BILL ANALYSIS
AB 1484
Page 1
Date of Hearing: April 24, 2007
ASSEMBLY COMMITTEE ON JUDICIARY
Dave Jones, Chair
AB 1484 (Krekorian) - As Amended: April 16, 2007
SUBJECT : Model State Trademark Law
KEY ISSUE : Should California trademark law, which is based on a
1949 model bill, be brought into conformance with the most
recent version of the Model State Trademark Bill?
SYNOPSIS
This bill, which is sponsored by the Conference of Delegates of
California Bar Associations, would repeal California's existing
trademark statutes and replace them with the most recent version
of the Model State Trademark Bill (MSTB). Drafted by the
International Trademark Association (INTA), the MSTB closely
parallels federal law and has been adopted by 30 states.
Although there have been changes to California trademark law in
the past, its basic structure is based on the 1949 MSTB. The
INTA updated its model bill most recently in 1996 in order to
reflect important changes in case law, changes that are not
always captured by California's dated statutory framework.
Supporters contend that it is time for California to update its
statutory framework and make it uniform with federal law.
Supporters also contend that, to the extent that California law
seeks consistency with federal law, well-developed federal case
law should be used as persuasive authority in interpreting state
trademark law. Although the bill faces no formal opposition, a
few individual attorneys have expressed concern that these
changes may unintentionally favor larger national and
international businesses at the expenses of smaller intrastate
trademark holders within California. The author, however, has
communicated to the Committee his willingness to address any
reasonable concerns as the bill moves forward.
SUMMARY : Repeals the existing trademark law and enacts the
Model State Trademark Law. Preserves many unique features of
California's existing trademark law but also makes many changes
that track developments in federal trademark law. Specifically,
this bill :
1)Expands the information required to be provided with an
AB 1484
Page 2
application for registration to include, among other things, a
drawing of the mark and three specimens of that mark as it is
actually used. Provides further that applications must be
signed and verified under penalty of perjury.
2)Permits owners of trademark registration to record change of
name, security interests, or licenses.
3)Expands the grounds upon which the Secretary of State shall
cancel a registration and specifies procedures for actions to
compel registration or cancel a registration.
4)Implements a number of changes designed to bring California
law into greater conformity with federal law and recent
develops in trademark case law. The most significant of these
changes do the following:
a) Reduces the duration of state trademark registrations
from 10 years to 5 years, and provides that renewal periods
for registrations shall similarly be reduced from 10 years
to 5 years.
b) Defines "abandonment," consistent with well-settled
federal case law, to mean either of the following: (1) that
a mark's use has been discontinued with no intent to
resume; OR (2) the owner's course of conduct, including
acts of omission as well as commission, causes the mark to
lose its significance as a mark. Provides further that
non-use for two consecutive years shall constitute prima
facie evidence of abandonment.
c) Provides a cause of action for dilution of a trademark,
defines "dilution," and enumerates the essential elements
for a finding of dilution.
d) Provides that state registration may be cancelled
because a mark has become "generic," and defines that term.
e) Provides that a trademark registration may be cancelled
if there is a likelihood of confusion with a mark that was
previously registered with the U.S. Patent and Trademark
Office, assuming the federal registrant's rights extends to
California.
f) Prevents applicants from knowingly filing an application
AB 1484
Page 3
when they are aware that another person has previously
registered a similar mark.
g) Permits the Secretary of State to require a trademark
applicant to state whether it previously sought to register
the mark with the U.S. Patent and Trademark Office and, if
registration was refused, to disclose why.
h) Declares that it is the intent of the Legislature to
provide a system of state trademark regulation that is
consistent with the federal system of trademark
registration and, to that end, the construction that the
courts give the federal act should be treated as persuasive
authority for interpreting and construing California
trademark statutes.
EXISTING LAW :
1)Provides generally, under the California Trademark Law, the
process by which trademarks and service marks shall be
registered and renewed with the Secretary of State, and
generally sets forth the remedies that the holders of
trademarks and service marks have against persons or entities
that wrongfully use, copy, dilute, imitate, or otherwise
infringe upon a validly registered mark. (Business &
Professions Code Sections 14200 et seq.)
2)Provides that a registration is effective for ten years and
may be renewed for successive ten-year periods. (Business &
Professions Code Section 14250.)
3)Provides that the Secretary of State shall cancel any
registered mark that has been "abandoned," but does not define
"abandoned" or "abandonment." (Business & Professions Code
Section 14281.)
4)Provides that a person shall be subject to a civil action by
the owner of a registered mark for using, without the consent
of the registrant, any reproduction, counterfeit, copy, or
colorable imitation of a registered mark, in connection with
the sale, offering for sale, or advertising of any goods or
services in a manner that is likely to cause confusion as to
the source of those goods or services. (Business &
Professions Code Section 14320.)
