New Consideration For A Trademark Licensee

"Liquidation sale sign new impact on a trademark licensee"

The United States Supreme Court recently decided an issue involving trademark licenses in bankruptcy that for years had split the lower courts. Prior to this decision, when a trademark licensor entered bankruptcy it had a choice to either continue with any existing trademark license agreements or terminate the agreements. The effect was trademark licensors would terminate trademark license agreements it deemed in its business judgment were unfavorable leaving the trademark licensee in a difficult spot.

In an 8-1 decision, the U.S. Supreme Court decided that trademark licensors will no longer have this choice. Instead, a trademark licensor that rejects a trademark license while in a bankruptcy proceeding is breaching not terminating the trademark license. Jay L. Westbrook, a professor at the University of Texas School of Law, in an article for Bloomberg Law said the decision “establishes the basic principle that once you transfer a property right, it won’t vaporize if the transferor files bankruptcy.” Professor Westbrook is right that this decision prevents the trademark licensee’s right from vaporizing overnight. But that does not mean the right will not eventually vaporize.

A trademark owners obligation to engage in quality control is a legal not contractual obligation. The purpose of a trademark is to indicate a single source of goods or services, and this is accomplished by the trademark licensor’s exercise of control of the quality of the goods and services offered under the licensed trademark. The legal consequence of not exercising quality control is an abandonment of all trademark rights.

Generally, trademark licensees want to be left alone from the trademark licensor. And trademark licensors are happy to oblige, which is why the trademark licensor’s exercise of actual quality control in couched in terms that leave it to the discretion of the trademark licensor. However, with this recent Supreme Court decision, trademark licensees may need to change their position on this even if it means more oversight from trademark licensors.

The practical effect of the U.S. Supreme Court’s decision will likely be that trademark licensors in bankruptcy will not reject trademark licenses because they do not want to be in breach of contract. They will simply stop exercising any quality control. Nothing in the U.S. Supreme Court decision forces trademark licensors to engage in quality control. Trademark licensees will still need to implement a Plan B, just later than they otherwise would have under the old law.

To guard against this possibility and to provide the trademark licensee with some recourse, trademark licensees may need to negotiate an affirmative contractual obligation on trademark licensors to engage in quality control.

Who Wants Some Football with Their Commercials?

"mercedes-benz stadium in background of super bowl trophy and new england patriots and los angeles rams football helmets when most viewers cared more about the commercials"

Super Bowl LIII was the culmination of the 2018-2019 National Football League season. It was a hard fought game between the New England Patriots and Los Angeles Rams with the Patriots winning their sixth Super Bowl. Although the game was entertaining, a significant number of people tuned in just for the ads.

Prior to the Super Bowl, the American Marketing Association published some interesting statistics about the big game. According to the AMA article, the price for a 30 second advertisement was more than $5 million. In 2018, 114 million people watched the Super Bowl, which represents about a third of the United States population. About 25% of surveyed Super Bowl viewers consider the commercials to be the most important part of the game.

At first impression, these statistics convey that only a select group of companies are capable of taking advantage of the Super Bowl platform to promote their goods or services. But for trademark owners the statistics should represent something more. These statistics are the type of information trademark owners need to collect to establish consumer recognition of their brands for purposes of secondary meaning and to established the strength of their mark.

Spending $5 million on a commercial is a significant number, but if it reaches only a relatively small number of prospective purchasers then its significance decreases. Context is key when assessing secondary meaning and strength. As a trademark owner, you should track not only advertising spend but also advertising reach. Internet advertising makes this easy by collecting impression statistics, but this type of data should be collected for other forms of advertising as well.

If you watched the Super Bowl for the commercials, you can see who the winners and losers were by checking out the USA Today Ad Meter. You can even exercise your Super Bowl viewer right and weigh in with you opinion.

KFC Extends Brand Again With Gravy Candle

"KFC's gravy candle"

Gravy candle. Yes, you heard me right. Gravy candle. If you thought the smell of Kentucky Fried Chicken’s crispy fried chicken enveloping your home from the fireplace was not enough, KFC agreed with you. That’s why it announced the KFC gravy scented candle. Unfortunately for U.S. consumers, the candle is available only in the United Kingdom and only 230 are being manufactured.

As we discussed last December, KFC could acquire and maintain trademark rights in the United States for its mark in connection with candles even if the use on candles is limited throughout the year. The key is that the company would have to repeat this promotion each year. Not only is KFC’s decision to offer a fire log and candle under its brands a brilliant public relations tactic, but it is also an opportunity to increase the fame – for likelihood of confusion purposes – of its brands.

