Trademark is defined as a distinctive mark, signature, or device, affixed to an article or to its wrapper, package, or container, to show that it is marketed, manufactured, grown, or selected by a particular person, firm, or corporation. A Trademark is an insignia, which serves as a guarantee that the product is authentic and genuine, and that the product is made with the same degree of quality as other products with the same insignia. The rationale of trademark law is to protect the symbol used to identify a particular manufacturer or seller’s products or services and distinguish them from the products or services of another. No person should be able to unfairly use, compete, or trade on the reputation of another. You should be able to trade only on one’s own reputation. Trademark law protects commercial identity and protects the consuming public by allowing them to easily identify the source of goods and services. As a result, trademark law reduces the customer’s costs of shopping and making purchase decisions, and at the same time trademark law encourages the production of quality goods.
Trademarks serve three basic functions:
(1) Indicate the source or origin of a product;
(2) Guarantee that the product is of the same quality as other products with the same trademark; and
(3) Distinguish the goods or services from other manufacturers or providers.
TYPES OF TRADEMARKS
Trademarks should be dramatic. It should stand out because you will have a better chance of it being protected. A Trademark concerns a sale of goods, a Service Mark concerns the sale of services. There are not much differences and they are used interchangeably. There is also a Certification Mark which identifies the authoritative entity which certifies a particular good. There is also Collective Membership Marks, which is a type of trademark used by members of a collective, association, or other organization to indicate membership and to distinguish the goods and services of members from those of non-members.
WHAT IS A TRADEMARK?
Trademarks are symbols. The symbols can be words (i.e. word marks), slogans, phrases, logos (i.e. design mark, such as the NBC peacock symbol), font-style (i.e. the Coca-Cola lettering), scents, packaging, sounds (i.e. the MGM lion roar), a series of musical notes, or even a color scheme. Protection is afforded to the source of the good, not the good itself. A trademark represents business reputation, goodwill, and brand identity. Trademark law provides incentive to businesses to invest in the quality of their goods.
The language of the Lanham Act, also known as the Trademark Act, the Federal law regulating trademarks, states that trademarks include: any word, name, symbol, or device, or any combination thereof.î The definition is therefore not restrictive and covers almost anything that is capable of carrying meaning.
WHAT IS NOT A TRADEMARK
Many “names” do not qualify as trademarks because they do not properly indicate the source of a good or service.
DOMAIN NAMES ARE NOT TRADEMARKS
The use of a domain name to identify a web address is not a trademark. Moreover, registration of a domain name on an accredited registrar does not give you any legal rights. In fact, the registered domain name may be required to be surrendered if it infringes on a trademark.
BUSINESS NAMES ARE NOT TRADEMARKS
The use of business name does not qualify as a trademark. In fact, despite filing your business with the Secretary of State, the use of the business name may be prevented if it is found to likely cause confusion with an existing trademark.
ORNAMENTAL DESIGNS ARE NOT TRADEMARKS
A design being used in a purely ornamental or decorative manner is not protected as a trademark. For example, use of a design on the front of a t-shirt has not traditionally been protected as a trademark. However, if the design on the t-shirt is recognized as a mark of another source, such as a television show, then the use may be considered as a trademark. Another example is the Nike Swoosh ñ it depends on how the mark is marketed. Nike does not always depict the mark on the front of the t-shirt but rather as a logo on the product. Even more, public perception is very important ñ it is all about how the public perceives the mark.
PRODUCT FEATURES ARE PROTECTED BY TRADE DRESS
Identifying features of a product are protectable if they do not present an unfair competitive advantage. Product features are generally protected under “trade dress”, which allows for protection if the consumers associate the specific feature with the particular manufacturer rather than with the product in general. For example, the Listerine container is protected by trade dress.
FUNCTIONALITY IS NOT PROTECTED BY TRADE DRESS OR TRADEMARK
However, the feature will not be protected if it serves a functional purpose because such protection would present an unfair competitive advantage to the particular manufacturer. For example, if the product feature allows for functionality of the product, such as easier handling or storing, then the feature will not be protected by trademark or trade dress. Also, a scent cannot be trademarked if it is a function of the good you are selling, such as a perfume.
TRADEMARKS MUST BE DISTINCTIVE
When selecting a trademark, the key characteristic is its distinctiveness. The most distinctive marks are fanciful, the next distinctive mark is arbitrary, then suggestive, descriptive, and lastly generic. Coined, arbitrary, fanciful, and suggestive marks are considered “inherently distinctive marks” and are registered on the Principal Register, the primary register of trademarks maintained by the United States Patent and Trademark Office (USPTO). The Courts group marks into four categories based on the relationship between the mark and its product. Some marks are afforded more potent rights and therefore more protection.
The four categories of trademarks, from the strongest to the weakest in terms of being distinctive and protected, are:
(1) Arbitrary and Fanciful (Strongest);
(2) Suggestive (Medium);
(3) Descriptive (Weak); and
(4) Generic (No Protection).
