Chapter Twenty Two | Intellectual Property: Trademarks & Trade Secrets


A trademark is a word, phrase, symbol, and/or design that identifies and distinguishes the source of the goods of one party from those of others. There are many famous trademarks including the Nike swoosh, Disney’s Mickey Mouse and the golden arches of McDonalds. A service mark is a word, phrase, symbol, and/or design that identifies and distinguishes the source of a service rather than goods. The lion’s roar used by Metro-Goldwyn-Mayer is an example of a service mark. An unregistered service mark is symbolized by the service mark symbol (℠). A trade name is a fictitious name, often different from the registered name of a business entity, that is used as an alternative for identification.

Since the law considers a trademark to be property, ownership can reside in an individual or any legal entity. Rights to a trademark can be created by registering the mark with the appropriate trademark registry or through its use in commerce. The United States Patent and Trademark Office (USPTO) is the registry in the United States.

An unregistered trademark is symbolized by the trademark symbol (™) and a registered trademark is symbolized by the letter “R” in a circle (®). The purpose of a trademark is to support the brand identity (brand name) of an individual, company and/or product in order to provide differentiation in the marketplace.

Trade dress refers to those characteristics of a product that are related to the visual appearance of a product or its packaging that symbolize the source of the product to consumers. It includes its size, shape, color, design, and texture as well as its packaging and labeling. It also includes advertising, including marketing strategies and distinctive graphics.

Sources of Law

Lanham Act

The primary federal law on trademarks is the Trademark Act of 1946 (Lanham Act) (15 U.S.C. §1051 et seq.).

The Lanham Act established the remedies available when a trademark is infringed upon. These remedies include damages and block imports of goods that infringe on registered trademarks, and authorized the use of injunctions to prevent the use of false descriptions and trademark dilution.

The Act has been amended several times:

  • the Trademark Counterfeiting Act of 1984 (TCA) (18 U.S. Code §2320),
  • the Federal Trademark Dilution Act (FTDA) (Pub. L. No. 104-98, 109 Stat. 985 (1996))
  • the Anticybersquatting Consumer Protection Act of 1999 (ACPA) (15 U.S.C. § 1125(d))
  • the Trademark Dilution Revision Act (TDRA) (Pub. L. No. 109–312, 120 Stat. 1730 (2006)


The registration process in the United States requires that the trademark owner:

  • file an application to register the trademark with the USPTO
  • the application is then reviewed by the USPTO to assure compliance with the rules included in the Trademark Manual of Examination Procedure (TMEP)
  • if the application is approved it will be “published for opposition”, a thirty day period when those who would be affected by the registration can object by filing an opposition proceeding that will result in a hearing by the Trademark Trial and Appeal Board (TTAB) to resolve questions related to the grounds for opposition and the applicant’s ability to register the mark
  • the mark will be approved if no objection is filed or if the TTAB finds for the applicant


There are various categories of trademarks depending on the mark’s distinctiveness. The court, in Abercrombie & Fitch, 537 F.2D 4 (1976), pointed out that registration requires a mark to be distinctive and then described both four different categories that supported trademark protection and a “spectrum of distinctiveness”. As the court noted:

“… Arrayed in an ascending order which roughly reflects their eligibility to trademark status and the degree of protection accorded, these classes are (1) generic, (2) descriptive, (3) suggestive, and (4) arbitrary or fanciful.”


A generic mark will never be protected because the identifying term is a common, hence generic, name for the product, or service, in question. For example, generic terms would include elevator, salt and aspirin.


A descriptive mark speaks to the specific characteristics of the product or service in question. A mark “… which (1) when used on or in connection with the goods of the applicant is merely descriptive or deceptively misdescriptive of them …” will not be protected. (15 U.S.C. § 1052(e)(1)). So, “salty” crackers would not be protected. In order to gain protection for a descriptive mark it must develop a “secondary meaning”. In other words, over a period of years consumers may come to identify a product or service with a particular trademark.


Suggestive trademarks are the most common category and merely evoke the quality or characteristics of goods and services. These trademarks require a customer exercise some amount of imagination in order to understand the nature of the goods. Of course, there is a fine line between what qualifies as “descriptive” or “suggestive” because the difference is “in the eye of the beholder” leading to different interpretations of the same mark. Examples of suggestive trademarks include Tesla for electric autos and 7-Eleven that identifies the hours of operation for a convenience store.


An arbitrary trademark is one whose meaning is unrelated to the goods or services identified by the mark. It is often a word with a common meaning. Among the most well known arbitrary trademarks is Apple, the technology firm. Apple, the fruit, does not usually evoke a computer, at least until Apple was launched by the Steves (Jobs and Wozniak) became a global brand.


A fanciful trademark is one that is created only to be used as a trademark. Its very lack of meaning is its greatest strength. Since the mark is created for a singular purpose, i.e., to be a trademark it cannot be confused with something else which is a weakness in the other categories of mark. Examples of fanciful trademarks include Kodak, Starbucks, Exxon and Verizon.

It is also important to note that the categories are fluid and that the kind of usage of a particular mark over time may result in a change in the appropriateness of the mark’s assigned category.

The Zatarains case discusses the “spectrum of distinctiveness” and secondary meaning discussed above.


Case Summary

Zatarains, Inc. v. Oak Grove Smokehouse, Inc. and Visko’s Fish Fry, Inc.

United States Court Of Appeals For The Fifth Circuit, 698 F.2D 786 (1983)

GOLDBERG, Circuit Judge:

This appeal of a trademark dispute presents us with a menu of edible delights sure to tempt connoisseurs of fish and fowl alike. At issue is the alleged infringement of two trademarks, “Fish-Fri” and “Chick-Fri,” held by appellant Zatarain’s, Inc. (“Zatarain’s”). The district court held that the alleged infringers had a “fair use” defense to any asserted infringement of the term “Fish-Fri” and that the registration of the term “Chick-Fri” should be cancelled. We affirm.



Zatarain’s is the manufacturer and distributor of a line of over one hundred food products. Two of these products, “Fish-Fri” and “Chick-Fri,” are coatings or batter mixes used to fry foods. These marks serve as the entree in the present litigation. *** Zatarain’s products are not alone in the marketplace. At least four other companies market coatings for fried foods that are denominated “fish fry” or “chicken fry.” Two of these competing companies are the appellees here, and therein hangs this fish tale.

Appellee Oak Grove Smokehouse, Inc. (“Oak Grove”) began marketing a “fish fry” and a “chicken fry” in March 1979. Both products are packaged in clear glassine packets that contain a quantity of coating mix sufficient to fry enough food for one meal. The packets are labelled with Oak Grove’s name and emblem, along with the words “FISH FRY” OR “CHICKEN FRY.” Oak Grove’s “FISH FRY” has a corn flour base seasoned with various spices; Oak Grove’s “CHICKEN FRY” is a seasoned coating with a wheat flour base.

Appellee Visko’s Fish Fry, Inc. (“Visko’s”) entered the batter mix market in March 1980 with its “fish fry.” Visko’s product is packed in a cylindrical eighteen-ounce container with a resealable plastic lid. The words “Visko’s FISH FRY” appear on the label along with a photograph of a platter of fried fish. Visko’s coating mix contains corn flour and added spices. ***


Zatarain’s first claimed foul play in its original complaint filed against Oak Grove on June 19, 1979, in the United States District Court for the Eastern District of Louisiana. The complaint alleged trademark infringement and unfair competition under the Lanham Act ***

The case was tried to the court without a jury. Treating the trademark claims first, the district court classified the term “Fish-Fri” as a descriptive term identifying a function of the product being sold. The court found further that the term “Fish-Fri” had acquired a secondary meaning in the New Orleans geographical area and therefore was entitled to trademark protection, but concluded that the defendants were entitled to fair use of the term “fish fry” to describe characteristics of their goods. Accordingly, the court held that Oak Grove and Visko’s had not infringed Zatarain’s trademark “Fish-Fri.”

With respect to the alleged infringement of the term “Chick-Fri,” the court found that “Chick-Fri” was a descriptive term that had not acquired a secondary meaning in the minds of consumers. Consequently, the court held that Zatarain’s claim for infringement of its trademark “Chick-Fri” failed and ordered that the trademark registration of “Chick-Fri” should be cancelled.

Turning to Zatarain’s unfair competition claims, the court observed that the evidence showed no likelihood of or actual confusion on the part of the buying public. Additionally, the court noted that the dissimilarities in trade dress of Zatarain’s, Oak Grove’s, and Visko’s products diminished any possibility of buyer confusion. For these reasons, the court found no violations of federal or state unfair competition laws.


The district court found that Zatarain’s trademark “Fish-Fri” was a descriptive term with an established secondary meaning, but held that Oak Grove and Visko’s had a “fair use” defense to their asserted infringement of the mark. The court further found that Zatarain’s trademark “Chick-Fri” was a descriptive term that lacked secondary meaning, and accordingly ordered the trademark registration cancelled. Additionally, the court concluded that Zatarain’s had produced no evidence in support of its claims of unfair competition on the part of Oak Grove and Visko’s. Finally, the court dismissed Oak Grove’s and Visko’s counterclaims for antitrust violations, unfair trade practices, misbranding of food products, and miscellaneous damages.

