Liability For Trademark Infringement

The Lanham Act is silent on the issues of contributory infringement and vicarious liability. Even so, courts have applied common law concepts to indirect infringers. “Liability for trademark infringement and unfair competition may be extended beyond those who actually sell goods with the infringing mark, to include those contributory infringers who knowingly cooperate in illegal and tortuous activity.” J. Thomas McCarthy, McCarthy On Trademark and Unfair Competition (2002) §§ 25:17, 18, referencing Warner & Co. v. Eli Lilly & Co., 265 U.S. 526 (1924) (applying common law concept of contributory infringement).

Contributory Infringement

To establish contributory trademark infringement, a plaintiff must show that the defendant either intentionally induced another to infringe a mark or continued to produce or distribute a product knowing or having reason to know the recipient is engaging in trademark infringement. Inwood Labs., Inc. v. Ives Labs., Inc., 456 U.S. 844 (1982).

1. Lockheed Martin Corp. v. Network Solutions, Inc., 175 F.R.D. 640 (C.D. Cal. 1997). The court held that defendant domain name registrar did not have an affirmative duty to screen registrants for potential trademark violations. The court also held that defendant did not commit contributory infringement merely by allowing a domain name to be registered, in part because the actual direct infringement did not occur at the time of registration, but only when the domain name was used in connection with the sale of goods and services on the registrant’s Web site. In order to establish contributory infringement, “[t]he defendant must have either induced another’s conduct or continued to supply a product after the defendant knew or should have known that it was being used to dilute the plaintiff’s trademark.” Id. at 646.
2. Gucci Am., Inc. v. Hall & Assocs. and MindSpring Enter., Inc., 135 F. Supp. 2d 409 (S.D.N.Y. 2001). The court denied defendant ISP’s motion to dismiss plaintiff’s contributory trademark infringement claim, where plaintiff had notified the ISP repeatedly that one of its customers was infringing on plaintiff’s trademark and the ISP failed to take corrective action. The court also held that the Communications Decency Act (see Chapter 1 (B)(3) above) would not shield ISPs from secondary liability for their users’ intellectual property violations.
3. Ford Motor Co. v. Great Domains.com Inc., 177 F. Supp. 2d 656 (E.D. Mich. 2001). The court held that a Web site that was auctioning domain names did not have the bad faith intent necessary for a finding of contributory liability for cybersquatting.

Vicarious Infringement

To establish vicarious trademark infringement, a plaintiff is required to show an apparent partnership between the defendant and the direct infringer, giving each the authority to bind the other or exercise control over the product at issue. Hard Rock Cafe Licensing Corp. v. Concession Servs., Inc., 955 F.2d 1143 (7th Cir. 1992).

Cases Finding Vicarious Infringement

1. Playboy Enters., Inc. v. Frena, 839 F. Supp. 1552 (M.D. Fla. 1993). Defendant operated a subscription computer bulletin board service that distributed unauthorized copies of copyrighted photos owned by Playboy magazine. The photos were uploaded onto the bulletin board by an end user and downloaded by other end users. The operator of the bulletin board claimed he did not upload any of the images and that he removed all of them once he became aware of the problem. In addition to granting partial summary judgment for plaintiff on its copyright claim, the court found that allowing the use of the PLAYBOY and PLAYMATE trademarks to identify files on the bulletin board containing the photographs was a trademark violation, regardless of whether the operator was aware of the presence of the marks or not.
2. Sega Enters., Ltd. v. MAPHIA, 857 F. Supp. 679 (N.D. Cal. 1994). When a game was downloaded from defendant’s bulletin board and played, a Sega trademark appeared on the user’s screen. The court concluded that bulletin board users or parties who may receive copies from the bulletin board “are likely to confuse the unauthorized copies downloaded and transferred from the MAPHIA bulletin board with genuine Sega video game programs,” and granted a preliminary injunction. Id. at. 684.
3. Sega Enters. Ltd. v. Sabella, 1996 U.S. Dist. LEXIS 20470 (N.D. Cal. 1996). Defendant claimed it did not know Sega games were being uploaded and downloaded on its bulletin board service (BBS). The court held that a triable issue of fact existed on the issue of whether defendant was liable for direct trademark infringement because Sega was unable to demonstrate either that defendant authored subscriber rules which were posted on the BBS and solicited others to upload “playable” files, or that defendant otherwise used the mark or knew that others were using it on the BBS.
4. Playboy Entm’t, Inc. v. Calvin Designer Label, 44 U.S.P.Q.2d 1156 (N.D. Cal. 1997). See discussion in Chapter 4 (B)(4)(d) above.

Fair Use Defense

In a classic trademark fair use (“fair use”) case, “the defendant has used the plaintiff's mark to describe the defendant's own product.” Playboy Enters. v. Welles, 279 F.3d 796, 801 n.10 (9th Cir. 2002) (internal quotations omitted; emphasis in original).

In contrast, a nominative trademark fair use ("nominative use") case occurs when the defendant has used the trademarked term to describe the plaintiff's product, "even if the defendant's ultimate goal is to describe his own product.” Mattel Inc. v. Walking Mountain Prods., 353 F.3d 792, 809 (9th Cir. 2003) (internal quotations omitted; emphasis in original).

The fair use defense, classic or nominative, applies when an allegedly infringing term is used (1) not as a trademark, but (2) fairly and in good faith (3) to describe the goods and services. Cairns v. Franklin Mint Co., 292 F.3d 1139, 1151 (9th Cir. 2002).

In KP Permanent Make-Up, Inc. v. Lasting Impression I, Inc., 543 U.S. 111 (2004), the U.S. Supreme Court resolved a split among federal circuit courts of appeal, holding that a defendant did not have the burden to show unlikely confusion in order to assert the affirmative defense of fair use against a claim of trademark infringement. Id. at 121-122.

1. New Kids on the Block v. News America Pub., Inc., 971 F.2d 302 (9th Cir. 1992). The Ninth Circuit adopted a nominative fair use test in which the defendant must prove "[f]irst, the product or service in question must be one not readily identifiable without use of the trademark; second, only so much of the mark or marks may be used as is reasonably necessary to identify the product or service; and third, the user must do nothing that would, in conjunction with the mark, suggest sponsorship or endorsement by the trademark holder. Id. at 308.
2. Century 21 Real Estate Corp. v. LendingTree, Inc., 425 F.3d 211 (3d Cir. 2005). The Third Circuit determined that the nominative use analysis from Interspace Corp. v. Lapp Inc., 721 F.2d 460 (3d Cir. 1983) was insufficient, and thus established a new analysis that required the defendant to show: "(1) that the use of plaintiff's mark is necessary to describe both the plaintiff's product or service and the defendant's product or service; (2) that the defendant uses only so much of the plaintiff's mark as is necessary to describe plaintiff's product; and (3) that the defendant's conduct or language reflect the true and accurate relationship between plaintiff and defendant's products or services." Id. at 222.
3. E.S.S. Entertainment 2000, Inc. v. Rock Star Videos, Inc., 547 F.3d 1095 (9th Cir. 2008). The Ninth Circuit upheld a district court ruling that the nominative use defense did not apply because defendant, makers of the Grand Theft Auto game series, did not use plaintiff's trademarked strip club logo to describe plaintiff’s club. Id. at 1099. However, the Court held that defendant's modified depiction of plaintiff's strip club was protected by the First Amendment because the modification was not "explicitly misleading." Id. at 1101.