ARBITRARY OR FANCIFUL MARKS
A fanciful mark is an invented word with no dictionary meaning. They consist of coined terms. For example, the marks “Exxon”, “Kodak”, “Polaroid”, “Starbucks”, “Xerox”, and “Haagen Daz”. They bear no relationship to their underlying product which are respectively gasoline, cameras, coffee, copy machines, and ice cream.
An arbitrary mark also bears no relationship to its product. For example, “Apple” for computers, or “Banana” for tires, or “All-State” for insurance, or the Nike Swoosh for sports apparel.
Arbitrary and fanciful marks are inherently distinctive and are given a very high level of protection under trademark law. They are prima facie registrable.
A suggestive mark refers to a particular characteristic of the underlying product. But it does not specifically describe the good. Rather, it is subtle. The consumer must exercise his or her imagination to understand the reference. Suggestive marks are considered distinctive and are given protection. For example, “Whirlpool” washing machines, “Coppertone” suntan lotion, and “Ivory” soap.
Descriptive marks directly describe the product, or some important characteristic of the product. For example, a depiction of a television for a “television repair service.” Descriptive marks are initially not protectable. Describing the nature or quality of the good is not protectable, unless it acquires a secondary meaning. As a practical note, in order to make a descriptive mark distinctive, it is possible to give the mark a distinctive type font and register it as a design logo by submitting a Special Form Mark drawing.
DESCRIPTIVE MARKS MUST HAVE SECONDARY MEANINGS TO BE PROTECTED
Secondary meaning is when the public perceives the mark as a trademark rather than its primary meaning. A common example is the mark ìHoliday Inn.î The mark must be thought of as a brand and not as a descriptive word. The public must associate the mark with a particular company and not the product in general. The test is for whether the mark has acquired secondary meaning is: Does the consuming public primarily associate the mark with a particular producer, rather than the underlying product? The Court will base the determination of secondary meaning on factors:
(1) Amount and manner of advertising;
(2) Volume of sales;
(3) Length and manner of the mark’s use (generally extensive use in commerce over a five (5) year period); and
(4) Results of consumer surveys.
Where the Defendant seeks to justify the use of a common word by the argument that he needs it to describe the particular product, Courts have developed a test to determine whether there is an “unnecessary use” by the Defendant. The concept of necessity is evoked not as a standard of legality, but rather as a test for an illegal intent. If there is no real necessity for the use of a particular term, because there are others of equal effect and in common use, or if the Defendant cannot offer a reasonable explanation for the particular usage, then a strong presumption that an intent to unfairly compete exists. The Defendant bears the burden to justify the use.
A generic mark describes the general category of the product. Generic marks are entitled no protection whatsoever under trademark law. For example, the mark “Apple” could not be used to identify apples as a product. No producer is entitled to have the exclusive right to use a generic term. Furthermore, in some circumstances, an original term can become generic over time through a process referred to as “genericity”.
COMMON LAW TRADEMARK RIGHTS
Trademarks are governed by both State and Federal law. However, the Federal law provides the most extensive protection available. Still, common law trademark rights and State common law actions are still available.
Assuming that a mark is distinctive and qualifies for protection, there are two ways that rights in a trademark are acquired: (1) first to use the mark in commerce; and (2) first to register the mark with the United States Patent and Trademark Office (USPTO).
Under the common law, the basis of getting rights in the trademark is by the use of the mark. You must use the mark in a particular territory. Use is the primary basis of getting rights in the mark. The use must be as a trademark, not in some other manner. The mark must be used in the course of business. Use of the mark means the actual sale of a product to the public with the mark attached.
Under common law, the first to use the mark is the owner of the mark. The owner may be an individual, Corporation, Partnership, Limited Liability Company, or other legal entity. However, common law trademark rights are not preferred, as they extend only to the places where a trademark has been used in commerce and areas in which there is a reasonable expectation of expansion.
Courts look at many factors in determining whether one has acquired common law rights in a mark: widespread distribution, public association with the mark, whether consumers associated the mark with the source of the goods, whether the mark has become distinctive, and whether the mark owner has exercised control over the quality of the goods and has used the mark in a trademark sense. Moreover, if the mark is descriptive, there may be a period of time in which the mark is used in commerce before it acquires a secondary meaning. During this period the mark is not entitled to protection. Only until the mark acquires secondary meaning is the mark protected by trademark law.
Common law rights are severely limited because they are restricted to the geographical area where the mark was used or reasonably expected to be used (the natural zone of expansion). Common law rights, when recognized, will protect a mark holder as against infringement only within that specific geographical market. If another mark-user comes along and registers the same mark on the federal level, the subsequent registrant will have rights in that mark in all areas but the limited geographical area where the prior mark-holder had used the mark in commerce, or the area where the common law mark holder would reasonably be expected to expand. Simply put, Federal registration is preferred if one seeks nationwide protection for a trademark because it will put the entire nation on notice of your claim of trademark rights in the mark.
Common law rights are a right of last resort. If you are seeking trademark protection on the internet and across the nation, it is best to seek a Federal registration with the United States Patent and Trademark Office (USPTO).
