Mr. Mulack: They put this green color on it, and that became the trademark.

Unidentified Justice: --Could you give a general answer to Justice Stevens and to me that you are not trying to get a trademark in color per se, but color as applied to something in particular?

Mr. Mulack: Yes, we are, and when Your Honor says color per se, I take that to mean, so that the record is clear, color alone.

Yes, we are seeking to establish a trademark in color alone as applied only to press pads.

Unidentified Justice: Now--

--In which case, Justice Stevens is correct in suggesting that the question that you present is somewhat too broad.

Mr. Mulack: The question I'm... that we present--

Unidentified Justice: Your question is whether the Lanham Act prohibits the registration of color as a trademark, and based on the colloquy we've had, it seems to me the question should have been whether or not the Lanham Act protects the registration of color as a trademark on the ironing pad that's the subject of this suit.

And, indeed, that's what's before us, is it not?

I assume that the Patent & Trademark Office granted a trademark here for a green-gold press pad, isn't that right?

Isn't that what the trademark office gave you?

Mr. Mulack: --That's exactly right.

Unidentified Justice: And that's what the Ninth Circuit invalidated?

Mr. Mulack: That is correct.

Unidentified Justice: And that's what's before us.

Mr. Mulack: What's before you--

Unidentified Justice: Not green-gold out here as some separate trademark item, but a green-gold press pad, right?

Mr. Mulack: --That is the specific issue with respect to the facts of this case before the Court.

The--

Unidentified Justice: So you stated your question too broadly.

Mr. Mulack: --Well, if the Court please, what we were certified by this Court on, after petition for cert was granted, the issue was directed as to whether or not color is--

Unidentified Justice: Why can't you say yes?

I mean, all you're interested in is having a green-gold press pad trademark upheld.

Mr. Mulack: --That is precisely what we'd like to do, but to reach that issue, the Court has to construe that the Lanham Act allows color as a trademark.

Unidentified Justice: Well, it's a little too simple.

I mean, really, you are arguing that your trademark is green-gold, but you are permitted to use that trademark only for press pads.

Mr. Mulack: That's right, and only because the Patent & Trademark Office allowed us to do it.

Unidentified Justice: Somebody asks you what's your trademark, you say, green-gold.

No, that's not right.

That's not what the registration says, is it?

What does the registration say?

The registration says it can only be used on press pads.

Mr. Mulack: Press pads, that's correct, but to reach that registration, and to have it given to us, the Patent & Trademark Office must have complied with the law, and the law was, under the Lanham Act, whether or not you can trademark a color, whether you can give a registration for color alone, so... so the Ninth Circuit says, while we agree that the Lanham Act does not prohibit the registration of color, they astoundingly decided that they wanted to cancel our trademark registration when the PTO gave it to us based upon that.

Unidentified Justice: Thank you, Mr. Mulack.

Mr. Mulack: Thank you, Your Honor.

Unidentified Justice: Mr. Wallace.

ORAL ARGUMENT OF LAWRENCE G. WALLACE ON BEHALF OF THE UNITED STATES, AS AMICUS CURIAE, SUPPORTING THE PETITIONER

Mr. Wallace: Thank you, Mr. Chief Justice, and may it please the Court:

There is a dual nature to the interest of the United States in this case.

On the one hand, we urge the Court to uphold the interpretation of the Patent & Trademark Office that the overall color of a particular product, not the color in the abstract, but the color of a particular product, or of a container in which the product is marketed, can qualify under the standards of the Lanham Act for registration as a trademark, and this case provides a textbook example of how it can qualify through the establishment of secondary meaning and nonfunctionality, a rather strong showing in this case.

On the other hand, we urge the Court not to undermine the rather exacting standards that the Patent & Trademark Office applies, and that we think are properly applied under ordinary principles of trademark law when it, or a reviewing court is considering whether an applicant has established the right to register a trademark.

In its 1993 second edition Trademark Manual of Examining Procedure, which we have cited and quoted a bit of in our brief, there is a whole section devoted to the question of color as a trademark.

It's four paragraphs long, and I would like to summarize just a few of the high points at section 1202.04(e), which first cautions the examiners that color is usually perceived as an ornamental feature of the goods, which is not something that could be trademarked.

However, color can function as a trademark if it is used in order to identify the source and if it is perceived by the purchasing public as identifying and distinguishing the source of the goods, and the applicant must submit evidence to the examiner that the proposed color mark has become distinctive of the applicant's goods in commerce, and--

Unidentified Justice: Mr. Wallace, can I interrupt you with a question?

Supposing I was a brand-new manufacturer of a product and I wanted to register a very distinctive new design as the trademark before I'd ever sold it, just to anticipate, I want to identify it.

Can that be done?

Mr. Wallace: --Are you speaking of, not--

Unidentified Justice: Not color, just--

Mr. Wallace: --Your question is not restricted to a single color?

You're talking about--

Unidentified Justice: --I'm just talking about a typical trademark with a fancy design--

Mr. Wallace: --If it is shown to be--

Unidentified Justice: --and a couple of animals in it.

Mr. Wallace: --inherently distinctive--

Unidentified Justice: If it's sufficiently distinctive--

Mr. Wallace: --it can qualify.

Unidentified Justice: --it can qualify even though you've never sold the product, for future use?

Mr. Wallace: Under the Lanham Act as it's been amended, that... if you have an intention to sell it--

Unidentified Justice: Right.

Mr. Wallace: --that will suffice, but then you have to introduce it in commerce and use it--

Unidentified Justice: Could you do that with a color?

Could you do that with a color, say I'm... say this product had never been on the market, and they say, we found this very distinctive color, by which we intend to market the product.

Could they do that?

Mr. Wallace: --Our brief said that a color of a product would not ordinarily be registerable as inherently distinctive.

We're not closing our minds to that possibility, but we have not encountered it in administering the trademark law.

Unidentified Justice: So the statute has two different meanings, depending on whether one plans to market the product on the one hand, or has already marketed it on the other?

Mr. Wallace: The statute has the same meaning.

In order for a mark to be registerable without a showing of secondary meaning, it has to be inherently distinctive, but mere coloration of a product, every product has some color, and colors are used in all kinds of contexts.

Mere coloration is not ordinarily inherently distinctive, so that in order to use just the overall color as a trademark, you have to show secondary meaning.

It's the same meaning of the statute.

Unidentified Justice: Why isn't every trade dress therefore trademarkable, or is it?

Mr. Wallace: Well, there may be aspects of it that are trademarkable, but the trade dress--

Unidentified Justice: Why not the entire thing?

Mr. Wallace: --There are similar... there may be instances where the trade dress could be put together as a trademark in its entire thing.

Unidentified Justice: Well, how about--

Mr. Wallace: If you're talking about the packaging of a particular product--

Unidentified Justice: --Right.

Mr. Wallace: --it could happen.

Unidentified Justice: A certain shape, and a certain color, and a certain ribbon on it, that's a trademark.

That becomes a trademark there, just because people get used to seeing it that way.

Mr. Wallace: Well, if you're--

Unidentified Justice: It's just a new meaning of trademark to me.

Mr. Wallace: --Well, it's not a new meaning, if you establish secondary... people don't usually box themselves into not being able to change any aspect of the trade dress in order to have a mark.

The mark is usually something more discreet that is then used over the years in different ways, but there's nothing in the act that requires that if something qualifies as trade dress it cannot qualify as a trademark, or vice versa.

Unidentified Justice: I suppose a smell, under the Government's theory, could also be... could also qualify.

Mr. Wallace: Well, I have not explored the question of fragrances.

Unidentified Justice: Well, you sell these ironing covers, and they always have a lavender smell, you know.

You associate the lavender smell with this company, so you're going to trademark lavender for ironing board covers.

Mr. Wallace: That is a question I have not explored with the Patent & Trademark Office, or--

Unidentified Justice: Mr. Wallace--

Mr. Wallace: --it hasn't come up in the cases.

Unidentified Justice: --you mentioned two interests of the Government.

Is there... does the Government have any interest that relates to its position vis-a-vis other countries?

That is, in the NAFTA section, article 1708, color is specifically mentioned as something that can be the subject of trademark to distinguish goods or services, so does the United States have any interest vis-a-vis its partners in the trading world to have the same definition of what's trademarkable?

Mr. Wallace: Well, it's not that the definition will always be the same.

The treaty recognizes that if the participating country affords trademark protection for color, then it will be recognized by the other signatories, and of course--

Unidentified Justice: But wouldn't it be odd, then, to recognize somebody else's color and say, but at home you couldn't do it?

Mr. Wallace: --Well, the treaty has not amended the laws of the participating countries so that everyone now has an identical trademark law, but it recognizes aspects of the trademark law that will be mutually enforced.

There are many similarities in the trademark laws, and we must remember that protection of color under the trademark laws can often mean something different from what it means in this case.

It can mean the color of a logo, or a combination of colors on the logo.

It doesn't always mean the color of a product, or the overall color of a container.

In any event, what I was hoping to emphasize is that both aspects of our dual interest can be illustrated by contrasting the situation in this case with claims that are suggested to this Court in one or two of the amicus filings that have been made in support of the petitioner in this Court, which seem to us to present much closer cases because they raise concerns that are not involved in this case about whether... concerns that would probably be explored before the... in the administrative or judicial proceedings about whether the color would qualify as a trademark, and I'm not attempting to prejudge those cases and certainly not asking the Court to prejudge those cases.

Unidentified Justice: What I'm trying to work out, the reason I raised this before, was why... what is the difference between a triangle and a color?

A triangle obviously could be used as a trademark, assuming all conditions.

Historically, I take it, many courts have said that colors cannot.

Now, the differences that I was... assumed had been in the briefs, that I wanted your reaction to, was that there are a limited number of, let's say, attractive colors.

They're prevalent everywhere.

So that if you allow in each field one person to get a trademarkable monopoly of color, you might have less attractive products, you might have trade advantages, et cetera.

That's what I wanted a reaction to.

Mr. Wallace: There are specific findings in this case that answer that question, that there are many other attractive colors available for press pads, and there's nothing in the act that precludes this basis for granting... as a per se matter, for granting a trademark.

Even though courts, mostly looking toward pre-Lanham Act law, some courts have adopted that view, it is not based on the statute.

Unidentified Justice: Thank you, Mr. Wallace.

Mr. Strick, we'll hear from you.

ORAL ARGUMENT OF LAURENCE D. STRICK ON BEHALF OF THE RESPONDENT

Mr. Strick: May it please the Court, Mr. Chief Justice:

I'd like to pick up on a comment that Justice Scalia just made, because I think it goes to the essence of the respondent's case.

Under the view asserted by Qualitex in this case, whatever distinctions might have existed in the law between registered trademarks and trade dress, two completely different concepts heretofore, would be eliminated.

The differences would go away.

In Qualitex's view, there is no difference between trade dress, the overall look and image of a product, and a registered trademark, which has generally and historically been limited to devices, symbols, and designs under the Lanham Act.

I don't think... in any way in which you torture the language of the Lanham Act, mere colors used on these press pads, unconfined to a symbol or a design, cannot be designed as a symbol or a design.

It is trade dress, which adequate protection already exists for, and which Qualitex was given in the case at bar, the same protection it would have been entitled to had it had a registered trademark.

No, petitioner would not answer, the 20-or-so times it was asked by the Court.

I will.

That is exactly what the petitioner is asserting.

The petitioner is asserting that I can walk into the Patent & Trademark Office with a color that is inherently... not inherently distinctive, that has never been used on a product, that the public has never even seen--

Unidentified Justice: Well, now, wait a minute.

Mr. Strick: --and say, register it.

Unidentified Justice: Wait a minute.

I'm not sure that's what petitioner said.

We tried to pin petitioner down and were unable to do it, but we do have a case here where the findings show there was secondary meaning acquired.

It's not a first-time registration before any production of the press pad.

This is a press pad that has been in use and been sold for a long time with the green-gold color, and where the Patent & Trademark Office, after some time of experience, did issue a trademark, and you say that that is improper?

Mr. Strick: Yes, I do, Justice O'Connor, and I say it for this reason.

Under section 2 of the Lanham Act, the only type of trademark that requires a showing of secondary meaning in order to earn registrability is a descriptive mark, as this Court pointed out in the Two Pesos case.

Now, the fact that Qualitex went ahead in this case and spent an awful lot of money to prove secondary meaning I think is itself a concession that its color is not inherently distinctive, otherwise it would have so asserted, and it didn't in this case.

Now--

Unidentified Justice: What do you mean by the term... and you've used it, and your opponent, to say that a color is inherently distinctive?

What precisely does that mean?

Mr. Strick: --It's a difficult question, Mr. Chief Justice.

Unidentified Justice: Well, it's apparently a difficult answer, too.

Mr. Strick: I think that there are certain colors that if you compare, for example, hot neon pink, that color, one might say that there are certain colors that might in fact be inherently distinctive, because--

Unidentified Justice: Well, is it a totally--

Mr. Strick: --just the spectrography of it.

Unidentified Justice: --Is it a totally subjective thing?

Mr. Strick: I think it is a totally subjective thing.

Unidentified Justice: Then how is it usable in deciding whether or not something can be trademarked?

Mr. Strick: It is the essence of one of the difficulties we've pointed out in our brief.

It is precisely because it is so difficult to tell colors apart, and to make fine distinctions between color.

I can't help but resort to props in this case, when I use--

Unidentified Justice: Well, I thought--

Mr. Strick: --Here are three shades of green--

Unidentified Justice: --Yes, but the Solicitor General says you can't have color as inherently distinctive, that only if secondary meaning has been acquired can the trademark issue.

That's the S.G.'s position.

Or at least it used to be.

It was in his brief, I think.

It was in the brief, anyway, and apparently that kind of fits the facts of this case, and why, on the facts of this case, is the trademark invalid, where we are not dealing with inherently distinctive color, we are dealing with something that has acquired secondary meaning and was found to be nonfunctional?

Mr. Strick: --Yes, justice O'Connor, I say that it's not registrable because it's not being used as a trademark as you defined it at the beginning of petitioner's argument.

The use of color in this case is not a symbol, it is not a device, it is not a design.

Justice Thomas, in his concurring opinion in the Two Pesos case--

Unidentified Justice: Well, the petitioner says--

Mr. Strick: --generally recognized--

Unidentified Justice: --The petitioner says color on a press pad is a symbol, in effect.

Mr. Strick: --I simply disagree with that proposition.

In my--

Unidentified Justice: The Patent & Trademark Office takes the position that it is.

Mr. Strick: --The Patent & Trademark Office, if you look back to the Owens-Corning case, was sort of... sort of led kicking and screaming into registering trade colors.

They had denied Owens-Corning a trademark in that case.

The case arose from an appeal of the Trademark Trial & Appeals Board.

It's not some--

Unidentified Justice: That's pink fiberglass insulation?

Mr. Strick: --That's the famous Owens-Corning 1-800-PINK color.

Unidentified Justice: Insulation.

Mr. Strick: Yes.

Unidentified Justice: Yes.

Mr. Strick: Behind-the-wall insulation.

Unidentified Justice: But did the... does the office take the position that color is a symbol, or simply that color as applied to a product is registrable under a definition which does not confine itself to symbols or words or what-not, but refers to a mark as including these things?

Mr. Strick: I think that the way they write the precise rule in question sort of begs the question.

Rule 1202.04(e) says the color can function as a trademark if it is used on the goods in the manner of a trademark.

What I am arguing is that mere color unconfined by a symbol or a design is not a trademark.

Unidentified Justice: Yes, but they--

Mr. Strick: It is protectable trade dress.

Unidentified Justice: --Wasn't... isn't it... that may not be a championship definition, but isn't it clear that they were not assuming that there was the little symbol or device involved, so they must have been assuming that it was color as applied to some kind of an object.

