American Airlines Sues Expedia Over ADD ON ADVANTAGE Mark

"Expedia sued by American Airlines over ADD ON ADVANTAGE mark"

The stereotypical trademark bullying case is the big company picking on the small company. But as we saw yesterday, a big company suing a smaller company for trademark infringement does not necessarily mean the big company is a bully. And what we will talk about today demonstrates that trademark bullying can occur between equally sized companies.

American Airlines sued Expedia for trademark infringement because of its ADD ON ADVANTAGE program. Expedia’s program allows users to add on a discounted hotel booking after using the site to book airfare or a rental car. It is descriptive of a feature of its program. American Airlines alleged that this mark is likely to cause confusion with its AADVANTAGE mark for its customer loyalty program.

ADVANTAGE is a highly diluted mark when used in connection with a customer loyalty program. Click HERE to see BOB search for the ADVANTAGE mark “customer loyalty programs” and HERE for “frequent flyer services.“ The TROP ADVANTAGE mark is in the same travel industry as the AADVANTAGE mark and so are several other ADVANTAGE marks. Yet, American Airlines is willing to co-exist with these other marks.

Trademark bullying occurs when one party attempts to assert rights in a trademark beyond what it is reasonably entitled to assert. When a trademark owner, regardless of its size, attempts to assert broader rights, the trademark bully label is appropriate. Unfortunately, the label is in name only given there is no legal consequence to being a trademark bully.

American Airlines attempts to justify its trademark infringement claim by characterizing Expedia’s service as a bundling program similar to what American Airline’s offers under its AADVANTAGE program. Although the law is unsettled, some Courts have held that harm is to be presumed when a likelihood of confusion finding is made. American Airlines should hope that Texas is one of those courts because it is highly unlikely that it will suffer any actual harm from Expedia’s use of the AD ON ADVANTAGE mark.

Hard Rock Should Not Have to Pay Startup Attorney Fees

"Startup RockStar Hotels advertisement asking for attorney fees"

Hard Rock Cafe Inc. does not think it’s fair to pay the attorney fees of a startup after suing the young company for trademark infringement. Hard Rock Cafe is a chain of theme restaurants founded in 1971 that has expanded to include casinos, hotels, a park, and sports stadium.

RockStar Hotels launched in January 2017, but includes a healthy portfolio of properties. The meaning behind the RockStar name is not to convey a party atmosphere, but that the guests will be treated like celebrities. This distinct difference in meaning resonated with the United States District Court for the Southern District of Florida and Hard Rock’s motion for a preliminary injunction was denied. Now, RockStar Hotels is asking the Court to order Hard Rock Cafe to pay $462,000 to reimbursement the startup for its attorney fees.

Under the Trademark Act, attorney fees are recoverable by a party when the case is exceptional. Whether a case is exceptional depends on the totality of the circumstances, which considers the respective merits of the parties’ case and the manner in which a case is litigated. Because the Trademark Act does not allow the prevailing party to recover its attorney fees, an exceptional case finding is the only way a party that is being bullied by a trademark owner can recover the costs to defend itself.

In response to RockStar Hotel’s attorney fees petition, Hard Rock argued that it did the right thing and dropped its lawsuit after the court denied its request for a preliminary injunction. We are guessing it was hard for Hard Rock’s attorneys to say that with a straight face. However, without knowing all the details, it is hard to say Hard Rock’s lawsuit was completely without merit. The Hard Rock mark is used on hotels and on restaurants, which are related to hotel services.

The better question that Hard Rock should have asked itself is whether RockStar Hotels will either take business away from them or will harm its reputation such that it loses business from the negative association. Obviously, the answer to these two questions was no otherwise it would not have dropped the lawsuit. Losing at the preliminary judgment stage does not mean you are prevented from ultimately winning at trial.

Just because a lawsuit is unwise does not mean the plaintiff is a bully just because it is bigger than the defendant. What is more suspect is startup RockStar Hotel’s attorney fees petition for $462,000 when the case is only at the preliminary judgment stage. By the time a preliminary judgment motion is filed, not much has happened in the case, and responding to a preliminary motion is not a hundreds of thousands of dollars event.

Reinforcement that Trademark Classes are Irrelevant

"woman putting postits on a wall showing that trademark classes are irrelevant"

The Trademark Trial and Appeal Board has said before that trademark classes are irrelevant to determining likelihood of confusion. A recent decision involving the SWISS certification mark reinforces this point. Pearl 9 Group, LLC filed a trademark application to register the mark I.W. SUISSE for “clocks and watches; parts for watches; watch bands and straps; ***; timepiece dial faces, and parts for timepieces ***” in International Class 14. The Trademark Office refused registration of Pearl 9’s mark on the ground that it was likely to cause confusion with the prior registered certification mark SWISS for “horological and chronometric instruments, namely, watches, clocks and their component parts and fittings thereof” in Class A.

