Trademark

I

Introduction

Trademark, any word, phrase, or symbol used by manufacturers or sellers to identify their goods and distinguish them from the goods of others. Trademarks help consumers identify goods they have used and enjoyed in the past. Trademarks also allow consumers to avoid goods and services that they dislike. Examples of well-known trademarks include Coca-Cola for soft drinks, Kodak for film, and Nike for footwear. When trademarks are used to identify services, such as hotel chains or restaurants, they are sometimes called service marks. The overall appearance of a product’s packaging is known as trade dress.

Most countries of the world legally protect trademarks, service marks, and trade dress. Trademark law is one branch of the larger legal field known as intellectual property, which also includes copyright and patent law. Because consumers often continue to buy products they trust, well-known trademarks can be extremely valuable. For example, experts in trademark law estimate that the value of the Coca-Cola trademark is more than $40 billion.

II

History

Throughout history, makers of goods have put their names or other marks on things they produce. Items such as medieval swords and ancient Chinese pottery were marked with identifiable symbols so buyers could trace their origin and determine their quality. Before the 20th century, trademarks were usually symbols or pictures rather than words, since many people in the world could not read. Formal legal disputes over trademarks arose as far back as the early 17th century in England.

As trade increased in the 19th century, many countries adopted laws recognizing the legal rights of trademark owners. These laws prohibited other sellers from using similar marks that might confuse the public about the source of a product. Congress passed the first federal trademark law in the United States in 1870 and has made major revisions in the law since then. The current U.S. trademark statute, the Lanham Act, was enacted in 1946. The first international agreement dealing with trademark law was a treaty known as the Paris Convention. Adopted in 1883, it required members to recognize the trademark rights of foreign producers.

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Most nations of the world, including Canada and the United States, are members of the Paris Convention. In 1994 most countries, again including Canada and the United States, signed another significant treaty dealing with international trademark law. This agreement, called the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS), strengthened legal protections for trademarks around the world. In 2003 the United States agreed to join still another trademark treaty known as the Madrid Protocol. That treaty makes it easier for a merchant to get trademark protection in several nations around the world with only a single application. About 60 nations, not including Canada, had joined the Madrid Protocol by late 2004.

III

U.S. Trademark Law

American companies can have trademark rights under both state and federal law. Under state law, the first firm to use a particular mark is the legal owner of that mark. A trademark owner can gain valuable additional rights by registering its trademark under the federal Lanham Act. To be eligible for federal registration the mark must be used in interstate or foreign commerce. It also must not fall into certain forbidden categories listed in the Lanham Act. For example, it is forbidden to use the flag of a foreign country or the name of a living person without that person’s permission. Additionally, inaccurate geographic terms cannot be used as trademarks, such as Idaho for potatoes grown in Maine. Most importantly, the general name for a type of product cannot be a trademark. Every maker of that product must be free to use that word. For example, Sony is a well-known trademark for televisions and radios, but no one can have trademark rights to the words television or radio.

The Lanham Act is administered by the U.S. Patent and Trademark Office (PTO), a division of the Department of Commerce. The PTO will not grant registration for a trademark until it has actually been used to identify a product. A firm may, however, begin the registration process before use by declaring that it has a good faith intent to use the mark in the future. In contrast, most other countries will register a mark before actual use, although they often require use within several years after registration. The PTO will also deny registration of a trademark if the mark is similar to one that someone else has previously registered or used in the United States. It is usually permissible, however, for similar trademarks to be used on different types of goods or services. For example, a trademark for both a brand of sugar and for a chain of pizza delivery restaurants may be similar without violating trademark law.

If, after conducting its examination, the PTO decides that a proposed trademark is acceptable, the PTO will publish the mark in its Official Gazette, which is available on the Internet. This enables members of the public to learn what registration applications are pending and to object if they think the trademark should not be registered. A party who objects can file a petition, called an opposition, which will be decided by the PTO. Only federally registered trademarks may use the registered trademark symbol, ®. Trademark registration lasts for ten years but may be renewed indefinitely if the mark is still being used.

The owner of a trademark may permit others to use it by granting them a license. Many franchise businesses, such as gas stations and fast food restaurants, involve trademark licensing. The owner of the trademark must supervise the licensees to make sure they provide a consistent type and quality of goods or services. Failure to supervise can result in loss of rights to the trademark.

Sometimes the public stops thinking of a trademark as a brand name and begins to think of it merely as a general category of goods. The trademark owner has a responsibility to make sure this does not happen. If the trademark owner fails in this task, it will lose its legal rights to the word or symbol because the source of the goods can no longer be easily identified. Experts in trademark law declare that such a mark has become “generic.” Examples of words that were once trademarks but are now generic include escalator, aspirin, cellophane, trampoline, and thermos. Companies that own popular trademarks like Xerox, Kleenex, and Band-Aid spend a great deal of money to make sure the public understands that these are brand names and not generic words.

The law prohibits the use of a trademark belonging to someone else in any way that might confuse the public. Anyone who does this is considered an infringer. The owner of the mark may sue the infringer and is entitled to an injunction forbidding the infringer from continuing to use the mark.

In certain cases, the trademark owner may also be entitled to an award of monetary damages. Even if the marks are not identical, or even if they are used on different types of products, a court can still declare this an infringement if it finds that the public might be confused. Courts look at many different kinds of evidence to decide if the public might be confused. Relevant factors include the similarity of the marks, the similarity or relationship of the goods, consumer familiarity with the plaintiff’s trademark, and the intent of the defendant. Parties in trademark disputes often take surveys to determine whether the public is confused and offer those surveys as evidence in court.

IV

Recent Developments in U.S. Trademark Law

In 1995 Congress amended the Lanham Act to forbid something called trademark dilution. The dilution theory is only available to owners of famous trademarks, such as Nike or Sony. Under this theory, the trademark owner may prevent others from using the mark, even if the public would not be confused. This is to prevent the trademark from being watered down by becoming associated with multiple products. For example, the owner of the Sony mark for televisions could use the dilution theory to prevent someone from selling Sony brand canned soup, even if no one would think that the soup and the televisions came from the same company.

In recent years, some individuals have registered well-known trademarks as Internet domain names even though they do not own the mark or have any relation to the owner. For instance, a person with no connection to the Sony Corporation might register the name sony.com as a Web site. Often they do this with the hope that the trademark owner will pay them to turn over the domain name. These individuals are often called cyber-pirates or cyber-squatters. In 1999 Congress passed a law to deal with the problem of cyber-squatting. This law makes it illegal to use another party’s trademark as a domain name on the Internet with a “bad faith intent to profit.” There is also an international system for arbitration of domain name disputes, which is administered by the Internet Corporation for Assigned Names and Numbers (ICANN), a nonprofit corporation responsible for Internet protocols. Courts have held, however, that it is permissible to use another party’s trademark along with a negative word, such as “stinks,” as the domain name for a Web site criticizing the trademark owner. The courts reasoned that such domain names do not create any confusion about who is sponsoring the Web site, because consumers understand that trademark owners do not normally criticize or make fun of their own trademarks.

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