Lanham Act

Last reviewed: February 2017

Abstract

Congress passed the Lanham, or Trademark, Act in 1946 to protect the rights of inventors and patent owners and to ensure that consumers would be able to identify authentic products from copies and knock-offs. Most other industrial countries had already passed such laws, and it had become essential for the United States to recognize those rights so that U.S. businesses would continue to be competitive in the world market. Congress has continued to amend the Lanham Act, and challenges to the Lanham Act’s protections of both registered and non-registered trademarks continue.

Overview

When the United States Constitution was written in 1787, it was essential that the new government be given the right to regulate commerce. Immediately after giving Congress the right to levy taxes and borrow money, the framers assigned Congress the authority to “regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes” (Article I, Section 8, Clause 3). A system for registering patents was set up in 1793 under the State Department. That first year, 988 patents were issued out of 1,955 applications received (Jost, 2015). The registration process was moved to the Commerce Department in 1925. By that time, applications had climbed to more than 80,000 a year. In the twenty-first century, some 300,000 patents are awarded each year by the U.S. Patent and Trademark Office.

The first substantial trademark law was the Lanham or Trademark Act of 1946. Over time, trademark protections have been extended to words, names, nicknames, symbols, and devices closely associated with a specific company name, product, service, or celebrity. Originally, the Lanham Act focused on unfair competition and deceptive packaging of products. By the 1980s, trademark protections had been extended to include the shapes and designs of products as well as names and symbols.

Trademark laws developed incrementally in the United States after originally depending on state common law for protection. It was not until 1870 that the first federal trademark law was passed. Six years later, Congress passed another law designed to authorize the collection of fines for those who sold counterfeit goods (Knoll, 2015). However, the Supreme Court overturned both laws, holding that Congress had overstepped the boundaries of the commerce clause. Congress tried again, and laws passed in 1905 and 1920 granted both injunctive and monetary relief for trademark holders (Knoll, 2015).

In 1924 in Prestonettes, Inc. v. Coty (264 U.S. 359, 368), Justice Oliver Wendell Holmes wrote that the purpose of trademarks was “to protect the owner’s good will against the sale of another’s product as his.” Industrial nations had been trying to establish an international agreement on intellectual property rights since 1884. On November 6, 1925, the Paris Convention for Protection of Industrial Property was finally able to offer international protection from unfair competition for patents, designs, trademarks, and trade names.

The major forces behind the Lanham Act were attorney Edward Rogers and Representative Ernest “Fritz” Lanham (D-TX). Rogers had been harshly critical of the 1905 law, describing it as slovenly and incoherent. The American Bar Association asked him to correct the mistakes, and his proposed law was repeatedly introduced in Congress between 1924 and 1937. Finally, in 1937, Lanham, who was serving as Chair of the House Patent Committee, asked Rogers to rewrite the bill as a framework that could be added to over time (Knoll, 2015). The framework bill was brought before Congress in 1938 as H.R. 9041.

Over the next five years, Congress added numerous amendments, and the bill finally passed in 1946 as the Lanham Act. The Lanham Act was also known as the Trademark Act of 1946 to differentiate it from a Depression-era Lanham Act or the Housing and Community Facilities and Services Act of 1940. Passage of the Lanham or Trademark Act of 1946 instituted a patent registration system designed to avoid consumer confusion.

Applications

Section 32(a) of the Lanham Act, which provides remedies for trademark violations, has proved to be one of the most controversial aspects of the law. It gives registrants the right to use the civil courts to challenge patent violations. A 1975 amendment to the Lanham Act forced trademark violators to pay attorney fees for successful plaintiffs. The United States Court of Appeals for the Federal Circuit was established in 1982 for the sole purpose of hearing appeals from cases that involved patent violations. In 1984, Section 32(b) further increased damages allowed under the Lanham Act, and a 1988 amendment provided more opportunities for winning monetary damages. A 1994 amendment allowed trademark holders who successfully sued to recover profits made by companies that violated trademarks.

Successful suits generally depended on a plaintiff being able to prove that the trademark violator engaged in “willful” misrepresentation. However, the definition of willfulness continued to be confusing, and Congress amended Section 35 in 1999 in an attempt to determine the point at which accidental conduct may cross into willful misrepresentation. Different federal circuit courts have handed down decisions that contradict one another. Some circuits have refused to award profits from trademark violations unless plaintiffs are able to demonstrate willfulness. Other courts have maintained that willfulness should be considered only in conjunction with other claims. Many of the problems with the Lanham Act have been the result of this lack of consistency.

