FINAL EXAMINATION IN TRADEMARK, UNFAIR COMPETITION, AND CONSUMER PROTECTION Fall Semester, 2005 Professor Maggs Write your Exam ID Number, but not your name, on the front page of your answers. If you use several exam booklets, number them in a pattern like: "#1 of 3; #2 of 3; #3 of 3." This is an open-book, open-notes, open-computer, closed-network examination. You may bring and use any printed, typed, photocopied, or handwritten material, whether prepared by yourself or others. You may bring a computer and use information (whether prepared by yourself or others) stored on its hard disk or other storage media, but may not connect to the law school nor other network, to the Internet, to Westlaw, to Lexis, to other databanks, to e-mail, to chat, etc. This is a three-hour examination (except for students for whom the appropriate authorities have authorized extra time). There are five questions. You should allot thirty-six minutes to each question. Question 1 (thirty-six minutes) The Yellow Cab Company of Sacramento has operated in the Sacramento area, including the suburb of Elk Grove, since 1922. By 2004, it was operating approximately 90 cabs, had approximately 700 business accounts, and was the only authorized taxicab provider to the Red Lion Hotel, Doubletree Hotel, Radisson Hotel, Holiday Inn Capital Plaza, Marriott Hotel Rancho Cordova, and the Amtrak Depot in the Sacramento area. In the fall of 2004, a cloud appeared over the Sacramento yellow cab empire when Michael Steiner started a one-cab taxi operation in Elk Grove, a suburb of Sacramento, and operated it under the name of "Yellow Cab of Elk Grove." You are an associate in the law firm that representing Yellow Cab of Sacramento. A senior partner familiar with the facts has asked you to write a note on the possible legal theories on which the client might sue Yellow Cab of Elk Grove and the possibility of success. Question 2 (thirty-six minutes) NYMEX owns various service mark registrations for the service marks NYMEX and NEW YORK MERCANTILE EXCHANGE. ICE uses the marks NYMEX and NEW YORK MERCANTILE EXCHANGE in its product specifications to describe the source of the final settlement price for its over-the-counter derivative contracts for Henry Hub natural gas and West Texas Intermediate Light Sweet Crude Oil. For example, the title of ICE's cleared over-the-counter contract for natural gas is "Natural Gas Swaps, Fixed for NYMEX LD1 [Last Day of Settlement for the Next Month]." NYMEX has threatened suit against ICE. You are an associate in the law firm that represents ICE. A senior partner has asked you to write a note on the legal issues possibly involved and steps that should be taken in preparation for trial. Question 3 (thirty-six minutes) Starbucks Coffee Company has threatened litigation against Lex Well. Well owns a combined minibrewery, bar (featuring country and western music), and beer store in Chambana, where he makes and sells various kinds bock beer. Lex Well is in full compliance with all Federal, state, and local alcoholic beverage and health code requirements. Merriam-Webster's Collegiate Dictionary gives the following definition for "bock." bock Function: noun Etymology: German, short for Bockbier, by shortening & alteration from Einbecker Bier, literally, beer from Einbeck, from Einbeck, Germany : a heavy dark rich beer usually sold in the early spring The sign outside his establishment says "STARBOCK'S". The labels on the handles of the beer taps say "Star Bock". The bottled beer has a large star on the label with the word "STAR" to the left of the star, the word "BOCK" to the right of the star, and the word "BEER" just below the star. Lex Well buys Starbucks coffee in a local grocery store. His menu prominently states, "FREE STARBUCKS COFFEE FOR DESIGNATED DRIVERS." Well does a poor job of making the coffee, using wrong proportions of grounds and water, so the coffee doesn't taste very good. Starbucks Coffee Company has indicated that it would be happy to settle the dispute, waiving damages and reimbursing Lex Well for all expenses involved if he would: (1) stop using "bock," "buck," or anything similar or would stop using "Star" or anything similar and (2) would stop mentioning Starbucks Coffee on his menu. You are an associate in the law firm that representing Lex Well. A senior partner has asked you to write a note on the legal issues possibly involved in this case, and an evaluation of whether or not your client should accept the settlement offer. Question 4 (thirty-six minutes) Xelor wristwatches are handmade in Switzerland. They are among the most expensive of wristwatches, selling in the range of $50,000 to $100,000 each. Ximet is an American maker of electronic watches that sell in the range of $50 to $100. Xelor sells about 50 watches a year in the United States; Ximet sells about 1,000,000. Both Xelor and Ximet have registered, incontestible United States trademarks. Testing by independent research laboratories has shown that the cheaper Ximet watches are generally accurate to within one second a year, while the Xelor watches may slip from the correct time at the rate of 30 seconds a year. Ximet is considering running a series of humorous TV advertisements that show wearers of Ximet arriving at important events on time, but Xelor users arriving embarrassingly late or early. One advertisement would show two weddings. In the first the bride and groom, both wearing Ximet watches arrive exactly on time and happily take their marriage vows. In another both bride and groom are wearing Xelor watches. The groom arrives early, waits impatiently for the bride, who is obviously late, and finally leaves in disgust. In another advertisement an actress strongly resembling the Secretary of State arrives (wearing a Xelor) for an appointment with the President of the United States in mock-up of the White House Oval Office. The actor playing (and strongly resembling) the President (wearing a Ximet) says, "You're late again, you'd better wear a Ximet like I do instead of a Xelor." In each television advertisement the camera zooms in on the watch on each actor's wrist, clearly showing the trademark and logo on the watch. Ximet is also considering adding numerous references to Ximet's superiority over Xelor to Ximet's website. As a result, leading Internet search engines would pull up a reference to Ximet's website as one of the two or three top choices when a user searches for "Xelor." Advise Ximet's General Counsel on possible legal problems Ximet might face if it goes through with its plans. Question 5 (thirty-six minutes) A number of companies have engaged in extensive advertising of "electric ankle belts". Their advertising falsely claims that use of these belts around the ankles will strengthen the ankles and prevent injuries for serious runners. The belts give a very mild, pulsating shock to the ankles, but in fact have no beneficial effects. Elastico is a leading maker of ankle exercise weights (which really do strengthen ankles and prevent injuries) and elastic ankle braces (which really do prevent injuries). Copyco started making and extensively advertising "electric ankle belts," but its advertisements make no claims whatsoever about the effects of these belts. By various operating efficiencies, Copyco has been able to undercut its competitors' prices, and so to sell more ankle belts than all its competitors combined, while still making millions of dollars in profits. Recently, Copyco has been threatened with suit by Elastico. Copyco also has noticed that the Federal Trade Commission has started proceedings against its competitors in the ankle belt business for deceptive trade practices. Copyco seeks your advise on its legal situation. What do you advise it and why? FINAL EXAMINATION IN TRADEMARK, UNFAIR COMPETITION, AND CONSUMER PROTECTION Fall Semester, 2004 Professor Maggs Write your ID Number, but not your name, on the front page of your answers. If you use several exam booklets, number them in a pattern like: "#1 of 3; #2 of 3; #3 of 3." This is an open-book, open-notes, open-computer, closed-network examination. You may bring and use any printed, typed, photocopied, or handwritten material, whether prepared by yourself or others. You may bring a computer and use information (whether prepared by yourself or others) stored on its hard disk or other storage media, but may not connect to the law school network, to the Internet, to Westlaw, to Lexis, to other databanks, to e-mail, to chat, etc. This is a three-hour examination (except for students for whom the appropriate authorities have authorized extra time). There are five questions. You should allot thirty-six minutes to each question. Question 1 (thirty-six minutes) Depositors National Bank of Evansville (DNBE) is a community bank founded in 1910 in Evansville (a northern suburb of Chicago). The bank has referred to itself as "Depositors" in its advertisements, promotional materials, and customer communications. DNBE now has sixteen branches, all within Evansville or with 5 miles of Evansville. It regularly advertising on an Evansville radio station whose signals reach an audience with a radius of 50 miles of Evansville. The Depositors Financial Group, Inc. (DFG) is a subsidiary holding company of the Commercial Bank of Switzerland. DFG has been doing banking business in the United States since 2000, and in 2001 registered the trademark "Depositors Bank." In July 2003, DFG purchased the retail banking operations of Melba Bank and announced that it would, and in December 2003 did, convert all Melba branches in Illinois to "Depositors Bank" branches. DNBE claimed that nine of these former Melba Bank branches were located near DNBE branches, and in addition some of the branches in Evansville were located on the same streets. Upon learning of DFG's announcement of its plan to rename the Melba Bank branches in Evansville as Depositors Bank, DNBE sent a cease and desist