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.

Trademark Licenses In Bankruptcy May Be Changing

"Bankruptcy petition may be changing for a trademark license"

When a trademark owner licenses its rights to another then subsequently files for bankruptcy, the bankruptcy trustee has the option to reject the trademark license. To reject, rather than assume, the trademark license means to terminate the license agreement. In this situation, the trademark licensee has no option to continue using the trademark. The trademark license is simply terminated. Generally, trademark licenses are rejected by a bankruptcy trustee when the agreement stands in the way of a restructuring.

This treatment of trademarks in the Bankruptcy Code is different from the other forms of intellectual property. When copyrights, patents, and trade secrets are involved, while the bankruptcy trustee can reject the license agreement, the licensee can elect to continue to use the intellectual property provide the royalty payments and other obligations under the license are followed.

For some Courts, this different treatment of intellectual property rights was wrong, so they treated trademarks like the other forms of intellectual property under the Bankruptcy Code. For other Courts, the language in the Bankruptcy Code was clear and Congress by its words decided to treat trademarks differently from the other forms of intellectual property. Mission Product Holdings, Inc. recently filed a Petition for a Writ of Certiorari in the Supreme Court of the United States to resolve the split among the Courts.

The International Trademark Association filed an Amicus Curiae (i.e., Friend of the Court) brief in favor of the U.S. Supreme Court taking the case. According to INTA, allowing trademark licenses to survive bankruptcy will result in a stronger trademark system that will increase the royalties trademark licensees are willing to pay.

There is no question that it is the trademark licensor’s obligation to ensure a certain level of quality in the licensed goods or services is maintained. In some cases, a trademark licensor can satisfy this obligation by relying on its relationship with the licensee. But the types of relationships that allows for this quality control delegation are few in number. If a trademark licensor fails to engage in actual quality control, the result can be an abandonment of all trademark rights.

The difficult question is whether a debtor trademark licensor should be obligated to incur the expense of engaging in quality control if the trademark licensee wants to continue using the trademark. If the Supreme Court takes the case and decides that trademarks should be treated like other intellectual property, then it may make sense to negotiate in any trademark licenses that the licensee must pay the costs for the debtor trademark licensor to exercise it quality control obligations in addition to any royalties owed.

Multiple Colors Not An Inherently Distinctive Trademark

"Forney Mig Wire multiple color product packaging not an inherently distinctive trademark"

Oberlo blogged about the Color Psychology, which is the important role color plays in how consumers perceive a brand. According the post, color affects our day-to-day decisions including what items to buy. The Drum also wrote about blue being the dominant color used by global industries. Because of its importance in the purchasing decision, more companies should consider protecting colors as trademarks. However, not as many as you think attempt to do this because obtaining a trademark registration for a color – as a non-traditional trademark – can require some effort.

Recently, the Trademark Trial and Appeal Board addressed, for the first time, whether multiple colors applied to product packaging can be an inherently distinctive trademark or if the colors must acquire distinctiveness. Forney Industries, Inc. – manufacturer of welding and abrasives tools, equipment, and accessories – applied to register the colors black, yellow, and red applied to packaging for a variety of welding and abrasives goods. The Trademark Office refused registration of Forney’s mark on the ground that the multiple colors is not an inherently distinctive trademark.

Color applied to product packaging is treated the same as color applied to a product and because color applied to a product can never be an inherently distinctive trademark, color applied to product packaging can never be an inherently distinctive trademark. This does not mean that color can never function as a trademark for a product or its packaging, but that color must acquire distinctiveness. It is not immediately protectable as a trademark. And there is no meaningful distinction between a single color or multiple colors when applying this principle.

This case involved color in the abstract. If Forney had applied the multiple colors applied to well-defined shape, pattern, other distinctive design, then the color applies to that extra matter could be inherently distinctive. But since Forney did not argue in the alternative that its multiple color mark had acquired distinctiveness, the Board affirmed the refusal to register Forney’s multiple color mark.

Trademark Office Continues Fight Over FUCT Mark

"FUCT logo on a hat is scandalous according to the Trademark Office"

The United States Trademark Office is fighting for its decision to refuse registration of the mark FUCT for “Athletic apparel, namely, shirts, pants, jackets, footwear, hats and caps; Children’s and infant’s apparel, namely, jumpers, overall sleepwear, pajamas, rompers and one-piece garments” on the ground that the mark is vulgar; thus, scandalous. Recently, the USPTO filed a Petition for Writ of Certiorari with the United States Supreme Court asking that it review the decision of the United States Court of Appeals for the Federal Circuit that held registration refusals on the ground of scandalousness violates the free speech right of the First Amendment to the U.S. Constitution.