A trademark search, also known as the “clearance” process, should be conducted before applying for trademark registration so that you do not waste the non-refundable filing fee. The USPTO’s Trademark Electronic Search System (TESS) can be used to conduct a free clearance search for word marks, design marks, and combinations of words and designs that are being used or applied for. The search focuses on whether there is a “likelihood of confusion” between your mark and a mark that has already been applied for or registered. A likelihood of confusion results when there is the same or similar mark and related goods and services. If there is a likelihood of confusion, your mark will be refused.
There are no set rules for conducting a search. The TESS (for Federal registrations and applications), Secretary of State web sites (for State registrations), and online internet searches (for common law trademarks) should be examined. Furthermore, the marks must be evaluated to determine if they are in the same class of goods and services.
A comprehensive search is offered by trademark search companies. The price ranges from $800 to $1,000. The trademark search company will run a better search strategy than any other individual or entity. They have state common law databases, and search domain names, business names, and many other categories. Still, a comprehensive search is not perfect, although very recommended when you think you have an important mark that has value to you.
BENEFITS OF FEDERAL TRADEMARK REGISTRATION
The Federal Government has the ability to regulate trademarks according to the Commerce Clause of the United States Constitution. The Lanham Act grants the United States Patent and Trademark Office the administrative authority to regulate trademark registrations. A Federal trademark registration is essentially a grant by the United States Government of a right to exclude others from using the mark in the same form or near resemblance that may be likely to cause confusion, mistake, or deception. The right to exclude others is renewable for successive ten (10) year periods as long as the mark is used in commerce or there is a justifiable reason for non-use.
Trademark registration on the Principal Register provides:
(1) Nationwide trademark rights;
(2) Presumption that the mark is valid;
(3) Presumption that the owner listed on the registration is the true owner;
(4) Presumption that the mark has not been abandoned through non-use;
(5) Presumption of the exclusive right to use the mark nationwide – that is, registration is considered prima facie evidence of exclusive rights;
(6) Access to Federal Courts for trademark infringement litigation;
(7) After five (5) years of unopposed registration, the mark is considered incontestable, which means the mark cannot be attacked on the grounds that it is merely descriptive;
(8) Constructive notice so that infringers cannot claim that they were not aware of the registered mark ñ this is referred to as “notice-priority”;
(9) Right to use the Federal registration symbol consisting of an R enclosed within a circle ®, or the words “Registered in U.S. Patent and Trademark Office” or “Reg. U.S. Pat. & Tm. Off.”;
(10) Listing in the USPTO’s online databases;
(11) Enhanced remedies for infringement, such as triple damages and criminal penalties for counterfeiting;
(12) Use of the U.S. Registration as a basis to obtain registration in foreign countries; and
(13) Right to have the United States Customs Service prohibit import goods that bear an infringing mark ñ this is important for large well-known brands.
Federal registration affirms the rights you have under common law and adds more. The basis for Federal trademark registration is actual use and an intent to use. A Use-based application must show actual use at the time of filing. An intent-to-use application states that there is a bona fide intent to use the mark with the particular identified goods and services.
It is a good idea to register your mark because it allows you to get into Federal Court. You can still get into Federal Court without Federal registration but certain presumptions are not permitted, whereas with registration presumptions are permitted. With registration there is a presumption of ownership. Registration gives the public constructive notice of the owners’ trademark. Registration permits the use of the symbol ® with the mark – this symbol can only be used once the mark has been examined, approved, and registered with the USPTO. The TM symbol can be used any time even without registration. Registration also allows for statutory damages in an infringement action.
One of the benefits of the Federal trademark registration is that it covers the entire country, even if actual sales are restricted to only a limited area. However, the nationwide right is restricted to the extent that there were prior similar marks already being used by others within a specific geographic area. The prior user retains the right to use the mark within the limited specific geographic area.
FEDERAL TRADEMARK APPLICATION FILING FEES
Before filing for trademark registration, you should determine whether the mark is distinctive and how difficult it will be to protect your mark based on its strength. A strong mark will allow you to easily prevent third-party use. A weak mark is usually descriptive and will be difficult and expensive to police and protect.
Federal trademark registration applications can be completed online through the USPTO website for a cost of $225.00 per class for a Trademark Electronic Application System (TEAS) Plus Application, $275.00 per class for a TEAS Reduced Fee Application, and $325.00 per class for a TEAS Regular Application. For TEAS Plus Applications, payment for each class is required at the time of filing; whereas, TEAS Reduced Fee Applications and TEAS Regular Applications only require the fee for one class to be paid at the time of filing, but any additional fees must be submitted before the application process is completed. The status of a pending application can be monitored with the serial number through the online Trademark Status and Document Retrieval (TSDR) system.
To note, the TEAS is a public information database. Therefore, if the product is meant to be a secret, such as a unique patentable product, then it is not a good idea to file for trademark registration until the patent is first received.