letter to DFG requesting that DFG not use "Depositors" as a name with respect to its branches in Evansville or within 30 miles of Evansville (an area that would include Chicago). DFG replied stating, "We consider that we are acting entirely lawfully and so will not comply with your request. Furthermore, we demand that you cease and desist from your radio advertising and from your announced plans to open a branch in downtown Chicago." DNBE has asked your law firm to commence a lawsuit against DFG. A senior partner in the law firm has asked you to write an informal memo on possible legal issues and on the type of evidence that DFG should secure in preparation for trial. Write the memo. Question 2 (thirty-six minutes) Sophisticated audiophiles and leading rock stars prefer vacuum- tube-based amplifiers to transistor-based amplifiers. The major manufacturers of vacuum tubes are all located in Russia. One of these manufacturers, LAMPA, distributed its tubes through Amdist, which, with LAMPA's permission, registered the trademark LAMPA in Amdist's name eight years ago with the U.S. Patent and Trademark offices. Two Amdist years ago fulfilled the formalities for incontestibility. Currently Amdist distributes vacuum tubes made by another Russian factory, PODDELKA, using the LAMPA trademark. The Russian Patent Office has cancelled LAMPA's Russian trademark registration because "lampa" is the generic term for vacuum tube in Russian. LAMPA now distributes its tubes in the United States through Newdist, under the trademark "=/\=". Newdist advertises, "Only tubes with the "=/\=" trademark are made by the original maker of LAMPA tubes, the LAMPA Company of Moscow, Russia." Impdist buys tubes made by both PODDELKA and LAMPA cheaply in the Russian internal market. It distributes both kinds of tubes in the United States under the trademark LAMPA. An article in Audio Consumer Report suggests that the tubes sold in the Russian internal market are subject to poorer quality control than those that Russian manufacturers sell for export and that PODDELKA export tubes are inferior to LAMPA export tubes. Amdist consults your firm about the possibility of suing Newdist and Impdist. A senior partner in your firm asks you to write an informal memo on possible theories under which Amdist could sue and possible outcomes of the case. Question 3 (thirty-six minutes) Xingco decided to go into the business of making railroad crossing warning signs and selling them using the trademark XING. It filed an Intent to Use application in January 2002. In February 2002, a Canadian competitor, Canco, started selling railroad crossing warning signs in the United States using the trademark XING. In May 2002, Xingco started selling railroad crossing warning signs with the name XING. Canco immediately brought a suit in United States District Court for trademark infringement, seeking damages and an injunction. The court denied a preliminary injunction and set the case for trial. In June 2002, Xingco applied for registration of "XING" for railroad crossing warning signs. It received the registration on January 5, 2003, and immediately sent a "cease and desist" letter to Canco. Canco responded by threatening to seek cancellation of XING's mark, but offering a settlement, under which Canco and Xing could each keep the parts of the United States where they were now selling and would divide the rest of the United States between them. Xingco has consulted you about its legal situation. Your research shows that the word "xing"is found in some dictionaries with the definition "abbreviation for crossing"; Xing is the name of a city in China with a population of 100,000; Internet telephone directories show over 200 telephone listings in the United States with the surname "Xing." What do you advise Xingco and why? Question 4 (thirty-six minutes) Shoemaster has long been the leading United States manufacturer of horseshoes. Every blacksmith and every serious horseowner knows the Shoemaster name and its registered, incontestible trademark, a horseshoe with the word "Shoemaster" in stylized script inside it. This year a horse named "LawStudent" won the Kentucky Derby, while wearing Shoemaster shoes. Shoemaster signed a contract with the owner of the horse giving Shoemaster the exclusive right to use pictures of the horse for advertising. Its website shows LawStudent winning the Kentucky derby ridden by the famous jockey Isabella. Shoeco, which has recently started to manufacture sports shoes using the mark Inverse, made the shoes that Isabella wore when she rode "LawStudent" to victory in the Kentucky Derby. It made an agreement with Isabella that she would allow her pictures to be used only in Shoeco advertising. Shoeco has a website, on which in shows the jockey (and LawStudent) crossing the finish line in the Kentucky Derby. The website says "Shoemaster is the shoe for your horse, Inverse is the shoe for you." The Shoeco website also says, "Every Inverse shoe is made painstakingly by hand by an experienced Old World shoemaster." Actually the shoes are made in a third-world country on old, unsafe machinery by child labor paid pennies an hour. Shoeco has also registered the domain name "shoemaster.com". Anyone going to www.shoemaster.com is automatically switched to the Shoeco website. When someone types "shoemaster" into the leading Internet search engine, it lists the www.shoemaster.com website first. Shoeco also pays a leading Internet search engine to display advertisements of its Inverse brand shoes whenever someone searches for "shoemaster," "LawStudent," or "Isabella." Shoemaster consults you as to its legal position. What do you advise it and why? Question 5 (thirty-six minutes) Sally wrote her Ph.D. thesis on Native American recipes, with particular attention to those recorded as being used by the indigenous Illini at the time the French first came to Illinois. Sally's Ph.D. thesis is on file and available to the public at her university's library. She decided to open a restaurant using these recipes modified to reduce fat, salt, and cholesterol. The restaurant, Illifoods, was a great success. From the start she had required her chefs to sign trade secret agreements, in which they agreed not to use any of the recipes that they learned while working for her. She did not, however, require kitchen help or wait staff to sign any agreement. The recipes were kept in a file marked "confidential recipes" and each recipe was marked "confidential." Kitchen help often prepared food using the recipes under the supervision of chefs. The restaurant was a success, and soon opened a branch at the airport serving Champaign-Urbana, providing table service and takeout meals for passengers. Mike, a food expert, often ate at Illifoods. Many times he would take portions of his food out in "doggy bags." He would then analyze the food in his laboratory to learn what he could about the ingredients. In the summer of 2004, the entire staff of Illifoods demanded a pay raise. When Sally refused, they all quit and formed a new restaurant called NAfoods. Mike provided both capital and recipe consulting services for the new restaurant. NAfoods advertises, "the same great food you used to get at Illifoods, but at new lower prices." Sally consults you about the possibility of legal action. What do you advise her and why? FINAL EXAMINATION IN TRADEMARK, UNFAIR COMPETITION, AND CONSUMER PROTECTION Fall Semester, 2003 Professor Maggs Write your ID Number, but not your name, on the front page of your answers. If you use several exam booklets, number them in a pattern like: "#1 of 3; #2 of 3; #3 of 3." This is an open-book, open-notes, open-computer, closed- network examination. You may bring and use any printed, typed, photocopied, or handwritten material, whether prepared by yourself or others. You may bring a computer and use information (whether prepared by yourself or others) stored on its hard disk or other storage media, but may not connect to the law school network, to the Internet, to Westlaw, to Lexis, to other databanks, to e-mail, to chat, etc. This is a three-hour examination (except for students for whom the appropriate authorities have authorized extra time). There are five questions. You should take thirty-six minutes for each question. Question 1 (thirty-six minutes) Overdrive, Inc., is a leading manufacturer of premium golf balls. It markets them under its registered "Overdrive" trademark, which is well-known to all serious golfers. Mulligan buys used golf balls in bulk from a number of sources, including driving ranges (which sell it balls with nicks and dents) and golf courses, which sell it "lost" balls (some good, some nicked or dented) found by course maintenance personnel and also balls found in water hazards. Mulligan separates and processes the balls into three categories: (1) Cleaned, which it restores to like new condition by merely cleaning, (2) Reprocessed - those with nicks and dents, which it restores by filling holes with putty, repainting, and reapplying the original trademark, and (3) Dried - those that have been in water hazards, which look good when cleaned but which have poor playing characteristics. The Reprocessed and Dried are stamped "Reconditioned by Mulligan." Mulligan sells used Overdrive golf balls at its website "www.mulligangolf.com" at prices far below what new Overdrive golf balls cost. The balls are classified on the website as "Cleaned" (the most expensive), "Reprocessed" (the next most expensive), and "Dried" (the cheapest). The website contains numerous mentions of "Overdrive." Typing "Overdrive golf balls" into leading Internet search engines brings up both the official Overdrive website and www.mulligangolf.com. In addition, Mulligan pays various search engines to display Mulligan's advertising when users search for Overdrive golf balls. You are a summer intern in the office of Overdrive's legal counsel. You have been informed of the above