Yaguchi International Law Firm PLLC

Technology and Intellectual Property Law

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Trademarks 102 (Part 2)

In Trademarks 101 (Part 1 of this series), trademarks, service marks and the registration process briefly explained.  In this installment, trademark limitations, infringement and importance of registration are explored.

Common Instances Where A Company Cannot Acquire Trademark Protection

  • Abandonment.  Abandonment is a situation in which the owner of a mark does not use the mark for a significant period of time, fails to protect the unauthorized use or lets others use the mark without adequate supervision.  If a mark is abandoned, the owner might lose its exclusive rights to the mark. For example, if the owner of a mark for an apartment closed its business and failed to use the mark for twenty years the owner would have abandoned the mark.
  • Generic Terms.  Generic terms are common words or terms which the relevant purchasing public identify products and services and are not specific to any particular source. For example, the term “cola” is a generic term.
  • Likelihood of Confusion.  The terms “likelihood of confusion” or “confusingly similar” refer to the foundation of trademark law.  It is the standard required to prove infringement of a trademark.  The likelihood of confusion test is also one of several examinations conducted by the USPTO in determining whether or not to approve an applicant’s trademark application.  Intent to infringe is not necessary as an innocent infringement is just as damaging to a trademark owner as an intentional one.  Although the defendant’s intent to infringe may play a role in assessing damages, there is no requirement that defendant have intended to infringe another’s mark.
  • Descriptive Trademark.  A descriptive trademark is a mark that is descriptive or suggestive of the product or service and entitled to a lesser degree of protection than a stronger mark (i.e., one that is arbitrary or fanciful).  A descriptive trademark will not be protected unless the owner of the mark can prove that consumers are aware that the mark is associated with their product or service.  If an applicant attempts to register a weak mark, the USPTO will not approve a mark unless the applicant proves distinctiveness.
  • Functional Design.  Trade Dress is the totality of elements in which a product or service is shaped or packaged, such as the shape and appearance of a product or container.  Trademark law will not protect functional aspects of a product or packaging.  For example, an electric guitar body can be made with various designs.  The guitar designs may be trademarked because the guitar’s design is not required for it to function properly.  The design may be also protected as a design patent.

Trademark Infringement

Infringement may occur when a mark is identical or confusingly similar to a trademark of its owner.  Once it is determined that another mark may be confusingly similar, a trademark owner should take aggressive action.  Failure to take steps to protect a mark can be held to constitute a waiver of any rights in the mark.  If a mark is federally registered, the registrant may initiate a civil action in federal court against anybody who used the mark without the registrant’s consent in a manner likely to cause confusion.

If the mark is infringing, the registered mark’s owner may be able to recover the infringer’s profits, the mark owner’s damages, treble damages, costs and attorney’s fees.  On the contrary, if the trademark’s owner has not been damaged, the court has discretion to allow the competitor to use the mark under very limited circumstances in order to avoid the possibility of consumer confusion.

Importance Of Trademark Registration

Registration of a trademark with the USPTO gives constructive notice nationally that trademark belongs exclusively to the registrant.  The registrant is also allowed to use the symbol ® to indicate that the trademark has been registered.  Once a mark is registered with the USPTO, an infringement action can be initiated in federal court, a variety of remedies can be granted, including damages.  A mark owner does not need to have federally registered a trademark with the USPTO to initiate a lawsuit for competing use of the infringing mark, but would rely on unfair competition laws.  Moreover, the unregistered mark owner’s right of enforcement may also be geographically limited to one or more states, rather than nationwide had the mark been registered with the USPTO.  Most states also provide for some means registering trademarks with a state agency and allow for some remedies in case of infringement.

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Trademarks 101 (Part 1)

What Is A Trademark?

A trademark is a “word, name, symbol, device, or combination” of these that an entity uses to identify and distinguish its goods from those of others. A service mark is similarly defined, but is used to distinguish services. The term “mark” includes both trademarks and service marks. Titles, character names, or other distinctive features of movies, television, and radio programs can also serve as marks when used to promote a product or service. Once a mark is established, the owner is entitled to its exclusive use. For example, the name “Chanel” and the overlapping double “C” symbol have value because people associate them with Chanel®’s products and all of the luxury and quality and trust that the company has built over the years.

Trademark Registration.

