By Christopher A. Brown
Woodard, Emhardt, Moriarty, McNett & Henry LLP
Recently, this question came across my desk: What is a newspaper’s potential for trademark infringement liability when an advertiser provides the publication with copy that improperly uses someone else’s trademark?
Suppose a business (OneCorp.) arranges with the News to place an ad, and provides copy of the ad featuring its product and a trademark to identify that product. Another business (TwoCorp.) claims that it owns that mark, and that it cannot be used by OneCorp. If the News runs the ad, associating the mark with OneCorp.’s product, will the News be liable for trademark infringement? Does it matter whether TwoCorp. notified the News before publication that it claimed ownership of the mark?
Trademark Law Background
Federal and state trademark law protects businesses and consumers from confusion arising from similar names or symbols on similar goods or services. A mark can be any word(s), logo, symbol or other identifying matter that identifies the source of goods or services (not the goods or services themselves) and is capable of distinguishing that source from other sources. One could not obtain protection for the words “cola” or “drink” applied to cola beverages, and could obtain only very limited protection (if any) for “bubbly” or “fizzy” for them, because those terms define the product or a characteristic of it. Multiple sellers of cola beverages use those words in order to describe their respective products. “Coke,” on the other hand, identifies a particular source of beverages, the Coca-Cola Company.
The law provides protection against unauthorized use of a mark or an imitation of it if the use is likely to cause confusion, deception or mistake as to the source of goods or services. The “ordinary” or “usual” case concerns use by a competitor or a new entrant into the market, and focuses on whether the second user’s mark, his or her products, and other factors make it likely that consumers will be confused as to who is the source of the product they are buying. Consumers should be able to assume that each time they choose “Coke” they are getting a product from the Coca-Cola Company they are accustomed to. The Coca-Cola Company should be able to keep others from riding on their products’ reputations. If the mark is famous (“Coke” or “Lego,” for example), then the owner can stop others from using the mark or similar items on unrelated products, if that use would dilute its established fame.
The “Innocent Infringer” Defense
Accordingly, a newspaper that prints a mark in an ad, where unauthorized by the mark’s actual owner, which raises a likelihood of confusion as to the source of a product, can be liable for trademark infringement. That’s the bad news. However, the federal trademark statute (15 USC 1114(2)) limits punishment for “paid advertising matter in a newspaper, magazine, or other similar periodical,” so long as the publisher is an “innocent infringer.” Only an injunction and no money damages or other remedy can be levied against that “innocent” publisher.
Very few reported court opinions that have addressed this part of the statute were found. The following example illustrates a Midwest federal court’s view on applying this “innocent infringer” defense.
In the case of World Wrestling Federation Inc. v. Posters Inc., a 2000 opinion from an Illinois federal district court, the WWF sued a printer over posters of wrestlers. The printer argued in a pre-trial motion that it was an innocent infringer, based on an unsigned letter from another defendant stating that defendant had the right to reproduce the posters and held the printer harmless for its services. The court left the ultimate question of “innocent infringement” for later determination, but it provided a base-line rule for that question. The printer would have to show that it did not actually know that the posters infringed, and that it did not recklessly disregard a high probability that they infringed, in order to be an “innocent infringer.” That standard is patterned after the “actual malice” standard for libel established in the Supreme Court’s 1964 opinion in New York Times v. Sullivan.
While that holding from the Chicago federal district court is good for newspapers in that it sets a relatively low bar for “innocence,” it is not necessarily a universal standard. It would seem likely that other federal courts would find that opinion persuasive, particularly courts in the same judicial circuit, i.e. in Illinois, Wisconsin and Indiana. However, no federal court is bound by that opinion.
What To Do?
This type of problem for a newspaper may come up relatively infrequently. Even so, a newspaper or other periodical has substantial incentive to take steps to remain within the shelter provided by the “innocent infringer” provision of the trademark law. Taking such steps might avoid a lawsuit altogether, along with the financial and opportunity costs beyond liability itself that can be involved in merely being drawn into a trademark dispute. Of course, if a plaintiff insists on a lawsuit, staying “innocent” at least removes money damages from the equation, and if the periodical stops publishing the offending material, then the suit should become moot.
One approach might be thought of as “zero tolerance.” When the periodical receives a credible and concrete allegation that a trademark is being or may be used by another without authorization, the periodical can refuse or withdraw the advertisement immediately. It is understood that eBay uses such a system. If it receives a notification that an auction or sale is using a trademark without the consent of the mark’s owner, it stops the auction and advises the parties. In this way, eBay seeks to keep itself out of any dispute between two parties, letting them resolve the dispute as they will. That policy clearly limits the chance of being drawn into a lawsuit. It also may limit revenues from advertising or sales, based solely on the word of another, who may have an ax to grind.
Another approach is to obtain indemnity from advertisers for costs incurred from litigation of these kinds of trademark issues. The contract between the newspaper and the advertiser could include a clause requiring the advertiser to assume the defense of the newspaper and/or to reimburse the newspaper for costs incurred in defending such a trademark lawsuit. The newspaper has little or no ability to investigate or judge whether the advertiser has the right to use marks or phrases in the advertising. The burden of making sure he or she is entitled to use the advertising can be borne by the advertiser through his or her contract with the newspaper. Some advertisers may balk at such a provision, however, and the newspaper may have to make the business decision of whether to insist on the provision (e.g. for new advertisers) or to waive it.
It should be unusual for a newspaper to be sued over this issue at all, since the putative trademark owner has an action against the advertiser. The owner should not need to sue the newspaper. Further, as noted above if the newspaper stops printing the alleged infringement and is otherwise an “innocent infringer,” a suit does not result in damages and no injunction is necessary because the printing has ceased. Absent other factors, a plaintiff should understand that there is nothing to be gained by such a suit, unless of course there is some evidence that the newspaper was not an innocent infringer.
Just as there may be cases in which a newspaper is not an innocent infringer, there is also the possibility that the accusing business (TwoCorp. in the above scenario) does not have a legitimate claim to the mark. In that situation, the News has lost advertising revenue for no reason. While the federal trademark law is silent on this issue, Indiana law (like that of most states) provides the ability to sue for intentional interference with a contract or with a business relationship. Where it can be proven that someone intentionally impedes another’s performance of his or her obligations under a contract, or goes beyond reasonable competition to block a business relationship, the person harmed can sue for the damages they have sustained. Indiana also has a relatively broad concept of “unfair competition,” which might be used in an appropriate case to redress a false representation concerning a trademark. Accordingly, it is wise to document allegations concerning advertising or trademarks as thoroughly as possible.
Conclusion
Newspapers and other periodicals are at minimal risk for involvement in a trademark lawsuit so long as they remain “innocent” trademark infringers. If that is the case, and a newspaper is sued for trademark infringement, then the only remedy available to the trademark owner is an injunction to prevent the newspaper from further publication of the mark. If the newspaper is on notice of a problem, and does not act reasonably to address it, it may be liable for the full range of monetary damages authorized by the trademark laws.
Christopher A. Brown is a partner in the firm of Woodard, Emhardt, Moriarty, McNett & Henry LLP in Indianapolis, specializing in patent, trademark and copyright issues.