Slides from Dayton AMA event: Protect Your Trademark: An Essential Part of the Marketing Plan

Brand Name Selection and Protection

Roger H. Bora
Thompson Hine LLP
Dayton, Ohio
937.443.6817
roger.bora@thompsonhine.com

© 2009 Roger H. Bora

ATLANTA BRUSSELS CINCINNATI CLEVELAND COLUMBUS DAYTON NEW YORK WASHINGTON, D.C.

Discussion Topics
Role of trademarks (owner and consumer)
Selecting a valuable trademark
Availability searches - Clearance
Domain names
Trademark rights
Federal registration process
Advantages of federal registration
Maintaining your federal registration
Protecting & enforcing trademark rights
Licensing Issues

2

Role of Trademarks
Source Identifiers

® Trademarks can be:
Words, letters, numbers, shapes, colors, sounds or
any symbol used to identify the source of products
and services

® Not all trademarks are created equal

® Spectrum of marks

3

Role of Trademarks

Source Identifiers

® Valuable trademarks distinguish goods or services from
competitors

® Nokia and Motorola

® Best Buy and Circuit City

4

Role of Trademarks
Source Identifiers

® Trademarks that do not distinguish goods or services from
competitors are generally not valuable and could potentially
harm brand image

® Heart Specialists of Southern Ohio

® Southern Ohio Heart Specialists

5

Role of Trademarks

Trademarks and Customer Loyalty

® Customer loyalty=Repeat business

® Consumers know exactly what to expect when they
purchase a Big Mac from McDonalds

® It is the consistent level of quality at a fair price that
generates repeat business for McDonalds
® Not best quality but consistent quality

6

Role of Trademarks

® Lack of a consistent level of quality damages a
trademark and potentially invalidates a trademark

7

Role of Trademarks


® CONSUMER PERCEPTION = GOODWILL

® GOODWILL = A VALUABLE ASSET

® Trademarks protect the “goodwill” and brand
image that businesses generate

8

Role of Trademarks


® Trademarks enable consumers to avoid
companies with bad reputations and seek out
those with good reputations

® Heart Specialists of Southern Ohio
® Southern Ohio Heart Specialists

9

Selecting a Valuable Trademark

Spectrum of Marks

Generic Descriptive Suggestive Arbitrary Coined

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Spectrum of Marks

® The Four D’s

® Distinctiveness – legally protectable?

® Distinguishable from competition?

® Da Position?

® Da Attributes?

11


Spectrum of Marks - Generic

® Name of product or service itself – not protectable

® YO-YO (once a trademark - what was the generic term?)
® Escalator (once a trademark)
® Audio Book Club
® Pizza Place
® Computer Store

12


Spectrum of Marks - Merely Descriptive

® A mark is considered merely descriptive if it
describes an ingredient, quality, characteristic,
function, feature, purpose or use of the
associated goods or services

® Not immediately protectable upon first use

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® Consumers may not perceive descriptive terms
as trademarks
® Dayton Real Estate Agency
® Best Software Developers

® Quick Epoxy Sealant

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® AFTER TAN - for after sunning lotion
® CD CREATOR - for computer program

® COZY WARM ENERGY SAVERS - for pajamas

® 5 MINUTE - for glue that sets in…

® HONEY ROAST – for roasted peanuts

® ITOOL – for Internet design tool services

® COMPUTER XPERTS – for computer repair services

15



® Some descriptive (non-inherently distinctive)
trademarks can become strong marks once
secondary meaning attaches

® News Week
® Best Buy

16



® Acquiring secondary meaning can take five
years or more unless you have a big advertising
budget for the product – and I mean BIG!

® Some descriptive marks may never reach
protectable trademark status because they are
too descriptive

17



® Even if they do acquire secondary meaning,
your competitors can still use your
“descriptive” trademark in a “fair use”
sense to describe their own products – and you
can’t stop them!

® Even a federal trademark registration WILL NOT
stop them!

18


Registration Number: 1698772

Mark (words only): WHISPER QUIET

Register: Principal

Owner: WHIRLPOOL PROPERTIES, INC.

