A trademark or portfolio of trademarks is often among the most
valuable assets of a business. A trademark serves as a fixed
representation of a business' brand and its goodwill, and conveys a
message to customers and potential customers of the quality of
goods and services offered by the business. A trademark owner not
only enjoys the exclusive right to use its marks in commerce, but
also has the right (and in fact the obligation) to stop others from
using similar marks in a manner that causes consumer confusion.
Thus, vigorous enforcement of trademark rights is necessary in
order to preserve those rights. However, a trademark owner is not
permitted to misuse its trademark rights so as to intimidate
another business into abandoning a mark that does not conflict with
the trademark owner's mark. The question then becomes: where does
vigorous enforcement end, and bullying begin?
It is well established that trademark rights do not grant one a
complete monopoly on the use of a particular word, words, logo or
symbol. Rather, trademark rights only extend to the goods and
services in which the trademark owner has used the mark in
commerce. As a result, ownership of a trademark does not permit one
to stop all uses of similar or even identical marks. Although a few
of the most famous marks -- think Budweiser or Coca-Cola -- are so
strong that it is likely that no one else could use those marks for
any goods or services, typically that is not the case. Even strong
marks like Delta (Delta Airlines, Delta Faucets, Delta Dental),
United (United Airlines, United Van Lines) and Columbia (Columbia
Records, Columbia Sportswear), are shared by businesses in
unrelated fields.
A trademark owner can only prevent others from using similar or
even identical marks in a way that is likely to cause consumer
confusion -- i.e., will lead consumers to believe that the two
marks come from the same source, that the sources of the marks are
affiliated, or that one source sponsors or authorizes the other
source's use of the mark. Thus, trademark rights are limited by the
extent to which another's use of a similar mark is likely to cause
confusion.
As a result of these competing principles of trademark law -- a
trademark owner is obligated to vigorously enforce its rights but
at the same time must respect the fact that those rights are
limited and not monopolistic -- a trademark owner frequently is
left in a quandary. What measure of enforcement is sufficient to
protect its rights without crossing the line? Adding to that
tension is the developing concept of "trademark bullying."
The United States Patent and Trademark Office (USPTO) has
defined a trademark bully as a business that uses its trademark
rights to "harass and intimidate" another business beyond what the
law might be "reasonably interpreted to allow." A number of
businesses -- typically large, powerful businesses with robust
trademark portfolios -- have been accused of bullying smaller,
less-heeled businesses into abandoning trademark rights that do not
conflict with the rights of the larger businesses. These alleged
"bullies" include such entities as Google, Coach and even the State
of New York. Numerous articles in legal and technology journals
have addressed the issue. The Trademark Technical and Conforming
Amendment Act of 2010 mandates that the USPTO conduct a study on
the extent to which trademark bullying has harmed small businesses
and to report on the possible need for legislation and/or
regulation to combat it.
To date, no law has been enacted or regulation implemented
proscribing trademark bullying in trademark infringement actions in
federal court or in proceedings before the USPTO. However, a
federal statute, 15 U.S.C. § 1114 (2)(d)(iv), does provide for the
awarding of damages to a domain name owner who is forced to defend
a federal court lawsuit in which a trademark owner, in bad faith,
seeks to force the domain holder to abandon a non-conflicting
domain name. There is no similar remedy available to defendants in
traditional federal court trademark infringement litigation, or in
proceedings before the USPTO. Not surprisingly, few who feel
bullied are willing to take their case all the way to verdict or
judgment. In one such rare instance from 2013, Already LLC v.
Nike Inc., the U.S. Supreme Court affirmed the dismissal of
Already's counterclaim based on Nike's dismissal of its affirmative
trademark claims and provision of a covenant not to sue Already.
The Supreme Court rejected Already's argument that Nike was guilty
of being a trademark bully and thus should face the prospect of
having its marks cancelled despite its recently adopted willingness
to drop its trademark claims. The Supreme Court's decision seems to
leave open the "out" for trademark owners caught overstating their
trademark rights -- they can simply dismiss their trademark claims
and agree not to pursue the other parties; effectively foreclosing
any relief for the allegedly "bullied" parties.
At this point the biggest risk to a trademark owner who "crosses
the line" through overly-aggressive enforcement tactics is social
media backlash. A number of blogs, including techdirt.com,
regularly report on the latest alleged instances of trademark
bullying. Further, industry-based blogs and websites have erupted
in protest when one industry member is seen as "bullying" another
into abandoning trademark rights. Because, as set forth above, the
power of a trademark lies in the perception of it (and the
corresponding brand) by the consuming public, businesses are quite
wary of the damage their brands can suffer as a result of the
public airing of bullying accusations -- especially on the
Internet.
So, what is a responsible trademark owner to do? First of all, a
trademark owner must resist the temptation to establish bright line
rules for enforcing its rights. Standing directives to oppose every
trademark application or demand the cessation of every use of a
mark that is even remotely close to the trademark owner's mark is a
sure-fire way to be labeled a "bully." Rather, a trademark owner
must be flexible, and must be committed to investing the time and
the money necessary to make a proper, reasonable decision with
respect to each instance of third-party trademark use that
arises.
In order to make a proper, reasonable decision, information is
key. A trademark owner needs to have methods in place for
identifying potentially harmful third-party trademark uses,
investigating those uses and determining the proper response. A
number of entities provide trademark watching services -- they
monitor the trademark office database and advise trademark owners
when a potentially conflicting trademark application has been
filed. These services are relatively inexpensive (several hundred
dollars per year, per mark) and provide a good foundation for
trademark enforcement. Additionally, a trademark owner should
establish a protocol for regular Internet searches for uses of
potentially-conflicting marks in the marketplace. While these
searches could be conducted by the trademark attorney, the
trademark owner would be better served by having the searches
conducted by an in-house employee (preferably someone involved in
marketing) who is most familiar with the trademark owner's brand
and can identifying the third-party uses that are truly potentially
problematic.
Armed with this information, the trademark owner is in a
position to make an informed decision as to a course of action, in
consultation with legal counsel as well as key in-house employees.
In determining that course of action the trademark owner should
consider more than the traditional options -- sending a cease and
desist letter, filing a lawsuit, or doing nothing -- and should
consider alternative strategies. Where the trademark owner does not
consider the third party use a significant problem at the time, a
letter placing the third-party on notice of the trademark owner's
rights and advising that the trademark owner will be monitoring the
third party's actions can be effective. In other circumstances, a
frank and friendly conversation directly between principles of the
two companies can often result in an agreement as to boundaries, an
agreement that respects the rights of both parties and avoids
expensive and time consuming legal proceedings, as well as the
potential for a social media backlash. Whatever strategy is
pursued, the trademark owner should seek to minimize such risks to
the extent possible.
This article appeared in the Spring 2015 edition of
the ComCom Quarterly,
the newsletter of the Complex Commercial Litigation Section. For
more articles like these on business litigation, bankruptcy, and
intellectual property topics, check out the
Quarterly at http://is.gd/lFJCJw.