CLASSIFICATIONS OF GOODS AND SERVICES FOR TRADEMARKS
The USPTO Trademark Registration Application filing fee is based on the type of application form and the number of International Classes of Goods or Services in the application. The class of goods or services to which the mark is or will be applied must be identified. There are about 45 classifications of goods and services. The number of classes will determine the total filing fee for the application. The USPTO requires a filing fee for each class of goods and services. There is an advantage for filing multiple separate applications for each class ñ a separate examiner will be reviewing the application. Whereas in a single application for multiple classes the same examiner will review the individual application. The USPTO has issued the International Schedule of Classes of Goods and Services and the Acceptable Identification of Goods and Services Manual (ID Manual) to assist in selecting the classification. To note, design marks are given a numerical classification.
TRADEMARK REGISTRATION FILING DATE NOTICE-PRIORITY
Once an application is filed, a “filing date” will be assigned, which is presumed to have priority over later applications. That is, if a later application is considered to likely cause confusion with your mark, then that later application will be “suspended” until your prior application is registered or is abandoned. However, the priority of a filing date is not absolute. A mark owner with “stronger” rights than a prior applicant can “intervene” in the application process and assert an opposition to the registration of the applied for mark. An example of strong rights include a long history of earlier use of the mark in commerce, despite not having filed a prior application.
OFFICE ACTION BY USPTO TRADEMARK EXAMINER
The application process may take up to a year or even longer. Within three (3) months, a USPTO Trademark Examiner will examine the application to determine if the mark complies with Federal law pursuant to the Trademark Manual of Examining Procedure, which can also be obtained through the USPTO website. The Examining Attorney will issue an “Office Action” letter stating any reasons for refusing the mark. If a Preliminary Rejection is issued, the applicant will have six (6) months to request a re-examination or file a Reply Response with supporting arguments. It is imperative that the applicant have the assistance of an Attorney in submitting a Reply to the USPTO. If a Reply is not filed, a Final Rejection will be issued.
FINAL REJECTION BY USPTO TRADEMARK EXAMINER
If the applicant receives a Final Rejection from the Trademark Examiner, the applicant can file an Appeal with the administrative tribunal Trademark Trial and Appeal Board (TTAB). In addition, if the application is opposed by any third parties, the Opposition Appeal will be reviewed by the TTAB. It is also important that the applicant have the assistance of an Attorney during this process. If the applicant is not satisfied with the decision of the TTAB, the applicant may appeal to the United States District Court for the District of Columbia by filing a civil action to obtain a registration. The applicant may also appeal to the United States Court of Appeals for the Federal Circuit.
OFFICIAL GAZETTE PUBLICATION OF TRADEMARK
The Trademark Official Gazette is a weekly online publication. Once an application is allowed, the application will be published in the Official Gazette. An exception to the publication on the Official Gazette exists when the mark is granted registration on the Supplemental Register. Any entities or individuals who would like to oppose the registration of the mark will have thirty (30) days to file an Opposition Appeal. An Appeal is a proceeding that is held before the Trademark Trial and Appeal Board (TTAB). The third party may also first file a Request for an Extension of Time to file an Opposition. Ultimately, if no Appeal is filed, the registration will finally be issued to the applicant. The USPTO will issue a Registration Certificate eleven (11) weeks after publication.
For an “intent to use” registration, the USPTO will issue a Notice of Allowance eight (8) weeks after publication. A Notice of Allowance indicates that the mark has been allowed, but the mark has not yet been registered, unless within six (6) months a Statement of Use is submitted to the USPTO. A Statement of Use contains a sworn statement that the mark is being used in commerce on all the indicated goods and services. The filing fee for a Statement of Use is $100.00 for each class of goods or services. If a Statement of Use is not filed within six (6) months, the mark will be considered abandoned unless a Request for an Extension is filed with a statement of the ongoing efforts to use the mark in commerce. Up to five (5) Requests for Extensions may be filed. If the mark is used in commerce before a Notice of Allowance is issued, the applicant can file an Amendment to Allege Use.
ACTUAL USE VS. INTENT TO USE TRADEMARK IN COMMERCE
Federal trademark registration applications can be based upon: (1) the “Actual Use”; and (2) a bona fide “Intent to Use” (ITU) the mark in commerce.
For an Actual Use application, the mark must be used in “interstate commerce” through the sale or transport of goods, or in the rendering of services. Interstate commerce means there must be transactions across state lines or with another country. If the mark is only being used intrastate (i.e. within one state), it may not be the proper time to file for Federal registration. But if you are doing business across State lines (i.e. over the internet), Federal registration is proper.
For an Intent to Use (ITU) application, the mark will not be registered until the applicant in fact uses the mark in interstate commerce. The purpose of an ITU application is to establish priority in determining which party first acquired trademark rights in the event of a dispute. An ITU application still requires that there be actual use before registration is in fact completed. As a result, an ITU application requires filing an additional form and fee ñ a Statement of Use. It is also possible to file an application in which some of the goods and services are in use and others are intended to be used. There must be a bona fide intent to use the mark, which is more than just the idea ñ it must be supported by evidence such as: a business plan, sample products, or other initial business activities.
