ment. Even registered marks which are otherwise incontestable may infringe "a valid right acquired under the law of any State or territory,"141 and if a registered mark which is otherwise incontestable may infringe such a right, a fortiori a mark which is not incontestable might also infringe. In such a situation, the acquisition and validity of the right, since its existence depends upon state or territorial law, would necessarily be determined in accordance with that law. The issue of infringement however, involves interpretation of the Lanham Act since determination of the "extent" of infringement determines the extent of incontestability.1

142

The Lanham Act affords additional protection for existing common-law rights by providing that where limited marks have been used concurrently, both may be registered so long as each is limited to its previous use.143 Such concurrent registrations may be granted only when continued use of the marks is unlikely to cause confusion, mistake, or deceit of purchasers, and the registrations must contain "conditions and limitations" necessary to maintain such distinctions.144 The evidentiary effect of such concurrent registrations is limited by such "conditions and limitations,"145 and presumably the constructive notice effect146 is similarly limited.

Concurrent-use registrations under the Lanham Act in effect preserve the exclusive features of certain pre-existing trade mark rights; but in addition, the Act provides for continuation of pre-existing rights to use marks. The exclusionary right is somewhat limited, but the defensive right as against registered marks which have not become incontestable is quite broad. Against registered marks which are not incontestable an infringer may rely upon "any legal or equitable defense or defect which might have been asserted if such mark had not been registered.”147 The Act does not specify what constitutes a "legal or equitable defense or defect," but the determination whether particular facts constitute a “defense or defect” within 141 Sec. 15, 60 STAT. 433, 15 U. S. C. §1165 (1946).

143 To leave the issue of infringement of state or territorial marks to state or territorial law would destroy the uniformity which the Lanham Act seeks. For example, there could be trade-mark rights in two states antedating the registered mark. If one of the two states follows a strict "passing off" theory of infringement and the other follows the "dilution" theory (Tiffany & Co. v. Tiffany Productions, Inc., 262 N. Y. 482, 188 N. E. 80 (1932)), a registered mark might "infringe" to a different extent in each state and hence, under $15 of the Lanham Act, be "incontestable" to a different extent in each of the two states.

143 Secs. 2(d), 7(a), 60 Stat. 428, 15 U. S. C. §1052(d), 60 Stat. 430, 15 U. S. C. §1057(a) (1946). See Diggins, The Lanham Trade-Mark Act, 37 T. M. Rep. 305 (1947). The Act does not in terms limit concurrent registrations to territorially limited marks and indicates that marks which differ as to "mode or place of use" or goods may be registered concurrently. Sec. 2(d). However, differences in mode of use or goods would make confusion, mistake, or deceit of purchasers unlikely, and the Patent Office in acting upon applications for registration is apparently construing the concurrent-use provisions of the Lanham Act as differing from prior law only in permitting concurrent registrations of marks used in different territories. Derenberg, The Lanham Act of 1946, Practical Effects and Experiences After One Year's Administration, 38 T. M. Rep. 831, 849 (1948), states: "The basic idea of Sec. 2(d) . . . was to permit registration of marks concurrently used in different parts of this country..." See also Halliday, Geography of Trade-Marks, Concurrent Use and Registrations (Practising Law Institute Lecture, Dec. 4, 1947.)

144 Sec. 2(d).

145 See note 132 supra. See also Sec. 7(b), 60 STAT. 430, 15 U. S. C. §1057(b) (1946).

the meaning of the Act involves construction of a federal statute and is therefore a matter for the independent judgment of the federal courts.148

There may be some question whether recourse to state law would be necessary in the case of some types of "defect." Prior to the effective date of the Lanham Act, acquisition of trade-mark rights "rested upon the laws of the several states."149 If the defect relied upon were a defect in the acquisition, it would seem to be essential to examine the law of the state under which the mark was acquired to determine whether the acquisition was in fact defective.

As pointed out above, valid local rights acquired prior to publication of a registered mark are effective against the "right of the registrant to use" such mark,150 and such local rights also constitute a defense against "the registrant's exclusive right to use"151 such mark even though the registration may have become incontestable. This defensive effect of such marks is, unlike the exclusionary effect described above, 152 a matter of federal rather than state law. The Lanham Act specifies the conditions under which and the extent to which such local marks constitute a defense against an incontestable registration, so that the defense involves interpretation and application of the Act itself.

VI

UNFAIR COMPETITION

153

The establishment of a substantive federal law of unfair competition does not present the same constitutional difficulty as a substantive federal law of trade-marks because, while trade-mark infringement is a species of unfair competition, specialized legal rules and concepts have been developed for the protection of trade-marks.1 Even local trade-marks are property which Congress cannot constitutionally destroy; but while one may have a right to compete with another, no one has or can have a vested right to compete unfairly. From time to time federal laws154 have prohibited various forms and types of unfair competition,155 and the prohibitions of these laws have been effective even in instances where most or all of the acts constituting the prohibited practice have preceded the effective date of the federal law.156 The Lanham Act merely makes unfair competition a matter of federal law and leaves it to the federal courts to determine what competitive acts, conduct, or prac

148

Jerome v. United States, supra note 83.

