Trade Marks, Trade Dress -

3rd Circuit

Trademarks / Trade Dress

1. What are the standards for nominative fair use of a mark in your Circuit?

There is a two-step approach as to nominative fair use.  The governing Third Circuit analysis has been described as follows:

Nominative fair use is an affirmative defense to claims of trademark infringement. See Century 21 Real Estate Corp. v. Lendingtree, Inc., 425 F.3d 211, 228 (3d Cir. 2005). Within the Third Circuit, courts apply a two-step approach when evaluating a nominative fair use defense. See Commerce Bancorp, LLC v. Hill, No. 08-cv-5628, 2010 WL 2545166, at *14 (D.N.J. June 18, 2010) (citing id. at 222). At the first step, “the primary inquiry is whether the defendant’s use of the mark is likely to cause confusion.” See Pierre & Carlo, Inc. v. Premier Salons, Inc., 713 F. Supp. 2d 471, 483 (E.D. Pa. 2010) (citing Century 21, 425 F.3d at 222). “[T]he burden then shifts to defendant to show that its nominative use of plaintiff’s mark is nonetheless fair.” Century 21, 425 F.3d at 222. At the second step, a court considers:

(1) Is the use of the plaintiff’s mark necessary to describe both plaintiff’s product or service and defendant’s product or service? (2) Is only so much of the plaintiff’s mark used as is necessary to describe plaintiff’s products or services? (3) Does the defendant’s conduct or language reflect the true and accurate relationship between plaintiff and defendant’s products or services?

See id. at 232. “If each of these questions can be answered in the affirmative, the use will be considered a fair one, regardless of whether likelihood of confusion exists.” Id.

Pennsylvania State Univ. v. Keystone Alternatives LLC, No. 1:19-CV-02039, 2020 WL 1082647, at *2–3 (M.D. Pa. Mar. 5, 2020).

“In the nominative fair use context, the traditional Lapp factors, which are used to evaluate the likelihood of confusion elements, must be tailored to only those that are ‘meaningful and probative in the context of nominative fair use.’”  Digital Dream Labs, LLC. v. Living Tech. (Shenzhen) Co., No. 2:20-CV-01500-CCW, 2022 WL 597358, at *12 (W.D. Pa. Feb. 28, 2022) (footnote omitted) (quoting Century 21 Real Estate Corp. v. Lendingtree, Inc., 425 F.3d 211, 224 (3d Cir. 2005)).

Further, “[d]istrict courts within the Third Circuit regularly decline to consider nominative fair use on a motion to dismiss because the analysis requires factual development.”  See Keystone Alternatives LLC, 2020 WL 1082647, at *3.

2. Does your Circuit hold that the Lanham Act can be used to impose an injunctive on conduct outside the United States?

Yes, the Third Circuit has held that “[t]he Lanham Act allows federal courts to enjoin extraterritorial conduct when necessary to prevent harm to commerce in the United States.”  See Scanvec Amiable Ltd. v. Chang, 80 F. App’x 171, 180–81 (3d Cir. 2003) (citing Steele v. Bulova Watch Co., 344 U.S. 280 (1952)).

“A proper invocation of extraterritorial jurisdiction under the Lanham Act depends on: 1) whether the defendant is a United States citizen; 2) conflicts between the defendant’s trademark rights under foreign law and the plaintiff’s rights in the United States; and 3) whether the defendant’s conduct has a substantial or significant effect on domestic commerce.”  Id. (citing Atl. Richfield Co. v. ARCO Globus Int’l Co., 150 F.3d 189, 192 (2d Cir.1998); Nintendo of Am., Inc. v. Aeropower Co., 34 F.3d 246, 250–51 (4th Cir.1994); Am. Rice, Inc. v. Ark. Rice Growers Co-op. Ass’n, 701 F.2d 408, 414 (5th Cir.1983)).

