Articles

Review of Basic Principles of Trademark Law

By Baila Celedonia

Jul. 1, 1998

Definition of Trademark
Distinguishing Between Patents
Function of Trademarks
Types of Trademarks
Distinctiveness of Marks
Acquisition of Trademark Rights
Protection of Trademark Rights
New Federal Dilution Statute
Searching Marks
Proper Use of Trademark
Federal Registration of Marks
Recent Revisions to the Lanham Act
Trademark Assignments and Licensing
Global trademark issues
Related Claims

I. Definition of Trademark

A. A trademark is defined as "any word, name, symbol or device or any combination thereof, adopted and used by a manufacturer or merchant to identify its goods and distinguish them from those manufactured or sold by others." 15 U.S.C. § 1121

B. A service mark is a type of trademark, which identifies the source of services. (The term trademark will generally be used hereafter to mean either a trademark or a service mark.)

C. A trademark identifies the source or origin of goods or services, even though that source itself may not be known to the potential purchaser.

D. A trademark symbolizes goodwill by identifying a particular, if unknown, source to potential purchasers. By so doing, the trademark can also serve as a warranty of quality.

II. Distinguishing Between Patents, Copyrights, Trade Secrets, Trademarks and Trade Names

A. Exclusive rights in inventions (through patents) and writings (through copyright) are based on the Constitution, which specifically authorizes Congress to enact legislation to "promote the progress of science and the useful arts, by securing for limited times to authors and inventors, the exclusive rights to their respective writings and discoveries." U. S. Const. Art. I, § 8, cl. 8

B. In granting copyright protection, the term "writings" used in the Constitution has not been restricted to the written word but extends to artistic creations in many forms. These include music, advertising, labels and computer software.

1. For a work to be copyrightable, the only requirement is that it be original. "Original" simply means that the work was independently created.

2. To be copyrightable, a work also must be fixed in a tangible medium.

3. It is important to note that the constitutional grant allows protection only "for limited times." The policy behind limiting the time of protection is that society will be benefited by causing works eventually to enter the public domain, while, at the same time, the author is rewarded by having a monopoly for the limited time. The Copyright Law is set forth in 17 U.S.C. § 101 et seq.

C. In contrast to copyright, patents protect inventions of all kinds, including ornamental designs. The granting of a patent also secures a monopoly in the invention for a limited period of time. Again, the societal benefit is perceived as rewarding the inventor for the creation, but, at the same time, making the invention free for public use in the future. The Patent Law is set forth in 35 U.S.C. § 101 et seq.

D. The term "trade name" is defined under the Lanham Act as meaning "any name used by a person to identify his or her business or vocation." 15 U.S.C. § 1127. Thus, a trade name could be the name Proctor & Gamble which is the name of the entire business. That business could have many trademarks which are used to identify the source of the particular products of the company, such as IVORY soap, TIDE detergent, and CREST toothpaste.

E. In contrast to patents and copyrights, trademarks and trade names are creations of the common law and are established based on use. In addition to common law protection, trademarks and trade names can be protected through registration under state and federal laws. To the extent they are federally protected, that protection is based on the commerce clause of the Constitution. Protection of trademarks and trade names is not limited in duration, but continues as long as use of the name or mark continues.

F. It is possible for the same designation to be protected as a trademark and a trade name, or under copyright or patent law.

1. For example, "Ford" is part of the trade name of the Ford Motor Co., but FORD also serves as a trademark for the automobiles and trucks of that company.

2. As to copyrights and trademarks, character representations can be entitled to both trademark and copyright protection. For example, MICKEY MOUSE as a character has long been entitled to copyright protection, but also serves as a service mark for entertainment services and a trademark on watches and other merchandise. In this form, protection can be continued even after the copyright expires.

3. As to the overlap in possible protection between patents and trademarks, an example is a design of a bottle, which can be protected both under a design patent and, if well-known and not functional, as a trademark.

G. Trade secret law is also based on the common law. There is no federal trade secret protection. Protection is based solely on state law. Most states have adopted a version of the Uniform Trade Secrets Act.