149 American Trading Co. v. Heacock Co., 285 U. S. 247, 258 (1932).

150 Sec. 15. 60 STAT. 433, 15 U. S. C. §1065 (1946).

151 Sec. 33. 60 STAT. 438, 15 U. S. C. §1115 (1946).

152 Sec. 33(b)(5). 60 STAT. 438, 15 U. S. C. §1115(b)(5) 1946.

158 "The infringement of a trade-mark, for instance, is conceived as an invasion of property. Unfair competition, on the other hand, cannot be placed on the plane of invasion of property right. This tort is strictly one of fraud, and a fraudulent intent or its equivalent is essential to liability." I THOMAS ATKINS STREET, THE FOUNDATIONS OF LEGAL LIABILITY 421 (1906).

154 The principal examples are the Sherman Act, 26 STAT. 209 (1890), as amended, 15 U. S. C. §1 (1946); the Clayton Act, 38 STat. 730 (1914), 15 U. S. C. §12 (1946); and the Federal Trade Commission Act. 38 STAT. 717 (1914), as amended, 15 U. S. C. §41 (1946).

155

156

Handler, Unfair Competition, 21 Iowa L. REV. 175, 214 et seq. (1936).

Cf. United States v. Pullman Co., 64 F. Supp. 108 (E. D. Pa. 1946).

tices are “unfair.” The Act does not in terms prohibit or make actionable acts or practices which were lawful when done, but, in effect, provides that there shall be a uniform federal law of unfair competition. Unfair competition is actionable at common law,157 and a change in the scope of actionable unfair competition by judicial decision, even though retrospective in effect, would not be unconstitutional,158

VII
CONCLUSION

The Lanham Act provides a uniform federal law of trade-marks and unfair competition which is controlling in all cases and situations affecting interstate or foreign commerce. The ever-expanding judicial concept of the commerce power of Congress makes the Act effective in substantially all trade-mark and unfair competition cases without recourse to state law. The Act eliminates most of the effects of the Erie decision in trade-mark and unfair competition cases, and thereby eliminates the uncertainty and confusion which resulted from the application of state law.

So far as trade-marks are concerned, the Lanham Act recognizes, preserves, and protects trade-mark rights existing at the effective date of the Act. To a limited extent, these rights necessitate recourse to the laws of the states under which such rights exist. However, as time passes, trade-mark rights existing at the effective date of the Act will probably either fall into disuse or qualify for registration and be registered under the Lanham Act. The Act is so drafted that, after a relatively few years, it may be expected that the state law of trade-marks and unfair competition will be of little more than historical interest.

157 Handler, supra note 155, at 179 et seq.

158

O Cf. United States v. General Electric Co., 80 F. Supp. 989 (S. D. N. Y. 1948).

INCONTESTABILITY

CASPER W. OOMS AND GEORGE E. FROST

"Incontestability"1 is a term of art new to the law of trade-marks. Although the roots of the underlying concept may be traced in the judicial decisions and foreign trade-mark laws, and analogous doctrines may be found in almost any other field of the law, the quantity of comment on the "incontestability" provisions of the 1946 Trade-Mark Act indicates that they are generally considered a major point of departure from the prior trade-mark statutes. Until definitive judicial decisions and Patent Office practices have been built up around the concept of "incontestability,” its metes and bounds can be indicated only in the broadest sense. Nevertheless, even this broad outline may serve a useful purpose in pointing the directions in which the decisions on "incontestability" may go and in emphasizing the frequently overlooked relationship of the new concept to what has gone before.

Seldom does a new concept enter the law without the accompaniment of extremist views. The "incontestability" provisions of the 1946 Trade-Mark Act are no exception, for they have been applauded,2 criticized, and, by some, considered

⚫LL.B. 1927, University of Chicago. Member of the Illinois bar. United States delegate to London Conference on German Owned Patents, 1946. Formerly Commissioner of Patents. Author, FEDERAL TAXES IN PATENT ACCOUNTINGS (1930); OUTLINE OF FEDERAL APPELLATE PROCEDURE (1938).

+ B.S. 1940, Illinois Institute of Technology; J. D. 1945, George Washington University. Member of the Illinois bar.

1 "Incontestability" is set off by quotation marks because of the technical meaning of the word in the 1946 Trade-Mark Act. As is discussed later, this meaning deviates from the dictionary meaning of the term.

For an extreme (though somewhat misleading) view of the benefits of incontestability, see Modern Industry, Sept. 15, 1946, p. 158. The following is taken from that publication:

"1. What's the most important benefit of the Lanham Act?

