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4. TRADEMARKS



4.1 What Is a Trademark? What Is a Service Mark?
4.2 Why Are Trademarks Important?
4.3 What Does a Trademark Cover?
4.4 What a Trademark Does Not Cover
4.5 How Can Trademark Rights be Protected?
4.6 Trademarks and the Internet
4.7 Selection of a Good Trademark
4.8 Strengthening Trademark Rights
4.9 Summary

The public is trademark conscious. Trademarks influence our daily lives and symbolize our system of free and competitive enterprise. We encounter them not only in the marketplace, but also in our work, recreation, reading, business and financial transactions, on the high-ways, and in every mode of transportation.

Most businesses encounter significant trademark questions. The selection of a strong trademark or service mark is a decision that may be critical to your business.

4.1 what is a trademark? what is a service mark?^

The most familiar trademarks are words and symbols used in associa-tion with a company’s goods or services to distinguish those goods and services in the marketplace. It will be helpful to begin with a clarification of the term "trademark." Trademarks presently are defined under federal law as:

any word, name, symbol, or device or any combination thereof adopted and used by a manufacturer or merchant to identify and distinguish his 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.

Importantly, there is a distinction between a trademark and a trade name. A trade name commonly is a company name used to identify a business, a vocation, or occupation. GENERAL MOTORS is the world-known trade name for a corporation, General Motors Corpora-tion, which manufactures and sells products with trademarks such as CHEVROLET, CORVETTE, OLDSMOBILE, PONTIAC, and GMC. CHEVROLET is a trademark that is applied to particular goods (automobiles) which are sold by General Motors Corporation. If a trade name is used in conjunction with goods or services, it may also be a trademark or service mark.

The present definition of a service mark under federal law is: a mark used in the sale or advertising of services to identify and distinguish the services of one person, including a unique service, from the services of others and to indicate the source of the services, even if that source is unknown.

A service mark is generally no different from a trademark, except that it is associated with services rather than goods. Service marks such as HERTZ, HOLIDAY INN, McDONALD’S, and TWA illustrate the extent to which service marks are used in the mainstream of commerce.

For convenience, throughout this handbook the word "trademark" will be used in its broad sense to embrace both trademarks and service marks.

4.2 why are trademarks important?^

Trademarks serve as the commercial identifiers symbolizing the goodwill developed in the goods or services of the business. A good trademark can have significant value to a company on the balance sheet as well as enhance a company’s reputation and recognition in the marketplace. Additionally, trademark rights may be enforced against a party who later adopts and uses a mark that when considered in con-nection with the goods or services offered is likely to cause confusion, or to cause mistake, or to deceive.

Not all words, names, symbols, or devices may be recognized as trademarks. To be a trademark, the word, name, symbol, or device must be used to identify the goods or services with which it is used and also distinguish those goods or services from those of others. If a mark distinguishes the origin of the goods or services with which it is used from the origin of other goods or services of the same kind, then it is "distinctive." A mark may be distinctive when used in connection with one product (RED ROSE on tea) and not distinctive when used on another (RED ROSE on a rose bush).

A mark may lose its distinctiveness when it becomes the common or generic term for the goods or services. A trademark, even though distinctive in its initial use, may no longer be protected as a trademark after it acquires generic character. Many famous trademarks have lost their distinctiveness, including ASPIRIN, THERMOS, SHREDDED WHEAT, ESCALATOR, CELLOPHANE, NYLON, and many oth-ers. The owners of the trademarks XEROX, FORMICA, BAND-AID, and KLEENEX, are working very hard to avoid loss of distinctiveness.

4.3 what does a trademark cover?^

Trademarks symbolize the goodwill and reputation of the owner of the mark. Rights under a trademark protect that goodwill and reputation against others using a mark that is likely to cause public confusion regarding the goods or services offered in connection with the mark. Trademark rights are potentially perpetual because they exist for so long as and to the extent the mark is used and trademark registrations can be renewed. Almost anything that is capable of distinguishing goods or services from the goods or services of others can serve as a trademark if it is used prominently as an identifier.

4.4 what a trademark does not cover^

Trademarks do not protect the underlying technology of the goods or services bearing the mark. For example, an unpatented tennis racquet bearing a trademark may be copied exactly by a competitor so long as the competitor does not use a confusingly similar mark on the racquet. Trademarks also do not cover generic or commonly descriptive terms. Trademarks are identifiers, therefore, trademarks should not be used as nouns or verbs.

