Fair Use Defense: No Burden on Defendant to Prove Absence of Confusion

In Lasting Impression, both parties sold permanent makeup and made some use of the term “micro color” (as either “micro color” or “microcolor,” singular or plural) in the marketing and sale of their products. KP Permanent Make-Up, Inc. (“KP”) claimed to have used the single-word “microcolor” since 1990 or 1991 on advertising fliers and since 1991 on pigment bottles. Lasting Impression I, Inc. and its licensee, MCN International, Inc. (collectively, “Lasting”), denied that KP began using the term that early, but this disputed fact proved irrelevant to the resolution of the issue. In 1992, Lasting applied to the U.S. Patent and Trademark Office (“PTO”) for registration of a trademark consisting of the words “Micro Colors” in white letters separated by a green bar within a black square. The mark was registered to Lasting in 1993 and became incontestable in 1999. In 1999, KP produced a 10-page advertisement brochure that prominently used the term “microcolor” in a stylized typeface. Lasting subsequently demanded that KP stop using the term “microcolor” in its advertising. KP then sued in the U.S. District Court for the Central District of California for a declaratory judgment that its use of the term did not infringe Lasting's rights, and Lasting counterclaimed for infringement of its “Micro Colors” trademark. KP sought, and was granted, summary judgment on Lasting's counterclaim for infringement, based on the statutory affirmative defense of fair use, with the court finding that KP used the term “microcolor” only to describe its goods and not as a mark, and that KP acted in good faith because it used the term “microcolor” continuously from a time prior to Lasting's adoption of “Micro Colors” as a mark. The district court did not address whether KP's activity was likely to cause confusion among consumers about the origin of KP's goods.

The Court of Appeals for the Ninth Circuit found it erroneous for the district court to have addressed the statutory fair use defense without also addressing the matter of possible consumer confusion generated by KP's practices. The Ninth Circuit reversed, taking the view that no use could be considered fair use where any consumer confusion was probable. The court did not explicitly address who had the burden of proof on this point, but appeared to have placed the burden on KP to prove an absence of any likelihood of consumer confusion. The case was remanded for assessment of disputed material facts relevant to the Ninth Circuit's test for likelihood of confusion. The Supreme Court granted KP's petition for certiorari to resolve “a disagreement among the Courts of Appeals on the significance of likely confusion for a fair use defense to a trademark infringement claim, and the obligation of a party defending on that ground to show that its use is unlikely to cause consumer confusion.”