Other Trademark Misuse and Unclean Hands

  1. Patsy's Brand Inc. v. I.O.B. Realty, 99 Civ. 10175 ___ F Supp ___, ___USPQ ___ (SD NY 2002) defendant signed affidavit as to first use of mark, attaching exhibit comprising invoice with phone number, area code not in existence as of alleged date of use. Later arguments blamed printer, contradicted allegations. Defendant sanctioned $250000 in attorneys fees and $100000 contempt. Law firm 'sanctioned' by 'publication' of opinion.
  2. Bushmill Wine & Products Company, Inc. v. Samuel Kunin & Sons, Inc., 29 USPQ 94 (ComrPats 1936) (John F. Brezina) /

  3. Antitrust

    1. Armstrong Cork Co. v. Armstrong Plastic Covers Co., 434 F. Supp. 860, 195 U.S.P.Q. 387 (ED Mo 1977): "To prevail upon its counterclaim for antitrust violations arising from the enforcement of plaintiff's [**32] trademark rights, the defendants must prove all the elements of an antitrust cause of action. Coca-Cola v. Howard-Johnson Co., 386 F. Supp. 330, 184 U.S.P.Q. 549 (N.D. Ga. 1974). Defendants have totally failed to make either showing. The good faith enforcement by the plaintiff of its trademark rights does not constitute an antitrust violation or a trademark misuse. Alberto-Culver Co. v. Andrea Dumon, Inc., 466 F.2d 705, 711 (7th Cir. 1972)."
    2. Alberto-Culver Co. v. Andrea Dumon, Inc., 466 F.2d 705, 711 (7th Cir. 1972): "as far as the Sherman Act contention is concerned, as the district court noted, defendant's [**17] counterclaim fails to allege any specific injury to its business or property by reason of plaintiff's conduct. Moreover, plaintiff's HN8Go to the description of this Headnote.good faith effort to enforce its copyright and trademark is not the kind of exclusionary conduct condemned by § 2 of the Sherman Act. The counterclaim was properly dismissed. "
    3. R. J. Reynolds Tobacco Co. v. Premium Tobacco Store..., 2001 U.S. Dist. LEXIS 8896:

      Courts have recognized that antitrust violations in which the trademark itself has been "the basic and fundamental vehicle required and used to accomplish the violation" may constitute an unclean hands defense to an action for trademark infringement. See Carl Zeiss Stiftung v. N.E.B. Carl Zeiss, Jena, 298 F. Supp. 1309, 1315 (S.D.N.Y. 1969) (quoted in Helene Curtis Indus., Inc. v. Church & Dwight Co., Inc., 560 F.2d 1325, 1337 (7th Cir. 1977) and Juno Online Services v. Juno Lighting, Inc., 979 F. Supp. 684, 688 (N.D. Ill. 1997)). See also Estee Lauder, Inc. v. Fragrance Counter, Inc., 189 F.R.D. 269, 273 (S.D.N.Y. 1999) (allowing trademark misuse defense where evidence "suggests the possibility that Plaintiffs are directly attempting to misuse their trademarks for anticompetitive purposes"); Phi Delta Theta Fraternity v. J.A. Buchroeder & Co., 251 F. Supp. 968 (W.D. Mo. 1966) (registration of insignias as trademarks for the purpose of unlawfully eliminating competition may justify application of antitrust misuse defense). "It is not enough merely to prove that merchandise bearing a trademark, however valuable the trademark, has been used in furtherance of antitrust violations." Zeiss, 298 F. Supp. at 1315. Rather, the party invoking the defense must "demonstrate that the trademark, as distinguished from collateral activities with respect to goods bearing the trademark, was itself being used as the prime and effective instrument to effectuate the antitrust activity." Id. at 1314. The burden of establishing such antitrust misuse is a heavy one, but it is not insuperable. Id.

    4. The Consortium v. Knoxville Int'l Energy Expo 223 USPQ 320 (ED Tenn 1983) price controls, but check for maximum resale price maintenance in light of State Oil.

