Will the Trailblazer Benefit from Residual Goodwill in the U.S.?

Chevy license plate residual goodwill for trailblazer"

The Chevy Trailblazer is making its comeback to the United States after a ten-year hiatus. Chevy stopped production of the SUV in the U.S. in 2009, but did that effectively stop its trademark rights in the TRAILBLAZER mark as well? Likely not if Chevy can benefit from the concept of residual goodwill (also known as lingering goodwill).

The United States Patent and Trademark Office has a policy that absent an extraordinary situation, everything filed with the Trademark Office will remain public. This includes any pending applications or registrations that subsequently are abandoned. When an application or registration is abandoned, the record is marked “dead” in the Trademark Office’s database.

The legal precedent is legion that “dead” registrations cannot prevent the registration of a subsequent mark. Nevertheless, some trademark searchers argue that reviewing “dead” records is time well spent because abandoning a registration is not tantamount to abandoning all trademark rights and because of the concept of residual goodwill.

Residual goodwill occurs after a trademark owner has permanently discontinued use of a trademark or service mark (i.e., abandoned the mark), but there remains some minimal use of the mark in connection with selling off inventory, for example, or in connection with related goods or services. This argument generally only succeeds when additional factors favor a finding of non-abandonment, for example, where there has been a continued presence of branded products in the marketplace or the manufacture and sale of replacement parts.

It seems pretty clear that General Motors permanently discontinued use of the TRAILBLAZER mark for vehicles when it decided to end production. However, General Motors was smart when it prepared its trademark application for the TRAILBLAZER mark back in 1997. The description of goods in the TRAILBLAZER application read “motor vehicles, namely, sport utility vehicles, engines thereof and structural parts therefor.” According to the General Motors Parts Store website, parts for the Trailblazer continued to be available after production of the SUV stopped. General Motors next renewal deadline is July 1, 2019, so we will see what General Motors renews.

Service Mark Strength Can’t Be Established By A Strong Trademark

"orange grove trees where Sunkist has strong trademark rights can't establish service mark strength"

Trademark strength for likelihood of confusion purposes is often misunderstood for fame in the context of dilution. The two concepts are different with fame for dilution being difficult to achieve. The common mistake service mark owners make is to assume that because their rights are strong for particular goods or services that this strength transfers to other goods or services. Trademark strength in the likelihood of confusion context does not transfer this way, which is a lesson Sunkist Growers, Inc. learned too late.

Sunkissed Families sought to register the service mark SUNKISSED FAMILIES (in standard characters with FAMILIES disclaimed) for “information in the field of parenting concerning the health of children” in International Class 44. The Trademark Office approved the mark for publication and Sunkist Growers, Inc. opposed.

Sunkist Growers plead numerous registrations for marks containing SUNKIST in connection with a wide variety of goods and services. However, because Sunkist Growers did not plead a family of SUNKIST marks, the Board focused on the registration with the most relevant description; namely, SUNKIST KIDS (Stylized) for “education and entertainment services, namely, providing a website featuring games, quizzes, experiments, educational lesson plans for teachers and educators, and related multimedia materials all in the field of food, health, and diet for the benefit of children” in Class 41. All trademark searchers should note that the Board looked for related services descriptions not overlapping International Class numbers.

Sunkist Growers argued that its mark was commercially strong entitling it to a broad scope of rights. The Board found that while Sunkist Growers provided evidence of its strength in the fruit field it provided no evidence of the strength of the SUNKIST KIDS mark in the education and entertainment services field. Therefore, the Board held that the SUNKIST KIDS mark was entitled to a normal scope of protection afforded to inherently distinctive marks. Sunkissed Families was only able to must 9 instances of third-party use of the SUNKIST mark, which was less than the 10 third-party registrations or use needed to establish conceptual weakness.

Abusive Trademark Applications Muddy the USPTO Database

"United States Patent and Trademark Office where trademark applications are filed"

Andrei lancu – the Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office – recently testified before a Congressional oversight committee that he could use help tackling the problem of abusive trademark applications. From 2013 to 2018, the USPTO reported an 1100% increase in trademark applications from China. The problem, however, with foreign applications is not just with China.

The problem with foreign applications stems from the fact that trademark applications in a foreign applicant’s native country are filed differently than in the U.S. Most countries do not require proof of use before issuing a registration, and some countries will let the applicant apply for every good or service in a particular International Class even if the applied-for mark will not be used with the vast majority of those goods or services.