1. "A trade secret is any information that can be used in the operation of a business or other enterprise and this is sufficiently valuable and secret to afford an actual or potential economic advantage over others." Restatement, Unfair Competition § 39.

2. Trade secrets can be as diverse as customer lists, formulas (such as the formula to make Coca Cola) and computer programs.

3. While a trade secret can endure for an unlimited period of time, it is lost when it ceases to be a secret.

4. Unlike patent law, trade secret law only protects against misappropriation. It offers no protection against independent discovery or reverse engineering.

III. Function of Trademarks

A. The primary function of a trademark is to identify the source of the goods or services being made available under that mark.

B. Consumers need not know the identity of that source, but must presume that all goods coming from that source have some desirable quality. ("Single albeit anonymous source.")

C. Trademarks also warrant that the goods coming from that source are of consistent quality.

D. By identifying a single source, a trademark also helps a merchant to advertise and sell the goods as a merchandising shortcut.

IV. Types of Trademarks

A. As noted in the Lanham Act, a trademark can consist of "any word, name, symbol, or device, or any combination thereof . . . ." The breadth of this definition means that almost anything can be a trademark if it serves to identify source.

B. Words are probably the principal form of trademarks.

1. Examples of words which serve as trademarks: KODAK cameras, APPLE computers, IVORY soap, and KOOL cigarettes.

2. Another form of words which can serve as trademarks are slogans. Although often developed primarily for use in advertising, slogans also identify the source and often appear on the products. Examples of such slogans include: THE RIGHT CHOICE, used by AT&T; and DON'T LEAVE HOME WITHOUT IT, used by American Express.

C. Names

Surnames can serve as both trade names and trademarks. Examples of this type of name include, FORD, McDONALD'S and PILLSBURY. First names, such as JOAN & DAVID for women's shoes and full names, such as JOHN HANCOCK for insurance services, can also function as marks (and as trade names).

D. Symbols

1. Symbols consist of letters (such as AT&T or GE), numbers (such as "7-

ELEVEN"), or combinations (such as V8).

2. Symbols also include label designs, characters (such as MICKEY MOUSE or MR. CLEAN), or any other symbol a company creates to use in connection with its products (such as logos).

E. Devices

The term "device" can be used to pick up almost any other possibility of identification which can serve as a trademark. This includes the shape of the container (such as a COCA COLA bottle), or the color of a product (such as the color pink which was recognized as a trademark for Owens Corning Fiberglas insulation).

F. Trade Dress

1. The term "trade dress" is most frequently used to describe the packaging for goods. In connection with services, it can include the decor of a restaurant or the color and shape of a building.

2. The particular configuration of goods, in certain circumstances, may also be protectible trade dress. An example is the distinctive configuration of LE SPORTSAC luggage.

3. In certain circumstances, where elements of trade dress function as trade-marks by identifying and distinguishing a product or service, these elements may be protected through registration under the federal Lanham Act. Examples of such trademarks include the shape of the FOTOMAT kiosk and the McDONALD'S golden arches.

V. Spectrum of Distinctiveness of Marks

The distinctiveness of marks is determined by placing them on a continuum which extends from coined or arbitrary marks at the high end, through suggestive marks, merely descriptive marks, and generic terms. At the high end, the marks are considered the most distinctive and, consequently, entitled to the strongest protection, while at the low end, the marks may be entitled to no protection. Placement of the marks on this continuum is not an exact science. Distinguishing between these categories is difficult, at best.

A. Coined or fanciful marks consist of terms which otherwise have no meaning. They have generally been created solely for the purpose of functioning as trademarks for the companies creating them. Examples of such marks include KODAK and EXXON.

1. Fanciful marks are necessarily distinctive, since the mark, as originally created, does not have any relationship to the product.

2. Fanciful marks, however, do run the risk of becoming generic if they become too strongly identified with the product. An example of a once fanciful mark which became generic is THERMOS.

B. Arbitrary marks are recognizable words, symbols, devices or trade dress which have no meaning with respect to the particular products or services with which they are used.

1. Examples of arbitrary marks include PLEDGE furniture polish, TIDE detergent, and CREST toothpaste.

2. Arbitrary marks are strong because the marks are inherently distinctive with respect to the products or services with which they have been used.