Battered, but not fried, Zatarain’s appeals from the adverse judgment on several grounds. First, Zatarain’s argues that its trademark “Fish-Fri” is a suggestive term and therefore not subject to the “fair use” defense. Second, Zatarain’s asserts that even if the “fair use” defense is applicable in this case, appellees cannot invoke the doctrine because their use of Zatarain’s trademarks is not a good faith attempt to describe their products. Third, Zatarain’s urges that the district court erred in cancelling the trademark registration for the term “Chick-Fri” because Zatarain’s presented sufficient evidence to establish a secondary meaning for the term. For these reasons, Zatarain’s argues that the district court should be reversed. *** We now turn to an appraisal of these issues.



1. Classifications of Marks

The threshold issue in any action for trademark infringement is whether the word or phrase is initially registerable or protectable. *** Courts and commentators have traditionally divided potential trademarks into four categories. A potential trademark may be classified as (1) generic, (2) descriptive, (3) suggestive, or (4) arbitrary or fanciful. These categories, like the tones in a spectrum, tend to blur at the edges and merge together. The labels are more advisory than definitional, more like guidelines than pigeonholes. Not surprisingly, they are somewhat difficult to articulate and to apply. ***

A generic term is “the name of a particular genus or class of which an individual article or service is but a member.” *** A generic term connotes the “basic nature of articles or services” rather than the more individualized characteristics of a particular product. *** Generic terms can never attain trademark protection. *** Furthermore, if at any time a registered trademark becomes generic as to a particular product or service, the mark’s registration is subject to cancellation. *** Such terms as aspirin and cellophane have been held generic and therefore unprotectable as trademarks. ***

A descriptive term “identifies a characteristic or quality of an article or service,” *** Descriptive terms ordinarily are not protectable as trademarks, *** they may become valid marks, however, by acquiring a secondary meaning in the minds of the consuming public. *** Examples of descriptive marks would include “Alo” with reference to products containing gel of the aloe vera plant, *** and “Vision Center” in reference to a business offering optical goods and services ***. As this court has often noted, the distinction between descriptive and generic terms is one of degree. *** The distinction has important practical consequences, however; while a descriptive term may be elevated to trademark status with proof of secondary meaning, a generic term may never achieve trademark protection. ***

A suggestive term suggests, rather than describes, some particular characteristic of the goods or services to which it applies and requires the consumer to exercise the imagination in order to draw a conclusion as to the nature of the goods and services. *** A suggestive mark is protected without the necessity for proof of secondary meaning. The term “Coppertone” has been held suggestive in regard to sun tanning products. ***

Arbitrary or fanciful terms bear no relationship to the products or services to which they are applied. Like suggestive terms, arbitrary and fanciful marks are protectable without proof of secondary meaning. The term “Kodak” is properly classified as a fanciful term for photographic supplies, ***; “Ivory” is an arbitrary term as applied to soap. ***

2. Secondary Meaning

As noted earlier, descriptive terms are ordinarily not protectable as trademarks. They may be protected, however, if they have acquired a secondary meaning for the consuming public. The concept of secondary meaning recognizes that words with an ordinary and primary meaning of their own “may by long use with a particular product, come to be known by the public as specifically designating that product.” *** In order to establish a secondary meaning for a term, a plaintiff “must show that the primary significance of the term in the minds of the consuming public is not the product but the producer.” *** The burden of proof to establish secondary meaning rests at all times with the plaintiff; this burden is not an easy one to satisfy, for ” ‘ [a] high degree of proof is necessary to establish secondary meaning for a descriptive term.’ ” *** Proof of secondary meaning is an issue only with respect to descriptive marks; suggestive and arbitrary or fanciful marks are automatically protected upon registration, and generic terms are unprotectible even if they have acquired secondary meaning. ***

3. The “Fair Use” Defense

Even when a descriptive term has acquired a secondary meaning sufficient to warrant trademark protection, others may be entitled to use the mark without incurring liability for trademark infringement. When the allegedly infringing term is “used fairly and in good faith only to describe to users the goods or services of [a] party, or their geographic origin,” a defendant in a trademark infringement action may assert the “fair use” defense. The defense is available only in actions involving descriptive terms and only when the term is used in its descriptive sense rather than its trademark sense. *** In essence, the fair use defense prevents a trademark registrant from appropriating a descriptive term for its own use to the exclusion of others, who may be prevented thereby from accurately describing their own goods. *** The holder of a protectable descriptive mark has no legal claim to an exclusive right in the primary, descriptive meaning of the term; consequently, anyone is free to use the term in its primary, descriptive sense so long as such use does not lead to customer confusion as to the source of the goods or services. ***.

4. Cancellation of Trademarks

Section 37 of the Lanham Act, ***, provides as follows:

“In any action involving a registered mark the court may determine the right to registration, order the cancelation of registrations, in whole or in part, restore canceled registrations, and otherwise rectify the register with respect to the registrations of any party to the action. Decrees and orders shall be certified by the court to the Commissioner, who shall make appropriate entry upon the records of the Patent Office, and shall be controlled thereby.”

This circuit has held that when a court determines that a mark is either a generic term or a descriptive term lacking secondary meaning, the purposes of the Lanham Act are well served by an order cancelling the mark’s registration.

We now turn to the facts of the instant case.


1. Classification

Throughout this litigation, Zatarain’s has maintained that the term “Fish-Fri” is a suggestive mark automatically protected from infringing uses by virtue of its registration in 1962. Oak Grove and Visko’s assert that “fish fry” is a generic term identifying a class of foodstuffs used to fry fish; alternatively, Oak Grove and Visko’s argue that “fish fry” is merely descriptive of the characteristics of the product. The district court found that “Fish-Fri” was a descriptive term identifying a function of the product being sold. Having reviewed this finding under the appropriate “clearly erroneous” standard, we affirm. ***

We are mindful that ” [t]he concept of descriptiveness must be construed rather broadly.” *** Whenever a word or phrase conveys an immediate idea of the qualities, characteristics, effect, purpose, or ingredients of a product or service, it is classified as descriptive and cannot be claimed as an exclusive trademark. *** Courts and commentators have formulated a number of tests to be used in classifying a mark as descriptive.

A suitable starting place is the dictionary, for ” [t]he dictionary definition of the word is an appropriate and relevant indication ‘of the ordinary significance and meaning of words’ to the public.” *** Webster’s Third New International Dictionary 858 (1966) lists the following definitions for the term “fish fry”: “1. a picnic at which fish are caught, fried, and eaten; …. 2. fried fish.” Thus, the basic dictionary definitions of the term refer to the preparation and consumption of fried fish. This is at least preliminary evidence that the term “Fish-Fri” is descriptive of Zatarain’s product in the sense that the words naturally direct attention to the purpose or function of the product.

The “imagination test” is a second standard used by the courts to identify descriptive terms. This test seeks to measure the relationship between the actual words of the mark and the product to which they are applied. If a term “requires imagination, thought and perception to reach a conclusion as to the nature of goods,” *** it is considered a suggestive term. Alternatively, a term is descriptive if standing alone it conveys information as to the characteristics of the product. In this case, mere observation compels the conclusion that a product branded “Fish-Fri” is a prepackaged coating or batter mix applied to fish prior to cooking. The connection between this merchandise and its identifying terminology is so close and direct that even a consumer unfamiliar with the product would doubtless have an idea of its purpose or function. It simply does not require an exercise of the imagination to deduce that “Fish-Fri” is used to fry fish. *** Accordingly, the term “Fish-Fri” must be considered descriptive when examined under the “imagination test.”

A third test used by courts and commentators to classify descriptive marks is “whether competitors would be likely to need the terms used in the trademark in describing their products.” *** A descriptive term generally relates so closely and directly to a product or service that other merchants marketing similar goods would find the term useful in identifying their own goods. *** Common sense indicates that in this case merchants other than Zatarain’s might find the term “fish fry” useful in describing their own particular batter mixes. While Zatarain’s has argued strenuously that Visko’s and Oak Grove could have chosen from dozens of other possible terms in naming their coating mix, we find this position to be without merit. As this court has held, the fact that a term is not the only or even the most common name for a product is not determinative, for there is no legal foundation that a product can be described in only one fashion. *** There are many edible fish in the sea, and as many ways to prepare them as there are varieties to be prepared. Even piscatorial gastronomes would agree, however, that frying is a form of preparation accepted virtually around the world, at restaurants starred and unstarred. The paucity of synonyms for the words “fish” and “fry” suggests that a merchant whose batter mix is specially spiced for frying fish is likely to find “fish fry” a useful term for describing his product.

A final barometer of the descriptiveness of a particular term examines the extent to which a term actually has been used by others marketing a similar service or product. *** This final test is closely related to the question whether competitors are likely to find a mark useful in describing their products. As noted above, a number of companies other than Zatarain’s have chosen the word combination “fish fry” to identify their batter mixes. Arnaud’s product, “Oyster Shrimp and Fish Fry,” has been in competition with Zatarain’s “Fish-Fri” for some ten to twenty years. When companies from A to Z, from Arnaud to Zatarain’s, select the same term to describe their similar products, the term in question is most likely a descriptive one.

