The United States Supreme Court limited the scope of federal trademark protection yesterday, saying that rival companies in some cases can use proprietary terms even when that might cause confusion among customers.
The justices said that companies accused of infringement need not show a lack of customer confusion when they invoke the “fair-use” defense to trademark lawsuits. The fair-use doctrine lets competing companies use trademarked terms for descriptive purposes.
“Some possibility of consumer confusion must be compatible with fair use,” Justice David H. Souter wrote for the unanimous court in Washington.
The ruling clarifies an area of trademark law that had divided lower courts. In the case before the justices, the 9th United States Circuit Court of Appeals in San Francisco had said that defendants invoking the fair-use doctrine needed to show that customers probably would not be confused.
The ruling came in a case involving Lasting Impression I Inc. of Englewood, N.J., a maker of liquid pigments that permanently change skin color to cover up scars and mask pigmentation disorders. The company, which sells its product under the name Micro Colors, sued a competitor, KP Permanent Make-Up Inc., a California company, for using the word microcolors on product bottles and fliers.
KP argued that its use of the word predated Lasting Impression’s trademark registration in 1993 and that the term was widely used in the industry. KP also contended that Lasting Impression’s trademark only covered a Micro Colors logo, not the term itself.
A federal trial judge threw out Lasting Impression’s trademark suit, saying KP was making fair use of the term. The 9th Circuit reversed that ruling, establishing a conflict with the 2nd Circuit United States Court of Appeals in New York, which had reached an opposite conclusion in a similar case. The conflict between the circuits set the stage for Supreme Court intervention.
Trademark experts say companies can still protect their products from infringing uses that truly confuse consumers.