The U.S. Supreme Court recently issued an important decision affecting trademark owner=s rights by making it easier for a party sued for infringement by a trademark owner to successfully defend against the claim. Under federal law, a trademark holder can sue users of their trademarks when the Ause is likely to cause confusion, or to cause mistake, or to deceive.@ The trademark holder must prove that the alleged infringer=s actual use of the trademark is likely to produce confusion in the minds of customers about the origin of the goods or services in question. The alleged infringer may be able to defend against such a claim by relying upon the fair use exception.
The fair use exception, created by federal law, allows the trademark to be used by someone other than the owner if the use of the trademark is a good faith attempt only to describe the goods or services of the user or their geographic origin. The exception protects the right of competitors to engage in comparative advertising, using the trademarked names of goods or services to draw comparisons between their product and the trademark owner=s product. Under the exception, competing products can be named on the labels of others, as long as the trademark accurately describes the products and distinguish them so as to avoid confusion. This benefits consumers, who are able to make accurate comparisons across products. Fair use also protects the right to use a trademark to specifically refer to the trademarked good or service. This is sometimes called "nominative" fair use, and it allows speakers to criticize, comment upon, compare, and even satirize companies, products, and advertising slogans.
In K‑P Permanent Make‑Up Inc. v. Lasting Impression I, Inc., the Supreme Court resolved disagreement between the lower courts over the application of the fair use exception. The case involved a dispute between two cosmetic companies over the right to use the term "micro color" in their marketing and sales of products. The trademark holder claimed the alleged infringer failed to establish its fair use defense. It claimed that for the alleged infringer to establish the fair use defense, it had to prove there would be no likelihood of consumer confusion. The Supreme Court did not agree and instead explained the statute mentions "likelihood of confusion" in describing what the plaintiff and trademark holder must prove to win its case ‑ not what the defendant and alleged trademark infringer must prove to show fair use. It is only when the trademark holder shows a likely confusion by a preponderance of the evidence that an alleged infringer has need of the fair use exception. If the alleged infringer had to prove that no likelihood of confusion existed, the fair use defense was useless. The Court explained that to show a fair use, an alleged infringer need not negate likelihood of confusion, but instead need only show a descriptive use. If the alleged infringer can do that, they cannot lose.
A "preponderance" of the evidence means that a version of events is more likely true than not to be true.