Introduction to Trademark Law
Michael M. Baylson, Senior Judge for the United States District Court for the Eastern District of Pennsylvania, summarized this blog post in just four words: “Trademarks are important concepts.” Lontex Corp. v. Nike, Inc., No. 18-5623, at 1 (E.D. Pa. Mar. 3, 2022). For those who would otherwise put this post in the “too long; didn’t read” category, please consider the judge’s quote to be as good as any in the realm of trademark law. For those who came here to take a bit deeper of a dive, please continue reading. There is much more to learn.
Trademarks are all around us. Start by looking down at your cell phone. If it happens to be an Apple product, note that “iPhone”, the partially eaten apple logo, as well as “Apple” itself are all registered trademarks of Apple Inc. Next, think about your car. What manufacturer did you go with? “Ford” is a registered trademark of Ford Motor Company; “Chevrolet” is a registered trademark of General Motors LLC; and “Honda” is a registered trademark of Honda Motor Co., Ltd. Now, consider your clothing. What one conceives as a brand is technically a trademark. American Bar Association, Section of Intellectual Property Law, What Is a Trademark? 5 (3d ed. 2009). The “Nike” lettering on your shoes embodies a registered trademark of Nike, Inc. The “Old Navy” text on your t-shirt is a registered trademark of Old Navy (Apparel), LLC. The little red tag sporting “Levi’s” on your jeans is a display of a registered trademark of Levi Strauss & Co. It is nearly impossible to separate trademarks from not only the world of business but also from daily life.
Trademarks are incredibly valuable assets. That is why companies of all sizes deploy meaningful resources to create, register, protect, police, and defend them. “There are many marks for consumer products such as foods and beverages which are estimated to be worth tens or even hundreds of millions of dollars.” American Bar Association, Section of Intellectual Property Law, What Is a Trademark? 5 (3d ed. 2009). “McDonald’s would never have achieved national prominence…without strong trademarks[.]” Intellectual Property Rights: Critical Concepts in Law 27 (David Vater ed., Routledge 2006) (4th ed. 2006). Any asset potentially worth hundreds of millions of dollars will always be of interest to corporate America, as will achieving national prominence. Seeking to understand the legal dynamics governing a valuable asset that aids in an entity achieving prominence, whether the student is a small business owner or a CEO of a publicly traded company, is a worthwhile endeavor.
Definition of a Trademark
What is a trademark (sometimes alternatively written as “trade-mark” or “trade mark”)? “[T]rademarks are intellectual property.” Perfect 10, Inc. v. CCBill, LLC, 340 F. Supp. 2d 1077, 1107 (C.D. Cal. 2004) (citing Allison v. Vintage Sports Plaques, 136 F.3d 1443, 1448 (11th Cir. 1998)). But knowing that trademarks are a type of intellectual property only helps so much in understanding the true nature of a trademark. Let’s continue to narrow the definition of a trademark. “[A] trademark is defined as ‘any word, name, symbol, or device, or any combination thereof … used by a person … to identify and distinguish his or her goods, including a unique product from those manufactured or sold by others and to indicate the source of goods[.]’” DaimlerChrysler v. The Net Inc., 388 F.3d 201, 205 (6th Cir. 2004) (quoting 15 U.S.C. § 1127). That means a trademark could be as simple as a word. It could also just be a symbol. A word combined with a symbol is another possibility. Simple or ornate, trademarks visibly separate one business or seller from another in the marketplace with regard to its goods and/or services. There is no favoritism for goods over services. “The same rules that apply to a trademark apply to a service mark, which is merely a trademark that has been applied to services rather than products.” Fotomat Corp. v. Cochran, 437 F. Supp. 1231, 1241 (D. Kan. 1977) (citing 15 U.S.C. § 1127). Oftentimes, trademarks and service marks are consolidated under the umbrella term “mark” or simply called “trademarks”.
Purpose of Trademarks
Why do we have trademarks? Different courts have answered this question differently. Let’s look at some of them.