We previously discussed the timing of the recent decisions involving Section 2(a) of the Trademark Act and the impact Federal Circuit’s decision would have on trademark searching if the decision stands. And the reason we discussed in that prior post is the argument the Trademark Office is making in its Petition to the Supreme Court. Section 2(a) will not prevent trademark owners from using immoral or scandalous terms as trademarks, it will simply prevent the trademark owner from receiving certain benefits from the Trademark Office that are afforded to registered trademarks.

When the In re Tam decision resulted in disparaging words no longer being off-limits for trademark registrations, we did not see a rash of new applications for disparaging marks. Similarly, it seems like the only person who took advantage of the Federal Circuit’s decision on immoral and scandalous terms was Erik Brunetti himself who filed five new trademark applications for or containing FUCT.

It is hard to imagine that the Supreme Court is going to make a meaningful distinction between disparaging terms and immoral or scandalous terms. Nevertheless, if the Trademark Office is successful, the concern about having to consider scandalous or immoral terms in a trademark search will remain.

Trademark Fair Use Protects Use of LOL, WTF, FML, and NBD

"Procter & Gamble products fair use to register WTF, NBD, and FML for these products"

Trademark fair use is an important concept that trademark owners should be aware of when selecting a new name. It is a lesson that can be learned form the Procter & Gamble’s attempt to register some common acronyms. Procter & Gamble made a lot news recently about trademarking popular millennial messages like LOL, WTF, FML, and NBD. Procter & Gamble filed trademark applications for these acronyms in connection with soap and other household cleaners. The majority reaction at the attempt at trademarking these acronyms has been negative with a hint of criticizing P&G for being self-righteous. How can a big company like Procter & Gamble think that they can own a trademark for common phrases like LOL, WTF, FML, and NBD? These comments stem from a misunderstanding of what is required to establish trademark rights in the first place.

We have discussed before that there is no such thing as a trademark right in gross. In other words, trademark rights must be in some thing either a physical good or service. In this case, Procter & Gamble will use the LOL, WTF, FML, and NBD acronyms in connection physical goods soap and other household cleaners. These goods are the starting point for its rights in these acronyms. Where the rights go from there is anybody’s guess, but given the proliferation of the use of these acronyms, the smart money is on Procter & Gable’s rights remaining limited to soap and other household goods.

Another misconception about Protecter & Gamble’s attempt at trademarking LOL, WTF, FML, and NBD is that no one else will be able to use these acronyms in connection with soap and other household goods. While Procter & Gamble may obtain trademark registrations, these acronyms clearly have a descriptive aspect. Individuals and companies are free to exploit the descriptive aspect of these acronyms even if the context of this use is in connection with soap or household cleaners. This principle is called is classic fair use, and is an issue trademark owners need to understand exists when they adopt words or phrases with known meanings as their trademark.


"New York Mayor Bill de Blasio Promises Made Promises Kept similar to President Trump's campaign slogan, which is not copyright protected"

New York City Mayor Bill de Blasio gave a speech at the site of what will be a new school in Brooklyn. His podium was placed in front of a sign with the campaign slogan PROMISES MADE PROMISES KEPT, which also appeared on a nameplate directly below the microphone. President Trump Tweeted his reaction to the speech by accusing Mayor de Blasio of stealing his campaign slogan and saying he has no “imagination.”

Unfortunately for President Trump, there is no such thing as campaign slogan misappropriation, and he has not sought to protect the PROMISES MADE PROMISES KEPT slogan has his trademark. The dispute between President Trump and May de Blasio is like the Seinfeld episode involving George Costanza and the name Seven. But this is an important principle for others to be aware of when having brainstorming sessions or casual conversations with others about potential names.

A slogan like PROMISES MADE PROMISES KEPT can be protected as a trademark if:  (1) it is attached to a good or service; (2) is capable of distinguishing the goods or services of others; and (3) is used in interstate commerce. Once these elements are satisfied, then the slogan owner has some legal recourse against another party that may use a confusingly similar slogan to deceive consumers. But if these elements are not met, then there is no actionable claim for trademark infringement or unfair competition.

In the case of copyrights, copyright protection does not extend to titles, names, slogans, or short phrases. Copyright protects original works of authorship including literary, dramatic, musical, and artistic works such as poetry, novels, movies, songs, software, and architecture. There is no copyright protection available for the PROMISES MADE PROMISES KEPT slogan.

What you need to do to protect your naming ideas is to treat them as a trade secret or other proprietary information. If you are in the business of naming, this means having Non-Disclosure Agreements with clients or including confidentiality terms in service contracts that requires the other party to acknowledge your exclusive ownership of the name and to refrain from using the names not chosen from the short list.

