incoroprate Archives

May 25, 2018May 24, 2018

Avoid a Possible Attorneys’ Fee Award with a Trademark Search

The Supreme Court’s decision in Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S. Ct. 1749 (2014), provided an opening for a more liberal standard for awarding attorneys’ fees in trademark cases. Octane Fitness was a patent case where the Supreme Court interpreted the Patent Act’s identical attorney fees language: “The court in exceptional cases may award reasonable attorney fees to the prevailing party.” 35. U.S.C. § 285.

Before Octane Fitness, attorneys’ fees were only recoverable in an “exceptional case” under the Lanham Act if there was evidence that the defendant acted in bad faith or willfully infringed the plaintiff’s trademark rights. Both acts were very difficult to prove, so attorneys’ fees awards were very rare in trademark infringement cases.

Octane Fitness held that, “an ‘exceptional case’ is simply one that stands out from others with respect to the substantive strength of a party’s litigation position (considering both the governing law and facts of the case) or the unreasonable manner in which the case was litigated.” The Third, Fourth, Fifth, Sixth, Ninth, and Federal Circuits have held that Octane Fitness applies to awards of attorneys’ fees under the Lanham Act. The remaining circuits are expected to follow suit.

Under the old, exceptional case standard, a failure to search alone was insufficient to conclude that a defendant acted in bad faith or willfully infringed the plaintiff’s mark. In fact, in some judicial circuits, a finding of actual confusion is a condition precedent to an award of attorneys’ fees, which Octane Fitness does not change.

Under the new, more liberal Octane Fitness standard, a failure to search alone will still be unlikely to warrant an attorneys’ fee award. But it may be a consideration when weighing substantive strength of a party’s litigation position. Defendants that did not conduct a search and do not have reasonable arguments supporting the absence of a likelihood of confusion need to carefully consider the impact protracted litigation may have on a possible attorneys’ fees award.

Most trademark attorneys advise their clients to obtain, at a minimum, all the top-level domain names associated with their trademark even if they will only use one of those domain names because the low-cost of a domain name registration is cheap insurance against the problem of cybersquatting compared to the cost associated wrestling a domain name away from a cybersquatter.

Conducting a reliable search using a reputable trademark search engine like BOB can function the same way as purchasing the available top-level domain names by assisting with a reasonable argument that no likelihood of confusion exists at a low cost.

May 24, 2018May 23, 2018

How to Conduct a Proper Trademark Search

A proper trademark search requires the consideration of three factors: (1) similarity of the marks; (2) relatedness of the goods or services; and (3) dilution. Generally, DIY searchers mistakenly believe they are conducting thorough searches by searching for the mark and any alternate spellings of the mark and considering closely related International Classes, which as we discussed in yesterday’s post is the wrong focus.

Searching for different spellings of a proposed mark is important, but the similarity of the marks analysis is deeper than looking for similar spellings. As trademark searchers, we need to assess the proposed mark to determine its dominant feature or features. We then need to include those dominant features in our search equation because the Trademark Office has said numerous times that more weight can be given to dominant features of a mark when determining similarity. Logically breaking up a mark to search its components is necessary because searching only for the identical mark, which is often called a direct hit search is – in most cases -worthless.

We then need to consider the relatedness of goods or services for two reasons. The first reason is because relatedness of the goods is an important likelihood of confusion factor. The second reason is so that we can properly assess dilution in the search results. You cannot properly evaluate dilution if there is no accurate consideration of relatedness.

Dilution occurs when similar marks or components of a mark for related goods or services owned by different owners peacefully co-exist on the Principal Register. When dilution is present in the search results, then the similar, shared elements of the marks in the results have less weight. If you are not properly considering the relatedness factor, then your dilution assessment can be flawed as well.

BOB focusses on the key considerations for a proper trademark search: (1) similarity of the marks; (2) relatedness of the goods or services; and (3) dilution.