4.5 how can trademark rights be protected?^

The most common way to protect ones trademark rights is to obtain a state or federal registration. However, even unregistered trademarks are entitled to common law protection.

Common law trademark rights are acquired through usage and are defined by the geographical area of use and the goods or services with which the trademark is used. Under common law principles, trade-mark protection normally extends only to the specific areas of actual usage of the mark.

Most states have trademark registration statutes which may offer statewide protection. Usually, the filing procedures are simple and inexpensive. Because the extent of review of the state trademark application is frequently merely checking the application for form and a quick computer data base search, marks that would not ordinarily pass federal registration standards may acquire state registration. Since rights in a trademark flow from its adoption and usage, a state registra-tion usually provides little or no substantive rights to an owner that were not already possessed under common law principles. However, a state registration may provide evidentiary presumptions that can assist enforcement of the mark through litigation.

Federal registration of a qualifying mark, on the other hand, can provide the trademark owner with significant benefits. For example,

federal registration gives rise to a cause of action in the federal courts for trademark infringement and also access to procedures for stopping importation of goods bearing infringing marks. Perhaps the most valuable benefit of a federal registration is that it affords nationwide constructive notice of the owner’s claim for the exclusive use of the registered mark in connection with its goods or services. Additionally, after a registration has been in effect for five years, the trademark registration may become "incontestable" (i.e., subject to cancellation only upon very limited grounds).

As recently as November 16, 1989, the United States implemented a dual system for trademark registration under which applications for registration may be filed on the basis of use or intent-to-use. Imple-mentation of an intent-to-use system signaled a drastic departure from the traditional trademark law in the United States. Although other countries have had intent-to-use systems, the United States stubbornly held onto its usage-based trademark system until 1989.

Both intent-to-use and use applications undergo a comprehensive examination in the Patent and Trademark Office. If the trademark examiner, after a search, determines that the mark is distinctive and suitable for registration, the mark is passed through for publication. The mark is then published for the purpose of opposition, allowing members of the public to oppose the mark’s registration if registration would cause injury. If no opposition is lodged, a use application will register while an intent-to-use application receives a notice of allowance. Although allowed, the mark in an intent-to-use application will not register and the applicant will not receive a Certificate of Registration until the applicant has established actual use of the mark in commerce.

One of the most significant aspects of the intent-to-use system is that filing of an application constitutes constructive use of the mark for the goods or services identified in the application. The constructive use afforded by statute has some limitations and is contingent on the mark being registered and fixes the registrant’s nationwide priority rights in the mark from the date on which the application was filed.

Trademarks may also be registered in foreign countries. Priority in most countries is based on who was first to file, not on who first used the trademark. Foreign trademark laws also differ from United States law in other important ways, including the marks that may be registered, the procedures and grounds for challenging an application or a registration, and the term of protection.

Another way that certain trademark owners can protect their marks is through the Federal Anti-Dilution Act. This act protects against the dilution of a trademark through inappropriate use by others, even without a likelihood of confusion. The 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 competition between the owner of the famous mark and other parties, or likelihood of confusion, mistake, or deception."

Dilution occurs primarily in two recognized ways: blurring and tarnishment. Blurring is the whittling away of the distinctiveness of a mark by the unauthorized use of the mark on dissimilar products. Tarnishment is an unauthorized use of a mark which links the mark to products or services that are of poor quality or which are portrayed in an unwholesome or unsavory context that is likely to reflect adversely upon the trademark owner’s product.

The Anti-Dilution Act protects marks that are famous. the factors used to determine whether a mark is famous include:

• the degree of inherent or acquired distinctiveness of the mark

• the duration and extent of use of the mark

• the duration and extent of advertising and publicity

• the geographical extent of the trading area in which the mark is used

• the channels of trade

• the degree of recognition of the mark in the trading areas and chan-nels of trade used by the mark’s owner and the person against whom the injunction is sought

• the nature and extent of use of the same or similar marks by third parties

• whether the owner of the mark has a valid federal registration

Many states have also passed state anti-dilution laws which in most cases parallel the federal law.

