1. Selecting a Non-Distinctive Brand
Establishing trademark rights begins with selecting a trademark. Under U.S. Trademark Law, not all marks are created equal. A trademark's strength is measured by its distinctiveness. The more distinctive, the stronger and more expansive its protection is. On the lowest end of the distinctiveness spectrum are descriptive marks. On the highest end of the spectrum are fanciful and arbitrary marks. In the middle are suggestive marks.
A fanciful mark is a newly created word used to identify particular products or services, such as KODAK for camera film. Arbitrary marks include common terms that are used in a way that has nothing to do with their meanings, such as APPLE for computers. Arbitrary and fanciful marks bear no connection to their underlying products and services. Consequently, they have the greatest strength and are entitled to the broadest scope of protection under the law.
Selecting a non-distinctive trademark is a common business mistake. It is no surprise a business would want to select a brand name that immediately describes a characteristic, feature or function of its product or service. While it may build brand understanding and awareness faster, those initial benefits lead to long-term troubles. Protecting descriptive marks is difficult, and enforcing rights may prove impossible. Due to the inherently descriptive nature of the mark, competitors may describe their product or service using the same term. Also, even if the trademark owner were able to prove that consumers understand the term as a trademark, his or her rights in the mark will likely be construed narrowly.
To avoid this pitfall, a business owner should consider selecting a trademark that is either fanciful or arbitrary.
2. Not Conducting Trademark Availability Searches
A common mistake when selecting a trademark is not conducting a proper availability search prior to adopting the mark. Businesses that fail to do this may face losing large sums of money spent on advertising and marketing because they are forced by an earlier trademark owner to drop the mark. This search should be conducted for all names, logos and slogans being considered. The search should be more extensive than an Internet search, which can be unreliable. A business should consider conducting a preliminary search of state and federal trademark registrations. A more exhaustive search may follow, such as searching for common law uses of the mark. In addition, it is usually a good idea to consult a trademark attorney.
3. Failure to Federally Register Trademarks
Once a business adopts a distinctive mark and clears it using a proper trademark search, the next step should be seeking federal trademark registration. This step is often missed by businesses. Trademark owners who fail to federally register their marks often have a harder time preventing competitors from using the same or similar marks.
Without a federal registration, the owner would need to prove that consumers recognize the term as a mark, and even then, these rights may be confined to the geographical location where the mark is being used. Use of a mark in commerce provides common law trademark protection governed by state law, and is limited to the geographic area where the mark is used. For example, if a business only uses its mark to do business in NH, it is unlikely the company would be able to assert rights outside the state. By contrast, federal registration provides nationwide rights. This is perhaps the most important reason to file for federal trademark protection.
4. Allowing Uncontrolled Trademark Use by Third Parties
The onus is on the trademark owner to police his or her mark. A trademark's worth is measured by its strength. Maintaining a trademark's strength requires proper policing and affirmative action to prevent third-party use of the same or confusingly similar marks. Allowing uncontrolled trademark uses by third parties can weaken a mark. Inadequate policing may also prevent a trademark owner from enforcing his or her mark against third parties in the future or even lead to abandonment of the mark altogether.
Proactive measures should be taken to eliminate unauthorized third-party uses of one's trademark, including a regular search for unauthorized uses followed by sending carefully worded cease and desist letters. Early detection is key to avoiding the time and expense of litigation. At a minimum, a trademark owner should regularly search the Internet for unauthorized uses.
A trademark owner should also consider taking preventative measures in anticipation of unauthorized trademark uses, including registering domain names that exactly match the mark as well as variations, such as misspellings and phonetic equivalents. A trademark owner should also consider taking advantage of sunrise periods and register domain names before new generic top-level domain extensions are publicly released. Another good policy is registering one's trademark as a username on social networking Web sites.
5. Using Third-Party Trademarks in Keyword/Metatag Advertising
Metatags are terms embedded in a Web site's code. Metatags are invisible to Web site visitors, but can be read by Internet search engines and Web browsers. Since Internet search engines read metatags, they can play a key role in ranking a Web site on search engines. Thus, a Web site owner may find it appealing to use a competitor's trademark as a metatag for a site to get his or her own Web site included in search results.