facts. Overdrive's technical experts tell you that the Cleaned balls perform just as well as new Overdrive balls, but that the Reprocessed and Dried balls perform less well. Write a memorandum on possible theories that Overdrive might use in a lawsuit, the likelihood of success, and possible remedies. Question 2 (thirty-six minutes) Sportoons offers a new service over the Internet. Its specialists watch college football games on TV or listen to them on the radio. They then type special codes into Sportoons' computer, which recreates animated cartoon versions of the games and distributes them by streaming video over the Internet. The cartoons include recognizable caricatures of the players, their jersey numbers, and team colors. The games thus become available worldwide, including where they are blacked out or are otherwise unavailable. Sportoons sells time for commercials to advertisers and includes the commercials in the streaming video during time-outs, halftimes, and other pauses in the games. Leading college football players, the colleges involved, and the TV networks (that show the games under exclusive contracts with the colleges) join in a lawsuit against Sportoons. You are law clerk for the judge hearing the case. Write a memo for your judge on the issues involved. You can ignore the issue of possible copyright infringement. The judge's other clerk is writing on the question of copyright infringement. Question 3 (thirty-six minutes) Jacques DuPaint is the grandson of the famous French impressionist artist Marcel DuPaint. Jacques has inherited a substantial collection of his grandfathers' paintings. Jacques has been very gradually selling off these paintings to museums so as maintain his apartment on Park Avenue in Manhattan, his yacht, his wine cellar, and other aspects of the good life. Recently Jacques has been distressed to see various private art galleries in New York displaying paintings purportedly by Marcel DuPaint, but which Jacques regards as fakes. Jacques believes that all genuine paintings by his grandfather are either in museums or in Jacques' private collection. Some galleries even offer "certificates of authenticity" purportedly signed by Jacques, who has never signed such a certificate. Jacques has written a series of letters to the editors and articles that have been published in leading art magazines and on art-related websites. Recently a private art gallery in New York has threatened suit against Jacques, sending Jacques a letter warning him that he will be sued under "Federal and state law" if he publishes anything attacking the authenticity of paintings being offered by the gallery as works of Marcel DuPaint. Jacques seeks your advice. What do you advise him and why? Question 4 (thirty-six minutes) Pharmrich held a patent on a drug that slows memory loss among the elderly. It marketed the patented drug in the form of barbell-shaped green pills. While the drug could only be sold by prescription, Pharmrich marketed extensively on television, choosing programs that might be watched by elderly viewers and also programs that might appeal to their younger care givers. These advertisements showed a muscular senior citizen lifting green barbells. Soon after the patent expired Cheappills started selling a much cheaper generic form of the same medicine, using the same color and shape. Cheappills runs television advertisements showing a weightlifting contest. One weightlifter tries unsuccessfully to lift green barbells marked "Pharmrich High Prices." The other weightlifter easily lifts green barbells marked "Cheappills Low Prices." Pharmrich has written a "cease and desist" letter to Cheappills, warning it to stop selling the medicine in barbell-shaped green pills and to stop the TV advertisements. Cheappills seeks the advise of your law firm, indicating that it has no plans to stop, but would like you to plan a strategy for its defense. What do you advise it and why? Question 5 (thirty-six minutes) Brakeomatic sells an "add-on" product for cars that it advertises as giving cars the benefit of an anti-lock braking system that are just as good as the electronic anti-lock braking systems sold by automobile manufacturers in some new cars. A test in the magazine Car Consumer News has come to the attention of an FTC staff member for whom you are working as a summer intern. This test indicates that the Brakeomatic product has absolutely no effect, for better or for worse, on automobile braking performance. Please provide the staff member with a memo indicating if the FTC has a legal basis to take action against Brakeomatic and if it should proceed to take action. FINAL EXAMINATION IN TRADEMARK, UNFAIR COMPETITION, AND CONSUMER PROTECTION Fall Semester, 2002 Professor Maggs Write your ID Number, but not your name, on the front page of your answers. If you use several exam booklets, number them in a pattern like: "#1 of 3; #2 of 3; #3 of 3." This is an open-book, open-notes, open-computer, closed-network examination. You may bring and use any printed, typed, photocopied, or handwritten material, whether prepared by yourself or others. You may bring a computer and use information (whether prepared by yourself or others) stored on its hard disk or other storage media, but may not connect to the law school network, to the Internet, to Westlaw, to Lexis, to other databanks, to e-mail, to chat, etc. Because ordinary word processors provide inadequate backup capabilities, you are be required to write your answers using the "ExamSoft" word processing software supplied by the law school. This is a three-hour examination (except for students for whom the appropriate authorities have authorized extra time). There are five questions. You should take thirty-six minutes for each question. Question 1 (thirty-six minutes) Soft sells cotton pads under the trademark "Soft & Natural" for use in making quilts. For many years these pads have been manufactured by Camden for Soft. After receiving the pads, Soft usually inspected them before shipping them to customers. On rare occasions Soft rejected pads made by Acme as not up to Soft's quality standards. Camden learned from a disgruntled former employee of Soft that Soft was planning to buy a factory and start producing its own cotton pads instead of buying them from Camden. Soon after learning this, Camden placed advertisements in quilting magazines and sent promotional materials to prospective customers stating, "The exact material you've grown to love as Soft & Natural by the Soft Company is now packaged by Camden Pad Corporation as Perfect Cotton." Several customers of Soft received these advertisements and mailings. Camden also contacted several of Soft's customers and informed them that it manufactured the product previosuly sold by Soft as Soft & Natural, that Camden no longer supplied the product to Soft, and that Soft might not be able to supply Soft & Natural. These actions occurred during the time of year when Soft's sales of Soft & Natural would normally begin to significantly increase. Instead, Soft's sales of Soft & Natural decreased sharply. You are an associate in the law firm representing Soft. Write a memo on the legal issues involved. Question 2 (thirty-six minutes) Barlissimo sells Barlissimo barley cereal in supermarkets across the United States. It has a "just in time" manufacturing operation, allowing cereal to reach supermarket shelves within 24 hours of the time it is packaged. Each Saturday night Barlissimo makes new cereal packages listing the statistics and winners of Friday and Saturday college sports games. It gets this information from the National University Athletic Association' website, where the leading universities provide up-to-date sports statistics and ticket sales. (Each year millions of fans check the sports statistics on this website and many buy tickets.) Barlissimo encourages free-lance photographers and fans to send in photos of great sports plays of the week. Each Sunday night it picks one of these photos to feature on the back of its cereal box. The National University Athletic Association and the famous college athlete Mad-dog Maggs (whose picture has been the "picture of the week" on a number of the weekly Barlissomo cereal boxes) have threatened suit against Barlissimo. You are an associate in the law firm representing Barlissimo. Write a memo on the legal issues involved. Question 3 (thirty-six minutes) TWOWHEEL, Inc. sells bicycles under the registered, incontestible trademark "TWOWHEEL" a mark well-known to bicycle enthusiasts. Orbi2wheel is a small manufacturer of exercise machines, including stationery bicycles. Orbit2wheel's website prominently features its "Two- Wheel Rowing Machine" in which two wheels with air vanes provide balanced variable resistance for exercise rowers and also features stationery exercise bicycles. Leading Internet search engines bring up Orbit2wheel's website (www.orbit2wheel.com) when a user enters a search request for "TWOWHEEL bicycles." One popular search engine displays advertisements for bicycles from competing manufacturers when a user enters a search request for "TWOWHEEL bicycles." You are an associate in the law firm representing TWOWHEEL. Write a memo on the legal issues involved. Question 4 (thirty-six minutes) Babysave purchases individual cans of infant formula from retailers with overstock. (Some retailers place large orders to get quantity discounts and then dispose of overstock.) Babysave consolidates the cans of baby formula, by manufacturer, into cardboard containers or shipping trays. These trays are designed to extend upward only a few inches so that the cans remain visible, and these trays resemble the trays used by the manufacturers themselves, including use of the manufacturers' trademarks on the trays. Also, though the cans in a tray may have come from different batches of the same manufacturer, all of the cans that are resold are genuine and unadulterated. Though