Loopholes. Despite numerous amendments, Congress has been unable to close all loopholes in the law. In the mid-1980s, the United States Trade Association began a decade-long study of trademark violations, finding that the system was characterized in large part by confusion over terminologies. That confusion was particularly strong in dilution cases, and the association asked Congress to create a new clause in Section 43 to deal with the confusion. In 1987, Senator Dennis DeConcini (D-AZ) attempted to comply with that request by introducing the Trademark Law Revision Act as an amendment to the Lanham Act. Broadcast and media industries led opposition to the act by arguing that it violated the First Amendment. Once the section dealing with dilution was taken out, the law passed and was signed into law in 1988. In 1995, Congress passed the Federal Trademark Dilution Act to make trademark laws consistent and clarify earlier amendments to the Lanham Act. After addressing the issue of First Amendment protections, the Trademark Law Revision Act established both monetary and injunctive relief for successful plaintiffs (Bertagna, 2008).

Coopting Celebrities. Another clause was added to Section 43 of the Lanham Act in 1989, as a means of protecting celebrities from having their names used in false or misleading advertising, including the making of false claims about the products and identities of others. Before that time, plaintiffs were required to provide courts with proof that trademarked goods and services had been illegally reproduced (Howard, 2000). More than thirty states recognize the right of celebrities to control use of their names. In the late twentieth and early twenty-first centuries, the Lanham Act became the basis for numerous suits in which various celebrities claimed that their names had been used without their permission to endorse specific companies or brands in violation of their right to control use of their own names.

Hannah Cook (2016) notes that 83 percent of Fortune 500 companies maintain Twitter accounts, and 80 percent are a presence on Facebook. Companies spent approximately $23.6 billion in social media advertising in 2015. The impact of social media on company products is ideally illustrated by a partnership between comedienne Ellen DeGeneres and Samsung at the 2014 Academy Awards when some three million viewers retweeted a selfie that DeGeneres snapped with Meryl Streep, Bradley Cooper, and Jennifer Lawrence. Celebrities such as Kim Kardashian and Charlie Sheen have been paid to tweet ads for companies such as Shoe Dazzle.com and Ad.ly respectively. Violations of the Lanham Act come into play when companies post on social media without a celebrity’s permission.

Other lawsuits have involved the copying of items closely associated with well-known entities, making false claims, and the coopting of unregistered names and identities. In 1979, the Dallas Cowboys cheerleaders forced a film company to cease distribution of the film Debbie Does Dallas in which Pussycat Cinema portrayed an actress in a suggestive uniform clearly modeled after that of the Dallas Cheerleaders. In December 1993, the tabloid the National Enquirer published what it claimed was an “exclusive” interview with actor/director Clint Eastwood. Eastwood sued, contending that the claim damaged his reputation by associating him with the tabloid and proving that the interview was not original to that newspaper. In 2014, the drugstore chain Duane Reade posted a photograph of actress Katherine Heigl carrying a bag emblazoned with the company’s logo on social media, insinuating that she was endorsing the company. Heigl sued on the basis that she had not given permission for her name to be associated with the store’s advertising claims.

Some experts, including Mitchell Nathanson (2007), argue that host cities of sports teams should be granted a limited Lanham Act right to publicity generated by sports teams that retain the name of the original host city even when they relocate to another city in the same region. This right has been raised by several cities that have lost sports teams to surrounding areas, including the San Francisco 49ers who moved to Santa Clara, the Dallas Cowboys who moved to Irving, and the Atlanta Braves who moved to Smyrna.

Discourse

Confusion has continued to plague the Lanham Act and its various amendments since much of the case law comes from federal district courts rather than the Supreme Court. There may also be an innate conflict between trademark rights and the First Amendment. Consequently, American Courts, particularly the Supreme Court, have a long history of favoring First Amendment rights when they come into conflict with other rights. In general, courts have held that news is non-commercial speech and is, therefore, protected by the First Amendment. Traditionally, trademark laws have reflected the fact that members of the House of Representatives have been concerned with protecting types of speech that are traditionally protected by the First Amendment, including political speech, satires and spoofs, and editorial and consumer comments and reviews (Howard, 2000). The Senate position has been that only political speech is protected when it comes to situations involving trademarks.

Politicians have been accused of false advertising when artists claim that political candidates violate their music copyrights and their trademarked names to associate them with candidates with whom they do not agree. In the summer of 2016, for example, Republican presidential candidate Donald Trump was chastised by a group of singers that ranged from REM to Josh Groban for using their songs during his campaign.