C. Suggestive marks are marks which suggest a quality or characteristic of a product, but do not describe it. Suggestive marks are considered inherently distinctive and subject to protection as soon as used, but are less distinctive than coined or arbitrary marks.

1. Examples of suggestive marks include FRESHIE for a soft drink, with the mark suggesting that the product is fresh, or MORNING FRESH for an aerosol room freshener, in which MORNING FRESH suggests the nature of the scent, but does not describe it.

2. Laudatory marks are those which contain an expression about the quality of the product. Laudatory marks can be either suggestive or descriptive, depending upon the mark and situation. For example, PLUS is laudatory of vitamins and natural food products and thus entitled to some protection, but PREFERRED was found merely descriptive of bird and squirrel repellant.

D. Merely descriptive marks are those which describe a quality or characteristic of the goods or services on which the mark is used. The quality or characteristic can be the purpose of the goods, the size of the goods, the class of users, or a desirable characteristic of the goods.

1. Examples include the mark DYANSHINE, for a shoe polish which dyes and shines; HOMEMAKER for home care services.

2. As previously noted, laudatory terms can be either descriptive or suggestive.

3. Geographic terms are considered merely descriptive if the goods on which they are used are associated with a particular locality. For example, MANHATTAN shirts are merely descriptive of shirts from New York City. The policy is that others in the same locality should be free to use that name to designate that their products are from the locality.

4. Surnames used as trademarks are also considered merely descriptive, since others with the same surname should be free to use their name. An example of a surname used as a trademark is JERGENS lotion.

5. Combinations of ordinary and/or functional elements in trade dress are considered merely descriptive.

E. Although merely descriptive marks, unlike coined or arbitrary marks and suggestive marks, are not protected as soon as they are used, they are protected if they acquire distinctiveness. A synonym often used for distinctiveness in this context is the term "secondary meaning".

1. "Secondary meaning" simply means that the mark has come to have a meaning beyond its original merely descriptive meaning and is now associated with a particular source by purchasers and potential purchasers.

2. Secondary meaning can be demonstrated by long and exclusive use of the mark, extensive sales under the mark, and extensive advertising under the mark.

3. When secondary meaning is obtained, the mark may even be entitled to strong protection, depending upon the degree of distinctiveness that has been attained. MCDONALD'S would now be a strong mark in the fast food field.

F. The most difficult distinction to draw on the continuum of distinctiveness is that between descriptiveness and suggestiveness.

1. One test simply asks whether some degree of imagination is required to associate the nature of the goods with the mark, or whether the association is immediate. If some imagination is required, the mark is considered suggestive, but if imagination is not needed, the mark is descriptive.

2. A second test is whether the mark is needed by others to describe similar goods. If so, the mark is descriptive; if not, it is considered suggestive.

G. A generic term designates the "genus" of the product -- what the product is. For example, KLEENEX is the coined term trademark and "tissues" is the generic term for the product.

1. Generic terms must be free for all to use and cannot acquire trademark significance. For example, even if there were only one baker of bread in the United States and everybody associated bread with that baker, the word "bread" could not become a trademark for bread since a subsequent merchant might wish to make bread and should be able to identify the product.

2. The test for determining whether a term is generic is whether that term denominates the "genus" of the product. Both dictionary terms and terms which were previously trademarks can be generic. Even if the public were to associate a term with only one manufacturer, as in the example of there being a single baker of bread, that association would not remove the term from the generic category.

3. Terms which were trademarks can become generic if they are used by the public to designate the genus of the products.

a. This misuse by the public is often brought about by misuse of the term by the manufacturer so that the mark is recognized in a generic sense.

b. Examples of terms which were trademarks and have become generic include "aspirin," "cellophane," and "thermos." An example of a term which is generic, and became associated with a single manufacturer, but remained generic would be "lite beer."

4. The danger of a mark becoming generic is the reason for advertisements by the owners of such trademarks as TEFLON and XEROX. These owners are always careful to supply a generic term in connection with the trademark and be certain that the term is used as a trademark. In addition, the advertising is designed to educate the public to the fact that these are trademarks, not generic terms.

