Month: May 2018

Trademarks containing a scandalous meaning are on the verge of being protectable by the federal government as registered trademarks. Section 2 a of the Lanham Act is under siege for a second time.

Section 2 a of the Trademark Act used to prohibit the registration as a trademark of any matter that:

“[c]onsists of or comprises immoral, deceptive, or scandalous matter; or matter which may disparage or falsely suggest a connection with persons, living or dead, institutions, beliefs, or national symbols, or bring them into contempt, or disrepute ***.”

Then, in 2016, the United States Supreme Court decided the In re Tam case holding that the disparagement provision violates the Free Speech Clause of the First Amendment. Accordingly, that a mark may “disparage . . . or bring . . . into contempt, or disrepute” is no longer a valid ground on which to refuse registration or cancel a registration.  The portions of Trademark Manual of Examining Procedure (TMEP) §1203 that relate specifically to examination under the disparagement provision no longer apply. After the In re Tam decision, what was left of Section 2 a was:

“consists of immoral, deceptive, or scandalous matter; or matter which may . . . falsely suggest a connection with persons, living or dead, institutions, beliefs, or national symbols ***.”

At the time of the In re Tam decision, the In re Brunetti case was pending, which concerned the constitutionality of the scandalous meaning aspect of Section 2 a. On December 15, 2017, the United States Court of Appeals for the Federal Circuit held in In re Brunetti that the scandalousness meaning provision of Section 2 a also violates the First Amendment of the Constitution because it impermissibly restricts free speech.

The Trademark Office has advised that it will continue to review applications for scandalousness until either the deadline to file a petition for writ of certiorari expires on July 11, 2018, the U.S. Supreme Court denies certiorari, or termination of the U.S. Supreme Court decision if certiorari is granted. In the meantime, applications refused on the ground of being scandalous will be suspended in the first office action.

What does this mean for trademark searchers? There may be a whole host of new trademarks you never thought you would need to pay attention to and now do. This probably will not happen on the Trademark Office database, but common law searching may become more challenging. It may become more challenging because you may have people unknowingly creating trademark rights in disparaging and scandalous meaning terms. You can certainly imagine a simple example of someone creating a line of t-shirts under a disparaging or scandalous meaning term not intending to create trademark rights but choosing the name solely for its shock value.

The similarity of the marks considers: visual similarity; phonetic similarity; and similar meanings. Maybe the meaning element is what will ultimately distinguish your client’s proposed mark from the other mark, but do you advise that the client invest in a brand knowing a potential issue with a disparaging or scandalous mark exists? A conflict may never come, but the person adopting a disparaging and scandalous mark is most likely an opportunist and may see his new trademark rights as an opportunity as well.

Reverse confusion and forward confusions are the two forms of confusion that consumers can succumb to. When we talk about the harm caused by confusion in the marketplace, we generally are referring to forward confusion. Forward confusion occurs when consumers mistake the junior user for the senior user and because of the confusion unjustly enrich the junior user at the cash register. Or if the confusion occurs outside of the checkout and the junior user offers a product or service that is inferior to the senior user, then the senior user can potentially lose sales over the mistaken connection.

If the senior user is a small company, forward confusion provides a scenario where a junior user could decide to intentionally infringe the senior user’s trademark. The incentive exists because the monetary damages in a forward confusion case are:  (1) the senior user’s actual damages caused by the infringement; or (2) disgorgement of the junior user’s profits. Actual damages are difficult and costly to prove, so most trademark infringement cases involve disgorgement of profits. But profits are awarded only in those geographic areas where confusion was possible; hence, the incentive to intentionally infringe.

A junior user in a forward confusion case to make the decision knowing that if it is forced to pay over its profits in say Minnesota – and even if this amount is trebled, which a court has the authority to do – it was a worthwhile business risk to intentionally infringe. And this may be something as searchers we identify to a client because we have more fully investigated a potentially concerning record in the search results and determined the particular trademark owner is unlikely to expand beyond its current geographic area. That is until reverse confusion came into play.

Reverse confusion occurs when the junior user saturates the market with its mark so that consumer mistake the senior user for the junior user. In this case, the harm to the senior user is the loss of its ability to control its reputation. The monetary remedy in these situations is corrective advertising. The theory for corrective advertising is that the senior user needs an amount of money equal to what was spent by the junior user to take back control of its reputation.

This does not mean that the senior user is entitled to the same amount of money spent on a national advertising campaign. Generally, the senior user is entitled to a percentage of the national advertising spend based on the number of states the senior user is operating in. But the amount of money for corrective advertising will most likely be larger than an actual damage or profits award.

As trademark searchers, we need to keep reverse confusion in mind along with our the company’s marketing plans. This will impact how company’s decide to address problematic marks.