What Is A Trademark?

Two hundred years ago, trademark protection was the poorer cousin to the patent and copyright systems. While protection of an inventor's discovery or an author's writing was the subject of a constitutional mandate, protection of trademarks was left to the common law. There was little public interest in trademark protection.

Today, trademarks may be protected under both state and federal statutes and the common law. There are many marks for consumer products such as foods and beverages which are estimated to be worth tens or even hundreds of millions of dollars. Public interest in trademark protection is high.

The Nature Of A Trademark

The Trademark Act of 1946, called the Lanham Act, defines a trademark as any word, name, symbol or device or any combination of those used by a person, or which a person has a bona fide intention to use in commerce and applies to register on the principal register established by this Act, to identify and distinguish his or her goods, including a unique product, from those manufactured or sold by others and to show the source of the goods, even if that source is unknown.

The statute provides a similar definition for “service marks,” that is, marks which identify a service (e.g., banking, dry cleaning, restaurant) rather than goods. For convenience, it should be understood that as used hereafter, the terms “trademark” and “mark” include service marks. Although not found in the statute, the term “brand name” is sometimes used synonymously with “trademark.”

A trademark has several functions. Arguably, the primary function is identifying the origin of the goods to which the trademark is affixed. This is reflected in the statutory phrase “to identify and distinguish.” It is not required that the purchaser know the identity of the source of goods as long as he or she recognizes that all goods bearing a particular trademark originate from a common, even if anonymous, source. For example, while most people probably do not know that LIVES PLUS cat food is made by StarKist Foods, Inc., it is likely they believe that all cat food labeled LIVES PLUS comes from a single source.

Trademarks also provide quality assurance. For example, when a consumer dines at a particular franchised fastfood restaurant, he or she expects that the nature and quality of the food served will be the same as that served at other restaurants bearing that name. A trademark induces the supplier to maintain a consistent level of quality.

The term “trade name,” according to modern usage, applies to names used to identify a business, such as a legal corporate name or a fictitious trade style (or “dba”). Thus, trademarks are associated with goods while trade names identify businesses.

A Trademark Must Be Distinctive

A trademark must be distinctive, or recognizable as a mark, to serve its identification function. The degree of distinctiveness has important implications.

Marks are typically classified as (1) arbitrary or fanciful, (2) suggestive, (3) descriptive, or (4) generic. An arbitrary or fanciful mark bears no relationship to the associated goods. It follows, therefore, that such a mark is inherently distinctive and readily distinguishes one merchant's goods from those of another. A “fanciful” mark is typically composed of coined words, while an “arbitrary” mark uses words that are in common use but bear no relationship to the associated goods.

A “suggestive” mark suggests some quality or character of the associated goods, but not so explicitly that no imagination is needed to detect the nature of the goods. Suggestive marks include CONTACT for selfadhesive shelf paper and UNCOLA for a noncola soft drink. Suggestive marks, like arbitrary and fanciful marks, are inherently distinctive and readily registrable as trademarks.

In contrast, a “merely descriptive” mark, which identifies a characteristic, quality, purpose or some other aspect of a product or service, is not inherently distinctive. A descriptive mark is not registrable unless it can be shown that consumers have learned to associate it with a single source. This learned association is called “acquired distinctiveness” or “secondary meaning.” Marks found descriptive include CHAPSTICK lip balm and RAISINBRAN breakfast cereal. The statute provides that a showing of exclusive and continuous use of the mark in commerce by the applicant for five years is prima facie evidence of distinctiveness.

A generic term is a common group or class name, such as beer, shoes or automobile, to which a particular product belongs. A generic term can never be a trademark. Examples of terms held to be generic include “shredded wheat” for cereal and “super glue” for a rapidsetting permanent adhesive.

A term which is generic for one product can be arbitrary when applied to another. For example, the word “trumpet” is generic for a type of musical instrument but would be arbitrary if used to designate an automobile. Furthermore, a term that is not initially generic may become so, if consumers come to believe that a mark is the generic name for a type of product. Marks that have become generic include aspirin, cellophane and escalator.

Virtually anything capable of indicating source may serve as a trademark.