Further, one district court within the Circuit has commented that “cases addressing the extraterritorial application of the Lanham Act involve instances where . . . trademark holders sought to enjoin conduct already taken abroad.”  See Kaisha v. Khales, No. CV1712312ESMAH, 2020 WL 5250540, at *2 (D.N.J. Sept. 3, 2020).

3. Are there any recent trends in your District or Circuit regarding the application of trade dress law, including with respect to functionality (utilitarian and aesthetic), color and color schemes, and the line between trade dress and patent protection?

Somewhat recently, in Ezaki Glico Kabushiki Kaisha v. Lotte Int’l Am. Corp., 986 F.3d 250, 260 (3d Cir. 2021), the Third Circuit address trade dress with respect to stick-shaped chocolate cookie snacks, and found the design of the product ineligible for trade dress protection on the basis that the design was functional.  In so holding, the court offered the following reasoning: “Pocky’s design makes it work better as a snack”; “Ezaki Glico promotes Pocky’s utilitarian advantages”; “There are alternative designs, but that does not make Pocky’s design non-functional.”  See id. at 259-60.

As to the relevance of patent protection, the court stated that the plaintiff’s utility patent for a manufacturing method was irrelevant to a functionality determination, and in doing so, reasoned that:

As TrafFix explained, “[a] utility patent is strong evidence that the features therein claimed are functional.” 532 U.S. at 29, 121 S.Ct. 1255. This is because patented items must be “useful.” 35 U.S.C. § 101. If a patentee relied on a product’s feature to show that the product was patentable, that reliance is good evidence that the feature is useful. As TrafFix put it, the question is whether the “central advance” of the utility patent is also “the essential feature of the trade dress” that the owners want to protect. 532 U.S. at 30, 121 S.Ct. 1255. So Ezaki Glico’s utility patent would be strong evidence of functionality if the features it claimed overlapped with its trade dress. But they do not.

The trade dress that Ezaki Glico defends is a stick-shaped snack that is partly coated with chocolate or cream. Yet those features are not the “central advance” of its utility patent. Instead, the patent’s innovation is a better method for making the snack’s stick shape. The method is useful for making the shape whether or not the shape itself is useful for anything. Thus, the patent’s mention of the shape says nothing about whether the shape is functional.

Ezaki Glico Kabushiki Kaisha v. Lotte Int’l Am. Corp., 986 F.3d 250, 260 (3d Cir.), as amended (Mar. 10, 2021), cert. denied sub nom. Kaisha v. Lotte Int’l Am. Corp., 142 S. Ct. 420 (2021), reh’g denied, 142 S. Ct. 1402, 212 L. Ed. 2d 345 (2022)


4. What are the recent rulings in your Circuit regarding the “fair use” defense?

In TD Bank N.A. v. Hill, the Third Circuit addressed fair use in the context of a copyright infringement action involving a former bank executive’s publication and marketing of a book following his termination of employment, in connection with a manuscript he previously authored while working for the bank:

As for fair use, the 2012 book was not transformative—i.e., it did not imbue the prior work with “new expression, meaning, or message”—so the permissible scope of fair use is more circumscribed. See Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 579, 114 S.Ct. 1164, 127 L.Ed.2d 500 (1994). Given this, as well as Hill’s commercial sales of the 2012 work, the unpublished nature of the 2007 manuscript, and the potential harm to the market for the original manuscript if TD Bank ever elected to publish it, the District Court correctly granted summary judgment to TD Bank on Hill’s fair-use defense. See Harper & Row Publishers, Inc. v. Nation Enters., 471 U.S. 539, 562, 563, 566–68, 105 S.Ct. 2218, 85 L.Ed.2d 588 (1985).

TD Bank N.A. v. Hill, 928 F.3d 259, 278 (3d Cir. 2019)

5. How does your District or Circuit approach claims that embedding content on one’s website using html links infringes the original author’s distribution and display rights under the Copyright Act? See Nicklen v. Sinclair (SDNY 2021); Leader’s Institute v. Jackson (2017 WL 5629514 (ND Texas 2017)).   

