KP Permanent Make-Up v. Lasting Impression I

On December 8, 2004, the United States Supreme Court decided KP Permanent Make-Up, Inc., v. Lasting Impression I, Inc., 125 S. Ct. 542 (2004), in the process clarifying the nature and scope of the fair use defense in trademark infringement cases. The Court held that a defendant asserting a fair use defense does not have a burden to disprove any likelihood of confusion regarding the origin of the associated goods or services , and that the existence of some likelihood of confusion does not necessarily preclude a successful fair use defense.

Before the Court issued this decision, a split existed among the Circuit Courts of Appeals, which differed on the significance of likely confusion to the fair use defense provided by section 33(b)(4) of the federal Lanham Act, 15 U.S.C. § 1115(b)(4) (2000). On its face, this statute allows a defendant to make fair and good faith uses of descriptive terms to describe their own products, even though those terms are included in a plaintiff’s incontestably registered mark. Some lower federal courts interpreting this statute prior to KP Permanent Make-Up had held that any likelihood of confusion would bar a fair use defense, on the theory that a confusingly similar use could not be considered a fair one. In contrast, other courts had held that some degree of likely confusion is compatible with a fair use defense.

KP Permanent Make-Up originated as a declaratory action for noninfringement brought by the petitioner, a user of the term "micro color" to describe its line of permanent cosmetic products. The respondents in turn brought a counterclaim for infringement of their incontestably registered MICRO COLORS mark for directly competitive goods. On the petitioner’s motion for summary judgment, the district court held as a matter of law not only that the respondents had failed to demonstrate a likelihood of confusion between the parties’ uses but also that the petitioner had made a fair descriptive use of the words in question within the meaning of section 33(b)(4).

On appeal, the Ninth Circuit vacated both these holdings. As to the petitioner’s attempt to escape liability for infringement, the appellate court held in a relatively routine analysis that the petitioner had failed to demonstrate an absence of likely confusion as a matter of law. More significantly, however, the court suggested that this failure precluded the petitioner from prevailing on its fair use defense as well. In other words, the Ninth Circuit imposed upon the petitioner a duty to disprove the existence of a likelihood of confusion as part of the petitioner’s burden under section 33(b)(4). Accordingly, it remanded the action for the district court to determine whether the petitioner could satisfy this obligation.

In reversing the Ninth Circuit on this point, the Supreme Court considered the text of the Lanham Act and Congress’s intent. The Court noted that the Lanham Act places the burden of proving likelihood of confusion on the party claiming infringement, not the party claiming fair use. The Court reasoned that because Congress included the "likely to cause confusion" language in describing the requirements of proving infringement, but did not use the same language in describing the requirements of proving fair use, Congress did not intend that the party asserting a fair use defense would have the burden of proving the absence of likely confusion. The Court also noted that Congress’s "failure to say anything about a defendant’s burden on this point was almost certainly not an oversight."

In analyzing the issue from a litigation standpoint, the Court additionally noted that after a plaintiff makes out a prima facie case for infringement, a defendant typically may either offer rebutting evidence to undercut the plaintiff’s evidence on any particular element of infringement (i.e. likelihood of confusion) or raise an affirmative defense, such as fair use, which operates to bar relief, even if the plaintiff successfully proves its prima facie case. The Court reasoned that it would not make sense to require a defendant to negate an element of infringement (i.e. likelihood of confusion) to be able to assert an affirmative defense, because "merely rebutting the plaintiff’s case on confusion would entitle the defendant to judgment." Accordingly, the Court concluded that a defendant asserting a fair use defense has no burden of proving that confusion is unlikely.

The Court did not, however, fully resolve another issue closely related to its treatment of the burden of proof, namely, what should be the significance to the fair use defense of evidence germane to the likelihood of confusion between the parties’ uses. On the one hand, the Court reasoned that some possibility of consumer confusion must be compatible with fair use because the Lanham Act was not intended to "deprive commercial speakers of the ordinary utility of descriptive words." The Court explained that while an applicant may obtain trademark rights in a descriptive term, after proving secondary meaning, it cannot prevent others from using the term in its ordinary descriptive sense. Thus, one risk that an applicant takes in choosing a descriptive term as its trademark is that some confusion may result from others using the term in a purely descriptive sense. The Court therefore concluded that some likelihood of confusion is compatible with fair use.

On the other hand, however, the Court noted that "our holding that fair use can occur along with some degree of confusion does not foreclose the relevance of the extent of any likely confusion in assessing whether a defendant’s use is objectively fair." Although the Court declined to elaborate on this point in detail, its holding therefore should not be interepreted to mean that all evidence bearing on the possible likelihood of confusion between the parties’ marks is irrelevant to section 33(b)(4)’s fair use defense. Moreover, certain evidence traditionally considered in the likelihood of confusion analysis, such as actual confusion and an intent to infringe by a defendant, may well still affect the inquiry into whether a junior use actually satisfies the defense’s requirements. Thus, rather than resolving all issues associated with the fair use defense, the Court’s opinion may trigger as much future litigation as it prevents.