The “drawing” in the USPTO Trademark Application refers to the depiction of the mark. The USPTO uses the drawing to upload the mark into the USPTO databases and to print the mark in the Official Gazette and on the Registration Certificate. Each variation of the mark requires a separate application and fee. The mark may appear as: (1) a Standard Character Mark, or (2) a Special Form Mark.
A Standard Character mark grants broad protection solely to the wording (including letters and numbers) without regard to font, style, size, or color ñ this means that you can be flexible and change how you display the wording in your mark at any time.
A Special Form mark consists of special characteristics, such as a particular font, stylization, design, logo, color, or combination thereof. There are two categories of Special Form marks: (1) Stylized marks (in which wording appears in a particular font), and (2) Design Marks (in which wording is combined with a design). A Special Form drawing has additional requirements, in that the “literal element” must be identified. All the words that appear in the mark image must be indicated. If the mark is in color, the applicant must claim each of the colors in the mark and indicate the location of each color within the mark. If you are submitting a color drawing, you must include: (1) a “Color Claim” naming the color(s) and stating that the color(s) is a feature of the mark, and (2) a Separate Statement describing the mark and indicating where the color(s) appear in the mark.
Because of the additional requirements for a Special Form mark with color, most applicants only apply for Standard Character marks or Special Form marks in black-and-white and no color.
If the mark consists of stylized words or a design, then the mark must be submitted to the USPTO as a JPG image. If the application is based on a mark that is actually being used in commerce and the goods and services with the mark are currently being sold, then a “specimen” of the particular use must be submitted as a JPG or PDF image file for each class of goods and services. A scanned copy or a photograph image of how the mark actually appears must be submitted ñ this can be a tag, label, packaging, or advertisement. To note, a specimen is not required for a “text only” mark or for a mark that is not yet used in commerce.
If the registration is based on an intent to use, a specimen for each class of good and services must be submitted when the Allegation of Use is filed, which may be filed prior to publication (i.e. Amendment to Allege Use) or after publication (i.e. Statement of Use).
PRINCIPAL REGISTER VS. SUPPLEMENTAL REGISTER FOR TRADEMARKS
The benefits of Federal trademark registration only apply to those marks on the Principal Register. Purely Descriptive Marks never are placed on the Principal Register. The only marks that are placed on the Principal Register are: (1) Arbitrary or Fanciful Marks; (2) Suggestive Marks; and (3) Descriptive Marks with Secondary Meaning.
The Supplemental Register consists of Descriptive Marks that have not yet obtained secondary meaning and therefore are not considered to be distinctive.
Moreover, Generic Marks are ineligible for trademark protection and are not registered on either the Principal or Supplemental Register.
SECONDARY MEANING OF DESCRIPTIVE MARKS
To acquire secondary meaning, a Descriptive Mark must be used for at least five (5) consecutive years in commerce. Alternatively, the user must provide evidence of substantial advertising and market recognition.
The test for secondary meaning is:
In the minds of the public, does the primary significance of the mark identify the source of the product rather than the product itself?
REJECTION OF TRADEMARK BY THE UNITED STATES PATENT AND TRADEMARK OFFICE
The USPTO will reject marks that are determined: generic, geographic, surnames (i.e. an individual’s name or likeness), title of a book or movie, matter that is used in a purely ornamental manner, or a foreign term that translates to a descriptive or generic term. The USPTO will also reject marks that are immoral, obscene, or scandalous. In addition, the mark will be rejected if it creates a likelihood of confusion with a prior existing mark. Rejection does not automatically mean that the mark is not protected. Rejection by the USPTO merely signifies that the mark will not be entitled to the benefits available pursuant to Federal registration.
STATE TRADEMARK REGISTRATION
State registrations are considered less potent and not as strong as Federal registration. In order to qualify for Federal registration, the mark must be used in interstate commerce. If a mark is only used within a particular State, then State registration is appropriate and Federal registration may not be necessary. To obtain a State registration, the application must be submitted to the State’s Secretary of State.
California has a State registration system for trademarks and service marks pursuant to California Business and Professions Code section 14000 et seq. California has adopted the Model State Trademark Law.
The Secretary of State’s office maintains registration and all updates of California State trademarks and service marks. This information is accessible to the public upon request.
The classification of goods and services are those adopted by the United States Patent and Trademark Office and a single application may include multiple classifications of goods or services. Applicants are required to state a declaration of accuracy that the material facts in the application are true. A willful inaccurate statement is subject to a civil penalty of up to $10,000.00 to be enforced by a public prosecutor. The duration of California registrations has been reduced from ten to five years and the renewal application requires submission of a specimen showing actual use of the mark. The applicant is required to state whether they previously sought to register the mark with the United States Patent and Trademark Office and, if registration was refused, to disclose the reasons why it was refused at the Federal level.
