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Basic Information
- Introduction - Overlap Between Trademark and Trade Names
- Definitions
- Establishing Rights in a Trademark
- Duration of Trademark Rights
- Registration of a Trademark
Avoiding Trademark Infringement
Selecting a Trademark
- Scope of Trademark Subject Matter
- Conducting a Trademark Search
- Legal Considerations
- Business Considerations
Protecting a Trade Name Nationally
- The Problem
- Preliminary Considerations
- Practical Advice
Miscellaneous Advice on Trademarks
- Proper Use of the Mark
- Foreign Rights
- Agreements Involving Trademarks
- Franchising
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Possibly the most common point of confusion in this area of the law is the overlap of trademarks with corporate names and other business names. As an initial step in forming a corporation, an attorney will commonly "reserve" a corporate name with the proper state office (generally the Office of the Secretary of State) for a limited period of time, so that the name is "protected" while the attorney completes the formation of the corporation. Is the client’s right to use that name protected? Not really. Reserving a corporate name will likely prevent another party from registering the same corporate name in that state during the reservation period, but it would not be an obstacle to someone else adopting the same or a similar name as a trademark or possibly as an assumed business name during that same period. Further, is the "clearance" given by the state office any assurance that adopting that name will be "all legal"? Not at all. The following example, while fictitious, in typical and illustrates the problem.
TYPICAL HORROR STORY: In l990 Art Miller formed a corporation in the State of Washington under the name "Zebra Enterprises, Inc." and began producing a variety of outdoor camping equipment. However, in December, l989, the Zebra Tent Company, located in Vermont, began manufacturing tents and shipped these to nearby New England states under the trademark "ZEBRA." Also in December, l989, the Zebra Tent Company filed an application for a federal registration of the mark "ZEBRA" as applied to tents, and the federal registration issued in December, l990. Both companies quickly became successful and expanded into other parts of the United States, each unaware of the existence of the other. Finally, in l99l their areas of distribution began to overlap and customers became confused as to who was producing the "Zebra" tent.
Now the horror story comes to light for Art Miller. The application for federal registration of "ZEBRA" by the Zebra Tent Company of Vermont served as constructive use in its claim to that trademark, as applied to tents, throughout the entire United States. Anyone who adopts a confusingly similar trademark or trade name (and understand, this includes corporate names) after such application for federal registration does so at his peril. The end result is that the Washington corporation is forced to stop using the name "Zebra" either as a trademark or as a corporate name in connection with its tents or other camping equipment reasonably related to tents. The frustrating thing in this example is that Zebra Enterprises acted in full conformity with the laws of the State of Washington; it had acted in good faith; and it in no way attempted to appropriate the goodwill of the other company. Yet, the substantial goodwill it had developed in its name was lost to another company.
This problem could have been avoided by performing an adequate search not only of the corporate names or other business names used in the State of Washington, but also searching for federally registered trademarks and applications for federal registration. In addition, it would have been prudent to broaden the search into other areas such as names of corporations and businesses operating in other states, and various trademarks which may have been adopted but not registered or for which no application for registration has been made.
PRACTICAL ADVICE: Quite often a company name (i.e., a trade name) is selected quite casually, possibly as one of the blanks to be filled in on the checklist of information required for incorporating, and at a later time, the name may evolve into a trademark in addition to functioning as the company name. As the company name and its major trademark are used for a number of years and advertised extensively, the substantial goodwill developed in the name and mark can become one of the most valuable assets of the company. Quite often the attorney can perform a very valuable service to the client in insuring that proper consideration is given at an early time to the selection of a company name and its trademarks.
NOTE: This is discussed further later in this Chapter.
trademark includes any word, name, symbol, or device or any combination thereof to identify and distinguish a person’s goods, including a unique product, from those manufactured or sold by others and to indicate the source of the goods, even if that source is unknown.
service mark is similar to a trademark but it is used to identify and distinguish the services of one person from the services of others and to indicate the source of the services (e.g. Hertz, Avis, MacDonald’s, Greyhound, etc.). Titles, character names and other distinctive features of radio and television programs may be registered as service marks.
certification mark is similar to a trademark but is used to certify regional or other origin, material, mode of manufacture, quality, accuracy, or other characteristics of a person’s goods or services, or that the work or labor on the goods or services was performed by members of a union, or other organization (e.g. Roquefort for cheese, the Underwriter’s stamp or Seal of Approval, etc.)
collective mark is similar to a trademark but is used by members of a cooperative, an association or other collective group or organization. (e.g. Greek letter fraternities, National Ski Patrol patches, etc.)
NOTE - The term "trademark" will generally be used in the following pages both in a broader sense to include service marks, certification marks, and collective marks.
A "trade name" or "commercial name" shall mean any name used by a person or entity to identify his, her or its business or vocation.