If you are an entrepreneur kicking around names over a couple beers or cups of coffee with friends, advisors, or anyone that will listen to you, having a signed agreement first is not going to happen. What you need to do is exercise some discipline about what information you disclose. Or at least make sure you can trust the people you are sharing the names with will not try to usurp the name for their own venture.

Did Pepsi Pay $3.2B to Bury the SODASTREAM Brand?

"SodaStream Logo purchased by Pepsi"

Pepsi announced that it was paying $3.2B cash to buy SodaStream, which sells machines that carbonate water as well as syrups that can be added to create different beverages. Some commentators have lauded the move as another way for Pepsi to diversify its holdings away from soda, which now account for less than 25% of its sales. Or was this a strategic play in response to Dr. Pepper Snapple Group’s merger with Keurig Green Mountain in July 2018? With Nestle and Starbucks entering their multi-billion dollar trademark license deal in May 2018, Coca Cola may be scrambling to find an entrance to the at home beverage market.

In 2017, SodaStream International earned $543.37m in revenue. While a large number, it is largely insignificant to Pepsi that had $63.53 billion in revenue in 2017. Under the circumstances, it is entirely possible that Pepsi’s purchase of the company was to prevent someone else (i.e., Coca Cola) from purchasing it first.

If Pepsi decides to bury the SodaStream brand, it is worth looking at exactly what it is giving up. According to its trademark filings, SODASTREAM (Stylized) in the form consumers recognize it has been around since 2009. But the mark was actually first registered by Sodastream Limited, a British company, on September 23, 1969. The identification of goods description reads “apparatus used in the manufacture of soft drinks and carbonated waters, namely, mixing, carbonating, and bottling machinery, and parts therefor” and “soft drinks and concentrates therefor.” Impressively, the registration claims a date of first use as early at 1904 (i.e., over 114 years). In 1999, SodaStream International’s predecessor in interest acquired the registration from Sodastream Limited.

It goes without saying that 114 years is a very long time and generally time is the friend of strong trademark rights. Given that the SODASTREAM mark has been around for over a century, Pepsi likely will not bury the brand as some commentators have speculated.

What Trademark Searchers Need to Know About Use in Commerce

"woman spooning samples of guacamole showing use in commerce of the Wholely Guacamole trademark"

In the United States, trademark rights are created through use in commerce not registration with the United States Patent and Trademark Office. This is why all new businesses or current businesses launching a new product are advised to pay for comprehensive searches. But even an expensive, comprehensive search is incapable of finding every possible threat to a proposed trademark. And here is why, the amount of use in commerce required to establish trademark rights in the United States, assuming the mark is inherently distinctive, is not as much as the average trademark searcher would think. In fact, the required amount of use in commerce is much lower.

This was an issue the Trademark Trial and Appeal Board addressed recently in Dexas International, Ltd. v. Ideavillage Products Corp. Ideavillage Products applied to register the mark SNACKEEZ DUO for beverageware and food containers. Dexas International opposed the registration of Ideavillage Products’ mark on the ground that it was likely to cause confusion with its common law mark SNACK-DUO for food and drink containers.

Ideavillage Products filed its SNACKEEZ DUO application on December 5, 2014 on an intent-to-use basis. Dexas International made the first sale of its SNACK-DUO food and drink container in January 2015, but claimed its trademark rights began in July 2014 based on the interstate shipment of two samples bearing the SNACK-DUO mark to a retailer.

It is well settled that use of a mark in a manner analogous to technical trademark use may furnish a valid basis for claiming priority and maintaining an opposition. Thus, even before proper trademark use in commerce commences, advertising or similar pre-sale activities may establish priority if they create the necessary association in the mind of the consumer. There is specific percentage or number of consumers required to associate the mark with the goods based on the pre-sale activity. Rather, the United States Court of Appeals has simply said that it must be:

more than insubstantial and more than negligible.

As you can imagine, what this means has been decided on a case-by-case basis, and often times requires a very fact intensive inquiry because priority is critical to bringing and maintaining an infringement lawsuit in District Court or proceeding before the Trademark Trial and Appeal Board.

In the Ideavillage case, the Board found that the two samples served a commercial purpose because the retailer eventually placed several more orders for the product. Therefore, the Board found that the priority date for the SNACKEEZ DUO mark was July 2014.

As a trademark searcher, if you were searching a mark similar to the SNACKEEZ DUO mark in 2014, there is no way you would have found Ideavillage’s mark. While the decision talks about other pre-sales activity Ideavillage engaged in, it does not say when these activities occurred. It is precisely because the level of use in commerce necessary to establish trademark rights is so low, that no trademark search, irrespective of its price, is capable of finding every possible conflict with a proposed mark. But the place a trademark searcher must absolutely search is the United States Patent and Trademark Office.

