Category: Trademarks

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Should I use Inc or LLC in my Trademark?

Look at the way well-known brands use their company name as a trademark or services mark. They usually do not include an entity descriptor–e.g. Inc., Corp., Ltd., or LLC–in those brand usages. For example, the company behind the Starbucks brand is “Starbucks Corporation.” However, you rarely see the word “corporation” used in connection with Starbucks when Starbucks is used as a trademark. Instead, “Starbucks Corporation” is mostly used in the fine print when referring to the corporation rather than the brand, such as in their copyright notice.

One reason for that is marketers probably do not want unnecessary legal language cluttering up their beautifully crafted names/brands. Another reason is that trademark law somewhat discourages the inclusion of entity descriptors in trademarks.

The Lanham Act provides for the federal registration of trademarks and service marks, but not trade names.  Under the Act, a “trade name” is “any name used by a person to identify his or her business or vocation.” 15 USC 1117.

The name of a business can act both as a trade name and a trademark/service mark. However, the Trademark Trial and Appeals Board has said that the inclusion of an entity descriptor in the mark to be registered “is a factor which frequently leads to a finding solely of trade name use, especially when the name appears in close proximity to a corporate address.” In re Univar Corp., 20 USPQ2d 1865, n.6 (TTAB 1991); TMEP 1202.01. Other factors that can lead to a conclusion that the mark applied for is only a trade name is if the mark is only used in a corporate address and is the same color, size, and font as the remaining or surrounding text. In re Diamond Hill Farms, 32 USPQ2d 1383 (TTAB 1994).

If you search the trademark database at the USPTO, you will find many registered trademarks containing entity descriptors. Therefore, many applicants have been able to show that their business names function as a trademark/service mark. Further, the mark you seek to register must match the mark you actually use in your business.

However, since an entity descriptor is not required in a trademark, and since a trademark might be marginally stronger without a entity descriptor, the entity descriptor is often not used in a trademark.

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Transferring Ownership of a Trademark

“Use of the mark by the [trademark] assignee in connection with a different goodwill and different product would result in a fraud on the purchasing public who reasonably assume that the mark signifies the same thing… Therefore, if consumers are not to be misled from established associations with the mark, [the mark must] continue to be associated with the same or similar products after the assignment.” – Fifth Circuit Court of Appeals

sugarbustersregCo-author and publisher, Sugar Busters LLC, purchased the registered service mark SUGARBUSTERS (Reg. No. U.S. 1,684,769). Then Sugar Busters LLC tried to sue on Ellen Brennan for trademark infringement based on the registration, but lost when it sought a preliminary injunction. Sugar Busters lost because the registered mark was for retail services, which were not related to the Sugar Buster’s book publication/sales activities.

Trademark Rights are Connected to Goods/Services

Trademark rights are connected to the goods and/or services with which they are used. This is why speculating in trademark without use is generally pointless. “A trademark is merely a symbol of goodwill and has not independent significance apart from the goodwill that it symbolizes,” the Fifth Circuit said in Sugar Busters LLC V. Brennan, 177 F. 2d 258 (5th Cir. 1999). Trademarks cannot be sold separate from the goodwill which they represent (the terms  trademark and service mark are used interchangeably in this post).

The sale of a trademark without its associated goodwill is characterized as a sale “in gross” and is invalid. The rule prohibiting the sale of a trademark in gross is “to prevent a consumer from being misled or confused as to the course and nature of the goods or services that he or she acquires.”

Therefore any sale or assignment of trademark right should recite that the goodwill associated with the mark(s) is assigned to the buyer. With respect to registered marks, this requirement is found at 15 USC 1060(a)(1), which provides “A registered mark or a mark for which an application to register has been filed shall be assignable with the goodwill of the business in which the mark is used, or with that part of the goodwill of the business connected with the use of and symbolized by the mark.” The transfer of goodwill does not generally need to be accompanied with the transfer of any physical or tangible assets of the former trademark owner.

However, while reciting the transfer of goodwill in the assignment is important, it is not enough. “Use of the [trademark] by the assignee [purchaser] in connection with a different goodwill and a different product would result in a fraud on the purchasing public who reasonably assumed that the mark signifies the same thing, whether used by one person or another.” Therefore, a trademark assignment needs to recite the transfer of goodwill of the business in which the mark is used and the purchaser of trademark rights needs to continue the use of the mark on the same or similar goods/services as were provided by the prior owner of the mark.

Sugar Busters

In the Sugar Busters case, Sugar Busters LLC co-authored and published a book entitled “SUGAR BUSTERS! Cut Sugar to Trim Fat” in 1995. The book sold over 210,000 copies. In 2007, Sugar Busters LLC granted permission to one of its founders, H. Leighton Steward, to independently create a cookbook based on the principles outlined in the original SUGAR BUSTERS! book. Steward and Sugar Busters LLC employee Ellen Brennan agreed to co-author the cook book. But in December 1997, Sugar Busters LLC withdrew its permission for the cookbook and determined its partners should not engage in independent projects. Ellen Brennan proceeded to co-author the cookbook “SUGAR BUST For LIFE!” without Steward, which was punished in May of 1998.