Prior to November l6, l989, trademark rights in the United States were initially established only by actually using the mark in connection with goods or services, and an application for federal registration could be made only after the mark was put into use in interstate commerce. (There are some exceptions to this where the U.S. trademark rights are based on a foreign trademark application or registration.) However, on November l6, l989, a basic change was made effective in the federal trademark law, and it then became possible to apply to register the mark in the U.S. merely on the basis of intent to use. As soon as an application for federal registration is filed, subject to subsequent use and registration, and also subject to the preexisting use or earlier application for federal registration by another, the applicant obtains "constructive use" of the mark throughout the United States.
PRACTICAL ADVICE: When the trademark has been selected, consideration should be given to the immediate filing of an application for federal registration, particularly if actual use may be many months away.
Rights in a trademark continue indefinitely unless use of the trademark is abandoned by the owner.
Federal registration should be a key part of any program to protect a trademark. In general, the application for federal registration preserves the right to later expand use of the trademark into other geographical areas. This right is subject to later registration of the mark, and subject to earlier rights established by another. If you do not file for the registration, a late comer may obtain valid rights in other geographical areas by actual use or by means of a federal registration of the same or a similar trademark, and limit your future expansion. (This question involves other complexities beyond the scope of this text.) A federal registration of a mark can be renewed indefinitely for consecutive ten year periods.
State registrations are available in most every state of the union. At present the procedure in obtaining registration in most states is not complex and it can provide certain benefits. However, with the federal law now providing for constructive use as of the date of filing, the benefits of filing the state registration have been diminished.
CAUTION: Do not assume registration within the state is a safeguard against infringement of a pre-existing federally registered mark.
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TYPICAL SITUATION: You are either adopting a new name for a product, adopting a new name for your business, or are planning to expand your business into other areas. You also have a logo or other device used with the product or services.
PRACTICAL ADVICE - CONDUCTING AN INFRINGEMENT STUDY
Either a trademark or a trade name can infringe a pre-existing trademark or trade name. Before becoming committed to the name or mark, your should consider conducting a search to identify potentially conflicting trademarks or trade names. This search should certainly cover the federally registered trademarks or applications for the same, also trade names, and to the extent possible, any "common law" trademarks.
As with patent infringement, early diagnosis of potential problems is essential. There is nothing so distressing as to build good will under a company name or to promote a product or service under a trademark in one geographical area very successfully and then, with expansion into another area, discover that another party has pre-existing rights to the name or mark in the new area. Or worse yet, the other party may have a pre-existing federal registration. At a later time, the registered owner may move into your area of operation and assert his pre-existing rights. Since the federal registration is constructive notice nationally (or constructive use as of the date of application), your innocent intentions are not a defense.
CAUTION: Even though you operate a small business wholly within a single state, (e.g., a single restaurant) and even though the selection of the trademark or business name complies with all the laws of that state, it may turn out to infringe pre-existing rights of another in a federally registered trademark. However, the problem may not come to light until the owner of the earlier federal registration expands his business into this state, possibly years later. (See the EXAMPLE at the start of this Chapter.
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To ensure that the full benefit is being derived from trademarks, you should be aware of the wide variety of items which can function as trademarks. These include the following:
- Word marks. These can include the following:
- invented marks, ("KODAK", "XEROX" and "EXXON");
- arbitrary marks ("Apple" as applied to computers);
- suggestive marks (i.e. these are not of themselves "merely descriptive" of the product or quality or functions of the product, but are somewhat suggestive. ("COFFEEMATE" for a non-dairy creamer used with coffee);
- nicknames ("BUD" is an abbreviation of "BUDWEISER"; "COKE" is an abbreviation of "COCA COLA");
- slogans ("Good to the Last Drop", for Maxwell House Coffee; "When it Rains it Pours" as applied to Morton Salt);
- letter and number trademarks such as "IBM"; "RCA"; the Boeing Family of marks (i.e. "707", "727" … "767"), "3M", "7-UP";
- logos, pictures, background patterns and colors (the "His Master’s Voice" trademark of RCA, the "Checkerboard pattern" of Ralston Purina; the background color pattern for "HAWAIIAN PUNCH")
- character marks, imaginary characters ("Betty Crocker", "the Jolly Green Giant", "Superman")
NOTE - the strength of Superman as a trademark is sufficiently broad that the owner of the mark, D.C. Comics, was able to enjoin another party from publishing a newspaper under the name "Daily Planet", the newspaper for which Superman’s alter ego, Clark Kent, worked.
- a person’s name (e.g. FORD, BOEING or JOHNNY CARSON.) Even the introductory words, "Here’s Johnny" is protectable, in that Johnny Carson was able to stop the use by another of the mark "HERE’S JOHNNY" as applied to portable toilets.
- sounds and scents (e.g. an introductory series of notes used by a broadcasting network) or a distinctive scent of a product).
- architectural shapes (MacDonald’s golden arches; the distinctive building design of Photo-Mat);
- product and container configuration, and trade dress (the Haig & Haig pinch bottle for its quality line of Scotch whiskey),
- any device that would serve to identify products, services, etc.