Mr. Strick: I don't get that meaning from the regulation, Mr.... Justice--

Unidentified Justice: Why couldn't color be... fit with the definition of a device used to distinguish goods?

The color here is a device, is a means to distinguish these press pads from other press pads.

Mr. Strick: --I am simply asserting as a matter of policy that color of a product itself, while it may be protectable as trade dress under appropriate circumstances, the overall product, color of a product, that which has always been traditionally referred to and regarded as trade dress, is simply not a device within the meaning--

Unidentified Justice: Well, I'm not sure that that's--

--The Patent & Trademark Office now thinks it is.

Mr. Strick: --I understand the Trademark Office--

Unidentified Justice: And wisdom may come late, but--

Mr. Strick: --And it may not be correct wisdom, for the host of reasons we set forth in our brief.

Unidentified Justice: --But everyone agrees, I take it, that color can be part of a registrable device or symbol.

Everyone agrees with that, don't they?

Mr. Strick: Everyone... even I agree with that.

Unidentified Justice: All right.

[Laughter]

Why isn't color, in the context of a press pad, something that has all of the impact and the force and the meaning of a symbol, or a device?

Mr. Strick: I simply disagree with that assertion, Justice Kennedy.

What... the law has always distinguished between trade dress and trademarks.

There is tremendous cross-over, and this Court has held numerous times that the same requirements for trademarkability are used to apply to trade dress to determine whether trade dress is protectable.

But again, to pick up on something Justice Scalia mentioned, why couldn't we trademark, for example, smells?

If I come up with an alleged unique chocolate smell for a candy bar and assert that it, too, functions... has all the functionality and all the attributes of a trade--

Unidentified Justice: You were saying that a design or a symbol need not be registrable with reference to its use on a particular product--

Mr. Strick: --I'm--

Unidentified Justice: --or it becomes trade dress--

Mr. Strick: --What I am saying--

Unidentified Justice: --and I don't think that's the law.

Mr. Strick: --Well, what I am saying is that the law has always separated the issue of registrability of a trademark from concepts of trade dress.

It's an issue in my mind between registrability and protectability.

The mere fact that trade dress may be protectable because it has the attributes of a trademark doesn't necessarily mean it ought to be granted registrability, because I think it puts it somewhat in tension with the Two Pesos case.

Two--

Unidentified Justice: Is there any other instance in which the registry has, before issuing a trademark, has requested... gone to the trouble of ascertaining whether that mark has already acquired a secondary meaning?

Are there any other areas where the registry does this?

Mr. Strick: --My understanding is that's exactly what happened in this case.

Unidentified Justice: In this case, I know.

Mr. Strick: The trademark office did require further declarations and affidavits regarding secondary meaning.

Unidentified Justice: Is that, as far as you know, unique?

Mr. Strick: As far as I know, it's unique.

I am not aware of every single instance of registration of color in the trademark office or what was filed.

Unidentified Justice: I had always assumed that you can get a trademark ex ante.

The whole purpose of it is to brand the stuff before you've ever sold anything.

Mr. Strick: That's correct.

I think that's why the holding in Two Pesos was that inherently distinctive trade dress is entitled to protection without secondary meaning, because it's the right to identify your goods even if it hasn't yet bestowed secondary meaning that's being protected.

What I'm simply suggesting is that the product feature in this case--

Unidentified Justice: You keep looking back there.

I can't see what--

Mr. Strick: --There's a press pad--

Unidentified Justice: --You're doing something.

Mr. Strick: --We have... we've brought the actual press pad.

Unidentified Justice: Ah, I see.

All right.

[Laughter]

Mr. Strick: The product feature in this case is something which has traditionally been regarded as trade dress subject to virtually the same protection as a trademark.

The difference is this.

Again referring back to Justice Scalia's question to Mr. Mulack, could they just walk into the office and say, register this, without a showing of secondary meaning, even if the color is not inherently distinctive?

Putting aside whether I concede that certain colors may be inherently distinctive, could they go in and simply say, register this color, without any showing of secondary meaning, when, under the Two Pesos holding, it's only inherently distinctive--

Unidentified Justice: Well, what if--

Mr. Strick: --trade dress that's entitled to proof without secondary meaning.

Unidentified Justice: --What if the effort was to register a small circle of the same color to simply be put on each of the pads and the rest of the pad stay in its natural color?

Mr. Strick: I think that's probably registrable.

It's a device, it's a design, or it's a logo, but that's not what they did in this case.

They sought to register the entire... in other words, there's no difference between the product and its trademark.

Unidentified Justice: I take it the word "device" in this list of things doesn't mean a gimmick, it means... it means like a heraldic device, that is, a symbol or sign.

It's another word for a sign.

Mr. Strick: Some element of design, that's correct, Justice Scalia.

Unidentified Justice: Where has it ever been defined that way by Congress or by the PTO?

Mr. Strick: I don't think it has.

Unidentified Justice: Hasn't it generally been given a very broad meaning, symbol and device?

Mr. Strick: Generally so.

Again, quoting from Justice Thomas' concurring opinion in the Two Pesos case at page 2766 of the Supreme Court Reporter version of the case, trade dress...

"trade dress, which consists not of words or symbols but of a product's packaging or image, seeks at common law to have been thought incapable ever of being inherently--"

Unidentified Justice: That's not the question I'm asking about.

Trade dress... correct me if I'm wrong.

I associate it more with a total packaging, as distinguished from the goods themselves, and I thought that the words "symbol" and "device", as used by Congress in the law, were given a broad meaning, not a narrow meaning, to mean a heraldic device.

I thought that those terms were given a broad meaning.

Am I wrong?

Mr. Strick: No, I don't think you are wrong, Justice Ginsburg.

I'm only suggesting that the word "device", "symbol" or "design" in my view requires some element of design or art to be a symbol or a logo, otherwise it qualifies as trade dress.

Now--

Unidentified Justice: So you disagree with the insulation case as well, the pink--

Mr. Strick: --That's correct.

We agree with Judge Bissell's dissent in the Owens-Corning case, not with the majority opinion.

We think that that was an unusual case based on the facts.

It ought to be limited to its facts, because you might recall that Owens-Corning... Owens-Corning was the only manufacturer that put color on its insulation that went behind walls.

No one cared what color it was, but Owens-Corning used--

Unidentified Justice: --They advertised it that way, too, the famous pink panther, right?

Mr. Strick: --And the 1-800-PINK telephone number, and on and on, so the Court in that case said, we don't think in this particular case it's anticompetitive to grant a trademark because no one else is using color.

I'm suggesting that's an unusual situation.

The facts in the case at bar are that every press pad manufacturer uses one color or another.

Unidentified Justice: May I ask you a question that really, I'm wondering how much emphasis we should properly put on the showing of secondary meaning in a case.

As I understand what you're telling us, the statute doesn't require it, but the trademark office does, is that right?

Mr. Strick: That's what it seems to require.

Unidentified Justice: But if that's true and the statute does not require it, would it not follow that if you came in tomorrow with a yellow pad, not even a distinct... you'd be entitled to a trademark?

Mr. Strick: Yes.

That's what that would mean.

Unidentified Justice: That's your position, that if they're right, that you don't really need all the secondary meanings.

Mr. Strick: That's correct.

They just walk in and get a trademark, even if what they're really talking about is trade dress, and even if it's not inherently distinctive trade dress, which would require an affirmative showing of secondary meaning under the Two Pesos case.

Unidentified Justice: Well, so then you're saying that no trademark requires secondary meaning as a condition of registration.

Mr. Strick: Section 2 requires a showing of secondary meaning only with respect to descriptive marks, as the Two Pesos case pointed out, and the reason why they did not graft on to section 43(a) requirement for secondary meaning for inherently distinctive trade dress is because section 2 doesn't require it except for descriptive marks, if it's arbitrary, fanciful, suggestive, et cetera, that section 2 does not require a showing of secondary meaning for registrability, only if it's the weakest form of mark, in essence, a descriptive mark.

The position adopted by petitioner in this case would turn that, I think, on its head, because they would be able... and be at tension with Two Pesos, because they would in essence be able to register that which might not have been protectable as trade dress absent a showing of secondary meaning, and we've pointed out that--

Unidentified Justice: Well, if you say that color can't be inherently distinctive, so that what we have here is something descriptive in the minds of the buyers?

Then under our Two Pesos case, and other authorities as well, there would have to be secondary meaning to make it protectable.

Mr. Strick: --That's correct.

Unidentified Justice: So I think maybe that's the rationale of the Patent & Trademark Office, to say color isn't inherently distinctive, it's part of the public domain, but if it's descriptive as applied to a product, it can be registered provided secondary meaning is established and provided it's nonfunctional, and isn't it true that very few items will be found where color is nonfunctional?

I guess an aesthetic use or purpose of color makes it functional.

Mr. Strick: I think color is generally used for aesthetic purposes, and since the so-called aesthetic functionality test really seems to have lost its way in the law, and it really isn't used... it isn't used in the Ninth Circuit any more, for example... we did show out there was a nonaesthetic function, in essence, for the use of color on press pads, a finding that was not persuasive either to the district court or to the Ninth Circuit.

Unidentified Justice: But color, not a particular color, as distinguished from the boat motor case, where the particular color, black, that color was functional because it made it look smaller, because it was compatible with different boats--

Mr. Strick: Exactly.

Unidentified Justice: --but here it's arbitrary.

Color is functional on a press pad, but not any particular color.

Mr. Strick: True.

Unidentified Justice: There, the color black was functional.

Mr. Strick: That's true.

I... both the district court and the Ninth Circuit held that color, the use of color may be functional, but not the particular shade of color employed in this case.

We argued, because there was substantial evidence, that you can't sell a light press pad.

They get dirty fast, they look untidy... that was generally uncontested.

But the point that both courts made, however, was it was this particular... there was no need shown for this particular shade of green, and therefore it was serving a source-identifying feature, not a functional feature of making the pad look neat.

But there... most, I think, examples of the use of color will be found functional.

As some of the courts have pointed out, ice creams tend to be packaged in blue or silver packages because it connotes coldness or iciness.

Vegetable cans are packaged in green, for example, because green connotes vegetables.

Lemonade is made yellow, because it connotes lemons.

I think one of the examples I've always used in this case, not... going back to 1920, to the Court's decision in the Coca-Cola versus Koke, K-o-k-e Koke, if you were to take a glass of Pepsi and a glass of Coke, a can of Pepsi and a can of Coke, say Coca-Cola, probably the most famous logo every invented, and a can of Pepsi, which basically is also a very well-known logo after all these years, no one would confuse them, because the logos are so well-known, so well done.

Now, if I took that beverage and poured them both into clear glass, I would hold up two glasses of brown-flavored liquid that you couldn't tell apart.

Now, this Court held in the Coca-Cola case that you couldn't get trademark rights in the brown color of that fluid because this Court held that coloring matter is free to all, and it's an example, I think, that goes to the--

Unidentified Justice: Well, but wasn't part of the reason that that, as a functional matter that was necessary for the manufacture of the product?

A different case, something which we might all need after the arguments, are Pepto-Bismol--

[Laughter]

--which is pink.

Mr. Strick: --And it's packaged in a clear bottle, so what you're seeing is really the product, not some image or design pressed onto the bottle.

If you empty a bottle of Pepto-Bismol it's a clear bottle.

That's another example.

They would be arguing, and it's one of the more difficult, I think, examples, because pink is a much more distinctive color than... than green.

Unidentified Justice: Well, but pink medication you associate with being soothing, so I assume that that's functional.

Mr. Strick: But... that may be true.

It's a soothing color, it's--

Unidentified Justice: Sure.

Also, it has kind of a candy connotation, so it's not really medicine, but that's a question I think that goes to the private... private, so-called private label manufacturers question, where this Court... courts are now holding that you can mimic packaging.

The issue is likelihood of confusion, not whether you're mimicking packaging.

If you're putting a sufficient descriptive label... this is Ralph's Market stuff, not Procter Gamble stuff... you're not infringing trademark rights, because the essence of trademark law is to prevent deception and confusion, not simply to protect property rights, but if you adopt Qualitex's position in this case, you are saying that all trade dress is now registrable.

Two Pesos can now take their trade dress one further and register a distinctive Mexican-looking motif for fast food, Mexican--

--I thought Mr. Wallace said no, you were buying into all this stuff that's in the manual, too, so that the trademark office had to be very careful about what colors on products it accepts for registration.

Mr. Strick: --And whether the color is truly being used, as I quoted from the regulation, in a trademark sense of the word.

We've also pointed out the practical problems that registering colors will present.

For example, the trademark office used the same lining codes for pink and red, so if I'm going to search the principal register to see if a client of mine's color is going to infringe a registered color, and I see a lining for red, I don't know what shade that is.

How do I know whether my client's color is going to infringe that color when it doesn't give me sufficient notice of what color we're talking about?

Second, how close do the colors have to be before they're found to be infringing?

I couldn't help notice at counsel table I've got a handful of amicus briefs in light green, I've got another shade of green here... these are pretty clearly different, but the pen blotter that counsel are provided at table is pretty close to this green, and as you get into those kinds of issues, I think you're dealing in an area where both the trademark office and perhaps even the law is not really prepared to exist.

Unidentified Justice: Your argument interests me that you would not know if you saw that a color was registered whether you were a possible infringer.

Is that unique to the color problem?

Don't you have to really examine the exact replication of each symbol or device before you can give an opinion as to whether or not it infringes?

You're not saying that every symbol must have a verbal description that is sufficient in and of itself to determine infringement, are you?

Mr. Strick: No, I'm not, Justice Kennedy.

What I'm saying is, you've got a traditional situation where I'm going to search the principal register and compare my client's proposed mark with a registered mark, I'm going to see words, I'm going to see a symbol or a design, and that symbol or design may or may not have lining codes which the trademark office uses to connote different colors.

Now, I can look at the symbol or the words and say, whoops, my client's mark is going to infringe that, irrespective of the color, or irrespective of whether we've changed the color.

What I'm saying is, when you have a registration that says green-gold for press pads, I don't know what the registration is talking about, and the lining codes may not help because it doesn't tell me what shade of green, what shade of red, what shade of blue.

Unidentified Justice: Well, before you yield some opinions as to some devices, I assume you would have to identify the precise color on the registered device by looking at the mark itself, not just some verbal description of it.

Mr. Strick: That's correct.

In this case it would force me to go out and buy a press pad, because that's the mark.

There's not a symbol.

It's not a design.

It's not a device.

I would have to go out and buy a press pad and then say, okay, this color does or does not... my appliance color does or does not infringe, and I think that's the essence of what I'm saying, and I think it's the essence of the question that Justice Scalia posed: why doesn't trade dress, then, therefore become registrable?

Under the view adopted by Qualitex, there's going to be no difference between trademarks as I've traditionally understood it in 18 years of practice and trade dress, which encompasses a whole host of features separate and apart from the logo, symbol, device, or design a manufacturer may use to differentiate his goods from the goods of a competitor, and I think that opens a host of problems that are unnecessary, particularly when color is already protectable either as part of a logo or as trade dress under section 43(a) of the Lanham Act.

Unidentified Justice: I'm trying to think of what authority the register has to insist that before he approve a particular trademark it have acquired recognition as the symbol of a particular--

Mr. Strick: Well, if you say... if I ask, what is the trademark in this case, I'm going to say green-gold.

I think that's inherently descriptive, almost per se.

Therefore, I suppose the trademark office could say, because just in--

Unidentified Justice: --I think--

Mr. Strick: --the color is descriptive we're going to--

Unidentified Justice: --I think... yes, I think the trademark office probably says it doesn't become distinctive until it has acquired distinctiveness from the public associating it with the particular product, but that's a strange, strange meaning of distinctive, it seems to me.

Mr. Strick: --I agree.

