Cases for Tuesday, Oct. 5, 2004
No. 03-409 KP Permanent Make-Up, Inc. v. Lasting Impressions, Inc.
In this case, two competing manufacturers of permanent makeup (i.e. tattooed on makeup) are in a dispute because they both use the term "Micro Colors" to describe their products. Lasting Impressions holds a federal trademark on its "Micro Colors" logo (which the Ninth Circuit reproduced in its opinion
in this case; the opinion also reproduced KP's use of the term). The lower court awarded summary judgment for KP on a number of issues, which the Ninth Circuit mostly reversed. The one that managed to get the Court's attention is whether "the classic fair use defense to trademark infringement require the party asserting the defense to demonstrate an absence of likelihood of confusion, as is the rule in the 9th Circuit, or is Fair Use an absolute defense, irrespective of whether or not confusion may result, as is the rule in other Circuits?"
does not have the briefs in this case, so the only information (short of doing independent research) that I have as to whether the other circuits actually have a different rule than the 9th Circuit is the question presented above, which makes it a bit difficult to evaluate the competing arguments. The Ninth, after all, did not discuss contrary precedent from other circuits that it was not going to apply.
Now you cynics out there might suggest that I just predict "reverse" based on the circuit from which this case came, and indeed, I have done so before (and been correct). But in this case, I chose to actually do independent research. What I found was that among the briefs that Findlaw
failed to post was the amicus brief of the United States. As their brief puts it:
the court of appeals erred in requiring defendants to prove the absence of any likelihood of consumer confusion as part of the fair use defense because (i) that factor makes no appearance in the statutory text and (ii) interpolating such a requirement cannot be reconciled with the structure and purpose of the fair use defense.
In short, I buy it. REVERSE.
No. 03-377 Koons Buick Pontiac GMC, Inc. v. Nigh
I recently overheard a conversation about this Truth-In-Lending-Act case, in which someone that Koons had really screwed Nigh over. Because I did not want to admit that I really knew nothing about this case, I smiled and nodded, and wandered away. Having now read the Fourth Circuit's opinion, I wholeheartedly--albeit belatedly--agree. Koons, an automotive dealership in my native northern Virginia, sold a truck to Nigh, agreeing to take his trade-in on the condition that it could find a letter to finance the deal. When it took the loan to various lenders, however, they noticed that Koons had added on a $965 charge for an alarm without promising Nigh to deliver the alarm. Koons told brought Nigh back in and forced him to sign another loan for $2,000 more. Nigh tried to back out, but Koons said it was too late; they had sold his trade in (which they had not). Lenders still wouldn't take the deal, so Koons brought Nigh back in a third time, this time telling him they would report his new truck stolen if he didn't sign a third financing deal. Meanwhile, the lender for his old truck repossessed it from Koons's lot.
Nigh sued and won damages based on the federal Truth In Lending Act (TILA) and Virginia's Consumer Protection Act. The Fourth Circuit affirmed. Among the arguments rejected by the Fourth Circuit was whether TILA allowed for damages in excess of $1,000. The statute states that "any creditor who fails to comply with any requirement imposed under this part . . . is liable . . . in an amount equal to the sum of"
(2)(A)(i) in the case of an individual action twice the amount of any finance charge in connection with the transaction, (ii) in the case of an individual action relating to a consumer lease under part E of this subchapter, 25 per centum of the total amount of monthly payments under the lease, except that the liability under this subparagraph shall not be less than $100 nor greater than $1,000, or (iii) in the case of an individual action relating to a credit transaction not under an open end credit plan that is secured by real property or a dwelling, not less than $200 or greater than $2,000 . . .
In this case, Nigh falls under subpart of (2)(A)(i), that is, his is not "an individual action relating to a consumer lease" or "to a credit transaction not under an open end credit plan," etc. So the question is whether the limitation in subpart (ii) applies to him. Reading the statute, one would conclude that it does not. After all, subpart (ii) limits recovery to $1,000 "under this subparagraph." If subparagraph means the whole subparagraph (i.e., parts (i) through (iii)), then part (iii) would also be limited to $1,000, even though it has an express limit of $2,000.
Why would Congress write something so awful? Well, it turns out that part (iii) originally was not in the statute. Thus, part (ii) plausibly could apply a $1,000 cap to "this subparagraph," including both parts (i) and (ii) and still make sense. When Congress amended the statute, it failed to take account of the "this subparagraph" language, leaving us with a statute that does not make sense. The Fourth Circuit decided that the only way to figure this out is to take the statute as it is written and make the best sense out of it that we can. The only way to do that, it reasoned, is to read "subparagraph" as referring only to part (ii), even though it's not really clear that Congress intended that meaning. I think the Court will REVERSE
. Where it appears Congressional intent was to leave a $1,000 cap on parts (i) and (ii), even though the statute doesn't say that, I think the Court will give meaning to that intent. I suspect Justice Scalia will disagree with me.