Introductory Note: The Uniqueness of Trademark and Unfair-Competition
Trademarks and unfair competition are unique among the four major fields
of intellectual property—patents, copyrights, trademarks and trade secrets.
They cannot properly be understood without reference to their uniqueness.
Accordingly, we begin the study of these two important fields of
law by noting in what respects they are unique.
1. Blend of federal and state law. Perhaps the most
important respect in which the trademarks and unfair competition are unique
is that they are governed by a complex blend of both state and federal
law. Patents and copyrights are creatures of federal statutes, and
jurisdiction over them is vested exclusively in the federal court. See
28 U.S.C. § 1338(a). There are federal criminal sanctions
for misappropriation of trade secrets, see Economic Espionage Act of 1996,
codified at 18 U.S.C. § 1831-1839, and federal law gives the federal Attorney
General the power to request civil injunctive relief. See 18 U.S.C.
§ 1836(a). Yet state law—principally adopted versions of the Uniform
Trade Secrets Act and common law—provides general civil sanctions for
claims of misappropriation of trade secrets made by private plaintiffs.
Only the law of trademarks and unfair competition involves both
state and federal civil laws that operate in tandem, generally without
preemption. The federal jurisdictional statute itself reflects this
point: while it vests original jurisdiction over trademark matters
in the federal district courts, trademark law is conspicuously absent
from the list of subject matter over which federal jurisdiction is exclusive.
See 28 U.S.C. § 1338(a).
2. Claims under federal and state law. The coexistence
of state and federal law in the field of trademarks and unfair competition
is not just legal theory. Every State of the Union has at least
one statute (and often several) addressing various aspects of trademarks
and unfair competition. Moreover, because the entire field developed
at common law, the common law of the several States continues to operate
within the interstices of the state statutes.
Careful plaintiffs' lawyers therefore invoke applicable state law in virtually
every case. They generally do so out of an abundance of caution,
in the hope that state law may provide substantive or remedial advantages
that federal law does not. Or they may do so in fear that the courts
will find lacking the effect on interstate or foreign commerce needed
to invoke federal jurisdiction. In most cases the hopes are vain:
since the 1970s federal law on this subject has expanded, both by interpretation
and amendment, to a point at which it generally offers equally powerful
or more powerful claims and remedies than state law. Similarly,
the fears are usually misplaced; especially in this age of the Internet
and World Wide Web, few matters in this field affect only a single state.
Nevertheless, the practice of pleading both state and federal causes
of action goes on because, in the rare case, state law may offer some
advantage, or the necessary effect on interstate or foreign commerce may
3. "Interstate commerce" or "weak" paradigm.
Trademarks and unfair competition law are also nearly unique in
the constitutional source of their authority. Congress derives its
power to adopt patent and copyright laws from the so-called Patent and
Copyright Clause—Article I, Section 1, Clause 8 of the Constitution. In
contrast, the power to regulate trademarks and unfair competition arises
from the Commerce Clause, Article I, Section 8, Clause 3. The Supreme
Court struck down the very first attempt by Congress to adopt federal
legislation governing trademarks under the Patent and Copyright Clause.
It ruled that trademarks, being in general neither novel nor original,
do not meet the constitutional standards for patent or copyright protection.
See Trade-Mark Cases, 100 U.S. 82, 93-94, 25 L.Ed. 550 (1879). (As
a matter of state law, insofar as civil actions are concerned, trademark
protection does not rely on any federal source of constitutional authority.)
4. No time limit on protection. Because trademark law
relies on the Commerce Clause as a source of federal power, trademarks
are not subject to the temporal limitations of the Patent and Copyright
Clause. That clause permits protection of intellectual property
only "for limited Times." Yet trademark protection can go on forever,
as long as the legal prerequisites for it are met. (Although federal
trademark registrations now last only ten years, they can be renewed indefinitely.
See Lanham Act § 9(a), 15 U.S.C. § 1059 (a)).
It would be a strange world of commerce indeed if this were not so. Imagine
a world in which trademarks somehow expired on a fixed date like patents
or copyrights. What confusion and commercial chaos would ensue if
mighty trademarks like Kleenex, Cadillac, Tiffany, IBM, or Microsoft suddenly
expired and went "up for grabs" by competitors?
In this respect trademarks and unfair competition are like trade secrets.
Both fields of intellectual property law follow the "weak" paradigm
of intellectual property protection, under which protection may last forever
but is relatively weak. In contrast, patent and copyright protection
follow the "strong" paradigm, in which protection is relatively strong
(nearly absolute, in the case of patents) but lasts only for a limited
time. See 1 Jay Dratler, Jr., Intellectual Property Law: Commercial,
Creative, and Industrial Property § 1.07 (Law Journal Press, 1991).
5. Different underlying policy. A fifth important respect
in which trademarks and unfair competition are unique relates to policy.
In all other fields of intellectual property, incentives for innovation
are a central feature of the governing policy. In the field of trademarks
and unfair competition, however, innovation is only a minor and subsidiary
policy. See 2 Dratler, supra, at § 9.02 (discussing trademark-related
The most important policy governing trademarks and related unfair-competition
law is promoting competition. The law does this by making comparison-shopping
simple and thereby increasing the efficiency of markets in goods and services.
The same basic policy can be expressed in two ways. Expressed
positively, it promotes comparison shopping by making sure that the symbols
consumers use to identify products and services in the marketplace have
unique and stable meanings. Expressed negatively—as is done in the
federal statute—it avoids consumer confusion, mistake, and deception.