Unidentified Justice: But if you take that... if you construe their work that way, then you would not be able to get a trademark on your yellow pad that we discussed earlier without proving secondary meaning.

Mr. Strick: That's correct.

That is exactly our position.

Unidentified Justice: It seems to me it either is or isn't distinctive.

It doesn't acquire distinctiveness.

It acquires recognition, perhaps.

Mr. Strick: I--

Unidentified Justice: It's either distinctive or not distinctive.

Mr. Strick: --Again, I think in Two Pesos the Court said the issue is not public recognition of the distinctiveness.

It's either inherently distinctive, or it's not.

If it's inherently distinctive, it's entitled to be protected irrespective of whether that inherent distinction has bestowed some other benefit.

It adopted the Fifth Circuit's position in that case.

If there are no--

Unidentified Justice: Do you agree with the view that this color is descriptive?

Mr. Strick: --I agree with the view that the color... I think that any color mark is inherently descriptive, because you have to describe it to describe it.

What is it?

It's yellow-green.

That's descriptive.

Unidentified Justice: But the word "descriptive" means descriptive of the product, doesn't it, not descriptive of the color?

Mr. Strick: I suppose you could... yes.

Normally, descriptive--

Unidentified Justice: And you agree that this is descriptive of the product?

Mr. Strick: --I think it's a descriptive use of the product, but it's not the same as a can of meat--

Unidentified Justice: Well, don't you say the color--

Mr. Strick: --that says, "good meat".

Unidentified Justice: --Don't you say the color is descriptive, not that this particular color is descriptive of this product?

Mr. Strick: Color is descriptive.

Unidentified Justice: Yes.

Mr. Strick: That's what I'm saying, but I'm also saying it's not the same as a can of chili that does says, "Good-eating chili", or something like that, which would clearly be a descriptive... a descriptive mark.

Unidentified Justice: I'm not sure I understand what you mean when you say color is descriptive.

What do you mean by, color is descriptive?

Mr. Strick: It's not something I planned to get into on the argument, but if you were to ask me, what is the trademark whose protection is sought in this case, I'm going to say the color, a green-gold color.

That sounds like I'm describing the mark.

Unidentified Justice: Not any mark.

I mean, you can describe a red cross mark as a, you know--

--The red cross--

Mr. Strick: The red cross would be a red cross colored red.

That's a slightly different example.

I am not asserting, by the way, in this case, and I did not in my brief, that registration should be denied in this case because it's purely descriptive, so I don't want any misunderstanding on that.

I did not assert it in the brief, and I am not asserting it, except as part of this--

Unidentified Justice: --I withdraw my question, then.

You have enough problems, without asking.

Mr. Strick: --If there are no more questions, I've pretty much had my argument.

Chief Justice Rehnquist: Thank you, Mr. Strick.

The case is submitted.

Attribution:

The Oyez Project

Featured:

Two Pesos, Inc. v. Taco Cabana, Inc. - Oral Argument

Fri, 09 Jan 2009 14:49:34 +0000

Case:

Two Pesos, Inc. v. Taco Cabana, Inc.

Media File:

91-971_19920421-argument.mp3

Related Transcript:

transcript.xml

Transcript:

Argument of Kimball J. Corson

Chief Justice Rehnquist: We'll hear argument next in No. 91-971, Two Pesos, Inc. v. Taco Cabana.

Mr. Corson.

Mr. Corson: Mr. Chief Justice, and Justices of the Court, good morning.

This is an intellectual property case.

It is a restaurant trade dress case under section 43(a) of the Lanham Act.

In broad terms, the issue before you this morning is not whether the Two Pesos restaurant chain copied the appearance of the Taco Cabana restaurant chain.

It is, instead, a different issue.

It is whether Taco Cabana has a publicly recognized and understood appearance that may not be copied.

It is a question of protectability under 43(a) of the Lanham Act.

If Taco Cabana does not have a protectable trade dress, the issue of copying is not involved, and there can be no actionable confusion under section 43(a) of the Lanham Act.

And the reason for this is that it protects an original, recognized source of origin.

That's what 43(a) does.

If it is not recognized by the public, then there is no issue of confusion.

You do not reach the likelihood of confusion issue under section 43(a) of the Lanham Act.

Unknown Speaker: Mr. Corson, I think this case arose under a previous version of section 43(a) of the Lanham Act.

Mr. Corson: That is correct.

Unknown Speaker: Now, it's been revised.

Mr. Corson: Yes.

Unknown Speaker: Do you think that under the revision of this statute that secondary meaning always must be shown?

Mr. Corson: Yes.

And the reason for that is that the revisions of the act were largely in regard to the disparagement issue, and do not affect the language that is key and relevant to this case.

We still have, in the revised act, the language that says, any person who, or in connection with any goods or services... skipping some material... uses in commerce any false designation of origin... and that gets back to the issue.

If we're talking about a false designation of origin, which is what was pled in this case, the infringement of which was the basis of the judgment, then we are still dealing with the issue of secondary meaning.

Unknown Speaker: If we think that secondary meaning is not required in a trade dress case, do you lose?

Mr. Corson: Yes.

Unknown Speaker: So that the brief for the Private Label Association states the question accurately... it states it differently than you do... but it states accurately the question that's before the Court?

Mr. Corson: I believe it does, but with contextual variation.

It's more general than we posit it.

Unknown Speaker: So we have to assume that this would be a protected trade dress if secondary meaning is not required?

Mr. Corson: That is correct, sir.

The issue of secondary meaning has historically been required for trade dresses.

That has been the rule for many, many years.

It was in the Chevron, Fifth Circuit case that that rule was changed.

And it was changed, interestingly enough, for a little, tiny label that really was quite unique.

It may well have been considered a trademark.

Unknown Speaker: Why was it changed?

What was the basis for changing it?

Mr. Corson: The basis for changing it was not well articulated, sir; it was simply the judgment that on viewing it, it was arbitrary or fanciful.

Unknown Speaker: Was there some agency involved?

Mr. Corson: No, sir.

Unknown Speaker: Well, who changed it?

Mr. Corson: The Fifth Circuit... the judgment--

Unknown Speaker: Well, so it was changed within the Fifth Circuit then, is what you're saying.

Mr. Corson: --Yes, de novo, on de novo... basically under a de novo standard it was viewed.

It was determined to be inherently distinctive, and that was largely the end of the discussion.

The difficulty that crops up in making those judgments is that it is very difficult to look at a trade dress and be able to tell whether it is inherently distinctive.

This is a problem the United States Trademark--

Unknown Speaker: Did it overturn any prior decision of the Fifth Circuit?

Mr. Corson: --Not that I recall, sir.

I don't think it had been--

Unknown Speaker: It wasn't based on any change in the statute?

Mr. Corson: --No, sir.

It was based on a sentiment that it would be nice to bring trade dress law into conformity with trade law... trademark law.

Unknown Speaker: And it recognized that it was in... contrary to other circuits, or not?

Mr. Corson: It did not discuss that, sir.

Unknown Speaker: Was it?

Mr. Corson: Yes.

Unknown Speaker: But we didn't take the case on the question of whether the restaurant is inherently distinctive in its trade dress, did we?

Mr. Corson: No, I believe it's on the question really of whether secondary meaning is required.

Unknown Speaker: Exactly, yes.

Mr. Corson: And I think the notion--

Unknown Speaker: So we should just assume the inherently distinctive trade dress, for purposes of answering the secondary meaning issue?

Mr. Corson: --That is a difficult proposition that has caused confusion in the case, Justice O'Connor.

Unknown Speaker: Yeah, but I thought you said that you lose if we decide secondary meaning is not necessary.

Mr. Corson: That is correct.

But there's a problem of semantics.

Unknown Speaker: Well, if it wasn't inherently distinctive, you never even get to secondary meaning, do you?

Mr. Corson: If it is not inherently distinctive, of necessity you have to address the question of inherent distinctiveness.

The argument would also be... and mine is a little different here... it is that even if it is inherently distinctive, all we are really saying when we use those words... and it's a bad bit of nomenclature... is that we will, from its appearance only, presume that it is distinctive.

And the difficulty we have in this case is that that presumption was resoundingly defeated by the actual evidence.

Because the evidence came in and said, in the Texas market there is no recognition of this trade dress.

So we wind up, then, with a very nominal situation of a mark being by... as judged from its appearance, be inherently distinctive.

It has no distinctiveness at all.

Unknown Speaker: Well, I would think... I would think here... I think any... based on trade dress would be almost impossible to prove if you require secondary meaning in the case of a new business.

Mr. Corson: The difficulty, sir, is that--

Unknown Speaker: Is that right?

It would be awfully hard.

Mr. Corson: --Depending on--

Unknown Speaker: Wouldn't you hate to be recognized... trying to prove a secondary meaning on behalf of a restaurant chain that had just started out, or just one restaurant?

Mr. Corson: --Yes.

Unknown Speaker: It would be kind of tough.

Mr. Corson: Yes.

And that's why I address that issue as the incipiency problem.

And in that context, for a limited period of time... only for the time that's reasonably necessary for that trade dress to become recognized if it will, there should be a recognition of the applicability of the Fifth Circuit rule.

Beyond that period of time, then the--

Unknown Speaker: Do you see that... do you think that's a--

Mr. Corson: --The Second Circuit rule.

Unknown Speaker: --the Fifth Circuit would be right for 6 months or so?

Mr. Corson: Yes, sir.

But not for 11 years, as we have here.

Unknown Speaker: Do you have authority in trademark law where such temporal protection is granted in other instances?

Mr. Corson: No, sir, no sir.

There is a practice in the Second Circuit district courts of attempting to develop a doctrine called secondary meaning in the making.

And it recognizes the sentiment that at the outset you have precisely this problem.

And that there should be some limited protection afforded.

So what they want to do is afford secondary meaning on a presumption basis for a limited period of time, after which secondary meaning must be proven.

Unknown Speaker: Well, it seems to me that your concession makes your case much more difficult.

Because as I think you will agree... maybe you won't agree... that what we're concerned here with is confusion, not copying.

Mr. Corson: Yes, sir.

Unknown Speaker: And it seems to me... maybe I'm wrong... but the rationale of your temporal protection is to punish or prohibit copying.

Mr. Corson: Sir, I believe the argument is a narrow one.

We do not reach the issue of confusion.

If there is not a determination that Taco Cabana's restaurant chain trade dress, after 11 years of use in the marketplace, is not protectable.

You must make a determination of the protectability of that mark before you can ever reach the confusion issue.

That has to be done... unless there is some rule adopted, like is proposed here, that there be a limited incipiency trade protection.

Unknown Speaker: I understand that.

But I'm trying to explore the rationale for your concession that there is a limited period of protectability.

Mr. Corson: The rationale for it is exactly the fact that if somebody comes into a market, they are fresh and new to the market, they develop a trade dress which is highly unusual, that for a limited period of time they should be afforded some protection.

Unknown Speaker: Why?

Mr. Corson: Because they have spent time, and money, and energy in developing that... and because one of--

Unknown Speaker: But that's a copying rationale, not a confusion rational.

It seems to me that I'm arguing your case in that respect.

Mr. Corson: --And because, sir--

Unknown Speaker: And if I'm wrong, please advise me.

Mr. Corson: --Okay, and because... I'm going to bring something else to it at this point... and because as looking at it from the appearance, a judgment can be reasonably made that it is arbitrary, fanciful, or suggestive.

And therefore, should be cloaked with the protection of a presumptive, inherent distinctiveness... or presumptive distinctiveness, for that limited period of time, to let itself get on its feet.

That's the thrust of all the district court cases in New York that are trying to provide secondary meaning in the making.

Unknown Speaker: Well, then--

Mr. Corson: This case is distinguished.

Unknown Speaker: --it's wrong to immediately copy a new trade dress that is highly unusual?

You can't copy it for 6 months or 1 year, but right after that you can copy it?

Mr. Corson: No, right after that there would be a requirement that secondary meaning be proved.

Unknown Speaker: Well, I know, but you can copy it unless you can prove secondary meaning.

Mr. Corson: That's right.

If the other side cannot prove secondary meaning, and you can disprove it, it's had its chance in the marketplace and the time and effort and the--

Unknown Speaker: What do you think secondary meaning means?

Mr. Corson: --It means the public recognizes that the trade dress is a symbol of an exclusive origin for the goods and services sold in connection with it.

The public understands that.

Even a purely, inherently distinctive mark has to have that recognition at some point.

It has to be recognized by the public.

If it's used and used and used, and the public doesn't recognize it, it's a real problem.

Here we have the difficulty that this trade dress is inherently descriptive.

You place any mortal in front of a Taco Cabana restaurant, and ask him what it is, he won't tell you it's a trademark.

He'll tell you it's a restaurant.

Its primary meaning is that it's a restaurant.

Unknown Speaker: It... and there's a finding in this case that there is no secondary meaning?

Mr. Corson: There is a finding in this case that there is no secondary meaning, sir, yes.

Unknown Speaker: Was that in the district court?

Mr. Corson: That was in the district court.

Unknown Speaker: Is the term inherently distinctive one that is found in the statute?

Mr. Corson: No, sir, it's judicial gloss.

Unknown Speaker: From the Fifth Circuit?

Mr. Corson: Um... from trademark law and the common law that antedates the statute.

Unknown Speaker: Uh... and what does it mean?

Mr. Corson: It means that we, from the appearance of this particular mark, trade dress, what you will, infer that it is arbitrary or fanciful, as those terms are used in trademark law, so that we will say it is inherently distinctive, or we will give it a presumption of distinctiveness.

Unknown Speaker: Oh, when you said a while ago, you described it as highly unusual.

Mr. Corson: That would be a way, too.

Unknown Speaker: And highly unusual.

Mr. Corson: There's a problem with the language.

Unknown Speaker: You also say arbitrary or fanciful... all those could be included within the meaning of inherently distinctive?

Mr. Corson: Technically it's arbitrary, fanciful, or suggestive... those three are historically the ones that--

Unknown Speaker: And that's what, by the common law?

Mr. Corson: --That is common law heritage that's been codified.

Unknown Speaker: Mr. Corson, does any of these cases that involve trade dress involve restaurants as well?

I have... most trade dress serves no function except to... except to identify the product.

I'm not sure that's the case.

In the case of a restaurant, the trade dress is the product, it's not just an identification.

Mr. Corson: That's precisely the problem.

Unknown Speaker: And you're paying some money for the food, and you're paying some money for the ambiance.

It's... does that mean that it's functional?

Is that the same thing as saying that it's functional?

Mr. Corson: It has functional characteristics.

The problem we have here is we're dealing with a whole restaurant appearance.

We're not dealing with a little logo, or a little mark, or a name, or what the public traditionally recognizes as an identifier.

We are dealing with a whole restaurant appearance.

And when you deal with a whole business appearance or with a whole product appearance, different rules apply.

Because then you have the problem of inherent descriptives.

Unknown Speaker: Well, a whole business... I mean Macy's might have a distinctive Macy's look about the store.

But I'm not buying the store.

I don't pay money to go and look at Macy's.

I do pay money to go and sit in that restaurant, in that particular environment, right?

It's called--

Mr. Corson: The analogy is packaging, sir.

Unknown Speaker: --Is... the analogy is--

Mr. Corson: Packaging.

Unknown Speaker: --Packaging.

Mr. Corson: Packaging for the product.

Yes, I think this... the ambiance of the restaurant, the whole package there is analogous, as it were, to a wrapper on a, or a label on a fertilizer jar.

Unknown Speaker: Well, then I don't understand, again, your concession about a temporary protection... if it's just descriptive or functional.

I would suppose you could copy it from the outset.

Mr. Corson: That's correct, because it would be denied the presumption on the basis of its appearance.

And in that instance it should not have an incipiency.

