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Trademarks

What Are Trademarks?

We generally refer to trademarks as brand names. It is words or symbols that identify that a product or service is from a particular producer. Business names can also be used as a trademark.

Trademarks are 'intellectual property'. Intellectual property can be created, bought, and sold. There are 3 types of intellectual property: trademarks, patents, and copyrights.

For example, suppose you design a line of Christmas cross stitch kits and the colors used in the designs are all shades of orange. You create a business and name it "Knot To Be" and call the series of kits "Orange Christmas". Both "Knot To Be" and "Orange Christmas" are trademarks. The actual designs are protected by copyrights.

You can register a trademark in the United States with the U.S. Patent and Trademark Office, but it is not required. Most trademarks (especially for small businesses) are not registered.

Trademark Laws Protect Both The Consumer And The Producer

The law protects consumers by prohibiting actions that confuse or deceive the buyer. When a buyer sees the "Knot To Be" or "Orange Christmas" brand, they know that they are buying a product that your company produced. They have an expectation of the quality of the product.

The law protects the producer by prohibiting another company from profiting from your hard work. So another company could not produce a cross stitch kit and and call it "Orange Christmas" because it would confuse or deceive the buyer, and deprive you of potential sales.

How Much Confusion Is Allowed?

As you read more about trademarks and court rulings you will find that this idea of customer confusion and deception is at the heart of trademark law.

Could another company create a line of cross stitch kits and call it "Purple Christmas"? How about line of scented candles called "Orange Christmas". What about an "Orange Halloween" needlepoint series?

As you can see, there no clear cut line when trademark infringement occurs. Each has to be handled case by case. The main issue is "confusion". Ask yourself, "Is the buyer going to be confused or deceived."

Confusion Is Judged By Considering All Aspects Of The Case

When considering the issue of confusion, courts do not look just at the use of the words or symbols in the trademark. They looks at the entire presentation.

Are the packaging style, colors, and type fonts similar? If so, there is more chance of confusion.

Are the two businesses selling to the same customers? This could be geographic (down the street or across the country), or the market (you sell to needlework stores, they sell to hardware stores)

Is the trademark unique? Trademarks can be more or less divided into 5 categories:

Fanciful.   Words with no meaning before it became a trademark (Haagen-Dazs brand ice cream)

Arbitrary. Words with no relationship to the product (Apple brand computers)

Suggestive. Words that suggest the nature of the product (Ray-Ban brand sunglasses)

Descriptive. Words that describe a characteristic of the  product (Salty brand crackers)

Generic. Words that describe or name the product. While generic words can be used as a trademark, generic words can not be claimed as an exclusive trademark and can not be registered. For example, no one could claim exclusive use of "Cross Stitch Pattern" as a trademark.


The higher up on the list your trademark is, the more protection a trademark has.

Dilution

Another area of trademark law is dilution. This is the idea that you can cause harm by diluting (or reducing) the value of another's trademark even if the customer is not confused or deceived. Suppose your store has a brick wall beside it. You could not name your store WallMart. No one would be confused that your store is a Walmart store, but your use reduces the value of the Walmart trademark.

Use Of Another Company's Trademark

Companies use another company's trademark all the time. In many case it is welcomed or encouraged by the trademark's owner. Suppose your "Orange Christmas" cross stitch kits used special threads or fabrics. Those companies would be happy to have you mention their brand names as the source of the threads and fabrics. Just don't imply that those companies are the source of the kit. Again, keep in mind that idea of 'confusion'.

If you are retail store, companies are delighted to have you use their trademark when you advertise that you sell their products.

Fair Use

There are two specific and important cases where you are allowed to use a trademark even when the trademark owner does not want you to use it. The first is "fair use".

Fair use is written into federal law 15 USC § 1115(b)4:

...the right to use the registered mark...shall be subject to the following defenses or defects:

b(4) That the use of the name, term, or device charged to be an infringement is a use, otherwise than as a mark, of the party’s individual name in his own business, or of the individual name of anyone in privity with such party, or of a term or device which is descriptive of and used fairly and in good faith only to describe the goods or services of such party, or their geographic origin

Basically, this allows you to use another company's trademark ONLY in a descriptive manner, AND it does not cause an undo amount of confusion. Remember that trademarks can be divided into general categories (fanciful, arbitrary, suggestive, descriptive, and generic). Our example of Orange Christmas cross stitch kits would be a descriptive trademark (you are selling Christmas designs done in orange colors). You can use a descriptive term as a trademark, but you can not complain if another company describes their design as "a Christmas pattern stitched in shades of orange", or even "a wonderful shades of orange Christmas chart". However, they could not claim this defense if they used "Shades Of Orange Christmas" as a trademark. It is "fair use" only if the use is descriptive, and not as brand or trademark.

