Branding Cooperation Key for a Successful Franchise

"Boy eating french fries outside a McDonald's franchise"

A franchise relationship is a trademark license relationship that has crossed the control line into turn-key business. A franchise relationship exists when: (1) there is a trademark license; (2) a fee; and (3) the trademark owner provides significant control over the operation of the business. This control element exceeds the quality control requirement of a trademark license, which is to monitor only the quality of the goods or services, and marketing collateral bearing the mark to ensure a certain standard is maintained. In some cases, a franchise relationship is the best way to scale a business and building unity between the franchisor and franchisees is key to success.

A franchisee is the franchisor’s presence in a given geographic area. In other words, the franchisee is the eyes and ears of the company. The United States is not a homogeneous market. What is important to consumers in Midwest about about a good or service may not be the same to consumers in, for example, the Northeast and so on and so on. A strong relationship between franchisor and franchisee can result in this information exchange and more targeted branding.

One aspect of a targeted branding strategy is the use of different taglines. A house mark (i.e., the trademark that appears across product and service lines) or product mark (i.e., the trademark that appears on a specific product or service) cannot change by the market. There needs to be consistent use of these trademarks for many reasons. A house mark or product mark also does not have to tell a prospective consumer everything about your goods or services. Other marketing collateral can be used convey this type of information including taglines.

A tagline can indicate source just like a house mark or product mark, so they should be protected and searched like a house mark or product mark. But the luxury of a tagline is that it can be more targeted to the geographic market it is being used in. This is not to say that franchisors should not also have a national tagline for the business. What this means is that a business should recognize that consumers can and will identify with their business through multiple trademarks. So the franchisor should develop a trademark portfolio accordingly by working with its franchisees on what taglines resonate with consumers in their particular geographic markets.

Rare Loss for Plaintiff in Alcoholic Beverages TTAB Case

"Thunder Road whiskey bottle wins at TTAB"

Breweries, distilleries, and wineries that are defendants in Trademark Trial and Appeal Board cases have not fared well this year. More often than not, alcoholic beverage defendants foolishly cling to overly broad goods descriptions that ultimately prove to be their downfall. The scene was set for another plaintiff victory in a recent TTAB case, but in a rare turn of events the defendant prevailed because it properly offered sufficient third-party use evidence to establish the term in common with the plaintiff’s mark was conceptually weak.

Thunder Road Brands, LLC applied to register the mark THUNDER ROAD (in standard characters) for “alcoholic beverages, namely, Tennessee sour mash whiskey and moonshine.” E. & J. Gallo Winery opposed the registration of the THUNDER ROAD mark based on its prior registered mark THUNDERBIRD for the broad description “alcoholic beverages except beers.” Thunder Road Brands did not bring a motion to narrow E. & J. Gallo Winery’s broad description to the actual THUNDERBIRD product, which is a flavored fortified wine.

Accordingly, with the goods being legally identical – thus less similarity between the marks required for a likelihood of confusion to exist – and the marks sharing the THUNDER term in the first position, things were not looking good for Thunder Road Brands. Its only hope was to convince the TTAB that the THUNDER term was so incredibly weak that the difference between ROAD and BIRD was enough to avoid a likelihood of confusion.

E. & J. knew this and offered evidence of its commercial strength:  (1) continuous use since 1957 (over 60 years); (2) sales volume and revenue from 2009-2016; (3) advertising expenses from 2009-2015; (4) two YouTube videos showing a THUNDERBIRD television advertisement; and (5) third-party publicity in two songs, one by ZZ Top and the other by The Beastie Boys. The TTAB was unpersuaded by this evidence because it was stale and showed a downward trend. Strength or fame must be determined at the time of trial.

Similarly, E. & J. relied on two stale brand awareness studies, but more importantly E. & J. failed to properly authenticate the studies. Nevertheless, while the evidence did not establish fame for likelihood of confusion purposes, the Board did find that the evidence demonstrated the THUNDERBIRD mark was entitled to broader than normal scope of protection. However, based on what happened next, “broader than normal” probably means THUNDER used with a bird name.

Thunder Road Brands offered 25 third-party registrations and 13 Internet examples of THUNDER formative marks mostly for beer. These examples were relevant because the Board found that beer, wine, and spirits are related goods. The Board held that these third-party examples were enough to outweigh the evidence of commercial strength offered by E. & J. to the degree that it concluded the THUNDER term for alcoholic beverages is overall a weak term.

What makes trademark issues deceptively simple is the interplay between the likelihood of confusion factors, which are generally overlooked by attorneys that merely dabble in trademark law. In this case, because the Board found the THUNDER term was weak, the difference between ROAD and BIRD was sufficient to distinguish the marks despite the goods being legally equivalent.