- “[T]he purpose of trademark protection is to allow manufacturers to place an identifying symbol or design on their brand to enable consumers to easily distinguish between competing products.” Brunswick Corp. v. Spinit Reel Co., 832 F.2d 513, 519 (10th Cir. 1987) (citing W.T. Rogers Co. v. Keene, 778 F.2d 334, 338-39 (7th Cir. 1985)).
- “[T]he primary purpose of a trade-mark is to indicate the origin, manufacture and ownership of the article in the mind of the purchasing public[.]” Avrick v. Rockmont Envelope Co., 155 F.2d 568, 571-72 (10th Cir. 1946).
- The protection of trademarks serves the “purpose of preventing deception and unfair competition.” Savant Homes, Inc. v. Collins, 809 F.3d 1133, 1146 (10th Cir. 2016).
- “The gist or value of the trade-mark is to signify the origin or source of a product[.]” National Nu Grape Co. v. Guest, 164 F.2d 874, 876 (10th Cir. 1947).
- “The core concepts of trademark protection are that consumers not be confused, misled, or deceived as to whose product they are buying, that sellers’ goodwill — or investment in their reputation for quality — be protected, and that competition thereby be enhanced.” Vornado Air Circulation Sys., Inc. v. Duracraft Corp., 58 F.3d 1498, 1508 (10th Cir. 1995).
- ‘“[T]he essence of a protected mark is its capacity to distinguish a product and identify its source. The gravamen of trademark law is source identification.”’ First Savings Bank, F.S.B. v. U.S. Bancorp, 117 F. Supp. 2d 1061, 1071 n.4 (D. Kan. 2000) (quoting Sunbeam Products, Inc. v. West Bend Co., 123 F.3d 246, 252 (5th Cir. 1997), cert. denied, 523 U.S. 1118, 118 S.Ct. 1795, 140 L.Ed.2d 936 (1998)).
- “[A] fundamental purpose of trademark law is to create a marketplace in which consumers are not deceived or confused by competing merchants using similar marks.” Paleteria La Michoacana, Inc. v. Productos Lacteos Tocumbo S.A. De C.V., 69 F. Supp. 3d 175, 195 (D.D.C. 2014).
- “The essence of trademark law is that one party not be able to steal the benefits of another’s efforts to build a profitable and strong reputation for his own product.” Varitronics Sys., Inc. v. Merlin Equip., Inc., 682 F. Supp. 1203, 1208 (S.D. Fla. 1988).
- The goal of trademark protection is to allow a firm to affix a mark to its product or service that will enable the consumer to discover in the least possible amount of time and with the least possible amount of head-scratching whether a particular brand is that firm’s brand or a competitor’s. Blau Plumbing, Inc. v. S.O.S. Fix-It, Inc., 781 F.2d 604, 609 (7th Cir. 1986) (citing W.T. Rogers Co. v. Keene, 778 F.2d 334 (7th Cir. 1985)).
That’s a lot of language! One would think there wouldn’t be so many explanations for why we have trademarks. As different as these citations may be, they can be synthesized and consolidated into a coherent whole. Here is one such possibility. The purpose of a trademark is twofold: (1) to protect consumers by furnishing them with a method to distinguish between manufacturers of goods and providers of services by way of an identifying symbol or word selected by the manufacturer or provider and placed on or about its respective goods or services and (2) to protect honest manufacturers of goods and providers of services from attempts of dishonest competitors to deprive them of their reputation for quality. By the two prongs of this definition, one can detect that trademark law is both about protecting consumers as well as businesses.
Consumer Benefits to Trademark Law
Trademark law creates a sensitive interplay between the benefits it yields to the purchasing public and the benefits it yields to sellers. “The value of a trademark is in a sense a ‘hostage’ of consumers; if the seller disappoints the consumers, they respond by devaluing the trademark.” Scandia Down Corp. v. Euroquilt, Inc., 772 F.2d 1423, 1430 (7th Cir. 1985). That is to say that sellers are entitled to trademark protection but that the disappointment of consumers by a seller results in a direct blow to its brand value. In a sense, then, consumers are king. Even if dishonest competitors attempt to cheat truthful manufacturers of goods or providers of services out of their reputations for quality, consumers may have already beaten them to the punch and neutered the deleterious effects of the nefarious imitators. Recall the phrase “[t]he customer is always right.” It applies here too. Relatedly, happy consumers make for favorable valuations of trademarks, strengthening sellers’ statures in the marketplace.
