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TRADEMARKS 101

Article by: Steven Richards
September 24, 2010

Imagine that you have just developed a revolutionary product that you are certain will take the marketplace by storm. You have researched the market, found that a need exists, lined-up manufacturing, and have a distribution system in place. Now, you need only to develop a name and logo that will distinguish your product and set it apart from your competitors.

You need a trademark.  The problem is that many of us don’t really know what a trademark is and oftentimes confuse the term, “trademark,” with its relatives–copyright and patent.  The purpose of this article is to shed a little light on what trademarks are, what they do, why they are so important to business, and how they are protected.  My intent is that the next time you see those strange ® and TM symbols, you will know what they mean.

What Is a Trademark and What Do Trademarks Do?

Generally speaking, a trademark is any unique word, name, symbol or device, or any combination of these elements, that is used by a manufacturer or merchant to identify and distinguish its goods from those manufactured or marketed by others.

The most common trademarks that we see in commerce are words and symbols (logos).  However, other things, such as the shape of a container, can also function as trademarks.  Coca-Cola’s distinctive bottle shape is a registered trademark owned by Coca-Cola.  Even fragrances can serve as trademarks!

You may have also heard the term, “service mark.”  A service mark is the same thing as a trademark except it is used to identify and distinguish a service offered by a company from those services offered by other companies.  So, while trademarks are associated with goods, service marks are associated with services.  An example of a well-known service mark is “McDonalds®.” McDonalds® is a service mark for restaurant services.  Note that McDonalds® is also a trademark for the goods (fast food) that McDonalds sells.

Because trademarks and service marks are so similar and are governed by the same laws, to simplify things, in this article I will use the term, “trademark,” to refer to both.

To function as a trademark, the word, words, or symbol must be used on the product, on the product’s packaging, on promotional materials for products and services, or on advertisements for the products or services. A trademark does not protect the proprietary nature of the product or service. Nor does a trademark protect inventions, discoveries, ideas, creations, or processes. Instead, trademarks protect how products and services are marketed, promoted, sold, and regarded by the public.

As a result, trademarks work in three distinct ways:

1.    A trademark distinguishes the owner or source of the goods or services from those of its competitors;
2.    A trademark serves as a guarantee of consistency of quality; and
3.    A trademark helps to advertise and sell products and services.

Stated another way, the principle functions of a trademark are to identify and distinguish the source of goods or services and to serve as a merchandising short-cut that induces a purchaser to select what he or she wants.

What Makes a Particular Symbol, Word, or Slogan a Trademark?

Virtually any symbol can serve as a trademark. Usually, the only limitation to the use of a symbol as a trademark is the possibility that another firm or person has selected the same or a confusingly similar symbol or logo as its trademark. In that case, if you used the symbol as your trademark, you would risk being sued for infringement.

Words and phrases, however, are subject to additional rules.  Generic and descriptive terms cannot serve as trademarks. Thus, the common name for a type of product or service can never serve as a trademark because it cannot be a unique identifier.  For example, “Vitamins,” as a name for a dietary supplement, is too generic to be a trademark. Additionally, a generic word or phrase cannot be a trademark because the public has a fundamental right to use the name.  As such, a manufacturer or marketer cannot claim the sole and exclusive right to use a generic term as a trademark.

A term or phrase is descriptive if it describes something about the product. Absent special circumstances, descriptive terms cannot serve as trademarks. Thus, “Bright-Light” could not function as a trademark for light bulbs; nor could “Apple Pie” for an apple pie scented candle or “Immune Support” for a dietary supplement.

If generic or descriptive terms cannot serve as trademarks, then what types of terms can?  Words or phrases that are suggestive, arbitrary, or fanciful can serve as trademarks.

Suggestive terms are those that subtly suggest something about the product or service and usually require the purchaser to use his or her imagination in order to figure out what the product or service is. Examples of suggestive terms that may function as trademarks include “Sno-Rake®” for a hand held snow removal tool, “Habitat®” for home furnishings, and “Orange Crush®” for a beverage.

An arbitrary mark is a word or phrase that is in common use but, when used to identify a particular good or service, does not suggest or describe anything about the good or service. Well-known examples of arbitrary words serving as trademarks are “Apple®” for computers, “Old Crow®” for whiskey, and “Tide®” for laundry detergent.

A fanciful trademark is a word that has been coined for the sole purpose of functioning as a trademark. Such marks are made up of words that are either unknown in the language or are completely out of common usage. Famous examples of fanciful trademarks are “Pepsi®“, “Kodak®“, “Xerox®“, “Motorola®” and “Exxon®.”

When selecting and evaluating names for products and services, you will want to stay away from those that are generic or that describe some feature or attribute of the product or service. Instead, consider those names that are suggestive or arbitrary, or coin your own fanciful term.

How are Trademarks Protected?

Aspirin, as we all know, is an over-the-counter pain reliever that contains as its active ingredient, acetylsalicylic acid. What few of us in the U.S. know, however, is that the word “Aspirin” was once registered as a trademark by Bayer throughout the world. In the U.S., however, a Federal court held that Aspirin had become a generic term through widespread usage by other companies selling pain relievers that contained acetylsalicylic acid.  As a result, it was no longer protectable as a trademark in the U.S. Consequently, there are several brands of Aspirin on the shelves of U.S. pharmacies and supermarkets. In Canada and several other countries, “Aspirin” is still a trademark of Bayer. In those countries, the generic term for the pain reliever is Acetylsalicylic Acid (or ASA). “Cellophane” and “escalator” are examples of other terms that once were registered trademarks but that now are generic terms used to describe thin, transparent, wrapping materials and moving stairs.  Cellophane and escalator lost their protected status in the U.S. due to widespread common usage of those terms.

