Monday Mornings with Madison

Intellectual Property: Are your Brands, Products and Services Protected? – Part 1

Trademarks and Service Marks

The average person knows very little about patents, copyrights, trademarks and service marks.  They all fall within the complex legal realm of protecting the rights to something unique created by or belonging to a person or company, generally referred to as ‘intellectual property’.   If you ask the typical entrepreneur if his brand needs a trademark or service mark, he probably wouldn’t know.  And if you asked an average CEO to explain if or when a product needs a patent, he is unlikely to know the answer.  In fact, even the average attorney knows little about this niche area of the law.  It focuses on that special axis point where creativity and invention intersects with business and marketing.

While multinational companies have huge legal departments that handle trademarks and service marks for their intellectual property, the average mid-sized and small businesses generally do not.  In fact, the leadership at small and mid-sized companies may not even give any thought at all to protecting the company’s intellectual property.  Although they should protect their brand, products or services from possible infringement, most don’t.  And that is risky business.  The first step in protecting intellectual property is to understand the basics about the protections available and how they work.

Trademarks and Service Marks:  What’s the Difference?

The most basic protection for a company’s identity is either a trademark or service mark.  Let’s start by clarifying the difference between the two terms. The term “trademark” is often used to refer to both trademarks and service marks.  Even though they are used interchangeably by most people, they are actually two distinct concepts.

According to the U.S. Patent and Trademark office, a trademark is a word, phrase, symbol, and/or design that identifies and distinguishes the source of the goods of one party from those of others. The Nike swoosh is an iconic part of its logo and a good example of a symbol that identifies the source of Nike’s products from those of others.  A trademark reveals the source of the goods. To put it simply, the trademark points to the brand name of the goods.

For example, the Louis Vuitton trademark denotes which luggage, purses and other goods are specifically designed and sold by Louis Vuitton and impedes competitors from manufacturing purses and luggage with the Louis Vuitton branding on them.  Not only does the trademark prevent competitors from using a trademarked brand, even third parties are not allowed to help counterfeiters market those products.  Indeed, in 2012, the Court of Appeals for the Ninth Circuit held that a web-hosting company that owned and operated servers was liable for contributory copyright and trademark infringement when it failed to take steps to curtail alleged infringement committed by Chinese websites that used the web-hosting company’s servers to display counterfeit Louis Vuitton products.  (Note that a trademark does not, however, protect the goods themselves from being copied without the trademark.  To protect a unique product, a company must patent it.  More about patents next week.)  An important fact about a trademark is that it does not expire and can be renewed forever as long as it is being used in business.

A service mark, on the other hand, is a word, phrase, symbol, and/or design that identifies and distinguishes the source of a service rather than goods. For example, Federal Express is a company that provides the service of package delivery.  Their memorable slogan says:  “When it absolutely, positively has to be there overnight.”  Federal Express does not produce a tangible good or product.  So to protect the Fed Ex slogan from being used by a competitor, the company service marked that slogan. A service mark, therefore, is used on the advertising of the service rather than on the packaging or delivery of the service, since there is generally no “package” on which to place the mark.  (No pun intended.)

Even sounds related to a specific business’ brand can have a service mark or trademark. For example, the popular three-tone chime used by the National Broadcast Channel (NBC), as well as the distinctive exhaust sound that comes from within a Harley-Davidson motorcycle, have been officially registered as a service mark and trademark respectively.  Similarly, AT&T (American Telephone & Telegraph) uses a tone sound followed by a woman speaking the company’s name to identify its long distance service and MGM (Metro Goldwyn Meyer Studios) uses the sound of a lion’s roar to denote its entertainment services.  Those have service marks.

Before a trademark or service mark is registered, it is common practice to use either the service mark symbol: ℠ (a superscript SM) or trademark symbol:  ™  (a superscript of TM).   When a service mark or trademark is federally registered, the standard registration symbol ® or “Reg U.S. Pat & TM Off” may be used.  However, a trademark or service mark does not need to be registered to be valid. A valid trademark or service mark can be established through “legitimate use.”

Does any brand element qualify for trademark or service mark?

To qualify for a trademark or service mark, the mark must pass a test of distinctiveness.

The determination of whether a trademark or service mark qualifies for protection is based, in part, on which category the mark belongs.

1.  Generic – Does not qualify for protection

By their nature, generic marks are not distinctive. They do not warrant protection because if one seller could trademark a generic name, other sellers would be unable to describe their products and would thus be at a great disadvantage. For example, it is not permissible to trademark the term “Apple” for a brand of apples or “Milk Chocolate” for a specific brand of chocolate.

