Federal Trademark Registration
Registration is not a necessary prerequisite to the existence of trademark rights. For example, California law defines a trademark as “any word, name, symbol, or device, or any combination thereof, used by a person to identify and distinguish the goods of that person … from those manufactured or sold by others, and to indicate the source of the goods, even if that source is unknown.” Cal. Bus. & Prof. Code sec. 14202(a). Courts recognize a common law right to exclusive use of a trademark, to the extent that it represents goodwill of the business.
What, then, are the advantages of a federal registration? For a full list as described by the PTO, see http://www.uspto.gov/faq/trademarks.jsp#_Toc275426681. The most important benefit is that with a registered trademark, you are presumed to have a legal right to exclusive use of the mark within all United States jurisdictions. With a common law trademark, your rights are strictly limited to the geographical area in which you have actually used the mark, and there is no presumption of priority. Another important benefit is that you can bring infringement actions in federal court, under a uniform and well-established body of law.
A note on symbols: The trademark ™ symbol can and should be used on any name or logo that you are using as a trademark, for it gives notice to others that you are asserting rights in the mark. The registered trademark ® symbol may only be used on federally registered trademarks.
When evaluating a new trademark, do some research on whether anyone is using an identical or similar mark already. This is the best way to avoid problems such as having to abandon the trademark later or getting into a dispute in which someone may accuse you of willful infringement. The gold standard in research is to do a full U.S. availability search with Thomson Compumark, but in recent years a number of lower cost services have set up shop – your mileage may vary. Like so many other Fortune 500-grade services, one of the benefits of going with Thomson is your ability to later stand up in court and say, “I used the best available search tools, therefore I did my reasonable duty.” This is not so critical for smaller players. On a shoestring budget, you may even consider, with proper risk analysis, simply doing some of your own internet searching and, in particular, searching the USPTO database. I would recommend, however, that this type of searching be done by or in consultation with your attorney or someone who is quite familiar with trademark searches.
The filing process for registration is not terribly complicated, but there are a number of pitfalls that a qualified attorney will know how to avoid. Not a few of my trademark registration clients have come to me after the initial filing to fix problems – some are more easily fixed than others. The areas of the application that usually require the most attention are the classes and description of the goods and/or services that the mark is intended to cover.
The “international classes” are a series of 45 categories (examples: “clothing,” “transportation and storage”) into which all goods and services must fall. Sometimes it can be a little tricky to determine the right one, and sometimes the intended coverage of the trademark requires registration in more than one class. The broader the better, but … most trademark filing fees are charged per class, so with a minimum application fee of $275 times the number of classes, the cost picture can change quite a bit on a budget. Accuracy is helpful, but ultimately not critical, because the examining attorney will decide on the correct classification based on the actual description you submit.
Aside from the mark itself, the description of goods and services is the heart of the application, because it determines how broadly trademark protection will apply. The golden rule of descriptions is: you can always trim it down later, but you can never, ever, expand it. So, when in doubt, go broad! Again, accuracy can save time and money in a few different ways, but if your claims are expansive then sometimes it makes sense to stake out a large sector (food – clothing – computers) and let the examining attorney make you tone it down step by step.
The process of negotiating the acceptable (or not) final form of the application is accomplished through office actions. An examining attorney will be assigned and either approve the application on the spot or send you an office action indicating what changes must be made in order to gain approval. These office actions can often turn on fine points of trademark law, so it is almost always advisable to engage an attorney at this time, if it wasn’t done sooner.
Should the application be allowed for registration, the final step is to submit a statement of use testifying that you are actually using the mark in commerce, along with a specimen showing the mark in use. This stage of the process provides endless opportunities to get it wrong, because “use in commerce” has a particular legal definition and there are a number of parameters for what makes an acceptable specimen.
Once the trademark is registered, there are some maintenance filings to be done over the years, but you have definitely completed the hard part and have increased the value and sustainability of your trademark. Congratulations!
The most intractable problem you are likely to encounter if you select a new trademark incautiously is that someone will claim that you are infringing a mark already in use. The USPTO may refuse to register your mark for this same reason. The legal basis for claiming that one mark is too similar to another is known as “likelihood of confusion” analysis. To paraphrase 15 U.S. Code Sec. 1052(d), “likelihood of confusion” is when one mark so resembles another “as to be likely … to cause confusion, or to cause mistake, or to deceive…” This leaves a lot of room for interpretation, but fortunately, a highly influential judicial opinion, In re E. I. du Pont de Nemours & Co., 476 F.2d 1357 (1973), lays out a number of useful points to consider in determining whether two marks are indeed that confusing. Although Sec. 1052 and du Pont concern themselves with trademark registration, the likelihood of confusion analysis under the “DuPont factors” is the general starting point for all manner of infringement cases. The DuPont factors are as follows:
- The similarity or dissimilarity of the marks in their entireties as to appearance, sound, connotation, and commercial impression.
- The similarity or dissimilarity and nature of the goods . . . described in an application or registration or in connection with which a prior mark is in use.
- The similarity or dissimilarity of established, likely-to-continue trade channels.
