The authors thank Sarah Hesse for her invaluable research assistance.
What Are Disclaimers?
Trademark infringement occurs when the use of a trademark in connection with the sale of goods or services is likely to result in consumer confusion as to the source, affiliation, sponsorship or approval of those goods or services. However, if a party uses another’s trademark in a way that does not deceive the public, there can be no trademark infringement because a trademark owner has the right to prohibit only uses of its mark that are likely to result in consumer confusion. Occasionally, a party will use a third party’s trademark and, in an attempt to mitigate any potential likelihood of confusion, may at the same time use a “disclaimer,” namely, an express statement that the parties are unrelated.
U.S. courts have found that prominent disclaimers can help reduce the likelihood of confusion in specific contexts—for example, in connection with repackaged goods (i.e., goods that have been repackaged by a third party prior to sale), in comparative advertising or for purposes of comment or criticism. Generally, however, disclaimers are not found to remedy traditional trademark infringement or to be helpful in cases where the likelihood of confusion is substantial.
Testing the Effectiveness of Disclaimers
The effectiveness of disclaimers in alleviating potential consumer confusion depends primarily on the purpose and context of the use of the third-party mark and the appearance of the disclaimer. The purpose and context of the use of the third-party trademark are important, because courts often find that as the likelihood of confusion increases, the effectiveness of the disclaimer in mitigating potential confusion generally decreases.
For example, the Second Circuit has held that if the plaintiff can successfully prove that consumer confusion would likely exist in the absence of a disclaimer, the burden generally will shift to the defendant to produce evidence that the proposed disclaimer “would significantly reduce the likelihood of confusion.” Home Box Office, Inc. v. Showtime/Movie Channel, Inc., 832 F.2d 1311, 1316 (2d Cir. 1987). However, the burden typically will not shift to the defendant if the defendant has used the third-party mark in a manner or context that is found to result in a relatively insubstantial likelihood of confusion. See Soltex Polymer Corp. v. Fortex Industries, Inc., 832 F.2d 1325, 1329 (2d Cir. 1987).
If the court concludes that confusion can be mitigated by the use of a disclaimer, the court will evaluate the appearance of the disclaimer itself (including its proximity and prominence relative to the third party’s mark) and the disclaimer’s wording.
Purpose and Context of Use of the Third-Party Trademark
There are certain contexts where, many courts believe, confusion is relatively insubstantial, and in those cases a disclaimer has been found to effectively mitigate the possibility of confusion. For example, in the context of comparative advertising (where U.S. trademark law does not prohibit the truthful comparison of competing products), disclaimers typically have been found to help avoid consumer confusion. Courts recognize that use of a third party’s trademark in comparing products often is necessary in order to adequately inform consumers of the object of the comparison.
For example, in Calvin Klein Cosmetics Corp. v. Lenox Laboratories, Inc., 815 F.2d 500 (8th Cir. 1987), the Eighth Circuit reversed the district court’s preliminary injunction against the defendant, which used Calvin Klein’s mark to promote its own fragrance product (indeed, Lenox stated, its product was “our version of OBSESSION”). The defendant used a disclaimer stating that it was “not authorized or endorsed by Calvin Klein.” The court held that use of Calvin Klein’s trademark OBSESSION accompanied by the disclaimer did not constitute trademark infringement because the reference was truthful and, in the context of the advertisement overall, consumers were not likely to believe that the smell-alike originated from the same source as the original. Id. at 504-05.
Similarly, where a distributor purchases trademarked items, repackages them and then sells them under the trademark of the original manufacturer, courts generally conclude that as long as consumers understand that the repackager and the manufacturer are unrelated, there is no likelihood of consumer confusion as to the source of goods, and therefore no infringement. Because the likelihood of consumer confusion in the case of repackaged goods is low, courts believe that the use of disclaimers in such contexts is sufficient to avoid confusion. Relying on Supreme Court precedent set in Prestonettes, Inc. v. Coty, 264 U.S. 359 (1924), courts have found that properly drafted disclaimers can mitigate a likelihood of confusion by informing consumers that the products were repackaged and that the company responsible for the repackaging is not related to the manufacturer of the underlying products. See, e.g., Enesco Corp. v. Price/Costco Inc., 146 F.3d 1083, 1084-85 (9th Cir. 1998) (indicating that in the context of repackaged goods, likelihood of confusion may be avoided if the public is “adequately informed” of the repackaging).
