United States: trademark litigation

Injunctions at a glance

Preliminary injunctions are available upon motion if the plaintiff demonstrates a likelihood of success on the merits coupled with harm that outweighs possible damage to the defendant. Statutory presumption of irreparable harm makes them easier to obtain.

Permanent injunctions are available after prevailing on the merits. Statutory presumption of irreparable harm makes them easier to obtain.

The payment of a security is required by rule to perfect a preliminary injunction but the amount is discretionary. A security is not needed for a permanent injunction.

Registered trademarks can be recorded with US Customs and Border Protection (Customs).

The United States does not recognise dynamic blocking injunctions.

Legislative framework and causes of action

Establishing protection

Both registered and unregistered rights are recognised. Except for treaty-created rights, trademark rights are established by using a mark in commerce and, even without registration, are protected by common law within the geographic area where the mark is used.

Rights owners may choose, but are not required, to register a trademark.

Each US state has its own statutory scheme governing registration and related remedies.

Federal registration at the USPTO provides more robust protection. Registration pursuant to the US trademark act (15 United States Code (USC) Sections 1051 and following) (the Lanham Act) confers certain benefits on the trademark owner, including presumptions that:

• the trademark is valid;
• the trademark is owned by the registrant; and
• the registrant has the exclusive right to use the trademark throughout the United States and its territories.

Federal registrations may also be recorded with Customs, which will seize, detain and ultimately destroy infringing and counterfeit goods intended for entry into the United States.

Possible forums

Although trademark infringement claims may be brought in state court, mark owners generally assert trademark-related claims in US district courts (ie, trial courts assigned to govern specific geographic territories within each US state that tend to have more experience with trademark cases). The Lanham Act provides causes of action for:

• infringement of a registered mark (15 USC Section 1114);
• infringement of an unregistered mark (15 USC Section 1125(a));
• dilution of a famous mark (15 USC Section 1125(c));
• claims arising from a false designation of origin (15 USC Section 1125(a));
• false advertising (15 USC Section 1125(a)); and
• cybersquatting (15 USC Section 1125(d)).

Litigants often add state law claims to bolster their federal claims, invoking state consumer protection statutes or common law unfair competition.

The USPTO’s TTAB decides Lanham Act claims, but its jurisdiction is limited to refusing applications, cancelling existing registrations and allowing concurrent geographically limited registrations. While lawsuits can provide more robust relief, TTAB proceedings can serve as useful tools for common law or registered mark owners seeking leverage to resolve a dispute without expending additional resources on more fulsome federal court litigation.

In cases involving the import of infringing goods, a second administrative body, the International Trade Commission (ITC), might provide additional relief. Both common law and registered mark owners can file complaints seeking investigation and ultimately an exclusion order that can operate more effectively than Customs seizures.

Test for infringement

Regardless of the forum, trademark-related claims under both state and federal law hinge on:

• valid prior rights;
• use in commerce (even for owners of registrations obtained through an international treaty without having to show use initially); and
• likelihood that the allegedly infringing mark will cause confusion, mistake or deception among consumers regarding the origin of the goods or services.

The likelihood of confusion test involves weighing several factors that vary slightly by jurisdiction, but generally include:

• similarities in sight, sound and meaning of the marks;
• the strength of the claimant’s mark;
• whether the marks are used on the same, related or complementary goods or services;
• whether the goods or services are likely to be sold in the same or similar shops or outlets, or advertised in similar media;
• the degree of care applied by purchasers of the goods and services;
• instances of actual confusion; and
• whether there was an intent to use a mark similar to the claimant’s mark.

Unjustified Threats

If a party is threatened with trademark infringement litigation, it may file a claim in a US district court under the Declaratory Judgments Act (28 USC Section 2201 and following) seeking a declaration of rights as between the parties.

Alternative dispute resolution

Alternative dispute resolution (ADR) is an increasingly popular means of resolving trademark disputes pending before state and federal courts, the TTAB and the ITC, and even in the absence of a formal proceeding.

ADR, which often involves a conference before a judge or a trained mediator, allows parties flexibility in selecting governing rules and confidentiality requirements. It can also be far less expensive than traditional litigation, making ADR especially appealing to parties involved in court proceedings. ADR is not often used in TTAB proceedings where only registration (as opposed to continued use of a mark in commerce and a possible monetary award) is at stake.