The Board held that the classification as a certification mark has very little effect on our determination as to whether or not there is a likelihood of confusion. Because the certification mark owner does not itself use the mark, the question of whether there is a likelihood of confusion is based on a comparison of the mark as applied to the goods or services of the certification mark users.

Using trademark classes in a trademark search only helps to narrow the universe of marks that trademark searchers need to evaluate. From there, the trademark searcher is left to sift through the results using only intuition to determine whether anyone of those marks is likely to prevent the registration of the proposed mark being searched.

And any software program that includes only the similarity of the marks and irrelevant International Class numbers yet provides a “score” for the search results begs the question of what that score represents. If all the search is telling is that there are similar marks registered with the United States Patent and Trademark Office, that information is largely unhelpful and something you can discover by yourself and for free.

And over reliance on trademark classes will result in overlooked trademarks that may be consequential marks in the likelihood of confusion analysis. That may have been the case in the Pearl 9 case. Focusing solely on International Class 14 where jewelry and watches are classified, would have resulted in missing the SWISS certification mark in Class A.

Similar Trademarks Matter In The Dilution Analysis

"diamond ring in a silver setting demonstrates similar trademarks in dilution analysis"

The dilution analysis requires evaluating  search results for more than just trademarks sharing a similar element. It requires finding similar trademarks. This issue was on display in a recent Trademark Trial and Appeal Board decision.

Don Vintache Inc. filed a trademark application to register the mark DIAMONDS ON THE ROCKS (in standard characters) for “jewelry, namely, diamond jewelry.” The Trademark Office refused registration of Don Vintache’s mark on the ground that it was likely to cause confusion with the prior registered mark SILVER ON THE ROCKS (in standard characters) for “jewelry made in whole or significant part of silver.”

It was easy for the Board to find that the goods at issue were related. “Diamond jewelry” was broad enough to include silver settings. When it came to the similarity of the marks, the Board found, without identifying much, if any, support, that ON THE ROCKS was a unitary phrase. A unitary phrase has observable characteristics that render the elements inseparable. This finding would prove to be the downfall for Don Vintache’s dilution argument.

Don Vintache identified several third-party registrations that contained the term ROCKS for various jewelry items. However, the Board found that in all the examples offered, the meaning of “rocks” was different from the meaning of “on the rocks.” The clear meaning in the third-party registrations was “to be extremely enjoyable, pleasing, or effective.” The meaning of “on the rocks” is “served undiluted and with ice cubes; experiencing difficulties and likely to fail.” These different meanings rendered the third-party registrations and unitary phrase ON THE ROCKS dissimilar. Therefore, because the dilution analysis requires similar marks the Board gave no weight to the third-party registrations offered by Don Vintache.

In addition to the third-party registrations, Don Vintache offered five third-party online jewelry store websites that use ON THE ROCKS. Unfortunately, this was five examples short of the ten example minimum generally required by the Board. Accordingly, Don Vintache’s dilution argument failed, and the Board found that DIAMONDS ON THE ROCKS and SILVER ON THE ROCKS are similar trademarks.

Heisman Trophy Trust Sues Owners of Hiesman Watch Website

"Heisman watch website with disclaimer not affiliated with Heisman Trophy Trust"

The Heisman Trophy is awarded to the most outstanding player in college football. Unlike other most valuable player awards, the Heisman Trophy winner is spotlighted. ESPN, for example, has the Heisman Watch, but not the MLB, NFL, NBA, or NHL most valuable player tracker.

Chase Leavitt, Joseph Middleton, and Kimball Dean Parker are Utah residents and operate a website at the <heismanwatch.com> and <heismancandidates.com> websites. The website uses a regression model to identify statistical influencers that drive the Heisman votes. For example, it predicted with almost certainty that Baker Mayfield would win the Heisman Trophy in 2017. The website is purely informational.

The Heisman Trophy Trust sued Chase, Joseph, and Kimball in New York for, among other claims, federal trademark infringement. The Trust alleged that it licensed ESPN to use the HEISMAN mark in connection with the Heisman Watch offering on its website, and that the boys from Utah do not have the same authorization. In this case, the Trust has the upper hand, just not in New York.

There is nothing illegal about using another party’s trademark provided that use refers to the trademark owner. In legal terms, this is called nominative fair use. In this case, the boys from Utah could have called their calculator something else, but said that it predicts the likely winner of the Heisman Trophy. In the context, HEISMAN is clearly being used to refer to the Trust. However, the moment the term was included the trademark for the calculator, a line was crossed.