It has to pass first muster of being on the basis of its appearance, inherently capable of being presumed distinctive.

If it doesn't pass muster, then--

Unknown Speaker: I don't think it is packaging.

I think you're disagreeing.

You're saying it is packaging?

I don't think it is packaging.

I think you're talking about the substance of what's being sold.

You're selling atmosphere and food, the two of them.

You can have wonderful food in a lousy atmosphere.

I'm not going to pay as much money.

Mr. Corson: --If that's the case--

Unknown Speaker: This is not the package.

This is what I'm paying for.

Mr. Corson: --If that's the case, Justice Scalia, then what you are doing is protecting the delivery of a product, and making the provision of that particular product exclusive to one source so that the competitors may not sell that product.

And that is a fundamental, massive limitation on competition.

Consider an example: Let's say you had McDonald's, 15 or 20 years ago.

It had pretty much--

Unknown Speaker: You can sell the same kind of a product, you just can't copy the other fellow's ambiance.

Mr. Corson: --If you--

Unknown Speaker: You can have your own.

Mr. Corson: --If you take his position, you can't sell that product.

If the product is the ambiance and all that's included, the total commercial concept that a competitor is precluded from that market and a monopoly is afforded judicially, and circumstances that are contrary to congressional policy of allowing trademarks to aid competition and minimize monopoly.

So fundamental congressional purpose is destroyed there, if that's the case.

And that's the problem with protecting commercial concepts.

Unknown Speaker: Well, I suppose to have a Lanham Act recovery, you have to be sure that the item is nonfunctional.

Mr. Corson: Yes.

Unknown Speaker: To which the trade dress is applied.

So really, your focus of how this concept should be limited turns on how you limit functionality.

Mr. Corson: Yes.

Unknown Speaker: But we don't have that issue here, do we?

Mr. Corson: That is correct.

Unknown Speaker: We just took this to decide whether secondary meaning must be required.

Mr. Corson: That is correct.

Unknown Speaker: So maybe we ought to talk about that a little bit.

Mr. Corson: That is right.

Secondary meaning is necessary for trade dresses that have been in use.

Because otherwise, the Court, if it renders a decision to the contrary, would be in the business of protecting whole business images, whole product images which are not recognized by the public, and serve no identifying function at all.

And that has very serious competitive implications.

Unknown Speaker: Is the line that you draw between trade dress and other kind of trademarks what is registerable?

Mr. Corson: No, sir.

Unknown Speaker: Are we going to have problems in drawing lines between what is a trade dress and what is some other type of protected mark?

Mr. Corson: No, you can avoid that problem.

Unknown Speaker: How?

Mr. Corson: In regard to trade dress, it is conceivable that there are some types of trade dress which can be registered.

So the line doesn't need to get drawn there.

But the line ought to be drawn, very hard I believe... if the Court wants the narrowest possible decision... in regard to whole business image trade dresses and whole product image trade dresses.

Because they have the most serious consequences for competition.

Unknown Speaker: So then we have a subset of trade dresses.

And so this becomes just a restaurant case?

Mr. Corson: This would become a whole business image trade dress case.

Unknown Speaker: May I ask you... in your judgment, could your opponent have obtained a registration, have registered this trade dress?

Mr. Corson: Not in a million years, sir.

Unknown Speaker: It would not be subject to registration?

Mr. Corson: It would not be subject to registration.

An examiner would look at it.

He would say it's inherently distinctive, it's loaded with functional features, it's loaded with a Mexican decor which describes the food type and origin of the recipes.

And it has anticompetitive consequences, and you can't prove to me it has secondary meaning.

Unknown Speaker: Now, are you saying that about this particular trade dress, or are you saying no trade dress can be registered?

Mr. Corson: No, this particular trade dress, sir.

Unknown Speaker: Even if it were... even if it's inherently distinctive, it cannot be... it could not be registered, and even if it's nonfunctional and nondescriptive.

Mr. Corson: If it were registered... assume it was inherently distinctive, and it was registered, there could be a litigation, immediately thereafter, which would rebut the presumption if it could be proved it had no secondary meaning.

Unknown Speaker: Let me ask you one other sort of basic question.

This action is entirely under section 43(a) of the Lanham Act, correct?

Mr. Corson: Correct, sir.

Unknown Speaker: There is no... they did not allege a common law cause of action under a Texas common law?

Mr. Corson: I believe they did, but it folded in under the 43(a) section.

And the focus has been on 43(a) because the common law brings nothing additional to it.

Unknown Speaker: It's at least theoretically possible in some States that even though there's no remedy under 43(a) they might nevertheless recover if the State chose to give protection.

Mr. Corson: That is correct, and New York would be an example.

Unknown Speaker: Yeah, does any State... any circuit other than the Second Circuit follow this rule of incipient, secondary meaning or whatever... what, you know, developing secondary meaning, or whatever you call it?

Mr. Corson: No, sir, the New York district courts are grappling with it; the Second Circuit does not know what it thinks of it very clearly just yet.

The Eight Circuit has said no to it, the others haven't come to grips with it.

Unknown Speaker: And you think it's good law or bad law?

Mr. Corson: I think for a trade dress that on the face of it qualifies as being arbitrary and fanciful for a limited period, some protection... not in the form of lost profits from diverted customers, but simply some portion of development costs might be reasonable.

But in this case where we have a trade dress used for 11 years, no way.

Unknown Speaker: You say if it's just a matter of business image there can be no protection.

What is having a business image?

How does that... is there any... does that mean anything other than what the public looks at?

Mr. Corson: Yes, sir... no, technically, trade dress ought to be limited to appearance.

Unknown Speaker: If you said what is your image, I would think it's what people think of you, or what... how people look at you.

Mr. Corson: Justice White, that is precisely a problem with the jury instructions in this case.

They dealt with image when trade dress has historically dealt with appearance.

And what we should be talking about is not somebody's reputation, and not some business's reputation, but the appearance.

Unknown Speaker: You say if this chain of restaurants has an image in the public mind, what is it?

It's--

Mr. Corson: That's a problem.

In fact, it has very many different--

Unknown Speaker: --I know, but why isn't it secondary meaning?

Mr. Corson: --It doesn't have secondary meaning because there's too many images.

You can look at it from the front; you can look at it from the side; you can look at it from the interior.

And in the McMillan Second Circuit case, the Second Circuit there said there was no protectability.

Unknown Speaker: The Circuit looks at it in totality.

Mr. Corson: Say again, sir?

Unknown Speaker: The Fifth Circuit doesn't just look at one thing or the other.

I think it's the totality.

Mr. Corson: That's right.

But the problem here is it was in regard to a little, tiny label... all of which could be taken in at a glance.

Here you have an entire restaurant, that to be viewed by a human being has to be viewed from many different perspectives.

And the Second Circuit says if you've got too many images, you don't know which one is going to serve as an identifier, and the public's not likely to pick up on any one.

And that's the Parone v. McMillan case, where they tried to deal with Babe Ruth's photograph.

It was a registered mark.

And there were other photographs that they wanted to preclude use of without their consent.

And the court said no.

There's too many images here for any one to be recognized by the public as an identifier.

And we're not going to afford it protection.

And they've got the same problem with respect to restaurants.

An example I'd like to turn to now is the one involving McDonald's that I mentioned earlier.

Consider it 15 or 20 years ago that McDonald's had decided that it wanted to protect its total business image as a trade dress.

And assume further that the Second Circuit law did not apply, and that the law of the land was that in Chevron.

At that time, McDonald's had pretty much covered the United States.

It was in the process of filling in in geographical locations, but it hadn't done it all.

Its competitors, on the other hand, Burger King, Jack-in-the-Box, and others, were coming after.

And they were coming into new territories at that juncture.

Now, if McDonald's had a protectable business image trade dress in regard to its restaurant appearance... and let's say it had gotten some for some of its products as well, whole product image trade dresses, and it had protection for those... can you imagine what it could have done for its competition?

Unknown Speaker: Well, you say they have that protection for 6 months, or 9 months, or a year.

Mr. Corson: Oh, but this--

Unknown Speaker: I just don't understand that.

Mr. Corson: --They're well past that, sir.

They're well beyond it.

I mean if we're talking 15 or 20 years, we're past that period of time.

That would be only for the start-up.

They're there.

They would be able, in that instance, because others would be coming new to the marketplace, let's say moving into Kansas, to be totally precluded.

Unknown Speaker: It doesn't seem... I think what Justice Kennedy's saying is it doesn't seem any more reasonable to protect it for 6 months than it does for a longer period.

Mr. Corson: That's a fair judgment.

Unknown Speaker: I mean... yeah, but the problem you're addressing, as Justice O'Connor pointed out is, it seems to me, a problem of functionality.

The reason it seemed bad is that you're talking a functional characteristic.

Mr. Corson: Also a descriptive--

Unknown Speaker: But that's out of this case.

Mr. Corson: --No, and also descriptive characteristics.

Those are the essences of what's required to not be in the appearance in order for it to be inherently distinct.

It can't be descriptive.

It can't be identifiable as something else.

And here it's identifiable as a restaurant.

It can't be identifiable--

Unknown Speaker: Yes, but in your McDonald's case, suppose they have the golden arch.

And the other people didn't put up the golden arch.

And your opponent here has this stripe, and the bunch of plants out in front and some other things that are the substitute for the golden arch that make it distinctive.

So I don't think you can... he isn't just relying on the fact that they sell tacos, or whatever it is, instead of hamburgers.

Mr. Corson: --Sir, McDonald's did it differently.

Unknown Speaker: I mean, the golden arch is a big part of their unique picture.

Mr. Corson: Very much.

They did not try to protect their image as a business.

They said we're going to go get some separate and distinct identifying feature.

And they used the golden arches... which were originally part of the sides of the restaurant.

And they pulled them out front, turned them into a big M, made them as large as zoning ordinances will allow.

And that is their identifying symbol.

They wanted some protection in regard to their identity.

They wanted recognition in regard to their identity.

And that's what they did.

They didn't rely on their business/restaurant image, which is what Taco--

Unknown Speaker: No, but here, under the findings of the jury, as I understand it, they, in effect, said that the stripes and the plants, and the way they have the carports and so on are the equivalent of a golden arch.

Mr. Corson: --But they're not.

Unknown Speaker: Is that--

Mr. Corson: The public--

Unknown Speaker: --But then you're arguing it's not inherently distinctive.

Mr. Corson: --The public doesn't recognize the appearance of their restaurant.

The public recognizes the golden arches.

And it is public recognition which is essential to the protectability.

For a trade dress, there has to be public recognition before there's anything to protect.

If the public doesn't recognize it, it's not protectable.

Unknown Speaker: Different from a trademark.

Mr. Corson: Because it doesn't serve.

Unknown Speaker: Why is it different from a trademark in that regard?

And why do you propose that we adopt some initial 6-month protectability for new trade dress, although we don't do that for trademarks.

I mean, we protect them indefinitely, not just for 6 months.

Mr. Corson: You have two questions.

Unknown Speaker: Right.

Mr. Corson: I'll answer the last one first.

The last one, basically is that you can challenge a trademark as not having secondary meaning and knock it out of the water.

And in regard to the... the first one, could you repeat it, sir?

Unknown Speaker: Well, I... you're proposing a system for protecting trade dress to handle the incipient trade dress.

You say it should get some imperfect kind of protection for 6 months or some short period?

We don't do that for trademarks.

Why should we read that difference into the Lanham Act?

It doesn't treat trade dress any differently from the other two.

Mr. Corson: That's a fair criticism.

Unknown Speaker: It is a fair criticism.

Mr. Corson: Yes, sir.

Unknown Speaker: Of course, we don't have to decide whether there would be a 6 months when... all you want us to say it can't be 11 years.

Mr. Corson: That's correct, sir.

That's exactly right.

Thank you.

Unknown Speaker: Thank you, Mr. Corson.

Mr. Taranto, we'll hear from you.

Argument of Richard G. Taranto

Mr. Taranto: Mr. Chief Justice, and may it please the Court:

In 1983, Taco Cabana created and adopted an inherently distinctive trade dress so that consumers would come to recognize it and associate it with Taco Cabana.

In 1985, before Taco Cabana had opened anywhere outside San Antonio, Two Pesos came along and deliberately took the trade dress and used it to identify its competing restaurants to its consumers.

The central, legal issue here is whether the Lanham Act allowed Two Pesos--

Unknown Speaker: --your client?

Mr. Taranto: --Absolutely.

Unknown Speaker: Where?

Mr. Taranto: In Houston, Dallas, El Paso, and cities all over the State... as Taco Cabana moved into exactly the same markets that Two Pesos opened in.

Two Pesos opened in Houston knowing even before they opened the restaurant that Taco Cabana was prepared to move into that market.

Unknown Speaker: May I just ask one factual... you said 1983?

Mr. Taranto: That's right.

The first Taco Cabana restaurant was 1978.

But that was before it became a chain at all.

It was a converted--

Unknown Speaker: They used the same inherently distinctive design?

Mr. Taranto: --No, it was a converted Dairy Queen restaurant that was not pink, that didn't have the garage doors, didn't have the two-box structure.

It was only with the opening of the second restaurant in 1983... also in San Antonio... that this trade dress, which has now been consistently used on its couple of dozen restaurants, was adopted.

Unknown Speaker: Is it critical to your case that there was competition?

Supposing they had opened up in California, Alaska, or someplace?

Could you have enjoined them from opening in remote, noncompetitive areas?

Mr. Taranto: The traditional rule, which has also been applied under 43(a) is that if a competitor innocently adopts a similar trademark or trade dress, in a remote area--

Unknown Speaker: Suppose they travel through San Antonio and say boy, that's a good-looking plan.

And they go to San Francisco and they open a carbon copy?

Mr. Taranto: --I think we could have enjoined them.

Unknown Speaker: You think you could.

Mr. Taranto: Yes.

Unknown Speaker: Is that essential to your case that you could?

Mr. Taranto: Not at all, because as the Fifth Circuit specifically said in this case, what we are talking about here is the zone of the natural expansion of Taco Cabana's business.

So that we are not talking about geographically remote areas where an entirely separate, completely nonoverlapping consumer class would be shopping at that particular restaurant.

And therefore, there was no conceivable possibility of--

Unknown Speaker: So the heart of your case does not turn on copying.

It turns on consumer understanding of the source.

Mr. Taranto: --That's right, the intent of Two Pesos is not essential to a violation of 43(a).

The intent may well be, and traditionally has been an important element in deciding on the available relief.

And it is in that respect that the question whether we could get an injunction would, I think, turn on whether Two Pesos just happened upon a look-alike trade dress, or deliberately took the plans and made it as close as possible, with the exception of changing the color.

Unknown Speaker: One other question, and then I'll let... could you have registered your trade dress?

Mr. Taranto: I think we could.

It wasn't done so.

There have been restaurant designs, complete architectural plans that have been registered as trademarks.

That has not been a traditional thing to do.

And I suspect one reason is that when you register something, you are registering something very precise.

And there are always dangers after that that you are frozen into exactly what has been registered, and can't change anything... even at the margins beyond something unnoticeable and trivial.

I do think that this could have been registered, traditional... and as far as I know all of the courts that have talked about the issue have said that trade dress, which is not a statutory term, is in general... does, in general, qualify as a trademark.

And there is, therefore, no reason why it shouldn't be subject to registration.

Unknown Speaker: Well, some courts have found that restaurants just can't be covered.

Isn't that right?

Mr. Taranto: I don't think that's... no, I don't think that's right, Justice O'Connor.

The Eighth Circuit Proofrock case specifically applied the functionality requirement and said that what was just the so-called down-home country style was part of what was being sold.

There was no suggestion there that a more distinctive restaurant design that did serve the purpose of a trademark... namely to identify the brand... that that couldn't be a trademark.