    Unclean Hands

  4. Erva Pharmaceuticals Inc. v. American Cyanamid Co. 755 F Supp 36, 19 USPQ 2d 1460 (D PR 1991) violation of FDA regulations made use of mark at issue unlawful, therefore, plaintiff could not enforce mark accord Strey v. Devine's Inc. 217 F2d 187 (7th Cir 1954)

  5. Estee Lauder, Inc. v. Fragrance Counter, Inc., 189 F.R.D. 269 (SDNY 1999), Sweet, J.:

    The doctrine of unclean hands is recognized as a valid defense in an appropriate trademark infringement or unfair competition case, and "can constitute a bar to some or all of the relief sought." 5 J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition § 31:44 (4th ed. 1999). "A court may deny injunctive relief based on the defense of unclean hands 'where the party applying for such relief is guilty of conduct involving fraud, deceit, unconscionability, or bad faith related to the matter at issue to the detriment of the other party.'" Estate of Lennon v. Screen Creations, Ltd., 939 F. Supp. 287, 293 (S.D.N.Y. 1996) (quoting Performance Unlimited, Inc. v. Questar Publishers, Inc., 52 F.3d 1373, 1383 (6th Cir. 1995) (quoting Novus Franchising, Inc. v. Taylor, 795 F. Supp. 122, 126 (M.D. Pa. 1992))).

    However, "the defense of unclean hands applies only with respect to the right in suit." Warner Bros. Inc. v. Gay Toys, Inc., 724 F.2d 327, 334 (2d Cir. 1983). [**9] "What is material is not that the plaintiff's hands are dirty, but that he dirtied them in acquiring the right he now asserts." Project Strategies Corp. v. National Communications Corp., 948 F. Supp. 218, 227 (E.D.N.Y. 1996) (quoting Republic Molding Corp. v. B.W. Photo Util., 319 F.2d 347, 349-50 (9th Cir. 1963)), aff'd 168 F.3d 1320 (Fed. Cir. 1998); see also Precision Instrument Mfg. Co. v. Automotive Maintenance Mach. Co., 324 U.S. 806, 814-15, 65 S. Ct. 993, 89 L. Ed. 1381 (1945) ("While equity does not demand that its suitors shall have led blameless lives, as to other matters, it does require that they shall have acted fairly and without fraud or deceit as to the controversy in issue.") (citations and internal quotation marks omitted).

    There is general agreement that "an essential element of the antitrust misuse defense in a trademark case is proof that the mark itself has been the basic and fundamental vehicle required and used to accomplish the violation. Although the burden of establishing such a direct misuse is a heavy one, it is not insuperable." Carl Zeiss Stiftung v. V.E.B. Carl Zeiss, Jena, 298 F. Supp. 1309, 1315 (S.D.N.Y. 1969) [**10] (discussing Phi Delta Theta Fraternity v. J.A. Buchroeder & Co., 251 F. Supp. 968 (W.D. Mo. 1966)); see also Rolls-Royce Motors Ltd. v. A&A Fiberglass, Inc., 428 F. Supp. 689, 697 (N.D. Ga. 1977); Coca-Cola Co. v. Howard Johnson Co., 386 F. Supp. 330, 335 (N.D. Ga. 1974).

    As the cases cited above make clear, an antitrust-related trademark misuse case is not impossible to maintain as a matter of law. Nevertheless, the defense is extremely narrow. "In almost every reported instance where the antitrust misuse of a trademark has been raised as a defense, it has been rejected[, because the defendant did not demonstrate] that the trademark, as distinguished from collateral activities with respect to goods bearing the trademark, was itself being used as the prime and effective instrument to effectuate the antitrust activity." Carl Zeiss, 298 F. Supp. at 1314.

  6. Marshak v. Treadwell, 240 F.3d 184
  7. proof of actual knowledge or belief is necessary in the context of fraudulent procurement. See Metro Traffic Control, 104 F.3d at 340.


  • Unclean Hands

    1. see also e.g. C. W. Worden & Co. v. California Fig Co. 187 US 516 (1903) reversing injunction because mark Syrup of Figs was itself deceptive. There was unclean hands because plaintiff's product was promoted based on false representations to the public. cited with approval Shondel v. McDermott 775 F2d 859, 868 (7th Cir 1985) (Posner, J., now C.J.)

