Trademarks & Deceptive Trade Practices

Final Examination

Professor Hennessey

SPRING 1995



General Instructions

This is an open-book exam, based upon a hypothetical set of facts. You may consult any written materials, but activity on the problem outside the exam room or discussion with any other person during the exam period is prohibited. The value of individual questions is 10 to 30 points. The total is 100 points. Do not spend more time on a problem than- it is worth and do not give answers for Questions that are not asked! Be sure to put your exam number on each item which you submit to be graded. Please answer the questions in blue books. Write on only one side of the page and observe margins. Organize your answer before you begin to write and try to keep your answers brief. ANSWER EVERY QUESTION, AND DO NOT SPEND SO MUCH TIME ON ONE QUESTION THAT YOU DO NOT HAVE TIME TO ANSWER ANOT'HER. Note to MIP students: do not write "MIP student' or put any marks on your exam booklet which would indicate that you are an MIP student.

Basic Facts

A hundred years ago, the industrial magnates C'the Robber Barons') Vanderbilt, Astor, Rockefeller, and Harriman built palatial mansions on the rocky seacoast of Newport, Rhode Island for their families. It was an era in American history known as the "Gilded Age." "Fine design has a very long life," said Terry Learned a hundred years later, speaking about reproductions of furnishings taken from those 19th century palaces. The reproduced furnishings of which she was speaking included furniture, textiles, wallcoverings, carpets, mirrors, lamps and porcelains. Miss Learned announced a "licensing program" for the furnishings at a news conference in New York City for leading newspapers and interior decorating magazines on November 17, 1989. "Most of these designs are already over a century old. They will soon be in the market under a new licensing program by the Preservation Society of Rhode Island called 'The Newport Historic Collection."' Miss Learned, a Newport resident, who had previously been responsible for the licensing program at the Winterthur Museum in Wilmington, Delaware, served as consultant in putting the collection together. She said the reproductions, although of furnishings from the mansions of the Robber Barons, were "not so opulent that a normally affluent person couldn't relate them to their houses."

At the same news conference, Christopher TH.Pell, executive director of the Preservation Society located in Newport, said that the reproductions "should be usable in many kinds of homes, as well as in commercial settings such as the lobbies of luxury hotels." When the reporters asked Pell if the reproductions would be in the high end of the market, or might descend to cheaper kinds of furniture made with particle-board, Pell said: "It will reflect the Preservation Society itself. It will always be first class." He added that licensing the furnishings not only raises revenue for the society, it also fits its educational mission. "If one can appreciate how these articles fit into new and different settings, there should be a renewed appreciation of how they fit in the great Newport mansions," he said. E.J. Hemdon of Morganton, North Carolina, the exclusive licensee for the furniture, stressed that his was a "small company devoted to fine craftsmanship and dedicated to detail, which is why I chose them." Other exclusive licensees were Scalamandre for textiles, trims, and wall coverings, Tianjin-Philadelphia for carpets, Friedman Brothers for mirrors, and Sadek Import for porcelains. Some, but not all of the pieces in the collection are true reproductions. For example, of the 22 pieces of furniture licensed to Hemdon, 15 are actual reproductions -- that is, made of the same materials, dimensions, and colors of the originals. One example is an early Louis XV commode from Cornelius Vanderbilt's estate ("die Elms), which is reproduced identically in solid walnut and veneers with kingwood parquetry and topped with marron brau marble. Seven pieces are not reproductions but "inspirations." For example, side chairs in the George M Chippendale style were "inspired by" armchairs in the Satinwood Room at the Elms but made with contemporary fabric coverings to reflect a more modem taste. An expert at antiques would be able to distinguish these "inspirations" from the original works immediately. Terry Learned added that, because of the durability of good design, these furnishings will continu to be manufactured and sold to "normally affluent persons" for at least twenty years. And in private homes, she added, they could last another 150 years. Furniture prices for the reproductions in "Me Newport Historic Collection: From the Mansions" range from $ 1,000 to $10,000." The most expensive article in the collection, at $13,000, is an Aubusson carpet woven with 127 different colors, from "the Elms." The reproductions and "inspirations" became available in very exclusive furniture stores in February 1990, in time for affluent shoppers to do their spring redecorating. After the news conference, the originals were put on display at the Preservation Society in Newport.

