The Lanham Act was enacted by Congress in 1946 to promote "the distinguishability of goods and services for the protection of the public as well as of businesses" and to protect the goodwill of businesses and their investment of "energy, time, and money" from the "misappropriation by pirates and cheats."
The term "trade name" is defined in the Lanham Act to mean "any name used by a person to identify his or her business or vocation" as distinguished from a trademark or service mark which is defined to mean a name or symbol used to identify and distinguish goods or services from those of others and to indicate the source of those goods or services. See 15 U.S.C. § 1127 (definitions of "trade name," "trademark" and "service mark"); 1 J. Thomas McCarthy, Trademarks and Unfair Competition § 4:4 (2d ed. 1984).
Section 43(a) of the Lanham Act provides a cause of action for false designations of origin used "in connection with goods and services." The critical focus of the likelihood of confusion inquiry under section 43(a) is the effect of defendant's usage of the name on prospective purchasers in the marketplace. See Alpha Industries, 616 F.2d at 444-45; Inc. Publishing Corp. v. Manhattan Magazine, Inc., 616 F. Supp. 370, 386 (S.D.N.Y. 1985), aff'd without opinion, 788 F.2d 3 (2d Cir. 1986)("the Lanham Act is concerned with confusion among consumers"); Sears, Roebuck & Co. v. Sears Financial Network, Inc., 576 F. Supp. 857, 861 (D.D.C. 1983).
The marketing channels and sophistication of prospective consumers are relevant in determining whether any confusion in the marketplace is likely to arise from a defendant's adoption of someone else's trade name. See Alpha Industries, 616 F.2d at 444-45 (taking into account sophistication of consumers and channels of trade in assessing likelihood of confusion in trademark/trade name challenge).
The Lanham Act protects a variety of intellectual property, from trade name to trade dress. Section 43(a) of the Lanham Act protects many trade dress characteristics:
Any person who, on or in connection with any goods or services, or any container for goods, uses in commerce any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which ... is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person ... shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act.
Unclean hands is a defense to a Lanham Act infringement suit." Fuddruckers, Inc. v. Doc's B.R. Others, Inc., 826 F.2d 837, 847 (9th Cir. 1987). Trademark law's unclean hands defense springs from the rationale that "it is essential that the plaintiff should not in his trade mark, or in his advertisements and business, be himself guilty of any false or misleading representation." Worden v. Cal. Fig Syrup Co., 187 U.S. 516, 528, 47 L. Ed. 282, 23 S. Ct. 161 (1903). To make out an unclean hands defense, a trademark defendant "must demonstrate that the plaintiff's conduct is inequitable and that the conduct relates to the subject matter of its claims." Fuddruckers, 826 F.2d at 847.
To show that a trademark plaintiff's conduct is inequitable, defendant must show that plaintiff used the trademark to deceive consumers, see Dollar Sys., Inc. v. Avcar Leasing Sys., Inc., 890 F.2d 165, 173 (9th Cir. 1989) ("Bad intent is the essence of the defense of unclean hands.") (citing Wells Fargo & Co. v. Stagecoach Props., Inc., 685 F.2d 302, 308 (9th Cir. 1982)); Republic Molding Corp. v. B.W. Photo Utils., 319 F.2d 347, 350 (9th Cir. 1963).
Federal courts do not have exclusive jurisdiction over an action brought under the Lanham Act. 28 U.S.C. § 1338(a) (1994); 15 U.S.C. § 1121 (1994).