Category: Trademarks

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How to Destroy Your Trade Dress Rights in a Product Design

Illinois Tool Works (ITW) was the owner of three product design trademark registrations used in connection with resealable plastic bags. ITW licensed these trademarks to third parties, including S.C. Johnson. S.C. Johnson appears to use these designs in its ZIPLOC branded bags. The product design trademarks (a.k.a. trade dress) are directed to a colored stripe extending across the top of a bag. Tm Reg. Nos. 0946120, 1055114, 1294243. An example figure from the Registration No. 0946120 follows.

946120

Poly-America, L.P. petitioned the USPTO to cancel these trademark registrations. [Poly-America, L.P. v. Illinois Tool Works, No. 92056833 (TTAB 2017)]. Poly-America asserted that the mark of each was ineligible for registration because the color stripe was functional.

Obtaining trademark protection over a product design or a portion of a product design is not easy. This is because it is more likely that consumers generally see design features as functional and not a source indicating. Functional features are protected by patents not trademarks. How can we determine if something is functional rather than source indicating? Well, it is easy to assert that a product design feature is functional if the trademark owner admits that it is functional in its advertising and in its utility patent. That’s what happened to ITW.

Here’s a portion of the present law on functionality. The registration of a product design may be denied or cancelled if it “comprises any matter that, as a whole, is functional.” 15 U.S.C. § 1052(e)(5). A product design or product feature is functional if it is (1) “essential to the use or purpose of the article,” or if it (2) “affects the cost or quality of the article.” TrafFix Devices Inc. v. Mktg. Displays Inc., 532 U.S. 23 (2001). Two factors relevant to whether a design is functional are “(1) the existence of a utility patent disclosing the utilitarian advantages of the design; and (2) advertising materials in which the originator of the design touts the design’s utilitarian advantages…”

In the Poly-America case, ITW’s predecessor admitted that the colored strip was functional in its utility patent, US Patent. No. 3054434. The patent stated, “In order to facilitate identification of the flanges as means to assist in the separation of the strips 9′, 9′ when they are engaged together, the flanges may be colored differently than the strips themselves.”

Further, ITW’s predecessor admitted that the color strip was functional it its advertising of the product. The advertising stated, the “color flange immediately identifies the point of opening” and “also serves a practical purpose. It immediately identifies the point of opening.”

The Board relied on these admissions to conclude that the registrations should be canceled as the colored strip is functional.

When seeking or holding trade dress protection in a product design, advertising and utility patent efforts must be closely monitored and coordinated so that you don’t destroy such trade dress protection by admitting that the relevant product design features are functional.

 

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Google’s Trademark Survives Genericide Attack Despite Use as a Verb

Google’s trademark was attacked by two individuals who claimed that the GOOGLE trademark was generic for the act of internet searching in the case of Elliott v. Google, Inc., No 15-15809 (9th Cir. 2017). The owner of a valid trademark can become the “victim of genericide,” which occurs when the public appropriates a trademark and uses it as a generic name for a type of goods or services regardless of the source. If this happens, as it did for ASPIRIN and THERMOS, the trademark owner can loose its rights in the mark.

Here, the plaintiffs claimed that the public’s use of google as a verb, e.g. “I googled it,” showed that the trademark was generic. The plaintiff’s claimed that a word can only be used in a trademark sense when it is used as an adjective, e.g. “the Google search engine.” However, the Ninth Circuit held that verb use alone does not automatically constitute a generic use. Trademark lawyers often counsel their clients to use a trademark as an adjective and not as a noun or verb to avoid the possibility that the mark could be come generic.

Here, though, the court says that more beyond verb use is needed to know whether a mark is generic for a type of good or service. Instead, to know if the public uses the mark as a generic name of a type of good or service, we need some information about what the consumer is thinking when they use the mark as a verb. Did the consumer mean the google search engine or any internet search engine when using google as a verb? The court found that there was insufficient evidence of what the customer/public was thinking when they used the term google as a verb.

The court also found that a claim that a mark is generic must be made in relation to a good or service, not an act. Therefore the proper question was whether Google was generic for internet search engines. The question was not whether google was generic for the act of internet searching, as the plaintiffs asserted.

While this case shows that use of a trademark as a verb is not conclusive evidence that a mark is generic, it is best to use and encourage others to use, as Google does, a trademark as an adjective, and not as a verb or a noun.