May 23, 2018May 22, 2018

International Class Numbers are Irrelevant in the Trademark Search Game; Relatedness of Goods or Services is What Matters

The case law is clear and settled that the international classification “is wholly irrelevant” to a likelihood of confusion claim. See, e.g., Jean Patou, Inc. v. Theon, Inc., 29 U.S.P.Q.2d 1771, 1774 (Fed. Cir. 1993). Nevertheless, there is far too much emphasis placed on searching the right International Classes than on finding goods or services that may be related to the goods or services offered or intended to be offered in connection with a proposed mark. The Nice Classification system is merely a way for Trademark Offices around the world to organize the millions of applications that are filed each year. So why do so many trademark search engines and some manual searchers rely on international class numbers as a way for evaluating potential conflicts between marks?

For one, old habits die-hard. DIY Searchers have been using the International Class System in their evaluations for years and it presents itself as a shortcut to evaluating the relatedness of goods factor. After all, the system does not randomly categorize goods or services together. But that does not mean that all goods in a particular class number are legally related.

To evaluate the relatedness of goods factor requires research to determine what goods and services have been found to be legally related to one another. Although DIY Searchers have access to some legal databases for free – TTAB’s e-FOIA page and Justia, it is time consuming to conduct this research. Considering the similarity of the marks and the International Classes only is not a thorough trademark search and can result in a costly mistake. As we discussed in a previous post, a legal proceeding can cost $300,000 or more and the cost to rebrand can cost at least $10,000.

BOB provides a thorough search by considering not only the similarity of the marks factor, but also relatedness of the goods or services and dilution.

May 22, 2018May 21, 2018

Related Goods Watch 2018: Athletic Wear and Jewelry

In In re Henson, the Trademark Trial and Appeal Board had to decide whether athletic wear and jewelry are related goods. Zackery Henson applied to register the mark LYKAN for “athletic apparel, namely, shirts, pants, shorts, jackets, coats, hats, caps, athletic uniforms, button-down shirts, graphic T-shirts, short-sleeved T-shirts, long-sleeved T-shirts; microfiber performance shirts; women’s apparel, namely, tops, jackets, coats, and pants; socks, underwear.” The Trademark Office refused registration based on a prior registration for the identical LYKAN mark for “watches” and “jewelry.”

The Trademark Office offered several retail websites that sell both athletic apparel and watches. The retail websites were primarily for department stores though. Nevertheless, the Trademark Office found that this evidence demonstrates consumer expect althetic clothing and watches or jewelry to be offered under the same mark.

Mr. Henson argued that the examples the Trademark Office relied on were for large, well-known brands like Macy’s and Adidas. But the TTAB was not persuaded that this meant the average consumer does not expect athletic apparel and watches or jewelry to emanate from the same source. In fact, the TTAB found that this made the relatedness of the goods more rather than less likely.

Finally, the TTAB reiterated that the relatedness of goods determination must be made on the descriptions in the application and registration, not the marketplace reality, and that the international class numbers are irrelevant to the likelihood of confusion analysis. Because Mr. Henson did not narrow his description of goods and did not attempt to the registrant’s description, his athletic apparel and the registrant’s watches and jewelry were deemed to travel in the same channels of trade and appeal to the same class of consumers.

When it comes to assessing relatedness of goods or services, it is necessary to consider prior court decisions because your intuition about what goods or services may be related is too prone to be incorrect.

May 21, 2018May 20, 2018

Trademark Searches Should Include Broad Goods/Services Descriptions

Using the right goods or services description is key to conducting a trademark search will uncover potential issues with a prior mark. In a prior post, we discussed that it is the goods or services description that is important not the International Class Numbers. When thinking about what goods or services description to use, it is tempting to use the exact wording that describes the goods or services that will be offered with the proposed mark. But using a narrow description in the trademark search is a mistake. Instead, you want to use a broad description.

Why use a broad description? Because trademark owners as a filing strategy try to obtain as broad a description as possible. After all, the goods or services descritpion dictates, in part, the scope of the trademark owner’s rights in a mark. A recent case from the Trademark Trial and Appeal Board demonstrates this filing strategy.

