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.

Interworking of the Similarity of the Marks Factor

"Cartier watch and two rings are jewelry that was the subject of a case involving similarity of the marks"

A recent Trademark Trial and Appeal Board decision is a good example of how the similarity of the marks, relatedness of the goods or services, and strength factors work together. Tai Fook Jewellery Company Limited sought to register the mark T MARK (in standard characters) for, among other goods, jewelry. The Trademark Office refused registration of Chow’s trademark application on the ground that its mark was likely to cause confusion with a prior registered mark TJ MARC & Design also for jewelry. .

Chow made the same losing argument about the sophistication of the consumers claiming that jewelry is personal; therefore, consumers will exercise care when making a purchasing decision. However, the Trademark Trial and Appeal Board said what it was said numerous times before that if the restriction does not appear in the goods or service description, then it will not read a limitation in to the description. Accordingly, the Board found the goods are legally related.

When goods or services are legally related, the channels of trade and classes of consumers are deemed to overlap. Moreover, less similarity between the marks at issue is required in order for a likelihood of confusion to exist.

Chow also made the common losing argument about the strength factor. Chow introduced a table of six third-party registrations – four shy of the 10 we believe is the minimum required to establish a weak mark – and then only one third-party registration containing the letters TJ and covering jewelry. Therefore, the rights in the TJ MARC & Design were not limited to a close representation of its mark.

When it came to the similarity of the marks factor, the Board stated that marks must be considered in light of the fallibility of memory. The proper focus is on the recollection of the average purchaser who normally retains a general rather than specific impression of trademarks.

Because the goods were legally identical, the fact that the marks began with the letter “T” and ended with the word MARK or MARC made the marks more similar than dissimilar. The crown design element and use of TJ instead of just the letter “T” were insufficient to distinguish the two marks because the TJ MARC & Design trademark was not weak, and consumer focus on the literal elements of a trademark before any design element (although this is debatable).

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.

Addition of House Mark Did Not Eliminate Confusion

"Sealy house mark does not distinguish COCOON trademark"

To add or not to add the house mark, that is the question. This is a good question because the Trademark Trial and Appeal Board has gone both ways on the question. In some cases, the Board has found that the addition of a house mark is sufficient to avoid confusion, and in others the Board has found that it aggravates the likelihood of confusion. In a recent decision involving the COCOON BY SEALY mark, the Board gave us some guidance on when to add the house mark.

Cocoon International Sales, LLC filed an application to register the mark COCOON BY SEALY (in standard characters) for “mattresses; pillows.” The Trademark Office refused registration of this mark on the ground that it was likely to cause confusion with the prior registered mark SLEEP COCOON (in standard characters) for “mattresses; pillows.”

The Trademark Office found the goods are identical and because the descriptions are unrestricted the channels of trade and class of consumers factor overlap. Cocoon International Sales tried the conceptual weakness argument but was only able to offer 4 third-party registrations (but in reality only two because three of the four were owned by the same entity), a number well below the 10 minimum we have posited is required.

Facing an uphill battle, Cocoon International Sales tried to distinguish its mark by arguing the addition of the famous SEALY house mark was enough to tip the mark similarity factor in its favor along with the ultimate finding of no likelihood of confusion. In finding that it did not adequately distinguish the COCOON marks, the Board identified when a house mark can distinguish two marks:

  1. When there are recognizable differences between the marks, then adding a house mark may help.
  2. When the marks are highly suggestive or merely descriptive, then adding a house mark may help.
  3. When the marks are conceptually weak, then adding a house mark may help.
  4. When the house mark precedes instead of follows the mark, adding it may help.

Unfortunately for Cocoon International Sales the Board found that COCOON was “mildly suggestive” of mattresses and pillows. Therefore, adding SEALY to the mark was not enough to avoid a likelihood of confusion finding.