LOSS OF TRADEMARK RIGHTS
Unlike other areas of intellectual property law, trademark protection does not have a set duration or definite expiration date. Trademark rights only expire once the mark is no longer being used in commerce. However, Federal trademark registration expires ten (10) years from the registration date unless renewed within one (1) year prior to expiration. Moreover, the rights in a trademark can be lost through:
(2) Improper licensing and assignment; and
ABANDONMENT OF TRADEMARKS
An abandonment of the trademark occurs when its use is discontinued with an intent not to resume. Intent can be inferred based on the circumstances surrounding the discontinuance. Non-use of a mark for three (3) consecutive years is prima facie evidence of abandonment.
IMPROPER LICENSING AND ASSIGNMENT OF TRADEMARKS
The rights in a trademark can be lost and the trademark cancelled if the mark is licensed without the proper quality control and supervision over how the mark is being used by the licensor. Moreover, if the mark is assigned in gross without the corresponding sale of the business assets which are the underlying product for which the mark is attached, then the mark will be cancelled. Simply put, under these situations, the purpose of the mark in identifying the source of the goods no longer exists.
A mark can lose its distinctiveness when in the minds of the public the mark symbolizes a broad category of products. The mark no longer specifically identifies the source or manufacturer. The mark in fact has become a generic term used by the public. To determine genericity, Courts will evaluate: (1) dictionary definitions, (2) use by newspapers and magazines, and (3) attempts by the trademark owner to police its mark. For example, the terms “escalator”, “thermos”, “aspirin”, “nylon”, “post-it notes”, and “cellophane” have become generic terms.
DUTY TO POLICE YOUR TRADEMARK
It is important to note that a trademark owner has a duty to police infringing uses of its trademark. It is solely the responsibility of the mark owner to file a civil lawsuit in State or Federal Civil Court in order to restrict infringement. If a trademark owner does not enforce its trademark rights or otherwise fails to maintain quality control over the trademark (i.e. a naked license), trademark rights may be lost. Cease and Desist Notices should be sent before initiating litigation.
To maintain Federal trademark registration, a Declaration of Continued Use must be filed with the USPTO before the end of the sixth year after the registration date. In addition, a Combined Application of Continued Use and Application for Renewal must be filed before the end of every ten (10) year period after the date of registration. If the documents are not timely filed, the registration will be cancelled and cannot be reinstated; rather, a new application must be filed. Federal trademark registration rights can last indefinitely if properly maintained.
TRADEMARK INFRINGEMENT AND THE LIKELIHOOD OF CONFUSION TEST
A claim for infringement of a trademark may be based upon a violation of Common Law rights, State trademark registration, or Federal trademark registration, and all three claims may co-exist at the same time.
Trademark registration only reinforces your rights. Contrary to popular belief, due to common law rights you need not own a trademark registration for trademark infringement to exist. The key inquiry in a matter of trademark infringement is whether an ordinary consumer is likely to be confused between the trademarks. If the trademarks are confusingly similar, the prior user should request that the subsequent user cease use of the trademark. This commonly occurs in the form of a Cease and Desist Notice. If the subsequent user refuses, trademark litigation may ensue.
The standard for trademark infringement is “likelihood of confusion”. No trademark shall be refused unless it causes confusion, mistake or deceit with a previous existing mark. A mark is infringing if it is confusingly similar to an existing mark. It is about public perception – will the public be confused? Specifically, the use of a mark in connection with the sale of a good is infringing if it is likely of causing confusion in the consuming public as to the source of those goods or as to sponsorship or approval of the particular goods. The Courts weigh factors to measure the likelihood of confusion:
(1) Strength of the mark;
(2) Proximity of the goods;
(3) Similarity of the marks;
(4) Evidence of actual confusion;
(5) Marketing channels used;
(6) Type of goods and the degree of care likely to be exercised by the purchaser (also known as “purchaser sophistication”);
(7) Defendant’s intent in selecting the mark;
(8) Likelihood of expansion of the product lines;
(9) Quality of Defendant’s goods or services; and
(10) Whether the Defendant’s attempt to register the mark was bona fide and in good faith.
Simply put, there are no hard and fast rules in determining whether a likelihood of confusion exists. To summarize, the Courts will look at:
(1) The similarity of the trademarks;
(2) The similarity of the goods or services;
(3) The similarity of trade channels;
(4) The number and nature of similar trademarks in use on similar goods; and
(5) The extent of any actual confusion.
The most important factors are often the first two. Marks are considered very similar if they are close enough in sound, appearance, or meaning. However, using the same mark on a completely unrelated product will not give rise to infringement because consumers are not likely to believe that the goods are being produced by the same business. However, famous marks such as Coca-Cola and Coach are registered in a broad range of classes, making them virtually impossible to use in a different channel of distribution.
