Trademark Basics

Definitions

Trademarks are names or symbols used to identify or distinguish one's goods from those sold or manufactured by another.

Service marks are used to identify or distinguish services.

Marks means either trademarks or service marks.

Trade names are used to identity a business. They may or may not constitute marks as well.

How Rights to Marks Are Created and Strengthened

Ownership. Essentially, ownership rights to a mark is created by using the mark in commerce.

• For goods, generally the mark must be placed on the goods, on their containers or the display connected with them, or on tags or labels attached to them.
• For services, the mark must be used or displayed in the sale or advertising of the services and the services must actually be provided in commerce.
• The use must be "real": sham sales are not sufficient. Keep the paperwork for the first sales throughout the life of the business.

Registration. Rights to marks are strengthened by registering them either at the state or federal level (or with other countries). Essentially, registration gives the owner exclusive use of the mark for that field throughout the jurisdiction of registration against all subsequent users of the mark.

Federal registration requirements.

• Federal marks require sales across state lines.
• However, an applicant can "reserve" a federal mark prior to actual use by filing an intent to use application stating that the mark will be used within the next six months.
  (1) Extensions are available for subsequent six-month periods on a "good faith" basis.
  (2) Upon a filing that the mark is in use, the registration is effective back to the initial reservation date (rather than the first sale date).

Conflicts with Prior Users.

• Generally, if the defendant was using the same or a similar mark in the same field before a) the plaintiff filed a post-1989 federal application for registration or b) the plaintiff's registration for a pre-1989 application was granted, then the defendant will retain the rights to use its mark within that geographic area. (Assuming the defendant had no knowledge of plaintiff's use of the mark.) However, the defendant effectively will not be able to expand beyond that area.
• Therefore, we strongly recommend that everyone conduct a name search prior to beginning use or reservation of a mark.

Foreign trademarks.

• Essentially, registration is on a country by country basis. The fact that an owner has a mark registered in one country gives no protection in another country.
• However, there is a new European Economic Community ("EEC") scheme that allows the owner to make one application for the 15 participating European countries.

Ownership Symbols. By law, the "R" within a circle can only be used for marks registered on the principal federal register. (Registration on the supplemental federal register or a state register is not sufficient.) For other marks, we recommend using a superscript "TM" for trademark. This at least puts others on notice that you are laying claim to this mark.

What Can Be Registered on the Federal Level?

Generally. Among others, the following sorts of items may be trademarked: container designs (for example, the classic Coca-Cola bottle), symbols and logos, names, distinctive ornamentation, sounds, colors, fragrances, buildings!

Prohibited Registrations. The following may not be registered: deceptive names, immoral or scandalous matter, national insignia, the name or image of a living person who does not consent, confusingly similar marks.

Generic Terms. Generic terms cannot be registered--or someone would be able to register the word "car."

Titles and Characters. Titles and characters names used in a series may be registered as service marks.

• "One-shot" titles and characters can only be registered upon a showing of secondary meaning.
• However, if the title is descriptive, secondary meaning probably still has to be shown.
• If a title or character has secondary meaning, it may cross media lines.
• Note that copyright law does not protect titles.

The Principal and Supplemental Federal Registers. Descriptive terms can be registered on the principal register only if they have secondary meaning. Otherwise they can be registered only on the supplemental register.

• Secondary meaning is a mental association in the minds of buyers between the mark and the source of the product. Generally this is proved by surveys.
• However, after a mark has been on the federal supplemental register for five years, it is presumed that the mark has secondary meaning--and an application for registration on the principal register may then be made.
• Registration on the principal register is better, because it
  (1) shifts the burden of proof to the defendant;
  (2) bars a defense of unknowing infringement;
  (3) allows the mark to become incontestable after five years; 
  (4) bars the importation of goods with infringing marks.

Strength of Marks. Roughly speaking, arbitrary and fanciful marks are the strongest, then suggestive marks, then descriptive marks.

