Chapter 12

Strategy for Acquiring Trademark Rights: A “How-to” for Branding

Trademark law has the goal of protecting two interests: those of the investor, who spends resources to create words or symbols identifying the business as a source, and those of the consumer, who relies on a mark as a symbol of quality and an association with a known source. Unlike copyright law, which secures protection only against copying, trademark law grants a monopoly to use a word or symbol in commerce. In other words, trademark law provides that, even if a second user is unaware of the original use, it may be forced to stop an infringing use.

As already noted, the nature of the rights secured by a trademark depend on a number of factors. Sometimes, the trademark proprietor has a master plan, an elaborate strategy for identifying and securing trademark rights. For example, when Exxon consolidated all its public images (Esso, Humble, Standard Oil, etc.) into a single brand, it followed a branding approach marked by a grand scheme to acquire rights and alert the public in a conspicuous and organized campaign. It carried out its stratagem methodically and diligently. But then, there are times when a product, like a toy or a film, becomes a phenomenon beyond anything one could have imagined. Cabbage Patch dolls and Mutant Ninja Turtles became sensations far greater than their creators could have anticipated. Pet Rocks were a Christmas sensation a number of years ago. Each success translated into markets for products and services not anticipated at inception. Because the Cabbage Patch dolls and Ninja Turtles scenario is common, it is useful to do a periodic inventory of the key words and symbols a business actually uses to determine which symbols, if any, are really important assets. The most important ones should be protected by federal registration; those of lesser importance could be protected by state registration.

Deciding Which Marks to Register

To determine which marks to register with the PTO, consider the five “hows”:

1. How distinctive is the mark?
2. How much has the owner invested in the mark?
3. How well is the mark known to consumers?
4. How diverse are the goods or services offered by the owner under the brand?
5. How likely is it that another's trademark use will confuse the public as to source?

As you answer these questions, it will become clear which marks are important to your operations. With that essential determination in hand, a strategy for ensuring protection for the mark will then develop.

How Distinctive Is the Mark?

Some images and phrases endure for decades, others disappear overnight. The CBS eye is of immense value to the network. It is a suggestive mark made strong by unique usage that indelibly stamps the program's source. When CBS finally chose to enter the cable market, it developed an “Eye on People” logo and look. By contrast, many radio stations have developed descriptive, weak trademark themes for their formats, such as “Beautiful 98” for an easy listening station on FM 98.3. On the trademark continuum, this title is doubly descriptive. Beautiful describes its music, and 98 is its geographic address on the dial. Given the radio allocation assignment rules, the Beautiful 98 format may be repeated in many broadcast markets. Therefore, radio station owners should be cautious when they invest primary identity in phrases of limited trademark distinctiveness.

Another interesting story involved the Fox television logo. When the owners of 20th Century Fox made their foray into broadcasting by acquiring the Metromedia television stations in the top broadcast markets, one moniker under consideration for the network was Fox Broadcasting Company, FBC for short. This acronym was designed to make the upstart appear like its established competitors, National Broadcasting Company (NBC) and American Broadcasting Company (ABC). However, FBC was already an acronym for a New York advertising company with ties to broadcasting. When the owners of FBC made a fuss, they forced the new network to be creative. This helped the Fox organization realize it had an even more useful and distinctive trademark already groomed for television. Hence, Fox Television was born.

How Much Money Is Invested in the Mark?

Look at expenditures over time. Promotional advertising is often a hefty chunk of any operation's budget. The more money invested in repeating thematic images to the public, the more important those images are. Trademarks are at the core of the imagery. With newspaper and magazine ads, flyers handed out on street corners, online and highway billboards, radio and television ads running many times an hour, the investment in a phrase can be substantial. This underscores a truism of trademark law: Every business has a name and an identity. Make sure that the ways you are known to the public justify the expenditures you have to make to compete. The more distinctive is a mark, from a trademark law perspective, the better. Be inventive and clever. Remember the trademark continuum: The more fanciful or arbitrary the mark, the stronger is the protection.

