Office Memo

TO: Professor Tetreault

FROM: Brian Pedigo

RE: Bud Coffer: Trademark Infringement

DATE: October 22, 2004

ISSUES

I. Parody–Whether Bud’s game is a parody, which is when an artist for comic effect closely imitates the style of the original and in so doing creates a new thing that makes ridiculous the style and expression of the original, where Bud’s character names are similar in spelling and sound to the names in the Lord of the Rings, in a realm that is also Middle Earth-like.

II. Consumer Confusion–Whether New Line Cinema can prove that Bud’s game infringed upon its trademark of the Lord of the Rings movies by meeting the elements of consumer confusion, which include trademark similarity, product similarity, marketing channels, consumer care, trademark strength, actual confusion, and intent of parodist, where Bud has created a video game called “King of the Ring and Realm,” sold solely on the Internet, with characters and elements of the game similar to that of the “Lord of the Rings” movie.

SHORT ANSWER

I. Parody–Yes, Bud can establish a parody defense because his game was created with the intent to poke fun at the Lord of the Rings, and his game contains comical references to the character names in the movie with the intent to amuse.

II. Consumer Confusion–Yes, New Line Cinema can show Bud’s game meets the elements of consumer confusion. There is trademark similarity because of the similarity of names and similarity in title. There is product similarity because both products were made to entertain using a similar setting and similar characters. There are similar marketing channels because there is an overlap in the target market and marking methods. There is a lack of consumer care because the intended audience may not be careful when purchasing. The intent of the parodist is to amuse and not to pawn off his work as someone else’s. On balance, Bud has met the elements necessary to make him liable for a trademark infringement against New Line.

FACTS

Our client, 24 year-old Bud Coffer, developed a video game called “King of the Ring and Realm,” sold exclusively through the Internet. The game became popular quickly, and has made more than a million dollars. Bud is being sued by New Line Home Entertainment (“New Line”), alleging infringement upon their trademark of the “Lord of the Rings” (“LOTR”) movie. Additionally, New Line claims the game was released at the same time as “Return of the King”. Bud wants to know how to defend against this trademark infringement suit.

Bud made a video game which was heavily influenced by the LOTR trilogy, being somewhat “Middle Earth-like.” Some of the characters in Bud’s game are a Dwarf named Gimby, the hero who is John Candy and Adam Sandler-like named Frodogan, a wizard named Grandelf, and a short guy named Joedo. LOTR uses character names including a dwarf named Gimley, a Hobbit named Frodo, the hero named Aragon, and a wizard named Gandalf. Bud says he thought the names were “cool” and named his characters to poke fun at the LOTR movie. There is no ring in Bud’s game. Bud’s initial intention was not to develop a funny version of LOTR, rather it “just happened that way.” Bud’s game appeals to boys around 10 to 15 years of age. Bud wants to know whether his video game will make him liable for a trademark infringement. The issues are whether Bud’s game is a parody of the LOTR movie, and whether Bud’s game confuses consumers.

DISCUSSION

There are two issues in this case regarding trademark infringement. The first is parody, and the second is consumer confusion. A successful parody will amuse instead of confuse. Nike, Inc. v. Just Did It, Enters., 6 F.3d 1225, 1227 (7th Cir. 1993). If a parody is found to exist, the court must determine whether the parody is likely to confuse consumers. A parody may reduce the likelihood of confusion, but consumer confusion is the dispositive factor in a trademark infringement. Actual confusion is an important element when it can be shown that at least 15% of customers are confused, but this must be proven in court; therefore it will not be discussed below. Id. at 1231. Consumer confusion can also be shown when trademarks, products or marketing channels are similar, consumer care is not adequately taken, or the intent of the parodist is to pawn off his work as someone else’s. Id. at 1228.

I. Parody

The first issue is whether Bud’s work is a parody. A parody is “when one artist, for comic effect … closely imitates the style of another artist and in so doing creates a new art work that makes ridiculous the style and expression of the original.” Id. In Nike, the defendant created a line of clothing that used the Nike swoosh symbol with the word MIKE. Id. at 1226. Defendant admitted that making fun of Nike was the whole point, and his humor deserved First Amendment protection. Id. at 1227. The court reasoned in Nike that even if something is a parody, it still must not confuse customers, and parody should be used as an additional factor in the analysis of consumer confusion. Id. at 1228. Many of Bud’s character names closely resemble the names in the LOTR movie. Compare Grandelf with Gandalf, Frodogan with Frodo and Aragon, Gimby with Gimley, and Joedo with Frodo. Both the sounds and the spellings of these names are confusingly similar. The title of his game has the word “King” in common to the LOTR, “Return of the King.” The game’s atmosphere is middle-earth like in the same way as LOTR. Bud’s game closely imitates the style of the LOTR movie. Bud’s game would probably meet the requirements for a parody defense, but parody is not the ultimate question in our case, just as it was not the ultimate question in Nike. Id. at 1228.

