Trademarks & Deceptive Trade Practices

Final Examination

General Instructions

IPSI 1996

Professor Hennessey

This is a two hour open-book exam. 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 varies from 10 to 50 points. Apportion your time in accordance with the value of the question. A 50-point question should take about one hour to answer, and a 20-point question should take approximately 20 minutes. Be sure to put your exam number on each item which you submit to be graded. Do not put anything on the on the blue book which would identify you. Please answer your 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 concise. If you feel that the facts are less than sufficient to answer the question completely, state what additional pieces of information you would need to know to answer the question completely.

Facts

In 1987, Michael Berard was a student at the University of North Carolina at Chapel Hill. lb supplement his income, Berard decided to go into the business of designing and selling Tshirts. During 1987, Berard devised a T- shirt design that he planned to sell as a souvenir of Myrtle Beach. That design depicted a beer can with a red, white and blue label. The words on the can did not refer to beer, however, but only to Myrtle Beach. In 1988, Berard incorporated Venture Marketing, Inc., (Venture) in order to manufacture and wholesale his T-shirts. Venture marketed the Myrtle Beach T- shirts through L & L Wings, Inc., (Wings) which operates a number of retail beach stores at Myrtle Beach, South Carolina and at other beaches. Wings purchased over 20,000 shirts from Venture. In 1989 Anheuser-Busch, Inc., brought a trademark infringement action against Venture and Wings. Anheuser-Busch alleged that the T-shirt design was confusingly similar to the Budweiser beer label, a registered trademark which AnheuserBusch had used on its own line of T-shirts and other apparel. For example, Anheuser-Busch has produced a T-shirt bearing the Budweiser label, the words. "Trap Skeet," and a drawing of shotgun shells and skeet. It has also used the label in promotions affiliated with various geographical sites. Anheuser-Busch brought a trademark infringement suit against Berard in which it complained that the Myrtle Beach T-shirt infringed its trademarks because consumers were likely to believe the T-shirt was sold or sponsored by Anheuser-Busch. The court in that case concluded that consumer confusion was unlikely based on a number of conspicuous differences between the T-shirt design and the Budweiser label. First, the T-shirt design makes no reference of any sort to Anheuser-Busch or Budweiser. By contrast, the Budweiser label displays a number of prominent indications of the product's source or sponsor: the name "Budweiser" flanked on either side by the word "genuine"; the geographic designation "Anheuser-Busch, Inc., St. Louis, Mo."; the letters "AB" for Anheuser-Busch; and the Anheuser-Busch trademark depicting an eagle in the middle of the letter "A." With respect to all of these, the T-shirt design either omits them entirely or replaces them with references to the beach. (see ILLUSTRATION) The T-shirt design replaces the Budweiser name with the words "Myrtle Beach"; substitutes the words "Myrtle Beach, S.C." for "Anheuser-Busch, Inc., St. Louis, Mo."; and replaces the letters"AB" with "SC." In addition, the T- shirt eliminates the Anheuser- Busch trademark "A" and omits the word "genuine." Second, the T-shirt replaces the Budweiser label's descriptions of the beer with analogous language descriptive of the beach. The Budweiser label reads as follows:

"This is the famous Budweiser beer. We know of no brand produced by any other brewer which costs so much to brew and age. Our exclusive Beechwood Aging produces a taste, a smoothness, and a drinkability you will find in no other beer at any price."

On the Venture Marketing T-shirt design, these sentences are replaced with a description of the beach: "This is the famous beach of Myrtle Beach, S.C." Similarly, the descriptive words at the bottom of the Budweiser label-- announcing that the beer is "Brewed by our original process from the Choicest Hops, Rice and Best Barley Malt" -are replaced in the T-shirt design with words proclaiming that "Myrtle Beach contains the Choicest Surf Sun, and Sand." The T-shirt design incorporates its own beach slogans in place of the Budweiser beer slogans. The Budweiser label includes the slogan "King of Beers" under the Budweiser name. On the T-shirt, this is replaced with the words "King of Beaches." In addition, the T-shirt mimics another Budweiser slogan, "This Bud's for You," with its own slogan, "This Beach is for You."

Michael Berard admits that he patterned the T-shirt's beer label after the basic Budweiser format. He says it is his intent in creating the T-shirt design was to parody the Budweiser beer label and that "his parody is entitled to First Amendment protection." Michael Kroshinsky, one of the wholesale purchasers of Michael's T-shirts, says that his initial reaction to the T-shirt was that it 1. was a copy of a Budweiser shirt." The court in that suit said that Michael was not liable for trademark infringement because there was no likelihood of confusion. Michael has continued to make T-shirts with the Budweiser "parody" logo, and opened a shop in New York in January 1996. He's already sold 10.000 shirts this year.
 

Illustration 1:

APPENDIX
T-Shirt Design


 

QUESTIONS

Question 1. [20 points, 20 minutes] Is Michael entitled to any First Amendment protection for his "parody." If so, why? If not, why not?

Question 2. [50 points, 1 hour] Assuming that Anheuser-Busch wants to bring suit again in July 1996 -- in the Federal District Court for the Southern District of New York - - against Michael, this time for dilution of a famous mark under Section 43(c) of the Lanham Act, state what A-B needs to prove in order to get a preliminary injunction and predict whether the court will issue one, including an explanation of why or why not.

Question 3. [20 points, 20 minutes] Suppose A-B learns that Michael plans to file an application to register his T-shirt design as a trademark in the U.S. Patent and Trademark Office this summer? Assuming that A-B is foreclosed from arguing that the marks are confusingly similar, will the trademark examiner reject the application under Section 2? Advise Anheuser

Busch of how to it should go about attempting to prevent the registration and predict the likelihood that it will be successful.

Question 4. [10 points] Below is the cartoon Dilbert. Assuming Dilbert follows the salesman's request, is his company liable under Section 43(a) of the Lanham Act? If so, for what?

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