Quaker Oats Brand Extensions Will Soon Include Milk

"Quaker Oats brand extensions to include oat milk"

The Quaker Oat Company started its business by producing oats. However, the company has engaged in several brand extensions since its founding. Today, the QUAKER mark is used in connection with 80 different hot cereals, 28 different cold cereals, 37 different grain-based snacks, 22 different rice-based snacks, 22 other grain-based products.  That is a total of 189 different products.

When 2019 rolls around, The Quaker Oat Company will add product number 190 when QUAKER oat milk becomes available, and why not. Milk has been made of almost every type of nut, so its time to start making milk out of grains. And as long as the alt-milk trend continues, we’re sure to see other brand extensions into the milk category.

What is interesting is to examine the brand extensions The Quaker Oat Company has executed. With the exception of a few products like the REAL MEDLEY line, the only brands used are the QUAKER term and Logo. With respect to the Logo, most of the packaging uses the modern version of the Quaker image, but some packaging deliberately uses older versions of this logo. This is a strategic decision by the company to avoid even the potential argument that any prior rights in the logo have been abandoned. It’s a smart move if a company can pull it off as part of the overall brand strategy.

It is an interesting decision to use descriptive words only on the brand extensions and not name the product or product line. From a trademark strength perspective, extending the QUAKER mark and Logo increases strength. The more opportunity prospective purchasers have to interact with a trademark, theoretically, the stronger their association with the brand becomes. But consumers can and often do rely on more than one mark to identify the source of goods or services. You don’t have to look further than an infant who can recognize company logos before they can read.

Wine Spectator Sues Weed Spectator Claiming Confusion

"woman drinking wine dispute between wine spectator and weed spectator"

Cannabis is undoubtedly a polarizing subject. Some people like Anheuser Busch heir Adolphus Busch V are jumping in head first starting cannabis companies. Other companies want nothing to do with plant and will fight to ensure prospective purchasers do not mistakenly associate it with any type of cannabis company.  M. Shanken Communications Inc., the publisher of Wine Spectator magazine, is on the later side of the cannabis spectrum, and sued Modern Wellness Inc. for using the mark WEED SPECTATOR for a website that provides information about cannabis and cannabis-based products.

Wine Spectator alleged in the lawsuit that Weed Spectator not only adopted a confusingly similar trademark, but that it also copied its 100-point rating system. In fact, Wine Spectator alleged that this was a “classic case of passing off.” In addition, Wine Spectator filed a letter of protest against Modern Wellness’ pending applications for WEED SPECTATOR in connection with “providing on-line digital publications in the nature of education in the field of cannabis via the Internet.”

A letter of protest is a way to object to a pending application before the application is published for opposition. The party submitting the letter of protest is not allowed to make any arguments about the registrability of the pending mark. You are only allowed to submit evidence the party believes supports a refusal to register the pending mark. If accepted, that evidence will be used as a basis to refuse registration of the applied for mark. Letters of protest are not always accepted though.

This case raises an interesting point for trademark searchers. We have talked a lot about the importance of the relatedness of goods factor and that prior case law is the best indicator for assessing whether certain goods or services are related. But what do you do when there is not a lot of case law to turn to? Cannabis is still a banned substance federally, but has recently been legalized in some states. There has not been an opportunity for a court to decide the issue of whether wine and weed are related goods.

In these situations, trademark searchers need to look to other context to see what other type of products have been found to be related. The context of the Weed Spectator website is to inform individuals about something they could use in a social setting much like alcoholic beverages are used in a social setting. Therefore, it would be reasonable to compare how the Trademark Office has treated alcoholic beverages and cigars, for example, to assess how the relatedness of goods factor will shake out. However, overtime, a body of case law will develop around cannabis and cannabis-based products.

Legal Demand Letter From Aloha Poke Co. Creates Outrage in Hawaii

"Aloha Poke Co. legal demand letter"

Aloha Poke Co. is a Chicago based restaurant chain with 6 locations in California, Colorado, Minnesota, Wisconsin, Washington DC, and Illinois. The company claims to have used its ALOHA POKE mark since 2016 and obtained a federal trademark registration for its mark in 2017. Things seemed to be going pretty well for the young company until it made the decision to send a legal demand letter to a single location restaurant in Honolulu called Aloha Poke Shop.

Aloha Poke Shop makes fresh poke bowls, which is a traditional Hawaiian dish. The restaurant is not open on the weekends and only for 9 hours Mondays through Friday. The company did not file a trademark application with the United States Patent and Trademark Office to register the name of its restaurant.

The company was outraged that a company from Chicago, IL had the nerve to tell a Hawaiian company that it cannot use the word ALOHA. Aloha Poke Co. disclaimed the word POKE from its mark, which is an acknowledgment that others are free to use that term in their mark. To express their outrage, the single location restaurant in Honolulu started a petition to demand that the Chicago-based company stop using the culturally significant Hawaiian words ALOHA and POKE. They were able to secure 150,000 signatures for the petition. A FaceBook Live video was also uploaded urging people to sign the petition and the video has been viewed 78,000 times.