Between the time that Sugar Busters LLC withdrew its permission and the date the “SUGAR BUST For LIFE!” book was published, Sugar Busters LLC purchased the SUGARBUSTERS service mark, registered as U.S. trademark registration number 1,684,769. It is not clear whether the service mark was purchased with an eye to litigation, but the timing of the purchase indicates it might have been.

The SUGARBUSTERS trademark registration was for “retail store services featuring products and supplies for diabetic people; namely, medical supplies, medical equipment, food products, informational literature and wearing apparel featuring a message regarding diabetes.” Therefore the retail store services of the trademark registration were different from the books sold by Sugar Busters LLC.

The court found that the trademark was in valid because plaintiff’s book and the retail store services were not sufficiently similar to prevent consumer confusion or deception when plaintiff used the mark previously associated with the store as the title of its book. As a result, the preliminary injunction based on the registration was vacated.

Conclusion

The transfer of ownership of a trademark should involve at least: (1) an assignment that recites the transfer of the trademark, (2) the assignment recites the transfer of goodwill of the business in which the trademark is used, and (3) the purchaser of trademark continuing the use of the trademark on the same or similar goods/services as were provided by the prior owner of the trademark.

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Secretary of State Approval of Corporate Name Is No Defense to Trademark Infringement

“the fact that defendant received a charter [from the State of Illinois] to use the name ‘Lady Esther Corset Shoppe, Inc.’ does not protect [the defendant].”

Lady Esther, Ltd. sued Lady Esther Corset Shoppe, Inc. for unfair competition based on the defendant’s use of “Lady Esther” in it company name. It appears the defendant argued it was protected from suit because the Illinois Secretary of State approved the formation of its corporation under the name Lady Esther Corset Shoppe. The court rejected this argument in Lady Esther, Ltd. v. Lady Esther Corset Shoppe, Inc., 317 Ill. App. 451, 458 (Ill. App. Ct. 1943).

The Lady Esther case is old, but this point is still valid: the approval of a corporate or LLC name by the Illinois Secretary of State is no defense against claims of trademark infringement. Therefore you cannot rely on the Secretary of State’s approval of the name of your corporation or LLC as clearance that you are free to use the name.

Trademark rights in the U.S. accrue to the person/entity who is first to use the trademark in commerce (or files an intent-to-use trademark application).

First User Wins; Later Incorporation Irrelevant

In 1913, Syma Busiel started a cosmetic business under the name Lady Esther. In 1922, she incorporated her business in the state of Illinois as Lady Esther Company (later changed to Lady Esther Ltd.).  Cosmetic sales between 1923 and 1936 totaled 36 million dollars.

In 1926, Ben Seigel and his wife Anna incorporated and began operating the Lady Esther Corset Shoppe selling women’s apparel and jewelry.

The court issued an injection prohibiting Lady Esther Corset Shoppe from using name Lady Esther. The appeals court agreed and stated, “the fact that defendant received a charter [from the State of Illinois] to use the name ‘Lady Esther Corset Shoppe, Inc.’ does not protect [the defendant].”

Do not rely on the Secretary of State’s approval of your corporation name or LLC name as an indication  that you are free to use the name. First, have a comprehensive trademark search performed.

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Trademark Disclaimers and Hopeless Trademark Appeals

LouisianaThis appears to be another case where the applicant pursued a hopeless claim. Why did this happen? The problem is that the applicant initially chose a weak trademark and then tried to prop it up by pursing a course that it could not win.

Louisiana Fish Fry Products (LFFP) filed a trademark application on LOUISIANA FISH FRY PRODUCTS BRING THE TASTE OF LOUISIANA HOME! as shown at the beginning of this post.

The Trademark Examining Attorney and the Trademark Trial and Appeals Board (TTAB) both found that LFFP was required to disclaim “Fish Fry Products” as it was descriptive and generic of LFFP’s products. LFFP appealed this requirement to the Federal Circuit Appeals Court and lost in In Re: Louisiana Fish Fry Products, Ltd., No. 2013-1619, (Fed Cir. 2015).

The applicant could have avoided two rounds of appeal along with the associated attorney’s fees while still obtaining a registration on its mark. All it had to do was disclaim “Fish Fry Products.” But it didn’t, likely because of its prior dispute over Florida Fish Fry Products.

What is a Disclaimer?

