Can Infringement on Etsy, CafePress, or Ebay be Considered "Fair Use?"

Sure, you know that someone registered the trademark of that logo you mock on those t-shirts you sell on CafePress. Or you've crafted a functional sculpture from food packaging that sells like hotcakes on ebay. Maybe you've printed a few lines from a famous song onto a mug and gave it the tag "Beyonce" in your Etsy store. But you can do it, right? It's fair use, right?

People generally don't know much about the law, but it seems that everyone has heard of the concept of "fair use." To the cynical IP owner, fair use is the excuse infringers of copyright or trademark offer when they are caught infringing. Our recent column, "Why Do Stars Like Katy Perry and Taylor Swift Go After Small Businesses for IP Infringement?" attracted a number of inquiries and responses, because there is a delicate balance between maintaining an exclusive claim to a creative work and allowing new creativity or innovation spring forth from the inspiration of that creative work. In other words, when creative people inspire others to create or innovate, should we quash these new endeavors? Morally, there might be a deep divide between those who believe more in creative monopoly vs. those who believe in sharing and building upon prior creativity. Legally, the answers are often fact-specific, but there are guidelines, statutes, cases, and even Constitutional factors that clarify questions of fair use, infringement, and, sometimes, legality itself.

Trademark infringement and dilution

The real initial question that should be asked when a trademark or trade dress infringement claim is made is, "Is there a likelihood of consumer confusion?" The consequences of an answer in the affirmative can be dire for the infringing party. Trademarks--names, brands, symbols, colors, etc.--are protected federally under the Lanham Trademark Act (15 U.S.C. §§ 1051 et seq.) and also by state statutes.

One of the overlooked elements of the Taylor Swift Etsy story is that "Taylor Swift" is actually a registered trademark! Apparently, Swift’s lawyers had interns explore Etsy, type in the words “Taylor Swift” and send out letters to everyone who used the tag. So when an Etsy seller uses the name Taylor Swift to tag a handmade product that contain phrases such as "Shake It Off"--which isn't registered by Swift--and "This Sick Beat"--which is, it is at least arguable that the tag itself is an example of trademark infringement for commercial purposes, and that there may be a likelihood that an Etsy customer would believe that Taylor Swift herself gave the product its blessing. Therefore, it is possible that the mere act of tagging an item to make it more associated with a registered or qualified brand is an act that justifies litigation. Legally, that is. Morally and pragmatically? That depends on your personal point of view.

A relatively recent fashion trademark and trade dress case to demonstrate the debilitating (to the defendant) result of a successful trademark and trade dress infringement (and dilution) claim was the Gucci Am., Inc. v. Guess?, Inc. case of 2012, when the US District Court for the Southern District of New York found that Guess? and its licensees attempted to "Gucci-fy" its products. Guess? was forced to account for millions of dollars and cease production of the offending products. Gucci also tried to also claim counterfeiting by Guess?, but could not demonstrate that the Guess products were "stitch-for-stitch" copies of Gucci products. From the District Court ruling:

"Gucci claims that Defendants have infringed or counterfeited four of its trademarks, and one trade dress on over one thousand stock keeping units (“SKU’s”) in an attempt to “Gucci-fy” their product line: 1) the Green-Red-Green Stripe mark (“GRG Stripe”); 2) the Repeating GG Pattern, 3) the Diamond Motif Trade Dress, which is the Repeating GG Pattern with a pair of inverted Gs in each corner rendered in a brown/beige color combination, 4) the Stylized G Design mark (“Stylized G”), and 5) the Script Gucci Design mark (“Script Gucci”). Gucci also seeks cancellation of Guess’s “4G Square Repeating Logo” trademark on the basis of abandonment."

Fair use

The term "fair use" is thrown around so often, but what is fair use? In fact, the definitions of fair use in copyright and trademark are different. But remember this: in the United States, fair use is a defense!That means you can't go out and apply for a license to infringe on intellectual property. Instead, when you infringe, you're kind of hoping that a court of law (if not the intellectual property owner) will see things as you do: that it's okay for you to appropriate a picture, a name, a word, etc.

