Expert Commentary

Is Your Brand Protected?

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).


Intellectual Property
November 2009

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 explained, 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.


1Indeed there are commercially available sources for conducting a search for most of the other common law databases.


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.

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