The Ninth Circuit case in Fuddruckers simply found that that particular trade dress was not inherently distinctive.

I think, in fact, inappropriately so, since it did not have a jury finding on that question.

But even the Ninth Circuit didn't say that restaurants, somehow, were incapable of having a distinctive trade dress.

And that would, I think, be really counter to common experience, from Howard Johnsons to the International House of Pancakes... there are a lot of restaurant trade dresses where the appearance, the image, in that sense, of appearance is, in fact, a very powerful identifier of the particular brand to consumers.

Unknown Speaker: I know if I go into a Howard Johnsons it's likely to look a certain way.

But I wouldn't... if I walk into another restaurant that looks somewhat like it, I wouldn't say boy, they have stolen this from Howard Johnsons.

I mean, that's the difference.

Suppose I'm a restauranteur and I find that people eat a lot, and really like to eat in a room that's entirely orange, all right?

[Laughter]

So I do that, and I set up a restaurant, and it turns out I'm right.

People really... it just makes food taste better.

Other restaurants begin to open.

It attracts people.

They buy the orange restaurant.

Mr. Taranto: Right, then--

Unknown Speaker: That is a, somehow, a Lanham Act violation?

Mr. Taranto: --I think probably not.

Because what you would have there is a very powerful argument that that color scheme was functional, it served a function as part of the product being sold to the consumers.

That was an issue in this case, carefully instructed to the jury, and the jury specifically found that this look of Taco Cabana was not functional.

That issue was carefully reviewed by the Fifth Circuit, and it's not before this Court.

What was protected in this case was not any right to monopolize a product, anything that competitors... competing Mexican restaurants need in order to compete with Taco Cabana, nor was anything protected that restricted other Mexican restaurants' ability to communicate with their customers, to say we have a Mexican restaurant, this is what you can expect in this restaurant.

The functionality standard and the standard that the trade dress not be merely descriptive... the latter not even argued to the jury by Two Pesos in this case... were presented to the jury.

And there are jury findings on those precise questions.

Unknown Speaker: Did they mean by functionality exactly what I mean, that is that people go to the restaurant just because they like that decor?

Mr. Taranto: The jury instruction on functionality is, in fact, a fairly length one, and allowed Two Pesos to argue that what was... what Taco Cabana was claiming protection for served any significant function as part of what it was selling to the public, that competitors and other Mexican restaurants needed, or reasonably needed this feature... whatever it was... or this combination in order to offer a substitute product.

And I think that that's exactly what you're talking about when you talk about ambiance.

If another restaurant needs a particular design in order to offer the same ambiance, and will lose customers because customers think there's... I want a certain atmosphere tonight, there's only one place I can get it, it's in the orange room, nobody has an orange room... then there's a strong argument for functionality.

That's nothing like what we're talking about here.

There--

Unknown Speaker: Well, why would your client spend all this money on a so-called trade dress if people didn't really... if it really didn't think people... it was going to attract people and it would mean that they would come there rather than someplace else?

Mr. Taranto: --Well, because the reason a trade dress, like a trademark, is adopted is not to attract people, but to identify the business to the customer, to consumers.

So that when people drive by and see this image they say I know what I get there.

I've heard about it.

I've been there before.

That's where I can go to get this kind of Mexican--

Unknown Speaker: Well, isn't that secondary meaning, though, in a sense if you say I've been there before, and--

Mr. Taranto: --Secondary meaning... we have to, I think, be careful about this... secondary meaning is a concept of widespread recognition throughout a market, here throughout Texas.

Any... with respect to any particular customer who has been to the restaurant, that image, if it is distinctive, inherently distinctive, will register.

But as we have talked about earlier, a new product, one by one, as customers come to notice it, will have... will make an impression.

But for a new product you can't possibly achieve market-wide recognition.

That's what secondary meaning is.

That the entire market in significant numbers, when it sees this image, has some association of that image with the particular restaurant.

Unknown Speaker: --It's a very esoteric distinction.

Mr. Taranto: Well, the statute, in section 2 of the Lanham Act makes a very... makes exactly this distinction, even though it doesn't use these terms.

The statute says that you can register, you can protect any mark, device, symbol, combination of devices, by which your product may be distinguished from other products.

That is what inherent distinctiveness is.

Anything that--

Unknown Speaker: Well, that goes to whether you can register or not.

Mr. Taranto: --That's right.

Unknown Speaker: Those words aren't in section 43(a).

Mr. Taranto: No, that's right.

Section 43(a)--

Unknown Speaker: If your whole... the whole statutory issue, as I understand it, is whether your opponent has provided the public with a false designation of origin.

Mr. Taranto: --Or a false description or a false representation.

Unknown Speaker: Which do you rely on mostly in 43?

What particular words do you think support your case?

Mr. Taranto: Well, in fact, I think all of them do.

I'm not... I wouldn't insist on calling it a false designation of origin because in its original meaning, that phrase may well--

Unknown Speaker: And you wouldn't insist on saying it tends falsely to describe or represent the same?

Mr. Taranto: --Well, I think it does that.

It falsely represents that Two Pesos is in some way affiliated with Taco Cabana; it falsely represents when Two... when Taco Cabana came into Houston, a few months after Two Pesos opened, that Taco Cabana was the copycat rather than the other way around.

Unknown Speaker: It falsely represents... representing it to somebody.

And I take it you would be talking about some section of the public.

It may not be market-wide.

But to some people, it would be a false representation.

Mr. Taranto: That's exactly right.

There will be some consumers in the markets where Taco Cabana and Two Pesos are both selling their services who will be confused about whether the two restaurants are affiliated with one another.

Unknown Speaker: I'm not sure, then, why you're so terribly harmed by our adopting the requirement that a secondary meaning is required.

Mr. Taranto: This case, I think, exactly illustrates why that doesn't make any sense.

In 1985 when Two Pesos opened its restaurant, Taco Cabana couldn't have achieved State-wide recognition.

It had five restaurants in San Antonio.

People in Houston, and Dallas, and El Paso and other places, by and large, never would have heard of Taco Cabana.

What... and then when Taco Cabana did come into Houston, and El Paso and other cities, it's hard to see... and this is exactly what Two Pesos said to the jury... it's hard to see how people would have recognized this trade dress as Taco Cabana's... Two Pesos already had it.

So it was the lack of exposure, of State-wide exposure, and Two Pesos' preemptive copying of the trade dress that prevented its lack... that prevented it from acquiring State-wide, widespread recognition.

Unknown Speaker: But isn't that... isn't that some evidence, or grounds for an inference that the reason the competitor adopted the trade dress was because it sold... not because it was attempting to confuse?

Mr. Taranto: No, some evidence... yes, I think it is probably some evidence.

And that went to the issue of functionality that was presented to the jury.

Is it sufficient basis for an inference that Taco Cabana's trade dress couldn't be recognized as the symbol of its origin?

I think inconceivably... this is not a case where you have market-wide, long, unimpaired exposure of a borderline distinctive trade dress/trademark and people still don't recognize it.

We had less than 3 years of very narrow exposure in one city in Texas before--

Unknown Speaker: Yes, but couldn't you have registered during those 3 years?

Mr. Taranto: --As I say, I--

Unknown Speaker: And then have gotten your protection?

Mr. Taranto: --As I say, I think we could have.

Unknown Speaker: Isn't that perhaps the mistake that was made, that you should have registered?

Mr. Taranto: I... well, I don't think it was a mistake.

As far as I'm aware, as Congress specifically provided when it amended the 1988... amended the statute in 1988... all of the courts, for 25 years now, uniformly recognized that there is Federal protection under the Lanham Act for unregistered marks.

Even the Second Circuit doesn't apply its secondary meaning rule to verbal marks.

And there's no reason for a distinction between verbal marks and nonverbal marks if what we are talking about is the basic requirement of section 43(a), that there's been a deceptive and misleading representation to consumers, likely to confuse consumers, and likely to lead to harm... harm of the--

Unknown Speaker: Is there some requirement in trademark law that the mark acquire a secondary meaning?

Mr. Taranto: --Let me try to be careful about this.

Unknown Speaker: If I... say... may I attack a registered mark on the ground that it does not have a secondary meaning?

Mr. Taranto: Not if it's inherently distinctive.

The Lanham Act at section 2 makes absolutely clear that inherent distinctiveness or secondary meaning... one or the other is required... but not both.

You can attack a trademark, even a registered trademark, as lacking secondary meaning only if it is descriptive, and therefore not inherently distinctive.

And the category of descriptiveness, as this Court said long ago in the Beckwith case is a very narrow category.

Unknown Speaker: What is the... what does inherently distinctive mean?

Do you agree then in this case that... that, or in a case like this the trade dress must be inherently distinctive?

Mr. Taranto: Yes, absolutely.

And all that means is, I think, something very common sensical.

It must be noticeable by consumers, and able... by virtue of being different from the way other businesses sell themselves to be--

Unknown Speaker: But to win under this--

Mr. Taranto: --recognized.

Unknown Speaker: --statute, this section, you've got to prove that it's a false representation to people.

Mr. Taranto: That's right.

And I think when a competitor comes along and takes a confusing... uses a confusingly similar brand identifier, whether it's a trade dress or a trademark, what that does is convey a deceptive and misleading... there's a false message of affiliation.

Unknown Speaker: And it also makes it impossible for you to acquire a secondary meaning.

Mr. Taranto: That's right.

In a way, we--

Unknown Speaker: So I take it you don't challenge... wasn't there a finding that you had... your client had never acquired a secondary meaning in this--

Mr. Taranto: --Throughout the State of Texas, that's exactly right.

But that finding, as I said, really has no bearing on whether it was capable of acquiring that secondary meaning had it been around for a long time and not been preempted by Two Pesos's confusingly similar trade dress.

So those two--

Unknown Speaker: --Well, that finding, then, was that it simply hadn't acquired the meaning throughout the State, not that it hadn't acquired the meaning anywhere in the State.

Mr. Taranto: --That's exactly right.

Unknown Speaker: Yeah.

Mr. Taranto: I think if the question had been put to the jury, has Taco Cabana's trade dress acquired secondary meaning in San Antonio, I suspect we would have gotten a quite different answer.

But the question was put on the State-wide market basis.

And Two Pesos said to the jury, you can't possibly find Taco Cabana is recognized State-wide.

They haven't been anywhere except San Antonio.

And we got to the other cities first.

Unknown Speaker: Yes, but the way we granted certiorari, maybe you're entirely right.

But we sort of assumed that the way the question arises, there's no secondary meaning, but there is inherent distinctiveness.

He doesn't like the inherent distinctiveness part; you don't like the secondary meaning.

But the legal question we sort of plan to address here is an assumption there is no secondary meaning at all, that seems to me.

Because you haven't proved secondary... I mean, you may be right.

But the record doesn't establish that there wasn't secondary meaning even for a small neighborhood in San Antonio.

Mr. Taranto: That's right.

Unknown Speaker: Well, as it comes to us, I assume that we take the case on the assumption that there is an inherently distinctive trade dress, that it is nonfunctional, and there is no secondary meaning.

Now, do we assume all those things to be a given?

Mr. Taranto: Yes, I think that is the legal question that this Court took to decide.

And what inherent distinctiveness... what the inherent distinctiveness finding establishes is that the trade dress can, and does, serve the function of designating the origin of the goods as a branded identifier.

It plainly can do that.

That's why Two Pesos, when it took it, wrote into its franchise agreement that this trade dress, its look-alike trade dress was a distinctive and identifying trade dress.

Now the reason that's enough, and you don't need widespread recognition throughout whatever market you're talking about... be it State-wide or elsewhere... simply follows from the reasons that protection is offered in the first place.

Protection of a trade dress or a trademark of any brand identifier serves two important functions: it protects consumers' ability to distinguish goods so that they can select the ones they like and the ones they don't like; and because it protects consumers' ability to distinguish goods, it protects businesses' ability to identify themselves to the public and to maintain, control, and build their own reputations based on their own quality without consumers being confused.

By protecting brand identifiers, you therefore serve the goal of competition on the merits among clearly distinguished brands.

What happens when somebody like... a competitor like Two Pesos comes along and copies, or uses a confusingly similar dress is that you replace competition in the merits by competition by deception.

You send a false message of affiliation to consumers.

And the harms that the Lanham Act... that any kind of protection of brand identifiers are designed to prevent... start from the beginning.

Consumers, one by one, as they come to know Taco Cabana, will be confused, and inhibited in their ability to know that there are two genuine competitors... two unrelated restaurants.

Unknown Speaker: May I ask you kind of a basic question of approach to the case?

This statute was enacted when, 194--

Mr. Taranto: 6.

Unknown Speaker: --1946... and it's kind of a common law statute.

I mean, it kind of picked up the common law, and the common law has developed since.

And it sort of affects how we address statutes.

There's some disagreement within the Court on questions of this kind.

Do you think that the law in 1946 had developed to the point where you would have prevailed, or do you rely largely on common law... what I might call common law developments of this statute subsequently?

Mr. Taranto: I think... let me try to answer that this way.

The common law categories in 1946 were sufficiently vague and amorphous that we would have had an argument that on these facts, the common law should say that inherent distinctiveness was enough.

That is simply because the common law recognized two somewhat distinct causes of action... a so-called technical trademark cause of action, and the broader, kind of residual, unfair competition cause of action.

As it happens, the technical trademark cause of action was more or less defined by the presence of inherent distinctiveness.

It hadn't come to be applied to something that we're calling a trade dress here.

But we would have had an argument that it could have been.

And what the Fifth Circuit said in the Chevron case was there's no reason why we shouldn't.

Anything including what we call a trade dress that serves to identify the brand, rather than to describe the product, serves the same functions and should be protected on the same standard.

Now secondary meaning, in the end, has nothing to do with what we're talking about here.

The harm to consumers' ability to choose between competing brands is present one by one as consumers come to be aware of Taco Cabana.

The harm to Taco Cabana's ability to identify itself to consumers, and to control its reputation, unimpaired by confusion, as a result of Two Pesos was there from the beginning.

And if, from a systemic point of view, you had a rule that said secondary meaning, market-wide, widespread recognition was required, what you would have is a perilous situation for any new product.

By definition, a new product cannot have market-wide recognition immediately.

If, in the interim, a competitor could... like Two Pesos... could come along and simply take the trade dress, the goodwill that the new company was trying to build up, customer by customer, would be immediately threatened.

And what you would have is a serious inhibition on the creation of new brand identifiers, possibly an inhibition on the creation of new business, and certainly a depravation of the informational benefits to consumers that having more clearly distinguished brand identifiers provide to consumers.

Unknown Speaker: Suppose all you had... suppose there wasn't any distinctive trade dress, but you had distinctive food in the sense that it was awfully good Mexican food.

And people got to know that the taco chain had good food.

And the... your competitor came along and copied every recipe.

Mr. Taranto: Well, aside from trade secret claims, the Lanham Act would say nothing whatsoever about that.

Unknown Speaker: So I--

Mr. Taranto: The product is unprotected.

Unknown Speaker: --So they could steal... they could steal all your recipes and copy your recipes?

Mr. Taranto: Well, as I--

Unknown Speaker: And you would have no protection for it?

Mr. Taranto: --No protection under the Lanham Act.

Yes, I think we would, as we did in this case, have a common law trade secret claim, and possibly some other claims.

Unknown Speaker: Oh, I know, but... you're not talking about a trade secret.

They... they just happened to have hired your chef.

Mr. Taranto: That's right.

Unknown Speaker: With whom you didn't have a contract not to compete.

Mr. Taranto: As I say, the Lanham Act does not restrict competitor's right to sell, essentially, the same product... assuming it gets that product.

Unknown Speaker: But that is if you sell it... if you sell it in the context of a... of a trade dress that is uniquely--

Mr. Taranto: Well, what it protects is the trade dress.

