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Profit

In some cases, the counsel for the right's holder will claim that they are taking action because the alleged infringing party cannot be allowed to profit from the use of their client's trademark and/or copyright.

This argument was addressed by the federal court in New Kids on the Block v. News America Publishing, Inc., 971 F.2d 302 (9th Cir. 1992): (emphasis added)

      "The New Kids' argument in support of this distinction is not entirely implausible: They point out that their fans, like everyone else, have limited resources. Thus a dollar spent calling the newspapers' 900 lines to express loyalty to the New Kids may well be a dollar not spent on New Kids products and services, including the New Kids' own 900 numbers. In short, plaintiffs argue that a nominative fair use defense is inapplicable where the use in question competes directly with that of the trademark holder.

We reject this argument. While the New Kids have a limited property right in their name, that right does not entitle them to control their fans' use of their own money. Where, as here, the use does not imply sponsorship or endorsement, the fact that it is carried on for profit and in competition with the trademark holder's business is beside the point. See, e.g., Universal City Studios, Inc. v. Ideal Publishing Corp., 195 U.S.P.Q. 761 (S.D.N.Y.1977)"

"Voting for their favorite New Kid may be, as plaintiffs point out, a way for fans to articulate their loyalty to the group, and this may diminish the resources available for products and services they sponsor. But the trademark laws do not give the New Kids the right to channel their fans' enthusiasm (and dollars) only into items licensed or authorized by them. See International Order of Job's Daughters v. Lindeburg & Co., 633 F.2d 912 (9th Cir.1990)"

The last sentence here is very important. But the trademark laws do not give the (trademark owner) the right to channel their fans' enthusiasm (and dollars) only into items licensed or authorized by them." That's exactly what a large number of companies try to do when controlling the secondary market and ebay auctions.

In another often quoted case, American Footwear Corp. v. General Footwear Co. Ltd., 609 F.2d 655, C.A.N.Y., 1979, the Second District Court of Appeals, stated:

"It was entirely permissible for American (Footwear) to attempt to capitalize on public receptiveness to a concept, idea or word which Universal has been responsible for creating or popularizing. The only limitation is that the party who takes advantage of the atmosphere the other party has helped create may not achieve a competitive boost by confusing the public into mistakenly purchasing his articles believing it to be that of his competitor. (citation omitted). American has not been guilty of that fault. It has at all times made clear that the Bionic boot it was attempting to promote was an American product. No effort of any kind was made to associate the boot with Universal's TV shows or with any of the characters in those shows. (Joint Appendix at 17-18.)"
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