Adding to the consumer protection theory, another benefit of trademark law is the time and money saved by a purchaser when searching for a desired item. “A trademark’s value is the saving in search costs made possible by the information that the trademark conveys about the quality of the trademark owner’s brand.” Kraft Foods Group Brands LLC v. Cracker Barrel Old Country Store, Inc., 735 F.3d 735, 739 (7th Cir. 2013). Imagine the difficulty a purchaser would have in buying consumer staples, e.g., hygiene products, foods and beverages, etc., or making potentially more expensive consumer discretionary purchases if he had no means of distinguishing one manufacturer from the next. We all have our trusted brands. Some people, for example, are ardent Toyota loyalists. A lot can be said about the reliability and durability of a Toyota Sequoia. This full-sized SUV can transport a large family, traverse numerous different types of terrains, accelerate rapidly, insulate its passengers in an accident, and offer more than adequate luxury features. Many can be found for sale (and later do sell) with more than 300,000 miles, a testament to their reliability. This vehicle is truly impressive and has a considerable following. If someone desires to purchase this vehicle, she would be able to find one without any trouble by ensuring it possesses the trademarks “Toyota” and “Sequoia” thereon. Identifying these marks on the vehicle is not difficult. By virtue of trademark law, a consumer does not have to become an expert overnight and learn how to distinguish the constituent parts of a Sequoia from the hundreds of other SUVs on the road. He can save his time and money and search only for the relevant marks that identify the quality of vehicle he seeks.
What a consumer thinks of when she sees a particular trademark must go back to the source or the trademark is not serving its purpose, if it can even be called a trademark at all. “It is helpful to keep in mind some of the basic principles of trademark law. While many associations may be invoked by a word, the only one which is of any significance as a trademark is its use in denoting the source of the product it labels.” Nestle Co., Inc. v. Chester’s Mkt., Inc., 571 F. Supp. 763, 766 (D. Conn. 1983) (citing Anti-Monopoly, Inc. v. General Mills Fun Group, 611 F.2d 296, 304 (9th Cir. 1979)). The term “source” refers to the producer, manufacturer, or provider or the good or service. It is not the product or the service itself that is intended to be invoked upon exposure to the company’s trademark but the company itself. Consumers are accustomed to relying on trademarks as trustworthy indicators of a product’s source: that is the point of a trademark. Versa Prods. Co., Inc. v. Bifold Co. (Mfg.) Ltd., 50 F.3d 189, 202 (3d Cir. 1995).
Trademarks as Limitations on Copying
What sometimes gets lost in the foundational teaching of trademark law is the concept that trademarks provide legal limitations on the right others have to use a particular word, phrase, or symbol subject to a trademark. “[T]rademarks…are exceptions to the right to copy.” Winning Ways, Inc. v. Holloway Sportswear, Inc., 903 F. Supp. 1457, 1460 (D. Kan. 1995) (citing 1 J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition § 1.01(2) (3d ed. 1995)). While patents and copyrights are without question important types of intellectual property, and also impose limitations on copying, the focus of this article is on trademarks. Trademarks impose restrictions on uses of words, phrases, and symbols in certain contexts. They do not remove words from the English language, but they do change the absolute, unconditional freedom to use a word, at least in a commercial context. Let’s return to the purposes of trademark law, protecting consumers and protecting sellers. It isn’t through just awarding a seller a trademark that consumers are empowered to make good purchasing decisions and sellers avoid being scammed by imitators. It’s through limiting how non-owners and non-registrants may use that trademark so as to not confuse, deceive, or defraud. If trademark law didn’t limit copying (as well as confusingly similar derivations), ownership of a trademark would be worth little.