In In re Dyson Technology Ltd. the TTAB decided whether Dyson Technology’s “Suspended lights in the nature of LED lighting fixtures designed to be suspended from a ceiling with uplighters and/or downlighters, the aforesaid optimized to reduce eye strain and increase comfort and productivity; parts and fittings for the aforesaid goods” were related to “Lighting apparatus and instruments – namely, a hand- held combination spotlight and floodlight.” Based on the evidence submitted, the TTAB found that the goods were not related, but Dyson Technology’s identification of goods description did not start with this narrow and detailed description.

Dyson Technology filed its request for extension of protection into the United States on July 7, 2016 with the following goods description:

“Apparatus for lighting; electric lights; ceiling lights; desk lights; floor lights; wall lights; suspended lights; spotlights; lighting units; lighting fittings; uplighters; downlighters; combined uplighters and downlighters; lamps; LED lighting apparatus; reflectors; diffusers and lenses for lights and lamps; light bulbs; LED light bulbs; parts, fittings and accessories for the aforesaid good.”

The use of a semicolon (;) in a goods for services description indicates a new good. You can see that Dyson Technology began the application process attempting to register its mark for, among other goods, the broad description “suspended lights.” Dyson Technology received a registration refusal from the Trademark Office and attempted to overcome the refusal by amending its original identification of goods description to:

“ceiling lights; suspended lights in the nature of lighting fixtures design to be suspended from a ceiling with uplighters and/or downlighters; parts and fittings for the aforesaid goods.”

This amendment did not persuade the Trademark Office to withdraw the refusal and it issued a final office action refusing Dyson Technology’s trademark application. Dyson Technology responded to the final office action by further amending its identification of goods description to the actual description of its goods; namely:

“suspended lights in the nature of LED lighting fixtures designed to be suspended from a ceiling with uplighters and/or downlighters, the aforesaid optimized to reduce eye strain and increase comfort and productivity; parts and fittings for the aforesaid goods.”

You can see the progression of Dyson Technology’s identification of goods description. As trademark searchers, if you started with the third, more detailed description, you would have certainly missed marks that may have been concerning even though the third description describes the actual goods. But if you searched more broad for just “suspended lights,” you would have uncovered not only the broad descriptions but also the narrow ones as well because the narrow descriptions include the broad categories.

May 17, 2018May 16, 2018

Reverse Confusion is Important to Understand for Trademark Searchers

When we talk about the harm caused by confusion in the marketplace, we generally are referring to forward confusion. Forward confusion occurs when consumers mistake the junior user for the senior user and because of the confusion unjustly enrich the junior user at the cash register. Or if the confusion occurs outside of the checkout and the junior user offers a product or service that is inferior to the senior user, then the senior user can potentially lose sales over the mistaken connection.

If the senior user is a small company, forward confusion provides a scenario where a junior user could decide to intentionally infringe the senior user’s trademark. The incentive exists because the monetary damages in a forward confusion case are: (1) the senior user’s actual damages caused by the infringement; or (2) disgorgement of the junior user’s profits. Actual damages are difficult and costly to prove, so most trademark infringement cases involve disgorgement of profits. But profits are awarded only in those geographic areas where confusion was possible; hence, the incentive to intentionally infringe.

A junior user in a forward confusion case to make the decision knowing that if it is forced to pay over its profits in say Minnesota – and even if this amount is trebled, which a court has the authority to do – it was a worthwhile business risk to intentionally infringe. And this may be something as searchers we identify to a client because we have more fully investigated a potentially concerning record in the search results and determined the particular trademark owner is unlikely to expand beyond its current geographic area. That is until reverse confusion came into play.

Reverse confusion occurs when the junior user saturates the market with its mark so that consumer mistake the senior user for the junior user. In this case, the harm to the senior user is the loss of its ability to control its reputation. The monetary remedy in these situations is corrective advertising. The theory for corrective advertising is that the senior user needs an amount of money equal to what was spent by the junior user to take back control of its reputation.

