Sixth Circuit has nominative fair use sans la lettre

Oaklawn Jockey Club, Inc. v. Kentucky Downs, LLC, No.
16-5582 (6th Cir. Apr. 19, 2017)
Query: Does the Sixth Circuit’s refusal to adopt nominative
fair use, and its insistence on a separate doctrine of “use as a trademark,”
make a difference?  After all, many
courts applying “nominative fair use” conduct the same back-of-the-envelope
mini-confusion inquiry in determining whether there can be any liability as we
see from the court here.
“In 2010, the Kentucky Horse Racing Commission amended its
regulations to permit gambling on historical horse races.”  This is a way of letting people gamble
without live races.  “Customers receive
anonymized information about the historical horses, handicap the race, and place
their bets,” or there’s also apparently an “automatic” feature that skips the
handicapping, so it’s basically a slot machine. 
After bets are placed, the regulations require, “the terminal shall
display a video replay of the race, or a portion thereof, and the official
results of the race. The identity of the race shall be revealed to the patron
after the patron has placed his or her wager.” In defendants’ product, the
replay isn’t an actual replay, but “computer-generated, generic, and lasts for
only a few seconds; it shows only the order of finish and does not attempt to
visually recreate the racetrack that originally hosted the race.”  It does display the track name as part of
substantiating the results.
 

from the brochure
The track owner-plaintiffs have registered marks for their
racing tracks.  They alleged that the use
of their marks was likely to confuse consumers into believing that they are the
source of the video recreation and endorse its accuracy.  Also, the game-maker’s ad brochure includes a
screenshot of a video replay that uses the track names of Mountaineer Casino
Racetrack & Resort, Rockingham Park, and Turf Paradise, though the owners
of these tracks weren’t parties to this suit. The brochure states that “[t]he
Encore RBG System and its individual games have successfully undergone the
rigorous testing of Gaming Laboratories International (GLI), the gold standard
in technical review and authorization of wagering software and hardware.”
“Trademark use” is required before the multifactor confusion
test is applied.  “When the mark is used
in a way that does not deceive the public we see no such sanctity in the word
as to prevent its being used to tell the truth.” Prestonettes, Inc. v. Coty,
264 U.S. 359, 368 (1924). “If defendants are only using [the] trademark in a
‘non-trademark’ way—that is, in a way that does not identify the source of a
product—then trademark infringement and false designation of origin laws do not
apply.” Interactive Prods. Corp. v. a2z Mobile Office Sols., Inc., 326 F.3d
687, 695 (6th Cir. 2003).
Well, how do you know? 
The inquiry focuses on “whether a consumer is likely to notice [the
plaintiff’s trademark] . . . and then think that the [defendant’s product] may
be produced by the same company[.]”  Why
is this not a poor woman’s confusion test? 
This is left as an exercise for the reader. In fact, the court described
its earlier Hensley case in these
terms: “Because there was no likelihood of consumer confusion regarding whether
the plaintiff trademark owner was the source of the defendant’s products, we
held that the defendant’s use of the trademark was a permissible non-trademark
use.”
The track owners argued that the display of their marks was a
trademark use because it confuses consumers into believing that the track owners
provided or verified the video replays.  The court of appeals disagreed, pointing out
that there were no live feeds of races or actual video replays.  (If there had been, would that have been
likely to confuse?)  “These depictions
are sufficiently different from the Track Owners’ product—live horse racing at
their venues—that the minimal use of the trademarks, preceded by the word
‘Location,’ would not confuse consumers into believing the videos were provided
by Plaintiffs.”  It could be true that
there is such a thing as “an Oaklawn® horse race,” and thus “deciding where to
watch a live horse race or which live-broadcast race to watch [note: not which
source to watch it via] may be similar to deciding which brand of computer to
purchase.”  But here, “the fact that a
race occurred at Oaklawn or Churchill Downs is relevant only as a factual
matter—it is used so consumers can substantiate the race’s result, not to
promote the quality of Exacta’s product.”
It was fair to say that the marks were used “to substantiate
or legitimize the video,” but “only in the sense that they provide consumers
with the requisite details to verify the video game’s accuracy.”  If the game displayed inaccurate results, it
was unlikely that a consumer would blame or complain to the tracks; the target
of complaint would be defendants, the parties actively representing the
accuracy of the results.  “The term
‘Location’ preceding the trademarks sufficiently explains to consumers that the
trademarks are being used in a wholly descriptive manner and does not cause a
likelihood of confusion as to the source of the video,” especially since the
replay didn’t depict the facilities.
As for Exacta’s advertising materials, the only display of
specific track names appeared in a screenshot of a video replay, and the
brochure touts defendants’ own expertise and goodwill.  “Because this was a non-trademark use of
Plaintiffs’ trademarks, we need not reach the question whether the fair-use
defense applies.”  Sure, fine, whatever.


The same analysis applied to Kentucky common law trademark infringement and
unfair competition claims.

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