VI. Acquisition of Trademark Rights

A. Trademark rights arise from use of the mark on the goods or in connection with the offering of services.

1. Mere selection is not enough.

2. In the past, a small or token use of a mark had been sufficient to establish rights in that mark, provided the token use was accompanied by activities evidencing an intent to continue use on a commercial scale. Now, use must be in the ordinary course of trade and not made merely to reserve a right in a mark.

B. Even if the mark is not used on a product, if there is sufficient use of a mark in advertising or promotion of a product, that can be sufficient to establish prior rights in the mark.

C. Federal registration of a mark provides procedural rights in the mark, including access to the federal courts and presumptions of validity, ownership and registrant's exclusive right to use the registered mark. 15 U.S.C. § 1115

D. Under the Trademark Revision Act, rights can be acquired simply based on a bona fide intent to use the mark. However, a registration will not issue until the mark has actually been used.

VII. Protection of Trademark Rights -- Trademark Infringement -- Likelihood of Confusion

A. Generally, the protection of a trademark is limited to actions against other trademarks which are likely to cause confusion.

B. Actionable confusion includes likelihood of confusion as to the source, sponsorship, or approval of the products. Thus, if the defendant's product is likely to be thought to have come from the same company as the plaintiff's product, or to be sponsored, licensed or approved by the plaintiff, that constitutes likelihood of confusion.

C. Likelihood of confusion is determined by considering various factors. These include:

1. strength or weaknesses of the plaintiff's mark;

2. similarity of the marks as displayed on the goods, or in connection with the services;

3. similarity of the products or services;

4. likelihood that the prior owner will bridge the gap between their respective products or services;

5. presence or absence of actual confusion;

6. the defendant's good faith in adopting the mark;

7. the quality of the defendant's products or services;

8. the sophistication of the potential purchasers;

9. the channels of trade for the products or services;

10. the similarity of the advertising media for the products or services.

D. No one of these factors is determinative and the weight given to each may vary depending upon the case.

VIII. New Federal Dilution Statute

A. Effective January 16, 1996, a new provision was added to the Lanham Act, § 43 (c)(1), which protects "famous" marks from dilution. It provides:

The owner of a famous mark shall be entitled, subject to the principles of equity and upon such terms as the court deems reasonable, to an injunction against another person's commercial use in commerce of a mark or trade name, if such use begins after the mark has become famous and causes dilution of the distinctive quality of the mark, and to obtain such other relief as is provided in this subsection.

B. In essence, the dilution statute provides the owner of a "famous" mark with the right to enjoin the use of a similar mark, when that use would "dilute" or lessen the ability of the famous mark to distinguish the owner's goods or services.

1. Under the definition of "dilution" which has been added to § 45 of the Lanham Act, there need not be any competition between the goods of the two parties.

2. There also need be no likelihood of consumer confusion.

C. To qualify for relief, the owner of a mark must prove that its mark is "famous". The non exclusive list of criteria which the court is to consider in determining whether a mark qualifies as famous are:

1. the degree of inherent or acquired distinctiveness of a mark

2. the duration and extent of use of the mark

3. the duration and extent of advertising and publicity

4. the geographical scope of the use

5. the channels of trade in which the mark is used

6. the degree of recognition of the mark in both the owner's channels of trade and the allegedly diluting user's channels of trade

7. the nature and extent of third party uses

8. whether the arguably famous mark is federally registered. Thus, federal registration of a mark is not a prerequisite to establishing that the mark is "famous."

D. Once a plaintiff can establish that it owns a "famous" mark, it is entitled to enjoin any use of a similar mark which results in the "lessening of the capacity of a famous mark to identify and distinguish goods or services." This lessening includes tarnishment, diminution, blurring and disparagement of the famous mark.

E. Monetary damages are also available, if the plaintiff can show that the defendant "willfully intended to trade on the owner's reputation or to cause dilution of the famous mark."

IX. Searching Marks

A. Before a mark can be cleared for adoption, use and federal registration, counsel should conduct a trademark search.

B. An initial search (for quick elimination of potential marks only) can be conducted first. Sources for this initial search include:

1. TrademarkScan (on-line search of Federal Register for relevant classes). On-line search of state registers is also available.

