United States: A Big Year For Trademarks: Part 2

A lot happened in 2016, including in the world of trademark jurisprudence. Last year brought several important decisions that will change the way companies and litigants approach trademark enforcement and protection. In this second instalment of two articles, we discuss five cases that address the constitutionality of the Lanham Act's bar on the registration of scandalous and immoral marks, the timing for acquiring fame when asserting a dilution action before the Trademark Trial and Appeal Board, when a consent agreement may not be enough to overcome a USPTO refusal, and the International Trade Commission's invalidation of Converse's 70-year sneaker design.

Scandalous and Immoral Ban Ends

The reverberations of the Federal Circuit's 2015 decision in In re Tam,1 which ruled the Lanham Act's Section 2(a) ban on the registration of "disparaging" trademarks unconstitutional, were felt in 2016. In In re Brunetti,2 the TTAB had refused the applicant's trademark application for FUCT as scandalous and immoral, which the applicant then appealed to the Federal Circuit. On 21 January 2016, the USPTO conceded in a letter brief that the Federal Circuit's reasoning in Tam also requires invalidation of the Lanham Act's prohibition on the registration of scandalous and immoral marks. Although the USPTO was clear that it believes Tam was wrongly decided, it acknowledged that the court's opinion in Tam effectively foreclosed any constitutional distinctions that could be made between the two parts of Section 2(a). Accordingly, the USPTO recommended that the case be remanded to the board for further proceedings.

In the meantime, the Supreme Court upheld the Federal Circuit's decision.3 So, rather than vacate and remand the board's decision, the Federal Circuit ordered the parties to submit supplemental briefing in Brunetti to address the applicability of the Supreme Court's decision.

Incidentally, while the Supreme Court noted that its ruling was limited to Section 2(a)'s disparagement provision, the court recognised that the other portions of Section 2 may likewise constitute an improper government regulation of expression based on message, such as the exclusions on immoral or scandalous marks. Indeed, following the Supreme Court's ruling, the USPTO issued Examination Guide 1-17 on 26 June 2017, noting that it will continue to suspend applications refused on "scandalousness" grounds under Section 2(a) pending a decision in In re Brunetti.

When Must a Dilution Claimant's Mark Have Achieved Fame?

On 31 March, 2016, the TTAB issued a precedential decision clarifying when a dilution claimant's mark must have become famous when opposing use-based applications in Omega SA v. Alpha Phi Omega.4 The Alpha Phi Omega fraternity owns several U.S. registrations for its "Alpha Phi Omega" name and the Greek letters "ΑΦΩ". In 2010, it applied to register its "ΑΦΩ" mark for "headwear; jackets; shirts; [and] sweatshirts" on the basis of use, asserting a first-use date of 1980.

Omega owns several OMEGA marks (shown below) for various goods and services, including, watches, clothes (namely, scarves and neckties), and retail store services featuring watches and jewellery: 

Omega opposed the fraternity's application on grounds of likelihood of confusion and likelihood of dilution by blurring. The board denied the fraternity's motion for summary judgment, finding there were genuine issues of material fact with respect to both claims.

Because the fraternity's application for "ΑΦΩ" was based on use, to prevail on its dilution-by-blurring claim, Omega was required to prove that its OMEGA marks became famous before the fraternity's first use of "ΑΦΩ". The question was whether Omega should be required to prove fame before (1) the fraternity's first use of "ΑΦΩ" for the goods in the application, or (2) the fraternity's first use of "ΑΦΩ" for any goods or services (which the fraternity argued date back to 1925).

After requiring the parties to submit supplemental briefing on this issue, the board held that a plaintiff must establish that its mark became famous prior to any established, continuous use of the defendant's mark as a trademark or trade name, and not merely prior to the defendant's use in connection with the specific goods or services set forth in a defendant's application or registration.

The board based its conclusion on the statutory language and supporting case law. Section 43(c) of the Lanham Act states that the owner of a famous mark is entitled to an injunction against another "who at any time after the owner's mark has become famous, commences use of a mark or trade name in commerce that is likely to cause dilution by blurring...."

Significantly, unlike other sections of the Lanham Act, this language does not specify that the defendant's use of the mark must be in connection with the goods or services set forth in the defendant's application or registration. The board found that this statutory construction was consistent with case law from the Ninth, Fourth, and Federal Circuits.

Because Omega made no allegations regarding the date its OMEGA marks became famous, the board granted Omega 20 days to amend its notice of opposition. Also, because there was a factual dispute as to when the fraternity first used "ΑΦΩ" as a mark or trade name, if the fraternity failed to establish its first use in commerce, the board found Omega would only need to prove fame prior to the fraternity's 5 January 2010 application filing date. On the other hand, to the extent the fraternity established that it first used its "ΑΦΩ" mark in 1925, Omega would be required to prove fame before 1925—a showing that, while possible, could present significant evidentiary challenges.