The correct categorization of a given term is a factual issue, *** consequently, we review the district court’s findings under the “clearly erroneous” standard of Fed. R. Civ. P. 52. *** The district court in this case found that Zatarain’s trademark “Fish-Fri” was descriptive of the function of the product being sold. Having applied the four prevailing tests of descriptiveness to the term “Fish-Fri,” we are convinced that the district court’s judgment in this matter is not only not clearly erroneous, but clearly correct.

2. Secondary Meaning

Descriptive terms are not protectable by trademark absent a showing of secondary meaning in the minds of the consuming public. To prevail in its trademark infringement action, therefore, Zatarain’s must prove that its mark “Fish-Fri” has acquired a secondary meaning and thus warrants trademark protection. The district court found that Zatarain’s evidence established a secondary meaning for the term “Fish-Fri” in the New Orleans area. We affirm.

The existence of secondary meaning presents a question for the trier of fact, and a district court’s finding on the issue will not be disturbed unless clearly erroneous. *** The burden of proof rests with the party seeking to establish legal protection for the mark–the plaintiff in an infringement suit. *** The evidentiary burden necessary to establish secondary meaning for a descriptive term is substantial. ***

In assessing a claim of secondary meaning, the major inquiry is the consumer’s attitude toward the mark. The mark must denote to the consumer “a single thing coming from a single source,” *** to support a finding of secondary meaning. Both direct and circumstantial evidence may be relevant and persuasive on the issue.

Factors such as amount and manner of advertising, volume of sales, and length and manner of use may serve as circumstantial evidence relevant to the issue of secondary meaning. *** While none of these factors alone will prove secondary meaning, in combination they may establish the necessary link in the minds of consumers between a product and its source. It must be remembered, however, that “the question is not the extent of the promotional efforts, but their effectiveness in altering the meaning of [the term] to the consuming public.”***

Since 1950, Zatarain’s and its predecessor have continuously used the term “Fish-Fri” to identify this particular batter mix. Through the expenditure of over $400,000 for advertising during the period from 1976 through 1981, Zatarain’s has promoted its name and its product to the buying public. Sales of twelve-ounce boxes of “Fish-Fri” increased from 37,265 cases in 1969 to 59,439 cases in 1979. From 1964 through 1979, Zatarain’s sold a total of 916,385 cases of “Fish-Fri.” The district court considered this circumstantial evidence of secondary meaning to weigh heavily in Zatarain’s favor. ***

In addition to these circumstantial factors, Zatarain’s introduced at trial two surveys conducted by its expert witness, Allen Rosenzweig. In one survey, telephone interviewers questioned 100 women in the New Orleans area who fry fish or other seafood three or more times per month. Of the women surveyed, twenty-three percent specified Zatarain’s “Fish-Fri” as a product they “would buy at the grocery to use as a coating” or a “product on the market that is especially made for frying fish.” In a similar survey conducted in person at a New Orleans area mall, twenty-eight of the 100 respondents answered “Zatarain’s ‘Fish-Fri’ ” to the same questions.

The authorities are in agreement that survey evidence is the most direct and persuasive way of establishing secondary meaning. *** The district court believed that the survey evidence produced by Zatarain’s, when coupled with the circumstantial evidence of advertising and usage, tipped the scales in favor of a finding of secondary meaning. Were we considering the question of secondary meaning de novo, we might reach a different conclusion than did the district court, for the issue is close. Mindful, however, that there is evidence in the record to support the finding below, we cannot say that the district court’s conclusion was clearly erroneous. Accordingly, the finding of secondary meaning in the New Orleans area for Zatarain’s descriptive term “Fish-Fri” must be affirmed.

3. The “Fair Use” Defense

Although Zatarain’s term “Fish-Fri” has acquired a secondary meaning in the New Orleans geographical area, Zatarain’s does not now prevail automatically on its trademark infringement claim, for it cannot prevent the fair use of the term by Oak Grove and Visko’s. The “fair use” defense applies only to descriptive terms and requires that the term be “used fairly and in good faith only to describe to users the goods or services of such party, or their geographic origin.” Lanham Act Sec. 33(b), 15 U.S.C. § 1115(b) (4) (1976). The district court determined that Oak Grove and Visko’s were entitled to fair use of the term “fish fry” to describe a characteristic of their goods; we affirm that conclusion.

Zatarain’s term “Fish-Fri” is a descriptive term that has acquired a secondary meaning in the New Orleans area. Although the trademark is valid by virtue of having acquired a secondary meaning, only that penumbra or fringe of secondary meaning is given legal protection. Zatarain’s has no legal claim to an exclusive right in the original, descriptive sense of the term; therefore, Oak Grove and Visko’s are still free to use the words “fish fry” in their ordinary, descriptive sense, so long as such use will not tend to confuse customers as to the source of the goods. ***

The record contains ample evidence to support the district court’s determination that Oak Grove’s and Visko’s use of the words “fish fry” was fair and in good faith. Testimony at trial indicated that the appellees did not intend to use the term in a trademark sense and had never attempted to register the words as a trademark. *** Oak Grove and Visko’s apparently believed “fish fry” was a generic name for the type of coating mix they manufactured. *** In addition, Oak Grove and Visko’s consciously packaged and labelled their products in such a way as to minimize any potential confusion in the minds of consumers. *** The dissimilar trade dress of these products prompted the district court to observe that confusion at the point of purchase–the grocery shelves–would be virtually impossible. Our review of the record convinces us that the district court’s determinations are correct. We hold, therefore, that Oak Grove and Visko’s are entitled to fair use of the term “fish fry” to describe their products; accordingly, Zatarain’s claim of trademark infringement must fail.


1. Classification

Most of what has been said about “Fish-Fri” applies with equal force to Zatarain’s other culinary concoction, “Chick-Fri.” “Chick-Fri” is at least as descriptive of the act of frying chicken as “Fish-Fri” is descriptive of frying fish. It takes no effort of the imagination to associate the term “Chick-Fri” with Southern fried chicken. Other merchants are likely to want to use the words “chicken fry” to describe similar products, and others have in fact done so. Sufficient evidence exists to support the district court’s finding that “Chick-Fri” is a descriptive term; accordingly, we affirm.

2. Secondary Meaning

The district court concluded that Zatarain’s had failed to establish a secondary meaning for the term “Chick-Fri.” We affirm this finding. The mark “Chick-Fri” has been in use only since 1968; it was registered even more recently, in 1976. In sharp contrast to its promotions with regard to “Fish-Fri,” Zatarain’s advertising expenditures for “Chick-Fri” were mere chickenfeed; in fact, Zatarain’s conducted no direct advertising campaign to publicize the product. Thus the circumstantial evidence presented in support of a secondary meaning for the term “Chick-Fri” was paltry.

Allen Rosenzweig’s survey evidence regarding a secondary meaning for “Chick-Fri” also “lays an egg.” The initial survey question was a “qualifier:” “Approximately how many times in an average month do you, yourself, fry fish or other seafood?” Only if respondents replied “three or more times a month” were they asked to continue the survey. This qualifier, which may have been perfectly adequate for purposes of the “Fish-Fri” questions, seems highly unlikely to provide an adequate sample of potential consumers of “Chick-Fri.” This survey provides us with nothing more than some data regarding fish friers’ perceptions about products used for frying chicken. As such, it is entitled to little evidentiary weight.

It is well settled that Zatarain’s, the original plaintiff in this trademark infringement action, has the burden of proof to establish secondary meaning for its term. *** This it has failed to do. The district court’s finding that the term “Chick-Fri” lacks secondary meaning is affirmed.

3. Cancellation

Having concluded that the district court was correct in its determination that Zatarain’s mark “Chick-Fri” is a descriptive term lacking in secondary meaning, we turn to the issue of cancellation. The district court, invoking the courts’ power over trademark registration as provided by section 37 of the Lanham Act, 15 U.S.C. § 1119 (1976), ordered that the registration of the term “Chick-Fri” should be cancelled. The district court’s action was perfectly appropriate in light of its findings that “Chick-Fri” is a descriptive term without secondary meaning. We affirm. ***


The last morsels on our plate are the counterclaims filed against Zatarain’s by Oak Grove and Visko’s. One group of counterclaims alleges violations of federal antitrust statutes and Louisiana law prohibiting the restraint of trade. In addition, the counterclaims pray for awards of attorneys’ fees under the Lanham Act Sec. 35, 15 U.S.C. § 1117 (1976), due to Zatarain’s alleged bad faith in instituting this infringement action. The district court found these allegations to be clearly without merit, noting that Oak Grove and Visko’s had introduced absolutely no evidence at trial to support the counterclaims. Our review of the record fully supports the district court’s judgment in this regard, and it is hereby affirmed.

