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Intellectual Property | Winter 2007 | Page 1
President Signs Trademark Dilution Revision Act
President Bush has signed into law the Trademark Dilution Revision Act of2006, which was intended by Congress to remedy the pre-existing law to protect famoustrademarks from uses that blur their distinctiveness or tarnish their reputation.Thelegislation was prompted by recent court decisions refusing certain protection forfamous marks against noncompeting uses. The new Act provides that,subject to the principles ofequity,the owner ofafamous mark that is distinctive,inherently or through acquired distinctiveness,shallbe entitled to an injunction against another person who,at any time after theowner's mark has become famous,commences use ofa mark or trade name incommerce that is likely to cause dilution by blurring or dilution by tarnishment of the famous mark,regardless ofthe presence or absence ofactual or likely confusion,competition,or actual economic injury.The Act also exempts fromdilution actions any references to a famous mark by another person other than as adesignation ofsource for that person's own goods or services,as well as all formsofnews reporting and news commentary,and all noncommercial use ofa mark. Aside from providing for injunctive relief,the new law also permits courts to grantadditional remedies,subject to the discretion ofthe court and the principles of equity,ifdilution began after the effective date ofthe new law and the defendant willfully intended to trade on the recognition ofthe famous mark or to harm thereputation ofthe mark.Ownership ofa valid registration under the federalLanham Act is a complete bar to a dilution action against the owner that is broughtby another person seeking to protect trademark rights under the common law or astatute ofa state.
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Sixth Circuit Holds Liability for Lanham Act Infringement ShouldNot Be Confined to Producers ofCounterfeit Goods,But May Extend to Retailers
 The U.S.Court ofAppeals for the Sixth Circuit,reversing a lower court decisionnot to grant a preliminary injunction prohibiting a retailer from selling counterfeitgoods,has held that Lanham Act liability for selling counterfeit goods need not beconfined to the manufacturer ofsuch goods.The ruling came in a suit brought by Lorillard Tobacco Co.against retailer Amuri's Grand Foods,Inc.after counterfeitpackages ofcigarettes bearing Lorillard's NEWPORT brand were found indefendant's store.
About our Intellectual PropertyPractice Group
Arnstein & Lehr's Intellectual PropertyPractice Group is comprised of attorneysfrom our Florida and Illinois offices. OurFirm provides legal services related topatents, copyrights, trademarks and tradesecrets, including preparation andprocessing of trademark, patent andcopyright applications, consultationregarding infringement, preparation oflicensing agreements and related matters.If you have any questions about thisarticle, including how it may impact you oryour company, or for updates regardingIntellectual Property Law, please contactthe lawyer in the firm with whom you areregularly in contact or one of the followingpersons in the Arnstein & Lehr IntellectualProperty Practice Group:
West Palm Beach
John A. Turner
Miami
Jeffrey B. Shapiro
Chicago
Robert D. ButtersJames F. GossettNorman P. Jeddeloh
Intellectual Property
A
RNSTEIN
&
L 
EHR LLP
Attorneys at Law
 _____________________________ 
1Source:Trademark Dilution Revision Act of2006.
 
 The lower court,refusing to grant a preliminary injunctionprohibiting the defendant from selling counterfeit Lorillardproducts,did so without making specific findingsconcerning the factors justifying issuance ofa preliminary injunction as set forth in prior rulings by the Sixth Circuit.On review ofthat decision,one ofthe arguments offeredby the defendant was that it was not liable for any relief under federal law for selling the cigarette products in itsstore,even ifthey were counterfeit,because it had neithermanufactured nor packaged the goods,and consequently had no way ofknowing whether the products werecounterfeit. The Sixth Circuit,however,declined to excuse thedefendant from liability due either to its ignorance or to itsrole as a retailer rather than a producer ofthe counterfeitgoods.Examining the Lanham Act,the Court ofAppealsfound that liability for counterfeiting in violation ofthe Actneed not be based on production ofcounterfeit goods by the defendant,but is based on a finding that the defendant"used" counterfeit goods "in commerce." Furthermore,theSixth Circuit agreed with other courts that no clearer "use"ofgoods "in commerce" could be found than offering themfor sale.Normally,where a lower court had improperly addressed amotion for a preliminary injunction,the Sixth Circuit said it would point out the error in the lower court's decision andremand the case for reconsideration by the lower court.But,in this case,the Court ofAppeals found that theplaintiff,Lorillard,had met all requirements for issuance of preliminary injunctive relief,and the Court ofAppealstherefore remanded the case with a direction that the lowercourt enter a preliminary injunction.
