The Chilling Effect Trademark Bullying Can Have on Speech

"Basketball going through a basketball hoop the NCAA trademark bullying"

The National Collegiate Athletic Association has and continues to aggressively enforce its trademark rights in the MARCH MADNESS trademark. In fact, its reputation for trademark enforcement is so well known that the KFANN sports radio station in Minneapolis, MN will not use the entire phrase MARCH MADNESS in an advertising spot for a local restaurant chain for fear of being sued by the NCAA. Instead, the word MADNESS is replaced with the sound of buzzer to indicate that the NCAA Men’s Basketball Tournament can be watched at this particular restaurant. This is a prime example of the chilling effect that trademark bullying can have on speech even when the speech is legal.

The NCAA’s first Trademark Trial and Appeal Board proceeding was commenced on May 24, 2007 against the University of Kentucky’s BIG BLUE MADNESS trademark application. Since then, NCAA has opposed:

  1. MOJO MADNESS for “prepared potatoes,” which is it ultimately lost when Shakey’s USA, Inc. voluntarily amended its description to “MOJO brand potatoes prepared at Shakey’s restaurants.” As an aside, this is a good example of how details a broad goods description may have to become in order to win a likelihood of confusion battle.
  2. MARCH RADNESS for a variety of clothing articles, which the NCAA won.
  3. LIVE THE MADNESS for a variety of clothing articles, which the NCAA won.
  4. APRIL MADNESS for sweepstakes, which the NCAA won.
  5. MARKDOWN MADNESS for automobile dealerships, which the NCAA lost.
  6. MARCH MATNESS for a website featuring entertainment information, which the NCAA won.
  7. MARCH IS ON! for coordinating and promoting athletic events, which the NCAA lost.
  8. MUNCH MADNESS for dips, processed vegetables, and chips, which the NCAA won.
  9. BASKETBALL MADNESS for downloadable video games, which is ongoing but suspended in light of a lawsuit filed in the United States District Court of the Eastern District of Kentucky. As an aside, the NCAA also petitioned to cancel the mark XOOKER, which is owned by the same owner of the BASKETBALL MADNESS mark. Hard not to construe that action as clear trademark bullying.
  10. And the most recent proceeding against MARCH MULLIGANS for sweepstakes, games of chance, and contests.

These are just the actions taken by the NCAA before the Trademark Trial and Appeal Board, but the NCAA has a reputation for also firing off demand letters. Some of these actions are legitimate, but several of them are not. It’s this overreaching that creates a trademark bully.

Not every use of another party’s trademark amounts to infringement. Under the doctrine of nominative fair use, a party – even a competitor – can use another party’s trademark to refer to that party provided only so much of the trademark is used to refer to the trademark owner. In other words, don’t use the full logo if the words are enough to refer to the trademark owner. In the case of the KFANN advertising spot, the radio station can legally use MARCH MADNESS to refer to the NCAA Men’s Basketball Tournament and should fear reprisal from the NCAA because of its overly aggressive trademark enforcement behavior.

Bicycles and Snack Bars Related Because Some Retailers Sell Both

"TREK snack bar packaging related to bicycles"

Most bicycle manufacturers do not make bicycles and snack foods. In fact, in a recent Trademark Trial and Appeal Board decision there was no evidence presented of a bicycle manufacturer also owning a federal trademark registration for the same mark in connection with any type of snack food. Nevertheless, the Trademark Trial and Appeal Board held that bicycles and snack bars are related goods.

Natural Balance Foods Limited sought to register the mark TREK for a variety of snack bars. The Trademark Office approved the TREK mark for opposition and Trek Bicycle Corporation (“Trek”) timely opposed the registration of Natural Balance Foods’ mark. Trek alleged that the TREK mark for snack bars was likely to cause confusion with its prior registered marks for TREK in connection with bicycles, online retail store services, and powders used in the preparation of sports drinks and energy drinks.

Based on the goods descriptions alone, snack bars, bicycles, online retail store services, and sport drink powders are different goods. However, when no restrictions are identified in the goods or services descriptions, these different goods are deemed to travel in all normal channels of trade and appeal to all classes of consumers. Natural Balance Foods made it easy for Trek to win its case.