Finally, Oak Grove and Visko’s assert a counterclaim based on the federal regulations governing the identity labelling of packaged foods, 21 C.F.R. Sec. 101.3 (1982). The counterclaim alleges that Zatarain’s sale of 100% corn flour under the name “Fish-Fri” is deceptive and misleading to the public. In particular, Oak Grove and Visko’s maintain that the size of the product identification “corn flour” on the “Fish-Fri” box is not reasonably related to the most predominate words on the box as required by the regulations. After examining the “Fish-Fri” package, the district court found this counterclaim to be without merit. The court initially noted that the size of the words “corn flour” complies with the specifications of 21 C.F.R. Sec. 101.2(c) (1982), which sets a minimum requirement for information appearing on the principal display panel of packaged foods. The court then found that the identification of Zatarain’s “Fish-Fri” as a corn flour product was reasonably related in size to the words “Fish-Fri.” This finding is not clearly erroneous and therefore is affirmed.

We agree with the district court that this smorgasbord of counterclaims by Oak Grove and Visko’s is without merit, and we affirm their dismissal by the district court. Sadly, for Oak Grove and Visko’s at least, these are “the ones that got away.”


And so our tale of fish and fowl draws to a close. We need not tarry long, for our taster’s choice yields but one result, and we have other fish to fry. Accordingly, the judgment of the district court is hereby and in all things



According to the USPTO, trademark infringement is the unauthorized use of a trademark or service mark on or in connection with goods and/or services in a manner that is likely to cause confusion, deception, or mistake about the source of the goods and/or services. Essentially, infringement occurs when an infringing party uses a trademark identical to one that is protected. Infringement can also occur where the infringing trademark is similar enough to a protected trademark that it confuses consumers.

The Lanham Act also established the “likelihood of confusion” standard for infringement of an unregistered trademark or trade dress allowing for a civil action:

  1. Any person who, on or in connection with any goods or services, or any container for goods, uses in commerce any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which:

(A) is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person, or

(B) in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person’s goods, services, or commercial activities, shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act. (15 U.S.C. §1125)The Federal Trademark Dilution Act (FTDA) (15 U.S.C. § 1125(c) and the Trademark Dilution Revision Act (TDRA) (15 U.S.C. § 1125(c) are the primary federal statutes governing dilution.


Trademark dilution arises when a famous mark is used in a way that damages the mark through blurring or tarnishment. The capacity of a famous mark to serve its purpose, i.e., to identify and distinguish products or services is in some way reduced. A mark is famous “… if it is widely recognized by the general consuming public of the United States as a designation of source of the goods or services of the mark’s owner.” (15 U.S.C. §1125(c)(2)(A)). Dilution by blurring is an “… association arising from the similarity between a mark or trade name and a famous mark that impairs the distinctiveness of the famous mark.” (15 U.S.C. §1125(c)(2)(B)). Dilution by tarnishment is an “… association arising from the similarity between a mark or trade name and a famous mark that harms the reputation of the famous mark.” (15 U.S.C. §1125(c)(2)(C)).

Remedies include injunctive relief and actual damages. The court has discretion to award the owner attorneys’ fees and profits in addition to actual damages where there is proof that the infringing party willfully intended to trade on the owner’s reputation or to cause dilution of the famous mark. (15 U.S.C. §1125(c)(5)).

The Starbucks case examines whether, and under what circumstances, the owner of a “famous, distinctive” mark can recover damages for dilution.


Case Study

Starbucks Corp. v. Wolfe’s Borough Coffee, Inc.

588 F.3d 97 (2d Cir. 2009)

Procedural Posture

Plaintiffs, including a trademark owner, sued defendant competitor, alleging federal trademark infringement, dilution, and unfair competition under the Lanham Act, state trademark dilution under N.Y. Gen. Bus. Law § 360-l, and unfair competition under New York common law. The United States District Court for the Southern District of New York entered judgment in favor of the competitor. Plaintiffs appealed.


The trademark owner sold coffee products in retail locations and supplied coffees to restaurants, supermarkets, and other businesses. The competitor was a relatively small company that began selling a coffee with a name similar to the trademark owner’s mark. The appellate court determined that remand was warranted as to plaintiffs’ claim of trademark dilution by blurring under 15 U.S.C.S. § 1125(c)(2)(B) because (1) the district court erred to the extent it required “substantial” similarity between the marks, and (2) the determination of an “intent to associate” did not require the additional consideration of whether bad faith corresponded with that intent. However, the claim for dilution by tarnishment failed because the competitor’s line of coffee was marketed as a product of “very high quality,” which was inconsistent with the concept of “tarnishment.” The trademark infringement and unfair competition claims failed under the Polaroid test because, inter alia, (1) the “bridging the gap” factor was irrelevant and thus did not favor plaintiffs where the two products were in direct competition with each other, and (2) there was no likelihood that consumers would confuse the marks.


The appellate court vacated, in part, the district court’s decision and remanded for further proceedings on the issue of whether plaintiffs demonstrated a likelihood of dilution by “blurring” under federal trademark law. The appellate court affirmed the district court’s judgment in all other respects.


There are defenses to trademark infringement available. The “fair use” defense finds its basis in the freedom of speech guarantees of the First Amendment. Since trademark protection is generally limited, “… the “fair use” defense applies only to descriptive terms and requires that the term be “used fairly and in good faith only to describe to users the goods or services of such party, or their geographic origin.”” (See Zatarains, Inc. v. Oak Grove Smokehouse, Inc., et al, 698 F.2D 786 (1983), discussed earlier).

“Nominative fair use” is a defense to a claim of infringement. The nominative use test essentially states that one party may use or refer to the trademark of another if:

  1. The product or service cannot be readily identified without using the trademark (e.g. trademark is descriptive of a person, place, or product attribute).
  2. The user only uses as much of the mark as is necessary for the identification (e.g. the words but not the font or symbol).
  3. The user does nothing to suggest sponsorship or endorsement by the trademark holder. (New Kids on the Block v. News America Publishing, Inc., 971 F.2d 302 (9th Cir. 1992))

When describing a business, it is permissible to identify services or products that may be used by that business. It is not permissible to use the reputation of those products or services in an effort to trade on their reputation for the benefit of the business using the referenced services or products.

Domain Name Issues

The rise of the internet saw an increase in cybersquatters who registered, and frequently, warehoused domain names. They did so, not for the purpose of creating an authentic website, but to essentially hold the legitimate owner of a trademark hostage for a higher price. In response, Congress adopted the Anticybersquatting Consumer Protection Act (ACPA) that targeted those who “… registered, trafficked in, or used a domain name …” that is “… is identical or confusingly similar …” to a trademark or personal name and has “… bad faith intent to profit from the mark.” The ACPA also allows a prevailing plaintiff to “… recover (1) defendant’s profits, (2) any damages sustained by the plaintiff, and (3) the costs of the action.” (15 U.S.C. §1117(d)). The Zuccarini case is an excellent example of the activities the ACPA addresses.


Case Study

Electronics Boutique Holdings Corp. v. John Zuccarini

United States District Court For The Eastern District Of Pennsylvania, 2000 U.S. Dist. LEXIS 15719 (2000)

Procedural Posture

Plaintiff brought an action against defendant, alleging violations of the Anticybersquatting Consumer Protection Act of 1999, 15 U.S.C.S. § 1125(d), violations of § 43(a) of the Lanham Act, 15 U.S.C.S. § 1125(a), dilution, common law service mark infringement, and unfair competition.


Plaintiff filed a complaint against defendant, alleging Internet cybersquatting. Plaintiff alleged that defendant purchased several Internet domain names similar to its trademarked names, in violation of the Anticybersquatting Consumer Protection Act of 1999 (ACPA), 15 U.S.C.S. § 1125(d). After it became apparent that defendant had knowledge of the lawsuit but was avoiding service, the court held a hearing on the merits in defendant’s absence. The court found that plaintiff was entitled to a permanent injunction under the ACPA. Plaintiff’s marks were distinctive and famous, defendant’s domain misspellings were confusingly similar to plaintiff’s marks, and defendant registered the domain misspellings with a bad-faith intent to profit form them. Defendant registered the domain misspellings in order to generate advertising revenue for himself, and did not sell any product. Plaintiff was also entitled to statutory damages of $100,000 per infringing domain name, attorney’s fees, and costs. Defendant’s conduct was particularly egregious; he continued to register domain misspellings after being enjoined from doing so in other cases.


Judgment was entered in favor of plaintiff on its claims under the Anticybersquatting Consumer Protection Act. Defendant was required to transfer the misspelled domain names to plaintiff, and was enjoined from using any domain name substantially similar to plaintiff’s marks. Plaintiff’s remaining claims, brought under other federal statutes and common law, were dismissed without prejudice.

Trade Secrets

A trade secret is any information that a business controls that gives it an advantage over its competition. Protecting trade secrets is relatively straightforward. When a business seeks to protect a trade secret, it must keep it a secret. The owner should create a process that identifies the information as private, limits access, and maintains the appropriate level of security necessary to prevent misappropriation. Unlike most other intellectual property rights, protection of trade secrets does not require completion of a lengthy and/or complicated application process.

There are many examples of famous trade secrets, including the secret recipes for Coca-Cola, Kentucky Fried Chicken, and Krispy Kreme donuts. Trade secrets need not be famous and may include lists of suppliers and clients, manufacturing processes, consumer profiles, sales and distribution methodologies.