GOODS AND/OR SERVICES: dishwashing machines and
clothes washing machines

Section 2(f)

19


® DeLonghi dishwashers are whisper quiet.
DeLonghi dishwashers use sound
absorbent material and special technical
features to lessen vibrations and
therefore sound. DeLonghi dishwashers
can wash a load at anytime of the day
without disturbing the household.

20


® Can be a marketer’s dream!

® Less advertising to sell product! – Right?

® Requires increased advertising to build secondary
meaning!

® Hurry! Competitors may use mark as a trademark before
secondary meaning attaches!

21

® Geographically descriptive
® Maine Lobsters (for lobsters from Maine)

® Geographically misdescriptive
® Ohio Windows (for windows from Vermont)

® Geographically deceptively misdescriptive
® Maine Lobsters (for lobsters from Massachusetts)

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® Laudatory (Puffery)
® Preferred Golf Resort

® Deluxe, Supreme, Dependable

® Surname
® Smith’s Trucking

23


® Ornamentation

24

Spectrum of Marks - Suggestive

® Suggests attributes/advantages (Not quite descriptive)
® Immediately protectable upon first use

® ROACH MOTEL – for insect traps
® FLORIDA TAN – for suntan lotion

® HEARTWISE – for low-fat, low-cholesterol foods

® MOVIEBUFF – for database of movie information

25

Descriptive or Suggestive?

® AMERICA’S BEST POPCORN (Popcorn)
® DIAL-A-MATTRESS (Mattress sales)
® GOBBLE GOBBLE (Turkey)
® EASYLOAD (Tape recorders)
® LIP RENEWAL CREAME (Lip Moisturizer)
® SLICED ANIMALS (Puzzles)
® 5 MINUTE (Glue that sets in five minutes)
® FILIPINO YELLOW PAGES

26


Spectrum of Marks - Arbitrary

® Common words used in meaningless context
® Immediately protectable upon first use
® Legally strong, but can be risky from marketing perspective

® CAMEL cigarettes
® APPLE computer

® WILD HORSE beer

27


Spectrum of Marks - Coined/Fanciful

® Made up words
® First to offer product, should create generic term

® Remember YOYO? -- The YOYO___ (what?)

® Yahoo, Xerox, Lexus, Kodak

28


Spectrum of Marks - Strong Marks

® Coined/Fanciful (Kodak, Verizon, Clorox)

® Arbitrary (Apple Computer, Wild Horse Beer)

® Suggestive (Wrangler, Die Hard, Close Up)

29

Spectrum of Marks - Types of Marks to Avoid

® Merely descriptive marks (Car Fresheners)
® Surname (Smith’s Auto Repair)
® Laudatory (Best Beer in America)
® Misspellings (Kleener)
® Geographical (Centerville Self Storage)
® Acronyms (ACCD – Most are meaningless)
® Hard to remember
® Arbitrary numbers and/or letter

30


Spectrum of Marks – Unprotectable

® Generic (Auto Repair Shop or Super Glue)
® Deceptively misdescriptive (“Maine Lobsters” for
lobsters from Massachusetts)
® Scandalous

31


® Selecting the “right” brand name for your
product will not only allow you to
differentiate your product from your
competitors’ products but will also allow
you to focus your time and efforts on
growing the brand itself rather than
continuously trying to enforce
weak/descriptive marks

32


Preliminary Considerations

® To influence the decision making process, a brand
name should symbolize the strengths, image and
values desired to be associated with the brand

® A good name may be the best insurance for long-term
success

33

Preliminary considerations

® Rather than look at how you perceive your product or
how you want consumers to perceive your product,
consider how consumers ALREADY perceive your
product or similar products

® Look for the “solution” inside the prospect’s mind

® Then select a name that reinforces consumers’
perceptions or wants

34


Preliminary considerations

® What are consumers looking for from your
product/service?

® Do they want security, accuracy or
reassurance?

35


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Preliminary considerations – Positioning?

® Can you take a position in the minds of
consumers?

® Select a name/slogan that begins the
positioning process

38


39

Melts in your mouth, not in your hand

40


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® Competitors’ trademarks?