Letters and numbers may be used as marks. For example, ABC, CBS and NBC are readily recognizable as the service marks of major radio and television broadcasting networks. Alphanumeric combinations such as V8 vegetable juice and 7ELEVEN convenience stores are also familiar marks.

Slogans can function as marks. For example, INTEL INSIDE shows the source of microprocessor chips used in personal computers. Similarly, GM used the slogan SO NEW FROM THE INSIDE OUT, EVERYTHING ELSE IS HISTORY as a trademark for its 1994 CHEVY SSeries trucks. A color or combination of colors may function as an indicator of source and be registered as a trademark. Musical notes and other sounds have been federally registered. The combination of notes “G, E and C”used by the National Broadcasting Company, was originally registered by the General Electric Company. A federal registration has even been granted for a particular fragrance, reminiscent of plumeria, used to identify sewing thread.

A product's “trade dress” which includes product features such as shape, texture, size, color and packaging, may also be protected if it is “nonfunctional.” A feature is functional if it is necessary to a product's utility, or affects its cost and/or method of manufacture. However, if other physical arrangements can do the same functions without sacrificing a functional advantage, the design may be considered nonfunctional.

Trademark Registration

The law protects trademarks based on bona fide commercial use in commerce subject to Congressional regulation. Registration does not create a trademark. Nonetheless, several very significant advantages are available to a trademark owner who registers a mark under federal law.

If a mark is inherently distinctive (arbitrary, fanciful or suggestive), or has become distinctive, it can be registered on the Principal Register. Benefits to registration on the Principal Register include prima facie evidence of the validity of the mark, registrant's exclusive right to use the registered mark, and registrant's ownership of the mark. If a registration becomes “incontestible” after five years on the Principal Register, it becomes conclusive evidence of validity and ownership and may only be canceled on certain specified grounds.

These benefits are not afforded to marks entered on the Supplemental Register, which is reserved for descriptive marks without secondary meaning. However, registering the mark on the Supplemental Register provides notice to interested parties of the owner's claim to rights, may deter others from adopting and using the mark, and provides a basis for registering the mark in many foreign countries.

An application for registration must be based on either use of or a bona fide intent to use the mark in commerce. To prove use in commerce, the applicant must show that it has placed the mark on the goods or on labels or tags affixed to the goods, packaging, or point of sale displays, and that the goods are sold or transported in interstate or foreign commerce. The “use in commerce” standard is liberal, but does not encompass token shipments made merely for purposes of obtaining or maintaining registration. In other words, the use must be “bona fide” commercial use.

If an applicant has not used the mark in commerce, but has bona fide intent to do so, it can file an intent to use (“ITU” application). A registration will not be granted, however, until the applicant files a verified statement that it has used the mark in commerce.

Trademark Applications are examined by the Patent and Trademark Office (“PTO”). The application is assigned to an Examining Attorney, who ensures that all statutory requirements are met and that the mark is registerable. Two of the most important determinations made of the Examining Attorney are whether the mark is distinctive as applied to the goods or services for which registration is sought, and whether the mark is confusingly similar to a mark that has priority. If the mark appears to be registrable, the PTO will publish it for opposition in the Official Gazette. During the thirtyday opposition period, which can be extended for up to an additional days without the applicant's consent, interested parties can oppose registration. If no one successfully opposes, the PTO will issue the registration if the application is usebased, or issue a Notice of Allowance for an ITU application.

After a Notice of Allowance is issued with respect to an ITU Application, the applicant has six months, extendable to months in sixmonth increments, to file a statement of use supported by evidence of use. Assuming all requirements are met, the PTO issues the Certificate of Registration. Trademarks may be registered in every state, the District of Columbia and Commonwealth of Puerto Rico. In general, state registration provides few of the advantages of federal registration. However, issuance of a state registration may be evidence of ownership, and even validity of the mark in that jurisdiction. Most importantly, entering the mark on a state register provides notice of the owner's claim or rights to any parties who undertake a comprehensive trademark search. Trademark Searches Before using a mark or filing for trademark registration, a party should check for possible conflicts with marks currently registered, in use, or for which applications have been filed. To check for conflicts, a search of state and federal trademark registrations, pending applications, business and trade directories, phone books, and the like should be made. Some courts have found that a reasonably prudent business person would not adopt and use a new trademark without first conducting a search to learn whether others might have prior rights to the mark.