Two Pesos can change the trade dress so that it doesn't look like ours, and consumers are not confused, and try to sell as close a product as possible in order to compete for the same consumers.

What they can't do is say to consumers through their image, through their trade dress, we are probably affiliated with those other guys.

And there was plenty of evidence here of actual confusion among consumers.

Unknown Speaker: --What if Taco Cabana has a mariachi band?

Can Two Pesos put in an identical mariachi band without infringing?

Mr. Taranto: I think the answer to that is yes.

But the place in the analysis that that would come in would be in the... would be with respect to functionality... presumably Two Pesos would say, and have a pretty good claim, that when you put a band in a restaurant you are now selling food and entertainment.

And that's the product.

And we have no right to monopolize the product.

All we have a right to do is to insist that the way we identify ourselves to the consuming public, others cannot confusingly copy.

Unknown Speaker: But if they had the band in front of the door, and they all wore orange uniforms and orange hats, your answer would be different?

Mr. Taranto: It might well be different.

It all depends whether, again, the look was, in any way, needed by competitors in order to sell the same product... whether it was functional, in that sense.

Unknown Speaker: It also assumes that these bands don't always wear orange.

And I assume that's true.

Mr. Taranto: I assume that's true, too.

Unknown Speaker: Earlier I asked you about registration.

You pointed out you'd be frozen to a particular concept.

Over a period of years, can the concept vary from time to time in minor degrees... like you change the uniform on the band and you change the plants in front and move them around?

And are all of the different patterns that you've used throughout the period inherently distinctive and entitled to protection?

Mr. Taranto: Well, what--

Unknown Speaker: Or do they have to be just copying the one you're using at the particular time?

Mr. Taranto: --What we have to show, in order to become entitled to protection, is that they came confusingly close to an image that the consuming public can and does, in small or large numbers, identify itself... our restaurants with.

We have had minor variations, depending on certain zoning restrictions since the second restaurant.

A restaurant in San Diego used white instead of pink.

Unknown Speaker: But you then... you do take the position you must put on some consumer testimony to win your case?

You couldn't just let the jury look at the two designs and say they're exactly alike?

Mr. Taranto: You could, but it would be risky.

It seems to me what you do in order to avoid that risk is to put on the testimony of restaurant experts, as we did; Taco Cabana employees who have received repeated complaints from people who had gone to Two Pesos and called up to say something at your restaurant up in Houston, or in Dallas, I liked or didn't like... whatever it was.

But they were clearly associating the two restaurants.

It seems to me there are a lot of different kinds of evidence to establish that the trade dress is capable of being identified with Taco Cabana if only it wasn't copied, and therefore subject to confusion.

If the Court has no further questions, I respectfully ask that the judgment be affirmed.

Unknown Speaker: Thank you, thank you, Mr. Taranto.

Mr. Corson, you have 3 minutes remaining.

Could I ask if you agree that a trademark to be challenged after it's registered, yet you have to prove that it's... that there's... has neither secondary meaning or is not... and is not inherently distinctive?

Rebuttal of Kimball J. Corson

Mr. Corson: Sir, if it's inherently distinctive, it may be challenged on the ground that it's functional or descriptive and contains those elements.

If it is not inherently distinctive, but registered, it may be challenged on the grounds that it has not secondary meaning.

Unknown Speaker: Well, here's... did you answer my question, really?

I didn't think you did.

Mr. Corson: I'll try again.

[Laughter]

Unknown Speaker: Well, here's a mark; here's a mark; and somebody wants to challenge it.

And he proves that it doesn't have any secondary meaning.

Now, that isn't enough, is it?

Mr. Corson: That should be enough, yes.

Unknown Speaker: Well, I thought... I thought... I thought he also had to prove that it didn't... that it wasn't inherently distinctive.

Mr. Corson: No, if you prove it has second... if you prove it has no secondary meaning, what you have proved is that the public doesn't recognize this as a mark.

Unknown Speaker: Then you disagree with your colleague on the other side.

Mr. Corson: I do, I do.

I think there has to be recognition.

There's a fundamental disagreement--

Unknown Speaker: And you give that answer with respect to trade dress or all trademarks?

Mr. Corson: --Certainly as to trade dress; and with respect to trademarks I can go that far, also, sir.

I think--

Unknown Speaker: I didn't hear the answer--

Mr. Corson: --I think I'd go that far, also.

You've got nothing to protect.

There's a fundamental disagreement here.

He's arguing that all you need to get to is to show that there is some possibility here that the trade dress has become confusingly close.

That's not the issue.

The primary issue is you must show that you have a protectable trade dress, and you can't do that if it isn't recognized, because the language of the act under which this case was brought is false designation of origin.

And if the original origin isn't recognized, then there can be no misstatement about it.

If none of you know about something and I make a statement to you about it, it can't be judged true or false.

That's the point.

This protects against false designation of origin.

And if the--

Unknown Speaker: --Well, what if it's a... there's a false representation to maybe 100 people, but no more?

It isn't secondary meaning, but it's 100 people.

Mr. Corson: --I think... no, it has to be recognized... recognition generally in the marketplace.

It's not limited just to a few people who have happened to patronize the unit.

Unknown Speaker: So here... but there is nothing in 43 that even mentions secondary meaning.

All it says is it has to be a false representation.

It doesn't say how many, State-wide, or for a block--

Mr. Corson: Two points... it's judicial gloss, in part; and also, if you look to section 2 of the act, they clearly preclude the registration of a mark without proof of secondary meaning unless it's--

Unknown Speaker: --Well, this isn't a mark.

That doesn't have to be a mark.

Mr. Corson: --That's true.

Unknown Speaker: This is a trade dress and that says... I gather you agree a trade dress can be protected under 43?

Mr. Corson: Yes.

But it cannot be an inherent... it cannot be a descriptive mark or a functional mark, or it's not entitled to registration under the act because it doesn't have secondary meaning in those instances.

Chief Justice Rehnquist: Thank you, Mr. Corson.

The case is submitted.

Attribution:

The OYEZ Project

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K Mart Corp. v. Cartier, Inc. - Oral Argument

Wed, 13 Apr 2011 20:11:00 +0000

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K Mart Corp. v. Cartier, Inc.

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86-495_19871006-argument.mp3

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86-495_19871006-argument.xml

Transcript:

ORAL ARGUMENT OF LOUIS R. COHEN ON BEHALF OF PETITIONERS

Chief Justice William H. Rehnquist: Mr. Cohen, you may proceed whenever you are ready.

Mr. Cohen: Thank you, Mr. Chief Justice.

May it please the Court:

As this Court explained quite clearly in Prestonettes and again in Champion Spark Plug, a trademark owner has the right to prevent other people from applying his mark to their goods.

But he does not have any right, by virtue of the trademark, to restrict resales of his own goods after he has put them into commerce.

The Treasury Department has, we think, validly interpreted Section 526 of the Tariff Act in accordance with that basic distinction.

It is common ground between the parties that Section 526 protects a U.S. trademark owner against importation of goods bearing his trademark that were manufactured abroad by someone else.

Section 526 responded to the Second Circuit ruling in the Katzel case which had allowed the importation of such goods as non-infringing on the ground that they were genuine in the country they came from.

Unidentified Justice: Mr. Cohen, I am just curious.

Has a stay been entered in this case?

Mr. Cohen: No, Justice Blackmun, but there has been only a declaratory judgment.

There is no injunction in this case.

The Court of Appeals thought it would not be appropriate.

The question in this case is whether the statute also does something quite different: whether it gives an enterprise operating in more than one country a right, a continuing right by virtue of the trademark to stop its own goods at the U.S. border after it has sold them abroad.

Nothing in Katzel or the legislative history suggests, and I will argue that it is wholly implausible, that Congress intended any such fundamental change in the nature of a trademark.

And, so, Treasury has long interpreted the section as not barring importation where the U.S. owner itself placed the goods in foreign commerce or in certain functionally similar cases.

COPIAT, Respondents, argue that the plain words of the statute compel exclusion of the goods in those cases, too.

But it is altogether proper, we suggest to construe a statute as not encompassing every situation its words might literally reach when that would produce results Congress did not intend.

As the Court said a century ago, a statute making it a crime to hinder a mail carrier in the swift completion of his rounds is quite properly read as if it contained the words except when the mailman has just committed a felony or is about to deliver a bomb.

Unidentified Justice: Mr. Cohen, neither the brief of Government nor your argument thus far addresses the issue of proper jurisdiction in the case.

Do you intend to say anything about it?

Mr. Cohen: The Government's view is that the Court of Appeals was correct.

Section 1581, if read literally, might confer exclusive jurisdiction on the Court of International Trade, but we think the Court of Appeals was correct in understanding that what Congress was getting at there was actions arising under trade statutes of which this is not one.

The Court has often construed statutes more narrowly than the words alone might literally suggest in order to results that Congress did not intend.

I think it is quite implausible that the 1922 Congress intended to change a trademark from an identifying mark only into a partial permanent leash on the goods themselves.

It is implausible, first--

Unidentified Justice: Mr. Cohen, even under your theory, I think it gives more substance to the mark than just an identifier... even the Second Circuit litigation, the way this Court decided it, said it was more than an identifier.

Mr. Cohen: --I think what this Court said was that: If I am the U.S. owner of a trademark, the fact that someone else owns the same mark in France and, therefore, legally entitled to make and sell goods in France doesn't mean that those goods, which would otherwise be infringing goods in the United States, because he is not me, can come into the States.

Unidentified Justice: Yes, but they are made by the same party.

Weren't they the same source of goods in that case?

Mr. Cohen: No.

The goods that were made in France were not made by the U.S. trademark owner.

Unidentified Justice: No, but they were made by the goods the U.S. trademark owner sold, were also made by the same manufacturer; weren't they?

Mr. Cohen: Yes, he got them and he reprocessed them.

Unidentified Justice: So, they had a common source.

Mr. Cohen: And he reprocessed them.

But the case would have been, I suggest, exactly the same if what had happened was that the U.S. rights to manufacture had been bought by the plaintiff in that case and what you had were some goods manufactured in the United States by the plaintiff and some goods manufactured in France by the defendant.

And the plaintiff saying,

"Those French goods are infringing when they come over here because they are not, they are not mine. "

The case would have been quite different, I suggest, and this Court would have decided it differently and Congress would have reacted differently if the U.S. manufacturer had established a French factory and then said,

"Because I am manufacturing these goods in France and I want to keep them there, my trademark will keep them out of the United States. "

I don't think either this Court or the Congress would have had the reaction that they did.

I was starting to say that I think I get some help from the very text of the statute which explicitly protects only U.S. owners of trademarks and protects them only against goods of foreign manufacture.

Those requirements, which are not found elsewhere in trademark law, make sense on our view that Congress was assuming that the U.S. trademark owner and the foreign manufacturer would be two different people and was seeking to protect the trademark owner from the foreign manufacturer's goods.

They make, I suggest, no sense those limitations on COPIAT's view that Congress was seeking to change the characteristics of a trademark, to make it broader to bar the flow of all goods bearing its mark, including its own, into the United States.

Unidentified Justice: Congress never writes a statute that does more than it was intended to do.

Is that the thesis?

Whenever a statute necessarily written in general language goes beyond the specific evils sought to be remedied, we should interpret it, despite its language so that it covers only the specific evils sought to be remedied?

Mr. Cohen: I think that you should interpret it in accordance with it intent as discerned from its language and its context and its history.

There are, here, two different possible general principles and I think--

Unidentified Justice: Well, I am talking about its language, not its intent.

The postman situation you give me is a situation in which you have a different statute that expresses a different policy which has to somehow be reconciled with the statute protecting the postman in the execution of his daily rounds.

And if there were another statute here that similarly indicated an intention that these goods should be admitted, then we would have a different problem.

But, as far as the explicit language of the statute is concerned, it covers this situation as well as the narrow situation that was immediately before the Congress.

Mr. Cohen: --I have in this case at least the general legal background of the trademark law as asserted by this Court I think in Katzel and the following year in Prestonettes which did not extend... which did not make one of the characteristics of a trademark a right to bar the sale of somebody else's goods.

The trademark law says that I can't make a car in my garage and sell it as a Chevrolet.

It doesn't say that I can't resell one of General Motors' Chevrolets anywhere I want to.

And it would have been quite startling for this statute to have changed the law that much, I think.

And I think some of the language that Congress used indicates that that is not what they were trying to do.

And, therefore, I think it is appropriate here as it was in Guerrera where the Court read the language of the Pregnancy Discrimination Act requiring pregnant women to be treated the same as other employees, as a floor and not as a ceiling, as the Court did in the Colorado Public Industry Research Group case where it read pollutants and radioactive materials not to include nuclear wastes as not reaching a case that there is evidence Congress didn't intend to reach.

Unidentified Justice: Mr. Cohen, would you just be... just so I am sure I have your point.

You said there are two principles that this 546 might have indicated.

Would you state the two principles?

Mr. Cohen: Yes.

We think what 526 and this Court's decision in Katzel did was to say that the mere fact that goods are genuine abroad does not mean that they do not infringe here if there is somebody else in the United States who owns the trademark.

I take it that COPIAT thinks that 526 means that the trademark owner in the United States has the right to say that goods to which it applied its own trademark in some foreign country are not trademarked in the United States.

I think that... let me say it a different way.

I think that 526 means that if I own the U.S. trademark and somebody else owns the French trademark for some goods, his goods are infringing here even though they are genuine in France.

I think it does not mean that if I owned both the U.S. trademark and the French trademark I am entitled to be treated as two different people.

I think that the limitations in the statute to U.S. owners and to goods of foreign manufacture make no sense on COPIAT's view.

If they intended to give all trademark owners such a right to stop their own goods at the border, there would be no reason to require Nikon to form a shell U.S. subsidiary to hold the trademark and, conversely, there would be no reason to require Kodak to build an offshore factory in order to get the protection of Section 526.

Now, the other thing I will point to is one important episode in the brief legislative history.

It is the Senate discussion of the Pear's Soap hypothetical which suggests that everybody, whether for or against Section 526 was against giving foreign companies the right to restrict the flow of their own goods into the United States.

COPIAT is reduced to suggesting that the sponsors of 526 were wrong in claiming that 526 didn't do what COPIAT would like.

And the opponents were correct in fearing that it would do what neither they nor the sponsors wanted.

There isn't any reason why a statute that can be read perfectly straight forwardly to do what everyone agrees Congress intended, must also be wrote so literally as to do something no one in congress wanted.

This is also, it seems to us, an appropriate case for deference to the agency.

It is, I think, at the very least not clear from the text and the legislative history that Congress intended to permit a U.S. trademark owner to bar importation of its own goods.

COPIAT challenges Treasury's consistency, but the basic principle of the Treasury regulation that 526 doesn't give a trademark owner the right to bar its own goods sold abroad from being imported into the United States has been set forth in the regulations at all times since 1936 and very clearly and consistently since 1943.

Unidentified Justice: You are taking the position then that the Treasury has been consistent throughout the years and did not take a different position in the Second Circuit case in 1983?

Mr. Cohen: Yes, as to Treasury.

That brief was signed by the General Counsel of the Customs Service.

It was not authorized by Treasury and it should not have been filed.

Unidentified Justice: But at least, then, the Government has been inconsistent?

Mr. Cohen: To that extent... I was going to say the Government has also varied in its handling of a point that I don't think is at issue in this case and that is the extension of the general principle that I have been talking about to cases involving companies that are more distantly related.

There has been some adjustment in the articulation and probably in the policy, but this case is not and has never been about where the Treasury's line ought to be drawn.

This case as framed by COPIAT has always been about whether there can be an exception at all.

Mr. Chief Justice, I would like, if I may, to reserve the remainder of my time.

Chief Justice William H. Rehnquist: Thank you, Mr. Cohen.