AB 1484
Page 4
5)Provides that the holder of mark may seek injunctive relief
against another party if the actions of the other party
produce a likelihood of injury to business reputation or
dilution of the distinctive quality of a registered mark,
notwithstanding the absence of competition between the parties
or the absence of confusion as to the source of goods and
services. Provides, however, that this provision does not
apply to the use of a mark in "comparative advertising," where
a competitor's trademark is used in advertising to compare the
relative qualities of the competitive goods. (Business &
Professions Code Sections 14330 and 14335.)
6)Sets out various remedies for infringement of marks under
specified conditions, including injunctions against
counterfeit goods or destruction or seizure of goods.
Provides further than any right or remedy available to a
registrant under the trademark law does not affect a
registrant's right to prosecute under any penal law, including
but not limited to Penal Code Section 350, relating to the
counterfeiting of registered marks. (Business & Professions
Code Sections 14335, 14340, and 14341.)
7)Provides that an applicant must sign a statement that "no
other person has the right to use such mark in this state
either in the identical form thereof or in such near
resemblance thereto as might be calculated to deceive or to be
mistaken therefore." (Business & Professions Code Section
14230.)
FISCAL EFFECT : As currently in print the bill is keyed fiscal.
COMMENTS : A "trademark" or "service mark," for goods and
services respectively, may consist of any word, name, symbol, or
device, or any combination thereof, that is adopted and used by
a person to identify the goods or services manufactured or
provided by that person. Most importantly, the trademark or
service mark is used to distinguish those goods or services from
goods or services manufactured or provided by others. (Business
& Professions Code Section 14207.)
California's existing trademark law (Business & Professions Code
Sections 14200 through 14342) was first adopted in 1941. In
1967 it was repealed and replaced with one based on the Model
State Trademark Bill (MSTB), which was drafted by the
AB 1484
Page 5
International Trademark Association (INTA). At the time that
California adopted the model bill in 1967, the most recent
version of the model bill was the one first promulgated in 1949.
Since that time, the INTA has issued major revisions of the
bill in 1992 and again in 1996 in order to codify important
developments in trademark case law and adapt to ever changing
business conditions and practices.
This bill would repeal California's existing trademark law and
replace it one based on the 1996 INTA model bill. By adopting
the model bill, this measure will also bring California into
alignment with federal trademark law and the 30 other states
that have already adopted one of the more recent version of
MSTB. In addition, this bill states the Legislature's intent to
provide a system of state trademark registration and protection
that is substantially consistent with the federal system of
trademark registration and protection. To that end, it is also
the intent of this bill that the construction the courts have
given to federal law should be treated as persuasive authority
for interpreting and construing the provisions of this bill.
Important Changes to Existing Law: Because this bill would
make a wholesale change by repealing the relevant sections of
the Business & Professions Code and replacing it with one based
on the 1996 model law, this analysis cannot possibly discuss all
of the changes in detail. However, the author and supporters,
as well as a number of individuals who have expressed concern,
agree that the most significant changes are as follows:
Reducing Registration and Renewal Periods : This bill reduces
the registration period from 10 years to 5 years. Both existing
law and this bill permit renewals, but whereas existing law
permits 10-year renewal periods this bill will only permit
5-year renewal periods. According to the author and supporters,
this reduction in time is necessary to remove the "deadwood"
registrations that remain on the books but are no longer in use.
Providing a cause of action for dilution and defining the term :
Existing law does not expressly define "dilution" and the only
remedy provided is for injunctive relief. This bill provides a
cause of action for dilution of trademark, defines the term, and
enumerates the factors for finding dilution. Specifically, the
bill defines "dilution" as "the lessening of the capacity of a
famous mark to identify and distinguish goods or services by
AB 1484
Page 6
blurring or tarnishment, regardless of the presence or absence
of either of the following: (1) competition between the owner of
the famous mark and other parties; or (2) likelihood of
confusion, mistake, or deception.
According to the author, this definition of "dilution" is now
established in federal statutory and federal case law.
Defining "Abandonment" : According to the author, the question
of whether or not the holder of a registered mark has abandoned,
or ceased using, a mark is a commonly litigated issue in
trademark disputes. Yet, California's existing law provides no
definition of that term. This bill, again following the most
recent model bill and well-developed federal case law, defines
"abandonment" to mean either of the following: (1) that a mark's
use has been discontinued with no intent to resume; or (2) the
owner's course of conduct, including acts of omission as well as
commission, causes the mark to lose its significance as a mark.
Provides further that non-use for two consecutive years shall
constitute prima facie evidence of abandonment
Cancellation of Registered Mark If There is "Likelihood of
Confusion:" This bill will permit the cancellation of a
registered mark if there is likelihood of confusion with a mark
that was previously registered in the U.S. Patent and Trademark
Office and the federal registrant's rights extend into
California. Existing law has no provision for this issue, and
this bill, according to the author, will codify existing case
law on this point.
Applicant Cannot Knowingly Register A Trademark that is
Confusingly Similar to An Existing Mark : Under existing law,
an applicant for a mark must state that "no other person has the
right to use such mark in the state." This bill would revise
this so that the applicant would state that, to the applicant's
knowledge, no other person has registered a confusingly similar
mark, state or federal, or has the right to use such a mark.
