'Non-commercial use' defence unavailable in TTAB dilution cases

United States of America

The changes in the language and interpretation of the Lanham Act since 1996 have led to some confusion regarding the scope of the trademark use exemptions relating to dilution claims. In American Express Marketing & Development Corporation v Gilad Development Corporation (March 15 2010), the Trademark Trial and Appeal Board (TTAB) held that the 'non-commercial use' exception, listed as a dilution defence in 15 USC §1125(c)(3)(C), is unavailable in a TTAB proceeding.

American Express Marketing & Development Corporation opposed the registration of the marks GRAND AMERICAN EXPRESS and GRAND AMERICAN EXPRESS RAILROAD CLEVELAND AND COLUMBUS (and design) for “transportation services, namely transporting passengers by means of a 19th-century replica train”. The oppositions were based on alleged likelihood of confusion with, and dilution of, the AMERICAN EXPRESS marks.

The applicant, Gilad Development Corporation, moved to amend its answers to include 'non-commercial use' under the Trademark Dilution Revision Act (TDRA) as an additional affirmative defence to the dilution claim. The amendment was filed after Gilad had already moved for partial summary judgment on the same issue. American Express then filed a cross-motion for summary judgment on likelihood of confusion and dilution grounds.

In the interest of judicial economy, and due to a “need for a slight clarification of procedure in this area”, the TTAB considered Gilad’s motion to amend its answers to assert 'non-commercial use' as an affirmative defence to American Express' dilution claim at the same time as its motion for summary judgment, even though the motion to amend was filed after the motion for summary judgment. However, in the future, the TTAB stated that it will deny any motion for summary judgment on an unpleaded claim, “unless the summary judgment is accompanied by an appropriate motion to amend or is withdrawn and refiled with such a motion to amend”. The TTAB then considered whether Gilad’s amendment was futile.

According to Gilad, the applications were inspired by a lithograph from Currier & Ives published in 1855, depicting train scenes in the American countryside, entitled "American Express Train". Gilad claimed that the marks at issue were non-commercial in nature, as they alluded to a work of art and evoked the 19th-century historical era. Therefore, they fell within the statutory 'non-commercial use' exclusion to dilution enumerated in the TDRA. Gilad further argued that there was no reason why use of a mark could not be both a 'use in commerce' for purposes of registration and a 'non-commercial use' for dilution purposes. In contrast, American Express asserted that the statutory 'non-commercial use' exception is improper in a TTAB proceeding because the TTAB’s jurisdiction extends only to registrability issues, whereas the 'non-commercial use' defence requires determination of an applicant’s right to use the marks.

The TTAB noted that the applicability of the 'non-commercial use' exception as an affirmative defence to a dilution claim was “an issue of first impression”. The TTAB agreed with American Express and concluded that the 'non-commercial use' exception was inapplicable in TTAB dilution cases.

First, the TTAB pointed out that, in order to obtain federal registrations, an applicant is required to show use of its marks in commerce to distinguish its services from those of others. Accordingly, it would contradict the purpose of the statute to allow a defendant in a TTAB dilution case to register a mark for its exclusive use in commerce as a service mark, and at the same time to assert the 'non-commercial use' exemption. The TTAB noted that the use of marks in connection with the rendering of free services is still considered use in commerce.

Second, the TTAB agreed with Professor J Thomas McCarthy, an oft-quoted trademark law expert, who suggested that a defendant’s use of a famous mark as a trademark on goods or services, whether in commerce or not, prevents a defendant from invoking the 'non-commercial use' exemption.

Furthermore, the TTAB added that, even if this exception were applicable, Gilad was not exercising its First Amendment right, which “consists of parody, satire; editorial and other forms of expression that are not part of a commercial transaction”. Rather, it used the marks to identify its own commercial services. The historical significance of the mark or the evocation of the 19th-century artwork did not create a form of protected artistic expression.     

Therefore, the TTAB denied both Gilad’s motion for leave to file to amend and its motion for summary judgment. The TTAB also denied American Express’ motion for summary judgment with respect to the likelihood of confusion and dilution claims, since genuine issues of material fact existed as to the similarity of the commercial impressions engendered by the parties’ marks, and as to the relatedness of the goods and services.

Over the past few years, legislative bodies and courts have sought to find a balance between freedom of speech and protection of trademark rights in the context of trademark dilution. The decision of the TTAB is important because, surprisingly, it appears to be the first time that the TTAB has ruled on the unavailability of the 'non-commercial use' exception in a TTAB proceeding in which a dilution claim is asserted.

Laure Hadas-Lebel, Arent Fox LLP, Washington DC

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