Intellectual Property Law

Chapter 23 Lecture Notes

Major points addressed in the chapter materials include the following:

1. The law of unfair competition is based upon the notion that individuals should be
protected from deceptive and improper conduct in the marketplace.

2. The law of unfair competition is found in case law, state statutes, federal statutes (in
particular, Lanham Act Section 43), and in FTC regulations.

3. Because the law of unfair competition often aims to protect intangible interests (such
as one’s personal or business reputation), it is often said to protect intellectual
property rather than real or personal property.

4. Actions for unfair competition are often combined with other actions, such as those
alleging trademark, copyright, or patent infringement. The International Trade
Commission can investigate allegations of unfair competition and block offending
goods.

5. Passing off (or palming off) occurs when one party attempts to pass off its goods
under the pretense they are the goods of another, such as by affixing another party’s
trademark to its goods to confuse consumers into thinking they are buying the
products of the trademark owner or substituting its own inferior product for that of a
competitor. Passing off is the earliest form of unfair competition. The most blatant
form of passing off is counterfeiting (selling a product with a “fake” trademark).

6. Passing off can occur when a party suggests that its products or services are somehow
affiliated with or sponsored by another.

7. Actions alleging passing off are brought less frequently now and plaintiffs often
prefer to rely upon Section 43 of the Lanham Act (called the federal unfair
competition statute), which provides expanded remedies and attorney’s fees.

8. Misappropriation occurs when one party takes the property of another (usually “hot”
news, event results, math formulae, indices, and other property that is not protectable
under copyright or patent law) that the other created through an investment of time
and effort.

9. Under the right of publicity, individuals have the right to protect their identities from
unauthorized commercial use. Use for non-commercial purposes (news reporting,
research, etc.) is generally permissible. Because celebrities can easily show economic
harm, most cases involve celebrities.

10. Unpermitted commercial exploitation of an individual’s persona would dilute the
value of the persona, making it more difficult for the individual to commercialize
his/her identity.

11. More than a person’s name is protected. Thus, use of a nickname, voice, likeness (by
cartoon, drawing, or look-alikes), roles and associated objects (such as imitating a
distinctive performing style or persona), or personal attributes can all be prohibited as
long as such use is understood to identify a particular person.

12. The duration of the right of publicity is subject to much variation. The majority of
states hold that the right of publicity survives death (at least for some period of time).

13. A variety of defenses can be asserted in a right of publicity case, including the
following: the plaintiff is not readily identified by the usage; the usage is protected
speech under the First Amendment (thus, use in connection with research or news
reporting is generally acceptable because it is non-commercial); the usage is parody,
satire, or commentary; or use was authorized (such as through a license).

14. INTA has proposed amending the Trademark Act to provide a federal right of
publicity with postmortem rights to promote uniformity in this field.

15. Under Section 43 of the Lanham Act, whoever uses a false or misleading description
or representation of fact or false designation of origin in commercial advertising, or
misrepresents his/her or another’s goods or services, is liable to any person likely to
be injured by such act. Section 43 has broad and sweeping scope and prohibits nearly
all forms of false advertising.

16. Section 43 protects competitors and allows recovery if a plaintiff can show he/she is
likely to be damaged (thereby eliminating the prior requirement that a plaintiff prove
actual damage).

17. Ads that are literally false are clearly actionable. Even ads that are implicitly false are
actionable if they are likely to deceive customers. If medical or scientific claims are
used in an ad, experts or studies must verify the claim.

18. There are a variety of defenses one can assert in a false advertising action. Truth of
the statement is a defense and puffing (exaggerated and highly subjective or boasting
statements upon which no reasonable person would rely) is a defense.

19. Comparative advertising is acceptable as long as it is true.

20. The FTC is charged with prohibiting unfair and deceptive acts and practices. The
FTC requires that objective claims made in advertising be truthful and substantiated.

Many FTC cases involve health and safety claims. The FTC also vigorously pursues
fraudulent telemarketing tactics and is increasing efforts to prohibit unfair or
deceptive practices on the Internet and those practices that target financially
distressed consumers. State statutes that are similar to the FTC Act are often called
“little FTC acts.”

21. The FTC can issue cease and desist orders, injunctions, and impose monetary
penalties and can also require offenders to make restitution to injured consumers and
disseminate corrective advertising.

22. Making intentional and untrue statements about another company or its products or
services that causes harm is called product disparagement or trade libel. Because a
plaintiff must show actual harm or damage when bringing an action under state law,
fewer such actions for trade libel are brought nowadays under state law, because most
plaintiffs prefer to rely upon Section 43 of the Lanham Act, which requires that they
prove only that they are likely to be damaged.

23. Dilution is another form of unfair competition and occurs when a famous trademark
is likely to lose its distinctive quality through tarnishment or blurring. The Federal
Trademark Dilution Act provides remedies for dilution and is intended to provide a
remedy for the owners of famous marks when the owners would not otherwise be
able to establish likelihood of confusion.

24. Dilution occurs through blurring (the erosion of a mark’s distinctive quality through
use on dissimilar products) or tarnishment (the linking of a mark to inferior or
unsavory products). Actual dilution no longer need be shown (but only a likelihood of
dilution), and a mark must be famous on a national basis (rather than in a niche
market) to be protectable against dilution.

25. The total image and overall appearance of a product or service is protectable as its
trade dress. Trade dress can include a product’s distinctive packaging or its product
design. Trade dress protection does not extend to utilitarian or functional aspects of a
product or service because such would stifle competition. To be protectable, trade
dress must be distinctive (either inherently distinctive, or for product design cases, the
design must have acquired distinctiveness through secondary meaning). If the trade
dress is registered, it is presumed that it is not functional.

26. The United States has assumed certain obligations under international agreements,
namely the Paris Convention, in the area of unfair competition. The Paris Convention
seeks to afford to citizens of the more than 175 member nations protection against
unfair competition and requires that member nations provide the same level of
protection against unfair competition to citizens of other member nations as they do
for their own citizens.