Using a trademarked term to describe a product can be fair use. TIFFANY v. COSTCO

Using a trademarked term to describe a product can be fair use. TIFFANY v. COSTCO

Trademark law is intended to protect consumers from being tricked into buying products from someone other than the trademark owner.  A trademark is something that a seller uses to brand its products.  Traditionally a trademark is considered a word phrase or symbol, but anything that signals to consumers the identity of the product manufacturer can qualify for trademark protection. Trademark law grants the senior user of a trademark the exclusive right to brand its products with the trademark.  If someone other than the senior user of a trademark starts branding products in a way that is likely to cause consumer confusion, that can be considered trademark infringement.

The likelihood that consumer confusion will occur is the key issue in trademark infringement.  Determining when a likelihood of confusion exists can be difficult to objectively define.  Courts review several factors, referred to as Polaroid factors, to determine whether there is a likelihood of confusion.  Polaroid Corp. v. Polarad Elecs. Corp., 287 F.2d 492 (2d Cir. 1961).  Each circuit in the United States federal court system has a slightly different set of factors but the principles of the test are similar.  Those factors are: (1) Strength of the senior user’s mark, (2) Similarity of the marks, (3) Similarity of the products or services, (4) Likelihood that the senior user will expand their product line into the junior user’s product line, (5) The junior user’s intent in adopting the mark, (6) Evidence of actual confusion, (7) Sophistication of the buyers, and (8) Quality of the junior user’s products or services.

Before a court reviews the Polaroid factors, a trademark Plaintiff must show that a Defendant is using a trademark to brand products.  If a Defendant is not using a trademarked term as a trademark, but instead are using the term descriptively the Defendant could claim fair use.  In order to establish fair use a defendant must show that it used the allegedly infringing term (1) other than as a mark, (2) in a descriptive sense, and (3) in good faith.  15 U.S.C. § 1115(b)(4)   Trademark fair use can be a difficult concept to grasp so it is useful to study case law to find examples.

TIFFANY AND COMPANY v. COSTCO WHOLESALE CORP, 19-404 (2nd Cir 2020) illustrates a case where a trademarked term used to describe the feature of a product was found to possibly qualify as a fair use.

Plaintiff in this case is Tiffany and Co is an internationally known luxury goods manufacturer.  Plaintiff produces a number of different jewelry items, like necklaces, bracelets and rings. Tiffany became famous for a specific style of mounting a diamond in an engagement ring.  Defendant, Costco Wholesale Corp is warehouse club retailer.  Costco charges a small fee to members for the opportunity to purchase items at the store.  Costco is best known for negotiating great prices on products from well known brands as well as Costco’s own value priced brands.  The catch is that great prices on well known brands only last as long as the stock on the shelf.

This suit arose from Defendant’s sale diamond engagement rings which were not branded but had labels with product descriptions containing the word “Tiffany.” Plaintiff sued for trademark infringement claiming that Defendant’s use of a term identical to Plaintiff’s trademark in connection with the sale of engagement rings violated the Lanham Act as a matter of law.  The District Court agreed and granted summary judgement in favor of the Plaintiff.  Defendant appealed to the Court of Appeals for the Second Circuit.

On appeal Defendant argued that “Tiffany” is not only a brand name, but also a widely recognized descriptive term for a particular style of pronged ring setting.  Defendant asserted that it used the word on product labels solely to identify engagement rings incorporating such settings.  On engagement rings that had a different setting, a different descriptive term was used. Based on these facts Defendant argued that a reasonable jury could find that there was not a likelihood of consumer confusion and even if  some confusion was likely, Defendant was entitled under the Lanham Act to use the term “in good faith only to describe” the style of its rings.

The Second Circuit agreed with the Defendant and remanded the case for trial.  It will be interesting to see if the Defendant presents its case to a jury as well as it did to the appellate court.

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