BOSTON COLLEGE LAW SCHOOL
FINAL EXAMINATION: TRADEMARK AND UNFAIR COMPETITION
(COURSE NO. LL41401)


PROFESSOR JOSEPH P. LIU

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FALL SEMESTER 2002

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2 QUESTIONS

TAKE HOME EXAMINATION

TOTAL TIME: 24 Hours

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PICKUP: ANY DAY FROM WED., DEC. 11 THROUGH TUE., DEC. 17

(EXCEPT FRIDAYS), BETWEEN 9:30-10:00 A.M. OR 4:00-4:30 P.M.;

ALSO WED., DEC. 18 BETWEEN 9:30-10:00 A.M.

DUE: 24 HOURS AFTER TIME OF PICKUP

LOCATION: STUDENT RECORDS OFFICE

INSTRUCTIONS: READ CAREFULLY

PICK UP AND DROP OFF. This is a 24-hour take-home examination. You may pick up this examination at the Student Records Office, on any of the days indicated above, during the time periods indicated above. Your answers must be turned in to the Student Records Office within 24 hours of the time you picked up the exam. If you miss the deadline, your answer may be treated as if it had not been turned in. So, please budget sufficient extra time (e.g. for transportation, last-minute technical delays, etc.) to make sure that you hand in your answers by the deadline.

DISCUSSION OF EXAM. Because this is a freely-schedulable take-home exam, it is absolutely critical that information concerning the exam not be disclosed to students who have not yet taken the exam. Accordingly, after you have taken the exam, you may not discuss the exam with anyone who has not yet taken the exam. Furthermore, since disclosure may be inadvertent, you must take care not to discuss the exam in any place where details of the exam may be overheard by other students who have not taken the exam. This is absolutely essential to ensure that the test is fair and that no students obtain an unfair advantage.

GENERAL INSTRUCTIONS. The exam has 2 questions. The questions are weighted according to the percentages set forth below, so please allocate your time and effort accordingly. Please read each question carefully before answering, paying particular attention to the type of answer that each question is asking for. Please also spend adequate time planning your responses, prior to writing your answers. Clear organization and analysis will do wonders for your answer. To that end, please try to budget some time at the end for reviewing and editing your answers.

RESOURCES. This is a limited open book exam. This means that you may consult the casebook, any outlines or notes, any commercial or third-party outlines, any other books or articles that you have purchased or borrowed. You may not, however, share any copies of such resources with other students during the course of the exam. In addition, you may not consult any on-line resources such as Westlaw or Lexis or the World Wide Web during the exam. You may not consult or communicate with any other individual about either the form or substance of the exam during the period in which you are taking the exam. If there are any ambiguities in either the form or substance of the examination, do not discuss the exam with anyone else; instead, indicate any assumptions you are making and proceed to answer the question as best you can.

FORMAT, WORD LIMITS, RELATIVE WEIGHT. Answers should be typed, double spaced, 12-point font with reasonable margins. The maximum word limits below will be strictly enforced. At the end of each answer, include the total number of words in the answer (including words in the footnotes, if any) using your word processor’s word count tool.

LIMIT WEIGHT

QUESTION 1: 1500 WORDS 50%

QUESTION 2: 1500 WORDS 50%

These word limits are maximum limits. Of course, you may choose to use fewer than the maximum words. (But you cannot “save” words from one question to use for another.) It may be that you will be unable to say all you want to say within the existing word limits. If this is the case, then you will need to make judgments about the relative importance of the points you wish to make.

CASE CITATIONS. You needn’t refer to any cases by name in any of your answers, unless the question specifically asks for such. A perfectly excellent answer can be turned in without mentioning a single case by name. However, if you do wish to refer to any cases (whether for support, as an example, or as a short-hand for a particular legal rule), simply write the case name or a recognizable abbreviation. Do not cite any cases that are not in the case book – this exam does not require any additional research (and conducting such additional research will probably serve only to confuse you); rather, this exam tests how well you have mastered the legal materials that have been assigned to read during the course.

