Personal names can be protected as trademarks, rules Seventh Circuit

In Peaceable Planet Inc v Ty Inc, the US Court of Appeals for the Seventh Circuit has ruled that the common law principle that personal names require proof of secondary meaning before they can be protected as trademarks "does not apply if the public is unlikely to understand the personal name as a personal name".

Generally, US common law considers trademarks and service marks that consist of personal names, including first names, to require proof of secondary meaning (ie, consumers associate the mark with the plaintiff) before they are eligible for protection. The rationale behind requiring secondary meaning is that a personal name is analogous to a descriptive term. In Peacable Planet, however, the Seventh Circuit appears to have rejected this analogy.

Both Peaceable Planet Inc and Ty Inc manufacture plush toys in the shape of animals, each of which has its own name. Peaceable Planet, the smaller of the two companies, began selling a plush camel with the name Niles in 1999. In 2000 Ty also began selling a plush camel named Niles. Ty sold almost two million of its camel toys in one year as opposed to the 15,000 sold by Peaceable Planet. Peaceable Planet brought suit in the US District Court for the Northern District of Illinois, alleging that Ty was trying to pass off its product as Peaceable Planet's, resulting in confusion.

The district court ruled that Niles was a personal name and therefore required proof of secondary meaning if it was to be protected as a trademark. However, because Peaceable Planet did not prove that consumers associate the name Niles with its toy camel, the district court held that the name was not entitled to protection. It therefore dismissed the claim.

On appeal, the Seventh Circuit reversed the decision and held that NILES as used in connection with a toy camel was a suggestive mark and there was no need to establish secondary meaning. It explained that the reluctance in common law to allow personal names to be used as trademarks reflected valid concerns, including:

• the fact that it may prevent a person from using his or her own name for his or her own business;
  
  
• the fact that some names are so common (eg, Smith, Jones and Woods) that consumers will not assume that two products having the same name also share the same source; and
  
  
• the realization that preventing someone from using his or her name to denote his or her business may deprive consumers of useful information.

The court stated that such concerns are "separate and distinct" from the concerns behind the requirement that descriptive marks are not protected until they acquire secondary meaning.

It concluded that "treating the personal name rule as a prohibition against using a personal name as a trademark in the absence of secondary meaning would lead to absurd results" and that the scope of the rule is limited by its purpose. If none of the principles behind the personal name rule are present in a particular case, the application of the rule "would impede rather than promote competition and consumer welfare" and therefore the rule should not apply. The court reasoned that Niles was not the name of the defendant company, neither was it a common name. In addition, the court noted that making Ty use a different name for its toy camel would not deprive the consumer of any valuable information. Therefore, the use of NILES was not subject to the personal name rule and was entitled to protection without establishing secondary meaning. The Seventh Circuit then remanded the case to the lower court to determine whether trademark infringement had occurred.

Recently, there has been much discussion in the United States and around the world as to whether names should be entitled to protection. Peaceable Planet indicates that US courts are willing to keep an open mind about protecting names that are used in commerce as trademarks.

Russell H Falconer and Abigail Rubinstein, Baker Botts LLP, New York