The Lanham Act was passed in part to protect American goods on the world market, and government officials have been adamant in arguing for the protection of American companies abroad. McDonald’s successfully protected its trademark in South Africa in the 1990s, and Starbucks successfully sued a Russian company that violated its trademark in 2005 (Lockridge, 2010). However, the United States has not always protected the rights of foreign trademark holders doing business in America unless they have registered those trademarks in the United States or are protected by common law.

One of the first cases to address this issue was Steele et al. v. Bulova Watch Company, Inc. in 1952. The case arose out of a situation in Texas where a local company registered the Bulova trademark on watches that had been manufactured in Mexico. The district court determined that it had no jurisdiction in the case, which had been decided according to state law. However, the case was reversed on appeal. The Supreme Court upheld the decision of the appellate court, agreeing that the district court did have jurisdiction.

International Infringement. In April 1994, the World Trade Organization expanded on the 1925 Paris Convention Agreement by negotiating the Trade-Related Aspects of Intellectual Property Rights (TRIPS), which ushered in a period of new international trademark cooperation. The agreement defined trademarks as signs or combinations of signs that were used to identify a company’s goods and services. The protection of trademarks included words, names, letters, numbers, colors, and elements created solely for trademark purposes. In 1999, the World Intellectual Property Organization and the Paris Union Assembly negotiated the Joint Recommendation Concerning Provisions on the Protection of Well-Known Marks (Joint Recommendation) to clarify provisions adopted in 1925 at the Paris Convention and in the TRIPS treaty of 1994.

Federal circuit courts have used the distinctions of senior and junior trademark holders to determine when trademarks have been violated. A senior holder is one that originated the trademark, and a junior holder is one who attempts to use the name and reputation of the senior to build up a business or to sell a product. In the 1939 case Maison Prunier v. Prunier’s Restaurant and Café, Inc., the Prunier restaurants had long established a reputation for fine dining in Paris. A New York company tried to trade on that reputation by identifying itself as the famous French seafood restaurant on its menu. Prunier, the senior holder, sued and won a temporary injunction to prevent the New York restaurant from using its name.

In 1946, the Lanham Act more clearly defined American trademark laws, and another restaurant case in 1958 (Vaudable v. Montmarte, Inc.) led to a permanent injunction to prevent a New York restaurant from trading on the reputation of Maxim’s, the famous French restaurant (Lockridge, 2010). One of the longest ongoing patent disputes has involved Apple, which holds the patent on smart phone technology, and Samsung, a South Korean company that developed the Galaxy phone systems using that same technology.

The actions of the federal district courts have been confusing since the ninth circuit court recognized the rights of foreign trademark holders in 2004. Three years after the ninth circuit court decision, that right was denied by the second circuit court (Lockridge, 2010). Upon occasion, the Supreme Court has also entered the fray, declaring in 2003 in Moseley v. V Secret Catalogue, Inc. (537 U.S. 418, 433) that the burden is upon the plaintiff to prove that dilution of reputation occurred and discarding the right of the plaintiff to claim that dilution of reputation was possible without showing proof.

The Supreme Court has frequently been criticized for its silence on trademark issues, but the Roberts Court has handed down several trademark decisions intended to clarify existing laws and either liberalize or tighten trademark standards. In 2014 in Lexmark International, Inc. v. Static Control Components, Inc., the Court attempted to deal with the issue of false advertising by developing a two-prong test based on zone-of interest and proximate cause. The Court argued that in the first case, plaintiffs were required to demonstrate that loss of reputation had led to a decline in sales. In the second, the plaintiff had to show that the damage was caused by actions of the violating party.

Terms & Concepts

Commerce Clause: Found in Article I of the United States Constitution, which details the make-up and powers of Congress, the framers assigned the right of promoting science and the arts to the legislative branch. That right granted federal legislators the authority to regulate commerce across state and tribal lines and to engage in trading with other countries.

Common law: Laws derived from the customs, habits, and traditions of the people. In the United States, common law is based on the British system of law. It has continued to evolve over time and is used by forty-nine states. Only Louisiana uses the Civil Code that is based on Napoleonic Law, reflecting the French rather than the British traditions of the state.

Dilution: Dilution refers to the weakening of something. Trademark holders have a legal right to ensure that the reputation of their name, products, or services is not threatened by the coopting of that reputation by others intent on falsely associating their own names, products, and services with that of the original trademark holder.

Trademark: Companies and individuals retain the commercial right to control their products, names, nicknames, logos, and other elements that define them in the eyes of the public. Examples of well-known trademarks include the four-colored windows of Microsoft Windows, the bitten-into apple that signifies Apple, and the golden arches of McDonald’s. In most cases, descriptive terms, family surnames, and places are not subject to trademark laws. Exceptions occur when those things are closely associated in the public mind with companies like McDonald’s or Wendy’s.