A disclaimer is a statement made by a trademark applicant, usually at the request of the USPTO, to “disclaim an unregistrable component of a mark otherwise registrable.” 15 USC 1056. Or stated another way:

…a disclaimer of a component of a composite mark amounts merely to a statement that, in so far as that particular registration is concerned, no rights are being asserted in the disclaimed component standing alone, but rights are asserted in the composite; and the particular registration represents only such rights as flow from the use of the composite mark.

[Sprague Electric Co. v. Erie Resistor Corp., 101 USPQ 486, 486-87 (Comm’r Pats. 1954); TMEP 1213]

So here the question is does LFFP have rights in “Fish Fry Products” alone when used in relation to the applicant’s goods of: marinades sauce mixes, namely, barbecue shrimp sauce mix, remoulade dressing, cocktail sauce, seafood sauce, tartar sauce, gumbo filé, and cayenne pepper. The Trademark Examiner said no, the TTAB said no, and the Federal Circuit said no, and predictably so.

Why Fight? The History Against Florida Fish Fry Products

Is it so bad to disclaim a portion of text in a trademark at the request of the USPTO?  The Trademark Act provides “No disclaimer…shall prejudice or affect the applicant’s or registrant’s rights then existing or thereafter arising in the disclaimed matter, or his right of registration on another application if the disclaimed matter be or shall have become distinctive of his goods or services.” 15 UCS 1056(b). Therefore, a disclaimer does not prohibit you from claiming rights in the disclaimed text later in ligation or in other trademark applications.

Why not just take the disclaimer in this case?

I speculate the reason is that in 2007 LFFP sued Charles Corry. Corry was selling products under the mark FLORIDA FISH FRY PRODUCTS. In 2008, Corry settled and agreed not to use Florida Fish Fry Products.

I predict LFFP would have had a very difficult time proving infringement by Corry if the case had not settled.

Here, LFFP probably didn’t want another Corry coming along and selling under Florida Fish Fry Products, Mississippi Fish Fry Products, Texas Fish Fry Products, or the like. So it was determined to fight this disclaimer requirement to better strengthen its position against such future problems on the common element “Fish Fry Products.”

The problem is LFFP didn’t have a chance. The fight over the disclaimer was a  waste of money and a predictable loss.

Further, it not only was a loss of money, but the appeal put LFFP in a somewhat worse position than if it had not appealed.  One concurring judge in this case asserted that FISH FRY PRODUCTS was generic. If FISH FRY PRODUCTS is generic, it can never achieve protection. Future defendants accused by LFFP could point to the this opinion that the term was generic as a defense.

The majority of the court did not reach the genericness question and instead relied on descriptiveness, as explained below.

Highly Descriptive: Fish Fry Products

The TTAB found that “Fish Fry Products” was highly descriptive of the applicant’s goods. The TTAB said that the evidence showed (1) public understands “fish fry” to refer to fried fish meals, (2) public understands “products” to mean, inter alia, “something produced; especially: COMMODITY … something . . . that is marketed or sold as a commodity,” (3) therefore the relevant public understands FISH FRY PRODUCTS to identify a type of sauce, marinade or spice used for fish fries.

No Acquired Distinctiveness

The applicant asserted that even if the mark was descriptive, the applicant had rights in “Fish Fry Products” through acquired distinctiveness (also known as “secondary meaning”). A trademark–or in this case the “Fish Fry Products” portion–has acquired distinctiveness when “in the minds of the public, the primary significance  of a product feature or term is to identify the source of the product rather than the product itself.”

Here, we ask this: when you see “Fish Fry Products” do you think of a source such as LFFP (then we have trademark protection) or do you think of the product itself (then no trademark protection)? Here, the “Fish Fry Products” refers to the product itself and not to the source, LFFP.

The applicant can show acquired distinctiveness by advertising expenditures, sales success, and length and exclusivity of use of the mark.

LFFP’s evidence fell short of proving acquired distinctiveness.

First, Under section 2(f) of the Lanham Act, the USPTO may accept five years of “substantially exclusive and continuous” use as prima facie evidence of acquired distinctiveness. But the USPTO is not required to do so. Therefore, LFFP’s allegation of five year of “substantially exclusive and continuous” of the mark did not prove acquired distinctiveness. The USPTO often does not accept section 2(f) declarations for highly descriptive marks.

Second, a declaration from LFFP’s president (1) stating that the LOUISIANA FISH FRY PRODUCTS has been used for 30 years was insufficient, and (2) providing sales and advertising expenditures for food  products bearing LOUISIANA FISH FRY PRODUCTS was insufficient. This evidence was insufficient because it related to product bearing  LOUISIANA FISH FRY PRODUCTS and not on the acquired distinctiveness FISH FRY PRODUCTS alone.

LFFP would have saved a lot of money, and an adverse ruling, by accepting the disclaimer and avoiding two rounds of appeal losses.