Practically, this decision protects trademark owners that seek to extend their brands to new goods and services. And challengers must now carefully investigate any and all uses of the opposed mark before bringing dilution claim.

Invalidation of a 70-Year-Old Shoe-Design Mark

In one of the most hotly-litigated trademark cases ever decided by the International Trade Commission, Converse's "midsole" trademark covered by U.S. Registration No 4398753 was deemed invalid.5 As shown below, Converse's trademark covered (1) the design of two stripes on the shoe's midsole, (2) the design of the toe cap, (3) the design of the multi-layered toe bumper featuring diamonds and line patterns, and (4) the relative position of these elements to each other. 

Converse had sought a general exclusion order barring the importation of shoes bearing the above design, initially naming over 30 respondents. Most respondents settled, but Walmart, Skechers, Highline, and New Balance took the case to trial.

The ALJ in the Initial Determination narrowly found that Converse's midsole design had acquired secondary meaning, despite survey evidence showing that only 21.5% of consumers associated the midsole design with a single company (which the ALJ acknowledged was insufficient to support secondary meaning). The ALJ gave weight to other factors such as Converse's sales and advertising evidence and, while recognising it was a close call, ultimately found secondary meaning due to the deference afforded Converse's federal registration. Somewhat paradoxically, the ALJ found that Converse's common-law rights in the midsole design were not protectable, as those rights could not benefit from the presumption of validity afforded federal registrations.

The Commission reversed the ALJ's finding of secondary meaning with respect to the midsole design. In particular, the Commission found that the ALJ had given insufficient weight to the extensive use of the midsole design by multiple third parties over the last 80 years, which weighed "heavily against a finding of secondary meaning." Additionally, the survey evidence, which provided the "strongest and most relevant" evidence as to whether secondary meaning existed, favoured the respondents.

Accordingly, the Commission found no violation of Converse's midsole trademark, either with respect to Converse's registered trademark or its common-law rights.

The Commission's rejection of the ALJ's determination underscores the importance of enforcing a mark against third-party copycats, particularly for trade dress. Once others are allowed in the marketplace, exclusivity (and trade-dress rights) can be lost. This case also highlights the importance of consumer surveys in Lanham Act litigation, which are becoming more common given judicial acceptance of online studies.

Trademark Refusal, Despite Private Consent

On 25 February 2016, the TTAB affirmed a refusal to register the mark TIME TRAVELER BLONDE for "beer", finding it too similar to the registered mark TIME TRAVELER for "beer, ale and lager", despite the existence of a consent agreement between the two brewers.6

On appeal, the applicant, Bay State Brewing Company, Inc, conceded that the marks were similar and the goods were related. However, Bay State maintained that if both brewers adhered to the terms of a consent agreement they had entered into, "confusion is extremely unlikely".

Key provisions of the agreement included a "Geographical Limitation", which provided that Bay State would not use its applied-for mark "outside of New England and the State of New York", while the registrant's use would not be geographically limited. The "Restrictions on Use" provision stated that both parties must use their respective house marks in connection with the marks at issue. And the "Trade Dress" provision stated that the parties would refrain from using confusingly similar packaging, labeling, and/or marketing. The parties provided examples of their respective trade dresses (see below).

The board first found that the identified goods (beer), the trade channels (liquor stores, grocery and convenience stores, bars and restaurants), and classes of purchasers were all virtually identical, as were the two marks. According to the board, the term BLONDE does little or nothing to distinguish the marks because it is a descriptive or generic term for a type of beer. These facts alone presented, "a compelling case for finding a likelihood of confusion."

Against this background, the board found that the consent agreement was not sufficient to avoid the likelihood of consumer confusion. Moreover, it also posed significant issues with respect to providing adequate notice to the public of Bay State's applied-for rights. For example, the board found the "Geographical Limitation" provision caused at least two problems. First, it allowed both parties to use their respective marks in the same territories—New York and New England. Secondly, with respect to trademark registration, these geographical restrictions were not reflected in Bay State's application. The board stated: "The trademark register should reflect...the realities of the marketplace." Though the agreement limited Bay State's use, Bay State would nevertheless own a nationwide registration, which would give Bay State presumptive nationwide exclusive rights to which it was not entitled.

The board found that the other provisions were even less effective. The use of house marks did not alleviate confusion because the marks were virtually identical and the goods were the same. The "Trade Dress" provision was inadequate because, while it prohibited each party from using the other's trade dress, it did not require the use of any particular trade dress by either party. In theory, the parties could use minimal trade dress and display their house marks in small font to comply with the letter of the agreement, but confusion would not be avoided. Moreover, the fact that Bay State's application was based on intent to use compounded the problems. The board stated, [Bay State] essentially is asking the board to make a likelihood of confusion determination based upon its mark (with use of its house mark and trade dress as shown in the examples) that not only is not being registered, but is not even in use yet as reflected by its Section 1(b) application, and which the applicant will not be required to use. That is to say, applicant desires a decision based on its mark, not as applied for, but rather as promised.