Tradename: Registered product names that are closely identified with companies such as Microsoft Windows operating systems, Apple iPhones, iPads, and iPods, or Sony PlayStations. Over time, some tradenames may become so commonly used that they are used to describe a family of products such as Kleenex for all tissues or Jell-O for all gelatin products. Some tradenames like aspirin or cellophane have achieved generic status. With the Lanham Act, trademarks and trade names were no longer distinct from one another.

Willfulness: The term refers to intentional acts in which an individual, group, or company knowingly violates the trademarked rights of another individual, company, product, or service by such methods as false advertising, misrepresentation, or illegal packaging. The problem is that plaintiffs are not always able to prove that trademark violations are willful.

Bibliography

Bertagna, B. R. (2008). Poaching profits: An examination of the ability of a trademark owner to recover an infringer’s profits under the Lanham Act as amended in 1999. Texas Intellectual Property Law Journal, 16(2), 257–298.

Cook, H. L. (2016). #Liability: Avoiding the Lanham Act and the right of publicity on social media. University of Chicago Law Review, 83(1), 457–502. Retrieved October 23, 2016, from EBSCO Online Database Business Source Ultimate. http://search.ebscohost.com/login.aspx?direct=true&db=bsu&AN=114160394&site=ehost-live

Grynberg, M. (2009). Things are worse than we think: Trademark defenses in a “formalistic” age. Berkeley Technology Law Journal, 24(2), 897–970.

Howard, A. (2000). A fistful of lawsuits: The press, the first amendment, and section 43(a) of the Lanham Act. California Law Review, 88(1), 127–180. Retrieved October 23, 2016, from EBSCO Online Database Business Source Ultimate. http://search.ebscohost.com/login.aspx?direct=true&db=bsu&AN=3208288&site=ehost-live

Jost, K. (2015). Patent controversies: Does the system help or hurt innovation? CQ Researcher, 25(9).

Knoll, K. (2015). Confusion likely: Standing requirements for legal representatives under the Lanham Act. Columbia Law Review, 115(4), 983–1028. Retrieved October 23, 2016, from EBSCO Online Database Business Source Ultimate. http://search.ebscohost.com/login.aspx?direct=true&db=bsu&AN=103017364&site=ehost-live

Lockridge, L.A.W. (2010). Honoring international obligations in U.S. trademark law: How the Lanham Act protects well-known foreign marks (and why the second circuit was wrong). St. John’s Law Review, 84(4), 1347–1413. Retrieved October 23, 2016, from EBSCO Online Database Business Source Ultimate. http://search.ebscohost.com/login.aspx?direct=true&db=bsu&AN=60847042&site=ehost-live

Nathanson, M. (2007). What’s in a name or, better yet, what’s it worth? Cities, sports teams and the right of publicity. Case Western Reserve Law Review, 58(1), 167–201.

Rothman, J. E. (2005). Initial interest confusion: standing at the crossroads of trademark law. Cardozo Law Review, 27(1), 105–191.

Scholtes, V. E. (2015). The Lexmark test for false advertising standing: When two prongs don’t make a right. Berkeley Technology Law Journal, (Special Issue), 30, 1023–1963. Retrieved October 23, 2016, from EBSCO Online Database Business Source Ultimate. http://search.ebscohost.com/login.aspx?direct=true&db=bsu&AN=112303707&site=ehost-live

Suggested Reading

Bunker, M. D. (2015). Mired in confusion: nominative fair use in trademark law and freedom of expression. Communication Law & Policy, 20(3), 191–212. Retrieved October 23, 2016, from EBSCO Online Database Business Source Ultimate. http://search.ebscohost.com/login.aspx?direct=true&db=bsu&AN=108329116&site=ehost-live

Steensma, H. K., Chari, M., & Heidl, R. (2015). The quest for expansive intellectual property rights and the failure to disclose known relevant prior art. Strategic Management Journal, 36(8), 1186–1204. Retrieved October 23, 2016, from EBSCO Online Database Business Source Ultimate. http://search.ebscohost.com/login.aspx?direct=true&db=bsu&AN=103644331&site=ehost-live

Zekos, G. I. (2016). Intellectual Property Rights: A Legal and Economic Investigation. IUP Journal Of Knowledge Management, 14(3), 28-71. Retrieved October 23, 2016, from EBSCO Online Database Business Source Ultimate. http://search.ebscohost.com/login.aspx?direct=true&db=bsu&AN=117530105&site=ehost-live