Trademarks are devices used to identify the provider of a product or service.1 While they offer much less intellectual property protection than patents, copyrights, or trade secrets, they do help companies to protect their brand names. For example, the Intel Inside® trademark helps Intel build its brand by making it easier for that company to differentiate itself from competitors.
In addition, trademarks can be used as leverage to drive other forms of strategic advantage. For example, Cisco recently settled a lawsuit with Apple Computer Inc. over violation of its iPhone trademark. Cisco wanted Apple to make its iPod and iPhone products compatible with non-Apple products. By blocking Apple’s use of the iPhone name, Cisco forced Apple to concede on the issue of compatibility.2
Because consumers associate particular trademarks or servicemarks with the quality of the products or services that companies provide, some trademarks are quite valuable. For example, the Microsoft trademark is now worth $60 billion.3 Therefore, learning how trademarks work and how they protect intellectual property is an important part of technology strategy.
What Can Be Trademarked?
A trademark can be obtained on any word, number, symbol, phrase, color, design, or even smell that distinguishes the products and services of one company from those of another. For example, Nike has trademarked its “swoosh” symbol, while Porsche AG has trademarked the numerical sequence “911.”4
However, not everything can be trademarked. For a word, number, symbol, phrase, color, design, or smell to be appropriate as a trademark, it cannot describe the product or service that a company provides. For example, a supermarket cannot trademark the word “carrot” because that word is descriptive of the products sold at a supermarket. However, an airline could trademark the name “carrot” because carrots are not descriptive of what airlines do. A common word, such as “house,” cannot be trademarked. However, what is a common word lies in the interpretation of the courts. A federal appeals court recently upheld Entrepreneur Magazine’s trademark on the word “entrepreneur,” allowing that company to block the use of that word by others.
Ironically, the fact that another party has trademarked a word, number, symbol, phrase, color, design, or smell does not mean that you cannot use the same one. A trademark can be used by more than one company if customers would not be confused about the identity of the provider of the product or what the product is used for, and if the use by a second party does not dilute the value of the trademark. Typically, this means that a trademark can be used by two companies if they sell different types of products and services (e.g., airplanes and vegetables) through different channels. For example, Apple Computer and Apple Records are both able to have trademarks with the word “apple” in them because Beatles songs and personal computers are very different products and are sold through different marketing channels. However, as Apple Computer moves further into the music business, it may face problems using its trademarked name for that business because the name might then cause confusion among customers as to the provider of the product.
Obtaining a Trademark
So how do you get a trademark? In common law countries, such as the United States, you get a trademark by using the word, phrase, symbol, design, or smell, or by registering that mark with the U.S. Patent and Trademark Office (USPTO).5 The process of registering a trade or service mark is very simple. You just send an application to the USPTO along with a drawing of the mark and the payment of the fee for the relevant category of mark.
However, before you send in your application and pay the money to register a trademark, you probably want to conduct a trademark search. The USPTO is not going to give you a trademark to something that violates another company’s mark. Conducting a trademark search will minimize the chances that you will select something that infringes another mark, and reduces the likelihood that you will select something that cannot be trademarked.
Although you will not get trademark or servicemark rights from the USPTO until you use a mark, and you do not need to register the mark to enforce it, you probably want to go down the registration route when you seek trademark protection. Registration provides a record of your claim of ownership of the mark, which is useful to signal your actions to competitors. In addition, you cannot sue to protect your trademark or servicemark, or collect triple damages in the case of infringement, until the mark has been registered.6 Furthermore, registration makes it easier to obtain trademark or servicemark rights in other countries.7
Enforcing a Trademark
Once you have registered a trademark, your ownership of it lasts for 10 years and can be renewed as long as the trademark is in use and has not been invalidated.8 However, 5 years after you have obtained the trademark, you will need to file an affidavit with the USPTO attesting that the mark is still in use. If you do not do this, your trademark can be cancelled.
Trademarks can be invalidated by the USPTO in one of three ways: through cancellation proceedings, through abandonment, or through generic meaning. Cancellation occurs when the owner of the mark fails to attest to its continued use.
Abandonment occurs when someone else can show that the trademark owner has stopped using a mark. For example, in the recent dispute between Cisco and Apple Computer over the trademark “iPhone,” Apple Computer sought to show that Cisco did not sell iPhone branded products for a period of time, thus indicating that Cisco abandoned the trademark.9 The potential for abandonment is why trademark holders fight hard to protect their trademarks. For example, Entrepreneur Magazine Inc. fought to exert its rights to the trademark “entrepreneur” against a variety of small companies not because it thought it would obtain any significant royalties from enforcing the trademark, but to defend the use of the mark against other companies that claimed that Entrepreneur Magazine had abandoned it.