Yarn Tree has had this very issue come up. S C Johnson & Son, the owners of the Ziploc trademark, demanded that we stop using the descriptive term ziplock to describe recloseable bags that we sell. You can read more about this here Yarn Tree Designs, Inc vs. SC Johnson & Son Inc.

Nominative Use

The second situation where you can use another company's trademark without their consent is "nominative use" or "nominative fair use". Unlike the "fair use" defense talked about above, nominative use is not written into law. Rather it is a fairly recent invention of the courts (search for the 1992 case New Kids on the Block v. News America Publishing, Inc.).

Nominative use allows you to use another's trademark if all three conditions are met:

1  The product or service can not easily be identified without using the trademark.

2  You only use as much of the trademark as is necessary to identify what you are referring to.

3  You do not try to cause confusion or imply a relationship with the trademark's owner.

Basically, you are OK if you are telling the truth and not trying to confuse or deceive the buyer. Remember, the idea of confusion and deception is central to all trademark law.

Examples:

You want to put a page on your website explaining why your product is better than your competitor's product. You can mention the competitor's product by its trademark name if your claims are truthful and you satisfy the three points above.

You want to make and sell a needlework cell phone case. You could call your product "Cell Fone Paks" and say "our Cell Fone Pak will fit the Apple iPhone" The alternative would be to force companies to say something like "our Cell Fone Pak will fit the popular cell phone made by the company whose name is a fruit that starts with the letter A". However, nominative use would not apply if you named (trademarked) your product "iPhone Paks" because consumers may think that your product is made by Apple, or is endorsed by Apple.

Practical Advice

Obviously this page is not intended to serve as legal advice, but here are my personal recommendations.

  • If you are naming your business or product to take advantage an existing trademark, DO NOT DO IT. You are just asking for trouble.
  • Do a search before you start using a trademark. At the very least do a quick internet search. You can also search for registered trademarks at http://www.uspto.gov/trademarks, but remember that only a small percentage of trademarks are registered (especially for small companies). For business names, the secretary of state office in most states has a website that will let you do a free business names search (for that state only, and only for companies that have registered their names).
  • If there is a trademark dispute, try to resolve it yourselves. Maybe just changing the type font and package colors is enough to satisfy objections.

Don't Be Bullied

It is rare, but you could be accused of trademark infringement and you are convinced that you have done nothing wrong. There may even be the cease and desist letter from a lawyer threatening legal action and the implied threat that it will cost you thousands of dollars to fight. Now what do you do?

Suddenly, you flash back to grade school and the playground bully is demanding your lunch money. Do you go without lunch, or do you fight back? How sure are you that you are right? What is the cost to make the change demanded?

Personally, I don't like bullies. So when SC Johnson demanded that we stop using the descriptive term ziplock to describe reclosable bags, we filed a lawsuit in federal court. This case is still open, so I don't know yet how it will turn out. It would have taken less than 30 minutes to make the changes they demanded. Instead, I spent probably 50 hours researching and preparing the court filing.

If I lose the case I will need to spend the 30 minutes changing our web site. If I win the case, I might be able to recover my $400 court filing fee. So why bother? Like I said, "I don't like bullies."

 Here is more information if you are interested. Yarn Tree Designs, Inc vs. SC Johnson & Son Inc.

Do You Need A Lawyer?

Again, this page is not offering legal advice. And I am sure that there are decent, honest, qualified lawyers out there. (A lawyer joke here would just be too easy.) But do you really need to pay a lawyer? Remember, it takes only 3 years to become a lawyer, but it takes at least twice that to become a master plumber. In those three years a law student will study all areas of law, so the amount of time spent on any one area might only be a matter of a few days or a couple of weeks.

An increasing number of court cases are filed "pro se", Latin for "for himself". In other words, filed without a lawyer. I think the internet is one of the main forces behind this. You can find copies of case filings that are similar to your own case. You can read the actual laws and court rulings. It still takes a lot of time and effort, but with the internet you can do legal research that was unimaginable a few years ago.

 
Links

United State Patent and Trademark Office Basic information about trademarks.

U.S. federal law for trademark fair use 15 USC § 1115(b)4

US Supreme Court in KP Permanent Make-Up, Inc. v. Lasting Impression I, Inc., (2004) This ruling changed the way courts must look at confusion and fair use.

US Supreme Court in Already, LLC, dba Yums v. Nike, Inc.(2013) Ruling that a covenant not to sue mutes declaratory judgment case.

 

 

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