To register and obtain benefits of registration under federal trademark law, an applicant files an application with the U.S. Patent & Trademark Office (“USPTO”).  A mark can be registered if it is currently used in commerce.  An applicant can also file an intent to use application if the applicant intends to put mark into practice within six months, although subsequent extensions are available and registration is required.  A registration is effective for ten years and renewable every ten years.  After the initial registration, however, the mark’s owner must file an affidavit demonstrating continuous use in commerce between fifth and sixth years after the initial registration.  World-wide trademark registration and management is complicated because trademark rights are solely territorial in scope.  Each country has its own laws and registration systems.  Some countries, for example, grant trademark rights based on a first to use in commerce basis and other countries on a first to file basis.  Generally, to obtain global trademark protection, the rights have to be acquired individually on a country by country basis, although treaties, such as the Madrid Protocol, provide a means to coordinate registrations.

Trademark Law.

Trademark law gives the most protection to distinctive names, logos, and other marketing devices. In decreasing order of distinctiveness are marks that are:  (1) arbitrary and fanciful; (2) suggestive; (3) descriptive; and (4) generic.  Arbitrary marks can be commonly used words that have no relationship to the goods or services they are associated with.  Fanciful marks are typically made-up names.  Suggestive marks suggest a good or service without actually describing them.  Descriptive marks describe a product or service, such as the purpose, quality or geographic origin.  Generic marks merely describe the type of product or service.  Distinctive marks include arbitrary, fanciful and suggestive marks, which are registerable with the USPTO without demonstrating that the mark has acquired a “secondary meaning” in the market.  Descriptive marks, however, may only be registered if a “secondary meaning” has developed through sales and advertising and can be demonstrated by the applicant’s substantially exclusive and continuous use for five years.  Competing uses of marks are generally resolved in favor of the owner to first to use the mark in a category or within a geographic area.  The test used to determine whether one company’s mark infringes that of another is whether the use is likely to cause confusion, mistake, or deception among the relevant consuming public.  In the test, actual confusion is not necessary.  It is likelihood of confusion that is measured.  In Trademarks 102 (Part 2 of this series), trademark limitations, infringement and importance of registration will be explored.

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Trade Names

What Is A Trade Name?

A trade name is a name that is commonly used by a business that does not use the full legal name of the business.  Although it is usually registered with a state government agency and is commonly referred to as a “doing business as” or “DBA,” it is a “shorthand” business name used for commercial purposes.  The state government does not give companies a trade name with a prospective right as granted for a trademark.  A trade name is protected only if it is functioning as a trademark to identify and distinguish the company’s goods from those of others.

Trade Name Registration

Although the procedures to register a trade name vary from state to state, registration of a trade name does not involve any complicated process to be approved by a state government.  Applicants simply list the name they want to register on the application and pay for the processing fee and the registration fee.  There is generally no “clearance” performed by the state agency other than to deny registration for a trade name already registered.

What Is The Difference Between A Trade Name And Trademark?

A trade name is a “shorthanded” name to identify a business other than by its legal name, such as “ABC” (trade name) instead of “ABC Inc.” (legal name).  A trade name may also be used to identify a company’s products or services just like a trademark but in order to receive trademark protection, the trade name that is used as a trademark must be protected as a trademark.  As mentioned in an earlier trademark article, trademark law gives the most protection to distinctive names, logos, and other marketing devices.  In decreasing order of distinctiveness are marks that are: (1) arbitrary and fanciful; (2) suggestive; (3) descriptive; and (4) generic.  A business should not assume that its registered trade name gives the company the right to use the trade name for any business purpose and is legally fully protected.

Trade Name Infringement

The test used to determine whether one company’s trade name infringes that of another is whether the use is likely to cause confusion, mistake, or deception among the relevant consuming public just as the test used for trademark infringement.  Therefore, if a company’s trade name is sufficiently similar to another’s registered trademark, the test of “likelihood of confusion” is applied to such confusing trade name and a trade name may infringe on a trademark.  Misuse of a trade name could also expose a company to liability under federal and state unfair competition laws and consumer protection acts.

Although trade name registration is not a complicated process, companies should be careful about selecting a trade name.  If the trade name is infringing another’s trademark, the company using the infringing name might ultimately have to change it and spend extra costs on reparative advertising in addition to defending and paying damages from a trademark infringement lawsuit by the trademark owner. In other words, the business should approach trade name adoption with similar care as it would create trademarks.

