Ten Questions: Trademark Law

with Steven W. Zoffer, Chair, Intellectual Property Law Group

Trademark disputes are popping up everywhere — from celebrity branding to landmark rulings over large e-commerce platforms like Amazon being held accountable for infringing trademarks abroad. And the recent controversy over Cracker Barrel’s rebranding underscores just how vital it is for businesses, creators, and individuals to understand how trademark law works — what counts as infringement, how rights are enforced, and what risks arise if you do not properly protect your trademark.

We spoke with the Chair of Dickie McCamey’s Intellectual Property Law Group, Steven W. Zoffer, to unpack the legal terrain including recent examples and to obtain clarity and actionable guidance amid a complex and challenging business and regulatory landscape.

1.  Why is trademark law considered such a complex area of intellectual property law?

It is the mixing of real-world sales and marketing, taking into account consumer perception and business strategies, with legal standards imposed by federal statutes, regulations and agencies. When you mix those elements together to achieve a successful trademark application, and an enforceable, protectable and valuable trademark, it can create complexity.

You have to be very creative. I will give you an example. We do trademark registrations all over the world, and we were registering a product for a name for one of our clients in China. And for this particular mark we were registering the name of a company that was also the name of a place, which is typically a very difficult mark to register because it is considered primarily geographically descriptive. So in China, like the United States (“U.S.”), they have some very restrictive rules about that, and it is very difficult to get that kind of mark registered. What we did in the Chinese market was to make use of some Chinese symbols that phonetically sounded like the name of our client’s company, and we were able to register that combination of symbols in China.

The objective is often to help clients pick names that will not only achieve registration but will work for them in the marketplace.

2.  What are the biggest challenges facing United States’ businesses in trademark and intellectual property law today?

There is a real problem, especially in the U.S. markets, with competitors that are coming in and “knocking off” popular products and selling them at the lower price points. It has become very problematic for U.S. manufacturers. Being able to control or exclude, especially foreign, knock-off products that are coming in to the U.S. is a real challenge for anybody that is manufacturing and selling a product.

There are ways of gaining access to, and making effective use of, the laws in those countries as well as enforcing your rights in the U.S. You can protect against foreign knock-offs by registering your product in those countries, and then you have the ability to enforce the trademarks there. It is not a guarantee, it can be expensive, and it is a big problem; but I do not think enough people think about the steps they can take to protect, especially their core business and critical product lines. If you can identify where the unfair and illegal competition is coming from, then you should carefully consider registering your key trademarks in the country that is causing you the problem.

But just as quickly as we do that in some of these countries, a new infringing product will pop up; it could be under a different brand name, maybe a different color — same problem however. After doing this for many years, we have developed a network of in-country trademark expert partners that we utilize and which our clients find to be both efficient and cost effective. You can try to do this yourself from the U.S. in foreign countries, but there is no substitute to having boots on the ground in some of these countries and being able to call upon them as needed.

3.  Why is it so critical for businesses — large and small — to secure protection for their trademarks?

A trademark is often the face of your business. It might be the first thing that a consumer sees, whether it is a sign or a logo on the product. And a strong mark can make a business stand out in the marketplace. It can become part of the company’s reputation. It can be part of the goodwill that we talk about when we are valuing a company for a sales transaction. It is an important, valuable asset of the company, just like anything else that the company owns or has exclusive rights to use would be considered valuable. So if somebody is infringing on your trademark and using something that looks like yours, if you have proof of registration, you have a much easier time enforcing that right and, ultimately, in removing that anticompetitive conduct or product from the marketplace.

4.  How does strong trademark protection contribute to building brand equity and consumer trust?

Brand equity represents the worth of a brand. The social value of a well-known brand name and the visual elements are not just pretty pictures but legal assets with very real financial value attached to them. For many companies, about 55% of market value comes from unidentified assets that a company has. So that kind of recognition of a brand is the kind of thing that really drives value for a business. Established trademarks, which gain strength over time, become strongly associated with consumers, and they acquire what is known in the trademark laws as “acquired distinctiveness.” And while a mark may not be initially recognizable, it can gain distinctiveness through use over time.

5.  What risks do businesses face if they delay or fail to register their trademarks?

The risk is primarily that somebody else will use it and get to register it first. There are some delays that can be associated with the registration process. And while you are busy trying to get your logo or your name or your slogan trademark, somebody else might get it ahead of you. And that would give the competitor the opportunity to register first. It is often a race to the U.S. Patent and Trademark Office. Whoever gets there first wins.