This does not mean that the senior user is entitled to the same amount of money spent on a national advertising campaign. Generally, the senior user is entitled to a percentage of the national advertising spend based on the number of states the senior user is operating in. But the amount of money for corrective advertising will most likely be larger than an actual damage or profits award.

As trademark searchers, we need to keep reverse confusion in mind along with our the company’s marketing plans. This will impact how company’s decide to address problematic marks.

May 16, 2018May 15, 2018

Two More Good Reasons to Avoid Descriptive Trademarks: Pivoting and Expansion

David Koller wrote an interesting article titled “The 7 Deadly Sins of Naming Your Startup.” What makes this article interesting in part is that David identifies what not to do when most articles talk about what you should do. The number three issue on his list is protectability. Although a mark can be unprotectable for a number of reasons, for trademark searchers protectability means avoiding a likelihood of confusion with a prior mark.

But the number 3 issue is not what caught our eye. What caught our eye was the number 2 issue, which is extendability. David says that pigeonholing yourself into a specific industry, niche, product, or feature will make it harder and more expensive to pivot like many startups end up doing. It can also restrict your ability to grow. What David is referring to in a legal context is choosing a descriptive mark.

In prior posts, we have talked about how descriptive words can complicate the trademark search process because they increase the number of results that must be reviewed. We have also talked about descriptive marks are not immediately protectable, take time to acquire trademark rights, and receive the lowest amount of conceptual strength possible at law. Finally, we have talked about being unable to expand because of possible confusion issues.

Depending on the mark you choose, you may not need to worry about any potential confusion issues because your mark practically will not allow you to expand because it was too narrow to begin with. Descriptiveness is an issue many startups deal with because there is no guess-work with a descriptive mark. The name tells consumers exactly what you are selling. Starting with a name that requires some imagination also requires some effort to educate consumers about what you are selling.

It was an issue we faced when naming our trademark search engine. The advisors we worked with recommended that we adopt QuickSearch or something similar. We decided to go another way. We wanted a name that users could come to rely on as a partner or teammate. So we decided that a human name was appropriate for that purpose. BOB is not a name that immediately describes a trademark search engine, but is a name users can form a relationship with.

May 15, 2018May 14, 2018

How to Search Coined Words

We have talked before about the spectrum of distinctiveness and that on the far right side of the spectrum are the coined or fanciful marks. Coined or fanciful marks receive the most conceptual strength a trademark can receive. That is an important starting point for creating a strong brand.

How do you ensure that a coined or fanciful mark is available? It is important to recognize that even made up words draw inspiration from something. We will turn to our favorite brand-in-a-box websites – FlipSwitch Brands – to help illustrate this point.

There is a mark available for GENMERA. According to the website, the GEN portion of the mark is short for GENERATION and the MERA suffix suggests AMERICA. As the trademark owner or as the branding firm generating a list of names, it is important to include these terms in your search because shortening a word does not necessarily avoid a likelihood of confusion.

Click HERE to watch BOB conduct a trademark search of GENMERA in connection with “financial planning services, retirement.” We used BOB’s hybrid search button, which allowed us to identify the components of the mark: GEN, MERA. It also allowed us to identify the long form of these terms: GENERATION AMERICA.

May 14, 2018May 13, 2018

Structuring the Client-Branding Firm-Attorney Relationship Without Waiving the Attorney-Client Privilege

Here is a common situation:

Some branding firms have lawyers they use for trademark clearance searching. Those firms generally deliver more than just the trademark search results to the branding firm. A clearance opinion at some level accompanies the trademark search results. The branding firm then takes those trademark search results and creates a shorter list of names that is presented the client. Usually, the client is advised by the branding company to retain a trademark lawyer to conduct a trademark search on the shorter list of names. A second trademark search is conducted by the client’s trademark lawyer, and the trademark lawyer delivers the trademark search results and a clearance opinion to the client. Finally, the client informs the branding firm of which name it is going to adopt.