§1.4 of the Uniform Trade Secrets Act defines a “trade secret” as information, including a formula, pattern, compilation, program, device, method, technique, or process, that:

(i) derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use, and
(ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

According to the World Intellectual Property Organization (WIPO), a trade secret is “… any confidential business information which provides an enterprise a competitive edge…”

In fact, trade secret law is presumed to encourage societal benefit as described by the U.S. Supreme Court which stated that trade secret law “… promotes the sharing of knowledge, and the efficient operation of industry; it permits the individual inventor to reap the rewards of his labor by contracting with a company large enough to develop and exploit it.” (Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470)

The Supreme Court of Ohio, in Plain Dealer (80 Ohio St.3d, 687 N.E.2d 661), established a six-factor test for determining whether information constitutes a trade secret:

  1. The extent to which the information is known outside the business;
  2. the extent to which it is known to those inside the business, i.e., by the employees;
  3. the precautions taken by the holder of the trade secret to guard the secrecy of the information;
  4. the savings effected and the value to the holder in having the information as against competitors;
  5. the amount of effort or money expended in obtaining and developing the information; and
  6. the amount of time and expense it would take for others to acquire and duplicate the information.”

Review the Nowogroski case carefully. The court differentiates between customer lists that are memorized, and those that are physically available, addressing the question of what constitutes a trade secret.


Case Study

Ed Nowogroski Insurance, Inc. v. Rucker

Supreme Court Of Washington, 137 Wash.2D 427 (1999)

Procedural Posture

Defendant former employees and competitor appealed from a decision of the Washington Court of Appeals, which reversed the judgment of the trial court in an action, brought by plaintiff former employer, alleging misappropriation of memorized customer lists, in violation of the Uniform Trade Secrets Act, Wash. Rev. Code §19.108, and ruled that memorized confidential information was protected by the Act.


Defendant former employees were hired by defendant competitor after leaving their jobs with plaintiff former employer, an insurance company. Plaintiff then sued defendants for misappropriation of plaintiff’s trade secrets by retaining and using its confidential client lists. The trial court found that, while the lists were trade secrets, defendants did not violate the Uniform Trade Secrets Act, Wash. Rev. Code § 19.108, by using information that they had memorized, as opposed to taking written information. The court of appeals disagreed and reversed.

Defendants appealed, not contesting that the lists themselves were trade secrets or that the lists were “appropriated” by memory. Rather, they argued that information in the memory of an employee about the lists was not a trade secret. In affirming, the court rejected defendants’ arguments and ruled that the protections of § 19.108 and the common law applied not only to written information, but to memorized information as well. The “memory rule” of agency law, which allowed use of memorized information, was rejected as inconsistent with promoting commercial ethics and fair dealing.


The judgment in favor of plaintiff was affirmed because the protections of the Act were not limited to written information, as asserted by defendants; there was no legal distinction, under the Act or common law, between written and memorized trade secrets; each was protected from disclosure by defendant former employees to defendant competitor.

Sources of Trade Secret Law

Sources of law related to trade secrets are primarily found in state law through the common law (Restatement of Torts (First) and the Restatement (Third) of Unfair Competition), uniform laws (Uniform Trade Secrets Act (UTSA)). At the federal level, the Economic Espionage Act (EEA) (1996) and the Defend Trade Secrets Act (DTSA) (2016) provide for both civil and criminal actions.

Restatement (First) of Torts (1939)

§757, comment b, states that a trade secret “… may consist of any formula, pattern, device, or compilation of information which is used in one’s business, and which gives him an opportunity to obtain an advantage over competitors who do not know or use it. It may be a formula for chemical compound, treating or preserving materials, a pattern for machine or other device, or a list of customers.”

Restatement (Third) of Unfair Competition

§39 states that “A trade secret is any information that can be used in the operation of a business or other enterprise and that is sufficiently valuable and secret to afford an actual or potential economic advantage over others.”

Uniform Trade Secrets Act (UTSA)

Like most uniform statutes, the UTSA, adopted by most states codifies the common law related to trade secrets as it has developed in various jurisdictions. The UTSA regularizes the standards and remedies available at common law.

The UTSA provides for several civil remedies including injunctive relief, damages, and attorney’s fees.

Economic Espionage Act (EEA) (18 U.S.C. §§1831–1839)

The EEA provides for the protection of trade secrets by criminalizing the misappropriation of trade secrets for the benefit a foreign power. §1839 of the Act defines “trade secret” to include “… all forms and types of financial, business, scientific, technical, economic, or engineering information, including patterns, plans, compilations, program devices, formulas, designs, prototypes, methods, techniques, processes, procedures, programs, or codes, whether tangible or intangible, and whether or how stored, compiled, or memorialized physically, electronically, graphically, photographically, or in writing …”

Defend Trade Secrets Act (DTSA) (18 U.S.C. §§1839 et seq.)

The DTSA provides a basis in federal law for trade secret misappropriation and gives the federal courts jurisdiction over those actions. It does not eliminate remedies available in state courts. Remedies include:

  • injunctive relief “… to prevent any actual or threatened misappropriation …” (18 U.S.C. §1836(b)(3)(A) et seq.)
  • damages for “actual loss” or “unjust enrichment” caused by the misappropriation of the trade secret (18 U.S.C. §1836(b)(3)(B) et seq.)
  • “ … seizure of property necessary to prevent the propagation or dissemination of the trade secret that is the subject of the action.” (18 U.S.C. §1836(b)(2)(A)(i))


The owner of a trade secret must take reasonable measures to protect its secrecy. Owners may use a variety of mechanisms to secure trade secrets. They will frequently include work-for-hire and non-compete clauses in employment agreements and will require their employees to sign non-disclosure agreements (NDAs) in an effort to protect these valuable assets. Of course, these employment related initiatives are subject to the constraints of employment law discussed in Chapter 17.

§1.2 of the UTSA defines “Misappropriation” as:

(i) acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means; or

(ii) disclosure or use of a trade secret of another without express or implied consent by a person who

(A) used improper means to acquire knowledge of the trade secret; or

(B) at the time of disclosure or use, knew or had reason to know that his knowledge of the trade secret was

(I) derived from or through a person who had utilized improper means to acquire it;

(II) acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use; or

(III) derived from or through a person who owed a duty to the person seeking relief to maintain its secrecy or limit its use; or
before a material change of his [or her] position, knew or had reason to know that it was a trade secret and that knowledge of it had been acquired by accident or mistake.

The Rivendell case examines whether a trade secret is a question of fact.


Case Study

Rivendell Forest Products, Ltd. v. Georgia-Pacific Corporation And Timothy L. Cornwell

United States Court Of Appeals For The Tenth Circuit, 28 F.3D 1042 (1994)

Procedural Posture

Plaintiff sought review of the decision of the United States District Court for the District of Colorado, granting defendant’s motion for summary judgment in plaintiff’s action for wrongful appropriation of a trade secret.


Rivendell brought suit against G.P. for wrongful appropriation of a trade secret. The suit was also against Cornwell for a violation of confidence. The suit centers on a computer software system which Rivendell had developed over the years, and which system it asserted to be a trade secret under Colorado law. It asserts that this system enabled Rivendell to provide its customers with special service, and to manage its distribution centers as no competitor could do. This was a computer system which enabled Rivendell employees to give immediate answers to customers’ questions and phone inquiries as to prices, quantities, places, and delivery time as to various lumber sizes and types without any computations which required a delay and a call back to the customer. It asserted that at the pertinent time no other wholesaler could provide such service and management, and this gave Rivendell a large advantage over its competitors including G.P. It is this software system that Rivendell asserts was its trade secret.


Plaintiff and defendant were competitors in the lumber business. Over nine years, plaintiff developed a unique computer system that enabled its employees to immediately answer customers’ questions about inventory. Defendant hired away one of plaintiff’s employees, who was not a computer expert but had helped develop plaintiff’s system. Within four months, defendant had a virtually identical computerized inventory system.

Plaintiff sued for wrongful appropriation of a trade secret under Colorado’s Trade Secret Act, Colo. Rev. Stat. § 7-74-102(4) (1986). The district court granted defendant summary judgment. On appeal, the court held that, unlike with patents, novelty and invention were not elements of a trade secret claim. A trade secret could consist of a combination of elements that were, separately, in the public domain. Plaintiff’s computer system was arguably a trade secret since the evidence showed the system gave plaintiff a competitive advantage. The court reversed and remanded for trial.


The court reversed defendant’s grant of summary judgment and remanded for trial because the issue of whether plaintiff’s computer system for managing inventory was a trade secret was genuine and material.

The court in Rivendell found that there were essential disputed issues of fact that were unresolved by the trial court. These were “… the value of the information to the plaintiff company …” and “… the reasonable precautions taken by the holder of the trade secret to guard the secrecy of the information.” The failure to resolve those issues resulted in the court’s reversal of the lower court’s decision.

Ethical Considerations

The Special (Secret) Rocky Road Recipe

Mary is CEO of Ice Cream Heaven (ICH), a manufacturer of specialty ice cream products. ICH is known internationally for its extraordinary Magnificent Rocky Road ice cream which is a registered ICH trademark. ICH has worked for years to refine the recipe and considers the recipe a trade secret. Mary and ICH’s chief flavor developer are the only individuals who know, and have access, to the recipe.