6.  Why is ongoing monitoring and enforcement just as important as the initial registration of a trademark?

This is a function of trademark law that many people are not aware of, and that is the requirement that you must police your trademark to see if anyone else is using it in commerce. If you do not enforce your mark, you essentially allow others to either infringe on it or use the same mark that you are using. It becomes weaker and weaker to the point where the other companies that are using similar marks could actually have your trademark cancelled. And if someone else wants to utilize your mark and you have not taken action to protect it or to enforce it, you can lose it, even if it is registered. A competitor can challenge the trademark, say it is not in use and that it has not been for a period of time. And you are not really able to selectively enforce it. So, if you are not resilient and vigilant about it, you could lose it.

7.  What are some of the most common mistakes that businesses make when selecting a trademark?

Sometimes they select them too early. You start a business and you think you want to use these trademarks, but there are costs associated with it. And eventually, you figure out once you actually go to the market with a product and a name that it is not working, sales are down, and the company wants to change its logo. Then you are left with registered trademarks that you do not need anymore or have not used. So your logo needs to actually be something that is used in commerce.

The trademark office will not permit or allow the registration of a trademark that is not in use. So get it out into the market and make sure that it is being used. If you wait too long, somebody else might jump ahead of you. But filing too early can be a costly mistake. Because you have not actually put a product out in the market yet, you end up paying for extensions for trademarks that do not work or that you may never use, and then potentially having to abandon the trademark.

8.  In a trademark dispute, does the U.S. Patent and Trademark Office have a role to play or is it strictly between the two parties and the court?

The primary role of the U.S. Patent and Trademark Office in this context is the registration process. The USPTO does not adjudicate disputes among parties. There is a process during the application for a trademark where the USPTO and its examiners might send you either a rejection or questions because they are aware from their due diligence that there are other marks that are similar that have already been registered. Sometimes you get an examiner that is very aggressive when it comes to similar marks when they see something that might prevent to the mark from being accepted. In those instances, they will either deny it outright or they will present a challenge or ask lots of questions about it. And sometimes they are right, but not always.

When we are doing a trademark application, we have done that initial research regarding availability too. So before we file for something, a client will tell us, “Here’s what I’m thinking about registering for this logo or this tagline.” We do the research to find out if it is available. If we are filing a trademark application out of our trademark group, it is because we have a high degree of confidence that it is available.

9.  How can startups or small businesses on a limited budget prioritize trademark protection without overextending resources?

An intellectual property portfolio, as I mentioned earlier, is a valuable asset to the company. But trademarks take time to register. They cost money. When you are starting up a business, you do not always have extra cash lying around to start hiring lawyers and registering trademarks. So it is important to consider the brands, the logos, and the taglines that are going to be part of your core branding of your company or the products and services that you are going to offer. And keep in mind that when you are a startup, you do not have to build your IP portfolio all at once; it can be built over time.

You are going to be coming out with new products or services. You want to call those products or services unique names and protect those names along with any associated logos or tag lines. As the company develops new products, you can add to your IP portfolio by registering the new products as you go along. And that is something that we do frequently for companies. They add new trademarks to their portfolio of existing marks that we, in turn, are monitoring and making sure that those are all protected and current.

10.  What advice would you give to a business that just discovered someone else using a name or a logo similar to theirs?

The first step is, once you become aware of it, check the status of your registration. Make sure you have a registered mark that you can enforce. Your registrations are the keys to the courthouse. If you have your marks properly registered, you can send a Cease and Desist Notice out to the offending party, telling them to stop using your protected mark showing them that you have a registration. Let them know that, unless they stop using it, you will take the necessary steps to stop them.

That kind of enforcement has legs, and market value, so it’s important to maintain your trademark. Then if the party does not stop in response to the Cease and Desist notice, you may have to file an action in court to stop them or to enjoin them from using your trademark. And as long as your mark is properly registered and you can establish the infringement, you can get an order granting that relief, and the offending party may have to pay you damages.

For more information, contact the Intellectual Property Law Group at Dickie, McCamey & Chilcote, P.C.

Steven W. Zoffer 412-392-5497 szoffer@dmclaw.com