Trademark Fame Lacking Admissible Evidence

"Misel Disel preshave liquid too similar to Diesel despite no trademark fame finding"

Plaintiffs arguing trademark fame for purposes of the likelihood of confusion analysis is about as common as defendants arguing the plaintiff’s trademark is conceptually weak. Plaintiffs want to establish trademark fame because strong marks are entitled to a broad scope of protection. For the record, trademark fame for likelihood of confusion purposes is different from fame for trademark dilution purposes.

More often than not, a trademark fame argument fails not because the evidence of fame does not exist, but because the plaintiff fails to properly admit the evidence to the Trademark Trial and Appeal Board. During the discovery period it is easy to get fixated on obtaining the evidence the party needs and not on the admissibility of the evidence being acquired. This was the problem Diesel S.p.A. encountered in its recent case before the Trademark Trial and Appeal Board.

Misel Disel, LLC filed an application seeking registration on the Principal Register of the mark MISEL DISEL (in standard characters) for “smooth shave enhancer, namely, pre-shave liquid.” The Trademark Office reviewed the application and found no conflicting marks that would bar registration under Trademark Act Section 2(d). The MISEL DISEL mark was published for opposition and Diesel S.p.A. opposed the registration of the mark.

Diesel was the owner of several prior registrations for DIESEL (in standard characters) and DIESEL formative marks, but the Trademark Trial and Appeal Board focused on one:  DIESEL (in standard characters) for, among other goods, “pre- and after shave creams and lotions.” The Board found that the MISEL DISEL and DIESEL marks were similar, the goods closely related, and there was no weakness based on the co-existence of third-party registrations. Misel only came up with three registrations for DIESEL and none were for goods remotely close to pre- and after shave creams and lotions.

Diesel argued that its DIESEL mark was famous for likelihood of confusion purposes. To support this argument, it relied on documents only. It offered no testimony, which was Disel’s fatal mistake.

Financial information is key to establishing trademark fame, but this information must be offered through testimony. It is not self-authenticating evidence. Web pages can be self-authenticating, but the Web pages are admissible of what they show on their face only, not to prove the truth of any matter asserted in the them.

Documents produced in response to a Document Request are also inadmissible unless other authenticated through a Request for Admission.

Because Diesel did not give any consideration to admissibility, it was left with minimal evidence on trademark fame and the Board was unable to find that the DIESEL was famous for likelihood of confusion purposes.

How to Win the Relatedness of Goods Argument

"jar of Sonia Soni Life is a Recipe spices which won the relatedness of goods factor against Mexican sauces"

Once again we see a trademark applicant trying to win the relatedness of goods argument without first narrowing the descriptions, and trying to win the conceptual weakness argument by not hitting the 10 third-party registration threshold. If you intend to make a real world marketplace argument, then the identifications of goods and services must reflect the real world. Unfortunately, this was a lesson Productos Verde Valle, S.A. de C.V. learned the hard way.

Productos Verde Valle applied to register the mark SONIA (in standard characters) for “sauces; chili sauce; hot sauce.” The Trademark Office refused registration of this mark on the ground that it was likely to cause confusion with the prior registered mark SONIA SONI LIFE IS A RECIPE (in standard characters) for, in relevant part, “spices, spice blends; spice rubs.”

The Trademark Office offered evidence showing the same mark being used for both sauces and spices. This evidence was sufficient to put the Tradmark Office in the first position to win the relatedness of goods argument. Productos Verde Valle argued the goods are unrelated because its sauces are sold as a Mexican food product whereas the SONIA SONI LIFE IS A RECIPE spices were sold as an Indian food product. However, the identification of goods descriptions were unrestricted as to a type of cuisine and an applicant may not restrict the scope of its goods or the scope of the goods covered in the cited registration by extrinsic argument or evidence.

The Trademark Trial and Appeal Board also noted that certain spices may be used in both Mexican and Indian cuisine. What this last sentence tells is the level of detail that may be required in order to differentiate the goods. In this case, for example, it would have been sufficient to say “Mexican sauces” and “Indian spices.” To win the relatedness of goods argument, it may be necessary to get very detailed about the real world marketplace. This requires examining the goods and services at issue in detail including not only the nature of the goods, but where they are marketed and who the target consumers are.