In Microsoft Corp. v., the district court addressed allegations that the defendants “advertised, marketed, copied, and distributed unauthorized copies of Microsoft software via internet download and software components, such as product activation keys, thereby infringing directly, contributorily, and vicariously on Microsoft’s copyrights.”  See Microsoft Corp. v., No. CV 16-2762, 2017 WL 5517379, at *1 (D.N.J. Sept. 29, 2017).

On a motion to dismiss, the court found the pleading insufficient for purposes of a direct copyright infringement claim, and in doing so, looked to rulings in various other circuits with respect to hyperlinks, reasoning as follows:

Microsoft alleges Defendants sold “abused” product activation keys, which had been “separated from the Microsoft software [they were] intended and authorized to activate,” and provided links to websites from which unauthorized copies of Microsoft software were made. SAC ¶ 17. However, Microsoft does not allege Defendants counterfeited the product activation keys or directly provided infringing copies of software to customers. Providing a link to a website containing infringing material does not, as a matter of law, constitute direct copyright infringement. See, e.g. Pearson Educ., Inc. v. Ishayev, 963 F. Supp. 2d 239, 251 (S.D.N.Y. 2013) (“A hyperlink does not itself contain any substantive content; in that important sense, a hyperlink differs from a zip file. Because hyperlinks do not themselves contain the copyrighted or protected derivative works, forwarding them does not infringe on any of a copyright owner’s five exclusive rights under § 106.”); MyPlayCity, Inc. v. Conduit Ltd., 2012 WL 1107648, at *12 (S.D.N.Y. Mar. 30, 2012) (“Because the actual transfer of a file between computers must occur, merely providing a ‘link’ to a site containing copyrighted material does not constitute direct infringement of a holder’s distribution right.”), adhered to on reconsideration, 2012 WL 2929392 (S.D.N.Y. July 18, 2012); see also Perfect 10, Inc. v., Inc., 508 F.3d 1146, 1161 (9th Cir. 2007) (holding that providing HTML instructions that direct a user to a website housing copyrighted images “does not constitute direct infringement of the copyright owner’s display rights” because “providing HTML instructions is not equivalent to showing a copy”).

Id. at *2.  While this case involves a different context than the Nicklen or Leader’s Institute cases, it illustrates the application of various principles with respect to hyperlinks in the copyright context.

6. What is necessary in your District or Circuit to prove (or disprove) that a work is “transformative’ and thus fair use? (This issue is likely to be heard at the Supreme Court next term in Andy Warhol Foundation v. Goldsmith.)

In discussing what it means to be “transformative,” the Third Circuit has commented that “[w]hen courts evaluate the first factor . . . [t]he central purpose of th[e] investigation is to see … whether the new work merely supersedes the objects of the original creation … or instead adds something new, with a further purpose or different character, altering the first with new expression, meaning, or message; it asks … whether and to what extent the new work is transformative.”  See Murphy v. Millennium Radio Grp. LLC, 650 F.3d 295, 306 (3d Cir. 2011) (second and third alterations in original) (quoting Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569 (1994)).

In Murphy, the court also quoted from the Supreme Court’s decision in Campbell and commented that “Campbell has made it clear that the ‘heart’ of a claim for transformative use is ‘the use of some elements of a prior author’s composition to create a new one that, at least in part, comments on that author’s works.’ . . . However, if ‘the commentary has no critical bearing on the substance or style of the original … which the alleged infringer merely uses to get attention or to avoid the drudgery in working up something fresh, the claim to fairness … diminishes accordingly (if it does not vanish).’”  See id. at 307 (internal citations omitted)

More recently, as noted previously, TD Bank N.A. v. Hill, the Court of Appeals stated that for the “transformative” prong to be met for purposes of fair use, the work in question must “imbue the prior work with ‘new expression, meaning, or message’—so the permissible scope of fair use is more circumscribed.”  See TD Bank N.A. v. Hill, 928 F.3d 259, 278 (3d Cir. 2019) (quoting Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 579, 114 S.Ct. 1164, 127 L.Ed.2d 500 (1994)).