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U.S. Trademark Law & The Hashtag: #canthisviolatetrademarklaw?

In the past decade, with the advent of social media, companies have found a multitude of new avenues for reaching potential consumers. Instead of solely relying on traditional marketing avenues, companies have been able to take advantage of the connective world of social media to reach consumer consciousness at an unprecedented rate. The implementation of the “hashtag,” a metadata tag that allows social media users to group their posts with others who have used the same hashtag phrase, has greatly increased visibility among social media users. By using a particular hashtag, companies are able to connect directly to consumer posts, while also encouraging consumers to spread company branding through their own social media use. In addition, the hashtag has in some ways served as the great equalizer in online advertising. Even companies with limited capital have been able to engage in this grassroots marketing, since the cost of using a social media account and a hashtag is often completely free.

As companies increase their presence on these social media platforms and continue to engage in hashtag marketing, legitimate questions about trademark protection have arisen. Namely, individuals in the legal and business community have begun to wonder if there are potentially damaging trademark violations lurking in this newfangled hashtag regime. Many startup companies are reliant on their ability to gain traction through these highly cost-efficient marketing streams, and therefore, founders must ensure that they understand the rules governing the use of “hashtags” in the social media marketplace.

While there are a number of different angles to approach this topic, this post will focus on the legal community’s current (but ever evolving) understanding of the role trademark law plays in policing hashtag marketing in two instances: (1) the use of certain word marks (i.e. words or slogans that are used as source identifiers for a company which are protected trademarks) in a hashtag and (2) the acquisition of protection for hashtag phrases (so, a word mark that includes the actual hashtag symbol at the beginning).

 

(1) Can the use of trademarks in a “hashtag” on social media ever violate federal trademark law?

 In short, the answer appears to be (potentially) yes – in the very limited case law discussing this question, courts appear to indicate that the unauthorized use of a trademarked word or phrase can constitute trademark infringement. To briefly outline what federal trademark infringement entails, a plaintiff (the company attempting to prove that the defendant infringed on their trademark rights) must demonstrate that: (1) the mark in question merits protection under federal trademark law; and (2) that the allegedly infringing use is likely to result in consumer confusion, causing damage to the plaintiff. For example, if a relatively unknown cell phone company began placing the Apple and iPhone words and logos on their products (in other words, trying to pass their phones off as genuine Apple iPhones) this clearly has the potential to cause significant consumer confusion in the marketplace. The question with “hashtags,” therefore, is whether one company’s use of another company’s (or individual’s) trademarked word or phrase could result in a similar type of consumer confusion.

In a recent case in Massachusetts, Public Impact v. Boston Consulting Group, the court determined that the defendant’s use of the hashtag “#publicimact” (as well as the use of a twitter handle “@4PublicImpact”) was an infringement of plaintiff’s protected word mark, “Public Impact.” Specifically, the court stated that the defendant’s use of the same two words that constitute plaintiff’s mark as a source-identifier would be concerning in any context where the words are used without other distinguishing features. The logical conclusion, therefore, is that the court believes that “hashtags” are capable of being used as source identifying mechanisms in social media, and not just merely categorization tools. In other words, the court here seems to recognize the role social media advertising plays in generating revenue for companies, and the potential need for adequate trademark protection for companies in this sphere. As a result of this finding, the court actually ordered a preliminary injunction against the defendant’s continued use of both the twitter handle and infringing hashtag — a result that clearly demonstrates the impact these rulings could have on a company’s ability to continue conducting business as usual.

While no other cases answer this question quite as directly, courts have at least demonstrated an openness to evaluating claims of infringement via “hashtags” on the merits (meaning, that there is at least a colorable claim of infringement). For example, in Fraternity Collection v. Fargnoli, the Southern District of Mississippi stated a willingness to accept, at least theoretically, that “hashtagging a competitor’s name or product in social media posts could, in certain circumstances, deceive consumers.” While there is no judgment on the merits in this case, it at least further shows the general understanding that “hashtags” are capable of doing more than just acting as convenient grouping labels, but instead serve a valid role in company marketing.

Additionally, trademark holders have increasingly threatened litigation over what they perceive to be improper use of their trademarks in hashtags. For example, the U.S. Olympics Committee made various statements during the lead up to the 2016 Rio Summer Olympic games that they would vigilantly seek to prevent the use of their marks (e.g., “usolympics,” “teamusa”) from being used by non-sponsors of the U.S. Olympic team, including in hashtag format. Differentiating individual non-commercial use of these marks from the alleged infringing use, a representative from the USOC stated: ““athletes can certainly generically say, ‘Thank you for your support’ during the Games, but a company that sells a sports drink certainly can’t post something from the Games on their social media page or website. They’re doing nothing but using the Olympics to sell their drink.”

This should give young companies pause when thinking about how to interact in the social media marketplace. While this increased protection is potentially a boost for companies looking to protect fledgling brands, start-ups should also be wary of the potential for using other more prominent marks, especially when doing so could be interpreted as an attempt to palm off on the goodwill of the more established mark.

 

(2) Are “hashtags” trademarkable? Is this a desirable form of protection?