"Incontestability. And this is something that trade-mark users never had before. By getting your mark on the Register at the Patent Office for five years you can get exclusive ownership of the mark for use throughout the U. S. In this five-year period, any person who believes he may be damaged by your acquiring exclusive rights to the mark can apply for cancellation. But if no one succeeds in canceling your registration, your rights to the mark are incontestable."

"From the standpoint of analytical evaluation the incontestability clause endows the trade-mark as a juridical institution with a higher conceptual standing than it had before. It can hardly be denied that there is no distinction between an incontestable, exclusive right and a property right so that the new Act implicitly demonstrates Congressional willingness to recognize the trade-mark as a property right. The exceptions to which this clause is subjected do not detract from this highly salutary result. They are nothing more than the usual limitations imposed upon every property right: the existence of its material substratum and the legality of its use." Callmann, The New Trade-Mark Act of July 5, 1946, 46 COL. L. REV. 929, 940-941 (1946).

It is significant that so eminent an authority as Harold G. Fox has recommended adoption of an incontestability provision in the Canadian trade-mark law along the lines of our 1946 Act or of Section 41 of the British Act of 1905 (see REPORT OF PROCEEDINGS, TWENTY-FIRST ANNUAL MEETING OF THE PATENT INSTITUTE OF CANADA 25 (1947)).

3

Perhaps the most critical analysis of the act is Williamson. Trade-Marks Registered under the Lanham Act Are Not "Incontestable," 37 T. M. Rep. 404 (1947). Williamson takes the position that the incontestability concept is so riddled with exceptions as to be not only useless but misleading as

mainly a codification of existing law.* More moderate critics have recognized that there is "real substance" in the concept, although it is weaker than the name implies.5 Probably all of these views are premature, for no real appraisal of the concept can be made until it has stood the test of time. Only after practical situations involving incontestability have arisen and have reached the courts and the Patent Office in sufficient numbers to give a good cross-section of the problems associated with the concept will there be any basis upon which final conclusions as to this phase of the new Trade-Mark Act can be made. Unfortunately, there is no prospect of such decisions until after July 5, 1952, when marks conceivably registered on the day the Act became effective first become eligible for incontestability.

The term "incontestability" as used in the 1946 Trade-Mark Act is a misnomer. As it appeared in early versions of the Act, the designation had a reasonable degree of accuracy, for at that time the right afforded the registrant was just what the name implies-freedom from all defenses of infringers and from possible Patent Office cancellation. But it was a long pull from these first drafts to the final Act. Each step necessarily involved progressively increased restrictions on the scope of the concept as more and more situations arose in which critics of the proposed legislation urged that exceptions should be drafted into the Act. Support for passage of the legislation demanded introduction of such exceptions. The rights were changed but the name was not, with the consequence that we now have the designation of "incontestability" applied to a somewhat limited and restricted concept which cuts off a few specific defenses to trade-mark infringement suits and limits the use of certain grounds for bringing Patent Office cancellation proceedings, without affecting a rather large number of defenses and reasons for cancellation specifically set forth in the statute.

8

The fact is frequently overlooked that judicial and legislative treatment of trade-mark rights has been far behind developments in other fields of the law as well. See note 26 infra. See also Robertson, Legal Ambush under the Lanham Act, Chicago Daily Law Bulletin, beginning April 28, 1947.

'See Digges, The Lanham Act, Printers Ink, Nov. 29, 1946, p. 30.

See DAPHNE ROBERT, THE NEW TRADE-MARK MANUAL 133 (1947); and Derenberg, The Status of Existing Trade-Mark Registrations under the New Trade-Mark Act of 1946, 3 FOOD, DRUG AND COSMETIC LAW QUARTERLY, 270, 276 (1948).

The 1946 Act was approved July 5, 1946, but its effective date was July 5, 1947. The Hawkes Bill (S. 1919, 80th Cong., 1st Sess. (1947)), provides that no incontestable right shall be acquired before July 5, 1954, but the bill died with the Eightieth Congress. A similar change has been approved by the House of Delegates of the American Bar Association (see 33 A.B.A.J. 477 (1947)), the purpose being to avoid a race for incontestability.

'H. R. 9041, 75th Cong., 3d Sess. (1938), §§13 and 14, in substance provided that a properly registered mark not previously abandoned could not be canceled or otherwise attacked for any reason after five years.

A synopsis of the progressive change in the Act through successive versions is given in ROBERT, op. cit. supra note 5, at 133. The most significant of these changes is that in Section 33(b)(7), 60 STAT. 438, 15 U.S.C. §1115(b)(7) (1946), making it a defense to an infringement suit to show that a mark is used to violate the antitrust laws. This last-minute change has generally been regarded as casting a very serious cloud over the value of any "incontestable" mark, although in fact it does not have the reach which most critics have read into it, and if it did it would be merely a statutory expression of a most elementary principle of the rule of equity known as the doctrine of "unclean hands."