Your brand, as represented by your trademark, defines the way your customers identify your business. If you do not own your trademark, then all your hard work building value into your brand through marketing and providing quality service or products may be for someone else’s benefit.
What is Exclusive Use?
In order to own your trademark, you must use it exclusively and actively protect that exclusive use. You may not own your trademark if someone else used a confusingly similar trademark prior to your use of the trademark. The time to ensure you can own your trademark is when your company is started, or you launch a new product or service line with a new trademark. I talk to companies regularly who suffer costly consequences because they either did not make sure their trademark was available or did not understand what qualifies as a confusingly similar name.
What is the Lanham Act?
The Lanham Act prohibits the use of any trademark that is likely to cause confusion with another trademark. If you violate the Lanham Act the possible penalties include an injunction–which will require you to stop using your trademark, your profits from use of the trademark, money damages, and costs which can include the other side’s legal fees. If you are required to pay all of your profits to another company then you have essentially been working for someone else, which is what just happened to Walmart.
What are Infringement Implications?
In 2011 Walmart started using the trademark Backyard Grill to sell Walmart’s own grills and grill accessories. The only problem with Walmart’s decision was that Variety Stores, which owns Roses, had been using the trademarks The Backyard, Backyard, and Backyard BBQ since 1993 for lawn and garden equipment. Walmart was warned by its attorneys that Backyard Grill was likely to be confused with Variety’s trademarks, but Walmart decided to forge ahead with its plans. Variety sued Walmart in 2014 for trademark infringement claiming Backyard Grill was likely to cause confusion with Variety’s trademarks. The Court awarded Variety all of Walmart’s profits from the sale of the Backyard Grill, which amounted to $32,521,671.40. An interesting fact here is that Variety’s revenue (not profit) from its use of its Backyard trademarks since 2002 was only $8,000,000.
Walmart obviously made a bad decision in picking the Backyard Grill name, but instead of climbing out of the hole Walmart just kept on digging. Walmart’s next step was to appeal the Court’s ruling, arguing, among other things, that the Court could not award damages without a jury trial. Walmart won its appeal and the case was sent back to the trial court for a jury trial. When the trial was held, the jury found Walmart’s use of Backyard Grill was likely to cause confusion with Variety’s brands and in 2019 awarded Variety $45,536,486.71 as a reasonable royalty for Walmart’s infringement, plus $50,000,000 in profits. The court also awarded Variety $4,136,168.75 in attorney’s fees and expenses.
Do not fall into the same trap as Walmart and think there are no consequences to picking a trademark that is confusingly similar to another company’s trademark.
John L. Wood is an intellectual property attorney at Egerton, McAfee, Armistead & Davis, P.C. that regularly advises clients on trademark and branding issues.
Does your business advertise? Do you have a website or social media account where you promote your products or services? Do you have catalogs, brochures, or product specification sheets? Do you compare your products or services to those of competitors? If the answer to any of these questions is yes, then under federal and state law, you are probably making advertising claims, whether you know it or not, and advertising claims can create serious legal obligations and risks.
Advertising claims can create legal liability under several sources of federal and state law and regulation. The Federal Trade Commission (the FTC), state attorney generals (under state consumer protection laws), consumers, and competitors all can potentially challenge any advertising claim you might make as false or misleading. Remedies and damages can be very burdensome and expensive.
In the context of false or deceptive advertising, the FTC analyzes claims for three common elements: a representation, omission or practice that is likely to mislead the consumer; an examination of the practice from the perspective of a consumer acting reasonably in the circumstances; and the representation, omission, or practice must be a “material.” FTC Policy Statement On Deception, appended to Cliffdale Associates, Inc., 103 F.T.C. 110, 174 (1984).
Furthermore, all advertising or product claims need to be properly substantiated. That is, a company or ad agency must have a reasonable basis for making any claim prior to dissemination of that claim.
What are Advertising Best Practices?
To hopefully minimize the risk of any challenge to advertising claims, here are some guidelines:
Claims must be truthful, non-deceptive, and accurate.
All facts or assertions made in the advertisement must be verified and substantiated and supporting documentation for each fact or assertion should be identified and retained.
The facts or data upon which the any claims are based must be “Competent and Reliable,” and all test procedures and results should be documented and accessible to consumers; third-party independent testing is recommended.
Comparative claims should fairly and accurately identify products or services and their source.
Comparative claims should include an apples-to-apples comparison of similar products or services.
Any comparative claim should be factual in nature and based upon objectively established facts or data; conclusions should not be presented in a biased or subjective manner.
Pre-publication reviews, surveys or consumer testing of claims should be considered to gauge likely consumer perceptions of the claims to ensure that the intended fair, accurate, and non-deceptive intent of the advertisement is likely to be perceived by the target audience.
