What Every Lawyer Should Know about Trademarks
by David A. Schnider
(County Bar Update, May 2007, Vol. 27, No. 5)

 

What Every Lawyer Should Know about Trademarks

 

By David A. Schnider, partner in the Los Angeles office of Sedgwick, Detert, Moran & Arnold LLP specializing in intellectual property and interactive entertainment.

 

1. What is a trademark?
A trademark is any word, name, symbol, or device used in commerce to identify and distinguish goods from those manufactured or sold by others and to indicate the source of the goods, even if that source is unknown. 15 U.S.C. §1127. Examples range from the obvious, such as the NBC peacock, to the obscure, such as the unique sound made by a Harley-Davidson motorcycle. To qualify as a trademark, a symbol must be sufficiently distinctive to distinguish the source of the goods. Symbols are classified on a spectrum to determine whether they qualify. At the most distinctive end are fanciful marks, or words that are simply made up, such as “Kodak.” Those are followed by arbitrary marks, which are common words used in a meaningless context, such as “Apple” for computers. Next are suggestive marks, which indicate something about the product without actually describing it, such as “Greyhound” for bus lines. Symbols in those three categories are inherently distinctive enough to qualify as a trademark. On the other end of the spectrum are descriptive and generic symbols. Descriptive symbols, like “Home Savings” for banking services, directly illustrate a quality of the product and are not inherently distinctive. Descriptive symbols can only qualify as a trademark if they achieve “secondary meaning,” which means that the public exclusively associates the mark with a particular source. An example might be the “Sharp” mark for televisions. A generic mark is the common name for a product, such as “Shredded Wheat” for cereal. Generic marks are never protectable as trademarks.

 

2. How do you get a trademark?
Trademark rights derive from use of a mark in commerce, not from registration. Simply by putting a mark on a product and selling it to consumers, the user obtains rights. However, the scope of rights is limited. By selling Scion cars, Toyota does not also earn rights in Scion-branded computers. Similarly, by opening a Flickers auto repair shop in Los Angeles, a small business owner does not obtain rights to the Flickers mark for an auto repair shop in New Jersey. Unregistered, or common law, trademark rights are limited to the scope of use of the mark.

 

Just as trademark rights are obtained through use, they can be lost through lack of use. If a trademark holder stops using the mark on goods for a period of years, the mark is generally considered abandoned. Trademarks can also suffer “genericide,” where they are so commonly used to refer to the product that the mark itself becomes generic and unprotectable. The most common example is aspirin, which used to be a trademark owned by Bayer but is now the generic term for acetylsalicylic acid.

 

3. Do you need to register trademark rights?
Trademark rights are derived from use, so registration is optional. However, registration confers a number of benefits not available under common law. Trademarks can be registered at both the state and federal level. Generally, a federal registration obviates the need for state registration. The primary benefit of registration is that it confers statewide or nationwide rights. Thus, a business operating solely in the southwest under a common law trademark could obtain rights throughout California or the entire United States with a state or federal registration respectively. Registration also gives constructive notice that a mark is taken. Federal registration affords additional remedies for infringement, including statutory damages for counterfeiting and access to the Customs Service for seizure of infringing goods being imported.

 

One significant additional benefit of registration is that trademark holders can use it to reserve rights before they actually start using a mark in commerce. Federal law and some state laws permit the filing of “intent to use” applications. By filing an “intent to use” application, the mark holder seeks an advance determination that registration will be allowed. The benefit of an “intent to use” application is that the trademark holder reserves rights from the date the application is filed and can seek a determination of registrability before committing resources to the mark.

 

It is important to note that trademark rights are territorial and that registration in one country does not confer ownership of the mark in another country. There is a procedure called the Madrid Protocol that allows for streamlined applications to register a mark in multiple countries simultaneously with a single application. However, the Madrid Protocol is limited to the participating countries and still requires that any queries or oppositions regarding the application be handled individually with each nation to which the mark holder applies. Unlike the United States, it is also the case in some countries that rights accrue from registration, not use. Thus, for trademark holders who plan to distribute internationally, it is advisable to seek registration in every country where the goods will be sold.

 

4. What symbols do you need to use to advise people of trademark rights?
There are two symbols used to give notice that a word, name, symbol, or device is a trademark. The first is TM, which indicates that the holder claims common law rights in the mark. The second is ®, which indicates that a trademark is federally registered. Trademark holders are not required to give notice using either of these symbols. However, for common law marks, the use of TM helps a mark holder prove that it used the mark to identify the source of goods and that third parties were aware of such use. For federal marks, the remedies available for infringement are limited if the holder fails to use the ® symbol to give notice of its trademark rights. Thus, one of the two symbols should always be used in a way sufficient to inform consumers and competitors that the holder claims rights.

 

5. What rights does a trademark provide?
Trademark law prevents the use of a similar mark in a way that is likely to cause consumer confusion. If a competitor begins using a mark for similar goods and services in a manner that is likely to confuse consumers as to the source of a product, trademark law allows the initial user to obtain an injunction. In some circumstances, the trademark holder also may be able to obtain an award of damages against the infringing user, including recovery of the infringer’s profits. 15 U.S.C. §1117. Federal law also allows for the trebling of any such damages. In cases of counterfeiting involving federally registered marks, trademark holders also can seek statutory damages of up to $1,000,000 per type of good sold.

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