We will hear now from you, Mr. Steele.

ORAL ARGUMENT OF ROBERT W. STEELE AS AMICUS CURIAE, SUPPORTING PETITIONERS

Robert W. Steele: Mr. Chief Justice, may it please the Court:

This Court has long recognized that considerable weight should be accorded to an executive department's interpretation and construction of a statute when that department has been entrusted with the administration of the statute.

This is an especially strong case for the application of that doctrine for three reasons.

First, the regulation in question has been in existence in one form or another since 1936.

Second, the regulation has been brought before Congress repeatedly in that time period and has been endorsed not by Congressional silence but by actual Congressional language in regard to specific legislation presented to the Congress.

And, third, and perhaps more important from the standpoint of my client, one of the intervenors in this case, during the 50 years that this statute has been interpreted by the Customs Service as it has been interpreted, a tremendous and substantial business has grown up in the United States among retailers based upon parallel imports, that everyone believes are lawful.

And everyone in the industry, the retail industry, believes to be lawful and believed for many years to be lawful.

My client is K Mart Corporation, a discount department store chain with 2,000 locations throughout the United States.

We are one of the intervenors.

47th Street Photo is the other intervenor who appears as a petitioner in this matter also selling merchandise and parallel imports included at discount prices.

The issue is important to the K Marts and the 47th Street Photos because of the difficulties that discounters have in obtaining trademark merchandise from time to time.

They provide price competition.

But more importantly than just the discount segment of the retail industry, the retailing industry generally handles some parallel imports.

Most retailers handle parallel imports.

They provide price competition with those imports.

They are a tool, an anti-monopoly tool.

And in this case, I must say that nothing in a brief filed in the Second Circuit was on the record to give notice to this industry that there had been a change in the views of any of the agencies in Washington, D.C. indeed, the language of the regulation in question has remained substantially the same during the time period with one exception.

In the 1950's, after the passage of the Lanham Act, the language was arguably broadened to permit more goods to be brought into the United States with a reference to the Lanham Act language for related companies dealing with affiliated companies and control.

Now, that language stayed in the regulation until 1959.

It didn't narrow it, as the Respondents would contend it should.

It broadened it.

It is not a real inconsistency in the sense that it supports the position which has been taken by the Respondents in this case.

During that same time period, this general understanding of the statute has been presented to Congress a number of times.

Now, as Mr. Cohen has pointed out, Section 526 was passed very clearly to remedy a perceived defect in a ruling under the 1902 trademark law.

And that ruling arose in the case of Bourjois & Co. v. Katzel.

And that is what caused 526 to be passed.

In 1936, Treasury interpreted the rule to provide and to allow for parallel imports.

But, more importantly, when the trademark act was amended with the Lanham Act in 1946, extensive reports were made to Congress before the passage of the Lanham Act.

And in passing the Lanham Act, Congress was told repeatedly that this regulation is on the books.

And under the trademark law and under 526, it was not envisioned that when one company, a multi-national company is manufacturing overseas and has a U.S. subsidiary, it is not envisioned that that U.S. subsidiary will be able to keep those imports out.

Congress was told that.

They put nothing in the Lanham Act--

Unidentified Justice: Mr. Steele, I am sorry.

Can I interrupt?

Robert W. Steele: --Yes.

Unidentified Justice: I have a problem... I am afraid I'm going to hear no argument to it from your side unless I hear something from you on it.

And that is the point on whether this matter should have been brought to the Trade Court or to the Court of Appeals here.

Robert W. Steele: Mr. Justice--

Unidentified Justice: I realize that financially this particular case is enormously important, but from the point of view... the merits of the case are enormously important.

But from the point of view of confusion in future cases for the Federal courts, the jurisdictional issue may well be the more significant.

And I would like to know what interpretation of the language of the statute you propose that will prevent jurisdictional disputes into the endless future.

What is the clear line of jurisdiction the Trade Court and the other Federal courts?

Robert W. Steele: --I do not believe that there is a clear line.

We did not raise the point of objection of jurisdiction originally when we intervened in the case.

K Mart Corporation took the position at the time that we felt that it should be litigated in the District Court in this particular proceeding.

So, we have not briefed the issue of jurisdiction.

And our position on the matter is that a number of cases have been brought and without undercutting the positions validly raised by 47th Street Photo, we have not addressed those intervening for the primary purpose of dealing with the substantive issue pertaining to the imports.

If I may turn very briefly to--

Unidentified Justice: It is true, is it not, though, that one of the respondents does still maintain there is no jurisdiction.

Robert W. Steele: --47th Street does address the question of jurisdiction.

Unidentified Justice: And the United States does.

Robert W. Steele: The United States has not address the question of jurisdiction, as I understand it.

Unidentified Justice: No.

It is sort of a one-sided argument we have here.

No one else even seems to want a day to discus the point.

Robert W. Steele: Turning back to the contentions I wish to make, in whatever court the issue arises, it has been our belief that there is ample legislative background to endorse the view that Congress has seen this interpretation for many years and has chosen not to disturb it.

The Lanham Act is one example and equally critical example and more up to date arises in 1984 when the Lanham Act was amended by the so-called Counterfeiting Act of 1984.

That Counterfeiting Act when it came in originally covered a number of different subjects and was the subject of extensive consideration by the Senate Judiciary Committee.

And the Senate judiciary Committee when it referred out the legislation ultimately passed, it said the Act did not include within its coverage so-called gray market goods, i.e., authentic trademark goods that have been obtained from overseas markets.

The importation of such goods is legal under certain circumstances.

For example, the Treasury Department has long interpreted Section 526 to permit the importation of such goods.

Now, at this point, before the Court, we have an interpretation which is clearly not Congressional silence sanctioning the Treasury Department, but express language from Congress.

Equally important is a recent situation in which Congress was called upon to look at the situation arising from a liquor importation question wherein specific legislation was proposed which would change the trademark... the trademark regulations and the regulations of the Customs Service.

It was rejected.

Thank you.

Chief Justice William H. Rehnquist: Thank you, Mr. Steele.

We will hear now from you, Mr. Allen.

ORAL ARGUMENT OF WILLIAM H. ALLEN ON BEHALF OF RESPONDENTS

Mr. Allen: Mr. Chief Justice, and may it please the Court:

At the risk of making an argument even more one-sided, I will say a word or two about the question of jurisdiction.

The District Courts have jurisdiction of actions relating to trademark.

And that is conferred by Section 1338 of Title 28 and by a provision of the Lanham Act.

The District Court here had and exercised that jurisdiction.

It had the traditional District Court trademark jurisdiction because nothing, I submit, in Section 1581 of Title 28 which deals with the jurisdiction of the Court of International Trade, makes an exception to the traditional trademark jurisdiction of the District Courts for this kind of case.

Certainly, nothing in Section 1581 says in terms that the Court of International Trade has jurisdiction over any trademark matters.

I have to acknowledge, however, that jurisdiction has been found to reside in the Court of International Trade by that court and it was affirmed in this respect by the Federal Circuit in the Vivitar case, which is a similar case.

That finding was based, that finding was based on provisions of subsection (i) of Section 1581 and, in particular, paragraph 3.

That is at page 9A of our brief.

The paragraph gives the Court of International Trade jurisdiction of any civil action against the government, an agency, or government official, arising out of a Federal statute providing for and, now, I quote:

Embargoes or other quantitative restrictions on the importation of merchandise for reasons other than the protection of public health or safety.

The argument is that Section 526 makes the importation of some goods bearing a United States trademark unlawful and, therefore, imposes an embargo on such goods.

Now, there are reasons set forth on the Court of Appeals opinions in our brief what that is not a tenable view.

I want to focus on just one of them.

What Section 526 really does is to enable the owner of a United States trademark to invoke governmental processes to bar those goods bearing his trademark that he wants to bar and conversely, if he gives consent, to allow those same goods that may be quite identical to enter the country.

The Customs Service is simply directed to enforce a private right to exclude some goods and admit others that may be quite indistinguishable.

And I submit that that sort of enforcement of private rights is not within the common understanding or, indeed, any reasonable understanding of an embargo.

That very point was made during the debate that preceded the re-enactment of Section 526 in 1930.

The Senate debated a proposal to delete from Section 526 the consent clause, the provision that allows the trademark owner to consent to the importation of goods bearing his trademark.

Senator George was one of the opponents of that proposal and he said that if it were adopted, if it were adopted, that would change... that would change Section 526 into an embargo kind of statute, but it wasn't.

It was not an embargo statute as it then stood.

There are plenty of embargo statutes on the books for this provision of Section 1581 to apply to.

There are some statutes that directly bar imports of certain goods or certain goods from some countries.

More commonly, there are statutes like the Trading with the Enemy Act, the Trade Expansion Act, the International Economic Powers Act that empower the President to bar those--

Unidentified Justice: The response to that, Mr. Allen, I presume is that the Senate realized that and taking that into account didn't just say embargo.

It said embargo or other quantitative restrictions.

Mr. Allen: --I do not see how this is a quantitative restriction, even less a quantitative restriction.

That is the typical kind of thing where you have a quota on goods.

I would have though, Your Honor.

Unidentified Justice: I would have thought it was meant to distinguish it from a restriction that consists of a high tariff.

There is no quantitative restriction, but the restriction is the dis-incentive caused by the tariff.

Mr. Allen: Well, I just really would have thought that embargo then or other quantitative restrictions, that it has to do with a measure that keeps out so many goods of this sort and not others.

Unidentified Justice: Well, it is important... to my mind, it is important to have some clear line because we are going to be struggling with this problem in many more contexts than we are going to be struggling with the merits problem that you seek to have before us.

The line you would draw is if the admission of the goods is dependent upon the voluntary agreement of a private party, it does not constitute an embargo or quantitative restriction.

Mr. Allen: That is the position.

That is correct, Your Honor.

Unidentified Justice: It doesn't provide for an embargo, it provides that a private party may impose a total restriction.

That is not providing for an embargo.

Mr. Allen: I understand that is the issue, Your Honor, and I simply say: No, the Customs Service is not directed to keep goods out except at the instance of a private trademark owner enforcing his trademark right.

Unidentified Justice: Enforcing its embargo.

It doesn't provide for... okay.

Mr. Allen: Now, let me turn, let me turn to the merits.

And I want to inquire first whether, as has been argued here this afternoon, I think, whether Section 526 as it is in fact worded can be made to sustain a meaning that is consistent with the Customs Services regulations interpreting it.

If it cannot, if it can't, then I think my clients win.

In every case that I am aware of where, in the eyes of some, this Court has strained a statute, it has thought itself bound to justify what it has done by reference to the text, the statutory words.

Church of the Holy Trinity and perhaps one or two other cases may be exceptions, but this is clearly not the case where statutory words taken at face value yields some sort of absurd result that has to be avoided.

You take any of the cases: Bob Jones, Guerrera, WMATA v. Johnson, the California Coastal Zone case, all of them... all of them, the interpretation of the statute however influenced by context, by secondary sources of illumination like legislative history was ultimately related to statutory text.

On the other hand, in not one of the District Court cases in which Section 526 has been held to have a limited meaning approximating that of the Customs Service regulations has a court engaged in any textual analysis.

I suggest that this inability to swear statute and regulation textually, may be why the Circuit judges of the Federal Circuit in Vivitar, the Second Circuit in Olympus, as well as the judges of the court below, were unwilling to accept the regulations as correctly interpreting the statute.

You cannot find, you certainly cannot find the exceptions that are expressed in the Customs regulations in the words of the statute.

They are not there explicitly.

The question is whether they lurk there or some justification for them lurks in the statutory words.

One suggestion offered this morning... offered this afternoon refers to the term of the statute that requires that trademark be owned by a corporation created within the United States, a citizen or a corporation created within the United States.

The requirement was added in conference, apparently because of questions raised in the Senate debate, and the part of the Senate debate to which Mr. Cohen referred... and I commend that part of the debate to Your Honors.

The lesson I draw from it and the lesson that the court below drew from it is quite different from the lesson that Mr. Cohen would draw.

But, in any event, that owned provision of the statute was added in the conference committee, presumably in the light of that part of the debate.

It has been suggested that a trademark is not owned by the United States subsidiary, that is the distributor for a foreign manufacturing parent, but is instead owned by the parent.

At least I assume that is the... spell it out fully what is suggested.

But the fact is, the fact is that the United States subsidiary distributor is recognized in law as the owner of the United States trademark.

Unidentified Justice: And the subsidiary register it here?

Mr. Allen: Yes.

Unidentified Justice: It is the one who did the registry?

Mr. Allen: A trademark can be registered only by the owner and these people, the subsidiary distributors have the registration certificates.

They are the ones whom the Patent and Trademark Office recognize as the owner.

There is no occasion in Federal law, as a general matter, for going into the corporate family tree of the apparent owner and registrants.

There was a simple way, there was a simple way for the conference committee to limit the class of corporate trademark owners that qualify for the protection of Section 526 if it had wanted to do that.

That would have been to require both the corporation be created in the United States as is done by Section 526 and that some specified proportion of the voting stock and some proportion of directors be United States citizens.

That is done in some other Federal statutes, which we referred to in our brief.

But not in Section 526.

But in any event, if you attribute to Congress the meaning of the word, 526 that is unknown to trademark law, you don't solve the problem of shoe-horning the Customs Service regulations into the text of Section 526.

The regulations deny the benefits of the statute to American manufacturing companies that manufacture trademark goods overseas themselves or have affiliates or licensees that do.

Examples of Duracell, the automobile manufacturers, Proctor & Gamble, some of them which don't even import any of the goods they make overseas.

All of which have described their gray market problems in amicus briefs in these courts.

If those companies are to be excluded from the protection of Section 526, it surely can't be on the ground that they don't own their United States trademarks.

And what has been belatedly suggested is that the case of these American manufacturing companies is covered by another term of the statute.

We have to go... that one didn't work, so, we turn to another provision.

The requirement that goods be of foreign manufacture.

Now, that, I submit, is just too far-fetched.

Congress is supposed to have intended by this argument quite ordinary words that on their face deal with where goods are manufactured in order to refer to something wholly different, i.e., who manufactures the goods.

And if I can depart for a moment from the purely textual argument, the of foreign manufacture amendment was introduced in response to a question that had been marked by Senator Lenroot about a person who went over into Canada and bought there a sack of the fine American product, Wonder Flour, that had been imported into Canada and now was going to bring it back.

He said, he was going to have his flour confiscated just because he was patriotic and wanted to buy American flour instead of Canadian flour.

He said, he said: buys that merchandise, suppose the American citizen purchased and brought back to this country a product of foreign manufacture with a foreign trademark and paid the duty on it in the regular way.

He distinguished the case of foreign manufacture from the case of American manufacture.

He was talking about where the Wonder Flour was made.

Furthermore, furthermore, the idea that of foreign manufacture means manufacture by a non-U.

S. company can't possibly, can't possibly be reconciled with the debate that preceded the re-enactment of the Section 526 as part of the Smoot Hawley Tariff Act in 1930.

The whole subject of that debate was goods manufactured abroad by American companies.

The Senate Finance Committee proposed deleting the clause at the end of Section 526 that permits such companies to consent to the importation of their goods.

The idea was then Ford Motor Company and these other companies that the Senators were complaining of weren't going to establish overseas plants and deprive Americans of jobs.

Whatever else that debate implies for the meaning of Section 526 and Mr. Cohen and I have debated the issue in our briefs, I think it is on the whole, that the debate can't possibly be reconciled with the Customs Service regulations.

But even leaving aside that debate in its whole breadth, surely, surely as to this matter, if even one Senator... if even one Senator had understood that the words, "of foreign manufacture", meant let us say manufactured by a foreign company that has no ownership or licensing ties to an American company, he would have said so.

