Trademark Protection: Background and Basics of the Lanham Act
The Lanham Act is the primary federal trademark statute of law in the U.S. The Act prohibits trademark infringement, trademark dilution, and false advertising (among other things). It’s name is derived from its creator, Representative Fritz G. Lanham of Texas, and the Act was passed into law by President Truman on July 5, 1946. The purpose of the Lanham Act is to protect trademarks so as to avoid consumer confusion and help consumers identify the source of particular goods or services.
How to Prevail on a Lanham Act Trademark Claim
To prevail, the plaintiff must prove: (1) that it has a protectable ownership interest in the mark; and (2) that the defendant’s use of the mark is likely to cause consumer confusion. See Network Automation, Inc. v. Advanced Sys. Concepts, Inc.
In trademark law, the standard test of ownership is priority of use. To acquire ownership of a trademark it isn’t enough to have created the mark or registered it first; the person or entity claiming ownership must have been the first to actually use the mark in commerce. To satisfy the first factor of the Lanham Act, a party must meet the threshold “use in commerce” requirement.
“Use in Commerce” Requirement
Under the Lanham Act, the term “use in commerce” means the bona fide use of a mark in the ordinary course of trade, and not made merely to reserve a right in a mark. This means that a mark must be used in the actual sale of goods or services to enjoy trademark protection under the Act. Furthermore, the mark must serve a source-identifying function, which can only be accomplished if the public is introduced to the mark. Thus, to meet the “use in commerce” requirement there are two factors, the mark must be actually used in commerce and be source-identifying. For example, a mark owner cannot simply render services in foreign commerce for it to be eligible for trademark protection. Nor can a mark owner simply use or display a mark in the sale or advertising of services to U.S. consumers. The mark owner must use or display the mark in the sale or advertising of services and the services must be rendered in commerce.
To analyze whether the two prongs have been met, courts will generally apply the “totality of the circumstances” test. This approach looks at the evidence showing, first, adoption, and second, use in a way sufficiently public to identify or distinguish the marked goods. In applying this approach, the courts are guided by the consideration of non-sales activities by factors such as:
- The genuineness and commercial character of the activity,
- The determination of whether the mark was sufficiently public to identify or distinguish it,
- The scope of the non-sales activity relative to what would be a commercially reasonable attempt to market the service,
- The degree of ongoing activity of the mark holder to conduct the business using the mark,
- The amount of business transacted, and
- Other similar factors which might distinguish whether a service has actually been rendered in commerce.
“Likelihood of Confusion” Requirement
The “likelihood of confusion” requirement generally considers whether a reasonable consumer is likely to be confused as to the origin or source of the goods or services that bear the marks or names at issue in the case. The plaintiff must show more than simply the possibility of such confusion.
There are eight factors, first enumerated in the Sleekcraft opinion, used in determining the “likelihood of confusion”:
- Strength of the mark;
- Proximity of the goods;
- Similarity of the marks;
- Evidence of actual confusion;
- Marketing channels used;
- Type of goods and the degree of care likely to be exercised by the purchase;
- Defendant’s intent in selecting the mark; and
- Likelihood of expansion of the product lines.
The courts apply this multi-factor approach in a flexible way. The factors are intended to be a proxy or substitute for consumer confusion, not a checklist. As the Court once noted, “we do not count beans.” Due to the open-ended nature of the multi-factor approach, most courts tend to disfavor summary judgment for trademark infringement cases. For a thorough analysis of each factor, you can read the recent opinion in Rearden LLC v. Rearden Commerce, Inc. (starting on page 9 of the opinion).
If you’d like to learn more about the Lanham Act or protecting your trademarks in your business, please contact us for your free 30-minute consultation.