Other Trademark Misuse and Unclean Hands
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.
Unclean Hands
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.
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
[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.
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).
"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
"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)