Generic use occurs when the mark no longer represents a specific product or service and ends up representing a general category of products or services (as occurred, for example, with the once trademarked term “escalator”).10 Once a trademark becomes a generic term, it reverts to the public domain and anyone can use it. That is why Bayer works hard to ensure that Aspirin® is not used to refer to all pain medications. If that were to occur, the word could no longer be trademarked because it would no longer distinguish Bayer’s product from those of other companies.
Like other forms of intellectual property protection, trademarks are enforced through legal action. Trademark owners can sue to prevent both infringement and dilution of their trademarks.11 Infringement occurs when a competitor’s use of a trademark causes confusion among customers about the provider of a product. For example, VOIP start-up, Vonage, has sued AT&T claiming that the name of AT&T’s VOIP service, CallVantage violates its trademark because the name is too similar to its own.
Dilution occurs when another party’s use of a word, phrase, symbol, design, or smell lowers the value of a company’s trademark. For example, American Express was able to stop a limousine service from using the name “American Express” by showing that its trademark’s value was reduced by that action.12
You need to protect your trademarks. Failure to take legal action to enforce your rights can result in the loss of the trademark through abandonment. Unfortunately, taking legal action costs money, and many organizations fail to protect valuable trademarks. For example, Metropolitan Transit Authority (MTA) in New York City has trademarked its circular route symbols for the A, D, F, 1, 4, and 7 trains. However, many companies frequently violate MTA’s trademarks by making unauthorized T-shirts—or, in the case of Eli Zabar’s food emporium, rectangular cookies with hard icing designed to look like New York City MetroCards. Although MTA has written letters to many of the trademark violators, it lacks the legal staff to go to court to enforce its trademarks and has allowed the value of those trademarks to deteriorate.13
Start-ups face a greater challenge than large, established companies in developing an effective strategy toward the management of trademarks. Because small, new companies are often cash constrained, they face the dilemma of whether challenging—and winning—a trademark infringement lawsuit is worthwhile. The start-up might win the suit against a deep pocketed competitor but be driven out of business by the legal effort. Take, for example, the case of Haute Diggity Dog, a dog toy manufacturer. They created dog toys shaped like handbags, called “Chewy Vuiton.” Louis Vuitton, makers of the handbags that Haute Diggity Dog was parodying, sued them for degrading the value of Louis Vuitton’s trademark. While Haute Diggity Dog won the lawsuit, it lost a lot of distributors because Louis Vuitton sent cease-and-desist letters to the retailers during the lawsuit, causing the retailers to stop carrying Haute Diggity Dog’s products.14
Domain Names
Domain names are the names used on Web sites to identify an organization providing a good or service. Domain names have become an increasingly popular form of intellectual property protection, as companies do more and more business over the Web.
Domain names are registered by the Internet Corporation for Assigned Names and Numbers (ICANN) to the first party to seek registration for that name.15 As with trademarks, it is useful to conduct a search before trying to register a domain name to make sure that you can obtain the name that you would like to use. You can do this at the ICANN Web site (www.icann.org).
The protection of domain names is similar to the protection of trademarks. However, two important distinctions exist: First, because geographic regions are not meaningful in cyberspace, companies in different places are not permitted to use the same domain name, though they are permitted to use the same trademark.16 Second, unlike with trademarks, common words can be used as domain names. For example, Proctor & Gamble has obtained the domain name “cavities.com.”17
Your domain name also cannot adversely affect another company’s business. If it does, the company whose business has been hurt can sue you for control of your domain name. For example, Universal Tube and Rollerform Equipment Corporation has sued YouTube for the rights to the www.youtube.com domain name because the volume of people going to Universal Tube’s Web site www.utube.com when looking for www.youtube .com has caused Universal Tube’s Web servers to crash repeatedly.
The enforcement of a domain name occurs in a similar way to the enforcement of a trademark. If you believe that someone else has infringed your domain name or has taken action to lower its value, you can sue the offending party.18 For example, Sir Ratan N. Tata of Bombay, India, the leader of India’s Tata group of companies (which includes Tata Steel, Tata Engineering, Tata Power, Tata Chemicals, Tata Finance, Tata Power, Tata Tea, and Tata Sons Ltd.) and the Sir Rata Tata Trust, sued a New Jersey porn site in 1999, and obtained an injunction against the latter’s use of the Internet domain name BODACIOUSTATAS.COM because the New Jersey company’s use of the domain name harmed the reputation, and hence the value, of Sir Ratan’s companies. 19
However, enforcement of domain name infringement is often more difficult than enforcement of trademark infringement because domain names operate in cyberspace. As a result, it is often difficult to determine the legal jurisdiction in which to sue an offender, and when that jurisdiction can be determined, it is often a place that does not strongly enforce intellectual property laws, making it hard for you to stop the offending action or collect damages.20