In addition to filing infringement claims for use of a mark within a hashtag, many companies, and other entities, have begun acquiring trademarks for actual hashtagged phrases (in their hashtag form) as a second way of increasing protection. For example, the USOC actually owns the mark: #rioready. Recently, National Football League super-star wide receiver Dez Bryant successfully filed the mark: #throwupthex, which had become his trademark slogan (to go along with his popular touchdown victory move where he crosses his arms in the air). Mr. Bryant noted at the time of the filing of the application his concern that companies would engage in misuse of the mark to generate marketing for their own brands.

While it is clear from these examples that hashtag phrases have been accepted as proper trademarks by the USPTO, there are a few observations that companies should keep in mind when evaluating the decision to register their hashtag marks.

First, the addition of a hashtag symbol (#) in front of an otherwise generic word or phrase does not elevate that word or phrase to a level of distinctiveness. In other words, if the mark is not protectable without the hashtag, it cannot gain protection simply from its inclusion. Second, it may not even be an expedient business decision to acquire this mark. For starters, if the company has not already obtained protection for the wordmark within the hashtag phrase itself, then there is no reason to believe that this mark would be enforceable. Further, companies should be careful to ensure that, if they do acquire a trademark in a hashtag phrase, that they are making sure to use it in a source-identifying way. It is perhaps not terribly difficult to see how (and make the argument that) another company is using an already established source-identifier to palm off the goodwill of that mark by using a hashtag containing that mark (the scenario discussed above). However, if a company obtains a trademark in a hashtag phrase, and then only uses that phrase in a hashtag context (to group their posts together) in a way that doesn’t seem to serve as a source identifier that company may have a tougher time demonstrating that the trademark in that hashtag phrase is valid. A better course of action would be to ensure that trademark protection is obtained first in the actual phrase (without the hashtag symbol).

In all, startup (and more established) companies should not rush to protectionist measures when it comes to trademarks. Much of the marketing benefit arises directly from the consumer’s ability to link directly through the use of trademarks, and owners of the contained marks should not necessarily assume that their usage by others, even other companies, is always an undesirable outcome. Further still, over-protectionist measures may generally be an objectionable decision from a business point of view. That being said, companies and their counsel should be advised to take full note of the rapidly changing landscape governing trademarks and their place in social media advertising.

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Domain Names and Trademarks: How to Get Your Website Name Sorted

 

Turns out being John Malkovich isn’t all it’s cracked up to be.

One of the first thing all new businesses do today is register a domain name. Oftentimes the selection of the online identity even figures significantly into choosing the name of the business itself. But what if you’ve already selected the perfect name only to find out someone already has it registered? You actually have a lot more options than you probably think.

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Option 1: Is It For Sale?

Seems obvious and intuitive, right? Well, it may be a bit more complicated than you think. If the domain registrar’s site (like godaddy.com) says the name is not available, the next step is to pay a visit to the site. If the address doesn’t lead anywhere or what you see doesn’t look like a legitimate business there is a good chance you and the owner can make a deal. If, however, it looks like someone is legitimately using the site it may be time to move onto the other options.

Next — finding the owners. You can do this by conducting a Whois search on ICANN’s website (ICANN is the governing body of the internet and stands for the Internet Corporation for Assigned Names and Numbers). The search results will either provide the contact information for the owner (or registrant) or designate that the owner has elected to use a privacy shield. In most cases, this is the time to call in the professionals. Many registrars offer a brokerage service where they will reach out to the owners of the name you want and try to make a deal. While this is usually going to be accompanied by a fee, an experienced, impartial party is more likely to commence a deal than someone who is emotionally involved.

If the broker is able to make a deal, your business is off and going. If the broker can’t make a deal, consider the following options.

 

Option 2: Pick a New Name

It sounds so simple, but in practice, unless you’re brainstorming and searching godaddy.com at the same time, you’ve probably already invested something in your company’s name, even if it’s only emotionally. However, in some circumstances it may be the right move, though if you’ve already invested in the business name, probably only as a last resort.

 

Option 3: Pick a New gTLD

Sure, everyone expects a web address to end in ‘dot-com,’ but what if I told you it didn’t have to. Today there are literally over a thousand other options. While none carry the same cultural weight as ‘dot-com,’ they are usually cheaper and certainly more widely available than ‘dot-coms.’ These so called ‘not-coms’ can also give customers more information about your business. For example, if I registered ‘catherine.plumbing’ it would be clear that this site is affiliated with Catherine the plumber, not Catherine the electrician. With so many options, it is unlikely your company’s name is taken in every single one, and you can probably even find something that represents your business better than a ‘dot-com’ could.

One potential drawback to this option is that people are unfamiliar with these new ‘not-coms’ and are potentially skeptical of their legitimacy. However, because there are a limited number of ‘dot-com’ addresses available, eventually internet uses will come to accept these new endings and selecting one now could put you ahead of the curve.