Unregistered vs. Registered Trademarks
The terms “non-owners” and “non-registrants” were just introduced. Indeed, there may be a difference between a trademark owner and a trademark registrant. A lot is made of registering a trademark with the United States Patent and Trademark Office, and justifiably so. There are numerous potential benefits to filing a trademark application with the USPTO and ultimately obtaining a registration. “The ease of federal registration and its relatively low cost make registration a good choice in virtually any protection scheme.” Adam L. Brookman, Trademark Law Protection, Enforcement and Licensing § 1.02[A] (2d ed. 2020). Upon reaching registration, what once was an applicant, the company or person who made the filing, becomes a registrant. This does not mean that failing to register a trademark deprives a business of what would otherwise amount to ownership. “While federal registration triggers certain substantive and procedural rights, the absence of federal registration does not unleash the mark to public use. The Lanham Act protects unregistered marks as does the common law.” San Juan Products, Inc. v. San Juan Pools of Kansas, Inc., 849 F.2d 468, 474 (10th Cir. 1988). Federal registration of a trademark is an enhancement. It’s important, valuable, and prudent. Failing to do so, however, does not mean that all is lost. A mark’s use in commerce, even without registration, still creates rights. “A fundamental tenet of trademark law is that use of a mark in commerce in connection with products or services creates rights under state and federal law.” First Savings Bank, F.S.B. v. U.S. Bancorp, 117 F. Supp. 2d 1061, 1069-70 (D. Kan. 2000) (citing Secular Organizations for Sobriety, Inc. v. Ullrich, 213 F.3d 1125, 1130 (9th Cir. 2000)); see also Mark V.B. Partridge, Guiding Rights: Trademarks, Copyright and the Internet 43 (2003) (stating that trademark rights in the United States arise from use, not registration, but that registration is beneficial to increase the scope of protection); Carol Chadirjian, The Business of Trademarks: A Practical Guide to Trademark Management for Attorneys and Paralegals 2 (2018) (stating that trademark rights accrue through actual use in the marketplace but that a federal registration would greatly enhance the value of a trademark). Some businesses, whether through good advisors or a wealth of experience, immediately seek federal registration of their trademarks. Others do not. While pursuing federal registration of a trademark is generally recommended, trademark law does not live and die at the USPTO.
Trademarks and Domain Names
The practical implications of a trademark cannot be overstated. Today, a lot of business is done over the internet, and consumers make significant purchasing decisions based upon what they find online. Businesses must generally be able to be found on the internet in order to do business on the internet. In some cases, that means a company’s trademark must be searchable on the web.
There are two primary ways an Internet user can find a particular company’s website. An Internet user may either guess that the company uses its name or trademark as its domain name, and enter that domain name into an Internet browser, or enter the company’s name or trademark into an Internet search engine such as Google.
Rescuecom Corp. v. Google, Inc., 456 F. Supp. 2d 393, 396 (N.D.N.Y. 2006). A company’s name may be the same thing as its trademark (and in fact is in many instances). In such event, the above quote could be simplified by saying that an internet user typically finds a particular company’s website by guessing that the company uses its trademark as its domain name or by entering the company’s trademark into Google. If a company doesn’t have a trademark, how will it be found on the internet? Generic business names that are found all over the country, especially ones that are in the same industry, might only be differentiated by the underlying companies’ physical addresses or superficial tweaks to their domain names (e.g., adding or dropping an “s”, including an article such as “the”, changing the domain extension from “.com” to “.net”, etc.). Trademarks are an important medium of advertisement.