U.S. Senate Passes Resolution To Increase Trademark Protection Awareness

"United States Capitol where trademark protection laws are made"

The U.S. Senate passed Senate Resolution 580 recognizing and supporting public awareness of trademark protection. Senator Chuck Grassley (Iowa) introduced the resolution and it was unanimously agreed to by the Senate Judiciary Committee.

The Resolution states that “consumers in the United States encounter an average of 1,500 trademarks each day.” This is a staggering statistic and means that in a year a consumer will encounter 547,500 trademarks. Some of these trademarks may indicate the same source, but even if there is some duplication this number is impressive. This number highlights the importance of trademark protection, which starts with selecting a distinctive trademark. And working with a naming firm is extremely helpful in developing that distinctive mark.

Moreover, if we encounter 1,500 trademarks in a day, it suggests that we do not spend a meaningful amount of time with each mark. In fact, we are spending on average less than a minute on each mark because there are only 1,440 minutes in a day. This means there is a high probability that confusion can occur between two similar marks for similar goods or services, which can result in lost sales. This is why conducting a trademark search, protecting your trademark rights by filing trademark applications, and then enforcing your trademark rights against confusingly similar trademarks is important to any business.

We try our best to educate entrepreneurs about the importance of trademarks and trademark protection because there is a clear disparity between the number of businesses that are started each year and the number of trademark applications filed each year. According to the 2017 Kauffman Index, about 540,000 adults became business owners in a given month. For a year, that means about 6,480,000 new businesses were started in a year. And this number does not reflect the number of existing businesses that launch new products or services under new names. However, only 594,107 federal trademark applications were filed in 2017. Lack of awareness about the importance of trademarks is likely the culprit for the disparity.

The Senate Resolution also states that:

[E]ducating the public about the value of brand names and trademarks in an increasingly competitive global marketplace serves the public interest of helping to safeguard consumers against deception and confusion in the marketplace.

Everyone working with entrepreneurs and businesses generally should work to spread the word about the importance of trademark protection because intellectual property fuels innovation, which create jobs in the United States.

The Value of a Supplemental Registration on the Supplemental Register

"chart showing the differences between the supplemental registrations of the supplemental register versus the principal register"

A supplemental registration often times gets a bad wrap primarily for the fact that it is not a principal trademark registration. The United States Patent and Trademark Office maintains to trademark registers, the Principal Register and the Supplemental Register. The Supplemental Register is reserved for trademarks that are descriptive and need time to acquire trademark rights instead of being immediately protectable.

As you can imagine, trademarks on the Supplemental Register do not enjoy the same benefits as those on the Principal Register. However, a trademark owner with a trademark on the Supplemental Register is allowed to use the circle “R” trademark designation, which is often an overlooked benefit of the Supplemental Register. But probably a more important overlooked and often overlooked benefit is the ability to prevent a subsequent trademark owner from registering a confusingly similar mark. This potential was on display in the recent Trademark Trial and Appeal Board case In re Productos Verdes Valle, S.A. de C.V.

Productos Verdes Valle filed a trademark application to register the mark TAMAL TAMAYO & Design for “tamales.” The design consisted of a chef standing behind a stock pot holding the lid in his right hand. The Trademark Office refused registration of Productos Verdes Valle’s mark in the ground that it was likely to cause confusion with a prior supplemental registration for the mark TAMAYO in connection with restaurants.

The Board held that there is no categorical rule that citation of registrations on the Supplemental Register is limited to registrations of substantially identical marks for substantially similar goods or services, or that a different test for confusion applies to supplemental registrations.

When it came to assessing the strength the TAMAYO mark, the Board found there was no evidence of commercial strength. Therefore, there was nothing to counterbalance the conceptual weakness in the TAMAYO supplemental registration.

With respect to the similarity of the marks, the Board found that TAMAYO was the dominant feature of both marks. The word TAMAL would either be understood as the foreign word for tamales or a given name. Because more weight is given to words instead of designs, the Board held that the marks were confusingly similar.

Finally, the Board found that tamales and restaurants are unrelated. In a familiar story before the Trademark Office, something more needs to be shown to support the finding that restaurants and a food items are related. In this case, the only evidence the Trademark Office offered was that some restaurants also sell branded tamales. This evidence alone was insufficient to satisfy the “something more” requirement for finding tamales related to restaurants. Therefore, the Board reversed the likelihood of confusion finding by the Trademark Office.

What this case demonstrates is the potential for preventing the registration of a subsequent mark with a supplemental registration.