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Home » Treatises » Trademarks
What Are Trademarks?
A trademark is a word, name, symbol, or device that indicates the source of a product.2 Trademarks provide an answer to the question, “Who makes this?” Perhaps the easiest way to appreciate the importance of trademarks is to imagine a world without them. Imagine purchasing running shoes in a shop where the shoes have no labels or packaging. In the past, I have been pleased with the quality and design of Nike shoes. Not seeing the word NIKE or the SWOOSH design, I must carefully inspect the shoes I want to buy and personally assess the design and quality of the shoes without relying on my past experiences with shoes made by Nike and other manufacturers. Obviously, making a purchasing decision in that world is going to take a lot longer and be much riskier than making a purchasing decision in our world. Trademarks are important because they promote efficient consumer decision making, and the trademark laws are designed to protect the “source-identifying” function of trademarks.
Trademarks commonly consist of words (GOOGLE, COCA- COLA, XEROX), known as word marks, or designs (Mercedes-Benz’s TRI-STAR, McDonald’s GOLDEN ARCHES), known as design marks or logos. Design marks often incorporate or consist of words or letters in stylized script (COCA-COLA displayed in cursive, Spenserian script; FORD displayed in cursive script, inside a blue oval). The source of goods may also be indicated by distinctive packaging (Coca-Cola’s contour bottle),3 product design (Volkswagen’s New Beetle auto), service uniform (Playboy’s Bunny uniform), color (brown used for shipping by UPS or robin’s egg blue used for bags and boxes by Tiffany & Co.), and even, although very rarely, sound (NBC’s chimes).
Selecting a Trademark.
In the U.S., trademark rights are initially established through use, with federal registration providing certain advantages.4 So-called “common law” trademark rights are acquired automatically upon use of a trademark in commerce. The first one to use a trademark has the right to prevent subsequent use of the same or confusingly similar trademark in the geographic areas where the trademark has been used in connection with the same types of goods or services. A catchy or memorable trademark is obviously important for marketing and advertising. Equally important is avoiding the burden and expense of starting over with a new trademark after discovering the trademark you originally adopted is already being used by someone else.
The trademark laws are designed to ensure that words are not removed from the English language when they are selected as trademarks. For instance, you may not adopt the mark NEW CARS FOR SALE and then prevent all other auto dealers from using your mark. Regardless of their use as trademarks, words remain available for use by all to convey their primary, or dictionary, meanings. In practice, this means that the less obvious the connection between the mark and the goods the mark is used to sell, the greater the scope of protection the mark will be afforded from use by others of the same mark or a similar mark. For this purpose, marks are divided into five categories, ranging from strongest to weakest. The stronger the mark, the greater the scope of protection. The strongest marks are those invented for the sole purpose of functioning as trademarks. Examples of such “fanciful” marks include ZYNGA, KINKOS, CLOROX, KODAK, and EXXON. Fanciful marks are not English words. Next are “arbitrary” marks. These marks may be English words, but, as the term “arbitrary” suggests, have no connection to the goods they are being used to sell—APPLE for computers and ARM & HAMMER for baking soda. “Suggestive” marks suggest a quality or feature while requiring the consumer to use imagination and perception to identify the goods—7 ELEVEN (suggestive of convenient hours) for convenience stores or MUSCLE MILK (suggestive of muscle-building nourishment) for protein shakes. “Descriptive” marks describe goods or their functions and are afforded narrower protection—HOLIDAY INN and BED BATH & BEYOND.5
Marks categorized as “descriptive” will not be protected unless they are proven to have “secondary meaning” distinct from the mark’s primary or dictionary meaning. The concept of secondary meaning recognizes that words with a primary or dictionary meaning “may by long use with a particular product, come to be known by the public as specifically designating that product.”6 Once the trademark owner can demonstrate public awareness of a descriptive trademark, the trademark will be considered distinctive and can be registered with the United States Patent and Trademark Office (USPTO). Although entitled to broader protection, an arbitrary mark may be undesirable because of the advertising that will be necessary before the public equates the mark with your goods. While weak marks will be entitled to less protection at the outset, many weak marks achieve secondary meaning—CHAP STICK, VISION CENTER, WHOLE FOODS, and 1-800-CONTACTS.
