Monday, April 24, 2017

Sixth Circuit has nominative fair use sans la lettre

Oaklawn Jockey Club, Inc. v. Kentucky Downs, LLC, No. 16-5582 (6th Cir. Apr. 19, 2017)

Query: Does the Sixth Circuit’s refusal to adopt nominative fair use, and its insistence on a separate doctrine of “use as a trademark,” make a difference?  After all, many courts applying “nominative fair use” conduct the same back-of-the-envelope mini-confusion inquiry in determining whether there can be any liability as we see from the court here.

“In 2010, the Kentucky Horse Racing Commission amended its regulations to permit gambling on historical horse races.”  This is a way of letting people gamble without live races.  “Customers receive anonymized information about the historical horses, handicap the race, and place their bets,” or there’s also apparently an “automatic” feature that skips the handicapping, so it’s basically a slot machine.  After bets are placed, the regulations require, “the terminal shall display a video replay of the race, or a portion thereof, and the official results of the race. The identity of the race shall be revealed to the patron after the patron has placed his or her wager.” In defendants’ product, the replay isn’t an actual replay, but “computer-generated, generic, and lasts for only a few seconds; it shows only the order of finish and does not attempt to visually recreate the racetrack that originally hosted the race.”  It does display the track name as part of substantiating the results.
from the brochure
The track owner-plaintiffs have registered marks for their racing tracks.  They alleged that the use of their marks was likely to confuse consumers into believing that they are the source of the video recreation and endorse its accuracy.  Also, the game-maker’s ad brochure includes a screenshot of a video replay that uses the track names of Mountaineer Casino Racetrack & Resort, Rockingham Park, and Turf Paradise, though the owners of these tracks weren’t parties to this suit. The brochure states that “[t]he Encore RBG System and its individual games have successfully undergone the rigorous testing of Gaming Laboratories International (GLI), the gold standard in technical review and authorization of wagering software and hardware.”

“Trademark use” is required before the multifactor confusion test is applied.  “When the mark is used in a way that does not deceive the public we see no such sanctity in the word as to prevent its being used to tell the truth.” Prestonettes, Inc. v. Coty, 264 U.S. 359, 368 (1924). “If defendants are only using [the] trademark in a ‘non-trademark’ way—that is, in a way that does not identify the source of a product—then trademark infringement and false designation of origin laws do not apply.” Interactive Prods. Corp. v. a2z Mobile Office Sols., Inc., 326 F.3d 687, 695 (6th Cir. 2003).

Well, how do you know?  The inquiry focuses on “whether a consumer is likely to notice [the plaintiff’s trademark] . . . and then think that the [defendant’s product] may be produced by the same company[.]”  Why is this not a poor woman’s confusion test?  This is left as an exercise for the reader. In fact, the court described its earlier Hensley case in these terms: “Because there was no likelihood of consumer confusion regarding whether the plaintiff trademark owner was the source of the defendant’s products, we held that the defendant’s use of the trademark was a permissible non-trademark use.”

The track owners argued that the display of their marks was a trademark use because it confuses consumers into believing that the track owners provided or verified the video replays.  The court of appeals disagreed, pointing out that there were no live feeds of races or actual video replays.  (If there had been, would that have been likely to confuse?)  “These depictions are sufficiently different from the Track Owners’ product—live horse racing at their venues—that the minimal use of the trademarks, preceded by the word ‘Location,’ would not confuse consumers into believing the videos were provided by Plaintiffs.”  It could be true that there is such a thing as “an Oaklawn® horse race,” and thus “deciding where to watch a live horse race or which live-broadcast race to watch [note: not which source to watch it via] may be similar to deciding which brand of computer to purchase.”  But here, “the fact that a race occurred at Oaklawn or Churchill Downs is relevant only as a factual matter—it is used so consumers can substantiate the race’s result, not to promote the quality of Exacta’s product.”

It was fair to say that the marks were used “to substantiate or legitimize the video,” but “only in the sense that they provide consumers with the requisite details to verify the video game’s accuracy.”  If the game displayed inaccurate results, it was unlikely that a consumer would blame or complain to the tracks; the target of complaint would be defendants, the parties actively representing the accuracy of the results.  “The term ‘Location’ preceding the trademarks sufficiently explains to consumers that the trademarks are being used in a wholly descriptive manner and does not cause a likelihood of confusion as to the source of the video,” especially since the replay didn’t depict the facilities.

As for Exacta’s advertising materials, the only display of specific track names appeared in a screenshot of a video replay, and the brochure touts defendants’ own expertise and goodwill.  “Because this was a non-trademark use of Plaintiffs’ trademarks, we need not reach the question whether the fair-use defense applies.”  Sure, fine, whatever.

The same analysis applied to Kentucky common law trademark infringement and unfair competition claims.

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