Larry, an assistant in the flavor development department, recently gained access to the Rocky Road recipe. Larry has decided to share it by posting it to his social media accounts. Are Larry’s actions ethical?

Analytics And Ethics: Perfect Together?

Boron Systems Corp. develops data analytics tools for corporate clients. Boron has just hired a new software engineer, Jeanine Patrick. Jeanine is considered to be one of the best coders of her generation and was heavily recruited by several companies. She was a key employee on several highly confidential projects while at her previous employer, Secret Systems, Inc. Those projects were focused on the development of analytics tools that represent significant advances in the field.

While Jeanine is absolutely thrilled to be working on bleeding edge analytics tools she is unaware that one of the primary reasons that Boron hired her was her work on Secret Systems’ confidential projects. While working diligently on Boron’s application, Jeanine realizes that the knowledge she gained while at Secret Systems would be enormously beneficial to Boron. Jeanine is really uncertain about using the knowledge she acquired at Secret Systems to benefit Boron. Of course, she is not aware that Boron was hoping that she would do exactly that when they hired her.

What are the ethical challenges facing both Jeanine and Boron?




  1. Can catch phrases can be trademarked?
  2. Describe the differences between trademarks and trade dress.
  3. What is the Lanham Act?
  4. What are the four classes of distinctiveness required for protection?
  5. What is the “likelihood of confusion” standard for infringement of an unregistered trademark?
  6. What is the “fair use” defense” to trademark infringement?

Trade Secrets

  1. What is a trade secret?
  2. How can a company protect a trade secret?
  3. What are the primary sources of trade secret law?

Chapter Twenty | Intellectual Property: Patents

Introduction To Intellectual Property

The Constitution of the United States provides the authority of the U.S. Congress to regulate that area of law known as intellectual property.

 “To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries …” (Article I, Section 8)

Intellectual property flows from inventions of tangible things and creative work, including written and artistic expression or symbols or names (marks) that identify goods or services. According to the World Intellectual Property Organization (WIPO), “…intellectual property refers to creations of the mind: inventions; literary and artistic works; and symbols, names and images used in commerce [and]  … is divided into two categories:

  • Industrial Property includes patents for inventions, trademarks, industrial designs and geographical indications.
  • Copyright covers literary works (such as novels, poems and plays), films, music, artistic works (e.g., drawings, paintings, photographs and sculptures) and architectural design.”

This type of property, often called “knowledge assets,” represents significant value to its owners. This area of law provides owners with a legal framework to protect tangible and intangible knowledge assets from unauthorized use or other forms of infringement. Owners are required to file with the U.S. Patent and Trademark Office (USPTO) for protection in the U.S. and with the World Intellectual Property Organization (WIPO) for purposes of global protection.

Intellectual property law is intended to encourage individuals, whether they are inventors, writers or artists, to be creators and innovators by providing for a limited period of time during which the monopoly of ownership allows them to profit from their creativity.

We will begin our examination of intellectual property with patent law.

Purpose Of Patents

A patent creates the exclusive right to exclude others from making, using, importing, and selling the patented innovation to an inventor, or patent holder, for a limited period of time. Congress first enacted a Patent Act in 1790 (1 Stat. 109). At present, the U.S. Patent Act (35 U.S.C. §§1 et seq.) is the controlling statute governing patent law. The grant of a patent gives the patent holder monopoly rights for a limited period of time to benefit from the invention. The grant of exclusive rights to an inventor encourages the investment necessary for the development of new and useful discoveries.

Patent Requirements

The Act grants the right to obtain a patent to anyone who “… invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof …” (35 U.S.C. §101). In order for the subject matter to be patentable, it must fit within one of those categories and also be novel, non-obvious and useful.

Therefore, in order for an invention to be patentable it must meet the following essential requirements: (1) patentable subject matter, (2) utility, (3) novelty, (4) non-obviousness, and (5) disclosure.

Patentable Subject Matter

The subject matter of a patentable invention must fall into one of the categories described in §101. Any “… process, machine, manufacture, or composition of matter, or … improvement thereof …” is eligible. (35 U.S.C. §101). However, laws of nature, physical phenomena, and abstract ideas are not considered eligible for patent protection.

The court in Mayo clarifies what is patentability and affirms that laws of nature are not patentable.


Case Study

Mayo Collaborative Services v. Prometheus Laboratories, Inc.

Supreme Court of the United States, 566 U.S. 66 (2012)

Procedural Posture

Respondent licensee of patents relating to the use of drugs to treat autoimmune diseases brought an action against petitioner competitors alleging that the competitors infringed the patents, but the competitors asserted that the subject matter of the patents was unpatentable laws of nature. The U.S. Court of Appeals for the Federal Circuit upheld the patents. Certiorari was granted.


The patents concerned a method of determining the proper dosage of thiopurine drugs which were metabolized differently by different patients with autoimmune diseases to avoid harmful side effects or ineffectiveness. The U.S. Supreme Court unanimously held that the patents were not patent-eligible since the relationships between concentrations of metabolites in the blood and the likelihood that a thiopurine drug dosage would prove ineffective or cause harm were known laws of nature, and the patents did not describe genuine applications of those laws. The steps of administration of the drugs by physicians who already used the drugs, advising the physicians to apply the natural laws in making treatment decisions, and directing the measurement of metabolite levels were well known and simply told the physicians to engage in well-understood, routine, conventional activity previously engaged in by scientists in the field. Further, considering the steps as an ordered combination added nothing to the laws of nature that was not already present when the steps were considered separately, and there was no inventive concept in the claimed application of the natural laws.

Laws of nature, natural phenomena, and abstract ideas are not patentable. A new mineral discovered in the earth or a new plant found in the wild is not patentable subject matter. Likewise, Einstein could not patent his celebrated law that E equals mc squared, nor could Newton have patented the law of gravity. Such discoveries are manifestations of nature, free to all men and reserved exclusively to none.

Phenomena of nature, though just discovered, mental processes, and abstract intellectual concepts are not patentable, as they are the basic tools of scientific and technological work. Monopolization of those tools through the grant of a patent might tend to impede innovation more than it would tend to promote it. However, too broad an interpretation of this exclusionary principle could eviscerate patent law. All inventions at some level embody, use, reflect, rest upon, or apply laws of nature, natural phenomena, or abstract ideas. Thus, a process is not unpatentable simply because it contains a law of nature or a mathematical algorithm. An application of a law of nature or mathematical formula to a known structure or process may well be deserving of patent protection.

If a law of nature is not patentable, then neither is a process reciting a law of nature, unless that process has additional features that provide practical assurance that the process is more than a drafting effort designed to monopolize the law of nature itself. A patent, for example, could not simply recite a law of nature and then add the instruction “apply the law.”


The judgment upholding the patents was reversed.

The Diamond case examined a different question presented by the patentable subject matter requirement, namely, whether a live, human-made organism is patentable.


Case Study

Diamond v. Chakrabarty

Supreme Court Of The United States, 447 U.S. 303 (1980)

Procedural Posture

Petitioner, Commissioner of Patents and Trademarks, appealed the judgment from the United State Court of Customs and Patent Appeals, which allowed respondent microbiologist’s patent claims for a genetically engineered micro-organism that was capable of breaking down crude oil.


Respondent microbiologist filed patent claims for human-made, genetically engineered bacterium that was capable of breaking down multiple components of crude oil. The court affirmed the judgment that allowed respondent’s claims. The court rejected the argument of the patent office board of appeals that 35 U.S.C.S. § 101 was not intended to cover living things such as laboratory created micro-organisms. The court held that respondent’s micro-organism constituted a “manufacture” or a “composition of matter” within the meaning of 35 U.S.C.S. § 101 and thus qualified as patentable subject matter. The court found that respondent had produced a new bacterium with markedly different characteristics from any found in nature and which had the potential for significant utility. The court held that the language of 35 U.S.C.S. § 101 embraced respondent’s invention.


Title 35 U. S. C. § 101 provides for the issuance of a patent to a person who invents or discovers “any” new and useful “manufacture” or “composition of matter.” Respondent filed a patent application relating to his invention of a human-made, genetically engineered bacterium capable of breaking down crude oil, a property which is possessed by no naturally occurring bacteria. A patent examiner’s rejection of the patent application’s claims for the new bacteria was affirmed by the Patent Office Board of Appeals on the ground that living things are not patentable subject matter under § 101. The Court of Customs and Patent Appeals reversed, concluding that the fact that micro-organisms are alive is without legal significance for purposes of the patent law.


A live, human-made micro-organism is patentable subject matter under § 101. Respondent’s micro-organism constitutes a “manufacture” or “composition of matter” within that statute. Pp. 308-318.