Question 1. [20 points] You work for the law firm of Sealy & Serta. If Christopher Pell had telephoned you the day after the news conference (November 18, 1989) about Aradernarking the term 'The Newport Historic Collection"'. what advice would you have given him? Advise him about how he could best protect the Society's interests in the name and whether he could get a Federal trademark registration.

Question 2. [20 points] Under Section 2 of the Lanham Act 15 USC 1052, what substantive basis or bases, if any, might the trademark examiner who examined the application employ to reject the Society's trademark application and what, if anything, could be argued to overcome any such rejection[s]?

Additional Facts

By early 1993, "The Newport Historic Collection" had become well-known among affluer consumers and had been featured on "Lifestyles of the Rich and Famous with Robin Leach" in the homes of a number of celebrities in New York, Martha's Vineyard, and even Santa Barbara,

California. Souder and MacIntosh, Inc. (S&M) of Newport, New Hampshire, is a company which makes several kinds of furniture for sale in Ames, K-Mart, Bradlee's and Rich's department store., including particleboard furniture with contact-paper veneer-like finishes and also resin-based lawn and patio furniture. The resin-based furniture is made in Alabama and the particle-board items are molded and coated with stick-on veneer paper in their factory in New Hampshire, which is next to a wood-chipper mill Dave Souder, president and "creative consultant" at S&M, saw the TV show in March, 1994. He telephoned Christopher Pell and left a message on his phone mail asking him if the Preservation Society would be interested in giving S&M a license to make inexpensive copier of the reproductions for sale in stores such as K-Mart. Dave said he wanted to sell the copies under the name: "Me Newport Elegance Collection." Pell never returned Piave's phone call. So Dave drove down to Rhode Island to take a look for himself and took photographs of the furniture Working from the photographs, Dave and his brothers roughed out models of the chairs, table, an( commode at the preservation society, which they then used to make molds. Instead of having drawers, the commode became a cabinet for a color TV or audio equipment. Because of the
intricacy of the wood carvings on the legs and tops of the chairs and tables, Dave decided to have them made from high-impact resin. The inner construction was particle board. The fittings for all of the articles were made of gold-tone anodized aluminium. Promising delivery by November 15, 1994, Souder sent out proposals about the "Newport Elegance Collection" for sale to buyers at K-Mart and other similar stores, Dave inserted some photographs of the original pieces which he had taken at the Preservation Society -- not photographs of his actual products. Next to those pictures were other photographs of his own dining room and TV furniture in apartment settings typical of K-Mart and Ames customers. 'Me buyers at K-Mart were very receptive and immediately placed orders for the dining room set with George M chairs and the TV cabinet in the Louis XV commode under the label: "'I'he Newport Elegance Collection.". Flyers for the furniture appeared in K-Mart and Ames flyers in April.

Question 3. [30 points] Christopher Pell called you on the day after Thanksgiving, 1994, furious about K-Mart's use of "The Newport Elegance Collection." Assume that S&M's products are actually sold in large quantities in K-Mart stores in the state of New York and that the court has jurisdiction over the parties. Pell wants to know whether to sue S&M and K-Mart for trademark infringement, trade dress infringement or unfair competition under Lanham Act Section 43(a), and dilution in New York. Advise him of the likelihood of success on each of these claims against S&M.

Question 4. [10 points] Should Pell have a survey of consumer confusion done? If so, what question or questions should it focus upon answering?

Question 5. [20 points] Assuming again that the court has jurisdiction, are the factual circumstances set forth above sufficient for a U.S. District Court in the state of New York to grant a preliminary injunction against S&M? If not, why not? If so, on which ground is the court most likely to act: trademark infringement, trade dress infringement or unfair competition under Lanham Act Section 43(a), or dilution? What inferences, if any, would the court have to make to reach such a conclusion?