:t>REGULATION FOCUS 1IIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIli

Ii
The regulation does not refer to "like-

FDA Overturns 750 lihood of confusion." Perhaps this is a

loophole in the regulations. In the

Years of Trademark Law "Baileys" case the court disregarded the

fact the name of the liqueur does not have
an apostrophe and the name of the ciga-
Tobacco manufacturers can now add a new threat to their business rettes does, so maybe for FDA purposes
challenges: the loss of their brand trademarks. > BY IAN D. TITLEY small distinctions such as adding an "e"
I or an "s" to a word would distinguish it
from a non-tobacco use.
"New" trademarks for tobacco prod-

I O
n March 19, 2010, the Food and
Drug Administration issued final
regulations imposing significant
North America et al v. S & M Brands, Inc.,
26 F. Supp 2d 815 (EDVA 1998.) Since
1979, IDV was the exclusive North
ucts (those introduced after January 1,
1995,or whatever other date the FDA set-
tles on) will be virtually worthless under

I restrictions on tobacco product marketing

and labeling. The regulations (21 CFR
1140.16(a)) will outlaw tobacco brand
names introduced since January 1, 1995if
they are the same as any other trade name
or brand name, for any product at all.
For perspective, if the FAA made this
rule, Delta Airlines would have to change
its name because of Delta Dental and
Delta Faucets. The FDA states it is "aware
of concerns regarding this provision and
is considering what changes, if any,would
I stand, the tobacco company's brand name
>How will the FDA compensate trademark owners
I whose property is deprived because their existing
, Trademarks constitute a property
marks are made illegal under this regulation?
be appropriate," but there is no assurance
that any changes will in fact be made.
This rule contradicts fundamental
trademark law under which companies
obtain trademark rights just from using a
trademark-registration is not required.
These rights are called "common law"
trademark rights. The concept dates back
at least to the 1200'swhen England enact-
ed the first trademark law, although there
is evidence that the Romans used trade-
marks too.
A fundamental principle of trade-
mark law is that infringement occurs
I I only when two marks are confusingly
similar. The same word can be used for
many uses if it is not likely to cause con-
fusion, which is why Delta Airlines and
Delta Faucets co-exist.
The trademark case between the mak-
ers of BaileysIrish Cream and Bailey's cig-
arettes is an excellent case study (IDV
American distributor of Baileys Irish
Cream liqueurs, which it marketed as a
premium product. In 1994 S&M Brands
introduced Bailey's cigarettes as an inex-
pensive "generic" cigarette. Mac and
Steven Bailey own S&M Brands, hence
the name of their product. IDV sued S&M
Brands claiming trademark infringement.
The court listed factors to consider in
determining whether the public was like-
ly to be confused "as to the source or
sponsorship of the goods" including: 1)
the distinctiveness of the mark used first,
2) the similarity of the marks, 3) the simi-
larity of the goods/services, 4) whether
the goods are sold in similar channels, 5)
the intent of the second user, and 6)
whether there was actual confusion.
The court reviewed the factorsand held
IDV did not meet "its burden of showing
that [S&M's]us~ of the Bailey'smark for its
cigarettes is likely to cause confusion
among customers." Today, S&M Brands
continues to market Bailey'scigarettes.
The foundation for trademark analy-
sis is completely missing from the FDA's
new regulation: "A manufacturer shall not
use a trade or brand name of a non tobacco
product as the trade or brand name for a ciga-
rette or smokeless tobacco product, except for a
tobacco product whose trade or brand name
was on both a tobacco product and a noniobac-
co product that were sold in the United 5tates
on January 1,1995."
this regulation because it prohibits a
tobacco product name unless it is com-
pletely unique in the universe of brand
names and trade names. Even if there is
zero chance of confusion, if the same
brand name is subsequently used for any-
thing at all, that subsequent use will pre-
empt the tobacco use. For example, if a
tobacco product manufacturer creates the
brand name G-Liquid for cigarettes, and
someone later starts selling G-Liquid hair
brushes or opens a G-Liquid lemonade
becomes illegal and it has no way to chal-
lenge the subsequent use because there is
no likelihood of confusion.
right that can be bought and sold. How
will the FDAcompensate trademark own-
ers whose property is deprived because
their existing marks are made illegal
under this regulation? What about "new"
unique marks that fall victim to a future
use by an unrelated party? What are the
First Amendment implications? What
company would qualify a new brand with
the various states if the name can be taken
away anytime someone opens a lemon-
ade stand under the same name?
The benefit to grandfathered trade-
mark owners carmot be overstated. The
regulation builds a fence around their
brands and any newcomers risk their
product name to the uncontrollable
actions of unrelated parties. It seems
unlikely there will be any newcomers as
long as this regulation is in effect. r:i
Ian Titley is a partner with Schroder
Fidlow Titley & Davis PLC, specializing in
intellectual property issues.

30 SMOKESHOP April 2010