(a) In choosing such expansive terms as “manufacture” and “composition of matter,” modified by the comprehensive “any,” Congress contemplated that the patent laws should be given wide scope, and the relevant legislative history also supports a broad construction. While laws of nature, physical phenomena, and abstract ideas are not patentable, respondent’s claim is not to a hitherto unknown natural phenomenon, but to a nonnaturally occurring manufacture or composition of matter — a product of human ingenuity “having a distinctive name, character [and] use.” ***

(b) The passage of the 1930 Plant Patent Act, which afforded patent protection to certain asexually reproduced plants, and the 1970 Plant Variety Protection Act, which authorized protection for certain sexually reproduced plants but excluded bacteria from its protection, does not evidence congressional understanding that the terms “manufacture” or “composition of matter” in § 101 do not include living things.***

(c) Nor does the fact that genetic technology was unforeseen when Congress enacted § 101 require the conclusion that micro-organisms cannot qualify as patentable subject matter until Congress expressly authorizes such protection. The unambiguous language of § 101 fairly embraces respondent’s invention. Arguments against patentability under § 101, based on potential hazards that may be generated by genetic research, should be addressed to the Congress and the Executive, not to the Judiciary.***

The court affirmed the judgment that allowed respondent microbiologist’s patent claims. The language of the patent statute covered respondent’s invention of a living, genetically engineered micro-organism.

The Diamond court concluded that the fact that the micro-organisms in question were alive was not legally significant to its decision since §101 allows for “… any new and useful … manufacture, or composition of matter …“ to be patentable.


Utility requires that the invention be useful but not hypothetical or abstract. The patent applicant must demonstrate that the invention is operational and it has both a beneficial and practical use.

In State Street Bank v. Signature Financial Group, Inc. (149 F.3D 1368 (1998)) the Court of Appeals evaluated whether an algorithm (software) that managed a mutual fund investment structure was patentable. Since “abstract ideas” are not patentable and an algorithm is an abstract idea it is, therefore, not patentable subject matter. The court, in State Street, though, using the “machine or transformation test” concluded that “… to be patentable an algorithm must be applied in a “useful” way.” The court in Bilski v. Kappos (561 U.S. 593 (2010)) decided that the State Street standard was not the exclusive test of patentability but a “useful clue” when determining patentability.


The requirement that the invention is novel means that patent will not be granted to a new invention that is already available to the public. If the invention has been disclosed to the public prior to the filing of an application for a patent the new invention is not considered to be novel. If the “… claimed invention was patented, described in a printed publication, or in public use, on sale, or otherwise available to the public before the effective filing date of the claimed invention …” it is not patentable. (35 U.S.C. §102). Prior public disclosure is determined by a search for what is called I” Prior art consists of all of the information available to the public prior to the date of filing that is pertinent to the invention.


The Patent Act of 1952 added the requirement of non-obviousness to the standard for patentability. (35 U.S.C. §103). The Supreme Court established the three conditions that must be met to determine whether the non-obviousness requirement has been met. (Graham v. John Deere Co., 383 U.S. 1 (1966)). The Court, in determining whether the standard of non-obviousness has been met, required that:

  1. the scope and content of the prior art must be determined;
  2. differences between the prior art and invention under consideration must be ascertained; and
  3. the skill that a person of ordinary skill in the art under review.

For example, if the new invention is not sufficiently different from others like it or if the new invention would be obvious to a person of ordinary familiarity with that type of invention then the non-obviousness standard has not been met by the new invention.

Sufficiency of Disclosure

The monopoly granted to the patent holder requires that the inventor fully describe the details of the invention in a way that a person skilled in the art would be able to make or use it. The description must also present the “best mode contemplated by the inventor or joint inventor of carrying out the invention” meaning that the disclosure must describe the inventor’s preferred way of making the invention. (35 U.S.C. §112).

Types of Patents

All patents must meet the standards of patentability described above, i.e., the invention must be of a new and useful process, machine, manufacture, or composition of matter, or a new and useful improvement thereof. There are, however, different types of patents to consider.

Utility Patents

Utility patents protect the functionality of the invention and are the most common. A utility patent protects the functional aspects of the invention, but a design patent protects the visual look. The term of protection for a utility patent is twenty years from the earliest filing date of the application.

Design Patents

Design patents protect “… any new, original and ornamental design for an article of manufacture …” (35 U.S.C. §171). These patents focus on the non-functional, visual aspects of the object. The drawings included in the application are very important since they clearly establish the visual characteristics of the subject of the application. The term of protection for design patents is fifteen years from the date of the grant of the patent.

Plant Patents

The Plant Patent Act of 1930 (35 U.S.C. Ch. 15) amended the Patent Act to make new varieties of plants eligible for patent protection. A patent is available to anyone who “… invents or discovers and asexually reproduces any distinct and new variety of plant …”. (35 U.S.C. §161). A grant of a plant patent will allow the owner to prevent others “… from asexually reproducing the plant, and from using, offering for sale, or selling the plant so reproduced.” (35 U.S.C. §163). The term of protection for a plant patent is twenty years from the earliest filing date of the application.

Business Methods Patents

Business methods are activities related to running a business. Patents for business methods have been available since Congress enacted the Patent Act of 1790. The issue to be addressed is whether the business method represents a “… new and useful process, … or any new and useful improvement thereof …” (35 U.S.C. §101). The term of protection for business method patents is twenty years from the earliest filing date of the application. This type of patent has become increasingly popular since the 1980s due to the rise of internet companies that use software to develop new “methods” of doing business. As a result, business method and software patents intersect. It is important to remember that while the inclusion of software is not a prerequisite for a business method patent, it frequently incorporates software. Tax strategies would be an example of such a patent.

While the USPTO, for many years, did not recognize the patentability of business methods the Patent Act does not prohibit them. The State Street decision (see above) in 1999 established the rule that patent laws were intended to protect any method, whether or not it required the aid of a computer, so long as it produced a “… useful, concrete and tangible result.” Bilski v. Kappos (561 U.S. 593 (2010)) overruled the “useful” result finding but did not invalidate business method patents. The “useful” result test remains the most appropriate method for determining the viability of a business method patent.

These patents are frequently used by owners to protect innovative business methods that are enabled as a result of software and the internet. They are particularly important in e-commerce applications. Amazon’s patent of its “1-click” shopping system is an example of a business method patent.

Software Patent

A software patent is commonly defined as a patent on any performance of a computer realized by means of a computer program. As with business method patents, patent protection of software is not specifically included in the Patent Act. In fact, the eligibility for patent protection for software remains unsettled. The issue has been addressed several times by the courts but a definitive answer has not been provided (see Bilski v. Kappos (561 U.S. 593, 2010), Mayo Collaborative Services v. Prometheus Laboratories, Inc. (566 U.S. 66, 2012) and Alice Corp. v. CLS Bank International (134 S. Ct. 2347, 2014)).

In Alice, the court addressed whether an abstract idea could not be patented just because it was implemented on a computer. The court found that a software implementation of an escrow arrangement was not patent eligible because it is an implementation of an abstract idea.


Case Study

Alice Corporation Ltd. v. CLS Bank International

134 S. Ct. 2347 (U.S. Sup. Ct. 2014)

Procedural Posture

A currency transaction facilitator sued a patent assignee, alleging that the claims disclosing schemes to manage certain forms of financial risk were invalid, unenforceable, or not infringed. A district court held that all of the claims were patent ineligible. The United States Court of Appeals for the Federal Circuit affirmed the judgment. Certiorari was granted.


Judicial precedent has long held that 35 U.S.C.S. § 101 contains an important implicit exception: Laws of nature, natural phenomena, and abstract ideas are not patentable.

Judicial precedent treads carefully in construing the exclusionary principle that the laws of nature, natural phenomena, and abstract ideas are not patentable lest it swallow all of patent law. At some level, all inventions embody, use, reflect, rest upon, or apply laws of nature, natural phenomena, or abstract ideas. Thus, an invention is not rendered ineligible for patent simply because it involves an abstract concept. Applications of such concepts to a new and useful end remain eligible for patent protection.

In applying the 35 U.S.C.S. § 101 exception, the court must distinguish between patents that claim the building blocks of human ingenuity and those that integrate the building blocks into something more, thereby transforming them into a patent-eligible invention. The former would risk disproportionately tying up the use of the underlying ideas, and are therefore ineligible for patent protection. The latter pose no comparable risk of pre-emption, and therefore remain eligible for the monopoly granted under federal patent laws.

Judicial precedent sets forth a framework for distinguishing patents that claim laws of nature, natural phenomena, and abstract ideas from those that claim patent-eligible applications of those concepts. First, the court determines whether the claims at issue are directed to one of those patent-ineligible concepts. If so, the court then asks what else is there in the claims before it? To answer that question, the court considers the elements of each claim both individually and as an ordered combination to determine whether the additional elements transform the nature of the claim into a patent-eligible application. Case law describes step two of this analysis as a search for an inventive concept, i.e., an element or combination of elements that is sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the ineligible concept itself.


Asserted computer-implemented inventions–consisting of (1) method for exchanging obligations, (2) computer system configured to carry out method, and (3) computer-readable medium programmed to perform method–held not patent-eligible under 35 U.S.C.S. § 101.


The judgment was affirmed.

Patent Application

A patent application requires four parts. They are the specification and claims, the drawings and the inventor’s oath or declaration (35 U.S.C. §115).

The specification is a summary of the technical aspects of the invention. It “… shall contain a written description of the invention, and of the manner and process of making and using it, in such full, clear, concise, and exact terms as to enable any person skilled in the art to which it pertains, or with which it is most nearly connected, to make and use the same, and shall set forth the best mode contemplated by the inventor or joint inventor of carrying out the invention.” (35 U.S.C. §112). The claims include a description of the novel features of the invention and of the scope of protection that will be created by the patent.

