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

On Dec. 8, 2004, the U.S. Supreme Court held that a party raising the statutory affirmative defense of fair use to a charge of trademark infringement does not have an independent burden to negate the likelihood of any confusion as to the source or origin of the trademark accused of infringement. KP Permanent Make-Up, Inc. v. Lasting Impression I, Inc., 543 U.S. ___, 2004 U.S. LEXIS 8170 (2004). The decision resolved a split between the circuits on the statutory, or “classic,” fair use defense to trademark infringement.

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.”

The Supreme Court began its opinion by discussing the language of ”1114 and 1115 of the Lanham Act, 15 U.S.C. '1051 et seq. Section 1114(1) grants the owner of a registered mark a civil action against anyone who uses in commerce “any reproduction, counterfeit, copy, or colorable imitation of a registered mark” when “such use is likely to cause confusion, or to cause mistake, or to deceive.” Although '1115(b) provides that an incontestable registration is “conclusive evidence of the validity of the registered mark” and “of the registrant's exclusive right to use the registered mark in commerce,” the owner of the incontestable registration must still prove infringement as defined in '1114. However, such infringement is subject to the “classic” fair use defense stated in '1115(b)(4), which provides that: “the use of the name, term or device charged to be an infringement is a use, otherwise than as a mark, … of a term or device which is descriptive of and used fairly and in good faith only to describe the goods or services of such party, or their geographic origin.”

The Court placed great weight on the difference in the language employed in '1115(b) and the fair use defense of '1115(b)(4). While '1115(b) clearly places the burden on the party charging infringement to prove a likelihood of confusion by referring back to '1114, the fair use defense utilizes the phrase “used fairly” and makes no reference to likelihood of confusion or '1114. The Court refused to imply an intent on the part of Congress to place a defendant under a burden to negate confusion when it chose to use the phrase “used fairly” in stating the fair use defense, as opposed to some variation of the “likely to cause confusion” language used to state a markholder's burden in proving infringement under '1114. The Court also noted in a footnote that the failure to say anything about a defendant's burden on confusion was not likely an oversight given that the House Subcommittee on Trademarks declined to forward a proposal to provide expressly as an element of the fair use defense that a descriptive use be unlikely to deceive the public.

The Court also found unpersuasive Lasting's suggestion that “used fairly” in '1115(b)(4) was an incorporation of a likelihood of confusion test developed in the common law of unfair competition. While many of the cases cited by Lasting suggested that taking into account the likelihood of confusion was relevant to deciding whether a use qualified as fair, the Court found that such cases did not state that an assessment of confusion may be dispositive or place a burden on the defendant to negate confusion entirely.

Furthermore, the Court explained that the sequence of a litigation for trademark infringement emphasized the irrationality of placing a burden on the defendant to show nonconfusion. The plaintiff in a trademark infringement action is clearly required to show a likelihood of confusion in proving infringement. The defendant may raise an affirmative defense and/or offer rebutting evidence on any element of the plaintiff's case. However, only after the plaintiff has proved likelihood of confusion (along with the other elements) by a preponderance of the evidence does the defendant have a need for an affirmative defense. A requirement that the defendant negate any likelihood of confusion in establishing a fair use defense would be nonsensical and render the defense moot prior to its assertion, given that the plaintiff has already established a likelihood of confusion.

The Court explained that some possibility of confusion is necessarily compatible with fair use, given that the law does not provide for the owner of a descriptive mark to deprive others of the ordinary use of descriptive words and only grants an exclusive right in any secondary meaning associated with the markholder's goods. The Court acknowledged that its decision did not foreclose the relevance of the extent of likely consumer confusion in determining whether a particular use qualifies as fair use, but declined to issue further guidelines as to what exact uses might qualify as fair or the extent of consumer confusion that might be necessary to characterize a use as an infringement. The Court vacated the judgment and remanded the case, drawing the district court's attention to factual issues concerning KP's use of the term “microcolor” on its bottles and fliers from the early 1990s and its more elaborate and stylized use of the term on a 1999 brochure.

