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Competition, Branding and Trademarks

Competition, Branding and Trademarks

September 11, 2008
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" Today, there are literally thousands of producers of adult content and tens of thousands of distributors. "

Once upon a time, not too long ago, the adult entertainment industry consisted of a few dozen brave producers and wholesale distributors who dared to create and sell explicit motion pictures and magazines in defiance of a government determined to stamp out commercial pornography.

Today, there are literally thousands of producers of adult content and tens of thousands of distributors. Many, if not most of them now feel that, with the end of the Bush Administration rapidly approaching, the government's war on porn is nearly over.

Leaving aside the issue of whether it is appropriate for the industry to declare "Mission Accomplished" in its battle against government censorship, there is clearly one thing that everyone in the industry now agrees has come with near universal acceptance of adult content: competition ... and lots of it. In fact, there are now so many sources of adult content available to consumers, including much of it for free, legally or otherwise, that it is clear that many companies simply will not survive the market forces that point to even more content production and more intense competition in the future.

But in business, competition is nothing new. Increased competition is actually a sign of a successful and thriving industry.

For example, in the early days of the automobile industry there were several thousand car and truck manufacturers. Regardless of whether the product produced is passenger cars or porn, the trick is how not to become a casualty of competition in a changing industry. Given the fact that most adult entertainment companies produce a relatively similar product, the answer to the question of survival pretty much boils down to one word: branding.

Adult companies that have established strong and widely recognized brands are simply more likely to survive in what is likely to be an even more intensely competitive environment in the future. This is primarily because strong brands enable consumers to more easily pick out products bearing a familiar brand from among a multitude of competing choices and then form an emotional attachment to the brand.

Many adult companies that have already successfully established their brands are also finding that they are in a much better position to deal with the twin dragons of an oversupply of content coupled with rampant piracy by associating their brands with goods and services that are not easily pirated. For example, strong adult brands are commonly used to create new profit centers through licensing and other exploitation of their trademarks and service marks in the areas of adult toys, live chat, online dating, gentlemen's clubs, casinos, and clothing, etc. In fact, one of my clients, the owner of the famous Deep Throat® motion pictures has recently introduced a wildly successful Deep Throat® energy drink.

Thus, association of a good brand with products that are not easily pirated affords adult entertainment companies with strong trademarks the opportunity to diversify their risk and make themselves less vulnerable to the negative effects of collapsing content profitability.

For adult content companies that have not yet established a strong brand, there are always opportunities for doing so.

Consider, for example, the fact that even in the current environment of a seemingly endless ocean of free adult content, there is always something fresh and new that strikes the public's fancy and generates great demand for the new content.

Those who have produced such content are afforded the chance, albeit often a limited window of opportunity, to establish a subsequently exploitable brand by careful and purposeful association of a memorable trademark with such successful content.

An example of this is the strong and widely recognized Bang Bros® brand which was established, in large part, because of the consistent association of that brand with the phenomenally successful Bang Bus® series.

There is a term for a brand that has been uniquely and consistently associated with a product or service, a word that itself symbolizes the bundle of rights that allows adult entertainment companies to effectively exploit the benefits of branding. Such a brand is a trademark.

What are trademarks?
Trademarks are a form of intellectual property that provides a trademark owner with a limited monopoly in the use of names, designs, logos, phrases and sounds associated with goods sold in 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, equipment, etc.), intellectual property can be bought, sold, licensed, rented and even function as security for bank loans.

Many adult entertainment companies own and exploit valuable trademarks. A few 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 the rest of the industry.

Playboy®, Hustler®, Digital Playground® and Vivid® are all good examples of adult companies that effectively exploit their brands through trademark licensing.

Virtually every adult product and service can be associated with a trademark. For example, adult entertainment companies can trademark a DVD line, such as Virtual Sex®, a contract star name, such as Jesse Jane®, entertainment services, such as Cybererotica®, affiliate program names, such as Max Cash®, a sex toy, such as Fleshlight®, and gentleman's club names, such as Spearmint Rhino®.

What is the function of a trademark?
The primary purpose of a trademark is to identify the source of related goods and services, and to distinguish them 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, or the commitment to packaging or advertising using a mark. Consequently, before you become wedded to a name, a phrase, a symbol, etc.,

I strongly recommend that you perform a "trademark search" and have the results evaluated by a competent trademark attorney.