not all of the cans in any given shipping tray would necessarily share the same "sell by" date, all of the cans are sold before to stores before their "sell by" date. However, some cans are distributed within two weeks of their "sell by" dates. Baby food manufacturers do not distribute baby food unless at least two months are left before the "sell by" date. The baby food manufacturers have brought suit against Babysave. You are an associate in the law firm representing Babysave. Write a memo on the legal issues involved. Question 5 (thirty-six minutes) Sometime in 1993 or 1994, Pollyanna began selling a line of hair care products called Generic Value Products, which Pollyanna conceived as a lower-priced alternative to brand name salon products. Generic Value Products contain ingredients, colors, and fragrances similar to their salon counterparts. The trade dress includes Pollyanna's white bullet-shaped bottle with a flat, black cap. In addition, the Generic Value Products mark appears in white lettering against a black rectangular field near the top of the bottle. In the middle of the bottle, the product compares itself to a brand name salon product. On the back, there is a side-by-side listing of the ingredients in the Generic Value Products item and the name brand salon product. DollBeaut launched the GENERIX line in 2002. The GENERIX shampoo product contains elements similar to the Generic Value Products line. Like the Pollyanna trade dress, GENERIX uses packaging consisting of a white bullet-shaped bottle with black lettering and a flat, black top. As in the Generic Value Products line, the GENERIX trade dress also compares itself to a name brand salon product on the front of the bottle and contains an ingredient comparison chart on the back of the bottle. Pollyanna has threatened suit against DollBeaut. You are an associate in the law firm representing Dollbeaut. Write a memo on the legal issues involved. Fall 2001 Trademark & Unfair Competition Exam Question 1 (thirty-six minutes) Tasunke Witko (better known as "Crazy Horse") was a famous leader of the Rosebud Sioux Tribe. He is famous for his key role in the defeat of General Custer in 1876. In 1877 he was treacherously and fatally stabbed in the back by a soldier while on a peaceful visit to an army fort. In 1951 the "Crazy Horse Saloon" opened in Paris, France. For decades it has been the world's most famous upscale strip-tease club. In 1992, Brewer started making and selling "Crazy Horse Malt Liquor." The back label of the product states: The black hills of Dakota, steeped in the history of the American West, home of Proud Indian Nations. A land where imagination conjures up images of blue clad Pony Soldiers and magnificent Native American Warriors. A land still rutted with wagon tracks of intrepid pioneers. A land where wailful winds whisper of Sitting Bull, Crazy Horse, and Custer. A land of character, of bravery, of tradition. A land that truly speaks of the spirit that is America. The Rosebud Sioux tribe and administrator of Crazy Horse's estate have sent a "cease and desist" letter to Brewer, indicating that they will file suit if Brewer continues to use the name "Crazy Horse." The Crazy Horse Saloon has also sent a "cease and desist letter" to Brewer. Brewer seeks advice from your law firm as to his legal position. A senior partner has asked you for a memorandum indicating the legal issues involved and the likely outcomes. (Another associate has been assigned to research the possible implications of the "Indian Arts and Crafts Act," so you do not need to discuss this act.) Question 2 (thirty-six minutes) The World Wilderness Association Trust ("WWAT") has retained your law firm to sue Debbie Darling ("Darling"), who has registered the domain name wwat.org and created a website called " Why Worry About Trash." WWAT is an environmental organization more than 600,000 members worldwide. WWAT "is dedicated to protecting the earth and its wilderness areas from solid waste pollution" Darling is a former internet executive who has registered many domain names since 1995, including several names similar to the initials of famous organizations. After registering the wwat.org domain name, Darling used it to create a website on behalf of a fictitious organization called the "Why Worry About Trash League." A viewer accessing the website would see the title "Why Worry About Trash" in large, bold type. Under the title, the viewer would see a statement that the website was a "resource for those who believe that the earth is meant to serve man, not man to serve the earth." The website points out the many advantages of waste dumps, such as their use to level land surfaces, create artificial ski slopes, and provided source material for future archeologists. It contains links to various waste dumping organizations, all of which held views generally antithetical to WWAT's views. Another statement on the website asked the viewer whether he/she was "Feeling lost? Offended? Perhaps you should, like, exit immediately." The phrase "exit immediately " contained a hyperlink to WWAT's official website. Darling has been quoted as stating, "[i]f they [WWAT] want one of my domains, they should make me an offer." Non-Profit Groups Upset by Unauthorized Use of Their Names on the Internet, THE CHRONICLE OF PHILANTHROPY, Nov. 14, 2000. Darling does not dispute making this statement. Please write a memorandum outlining possible issues and outcomes. Question 3 (thirty-six minutes) You are a staff attorney with the Federal Trade Commission. You have been asked to review the websites of a number of organizations that are in the business of selling "star registrations." A typical website advertisement for such an organization is the following: The Cosmic Registry (SM) will assign a name to an actual Star in the Universe and maintain the registration of the new name and coordinates of your Star. You will receive a certificate customized with your expressions printed on parchment paper, a Star Chart with the specific Star highlighted, approximate coordinates, along with additional star information. The certificate includes an individually hand-pressed raised gold seal with both the Registration and Certifying Officers hand-affixed signatures in ink . Why choose the Cosmic Registry ? Unique Gift: Our creative staff will work to produce a Customized Certificate as Unique and Special as those giving and receiving. The main text of the certificate is not pre-printed and is specially created and printed for each order received. It is tailored to your needs to capture your thoughts and feelings. Our certificate does not include handwritten "fill-in-the-blank" information and, except for the imprinted heading and certificate seal, is not mass produced! Price, Quality, Service: Other gifts don't pack the Supernova Effect of naming a Star for Someone Special. When you need that special gift.....We'll be here ! Do you love someone, do you miss someone, do you appreciate someone? Do they know that and do they know how much? Isn't it about time you let them know for the first time? Isn't it about time you let them know again? NOTICE: This product is a novelty item. Cosmic Registry is a service mark. The Cosmic Registry has no affiliation with any scientific or government body, star name company, or any other entity in the field of astronomy. As such, other persons or entities may not be aware and not honor or recognize the designations of the Star made by the Cosmic Registry. Cosmic Registry guarantees it will not duplicate the assigned Star and that registration will occur within the Cosmic Registry. Cosmic Registry has no control over assignments made by other companies or by any scientific, governmental, or other body. Your research shows that there is no official body that registers names of stars, but that the scientific community generally recognizes the registry of the International Astronomical Union, which, however, assigns numbers, not names to stars. Write a memorandum on the following two questions: (1) Does the Federal Trade Commission have the power to take action against the Cosmic Registry and, if so, what action? (2) Assuming that the Federal Trade Commission does have the necessary power, should it exercise its power? Question 4 (thirty-six minutes) During the Second World War, the word "blockbuster" was used to refer to an extremely powerful bomb, capable of destroying a whole city block. Viacom Inc. and Blockbuster Entertainment, Inc. ("Viacom"), own many federally registered trademarks centered around the marks BLOCKBUSTER and BLOCKBUSTER VIDEO. The first mark was registered in 1986, and some are now incontestable under 15 U.S.C.  1065. Viacom owns or franchises 4,500 Blockbuster Video and 500 Blockbuster Music stores. The BLOCKBUSTER marks are heavily advertised and promoted and are used on a wide variety of consumer products and services. Ingram Enterprises, Inc., and three of its affiliates ("Ingram") own and operate fireworks stands in Missouri and California. Ingram owns a BLOCKBUSTER mark that was federally registered for fireworks sales in 1992, and a BLOCKBUSTER FIREWORKS mark for which a federal registration application is pending. Your firm does intellectual property work for Viacom. A senior partner has asked you to write a memo evaluating Viacom's possible legal remedies against Ingram. Question 5 (thirty-six minutes) For many years, Sam had bought bread from Marvel Baking and had resold it to a series of shops. In 1998, Mike paid approximately $28,000 for the purchase of this business. Mike had no contractual relationship with Marvel Baking which would require Mike to purchase bread products from Marvel Baking or require Marvel Baking to supply Mike with bread products. Mike had well-established relationships with his customers who were reselling the bread at retail. Some of them had contracted with Mike for long-term supply of their bread needs. In January 1999, Marvel Baking's president asked if he could ride along with Mike on the bread route. Marvel's president said the reason was quality control--to make sure that Mike was handling the bread carefully and not deforming the loaves of bread. This was a lie. The real reason was that Marvel wanted to know the names and addresses of Mike's customers. During the ride, Mike secretly noted down the names and addresses of the customers. On February 18, 1999, Mike had family problems and missed the daily bread pickup and delivery. On February 21, after loading Mike's truck with bread, the president of Marvel informed Mike that Marvel would sell no more bread to Mike. On the same day, Marvel's president visited all of Mike's customers and told them that they would be given a reduced price were they to purchase bread from Marvel Baking and that Mike would no longer be delivering their Marvel bread. Marvel Baking has begun to service Mike's bread route with its own truck and driver. Mike has filed suit against Marvel Bread, reciting the above facts. You are clerk to the judge assigned to the case. Write a memorandum indicating the legal issues that are likely to arise and how they should be resolved. FINAL EXAMINATION IN TRADEMARK, UNFAIR COMPETITION, AND CONSUMER PROTECTION Fall Semester, 2000 Professor Maggs Write your ID Number, but not your name, on the front page of your answers. If you use several exam booklets, number them in a pattern like: þ#1 of 3; #2 of 3; #3 of 3.