    2. see also Urecal Corp. v. Masters 412 F Supp 873, 875 (ND Ill 1976) falsely using Federal trademark Registration Symbol; injunction denied (Hoffman, J.)

    3. contra Kusan Inc. v. Fairway Siding Corp. (DC Mass) 7 USPQ2d 1202 (2/3/1988)



    4. see Deflecta-Shield Corp. v. Kar-Rite Corp. 1 U.S.P.Q 2d 1236 (N.D. Ill., 1987); see also, Trademark Revision Act of 1988, amendment to § 33 (b) (8) of the Lanham Act: "equitable principles, including laches, estoppel, and acquiescence, are applicable . . . " 79 TMR at 377

  • Franchising

    1. "Hugh Collins v. International Dairy Queen, No.94-95-4-MAC (M.D. Ga. April 14, 1994). settlement required defendants to pay $30 million in advertising, $250,000 to each of the suit's five original Central Georgia plaintiffs and $11.3 million in legal fees. . Defendants also made concessions on supply and other franchise issues. According to the complaint, "in an effort to prevent franchisees from purchasing alternative products, defendants have systematically repeatedly violated their contractual obligation ... to establish a reasonable process by which franchisees may obtain new sources of products that are approved for use in Dairy Queen stores."

    2. Violation of Franchise Disclosure Requirements -- Denial of Service Mark Relief My Pi Int. v. Diebould Inc. 687 F2d 919, 220 USPQ 398, (7th Cir, 1982)

  • Incontestability
    1. Effect of § 33(b)(7) of Lanham Act (15 USCS § 1115(b)(7)) is merely to make defense of antitrust misuse available to defeat conclusive evidentiary force that would otherwise attach to federal registration of trademark. Carl Zeiss Stiftung v V.E.B. Carl Zeiss, Jena (1969, SD NY) 298 F Supp 1309, 161 USPQ 414, 1969 CCH Trade Cases P 72734, mod (CA2 NY) 433 F2d 686, 167 USPQ 641, 1971 CCH Trade Cases P 73407, cert den 403 US 905, 29 L Ed 2d 680, 91 S Ct 2205, 170 USPQ 1.
  • Fraudulent procurement of registration
    1. Where defense that plaintiff was guilty of fraud in procuring registration is put forth under 15 USCS § 1115, question to be decided is whether defendant has established that either registration or incontestable right to use mark was obtained fraudulently. Apple Growers Asso. v Pelletti Fruit Co. (1957, DC Cal) 153 F Supp 948, 115 USPQ 169.
    2. Defense and counterclaim based on false declarations and representations to PTO and failure to disclose facts to PTO alleges sufficient particulars to survive motion to strike. McDonald's Corp. v Hardee's Food Systems, Inc. (1976, ND Ill) 195 USPQ 63.
    3. Cancellation proceeding is not prerequisite to allegation of fraud in procuring trademark as defense to trademark infringement action. Amstar Corp. v Domino Pizza, Inc. (1978, ND Ga) 200 USPQ 566, 1978-1 CCH Trade Cases P 61881, revd on other grounds (CA5 Ga) 615 F2d 252, 205 USPQ 969, 29 FR Serv 2d 1528, reh den (CA5 Ga) 617 F2d 295 and cert den 449 US 899, 66 L Ed 2d 129, 101 S Ct 268, 208 USPQ 464.
    4. There being no fraud in procurement of registration under Lanham Act, plaintiff's registration of its service mark was conclusive evidence of its right to use such mark to exclusion of defendants' use and entitled plaintiff to injunctive relief. Travelodge Corp. v Siragusa (1964, ND Ala) 228 F Supp 238, 141 USPQ 719, affd per curiam (CA5 Ala) 352 F2d 516, 147 USPQ 379.
    5. Fraud in procurement of trademark registration may be raised even if registration has become incontestable. National Trailways Bus System v Trailway Van Lines, Inc. (1965, ED NY) 269 F Supp 352, 152 USPQ 507.
    6. Registered mark is cancelled for fraudulent procurement by US distributor of foreign product who used mark in US with consent of manufacturer and registered mark fraudulently to secure distributorship interest. Hank Thorp, Inc. v Minilite, Inc. (1979, DC Del) 474 F Supp 228, 205 USPQ 598.

