Legal Reality: Trademark Basics
We live in the age of information. It is an extraordinary time, unlike all others, where literally billions of people have access to an unprecedented amount and scope of content. Amid it all is a relentless deluge of advertising information that has challenged sellers of goods and services like never before to find a way to somehow stand out and “get through the noise” to reach new customers. As the competition for eyes and ears intensifies, so too does the importance of effective branding and brand-building.
For more than two decades, as an attorney and business consultant, I have helped a wide variety of companies develop, exploit and protect their brands. While the process of effective branding and brand-building is by its nature always unique for each company, one critical element is common to virtually every branding and brand-building program: the acquisition and effective use of trademark rights. In this article, we will explore some the basics of trademark rights protection that are critically important for any effective branding program.
What Are Trademarks?
Trademarks are a form of intellectual property that provide a trademark owner with a limited monopoly in the use of names, designs, logos, phrases and even, in some cases, sounds, used in association with goods in interstate commerce. Service marks provide the same type of protection for services. (For the purposes of this article I will use the term “trademark” generically to refer to both service marks and trademarks.) Because trademark rights constitute intellectual property, like real property (land, homes, office buildings, etc.) and personal property (cars, jewelry, computers, etc.), intellectual property can be bought, sold, licensed, rented and even function as security for bank loans.
Many entertainment companies own and exploit valuable trademarks and have made their trademarks the cornerstone of their branding and trademark licensing efforts. For these companies, their marks have become very valuable company assets that have helped set their companies apart from their competitors. Disney®, Marvel®, Playboy®, and Hustler® are all good examples of entertainment companies that effectively exploit their brands through trademark licensing.
Virtually any legal product or service can be associated with a trademark. For example, online entertainment companies can trademark website names, affiliate program names, and even contract star names.
What is the Function of a Trademark?
The primary purpose of a trademark is to identify the source of the goods or services associated with the mark, and to distinguish that source from others in the marketplace. Consequently, the owner of a valid trademark can prevent another person from using that trademark or a confusingly similar mark to identify similar goods or services. Because of this, it is first important to determine whether you can rightfully use a desired name, design, logo, phrase, etc., in association with your products or services. This inquiry is best made prior to committing resources to the launching of a product or service. Sadly, too often, clients come to us fully committed economically, and often emotionally, to a mark that unfortunately belongs to someone else. Unfortunately, for some companies the receipt of court papers alleging trademark infringement is the first time they learn that another party claims trademark rights in a brand name in which they have invested large sums of money and company good will on packaging and advertising. Consequently, before you become wedded to using a name, a phrase, a symbol, etc., in association with a product or service I strongly recommend that you perform a “trademark search” and have the results evaluated by a competent trademark attorney.
Trademark rights can only be acquired by a party through the use of a mark in association with specific goods or services in interstate commerce. This differs from copyrights, which automatically belong to the authors of expressive works at the time the works are created. Thus the mere registration of a domain name will not, in and of itself, generate any trademark rights for the registrant.
Another important distinction from copyrights is the fact that copyrights have a limited duration, whereas there is no set term for trademark rights. Trademark rights can theoretically continue indefinitely because they are principally tied to the mark’s continued use in interstate commerce. The potentially unlimited duration of trademark rights provides one of the major asset-building benefits provided by trademark ownership. The “Coca-Cola” trademark, for example, was first registered on Jan. 31, 1893 and has enjoyed continuous protection since. But that mark is a relative new kid on the block compared to a certain famous British insurance company’s trademark, “Lloyd’s of London,” which has been in use for several hundred years.
Obtaining Valuable ‘Common Law’ Trademark Rights
In the U.S., a party is not required to formally register a trademark to obtain trademark rights in a word, phrase or logo associated with a product or service. In fact, “common-law” trademark rights may be acquired by a person or entity through the continuous use of a mark in association with goods or services sold in interstate commerce. Such common-law trademark rights are, however, generally limited to geographic locations in which the goods or services bearing the mark are marketed or sold. There are also a few requirements that must be satisfied before a party can obtain common-law trademark rights. One, for example, is that no one else was using the same or a confusingly similar mark in association with goods or services similar to those you want to associate with the mark prior to your use.
Another requirement is that the mark must be capable of operating as the identifier of the source of the goods or services with which it is associated. For example, to operate as a source identifier, the mark cannot be a generic term for the goods or service. Thus, a word like “Glass” in association with drinking glasses would not provide a source identification function and generally could not acquire trademark status for drinking glasses. However, the word could be used as a trademark to identify other types of products not related to drinking glasses such as hair conditioner, musical chimes, or a wearable computing device.
Common-law trademark rights resulting from commercial use of a mark is more likely when the use of the word, phrase, logo, etc., clearly indicates the user’s intent to use them as trademarks. This is one of the reasons why you will often see the notation “tm”, for trademark or “sm” for service mark in association with the branding of products or services. Such notice says to the world that the user is attempting to appropriate the word or term as their trademark or service mark for the associated goods and services. In doing so, the notice also warns potential users of the mark or a confusingly similar mark that such use might violate the trademark owner’s rights and subject them to trademark infringement litigation and possible payment of damages.
Also, it is important to note that more than one party may acquire common law trademark rights in a mark. This can substantially increase the complexity of trademark disputes. It is often also an issue that arises in domain name disputes brought under the Uniform Domain Name Dispute Resolution Policy (UDRP), where establishment that a party has a valid trademark is a required to prevail. One way of preventing multiple parties from owning trademark rights in the same name is by federal registration as discussed below.
Acquiring Trademark Rights Through ‘Intent to Use’ Applications
A party can commence the process of acquiring trademark rights in the U.S. even before the mark is commercially used in association with any goods or services.