A generic mark refers to the common, dictionary name for the class of goods the mark is used to describe and is not entitled to any trademark protection—NEW CARS used to sell new cars or SUSHI used to sell the Japanese food consisting of bite-sized pieces of rice served with fish or vegetables. If, however, SUSHI was used as a brand to identify goods such as apparel or computer software, the mark would not be generic. In that case, SUSHI would not be used to denominate the class of food known as sushi, but would instead be used to distinguish SUSHI brand apparel or computer software from other brands of apparel or computer software.
Avoiding Liability for Trademark Infringement.
Having selected a mark for your product, you must next investigate whether your use of the mark infringes the rights of any prior user. Trademark infringement occurs when use of a mark is likely to cause consumers to be confused about who makes the product bearing the mark.7 When simultaneous use of similar marks is likely to cause consumer confusion regarding who makes a product bearing the mark, the first one to use the trademark may require the “junior” user to “cease and desist” use of the mark. A use is also infringing if consumers are likely to be confused as to whether the junior user is licensed or endorsed by the senior user.8
The trademark laws aim to protect consumers. If use of similar marks by different merchants renders consumers unable to quickly and accurately identify the goods each merchant puts out, market efficiency will suffer. When I seek to buy Nike running shoes because I have known Nike to supply high-quality products and accidentally buy lesser-quality shoes from another merchant because the shoes bear a SWOOSH design that is similar to Nike’s, my expectations will be frustrated. At the same time, Nike will not reap the benefit of its high standards and the production of high-quality running shoes will suffer.
A trademark does not have to be identical to be infringing. Even if you do not believe your company is infringing another’s trademark, you may still be held liable for infringement by a court. Subjective good faith is not a defense. The test for trademark infringement is whether simultaneous use of the marks is likely to cause consumer confusion regarding the source of the two parties’ products. Whether a use is likely to cause confusion depends on factors such as the strength of the senior trademark, the similarity between the marks at issue, whether there is overlap in the geographic areas in which the parties’ goods are sold, and the similarity between the parties’ goods.9 When the goods of two merchants are different and the senior merchant has no intention of expanding into the junior merchant’s field of use, identical marks may be used without the risk of consumer confusion. DELTA is used for faucets and for airlines without causing consumer confusion.10
Determining whether someone else is using the mark you have selected is an inexact science. The USPTO maintains a searchable database containing the records of active and inactive trademark registrations and applications, known as the Trademark Electronic Search System or TESS, located at uspto.gov. Although searching TESS is a critical first step, TESS does not include trademarks registered under state law. Each state maintains a database of trademarks registered in the state. As registration is not required to establish rights in a trademark, checking these databases will not eliminate the possibility that someone else is already using the mark. Search the Internet, trade publications, and newspapers. Attorneys and trademark search firms perform professional trademark searches. If you discover an existing use of the same or similar mark and do not want to select a different mark, you should consult a trademark lawyer to assess the risk.
Benefits of Federal Registration.
Federal registration has important advantages. Perhaps most importantly, federal registration serves as prima facie evidence of the registrant’s exclusive right to use the registered mark in commerce.11 The registrant is deemed to have nationwide priority of use, without regard to the geographic areas in which the mark has actually been used.12 A business selling goods in Colorado and Utah that obtains a federal registration will have priority over a business that later uses the same mark in Georgia, even though the senior user has never used the trademark there. Moreover, experienced investors will insist on protections for the intellectual property assets of any business before providing funding.
Requirements for Federal Registration.
To be eligible for federal registration, you must have used your mark in interstate commerce. Generally, this means that you have sold goods or provided services to a buyer in another state, U.S. territory, or country. Although no particular magnitude of sales is required, sales that are staged simply for the purpose of satisfying this requirement will not be sufficient. You should document and preserve evidence both of the date you first used your mark and the date you first used your mark in interstate commerce. If you have not yet used your mark in interstate commerce but have a bona fide intent to do so, you may seek registration on an “intent-to-use” (ITU) basis. A bona fide intent to use the mark is more than an idea and less than market ready. For example, having a business plan, creating sample products, or performing other initial business activities may reflect a bona fide intent to use the mark. In that case, as discussed below, you will be permitted to submit proof of use (together with an additional fee) up to 24 months later. If you will not sell goods or services across state lines, your mark will not be eligible for federal registration and you should consider state registration.