TRADEMARK LITIGATION PROCESS
In trademark litigation, a frequent issue is whether or not a likelihood of confusion exists between two trademarks. Many factors are considered in this determination, but the two primary factors are the similarity of the trademarks and the similarity of the goods or services. If a typical consumer is confused between the two uses, then a likelihood of confusion exists. It is the Plaintiff’s burden to prove that a likelihood of confusion exists. Generally, the Plaintiff must also prove ownership and prior use. For these issues, a trademark registration can create presumptive rights. If the Plaintiff is successful in proving prior use and a likelihood of confusion, the Court may issue an injunction against the Defendant. Other damages potentially available in trademark litigation matters apart from an injunction include costs of litigation, damages, Plaintiff’s loss of profits, the Defendant infringer’s profits, treble damages, and Attorney’s fees.
In some cases the likelihood of confusion is not present, but there is still damage done to a recognized mark by a second seller’s unfair use of it. If the mark makes the public think there are two different sources for the same mark, even though there is no confusion. This type of perception injures the brand. The mark is weakened because it is identified with dissimilar goods. Therefore, the mark can be charged as diluting another mark.
An action for trademark dilution can be brought under either Federal or State law. However, under Federal law there is a strong standard to have an existing mark to be diluted ñ the mark must be “famous” and well-known.
To determine if a mark is “famous”, the Court will weigh factors:
(1) Degree of inherent or acquired distinctiveness;
(2) Duration and extent of use;
(3) Amount of advertising and publicity;
(4) Geographic market;
(5) Channels of trade;
(6) Recognition in trading areas;
(7) Use of similar marks by third parties; and
(8) Whether the mark was registered.
Under State law, the mark does not need to be famous. Rather, an action for trademark dilution exists if: (1) the mark has “selling power” or distinctive quality; and (2) the two marks are substantially similar.
Another related cause of action is trademark tarnishment. A trademark is tarnished when an infringing mark portrays the infringed mark in a negative unflattering light ñ usually in the context of sex, drugs, or crime. Tarnishment can also happen if the infringer is offering low quality goods. The rationale is that through the association of inferior products or services, the mark’s commercial value and quality is diminished.
Unfair Competition, both the Common Law tort and the Federal statute, attempts to enforce a certain level of “honest practices in industrial or commercial matters.”
A State law cause of action for Unfair Competition consists of: passing off, contributory passing off, reverse passing off, and misappropriation. Passing off involves the Defendant “passing off” the product as if it is coming from the Defendant. Contributory passing off involves the Defendant assisting or inducing another, such as a retailer, to pass off a product as if it is coming from another source. Reverse passing off involves the Defendant trying to pass off the Plaintiff’s product as if it is Defendant’s own product, for example by putting on a different label on Plaintiff’s product.
An injured party brings Federal Unfair Competition claims under section 43(a) of the Lanham Act. Because the Lanham Act is a Federal statute, there must be some degree of interstate commerce involved. Unlike trademark infringement claims under the Lanham Act, Unfair Competition claims do not require any Federal registered marks. As a result, section 43(a) involves all Federal trademark infringement claims and extends further to cover other unfair business practices. Section 43(a) claims break down into two categories: likelihood of confusion and false advertising.
As in Federal trademark infringement analysis, a likelihood of confusion exists when there is confusion as to the source, sponsorship, or association between goods or services. The elements to prove a section 43(a) claim based on likelihood of confusion are:
(1) One uses any word, term, name, symbol, device, or combination,
(2) In interstate commerce, and
(3) Which is likely to cause confusion as to source, sponsorship, or association.
The elements for a section 43(a) claim of likelihood of confusion are comparable to trademark infringement except one does not need a Federal registered trademark.
One seller unfairly competes with another seller by adopting and using a trademark that is confusingly similar to the prior adopted and used trademark of the first seller. It is easy to see why this type of practice is prohibited by the law. If it were otherwise, consumers would be confused as to the origin of a certain product and, thus, could not rely on receiving consistent quality. In addition, there is something inherently unfair in letting an infringer get the benefit of the first seller’s time, money, and effort in building good will for the trademark.
DEFENSES TO TRADEMARK INFRINGEMENT CLAIMS
The affirmative defenses to trademark infringement are: (1) Classic Fair Use; (2) Nominative Fair Use; and (3) First Amendment Free Speech Parody. All defenses require that there be no consumer confusion as to the source or sponsorship of the product or services.
CLASSIC FAIR USE OF TRADEMARK
Fair Use, in the context of trademark law, consists of using a descriptive mark in good faith for its primary meaning and not for its secondary distinctive meaning. Therefore, no consumer confusion is likely to result. The use of the mark is considered fair because it is used in purely a descriptive accurate manner and does not invoke the distinctive nature of the mark. Such use is considered privileged from a trademark infringement action.
NOMINATIVE FAIR USE OF TRADEMARK
Another Fair Use defense is when the mark is used in its nominative nature. The trademark is being used to actually refer to the trademarked product or the trademark owner. That is, the use of the mark is necessary in order to identify another producer’s product. The rationale is that the use of a trademark is sometimes necessary in order to comment and reference another party’s product and services. The use is not directly profiting from the mark.
PARODY OF TRADEMARK
Parody is a form of speech protected by the First Amendment to the United States Constitution. Parody promotes public comment and criticism. However, the connection to the use of the mark and the form of speech must not be directly tied to commercial purposes, rather it must be for editorial and artistic purposes.
ADDITIONAL DEFENSES TO TRADEMARK INFRINGEMENT
Additional Defenses include asserting that Plaintiff’s mark is invalid, that no confusion or dilution exists, that the Defendant is the senior user of the mark, that there was insufficient notice and Defendant is an innocent infringer, or that the Statute of Limitations under State law has expired (to note, infringement of a Federal trademark does not have a specific Statute of Limitations; instead, Courts often apply the most analogous State law).
REMEDIES FOR TRADEMARK INFRINGEMENT
The remedies available for trademark infringement under Federal law include an injunction and monetary damages. An injunction is an order by the Court to stop using the infringing mark or to stop diluting the mark of the Plaintiff. In addition, the Court may order the seizure and destruction of the infringing goods.
Section 35(a) of the Lanham Act, 15 U.S.C. section 1117(a), allows for monetary damages, which may include: (1) Defendant’s profits; (2) actual damages sustained by the Plaintiff (i.e. Plaintiff’s lost profits); and (3) Attorney fees. Generally, absent clear and convincing evidence of actual harm, Courts and juries will often look for evidence of intentional, culpable, or reckless conduct in order to award monetary damages in trademark infringement cases. The recovery of Defendant’s profits requires a showing of willful intent to deceive, bad faith, or an intent to confuse. In order to recover damages for Plaintiff’s actual harm, the Plaintiff must provide evidence of actual consumer confusion or deception. If Plaintiff can prove Defendant’s actions were intentionally deceptive, then a rebuttable presumption of consumer confusion exists. Some Courts will presume that the Defendant’s profits would be profits that would have belonged to Plaintiff but for the infringement. Thus, Courts will use Defendant’s profits as a measure of actual damages.
Moreover, upon showing bad faith displayed by the Defendant, the Plaintiff may recover treble damages. However, no damages, whether Defendant’s profits or Plaintiff’s actual damages, may be recovered unless the infringer had actual notice of the registration or Plaintiff used the symbol R within an enclosed circle ®, or the words “Registered in U.S. Patent and Trademark Office”, or the abbreviated “Reg. U.S. Pat. & Tm Off.” In addition, no damages can be recovered from any infringement that occurred prior to the date of registration. Also, punitive and exemplary damages to punish the Defendant are not recoverable under the Federal Lanham Act, but may be available pursuant to State law causes of action for trademark infringement and unfair competition. Furthermore, under the Lanham Act, Attorney’s fees are awarded to the prevailing party only in “exceptional cases”, such as bad faith on the part of the infringer Defendant or on the part of the Plaintiff bringing an unfounded action.
For trademark dilution lawsuits, the Plaintiff is required to prove willful conduct on the part of the Defendant in order to recover monetary damages. The Plaintiff must show that the Defendant willfully traded on the Plaintiff’s goodwill and business reputation. Otherwise, the Plaintiff is only allowed the remedy of an injunction.
Trademark protection is country specific. That is, foreign trademark protection is obtained primarily through actual registration in each particular country. This can be an expensive process. Fortunately, there are international treaties that facilitate the process.
The Paris Convention for the Protection of Industrial Property allows you to file in signatory countries within six (6) months of filing in the United States. The Paris Convention gives you a six (6) month period to file in an international country. The Paris Convention has been adopted by 175 countries, which are referred to as the Paris Union. The main principle of the Paris Convention is that nationals of any Paris Union country are afforded the same intellectual property protection and enforcement that the national law of any country of the Union grants its own citizens.
Another treaty is the Madrid Protocol, in which U.S. applicants can get protection in multiple countries by simply filing one application. The Madrid Protocol allows applicants to file in a single country and the filing costs will be less in filing in the other approximately 60 signatory countries. You also get the benefit of the Paris Convention through the Madrid Protocol. The rule of thumb is: if you want to register your mark in three (3) or more countries, it is advisable to file under the Madrid Protocol. An International Application under the Madrid Protocol is filed with the USPTO which is then transmitted to the United Nations World Intellectual Property Organization (WIPO), which will then forward the International Application to each designated country for evaluation. Significant costs are saved because payment of agents and Attorney’s fees abroad may be eliminated. However, if the International Application is rejected by any of the designated countries, a foreign trademark Attorney will need to be retained in order to file a response. A rejection in one designated country will not affect the other designated countries. An International Registration under the Madrid Protocol lasts ten (10) years and can be renewed for an additional ten (10) years.
EUROPEAN UNION’S COMMUNITY TRADEMARK
The Community Trade Mark (CTM) registration process through the European Union allows you to file in all EU territories with one application for a single fee.
DEFENSIVE REGISTRATION IN CHINA
In order to protect against trademark piracy, a mark owner should file a defensive registration. Many trademark pirates will take United States trademarks and register them in China. As a defensive measure, the trademark owner should file a trademark application in China so that their goods are not blocked at customs if selling in China.
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