2. Relevant trade directories in client's industry.

3. In-house database of competitors, products and/or questioning of sales staff knowledgeable about products or services in field.

C. Full search from outside service (Thomson & Thomson, Trademark Research and Corsearch are the leading search companies).

1. Search must include federal and state registrations (even if you have done an on-line search first).

2. Search must include common law sources, since rights in trademarks in this country come from use, and not registration.

3. Search must include trade names.

4. Search must include internet domain names.

5. Search should not only cover classes in which product falls but natural extensions or related classes (e.g., a search for a mark for beer, Int'l Class 32, should also include a search of Int'l Class 33, which covers wines, spirits and liqueurs, and possibly various food classes).

D. Clearing a corporate name through the state is not clearance for trademark purposes. Such corporate name may still infringe another's trademark or service mark.

E. Criteria for evaluating a search report:

The question you are asking is whether your client's use of the mark is likely to cause confusion as to source or origin with any of the marks or trade names found in the report, see VII. A. above. Now, however, you must also be concerned about whether the mark you are searching is likely to cause dilution of a famous mark. Criteria to consider include:

1. Similarity in sight, sound and meaning.

2. Similarity in nature of the goods or services.

3. Strength of mark.

a. Fame of preexisting mark -- advertising, length of use, sales. (This is particularly important when evaluating potential dilution.)

b. Number and closeness of other similar marks appearing in search.

c. Descriptiveness of mark.

d. If client has been using the mark, length of time without actual confusion.

4. Similarity in channels of trade.

5. Sophistication of purchasers.

F. Investigating possible conflicting marks

1. On-line Dun & Bradstreet search of owner of mark to determine if still in business (and size and nature of business).

2. Telephone call to determine if still using mark and nature and extent of such use.

3. If the mark is still being used, it may be possible to purchase rights (often as agent for undisclosed principal).

4. Even if the mark is no longer being used, it may make sense to purchase prior "rights." Benefits include:

a. Less costly than filing a Petition to Cancel an existing registration which would block client's ability to register mark.

b. Establish earlier first use date by relating back to predeces sor's earlier use.

X. Proper Use of Trademark

A. Differentiate trademark from words around it -- use in all caps, bold, quote marks, italics or in some other special form.

B. Use as an adjective (i.e., modifying the generic term for the product) and not as a noun. wrong - buy KLEENEX when you shop next correct - buy KLEENEX tissues when you shop next

C. Use ® if registered and � if not registered.

D. Never use in possessive form. wrong - the I.B.M.'s best feature is correct - the best feature of the I.B.M. printer is

E. Never use in the plural form. wrong - John Jones only wears ROCKPORTs

correct - John Jones only wears ROCKPORT walking shoes.

F. Product may bear more than one trademark; e.g., NABISCO RITZ crackers

XI. Federal Registration of Marks

A. Applicable laws and regulations:

1. Registration is governed by the Lanham Act, 15 U.S.C. §§ 1051 - 1127.

2. The rules of practice before the Trademark Office are contained in The Trademark Rules of Practice, Chapter 1 of 37 C.F.R. and in the Trademark Rules of Examining Procedure (TMEP).

3. Changes in rules as well as marks "passed for publication" are printed in the Trademark Official Gazette.

B. Types of marks registered.

1. The Trademark Office will register trademarks, service marks, collective marks (indicates membership in an organization such as a fraternity) and certification marks (such as the UL mark).

2. Principal and Supplemental Register. The Trademark Office maintains two registers. The Principal Register is for marks which are or have become distinctive. The Supplemental Register is for marks which are merely descriptive.

C. Benefits of registration on the Principal Register

1. Nationwide constructive notice of registrant's claim of ownership and constructive date of first use to date of filing of application. 15 U.S.C. §§ 1057(b) and (c).

2. Prima facie evidence of validity of mark, ownership of mark. 15 U.S.C. §1115(a).

3. If the mark becomes "incontestible," registration is generally conclusive proof of registrant's ownership and exclusive right to use the mark, as well as the mark's distinctiveness. 15 U.S.C. §§ 1065 and 1115(b).