Trek offered several third-party websites that sold bicycles and snack bars. The snack bars sold by the retailers were a different brand owner from both the retailer and bicycle manufacturer. But the fact that these goods were sold by the same retailer was enough for the Board to conclude that the channels of trade overlapped. And because the marks were identical, this overlap was enough for the Board to conclude that a likelihood of confusion was likely.

This decision highlights the challenge for trademark searchers. It is not enough to rely on the good or services descriptions because on their face these descriptions may lead to an incorrect analysis. It is imperative to consider past decisions to determine whether a relatedness finding had been found.

List of the Top 50 Most Valuable Apparel Brands

"person wearing NIKE shoes are the the most valuable apparel brands"

Brand Finance issued its list of the Top 50 Most Valuable Apparel Brands, and topping the list for a second year is NIKE. Brand Finance used the same valuation methodology in its evaluation of the Top 500 Bank Brands. Rounding out the Top 10 Apparel Brands are ZARA, ADIDAS, H&M, CARTIER, LOUIS VUITTON, UNIQLO, HERMES, GUCCI, and ROLEX.

Examining the list reveals an important insight. The majority of luxury brands are associated with a well-known designer. PRADA was founded by Mario Prada in 1913. GUCCI was founded by Guccio Gucci in 1921. HERMES was founded by Thierry Hermes in 1837. LOUIS VUITTON was founded by Louis Vuitton in 1854. CARTIER was founded by Louis-Francois Cartier in 1847.

The non-luxury brands are not associated with designers and are all inherently distinctive marks. Nike was a goddess in Greek mythology who personified victory. Victory being suggestive of sports apparel. The North Face being suggestive of outdoor apparel. Under Armour is also suggestive of athletic apparel.

These non-luxury brands demonstrate the importance of starting the journey from trademark to well-known brand with a suggestive, arbitrary, or fanciful mark. The law rewards creativity, and that reward comes in part with a finding that the mark is conceptually strong. Conceptual strength forms the keystone upon which a commercially strong mark can be built.

Coming up with a suggestive, arbitrary, or fanciful mark that resonates positively with consumers is not easy. That is why working with a naming professional is important. While cost is a concern for startups, considering the cost of a rebrand not only in terms of money spent but also lost time puts into perspective the value you get with a professional namer. Because of their experience, professional namers have a better sense for what will resonate with consumers than the founder of a company who more often than not chooses a name that sounds goods or merely describes the goods or services, which is not where you want to be.

Consumers Likely to Confuse Coffee and Energy Drinks

"Kick Ass coffee can related to energy drinks"

In a second case this year the Trademark Trial and Appeal Board looked beyond the identifications of goods descriptions to determine whether two goods were related. David John Critchley registered the mark KICK ASS (in standard characters) for, among other goods, energy drinks. Kicking Horse Coffee Co. Ltd. petitioned to cancel Mr. Critchley’s registration based on its prior rights in KICK ASS for coffee.

The Trademark Trial and Appeal Board found that the marks were similar and Mr. Critchley failed to produce more than 10 third-party registrations for coffee or goods related to coffee to establish that Kick Ass Coffee’s rights in KICK ASS were limited to coffee. The disputed factor was the relatedness of the goods.

The Board stated as it always does that the relatedness of goods is determined based on the goods or services as described in the application or registration. In this case, coffee and energy drinks are not technical goods in nature, nor are these words vague. An “energy drink” is defined as “any of various types of beverage that are considered a source of energy, especially a soft drink containing a high percentage of sugar and/or caffeine or other stimulant.” It is common knowledge that coffee contains caffeine and is consumed for a source of energy.

Coffee falls squarely within the definition of an “energy drink.” Nevertheless, the Board considered evidence of the real world marketplace to determine if identical marks were used on coffee and on energy drinks. Because there were numerous examples showing this, the Board concluded that coffee and energy drinks are related.

On May 5, 2006, David John Critchley filed a trademark application for KICK ASS in connection with, among other goods, energy drinks. Then for 8 years Mr. Critchley battled to acquire his registration going all the way through an ex parte appeal. His KICK ASS application was published for opposition on April 8, 2014 and matured into a registration on June 24, 2014. Then, shortly after his registration issued, on September 10, 2014 Kicking Horse Coffee Co. Ltd. petitioned to cancel his registration.