For the internet user who uses the method of guessing that the company uses its name or trademark as its domain name, and entering that domain name into an internet browser, he lends support to the proposition that a domain name matching the company’s name is a valuable corporate asset. “A customer who is unsure about a company’s domain name will often guess that the domain name is also the company’s name. For this reason, ‘a domain name mirroring a corporate name may be a valuable corporate asset[.]’” Cardservice Int’l, Inc. v. McGee, 950 F. Supp. 737, 741 (E.D. Va. 1997) (quoting MTV Networks, Inc. v. Curry, 867 F. Supp. 202, 203-04 n. 2 (S.D.N.Y. 1994)). This makes logical sense. Websites create business opportunities. Some people find websites by entering company names or trademarks directly into internet browsers. If the desired website appears, which would be the corresponding website for the company name or trademark entered into an internet browser, that business gathers additional exposure and potentially an additional purchaser.
Provided that one has the right to do so, of course, which has deep roots in trademark law, the advice to have a domain name match the company’s name may be prudent and build corporate value, but the concept may be taken two steps further. “In general, the shorter the better. Shortness is an attribute even more important for an Internet brand than an outernet brand. You have to keyboard the Website name into your computer.” Al Ries & Laura Ries, The 22 Immutable Laws of Branding, 151 (HarperCollins Publishers 2002). It is hard to argue with this quotation. The less work one has to do, the less resistance he will have at arriving at a given website. Making it easy for an internet user to land upon a desired web page should serve to increase web traffic.
Shortness is only the first of the two steps. Ease of spelling is the second. “That’s why the site name should be both short and easy to spell.” Id. This goes back to making it easy on the consumer. Spelling complications lead to erroneous searches. If a word or name is misspelled when entering company names or trademarks directly into internet browsers, the desired website may not appear. It is hard to do business on the internet if a desired web page cannot be found. The three principles of having a domain name match the company’s name, keeping said name short, and keeping said name easy to spell are generally good to follow, provided, of course, that proper trademark research and analysis is conducted in advance.
Trademark Infringement
As in all areas of business, in the realm of trademark law, some people follow the rules, and others don’t. There are those who disregard trademark laws intentionally and maliciously. Others are simply uneducated or naive. Whatever the reason for running afoul of the law, the aggrieved trademark owner has rights, and she may choose to exercise them in the form of a trademark infringement claim.
Lawsuits are often about money. Civil lawsuits, in particular, are largely disputes over who owes what to whom based upon some form of wrongdoing. This norm is turned on its head in trademark disputes. “Injunctions tend to be the only remedy in trademark litigation.” Ryan McLeod, Injunction Junction: Remembering the Proper Function and Form of Equitable Relief in Trademark Law, 5 Duke L. & Tech. Rev. 13, at ¶ 6 (2006). “The very purpose of a trademark infringement lawsuit is to force the allegedly infringing party to change its mark.” Taco John’s Int’l, Inc. v. Taco Chon Mexican Grill LLC, No. 22-1050, at 14 (D. Minn. Sept. 6, 2023). “Often, the only goal of trademark litigation is to keep other people from using the mark to avoid confusion in the marketplace[.]” Kris Olson, For IP Bar, New Federal Laws a Pleasant Surprise, Massachusetts Lawyers Weekly, Jan. 2021 (quoting Barbara A. Fiacco, past president of the American Intellectual Property Law Association). “[I]f all the accused has done is advertise using an infringing mark and made no sales, there will probably be no damages: in such a case, an injunction is the only remedy.” N. Star IP Holdings, LLC v. Icon Trade Servs., LLC, No. 22-7324, at 30 (S.D.N.Y. Jan. 3, 2024) (quoting McCarthy on Trademarks and Unfair Competition § 25:26 (5th ed.)). Throughout these various citations, references to money or exchanges of funds are absent. That doesn’t mean that damages are irrelevant or unobtainable, or that securing a judgment for something other than an injunction isn’t possible, just that injunctive relief is the most prevalent remedy for trademark infringement. In essence, the goal of trademark litigation is to force the counterfeiter to use a different brand than the confusing one it is currently using.