When it came to the conceptual weakness factor, Productos Verde Valle did not find any SONIA mark only marks that shared the letters “S”, “O”, “N”, and “A.” Unlike what happened in the CARDITONE case a few days ago where the Board refused to give any weight to the 69 CARDIO third-party registrations because the mark at it issue was CARDI, the Board gave some weight to the third-party registrations offered by Productos Verde Valle. Nevertheless, Productos Verde Valle was only able to find four third-party registrations to support its conceptual weakness argument. Accordingly, the Board did not find that the SONIA mark was weak.

Even if it was found to be a weak term, Productos Verde Valle’s mark was incorporated in its entirety in the SONIA SONI LIFE IS A RECIPE mark. If you are going to make the conceptual weakness argument, you must have something to point to that distinguishes your mark from the other mark that shares the weak term. Therefore, the Board affirmed the registration refusal.

Reinforcement that Trademark Classes are Irrelevant

"woman putting postits on a wall showing that trademark classes are irrelevant"

The Trademark Trial and Appeal Board has said before that trademark classes are irrelevant to determining likelihood of confusion. A recent decision involving the SWISS certification mark reinforces this point. Pearl 9 Group, LLC filed a trademark application to register the mark I.W. SUISSE for “clocks and watches; parts for watches; watch bands and straps; ***; timepiece dial faces, and parts for timepieces ***” in International Class 14. The Trademark Office refused registration of Pearl 9’s mark on the ground that it was likely to cause confusion with the prior registered certification mark SWISS for “horological and chronometric instruments, namely, watches, clocks and their component parts and fittings thereof” in Class A.

The Board held that the classification as a certification mark has very little effect on our determination as to whether or not there is a likelihood of confusion. Because the certification mark owner does not itself use the mark, the question of whether there is a likelihood of confusion is based on a comparison of the mark as applied to the goods or services of the certification mark users.

Using trademark classes in a trademark search only helps to narrow the universe of marks that trademark searchers need to evaluate. From there, the trademark searcher is left to sift through the results using only intuition to determine whether anyone of those marks is likely to prevent the registration of the proposed mark being searched.

And any software program that includes only the similarity of the marks and irrelevant International Class numbers yet provides a “score” for the search results begs the question of what that score represents. If all the search is telling is that there are similar marks registered with the United States Patent and Trademark Office, that information is largely unhelpful and something you can discover by yourself and for free.

And over reliance on trademark classes will result in overlooked trademarks that may be consequential marks in the likelihood of confusion analysis. That may have been the case in the Pearl 9 case. Focusing solely on International Class 14 where jewelry and watches are classified, would have resulted in missing the SWISS certification mark in Class A.

Perplexing Trademark Office: Clothespins Related to Scissors

"man getting a haircut with scissors that were found to be related to clothespins"

A recent Trademark Trial and Appeal Board decision where the Board found clothespins related to scissors again demonstrates that relying on International Class numbers in a trademark search rather than prior case decisions involving the relatedness of goods factor will lead to wrong search results. Ing. Monika Norkova filed a request for extension of protection of her International Registration to the United States for the mark ZIPZAP (in standard characters) for “drying racks for laundry; clothes[pins]” in International Class 12. The Trademark Office refused registration of this mark.

The Trademark Office argued that Ms. Norkova’s ZIPZAP mark was likely to cause confusion with a prior registered mark ZIPZAP (also in standard characters) for – are you ready – “scissors, in particular hair cutting scissors, manicure scissors, sheet-metal scissors, poultry shears, cable scissors; tree pruning shears; nippers, nail nippers, cuticle nippers; files; utility knives and pliers” in International Class 8.  While it is true that when the marks at issue are identical, less similarity is necessary in order for a likelihood of confusion to exist, one would like to think that hair cutting scissors or tree pruning shears are sufficiently different from drying racks and clothespins that confusion is unlikely.