When people refer to fair use, they usually refer to the defense to copyright claims. Copyright--the exclusive ownership of original creative and intellectual works--is almost always a federal protection. Copyright fair use was written into law in the Copyright Act of 1976 17 U.S.C. §107:

Notwithstanding the provisions of sections 17 U.S.C. §106 and 17 U.S.C. §106A, the fair use of a copyrighted work, including such use by reproduction in copies or phonorecords or by any other means specified by that section, for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright. In determining whether the use made of a work in any particular case is a fair use the factors to be considered shall include:

  1. the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;
  2. the nature of the copyrighted work;
  3. the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and
  4. the effect of the use upon the potential market for or value of the copyrighted work.

However, the interpretation of this section of the Copyright Act by different courts is extraordinarily complex, and sometimes contradictory.

There are also also the concepts of trademark fair use and nominative use, which are fuzzier and less established. Some might argue it is an artificial standard created by certain segments of the judiciary. Nonetheless, different courts have come up with standards for fair use infringement of trademark. A recent federal case in New York involving Oprah delineated guidelines for trademark fair use, finding that the trademark was used:

  • In a way other than as a mark.

  • In a descriptive sense.

  • In good faith.

"Nominative fair use," a phrase coined in a Ninth Circuit case that involved the band New Kids on the Block suing a company that was conducting a "New Kids on the Block survey," may be a valid defense to a claim for trademark infringement when:

"First, the product or service in question must be one not readily identifiable without use of the trademark; second, only so much of the mark or marks may be used as is reasonably necessary to identify the product or service; and third, the user must do nothing that would, in conjunction with the mark, suggest sponsorship or endorsement by the trademark holder."

One takeaway you should glean from these cases, though, is that if you think you might be infringing on someone else's trademark or copyright, you ought to speak with an attorney before going forth with the potential infringement. Don't just shrug your shoulders and plow ahead, claiming "fair use."

First Amendment

When artists speak of having the right to use trademarks in their art, they often fall back on the fair use defense, when, in actuality, their best defense may be the good old-fashioned Constitution. The First Amendment, of course, protects creative expression, and, if the incorporation of the trademark is artistically necessary to the full creative expression of that work of art, then a First Amendment defense may be successful. And it doesn't have to be parody to be an acceptable artistic expression.

However, a court might find that, while use of a trademark on a painting is acceptable, its use on mugs might not be. A case worth noting is the case of University of Alabama Board of Trustees v. New Life Art, Inc., when the the US Court of Appeals for the Eleventh Circuit accepted as valid an artist's expression of the Crimson Tide's uniforms in paintings and calendars. However, the Eleventh Circuit sent the dispute over mugs and other commercial goods back to the lower court. The Court of Appeals ruled:

Therefore, we have no hesitation in joining our sister circuits by holding that we should construe the Lanham Act narrowly when deciding whether an artistically expressive work infringes a trademark. This requires that we carefully “weigh the public interest in free expression against the public interest in avoiding consumer confusion.” (emphasis added) Cliffs Notes, 886 F.2d at 494. An artistically expressive use of a trademark will not violate the Lanham Act “unless the use of the mark has no artistic relevance to the underlying work whatsoever, or, if it has some artistic relevance, unless it explicitly misleads as to the source or the content of the work.” ESS Entm’t, 547 F.3d at 1099 (quotations and alterations omitted); see also Rogers, 875 F.2d at 999.

Counterfeiting and Criminal Infringement

Believe it or not, you can end up with jail time for certain types of trademark and copyright infringement. It would take a lot of willfulness (or willful blindness) on your part, but the U.S. and various states have prosecuted ordinary citizens over infringement and counterfeiting. The repercussions of even civil counterfeiting can seem punitive; you might be surprised to learn that, under certain circumstances, your products can be seized "ex parte" (without you being present for the order of seizure) in certain civil counterfeit actions.

The lesson here is, never, under any circumstance, sell products you know to be forgeries, exact replicas, or bearing labels that belong to another person or company. At the very least, speak to an attorney first.