þ This is an open-book, open-notes, open-computer, closed- network examination. You may bring and use any printed, typed, photocopied, or handwritten material, whether prepared by yourself or others. You will be expected to bring the Casebook and Statutory Supplement assigned for the course. You may bring a computer and use anything (whether prepared by yourself or others) stored on its hard disk or other storage media, but may not connect to the law school network, to the Internet, to Westlaw, to Lexis, to other databanks, to e-mail, to chat, etc. This is a three-hour examination (except for students for whom the appropriate authorities have authorized extra time). There are five questions. You should take thirty-six minutes for each question. Question 1 (thirty-six minutes) In 1980, "Flying Mushroom Pizza" started business in Urbana, Illinois. By 1990, Flying Mushroom was running pizza parlors in 5 Midwestern states, in 20 different cities and towns, a total of 30 pizza parlors in all. In 1991, it secured Federal registration for its trademark "Flying Mushroom" - which incorporated the words "Flying Mushroom" and a picture of a mushroom with wings. In 1996, it registered the Internet domain name, "flyingmushroom.com". Thanks to a hundred thousand dollars a year in advertising, it now does a million dollars a year of business through its website, taking pizza orders within its delivery areas and shipping frozen pizza and pizza ingredients to buyers throughout the country. Early in 2000, Joe Lee Roger registered the domain names, "mushroompizza.com", "flyingmushrooms.com", "flying- mushroom.com", and "fliingmushroom.com". He created a website entitled "Mushroom Pizza" which sells various types of pizza for home delivery (through arrangements with independent pizza parlors in various cities) and ships frozen pizza and pizza ingredients. The website always features specials on mushroom pizza and lists a huge stock of different types of mushroom pizza ingredients. Users who type in any of Roger's registered domain names (with or without "www." in front) go to his "Mushroom Pizza" site. Likewise people who use one of the major Internet search engines (such as Yahoo, Altavista, Lycos, or Google) and type in the search request "Flying Mushroom Pizza" or even just "Mushroom Pizza" are directed to Roger's website as well as to the real Flying Mushroom Pizza website. Flying Mushroom Pizza has contacted Mr. Roger and asked if he was interested in selling his domain names. Mr. Roger replied that his domain names were not for sale, but that he would consider selling his business as a whole for $1,000,000. Flying Mushroom Pizza is a client of your law firm. You have been asked to write a memo for a senior partner outlining any legal remedies Flying Mushroom Pizza may have. Question 2 (thirty-six minutes) Superseats, Inc., sells seating for airport boarding gate areas. In 1995, it developed a new form of seating consisting of chairs with unusually-shaped oval bottoms and oval backs supported on transparent plastic posts. The seats were very comfortable for sitting (important for passenger good-will) but quite uncomfortable for sleeping (important for discouraging use by homeless people). They won several awards for their beautiful design. Superseats' seats were chosen for the remodeled areas of La Guardia Airport in New York. By the year 2000, Superseats, Inc., had sold over $5,000,000 worth of seats for use in airports around the country. Early in 2000, a competitor, Econoseats, Inc., started selling seats with a virtually identical appearance, obviously copied from the Superseats product. In June 2000, Econoseats won a $2,000,000 contract to provide the seats for a newly-remodeled terminal at John F. Kennedy Airport in New York. Econoseats is aggressively marketing its seats to airlines and airports around the country (at some airports airlines select the seats, at others selection is made by the airport management). Recently Econoseats received a letter from Superseats stating, "If you continue to sell seats copied from our product, we will bring appropriate legal action against you." You work in the law firm that represents Econoseats. You have been asked to write a memo for a senior partner outlining the claims that Superseats might assert in court and assessing its chances of success. Question 3 (thirty-six minutes) PCvote manufactures computerized voting machines. A leading competitor, Chadvote, makes punch card voting machines. Chadvote's president, Susan Dimple, consults your law firm. She tells you that PCvote hired a former employee of Chadvote, Quisling, who was fired for sexual harassment. Quisling remembered statistics of the error rate of Chadvote's machines revealed in Chadvote's internal tests, an error rate that was much higher than the error rates of the various models of PCvote's machines. Using data supplied by Quisling, PCvote has sent advertising flyers to election officials around the country comparing the error rate of PCvote's machines to the error rate of Chadvote machines. Another company, Testvote, at great expense collects statistics around the country from recounts and compiles reports showing the error rate found in recounts for every type of voting machines. Testvote sells its reports to local election officials at very high prices. Testvote's statistics also show Chadvote's machines as having a much higher error rate than PCvote's machines. Susan Dimple tells you that she thinks that the error rates of the two systems are not comparable. Chadvote's errors can always be corrected by a hand recount of the punched card ballots. PCvote's machines, on the other hand, only keep a total of all votes cast, so that PCvote's machines' errors cannot be corrected. Ms. Dimple shows you a advertisement that she is planning to distribute which says, "You will always have errors with PCvote!". She asks you for advice on her overall legal situation. What do you advise her and why? Question 4 (thirty-six minutes) Between 1930 and 1959, one hundred ninety "Three Stooges" film comedies were made. Six different individuals (none of whom are now living) played the roles of the Three Stooges at various points during this long period. T3 is a maker of t-shirts in Hollywood. It is selling T-shirts bearing photographs taken from Three Stooges films made in the 1930s, on which films the copyrights have expired. The photographs show only three of the six actors--Moses Horwitz (who played "Moe"), Jerome Horwitz (who played "Curly"), and Louis Feinberg (who played "Larry"). The estates of all six actors have threatened to file suit against T3. You work in the law firm that represents T3 You have been asked to write a memo for a senior partner outlining the claims that the estates might assert in court and assessing their chances of success. Question 5 (thirty-six minutes) You are working as a summer intern in the Bureau of Consumer Protection of the Federal Trade Commission. You have been asked to write a memo for your supervisor on the advertisement on the next page. She wants you to analyze what factual inquiries the FTC might wish to make and what action it might wish to take (or not take) on the basis of what it learned from its factual inquiries. FINAL EXAMINATION IN TRADEMARK, UNFAIR COMPETITION, AND CONSUMER PROTECTION Fall Semester, 1999 Professor Maggs Write your ID Number, but not your name, on the front page of your answers. If you use several exam booklets, number them in a pattern like: "#1 of 3; #2 of 3; #3 of 3." This is a completely open-book, open-notes, open-computer examination. You may bring and use any printed, typed, photocopied, or handwritten material, whether prepared by yourself or others. You will be expected to bring the Casebook and Statutory Supplement assigned for the course. You may bring a computer and use anything (whether prepared by yourself or others) stored on its hard disk or other storage media, but may not connect to the law school network, to the Internet, to Westlaw, to Lexis, to other databanks, to e-mail, to chat, etc. This is a three-hour examination (except for students for whom the appropriate authorities have authorized extra time). There are five questions. You should take thirty-six minutes for each question. Question 1 (thirty-six minutes) Plaintiff Paramite, Inc., a Missouri corporation with its principal place of business in Missouri, owns and operates numerous movie theaters in the St. Louis