Famous trademarks are the pinnacle of brand recognition and a distinction more trademarks reach than you would expect. Famous trademarks come in two varieties: famous trademarks for a dilution claim and famous trademarks for a likelihood of confusion claim. The absolute pinnacle of brand recognition is a famous mark for a dilution claim, but a brand needs to pass through famousness for a likelihood of confusion claim to get there, which in and of itself is a good place to be.
Trademark fame plays a dominant role in the process of balancing the likelihood of confusion factors because famous trademarks enjoy a wide latitude of legal protection. Famous trademarks cast a long shadow that competitors must avoid. Consumer surveys provide direct evidence of fame and the best evidence of fame, but consumer surveys are not commonly used primarily because they are expensive to obtain.
Accordingly, circumstantial evidence is primarily relied on to establish the trademark’s fame. The most common categories of circumstantial evidence used to establish trademark fame:
- Volume of sales;
- Amount of advertising expenditures; and
- The length of time that both sales volume and advertising expenditures have been high.
These factors are indicative of a famous mark because they provide a sense of popularity among consumers and the likelihood of consumers encountering the mark. But equally important to these three common categories of evidence are:
- The length of the use of the mark;
- The trademark owner’s market share;
- Trademark licensing activities; and
- The variety of goods bearing the mark.
These factors were on display recently in the Gucci America, Inc. v. UGP, LLC case involving the GUCCI brand. Uberto Gucci – the great-grandson to the original founder Guccio Gucci – filed a trademark application to register the mark UBERTO GUCCI & Design for “electronic cigarettes.” Gucci America, Inc. opposed the application alleging prior use and registration of the GUCCI mark for a variety of goods.
While most of the financial information was submitted under seal to maintain its confidentiality, but sales of GUCCI products in the U.S. were reported to be in the billions of dollars. Gucci America’s advertisements appeared in publications with a combined circulation exceeding 220 million, it has 4.9 million Twitter followers, 17.4 million Instagram followers, 16 million FaceBook followers, and received over 16.2 million FaceBook likes. These data points show how important social media is to not only creating brand awareness, but also in legal determinations involving the strength of a mark.
Millions of people visit the Gucci website, several books have been written about the brand, and it is consistently ranked as a top global brand. All of this circumstantial evidence lead the Trademark Trial and Appeal Board to find that the GUCCI mark is famous and that its rights extend to electronic cigarettes.
To build a strong brand requires a strong brand identity and strong brand presence. We are piggybacking off of yesterday’s post and the remarkable $7.15 billion dollar figure Nestle is paying Starbucks for what is primarily a trademark license. One fact reported by Bloomberg was that according to BrandZ Starbucks is the second-most-valuable brand in fast food, which is estimated to be worth $44 billion. This leads us to the topic for today, which is what should a company do to build a strong brand so that it may be worth billions of dollars some day? The following five factors help establish a sound foundation upon which to build a strong brand:
- It starts with conceptual strength. The conceptual strength of a mark is measured on a spectrum with marks classified on the right possessing the most conceptual strength possible and the marks on the left possessing no strength at all. The type of mark you select whether it is a made up word or a word that describes your goods and services will dictate where on the spectrum your mark will land.
- Increasing annual sales and annual marketing expenses. It is common sense that high annual sales suggests a stronger mark. Although, sales volume must be considered as well. And while significant marketing expenses are also indicative of a strong mark, ideally the historical, annual marketing spend should resemble a bell curve. The more well-known a mark becomes, the less is required to promote it.
- Unsolicited, third-party publicity. Well-known marks receive publicity from other sources because those sources want to be associated with popular brands. You can build these sources more easily through social media for young companies. But having a consistent brand image is important to achieving a strong following.
- Preventing infringement. The more third parties allowed to use confusingly similar marks for related goods or services dilutes the strength of your mark. This does not mean that a trademark owner needs to take on all comers. An enforcement campaign must be thoughtful and measured, but some form of enforcement must occur for a brand to grow in strength. Imitation is the sincerest form of flattery, except when you are talking about trademark rights.
- Product and service line expansion. By giving consumers more opportunity to encounter your mark, you increase the association of your mark with your company. How consumers perceive your mark after all is the ultimate test of strength.
If you are a startup company, a brand in a box can be a big help when launching your new company. They offer everything you will need to create marketing collateral and an online presence for half the price of what you will pay for a custom brand identity. Even established companies may find some bargains searching these sites. You may have a specific identity in mind and find the name and design that are a perfect match for your vision.