Given the foreign applicant’s experience in their native country, the problem in the U.S. becomes obvious. Foreign applicant’s file U.S. trademark applications like they file trademark applications in their native country. The USPTO does not currently require a U.S. licensed attorney to file the applications for the foreign applicant. Accordingly, U.S. trademark applications filed by foreign applicants contain broad descriptions of goods that will never be used with the mark.

These foreign applications can cause all sorts of havoc for trademark searchers because of the Trademark Office’s presumptions. When goods or services descriptions are unrestricted the Trademark Office assumes the description covers all goods of a similar nature, travel in all channels of trade, and appeal to all classes of consumers. When a trademark searcher encounters a broad description with a similar mark, you have to assume it could be cited against the registration of your proposed mark. Then you are left with deciding how to respond to the issue. In the case of a foreign applicant, the likely response is a petition to cancel either on the ground of fraud or void ab initio.

Trademark owners should not have to incur this expense. Foreign applicant’s should ensure their applications comply with U.S. filing requirements. Director lancu testified that the agency has ramped up training for trademark examiners to them help spot troublesome applications, escalated a process to cancel fraudulent marks, and started piloting software that can help detect images in applications that have been tampered with on Photoshop. The agency is also considering requiring all foreign applicants to be represented by a licensed U.S. attorney.

The Board Throws Another Curveball on the Strength Factor

"baseball pitcher throwing a curveball like the Board recently did"

The strength factor in the likelihood of confusion analysis is very important, and it’s not easy to establish either way. The strength analysis becomes even more difficult when the Trademark Trial and Appeal Board throws curveballs.

Friedman and Wieder Enterprises Inc. applied to register the mark HULA DELIGHTS (in standard characters) for “gift baskets featuring processed nuts.” The Trademark Office refused registration of the HULA DELIGHTS mark based on a prior registered mark HULA PRINCESS for “shelled nuts and roasted nuts.”

Friedman and Wieder Enterprises attempted to make the weakness argument with respect to the term HULA. In support of its weakness argument, Friedman and Wieder Enterprises submitted 26 third-party registrations for marks containing the HULA word and identifying some type of food product. The applicant was on the right track exceeding the minimum number of third-party registrations generally required to make the weakness argument.

However, Friedman and Wieder Enterprises made the mistake of assuming all food is related. Of the 26 third-party registrations offered, none identified nuts or even gift baskets with nuts. And Friedman and Wieder Enterprises did not offer any evidence or legal precedent to demonstrate that any of the food identified by the third-party registrations was related to nuts. Therefore, despite offering 26 third-party registrations, Friedman and Wieder Enterprises effectively had 0 third-party registrations supporting its weakness argument.

Nevertheless, the Board concluded that even though HULA is arbitrary when applied to shelled and roasted nuts, and there is no evidence of third-party use, there is evidence of third-party registrations for similar marks in connection with a variety of food products. Therefore, the HULA PRINCESS mark was entitled to a narrower scope of protection than what inherently distinctive marks normally enjoy.

Huh? The Board just finished concluding that the 26 third-party registrations were given little probative value. The moral of this story is that any similar mark for a good or service in the same broad category is enough to establish the weakness of a term or mark.

To try and make sense of this case you could chalk it up to simply a bad decision. The problem is that the Board does not reverse itself. So this is a decision that future Examining Attorneys will cite when the situation suits them, and attorneys in inter partes proceedings will cite when the situation suits them. What this case highlights is the importance of starting any legal research with the United States Court of Appeals for the Federal Circuit, and then working your way to the TTAB precedent if necessary.

Trademark Strength is the Most Misapplied Factor

"man shooting arrow at blurry target metaphor for misapplying strength factor"

The two most talked about likelihood of confusion factors are the: (1) similarity of the marks; and (2) relatedness of the goods or services. While these factors possess their own intricacies, trademark applicants seem to misapply the trademark strength factor the most. The misapplication of this factor then leads trademark applicants to make poor filing and prosecution decisions.

Two recent Trademark Trial and Appeal Board decisions demonstrate the problem when misapplying the trademark strength factor. Ming’s Mark Inc. applied to register the mark POWER TECHON for, among other goods, “electrical power extension cords.” Gehr Industries, Inc. opposed the registration of Ming’s Mark on the ground that it was likely to cause confusion with its prior registration for POWER TECH in connection with “electric extension cords for use with portable electric hand tools . . . .”