Good Luck!


QUESTION 1 (50%):

(1500 WORDS)

You are a junior associate at a mid-sized law firm. One evening, just as you are preparing to leave the office, your phone rings. A partner is on the other end of the line. She says that a client of hers will be coming into the office tomorrow morning. The client needs some advice concerning a number of potential legal issues relating to her company’s business. Unfortunately, the partner is going to be out of town tomorrow morning and will be unable to meet with the client. However, she would like you to meet with the client and find out the nature of the legal issues facing the client. She would also like you to draft a short memo for her, outlining any legal claims that the client could possibly have against other parties or that the other parties could possibly bring against the client, along with your preliminary assessment of the likelihood of success of any of these claims.

The next morning, you meet with the client and find out the following information:

The client, Sarah Carpenter, is the CEO of Performance Running, Inc., a manufacturer and seller of running shoes. Performance Running has, for a long time, focused exclusively on selling running shoes to only the most serious runners, those who train extensively and race competitively. Performance Running’s shoes, accordingly, embody significant technological innovations in their design and materials, and are quite expensive. Despite their high cost, Performance Running’s shoes have been extremely successful in their particular market niche. In fact, among serious competitive runners, Performance Running’s shoes have a market share approaching 70%. Performance Running sells these shoes under the trademark “Champion.”

In 1999, Carpenter decided to expand on Performance Running’s success in the high-end market by introducing a new line of shoes aimed at the more casual runner. These shoes would include some of the less-expensive technological innovations from Performance Running’s top-of-the-line “Champion” shoes and would be made of somewhat less expensive materials. However, the goal would be to leverage Performance Running’s reputation for high athletic achievement and excellence in competition.

Carpenter decided to name this new line of shoes “Victor.” Moreover, the specific shoes within this line of shoes would be named according to some of the standard race distances found at track and field events. For example, shoes within this line included the “Victor 100M” (referring to the 100-meter dash), the “Victor 200M” (200 meter dash), the “Victor 1500M” (1500 meter run), and the “Victor Marathon.” The names of the shoes roughly corresponded with the way in which the shoes were marketed – i.e. the Victor 100 was marketed more for short-distance running, while the Victor Marathon was marketed for more long distance running. However, since these shoes were aimed largely for the more casual runner, the differences between the specific shoes were in fact relatively minor (e.g. slightly less padding and support for the Victor 100M as compared to the Victor Marathon, etc.).

Carpenter devoted a significant amount of attention to the design of the new shoes. Because these shoes were aimed at the more casual runner, Carpenter believed that they had to be visually more attractive than Performance Running’s high-end Champion shoes. After much testing, Performance Running’s designers eventually came up with the idea of coating the shoes entirely in a shiny, reflective silver foil. The shoes thus appeared, from a distance, to be made out of a shiny metallic substance. Since most other shoes on the market came in solid, unreflective colors, the design of Performance Running’s “Victor” line of shoes was quite unique. The reflective nature of the shoes had a slight added safety benefit, in that it made runners more visible when running in the dark, since the shoes would more effectively reflect the headlight beams of oncoming cars (although most other shoes have at least a few reflective strips that serve largely the same purpose). The specific model name of each shoe (e.g. “Victor 100M”) was printed underneath, on the sole of each shoe. Performance Running packaged the shoes in similarly unique, reflective, shiny foil-covered shoe-boxes.

Performance Running first announced the new Victor line of shoes in press releases and at a press conference in January of 2000. Samples of the shoes were finished in February of 2000 and were displayed at an athletic equipment trade show in March of 2000. Samples were sent to retailers in May of 2000. In June of 2000, Performance Running began accepting orders for the shoes from retail stores. In July of 2000, Performance Running launched a massive, multi-million dollar media campaign, advertising the Victor line of shoes nationally on television and in radio commercials, as well as print magazines. The commercials stressed the competitive pedigree of the shoes, stating that casual runners could now take advantage of “the same technological innovations that help the best runners in the world.” The first shipments of the Victor shoes were sent to retailers in August of 2000, and the first sales to the public occurred in September of 2000.