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Eleventh Circuit Determines Appropriate LegalStandard for Good Faith with Respect to Trademark Usage Fair-Use Defense
In a case offirst impression for that court,the U.S.Court of  Appeals for the Eleventh Circuit has determined that theappropriate legal standard for good faith with respect to atrademark usage fair-use defense is whether the allegedinfringer intended to benefit from the good will associated with the owner ofthe mark.The ruling came in a suitbrought by a producer ofgreeting cards and note cardsagainst the U.S.Postal Service,which the plaintiffalleged tohave violated its trademark in a perforated border design,used in some ofits cards,that evoked the functional flat-edged perforation ofolder postage stamps,after the PostalService began producing its own line of"stamp art" notecards and greeting cards.In the trial court,the Postal Service had asserted a fair-usedefense in response to the plaintiff's infringement claim,andthe trial court granted summary judgment to the PostalService on that defense.On appeal ofthat determination,the Eleventh Circuit noted that a fair-use defense requiredshowing that the plaintiff's mark was used by the defendantnot as a mark,but in a descriptive sense,and in good faith. The Eleventh Circuit had never determined the legalstandard for "good faith" in relation to a fair-use defense.Inthis case,the Eleventh Circuit joined with four other circuitsin holding that the legal standard is the same as for any othertrademark infringement inquiry into good faith - whetherthe alleged infringer intended to benefit from the good willassociated with the owner ofthe mark. The Eleventh Circuit then examined the evidence,whichindicated that the perforated border design trademark claimed by the plaintiffappeared in plaintiff's cards andincorporated the design ofold postage stamps,to which thePostal Service had a copyright and for which the PostalService had licensed the plaintiff's use.Furthermore,theevidence indicated that the Postal Service,when itdeveloped its own "stamp art" cards,merely incorporatedthe perforated border ofits own original stamp as part of the stamp's images on the cards,and always clearly indicatedthat the cards were the products ofthe Postal Service,generally including with its cards information about thehistory ofthe stamp or stamp art depicted thereon.For thatreason,the Court ofAppeals concluded that the evidencedid not indicate any intent by the Postal Service to trade onthe good will ofthe plaintiff,and the Eleventh Circuitaffirmed the lower court's summary judgment.
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Licensee ofTrademark Rights May Not Sublicenseto Third Parties Without Original Licensor's ExpressConsent
 The U.S.Court ofAppeals for the Ninth Circuit,upholding a lower court decision,has ruled that a licensee oftrademark and related publicity rights may not sublicense those rights
Intellecutal Property | Winter 2007 | Page 2
 _____________________________ 
2Source:
Lorillard Tobacco Co. v. Amuri's Grand Foods, Inc 
.,U.S.Court ofAppeals for the Sixth Circuit,No.05-1642,June 30,2006.3Source:
International Stamp Art, Inc. v. United States Postal Service 
,U.S.Court ofAppeals for the Eleventh Circuit,No.05-13492,July 18,2006.