 

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Components of a Trademark Cease and Desist Letter

At its most basic, a trademark cease and desist letter explains the what and why of the wrongful conduct and requests that it stop. Below provides a more detailed explanation of some components that may go into a cease and desist letter, depending on the circumstances.

1.  Who is this?

Simply explain who you are. For example, “I’m the president of Acme, Inc.”

2. Tell them what you want

Provide a brief one or two sentence summary of the issue and what you want. For example, “I am writing regarding Beta Inc.’s use of the word “BOSSES” in connection with the sale of widgets. As this use infringes Acme’s trademark rights, Acme demands that you immediately stop all use of BOSSES in connection with the sale of widgets.”

3. Explain your rights

Provide an explanation of the basis for your trademark rights. Trademark rights can be based on use of a mark in connection with goods or services. A trademark registration is helpful but is not required to obtain trademark rights.

Acme Inc. is the owner of the BOSS trademark. Acme has used the mark continuously and exclusively in connection with widgets since at least [first use date]. Acme has advertised and sold widgets in the U.S. through its [channels of trade, e.g. website, retailers, etc…]. Therefore, Acme has established valuable trademark rights. In addition to its common law trademark rights, Acme is the owner of U.S. Trademark Registration No. __________ for the mark BOSS.

4. Introduce the wrongful conduct

Explain the activities of the recipient that violate your trademark rights.

Beta is engaged in the sale of widgets having the BOSSES mark at [locations of sale, e.g. website, retail, etc]. This activity infringes Acme’s trademark rights.

5. Explain the applicable law

Explain the trademark law that is applicable to your situation.

Trademark law prohibits parties from using a trademark in a manner that is likely to create confusion in the market place as to the source of the goods provided in connection with the trademark. Whether there is a likelihood of confusion depends on several factors including the similarities of the marks and the similarities of the good/services.

6. Explain how the law applies

Explain how the trademark law applies to your situation.

Here, comparing the marks, BOSSES is very similar to BOSS. Each mark contains the common root word BOSS, which provides a similarity of sound, meaning, and appearance. Your mark merely provides a plural of Acme’s BOSS mark. Therefore, the marks are similar.

Turning to the goods, your widgets are ________ type widgets, which are the same type of widget sold by Acme under its BOSS trademark. Further, your widgets are sold to the same type of customers and are useable in the same type of applications as the Acme widgets sold under the BOSS mark.

As a result, your use of BOSSES in connection with the sale of widgets is likely to cause confusion with Acme’s trademark BOSS in the marketplace.

7. Explain the possible consequences

You can also explain the consequences of trademark infringement.

Trademark law and common law provide protection for trademark owners. Some of the remedies available to trademark owners against trademark infringers include enjoining the infringer from using the trademark, impounding and destroying goods bearing the trademark, recovery of the infringer’s profits, and an award of attorney’s fees.

8. State Your Demand(s)

List your demand or demands.

Therefore, Acme demands that Beta take the following steps by [deadline]: (1) stop using the mark BOSSES and any similar mark in the marketing and sale of widgets; (2) recall and destroy all advertising, products, labels, packaging, stationary, and other materials having the BOSSES mark, (3) turnover control of any domain names having the BOSSES mark to us, etc…

9. Reservation

A reservation of rights statement can be included stating that Acme reserves all of its rights, none of which is waived by the letter.

Cautions

The above are possible parts of a cease and desist letter. Lawyers often receive requests for “forms.” However, forms, if they are any good at all, are only a starting place and most often need modification to fit a particular circumstance. Therefore, the example excerpts might not be appropriate for your circumstance.

Further, it might be that you should not send a cease and desist letter at all. Generally, trademark law awards rights based on priority–that is, who was first. If you send a cease and desist letter to someone that started using their mark before you started using your mark, you could be in trouble. If the recipient was first, he/she/it could be a senior user that could turn around and sue you for infringing their mark. And your letter could be used as an admission of infringement. Therefore, it is critical to determine whether you have priority over the target of your letter before any letter is sent. But examining all the details of priority is outside the scope of this post.

Moreover, the recipient of your letter could use it to gain “home court advantage” by filing a declaratory judgement lawsuit against you in their home state or district. Many courts can only decide cases and controversies. And your threatening cease and desist letter will create a controversy that the target of the letter could use to start a lawsuit in their preferred court asking the court to declare that they do not infringe your mark. Therefore, when sending a cease and desist letter, you must consider the risk that the target could file a lawsuit based on the letter in a court that is far from you or otherwise disadvantageous.

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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 fil©, 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.