Trademark litigation is not for the faint of heart. The idea of a trademark plaintiff pursuing a claim that might possibly not result in any hard dollars put back in his pocket (at least not retroactively in simply an injunction award outcome scenario) yet spending hard dollars to get there isn’t exactly a businessman’s dream. Whatever remaining appetite he may have to proceed dries up almost to the point of extinction if his business is small and closely held. Lawsuits, the ultimate weapon for protecting trademarks, are extremely expensive. Adam L. Brookman, Trademark Law Protection, Enforcement and Licensing § 1.02[B] (2d ed. 2020). As of a 2015 report, admittedly dated in the wake of pandemic-era inflation, the median litigation cost through trial for a trademark infringement suit with less than $1,000,000 at risk was $325,000. Am. Intell. Prop. Law. Ass’n, 2015 Report of the Economic Survey, at 38 (June 2015). Few start-up or mom-and-pop companies can afford this sort of expense. The financial burden of trademark litigation appears to be unique to the practice area. “[R]esolution of trademark disputes often requires a more context-dependent approach than is necessary in other areas of intellectual property law.” Ludden v. Metro Weekly, 8 F. Supp. 2d 7, 12 (D.D.C. 1998). “[A] bright-line approach to the limits of trademark protection is far more difficult, if not impossible.” Id. Perhaps this would make a first-rate testimonial for the value of trademark searches and clearances, dutifully prosecuted trademark applications, and alternative dispute resolution. At least one scholarly article indicates that settling is the goal of trademark litigation. Alison T. Fiala, Trademark Law – The Lanham Trademark Act – Third Circuit Refuses to Hold Attorneys Liable for Wrongful Ex Parte Seizures, 38 Vill. L. Rev. 1338, 1343 n.30 (1993) (The “goal of trademark litigation is to put [the] counterfeiter out of business and to settle[.]” (citing Glen E. Weston et al., Unfair Trade Practices And Consumer Protection 251 (5th ed. 1992))).
Fair Use Defense
Trademark infringement cases are far from black and white. The above information easily supports such a conclusion. Defenses that an alleged infringer has add more complexity. One defense to trademark infringement is fair use. When an allegedly infringing term is “used fairly and in good faith only to describe to users the goods or services of [a] party, or their geographic origin”, trademark infringement defendants may assert the “fair use” defense. Zatarains, Inc. v. Oak Grove Smokehouse, Inc., 698 F.2d 786, 796 (5th Cir. 1983) (quoting Lanham Act § 33(b)(4), 15 U.S.C. § 1115(b)(4) (1976)), abrogated on other grounds by KB Permanent Make-Up, Inc. v. Lasting Impression I, Inc., 543 U.S. 111, 125 (2004). “[T]he doctrine known as classic fair use…protects from liability anyone who uses a descriptive term, ‘fairly and in good faith’ and ‘otherwise than as a mark,’ merely to describe her own goods.” United States PTO v. Booking.com B.V., 140 S. Ct. 2298, 2307-08 (2020) (citing 15 U.S.C. § 1115(b)(4)). The fair use defense, on a simplified level, allows a party to use a mark owned by another party in a purely descriptive sense (to describe his goods or services) and not be in violation of trademark law. Think of an honest person who simply is describing his product or service and integrates in his description a term or word that is the trademark of another party. This honest person would not be subject to trademark infringement remedies if he successfully raises the fair use defense. For example, an upstart cereal manufacturer may be able to describe its new cereal product as being made up of “all bran” without infringing upon Kellogg’s existing rights in the mark “All Bran”. The use of “all bran” would be in a purely descriptive or informative manner and not indicative of the source of the goods. While trademark rights may be acquired in a word or phrase, such rights do not prevent others from using the word or phrase in good faith in its descriptive sense (and not as a trademark). In general terms, ownership of a trademark does not withdraw the trademark from the language in an absolute sense.
Services Provided by this Law Firm
Kincaid Law KC, LLC regularly provides services in trademark law. This law firm has experience filing federal and state trademark applications, responding to USPTO Office Actions, working on resolving trademark disputes outside of court, as well as litigating trademark infringement claims. We additionally have experience advising on trademark issues when forming LLCs. Please contact us at 913-735-7707 or schedule with us here if we can be of service to you or your business.
Matthew T. Kincaid