® Do they already hold a position in the minds of consumers?

42



® Should you really compete for that same position or
should you find a hole and fill it? Make that hole yours!
Own it!

® Select that mark/slogan that will capture the position or
niche, then don’t let it go!

43


44


45

First Class is Michelob

46


® Can you exploit any weaknesses of your
competitors?

® Then reposition them?

47


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® If taking a position in your industry is not available or
practical, consider:

® Selecting marks that suggest an advantage of
your product or a result that consumers want from
your product and/or service

® Selecting an arbitrary or coined mark and using it
with a tagline that touts positive attributes of
product

49


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® Consider the image that you want to convey, then
select a slogan that “sells” that image

56



® What should your brand name represent?

57



® Consider growth of products/services (Don’t be too narrow)

58


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Considerations

® Memorability – Keeping it memorable is your advantage!
® Meaning - Should communicate positive attributes
® Short, Simple and easy to understand
® Likeability – Die Hard
® Language problems? Nova

60


Global Considerations

® Strong in one country may be descriptive in another

® If descriptive, consider adding design element

® Language barriers? Nova

® Consistent global icon?

61

Global Considerations – Global Icons

62

Global Considerations - Gerber Enters African Market!

63


® In Africa, companies routinely place pictures on the
label of what is inside, since most people cannot
read

® African consumers were appalled because they
thought the jar contained ground up babies

64



® Pepsico launches slogan in China!

® “Come Alive with the Pepsi Generation”

® Translation:
“Pepsi Brings Your Ancestors Back from the
Grave”

65


® Strong brands have powerful visuals

® So, consider using logos or visuals to reinforce
the brand

66


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Clearance

Why?

® Is selected mark available for use?
® May avoid lawsuits – cheaper than defending claims
® Determines whether businesses can expand geographically
® Determines whether businesses can expand their products
and/or services under same trademark

70

Clearance

Why?

® Consider expansion of trade

® ABC Auto Repair opens for business in Dayton on
January 1, 2009 and ABC Towing opens for business
in Oakwood on January 7, 2009. Problem?

71

Clearance
Why?

® Will reveal whether a mark is weak or strong
® Are there many users of same or similar term(s) for
same or similar goods and services?

® Weak marks receive a narrow scope of protection (crowded
field)
® Atlantic Bank of New York
® First Atlantic Bank

72

Clearance

Why?

® Cheaper than re-educating customers of newly adopted
trademark

® Evidence of clearance may be used to show that good
faith was exercised to ensure that no other similar marks
were in use

73

Clearance
Types of Searches
® Knockout search (USPTO, Internet, Domain names)
® Enhanced knockout (USPTO, State, Internet, Domains)
® Full search
® U.S. Federal trademark database
® State trademark databases

® Common law marks

® Business name directories

® Domain names

® International registrations

74

Clearance
Global Clearance

® U.S. counsel evaluates foreign searches

® Protection less predictable in certain jurisdictions (i.e.,
descriptiveness)

® Clearing U.S. does not clear Mexico, Canada…

® Request comment on negative connotation in foreign country

75

Clearance

Global Clearance - When and How?

® Well before launch
® U.S./Multi-country searches
® WISS
® Start in-house? (Saegis)

77

Clearance

Global Clearance - Where?

® Start in priority countries

® Conduct searches in stages (countries or
goods/services)

78

Domain Names/Internet

® Before adopting and using a selected trademark you may
want to reserve the Internet domain name

® Should also reserve commonly misspelled marks - Pirates

® If already using your trademark and want to register a
domain name, may need to consider .net or .biz etc… if
.com is already reserved or adding another term to your
domain name

79

Trademark Rights

® Use alone creates common law trademark rights
® In U.S. and some other countries. First to file in other countries.

® Federal registration provides additional trademark
rights

® (TM), (SM) and ® (Which one should I use?)