What is amazing about this prosecution history is that the application was filed on intended use of the mark in the United States. Why someone would fight for 12 years over a mark that is not even being used in the United States is peculiar. The amount of money spent by the applicant is simply not justified.

Evidentiary Mistakes Haunt NABOSO Application

"NABOSO product packaging"

Naboso Technology, LLC filed a trademark application to register the mark NABOSO (in standard characters) for “orthotics for feet,” rubber flooring, and “yoga mats.” Naboso Technology identified in its application that the English translation of NABOSO is BAREFOOT. The Trademark Office refused registration of Naboso Technology’s mark on the ground that it was likely to cause confusion with prior registrations for the mark BAREFOOT in connection with orthotics, rubber flooring, and yoga mats.

Naboso Technology did not attempt to narrow its goods descriptions and make a corresponding amendment to the descriptions in the cited registrations. Therefore the goods were deemed to be related, travel in the same channels of trade, and appeal to the same class of consumer. Not a good start for Naboso Technology.

Naboso Technology decided to make the conceptual weakness argument, and was on the right path because it submitted 11 third-registrations for marks containing the term BAREFOOT. However, there was a cloud over what appeared to be sufficient evidence because Naboso Technology did not properly introduce its evidence.

To make third-party registrations of record, that status and title copy of the registration must be introduced. Offering the registration certificate is insufficient. Additionally, lists of third-party registrations are also insufficient. Nevertheless, Naboso Technology made both mistakes. The only reason any of its third-party registration evidence was considered was because the Examining Attorney did not object to it.

When it came to commercial strength, the Board did not give many of the third-party registrations any weight because Naboso Technology did not introduce evidence of use for most of these marks. This was a costly mistake because instead of having 11 third-party registrations to rely on the number dropped to four, which was well below the 10 minimum.

The Board next considered the third-party registrations with respect to the conceptual strength of BAREFOOT mark. The lack of use evidence negatively impacted the conceptual strength argument as well brining the number of third-party registrations below 10. The Board also found that the third-party registrations demonstrated that BAREFOOT was a suggestive. Overall, the Board found that the BAREFOOT mark was not weak.

Finally, the Board turned to the similarity of the marks. Applying the doctrine of foreign equivalents, the Board found the the marks were confusingly similar. The outcome may have been different if the strength factor had come out in favor of Naboso Technology because Czechoslovakian is not a common language in the U.S.

List of the Top 500 Global Bank Brands Released

"cover page for top 500 bank brands report"

Brand Finance released its annual list of the top global bank brands. China’s banks topped the list with ICBC coming in at the number one spot, valued at $79,823M. The U.S. banks cracking the top ten are Wells Fargo at number five; Bank of America at number six; CITI at number seven; and Chase at number eight. The Visual Capitalist created a helpful visual showing the rise and fall of the top ten brands over the last ten years. As a sector, banks lagged behind hotels, autos, tech, beer, oil & gas, airlines, insurance, and utilities.

The methodology used by Brand Finance to value a bank brand is the Royalty Relief approach. This methodology estimates the likely future revenues attributable to a brand by calculating a royalty rate that would be charged for its use, to arrive at a “brand value” understood as a net economic benefit a licensor would achieve by licensing the brand in the
open market.

Brand Finance assigns a Brand Strength Index number, which is applied to the prevailing royalty rate ranges for like goods or services based on prior licensing deals or court decisions. For example, if the prevailing royalty rate range is 0-5% and the Brand Strength Index number is 80, then the royalty rate would be set at 4%. Basically, the stronger the brand the higher on the range a particular brand will land.

For Brand Finances analysis, it is key get a high Brand Strength Index number. The Brand Strength Index is made up of three variables: Marketing Investment, Stakeholder Equity, and Business Performance. Of the three variables, Stakeholder Equity is the most subjective, but one metric considered in this analysis is “awareness.”

We talked before about what is takes to build a strong brand worth billions of dollars. Starting with a unique mark that is conceptually strong and not part of a crowded field is an important first launch pad.

