Trademark – Establishment Outline

18-21. Establishment of Trademark Rights

Establishing Trademark Rights P.875

1. Distinctiveness

   1. Classification of Marks and Requirements for Protection

   2. Genericness

   3. Distinctiveness of Trade Dress and Product Configuration

   4. Product Configuration

   5. Functionality

2. Priority: first to use in commerce

   • Actual use in Commerce

   • Intent-to-use application process

   • Geographic limitations on trademark use

3. Federal Registration and PTO Procedures

4. Incontestability

Purpose

• Help identify source and protect from consumer confusion

  • Purchasers may think they are buying something else (wrong source, diff quality)

• Company: Brand lose value, lose sale, lose goodwill due to customer’s confusion

• Customer: Dilute value of the brand; consumer confusion, not fully informed

• Tort notion: deception of consumers

• No time limit, as long as they are used in commerce (can last forever)

Historical Background

• Early Legal Protection

  • Early 1800s: Common Law Tort: Palming off, piracy

  • Federal Trademark Act 1870 (based on IP Clause)

    • Fed TM law dominates States’ TM law

    • Started off narrower requiring identicality, intend to deceive

  • Trade-Mark Cases 1879

  • 1881 Federal TM Act: based on commerce clause, limited to foreign commerce

• Modern History

  • 1905 Federal TM Act: extended to interstate commerce

    • broaden require likelihood of confusion and unfair

  • 1946 Lanham Act

    • S.22 federal registration constructive notice

    • S.43(a) unfair competition: not limited to same goods and names

  • 1984 Counterfeiting: ex parte seizure orders, criminal penalties 18USC s.2320

  • 1988 TLRA: intent to use registration

  • 1996 No anti-dilution protection (expansion)

    • Can control market even when use is not confusing to consumers, if you have very famous trademark

  • 1999 ACPA

Trademark Theory

• Doesn’t depend on novelty, invention, discovery, or any work of the brain

• Trademark protection is awarded merely to those who were the first to use a distinctive mark in commerce: the senior (first to use) user of a mark may prevent junior (subsequent) users from employing the same or a similar mark where there is a likelihood of confusion between the two marks

• Functions of Trademark: source identification, quality assurance, advertising vehicle

• Broad TM

  • Consumer protection: lower search costs

  • Incentives to for businesses to invest in

    • Creation of the mark

    • Advertising and promoting the product in association with the mark; and

    • Product related investments, e.g. high-quality raw materials, product equipment, quality assurance techniques

  • Prevent competitors from freeriding

• Limited TM: Free competition, Innovation, Free speech

The Basic Economics of Trademarks and Advertising

• Early economists were critical of advertising – as it serves both useful (informative) and wasteful (persuasive, intended to suggest that one product is superior to a similar if not identical alternative)

• Nowadays widely accepted view of consumer info economics

  • Trademarks economies on consumer search costs,

  • informs consumer of the quality of the branded product,

  • consumers benefit from concise and efficient designation of the source of products

• Fostering incentives for firms to invest in product, to develop and maintain consistent quality standards

• Foster competition among firms over a wide quality and variety spectrum

• Facilitate efficient new business models, such as franchising

• Consumers generally distinguish among 3 types of product features:

  • Search attributes: e.g. color and price

  • Experience attributes: e.g. taste

  • Credence attributes: durability

• Some trademarks also signal status/ identity for some consumers:

  • e.g. luxury brands like Rolex watches, T-shirts with university logo

  • When a trademark serves as an indication of a brand, it primarily associated with general qualities and attributes but overtime they become something much more: a signal of values, qualities and even a particular lifestyle

  • Counterfeit goods could conceivably divert some consumers who would otherwise purchase the authentic article, though knowing it is not genuine

• Protection entails server types of costs

  • Generic/ descriptive terms as trademark can increase search costs and impair competition by raising the marketing costs of competitors, e.g. “cookies”

    • Greater costs when trademark law protects characteristics of the product themselves, preventing competitor form using the word to describe its product would bring inconvenience, forcing them to find another word that consumers would understand

  • Admin and maintenance costs

    • Mark owners must police their marks to prevent unauthorized use and supervise licensees to ensure that quality standards are maintained

Subject Matter

MML 861-75; 15 U.S.C. §§ 1125(a), 1127

What can be protected as Trademark? P.870

• Company names can become product names if that co. gets exclusive right to describe it product with that name, customers might encounter difficulty in knowing what to ask for

• Only some terms and symbols are eligible for trademark protection

• Degree or protection depend on the strength of the mark

Classification of the term:

• Decreases in strength as they increase in natural association

1. Arbitrary/ fanciful:

   • Word or phrase that bears no relationship to the product it describes

   • strongest, as any value the possess in terms of name recognition comes from the corporate use of the name, rather than natural association in people’s mind

2. Suggestive: Suggest a product in people’s minds

3. Descriptive: Geographic designations/personal names, describe the product/ service offered

   • Only protected upon acquiring source-identifying meaning to consumers

4. Generic: Natural way to refer to that type of product, ineligible for trademark protection

(1) Trademarks, Trade Names, and Service Marks

• Laham Act s.45 Definition of Trademark

  • “The term “trademark” includes any word, name, symbol, or device, or any combination thereof –

    • (1) used by a person, or

    • (2) which a person has a bona fide intention to use in commerce and applies to register on...

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