Legal Question in Business Law in California

Re: Coty disclaimer

A "Coty disclaimer" is a statement by a repackager disclosing that the repackaged product has been modified by it, even though it contains the famous-brand product as a major component.

The name derives from a U.S. Supreme Court case, Prestonettes, Inc. v. Coty (1924) 264 U.S. 359 at page 367. Prestonettes was using Coty fragrances in its compacts. The Court (Holmes, Chief Justice) held that this was not an unfair use of Coty's trademark so long as Prestonettes made full and accurate disclosure that it, not Coty, was responsible for the quality of the compacts.

The decision in Prestonettes v. Coty has been much eroded over the years, and cannot be relied upon to authorize incorporation of brand-name components into a derivative product where the brand-name product is identified or identifiable.

For example, a bakery can use brand-name flour in its bread with little fear of a trademark suit. However, a LawGuru inquirer (you?) who wanted to know if he could incorporate Rossignol snowboards into a new recreational product could easily run afoul of Rossignol's trademark protection under recent theories of trademark dilution including one called 'tarnishment.' A Coty disclaimer might help, but in my opinion he would be at risk of being sued and perhaps losing.