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Know When to Stop Wasting Money on Trademark Litigation

MoneyWasteYou need to know when to stop wasting money on trademark litigation. Here is a case where the plaintiff should have stopped on day two of the lawsuit, but didn’t.

Dr. Tartell and Dr. Mandel jointly practiced medicine until 2011, when they split their practice and went separate ways. The break up was contentious.

After the break up, Dr. Mandrel (1) registered six domain names using some variation of Dr. Tartell’s name, redirecting some to Dr. Mandrel new website, and (2) purchased Google AdWords keyword for Dr. Tartell name, which caused Dr. Mandell’s website to appear as an advertisement whenever someone searched with those terms on Google.

Tartell filed suit against Dr. Mandell including claims for cybersquatting, false designation of origin, and unfair competition (all trademark law related claims).

The day after the suit was filed in 2012, Dr. Mandel canceled the domain names. Many trademark related disputes are resolved this way, e.g. with one party stopping or changing their name.

It is unclear whether the Adword purchases stopped. They probably did, but even if they did not, plaintiffs do not fare well in competitive keyword advertising suits.

So, the day after the suit was filed, Dr. Tartell probably got the best he could get, e.g. Dr. Mandell releasing the domain names and (probably) stopping the Google Adword buy. This was a good time to settle.

Litigating on Principle is Expensive and Often Unsatisfying

But the case continued for at least three years. It continued all the way through a four day bench trial and through an appeal in 2015. Why did this case continue? As stated by the trial court:

this action continued all the way through [a four-day bench] trial because Dr. Mandel refused to take responsibility for his antics while Dr. Tartell sought a statutory windfall for a short-lived and largely pointless deceit.

In other words, (1) Dr. Mandel would not apologize and (2) Dr. Tartell wanted statutory damages and attorneys fees as a result of the alleged cybersquating.

Pursuing litigation to achieve an apology or an an acknowledgment of wrong doing (litigating on principle) can be a very expensive undertaking with often unsatisfying results, as Dr. Tartell experienced here. Dr. Tartell won only $6000 at trial, much less than he likely paid his attorneys. But he would not keep even that amount. Dr. Tartell ultimately lost on appeal in Tartell v. South Florida Sinus and Allergy Center, Inc., No. 14-13178 (8th Cir. 2015). And it is a pretty safe bet that Dr. Mandel did not apologize to Dr. Tartell.

Short Use and Quick Turnover Kills Off Statutory Windfall

On the second issue, you need to carefully evaluate your likelihood of success in obtaining money damages, even when the other side’s actions appear willful and to reflect poorly on them. The statistical likelihood of receiving an award of any damages in trademark litigation is low.

Dr. Tartell may have been expecting closer to $600,000 in statutory damages and not the $6,000 that was awarded by the trial court. The Lanham Act provides for statutory damages of between $1,000 and $100,000 per domain name for cybersquatting. 15 U.S.C 1117(d). This case indicates that when the defendant carries on with the offending conduct only a short time and cancels or turns over the domains immediately after suit, the court could see this as a mitigating factor leading to an award of damages at the low end of the range and not the top, e.g 6 domain names * $1,000 = $6,000 and not 6 domain names * $100,000 = $600,000. This is true here even though Dr. Mandrel’s “antics” were in bad taste and, as the court noted, included “deceit.”

Difficulty in Protecting One’s Personal Name in Medicine

Dr. Tartell lost on appeal because he could not establish that his name was protectable. Therefore he could not recover any money damages. This result should have been predicted.

A quick reference to McCarthy on Trademarks reveals that “in professions where use of personal names as identifiers is traditional, a court may require a strong showing of secondary meaning.” McCarthy 13.2. Or as the Eighth Circuit Appeals Court stated, “in professions where use of personal names as identifiers is traditional such as the medical profession, it is more difficult to establish secondary meaning [in such personal names].” In other words, it is known that it is difficult to protect your personal name in the medical profession under trademark law.

In the Eighth Circuit, a plaintiff must prove that his service mark is “distinctive” to establish a claim for cybersquatting, false designation of origin, and unfair competition. So to obtain any relief, Dr. Tartell needed to prove that the consuming public recognized Dr. Tartell as the source of a service and not merely as a person’s name.

For example, “Ford” was a surname of Henry Ford, but overtime through sales and advertising “Ford” became associated in the minds of the consuming public with a car producing company and not merely the individual.

In the Eighth Circuit, a plaintiff can show a name is distinctive through consumer surveys or circumstantial evidence. Circumstantial evidence may include (1) the length and nature of name’s use, (2) the nature and extent of advertising and promotion of the name, (3) the efforts of the proprietor to promote a conscious connection between the name and the business, and (4) the degree of actual recognition by the public that the name designates the proprietor’s product or services.

Dr. Tartell provided no consumer surveys. Dr. Tartell presented evidence of his academic activities and reputation among other medical professionals. But this is not relevant because the target audience for such information was professionals and not the consumers of his medical services.

