BOB wishes everyone a happy and safe Halloween!
Too often we hear that the Secretary of State issued me a corporate name or an assumed name; thus, I have secured my trademark rights. Unfortunately, this way of thinking is wrong. The Secretary of State has no authority to grant trademark rights. Moreover, the Secretary of State is not evaluating company names in its database for confusion. As far as the Secretary of State is concerned, two company names can co-exist if the corporate entity designation is different (Inc. vs. LLC).
The majority of Secretary of State websites put too much emphasis on hurrying to reserve a company name. Some will even let you pre-register a name so you don’t lose it. The reality is that the trademark search should come first, then the reservation of the company name. Why, because most businesses use their company name as a trademark or service mark. Thus, the owner of federal registration can force a junior user to change its company name even though the Secretary of State issued the corporate name to you.
U.S. law recognizes the sanctity of communications between attorneys and clients; thus, the law will normally protect such communications from disclosure to third parties under the policy of attorney-client privilege. In Upjohn Co. v. United States, 449 U.S. 383, 389 (1981), the United State Supreme Court held that the primary purpose of the attorney-client privilege is to “encourage full and frank communications between attorneys and their clients, and thereby promote broader public interests in the observance of law and administration of justice.”
The attorney-client privilege rule appears to be straight forward, but there are misconceptions about the breadth of privilege; namely, it applies to everything and every piece of information given to an attorney. But the attorney-client privilege protects only the legal advice given to a client, not the underlying facts given to an attorney. With respect to trademark searches, the rule is settled that an attorney’s opinions relating to a trademark search are privileged but the trademark search itself is not privileged. See Fisions Ltd. v. Capability Brown Ltd., 209 U.S.P.Q. 167 (T.T.A.B. 1980).
There is value in having an experienced, trademark attorney review search results. But its not worth the extra money for an attorney to conduct a trademark search if the rationale is to shield the results from discovery by another party.
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.
AILPA recently released its 2017 Economic Study, and reported that the median cost of a clearance trademark search is $1,100. This number is based on an outside law firm performing the search. $1,100 is a lot of money to spend on a trademark clearance search, but as legal salaries continue to rise, so will this median number. The national average salary for a first-year associate in a law firm is about $153,000. The national average of a trademark paralegal is also high at about $55,000. And these numbers do not include other employment expenses like overhead and benefits.
As we discussed before, trademark searching is deceptively complex because of the nuance involved. But a computer can adequately account for the nuance and produce accurate results at a significant discount to the cost of a manual search. This does not mean that computers are here to replace attorneys, paralegals, or other professional trademark searchers. Instead, it is an opportunity to utilize technology to make the trademark clearance process more efficient, and change the way attorneys, paralegals, and professional searchers are used.
Instead of having the search performed by an outside firm, have BOB conduct the search and the search results interpreted by the outside firm. At $49.99-$14.99 per name, there no outside firm that can be as cost efficient as BOB.
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 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 different 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, and Ninth 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 decision of protracted litigation.
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 compared to the cost associated wrestling a domain name away from a cybersquatter.
BOB’s trademark search is similar. At $49.99 or less, you will not find cheaper insurance against a charge that you did not discharge your obligation to be a responsible trademark owner.
Truncation is a searching technique used in databases where a word ending is replaced by a symbol. Frequently used truncation symbols include a question mark (?) or a dollar sign ($). Different databases use different truncation symbols, so it is important to check for a Help menu or Search Tips for details about what symbols to use.
Truncation allows different forms of a word to be searched for simultaneously and will increase the number of search results found. The USPTO uses the $ to signify an unlimited number of additional characters in the search for a term root. For example, the truncated word laugh$ will search for results containing laugh, laughter, laughing, etc. Placing the truncation symbol too soon in word should be avoided. For example, hum$ will search for results containing humor, human, humbug, humerus, hummus, etc.
Soon, BOB will include the option to use truncation in the mark search field.
Dilution is an important concept when conducting a trademark search. When a mark or term revealed in the search results is diluted, small differences in a proposed mark may be sufficient to avoid a likelihood of confusion. But dilution cannot be accurately evaluated unless you first accurately evaluate the relatedness of the goods or services. Like other likelihood of confusion factors, similarity of the mark, relatedness of the goods and services, and strength directly impact each other. And dilution only occurs when multiple marks sharing a common element in connection with related goods and services peacefully co-exist with each other on the Principal Register of the Trademark Office.
Because BOB includes the relatedness of goods and services factor, it also accurately evaluates the presence of dilution in the search results.
The case law is clear and settled that 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 intended to be offered in connection with a proposed mark. The Nice Classification system is merely a way for Trademark Offices to organize the thousands of applications that are filed each year. So why is the system relied on 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 legal 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. In commenting on the recent settlement with Gorilla Glue Co., Ross Johnson, founder of GG Strains, said the lawsuit and rebranding efforts costs the company $250,000.
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.
Like most tasks facing new business or the creation of a new product, where to search for a conflicting mark can be a daunting task. Some people will say you need to pay a professional search company to look for any conflicting marks. Whereas, others will say a Google search is sufficient. Like most things in the law, the answer, unfortunately, is it depends on the business or product.
Absent a federal trademark registration, trademark rights are geographically limited in scope. This means that trademark rights extend only to those areas where the mark is being used and where the trademark owners reputation may have taken them. If a business decides to focus on a particular geographic area, a professional search for unregistered or common law rights may be unnecessary.
The benefit of a federal registration is that it takes those geographically restricted rights and expands them to the nation even if the trademark owner is not offering their goods or services in every part of the country. This means that a party who federally registers its mark can force a subsequent user to rebrand once the senior party enters the junior party’s market.
This means that every business must search the United States Patent and Trademark Office for any conflicting marks, but may save some money by not conducting a professional trademark search. Even if a business forego’s a professional search, an Internet search should still be conducted to uncover any unregistered rights in the geographic area where the business intends to do business.