• Fanciful marks are those involving a "coined" word, such as Clorox bleach or Kodak film.
• Arbitrary marks use words, symbols, pictures etc. that are in common use but which neither suggest nor describe any characteristic of the product; for example, Black & White scotch or Tea Rose flour.
• Suggestive marks are those that require imagination, thought and perception to reach a conclusion as to the nature of the goods; for example Chicken Of The Sea, Coppertone sun tan oil.
  (1) Incongruity is one strong indicator of suggestiveness. (Roach Motel insect traps.)
  (2) On the other hand, the fact that competitors use the mark on similar merchandise is an indication that the mark is descriptive rather than suggestive.
• Descriptive marks describe the intended purpose, function or use of the goods, the size of the goods, the users of the good, desirable characteristics of the goods, or the end effect upon the user.
  (1) Example: Le Croissant Shop for food services.
  (2) Marks that are laudatory are regarded as being descriptive; for example, Gold Medal flour, Blue Ribbon beer. v. Obviously, there is a significant subjective component to these categories.

Infringement: Likelihood of Confusion

A newer mark infringes on an earlier one if it causes "likelihood of confusion": whether an ordinary, prudent purchaser would be likely to purchase one item believing that another was being purchased.

In determining likelihood of confusion, the court will examine (among other factors) the similarity of the marks, the similarity of the goods, the marketing channels used, the strength of the plaintiff's mark, and the defendant's intent in adopting the mark.

• Obviously, there is no likelihood of confusion if the two marks are used in completely different commercial fields.
• Actual confusion by customers is the best proof but is not required.
• Probable confusion (versus possible confusion) is required.

The confusion may be based on similarities in the sight, sound or meaning of the marks.

Ways to Lose a Mark

Abandonment. Abandonment occurs when an owner discontinues use of the mark with the intent not to resume such use. Intent not to resume use may be inferred from the circumstances. Under the federal Lanham Act, non-use for two years is prima facie evidence of abandonment.

Failure to maintain quality control over the mark. If the owner licenses the use of the mark, but fails to maintain adequate control over the nature and quality of the goods or services sold under the mark, the mark may lose its significance as a symbol of quality--and therefore be deemed abandoned.

Failure to defend the mark. If the owner fails to be reasonably diligent in protecting rights to the mark, an intent to abandon may be inferred. However, the owner is not required to act against every infringing use. On the other hand, allowing some significant infringer to continue conflicting use may well weaken the mark over time.

Failure to confirm use of the mark. A federally registered mark will be canceled by the U.S. Patent and Trademark Office at the end of six years following the date of registration unless, during the final year, the owner files an affidavit stating that the mark is in use in commerce.

Failure to renew the registration. Federal registrations and renewals issued prior to November 16, 1989, are valid for 20 years. Since that date, all registrations and renewals have been valid for 10 years. Renewals must be filed within the final six months of the current period.

Dilution and the "Famous Marks" Law

In general, trademark law is no help to an owner when there is no competition with the other party's goods or services. However, there still may be legal remedies in some instances.

In California, Business & Professions Code Section 14330 provides for relief against injury to business reputation or dilution of the distinctive quality of a registered mark or a common-law mark despite the absence of competition between the parties or the absence of confusion as to the source of goods or services. For example, Playboy Magazine was able to obtain an injunction prohibiting a fiberglass manufacturing business from using the name.

The Federal Trademark Dilution Act, which was signed into law in January of 1996, protects "famous" marks.

• The Act establishes non-exclusive guidelines to determine which marks are distinctive and famous:
  (1) the degree of distinctiveness of the mark;
  (2) the duration and extent of use of the mark;
  (3) the duration and extent of advertising and publicity;
  (4) the geographical extent of the trading area in which the mark is used;
  (5) the channels of trade;
  (6) the degree of recognition of the mark in the trading areas and channels of trade used by the mark's owner and the person against whom the injunction is sought;
  (7) the nature and extent of use of the same or similar marks by third parties; and
  (8) whether the owner of the mark has a valid federal registration. Despite this final consideration, even unregistered marks are protected.
• The new act defines the term "dilution" as "the lessening of the capacity of a famous mark to identify and distinguish goods or services, regardless of the presence or absence of:
  (1) competition between the owner of the famous mark and other parties, or
  (2) likelihood of confusion, mistake, or deception."

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Methven & Associates
2232 Sixth Street Berkeley, CA 94710
Phone: (510) 649-4019 Fax: (510) 649-4024
Web Site: www.methvenlaw.com
Copyright 2004 Bruce E. Methven, All Rights Reserved.

The foregoing article constitutes general information only and should not be relied upon as legal advice.