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Trade Secrets

What Is A Trade Secret?

A trade secret is any information that derives economic value from not being generally known, has been maintained in confidence, and is not known by competitors.  A company that owns trade secret may petition a court for a relief against those who have obtained or used its trade secret through improper means.  The trade secret owner can also institute an action against those who wrongfully publicly disclose the trade secret in violation of legal obligations such as conditions set out under a non-disclosure agreement (“NDA”).

 Trade Secret Law

Each state has its own statute or regulations that govern trade secrets.  Most states, however, have enacted a form of the Uniform Trade Secret Act (UTSA).  Although the majority of states have adopted the UTSA, the enacted versions and judicial interpretations of the UTSA may also differ from state to state.  In Washington State, Uniform Trade Secret Act is set out in Chapter 19.108 of the Revised Code of Washington (RCW).

 Trade Secret Protection

Trade secret law requires maintenance of secrecy, and it is a type of intellectual property law.  Whereas patent law protects inventions, processes or useful business methods for a number of years in return for the owner’s full disclosure of the information to U.S. Patent and Trademark Office (USPTO).  On the contrary, a trade secret can be protected permanently so long as it is not disclosed to the public and reasonable steps are undertaken to preserve secrecy.

Companies need to consider whether hey seek protection under trade secret law or another type of intellectual property law such as copyright or patent law.  A typical example for this choice is the Coke® recipe.  The Coca-Cola Company protects the Coke® formula as a trade secret, which allows for indefinite protection so long as the company takes reasonable efforts under the circumstances to maintain secrecy.

Compare protection under patent law, which gives the owner the exclusive rights to make, use and sell the protected item for a limited period of time.  Patent rights are more comprehensive for a finite period, but require patent filings with the USPTO.  Patents can also be very expensive to prosecute.  On the other hand, the trade secret owner does not have to file a trade secret application or registration with any government office.

The fact that no registration is needed does not mean that obtaining trade secret protection is easy.  Trade secret protection requires significant efforts by setting up a program to create and administer reasonable measures to keep the information secret.  Moreover, a trade secret owner does not command exclusive use of the trade secret.  Any competitor may lawfully use the subject of the trade secret so long as it is independently developed and implemented.

Trade Secret Protection Methods

Since the key in determining whether information is deemed to be a trade secret is the confidentiality of the information, it is essential to institute a preventive program to protect the company’s confidential information.

  •  Physical Measures.  Companies need to develop a variety of physical measures to protect their proprietary information.  Reasonable security measures are required for trade secret protection.  Reasonableness may require that areas in which the information was being used or store were made physically inaccessible to others (for example, one is personally escorted to another floor where all the doors are locked and monitored).  For trade secrets stored electronically, reasonable efforts may require adequate IT security measures such as commercially reasonable firewalling, access control and use of encryption technologies.
  • Contractual Measures.  Under many circumstances, someone receiving a company’s trade secret takes it subject to an implied obligation not to disclose.  However, having a written agreement has several benefits for the trade secret owner.  The existence of a NDA provides evidence that the owner of the trade secret is taking confidentiality measures.  The formality of an agreement also ensures that the recipient of the trade secret is expected to protect the information and it warns of possible consequences if it is not implemented.  A written agreement also makes available a remedy for breach of the agreement as well as trade secret liability.

 Trade Secret Protection Limitations

While a patent, for example, gives the patent owner the exclusive use of the patent, trade secret protection does not protect against independent development of a product or process that is the subject of the trade secret.  Moreover, trade secret law does not protect information that is in the public domain.

 Trade Secret Litigation

The owner of the trade secret harmed by trade secret theft can commence by filing of a complaint describing the defendant’s wrongful conduct.  Such action should be done as soon as the leakage of the trade secret is discovered.

Litigation between a company and its former employee is the most common trade secret case.  This situation typically arises where an employee departs from the former employer and starts their own business or joins another company, either of which is a competitor of the former employer.  Employers often file a trade secret action, claiming that the former employee is using the employer’s trade secret.  Memorization of trade secrets is typically is not a defense.  A successful plaintiff can obtain injunctive relief to prevent further leakage of the information and monetary damages to compensate the owner of the trade secret.