- The conditions under which and buyers to whom sales are made, i.e. “impulse” vs. careful, sophisticated purchasing.
- The fame of the prior mark.
- The number and nature of similar marks in use on similar goods.
- The nature and extent of any actual confusion.
- The length of time during and the conditions under which there has been concurrent use without evidence of actual confusion.
- The variety of goods on which a mark is or is not used.
- The market interface between the applicant and the owner of a prior mark.
- The extent to which applicant has a right to exclude others from use of its mark on its goods.
- The extent of potential confusion.
- Any other established fact probative of the effect of use.
None of these is to be considered any more or less important than any other; the particular facts and circumstances involved will determine which ones are particularly relevant in deciding a given case. There are however, a few of these that come up more commonly, so let’s take a look at these.
“The similarity or dissimilarity of the marks in their entireties as to appearance, sound, connotation, and commercial impression.” The first two factors will almost always be considered. In this one, looking at just the two trademarks themselves, how similar are they? Perhaps they are identical, in which case this is an easy one. If not, you should be aware that minor changes to words or phrases are not usually enough to make two marks dissimilar, nor is the addition of design elements and images to otherwise similar word elements enough. The PTO will also generally discount spelling differences if the words sound the same, and probably vice versa. Many of us would like the certainty of relying on concrete differences (“cats” and “katz” are obviously different, right?), but the relevant question in likelihood of confusion analysis is, what is the overall impression created by the mark in the eyes of the target audience, that is, the potential consumers of the product? An argument that two potentially conflicting marks are inherently too dissimilar to create a likelihood of confusion is not often successful on its own, since there is typically some similarity or the question would not have been raised to begin with.
“The similarity or dissimilarity and nature of the goods . . . described in an application or registration or in connection with which a prior mark is in use.” The second almost universally relevant factor is the similarity of the goods being marketed. Even identical trademarks are OK if they apply to completely different products. Once again, a defense on this ground is not as easy as it may at first appear, because the question comes back to, could the typical consumer become confused? Thus, a mark used for computer software in one instance and for IT services in another would likely cause confusion, but not if one use was for software and another was for a chain of bar & grills. A better way to understand this factor may be to think of the (dis)similarity of the general field, market, or sector of the conflicting marks.
“The similarity or dissimilarity of established, likely-to-continue trade channels.” This factor is very closely related to the previous one. How are the products brought to consumers, and thus, how likely are they to encounter them in the same context? A case for dissimilarity might be made, for example, if computer software is sold only in retail stores and IT services are only marketed directly to large commercial enterprises.
“The fame of the prior mark.” This factor introduces a new concept, which is that famous marks are considered to be more worthy of protection than others, presumably because they are so well-recognized by the public that any other use in any other context would cause the typical consumer to associate that product with the famous mark. You would be ill advised to market your new business as “Coca-Cola Auto Repair” for this reason. The point to remember is that the more famous the mark, the less any dissimilarity in goods or channels matters.
“The nature and extent of any actual confusion.” Here is an opportunity to counter the, often subjective, impressions of the previously discussed factors with hard evidence. It will always be more difficult to prove a negative than a positive, but anecdotal/testimonial evidence as well as consumer surveys or actual market behavior can be brought to bear in order to support or undermine arguments on the other factors.
Having considered some of the common issues that arise in establishing your legal right to use and/or register a new trademark, my next and final post on this issue will take a closer look at the process of federal trademark registration.
This is the first in a 3-part series on some of the legal considerations in evaluating and protecting a new trademark. To begin with, what is a trademark? It is, first and foremost, an indicator of origin. The trademark is supposed to identify goods or services as coming from you, and trademark law is designed to protect you from anyone else trying to fool people into thinking that their goods or services come from you. The trademark represents your “brand” – the brand includes all of the messaging and perception and goodwill associated with the products in question, including the trademark itself. The trademark can theoretically take any number of forms, including exotics such as sounds and even scents, but generally it consists of a text word or phrase, a simple graphic design, or a combination of the two.
The primary business objectives in selecting a trademark are, therefore, to create something that properly represents your brand, supporting the message and image that you would like to transmit to the world, and to create something that will help sell product by stimulating in the consumer’s mind feelings like interest, excitement, and trust.
When I first meet with clients, they typically already have one or more solid ideas on what they would like their trademark to be. The legal analysis of a prospective trademark involves how well it can be protected from direct legal challenge, that is, someone denying you the right to use that mark, and how well it will enable you to prevent others from using the same or confusingly similar marks. These two questions follow generally the same analysis, only that one deals with existing users of a similar mark and the other deals with subsequent users. The most critical factor in both cases is the likelihood of confusion between two marks. Likelihood of confusion analysis is such a large topic that it will form the substance of my next post!
