Definition
A cause of action for trade name unfair competition must allege that the plaintiff previously and continuously used the trade name; the trade name acquired a secondary meaning; the defendant subsequently used a confusingly similar trade name, and there is a likelihood of public confusion. (Aloha Pacific, Inc. v. California Ins. Guarantee Ass’n (2000) 78 Cal.App.4th 749.
Common Law: Unfair Competition
California Trademarks and Service Mark Registration
Free consultation. Call now: 800-484-4610
We invite your attention to our disclaimer.
Element 1: Trade Name
A “trade name” means any name used by a person to identify a business or vocation of that person. (Cal. Bus. & Prof. Code, § 14202, subd. (d).)
A “trade name” relates to the business and its goodwill, as contrasted with a “trademark” which attaches to a commodity or service as a guarantee of quality. (Franklin Mint Co. v. Manatt, Phelps & Phillips, LLP (2010) 184 Cal.App.4th 313; Balesteri v. Holler (1978) 87 Cal.App.3d 717, 721.)
Element 2: Secondary Meaning
A descriptive trade name must have achieved secondary meaning to qualify for protection. (Japan Telecom, Inc. v. Japan Telecom America Inc. (9th Cir. 2002) 287 F.3d 866, 876.)
A plaintiff’s trade name acquires a secondary meaning when it has been so exclusively identified with the plaintiff’s goods or business so as to indicate his goods or business and his alone. (Gordon v. Warner Bros. Pictures, Inc. (1969) 269 Cal.App.2d 31, 36-37, quoting Academy of Motion Picture Arts and Sciences v. Benson (1940) 15 Cal.2d 685, 690.)
In proving the existence of a secondary meaning, a court will consider the duration and continuity of the use of the name, the extent of advertising and promotion of the name and the sums spent therefor, and the parties’ respective markets or marketing areas. (Cowles Magazines & Broadcasting, Inc. v. Elysium, Inc. (1967) 255 Cal.App.2d 731.)
Buyers do not need to actually know the name of the source for there to be a secondary meaning; they may directly associate the mark with but one, though anonymous, source. (North Carolina Dairy Foundation, Inc. v. Foremost-McKesson, Inc. (1979) 92 Cal.App.3d 98, 108-10 [scientifically conducted opinion survey in relevant market area demonstrated that buyers associated mark with a single source].)
Although the name “Credit Bureau of Palm Springs” may have attained a secondary meaning when used by the prior owners to identify their business, this secondary meaning terminated when their business terminated. (Hair v. McGuire (1961) 188 Cal.App.2d 348, 353.)
Generic or descriptive words can sometimes acquire a secondary meaning. (See, e.g., Family Record Plan, Inc. v. Mitchell (1959) 172 Cal.App.2d 235, 242.)
Element 3: Subsequent Use
The defendant must have used the trade name after the plaintiff, and after it had acquired a secondary meaning. (Sunset House Distributing Corp. v. Coffee Dan’s, Inc. (1966) 240 Cal.App.2d 748.)
Element 4: Confusingly Similar
In determining whether a trade name is confusingly similar, the courts will consider “the impression which the trade name as a whole creates on the average reasonably prudent member of the relevant public.” (Ball v. American Trial Lawyers Ass’n (1971) 14 Cal.App.3d 289, 308.)
“If the names are not identical, confusion can be inferred solely from a comparison of the names only if the names are colorably similar. Colorable similarity is not established from the fact alone that both trade names have in common a single word.” (Cowles Magazines & Broadcasting, Inc. v. Elysium, Inc. (1967) 255 Cal.App.2d 731.)
An appeals court affirmed a preliminary injunction against businesses using the name “Family Album Plan” in conjunction with photographic albums, where plaintiff’s “Family Record Plan” had acquired a secondary meaning. (Family Record Plan, Inc. v. Mitchell (1959) 172 Cal.App.2d 235.)
Element 5: Likelihood of Public Confusion
“If the facts support a conclusion that a person of ordinary intelligence could reasonably be deceived or confused, that is all that is required.” (Hair v. McGuire (1961) 188 Cal.App.2d 348, 353.)
“Although many factors may enter into a determination of whether the use of a specific trade name is likely to result in a confusion of source, the question is primarily one of fact to be determined from all of the circumstances of a particular case.” (Schwartz v. Slenderella Systems of Cal., Inc. (1954) 43 Cal.2d 107.)
“In deciding the question of likelihood of confusion, the preliminary determination of what constitutes the relevant public is a material issue.” (Ball v. American Trial Lawyers Ass’n (1971) 14 Cal.App.3d 289, 308.)
“The use of identical trade names justifies an inference that the public is likely to confuse the two.” (Hair v. McGuire (1961) 188 Cal.App.2d 348, 353.)
Although direct competition between the parties is not a prerequisite to relief in an action for common law trade name infringement, plaintiff should be able “to prove some special circumstances, peculiar to the two business involved, from which confusion would be likely to result.” (Tomlin v. Walt Disney Productions (1971) 18 Cal.App.3d 226, quoting Sunset House Distributing Corp. v. Coffee Dan’s, Inc. (1966) 240 Cal.App.2d 748, 753-54.)
