June 10, 2015

Antitrust Law and Trademarks

by Guest Blogger

Trademark law is part of a larger body of law known as "unfair competition law." In the U.S., we really want everyone to be able to compete freely. We have decided that, as a general proposition, free competition serves consumers and businesses. The caveat to this general proposition is that we expect competition to be "fair." Not as in "life is not fair" fairness. Rather, in the sense that we do not want any business to use "dirty tricks" to get an upper hand in the marketplace.

Unfair competition law not only prevents the use of a trademark that is likely to confuse consumers about the source of goods or services, but also prevents the misappropriation of trade secrets, and prevents false or misleading advertising regarding product attributes or performance.

Believe it or not, all of the legal prohibitions within the umbrella of unfair competition law are intended to foster competition. Who wants to invest in a business when someone can come along and rip you off or lie about your product? Who wants to buy something when you don't know what you are getting?

So what happens when a business uses the unfair competition laws, not to protect or promote fair competition, but rather to stifle it? This conduct falls at the other end of the "free and fair competition" spectrum and is known as anticompetitive conduct and is governed by antitrust law.

This week, the company that offers the fruit arrangement alternative to flowers under the dubious trademark "Edible Arrangements" filed a motion in federal court asking the Judge to dismiss objections by the equally dubiously named "1-800-Flowers.com" company that its trademark infringement claims violated the antitrust laws of the United States.

Edible Arrangements

Edible Arrangements sued 1-800-flowers.com last year alleging that the company was infringing its trademarks through use of terns including "edible" and "bouquet." 1-800-flowers.com, pulled the red card, citing the Noerr-Penninton doctrine to argue that Edible was not only misguided in its claims of infringement, but that Edible crossed the line into its own unlawful conduct -- antitrust violations.

Trademark misuse is an affirmative defense and is ground in the principles of antitrust law. To sustain a claim of antitrust violation, a company must show: 1) standing including an alleged injury, 2) attempted monopoly violations of the §2 Sherman Act, and 3) that the defendant's conduct is not entitled to immunity under the Noerr-Pennington Doctrine. G Heileman Brewing Co. v. Anheuser-Busch, Inc., 676 F. Supp. 1436, 1472-1478 (E.D. Wis. 1987).

Conversely, good faith efforts by the mark holder to enforce rights within their appropriate scope are insufficient to support antitrust claims.

Once standing has been met, three additional elements must be shown to proceed on trademark misuse claims: 1) the defendant has engaged in predatory or anticompetitive conduct with 2) the specific intent to monopolize a market, and 3) the defendant has a dangerous probability of achieving said monopoly. G Heileman Brewing Co. v. Anheuser-Busch, Inc., 676 F. Supp. 1436, 1473 (E.D. Wis. 1987).

I see both companies' trademarks, which tend toward the descriptive end of the spectrum, as lending themselves to these battles, particularly in the context of Internet advertising and sales.

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