Sadly, too often, clients come to us fully committed economically, and often emotionally, to a mark that unfortunately belongs to someone else.

Trademark rights can only be acquired by a party through the use of a mark in association with specific goods or services in commerce. This differs from copyrights which automatically belong to the authors of expressive works at the time the works are created.

Another important distinction from copyrights is the fact that copyrights have a limited duration (currently the life of the author plus 100 years), whereas there is no set term for trademark rights. The rights can theoretically continue forever because they are principally tied to the mark's continued use in commerce.

The potentially unlimited duration of trademark rights provides one of the major asset and wealth-building benefits provided by trademark ownership. The trademark for the famous British insurer Lloyd's of London, for instance, has been in use for several hundred years, and the American company "Coca-Cola" registered its first trademark on January 31, 1893. Each mark is worth billions of dollars.

Obtaining valuable "common law" trademark rights
A party does not have to register a name, a logo or a design with any governmental entity to obtain rights in a trademark.

In fact, "common-law" trademark rights may be acquired by a person or entity through the use of a mark in association with goods or services sold in commerce. Common-law trademark rights are generally limited to geographic locations in which the goods or services bearing the mark is marketed or sold, and there are a number of requirements that must be satisfied before a party can obtain common-law trademark rights.

For example, one requirement is that no one else is using the same or a confusingly similar mark in association with goods or services similar to those you want to associate with the mark. 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 of service. Thus, words like "CAR" or "VEHICLE" in association with automobiles would not provide a source identification function and generally cannot acquire trademark status for cars. However, both words could be used as trademarks to identify other types of products not related to automobiles, such as clothing, for example.

Common-law trademark rights resulting from commercial use of the 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.

A party can also 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.

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 www.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.

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.

Obtaining valuable 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 entire country (except in any area in which someone was previously using the same or a confusingly similar name or logo);
  • Refusal by the Trademark Office to register potentially confusing marks in connection with goods or services that are identical or similar to the registered mark;
  • The right to use the symbol ® in connection with your goods and services after registration has been granted;
  • After five years of continuous use commencing from the date of registration, a designation that your 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 your registration to other users, notifying them of your 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.

Obtaining trademarks in foreign countries is increasingly important in a wired world.

In addition, trademark registration can make an important difference in litigation. 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.

A valid trademark registration may increase the likelihood that you will prevail in a dispute regarding an Internet domain name comprising the trademark or a confusingly similar variant.

Unlike common-law marks, federal trademark registration also gives you nationwide rights in the mark instead of only where the mark has actually been used in commerce.

Additionally, in the event of a trademark infringement action, federal registration entitles the trademark owner to recover up to three times actual damages, and attorney's fees, resulting from willful infringement of the mark.

The mechanics of federally registering a trademark
In general, a trademark application requires that all of the following be submitted to the 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.

As previously indicated 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.

But 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 and the identification of goods or services cannot be expanded after the application is filed.

With respect to specimens you provide to the USPTO, it is very important to remember that if you are mailing materials to the government for registration you should be sure that the works you send are fully compliant with all the laws pertaining to the works, including the federal labeling requirements pursuant to 18 U.S.C. §2257 et seq. In addition, you should also be sure that the specimens of use you provide to the USPTO are not offensive.

It's also important to know that if you federally register a trademark, the 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 ten year anniversary (10th, 20th, 30th anniversaries, etc.) after the date of registration.

While the USPTO website allows you to file your own trademark registration application, the process can get complicated. After filing literally hundreds of trademark applications, we have found this to be particularly so regarding marks that may be deemed to be generic, descriptive or scandalous, as is often the case regarding an adult entertainment mark.

Consequently, the foregoing information is intended to only provide you with a general understanding of trademark registration procedures. It is not intended to be an exhaustive tutorial regarding all of the requirements pertaining to trademark registration.

Consequently, I strongly advise that you seek the advice of competent counsel, specifically an attorney experienced in trademark registration matters, and preferably one that has registered marks for adult entertainment businesses.

Greg Piccionelli is one of the country's most experienced adult entertainment attorneys. He can be reached at Piccionelli & Sarno at (310) 553-3375.


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