In an opinion some legal scholars call confusing, the 3rd U.S. Circuit Court of Appeals has created a test for certain trademark cases that differs from widely relied-upon standards set by the 9th U.S. Circuit Court of Appeals.
A three-judge panel of the Philadelphia-based 3rd Circuit held that to establish a violation in a case of nominative fair use of another’s trademark, the plaintiff must first show defendant’s use of its trademark creates a likelihood of confusion. Then, according to the court’s new test, the defendant must show, based on a three-pronged test, fair use of the plaintiff’s trademark. Century 21 Real Estate Corp. v. LendingTree Inc., No. 03-4700 (Oct. 11).
Nominative fair use occurs when one business uses the trademark of another company to describe its own services. One example is a repair service using the brand name of an appliance manufacturer in advertisements to describe what products it services.
"I’ve spent many decades studying trademark law, and this is one of the most confusing cases I’ve seen," says J. Thomas McCarthy, founder of the McCarthy Institute for Intellectual Property and Technology Law at the University of San Francisco School of Law. "The majority made a mountain out of a molehill, and at so many points, they made something that’s fairly straightforward very complicated.
"An opinion like this will make legal advice more costly, make the area of the law less predictable, and create more forum-shopping," McCarthy says. "The only people a decision like this benefits are treatise writers like me who get more to write about."
According to McCarthy, "Ninety-nine percent of all case law on nominative fair use is from the 9th Circuit, and I don’t think the [3rd Circuit panel’s] majority really understands the 9th Circuit’s rule."