Ming’s Mark argued that Gehr Industries’ POWER TECH mark was weak and attempted to prove it the following ways:

  1. Offering the dictionary definitions of POWER and TECH. Unfortunately, Gehr Industries’ POWER TECH mark was registered on the Principal Register so under Section 7(b) of the Trademark Act the mark was presumed valid. And since the registration was not based on Section 2(f) of the Trademark Act (i.e., acquired distinctiveness), the mark was at least suggestive.
  2. Offering TESS listing of 100 third-party pending applications and registered marks for or including the POWER term in International Classes 9 and 2. Offering the same TESS listing for the TECH term. First, listing from the Trademark Office database is not evidence. A trademark applicant must submit title and status copies of each registration. Second, don’t waste your time with applications, the Board will not consider them. Third, make sure the third party registrations correspond to the mark you are claiming is weak. In this case, third-party registrations for POWER TECH needed to be offered. Fourth, don’t focus on the class numbers. the focus of the third-party registrations needs to be on identical or related goods.
  3. Offering the fact that other Examining Attorneys registered marks for or containing POWER TECH without issue. Prior decisions by Examining Attorneys do not bind subsequent Examining Attorneys. Each trademark application must be decided on its own merits and you will be reminded of this time and time again if you try to make this argument.

None of Ming’s Mark’s strength arguments persuaded the Board; therefore, the opposition was sustained.

Here for the Girls, Inc. sought to register the mark HERE FOR THE GIRLS for providing emotional support services for young women affected by breast cancer. The Trademark Office refused registration of this mark on the ground that is was likely to cause confusion with the prior registered mark FOR THE GIRLS in connection with promoting public awareness of breast cancer.

Here for the Girls argued that THE GIRLS was weak by offering Google search results. Google search results are ineffective strength evidence because they provide little context with respect to the use of the mark. To make Internet evidence of record and persuasive on the strength factor, you need to offer pages from the website and some context for how many consumers likely encountered the website. Here for the Girls did none of this; therefore, the Board concluded it had no evidence to support its weakness argument.

Getting the strength analysis right is critical and something that must be assessed during the trademark search process, and certainly when a registration refusal is made or an enforcement proceeding is threatened or commenced.

Video Conferencing is a Related Service to E-mail

"INFOCUS MARKETING e-mail service was a related service to video conferencing"

The Trademark Trial and Appeal Board relied on evidence in the real world marketplace to conclude that video conferencing is a related service to the electronic transition of messages like e-mail. This decision is a good reminder that intuition about whether certain goods or services are related can lead to wrong decisions.

InFocus Corporation filed a service mark application to register the mark INFOCUS (Stylized) for “video conferencing services, namely, providing cloud-based telecommunications connections between video conferencing systems for video calling” in International Class 38. The Trademark Office refused registration of the mark on the ground that it was likely to cause confusion with a prior registered mark for INFOCUS MARKETING (in standard characters with MARKETING disclaimed) for direct mail and e-mail marketing services.

The Trademark Trial and Appeal Board found the marks at issue were similar to both contained the dominant word INFOCUS and the rights in the cited mark extended to all forms of stylization of the word INFOCUS. The similarity of marks factor favored a finding of confusion.

As for the relatedness of the services, the Trademark Office offered 15 third-party websites that promoted video conferencing and some type of electronic messaging such as e-mail, text, or instant messaging. In a majority of these websites, the messaging feature is ancillary to the primary services, which is video conferencing. Nevertheless, because InFocus Corporation made the mistake of not petitioning to partially cancel the INFOCUS MARKETING registration to narrow the identification of services description to e-mail as part of a marketing campaign, the Board considered all forms of electronic messaging whether ancillary to a primary service or not.

When the marks at issue are identical, trademark searchers need to take a closer look at goods or services their intuition is telling them may not be related. We know that when marks are identical, less relatedness between the goods or services at issue is required in order to create a likelihood of confusion. Looking at prior decisions and paying attention to what any competitors are offering should be considered.

No Brand Extension When Giving Branded Clothing to Employees

"brand clothing polo shirt"

Companies give branded clothing items to their employees to wear during the performance of their job. Make the branded clothing stylish enough and the employee may just wear it out socially as well. Brand extensions are helpful to increasing the conceptual strength of the mark, so being able to extend a brand to clothing or anything else can be a positive thing. Unfortunately, giving branded clothing to employees will likely not extend your brand to clothing because it likely does not qualify as transport in actual trade.

