If so, you need to know trademark law fundamentals to avoid the risk of drastic consequences. The following scenario illustrates these consequences. You select a new name to identify your company to the public as the source of certain goods or services. You invest substantial time and money in publicizing the new name by advertisements, promotional events, stationary, labels, etc. Then, after you have developed valuable goodwill and a respected reputation, you receive what is known as a “cease and desist” letter from Company X. In the letter, Company X informs you that your new name is infringing upon Company X’s federally registered trademark. Company X demands that you cease using your new name by a certain date. If you do not, Company X threatens to enforce its legal rights by subjecting you to an injunction directing you to cease using Company X’s trademark, and monetary damages including:
- the profits you made from using Company X’s trademark;
- and/or the damages Company X has suffered;
- Company X’s litigation costs;
- three times the amount of damages claimed by Company X; and
- Company X’s attorney fees, if an “exceptional case.”
A trademark is a word, symbol, phrase or design and combinations thereof which, when used in connection with goods or services, serve to identify the source of goods or services to the public and aid the public in determining the quality of those goods and services. A trademark provides the owner with the exclusive right to preclude, through legal proceedings, its use by others in connection with similar goods or services without the owner’s permission.
There are four basic types of marks:
- “trademarks” which identify the source of goods, e.g., KodakTM for camera equipment;
- “service marks” which identify the source of services, e.g., Century 21SM for realtors;
- “certification marks” which identify a product or service as complying with a uniform standard of quality established by a certifying entity, e.g., Good Housekeeping Seal of Approval® for household products; and
- “collective marks” which indicate membership in a union, association or other organization, e.g., Teamsters for labor unions.
Trademarks should be used as adjectives, rather than as nouns or verbs. They should indicate the source of goods and services and not merely describe them. Consistent with common practice, the four types of marks will be collectively referred to in this article as “trademarks” or “marks.”
Essentially, legal rights to trademarks are acquired simply by using the words and/or symbols to indicate the source of goods or services. This is true under state common and statutory law, as well as the federal trademark statute known as The Lanham Act of 1946.
Common law trademarks, i.e., those that do not have a federal or state registration, can be enforced only within the area of actual use, as well as a “zone of natural expansion.”
Federal registration confers the benefit of nationwide “constructive” use and a right of priority, over all subsequent users or filers, as of the application filing date. Likewise, it prevents acquisition of common law rights by use of the same or similar mark by another entity. A federal certificate of registration is primary evidence of the registrant’s right to exclusive use of the mark and the validity of the mark’s registration. Furthermore, after five years of use from the registration date, a federal trademark registration becomes “incontestable,” which means that it cannot be invalidated for certain grounds such as prior use of a conflicting mark.
State registration is available in all states, but not the District of Columbia. West Virginia has a trademark statute which can be found at West Virginia Code, §§47-2-1, et seq. State registrations can be easy and inexpensive to secure, but offer limited benefits, such as preventing competitors from registering to do business in the state under the same name.
Most states, including West Virginia, require actual use of the mark in commerce prior to filing the registration application. Others follow the federal trademark statute and allow applications on an intent-to-use basis. Some states, including West Virginia, provide anti-dilution protection in their statutes, meaning protection against any decrease in the capacity of the registrant’s mark to identify and distinguish goods or services.
The United States Supreme Court has described trademarks as being “constitutionally cognizable property interests” because trademark owners can exclude others from using them. Trademarks can also be licensed, bought, sold and assigned with the corresponding goodwill of the business or profession. Trademarks can be enormously valuable business assets as a result of their being imprinted into public awareness by years of promotion and millions of dollars in advertising.
Domain names are web addresses that allow internet users to specify their location as an electronic address on the internet, e.g., macdonalds.com. Many people believe that registering a domain name with a domain name registrar, such as Internet Networks Information Center (“InterNIC”) provides protection against claims of trademark infringement and dilution. Not so! Registration of a domain name that is also a registered trademark of another entity can result in liability as a “cybersquatter” for trademark infringement and dilution. There is no exception for the internet under The Lanham Act and no avoidance of liability for using a trademark registered to another as a domain name, including Meta-Tags, which are invisible words inserted into the programming of web pages that are detected by search engines when they identify and prioritize web sites.
Trademark owners can litigate internet infringement, dilution and false advertising using traditional principles of trademark law, as well as The Lanham Act provisions that apply specifically to cyberspace. Enacted on November 29, 1999, the Anticybersquatting Consumer Protection Act (“ACPA”) prohibits registration of, trafficking in or use of a domain name with a bad faith intent to profit from the goodwill of another’s trademark. The ACPA essentially added a cause of action against cyberpiracy and cybersquatting to protect trademark owners from infringement and dilution by domain name registrants acting in bad faith.
Step No. 1: Before adopting words or symbols for use in promoting goods or services or before registering a domain name, plain economic sense suggests that a search should be conducted to determine if there will be a conflict with a registered or senior common law trademark. Moreover, the failure to conduct a pre-adoption trademark search could be considered by a court in an ACPA action as an indicator of bad faith, particularly under circumstances where a company has reason to believe that there may be a prior use of a similar mark.
Searches can be conducted online and manually at the United States Patent & Trademark Office (“USPTO”). Limited records of registered marks and pending applications can be obtained at the USPTO web site, www.uspto.gov. Some state trademark registrations can be searched online. West Virginia’s cannot, but a search can be conducted by submitting a request to the West Virginia Secretary of State’s Corporate Division.
General searches can also be made by using the internet search engines such as Google or Yahoo, and by using telephone listings, trade directories and a variety of public and private business and product name databases. There are also several private search firms and attorneys that perform trademark searches for set fees.
Searches for potential conflicts with registered domain names can be performed at the InterNIC homepage using the “whois” directory.
Items of information needed for a search include: the correct spelling of the mark; an accurate depiction of any images or graphics; an explanation of the meaning of the mark if it is an acronym, etc.; and, a specific listing of the goods or services with which the mark will be associated.
The search results should be evaluated on the basis of a likelihood of confusion, which is the test for trademark infringement. In applying this test you should consider: (a) the similarity of the potentially conflicting marks in appearance, sound and meaning; (b) the similarity of the respective goods and services; and (c) the owner’s channels of trade. The mark should also be evaluated to determine whether certain other elements are generic, merely descriptive or extremely diluted and, hence, weak. In cases of doubtful or complicated analysis, an attorney knowledgeable in trademark law should be consulted.
Step No. 2: Acquire a USPTO federal registration of your mark to obtain the benefits described above.
In sum, failure to consider the impact of trademark law while conducting your business or profession could result in the reversal of promotion plans for goods or services, lost investments, as well as lost profits.
The author presents these materials with the understanding that the information provided is not legal advice. Due to the rapidly changing nature of the law, information contained in this publication may become outdated. Anyone using these materials should always research original sources of authority and update this information to ensure accuracy when dealing with a specific matter. No person should act or rely upon the information contained in this publication without seeking the advice of an attorney.