The term “Xerox®,” is a word that almost met the same fate as cellophane and escalator.  Those of you old enough will recall that back in the 1970’s, Xerox unleashed a major advertising campaign, the point of which was to remind people that making photocopies was not “Xeroxing.” Instead, the company reminded us that Xerox products are used to make photocopies. The company sought to educate the American public that “Xerox” was an adjective and not a noun or verb. The company was largely successful. Can you remember the last time that you heard someone say that he or she was going to “xerox some copies”? The lesson to be learned by the Aspirin and Xerox examples is that efforts must be undertaken to protect your trademarks.

The first step in protecting your trademark is to establish and assert your trademark rights. In the United States, there are three ways in which trademark rights are established: 1) Common Law, 2) State Registration, and 3) Federal Registration.

Common Law Trademark Protection

Common law rights arise upon the first use of a trademark in commerce. Use in commerce occurs when a company first advertises or sells a product or service using the trademark and notifies the public that it claims the trademark as its own.  This is typically accomplished by using the “TM” symbol as a superscript adjacent to the mark, i.e., “McDonalds™.” The use of this symbol serves as notification to the world that the proprietor of the product or service claims the trademark as its property.

While there is no cost to establish common law trademark rights (beyond the cost of advertising), the protection offered by a common law trademark is limited. Common law trademark rights are restricted to the geographic area of actual use and the common law trademark can be superseded by a latecomer who files for federal trademark registration using the same trademark. The only legal remedies that can be obtained are actual damages that the common law trademark owner actually suffered and an injunction preventing the infringer from using the mark in that geographic area. Additionally, if someone files a federal trademark registration of the common law trademark, the owner of the common law trademark is restricted to use of the mark in the then current geographic area of use.

State Trademark Protection

All 50 states have statutes that provide a simple method for filing for and registering a trademark in that state. Under those statutes, a state trademark owner has the right to keep others from infringing upon his or her trademark (by using an identical trademark or one that is confusingly similar to the registered trademark), but only in that state. In the past, state trademark registrations were common. Due to the interstate and global nature of American business today, state registration is rarely worth the time, effort, or minimal expense involved. A state-registered trademark cannot prevent another person or company from filing a federal trademark application for the same or similar trademark, or a similar application in another state.

Federal Trademark Protection

Federal trademark registration is the most powerful form of protection in the U.S. Federal (and most state) trademarks are registered according to over 40 international classes or groupings of goods and services. A trademark can only be registered in those classes in which the trademark is actually being used. If a registered trademark is not “famous,” the exact same trademark can be registered by another owner in a different international class if there is no connection or relationship between the respective goods or services. Thus, if a company has obtained a U.S. federal registration for “Sunshine” for dietary supplements, another individual or company could register “Sunshine” for office equipment, provided “Sunshine” is not a famous trademark. On the other hand, since “Xerox®” is a very famous mark for photocopiers and other office equipment, the word “xerox” (or even “zerox”) likely could not be registered for dietary supplements.

Whether or not a trademark is a common law trademark, a state registered trademark, or a federally registered trademark, the status of the word, words, or symbol as a trademark must be preserved. Trademark rights are “abandoned” if the trademark is not continuously used and affixed to the goods (or tags or packaging) or advertised or displayed in association with the services. If the trademark is registered, the owner must maintain it by filing periodic affidavits of continued use and renewal applications with the U.S. Patent and Trademark Office. If those documents are not filed in a timely manner, the Trademark Office will cancel the registration. If a trademark owner abandons a trademark, another party can swoop in and claim it as his own.

The trademark owner must also work to prevent his mark from becoming generic. A trademark should always be used as an adjective, and never as a noun or a verb. As an adjective, the trademark should be accompanied by a generic term-e.g., “Kleenex®” tissues and “Saran®” wrap. The consequence of not using a generic term with the trademark is that the trademark can be forever lost to the public domain as a generic term, as happened to Aspirin.

Finally, the trademark owner must continuously monitor the marketplace to make certain that no other person or entity is using a trademark that is identical to or even confusingly similar to his/her trademark. If a trademark owner learns that another entity is using a similar trademark in association with a similar product or service (remember that neither the marks nor the goods or services need be identical), the trademark owner must take action to prevent the other entity from using the infringing mark. Failure to do so for an extended period of time may result in loss of the exclusive right to use the trademark.

Conclusion

As a society, we are continually exposed to symbols, logos, and a word or two that instantly convey a wealth of information to us.  Without seeing anything more than a silhouette of an apple with a bite out of it (Apple®), a swoosh (Nike®), some golden arches (McDonalds®), or words such as “Microsoft®,” “Coca-Cola®,” and “Dell®,” we instinctively know something about the quality and desirability of a product.  At its height of effectiveness, a trademark is a merchandising shortcut that conveys, in the mind of the consumer, the desirability of the product or service with which it is associated. Once a trademark achieves that level of recognition as a symbol of quality and good will, the trademark owner has something of exceedingly great value. So, select your trademarks with care and protect them as if your entire business depended upon them, and perhaps someday your marks will achieve a similar place in the consciousness of the consumer.

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Steven Richards

Steve Richards is a partner at the law firm of Grimes & Reese.

Steve is a graduate of the Seattle...

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