area, as well as in other geographic areas not at issue in this case. Defendant Movietel, Inc. is a Delaware corporation with its principal place of business in New York. In order to exhibit movies in its theaters, plaintiff must generate and publicize movie show time schedules for each of its theaters which, according to plaintiff, takes much time and effort. Plaintiff maintains an automated phone system and ticketing system called CINE-TIC through which movie patrons may purchase movie tickets by credit card up to five days in advance. In addition, plaintiff also operates a web site which contains plaintiff's movie schedules and information about its movie theaters. Plaintiff receives revenue from a few companies in exchange for its movie schedule information. Defendant provides movie listings for approximately 20,000 movie screens belonging to numerous theater companies in at least thirty-four geographic markets, including the St. Louis market, through its automated phone system and its Internet web site. In nineteen of those markets, defendant also engages in teleticketing, which allows movie patrons to purchase tickets in advance by credit card on the phone or over the web site. Defendant does not, however, provide teleticketing services in the St. Louis market. Defendant entered the St. Louis market in the summer of 1998. While some theaters in St. Louis provide their movie show time information to defendant directly via computer or fax, defendant collects other theaters' schedules, including plaintiff's schedules, independently, and then places the information on its phone and web systems. Plaintiff contends that defendant, through defendant's fault, frequently provides incorrect and inaccurate movie theater and show time information in regard to plaintiff's schedules on its phone system and web site. Defendant advertises its services in the St. Louis market by placing advertisements in various publications, such as the Riverfront Times. These advertisements make no reference to individual movie exhibitors or to any movie show times. Defendant also sells advertising space on both its automated phone system and its web site, which movie studios and other companies purchase in order to advertise their movies or other merchandise. In addition, defendant's phone number and web site address often appear in cooperative advertisements found in newspapers. Cooperative advertisements publicize a particular movie, and are paid for by the movie studio that produces the movie and different movie exhibitors. These ads also contain a list of movie exhibitors showing the particular movie, therefore the names of plaintiff's theaters are, at times, found in cooperative advertisements with defendant's contact information. Plaintiff seeks an injunction to prevent defendant from listing plaintiff's movie showtimes. You are law clerk for the judge who is to try the case. He has asked you for a memorandum on legal issues that may arise in the case. Question 2 (thirty-six minutes) Plaintiffs Conopco, Inc., doing business as Calvin Klein Cosmetics Company, and Calvin Klein Cosmetic Corporation (collectively "Conopco") seek a preliminary injunction against Cosmair, Inc., Polo Ralph Lauren Corporation, and PRL USA Holdings, Inc., (collectively "Cosmair"), from selling or advertising one of Cosmair's new products that Conopco claims, inter alia, infringes on its trademark and trade dress rights. Conopco is the licensee of Calvin Klein Industries responsible for manufacturing and marketing various cosmetics that bear the name "Calvin Klein." ETERNITY is one of ten brands of Calvin Klein Cosmetics handled by Conopco. The ETERNITY line of products is sold in approximately 2,000 retail stores here in the United States and throughout the world. The line includes an eau de parfum [perfume diluted with alcohol], a higher quality perfume product, and ancillary products such as soap and scented candles. Prices for the fragrance products range from $30 for a smaller-size, low-grade fragrance up to $180 for the one-ounce high quality perfume. The bottle and trade dress of the "premium," high-end ETERNITY perfume is the product at the heart of the instant litigation. Since 1988, ETERNITY sales in the United States of the higher quality perfume product have averaged about $500,000 a year--just less than two percent of the total ETERNITY fragrance business. The ETERNITY perfume bottle is described by Conopco as their "icon bottle;" it is supposed to be the image the consumers picture when they think of ETERNITY. The high quality ETERNITY perfume is sold in a bottle that is a registered trademark owned by Conopco and held by plaintiff Calvin Klein Cosmetic Corporation. It is "elegantly dimensioned" and made of "high clarity flint glass." It has "beveled edges, and heavy walled distribution ." The design "gives the illusion of a bottle within a bottle, with softly contoured sides, and the fragrance free floating in the inner bottle cavity." The bottle's cap is a squared-off silver-colored stopper. On June 19, 1998, Conopco filed a complaint seeking injunctive relief to "prevent [Cosmair] from infringing--and eventually destroying" their "valuable, federally-registered trademark"--their "icon bottle." This followed a May 1st article in the trade publication Women's Wear Daily that led Conopco to believe that the defendant, Cosmair, a licensee of Ralph Lauren, planned to launch a line of fragrance products that would directly compete with its ETERNITY products. See id. at 90-93. This new line of products would be sold under the name ROMANCE. Cosmair hoped to have advertisements in September magazines and launch the new product on August 15th. [Monthly magazines frequently reached the news stands during the month prior to the date which appears on its cover. Therefore, an advertisement in a September magazine would reach consumers before ROMANCE's August 15th launch date.] Like ETERNITY, ROMANCE is a "prestige fragrance." As such, it is sold in specialty stores or department stores and commands a fairly high price. Cosmair also includes a photograph of the ROMANCE bottle, currently its highest quality perfume, in all advertising and related marketing displays for the entire ROMANCE line of products. Cosmair planned to use this bottle to advertise the ROMANCE line and hoped the bottle would become its "icon bottle" over time. It is this bottle which Conopco believes infringes on its trademark. Focus group participants called the ROMANCE bottle "[p]ure, simple, modern," and "elegant." Technically speaking, however, the container is a squat, rectangular, glass bottle with straight edges. It has a silver cap that is flat and square, unlike the curved "T"- shape cap of the ETERNITY perfume bottle. The name "RALPH LAUREN ROMANCE" appears on the collar of the cap. Although the walls are slightly curved, they are "as thin and straight as technically possible." Conopco claims that Cosmair's use of the ROMANCE perfume bottle and the trade dress chosen for the ROMANCE line are likely to cause confusion among consumers regarding the identity, origin, association or affiliation of each product. Accordingly, Conopco alleges that it is continuously and irreparably harmed so long as Cosmair is allowed to continue to use the ROMANCE perfume bottle, in violation of the Lanham Act, New York's anti-dilution statute, and the New York common law of unfair competition. You are law clerk for the judge who is to try the case. She has asked you for a memorandum on legal issues that may arise in the case. Question 3 (thirty-six minutes) PMI manufactures "Marlboro" brand cigarettes for distribution in the United States ("domestic cigarettes") and also manufactures cigarettes purportedly intended only for foreign distribution ("foreign cigarettes"). The packaging of both foreign and domestic cigarettes bears the same trademarks, namely the "Marlboro" brand name and a red and white "roof" design. PMI owns both of these trademarks in the United States and claims that Defendants are infringing its trademark rights by selling foreign cigarettes domestically. PMI asserts that the domestic sale of foreign cigarettes both damages the goodwill associated with its trademarks and also confuses consumers because the foreign Marlboros differ materially from domestic Marlboros. The asserted differences include the fact that foreign cigarettes, unlike their domestic counterparts, do not come with Marlboro "Miles" ["Miles" allow consumers to redeem Universal Product Codes from domestic cigarette packages in exchange for merchandise], and are not subject to certain post- manufacturing quality control measures, including PMI representatives' routine inspections of the facilities of wholesalers and retailers of domestic Marlboro cigarettes and replacement of any products found to be damaged or otherwise substandard. The foreign Marlboros also differ from the domestic version by including the phrase "U.S. Tax Exempt For Use Outside U.S." and by displaying the name of an affiliated company, Philip Morris Products, Inc. (PMP), on the packs instead of that of PMI. In addition, Plaintiff asserts that "home made looking" stickers have been applied to the packaging of the foreign cigarettes allegedly sold by Defendants. These stickers are imprinted with the mandatory Surgeon General's health warning. PMI explains that it produces foreign cigarettes in its capacity as a contract manufacturer for PMP and that these cigarettes are manufactured pursuant to specifications provided by PMP. While PMI owns the Marlboro and roof trademarks in the United States, PMP owns these marks in foreign jurisdictions and distributes and sells foreign cigarettes. It is not clear from the parties' submissions whether PMP exports foreign cigarettes for sale abroad, whether it sells the cigarettes domestically employing some sort of contractual device to prevent domestic resale or whether some other business model