Dr. Tartell’s name used in advertisements for his business with Dr. Mandell before the split did not show Dr. Tartell’s name was distinctive because his name was not used prominently as a trademark in such advertising.

The appeals court ultimately found that Dr. Tartell did not establish any of the four distinctiveness factors. Therefore, Dr. Tartell lost and received no money damages. Dr. Tartell should have settled on the second day of his lawsuit.

Photo credit to flickr user Mike Poresky under this creative commons license.

 

 

 

 

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Names Predictive of Future Product Success?

“…the names of companies are often very predictive of future failure or success.” — Peter Theil.

“[a] great name can’t fix a bad product. A great product can fix a bad name.” — Paola Norambuena.

Choosing a name for your company, product, or service can be difficult and time consuming. But does the name you choose matter?

In other words, assuming that the name you choose does not conflict with another’s trademark rights and the name is a strong trademark, does the name impact the success of your company, product, or service?

Peter Theil, venture capitalist and co-founder of Paypal, thinks names matter. Peter discusses his view on naming in an exchange with Tyler Cowen:

TYLER COWEN: You mentioned Facebook a few minutes ago. In the back, we were talking about good and bad names for companies. If you could tell us your view on this, how important is the name of a company? What are a few good names, and why, and what are a few bad names?

PETER THIEL: A slight aesthetic thing I believe in very strongly is the names of companies are often very predictive of future failure or success.

PayPal was a very friendly name. It was the friend that helps you pay. Napster was a bad name. It was the music sharing site. You nap some music, you nap a kid. That sounds like a bad thing to be doing.

[laughter]

PETER THIEL: It’s no wonder the government then comes in and shuts the company down, within a few years. You want to be very careful how you name companies. In the sharing economy context, I like Airbnb, way more than Uber. Airbnb sounds like this very innocent, virtual bed and breakfast. It’s [a] very light, nonthreatening company. Uber, it sounds like a bad name from Germany sometime in the 1930s.

[laughter]

PETER THIEL: What are you exactly above? Maybe the law?

[laughter]

PETER THIEL: This is probably something that, again, from government regulatory perspective, Airbnb is a vastly better name than Uber. On the social networking side, I would say that I actually think Facebook was a very good name. MySpace was a more problematic name.

You can say that all these social networks involve both reading and writing. Unlike real life, you have to write, before you read. You first have to write some things about yourself, then you read more about other people. Over time, reading dominates writing.

Facebook was about learning about people around you. About the real identities at Harvard. MySpace started among wannabe actors in Los Angeles, and it was about them coming up with fictional narratives around themselves, and then a lot of other people in LA, who are generally like that.

Because reading dominates writing, Facebook would ultimately dominate MySpace. There’s a certain version where the whole product arc was implicit in the names.

[Peter Theil on the Future of Innovation ]

This raises the proverbial chicken-and-the egg question: does the name cause a particular product direction or does the preexisting product direction manifest itself in the chosen product name? Maybe the direction of Myspace was not a result of its name, but a preexisting direction in the company independent of its name. Nonetheless, it is possible that a name can influence or reinforce the direction of a company, product, or service.

Paola Norambuena, the executive director of verbal identity at Interbrand, explains that a great product can fix a bad name and provides examples:

…even if the name they chose received a tepid reception, the power of their production process could still overcome it. Most namers will tell you, as Paola Norambuena puts it, that a “great name can’t fix a bad product. A great product can fix a bad name.” Accenture was met with derision for reminding people of dentures. Gap was an empty space. Yelp was a dog in pain. The iPad was confused with a tampon. Now these names have no odd connotations at all, thanks to the success of the things they name.

So it may have been that after hours upon hours of brainstorming and hours more of deliberations and still hours more of trademark searches, and after the expenditure of tens of thousands of dollars, not as much was at stake as Christensen, van Hoff and Annau thought — at least not in commercial terms. Personal and emotional stakes were a different story….

[The Weird Science of Naming Products, New York Times (Jan 15, 2015)].

Norambuena’s view tempers the otherwise stress inducing, “better get the name right” conclusion from Theil’s view. If a name is predictive of future success, then that predictive tenancy can be overcome by a great product or bad product according to Norambuena.

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Speculating in Trademarks is Fruitless: Race to Grab iWatch Fails for Lack of Bona Fide Intent

iWatchThe iPhone was released on June 29, 2007. Six days later on July 5, 2007, watch maker M.Z. Berger & Co. filed a trademark application on iWatch for watches, clocks, and related accessories. Coincidence?

Was the plan to grab up the iWatch trademark and sell it to Apple later? Too bad Apple went with “Apple Watch” instead.

Its a common misconception that filing a trademark application grants rights in a trademark without actually using the trademark. Just file a trademark application and the trademark is yours! No.