4. A Principal Register registration can be deposited with U.S. Customs in order to bar importation of goods bearing infringing mark. 15 U.S.C. § 1124.

XII. Recent Revisions to the Lanham Act -- Key Provisions

A. Trademark Revision Act.
Effective 11/16/89

1. For the first time an applicant can file a trademark application based on a bona fide intent to use a mark in U.S. Previously, applications could only be based on actual use of mark (or foreign application or registration).

a. The ITU provisions allow for reservation of a mark before commercial use is made.

b. A registration will only issue after actual use is made and an amendment to allege use is filed or a statement of use accepted.

c. Commercial use must be made within six months of receiving a Notice of Allowance or extensions (up to four additional six month periods) upon showing of good cause for extension and payment of fee.

d. Bona fides or good faith intention is not defined in the statute, nor has it been the subject of any litigation to date.

2. Constructive date of first use of mark is now filing date (not date of registration, as under old Act).

a. Since filing date for intent to use applications is the critical date - filing should be made as soon as possible.

b. Constructive date of first use can, therefore, be two or three years earlier than actual first use date (and will have priority over party who used mark earlier but filed later).

3. Registrations and renewals are now for 10 year terms, and not 20.

B. GATT -- Effective 1/1/96. Prohibits registration of certain geographically misdescriptive marks. 15 U.S.C § 2(a) and (e).

C. Federal Dilution Act. See section VIII above.

XIII. Trademark Assignments and Licensing

A. Assignment of trademarks in this country must also include an assignment of the "good will" in the trademark.

B. A trademark license must include the right of the licensor to exercise "quality control" over the licensee's products.

1. For trademark purposes, the licensor is considered the source of the product, and may be liable under strict liability theories for defects in the licensee's product.

2. Use by the licensee inures to the licensor's benefit, i.e., it is considered licensor's use for purposes of secondary meaning.

XIV. Global trademark issues

A. In most countries, trademark rights come from registration, and not use of the mark. Early registration is essential if your client is not to be foreclosed from using a mark abroad.

1. Registration can usually be obtained without use (and maintained without use, for various periods of time).

2. If sales abroad are contemplated in the future (either directly or through distributors or licensees), register well ahead.

B.Your client is probably already selling in Canada, and should be registered there.

C. For imported goods, registering a trademark in the country of manufacture may afford additional trademark protection, especially in those countries known for counterfeiting.

XV. Related Claims

A. Other causes of action related to trademark law may exist under state unfair competition and Section 43(a) of the Lanham Act, if the trademark or trade dress is protectible and likelihood of confusion is shown. These claims do not require that the trademark or trade dress be registered, and are particularly important in cases where protection is sought for the overall trade dress of a product or service.

B. Unauthorized use of a trademark or trade dress in connection with the sale, advertising, or promotion of goods and services may be actionable as unfair competition under the common law and statutes of the various states if likelihood of confusion is shown. Protectible trade dress may include the overall appearance of the pro-duct or service, including the packaging, labelling, size, shape, graphics, placement of text on the package, ornamentation, signage, decor, menus, etc.

C. Section 43(a) of the Lanham Act, 15 U.S.C. § 1125 (a), also provides a remedy against using any false designations of origin or any false or misleading description or representation, including words or other symbols, in connection with any goods or services sold or offered for sale in interstate commerce.

1. If an unregistered mark or trade dress used in interstate commerce is inherently distinctive or has acquired secondary meaning, Section 43(a) can be used to obtain federal court jurisdiction, where jurisdiction would not have otherwise been available. Section 43(a) has been used to provide relief in a broad spectrum of cases involving infringement of trade dress, including the overall look of restaurants and candy packages.

2. Section 43(a) has also been used to remedy false representations in advertising and promotion of goods and services which misrepresent the nature, characteristics, qualities, or geographic origin of goods or services, such as where a merchant uses in his advertisements depictions of his competitor's product, falsely claims that the products are equivalent, or misrepresents an association with another company.

D. Many states also have dilution statutes similar to the new Federal Dilution Act.

Based on materials prepared for the Practising Law Institute.

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