We’ve all moaned and wailed and gnashed our teeth about copyright fair use. But what some people don’t know is that there is also a fair use doctrine in trademark law. And it’s an entirely different thing than the copyright version, in some ways clearer, and in other ways not.
When it comes to trademark fair use, there are actually two different varieties. The first is statutory fair use, or “classic” fair use, which allows a third party to use someone else’s trademark to describe the third party’s goods. The trademarked term must be used (1) other than as a trademark, (2) in a descriptive sense, and (3) fairly and in good faith. For example: at present, American Airlines is a registered trademark of American Airlines, Inc. However, it is nevertheless accurate to say that Delta Air Lines and Alaska Airlines are both “American airlines,” that is, they are headquartered in the United States and offer air travel within the United States. In this context, it is not wrong for Delta to describe itself as an American airline.
Fair use is a defense even if some consumer confusion arises. The Supreme Court has stated that risk of confusion “is a risk the plaintiff accepted when it decided to identify its product with a mark that uses a well-known descriptive phrase.” KP Permanent Make-up, Inc. v. Lasting Impression I, Inc., 543 U.S. 111, 122 (2004). However, the degree of consumer confusion may have an impact on whether the use was truly made “fairly and in good faith.”
The other type of fair use is called “nominative fair use,” and it consists of using a third party’s mark to refer to that third party and its goods and services. This is the case, for example, in cases of comparative advertising (“Four out of five dentists prefer the taste of Acme-brand soda over Coco-Cola!”). If the statements are accurate, then the Acme may have a defense in the event that the Coco-Cola Company were to sue.
However, nominative fair use is a judicially-created defense, and those courts that recognize the defense do not agree on how to apply it. To date, the Third Circuit is the only federal appellate court that styles nominative fair use as an actual affirmative defense. The Ninth Circuit, by contrast, applies a three-factor test that replaces the standard likelihood-of-confusion analysis: (1) The use of the mark is necessary to describe both the plaintiff’s and the defendant’s goods or services; (2) Only so much of the plaintiff’s mark as is necessary was used; (3) Defendant’s conduct or language reflects the true and accurate relationship between the products or services.
Conversely, the Fifth Circuit uses a two-factor test (omitting the Ninth Circuit’s first factor) that does not replace likelihood of confusion, but is used in conjunction with it. The First Circuit, for its part, has recognized the principle underlying nominative fair use but has not endorsed any particular formulation. The Seventh, Eighth, Tenth, and Eleventh Circuits have never addressed the issue at all, although the Northern District of Illinois (within the Seventh Circuit) has shown an openness to considering it.
Ultimately, like copyright fair use, fair use in the trademark context is a fact-dependent inquiry.