Most federal and state courts now require the parties to participate in some form of ADR and even maintain panels of potential mediators that include active or retired trademark practitioners. These subject matter experts can provide neutral views on the strengths or weaknesses of each side’s case, which may help change the dynamics for potential resolution of the case.

Litigation venue and formats

Proper venue and forum shopping

Because the Lanham Act is a federal statute that is applied relatively uniformly across federal district courts, choice of venue for a trademark infringement lawsuit is typically dictated by the geographic locations of the parties. Mark owners seeking to inconvenience the infringer by filing far from where they are located may have to weigh that advantage against the possibility of a procedural motion delaying the lawsuit.

The US Constitution dictates that a defendant may be sued only in a jurisdiction in which it can reasonably expect to be brought into court (ie, where the defendant lives or does business, or both). A defendant can ask to transfer the lawsuit to another court or seek dismissal for lack of personal jurisdiction.

Even if a particular district court has personal jurisdiction over the defendant, transfer or dismissal can result if the requirements of the federal venue statute (28 USC Section 1391) are not met. Pursuant to that statute, trademark infringement cases may be brought in:

• the court located where one of the alleged infringers resides, if all reside in the same state;
• a court located where “a substantial part of the events or omissions giving rise to the claim occurred”; or
• if neither of these apply, where any alleged infringer is subject to the court’s personal jurisdiction.

An alleged infringer who is not a US resident can be sued in any district court.

The same jurisdiction and venue questions arise in state court actions, which are typically governed by state procedural statutes aligning with the same constitutional requirements present in federal cases.

These considerations, however, do not apply to administrative proceedings at the TTAB or the ITC. Any owner of a US trademark application or registration may be subjected to TTAB jurisdiction, while any party with some nexus to the import of infringing goods into the United States could find itself the subject of an ITC investigation or adjudication.

Right to a jury trial

While TTAB and ITC matters are decided by specially appointed administrative law judges who are experts in their fields, a defendant in federal district court or state court has a right to make a timely written demand for a trial by a jury of randomly selected members of the local community. Alternatively, parties can agree to have a case tried by the judge assigned to preside over the case (who may not be a subject matter expert).

Damages and remedies

Monetary relief

The Lanham Act and many state statutes provide vehicles for recovery of an infringer’s profits, actual damages and costs in traditional trademark infringement cases brought in court (as opposed to at the TTAB). The trier of fact awards such relief.

For disgorgement of profits, the trademark owner need only prove the gross revenue received by the infringer from the sale of the infringing goods or services. It is then incumbent on the infringer to prove what, if any, costs can be deducted. Proof of wilfulness is not required to recover a defendant’s profits.

With regard to actual damages, a trademark owner is entitled to recover:

• any quantifiable economic loss caused by the infringement, such as lost profits (provided that they are not duplicative of the infringer’s profits);
• lost goodwill or reputation; and
• the cost of remedial advertising.

The Lanham Act affords courts discretion to award up to three times the actual damages “according to the circumstances of the case” (15 USC Section 1117(a)).

Recoverable costs include certain disbursements made during litigation, excluding attorneys’ fees. However, attorneys’ fees may be awarded in the relatively rare instance where a judge determines that a case was exceptional.

Further enhancements are available in Lanham Act counterfeiting cases, where the mark owner can elect to seek treble damages (even without extenuating circumstances) or statutory damages, which can range from $1,000 to $200,000 per counterfeit mark per type of good or service. The upward limit jumps to $2 million if the counterfeiting is found to be wilful.

Injunctive relief

The Lanham Act and many state statutes also allow for injunctive relief, which only courts are empowered to grant. These include:

• temporary restraining orders (TROs) to prevent imminent and irreparable harm on an emergency basis;
• preliminary injunctions prior to final judgment to maintain the status quo during litigation; and
• permanent injunctions.

TROs and preliminary injunctions are only issued if a plaintiff can demonstrate:

• likelihood of success on the merits of its claims;
• irreparable harm without injunctive relief;
• a balance of hardships in its favour; and
• public interest in issuing an injunction.