 

Option 4: UDRP

At this point, poor John Malkovich still might not have found any relief, so we turn to legal remedies. ICANN’s Uniform Domain Name Dispute Resolution Policy (UDRP) provides that if someone has, in bad faith, registered your trademark, or something confusingly similar to your trademark, and that person does not have any legitimate interest in the domain name you may bring a claim of cybersquatting in an administrative proceeding against them in order to recover the domain name, but not monetary damages. The most difficult portion of this test to satisfy is the requirement that the domain was registered in bad faith. To prove this, the UDRP directs the administrative panel to look to facts that indicate:

• the individual has registered the domain with the purpose to sell the name to the owner of the trademark for more than the original cost

• the individual registered the name in order to prevent the owner of the mark from obtaining the mark

• the individual registered the name in order to disrupt a competitor’s business, or

• the individual has used the name to attract internet traffic away from the trademark holder’s site by creating confusion about the true source of the site.

This means that a competitor who registers your company’s name (or something confusingly similar), in which you have either common law or statutory trademark rights, can be forced to hand it over. The UDRP also protects against, so-called, domain trolls. These trolls buy up domain names with the intent to sell them to legitimate users for exorbitant amount.

Once you conclude that you have been the victim of cybersquatting (hopefully after consulting an attorney), you must complete a UDRP Complaint and file it with the World Intellectual Property Organization (WIPO). The WIPO has available a model complaint that can serve as a guide to your filing. If the complaint is not deficient the registrar will put a lock on the domain name and a trial will be held before a panel of moderators, who will determine the winner. While this process is considerably faster and less expensive (because it is arbitration, not litigation), the most the WIPO can do is transfer to you the domain name, it cannot award monetary damages.

 

Option 5: ACPA

The Anticybersquatting Consumer Protection Act (ACPA) (15 U.S.C. §1125(d)) provides relief in very similar situations as the UDRP. As under the UDRP, one must show that the registering individual’s registration was in bad faith, the infringed trademark was distinctive, and that the domain name was the trademark exactly or just confusingly similar. When determining whether the domain name has been registered in bad faith, the statute directs courts to look to many more factors than the UDRP does. Because the statute does not limit the appropriate evidence for determining bad faith, a judge may consider basically anything deemed relevant. If, however, the registrant had a reasonable belief that her use was fair use or otherwise lawful the statute precludes a finding of bad faith.

The most significant advantage of pursuing a claim under the ACPA is that the judge is able to award monetary damages. However, this method is almost certainly going to take longer and cost more than a proceeding under the UDRP. Because of these costs this option should almost always be a last resort.

By now you have learned more about domain names than you ever wanted to know. But hopefully you’ve also learned the importance of protecting your company’s name online and what you can do if your protections fail.

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University Trademarks and Leveraging the Brand

Many student entrepreneurs want to use their university's brand as part of their product.

Many student entrepreneurs want to use their university’s brand as part of their product.

It is a well-known fact that universities foster innovation and entrepreneurship. But what happens when you want to incorporate your university’s brand into your startup concept?

It is time to consider trademark law.

Trademark Basics

A trademark is a word, phrase, symbol, and/or design that identifies and distinguishes the source of the product and seeks to prevent consumer confusion. Universities register trademarks in an effort to protect their brand, maximize revenue and maintain control over the way their trademarks are presented to the public.  Universities are some of the most diligent institutions when it comes to protecting their marks. They usually have significant resources dedicated to seeking out infringements. Therefore, before leveraging the brand of the university, it is especially important to take preventative measures and understand what is available for use.

Acquiring Trademark Rights

Trademark rights may be acquired in either of two ways:

  1. Common Law- rights are acquired through the use of the mark in commerce
  2. Registration- rights are acquired by registering with the USPTO

The following symbols may be used with trademarks, although they are not required for one to claim trademark protection:

™ symbol indicates an unregistered trademark

® symbol indicates a registered trademark

This prior post provides more information on the trademark registration process.

University Trademarks

A university can acquire rights to more than just its name and logo; colors are also protectable. Courts have decided that specific color schemes, whether registered or not, are so related to the university that they develop a “secondary meaning.” At which point, customers would likely identify the university as the source of the product. This, along with other factors including medium, sales, advertising and intent, determine if the university has trademark rights to its colors. Universities have recently gotten more creative with colors and trademarked the distinctive name of the colors or the colors in association with other objects.

Many schools will have a website that outlines their expectations regarding the use of their trademarks. Often, you will need to request permission from the university and include a detailed explanation of your plans for the mark. Approvals are granted depending on the applicant, often more favorable to students, alumni, and faculty. The university will also consider how the mark will be used (if it is commercial in nature) and the medium for its display.

Information regarding the use of the University of Michigan’s trademarks can be found here.

It is a good idea to consult your university before making decisions about using their brand as part of your startup product or service.

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How to Win the Name Game

Selecting a strong brand might be more difficult, yet more important, than you anticipate.

Selecting a strong brand might be more difficult, yet more important, than you anticipate.

What’s in a name? As Shakespeare once said, “That which we call a rose by any other name would smell as sweet.” And it is true that the success of a start-up is ultimately determined primarily by the quality of its value proposition and its ability to execute rather than its name. But names are still very important. If they weren’t, we wouldn’t have trademark law to protect names and creative firms wouldn’t be able to charge exorbitant fees to come up with great names.