State trademark registration, federal trademark registration, foreign trademark registration, trade name registration, and Internet domain name registration are related in various ways. But in general, one form of registration is not a substitute for another. Businesses should consult with competent legal counsel to determine which registrations are most advantageous given their goals and other circumstances.

4.6 trademarks and the internet^

With the rise of Internet usage and e-commerce, the protection of trademarks in cyberspace has become increasingly important. As Internet traffic and communication, and thus e-commerce, is directed through the use of domain names, many individuals and corporations have profited from registering popular trademarks as domain names. Unfortunately, not all of the people registering trademarks as domain names are the owners of the trademarks. Some of the domain name owners appear to have registered with the intent of selling the domain name to the trademark owner at inflated prices, others register the domain name for competition within the same market, while still others register domain names similar to popular trademarks hoping to divert traffic from the true owners (two recent examples include Gateway20000.com similar to Gateway 2000 computers and Porsch.com similar to Porsche automobiles). Regardless of the motive, many trademark owners have had to deal with these domain name owners that are commonly known as "cybersquatters." Historically, the courts seemed uncertain in their handling of this new area of trademark law and many trademarks owners paid large amounts of money to domain name owners to buy the infringing domain name. In 1999 however, the Anticybersquatting Consumer Protection Act (ACPA) was signed into law. This law was designed to provide greater protection to trademark owners on the Internet.

The ACPA provides for a new civil action against persons that register or use a domain name that is identical or confusingly similar to a trademark that is distinctive at the time of registration of the domain name; or that is identical, confusingly similar to or dilutive of a famous mark at the time of registration of the domain name; or that consists of or is substantially and confusingly similar to the name of another living person without that persons consent. To protect innocent domain name registrants, the Act also requires a plaintiff under this act to show that the domain name registration was done in "bad faith." The Act sets forth various factors for the courts to consider in determining the intent of the domain name owner.

One of the most important parts of the ACPA is its provision for civil actions against the domain name itself, rather than the domain name owner, in what is called an in rem proceeding. It was a common practice of "bad faith" domain name registrants to provide false information to the domain name registrar so that they could not be found. This made it nearly impossible for trademark owners to initiate the civil action because they could not properly identify nor locate the defendant. Under the ACPA, trademark owners can now proceed in rem against the domain name after they have completed certain required steps to attempt to locate the domain name owner. Thus, the ACPA not only provides for a civil action but it also ensures that the trademark owner will be able to protect his rights, either against the "bad faith" registrant or against the domain name that was registered.

The remedies available under this new law are similar to those traditionally available under trademark law, such as injunctive relief and monetary relief for any actual damage that was caused. The ACPA also allows the trademark owner to opt for statutory monetary damages providing him with remedies between $1,000 and $100,000 per domain name. In addition, the ACPA authorizes the courts to order the domain name owner to transfer the ownership of the domain. Thus, the trademark owner in a successful civil action under the ACPA could receive control of infringing domain names and sizable monetary awards.

The Anticybersquatting Consumer Protection Act obviously provides many reasons to discourage potential future cybersquatters. It also provides many reasons for businesses to ensure that they are protecting their trademarks.

4.7 selection of a good trademark^

Contrary to popular belief, a word or combination of words need not be invented or coined to be a good trademark, and in fact, most marks are not invented or coined. However, a good mark must be capable of differentiating the goods or services from those of others. Words that are either the generic term or a term that describes the nature or charac-teristics of the goods or services are not good choices as marks, because they may either be incapable of or have difficulty in distinguishing the goods or services from those of others. Although marks that are somewhat non-distinctive may become eligible for trademark protec-tion through secondary meaning, establishing secondary meaning in a mark requires prolonged, exclusive use of the mark. A mark that has acquired secondary meaning serves to indicate the origin of the goods upon which it appears, rather than simply referring to the article itself.

Many times in selection of a trademark, the owner falls prey to a desire to adopt a catchy name or phrase or use terms that will tell the public just what type of business, goods, or services the owner is offering. Although such a selection may please the marketing department because it makes their advertising job easier, the adoption of a weak or unprotectable mark is usually ill-advised. Consequently, it is extremely important to select a mark that can develop into a strong mark around which a business can build a solid foundation.