See, Lanham Act §§ 32(1), 43(a)(1), 45 (last ¶), 15 U.S.C. §§ 1114(1),
1125(a)(1), 1127 (last ¶). However expressed, it is the primary
policy that underlies most doctrine in the field.
Two other related policies also are relevant. First, trademark and
unfair-competition laws seek to promote commercial morality and keep competition
"fair" by discouraging "dirty tricks" in commerce that impede the smooth
functioning of markets. See Lanham Act § 45 (last ¶), 15 U.S.C.
§ 1127 (last ¶). Second, those laws encourage and protect investment
in marketing and in the quality of products and services by protecting
producers' reputations from usurpation and disparagement. See id.
Only this last policy reflects the desire to create incentives for
innovation that motivate other fields of intellectual property, and the
reflection is pale indeed.
6. The "dead hand" of history. The sixth
respect in which trademark and unfair-competition law are unique in the
field of intellectual property relates to history. Much of the substance
of these fields of law developed case by case at common law, long before
their codification in statute. Indeed, most of the basic principles
of the law of trademarks and unfair competition developed before Erie
decreed that federal courts could not make general common law. See
Erie Railroad Co. v. Tompkins, 304 U.S. 64, 78, 58 S.Ct. 817, 82 L.Ed.
Thus, the fundamental principles of trademark and unfair-competition law
arose at a time when the common-law courts made no distinction between
state and federal common law. Consequently, those principles were
generally congruent throughout the nation. Later, to the extent
governed by state law, they diverged slightly over the years in the several
States, as those States Erie-ly went their separate common-law
ways and adopted different codifying statutes.
More important for practical purposes, the federal statute was historically
derived from the common law. Indeed, after the Supreme Court had
rebuffed Congress for citing the wrong source of federal constitutional
authority, Congress' first valid trademark statute was quite timid in
scope. It did little more than recognize state-granted rights in
trademarks and provide a central place in which to record those rights,
in order to give the public notice of them. The rights themselves
were governed by state law and based upon priority of use. See,
e.g., United Drug Co. v. Theodore Rectanus Co., 248 U.S. 90, 98, 100,
39 S.Ct. 48, 63 L.Ed. 141 (1918); Hanover Star Milling Co. v. Metcalf,
240 U.S. 403, 413, 36 S.Ct. 357, 60 L.Ed.713 (1916).
That pattern continued for most of a century. It was only in the
post-World War II period, with the advent of the Lanham Act (adopted in
1946), that Congress passed a statute which had some substantive "bite"
not present in the common law of trademarks. The trend has accelerated
since 1988, when Congress adopted the Trademark Law Revision Act of 1988
(a plenary revision) and has culminated most recently in the anti-cybersquatting
provisions of Lanham Act § 43(d), 15 U.S.C. § 1125(d), which provide a
cause of action for Internet domain-name usurpation never seen at common
7. A conceptually incomplete statute. Unlike the patent
and copyright statutes, the federal trademark statute historically was
not an attempt to set out a complete set of rules governing the subject.
Rather, it was an attempt to overlay a system of central, federal
registration and its consequences on a pre-existing system of common-law
rights based upon use. Insofar as those common-law rights were concerned,
the federal statute was descriptive, rather than prescriptive,
and that only incompletely.
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This strange history has two principal consequences. First, one
of the most important principles of American trademark law—that valid
trademark rights arise from use of a mark, before or even without
registration—is buried in the statute. It appears only indirectly,
in such provisions as Section 1(a), which permits registration based upon
use, Section 7(c), which gives registration the effect of constructive
use nationwide, retroactive to the date of application, and Section 33(b)(5)'s
so-called "limited area defense," which gives prior users of conflicting
marks defenses in infringement actions even against owners of "incontestable"
registrations. See Lanham Act §§ 1(a), 7(c), 33(b)(5), 15 U.S.C.
§ 1051(a), 1057(c), 1115(b)(5). This point, so murky in the statute,
distinguishes American trademark law from the laws of most foreign countries
(i.e., civil-law countries), in which trademark rights depend upon registration,
not use (apart from some residual protection provided by laws compelled
by international convention).
The second important consequence is really a generalization of the first.
Because the Lanham Act was originally incompletely descriptive
of the common law, and not entirely prescriptive, many other important
features of trademarks and unfair competition appear only murkily, if
at all, in its text. For example, it is well established that the
"distinctiveness spectrum" in trademark law contains four hues—arbitrary/
fanciful, suggestive, descriptive, and generic marks. Yet the statute
mentions only the latter two, and them in widely separated sections. See,
e.g., Lanham Act § 2(e), 14(3), 15 U.S.C. § 1052(e), 1064(3). There
is no mention of arbitrary, fanciful, or suggestive marks.
There are other important examples of this phenomenon. In the plenary
revision in 1988, as well as in later amendments, Congress tried to make
the federal statute more complete in both terminology and coverage. But
the attempt has not been entirely successful. As a result, it it
virtually impossible to learn the law of trademarks and unfair competition
from the statute alone.
We start with the statute not because it provides, like the patent and
copyright statutes, a reasonable outline of the law's structure. Rather,
we start with it because it is the most useful and powerful law in the
field, and because virtually every case in the field of trademarks and
unfair competition (unless an effect on interstate or foreign commerce
is lacking) turns on its provisions. It is therefore important for
every lawyer working in the field to know this statute, regardless of
how incomplete it may be, and precisely because it is badly organized
and becomes transparent only with long familiarity.