is employed. The details of the corporate relationship between PMI and PMP also are unclear. PMI has provided testimonial evidence to the effect that PMI and PMP both ultimately can both trace their lineage back to Philip Morris Companies Inc. Philip Morris Companies Inc., according to PMI, is a holding company which owns PMI and also owns a company called Philip Morris International Inc., which, in turn, owns PMP. In other words, PMI contends that PMP is its first cousin. No information is provided regarding the terms of any contractual relationship between PMI and PMP pertaining to the use of the Marlboro name and "roof" design. PMI seeks a preliminary injunction preventing Defendant from marketing imported Marlboro cigarettes. Defendant argues that no preliminary injunction and certainly not such a broad preliminary injunction should issue. You are law clerk for the judge who is to try the case. She has asked you for a memorandum covering the preliminary injunction issue and also the issues that might arise if and when the case goes to trial. Question 4 (thirty-six minutes) Two communicative functions of the Internet are relevant to this case: the capacity to support web sites and the corollary capacity to support electronic mail ("e-mail"). A web site, which is simply an interactive presentation of data which a user accesses by dialing into the host computer, can be created by any user who reserves an Internet location--called an Internet protocol address--and does the necessary programming. Because an Internet protocol address is a string of integer numbers separated by periods, for example, 129.137.84.101, for ease of recall and use a user relies on a "domain-name combination" to reach a given web site. The registrars of Internet domain names maintain a database of registrations and translate entered domain-name combinations into Internet protocol addresses. When accessing a web site, a user enters the character string http://www., followed by the reserved domain-name combination. The domain-name combination must include a top-level domain ("TLD"), which can be .com, .net, .org, .gov or .edu, among others, although some, like .gov and . edu, are reserved for specific purposes. The combination also includes a second-level domain ("SLD"), which can be any word not already reserved in combination with the TLD. Once a domain-name combination is reserved, it cannot be used by anybody else, unless the first registrant voluntarily or otherwise relinquishes its registration. A web site can be programmed for multiple purposes. Some merchants maintain a form of "electronic catalog" on the Internet, permitting Internet users to review products and services for sale. A web site can also be programmed for e-mail, where the provider licenses e-mail addresses in the format alias@SLD.TLD [e.g. jdoe@law.uiuc.edu], with alias selected by the e-mail user. A person or company maintaining a web site makes money in a few different ways. A site that aids in marketing goods and services is an asset to a merchant. E-mail providers make money from licensing fees paid by e-mail users. Money is also made from advertising and links to other web sites. Sumpton is the president of Freeview, an Internet e-mail provider doing business as "Mailbank." Mailbank offers "vanity" e-mail addresses to users for an initial fee of $19.95 and $4.95 per year thereafter, and has registered thousands of domain-name combinations for this purpose. Most SLDs that Mailbank has registered are common surnames, although some represent hobbies, careers, pets, sports interests, favorite music, and the like. One category of SLDs is titled "Rude" and includes lewd SLDs, and another category, titled "Business," includes some common trademark SLDs. Mailbank's TLDs consist mainly of .net and .org, but some registered domain name combinations, including most in the "Business" and "Rude" categories, use the TLD .com. Mailbank's surname archives include the domain-name combinations avery.net and dennison.net. Avery Dennison sells office products and industrial fasteners under the registered trademarks "Avery" and "Dennison," respectively. "Avery" has been in continuous use since the 1930s and registered since 1963, and "Dennison" has been in continuous use since the late 1800s and registered since 1908. Avery Dennison spends more than $5 million per year advertising its products, including those marketed under the separate "Avery" and "Dennison" trademarks, and the company boasts in the neighborhood of $3 billion in sales of all of its trademarks annually. No evidence indicates what percentage of these dollar figures apply to the "Avery" or "Dennison" trademarks. Avery Dennison maintains a commercial presence on the Internet, marketing its products at avery.com and averydennison.com, and maintaining registrations for several other domain-name combinations, all using the TLD .com. Avery Dennison has sued Freeview, alleging trademark dilution under the Federal Trademark Dilution Act and the New York dilution law. You are law clerk for the judge who is to try the case. He has asked you for a memorandum on legal issues that may arise in the case. Question 5 (thirty-six minutes) John R. Cool is the president, director, and sole-shareholder of King Publishing, Inc., which advertised and sold work-at-home opportunities and certain financial services, such as loans and grants. King provided four work-at-home opportunities: (1) the "Home Inquiry Tabulator" program which asserted that consumers could earn $764 in a few hours for a minimal amount of work; (2) the "Amazing Pase Photo System" program which claimed that consumers could earn up to $1800 in one day; (3) the "High-Tech 900" program which claimed that a consumer could earn over $250,000 per year in proven income; and (4) the "Mailing Postcards" program which stated that a consumer could earn up to $15,000 per day just by mailing postcards. King also promoted the "Mailing List Compiler" program which presumably allowed consumers to compile names and addresses from readily available sources. King also provided three financial services programs: (1) the Grant program; (2) the Self- Liquidating Loan program; and (3) the Fortunecard program. The FTC has investigated the business practices of Cool and King. Typically, the business opportunities advertised by Cool and King claimed that consumers could make large sums of money by purchasing these programs and making initial payments of between $9.95 and $89.00 in order to participate. However, after making the initial payments, the consumers received additional information that disclosed significant additional costs for continued participation in the programs. Many consumers did not invest any further time or money, but others continued to pay the money demanded, still hopeful of realizing the income the advertisements promised. You are the lawyer for Cool and King. The FTC has offered to settle on the basis that Cool and King would cease advertising these or similar programs and would pay to the FTC (for distribution to the customers, or if customers could not be found, to the United States Treasury) an amount equal to the total amount of money Cool and King have received from customers. Advise Cool and King on whether or not they should accept the offer and why. ENDNOTE All questions are based on actual cases. Some names and facts have been changed. FINAL EXAMINATION IN TRADEMARK, UNFAIR COMPETITION, AND CONSUMER PROTECTION Fall Semester 1998 Professor Maggs Write your Exam-taking ID Number, but not your name nor your social security number, on each exam booklet you use. If you forget and write your name or social security number, obliterate it! If you use several exam booklets, number them in the pattern, "#1 of 3; #2 of 3; #3 of 3," and nest them together. Return your exam booklets to the box at the front of the room by the ending time for the exam. TYPISTS: report to the room where you would have reported if you were planning to handwrite your exam. Take a seat and get an exam like everyone else. After I have handed out the exams and left, you may take the exam to the typing room. When you are done, leave the exam booklets in the box at the front of the room where you picked up the exam by the ending time for the exam. TYPISTS, IT IS YOUR RESPONSIBILITY TO RETURN THE EXAMS ON TIME. I WILL NOT COME INTO THE TYPING ROOM TO REMIND YOU OF THE TIME! This is fully open-book, open notes examination. You may use any printed or written materials whether or not assigned for the course or prepared by you. You may not use a computer. This is a three-hour examination. (Foreign LL.M. students may take an extra hour; all other exceptions require the approval of the appropriate law school administrator.) Important: Assume that all questions arise in jurisdictions that have a "Baby FTC Act" allowing a private right of action for "unfair or deceptive practices" and also have the Uniform Trade Secrets Act. Assume that no relevant statutes of limitations have expired. QUESTION 1 (36 minutes) In 1983, Karen Billups enlisted the aid of a cosmetic chemist to simulate a tan. She named the resulting product "sun powder" to evoke "an association with sun bathing and the resulting effects." The next year, Billups formed K'Arsan Corporation, which marketed "K'Arsan SUN POWDER" as its flagship product. K'Arsan sought to obtain federal registration for the mark "K'Arsan SUN POWDER." The Patent and Trademark Office initially objected, informing K'Arsan that "[t]he term 'sun powder' forms no part of the mark and should be deleted from the drawing.... 