Circuit Splits Impact Results in Trademark Infringement Cases
Where one sues, or is sued, for trademark infringement can make all the difference in how the case is resolved. The circuits (particularly the Second and the Ninth) are split on how to factor First Amendment interests in a trademark case when the unauthorized trademark use occurs in an expressive work, such as a movie or TV program. The circuits are also split on whether a plaintiff can receive an award of profits without showing the defendant acted willfully. The Supreme Court will attempt to address that split in the upcoming term.
Where the use of a trademark in an expressive work is at issue, the Second and Ninth Circuits have diverged on the extent to which the First Amendment protects such uses from a claim of infringement under the Lanham Act. In the late 1980s, the Second Circuit developed a test for balancing the First Amendment against the Lanham Act where the title of an expressive work is alleged to be false advertising. In Rogers v. Grimaldi, the Second Circuit held that the use of the trademark is protected by the First Amendment if the title: (1) has “at least some artistic relevance to the work” and (2) is “not explicitly misleading as to the content of the work.” Rogers v. Grimaldi, 875 F.2d 994, 1000-01 (2d Cir. 1989). The Second Circuit later applied this framework to trademark infringement claims. E.g., Twin Peaks Prods., Inc. v. Publ’ns Int’l, Ltd., 996 F.2d 1366, 1379 (2d Cir. 1993). Other circuits, including the Ninth Circuit, have since adopted the Rogers test for trademark infringement claims based on expressive works.
The Second and Ninth Circuits, however, apply the Rogers test in meaningfully different ways. When the Second Circuit adopted Rogers for use in trademark infringement cases, it held that whether a use of a trademark in an expressive work is explicitly misleading “must be made, in the first instance, by application of the venerable Polaroid factors.” Twin Peaks, 996 F.2d at 1379. The Second Circuit also held that, where the likelihood of confusion is “particularly compelling,” the “explicitly misleading” prong is satisfied. Id. Accordingly, in the Second Circuit, the same eight factors for determining whether an authorized trademark use is likely to cause confusion in a normal trademark case governs the question of whether such use is explicitly misleading and therefore actionable in the context of expressive works.
By contrast, the Ninth Circuit treats the explicitly misleading inquiry as a threshold requirement that is separate and apart from the likelihood of confusion test. Thus, for a use to be explicitly misleading, the Ninth Circuit requires that there be “an ‘explicit indication,’ ‘overt claim,’ or ‘explicit misstatement.’” Twentieth Century Fox Television v. Empire Distrib. Inc., 875 F.3d 1192, 1199 (9th Cir. 2017). A trademark infringement plaintiff need not meet this standard in the Second Circuit, but instead show only that there is a particularly compelling likelihood of confusion arising from the use of a trademark in an expressive work. In the Ninth Circuit, however, the likelihood of confusion factors are irrelevant to whether a trademark use in an expressive work is explicitly misleading.
The circuits are also split on whether a plaintiff in a trademark infringement case must prove the defendant committed willful infringement before receiving an award of the defendant’s profits under 15 U.S.C. § 1117(a). That statute permits an award of profits “subject to the principles of equity,” which many courts have interpreted as incorporating the common law requirement of willfulness, while other courts have looked to a host of equitable factors to determine whether a plaintiff is entitled to profits. Id.; see, e.g., Quick Techs. v. Sage Grp. PLC, 313 F.3d 338, 349 (5th Cir. 2002) (considering factors including “(1) whether the defendant had the intent to confuse or deceive, (2) whether sales have been diverted, (3) the adequacy of other remedies, (4) any unreasonable delay by the plaintiff in asserting his rights, (5) the public interest in making the misconduct unprofitable, and (6) whether it is a case of palming off”).
Congress amended Section 1117(a) in 1999 to clarify that an award of profits in a trademark dilution case requires “a willful violation.” Courts have since wrestled with the question of whether Congress’ express inclusion of a willfulness requirement for dilution claims, but not including a similar requirement for trademark infringement, should be construed as negating the willfulness requirement for trademark infringement. The Federal Circuit recently rejected that view in Romag Fasteners, Inc. v. Fossil, Inc., 817 F.3d 782, 789 (Fed. Cir. 2016), finding that willfulness remains a requirement for trademark infringement because Section 1117(a) requires an award of profits be “subject to the principles of equity.” The court reasoned that the amendment “was simply to correct an error in the 1996 Dilution Act” and the insertion of a willfulness requirement for dilution “does not create a negative pregnant that willfulness is always required in dilution cases but never for infringement.” Id.
The Supreme Court has granted certiorari in Romag and will determine whether Section 1117(a) requires plaintiffs to show that a trademark infringer acted willfully before obtaining an award of profits. Until then, the circuits remain split on whether willfulness is required.