Understand How Trademarks Affect Your Business Success

I’m Susan Kornfield, I’m an intellectual property attorney, and I’ve been practicing law for 33 years. Our goals for this segment, are first to identify the core intellectual property doctrines. So you understand what they do protect and what they don’t protect. Because what they don’t protect, can also be available to you when you develop your business assets. We’re going to talk about how we can avoid risk or manage risk for claims of intellectual property infringement or trade secret misappropriation. And we’ll also talk about steps that the business managers can take to help a company develop intellectual property value. The core business issues and the core legal doctrines are trademarks that protect the company’s brand.

And you’ll see that when we talk about a brand, we talk about much more than just a word. We talk about the product packaging, product design, and even service design. Copyright protects creative content, so we see copyright law as it applies to texts, photos, videos, music and other sound recordings, software and architecture. Trade secret is the doctrine that protects the nonpublic information that a company develops regarding competitors and regarding the company itself. Patent is the area of intellectual property law that protects elements of methods, new composition of matter such as drugs, designs and plants.

The requirement for patent law, which is different than all of the other intellectual property doctrines, is that what you claim must be novel and it must be novel with respect to all of the inventions that are known worldwide. And finally, industrial design is also included as a part of a classic intellectual property doctrine. Although you will see that that’s an area that is protected outside the US. Primarily in Europe, Latin America, and South America. And it is actually not a separate doctrine in the United States. One of the reasons you care about the development of intellectual property assets are the very powerful remedies, that the law will give you, in the event you discover an infringement or a misappropriation.

And those powerful remedies are an injunction. So a court order that actually orders a company to stop doing something. These are the kinds of orders where courts require certain products to be removed from the marketplace or ban in the importation of goods into a country. Another remedy is you can get a court order that requires the infringer to turn over to you all of the profits that they made in connection with that infringement. Another remedy is damages, and damages means your lost income, lost revenue because of that infringement or misappropriation. Attorneys’ fees and expenses depending on the particular intellectual propery doctrine are also available.

Meaning, it’s going to cost the infringer, not just the loss of their profits and payment to you of damages, but they will be paying your attorneys’ fees and your expenses of litigation. You can also secure court orders requiring that goods be destroyed. And as we were mentioning earlier, in some cases, banning the importation into a country of infringing goods, which is a very powerful remedy. And sometimes in particular with counterfeit goods, you can secure the assistance of law enforcement.

And this can be a very powerful remedy sometimes for a small business that doesn’t have an army of lawyers to have the law enforcement, in the Unites States the FBI, the federal marshalls, actually go on to premises, seize goods, seize digital and physical evidence. It’s a very powerful remedy and indeed these laws are not international. They are national. Sometimes there are international treaties where various countries agree that their laws will comply with certain requirements. But US patent law applies in the US, Chinese patent law applies in China and the like. So we’re going to begin with trademarks. And this slide reminds us that the brand itself can be of tremendous value.

So here we see that in a very recent trademark survey, Apple’s brand is worth $118 billion, Google $107 billion, Coca-Cola $81 billion. Meaning if they sold the brand and didn’t sell for example the secret to the Coca-Cola formula, the brand Coca-Cola is worth $81 billion.

In the United States, our Supreme Court has noted that the function of a brand is to make a connection between your consumer, your purchaser, and your product. So it is, as the court says, a merchandising shortcut that gives the owner something of value because of the association that we have between the brand and the product.

These are the areas of business that are affected by your choice of trademark law. So indeed your company name, your logo, your slogan, a product name, product design, product packaging, marketing materials in your website. And what this means is you should think carefully about each of these elements because if you put some thought into the creation of your mark and the design of your brand, you can prevent competitors and others from using that brand and using the similar brand. Trademark law also affects the characters that you develop, which may be particularly useful for companies targeting younger consumers or creating video games. Trademark law affects how you use a competitor’s name in your comparative advertising.

Your ability to secure a domain name and to register that domain name, which is very important these days because of online presence. A powerful mark makes it much easier for you to engage in trademark licensing. You can sell a trademark and the registration of that mark apart from other business assets. I have been involved in situations where a client was contacted by a company, and the company said, we want to buy a particular mark, and a few weeks later, and a few million dollars later, the client sold the particular mark. It didn’t sell any inventory, or products, or customer information, or other physical assets.

It just sold the mark because that mark was valuable to that particular company who was buying it. Trademark Law also affects your ability to partner with others strategically and to co-brand products. And finally a powerful mark is very important if you’re ever involved in trademark or unfair competition litigation.

This slide is taken from the US Trademark Act and it’s fairly standard definition around the world. What is a trademark? A trademark or a service mark. Trademark is for goods, service mark is for services. They’re treated essentially the same under the law. It includes any word, name, symbol, when you hear symbol, think logo, or device, such as product design or product packaging, or a combination, that is used to identify and distinguish your goods and services from those manufactured by others. And to indicate source, and this phrase, to indicate source, is the most important function of the trademark.