'Sun powder' is an apt name for the goods ...." Although the record does not disclose any additional communication or action, the matter was evidently resolved, and K'Arsan received its registration for "K'Arsan SUN POWDER" on October 21, 1986. Primarily selling its goods through Michigan drug stores and boutiques, but with scattered outlets across the country, K'Arsan enjoyed initial success, with net sales in 1986 of $159,333.00. Net sales then steadily declined, bottoming out in 1992 at $35,281.90, and settling to $44,806.30 in 1995. In 1989, the French company Parfums Christian Dior S.A. ("Christian Dior") began planning the introduction of a sunless tanning agent to the American market. Christian Dior planned to introduce its product as "Terra Bella Poudre de Soleil Sun Powder." (Christian Dior claims that it was unaware of the existence of K'Arsan or "K'Arsan SUN POWDER.") Christian Dior intended "Terra Bella" to serve as the mark, while the phrase "Poudre de Soleil" (frequently used in France in connection with such cosmetics, and translated as "sun powder") and its English translation would describe the product. Thus, Christian Dior searched the trademark registry for "Terra Bella," found no conflict, and obtained registration on January 8, 1991 for "Terra Bella." Christian Dior launched its product in May 1990; department stores began selling the powder in August. Since then, American consumers seeking sunless tanning agents have encountered both K'Arsan and Christian Dior's uses of "sun powder." [See Footnote 1] Christian Dior, a prestige brand, targets "leading" department stores, and advertises its product line as a whole rather than by emphasizing particular cosmetics. The evidence in the record suggests that K'Arsan sells most of its goods by mail or through drug stores, boutiques, and hair salons. It is uncontested, however, that the two products were sold side-by-side for five years at Jacobson's department stores. In 1997, Christian Dior ceased to use Jacobson's as an outlet for its products. K'Arsan claims that side-by-side sales also occurred at Neiman- Marcus, Broadway, and Bonwit-Teller department stores, but the lists of K'Arsan's sales outlets do not include these three chains. In the winter of 1995-96, K'Arsan's president and founder visited a Jacobson's department store and encountered Christian Dior's Terra Bella cosmetic. Christian Dior's packaging alarmed her. The K'Arsan box has a white background and a prominent display of the words "K'Arsan SUN POWDER.TM" Nothing else sullies the front cover apart from a yellow circle graphic and the phrase "For a Healthy Natural Look." Christian Dior's Terra Bella powder appears in the distinctive trade dress used on over thirty of Christian Dior's cosmetic products: a royal blue box banded with a navy blue stripe and a yellow oval containing text. The words "TERRA BELLA POUDRE DE SOLEIL SUN POWDER" appear in the oval, as does the phrase "Christian Dior PARIS." The two products share some ingredients, and have comparable prices per ounce. Confronted with another company's use of the words "sun powder," K'Arsan sued. Your firm represents Christian Dior. A senior partner has asked you, a beginning associate, to write a memorandum on possible legal claims that K'Arsan may have and the probability of success. Footnote 1: Other companies also use "sun powder" to identify their sunless tanning agents. Their products include "Clinique sun powder," "Estee Lauder instant sun powder," "Lancaster sun powder," "Prescriptives soft sun powder," and "Valerie sun powder." K'Arsan contends that all third-party uses began after K'Arsan commenced its use. QUESTION 2 (36 minutes) Kendall-Jackson is a California winery that has a reputation for producing high quality, mid-priced varietal wines. [A varietal wine is a wine that is made from at least 75% of one variety of grape.] Since its inception in 1983, Kendall-Jackson has sold over ten million cases of its Vintner's Reserve line of premium wines. By 1994, Kendall-Jackson was selling over $100 million worth of Vintner's Reserve wine a year, and its Chardonnay was the number one selling Chardonnay in the United States. During this time, Kendall-Jackson featured on its Vintner's Reserve wine labels a downward-pointing, stylized grape leaf design using various shades of green, yellow, orange, red, and brown. The leaf design was always coupled with a banner that intersected the leaf and that read "KENDALL- JACKSON." In addition to using the leaf design, Kendall-Jackson tried to distinguish its Vintner's Reserve wine by packaging the wine in recognizable bottles. The Vintner's Reserve bottles, which came in one of two shapes ("Burgundy-style" or "Bordeaux-style"), [The "burgundy-style bottle" has a gradual, tapered neck, and the "Bordeaux-style bottle" has a shorter, three-inch bottle neck sitting on rounded shoulders of the bottle.] had a rounded flange [A flange surrounds the lip at the top of the bottle neck.], a visible cork with printed leaves on it, a brown or burgundy neck label with gold lines on the top and bottom that form an oval in the back, and an off-white label featuring the multicolored leaf design. Gallo is also a successful California winery. In fact, Gallo is the largest wine-producer in the world. But unlike Kendall-Jackson, Gallo has a reputation for producing lower-priced, non-premium wines. During the time that Kendall- Jackson was establishing itself as a leader in the premium wine market, the market for non-premium wine was rapidly declining. In 1992, Gallo considered entering the premium wine market. For three years, Gallo conducted extensive market research to determine how best to enter the market. Much of this research was directed at the success of the market leader--Kendall-Jackson Vintner's Reserve. Through its market research, Gallo determined that consumers associate the name "Gallo" with "jug wine" rather than premium wine and that a colorful grape-leaf design attracts consumers. In accordance with these results, Gallo introduced in the fall of 1995 a line of premium wine that did not use the Gallo name and that featured the consumer-preferred leaf motif. Gallo called this wine "Turning Leaf." Like Kendall-Jackson's Vintner's Reserve wines, Gallo's Turning Leaf wines came in either a burgundy-style bottle or a Bordeaux-style bottle and featured a rounded flange, a visible cork with printed leaves on it, a brown or burgundy neck label with gold lines on the top and bottom that form an oval in the back, and an off-white label with a prominent, downward- pointing, stylized grape leaf design in various shades of green, yellow, orange, red, and brown. Kendall-Jackson is a client of your law firm. A senior partner has asked you, a beginning associate, to write a memorandum on possible legal claims that Kendall-Jackson may have and the probability of success. QUESTION 3 (36 minutes) Defendant-appellant, Palm Beach Blood Bank, Inc. ("Palm Beach"), is a non- profit Florida corporation engaged in the business of collecting, processing, and distributing blood components. Similarly, plaintiff- appellee, American Red Cross ("Red Cross"), is also a non-profit corporation engaged in collecting, processing, and distributing blood components, though its activities are more national in scope. Despite a history of at least limited cooperation, Palm Beach and Red Cross compete with each other for sponsors and donors. Competition between the two companies is especially keen regarding recruitment of apheresis donors, a small subset of blood donors willing to undergo a longer and less- comfortable donation procedure. In October 1995, Palm Beach opened a Miami branch and over the next several months hired a number of Red Cross's Miami personnel. At least one of these former Red Cross employees took a list of Red Cross donors with her to Palm Beach, where she used the list to contact and recruit blood donors for her new employer. Soon after opening its Miami office, Palm Beach succeeded in recruiting several former Red Cross donors, including apheresis donors, to participate in Palm Beach's blood collection program. In April 1996, Red Cross discovered that Palm Beach was using at least one of Red Cross's donor lists for Palm Beach's own solicitations, leading Red Cross to demand that Palm Beach cease all efforts to contact Red Cross's donors. Unsatisfied with Palm Beach's response, Red Cross has asked the United States District Court to grant a preliminary injunction prohibiting Palm Beach from contacting any person on the Red Cross list of donors. Red Cross has submitted evidence that all of its employees have long been required to sign an agreement providing, "I promise to keep all donor medical information confidential." You are clerk to the District Court judge. The judge asks you to write a memorandum on the legal issues involved. QUESTION 4 (36 Minutes) DBOOKS and PBOOKS are leading sellers of books on the Internet. DBOOKS advertises, "Over three million titles in stock!"; "Lowest Prices on the Internet"; and "We Beat All Other Book Prices on the Internet." In fact DBOOKS has no inventory at all. It has linked its computer to the computers of leading book publishers and wholesalers. When DBOOKS takes an order over the Internet, its computer relays the order to the appropriate publisher or wholesaler, who ships the books. It is true that these publishers and wholesalers combined have over three million titles in stock. PBOOKS in contrast has its own warehouse with about one million titles stocked. DBOOKS' prices are usually lower than other prices on the Internet, but for about 10% of the titles there are cheaper Internet booksellers. For about half of this 10%, PBOOKS is a cheaper alternative source. DBOOKS charges its actual cost for shipping. PBOOKS and some other competitors waive shipping charges for orders over $100. DBOOKS will match competitors' prices, but only if a customer calls DBOOKS' non- toll-free number and requests a price reduction. Most customers on the non-toll-free number are put "on hold" for 4 or 5 minutes before they can talk to a DBOOKS representative. PBOOKS is a client of your law firm. A senior partner has asked you, a beginning associate, to write a memorandum on possible legal claims that PBOOKS may have aga