TROs and preliminary injunctions are contingent on the payment of a security the court finds sufficient to pay a wrongfully enjoined party’s costs and damages.

Permanent injunctions are only issued after final judgment if a plaintiff can demonstrate:

• irreparable harm without injunctive relief;
• a balance of hardships in its favour; and
• public interest in issuing an injunction

US law provides for a statutory presumption of irreparable harm upon a showing of likely success (in the case of TROs or preliminary injunctions) or success (in the case of permanent injunctions) on the asserted claims.

Evidencing the case

Investigations and first steps

All trademark proceedings require proof of valid prior rights and likelihood of consumer confusion. The initial investigation of any matter must focus on these elements.

Confirming that the claimant began using its mark in commerce before the alleged infringer is vital. Because US trademark rights are conferred by use, even prior unregistered common law use can trump a registrant’s rights and create a valid defence to an infringement claim. Moreover, if the claimant takes action against a party that has prior rights, the prior user may take adverse action to challenge the claimant’s asserted trademark.

A potential litigant should also investigate and gather the evidence required to support the other elements of its claims. This includes:

• evidence of use;
• determining whether the trademark to be asserted might be vulnerable to attack and gathering evidence to blunt such an attack;
• determining whether and to what extent there is evidence of actual harm; and
• gathering evidence of any other relevant circumstances such as actual confusion in the marketplace (which is not required to prove a claim but is considered to carry a great deal of weight).

All this evidence should be collected and preserved to avoid sanctions up to and including dismissal of a case. Such sanctions are common when electronically stored information (ie emails, documents) is erased or lost.

Courts, the TTAB and the ITC all allow for robust discovery from both parties and non-parties, including requests for a party to:

• produce documents;
• respond to written questions; and
• produce witnesses for deposition.

Survey evidence

Consumer survey evidence may be used in court, TTAB and ITC litigation. Surveys can be persuasive on issues such as fame, secondary meaning, genericness, likelihood of confusion, consumer perceptions of allegedly false advertising, and many of the other factors implicated by trademark and false advertising claims.

Use of expert witnesses

Expert witnesses may be used regarding surveys or to measure the tangible – and sometimes intangible – impact of infringement or false advertising claims for the purpose of seeking monetary damages. A linguistics expert might also be used to opine on aural similarities between marks, as well as the origins and meaning of a mark.

Expert testimony can be excluded before trial if the expert does not have sufficient experience or uses an improper methodology. A party should adhere to the well-developed standards set out in case law to avoid this outcome.

Available defences

In all trademark litigation, the party asserting claims bears the burden of proving all the elements of each claim. The defendant will prevail where the claimant has not introduced sufficient evidence to prove all elements, or where the defendant is able to develop sufficient evidence to defeat one or more elements.

For example, when evaluating a mark’s strength, federal district courts and the TTAB have recognised that the existence of a significant number of similar, but not identical, marks may indicate that the relevant consuming public can distinguish between those similar marks based on small differences. Because the burden of presenting evidence of third-party use is on the defendant, this can be technically considered a defence.

Similarly, evidence of differences in goods or classes of consumer, or any other confusion factors, may be viewed as defences to a trademark claim. In cases where common law rights are asserted, a defendant may argue that no likelihood of confusion exists because it was innocently using its mark in a geographically distinct market, and therefore no overlap in consumer base exists.

A claim can also be defeated by asserting the affirmative defence of invalidity of the asserted mark. Bases for an invalidity defence include the following:

• The asserted mark is generic and therefore does not function as a source identifier. Even previously registered marks may be rendered generic.
• The asserted mark was abandoned through intentional non-use.
• The registration of the asserted mark is void because:
  • the mark was not in use when a use-based application was filed;
  • the applicant was not the actual owner of the mark at the time of filing;
  • the applicant or registrant committed fraud by filing a declaration that was intentionally false or was filed with reckless disregard for the truth; or
  • an underlying intent-to-use application was improperly transferred to a new owner before the mark was used.

Equitable defences such as estoppel, laches and unclean hands can be asserted if supported by the underlying facts.

Appeals process

Appeals can be taken, as of right, from any decision by a federal district court, a state court, the TTAB or the ITC.

State court decisions may be appealed to state-specific appellate courts.