Speculating in trademarks without actual use of the trademark is a fruitless endeavor.

Watch maker Swatch AG filed an opposition against the iWatch trademark application. The TTAB, and later the appeals court, sustained the opposition and prevented the registration of iWatch because the evidence showed that Berger did not have a bona fide intent to use the iWatch mark with watches, clocks, and related accessories at the time the application was filed. M.Z. Berger & Co., Inc. v. Swatch AG, No. 2014-1219 (Fed. Cir. June 4, 2015). Instead, Berger merely intended to reserve the trademark.

Trademark rights are only acquired by using the trademark in conjunction with the sale/providing of goods or services. An intent-to-use trademark application can be filed before a trademark is used with products or services, but only if there is a bona fide intent–at the time the application is filed–to use the trademark with the goods/services described in the application. This is where Berger failed with iWatch.

You Can’t File an Application to “Leave All Doors Open” 

Berger ‘s CEO admitted that Berger never intended to use the iWatch mark for anything other than watches, but the application included clocks and related accessories. The paralegal who filed the application for Berger said the the CEO instructed her to register the mark for only watches and clocks, but she included other related accessories to “leave all doors open.”

An application can’t be filed to leave all doors open, you need to have a present bona fide intent to use the mark on all of the goods listed in the trademark application.

So, Berger admitted it did not intend to use the mark on clocks and accessories at the time the application was filed.

Conflicting Stories Don’t Engender Belief

Berger witnesses had conflicting stories about the evidence. For example, Berger presented images depicting mockups of an iWatch. Some employees testified that the images were pictures of actual mockup watches and clocks. But the CEO testified that no mockups were ever made and the the images were generated for the purpose of advancing the trademark application.

Also, Berger’s VP testified that he discussed the iWatch mark with a buyer. But the CEO testified that the iWatch had not been discussed with anyone outside of the company.

The court concluded it was proper to consider all circumstances regarding the Berger’s alleged intent to use the mark, including those facts that would tend to disprove that Berger had the intent. The TTAB and the court ultimately concluded that Berger did not have a bona fide intent to use the iWatch mark on watches.

Keep Evidence of Intent

Berger did not present any physical or documentary evidence relating to the iWatch watch beyond the images submitted to the USPTO.

Further the CEO testified:

Q. Okay. And how did you come up with that mark?

A. I think that I came up with the mark because of the advent of technology and information gathering around the globe over the last I guess few years, I thought that if we decided to do a — either a technology watch or information watch or something that would have that type of characteristics that would be a good mark for it.

The “if we decided” language indicates that Berger did not have a present intent to use the iWatch mark because Berger had not made a definite decision yet to proceed with a technological watch.

Further, Berger employees testified that Berger had not previously made a watch with technological features and admitted that they never took any steps toward developing such features at the time of filing the application or in the 18 months that followed.

A bona fide intent to use a trademark requires more than a subjective belief/intent. It “requires objective evidence of intent.”

Therefore, you should keep evidence (documents, models, samples, prototypes, communications, etc.) to show that you had an intent to use the trademark on all of the goods listed in the application at the time the trademark is filed. You should also keep such evidence that develops after the time the application is filed to show your efforts at bring the product and/or service to production/market using the trademark.

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Use Your Trademark Consistently or It Will Be Weak: WD-40 in the Crosshair

Most damaging to Sorensen’s argument regarding this factor is his inconsistent use of the crosshair [trade]mark. – Seventh Circuit Court of Appeals.

Sorensen_v_WD-40_CrosshairIn 1997, Jeffery Sorensen founded a company and began selling rust preventive products under the trademark THE INHIBITOR. Sorensen claimed trademark rights in THE INHIBITOR mark and common law trademark rights in the Sorensen Crosshair provided on some of his products, shown to the right.

In 2011, the WD-40 Company, began selling WD-40 Specialist Long-Term Corrosion Inhibitor for a similar purpose. The WD-40 product contained the same volatile corrosion inhibitor as Sorensen’s product.

Sorensen sued WD-40 for infringing THE INHIBITOR and crosshair trademarks in the case of Sorensen v. WD-40 Company, No. 14-3067 (7th Cir. June 11, 2015). But he lost on all counts.

While its not the only reason that Sorensen lost on his claim that WD-40’s crosshair infringed Sorensen’s crosshair, one factor in the defeat was the fact that Sorensen did not use the crosshair consistently across his products and marketing.

The consistent use of a trademark is very important to maintaining its strength. Trademark strength is one factor in determining whether there is a likelihood of confusion between two marks and therefore infringement. If you have a weak trademark you will have a harder time asserting infringement against similar marks.

In the WD-40 case, the court stated:

Inconsistent use makes a symbol less helpful to consumers as a source indicator, and therefore a weaker mark.