For today, I want to discuss the second-most-critical factor affecting a trademark’s strength: the trademark’s level of descriptiveness. Imagine a scale running from completely descriptive (for example, “Search Engine Services”) to completely distinctive (for example, “Google”). The closer your mark is to the distinctive end of the spectrum, generally the more legal strength it has. This reality is often in conflict with the business desire to use a mark that immediately tells the consumer something about the product. The law is hesitant to grant trademark protection to descriptive words and phrases that a competitor might reasonably need to use in order to describe their product. The following chart, based on the USPTO’s Trademark Manual of Examining Procedure (TMEP), illustrates some different ways of classifying the relative descriptiveness of a mark:
|Fanciful||The mark is either an invented or virtually unknown term.|
|Arbitrary||The mark is a word or words in common usage but not descriptive of the product.|
|Suggestive||The mark contains some descriptive element but it requires some degree of imagination or perception to see how it applies to the product.|
|Generic||The mark consists of a commonly recognized term for the product.|
|Descriptive||The mark describes a significant aspect of the product.|
Generic and descriptive terms will generally not be registered by the USPTO, but the other three categories will. It is interesting to note that these qualities can change over time. A mark can acquire distinctiveness if the public starts to treat it as such, but it can also become generic by the same method. A famous example of a mark becoming generic is the common use of the fanciful term “Kleenex” for facial tissue in general.
Misdescriptive marks are also frowned upon. One sees this most commonly with geographical references. “Napa County Wine” is not a good mark because it is geographically descriptive – assuming that’s where the wine comes from. If the wine actually comes from Sonoma County, that is neither suggestive nor arbitrary, but misdescriptive.
Generally, you can make it easier on yourself by steering clear of descriptive elements and other attributes that are listed in TMEP Sections 1203-1211 (link to TMEP) as a basis for refusal of registration. The TMEP forms a reasonable summary of the law as applied in courts nationwide, although it is only a basis for USPTO procedure and not legal precedent. Items such as scandalous/immoral matter, names of persons and places, etc. are all discussed here to give you an idea of the issues, although an experienced trademarks attorney will be very helpful in interpreting these rules for your particular situation.
Check back next week for a discussion on likelihood of confusion in trademarks.
Hello, and welcome to my new web site. I will be using this space to discuss and present my take on various issues relevant to the North bay business community from a legal perspective. I hope to invite guest contributions over time as well, as I have gotten to know so many skilled professionals over my years in the region. Let’s hope a bit of collective wisdom can be of use to those visiting these pages, particularly since we all know how difficult it is for businesses in these times to afford the panoply of professional services they should ideally have access to.
For my first topic, I want to take a closer look at the basic structures of corporate governance. I give you:
Corporate Governance 101
As a fictional “person,” a corporation cannot do anything for itself, but must act through its duly authorized agents – human beings, in other words. For the rest of the world, it is important to know who these authorized agents are, because (in general) only such an agent can commit the corporation to legally enforceable responsibilities, such as contracts. So, how do we know who is a duly authorized agent? Corporate law gives us a template to figure out what we are dealing with.
We know that every corporation will have a board of directors. The board is a group of individuals who share the ultimate authority and responsibility for management of the corporation – as a group. The board has a legal duty to manage the corporation in the best interests of what may loosely be termed the beneficial stakeholders of the corporation. In typical for-profit stock corporations, these are the shareholders; in non-profits, this may be a membership group (for example, a chamber of commerce), or the general public.
Because the board is only empowered to act as a group (usually by majority vote), it is poorly suited to the task of carrying out real-world actions on behalf of the corporation. It is intended as a deliberative, policy-making body, not an executive one. Therefore, as a practical matter, the board must specifically authorize individuals, whether members of the board or not, to act for the corporation. This can be done on a piecemeal basis for specific actions, but in general corporations find it efficient to delegate broad authority to one or more individuals so that they may carry out the daily management of the business. This is the role foreseen in the corporate law by officers.
The officers, then, are the duly authorized agents through which the corporation acts. Since the designation of an individual as an officer can generally be relied upon as empowering that individual to take action within his/her particular sphere of responsibility, this makes it a little easier for the rest of us to know what is going on. Usually, officers have a great deal more involvement with the management of the corporation than the directors do.
The officers are not, however, agents of the board, but agents of the corporation. It is the board’s duty to select the officers, to set goals for them, and perhaps to set limits to the scope of their authority, but the board is itself doing so on behalf of the corporation. The relationship between board and officers is perhaps analogous to the relationship between a manager and an employee – that employee is not there to be a personal servant to the manager (unless such a role is in fact what the corporation’s business requires), but to serve the corporation.
A simplified view of these relationships is depicted here:
It is largely irrelevant to this basic structure whether or not any given individual may be a director and an officer concurrently (or even a shareholder/member). They are separate functions, and one person may carry out both if doing so would not endanger the ability of the corporation to function efficiently and ethically. Certainly there will be instances where the two must be separated, as for example in a discussion of the employment status of an officer-director, but this should not be hard to do with a straightforward conflict of interest policy.
It is of course critical to be clear about whether an individual is or is not an employee of the corporation, a topic for a future post. However, although the employment status of an individual who also happens to be an officer and/or director will have an important effect on how these roles play out, it is also an independent status. Thus, in logical terms, director, officer and employee of a given corporate entity are three independent binary variables, with any combination both theoretically and practically possible.
Since the law permits any combination of roles to be held by an individual, it falls upon the board to consider carefully whether there should be any particular limitations on such combinations, and define them in the corporation’s bylaws.