educational

The Trademark Basics

Gregory A, Piccionelli
In last month’s article, I discussed how an approval of the .XXX top-level domain will likely trigger an avalanche of domain name disputes regarding the registration of .XXX domain name versions of trademarks not owned by .XXX domain registrants

Last month’s article also discussed domain name dispute resolutions and why a valid, and preferably federally registered trademark is so important in such disputes. So, in this month’s article, as promised, we will cover some basic, but important, information regarding trademarks.

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®, sex toys, such as Real Touch®, and gentleman’s club names, such as Deja Vu®.

What is the function of a trademark? The primary purpose of a trademark is to identify the source of the goods and services associated with the mark, 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, whereas there is no set term for trademark rights.

Trademark 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-building benefits provided by trademark ownership.

The trademark for the famous British insurer “Lloyd’s of London,” for example, has been in use for several hundred years, and the American company “Coca-Cola” registered its first trademark on Jan. 31, 1893.

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, “commonlaw” 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.

As discussed, establishing that a party has a valid trademark is a required to succeed in litigation to resolve most domain name disputes. It is therefore of critical importance that the name used in the domain name at issue be, or be confusingly similar to, a functional trademark.

Also, it is important to note, that in the discussion above regarding common law trademarks, it should be evident that more than one party could potentially have a trademark use of the same name.

This can substantially increase the complexity of domain name dispute. One way of preventing multiple parties from owning trademark rights in the same name is by federal registration as discussed below.

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 (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 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.

Acquisition of an early priority date can 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 mark.

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 entire country (except in any area in which someone was previously using the same or a confusingly similar name or logo and has superior trademark rights);

• Refusal by the Trademark Office to register potentially confusing marks in connection with goods or services that are identical or similar to registered marks;

• 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, an increasingly important matter in our globally wired world.

In addition, 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, in statistics show that plaintiffs in U-DRP procedures whose rights asserted in the procedure were appurtenant to registered marks fare better than plaintiffs asserting rights in common law trademarks.

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. 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 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.

Unfortunately, however, filings by a non-attorneys or attorneys who are not familiar with trademark applications can contain errors that could affect the enforceability or even the validity of the registration which may not become evident until the registered mark is asserted against an infringer or 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 an opponent to cancel the registration of the mark.

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, therefore, be absolutely certain 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. and 18 U.S.C. §2257A et seq.

In addition, you should also be sure that the specimens of use you provide to the USPTO are not offensive and do not comprise an infringement of any third-party’s copyright in the materials.

Its 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.

To be sure, the effective acquisition, maintenance, exploitation and enforcement of trademarks requires an investment of time and money. Despite this, however, many adult entertainment companies have come to learn how important trademarks are to their business. It is a lesson that many more adult company’s may soon learn if the .XXX top-level domain is approved.

This article is not intended to be, nor should it be considered to be, an exhaustive tutorial regarding any topic or legal advice regarding any matter. I strongly urge you to seek the counsel of a qualified and experienced adult entertainment attorney familiar with the matters discussed in this article.

Gregory A. Piccionelli is an adult entertainment attorney. He can be reached at Piccionelli & Sarno at (805) 497-5886 or greg@piccionellisarno.com.

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