The drawings will show all of the different features of the invention “… where necessary for the understanding of the subject matter sought to be patented” (35 U.S.C. §113). The USPTO may also require a “… a model of convenient size to exhibit advantageously the several parts …” of the invention (35 U.S.C. §114).

Finally, the inventor’s oath or declaration will include a statement that “… the application was made or was authorized to be made by the declarant and but the declarant believes himself or herself to be the original inventor or an original joint inventor …“ of the claimed invention (35 U.S.C. §115).

A patent examiner will review the application thoroughly and examine the prior art. If the review is satisfactory a patent will be issued (35 U.S.C. §131). In the event that the reviewer either rejects, or objects to, the application, the USPTO will notify the applicant and provide reasons for the rejection or objection.

The applicant may request further review of the application (35 U.S.C. §132). If the applicant does not move forward with the application with six months following the rejection or objection the application will be considered to be abandoned (35 U.S.C. §133). The applicant may pursue an appeal to the Board of Patent Appeals and Interferences (BPAI) (35 U.S.C. §134). There are two additional opportunities for appeal if the decision of the BPAI is not acceptable to the applicant. §141 allows the applicant to file an appeal with the United States Court of Appeals for the Federal Circuit. If that option is not taken, the applicant may ”… have remedy by civil action against the Director …” (35 U.S.C. §145).

An inventor can file a provisional patent application (PPA). A PPA is a strategy that will allow the applicant to establish an early filing date for the patent application. The PPA must sufficiently disclose the invention and a full application must be filed within one year. Patent protection continues for a full 20-year patent term from the filing date of the regular application if approved.

Types of Infringement

Direct infringement arises when anyone “… without authority makes, uses, offers to sell, or sells any patented invention within the United States or imports into the United States any patented invention during the term of the patent therefor …” (35 U.S.C. §271).

Anyone who induces another party to infringe on a patent will be liable for indirect infringement (35 U.S.C. §271(b)). Indirect infringement requires that the person allegedly inducing infringement must be shown to have known the existence of the patent. Contributory infringement arises where a party knowingly “… offers to sell or sells within … or imports into the United States a component …” of a patented invention that will be used in a manner that will infringe on the patent (35 U.S.C. §271(c)). In both instances, the existence of direct infringement is required.

Defenses to Infringement

Invalidity and non-infringement are the two most common defenses to patent infringement (35 U.S.C. §282(b)). Invalidity challenges the validity of the patent itself. Since the statute establishes a presumption that the patent is valid the burden of establishing the “… invalidity of a patent …” is on the party asserting such invalidity (35 U.S.C. §282(a)). Raising invalidity as a defense requires a defendant to show that the patented invention did not meet the novelty or non-obviousness standards.

Non-infringement requires the defendant to describe or demonstrate the differences between its invention and the plaintiff’s patent. Essentially, this defense shows that the challenged invention is different from the patent that is the subject of the infringement claim.

If a plaintiff (patent holder) engages in illegal or unethical behavior in order to benefit its patents the patent holder has engaged in patent misuse and will be barred from instituting a patent infringement claim.

First Sale Doctrine

The first sale doctrine allows purchasers of a patented product to resell it without fear of an infringement claim. The Impression Products case supports the “right to tinker” by purchasers of products.


Case Study

Impression Products, Inc. v. Lexmark International, Inc.

Supreme Court Of The United States, 137 S. Ct. 1523 (2017)


A United States patent entitles the patent holder to “exclude others from making, using, offering for sale, or selling [its] invention throughout the United States or importing the invention into the United States.” 35 U. S. C. §154(a). Whoever engages in one of these acts “without authority” from the patentee may face liability for patent infringement. §271(a). When a patentee sells one of its products, however, the patentee can no longer control that item through the patent laws—its patent rights are said to “exhaust.”

Respondent Lexmark International, Inc. designs, manufactures, and sells toner cartridges to consumers in the United States and abroad. It owns a number of patents that cover components of those cartridges and the manner in which they are used. When Lexmark sells toner cartridges, it gives consumers two options: One option is to buy a toner cartridge at full price, with no restrictions. The other option is to buy a cartridge at a discount through Lexmark’s “Return Program.” In exchange for the lower price, customers who buy through the Return Program must sign a contract agreeing to use the cartridge only once and to refrain from transferring the cartridge to anyone but Lexmark.

Companies known as remanufacturers acquire empty Lexmark toner cartridges—including Return Program cartridges—from purchasers in the United States, refill them with toner, and then resell them. They do the same with Lexmark cartridges that they acquire from purchasers overseas and import into the United States. Lexmark sued a number of these remanufacturers, including petitioner Impression Products, Inc., for patent infringement with respect to two groups of cartridges. The first group consists of Return Program cartridges that Lexmark had sold within the United States. Lexmark argued that, because it expressly prohibited reuse and resale of these cartridges, Impression Products infringed the Lexmark patents when it refurbished and resold them. The second group consists of all toner cartridges that Lexmark had sold abroad and that Impression Products imported into the country. Lexmark claimed that it never gave anyone authority to import these cartridges, so Impression Products infringed its patent rights by doing just that.

Impression Products moved to dismiss on the grounds that Lexmark’s sales, both in the United States and abroad, exhausted its patent rights in the cartridges, so Impression Products was free to refurbish and resell them, and to import them if acquired overseas. The District Court granted the motion to dismiss as to the domestic Return Program cartridges, but denied the motion as to the cartridges sold abroad. The Federal Circuit then ruled for Lexmark with respect to both groups of cartridges. Beginning with the Return Program cartridges that Lexmark sold domestically, the Federal Circuit held that a patentee may sell an item and retain the right to enforce, through patent infringement lawsuits, clearly communicated, lawful restrictions on post-sale use or resale. Because Impression Products knew about Lexmark’s restrictions and those restrictions did not violate any laws, Lexmark’s sales did not exhaust its patent rights, and it could sue Impression Products for infringement. As for the cartridges that Lexmark sold abroad, the Federal Circuit held that, when a patentee sells a product overseas, it does not exhaust its patent rights over that item. Lexmark was therefore free to sue for infringement when Impression Products imported cartridges that Lexmark had sold abroad. ***


[1] A patent holder could not bring a patent infringement suit against a toner cartridge remanufacturer to enforce the single-use/no-resale provision accompanying its domestic return program cartridges because once sold, the return program cartridges passed outside of the patent monopoly, and whatever rights the patent holder retained were a matter of the contracts with its purchasers, not patent law;

[2] A patentee’s authority to limit licensees did not mean that patentees could use licenses to impose post-sale restrictions on purchasers that were enforceable through the patent laws;

[3] An authorized sale outside the United States, just as one within the United States, exhausted all rights under the Patent Act.


Judgment reversed; case remanded ***


Estoppel in its various forms is a concept that we have discussed earlier in chapters relating to contracts, agency, and business associations. Estoppel may, for a variety of reasons, prevent someone from asserting a claim or defense. Defendants can raise two types of estoppel defenses to an infringement claim. They are file wrapper and equitable estoppel. The file wrapper includes all of the patent documents filed with the USPTO. This type of estoppel prevents an inventor from denying any deficiencies in its invention that were disclosed during the patent application process. Equitable estoppel will arise when the patent holder represented to the defendant that the patent would not be enforced. If the defendant relied on the holder’s misrepresentation then the holder’s claim may be dismissed.

Remedies for Infringement

The Patent Act provides for civil remedies for infringement of a patent. These include injunctive relief, damages and, in exceptional cases, attorneys fees. The statute of limitations for an infringement suit is six years (35 U.S.C. §281 et seq.).

Injunctive Relief

The court may issue an injunction either at a preliminary stage in the dispute or as part of the final resolution of the claim. A preliminary injunction may be issued where the patent holder can demonstrate that there is a significant likelihood that (a) it will suffer permanent harm in its absence, and (b) the patent holder will prevail in its infringement claim.

Damages for Infringement

Damages available to patent holders as a remedy for infringement include compensatory and increased damages. Lost profits and costs are recoverable as compensatory damages where the patent holder can establish the value of the patent. Increased damages are available at the discretion of the court if deliberate or willful infringement has been established. Attorney’s fees may be awarded by the court where willful infringement has been shown.


Ethical Considerations

Brewing Infringement

Jim teaches 4th grade history. He developed and patented a tea brewing device. He sold one of the tea brewers to Walter. Walter sees real potential in the tea brewer. He decides to launch a company that will sell the device on the internet. Walter reverse engineers Jim’s design, copies it and begins to sell his version of the tea brewer on his website. Are Walter’s actions ethical?



  1. What is the constitutional basis for intellectual property law?
  2. What rights are granted when a patent is issue?
  3. What is patentable subject matter?
  4. Does a patent application meet the novelty requirement if it is already published?
  5. Do design patents focus on utility of the invention?
  6. How are business method and software patents similar?
  7. What are the two most common types of patent infringement? Explain their differences.
  8. What is the First Sale Doctrine?