Despite citing the rule that the words “in particular” clarify and narrow overly broad goods or services descriptions, none of the used based evidence offered by the Trademark Office involve any of the specific types of goods identified in the cited registration. Nevertheless, the Board found that because some scissors are marketed under the same brand as a laundry drying rack, then all scissors must be related in the minds of consumers to laundry drying racks and clothespins.

And what’s even more important is that it does not matter if you agree with the decision or not. In fact, we guess that most people reading this post disagree with the decision. But it’s a decision that is not going to be overturned and that could produce a negative outcome for a naming decision if you are focused on International Class Numbers and not prior case decisions involving relatedness of goods or services findings. In fact, the USPTO does not identify International Class 12 as a Coordinated Class to International Class 8.

Toys R Us Comeback Cites Brands as Valuable Collateral

"Toys R Us storefront"

In September 2017, Toys R Us representatives announced that the company was filing for bankruptcy protection. The company closed and sold all 735 stores in the United States and shutdown its website. What remained was to auction off its intellectual property. But that plan was abruptly put to an end on Monday when the controlling lenders ended the auction.

The lenders determined that any bids they would receive in the auction for – primarily – the brands, would be significantly less than the value they could create by leveraging the brands themselves. The reorganization plan contemplates a new Toys R Us and Babies R Us branding company that will maintain its global licenses and can invent in or create new, domestic retail operating businesses.

This is a great story about the power and value a brand possesses. Too often, trademarks take a back seat to patents and copyrights. Businesses, especially startups, see value in the patent and not the trademark. Patents are not appropriate for every type of business, but every business has a brand. Every business has something consumers rely on to distinguish it from other goods or services in the marketplace.

This is why selecting a strong trademark to begin with is so important, and why working with a naming company could be some of the best money a business can spend. It is also why making sure the name you choose is protectable by doing a trademark search is so important.

Finally, this is why protecting the scope of your trademark rights is important. The more capable a trademark is of identifying the owner as the source of goods and services, the more valuable it becomes. Having a thoughtful enforcement strategy will directly increase in the value of a brand. The money spent should be thought of as an investment instead of a cost.

TACOLAND Live Music Concerts Are Related to Restaurants

"TACOLAND sign where live music was found to be related to restaurants"

If you read enough decisions from the Trademark Trial and Appeal Board involving restaurant services, you would get the impression that restaurants do everything. A recent decision from the TTAB stayed with this trend. TacoLand Holdings, LLC d/b/a TacoLand (standard characters) filed a service mark application for TACOLAND in connection with “entertainment, namely, live music concerts” in International Class 41 and “bar and cocktail lounge services” in International Class 43.

The Trademark Office refused registration of the TACOLAND mark based on a prior registered mark for TACO TIERRA & Design for “restaurant services ” in International Class 43. TACO TIERRA is a traditional Mexican-American restaurant and does not advertise any live entertainment.

The Trademark Office offered three, third-party websites for establishments that served food and advertised live music, and several use-based third-party registrations for live music entertainment and restaurant services. In all the examples offered by the Trademark Office, the live musical performances are ancillary to the restaurant aspect of the establishments. In the case of TACOLAND, the live musical entertainment is the primary business and any food service is ancillary to this main business. Nevertheless, because the Trademark Office does not consider the marketplace reality, it found that the services at issue were related.

Which raises two important issues. First, if you were focusing only on Class Numbers when doing a trademark search, you would have missed that live musical concerts are related to restaurants. This why focusing on related goods instead of class numbers is so critical when doing a trademark search.

Second, when dealing with goods or services that could be offered at a restaurant, it is critical to focus a trademark search or response to an office action on what the restaurants are known for. If the evidence shows that something is merely offered at the restaurant, that needs to be your focal point because that is where you will have the best chance at overcoming a refusal.

With the services being related and TIERRA being the Spanish word for LAND, TacoLand had to make the conceptual weakness argument. Unfortunately for TacoLand, it was only capable of producing three TACO-formative third-party registrations, which is seven less than the magic number 10 we believe needs to be hit before the Board will conclude a crowded field exists.