80

U.S. Registration Process

® ITU applications

® Use-based applications

® Based on foreign registration

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U.S. Registration Process

® Examination process
® May receive a letter from an Examiner and, if so, must respond
within six-month period

® Publication for opposition
® Trademark is published in the Trademark Official Gazette

® Registration
® If there is no opposition to registration, registration certificate
should issue (but must have use first)

82

Global Registration Considerations

Planning for Registration

® Where to protect? (Priority 1, 2 and 3 jurisdictions)
® Reach of global advertising/Sales figures?
® Geographic scope of initial launch?
® Location of current customers?
® Expansion plans? (2 years, 5 years)
® Staged filings/Multi-year budget

83


Global Protection Filing Mechanisms

® Madrid Protocol – Advantages
® 78 members
Australia, China, EU, France, Japan, South
Korea, Switzerland, United Kingdom…

84


® Madrid Protocol – Some Advantages

® One application – English – File at USPTO
® One filing fee

® No foreign agents needed for filing

® One registration with one registration number

® One renewal application and one renewal fee

® Subsequent designations at any time

85


® Madrid Protocol – Some Disadvantages

® Central attack - three-month transformation period

® Amendments to home country application -
registration affect all designations

® Scope of goods/services narrower for IR based
upon U.S. registration

86


® Community Trademark (European Union)

® Covers 27 EU countries

Finland, France, Germany, Ireland, Italy, Spain,
Sweden, U.K….

87


® Community Trademark (EU) – Some Advantages

® One application and one fee
® No use required to get registration
® One registration to maintain
® Good to all or good to none

88

Advantages of Federal Registration

® Constructive notice that the owner of the mark has the right to
use the mark throughout the United States, even if the mark is
not being used in a specific geographical area (Subject to
common law rights)

® After five years of continuous use in commerce, the mark
becomes incontestable, which means that the registration
cannot be attacked on basis of prior use or descriptiveness

89


® Registration is prima facia evidence of validity that the
registrant owns the mark and has exclusive right to use the
mark in commerce

® May receive statutory damages, including attorneys fees

® The registrant may sue in federal court

90


® The registrant may use the powers of the federal government
(U.S. Customs Services) to prevent the importation of products
that use infringing marks

® Registrant can receive an earlier application filing date under
the Paris Convention if Registrant files an application in a
member country within six-months of the filing date of the U.S.
application

91


® A registrant obtains the right to use the symbol ® after its
mark, warning others of the federally registered status of its
mark

® The USPTO should refuse registration of a mark that is
confusingly similar to the registered mark

92

Maintaining Your United States
Trademark Registration
® Affidavit of continued use between 5th and 6th year of
registration

® Affidavit of incontestabilty between 5th and 6th year of
registration

® Ten year renewal

93

Protecting and Enforcing Your
Trademark Rights
Trademark Use

® An owner must use its trademark before common law
rights are acquired, or before a U.S. registration certificate
will issue (Some countries first to file)

® Failure to use mark for three consecutive years may
result in abandonment of trademark rights (3-5
years most countries)

94

Trademark Rights
Proper Trademark Use

® Do not use a mark as a verb or noun but rather use as an
adjective

® The Xerox is efficient
® Our new copier will let you Xerox quicker than before

95

Trademark Rights

Instead use:

® The new Xerox photocopier is much faster and
efficient

96

Trademark Rights


® Now generic:

® Yo-Yo, Nylon, Zipper, Aspirin, Thermos

97

Trademark Rights

® Trademark rights can be lost if one fails to police and
enforce those rights

® Monitor newly filed trademark applications (US and/or
Global)

98

Licensing

® Income generation

® Broadens scope of protection of trademark -
covers other goods and services

99

Licensing: Do’s & Don’ts
DO’S

® Quality Control
® Trademark Infringement Procedures
® Non-Exclusive or Exclusive? (Best Efforts)
® Territorial Restrictions
® Policing Third Party Use by Licensee
® Licensee Estoppel – Licensee’s Challenge of Validity

100

Licensing: Do’s & Don’ts
DON’TS

® Too Little Control
Naked Licensing – May result in abandonment of mark

® Too Much Control

Anti-trust – Tying arrangements and territorial restrictions

Product Liability – May be on hook for damages

Franchise -- Different laws and potential civil/criminal penalties

101

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