Where the parties engage in the same business in the same locality, the possibility of confusion is so obvious that only these facts need be alleged. The same is true where, although not in direct competition, it appears from the complaint that the two businesses deal in articles or in services so similar that the public might reasonably conclude that the plaintiff had merely enlarged the scope of its basic operations. However, in other cases, a plaintiff should not be allowed to force another businessman into court, or to impose on the time and effort of a busy judicial system, unless it is able to plead and to prove some special circumstances, peculiar to the two business involved, from which confusion would be likely to result. (Tomlin v. Walt Disney Productions (1971) 18 Cal.App.3d 226, quoting Sunset House Distributing Corp. v. Coffee Dan’s, Inc. (1966) 240 Cal.App.2d 748, 753-54.)
In determining whether the public would be confused by the use of the magazine titles Look and Nude Look, the court noted the difference between the price, frequency of publication, subject matter, typography, and format of the two publications. (Cowles Magazines & Broadcasting, Inc. v. Elysium, Inc. (1967) 255 Cal.App.2d 731.)
There was no likelihood of confusion between “Slenderella” for use in connection with the sale of clothing for large women and “Slenderella” for use in connection with weight reduction salons, where there were other businesses using “Slenderella” prior to plaintiff’s use and where the clothing and weight loss businesses are somewhat inconsistent with each other, even though plaintiff presented evidence of actual confusion. (Schwartz v. Slenderella Systems of Cal.,Inc. (1954) 43 Cal.2d 107, 112, 271 [“although factual instances of confusion may support a determination that confusion of the public is likely from the use of identical or similar trade names, they do not compel that conclusion as a matter of law”].)
A permanent injunction was appropriate where there were numerous instances of actual public confusion between plaintiff California Western School of Law and defendant California Western University. (California Western School of Law v. California Western University (1981) 125 Cal.App.3d 1002.)
Remedies
Injunction
Any owner of a mark registered under this chapter may proceed by suit to enjoin the manufacture, use, display, or sale of any counterfeits thereof and any court of competent jurisdiction may grant injunctions to restrain the manufacture, use, display, or sale as may be deemed just and reasonable, and shall require the defendants to pay to the owner up to three times their profits from, and up to three times all damages suffered by reason of, the wrongful manufacture, use, display, or sale. If, in any action brought under this section, the court determines that any goods in the possession of or services offered by a defendant bear or consist of a counterfeit mark, the court shall order the destruction of any goods, labels, packaging or any components bearing the counterfeit mark and all instrumentalities used in the production of the counterfeit goods, including, but not limited to, any items, objects, tools, machines or equipment or, after obliteration of the counterfeit mark, the court may dispose of those materials by ordering their transfer to the state, a civil claimant, an eleemosynary institution, or any appropriate private person other than the person from whom the materials were obtained. (Cal. Bus. & Prof. Code, §14250, subd. (a); see also Century 21 Real Estate Corp. v. Sandlin (9th Cir. 1988) 846 F.2d 1175, 1180-81 [injunctive relief is the remedy of choice for trademark cases, since there is no adequate remedy at law for the injury caused by a defendant’s continuing infringement; and in cases where the infringing use is for a similar service, broad injunctions are especially appropriate].)
Liability for Damages
Any person who, either for himself or herself or on behalf of another person, procures the filing or registration of any mark pursuant to this chapter by knowingly making any false or fraudulent representation or declaration, either orally or in writing, or by any other fraudulent means shall be liable to pay all damages sustained as a consequence of the filing or registration, to be recovered by or on behalf of the party injured thereby in any court of competent jurisdiction. (Cal. Bus. & Prof. Code, § 14240.)
Statute of Limitations
2 Years
Cal. Code Civ. Proc. §339(1). 1. An action upon a contract, obligation or liability not founded upon an instrument of writing, except as provided in Section 2725 of the Commercial Code or subdivision 2 of Section 337 of this code; or an action founded upon a contract, obligation or liability, evidenced by a certificate, or abstract or guaranty of title of real property, or by a policy of title insurance; provided, that the cause of action upon a contract, obligation or liability evidenced by a certificate, or abstract or guaranty of title of real property or policy of title insurance shall not be deemed to have accrued until the discovery of the loss or damage suffered by the aggrieved party thereunder.
4 Years
Cal. Bus. & Prof. Code, § 17208. Any action to enforce any cause of action pursuant to this chapter shall be commenced within four years after the cause of action accrued.
Affirmative Defenses
Laches
Central purpose of laches doctrine in trademark field is to discourage trademark holder from waiting to bring suit until junior user has begun to establish secondary meaning in its mark. (See California Western School of Law v. California Western University (1981) 125 Cal.App.3d 1002, 1006; see also MDT Corp. v. New York Stock Exchange, Inc. (C.D. Cal. 1994) 858 F. Supp. 1028, 1033.)