Most brands in a box will suggest a particular industry that a pre-made name is intended for. But these sites are careful to remind any interested buyers that they have to do a trademark search first. Those brand in a box sites that do not recommend prospective buyers conduct a trademark search, should be making this recommendation.
There is no trademark right in gross. A trademark right in gross mean a trademark that has rights independent of any particular goods or services. Unless you are fortunate to one day achieve fame for your brand, there is no trademark right that extends to every good or service. Even if you are fortunate to some day have a famous mark for dilution purposes, there are limitations to the extent of a famous marks rights as well. Trademark rights apply to specific goods or services.
Before spending about $5,000 for a brand in a box, spend the $49.99 with BOB first to make sure what you are buying is something that you will be able to use. If you are interested in a number of the marks, use BOB’s multi-name search functionality to get answers about those marks quickly, at a per name price that is less than $49.99 per name. The best value is $14.99 per name. You can see BOB’s multi-name search functionality in action by clicking HERE.
A real estate developer should seek federal protection for its trademarks even if it will operate only within a single state. Doing business within one state should not be the test for deciding whether federal trademark protection should be pursued. An intra-state, real estate developer may qualify for federal protection of its trademarks if its business – and by extension the use of the trademarks – affect interstate commerce. Generally, a businesses like an apartment or condominium will affect interstate commerce because it will rent or sell units to individuals from other states.
So if a real estate developer qualifies for federal protection of its trademark, why get it? Trademark rights are geographically limited in scope. It may be that your geographic area does not encompass another development that is using a confusingly similar mark. Getting the federal registration ensures that you can prevent another real estate developer from adopting a similar mark, which can have the effect of taking renters or prospective buyers away from you.
Federal protection for a trademark is also an important element when doing any type of enforcement on the Internet. When you have federal protection, others are deemed to have notice of your trademark rights. And the knowledge imputed to others is a key enforcement tool.
The other reason to get the federal registration is to lock in a priority date. Priority questions are difficult and come down to the wire when you have to investigate activities that qualify as use tantamount to trademark use. Put another way, activities done in preparation of conducting actual business.
When you are thinking about a new development you should conduct a trademark search and then file an intent-to-use trademark application. The filing of this application will predate any activities that may qualify as activities done in preparation of business, and your priority date will be locked in as soon as the registration issues.
In 1959 one of the important trademark rules was created. The United States Court of Appeals for the Second Circuit issued a decision in Dawn Donut Co. v. Hart’s Food Stores, Inc., 267 F.2d 358 (2d Cir. 1959). Dawn Donut Co. was a wholesale distributor of doughnuts and other baked goods, the senior user, and owned a federal registration for the trademarks DAWN and DAWN DONUT. Hart’s Food Stores, Inc. used the mark DAWN in connection with the retail sale of doughnuts and baked goods within certain counties surrounding Rochester, New York. Dawn Donut Co. sued Hart’s Food Stores, Inc. for trademark infringement and sought to enjoin the continued use of the DAWN mark even though Dawn Donut Inc. was not using its marks at the retail level or in the counties surrounding Rochester, NY. The district court denied the injunction; the Second Circuit affirmed, and created the “Dawn Donut Rule”:
[I]f the use of the marks by the registrant and the unauthorized user are confined to geographically separate markets, with no likelihood that the registrant will expand his use into the defendant’s market, so that no public confusion is possible, then the registrant is not entitled to enjoin the junior user’s use of the mark.
Trademark rights in the United States are created through use—not registration. Once a party begins using a mark in commerce, it begins to acquire common-law rights in the mark provided the mark is inherently distinctive. These common-law rights are limited to the geographic area in which the mark has been used on products sold or in which the services it covers have been promoted. A federal registration confers upon the owner presumptive nationwide rights in the mark regardless of the geographic areas where the owner is using the mark.
Although the owner of a federal registration has a nationwide right to use its mark, the Dawn Donut trademark rules provide that the injunctive remedy does not ripen until the owner of the federal registration shows a likelihood of entry into the disputed territory. This rule has been adopted in the majority of federal appellate courts across the country.
What is means for any company choosing a new name is that a search of the United States Patent and Trademark Office database is 100% necessary because even though the owner of a federal registration is not currently in your market, the minute the federal registrant shows a likelihood of coming into your market it can force the junior user to rebrand.