2.  Descriptive – Sometimes qualifies for protection

Descriptive terms and symbols generally identify anything about the product: purpose, size, color, ingredients, origin, and so forth. Merely descriptive, general marks do not qualify for protection.  To qualify for protection, a mark must acquire a secondary meaning. To acquire a secondary meaning, the mark must be associated by the public with the manufacturer or seller rather than the underlying product itself.

There is no bright line rule for determining whether a descriptive mark or surname has acquired a secondary meaning. There is a list of factors considered from previous cases but no single factor is determinative. These factors include:

  • advertising expenditures
  • consumer studies linking the name to a source
  • sales success of the product
  • unsolicited media coverage of the product
  • attempts to plagiarize the mark
  • the length and exclusivity of the mark’s use

Courts also consider the how others have used the terms or symbols, whether they are likely to use them in the future, and the extent they have used them in the past.  An example of a descriptive mark that could not be registered would be a geographical word or phrase that merely indicates the origin of the product or service operation.  For example, Las Vegas Burgers was denied trademark protection on the grounds that the name Las Vegas was merely descriptive of the geographic location of the company and where the product originated.  Similarly, a trademark was denied to California Pizza Kitchen for the same reason. A company would have better luck registering a name such as “South Pole Snow Cones”. In this fictional example, although South Pole is a geographical location, it is highly unlikely that the snow cones would actually be made in the South Pole and it would also be widely understood that the business would not be based in a largely uninhabited place.

3.  Suggestive – Qualifies for protection

A suggestive mark does not describe the product; it suggests its nature or characteristics of the product. Although an inference must be made about the product, the product must still bear some relationship to the mark. For example, the word Target suggests an object or goal that is aimed to hit the mark, but it has no inherent relationship to a retail store.  Or the name Infiniti suggests a number greater than any assignable quantity and goes on forever, but it has no inherent relationship to an automobile.  It may infer something about the nature of the business or product, but is not inherently related to it.

4.  Arbitrary and Fanciful – qualifies for protection

Marks that are arbitrary and fanciful do not describe or suggest any characteristic of the product at all. The symbol’s meaning is not inherently related to the product, so the product is more likely to be associated with the symbol. Examples might include Yahoo (for a search engine), Kodak (for a camera maker) or Apple (for a computer manufacturer).  If Apple were being trademarked by a company that grows apples, that mark could not be registered.  However, Apple can be (and is) trademarked for a company that manufactures computers, since it has no inherent or even hidden relationship with the product.

Is a Trademark or Service Mark necessary?

As stated earlier, a trademark or service mark does not need to be registered to be valid.  However, having a registered trademark or service mark does have benefits.  Federal registration provides several advantages, including a notice to the public of the registrant’s claim of ownership of the mark, a legal presumption of ownership nationwide, and the exclusive right to use the mark on or in connection with the goods or services set forth in the registration.

While many small businesses don’t think they really need to trademark or service mark the identity of their company’s name, brand, logo, slogans, etc., those marks do help to protect a company so that it can grow without impediment.  Case in point.  Coca Cola started out as a very small company.  The first servings of Coca-Cola were sold for just 5 cents per glass at soda fountains and sales in Coca Cola’s first year averaged a modest nine servings per day in Atlanta.  Even though Coca Cola was just a fledgling business in 1887, the owners sagely added “trade mark” to the logo to safeguard it from infringement.  Now, 128 years later, Coca Cola is ranked third on Interbrand’s annual list of the 100 best global brands, and the Coca Cola line includes 20 beverages each of which generates over $1 Billion in sales annually.  What if Coca Cola’s brand had not been trademarked?  Could the company have survived and thrived?  Who knows but one of the biggest challenges that Coca Cola faced in its first 30 years was competition by imitators.

Trademarks and service marks help companies to protect the goodwill attached to their brand from abuse by competitors willing to profit from a name brand’s recognition.  That’s why women will pay more for a Gucci purse than a no-name purse.  It is why techies will pay more for an iPhone 6 than other less-reputable smart phones.  Of course, to get a true and complete understanding of trademarks and service marks, business leaders should consult with their attorney.  Next, week, we’ll look at how companies can also protect their unique products, services and artistic creations through patents and copyrights.  Stay tuned.

Quote of the Week

“Intellectual property is playing an increasingly important role for our group.  It’s just a fact of life in our business now that you have to cultivate and protect IP.” Rudy Provoost

 

© 2015, Written by Keren Peters-Atkinson, CMO, Madison Commercial Real Estate Services. All rights reserved.

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