Allowing a registration on the basis of such a promise "would result in a failure of the public notice function of registrations".

While the board recognised "the importance of consent agreements entered into by business people and the significant role that they can play in determining likelihood of confusion issues," it found that this particular agreement was not properly designed to avoid confusion. This holding serves as a warning that the board is not obligated to accept consent agreements, and indeed will not rubber-stamp them, when marketplace confusion remains likely despite an agreement's terms and safeguards.

Manhattan Jury Awards Tiffany $8.25M in Damages

On 5 October 2016, a Manhattan civil jury awarded Tiffany $8.25m in punitive damages for Costco Wholesale Corp's sale of rings falsely identified as brand-name "Tiffany" rings.7 This ruling came on the heels of the jury's earlier award of $5.5m in compensatory damages for Costco's unlawful profits dating back to 2007.

The case arose out of Costco's marketing and display of non-Tiffany-brand solitaire diamond rings proximate to signage reading "Platinum Tiffany" and "Round Diamond Ring", or "Platinum Tiffany" and "Round Brilliant Solitaire Ring". Tiffany alleged that Costco did not use the "Tiffany" trademarks in its online advertising, making it difficult to detect its activities through Tiffany's normal trademark policing procedures. Upon learning of Costco's in-store activities in December 2012, Tiffany immediately objected and subsequently filed suit in February 2013.

The district court granted Tiffany's motion for summary judgment for infringement and counterfeiting in September 2015, holding that Tiffany would be permitted to seek an accounting of Costco's profits as a result of its willful infringement. The court also found Tiffany could seek punitive damages under New York unfair competition laws because Tiffany had proffered sufficient evidence upon which a finder of fact could conclude Costco's conduct constituted "gross, wanton or willful fraud". The court rejected Costco's fair-use defence that "Tiffany" was descriptive for a particular type of pronged diamond and no longer functioned as a trademark for a particular source because Tiffany had submitted evidence showing Costco's bad faith. Specifically, Costco had been requesting that its vendors copy Tiffany products, that Costco employees knew of the vendors' efforts to do so, and took no action to stop it.

On 29 September 2016, the jury estimated Costco's profits at $3.7m, but finding that sum inadequate to compensate Tiffany, added a further $1.8m. With the jury's additional award of $2m in statutory damages, Costco is now on the hook for $15.75m in total damages. The parties have filed post-trial briefs.

Key Takeaways

  • The Lanham Act's bar on disparaging marks is dead. And the analogous "scandalous" and "immoral" bar is likely to suffer a similar fate.
  • An applicant or registrant can now rely on its historical use of the applied-for mark—in connection with goods or services other than those identified in the challenged application or registration—to defend a dilution claim in opposition or cancellation proceedings before the Trademark Trial and Appeal Board.
  • Trademark owners must carefully police their marks against imitations. If left unchecked, these third-party uses can undermine—or worse invalidate—one's rights.
  • Consent agreements are not always sufficient to overcome a refusal in the U.S. The consent must avoid likely confusion and fully contemplate real-life circumstances.


1 808 F.3d 1321 (Fed Cir 2015) (en banc).

2 2015 WL 2237665 (Fed Cir 2015).

3 See Matal v Tam, 582 U.S. ___ (2017).

4 118 USPQ2d 1289 (TTAB 2015).

5 In USITC Inv No. 337-TA-936 (U.S. International Trade Commission), 2016 WL 3475715 (ITC 2016).

6 In re Bay State Brewing Co, Inc, 117 USPQ2d 1958 (TTAB 2016).

7 Tiffany & Co v Costco Wholesale Corp, 1:13CV01041 (SDNY 2016).

Originally printed in Intellectual Property Magazine on August 29, 2017.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Events from this Firm
23 Jan 2018, Conference, Bangalore, India

Finnegan is a Bronze sponsor of the 10th annual Global Intellectual Property Convention, hosted by ITAG Business Solutions.

24 Jan 2018, Conference, California, United States

Finnegan is a Crystal sponsor of the American Intellectual Property Law Association Mid-Winter Institute, supporting the IP Practice in Japan Pre-Meeting.

30 Jan 2018, Webinar, Washington, DC, United States

As part of the Intellectual Property Institute of Canada’s webinar series, Finnegan partners Andrew Holtman and Jason Stach will share their insights on how the PTAB trial process is changing and how patent owners and petitioners alike can best position themselves for success.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement

    Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of www.mondaq.com

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at enquiries@mondaq.com.

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions