Trademark Basics – Klinck LLC

Trademark Basics

Trademarks protect branding. In some respects, a trademark may be viewed as the weakest form of intellectual property protection because it does not provide as robust protection as patents or copyrights. Nonetheless, when utilized correctly, a trademark can offer many benefits to a growing business.

What is a Trademark?

At its most basic level, a trademark is a mark used to indicate the source of goods. Unlike copyrights and patents, a trademark is not to encourage science or the arts – the purpose of a trademark is to prevent the likelihood of consumer confusion. Trademarks serve a signaling function by providing consumers information regarding a specific good through association with a particular mark. This is especially true when goods are hard to inspect or consumer research costs are high.

Trademarks, and other marks providing the same signaling function, are generally protected under common law, state law, and federal law. Under federal law, trademarks are governed by the Lanham Act and are generally administered by the U.S. Patent and Trademark Office (“PTO”).

What Can Be Protected?

Under the Lanham Act, trademarks can take the form of words, names, symbols, or devices that an entity uses or intends to use to distinguish its goods from others. Although trademarks are commonly in verbal form, in certain cases, shapes, sounds, fragrance, and even color may be used as a trademark as long as they serve to identify goods and are not an essential functional aspect of those goods.

In addition to trademarks, the Lanham Act protects marks that serve to identify a particular source or characteristic of a product. These marks are briefly outlined below.

Service Mark​

A service mark serves the same function as a trademark except it is used to identify and distinguish services instead of goods. Like a trademark, a service mark may take the form of words, names, symbols, or devices. Such forms may also include titles, character names, and other distinctive features of radio and television programs as well.

​Trade Name

A trade name serves the same function as a trademark except it is used to identify and distinguish businesses as the source of particular goods or services.

Trade Dress​

Trade dress serves the same function as a trademark except it is in the form of the design and packaging of materials. This can include the way a product is presented (e.g., the interior design of a regional or national chain restaurant) or the way a product is shaped or designed (e.g., the shape of a beverage bottle).

Certification Mark​

A certification mark certifies that a good, a service, or the labor that went into that good or service is from a particular region, made from a particular material, manufactured using a certain process, made with a certain quality, has a certain level of accuracy, or made by members of a particular union or organization. Like a trademark, a certification mark may take the form of words, names, symbols, or devices.

Collective Mark​

A collective mark is a trademark or service mark that identifies membership in a union, association, or other organization.

What Are The Legal Requirements For Protection?

The strength of a trademark – i.e., the legal protection that comes with a trademark – comes down to distinctiveness. The more distinctive a mark, the more protection it receives. Named after a case involving a popular U.S. retail clothing chain, the test for determining the strength of a trademark is called The Abercrombie Test.

Applied by U.S. courts, The Abercrombie Test essentially provides four levels of distinctiveness under which a trademark can fall. From weakest to strongest, the classifications are as follows:

GENERIC. A generic mark receives no trademark protection because it does not sufficiently identify the source of goods and distinguish the goods from others. Such a mark would include a genus, a natural reference, or a class of products. One example of a generic mark is the Murphy bed. To consumers, a Murphy bed is a type of bed that can fold into a wall – not a bed specifically made by the Murphy Door Bed Company. The Murphy bed demonstrates the importance of maintaining a strong brand name while avoiding what some attorneys call “genericide” – the death of a protected trademark due to wide adoption of the name to describe a general type of good. Genericide will be discussed in further detail below.

DESCRIPTIVE. A descriptive mark is a mark that describes a product or service. Similar to a generic mark, it can refer to broad classes of things and therefore may not be helpful in identifying a source or distinguishing a good/service from others. However, if the public views the mark as having a secondary meaning, then the descriptive mark may obtain legal protection.

To have trademark protection, a descriptive mark must have a secondary meaning that points to the source of the product. For example, Kentucky Fried Chicken was initially a descriptive mark because it describes the good being sold. However, through heavy branding, consumers found a secondary meaning to the mark and associated the mark to chicken particularly made by the fast food company.

SUGGESTIVE. A suggestive mark does not describe the good or service being sold but suggests a characteristic or quality of the product with the help of the consumer’s imagination. As such, a suggestive mark is “inherently distinctive” and receives relatively strong trademark protection.

One example of a suggestive mark is Forever 21, a retail clothing chain targeted to young adult consumers (or consumers who want to look like young adults). The mark does not describe the goods that it sells but, in the minds of consumers, evokes the quality of youthfulness, which is the core of the company’s business.

FANCIFUL or ARBITRARY. A fanciful or arbitrary mark is unrelated to the good or service being sold and so receives the strongest trademark protection. The mark may not make sense, may be made up, or may be an established word that is entirely unrelated to the good/service being offered.

A prominent example of a fanciful or arbitrary mark is Apple. The technology company uses a fruit in name and in shape to identify the source of its consumer electronic products.

How Do You Obtain Protection?

To obtain legal protection for a trademark, an entity must obtain “priority” (i.e., be the first to apply the mark) and provide “notice” (i.e., give notice to the public of the assertion of trademark rights). There are three ways to obtain priority and give notice: (1) through creation, (2) through use, and (3) through registration.

CREATION. Creation is the least reliable method of obtaining legal protection for a trademark. Under this method, an entity is the first to design the mark and fix it upon a good or service. There is no particular significance of being the first to create for the purpose of priority and notice because the mark may be left unseen by the public.

USE. Obtaining legal protection through use signifies that an entity is the first to use its mark in commerce. Under this method, use may include an intention to use, bona fide use, use with purchasing distributors, and use by reaching a particular quantity of sales depending on the type of relevant industry. Use of a mark for pre-sale transactions does not count.

The quantity of use determines the quality of the notice. In other words, the more a mark is distributed in commerce, the more notice is given to consumers and businesses.

REGISTRATION. The best method to obtain trademark protection is through registration on both the state and federal level. While state registration provides intrastate benefits that may vary by state, federal registration generally provides constructive nationwide use and the best notice. In other words, an entity that is the first to register its trademark with the PTO is the first to effectively assert its trademark rights on a national level, thereby obtaining the presumption of ownership and validity for its mark on a national level.

Trademark Registration

The PTO maintains two registers to which an entity may apply for its mark: the Principal Register and the Supplemental Register. The Principal Register holds marks with a higher level of distinctiveness than those in the Supplemental Register. For example, fanciful or arbitrary marks will find a place on the Principal Register, while descriptive marks are likely in the Supplemental Register.

Although both registers provide trademark owners some form of priority and notice, the Principal Register offers additional and robust protections such as:

  • the possibility of obtaining “incontestable” trademark status after five years of registration,
  • the right to request U.S. custom officials to bar the importation of goods with infringing marks, and
  • the opportunity to obtain treble damages, attorney fees, etc., in court.

Registration of a trademark is not necessary to enforce trademark rights, but it provides presumptive benefits of ownership and validity and more legal advantages when it comes to litigation. In short, registration provides an entity a “head start” in court when enforcing its trademark rights.

Registration of a trademark does not require an attorney. In fact, application forms are available online at http://www.uspto.gov/trademarks-application-process/filing-online. However, filing a trademark application launches a legal proceeding. A trademark attorney at the PTO will be assigned to examine an applicant’s trademark. Because the process may be complicated – both on a substantive and procedural level – an attorney familiar with trademark law would be beneficial in ensuring a smoother or more efficient application process. This is especially true given that the $225 to $325 filing fee is non-refundable.

Before starting the application process, an applicant should first conduct an online search on the PTO database, the Trademark Electronic Search System, to make sure that the proposed trademark is not already in use. The search is free and is highly recommended before starting a costly, time-consuming proceeding.

The registration process takes several months to several years, excluding the two months that it will take the PTO to issue a registration after an application is approved. After receiving a trademark application, the PTO assigns a serial number to the application and assigns an examining attorney to review the proposed mark. The attorney determines whether the application complies with all laws, whether all mandatory fees have been paid, and whether there are any competing marks. After months of review, the attorney will either issue (1) an “Office Action” in the form of a letter or (2) a notice of publication in the “Official Gazette,” a PTO publication. An Office Action means that the attorney has decided not to register the applicant’s mark and includes reasons as to that determination. The applicant has six months to respond to that letter. A late response, or a failure to respond, results in an abandoned application. After all deficiencies have been resolved, or if the attorney found no deficiencies at the outset, a notice of publication is sent to the applicant.

A notice of publication is not yet an all-clear sign of trademark registration. After the mark is published in the “Official Gazette,” any entity has thirty days after the publication to challenge the registration (or request an extension to challenge). For example, if I wanted to trademark “Starbux” for my coffee shop business and somehow received a notice of publication, then Starbucks can file an opposition within thirty days of my mark’s publication in the “Official Gazette” if the company believes it will be harmed by the registration of my mark. I will then have to face Starbucks in an administrative proceeding before the Trademark Trial and Appeal Board, the “court” of the PTO.

After the PTO registers a trademark, the registration is good for ten years if the registration was issued on or after November 16, 1989. All other marks registered before that date is good for twenty years. All marks, regardless of registration date, must be renewed every ten years to maintain registered status. In addition to renewal, an applicant must file an affidavit swearing that the trademark is in continuous use (or excusable non-use) between the fifth and sixth years of registration. Such maintenance documents must be filed with the PTO to ensure that the registration does not expire or get cancelled. Otherwise, there must be a new application process to preserve the trademark.

Trademark Refusal

The PTO can refuse to register an applicant’s trademark for a variety of reasons. A mark can be confusing, i.e., be too similar to another’s mark thereby confusing consumers as to the actual source of the good or service. A mark can also be refused registration for being “immoral,” “deceptive,” or “scandalous.” Such marks are usually considered against the public interest. One example of an immoral mark is the never-ending controversy surrounding the Washington Redskins, a football team that not only uses a derogatory name for its trademark but also uses a caricature of a Native American for its logo.

Other marks that may be rejected include marks that lead consumers into believing the marks are associated with the government, whether local, state, or foreign. This includes the use of the United States flag as a logo. Marks that use a living individual’s identification without his or her consent is also problematic. Functional trademarks are also refused registration because they preclude businesses from using a functional aspect necessary for the good or service being sold.

Concurrent Use and Registration

Trademarks generally provide exclusive rights – i.e., no one else can use an entity’s trademark. With federal registration, exclusive rights cover the entire United States. Without registration, exclusive rights cover only the area in which the marked goods are actually sold or advertised. In some situations, this might include a geographic area in which the trademark owner’s reputation is established even though its goods are not yet sold there (e.g., through advertisements or media coverage), and it may also include any area within the business’s “normal” or “natural” expansion.

Despite the exclusivity that normally comes with a trademark, the PTO may allow concurrent use and registration of trademarks as long as there is no likelihood of confusion among consumers. Concurrent use generally comes into play where similar marks are used in different industries or geographical markets, thus supporting the low risk of consumer confusion. In this context, there is a “senior user,” who is the first to use the mark in commerce, and a “junior user,” who comes after the senior user.

Despite the presence of a senior user, a junior user may be able to obtain exclusive use of its mark in a limited area if all of the following occurs:

· The junior user adopted its mark before the senior user registered the mark and did so without knowing about the senior user’s prior use of the mark

· The junior user demonstrates the extent of the area in which it used the mark before the senior user’s registration

· The junior user has continuously used the mark in the particular area above

Concurrent use registration requires a legal proceeding before the Trademark Trial and Appeal Board, in which the Board determines whether an applicant is entitled to a limited trademark registration. The applicant for concurrent use must show that (1) the applicant used the mark in a specific area in good faith before the senior user’s registration, as listed above, and (2) there is no likelihood of confusion between the two marks. Upon the applicant’s showing, the Board may grant registration limited in scope (typically, geographic scope).

Transfers Of Ownership

Like for other intellectual property rights, an owner can transfer or “assign” its trademarks to others. Assigning a trademark means to transfer ownership of the trademark – i.e., all substantive rights and responsibilities – from the current owner to a new owner. Assignments are particularly common in business acquisitions or reorganizations. For a federally registered trademark, an owner must take two steps to ensure proper trademark assignment: (1) enter into a legally binding assignment agreement and (2) notify the PTO of the assignment.

Assignments are made by signed, written contract. Among other items, the contract must include the names of the parties, the date of enforcement, the terms and conditions of the assignment, the rights being assigned, and the representations and warranties. Assignment of a trademark is essentially an asset transfer, so the involvement of an attorney in the contract-drafting process might be worthwhile to ensure that all necessary clauses are included.

After its enforcement, the assignment must be recorded with the PTO. This will require sending a cover sheet with a copy of the actual agreement as well as payment of a fee. Recording the assignment with the PTO can be done online or by paper. Online recordings are generally processed in one business day, while paper recordings are processed within one week.

Keeping the PTO informed of the actual owner of a trademark is crucial in maintaining current communications with the PTO. Because a trademark must be continuously renewed and in use for federal registration status, any missed communication with or payments to the PTO may result in abandonment or expiration of the trademark.

How Are Trademark Rights Enforced?

Trademark rights enforcement is the trademark owner’s responsibility. The trademark owner must monitor for infringing uses and determine whether or not a certain entity’s use of a certain mark infringes upon its rights.

Depending on where the trademark is registered or used, enforcing one’s trademark rights entails filing a lawsuit either in state or federal court against the infringer. Typically, trademark cases – particularly those involving federally registered trademarks – are filed in federal court.

In court, the plaintiff (the owner) must prove that it owns a valid trademark, that it has priority to that mark, and that the mark used by the defendant (the entity being sued) is likely to confuse consumers as to the source of the goods being sold. This is where registration of a mark on the Principal Register comes in handy – ownership and validity of the mark are automatically presumed. Such presumption may be rebutted in court, but it is still an advantage in court.

Federal courts generally apply, in some form, an eight-factor test to determine whether there is a likelihood of confusion between two marks. 

Not all factors have to be used, and none have to be weighed equally. For example, a close proximity of the goods can compensate for the less similarity found between the marks. In assessing these factors, if the court finds that there is a likelihood of consumer confusion, then the plaintiff will receive some kind of remedy.

STRENGTH OF THE MARK. The strength of the plaintiff’s trademark factor echoes our earlier discussion on distinctiveness. The more distinctive a trademark, the stronger the trademark. Thus, if a plaintiff comes into court wanting to enforce its rights of its fanciful or arbitrary mark, then it will obtain robust legal protection. A suggestive trademark will receive similar protection. A plaintiff with a descriptive trademark, however, will only receive legal protection if it can show a secondary meaning. And a plaintiff with a generic trademark will receive no protection at all.

PROXIMITY OF THE GOODS. The proximity of the goods factor focuses on how similar the parties’ goods are to each other. The reasoning behind this factor is that the more similar the products, the more consumers will likely associate the sources of the products. For example, in the case from which the eight-factor test arose, the parties sold recreational boats that were similar in purpose and function. Both types of boats were designed for water sports and both had fiberglass bodies, outboard motors, and seating for several people. The court found that these similarities would likely lead the public to mistakenly assume that the sources of the boats are associated.

Although objective, this factor may vary based upon the level of abstraction. In other words, the more generalized the description of the goods, the more likely they will appear similar. Regardless, if the defendant’s goods are substitutes or complements to the plaintiff’s goods, then there likely is a heightened chance of consumer confusion.

SIMILARITY OF THE MARKS. The similarity of the marks factor focuses on three aspects: sight, sound, and meaning. The court will look to see if the trademarks, including any logos, look similar, if they sound similar, and if they have similar meanings. Evidence such as expert testimony and survey responses can help demonstrate or oppose similarity, and the particularities of the case will, of course, be applied. The court assesses all three aspects in considering the similarity of the marks, although one itself may be sufficient to claim similarity.

EVIDENCE OF ACTUAL CONFUSION. The evidence of actual confusion factor is difficult to prove. This factor could include sales impact, advertising campaigns, or evidence of past confusion. However, absent persuasive proof of confusion, a court will likely not place too much weight on this factor.

MARKETING CHANNELS. The marketing channels factor focuses on whether the parties use similar marketing channels in offering their marked goods to consumers. This factor would look into whether the parties participate in the same trade shows, use the same dealers or sales methods, offer goods in the same price range, advertise their goods in similar industry or national/regional publications, etc. If there is overlap in marketing channels, there is likely an increase in the likelihood of confusion.

TYPE OF GOODS AND PURCHASER CARE. The type of goods offered by the parties and the amount of care that a purchaser will likely use in purchasing the type of good is important in determining the likelihood of confusion. This factor adopts the perspective of “the typical buyer exercising ordinary caution,” which includes “the ignorant and the credulous.” The reasoning behind this factor is that if the good is such a type that a buyer would exercise more care, then there will likely be a higher standard for the plaintiff to meet in showing likelihood of confusion. After all, the purchase of an expensive recreational boat would likely come with a more attentive eye for quality rather than a careless one for a trademark; whereas a purchase for a box of mac-and-cheese would likely come with an eye for that blue and yellow.