While a start-up’s value proposition may be strong, if other start-ups have the same or a similar idea, whoever can get their name out there to the most people first often wins. If a start-up chooses a name someone already owns, they may need to change names late in the game, leading to potentially drastic setbacks, as they rebuild name recognition and combat customer confusion. Choosing a bad name can signal many things—not only to customers but also to potential investors. A bad name can signal a lack of self-awareness and diligence, and poor attention to detail, among other bad traits. Investors who hear a pitch for a start-up with a terrible name may have thoughts like, “If they didn’t realize their name was bad, what else won’t they realize? What else won’t they pay attention to? What else is wrong with this company besides the name?” These are thoughts you want to avoid. In short, the quality of a name can be a proxy for the quality of the team behind it.

Moreover, a solid, catchy name can create brand-building power. We often use the best names of companies as verbs. We Google things, we Facebook people, we blow our nose with a Kleenex, we Xerox things, we Uber to places, etc.   Every time someone uses a company name in this manner, the company gets free publicity. Having this universal recognition does not come without a good name. Below are some tips on how to brainstorm name ideas and then some rules of the road for what to do once you have your name.

Brainstorming

Often one of the hardest parts of starting a business is coming up with a name. It seems easy at first but after staring at a blank sheet of paper for hours, many entrepreneurs grow frustrated and either settle for a bad name or hire someone else at significant cost to come up with a name for them. A proper brainstorming process can solve these problems and help you come up with many strong name ideas.

  • Make a list of words/names that relate to your product or value proposition. Use a thesaurus to find related words.
    • Example: If your business is a financial services application, you might list words like coin, blue chip, money, cash, banking, finance, etc. Then, use a thesaurus to find less common, but more interesting or catchy words.
  • Use foreign words. Foreign words can evoke positive responses by lending an exotic, new, and fresh sound to your name. Take the list of words related to your business and try translating some of them into other languages.
  • Always be listening. Things may come up in daily life that inspire the perfect name. Jot down ideas as they come up in a simple journaling or note-taking mobile application.
    • Example: The company, Caterpillar, found its name when a photographer was taking a picture of a tractor and remarked that the tractor crawled like a caterpillar.
  • Make up Words. Using made up words can help your company stand out. Try combining words, changing the spelling of words, and simply creating words that sound catchy.
    • Example: The name Kinkos was created because the founder had very curly hair with lots of kinks.

Rules of the Road

 Coming up with a good name early on can save you a lot of headache down the road. Avoid the pitfalls of many entrepreneurs by following these rules:

  • Keep it short. Twitter, Facebook, Nike, Pixar, eBay, Google, Apple, Kinkos—what do these iconic names have in common? They are all two syllables long. Try to keep your name to two syllables or less. This will maximize its repeatability and memorability.
  • Keep it punchy. What else do the above names have in common? They make use of strong consonant sounds. This will help the name to stand out in conversation and stick.
  • Never make your move too soon. Once you have a list of names, spend at least a week mulling over the options. The best names will be remembered without you having to go back to the list. The proof is in the pudding.   The names that you remember are likely the better names. If it sticks in your mind, it will be more likely to stick in the minds of others and this “stickiness” is exactly what you should be after.
  • Get quality feedback. Try to do more than simply ask close family and friends for feedback. It will be hard for them, if not impossible, to avoid bias. Test the names out on random people and see how they react. Ask them questions to see what they think about the names and what responses the names evoke. Record your findings and analyze them.
  • Make sure the name is available. Cover your bases by conducting appropriate searches including trademark searches via the US Patent Office and company name searches via your state incorporation website.

A rose by any other name may smell as sweet. But what good is the rose if no one gets to smell it? A great name can help propel your business or product through the early stages and contribute to the likelihood of survival. After you’ve followed the above rules and found your name, it’s time to file a trademark.

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What’s in a Name? (According to the App Store)

Startups should confirm that their product name does not have any conflicts with other app names.

Startups should confirm that their product name does not have any conflicts with other app names.

Picking a product name may be one of the hardest tasks faced by a mobile app startup. The ideal name is one that seizes people’s attention and stays in their memory, conveys some desirable quality of the app, and—despite an increasingly crowded marketplace—steers clear of infringing other companies’ trademarks. That’s a lot of boxes to check. Startup founders may have to rely on their own creativity to come up with a memorable and evocative name, but they can mitigate the risk of committing trademark infringement by following a few concrete guidelines. This article briefly discusses these guidelines for a startup seeking to release an app in Apple’s App Store.

Trademark Basics and Searching Registered Marks

Trademark law prevents one from using a mark (such as an app name) that is likely to cause customer confusion with an existing mark. Additionally, Section 8.5 of Apple’s App Store guidelines for developers says simply: “Apps may not use protected third party material such as trademarks, copyrights, patents or violate 3rd party terms of use.” This means that Apple, through its own guidelines, has the ability to enforce what it perceives to be the trademark rights of others. That raises the question of whether your app uses another’s trademark.

As covered in previous posts, trademark protection can be acquired through registration with the USPTO or through use in commerce. Founders should check both avenues before committing to a name. The first step simply involves searching USPTO’s Trademark Electronic Search System to see what else is already registered under the proposed name.