Performance Running’s “Victor” shoes were phenomenally successful. Casual runners were strongly attracted to Performance Running’s reputation for athletic excellence, as well as the striking design of the shoes. In fact, demand for the shoes was so high in the first six months that long lines formed at stores awaiting shipments of the shoes, and shortages were widespread. Sales figures for 2000 and 2001 exceeded Performance Running’s expectations.

Soon after the launch of the Victor line of shoes, Carpenter learned that one of Performance Running’s main competitors in the high-end shoe market, Triathlon Athletics, Inc., had introduced, nearly simultaneously, a similar line of shoes aimed at the casual running market. In introducing this line of shoes, Triathlon Athletics had independently adopted a nearly identical system for naming the specific models. The name for the overall shoe line, however, was quite different. Thus, Triathlon Athletics sold the “Jaguar 100M”, the “Jaguar 200M”, and the “Jaguar 1500M”. Triathlon’s shoes were not sold to the public until October of 2000. However, Triathlon first developed the naming scheme for its shoes in December of 1999. Triathlon shipped a number of sample shoes to its regional sales offices as early as April of 2000. The sales offices then began soliciting offers from retail stores in July of 2000.

In September of 2002, Carpenter learned that another shoe company, Acme Shoes, Inc., was introducing a new line of shoes that mimicked the striking design of Performance Running’s “Victor” shoes. Unlike Performance Running, Acme Shoes manufactured and sold casual shoes for everyday wear, and did not serve the athletic shoe market. However, Acme noticed the popularity of the silver, metallic design of Performance Running’s Victor line of shoes. Accordingly, Acme introduced a line of casual shoes that were similarly covered in a bright, shiny metallic silver foil. These shoes turned out to be extremely popular. Acme packaged these shoes in similar, shiny, silver-foil-covered shoe-boxes.

In October of 2002, Carpenter received a letter from an individual named Jerry Phillips. In his letter, Phillips asserted that he owned trademark rights to the term “Victor” as applied to athletic equipment, and requested a payment of $200,000 in exchange for a license to continue using the mark. After some investigation, Carpenter learned that Phillips once owned a company called Stratus Sports Equipment, Inc. Stratus owned a federally registered trademark in the term “Victor” as applied to athletic equipment, such as footballs, basketballs, baseballs, baseball bats, helmets, etc. Stratus first obtained the registration in 1994 and sold athletic equipment under that trademark for approximately five years. In 1999, Stratus successfully applied for incontestable status. However, Stratus’s business was ultimately unsuccessful and folded in December of 2000. Stratus transferred all rights in the trademark to Phillips, and since 2000, Phillips has licensed the use of the mark to twelve separate companies, in connection with athletic equipment. As far as Carpenter can tell, after Stratus folded, Phillips was no longer engaged in the business of making and selling athletic equipment himself. Rather, his sole continuing involvement in the athletic equipment business was through these licensing arrangements.

Finally, in November of 2002, Carpenter learned of a web-site containing critical statements regarding Performance Running’s labor practices. The web site is located at the address www.performance-ruining.org and is run by an individual named Frank Dellinger. The web site alleges that Performance Running’s manufacturing plants, which are located in Southeast Asia, employ women and children in substandard working conditions and at substandard wages. The site calls for a boycott of Performance Running’s products. The site also sells running shoes that are designed to resemble Performance Running's line of Victor shoes. The shoes are spray-painted with shiny, silver reflective paint, and thus resemble the Victor shoes from a distance (although up close, it becomes clear that the shoes are different). Moreover, Dellinger sells these shoes under the trademark “Victim,” which is printed underneath on the sole of each shoe. Dellinger has also printed, underneath on the soles of the shoes, images of poor children and workers from Southeast Asia, i.e. the “victims” of Performance Running’s labor practices.