DEFENDANT’S INTENT. The defendant’s intent factor focuses on the defendant’s good faith. If the defendant unknowingly adopted a similar mark, this factor plays less of a role in assessing the likelihood of confusion. However, if the defendant knowingly adopted a mark for the purpose of deception, then it is presumed that there will be consumer confusion as to the source of the marked goods.

LIKELIHOOD OF EXPANSION. The likelihood of expansion factor focuses on whether the parties’ respective businesses or product lines are likely to expand into each other’s markets, thereby creating direct competition. The higher the likelihood of expansion, the higher the likelihood of confusion.

Remedies

Remedies for trademark infringement come in the form of legal or equitable relief. “Legal” relief typically means monetary compensation. “Equitable” relief typically means an injunction (an order to have the defendant do something or stop doing something).

Legal remedies may include any damages that the owner experienced due to the infringement, the defendant’s profits resulting from that infringement, the costs of the lawsuit, and in certain cases, attorneys’ fees.

Equitable remedies may include an injunction to have the defendant cease use of the accused mark on all goods, advertisements, signs, etc., and destroy all goods with the infringing mark.

Defenses

Defenses to trademark infringement fall under four general categories: (1) abandonment, (2) unsupervised licensees (a subpart of abandonment), (3) fair use, and (3) nominative use.

ABANDONMENT. A defendant can assert that a trademark is abandoned and therefore not enforceable. Under the Lanham Act, a mark will be deemed “abandoned” when either the owner discontinues use with the intent of not resuming use, or the owner through any act of its own causes the mark to lose significance as an indicator of origin. In the former instance, a user’s intent may be inferred from the circumstances, and non-use for three consecutive years is prima facie evidence of abandonment. In the latter instance, acts of omission or commission can cause a mark to lose significance. For example, not filing a response to an Office Action or not paying a fee.

UNSUPERVISED LICENSEES. Trademark owners have an affirmative duty to police their trademark licensees. Thus, when a trademark owner fails to ensure adequate quality control and supervision of its licensees, then its trademark will lose significance as a mark and the trademark will be deemed abandoned. This is a particular concern to trademark owners with franchisees.

FAIR USE. Fair use is available to a defendant where the use of the mark is not for trademark purposes but for descriptive purposes, and the mark is used fairly and in good faith only to describe the defendant’s goods/services or their origin.

NOMINATIVE USE. The nominative use doctrine is parallel to fair use. If the only word reasonably available to describe a particular thing is used, then such use is outside trademark infringement. This is because such nominative use does not deceive the public but only tells the truth: e.g., “I have a Tesla.” This defense is available where either (1) the defendant’s use of the plaintiff’s trademark is to describe something other than the plaintiff’s product (i.e., it is descriptive) or (2) the defendant’s use of the plaintiff’s trademark is to describe plaintiff’s product and (a) that product is not readily identifiable without the use of the trademark, (b) the defendant only uses the trademark as much as necessary and no more, and (c) the defendant does not do anything that suggests sponsorship or endorsement.

Dilution

Besides infringement, a trademark owner has an additional tool to protect its trademarks: the Trademark Dilution Revision Act of 2006 (“TDRA”), revising the Federal Trademark Dilution Act of 1995 (“FTDA”). The TDRA protects a trademark owner from “highly similar” marks that “dilute” the trademark owner’s famous mark. Note that dilution is a legal issue separate and different from trademark infringement and applies only to famous and distinctive trademarks.

Dilution occurs in two forms: blurring and tarnishment. Dilution by blurring means a highly similar mark is diluting the distinctiveness of an owner’s trademark. Recall that distinctiveness is important in trademark law because the more distinct a mark, the more legal protections afforded to that mark. Thus, a similar mark that blurs the distinctiveness of one’s mark has significant legal consequences.

Dilution by tarnishment aims at the reputation of the trademark usually through association with unrelated products or services.

One example involving both dilution by blurring and dilution by tarnishment is the case involving the infamous “Barbie Girl” song by Aqua in 1997. The song featured a high-pitch doll-like voice that recited the superficial life of Barbie (as well as Ken). In addition to trademark infringement, Mattel brought dilution accusations against the associated record labels, asserting that the song diluted Mattel’s marks and their reputation. Mattel lost. The song and its use of Barbie were protected under a noncommercial use exception under the FTDA – essentially, free speech. The defenses to dilution are similar to those of trademark infringement.



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