Pharma Case Provides Lesson for Searching A Fanciful Mark

"picture of three white pills displaying a fanciful mark"

A recent TTAB decision is instructive on how to break up a fanciful mark when conducting a trademark search. When faced with a fanciful mark, it may be tempting to search only for the entire coined term. But it is important to break up the fanciful mark and search the parts even if the parts themselves are not known words.

AbbVie Biotechnology Ltd. applied to register the mark SKYRIZI (in standard character form) for pharmaceutical preparations and substances. The Trademark Office found no issue with AbbVie’s application and published it for opposition. However, Novartis AG had an issue with AbbVie’s SKYRIZI application and filed a Notice of Opposition against the registration of AbbVie’s mark. Novartis claimed rights in a prior registration for IZIRIZE (in standard character form) also for pharmaceutical preparations.

The parties agreed to use the Board’s Accelerated Case Resolution procedure through with the parties stipulated that the goods were related, the channels of trade were overlapping, and the parties targeted the same class of consumer. The two factors that remained in dispute were: (1) similarity of the marks; and (2) strength of the IZIRIZE mark.

AbbVie argued that RIZ was a conceptually weak term when used in connection with pharmaceutical goods. Regardless of the industry, the 10 third-party registration minimum trend we saw emerge in 2018 applies. To support its argument AbbVie offered 19 third-party registrations for marks that contained the letter string RIZ for pharmaceutical products. For example, ACARIZAX; BACTRIZOLE; RIZIMO; and ORIZON. Despite the evidentiary issues with the admission of the third-party registrations, the TTAB found that the 19 third-party registrations established the RIZ word string was conceptually weak for pharmaceutical products.

The weakness finding is instructive of the importance to break up even fanciful marks into any logical components and include those parts in any preliminary trademark search. In this case, the Board did not find that RIZ was a known word, acronym, or abbreviation. Nevertheless, the Board focused on it to determine whether it was a weak term, and the strength of a mark has a direct impact on the similarity of the marks analysis. Having found that RIZ was weak, the Board found that the use of SKY as opposed to IZI was sufficient to distinguish the marks at issue. And these two factors where enough to outweigh the stipulated factors that favored a finding of confusion. Therefore, the Board dismissed the opposition proceeding.

Not breaking up a fanciful mark and searching any logical components could result in a missed record that could be a knockout.

Another Acronym to Add to the Bad Rebrand List

"Coffee by Design rebranded product packaging may be a bad rebrand"

Earlier this year, we wrote about AdAge’s list of the worst rebrands in 2018. Topping the list were acronyms, nicknames, and abbreviations. If Coffee by Design finished its rebrand to CBD in 2018 instead of 2017, it may have made the list as well.

Coffee by Design was founded in 1994 in Portland, Maine. The company operates four coffeehouses and coffee roastery that sells to nearly 500 wholesale and mail order customers around the globe. In 2010, Coffee by Design obtained a federal trademark registration for the acronym CBD in connection with “coffee shops” and “coffee.” In 2010, the CBD acronym did not dominate the Coffee by Design packaging, and the packaging did not change much, if at all, in 2015. But in 2017, Coffee by Design decided to change all of its packaging and marketing materials – from cups to bags – from Coffee by Design dominating to its new CBD logo dominating.

It was after this change was implemented that the problems started happening. In 2016, Maine residents voted in favor of legalizing recreational marijuana. Governor Paul LePage vetoed the adult-use pot bill, which the Maine Legislature overturned. That paved the way for marijuana retail shops to begin doing business in the spring of 2019.

Apparently, the owners of Coffee by Design did not know that CBD was a common acronym for cannabidiol, an ingredient in some products. All of a sudden, there was an influx of retail shops in Portland, Maine and other states where marijuana is legal promoting the sale of CBD products. This was causing confusion in markets where Coffee by Design was known.

It also caused some of Coffee by Design’s customers in geographic areas that do not allow marijuana sales or who simply do not agree with marijuana use, to question the quality of Coffee by Design’s product. As a result, Coffee by Design has spent considerable time and money to educate its customers that its CBD mark does not stand for cannabidiol. For example, the company had to prepare a list of talking points for its 65 employees to better handle questions about the confusion.

