Is Your Brand Protected?
November 2009
One of a company's most
valuable assets is its brand. In the customers' minds, the brand
and the company become indistinguishable, i.e., the brand is the
company (think Nike, Coca-Cola, iPod).
by
Sanford E. Warren Jr.
Akin
Gump Strauss Hauer & Feld LLP
A company's brand signifies the quality of goods or services
it offers. Anything showing a company's brand carries with it
the company's reputation. The connection between a company's
brand and reputation makes the need to protect its brand
critical. One important step in protecting a company's brand is
to trademark it. But registering the trademark is only one
necessary step in protecting a company's brand. A company must
also maintain and protect its trademark.
Search before You Start
Before your company begins selling a product with a new
trademark, it should conduct a thorough search to make sure the
new mark will not infringe on an existing mark. The test for
whether a proposed mark infringes is not whether an exact match
for the proposed mark already exists, but whether the proposed
mark will create a likelihood of confusion with an existing
mark. A likelihood of confusion exists when the relevant public
is likely to confuse or mistake the source of the goods or
services offered. If your desired mark is similar enough to an
existing mark that it would likely confuse a consumer as to the
source of the product, your proposed mark probably creates a
likelihood of confusion.
The best place to start the new trademark search is the U.S.
Patent & Trade Office's (USPTO) trademark database. All
federally registered marks are located in the USPTO's trademark
database. A search of the USPTO's trademark database will reveal
whether any federal trademarks exist which would create a
likelihood of confusion.
Searching only the USPTO's trademark database, however, is
not a complete trademark search. While the database contains all
federally registered trademarks, not all trademarks are
federally registered. The U.S. trademark system is a
first-to-use, rather than a first-to-file system. In a
first-to-use system the first to use the mark in commerce has
the right to use that mark. As a result, an individual may have
the right to use a mark in commerce, despite never registering
the mark with the USPTO. In such situations, a search of the
USPTO's trademark database alone will not reveal the preexisting
mark. Accordingly, a thorough search should include more sources
than just the USPTO's trademark database. Specifically the
sources in a thorough search might include sources like state
trademark databases, phone directories, and industrial
directories.1 While no amount of
searching can guarantee a mark is not already in use, thorough
searching reduces the likelihood that you will be surprised by a
preexisting mark down the road.
Why a Federally Registered Trademark Is Preferable to a
Common Law Trademark
Federal registration is not necessary for trademark
protection. As discussed above, being the first to use a mark in
commerce creates a trademark under common law. Once the public
associates the mark with the particular goods or services it
represents, a common law trademark exists. While a common law
trademark ensures the owner will be able to use the mark with
the goods or services he provides, a common law trademark also
has significant limitations. The most significant limitation to
a common law trademark is the regional limitation for such a
mark.
Common law trademarks are only valid in the region in which
the mark is used. For instance, if Company A were to begin
selling computers in Texas using a then unregistered mark, "RED
TREE," the company would have a common law trademark for
computers sold under the "RED TREE" mark. But Company A's
trademark would only be valid in Texas. If Company B then
registered the "RED TREE" mark for computers with the USPTO,
Company B would have a valid trademark everywhere in the United
States, other than Texas, even though Company A was the first to
use the mark in connection with computers.
Federal registration provides far greater protection to the
owner than a common law trademark. Specifically, federally
registered trademarks provide the following benefits:
- No regional limitation
- Constructive notice nationwide of the trademark owner's
claim
- Evidence of ownership of the trademark
- Jurisdiction of federal courts may be invoked
- Registration can be used as a basis for obtaining
registration in foreign countries
- Registration may be filed with U.S. Customs Service to
prevent importation of infringing or counterfeit foreign
goods.
These benefits give the trademark owner much more power and
flexibility in how they choose to enforce their mark.
The Need to Maintain Your Mark
Federal registration is only one of the steps necessary for
protecting your company's trademark. Federally registered
trademarks require periodic maintenance to ensure the
registration accurately reflects how the mark is used in
commerce. When a mark is registered, the accompanying
registration contains a "Statement of Use." The Statement of Use
on a mark's registration indicates the particular goods or
services on which the mark is used.
Periodically, trademark owners validate the mark's use by
filing a "Declaration of Use." The Declaration of Use is filed
between the fifth and sixth year after registration and restates
the goods or services on which the mark is being used. If the
mark is no longer used on goods or services that are listed in
the Statement of Use, the owner should remove those goods or
services from the Declaration of Use.
Typically, trademark owners choose to file a Section 15
Declaration of Incontestability when they file their Section 8
Declaration of Use. Unlike a Declaration of Use, the Declaration
of Incontestability is optional. The Declaration of
Incontestability is desirable, however, because it limits the
grounds on which the mark can be canceled. But a Declaration of
Incontestability does not prevent a mark from being canceled due
to fraud in the procurement.
In 2003, the Trademark Trial and Appellate Board made it
clear that mistakes or errors in a Statement of Use could
constitute fraud in the procurement of the mark and thus be the
grounds for cancellation. See
Medinol Ltd. v. Neuro Vasx, Inc.,
67 U.S.P.Q.2d 1205, 1208 (T.T.A.B. 2003). In the cases that
followed Medinol, the Board made it clear that mistakes in the
Declarations of Use accompanying Section 8 and 15 filings also
constituted fraud. Jimlar Corp. v.
Montrexport S.P.A., Cancellation No. 92032471 (T.T.A.B.
2004).
The requirement for absolute accuracy in Statements of Use
can become an issue when a company changes the goods or services
it provides. If a company stops producing any of the goods or
services listed in the registration's Statement of Use and fails
to update the registration, the company may lose its mark for
fraud.
Recently, the Board indicated that a trademark owner could
avoid a finding of fraud for mistakes in a Statement of Use by
taking "timely proactive" measures.
Zanella Ltd. v. Nordstrom, Inc., 90 U.S.P.Q.2d 1758, 1761
(T.T.A.B. 2008). Specifically, the Board ruled that by amending
the registration "prior to any actual or threatened challenge to
the registration," the trademark owner could create a rebuttable
presumption that they did not intend to commit fraud.
Additionally, the Board has noted that if a trademark applicant
corrects an error in a trademark application prior to
publication, there is no fraud. Hurly
Int. LLC v. Volta, 82 U.S.P.Q.2d 1339 (T.T.A.B. 2007).
The recent rulings in Zanella
and Hurly make clear the Board's
stance on errors in a Statement of Use. If the applicant amends
the registration prior to publication, there is no fraud. If the
registrant amends the registration after publication, but before
the mark is challenged for fraud, there is a presumption against
fraud. Otherwise, if the Statement of Use is incorrect, the
Board will find fraud and cancel the mark.
Conclusion
A company's brand can be a valuable resource, but only if the
underlying trademark is properly protected and maintained. By
incorporating measures such as searching for similar marks
before using a new mark, registering their marks with the USPTO,
and periodically reviewing their marks to make sure the
registrations are accurate, companies can protect the value of
their trademarks and their brand.
Opinions expressed in Expert Commentary articles are those of the author and are
not necessarily held by the author's employer or IRMI. Expert Commentary articles
and other IRMI Online content do not purport to provide legal, accounting, or other
professional advice or opinion. If such advice is needed, consult with your attorney,
accountant, or other qualified adviser.