On Dec. 8, 2004, the U.S. Supreme Court held that a party raising the statutory affirmative defense of fair use to a charge of trademark infringement does not have an independent burden to negate the likelihood of any confusion as to the source or origin of the trademark accused of infringement. KP Permanent Make-Up, Inc. v. Lasting Impression I, Inc., 543 U.S. ___, 2004 U.S. LEXIS 8170 (2004). The decision resolved a split between the circuits on the statutory, or “classic,” fair use defense to trademark infringement.

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.”

The Supreme Court began its opinion by discussing the language of ”1114 and 1115 of the Lanham Act, 15 U.S.C. '1051 et seq. Section 1114(1) grants the owner of a registered mark a civil action against anyone who uses in commerce “any reproduction, counterfeit, copy, or colorable imitation of a registered mark” when “such use is likely to cause confusion, or to cause mistake, or to deceive.” Although '1115(b) provides that an incontestable registration is “conclusive evidence of the validity of the registered mark” and “of the registrant's exclusive right to use the registered mark in commerce,” the owner of the incontestable registration must still prove infringement as defined in '1114. However, such infringement is subject to the “classic” fair use defense stated in '1115(b)(4), which provides that: “the use of the name, term or device charged to be an infringement is a use, otherwise than as a mark, … of a term or device which is descriptive of and used fairly and in good faith only to describe the goods or services of such party, or their geographic origin.”

The Court placed great weight on the difference in the language employed in '1115(b) and the fair use defense of '1115(b)(4). While '1115(b) clearly places the burden on the party charging infringement to prove a likelihood of confusion by referring back to '1114, the fair use defense utilizes the phrase “used fairly” and makes no reference to likelihood of confusion or '1114. The Court refused to imply an intent on the part of Congress to place a defendant under a burden to negate confusion when it chose to use the phrase “used fairly” in stating the fair use defense, as opposed to some variation of the “likely to cause confusion” language used to state a markholder's burden in proving infringement under '1114. The Court also noted in a footnote that the failure to say anything about a defendant's burden on confusion was not likely an oversight given that the House Subcommittee on Trademarks declined to forward a proposal to provide expressly as an element of the fair use defense that a descriptive use be unlikely to deceive the public.

The Court also found unpersuasive Lasting's suggestion that “used fairly” in '1115(b)(4) was an incorporation of a likelihood of confusion test developed in the common law of unfair competition. While many of the cases cited by Lasting suggested that taking into account the likelihood of confusion was relevant to deciding whether a use qualified as fair, the Court found that such cases did not state that an assessment of confusion may be dispositive or place a burden on the defendant to negate confusion entirely.

Furthermore, the Court explained that the sequence of a litigation for trademark infringement emphasized the irrationality of placing a burden on the defendant to show nonconfusion. The plaintiff in a trademark infringement action is clearly required to show a likelihood of confusion in proving infringement. The defendant may raise an affirmative defense and/or offer rebutting evidence on any element of the plaintiff's case. However, only after the plaintiff has proved likelihood of confusion (along with the other elements) by a preponderance of the evidence does the defendant have a need for an affirmative defense. A requirement that the defendant negate any likelihood of confusion in establishing a fair use defense would be nonsensical and render the defense moot prior to its assertion, given that the plaintiff has already established a likelihood of confusion.

The Court explained that some possibility of confusion is necessarily compatible with fair use, given that the law does not provide for the owner of a descriptive mark to deprive others of the ordinary use of descriptive words and only grants an exclusive right in any secondary meaning associated with the markholder's goods. The Court acknowledged that its decision did not foreclose the relevance of the extent of likely consumer confusion in determining whether a particular use qualifies as fair use, but declined to issue further guidelines as to what exact uses might qualify as fair or the extent of consumer confusion that might be necessary to characterize a use as an infringement. The Court vacated the judgment and remanded the case, drawing the district court's attention to factual issues concerning KP's use of the term “microcolor” on its bottles and fliers from the early 1990s and its more elaborate and stylized use of the term on a 1999 brochure.