The lurking danger in this scenario is when the client, branding firm, and attorney forget that while they are all working towards a common goal their individual relationships need to stay independent. We discussed in a prior post that trademark search results cannot be protected through the attorney-client privilege or work product doctrine, but any opinion interpreting those results can be protected. When a communication is privileged, the party asserting the privilege does not have to disclose that communication to anyone, which is important in the trademark context because more often than not there is some debate about the availability of the mark.

The attorney-client privilege provides protection to clients asking their lawyers for legal advice, or providing the facts that the lawyer needs. This privilege can be waived when the privileged information is shared with a third-party that does not qualify as the functional equivalent of an employee. When this waiver happens, at a minimum, the individual communications can no longer be kept secret and in some cases a broader waiver that the subject matter contained in the communications is no longer privileged . In the context of a trademark dispute, this means all communications involving the availability of a proposed mark.

With this background, let’s go back to the example we identified at the beginning of this post. When the branding firm communicates the trademark search results it conducted to the client, only the search results should be disclosed. The branding firm should not disclose even one opinion about the availability of a mark to the client. This also includes trying to pass off the trademark lawyer’s opinion as the branding firm’s opinion. Likewise, the client should not share the opinion of its trademark lawyer with the branding firm.

Communications should be separate. The trademark lawyer should not be copied on communications with the branding firm and the branding firm should not be copied on communications with the trademark lawyer. This same rule goes for meetings and telephone calls. Whenever a legal discussion is going to occur, this needs to occur separate from the branding firm or trademark lawyer as the case may be.

When it comes to discussing the search results, all that should be said is “the trademark lawyer said it is or is not available.” As a branding firm, if you are questioning the trademark search or advice, you should advise your client to have its trademark attorney provide a second opinion.

May 11, 2018May 11, 2018

Strategies for Searching a Cannabis Company’s Name

Thirty U.S. states have legalized cannabis in some form, and Canada will likely become the first industrialized nation to legalize recreational use of cannabis this year. While the acceptance among the U.S. states is growing, the U.S. federal government is holding fast on its laws that characterize cannabis as an illegal controlled substance.

The Trademark Office has consistently held that to qualify for a federal registration the use of a mark in commerce must be lawful. Thus, for a mark to be eligible for federal registration, any goods or services for which the mark is used must not be illegal under federal law. In the context of an intent-to-use application, if the identified goods or services with which the mark is intended to be used are illegal under federal law, then the applicant cannot use its mark in lawful commerce and it is legally impossible for the applicant to have the requisite bona fide intent to use the mark.

Registration generally will not be refused based on unlawful use in commerce unless either: (1) a violation of federal law is indicated by the application or when a court or a federal agency responsible for overseeing activity in which the applicant is involved issues a finding of noncompliance under a relevant statute or regulation; or (2) when the applicant’s application-related activities involve a per se violation of a federal law.

This means that cannabis companies are unable to register their names for the actual cannabis products they sell. But this does not mean they cannot protect their names at all. Cannabis companies were forced to turn to goods and services that do not violate any federal laws in order to build a fence around their core product, which is contrary to what normally occurs when building a new trademark portfolio.

Cannabis companies started filing for water bottles, ash trays, smoking pipes, humidor, chocolate, candy, etc. The chocolate and candy descriptions could possible be blocked if the examining attorney issued a request for addition evidence. But if no request is made, the registration would issue. It is still vulnerable to a cancellation or opposition proceeding, but there may be a significant deterrent effect to having the registration before a challenge is made.

What does this mean for searchers? The lesson is that sometimes you need to think of what is related to the core goods or services of the trademark owner, and include those goods or service in your search equation. It also requires the searcher to ask questions about the trademark owner’s goods or services if your gut is telling you there may be an issue with what the trademark owner is trying to do.