Testing the Waters

Sometimes people don’t register with USPTO, but they might still enjoy trademark protection. To determine whether protection has been acquired through use in commerce, an app developer seeking to release an app should search the App Store. This is actually less intuitive than it sounds because Apple separates content in the App Store by device. The easiest way to run a comprehensive search is to go to the iTunes Content Dispute page, and provide your contact information to log in (it doesn’t have to be real if you don’t actually intend to submit a complaint). This takes you to a page (as shown below) with a drop down menu from which you can select iPhone apps, iPad apps, and Macbook apps to search the App Store for each device.

Running a comprehensive search of the App Store can be less intuitive than it sounds because Apple separates App Store content by device.

Running a comprehensive search of the App Store can be less intuitive than it sounds because Apple separates App Store content by device.

You found a similar name. Now what?

Even if a prospective name has been registered or is in use on the App Store, a founder might still be able to go forward with it. Courts apply a standard based on the “likelihood of confusion,” considering factors such as similarity of product/service, strength of the prior user’s mark, etc. So for example, if a founder wanted to use the name “Wizard” for a mobile gaming app, a company which has registered the trademark “Wizard” but is in the construction industry will probably not have a good claim since their product/service is not similar. Similarly, a developer will likely have less risk if it uses a highly descriptive name (for example “storefinder” because anyone else using a similar mark for a similar purpose would likely not have strong trademark rights, if any.

There are several risks associated with using a similar name to an existing app, including:

  • Apple may decline to place your app on the App Store citing Section 8.5 of its Guidelines if it believes your app is using another’s trademark;
  • the owner of the similar mark may complain to Apple and cause Apple to remove your app from the App Store;
  • the owner of the similar mark may seek to enforce its trademark rights directly against you (for example, by sending a cease and desist letter, opposing your trademark registration, or pursuing litigation); and
  • consumers mistakenly downloading your app (seeking the other app with the similar name) may cause havoc with your conversion metrics.

Apple delaying or denying an app’s placement on the Apple Store, or removing your app from the App Store in response to a third party complaint is of particular concern. Apple might be incentivized to err on the side of caution. For example, in response to a complaint, it is easiest for Apple to verify that two apps are similarly named and remove the latter app. It would be costly for them to analyze the “likelihood of confusion” factors for each case that gets brought to their attention. So developers run the risk that Apple can remove their app even if they are legally in the clear with regards to a trademark.

So what’s a founder to do? If the founder has identified sources of risk through TESS or the App Store, s/he should assess the size of the risk. How active and successful are the other companies? Are multiple people operating under the same or similar names? How similar are the other products/services? More often than not, it is best for founders to avoid the numerous problems posed by similarly named existing apps. If a founder continues to see significant value in a chosen app name, despite the existence of an app with a similar name already on the App Store, an experienced trademark attorney can help to quantify and suggest steps to mitigate the risk.

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Trademarks in National Parks

A looming trademark dispute involving our national parks illustrates the importance of clarifying trademark ownership.

A looming trademark dispute involving our national parks illustrates the importance of clarifying trademark ownership. Photo by David Liff.  License CC-BY-SA.

Like the giant sequoias, there is a trademark dispute rising out of Yosemite National Park. Delaware North, a concessions powerhouse, has operated the hotels, restaurants, and other concessions in Yosemite since 1993. Their contract is set to expire in 2016, and as other firms line up to bid on the new contract, Delaware North has made clear to the Park Service that it claims to own the intellectual property in the names of famous sites like the Ahwahnee Hotel and Curry Village. The National Park Service disputes this claim, and says that the names, which historians suspect have been in use for over 100 years, belong to the American people. Delaware North claims the IP is worth $51 million, and says it will seek that amount if the Park Service wants to use the names without Delaware North’s permission.

Background on Trademark Law

The situation implicates some core issues of trademark law and serves as a good trademark primer for entrepreneurs unfamiliar with the field. Words, phrases, logos, and other designators of a product’s source are granted protection under federal law via the Lanham Act. While registering a trademark with the federal government grants certain protections and other benefits, one does not need to register a trademark for protection to exist. For both registered and unregistered marks, trademark protection is gained through use of the mark in commerce in a way that serves as a source designator. While registering a mark gives the registrant nationwide priority to the mark over subsequent users, the first user of any mark has rights to it, registration or not, given certain geographical and industry limitations.

Delaware North’s Potential Trademark Rights

Delaware North acquired the trademark registrations from the company from which it bought the Yosemite properties. Delaware North subsequently sold the properties to the National Park Service, but retained assets like furniture, vehicles, and as Delaware North argues, the IP) and began running the concession for the Park Service. Delaware North’s ownership of the registrations in the park properties, however, is not conclusive as to the marks’ rightful owners. As the National Park Service points out, if another party used the mark as a source designator before the registration, they could have rights in the mark. While a party that has not used a mark for more than three years is generally considered to have abandoned the mark, Delaware North should not expect the Park Service and other interested groups to give up easily.