Despite the clear confusion occurring, Coffee by Design does not plan to rebrand again. The owners think the confusion will subside as the sale of marijuana becomes old news, and instead made a plea for the marijuana retailers to use cannabidiol instead of CBD when promoting their products. Well, we hate to burst Coffee by Design’s bubble, but that is likely not going to happen. When you choose a descriptive mark, businesses are allowed to exploit the descriptive meaning of the mark. Our best guess is the use of the CBD acronym is not going away any time soon.

2018 Trademark Weakness Trend Carries Over to 2019

"bmx biker landing on RED BULL branded ramp which does not have conceptual weakness"

In 2018, we wrote frequently on the strength trend we saw emerging from the Trademark Trial and Appeal Board decisions. The emerging trend was that in order to demonstrate conceptual weakness a trademark applicant had to be able to introduce a minimum of 10 third-party registrations for marks: (1) sharing the same term; and (2) registered for identical or related goods or services. The ability to meet this minimum threshold had a direct bearing on the success of one of the more common arguments made by trademark applicants to overcome a registration refusal.

In 2019, we have seen the first TTAB case to carry over this trend. Morganti Flavio Innovaciones Gastronomicas, S.L. applied to register the mark PINKCOW & Design for, among other goods, “soft drinks.” Anticipating a potential issue with Red Bull GmbH, Morganti voluntarily excluded “energy drinks” from its entire goods description in International Class 32. The Trademark Office found no issue with Morganti’s PINKCOW & Design mark and published the mark for opposition.

Red Bull, on the other hand, had an issue with Morganti’s application and opposed the registration of its mark. Red Bull alleged that the PINCOW & Design mark was likely to cause confusion with its prior registered marks RED BULL for, among other goods, “soft drinks.”

Morganti unsuccessfully argued that Red Bull’s product was an energy drink not a soft drink. Therefore, the goods descriptions at issue were legally identical because they both included the phrase “soft drinks” and the evidence showed that Red Bull’s product satisfies the ordinary definition of an “energy drink” and “soft drink.”

Red Bull was able to demonstrate that its RED BULL was commercially strong. Consequently, Morganti had to demonstrate the conceptual weakness of the RED BULL mark to counteract Red Bull’s evidence. Unfortunately, Morganti fell two short of the minimum number of the third-party marks target with a showing of eight.

Because the Board found that Red Bull’s mark was strong and the goods at issue were legally idential, Red Bull’s mark was entitled to a broad scope of rights. Those rights extended to Marganti’s PINKCOW mark, and so the TTAB granted Red Bull’s opposition.

North Carolina Jury not Kind to Walmart in BACKYARD Lawsuit

"Woman counting money as jury orders Walmart to pay $95.5M"

About a month ago we talked about the trademark infringement loss Walmart suffered over its use of the BACKYARD GRILL mark. We reported that in the first case, Walmart was ordered to pay Variety Stores $32.5M. Walmart successfully appealed this decision and the case was retried before a jury. The jury found in favor of Variety Stores and the case entered the second phase where the jury would decide how much Walmart is obligated to pay Variety Stores.

The jury has spoken and has ordered Walmart to pay Variety Stores $95.5M. This is a little less than three times the $32.5M a judge ordered Walmart to pay Variety Stores in 2016. This is one of the larger damage awards involving trademark infringement, but million dollar and multimillion dollar damage awards are not uncommon in trademark infringement cases.

On August 22, 2018, DatabaseUSA.com, L.L.C. was ordered to pay Infogroup, Inc. $4M for the trademark infringement claim and $43.6M for the unfair competition claim. On July 31, 2017, iShow.com was ordered to pay Lennar Corp. $5.5M for its trademark infringement. On October 5, 2016, Costco Wholesale Corporation was ordered to pay Tiffany and Company $15.8M for trademark infringement.

Walmart made the decision to adopt a mark with known words and that shared the dominant term BACKYARD with another trademark owner. From a trademark searching perspective, marks comprised of known words generally exist to a certain degree in a crowded field. If you layer in international markets on top of it, the probability of finding a mark that is 100% in the clear in every jurisdiction is extremely low. When a trademark owner decides to adopt a mark with known words, the owner needs to accept some amount of risk and work to put himself and herself in the best defensible position should an issue arise.