Can a color be a trademark? The answer is that it depends on just how that question gets into court.
Until five years ago, there wasn't much debate on the issue. "As a rule color cannot be monopolized to distinguish a product," the U.S. Court of Appeals in Chicago ruled in 1950. The court was rebuffing an attempt by Life Savers to keep Curtiss Candy Co. from marketing rolls of fruit-flavored hard candies in the green-red-yellow-orange assortment made popular by Life Savers. Courts ever since had followed that dictate.
But in 1985, a split U.S. Court of Appeals for the Federal Circuit found that there were situations in which a color can indeed be given trademark protection and they rejected the Life Savers precedent. In assessing a trademark bid for pink insulation, the majority set two conditions. First, the company had to show that potential competitors had no need to use the color in question. Second, the company had to show that consumers tied the color to the original product.
Trademark infringement cases, in which one company sues another to stop it from marketing look-alike products, are reviewed by the regional federal courts of appeals. And last month the same Chicago court that laid down the law for Life Savers in 1950 decided to stick with the earlier decision, rejecting the reasoning of the federal circuit in the insulation case.
The Chicago judges were considering a controversy over the color of packets of sugar substitute. NutraSweet Co. complained that Stadt Corp. was using unfair methods of competition by packing its product in blue packets too close to the look of NutraSweet's Equal brand. The Chicago judges found that there is no reason to allow a color itself to serve as a trademark because a company can still make sure that competitors do not use the same symbols and designs it uses on its packages.
If a color could be a trademark, the judges envisioned a nightmare of litigation over precise shades and how different one tone of blue could be from another. If enough colors got locked up, they feared, it would be hard for a new competitor to enter the market. Already, they noted, just as Equal has appropriated blue, Sweet 'N Low uses pink packets and Sugar Twin uses yellow.
In other cases, courts ruled that:
Being right doesn't justify being wrong. An investor who had made money following his broker's advice to buy stock in an oil company sold his holdings at a profit and then, three days later, followed the same broker's advice and bought more of the stock. The price then nose-dived, a development the broker might have anticipated had he done more research.
An arbitration panel agreed that the investor could collect from the broker for his losses on the second transaction, but deducted from the amount due the profits on the initial investment. The U.S. Court of Appeals in Atlanta found no legal basis for such a "netting" approach and said the broker had to make up the entire loss on the second purchase.
(Kane v. Shearson Lehman, Nov. 6)
The antitrust laws don't reach a "conspiracy" between a company and its employees or agents. Some courts have found that it can be unlawful for a company and its employees to get together to restrain trade if the employees have an independent personal stake in the outcome.
That would have been so in a case being decided by the U.S. Court of Appeals in Cincinnati: an allegation that hospitals plotted with their medical staffs to keep out midwives. But the Cincinnati judges refused to accept the independent personal stake approach, and ruled that regardless of personal motives joint efforts of employees and the organization for which they work is never legally a conspiracy.
(Nurse Midwifery v. Hibbert, Nov. 6)
Judges have to be sure of themselves before handing out unusually stiff sentences. The guidelines now in use in federal courts allow judges to give tougher-than-normal sentences if they have good reason for doing so, but it is not yet clear how persuasive the evidence behind those reasons need be.
Many courts have said merely that the preponderance of evidence has to support the judge's conclusion. But the U.S. Court of Appeals in Philadelphia imposed a higher standard in a case where the judge sent a felon to jail for 12 times the recommended term -- the largest reported departure from the suggested sentence since the guidelines went into effect. At the very least, the evidence has to be "clear and convincing" to support such an extreme variation from the normal sentence, the ruling says.
(U.S. v. Kikumura, Nov. 2)
Daniel Moskowitz is a Washington editor for Business Week newsletters.