Trademark rights are based on use of the mark in commerce, and for use to be sufficient to establish trademark rights it must: (1) be a bona fide use in the ordinary course of trade; and (2) not be merely for the purpose of reserving rights in a mark. The use must a genuine commercial use as opposed to use solely for the purpose of establishing trademark rights. Accordingly, whether use is genuine is based on what is a typical commercial use within the relevant industry.

Commercial use does not mean that a sale must occur. A mark is used in commerce in connection with goods when the goods are sold or transported in commerce. For a sale or transport to qualify as use in commerce it must be: (1) in actual trade; and (2) lawful. And in the case of transport as the basis, the use must also be: (a) of a finished product; and (b) open and public to actual consumers of the goods.

Transport of a good in actual trade means the good must benefit and have independent value to others, and cannot be an item that is transported incidentally in connection with other primary goods and services. Goods that are incidental to other primary goods and services: (1) are useful only in connection with a primary good or service; (2) are inextricably tied to a primary good or service; and (3) lack independent value.

Branded clothing given to employees is connected to the primary purpose of the business. It is incidental to the primary purpose of the business. Generally, the branded clothing is useful only in the performance of the employee’s job. And, generally, it lacks independent value. Branded clothing given to employees functions more like advertising or promotional material, which is insufficient to establish trademark rights for goods.

Lessons from Trademark Litigation Over PATAGONIA for Beer

"Patagonia beer packaging spurs trademark litigation"

The Patagonia clothing company commenced trademark litigation with AB InBev over what has been characterized as its “launch” of a new beer brand PATAGONIA in Colorado. Although, this characterization is not accurate. Nevertheless, on its face, the Patagonia clothing company should have a real concern with AB InBev’s PATAGONIA beer brand. AB InBev is BIG and could easily saturate the market with advertising bearing the PATAGONIA brand.

Patagonia was founded as a climbing hardware manufacturing company in about 1960. By about 1970, the company expanded into clothing and it was also the time the PATAGONIA mark was adopted. Fast forward to the present, and the Patagonia company had revenue of about $209M in 2017, and has 33 retail locations nationwide.

And Patagonia expanded into beer in 2016, but not under its PATAGONIA mark. Its beer is branded LONG ROOT ALE. Unfortunately, there is a reason for this.

On July 24, 2007, Warsteiner Importers Agency, Inc. filed an intent-to-use application for PATAGONIA (in standard characters) in connection with “beer.” A statement of use was filed on July 17, 2012 with a specimen of use consisting of a beer bottle with a label depicting a mountain range and the word PATAGONIA. The PATAGONIA application for “beer” matured into a registration on October 16, 2012.

About two months later, on December 20, 2012, Anheuser-Busch, LLC acquired the PATAGONIA registration from Warsteiner Importers Agency, Inc. The assignment was officially recorded with the United States Patent and Trademark Office on February 8, 2013. On October 5, 2018, the PATAGONIA registration was maintained by Anheuser-Busch and the Declaration of Incontestability was filed. This declaration can only be filed if the registered mark has been continuously used for the previous 5 years. This declaration must be valid because Patagonia clothing did not petition to cancel the PATAGONIA registration for beer on the ground that it was abandoned.

For the news outlets to characterize AB InBev as having “launched” the PATAGONIA brand is not accurate. It appears that the PATAGONIA brand for beer has been around for almost 7 years and Anheuser-Busch was in charge of the brand for 99% of that time.

The more pressing problem for Patagonia clothing company is the Colorado Statute of Limitations for Unfair Competition claims. The federal Trademark Act does not contain a statute of limitations like the Copyright Act. Instead, courts look to state unfair competition statutes of limitation to determine whether a trademark infringement claim was not brought in time.

In Colorado, the statute of limitations is 3 years from the time the plaintiff knew or should have known of the infringing act. The Patagonia clothing company has retail stores in Boulder, CO and Denver, CO, and is a large company. Therefore, the key question in the case will be whether Patagonia clothing company knew or should have known of AB InBev’s PATAGONIA beer brand by 2015. If this is the case, then Patagonia clothing company will not succeed in its lawsuit.

The takeaway from this case is the importance as trademark owners to monitor the filings at the Trademark Office, and have a thought out enforcement strategy. Had Patagonia been monitoring the Trademark Office, maybe it would have acquired the PATAGONIA trademark application before Anheuser-Busch. That would have avoided trademark litigation.