This situation is another great example that context matters in trademark law. There was nothing to correct on the Principal Register and Aloha Poke Shop’s use of its name in Honolulu was having no impact on the overall strength of Aloha Poke Co.’s mark. There was no reason to send the legal demand letter. Clearly, Aloha Poke Co. did not anticipate the cultural sensitivity the Hawaiian people have to their language, and as a result will likely be unable to expand its business to Hawaii successfully now even if its trademark registration legally allows it to expand there.

Using a Hashtag as a Trademark Requires a Trademark Search First

"hashtag in lights"

A hashtag is a word or phrase preceded by a hash or pound sign (#) and used to identify messages on a specific topic. Sharing content on a specific topic can be accomplished by adding the hashtag topic to the message. Others searching for that topic can search for that hashtag topic to find other messages on the same social media platform. Hashtags have become such a prominent part of our society that the word was added to the Oxford dictionary in 2010 and to the Scrabble dictionary in 2014.

Given its popularity, naturally there is a tendency to want to trademark a particular hashtag. The motivation to get trademark protection usually stems from someone’s desire to control a certain phrase. However, there are a few requirements that must be met in order for a hashtag to be protected as a trademark.

Like domain names, a hashtag at its core is no different from a street sign. It functions to direct people to relevant content in cyberspace. If its status as a cyberspace street sign does not change, then it cannot be protected as a trademark because consumers do not recognize it as an indicator of source nor rely on it to distinguish goods or services.

If you start to use the hashtag in a trademark sense, then you may start to develop trademark rights in the phrase following the #. In most cases, the Trademark Office will require that you disclaim the use of the # because it is functional. A disclaimer is merely an acknowledge to the world that you will not claim exclusive rights in the disclaimed matter apart from your mark as a whole. In other words, other people can use the #.

Whether you can protect the phrase following the # depends on whether it is registrable just like any other word for the applied for goods or services. That means surviving a likelihood of confusion inquiry.

As trademark searchers, we should not concern ourselves with generic, descriptive, or purely functional matter when we construct our search equations. We don’t concern ourselves with this matter because it can only muddy our search results with irrelevant results. Instead, we should focus on the phrase separate from the #.

For example, it does not make much sense to search for FIRST BANK in connection with “banking services.” BANK is generic of banking services and no one would be able to tell another bank that they can use the word bank in their trademark. Instead, the focus should be on FIRST. The same strategy applies when asked to search a hashtag.

Handling Difficult Conversations About Trademark Search Results

"couple having difficult conversations"

If you are conducting a trademark search for someone else, difficult conversations about one of the trademarks being searched is going to happen. As of July 2, 2018, there are 312,339 pending trademark applications and 2,386,268 live registrations in the United States Patent and Trademark Office TESS database. That is almost 2,700,000 records that need to be considered when selecting a trademark and it only takes 1 record to prevent the registration of a proposed mark.

Inc. published an article about The No. 1 Mistake People Make When Handling Tough Conversations. According to the author John Hall – CEO & co-founder of Influence & Co. – the No. 1 mistake leaders make is worrying about their own performance instead of the team. Some of Mr. Hall’s tips are transferable to a client relationship, but there is one tip that makes a big difference in the client context. You can avoid difficult conversations if you demonstrate you are invested in and care about your client by adding value about the search results beyond just the results. In other words, show the client that you tried to find ways to make sure the name they fall in love with is available for their use.

To add this value requires a more critical analysis of the search results. It means that there may be a way around a search result colored red. Or that a small change to a mark may avoid an issue with a search result colored yellow.

If you are a naming firm or professional trademark searcher, here is strategy to employ to demonstrate to your clients that you are invested in their business while using your time and money in the most cost-effective way. First, use a trademark search engine to conduct the preliminary trademark search. When reviewing the search results, sort them by green first, then red, and finally yellow. Set the green marks aside, and turn your attention to the red marks. Review the list of red marks for any you suspect your client would really like. Put those list of red marks in separate list. Then turn your attention to the yellow marks. Similar to the red marks, make a list of the yellow marks you suspect your client would really like.

If you do not have a relationship with a trademark attorney, then you should get one. Send the list of red marks and yellow marks to the trademark attorney along with the relevant search results. Have the trademark attorney reviewing the prosecution history for the marks to determine if he or she sees a potential path to registration for any of the marks on the list. If a path exists, have the trademark attorney provide the patch details.

When you structuring a relationship with a trademark attorney this way, you maximize the value the trademark attorney brings to the clearance process. You are not wasting money on a search, which can be done in a more cost-effective way.

Through this process you will avoid difficult conversations with your client because they will see the extra mile you went to ensure they can use a name they ultimately fall in love with.