It identifies one source so that when I, the consumer, am in the marketplace, and I see a particular brand, I understand it comes from one source. The most important attribute of a trademark is that it is distinctive, meaning it does not describe your goods or services. In fact, the more unrelated the trademark is to the goods and services, the more powerful the mark. So we have a concept here called the Trademark Power Hierarchy. And it goes from the most powerful to the least powerful. The most powerful trademark you can have is what we call a coined mark. And a coined mark is one you invented. That word did not exist before you created that word. Words such as Google.

Or Kleenex, Visteon. A fanciful mark is a little less distinctive but still a powerful mark, and it’s usually a word that combines two other words, such as Microsoft. If you think of those words Micro relates to the microprocessor, soft relates to software, but it is a newly created word from words that previously existed. An arbitrary mark is a mark that has no relation to the goods, but the word existed before you identified it as a mark for your goods, for example, Apple for computers. The word apple existed, indeed it has a very positive association in certain cultures. And Apple Computer claimed that word and developed that logo in association with its products and its company.

A suggestive mark is a mark that when you hear it, it conjures up some of the qualities of the product, but it does not actually describe the product. For example, Downy for fabric softener. You hear the word Downy, you might think soft, silky, fluffy, but it doesn’t actually describe fabric softener. And at the bottom of this list we have descriptive marks. And they re in a parenthetical, because if you choose a descriptive mark, as you will see from slides that we’re about to view. You may not have any protection at all for the mark.

So you will have invested significant dollars in branding the product, perhaps in publishing material, in packaging, and you will not be able to stop others from using that word. The one exception to this is what is called acquired distinctiveness, and that is where a descriptive mark is used for so long, with so much dollars behind it, it acquires distinctiveness. Here’s an example of a company that fought for several years to register the mark multi-touch in the United States. Apple computer was unable to convince the U.S. Trademark office that multi-touch stood for anything other than multiple touches. And as we see the trademark trial and appeal board concluded that multi-touch is indeed highly descriptive of a feature of the identified goods.

And indeed the Trademark Trial and Appeal Board, was completely unconvinced with all of the success that Apple had with its product, and all of the sales, revenue, and the marketing expenditures because as the trademark trial and appeal board said, it is not helpful in establishing that the purchasing public associates the term multi touch with Apple. Years of battling for nothing.

And here’s the slide that we were talking about earlier, that refers to the kinds of activities, and the kinds of evidence you have to gather to try to convince the Trademark office or a court that a descriptive word that you have chosen as your brand, in fact, has acquired distinctiveness and is now associated, in the minds of the public, just with you. How long you have used it, how many commercial impressions have been made through radio, television, clicks, online, sales figures, advertising dollars. Usually this sort of information is gathered by having to prepare affidavits by individuals who are in your commercial sector, and statements from them that they in fact associate this market just with you.

It can take many, many years. It can take millions of dollars in advertising and sometimes you don’t prevail, because too much time has passed and other competitors are already using that term.

So as you’re thinking of developing a product line, the next several slides should focus your attention on what you should be thinking of. So first of all, what is the word itself? The name of the company, the name of a product, the name of a service? So we have the mark that is comprised of words, including slogans and including company nicknames. FedEx, was actually an abbreviation developed by the public, that didn’t want to keep saying Federal Express, Federal Express FedEx. And FedEx, of course, filed this application with the trademark office to claim that nickname as its own, as did the restaurant Howard Johnson’s, and Volkswagen, the Bug.

You should also be thinking about how you are going to present the word, because you can have a separate trademark in, and a separate registration in the color and the shape of letters, they’re used to identify your word.

You’ll also want to think about the logo. So we have an example here, the NBC peacock, which has undergone many evolutions of shape over the years. And we also have the logo of Ghostly International, a small independent record label. So trademarks are not just for the very large, international, multi-billion dollar companies, they are for smaller companies also, and indeed for non-profits. You can also attempt to save money sometimes, if you’re a small company starting out, by filing one application to register a combination of a word element, and a logo. We call these composite marks. So that means that the public will associate the combination of the word and the logo together.

Again, on the one side we have NBC, and on the other we have a logo that was developed by a local non-profit animal shelter as a part of its fundraising activities to build a new facility. Color, alone, in some cases can be a trademark. And this was a rather remarkable outcome of the case in the United States about 30 years ago. But it has now been adopted through many parts of the world and that is, when you develop a product, if you choose a distinctive product color. You can acquire rights in that color over time. Here are few examples. Pink for insulation, Green for press pads.

In a few moments we’re going to continue looking at other kind of marks that you can develop to identify your products and services.