But the Trust will have a difficult time keeping the case in New York. A passive website does not confer personal jurisdiction in every state simply because the website is accessible by people in every state. And the <heismanwatch.com> website is a totally passive website. Its only purpose is to provide information about the Heisman Trophy race. Rather than fighting the battle in New York, Chase, Joseph, and Kimball should make the Heisman Trust fight the battle in Utah.

Study Shows Correlation Between A Trademark Filing And Growth

"working paper title about the benefits of a trademark filing"

When dealing with intangible property, it is often hard for a business owner to understand why money should be spent on, for example, a trademark filing. Obtaining a trademark registration can be expensive depending on the path the business owner chooses when starting the trademark registration journey. And the effects of that decision to make a trademark filing my go unnoticed or the positive effects of that decision may be misattributed to something else in the business.

A working paper titled An Anatomy of U.S. Firms Seeking Trademark Registration was recently published by the National Bureau of Economic Research, and it may provide the clarity and understanding business owners need to see that a trademark filing makes a business money. The working paper was also released in perfect timing with the U.S. Senate’s Resolution to Increase Trademark Protection Awareness.

The study created a new dataset by combining the USPTO trademark filing data with firm characteristics, performance, and dynamics in the United States as reported by the U.S. Census Bureau. The paper then provided a first look at the connection between a trademark filing and the broader measures of firm outcomes.

The study found that a trademark filing is highly correlated with the ultimate success of an early entrepreneurship activity including employment and revenue growth. Firms that do not apply for a trademark registration in their initial years are unlikely to do so unless they experience employment growth. However, difference-in-differences analysis suggests sizable treatment effects, with firms making a trademark filing having substantially higher employment and greater revenue in the period following the first trademark filing.

Hopefully, this paper will be peer-reviewed and ultimately validated because, if accurate, it provides businesses with the most valuable justification for protecting a trademark: namely, that it likely will make you money.  More businesses need to recognize the importance of filing trademark applications and the data suggests that too few businesses understand this. According to the Kauffman Startup Index in 2017 there were about 540,000 new business owners each month during the year. That means for the entire year there were about 6.5 million new business owners in 2017. However, through the third quarter of 2018, there are only 480,111 new trademark applications that have been filed in 2018.

Every business, whether a startup or established enterprise, should pursue trademark protection for not only its business name, but also the names of its goods or services. But if you are going to spend the money to protect your brand, you might as well do it wisely. Engage a naming firm to help with the design of a new name and conduct a trademark search to make sure the name is available.

Perplexing Trademark Office: Clothespins Related to Scissors

"man getting a haircut with scissors that were found to be related to clothespins"

A recent Trademark Trial and Appeal Board decision where the Board found clothespins related to scissors again demonstrates that relying on International Class numbers in a trademark search rather than prior case decisions involving the relatedness of goods factor will lead to wrong search results. Ing. Monika Norkova filed a request for extension of protection of her International Registration to the United States for the mark ZIPZAP (in standard characters) for “drying racks for laundry; clothes[pins]” in International Class 12. The Trademark Office refused registration of this mark.

The Trademark Office argued that Ms. Norkova’s ZIPZAP mark was likely to cause confusion with a prior registered mark ZIPZAP (also in standard characters) for – are you ready – “scissors, in particular hair cutting scissors, manicure scissors, sheet-metal scissors, poultry shears, cable scissors; tree pruning shears; nippers, nail nippers, cuticle nippers; files; utility knives and pliers” in International Class 8.  While it is true that when the marks at issue are identical, less similarity is necessary in order for a likelihood of confusion to exist, one would like to think that hair cutting scissors or tree pruning shears are sufficiently different from drying racks and clothespins that confusion is unlikely.

Despite citing the rule that the words “in particular” clarify and narrow overly broad goods or services descriptions, none of the used based evidence offered by the Trademark Office involve any of the specific types of goods identified in the cited registration. Nevertheless, the Board found that because some scissors are marketed under the same brand as a laundry drying rack, then all scissors must be related in the minds of consumers to laundry drying racks and clothespins.

And what’s even more important is that it does not matter if you agree with the decision or not. In fact, we guess that most people reading this post disagree with the decision. But it’s a decision that is not going to be overturned and that could produce a negative outcome for a naming decision if you are focused on International Class Numbers and not prior case decisions involving relatedness of goods or services findings. In fact, the USPTO does not identify International Class 12 as a Coordinated Class to International Class 8.