Recently, a plaintiff attempted to challenge the use of disclaimers on repackaged goods, arguing that the disclaimer used did not do enough to avoid confusion. In Farouk Systems v. Target Corp., the plaintiff sued Target Corporation and Pro’s Choice Beauty Care, Inc. when Pro’s Choice repackaged Farouk’s BIOSILK products into boxed sets. The sets were then sold in Target stores, bearing both Farouk’s BIOSILK trademark and a small disclaimer on the back informing consumers that the bottles had been repackaged by Pro’s Choice, which was not affiliated with Farouk. No. 06-20883 (5th Cir. 2008). The district court awarded summary judgment to Target and Pro’s Choice, ruling that no reasonable trier of fact could conclude that the boxes displaying this disclaimer would give rise to a likelihood of consumer confusion whereby consumers would believe that the boxed sets were being offered by Farouk, rather than Pro’s Choice or Target. On appeal, Farouk argued that confusion was likely, and that the disclaimer should be analyzed in more depth to determine its effectiveness. According to Farouk, the Supreme Court’s decision in Coty required that when using disclaimers on repackaged, trademarked goods, the trademarks and disclaimers must appear in the same size font on labels of repackaged products. The Fifth Circuit rejected this broad reading of Coty, and held that the details of the label described by the Court in Coty were not strictly required on all repackaged products.
Appearance of the Disclaimer
As illustrated by the Fifth Circuit’s holding in Farouk Systems, if a court determines that a disclaimer could help avoid confusion in a particular context, the court will then evaluate the effectiveness of the defendant’s disclaimer. Specifically, courts will evaluate the appearance of the disclaimer, including its proximity to the use of the third party’s mark, its wording and its prominence.
For example, a disclaimer that does not appear in close proximity to the potentially confusing mark may not be viewed as effective. See Weight Watchers International, Inc. v. Stouffer Corp., 744 F. Supp. 1259, 1277 (S.D.N.Y. 1990) (disclaimer indicated that Weight Watchers did not approve or endorse the Stouffer products, but disclaimer was included below the coupon’s “clip” line, so consumers who clipped the coupon would clip—and give away—the disclaimer along with the coupon, but would retain the advertising that included the use of the WEIGHT WATCHERS mark). In addition, if the disclaimer would be seen only briefly, or might in the normal course be overlooked, it is not likely to be found effective in avoiding confusion. Freeway Ford Inc. v. Freeway Motors, Inc., 512 F. Supp.2d 1353, 1359 (M.D. Ga. 2007) (disclaimer on a used-car dealership sign was insufficient to avoid confusion because the disclaimer would probably be visible to consumers only after they went onto the dealer’s lot, that is, after they were confused enough to enter the lot).
The wording of the disclaimer is also relevant. For example, the U.S. District Court for the Central District of California found the defendant’s use of the word UNAUTHORIZED on the front cover of its books featuring plaintiff Toho Co.’s Godzilla character ineffective. Toho Co. v. William Morrow & Co., 33 F. Supp.2d 1206 (C.D. Cal. 1998). The court determined that the disclaimer did not “alleviate the potential for consumer confusion” because it consisted only of the word UNAUTHORIZED, which was found to be an insufficient disclaimer. The court suggested that a more effective disclaimer would have read “the publication has not been prepared, approved, or licensed by any entity that created or produced” the original Godzilla films.
The font type and size may also be analyzed to determine a disclaimer’s effectiveness at alleviating confusion. See Cartier, Inc. v. Deziner Wholesale, LLC, No. 98 Civ. 4947(RLC) (S.D.N.Y. Apr. 3, 2000). In Cartier, the defendant made sunglasses sold in boxes labeled with the Cartier name but placed its own name, along with the statement “compare our prices,” above and below the Cartier name on the boxes, along with a disclaimer. The disclaimer, along with the Deziner name and the phrase “compare our prices,” was printed in one-sixteenth-inch type, while the Cartier name appeared in one-inch type. While the district court ultimately found trademark infringement on other grounds, it found it significant that the disclaimer was one-sixteenth the size of the infringed trademark.
Companies that use third-party brands without obtaining permission from the brand owner, and that attempt to avoid confusion by using disclaimers, should take care. If the mark is being used in a manner or context in which consumer confusion is likely to result, the disclaimer is unlikely to be found to remedy trademark infringement. However, prominent and clear disclaimers may be found effective where the likelihood of consumer confusion is relatively low, such as when the company is making comparative claims or selling repackaged products.
Although every effort has been made to verify the accuracy of items carried in the INTA Bulletin, readers are urged to check independently on matters of specific concern or interest.