Another consideration when selecting the name of a trademark is its availability as a domain name. Domain names are merely Internet addresses. Minor modifications to a domain name may allow a second domain name to be registered despite a very similar first domain name. Domain names are not analyzed for confusing similarity, which is the test for who may or may not use a trademark. If you are planning to do business, or simply advertise, over the Internet, it is a good idea to check the domain name that matches your trademark for availability. It is also a good idea to check domain names that are close, but not identical to you trademark.

4.8 strengthening trademark rights^

MINIMAL APPROACH^

• A trademark should always be fully capitalized when referenced in text. For instance, write "JELLO" rather than "Jello" or "jello."

• Do not use the trademark as a noun. Instead use the trademarks as a proper adjective in connection with a generic term for the product. For instance, write "this JELLO gelatin is cherry flavored" rather than "this Jello is cherry flavored."

• Do not use the trademark as a verb. For instance, write "please make a XEROX copy of this paper" rather than "please xerox this paper."

• Do not abbreviate or alter the trademark.

• If the trademark is federally registered, indicate such with the (r) (Circle R) symbol near the first use of the mark. Otherwise (includ-ing state registrations), place a _ near (either superscript or subscript) trademarks for products and an SM near service marks for services.

• A notice credit should be placed to provide legal notice of the owner-ship of the mark. Such notice credit may be placed in fine print at the bottom of the page containing the mark, or another readily visible location. The notice may take several forms, such as "CHEVROLET is a trademark of General Motors" or "CHEVROLET is a registered trademark General Motors" as appropriate.

• As soon as a mark is selected, it is advisable to have a trademark search conducted. A search can be invaluable in avoiding possible future conflicts with the same or similar mark being used by someone else. Also, the problems that can occur for a new business as a result of adopting a mark that cannot be enforced or that must be changed at the insistence of an earlier user can be devastating.

MODEST APPROACH^

• Adhere to the precautions and advice listed under the Minimal Approach above.

• As soon as a mark is selected and searched, file an intent-to-use application for federal registration of the mark if the mark will not be used immediately.

• If a mark is already in use or soon will be used, file an application for federal registration.

• If a mark will be used as an Internet domain name, file an application for InterNIC registration.

• Prepare and implement a written policy for maintaining quality control of the use of your marks.

• Consider and begin developing a portfolio of marks that carry a con-sistent theme. A classic example of a family of marks is McDonald’s "Mc" family which includes "McDLT," "McNuggets," "McMuffin," and "McKids."

• Consider foreign filing of marks likely to be used in foreign markets. Each country has its own trademark laws and registration schemes, but almost all foreign countries have a first-to-file priority. However, various treaties may permit a foreign applicant to use the filing date for the application filed in the United States if the foreign application is filed within six months of filing the domestic application.

• Consider filing for one or more domain names that incorporate your mark or similar marks.

AGGRESSIVE APPROACH^

• Adhere to the precautions and advice listed under the Modest Approach above.

• Adopt and implement a carefully planned foreign trademark policy.

• Conduct a regular trademark audit of your facilities to determine usage of marks and make certain that each mark is adequately being protected by appropriate registration.

• Adopt an enforcement program that is designed to develop a reputa-tion in the marketplace that you will vigorously enforce your marks. This enforcement program should include the transmittal of cease and desist letters to infringers and litigation if necessary.

• As part of your enforcement program, engage a watch service to monitor the publication of marks (all applications for federal registra-tion on the Principal Register are published for opposition) that you may wish to oppose because of the likelihood of confusion with one of your marks.

• Regularly check for confusingly similar or infringing uses of your marks on the Internet.

• When appropriate, adopt a formal licensing program for the use of your marks by others. This program should include comprehensive licensing agreements and active policing of the use of the marks.

• When appropriate, record federally registered trademarks with the United States Customs Service. This allows line officers at various ports to spot check incoming shipments for counterfeit or infringing goods which, if found, can be detained before entry into the United States.

4.9 summary^

Trademarks are one of the best ways to distinguish your company’s goods and services from those of your competitors. They are common-place in the lives of every American and can act as self-perpetuating advertisements. With these positive characteristics, it is easy to see the importance and value in developing and protecting your company’s trademarks. Though trademarks receive some protection from the

common law through usage, greater protection has been provided. The company with a good trademark can see that the value in registering a trademark is far greater than the cost of registration.