Opinion ID: 2051720
Heading Depth: 2
Heading Rank: 1

Heading: Background law concerning trademarks.

Text: To succeed on a common-law trademark infringement claim and to obtain injunctive relief, a plaintiff must prove (1) that it has a valid trademark or a protectable proprietary right in the name it seeks to exclude others from using, and (2) that there has been infringement of that right. See Gulf Coast Bank v. Gulf Coast Bank & Trust Co., 652 So.2d 1306, 1309 (La.1995). Trademarks are signs or symbols used to identify goods (referred to as trademarks) or services (referred to as service marks). Pundzak, Inc. v. Cook, 500 N.W.2d 424, 430 (Iowa 1993) (emphasis added); see also Iowa Auto Market v. Auto Market & Exchange, 197 Iowa 420, 422, 197 N.W. 321, 322 (1924); Restatement (Third) of Unfair Competition § 9 (1995) [hereinafter Restatement] (defining a trademark as a word, name, symbol, device, or other designation,... that is distinctive of a person's goods or services and that is used in a manner that identifies those goods or services and distinguishes them from the goods or services of others). We recognized long ago that trademarks are a form of common-law property right. See Pundzak, 500 N.W.2d at 430. Registration of trademarks is therefore not a prerequisite to protection from infringement. See id.; see also William C. Holmes, 1 Intellectual Property & Antitrust Law § 3.02, at 3-4 (1998) [hereinafter Holmes] (Acquiring ownership of a trademark requires no governmental action whatsoever, but is instead accomplished through the physical act of using the mark in trade to identify a product or service as coming from a particular source.). Trademarks perform the important economic function of identifying the products of one business and distinguishing them from those of its competitors. Holmes, § 3.01, at 3-3. Trademark infringement is considered a form of unfair competition because the similarity in the marks could lead a prospective buyer to believe that defendant's goods are those of the plaintiff. See Rudolf Callmann, 3A The Law of Unfair Competition, Trademarks & Monopolies § 20.02, at 9 (4th ed.1988) [hereinafter Callmann]. Thus, potential customers may be attracted to the reputation and name built up by the first user. Id. § 20.12, at 80. The danger is not that the sophisticated buyer will actually purchase from the defendant/second user believing that he has purchased from plaintiff/first user, but rather that the purchaser will be misled into an initial interest in defendant based on a mistaken belief as to a potential interrelationship between the two businesses. Id. § 20.03, at 12. In such cases, a defendant should not be permitted to benefit or trade upon any misleading suggestion of a relationship with the plaintiff's business or products. Id. § 20.04, at 20. Thus, a plaintiff's market share may be diminished where the purchaser stops buying plaintiff's product because it is dissatisfied with defendant's product and believes there to be some connection between plaintiff and defendant. Id. § 20.04, at 18. The justification for an injunction is that the plaintiff, as owner of the infringed trademark, is entitled to insist that its reputation shall be of its own making alone and that quality of its products or services lies within its exclusive control. Id. § 20.04, at 21. Thus, `[w]hat is infringed is the right of the public to be free of confusion and the synonymous right of a trademark owner to control [its] product's reputation.' Phipps Bros. v. Nelson's Oil & Gas, 508 N.W.2d 885, 886 (S.D.1993) (quoting James Burrough Ltd. v. Sign of the Beefeater, Inc., 540 F.2d 266, 274 (7th Cir.1976)).