The court noted that Sorensen’s products, shown in the image below, provided evidence of inconsistent use of the crosshair. The court stated, “Sorensen’s crosshair has been used since 1997, but inconsistently—sometimes the crosshair has symbols in each quadrant, sometimes the quadrants are empty, and many times there is no crosshair at all, but rather a bull’s eye.”

Sorensen_v_WD-40_InhibitorProductLine

The court concluded that the inconsistent use of the crosshair mark weighed in favor of WD-40. This, together with other factors, ultimately led the court to find the WD-40 did not infringe Sorensen’s crosshair trademark.

To strengthen your trademark rights ensure consistency in all usage of your trademark. It is best to use the same capitalization, the same font, and the same color scheme for a given trademark for maximum consistency.

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Illinois State Trademark Registration Does Not Grant Rights Throughout the State

Steak_and_Brew_trademarkSteak & Brew, Inc.’s predecessor owned an Illinois trademark registration on STEAK & BREW and operated a restaurant under the STEAK & BREW mark in Peoria, Illinois up to the fall of 1971. In April of 1971, Beef & Brew Restaurant, Inc. opened a restaurant under the name BEEF & BREW in Rock Island, Illinois.

Steak & Brew sued Beef & Brew alleging Beef & Brew infringed its Illinois State trademark registration, but lost in the case of Steak & Brew Inc. v. Beef & Brew Restaurant, Inc., 370 Supp. 1030 (S.D.Ill. 1974).

Steak & Brew lost not because the word “Steak” is different from the word “Beef” in the respective marks. But it lost because of the counter-intuitive principle that an Illinois state trademark registration does not grant the registration owner exclusive rights to use the trademark throughout the entire state of Illinois. This is in contrast to a federal trademark registration, which does create a presumption of exclusive rights throughout the nation.

Illinois State Trademark Registration Worthless Against a Federal Registration

Previously I discussed the case of Burger King of Florida Inc. v. Hoots, 403 F. 2d 904 (7th Cir. 1968), which demonstrated that an Illinois state trademark registrations is subordinate to a federal trademark registration. In the Burger King case, the Hoots were the first to use its Burger King mark in Illinois, but Hoots’ Illinois state trademark registration was essentially worthless against the Burger King of Florida’s federal trademark, even where that federal registration was obtained after Hoot’s started using the Burger King mark in Illinois.

The court refused to accept the argument that the Hoots’ Illinois trademark registration entitled them to rights throughout the state when they were only using the mark in and around Mattoon, IL.

The Illinois state registration will not insulate against claims of infringement made by the owner of a federal registration nor will it block third parties from moving into the state using your mark in areas of the state where you are not operating/selling.

Geographic Scope of Illinois State Registration: Area of Use, Not Entire State

In the Steak & Brew case, the Illinois trademark registration owner operated in Peoria, Illinois and the defendant operated its restaurant 100 miles away in Rock Island, Illinois. The Steak & Brew court stated, “[The Plaintiff’s] registration of the ‘Steak & Brew’ mark simply does not bar the innocent adoption and use by the defendants of a somewhat similar name embracing the word ‘Brew’ in the Quad-Cities area where plaintiff’s mark has never been used.”

Therefore, the court stated that the Illinois trademark registration does not grant rights in geographic areas where you are not using the mark. This is counter-intuitive. One would think that an Illinois trademark registration would give the owner rights throughout the entire state, but it does not.

No Geographic Scope Beyond Common Law Rights

At common law, a business obtains rights in the trademark simply by being the first to use the trademark in the business to identify goods or services in a particular geographic area. An Illinois state trademark registration only gives you the geographic scope of trademark protection that you would already obtain under the common law by simply using the trademark without registration.

The trademark act effective in the Steak & Brew case is different from the current act in Illinois, but the result is the same. The current Illinois Trademark Registration and Protection Act (Illinois Trademark Act) provides a protection of common law rights: “Nothing in this Act shall adversely affect the rights or the enforcement of rights in marks acquired in good faith at any time at common law.” 765 ILCS 1036/80.

The “at any time” language must mean rights acquired under the common law either before or after an Illinois registration is granted.

Therefore, under the common law, the defendant Beef & Brew Restaurant would begin to build up rights in the BEEF & BREW mark simply by operating its restaurant under that name in Rock Island. As the plaintiff only operated far away in Peoria, its rights would not extend to Rock Island under the common law. This is true even though the plaintiff obtained its Illinois registration before the defendant began operating in Rock Island.

The plaintiff’s Illinois state trademark registration could not be used to stop others in remote geographic areas within the state from using the same or similar mark for the same or similar services.