How to Use a Trademark

A trademark or service mark can be identified by placing the designation TM or SM next to it. These designations do not show that the mark is federally registered. Rather, they say that trademark rights are claimed. Alternately, an asterisk may be used, instead of the TM designation, with an explanation that the mark is a trademark of a particular entity.

The statutory ® notice says that a mark is federally registered. Other forms of statutory notice include the words “Registered in U.S. Patent Office” or “reg. U.S. Pat. Off.” Using the statutory notice is constructive notice of registration.

When it appears in print or other textual media, the trademark should be distinguished from the surrounding text by use of a different type size or style (e.g., all capital) and the appropriate notice (TM or ®). The trademark should be used together with a generic term or descriptive word for the goods or services to emphasize the “brand” aspect of the mark. The mark should never be used as a noun. In fact, the word “brand” is often used with the mark to emphasize that the mark is a trademark, not the common name of a product. An example of this usage is “Postit TM Notes” for adhesivebacked paper pads sold by the 3M Company.

Trademarks as Property

A party has an interest in the goodwill of its business, and a trademark symbolizes that goodwill. As a property right, a trademark exists only in connection with its associated product. A trademark cannot validly be transferred apart from the goodwill it symbolizes.

A valid trademark assignment, therefore, involves the transfer of the goodwill of a business. If the product associated with the trademark requires proprietary knowledge or equipment otherwise unavailable to the assignee, those assets must be transferred. If the assignee can produce the product without obtaining knowledge or equipment from the assignor, there is no need for an asset transfer. The assigned trademark must be used on a product with which the trademark was formerly used by the assignor.

A valid licensing arrangement requires that the licensor maintain control over the nature and quality of the goods sold under the mark. The quality assurance function protects the buying public. If a licensor fails to maintain the quality of the goods, loss of trademark rights can result. Provisions should include, at a minimum, acknowledgment of the licensor's right to control the nature and quality of the goods and right to inspect the licensee's operation, and the licensee's duty to provide samples of the goods bearing the mark upon the licensor's request.

Trademark Infringement

Using a mark that is likely to confuse the relevant public into thinking that the goods associated with that mark originate from the same source as those of another person's mark is infringement. While an infringer's wrongful intent may be evidence of infringement and may also affect the quantum of damages, wrongful intent in not required for a finding of Infringement. The interest in protecting the public from confusion as to source is sufficient to trigger liability independent of an infringer's intent to deceive.

In a trademark infringement action, the plaintiff must prove by a preponderance of the evidence that defendant's use of the alleged infringer's mark will create a likelihood of confusion, mistake or deception in the minds of the relevant public. Several factors are analyzed in determining whether there is a likelihood of confusion, including the strength of the plaintiff's mark, the similarity between the plaintiff's and the defendant's marks, the degree to which the plaintiff's and defendant's products or services are related, the likelihood that the plaintiff will expand its business into the field of the defendant, the defendant's good faith in adopting its mark, evidence of actual confusion, the sophistication of the buyers, and the quality of the defendant's product. In any given case, some factors will weigh more heavily than others. Proof of bad faith can be decisive since one who has set out to deceive may be presumed to have succeeded, no matter how inept the attempt.

The Lanham Act distinguishes between a mark which is a “colorable imitation” of a registered mark and a “counterfeit” mark. The former means a mark which “so resembles a registered mark as to be likely to cause confusion, mistake or to deceive. A counterfeit mark, by contrast, is a “spurious mark which is identical with, or substantially indistinguishable from a registered mark.”

Goods associated with a counterfeit mark are typically imitations of a wellknown article associated with the registered mark. The goods associated with the counterfeit mark are usually priced significantly lower and are of lower quality than the genuine article. Under the Lanham Act, damages for infringement are ordinarily trebled if a party intentionally counterfeits a registered mark. Under the Customs Acts, any articles imported into the U.S. bearing a counterfeit mark are subject to seizure and forfeiture. Under the Trademark Counterfeiting Act of 1984, a person intentionally trafficking in goods or services, who knowingly uses a counterfeit mark in connection with those goods or services, may be fined $250,000 and imprisoned for five years. An organization may be fined $1,000.0. For repeat offenders, the sanctions are even greater.