Supreme Court makes up its mind to hear case on fair use defence

The US Supreme Court has granted a writ of certiorari in the matter of KP Permanent Make-up Inc v Lasting Impression I Inc, which came before the US Court of Appeals for the Ninth Circuit in 2003. The Supreme Court will determine whether the classic fair use defence requires a likelihood of confusion analysis.

As previously reported in World Trademark Law Report, KP Permanent Make-up Inc filed a declaratory judgment action against Lasting Impression I Inc alleging that Lasting Impression's mark MICRO COLORS is generic for pigments used in preparing permanent cosmetics (see Mark's secondary meaning extends to its most salient feature). The district court granted summary judgment in favour of KP, holding, among other things, that the classic fair use defence as raised by KP precludes a claim of infringement.

There are two types of fair use: classic and nominative. Classic fair use occurs when the alleged infringer has used the trademark owner's mark only to describe the alleged infringer's products or services. In contrast, nominative fair use occurs when the alleged infringer has used the trademark owner's mark to describe the trademark owner's own products or services, or if the only way to describe a product or service is to use the trademark owner's mark. Because KP used the term 'micro colors' to describe its own products, it claimed that the classic fair use defence applied.

On appeal, the Ninth Circuit vacated entry of summary judgment in KP's favour and remanded the case for trial on the issue of likelihood of confusion. The court held that (i) when determining whether the classic fair use defence applies, a court must also analyze whether a likelihood of confusion exists, and (ii) the defendant bears the burden of proving an absence of likely confusion.

KP petitioned the Supreme Court to address the following question:

"Does the classic fair use defence to trademark infringement require the party asserting the defence to demonstrate an absence of likelihood of confusion, as is the rule in the Ninth Circuit, or is fair use an absolute defence irrespective of whether or not confusion may result, as is the rule in other circuits?"

As noted in KP's petition, there is a split in the circuits regarding whether a likelihood of confusion analysis is required when determining whether the classic fair use defence applies. The Ninth Circuit has held that the classic fair use defence does not apply if there is a likelihood of confusion. In contrast, the Second Circuit has held that the classic fair use defence may apply notwithstanding whether there is a likelihood of confusion, and that factors relevant to the likelihood of confusion analysis are not relevant to the classic fair use defence. The First Circuit has also held that the classic fair use defence may apply despite a finding of likelihood of confusion. Other circuits, including the Fourth and Seventh Circuits, have adopted an intermediate position similar to that set out in the American Law Institute's Restatement (Third) of Unfair Competition. Section 28 of that text indicates that the classic fair use defence may apply "even if some residual confusion remains likely," although "the extent of likely or actual confusion is an important factor in determining whether a use is fair".

The Supreme Court's grant of certiorari in this matter should resolve this split in the circuits and provide some guidance regarding the applicability of the classic fair use defence.

Maria Baratta, Kilpatrick Stockton LLP, Atlanta