Choosing the Right Trademark Search Description

"man choosing between two apples like choosing between two trademark search description"

The purpose of a trademark search is to find the problematic mark. That’s the game. This means starting with the right trademark search descriptions for the goods or services at issue is a key decision point that may be the difference between winning or losing the game.

The temptation at this decision point is to use the trademark search description that describes the goods or services at issue in detail. However, the detail at this point is not what’s important because it results in too narrow a scope of the search. Instead, when you conduct a trademark search you want to use a trademark search description that captures the goods or services you are or intend to offer with the mark.

It is wise to do this for a couple of reasons. First, you want to capture as many potentially relevant marks as possible so you can determine which marks are truly concerning and which marks are not. Second, and not talked about often, is because most attorneys that file trademark applications use a description that the United States Trademark Office has already approved.

To avoid unnecessary refusals, the Trademark Office published a searchable identification of goods and services manual. If you choose a description from this manual, the Trademark Office will not issue a refusal based on an indefinite goods or services description. So let’s explore the manual a little.

Some descriptions that have been accepted by the Trademark Office are:  “restaurant services,” “beer,” “mobile phones,” and “vacuum cleaners.” Because the goal of a trademark attorney is to get as broad protection as possible for their client, they are using the broad descriptions the Trademark Office has approved. The only reason to go narrow at the beginning is to avoid a potential cancellation proceeding to narrow later by another party. But if a dispute would arise, you can always voluntarily narrow in the interest of settling a case.

Most trademark attorneys are using broad descriptions when they can, so you should be searching using broad descriptions as well. Narrow descriptions at the search stage may result in missed marks that end up being concerning.

Where to Search for Conflicting Trademarks

"man with binoculars searching for conflicting trademarks"

Like most tasks facing new business or the creation of a new product, where to search for conflicting trademarks can be a daunting task. Some people will say you need to pay a professional search company to look for any conflicting trademarks. The professional search company will produce a comprehensive search report that is usually hundreds of pages and costs about $800.  Half of the report is usually directly at uncovering common law or unregistered trademarks that may be concerning to you. If a retain a trademark attorney to review the results and provide a legal opinion on the availability of your proposed mark, the costs will likely exceed $1,000. Whereas, others will say searching the Internet is sufficient. Like most things in the law, the answer, unfortunately, is it depends on the business product, or service.

Absent a federal trademark registration, trademark rights are geographically limited in scope. This means that trademark rights extend only to those areas where the trademark is being used and where the trademark owner’s reputation may have taken them. If a business decides to focus on a particular geographic area, a professional trademark search for unregistered or common law rights may be unnecessary.

The benefit of a federal registration is that it takes those geographically restricted rights and expands them to the entire nation even if the trademark owner is not offering his or her goods or services in every part of the country. A party who federally registers its mark can force a subsequent user to rebrand once the senior party enters the junior party’s market.

This means that every business must search the United States Patent and Trademark Office for any conflicting marks, but may be able to save some money by not conducting a professional trademark search. Even if a business forego’s a professional search, an Internet search should still be conducted to uncover any unregistered rights in the geographic area where the business intends to do business.

The Diageo Marketing Effectiveness Tool: TM Lawyers take Notice

"Diageo catalyst could help tm lawyers"

In our data driven world, it is not surprising to read that some brands are creating a culture of marketing effectiveness. The days of making an educated guess about what marketing efforts could be successful are slowly being replaced by data driven models that quickly show which marketing efforts are successful and those efforts that are failing.

One tool created by Diageo – the owner of such well-known brands as Guinness beer, Johnnie Walker whiskey, Smirnoff vodka, and Captain Morgan rum among others – developed a tool called Catalyst. Catalyst not only uses data to determine the right budget for each Diageo brand, but also allows the user to assess the likely impact of a planned activity.

The articles about Catalyst do not discuss what variables it considers as part of its planning capability, but if it does not include a legal variable then it should or a law firm should consider building a similar tool. Too often in trademark law the advice given is couched in “should” instead of “will.” The use of “should” is used more often to hedge against an opposite outcome, but it is also used because the attorney cannot honestly say what impact the decision to spend money on a particular trademark application or enforcement action will have on the profit of that business, product, or service.

Take the strength element of the likelihood of confusion analysis. Some TM lawyers will advise clients to sue anyone that adopts a similar name. The theory is that the more similar marks the trademark owner co-exists with, the more difficult it is for consumers to identify a single source, which results in a lower brand value. But does the co-existence result in any lost profit?

The question that should be discussed is whether a particular enforcement action is going to result in actual lost sales or a material loss in brand value. And if Diageo can create a forward-looking planning tool for marketing activities, a similar tool could be created for legal actions as well.