NOTE - Designations that are "merely descriptive" of the product or services or of characteristics thereof cannot normally be registered, and usually cannot function as a protectable trademark.
Before adopting the mark (or company name), identify any possibly conflicting marks. (See previous in this chapter on infringement, where the trademark search is discussed.)
Select a mark which can be federally registered. A trademark is not entitled to federal registration it if is:
- merely descriptive of the product or characteristics of the product,
- deceptively misdescriptive,
- primarily geographically descriptive or misdescriptive,
- primarily merely a surname, or
- confusingly similar to an existing trademark or trade name.
Therefore, from a lawyer’s view, a trademark like "Xerox", "Kodak", Exxon" or Boeing’s "707" is desirable since it is more easily registerable and can very quickly become a very strong trademark with a wide range of protection.
EXCEPTION: However, if a trademark that is geographically descriptive or a surname is used for a length of time sufficient to obtain "secondary meaning," quite often it can be registered and function as a trademark. For example, in the automobile industry "Ford" quite obviously was originally only a surname, and "Cadillac" was the name of an early explorer-soldier (Antoine DeMothe Cadillac) and later of a city in Michigan.
NOTE: However, in General Motors v. Cadillac Marine and Boat Co. (l964) the defendant boat company, which began use of its mark in l953, was permitted to keep the use of the mark "Cadillac" on the boats it sold, the court noting that "Since Cadillac is both an historic and geographical terms, it is only entitled to very narrow protection." This illustrates that a surname or geographically descriptive name would usually be entitled to a narrower range of protection than an invented mark (e.g. KODAK).
Obviously you will want to adopt a trademark which is attractive and will help sell the product. From the advertising view, an extreme approach would be that the trademark should tell everything about the product or services. However, it is very difficult to register such a mark and it is not entitled to a very wide range of protection, if any protection at all. Often, there is a compromise and a mark is selected which is "suggestive" rather than "merely descriptive." Examples of this are "Halo" for shampoo, "Coffee Mate" for a non-dairy creamer, etc.
CAUTION: If you are contemplating exporting your product, select a trademark that is suitable for export. For example, when one company found that it’s trademark sounded very much like a rather crude term for manure in the language of a major industrial country to which it exported, the mark was changed.
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At present, there is no way to register a trade name (i.e. a corporate name or an assumed business name) nationally, and it must be done on a state by state basis. You may be operating a business successfully in the Pacific Northwest, but it may be years before you can expand the operation in the rest of the country. You are worried about others adopting similar trade names in other parts of the country and blocking your future expansion under your existing trade name.
Quite often a company name (i.e., trade name) can also function as a trademark or a service mark (e.g., Kodak, Xerox, DuPont, Prudential, etc.).
Even though only the trademark or service mark can be federally registered, and not the company name, the federal trademark law protects against infringement by a confusingly similar trademark or trade name. (See EXAMPLE at the start of this chapter on Trademarks and Trade Names.)
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Always capitalize at least the first letter of the trademark as you would a proper name, or put it in quotation marks or possibly set it off in distinctive lettering or typeset. Don’t use it as a common name for your product. Otherwise your mark may end up being the generic name of the product and your trademark rights will be lost. Words such as escalator and aspirin were once valuable trademarks that were lost by such "genericide". It is often desirable to add a "TM" after the mark to indicate that you claim it as your trademark. Use the "R" in a circle only after the mark is federally registered.
A U.S. registration does not have effect in foreign countries,. However, after an application for registration has been filed in the U.S., the applicant can file in most foreign countries within six months of the U.S. filing date and obtain the benefit of the U.S. filing date.
CAUTION: Since in many foreign countries registration can be obtained merely on intent to use, if export sales are planned, timely registration in foreign countries is desirable. Otherwise, another person might register your mark in that country and later want to be your "exclusive import agent" at an appropriate price.
- A trademark cannot be sold or transferred without also transferring the good will of the mark in connection with the product with which it is associated.
- In licensing under a trademark, since it is an indication of source, provisions insuring quality control by the licensor must be included.
- As with patent licenses, there is a body of anti-trust law in the licensing of trademarks.
- An assignment of a federally registered trademark should be recorded in the U.S. Patent and Trademark Office.
- Trademark rights are substantially indivisible as to ownership. Since a primary function of the trademark is to designate source, it is not permissible to divide the same trademark rights among several parties who can act independently of each other with respect to the same or related products in the same area, so that confusion might result. (See EXAMPLE 2 given in Chapter I.)
- A product liability claim against a licensee under a trademark may subject the licensor (i.e. the owner of the trademark) to liability, on the theory that the licensor is guaranteeing quality.
When there is a trademark license along with a prescribed business plan for the licensee, the arrangement may come under the legal definition of a "Franchise" which subjects it to Federal regulation and also regulation in certain states. You may have to go through complex registration proceedings in the various states where registration is required. Further the legal interpretation relative to what is or is not a franchise can be different in various states.
CAUTION - Simply stating in the agreement that the arrangement is not a Franchise is not an adequate safeguard.
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