 
to third parties without express permission from theoriginal licensor.The ruling came in a suit brought by theadopted children ofHelen Miller,wife ofworld-renownedband leader Glenn Miller,and their exclusive licensing agent,who sued Glenn Miller Productions,Inc.for allegedbreach ofa license agreement for the GLENN MILLER mark.Helen Miller's children claimed that the defendantobtained rights in the GLENN MILLER mark by way of a license from Helen Miller in 1956,but thereafterbreached the license agreement by attempting to sublicensethe mark.The defendant claimed that it had a right tosublicense the mark,or,alternatively,it had not sublicensedthe mark,but had merely licensed rights in its ownregistered GLENN MILLER ORCHESTRA mark. The lower court found that a licensee oftrademark andrelated publicity rights may not sublicense those rights to athird party without the express permission ofthe originallicensor,extending a well-established "sublicensing rule"from copyright and patent law to trademark and relatedpublicity rights.The Ninth Circuit agreed with the lowercourt's reasoning,and found that the defendant had violated the 1956 license agreement with Helen Miller by attempting to sublicense rights in the GLENN MILLER mark.In so ruling,the Ninth Circuit noted that,eventhough the defendant had registered the GLENNMILLER ORCHESTRA mark at the U.S.Patent and Trademark Office,and that registration had becomeincontestable,that registration did not affect the plaintiffs'ownership ofthe GLENN MILLER mark,and did notforeclose the plaintiffs from demonstrating that thedefendant had breached the 1956 agreement and infringedupon their rights in the GLENN MILLER mark.On the other hand,the Ninth Circuit also went along withthe lower court in finding that,even ifthe defendantbreached the 1956 license agreement,the plaintiffs couldnot now sue for such breach.Both the lower court and theNinth Circuit found that the plaintiffs were barred by theequitable doctrine oflaches from bringing this suit againstthe defendant because the plaintiffs waited too long to filetheir suit,even though the plaintiffs did not acquireabsolute knowledge ofthe defendant's activities for sometime after those activities began.Key to that decision wasthe fact that the plaintiffs had constructive knowledge of those activities more than 20 years before they filed thecurrent suit,since they should have discovered thedefendant's activities at that time had they been diligently seeking to enforce their rights in the GLENN MILLER mark.
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Doctrine ofAesthetic Functionality Does Not Allow Maker ofAutomobile Accessories to Sell Key Chainsand License Plate Covers Bearing Audi and Volkswagen Marks Without Authorization
 The U.S.Court ofAppeals for the Ninth Circuit has ruledthat the doctrine of"aesthetic functionality" did notpermit a maker ofautomobile accessories to sell,withoutlicense or other authorization,key chains and license platecovers bearing trademarks owned by Audi and Volkswagen.The ruling came in a suit brought against theautomobile manufacturers by Au-Tomotive Gold,Inc.,seeking a declaratory judgment that,because thetrademarks ofAudi and Volkswagen were "aesthetically functional" elements ofthe products sold by Au-TomotiveGold,they were unprotected by the federal Lanham Act. Audi and Volkswagen counterclaimed for trademark infringement and dilution.On appeal ofa district court summary judgment for Au- Tomotive Gold on the basis of"aesthetic functionality,"the Ninth Circuit reversed the judgment,reversed thelower court's denial ofthe auto manufacturers' motion forsummary judgment with respect to their infringement anddilution claims,and remanded the case for furtherproceedings.In doing so,the Ninth Circuit found that,even though there might be some aesthetic value to the Audi and Volkswagen marks that would make Au- Tomotive Gold products more attractive to consumers,thecar manufacturers' marks were not functional as applied to Au-Tomotive Gold's products,the approach for which Au- Tomotive Gold argued would distort basic principles of trademark law,and the doctrine ofaesthetic functionality, which had been recognized by some other courts in othercases,did not provide a defense for what appeared to theNinth Circuit to be a naked appropriation ofthemanufacturers' marks by Au-Tomotive Gold.
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Intellectual Property | Winter 2007 | Page 3
 _____________________________ 4Source:
 Miller v. Glenn Miller Productions, Inc.
,U.S.Court ofAppeals for the Ninth Circuit,No.04-55874,July 19,2006.5Source:
 Au-Tomotive Gold, Inc. v. Volkswagen ofAmerica, Inc.
,U.S.Court ofAppeals for the Ninth Circuit,No.04-16174,August 11,2006.
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