Trademark Dispute Driven By Emotions Not Necessarily Fact

"Trademark dispute over Bittman's Medium publication"

About a month ago, Mark Bittman – a cookbook author and former New York Times columnist – announced the launch of his new online food publication called SALTY. His publication would cover the world of food with an eye for politics and inequality, in addition to recipes and personal essays. Unfortunately for Mr. Bittman, another publication was already using the SALTY name and took issue with Mr. Bittman’s choice of name.

The focus of the other SALTY publication was a sex, dating, and relationships newsletter for women, transgender, and non-binary people. The founder said SALTY was chosen because “it’s visceral. Sex is salty, sweat is salty, sweat is salty, tears are salty.” This publication has not been around for a long time having been launched in March 2018.

When the founder learned of Mr. Bittman’s publication she reportedly was “really angry.” This reaction is not uncommon in trademark disputes. Unlike copyrights and patents, trademarks are supposed to embody all the good things about a good or service and help tell the story. That’s why from the beginning founders in particular are closely tied to their trademarks.

When a trademark dispute rears its ugly head, it can be difficult for trademark owners to look past the emotion and make decisions based on the facts of the case. But getting to the facts is key to making smart decisions. With every trademark dispute, the question must be asked “Is this other use harming me” or “could this use realistically harm me in the future”?

The word “salty” has multiple meanings and conveys different impressions depending on the context of the use. This means that – assuming no famous mark for dilution purposes exists – identical marks may be capable of peacefully co-existing in the marketplace. Not all publications are same for likelihood of confusion purposes.

This was the case with the SALTY publications. First, the two marks – while visually and phonetically identical – conveyed very different meanings because they were exploiting different meanings of the “salty” term. Second, their target audiences are very different because the subject matters of the publications are very different.

It is unlikely that any consumer would mistakenly believe that Mr. Bittman’s publication is associated with the first SALTY publication such that Mr. Bittman will unjustly benefit from more visitors, subscribers, or readers. Because the subject matters are so different, there is no way the first SALTY publication will lose readers or visitors because of Mr. Bittman’s publication. Mr. Bittman was a former New York Times columnist, so the likelihood that his publication would be so poor that it would negatively reflect on the first SALTY publication is highly unlikely. Finally, the publications both are new, so there is no potential loss of control of a reputation because Mr. Bittman’s publication is so large.

By getting through the emotion and looking at the facts, this isn’t a case that the first SALTY publication should spend the time pursuing. And hopefully, first SALTY does not pursue it because Mr. Bittman voluntarily rebranded his publication to MEDIUM X BITTMAN. However, the name change wasn’t enough, first SALTY is looking for a payday.

Trump Takes Aim at Counterfeit and Pirated Goods

"counterfeit purses"

The counterfeit goods market is a global problem and President Trump recently issued a memoranda taking aim at it. The memoranda states that it is the policy of the Trump Administration to protect American businesses, intellectual property rights holders, and consumers from counterfeit and pirated goods, including those imported through online third-party marketplaces and other intermediaries.

The Organization for Economic Co-operation and Development (“OCED”) indicated that $100 Billion each year in counterfeit goods comes at the expense of United States intellectual property owners. And the Government Accountability Office found that, based on a small sample of frequently counterfeited goods, more than 40% of these goods purchased online were counterfeit. In addition to studying the existing policies of procedures of online retailers and other third-party intermediaries, the memorandum also orders the report o include the identification of administrative, statutory, regulatory, and other changes, including enhanced enforcement actions.

Amazon responded to the White House’s memoranda saying that it strictly prohibits the sale of counterfeit products, and has built industry-leading tools like Brand Registry, Transparency, and a newly launch Project Zero to protect consumers and intellectual property rights holders. Until the launch of Project Zero, Amazon’s tools are all reactive instead of proactive.

Another problem with Amazon’s Brand Registry program and other similar programs is that it does not extend protection as broadly as it should and is too easy to game by a counterfeiter. First, Amazon’s program and others like it apply only to registered trademarks. In the United States, registration is not required to establish trademark rights. Year to date, only 90,192 registrations have been issued. While that seems like a lot, it is a fraction when compared to the number of new businesses started every year.

Second, only trademarks registered on the Principal Register need apply. If your mark happens to be on the Supplemental Register, you are out of luck. Unless, you register the entire logo on the Principal Register and disclaim the literal portion of the mark, then you are eligible for the program. But then all the counterfeiter needs to do is use only the literal portion of the mark to avoid the consequences of the Brand Registry.

What this means for trademark owners if they will be doing any business online is that registration is a necessity even though it is not legally a requirement.