Keywords are search terms that allow an advertisement to be viewed on the search result page when a certain term is searched. Similar to using competitors' trademarks as metatags, it may be enticing for a business to purchase competitors' trademarks so their advertisement is displayed when the trademark is searched using the search engine from which the keyword was purchased. Uses of third-party trademarks as metatags and keywords could be deemed trademark infringement and should be avoided.
6. Not Securing Copyrights Ahead of Time
Many businesses incorrectly assume that if they hire a software developer, Web site developer or graphic designer the business will own the underlying copyright in the resulting creations. This is a common misconception. Even if a business pays for the program, marketing or brand development materials, they don't automatically own the copyrights.
As the author, the developer/designer of these commissioned works is the owner unless there is a signed contract that says otherwise. A business should have a signed written agreement stating all rights, title and interest in the commissioned works, including all copyrights, belong to the business.
7. Inadequately Protecting Trade Secrets
A business shouldn't underestimate the value of its trade secrets. Trade secrets often provide a business with a valuable source of intellectual property. Broadly speaking, a trade secret is business information that has economic value because it is not generally known and properly ascertainable by others in the trade, and is the subject of reasonable efforts to maintain secrecy.
Trade secrets may include marketing data such as analyses and projections, business plans, and competitive activity data; sales data such as customer lists, pricing, and order information; technical data such as research and development reports, manufacturing processes, and product engineering information; unpublished financial information; supplier and purchasing information and personnel information.
Generally, disclosure to persons who are under no obligation to maintain secrecy voids the property right in a trade secret. By law, a trade secret may be protected against those who reveal it, such as industrial espionage or a breach of a confidential or fiduciary relationship.
To minimize the disclosures of trade secrets, or at least provide a business with a stronger position in litigation, consider having a plan to protect trade secrets that takes into account the value of the trade secret, the financial abilities of the business, and industry customs. Such efforts include restricting access to the trade secret, providing notice to the recipient of trade secret's status, and imposing an obligation to maintain secrecy through a Non-Disclosure Agreement.
8. Non-Confidential Disclosure of New Ideas to Third Parties
In the world of intellectual property, non-confidential disclosure of a new idea to a third party can have devastating consequences. For example, in the United States, non-confidential disclosure or sale of an invention to a third party may immediately extinguish the invention's property right as a trade secret. Furthermore, it may immediately bar patent protection in many foreign countries. In the U.S., any non-confidential disclosure may start the one-year grace period during which a patent application must be filed with the U.S. Patent and Trademark Office. If that does not occur, the opportunity to do so will likely be permanently barred.
Companies should keep a close eye on what and when their technical staff or sales group discloses or sells to the public. They should also consider filing a patent application for an invention before disclosing it to a third party, and doing so through a U.S. provisional filing to better control fees/costs. A provisional filing provides a company with one year, after filing, to consider whether formal patent protection is ultimately desired.
9. Not Taking Steps to Avoid Patent Infringement
One of the more unpleasant experiences is receiving notice of patent infringement from a patentee who simply has no interest in negotiating a settlement. Consider implementing a standing watch on the patent portfolios of your competition. Companies can readily monitor pending applications that become public one and a half years from filing. Both the United States Patent Office and various foreign patent offices have user-friendly electronic databases to facilitate such a search and review.
10. Not Having an Employee Agreement in Place
Companies should
review and make certain appropriate employment agreements are in place to
address the transfer of intellectual property from the employee to the company.
At a minimum, most companies require that engineering staff or inventors agree,
in writing, that all inventions made during their employment automatically are
assigned to the company. Companies may also include other provisions in
employment agreements ensuring that even in situations where an employee is no
longer with the company, he or she agrees to confirm the transfer of his or her
inventions to
the company.
Jennifer L. Fessler Morris and Michael J. Gallagher are intellectual property attorneys with Grossman, Tucker, Perreault & Pfleger, PLLC in Manchester. They can be reached at jfessler@gtpp.com and mgallagher@gtpp.com respectively or 603-668-6560.
Current Issue - May 2024