Following these guidelines will not eliminate the possibility that your advertising claims will be challenged as false or misleading, but doing so can go a long way toward mitigating the possible risk associated with getting the word out about your business, products and services and will help to maintain and preserve your reputation in the marketplace.
This article is for general informational purposes only, does not constitute legal advice and should not be used as a substitute for competent legal advice from a licensed professional attorney.
A trademark application can usually be prepared in two to three hours of attorney time. The applicant may file (1) a “use” application or (2) an “intent-to-use” application. Each of these applications has different filing requirements.
What is the difference between a “Use” application and an “Intent-to-use” application?
In an intent-to-use application, there must be included, among other things, a drawing of the mark that is intended to be used and a description of the particular goods/services in connection with which the applicant has a bona fide intention to use the mark. In a use application, there must be included, among other things, a drawing of the mark that is used, the particular goods/services in connection with which the mark is used, and allegations of the applicant’s first use of the mark in connection with the goods/services. Further, in each of the foregoing applications, the applicant must sign an oath (or declaration) indicating the truth of the facts asserted in the corresponding trademark application. An advantage of an intent-to-use application is constructive use is deemed to have commenced from the date of filing the application. This constructive use can be critical in some circumstances when determining priority of use.
After the trademark application is filed at the U. S. Patent and Trademark Office (USPTO), the USPTO assigns the trademark application to an examiner. The trademark application is usually assigned to an examiner within three months after the application is filed. The examiner evaluates a number of criteria to determine if the trademark can be registered including performing a search of trademark records to determine whether the proposed mark is confusingly similar to any marks of record
.
What is an Office Action?
If the examiner finds an issue with the proposed trademark, a report, referred to as an “Office Action,” is prepared by the trademark examiner and is forwarded to the attorney. The Office Action may reject the proposed trademark based upon a variety of grounds, including confusing similarity with existing mark registrations, descriptiveness of the mark, technical objections, or for a variety of other reasons. Usually, if the application is rejected, the trademark examiner sets a six-month deadline for response to the Office Action.
How to Respond to an Office Action?
After a rejection, the client and the attorney consult with each other and strategize in order to prepare a response, called an “Amendment,” which can include arguments and/or amendments in an attempt to achieve allowance of the trademark application. Generally, amendments to the drawing of the proposed trademark will not be permitted.
What is a Final Office Action?
When the response is received by the USPTO, the same trademark examiner usually reconsiders the trademark application. Hopefully, the trademark examiner will allow the trademark registration, but the examiner may repeat the rejections. If the examiner rejects the trademark once again, then the examiner may issue the rejections in a “Final Office Action.” If the rejections issued in a Final Office Action are not overcome by subsequent Amendments within six months after the date of the Final Office Action, then the application will become “abandoned”. An appeal of final rejections may be filed within the six months after the Final Office Action so that the Trademark Trial and Appeal Board (TTAB) reviews the examiner’s rejections of the trademark application.
What is Publication for Opposition?
If the trademark examiner allows the trademark application, then the trademark will be published for opposition. The USPTO will inform the attorney when the trademark will be published for opposition. The trademark is published in the “Official Gazette” which is a publication of the USPTO that is regularly reviewed by trademark attorneys throughout the country. If an existing mark owner files an opposition during the 30 days after publication, then an opposition proceeding, like a mini-litigation, is held before the TTAB at the USPTO to adjudicate whether registration is proper.
If no opposition to the published trademark is received by the USPTO within 30 days, then the trademark is registered. Even after registration, a mark may be canceled through a “cancellation” proceeding initiated by another mark owner. The cancellation proceeding is also like a mini-litigation before the TTAB to adjudicate whether registration was proper. The mark owner must usually initiate the cancellation proceeding within five years of registration. The reason is that after five years on the register, the registration becomes “incontestable” if proper documentation is filed at the USPTO.
Currently Not Collectible Status – I.R.S. Debt Collection Alternatives
If you cannot afford to pay the full amount of your tax debt owed to the Internal Revenue Service (“I.R.S.”), there may be collection alternatives available to you. One of these alternatives is having your account with the I.R.S. placed in Currently Not Collectible Status.
Currently Not Collectible Status allows you to acknowledge that while you owe the tax debt, you are unable to currently make any payments. The I.R.S. will look to see if payment of your tax debt will cause a financial hardship. A financial hardship occurs when you are unable to pay your reasonable basic living expenses. To determine whether a financial hardship exists, you may be required to complete a Collection Information Statement (Form 433) to enable the I.R.S. to accurately assess your financial situation. The Collection Information Statement requires you to provide a detailed list of your monthly necessary living expenses as well as any assets you own or income you are currently receiving. The I.R.S will look at all information contained within the Collection Information Statement to determine whether a financial hardship exists. If your account is placed in Currently not Collectible Status as a result of a financial hardship, the I.R.S. is unable to levy against your wages or other assets while your account remains in Currently Not Collectible Status.