    7. Orient Express Trading Co. v. Federated Department Stores Inc. (CA 2) 6 USPQ2d 1308:

      cancelling 19 registered marks held by trademark infringement plaintiffs, including two marks that had obtained incontestable status, in view of clear and convincing evidence demonstrating that plaintiffs' dates of first use on trademark applications and subsequent affidavits were "greatly exaggerated," demonstrating that claimed scope of use had been exaggerated, demonstrating that claimed continuous use had in fact been sporadic, and demonstrating that plaintiffs' statements to Patent and Trademark Office had not reflected requisite "uncompromising candor

    8. Gilbert/Robinson Inc. v. Carrie Beverage-Missouri Inc. (CA 8) 26 USPQ2d 1378 (4/5/1993)
      [Headnote from USPQ] Infringer which seeks to recover under 15 USC 1120 for injury resulting from trademark owner's fraudulent procurement of registration must, in order to demonstrate that owner's non-disclosure of information to Patent and Trademark Office was material, demonstrate that mark would not have been registered but for fraud, rather than simply showing that information not disclosed would have been considered significant by PTO, since owner's right to use and enforce mark does not depend upon registration, and since, if mark would have been registered regardless of fraud, purposes of Lanham Act would be frustrated if infringer were allowed to escape consequences of its infringing activity on account of fraud.

    9. Bausch & Lomb Inc. v. Leupold & Stevens Inc. 1 USPQ2d 1497 (TTAB) vstatement is merely innocent and overbroad and falls short of fraud

    10. Proposed Jury Instruction (check cite)

      FRAUDULENT REGISTRATION

      In this case, [Defendant] claims that [Plaintiff] committed fraud on the Patent and Trademark Office ("PTO") by submitting false information. In order for [Defendant] to prevail on this claim, you must find, by clear and convincing evidence, that:

      (1) [Plaintiff] made a false or misleading statement to the PTO about an important fact;

      (2) [Plaintiff] knew or had reason to know that this fact was false or misleading;

      (3) [Plaintiff] meant for the PTO to rely on this important fact;

      (4) the PTO reasonably relied on this false or misleading fact; and

      (5) [Defendant] suffered damages as a result.

      Material Supply Int'l Inc. v. SunMatch Industrial Co., 47 USPQ2d 1341 (D.C. Cir. 1998).

  • L. G. Balfour Co. v. FTC, 442 F.2d 1, 17, 169 U.S.P.Q. 693; (7th Cir 1971)

    "Commission found that petitioners had misrepresented to fraternities, suppliers and competitors that "all" or "practically all" fraternities had their insignia protected by the Lanham Act when only a minority had such protection. By this, petitioners discouraged competitors from entering the field. Petitioners do not contest the truth of these statements, but maintain that this charge is not contained in the complaint.

    reversed, based on lack of notice of charge

  • J.E.M. International Inc. v. Happy Rompers Creations Corp., 74 USPQ2d 1526 (TTAB 2005):

    "We conclude that respondent knew or should have known that its Statement of Use was materially incorrect. Respondent's knowledge that its mark was not in use on about 100 of the approximately 150 identified items—or “its reckless disregard for the truth—is all that is required to establish intent to commit fraud in the procurement of a registration.” See Medinol v. Neuro Vasx, 67 USPQ2d at 1210. While it is clear that not all incorrect statements constitute fraud, the relevant facts in this record allow no other conclusion. We find that respondent's material misrepresentations made in connection with its statement of use were fraudulent. Id. at 1210." Next Case Continental Paper Bag Co. v. Eastern Paper Bag Co. 210 U.S. 405, 28 S.Ct. 748, 52 L.Ed. 1122 (1907)