II. Consumer Confusion

The next, and most important, issue is whether Bud’s game confuses consumers. The elements of consumer confusion are similarity of trademarks, similarity of products, marketing channels, consumer care, trademark strength, and the intent of the parodist. Id.

A. Similarity of Trademarks – The first issue is whether the trademarks are significantly similar. In assessing the similarity of trademarks, the court will consider the degree of similarity in appearance (or sound) and suggestion of the marks. The similarity issue also considers how the words are pronounced and whether they suggest similar ideas or meanings. Id. at 1229. The Nike court realized that NIKE and MIKE are identical but for one letter. Even though the names were similar, the court held that a consumer may not be confused at the point of sale. Id. at 1230.

In Bud’s game the characters’ names are spelled as little as one letter off from the names in the LOTR; in addition, the names sound similar. It is possible that Bud’s video game would be confused at the point of sale as a product that New Line was promoting because of the similarity of names and because the setting of the game is “Middle earth-like.” “King of the Ring and Realm” may suggest a connection to “Lord of the Rings, Return of the King” and consumers at the point of sale could confuse the product’s origin; therefore this element is met.

B. Similarity of Products – The second issue is whether the products are significantly similar. In evaluating similarity, the court will assess if the goods are used for similar purposes and also a “total concept and feel” in order to find potential confusion. Id. at 1230. In Nike the parties were selling the same product (clothing), to be used for similar purposes (to wear), therefore the element was met. Id. Bud’s product is a video game with a purpose to entertain, and New Line’s product is a movie with the same purpose. Even though the two products are not exactly the same, both the game and the movie entertain using a similar setting and have similar characters. The products are similar as they were in Nike. This element is met.

C. Marketing Channels – The third issue is whether the parties used similar marketing channels. The court will assess if the parties have distinct, similar, or overlapping marketing channels, as well as the intended target markets. Id. In Nike, plaintiff marketed to the general public, and defendant marketed strictly by mail-order to those with the first name of Mike. Nike found that there were different marketing channels, and defendant’s target market was not in direct competition with Nike, therefore the element was not met. Id. In Bud’s case, his target market is 10 to 15 year old boys, with an Internet-only marketing channel, while New Line has a target market of the general public, and markets using TV commercials, movie theaters previews, and the Internet. LOTR is likely to appeal to boys aged 10 to 15, who would need to be accompanied by a legal guardian to the R-rated movie. Because the marketing channels and target markets may overlap, this element is met.

D. Consumer Care – The fourth issue is whether consumers exercise a sufficient degree of care when purchasing the product. It is assumed that the lower the price of a product, the less care a consumer will exercise at the point of purchase, increasing the chance of confusion, but price alone is not enough. Id. at 1230. Nike held that a customer may take care when purchasing. Id. In Bud’s scenario, a typical customer would be a 10 to 15 year old boy. A customer could find this popular game on the Internet and input a credit card number–possibly a parent’s credit card. Bud’s customers may utilize a less than desirable degree of care when ordering because of the ease of ordering on the Internet and the young target market for Bud’s game. A consumer may not take the necessary care when ordering from Bud. This element is not met.

E. Trademark Strength – The fifth issue is the strength of New Line’s trademark. The stronger the trademark the greater protection it will receive. Id. at 1231. Nike held that Nike had a widely recognized trademark deserving protection. Id. It is generally known and accepted that LOTR is widely-recognizable and deserves protection. This element is met.

F. Intent of the Parodist – The sixth issue is whether the intent of the parodist was to amuse or confuse. Id. Intent to parody raises an inference that the parodist’s intent was to amuse. Id. In Nike, the defendant’s alleged intent to confuse was overruled by the fact that upon closer inspection an observer would understand the joke. Id. In Nike, it did not matter if defendant benefited from Nike’s advertising and promotions. Nike said that it was likely defendant did not intend to pass off to purchasers his product as a Nike product. Id. at 1232. Because Bud used parody, it is likely that he did not intend to pawn off his game as a New Line production but instead intended to amuse.

CONCLUSION AND RECOMMENDATION

Bud has raised a possible parody defense, but on balance Bud has failed to adequately demonstrate the absence of consumer confusion. Since consumer confusion is the dispositive factor in a trademark infringement, Bud should settle with New Line and re-think his character names and the title of his game. Bud should also expressly disclaim any affiliation with New Line. If Bud fights this trademark infringement action in court, it is likely that he will lose.