In addition to filing a Collection Information Statement, you may also be required to file any late tax returns in order to qualify for Currently Not Collectible Status.
It must be remembered that while your account is in Currently Not Collectible Status, penalties and interest will continue to accrue on the amount owed. Additionally, the I.R.S is entitled to keep any tax refunds you may be eligible for while your account is in Currently Not Collectible Status and apply your refunds towards your debt. Further, while the I.R.S. may not levy your wages or other assets while your account is in Currently Not Collectible Status, a Notice of Federal Tax Lien may still be placed against your property. Unlike a levy which involves a current taking of your assets by the I.R.S. to satisfy your tax debt, a Notice of Federal Tax Lien provides notice to other creditors of the debt owed to the I.R.S.; however, such property is not being seized by the I.R.S. at that time.
Once your account is placed in Currently Not Collectible Status, the I.R.S. will annually reassess your financial situation to determine whether you are now able to make any payments on your tax debt, and thus whether to remove your account from Currently Not Collectible Status.
Registration of a trademark, although not mandatory, is recommended because registration can substantially expand the common law rights of a trademark owner. A trademark may be registered federally at the USPTO if used in interstate commerce. Moreover, a trademark may be registered at the registration office in any of the 50 states where used.
In general, state registrations offer only limited additional benefit over no registration. A state registration in a particular state can accord standing to sue in that state’s courts of law, pursuant to corresponding state statutes. Further, a state registration can aid in proving priority of use. However, state trademark laws, and especially the level of protection accorded trademark owners by state trademark laws, vary widely from state to state.
Federal registration of a trademark at the USPTO is strongly recommended because federal registration provides nationwide rights. Federal registration expands common law trademark rights in at least the following ways:
Nationwide Rights
(a) Nationwide Rights – Under U.S. common law, rights extend only throughout the geographical areas where the mark has actually been used or become known. A junior party in a remote location can adopt a senior party’s mark for identical goods or services and successfully defend against an infringement claim on the basis of good faith, ignorant adoption. Under these circumstances, the junior party can even claim superior rights in its own territory and prevent the senior party from expanding use into the junior party’s territory. However, if the senior party’s mark is federally registered at the USPTO, then the good faith, ignorant adoption defense is unavailable to a junior user in an infringement suit because the junior party is on legal, constructive notice nationwide.
Federal Jurisdiction
(b) Federal Jurisdiction – The federal registration at the USPTO creates federal question jurisdiction for infringement suits. Hence, a federal registration accords standing to institute lawsuits against parties in federal court. This can be a tremendous advantage. Trademark suits in federal courts minimize any prejudice that might be experienced by a litigant who is foreign to a particular geographical region. Moreover, the outcome of federal trademark suits is more predictable than in-state trademark suits because of the extensive federal case precedent that has developed over many years.
Significant Value As Court Evidence
(c) Significant Value As Court Evidence – A federal trademark registration can be strategically useful in court. First, a certificate of federal registration is prima facie evidence in a court of law of the registrant’s ownership right and exclusive right to use the mark throughout the territories of the United States. Second, the registration certificate is prima facie evidence in a court of law of the registrant’s continuous use of the mark in commerce from at least as early as (1) the filing date of a “use” application or (2) the alleged use date in an “intent to use” application. Third, many court cases have held that a federal registration is presumptive evidence that the mark, even if arguably descriptive, is distinctive. The rationale for this presumption is that the mark has been determined to be registrable by the expert administrative agency, or the USPTO. This possible presumption may eliminate the need to prove secondary meaning in a court case. Finally, the right to use a registered mark may become “incontestable” in a court of law after five years of use, if proper documentation is filed at the USPTO. This incontestability eliminates important defenses from infringement actions, such as lack of distinctiveness and lack of secondary meaning.
Federal Statutory Remedies
(d) Federal Statutory Remedies – Federal statutes prescribe recovery of profits, damages, and costs, as well as equitable relief in the form of injunctions and seizure orders. Even treble damages and attorney’s fees can be obtained in exceptional cases.
Trademark Counterfeiting
(e) Trademark Counterfeiting – The Trademark Counterfeiting Act of 1984 creates very substantial civil and criminal penalties for the counterfeiting of federally registered trademarks.
Customs Recordation
(f) Customs Recordation – The federal registration can be filed in the U.S. Customs Service to prevent importation of goods bearing the infringing mark into the United States.
Deterrent Effect
(g) Deterrent Effect – A federal registration is very likely to be uncovered during a clearance search, which is usually performed by a junior party before adopting a new mark. Notice of the federal registration tends to deter junior parties from adopting confusingly similar marks which otherwise could be infringements.