The process requires the filing of an Intent to Use (ITU) application for federal trademark registration with U.S. Patent and Trademark Office (USPTO).
The USPTO is the agency that is responsible for granting statutory trademark rights under federal law.
(Note: The USPTO maintains a very informative and user-friendly website at USPTO.gov. The site also allows you to search the USPTO’s registered trademark database and even file trademark applications online.)
The ITU application is very useful because it enables the applicant to establish a priority filing date and rights in the trademark if the mark is approved for registration by the USPTO. This is so, provided that the applicant begins to actually use the mark in commerce in the manner represented in the application and an acceptable “Statement of Use” is filed with the USPTO within three years of the date of issuance of a “Notice of Allowance” to the applicant.
Acquiring such a priority date can be critically important if there is even a moderate amount of time between a company’s commitment of resources to the use of a mark that has cleared the search process and the actual use of the mark in commerce.
This is because, without the priority date, the company’s entitlement to rights in the mark will remain at risk and vulnerable to a third party’s potentially superior claim to rights in the mark if the third party acquires common-law rights through actual use, or the party first files its own ITU, before the company.
Acquisition of an early priority date can also be critical in resolving domain name disputes. If the trademark applicant properly acquires a priority date through an ITU application, the priority date becomes the effective date for determining whether a third party has superior entitlement to registration of the mark.
Often the ultimate ownership of a disputed domain name turns upon which of the opposing parties had the superior rights to the trademark.
Obtaining Valuable Additional Trademark Rights Through Federal Trademark Registration
Federally registering a company’s trademark(s) can provide a number of important benefits, including:
- Exclusive ownership of the mark across the U.S. (except in areas where another party was previously confusingly similar mark);
- Refusal by the Trademark Office to register potentially confusingly similar marks in connection with goods or services that are similar to those associated with the registered mark;
- The right to use the symbol ® in connection with goods and services for which registration has been granted (but only after registration has been granted);
- After five years of continuous use commencing from the date of registration, a designation that the registered mark is “incontestable” (i.e., the mark may not be challenged on the grounds that it is “descriptive” or lacks required “secondary meaning”);
- Public notice of the mark’s registration to other users, notifying them of the registrant’s superior rights to the mark; and,
- A trademark application in the U.S. can also provide a priority date for trademark applications in foreign countries for a limited time. This is an increasingly important matter given the near ubiquitous reach of the web.
In addition, federal trademark registration can make an important difference in trademark litigation, as well as in domain name disputes. For instance, if you have a registered trademark, then you are presumed to be the legitimate owner. The burden is on the other party to prove that you are not. Also, a valid trademark registration may increase the likelihood that you will prevail in a domain name dispute regarding a domain name comprising the trademark or a confusingly similar variant. In fact, statistics show that plaintiffs in UDRP actions involving federally registered marks fare better than plaintiffs asserting rights in common law trademarks.
Unlike common-law marks, federal trademark registration also provides nationwide rights in the mark instead of rights limited to where the mark has actually been used in commerce. This can be critically important in domain name disputes where two or more parties may have rights in a mark that is incorporated in a domain name at issue.
Finally, in the event of a trademark infringement action, federal registration entitles the trademark owner to recover up to three times actual damages, and possible recovery of attorney’s fees, for willful infringements of the owner’s mark.
The Mechanics of Federally Registering a Trademark
In general, a trademark application requires that all of the following be submitted to the USPTO:
- The name of the applicant;
- A name and address for correspondence;
- A clear representation of the mark;
- A listing of the goods or services which are or will be identified by the mark; and,
- The filing fee for at least one class of goods or services.
Trademark applications may be filed online without the assistance of an attorney. In many cases, small business owners can save money by filing their own trademark registrations. Unfortunately, however, filings by a non-attorneys or attorneys who are not familiar with trademark applications can contain serious errors or omissions that could affect the enforceability or even the validity of the registration.
Unfortunately, many such problems may not become evident until the registered mark is asserted against an infringer or is at issue in a domain name dispute. Consequently, if you are considering the filing of an application yourself, please read the materials provided on the USPTO website carefully. It is also particularly important to understand the requirements associated with the disclosure of the goods and/or services associated with the mark.
This part of the application is critically important. Errors in this part of the application can even provide grounds to cancel the registration of the mark.
With respect to the specimens of use that an applicant is required to provide to the USPTO, it is very important to remember that you are transmitting the materials to the government. You should, therefore, be absolutely certain that the works you send are fully compliant with all the laws pertaining to the works. For example, if specimens of use for registration of a mark associated with explicit adult content include explicit depictions, which must have compliance statements required by 18 U.S.C. §2257 or 18 U.S.C. §2257A, such compliance statements must be affixed to the content provided. In addition, all specimens of use provided to the USPTO should not be offensive or comprise an infringement of any third-party’s copyright in the materials.
It’s also important to know that federal trademark registration will be cancelled if no declaration of continued use is filed between the fifth and sixth year following registration, or if renewal applications and declarations of use are not filed by the end of each 10-year anniversary (10th, 20th, 30th anniversaries, etc.) after the date of registration.
Unfortunately, this article has only skimmed the surface of a very complex area of law. It is not intended to be, and cannot be, a substitute for a visit with a competent trademark attorney. But if your company is interested in protecting or exploiting trademark rights, I urge you to discuss the matter with our firm or other compatent counsel as soon as possible.
This article is for educational purposes only and is not intended to be, nor should it be interpreted as, legal advice of any kind.
Gregory A. Piccionelli is an entertainment and Internet attorney and free speech advocate. He can be reached at (818) 201-3955 or firstname.lastname@example.org.