He would have said,

"Look here. "

"We have to do something more than just delete this consent provision. "

"Because that statute as we enacted doesn't have anything to do with this case we are talking about. "

"If we just adopt the Finance Committee's amendment, we're going to wake up and find that we have accomplished nothing, nothing in the way of saving American jobs. "

Now, that brings me... that brings me to a second point.

I think my clients win on the text.

It can't... the text of Section 526 can't be made to fit the regulations.

But I don't lose.

I don't lose I don't think even if somebody finds some way of, by heroic efforts, of making the fit.

Because what we want to know finally is not what meaning the statute might be made to sustain, but what in fact Congress meant when it enacted the statute in 1922 and re-enacted it in 1930.

Now, a good index to what Congress meant is how what it said was immediately understood.

And I have already suggested that a particularly good index is the understanding that Senators in 1929 debating the re-enactment of Section 526 had, of what they had done back in 1922, absolutely nothing to suggest that any of them thought that it meant what the present Customs Service regulations say it means.

And a lot, a lot to indicate the contrary.

But that's not all.

Those who wrote the regulations for the old Customs Bureau on the heels of the enactment of the Tariff Act of 1922 had to be keenly attuned to what had just happened in Congress.

You would expect that if they had laid the emphasis on the debate in the Senate, the five or six columns of Congressional Record to record that debate that is now laid on it at this late date, they might have said something like this:

"Section 526 is written in seemingly broad terms, but in fact Congress meant only to overrule a decision of a Court of Appeals on its narrowest facts. "

Unidentified Justice: We would also expect, though, Mr. Allen, that if your clients had thought that this regulation was as contrary to the statute as you now tell us it is, they would have challenged it many, many years ago.

Mr. Allen: My clients don't move until they are hurt, I suppose is the answer to that, Your Honor.

And my clients did not move into court quickly even after they had been hurt.

There is a good deal of efforts at the Treasury Department, at the Customs Service that preceded this lawsuit.

And the fact is that the gray market, as a phenomenon, has bloomed in recent years.

And, indeed, if you go back to 1972 rulemaking, you will find... and this is in the record... that a number, a number of companies, a number of entities did say,

"Customs Service, you are, you are interpreting the statute wrong. "

"Section 133.21(c) regulations are not in accord with Section 526. "

Unidentified Justice: Well, I must say that is admirable restraint.

I wish more prospective litigants would emulate it.

[Laughter]

I am just interested in exploring that a little more.

If the answer to the absence of litigation challenging the regulation, and surely the AMOCO brief indicates it is a pretty important problem to a lot of people, is because the problem bloomed lately, the gray market problem bloomed lately, would that no suggest that it was not a problem Congress gave any thought to?

Mr. Allen: It is quite possible that... I mean you could infer that, but I have to look at what Senators Lenroot and Edge and McCumber were debating at the end of the 1922 debate in Congress and it concerned this very kind of thing: what about the Pear's Soap Company that establishes an agent in the United States and he registers this trademark.

I mean this... at least the concept of what became the gray market, what we now call the gray market issue was in Congress' mind.

Yes, yes.

In any event, those regulation writers didn't say that.

They didn't say anything like that.

They, in 1923... and it is a fortunate thing.

There were regulations that were written in 1923 right after the Tariff Act of 1922.

They simply paraphrased the statute.

Unidentified Justice: They just parroted the statute.

Mr. Allen: Just the same way in 1931, the regulation writers who were called upon to flesh out the Smoot Hawley Tariff Act gave subsection 526 its full apparent sweep.

And then you had the Court of Appeals for the Second Circuit deciding a case about this time.

And that court, of course, had to be acutely aware of Section 526, one of two blows suffered by its Katzel decision: reversal by this Court and overruling by Congress.

And were not just acutely aware of it, but perhaps not very hospitable to it.

But the argument was made to that Court that Section 526 should be limited according to its Katzel parentage so as not... so as not to bring in goods that were not imported for commercial purposes.

In that case, a luxury automobile.

Judge Hand, Judge Augustus Hand wrote the opinion for the Court.

He said that, of course, our Katzel decision brought about the legislation, but that fact does not settle the scope of the act.

And he called it this "drastic", "this drastic statute".

The narrow reading, the narrow reading of Section 526 that is now advocated was put to several contemporaneous tests and it flunked.

It flunked every one of them.

You have to move all the way ahead to 1936 where the first positive evidence that can be pointed to of someone understanding that Section 526 doesn't mean all it says.

And, if you look closely at the supposed evidence from 1936, it evaporates.

It evaporates.

The evidence is a provision of the Customs Service regulations that were amended in that year.

The second sentence of the amended Article 518(b).

It is at page 28 of the joint appendix.

On its face, on its face, the amended Article 518(b) is a belated recognition of one of this Court's decisions.

This Court held in 1923, after the Katzel decision that a section of the Trademark Act that forbids the importation of goods with a trademark that copies or simulates a United States' trademark applied to genuine goods with a trademark identical to a United States trademark.

The amended Article 518(b) cites that case from this Court in the margin.

Marginal notation: A. Bourjois Co. v. Aldredge.

And in keeping with the cited Aldredge decision, the first sentence of the amended Article 518(b) says that a genuine identical trademark shall be deemed to copy or simulate.

Those are the words, exact words, a United States trademark.

In that respect and others that are stated in our brief, the amended Article 518(b) was written solely in terms of the pertinent section of the Trademark Act and not at all in terms of Section 526.

Second sentence, Article 518(b) begins with the same, with the word, "However".

It is written in the same Trademark Act terms and says that if the foreign trademark... the United States trademark are owned by the same person, partnership, association or a corporation, the foreign trademark shall not be deemed to copy or simulate the United States trademark.

That, "Aha", say the Petitioners,

"That is the harbinger of everything that is stated in the 1972 regulations. "

Not so.

Not so at all.

The overall reason obviously was to, for this regulation, was to recognize after 13 years the force of this Court's Aldredge decision, the gloss that it had put on Section 27 of the Trademark Act.

It appears from what Congress was told when it was considering trademark legislation in 1944, it appears that the second sentence qualifying the general Aldredge rule was nothing more complicated than someone's conceptual difficulty with the idea that a person's own foreign trademark could be said to copy or simulate his identical United States trademark.

It had nothing to do with any supposed policy of Section 526 or for that matter any policy of the Trademark Act.

We can't know this for sure because the Customs Service has never once explained its regulations.

Not once.

Not once explained what it was doing when it made an amended regulation.

But the explanation was given, as I have said, to a Congressional committee by a witness from what was then the Tariff Commission.

And, without contradiction, he told the committee that Article 518, the amended Article 518 in 1936 effected only Section 27 and did not... and did not limit the reach of Section 526.

And I would pass from there to the 1950's and invite, invite Your Honors' particular attention to the discussion of the Guerlain case in our brief and of the Solicitor General's motion in this Court to vacate the judgment in favor of the government where he said that the Customs authorities have deemed themselves legally constrained to grant the claim of statutory protection invoked by the American distributors of French perfumes who were, according to Judge Edelstein's decision, part of a single international--

Unidentified Justice: But Mr. Allen, wasn't that partly because of the debate over whether they are related companies or the same company within the--

Mr. Allen: --It is very hard to make that out, Your Honor.

Unidentified Justice: --Because there was a factual dispute as to whether they were the same company.

Mr. Allen: There was, indeed.

They did contest that.

But listen to what further the Solicitor General said.

He was asking the judgment be vacated so that they could ask for legislation.

He said,

"An intragovernmental conflict as to the meaning of the tariff or trademark laws should be resolved through means other than antitrust litigation. "

Unidentified Justice: Yes, but that could be that the Department Justice thought that the exception extended to related companies and Treasury thought it only went to the same company.

There is that history.

Mr. Allen: Well, that is barely possible.

Unidentified Justice: There was a debate over that at the time.

Mr. Allen: But if... then if it is only the same company, it surely doesn't reach--

Unidentified Justice: Well, same or affiliated.

Same in the sense of 100 percent owned, whereas the related company concept talked about partially owned.

Mr. Allen: --At least one of the perfume companies in that case was a simple parent and subsidiary situation, according to Edelstein's finding.

Unidentified Justice: But one was not.

Guerlain was not, I think.

Mr. Allen: Guerlain was not.

But at least one of them was.

But that... well, it is a suggestion, Your Honor.

I had thought it seems a narrow view to talk about--

Unidentified Justice: But it is possible if there was that dispute between Treasury and Justice, not necessarily the dispute as to whether to the statute meant exactly what it said.

Mr. Allen: --It is possible, Your Honor.

It had not occurred to me that an intragovernmental conflict as to the meaning of the tariff or trademark laws would be that... would be that narrow a conflict.

But I can be wrong.

Chief Justice William H. Rehnquist: Thank you, Mr. Allen.

Mr. Cohen, you have four minutes remaining.

ORAL ARGUMENT BY LOUIS R. COHEN, ESQ. ON BEHALF OF PETITIONERS -- REBUTTAL

Unidentified Justice: Mr. Cohen, I just want to make clear: the United States has taken a position on the jurisdictional issue.

Mr. Cohen: Yes, and we have filed--

Unidentified Justice: And you agree with the court below?

Mr. Cohen: --Yes.

And we filed a memorandum which is probably lost in the stack of briefs in this case.

Unidentified Justice: Yes, I have it here.

Mr. Cohen: Mr. Chief Justice, with respect to the textual argument, our position is that it is entirely appropriate to read this text with the implicit contextual qualification supplying the ellipses, if you will, that after the words, "bears a trademark", it said...

"bears a trademark not applied by the U.S. owner or any affiliate. "

We think the evidence is consistent with the notion that that was the intention of this statute.

Unidentified Justice: But you do have to rewrite it a little bit.

Mr. Cohen: Well, no more than you have to rewrite an agreement with Panama that says, "any tax", to read it to say,

"any tax, but not a U.S. tax. "

Or to rewrite the statute that was involved in Watt v. Alaska which talks about minerals on Federal wildlife refuges to read:

"But not on reserved lands, only on acquired lands. "

Let me respond to some of the points that Mr. Allen has made.

With respect to the first version of the regulations, it is true that the first version of the regulations simply parroted the statute.

The 1922 Act was a massive statute.

It constituted almost the whole of Title 19.

That Treasury did not see fit to do anything other than quote the statute in the regulations that were adopted immediately thereafter, doesn't seem to us to have much bearing one way or the other.

The Clark Pease case, the Second Circuit case to which Mr. Allen was referring was not about the issue that is presently before the Court.

It was about whether the word, "merchandise", applies to goods brought in for personal use.

It does not appear in the opinion of that case that the U.S. trademark owner and the foreign trademark were the same person or were in any way related.

I will concede that the 1936 regulations, although they cite Section 526 and contain an explicit exception for the related company situation, don't do so as neatly as we might wish.

I think that the 1943 regulations leave no doubt whatever that the Treasury is treating the Lanham Act section, Section 27, which later became the Section 42 of the Lanham Act dealing with copies and Section 526 together and provided quite clearly as to both of them an exception that persists to this day for goods of the U.S. trademark owner.

Unidentified Justice: Mr. Cohen, you don't contend that the interpretation being urged by Respondents here produces an absurdity; do you?

Will you concede also that that result is not an absurd result?

Just a policy result that you say Congress didn't have in mind.

Mr. Cohen: Yes.

And the Court said quite clearly in the 1940 American Truckinq Association case where it was holding that a statute given the ICC jurisdiction of the wages and hours of trucking company employees, the Court said,

"It is said that a broader reading would not be absurd, but it doesn't have to be absurd. "

"What we are looking for is what Congress intended. "

And, therefore, it limited the words of that statute to the case of employees with safety-related jobs.

Chief Justice William H. Rehnquist: Thank you, Mr. Cohen.

The case is submitted.

Featured:

K Mart Corp. v. Cartier, Inc. - Oral Argument

Fri, 09 Jan 2009 14:48:39 +0000

Case:

K Mart Corp. v. Cartier, Inc.

Media File:

86-495_19871006-argument.mp3

Related Transcript:

1987_86_495_argument.xml

Transcript:

Argument of Louis R. Cohen

Chief Justice Rehnquist: Mr. Cohen, you may proceed whenever you are ready.

Mr. Cohen: Thank you, Mr. Chief Justice.

May it please the Court:

As this Court explained quite clearly in Prestonettes and again in Champion Spark Plug, a trademark owner has the right to prevent other people from applying his mark to their goods.

But he does not have any right, by virtue of the trademark, to restrict resales of his own goods after he has put them into commerce.

The Treasury Department has, we think, validly interpreted Section 526 of the Tariff Act in accordance with that basic distinction.

It is common ground between the parties that Section 526 protects a U.S. trademark owner against importation of goods bearing his trademark that were manufactured abroad by someone else.

Unknown Speaker: Mr. Cohen, I am just curious.

Has a stay been entered in this case?

Mr. Cohen: No, Justice Blackmun, but there has been only a declaratory judgment.

There is no injunction in this case.

The Court of Appeals thought it would not be appropriate.

Nothing in Katzel or the legislative history suggests, and I will argue that it is wholly implausible, that Congress intended any such fundamental change in the nature of a trademark.

And, so, Treasury has long interpreted the section as not barring importation where the U.S. owner itself placed the goods in foreign commerce or in certain functionally similar cases.

COPIAT, Respondents, argue that the plain words of the statute compel exclusion of the goods in those cases, too.

But it is altogether proper, we suggest to construe a statute as not encompassing every situation its words might literally reach when that would produce results Congress did not intend.

Unknown Speaker: Mr. Cohen, neither the brief of Government nor your argument thus far addresses the issue of proper jurisdiction in the case.

Do you intend to say anything about it?

Mr. Cohen: The Government's view is that the Court of Appeals was correct.

The Court has often construed statutes more narrowly than the words alone might literally suggest in order to results that Congress did not intend.

I think it is quite implausible that the 1922 Congress intended to change a trademark from an identifying mark only into a partial permanent leash on the goods themselves.

It is implausible, first--

Unknown Speaker: Mr. Cohen, even under your theory, I think it gives more substance to the mark than just an identifier... even the Second Circuit litigation, the way this Court decided it, said it was more than an identifier.

Unknown Speaker: Yes, but they are made by the same party.

Weren't they the same source of goods in that case?

Mr. Cohen: No.

The goods that were made in France were not made by the U.S. trademark owner.

Unknown Speaker: No, but they were made by the goods the U.S. trademark owner sold, were also made by the same manufacturer; weren't they?

Mr. Cohen: Yes, he got them and he reprocessed them.

Unknown Speaker: So, they had a common source.

Mr. Cohen: And he reprocessed them.

And the plaintiff saying,

"Those French goods are infringing when they come over here because they are not, they are not mine. "

"Because I am manufacturing these goods in France and I want to keep them there, my trademark will keep them out of the United States. "

I don't think either this Court or the Congress would have had the reaction that they did.

Unknown Speaker: Congress never writes a statute that does more than it was intended to do.

Is that the thesis?

Mr. Cohen: I think that you should interpret it in accordance with it intent as discerned from its language and its context and its history.

There are, here, two different possible general principles and I think--

Unknown Speaker: Well, I am talking about its language, not its intent.

And if there were another statute here that similarly indicated an intention that these goods should be admitted, then we would have a different problem.

But, as far as the explicit language of the statute is concerned, it covers this situation as well as the narrow situation that was immediately before the Congress.

The trademark law says that I can't make a car in my garage and sell it as a Chevrolet.

It doesn't say that I can't resell one of General Motors' Chevrolets anywhere I want to.

And it would have been quite startling for this statute to have changed the law that much, I think.

And I think some of the language that Congress used indicates that that is not what they were trying to do.

Unknown Speaker: Mr. Cohen, would you just be... just so I am sure I have your point.