Lessons for Entrepreneurs

The takeaway for entrepreneurs is that trademark rights can become extremely valuable and it is of the utmost importance to establish whether or not you have rights in a mark you are using early on. This can be especially important when partnering with third parties. Entrepreneurs should understand that ownership of tangible property does not necessarily mean that rights in related intellectual property are secured. As a product or service is marketed to the public under a consistent brand, the trademark rights in that brand will likely increase in value. Entrepreneurs should ensure that they have the necessary rights in any brand related to their products or services.

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Are Trademark Disputes Brewing in the Craft Beer Industry?

The craft beer industry may be ripe for trademark disputes due to the increasing number of breweries, limited number of beer-related puns, and large number of small-scale operations.

Trademark is an important but often overlooked area of the law for new startups and small businesses. Many entrepreneurs believe that merely registering a company with a state as an LLC or Corporation secures trademark rights in the name or brand, while others assume they can secure protection by maintaining a website or social media presence. It is true that each of these steps might help expand protection, but neither will definitively establish the right to prevent others from using a particular mark or independently bestow rights on a company. The lack of understanding has become especially problematic in the expanding market for craft beer, where the exploding number of breweries, limited number of beer-related puns, and large number of small-scale operations have created a veritable minefield of potential trademark issues.

Limited Number of “Punforgettable” Trademarks

One issue stems from the desire to utilize existing pop culture and media to create attention grabbing, punforgettable (see what I did there?) trademarks. “Hoptimus Prime,” “The Empire Strikes Bock,” and “Harry Porter” are certainly memorable, but trading on protected intellectual property and brands can engender lawsuits from big companies with vast resources. These companies are even more likely to bring suits against breweries now that there is some precedent for licensing out popular intellectual property to beer labels (see Game of Thrones branded beer here. 

Local Nature of Early-stage Breweries

A second issue is more problematic because it is difficult to foresee and thus less preventable. The foundation of a trademark infringement claim is customer confusion, and the likelihood of confusion predictably increases when more participants join the market. But when starting out, the primary concern of a small brewery is brewing good beer, and trademark registration is probably doesn’t even enter the mindset of young entrepreneurs trying to keep costs as low as possible. So while a brewery in Oregon may create its own mark independently and believe it to be original, there is no guarantee that a brewery in Massachusetts hasn’t been using the same mark for its own beer. The problem is compounded by the fact that with so many players in the craft beer space, it can be difficult to determine whether someone else is using a mark even if you take the time to search beforehand.

How to Help Protect Yourself

A trademark can be a word, symbol, phrase, design, logo, product packaging, or some combination. The essential requirement is that the mark be used as source designator, so that customers associate the mark with a particular brand or company. For example, Budweiser’s trademarks include its crowned logo and “king of beers” slogan.  Both of these trademarks have been associated with the Budweiser brand, so that when a customer sees them they assume some relationship to Budweiser. For small breweries without the budget for a trademark attorney, the best option to test the availability of a desired mark is to scour the web. First, search the free trademark database and perform a general Google search including your trademark and related terms like “beer,” “brew,” “IPA,” etc. Beer rating sites like beeradvocate.com, which features over 93,000 beer brands, can also be a useful resource for assessing what marks are already being used in the market.

Unfortunately, it may be impossible to know exactly which marks are being used in a fairly regional industry. Since beer can’t generally be sold and shipped to customers across the web, common law trademark protection without registration is far more common, and small breweries may have local clout that doesn’t transcend regions. Still, by performing a few simple searches and conducting due diligence early on, craft beer makers could avoid a lot of potentially ugly legal disputes down the road if business expands and conflicts arise. When thinking long term in any industry, having a memorable mark is great, but avoiding legal disputes is probably better.

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Analyzing the Looming Trademark Disputes Over Facebook’s “Paper” (Part 3 of 3)

Facebook's January 30 launch of its "Paper" app prompted FiftyThree and Paper Communications to apply for trademark registrations on their respective "Paper" marks.

Facebook’s January 30 launch of its “Paper” app prompted FiftyThree and Paper Communications to apply for trademark registrations on their respective “Paper” marks.

This post continues our series on the looming trademark disputes over Facebook’s “Paper” app.  As previously reported, on the same day that Facebook launched its Paper app, FiftyThree, Inc. filed an application for federal trademark registration for its use of the term “Paper” in connection with computer application software enabling writing on tablets (paraphrased).  On the very next day, Paper Communications, Inc. owner of the publisher of Paper Magazine, filed its own application for federal registration on the use of “Paper” with online and traditional magazines.

In this post we will discuss the standard for determining whether Facebook’s use of “paper” infringes on anyone’s prior rights in that mark.

What is the Standard for Trademark Infringement?  The most common way for a mark to infringe the trademark rights of another is for the later user’s mark to cause a “likelihood of customer confusion” as to the source of the goods.  In other words, assuming FiftyThree or Paper Communications have prior trademark rights in the “Paper” mark, Facebook’s use of that mark will constitute trademark infringement if it is likely to cause customers to be confused as to the source of the underlying goods.