The United States Court of Appeals for the Federal Circuit has said that in the absence of direct evidence of fame the “fame of a mark may be measured indirectly by . . . the variety of goods bearing the mark.” Coach Services, Inc. v. Triumph Learning LLC, 101 USPQ.2d 1713, 1720 (Fed. Cir. 2012). And strong marks cast a long shadow that competitors must avoid. It would seem like a no brainer that KFC should be filing new trademark applications for its brands in connection with a fire log and gravy candle, but to date it has not.

The Federal Circuit’s decisions on the issue of fame do not require the trademark owner to federally register its brands for all the goods or services it offers under the marks. But there is so much benefit that comes with a federal registration, and some of those benefits are a presumption of trademark validity, ownership, and the exclusive right to use the mark in connection with registered goods or services.

The goods new is it is not too late for KFC to change course and file some of these applications because as we seen in prior cases the sooner you file the trademark application the better.

Technical Goods Require Examination of the Actual Goods at Issue

"Artemis Health software is technical goods"

Pick up a Trademark Trial and Appeal Board decision involving a likelihood of confusion refusal and will likely see the statement that the relatedness of goods factor must be decided based on goods or services as they are described in the applications or registrations at issue. No consideration is given to the actual goods or services at issue. This is why when conducting a preliminary trademark search it is imperative to focus on the descriptions of goods rather than what you learn through an Internet search.

There is an exception to this general rule. When the nature of the goods or services is technical in nature or the description is vague, extrinsic evidence may be offered to understand the meaning of the descriptions. The TTAB issued one case that applied this exception in 2018 and we recently saw the first case of 2019 to apply the exception.

Reproductive Medicine Associates of New Jersey, LLC applied to register the mark ARTEMIS for “computer software platforms for use by fertility healthcare providers for the purpose of accessing patient electronic medical records.” The Trademark Office refused registration of this mark on the ground that it was likely to cause confusion with a prior registered mark ARTEMIS HEALTH (HEALTH disclaimed) for “software as a service (SAAS) services featuring software, namely, for analysis, monitoring, report generation, planning, risk and expense management and decision making regarding health care information and utilization of employees.”

The Trademark Office argued that this broad description covered software used by fertility healthcare providers for accessing electronic medical records. Reproductive Medicine Associates of New Jersey argued that the ARTEMIS HEALTH description was limited to managing employee benefits. The TTAB found the goods were technical in nature and the ARTEMIS HEALTH description was vague. Therefore, extrinsic evidence of the actual goods was allowed, which lead to the ultimate conclusion that the two software applications were unrelated.

This is an important decision for trademark searchers when formulating a search plan and reviewing the search results. When goods or services are technical nature, more is needed than merely a similar nature and similar field in order for relatedness to be found.

BOB’S Take on the Seattle NHL Team Name

"Welcome sign to Seattle NHL team"

The National Hockey League recently announced the addition of a new team in Seattle, WA bringing the total number of teams in the league to 32. This is an exciting time for hockey fans, but also an exciting time for namers and trademark searchers. Shortly after the announcement of the new team in Seattle, the speculation began about the new team name. It did not take long for the list of prospective names to be leaked and for Vegas to start putting odds on which team name will emerge victorious. 

Here is the list of prospective names:

Vegas believes the EMERALDS is the odd on favorite to be the name of the new hockey club. Being the inquisitive trademark searchers that we are, we want to know what BOB thinks the name should be. We used BOB’s patent pending, multiname search functionality to conduct the search. 

First, we downloaded the Sample Excel Worksheet. Next, we entered the proposed names under the “Mark” column. In the “Wild Card” column, we used the truncation symbols we believe will result in a broad enough search to uncover any potential conflicts with the proposed names.

We saved the Excel Worksheet to our desktop and went back to BOB’s website. There, we uploaded the Excel Worksheet and selected a goods and services description. 

We chose “Entertainment Services” because a hockey game is entertainment and we want to know about other entertainment services that may have names similar to the names the new Seattle franchise is interested in. It is always a good idea to use a broad description of goods or services in a trademark search. You can’t eliminate marks from the results as not being concerning if you don’t find them in the first place.  

Finally, we entered our email address – bob@trademarkbob.com – and clicked “Import.” We received a message that our list was uploaded, the 13 credits were deducted from our account, and within minutes the results were in our in-box. 

What we learned is that there is a crowded field for every mark being considered by the Seattle franchise except for TOTEMS. In other words, there are other entertainment services being offered in connection with the entire proposed name or a portion of the proposed name. And because none of these marks are for “entertainment services, namely, hockey games,” Seattle franchise should be safe to adopt anyone of them.