Benefits of Illinois State Trademark Registration

The Illinois Trademark Act provides for an award of treble monetary damages in the case of willful trademark infringement, which is not available to unregistered marks under the federal Lanham Act. 765 ILCS 1036/70. However, it is often difficult to prove willfulness in a trademark infringement suit. And if litigation under the Illinois Trademark Act is similar to that under the Lanham Act, the statistical likelihood of obtaining an award of money damages at trial is low.

Federal Registration Generally Preferred

An Illinois state trademark registration is inexpensive but provides few benefits. The state registration does not grant exclusivity within Illinois. And the state registration is subordinate to federal trademark registrations. Therefore if you’re interested in broad protection of your trademark you should consider filing a federal trademark application if your circumstances allow.

 

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Lapse of Trademark Registration is Not Abandonment of All Trademark Rights

CrashDummiesYou search the trademark database at the USPTO and find that your competitor’s trademark registration was canceled because the competitor did not file renewal documents and fees. You jump at the chance to grab their trademark by filing your own trademark application on their mark. Did you succeed in grabbing up rights in their trademark? Not necessarily.

Common law trademark rights can be obtained by use of the trademark in business/commerce alone without a federal registration. Therefore lapse of a trademark registration does not automatically result in a loss of all trademark rights.

This principle is demonstrated in the case of Crash Dummy Movie, LLC v. Mattel, Inc., 601 F.3d 1387 (Fed. Cir. 2010).

Crash Dummies Fight

Mattel owned a trademark registration on CRASH DUMMIES for toys. Mattel acquired rights in the CRASH DUMMIES trademark when it acquired Tyco in 1997. In December of 2000, the USPTO cancelled Mattel’s registration on CRASH DUMMIES because Mattel did not file the required trademark renewal documents and fees.

On March 31, 2003, The Crash Dummy Movie, LLC (“CDM”) filed an intent-to-use trademark application on CRASH DUMMIES for games and playthings.

Mattel filed an opposition against the CDM’s trademark application based on Mattel’s common law rights in the mark CRASH DUMMIES. CDM claimed that Mattel abandoned its trademark rights in the mark.

Registration Lapse is not Abandonment

The Court stated, “Although Mattel later allowed its trademark registrations to lapse, cancellation of a trademark registration does not necessarily translate into abandonment of common law trademark rights.”

As explained in prior abandonment posts here and here, a trademark is abandoned if (1) its use in commerce has been discontinued (2) with no intent to resume use. The Lanham Act provides “[n]onuse for 3 consecutive years shall be prima facie evidence of abandonment….” 15 U.S.C. § 1127. This means that after three years of nonuse there is a presumption that the mark has been abandoned.  But, the trademark owner can rebut that presumption by presenting evidence that during the three years the owner formulated an intent to resume use of the trademark in commerce.

Presumption of Abandonment and Rebuttal Evidence

Abandonment depends on trademark use and owner intent and not on registration alone. In the Crash Dummy Movie case, the presumption of abandonment attached because Mattel did not use the CRASH DUMMIES mark for more than three years beginning in December 1995 and ending in December 2003 (8 years) when Mattel made a shipment of CRASH DUMMIES toys.

But Mattel was able to rebut the presumption of abandonment and maintain its ownership of the mark by presenting evidence that Mattel intended to resume use of the mark during the first three years of non-use. That evidence included: (1) Mattel’s discussion with KB Toys in 1998 about them being the exclusive retailer of CRASH DUMMIES toys, (2) Mattel recorded trademark assignment in 1998 transferring ownership of the CRASH DUMMIES mark from Tyco to Mattel, and (3) research and development activities by Mattel from 2000 to 2003 regarding CRASH DUMMIES toys.

Looking at the Trademark Database is Not Enough

The Crash Dummy Movie case demonstrates that the failure to renew a trademark registration does not automatically result in abandonment of all the owner’s trademark rights. The trademark owner may still have common law trademark rights based on their ongoing use or intent to resume use of the mark.

Therefore, simply looking at the status of a registration in the USPTO trademark database will not tell you conclusively whether a trademark owner has abandoned all rights in the trademark. You will need to perform due diligence to gain reasonable assurance that the trademark owner has (1) stopped using the mark in business/commerce and (2) does not intend to resume use.

Determining the trademark owner’s intent is often not easy. So grabbing up an apparently dead trademark of another will likely carry some risk that the trademark owner has not abandoned all of its trademark rights.

8 Years of Non-Use Not Too Long

The risk that the owner has not abandoned all rights may reduce as the period of non-use grows over time. However, Mattel did not use its CRASH DUMMIES mark for 8 years from 1995 to 2003 and still retained its trademark rights based on its activities showing intent to resume use as explained above.

Risks If Trademark Rights Not Abandoned

If the original trademark owner has not abandoned all of its trademark rights, the owner might be able to sue you for trademark infringement based on your use of the mark and/or may oppose your registration of the mark as Mattel successfully did in the Crash Dummy Movie case.