This change is intended to prevent individuals from knowingly
filing a state application when they are aware that others have
better rights to the mark.
Using Federal Case Law as Persuasive Authority . According to
the author and many of the supporters, trademark disputes are
often litigated in federal courts, and as such federal courts
have built a substantial and relatively uniform body of case
AB 1484
Page 7
law. The bill's expressly stated intent is that federal case
law should be used as persuasive (but of course not binding)
authority in interpreting California law and settling disputes
that arise under California law.
ARGUMENTS IN SUPPORT : According to the supporters, this bill
seeks two straightforward objectives: first, it will replace
California's "outmoded trademark law" with current trends
embodied in the 1996 version for MSTB; second, it will bring
California law into conformity with federal law and the law of
at least 30 other states.
According to the sponsor, the Conference of Delegates of
California Bar Associations, this bill will "result in increased
consistency in trademark standards across state lines and
conform to federal and international trends." The sponsor adds
that this consistency and uniformity will "be positive for both
trademark holders and the consumers who rely on the
enforceability of trademark law to identify the source of goods
and services." The supporters also stress that while this bill
is based upon the 1996 MSTB, it is not a wholesale adoption.
Supporters point out that this bill retains important California
provisions regarding anti-counterfeiting, vicarious
infringement, and seizures by retaining the existing language in
Business & Professions Code sections 14320, 14335, and
1430-14341.
The Committee has received about two dozen letters from
trademark holders and business associations representing a broad
swath of California's commercial landscape, from high-tech
companies to skateboard manufacturers and the entertainment
world. Overwhelmingly these letters stress the need to bring
California law into conformity with federal law and the law of
most other states. They also believe that this consistency will
strengthen the intellectual property laws that "are an important
part of creating a pro-business environment in our state."
Attorney Comments to Proposal : Before pursuing this bill with
the author, the Conference Delegates circulated a proposal to
its members for comment. Apparently, most of these comments
were favorable. However, the author and sponsor appropriately
shared with the Committee ten comments that expressed concern
with, or outright opposition to, the bill. Some of the comments
contend that changing California law to conform to federal law
will favor larger national and international trademark holders
AB 1484
Page 8
over smaller and newer trademark holders within California. As
one comment put it, this "proposed change obviously is a power
grab intended to benefit national and international businesses
against regional and smaller businesses." It is not clear,
however, why a uniform trademark law will necessarily benefit
large trademark holders over smaller trademark holders.
Other comments pointed to the provisions relating to "dilution."
As most recently amended, this bill adopts a standard that
would permit the owner of a mark to obtain injunctive relief
where another person's use "is likely to cause dilution" of the
distinctive quality of the owner's mark. At least two comments
contend that existing law provides injunctive relief only where
the use actually "caused dilution" of the mark, not where it is
merely "likely to cause dilution." However, the author
apparently made this change in order to track a recent change to
the parallel provision in federal law, which also adopts the
phrase "likely to cause dilution" in place of the former "caused
dilution." (See 15 USC Section 1125.)
California's existing dilution is not as clear as one might
hope. That is, the existing statute states that the owner of a
mark is entitled to injunctive relief if the use of that mark,
or a similar mark, will result in "likelihood of injury to
business reputation or of dilution of the distinctive quality"
of the registered mark. It is not entirely clear if the
Legislature intended the word "likelihood" to apply only to the
"injury to business reputation" or if it was intended to carry
over to "dilution of the distinctive quality." In any case,
this bill will bring California law into conformity with the
most recent federal law on this point. This change is also
consistent with other provisions of existing law that permit
civil actions for infringements that are "likely to cause
confusion" (Business & Professions Code Section 14320) and
injunctive relief against uses where there is a "likelihood of
injury to business reputation" (Business & Professions Code
Section 14330).
In sum, the concerns expressed by those attorneys who responded
to the Conference of Delegates inquiry apparently do not
represent a majority opinion, and the Committee has received no
formal letters of opposition or concern relating to the issues
raised in the handful of comments discussed above. Nonetheless,
the Committee may wish to discuss some or all of these points
with the author or sponsor.
AB 1484
Page 9
REGISTERED SUPPORT / OPPOSITION :
Support
Conference of Delegates of California Bar Associations (sponsor)
Better Business Bureau of California
Digibeam
Fetish Group
FocalSpot, Inc.
FourStar Distribution
I-Flow Corporation
Inspired Concepts
International Trademark Association
International Association of Skateboard Companies
Mach Ventures
Marimix
Mayer Pharmaceuticals
Oakley, Inc.
Ophthonix
Plant-CML
QuietCool, Inc.
Rowe Technical Design
Sunkist
SunWorld
Sylvan Source
Teacher Created Materials Publishing
Universal Studios
Vito-Tech International
Vurtego, LLC
Opposition
None on File
Analysis Prepared by : Thomas Clark / JUD. / (916) 319-2334