You must also answer “no” to each of the following questions:
Is the mark the generic name of the product itself? Does the mark merely describe the product itself? Is the mark the same or similar to an existing mark used on similar or related goods or service? Is the mark a prohibited or reserved name?14
You may submit an application to the USPTO by mail or online at uspto.gov. While applications are frequently submitted by trademark counsel, representation by a lawyer is not required. The filing fee is lowest for an application that is submitted online, a so-called “TEAS PLUS application.” You will need the applicant’s name, address, phone number, email address, and means of electronic payment. The applicant is the person or entity who will own the registration. If the mark belongs to a corporate entity, that entity should be the applicant. If the mark is a design trademark, you will need an electronic version of the design to upload. If you are filing an ITU application, the drawing must show the mark as you intend to use it.
Second, you will need to identify the industry classes in which the mark is used. A worldwide standard has developed for categorizing goods and services by type within one of 45 classes, ranging from International Classification 001 (Chemicals) to 045 (Personal & Social Services). The classifications are used by the USPTO and the courts in determining whether use of similar marks is likely to cause confusion. As of the time of this writing in 2015, the filing fee is currently $325 per class. Overlap between classes is entirely possible, and you do not have to seek registration in every class in which you are using the mark.
Third, for each class selected, you will need to provide a “specimen of use,” or real-world example of how the mark is actually used, in a format acceptable to the USPTO, such as .pdf or .jpeg. For marks used in connection with goods, an image or picture of the mark as used on the product or packaging suffices. For marks used in connection with services, an image of a sign, brochure, or business card showing the mark used in connection with the services usually suffices. A specimen of use is not required for an ITU application.
Fourth, for each class selected, you will need to identify the goods or services in connection with which the mark is used. Preparing the description of goods and services is typically the most difficult aspect of preparing the application and must be done correctly the first time. In this regard, “close” is not “good enough.” Acceptable descriptions are listed in the U.S. Acceptable Identification of Goods and Services Manual or “ID Manual,” available on the USPTO’s website at http://tess2.uspto. gov/netahtml/tidm.html. If the ID Manual contains a description that accurately reflects your goods and services, use it verbatim. If the ID Manual does not contain a description that accurately reflects your goods and services, you will not be able to file a TEAS PLUS application.16 You will need to submit a TEAS application and pay a slightly higher filing fee. In that case, you will use the “free form text option” to enter a description that, in your own words, accurately identifies your goods or services.
Fifth, you will need to supply the date of first use anywhere and the date of first use in interstate commerce. The date of first use anywhere is the date on which the goods were first sold or transported or the services were first provided under the mark even if that use was only local. The date of first use in commerce is the date on which the goods were first sold or transported or the services were first provided under the mark between more than one state or U.S. territory, or in commerce between the U.S. and another country. The date of first use anywhere must be the same as or earlier than the date of first use in commerce. If you are filing an ITU application, you must include a sworn declaration stating the owner’s intent to use the mark. You will file a Statement of Use when the mark is used in interstate commerce. There is an additional fee (presently $100) to file a Statement of Use.
Unlike copyrights and patents, trademark rights can last indefinitely as long as the owner continues to use the mark to identify its goods. The term of a federal trademark is 10 years, with 10-year renewal terms. However, between the fifth and sixth year after the date of registration, the registrant must file a “Section 8 Declaration of Continued Use,” swearing that the mark is still in use. The registration is cancelled if the Section 8 Declaration is not filed, and the USPTO does not remind the trademark owner of this deadline.
Use of the ® design is reserved for federal trademarks registered with the USPTO. The ™ symbol may be used on any mark that you wish to designate as a trademark.
International Registration under the Madrid System.
Trademark rights are territorial and you will need to seek protection in each country where your goods are sold. You may obtain foreign protection by filing in each country directly or by filing an international application under the Madrid Protocol. The Madrid Protocol, to which the U.S. is a signatory, is an international trademark filing treaty that enables trademark holders to file a single trademark application and extend it to member countries as desired, at any time.17 The application is based on a U.S. application or registration filed with the USPTO. The USPTO certifies the application and forwards it to the World Intellectual Property Organization (WIPO). If minimum filing requirements are met, an International Registration is issued by WIPO and the application is forwarded to the national trademark offices in the countries you have designated for examination based on their national requirements. Individual national trademark offices that approve the mark will then grant protection equivalent to a national trademark registration. The costs of applications for international registration vary depending upon the identity and number of countries designated and the number of classes claimed. As many countries require use of the mark within a limited period of time following registration, a staggered filing program, where registration is first sought in the countries where goods will be introduced or the mark will be licensed, often makes sense. Keep in mind that in many countries, trademark rights are acquired upon filing, not upon use as they are in the U.S. Consider applying for trademark rights in the countries where you plan to sell before an opportunist realizes that your brand is valuable and files an application that predates your own.