Establishing a mark
A trademark or mark is a word, phrase, or symbol that both identifies and distinguishes the source of goods, such as “McDonald’s”, “Starbucks”, “IBM”, and “NBA”. Service mark is the same but for services. The mark for goods appears on the package and the service mark appears on the advertisement for the service.
To establish a right in a trademark you must actually use the mark, or register the “mark” in the Patent and Trademark Office (“PTO”) declaring an intention to use the mark in commerce. Registration creates a presumption of ownership but does not necessarily allow for usage. Generally, the first party who either uses a mark in commerce or files an application in the PTO has the ultimate right to register that mark. The PTO's authority is limited to determining the right to register.
The right to use a mark can be more complicated to determine. This is particularly true when two parties have begun use of the same or similar marks without knowledge of one another and neither has a federal registration. Only a court can render a decision about the right to use, such as issuing an injunction or awarding damages for infringement. It should be noted that a federal registration can provide significant advantages to a party involved in a court proceeding.
Unlike copyrights or patents, trademark rights can last indefinitely if the owner continues to use the mark to identify its goods or services. The term of a federal trademark registration is 10 years, with 10-year renewal terms. However, between the fifth and sixth year after the date of initial registration, the registrant must file an affidavit setting forth certain information to keep the registration alive. If no affidavit is filed, the registration is canceled.
Anyone who claims rights in a mark may use the TM (trademark) or SM (service mark) designation with the mark to alert the public to the claim. It is not necessary to have a registration, or even a pending application, to use these designations. The claim may or may not be valid. The registration symbol, ®, may only be used when the mark is registered in the PTO. It is improper to use this symbol at any point before the registration issues.
Registration; use in commerce
The application must be filed in the name of the owner of the mark, usually an individual, corporation or partnership. The owner of a mark controls the nature and quality of the goods or services identified by the mark. You may apply for federal registration in three principal ways: (a) if you have already commenced using a mark in commerce, you may file on the basis of that use (a "use" application); (b) if you have not yet used the mark, you may apply on the basis of a bona fide intention to use the mark in commerce (an "intent-to-use" application); (c) under certain international agreements, someone from outside the United States may file in the United States on the basis of an application or registration in another country. The applicant must designate in writing the name and address of a domestic representative -- a person residing in the United States "upon whom notices of process may be served for proceedings affecting the mark.
What does “use in commerce” mean in this context? Here commerce means all commerce which may lawfully be regulated by the US Congress, for example, interstate commerce or commerce between the US and another country. The use in commerce must be a bona fide use in the ordinary course of trade, and not made merely to reserve a right in a mark. Use of a mark in promotion or advertising before the product or service is actually provided under the mark on a normal commercial scale does not qualify as use in commerce. Use of a mark in purely local commerce within a state does not qualify as "use in commerce." If an applicant files based on a bona fide intention to use in commerce, the applicant will have to use the mark in commerce and submit an allegation of use to the PTO before the PTO will register the mark
Conflicting marks; avoiding infringement
To determine whether there is a conflict between two marks, the PTO determines whether there would be likelihood of confusion, that is, whether relevant consumers would be likely to associate the goods or services of one party with those of the other party as a result of the use of the marks at issue by both parties. The principal factors to be considered in reaching this decision are the similarity of the marks and the commercial relationship between the goods and services identified by the marks. To find a conflict, the marks need not be identical, and the goods and services do not have to be the same.
The PTO does not conduct searches for the public to determine if a conflicting mark is registered, or is the subject of a pending application, except as noted above when acting on an application. However, there are a variety of ways to get this same type of information. First, by performing a search in the PTO public search library. Second, by visiting a patent and trademark depository library. These libraries have CD-ROMS containing the trademark database of registered and pending marks. Finally, either a private trademark search company, or an attorney who deals with trademark law, can provide trademark registration information.
The first step in avoiding trademark infringement is to stay clear of the marks of well-known parties and potential competitors. Evidence of an attempt to trade on another's goodwill will generate a presumption that the junior user has in fact accomplished what it set out to do. Next, it is necessary to search for unknown parties who may be using a proposed mark. At a minimum, one must avoid adopting the mark of a federal registrant. Even though the registrant may not be in the local market, its right to enter seems clear. Also, it is good to search beyond federal and state registers. Failure to do so can result in being excluded from any geographical or product market where others have established rights. Marks as property
Trademarks have no value except as part of a business and as they serve some function with regard to indicating source or sponsorship. Subject to those limitations, trademarks and registrations can be assigned and trademarks can be licensed. A business may be sold without conveying goodwill or assigning marks, but marks cannot be assigned (or probably retained) without the business. Trademarks can be licensed with fewer restrictions, and an enormous franchising industry has grown up around this proposition. In such circumstances, the owner must police the products or services for which the mark is licensed or risk loss of the mark.
While IP licenses may often be no more than a promise not to sue, they cannot be so regarded in the trademark area. Failing to police licensees' use of marks is likely to work a fraud on the public and could be the basis for denying relief. However, trademark law is much stricter: Failure to police the use of one's marks may result in forfeiture of rights in them even without consumer harm. The result may be less harsh if independent parties cross-license to settle an infringement dispute, but, even there, disputants should consider the broad implications of their agreement. For example, both marks will be weaker, and it will be easier for third parties to adopt more similar marks for more similar goods than would otherwise be possible.
Therefore to maintain the property value of the mark you have to preserve the mark’s ability to identify the origin of products or services, and minimize the likelihood that a mark will become generic or be abandoned, unintentionally by its rightful owner.
Enforcement and defenses
Despite federal registration, diversity or amount in controversy, or actual competition, trademark actions can be brought in federal courts. Infringement occurs when a mark is applied to goods when another has a pre-existing right to use the same or a similar mark and when the concurrent use is likely to cause confusion as to source or sponsorship.
Remedies available for trademark infringement include (1) injunctive relief, (2) damages, (3) profits, (4) costs and attorneys' fees, and (5) seizure and destruction of infringing articles. Defenses include invalidity, non-infringement and general defenses such as unclean hands. A defendant can assert general invalidity, i.e., that the mark has been abandoned or has become the common name for goods or services in question. Also, a defendant can assert invalidity in a particular market, e.g., by virtue of prior use. Non-infringement can be established, e.g., by rebutting the plaintiff's showing of likelihood of confusion. Finally, defendants in trademark infringement often have enormous opportunities to avoid or narrow injunctive relief in light of their right by accurately describing themselves, and using their specific geographic location or their product description to differentiate from their competitor.
Copyright 2001 by Yitzhak Rosenbaum
Published by Israel's Business Arena on February 15, 2001