When does a likelihood of consumer confusion exist?  Courts use a variety of factors in determining whether a likelihood of customer confusion exists.  These factors typically include:

(1) the similarity of the marks;

(2) the similarity of the underlying goods or services;

(3) the strength of the plaintiff’s (e.g., prior user’s) mark;

(4) any evidence of actual confusion by customers;

(5) the junior user’s intent in adopting the mark;

(6) the distribution channels for the products;

(7) the typical customer’s degree of care and/or sophistication; and

(8) the likelihood that the product lines will expand to overlap.

The “Domino” Example – One famous example of a court applying the above factors is the case between Amstar (the maker of Domino Sugar) and Domino’s Pizza.

In 1975, Amstar (maker of Domino Sugar) sued Domino's Pizza for infringing Amstar's trademark rights in the "Domino" brand.

In 1975, Amstar (maker of Domino Sugar) sued Domino’s Pizza for infringing Amstar’s trademark rights in the “Domino” brand.

The district court ruled in favor of Amstar, finding that Domino’s Pizza infringed Amstar’s rights in the “Domino” mark.  The court of appeals ruled for Domino’s Pizza, finding that its use of the “Domino” mark with pizza was not likely to cause customer confusion with Amstar’s use of the “Domino” mark with sugar.  In analyzing the likelihood of confusion factors, the court ruled that:

(1) the marks were stylistically and typographically distinguishable;

(2) while the underlying goods were both edible, they had little else in common;

(3) Amstar’s “Domino” mark was not considered a strong mark because numerous other uses of that work exist (including as a common name for people);

(4) there was limited evidence of actual confusion;

(5) Domino’s Pizza never tired to “pass off” its product as deriving from Amstar;

(6) the distribution and advertising channels were distinct because Amstar’s sugar was sold in grocery stores and Domino’s Pizza was delivered from the restaurant to consumer’s homes;

Advice for Entrepreneurs – While the above factors give room to creatively find differences in how consumers would view similar marks, when selecting a product or company name at the outset of a venture, entrepreneurs would be wise to avoid any risk of a trademark dispute.  The cost (in terms of money and time) of dealing with a cease and desist letter from a prior user can derail a new venture.  If forced to change one’s brand, one will not only incur the cost of rebranding but lose its established good-will associated with its brand.  At the very least, entrepreneurs should perform a preliminary clearance of their potential brand.  This checklist will rule out most obvious conflicts.  If you find yourself spending more than a few minutes analyzing the likelihood of confusion factors with respect to a similar existing mark, do your company a favor and simply pick another brand.  While much of the risk of launching a venture is unavoidable, one can avoid much of the risk of future trademark disputes by clearing a potential company or brand name.

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Analyzing the Looming Trademark Disputes Over Facebook’s “Paper” (Part 2 of 3)

 

Facebook's January 30 launch of its "Paper" app prompted FiftyThree and Paper Communications to apply for trademark registrations on their respective "Paper" marks.

Facebook’s January 30 launch of its “Paper” app prompted FiftyThree and Paper Communications to apply for trademark registrations on their respective “Paper” marks.

This post continues our series on the looming trademark disputes over Facebook’s “Paper” app.  As previously reported, on the same day that Facebook launched its Paper app, FiftyThree, Inc. filed an application for federal trademark registration for its use of the term “Paper” in connection with computer application software enabling writing on tablets (paraphrased).  On the very next day, Paper Communications, Inc. owner of the publisher of Paper Magazine, filed its own application for federal registration on the use of “Paper” with online and traditional magazines.

In this post we will discuss the benefits of registering one’s trademark with the United States Patent & Trademark Office.

Is Registration Required?  One does not need to register a mark in order to possess trademark rights in that mark.  Merely using a mark in commerce as an indicator of product source establishes common law trademark rights in the geography in which the mark is used.  One can provide a trademark notice for an unregistered mark with a TM (for trademarks) or an SM (for service marks).

Why Register One’s Mark?  If one can establish trademark rights merely by using a mark in commerce, then the next question might be why would companies like FiftyThree and Paper Communications rush to register their “Paper” marks no.   FiftyThree has been using “Paper” since 2012 and Paper Communications has been using that mark since 1996.  So, to the extent those are distinctive identifiers of the source of the underlying goods, FiftyThree and Paper Communications should have already have common law trademark rights.

The answer is that registering a mark provides important advantage.  These advantages include:

•a presumption that you own the mark;

•a presumption that you have the exclusive right to use the mark nationwide;

•notice to public of your claim of ownership of the mark;

•the right to sue an infringer in federal court;

•the use of the U.S. registration to obtain foreign registrations;

•the right to use the federal registration symbol ®

•listing in the U.S. Patent & Trademark Office’s online databases.

Here, FiftyThree and Paper Communications were likely already using their “Paper” marks on a nationwide scale.  So, establishing nationwide rights was probably not the driving force behind their registration attempt.  Most likely, these registrants the desire to sue an infringer (such as Facebook perhaps) in federal court.

Is There Any Reason Not to Register a Mark?  Given these benefits of registering one’s mark, it is worth asking if there is any reason not to register a mark.  There might be a few.  First is cost.  Whereas common law rights in a mark are obtained automatically (and with no legal costs) upon use of a mark in commerce.  Registration is not free.  It will cost at least $325 to apply for registration in addition to any attorneys fees (typically in the $1,000-$3,000 range).

Another reason why some entrepreneurs elect not to register their mark is when there are prior marks that are potentially confusingly similar.  An entrepreneur may decide that attempting to register a mark may prompt an owner of a prior similar mark to not only oppose the registration by to challenge the entrepreneur’s right to use the mark at all.  If this is a concern, it might be better for the entrepreneur to select a new brand with a clearer path to use and registration.

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Analyzing the Looming Trademark Disputes Over Facebook’s “Paper” (Part 1 of 3)

Facebook's January 30 launch of its "Paper" app has prompted multiple trademark applications filed by others who use the word "Paper" as a brand.

Facebook’s January 30 launch of its “Paper” app has prompted multiple trademark applications filed by others who use the word “Paper” as a brand.

It has been widely reported that Facebook’s release of its “Paper” app has created a stir about trademark rights.  As reported by TechCrunch, Facebook’s release prompted FiftyThree, Inc. to complain about its prior rights in the brand “Paper.”  FiftyThree owns the registered mark “Paper by FiftyThree.”  Also, on the same day that Facebook released its Paper app, FifthThree, Inc. applied to register  the mark “Paper.”

FiftyThree Paper Registration

FiftyThree has complained on its blog about Facebook’s use of the name “Paper.”

“We reached out to Facebook about the confusion their app was creating, and they apologized for not contacting us sooner.  But an earnest apology should come with a remedy.”

Indeed, FiftyThree is not the only company to take notice of Facebook’s use of the term Paper.  On January 31, 2014, the next day after Faceook released its app, another company, Paper Communications, Inc., who owns Paper Publishing, Inc., publisher of “Paper Magazine,” filed multiple applications to register the mark “Paper” in association with websites and magazines in the fields of style, fashion, news, music, the arts, culture, nightlife, and entertainment.

Paper Comm Registration

This three part series overviews some of the trademark law issues concerning these looming disputes.  This first post analyzes the legal considerations governing whether the use of the term “Paper” by FiftyThree and Paper Communications is entitled to trademark protection.

Can One Trademark a Common Word Like “Paper”?

After news broke about the potential dispute over Facebook’s use of the name “Paper,” it was common to hear people ask “how can someone trademark a word that we all use everyday.”  To answer that question, we first need to understand that trademark law protects the use of a word (or other symbol) as an indicator of the source of a good or service (e.g., a brand).  Accordingly, a trademark owner only has the right to prevent others from using that mark in a way that causes customer confusion as to the source of goods or services.  Trademark law does not provide an owner with broad monopoly rights over the use of a word.

Distinctive v. Descriptive Marks

Because of this, trademark law makes it more difficult to claim trademark rights in a name that describes the underlying goods or services.  The law refers to this as the “spectrum of distinctiveness.”  We have blogged about this in the past.  On one hand, coined or arbitrary marks (like Google, Coca-Cola or Apple) do not describe the underlying good or service and are therefore considered highly distinctive and entitled to trademark protection.  They could serve no other purpose than to indicate the provider of the product.  On the other hand, a mark that describes the underlying good or service is presumed to serve as a description of that good or service rather than an identifier of the source of the good or service.  It would be unfair to grant a particular entity rights in a word that serves as a common description of a product the market.

Can Descriptive Marks Obtain  Protection?

While a descriptive mark may eventually gain trademark status, the owner will have to show that the mark has “acquired distinctiveness.”  This is typically done by showing that the relevant consuming public views the mark as an indicator of the source of the goods rather than a description of the goods.   windows logoMicrosoft’s “Windows” brand was famously deemed to be a mere description of the Microsoft operating system.  It only acquired trademark status after Microsoft showed it had acquired secondary meaning as an indicator that the operating system was sold by a particular provider – Microsoft.

Is “Paper” Descriptive?

In the case of the FiftyThree and Paper Communications applications to register the “Paper” mark, questions may exist as to whether the “Paper” brand is descriptive.  As described on its website, FiftyThree’s “Paper” app provides:

Five essential tools optimized for the creative process to Sketch, Write, Draw, Outline and Color.

 These are actions which normally occur on paper.  Paper Communications uses the “Paper” mark in association with its popular Paper Magazine (available both online, and in paper). If a dispute erupts, Facebook will likely argue that both of these marks are descriptive.and therefore “weak” marks on the spectrum of distinctiveness, if not entirely unprotectable.

Can FiftyThree and Paper Communications Demonstrate Secondary Meaning?

As discussed above, even if these marks are, in fact, descriptive, and not inherently distinctive, FiftyThree and Paper Communications could establish trademark protection by providing evidence of “secondary meaning” (i.e., that the relevant consuming public views these marks as indicating the source, rather than the nature, of the goods or services).  Paper Communications is in particularly good shape to show secondary meaning and therefore obtain a federal trademark registration.  The trademark office will assume a mark has obtained secondary meaning through the applicant’s continuous and exclusive use for five years.  According to the Paper Communications application, they have used the “Paper” mark since at least 1996.

While FiftyThree has only used the “Paper” mark since 2012, it will not be entitled to the presumption of secondary meaning (having less than five years of continuous use) but it may still be able to prove secondary meaning through other evidence.