Take the Beautiful 98 example. It is a simple and informative phrase, but hardly one that can be hailed as inventive or fanciful. It may more than serve the purpose of helping the listener in a search for a specific sound while driving in steady traffic; however, it will win no uniqueness awards and will not prevent competitors in neighboring towns from adopting the same phrase. In sum, the amount invested in this phrase should be commensurate with its lack of trademark strength.

By contrast, when a firm wants the public to know it has a new name, it can go all out. Launching products on Super Bowl Sunday, with the largest viewing audiences of the year glued to their sets, affords the well-healed the opportunity to bring trademarks instant recognition. Monster.com had such a campaign during a recent football classic. Telephone companies in the business of merging and adopting new logos are also known for investing hugely in corporate images. Verizon, born from the merger of Bell Atlantic and NYNEX, remains one of the biggest national advertisers. So too does BellSouth's switch to Cingular. In the end, when the amount invested is big, the trademark payoff can be equally large.

How Much Consumer Awareness?

Heavily promoted marks are known to consumers. Also, events can make marks more popular. It is often surprising that, while a trademark owner may decide to drop a mark from its advertising, the consumer may nevertheless maintain a favorable association for many more years. The power of consumer awareness was brought home when Duracell announced plans to pull its slogan CopperTop Battery off the retired shelf after learning that the phrase still resonates favorably with consumers. If a campaign works, it is not surprising that, years after it has concluded, many consumers still fondly remember it. Checking through the trademark attic can result in discovery of some valuable assets.

How Diverse Are the Products?

Brand extension is often a fundamental strategy. We start with the understanding that some trademarks are the signature for a company; for example, Disney's rendition of Mickey Mouse's ears are world renowned. If one sees this symbol on any product or service, the connection is instantaneous. Disney owns that image in the marketplace as one of the trademarks signifying its company. Not only can it stop others from confusing the public to the detriment of the company, it can also leverage the mark to extend into new markets and diversify. When Disney launched a cable channel or when it opened a chain of stores, the logo for the company was used front and center. In short, Disney is able to attach the mark to a wide variety of goods, capitalizing on its brand's popularity, and diversify the products associated with Disney to make more money.

How Likely Is It That Another's Mark Will Create Confusion?

As we often repeat, the key issue in trademark law is the likelihood of confusion as to source. When a strong trademark is used in connection with certain goods or services, it can be said to have a “penumbra effect,” a halo around it that translates into an association with other goods or services. Even if a trademark owner does not sell certain goods or offer certain services, the public may be led to believe it does. Kodak does not own movie theaters, but if a theater chain opened with that name, the film manufacturer might object. How likely is it that consumers will be confused, even without direct competition? That is always a pertinent issue.

Answering the five “hows” leads to a crucial practice of trademark law for the 21st century, branding. When a mark is important, claim it and let the world know it stands for you as the source. Even if the public does not really know who H-P, Handspring, or Intuit is, the constant and aggressive use of branding establishes trademark imagery in the public's mind.

Key Hints for Branding

Here are the key hints for branding:

• Do that search at the very first opportunity. If any significant financial investment is going to be put into a mark, start out with a search. The wisdom of clearing titles early is proven by the bitter disappointment of many who learn well after the fact that third-party use of the same mark is an insurmountable barrier to plans. In some cases, if the early search discloses a prior use, the first user may be willing to sell its rights, and to do so for a lot less than after a trademark is launched. If you doubt this, just compare Exxon's handling of the Exon name with the NBC-Nebraska N logo dispute.
• If the mark is clear and you think it will be useful, register it. Once cleared, if the mark is important, register it with the PTO. If the plans do not call for initiation of the goods or services for a period of time (more than a few months), file an ITU application. The filing establishes rights fixed by law, and the modest fees associated with the effort repay themselves over and over again during the ensuing years.
• Brand all uses of the mark. Until a mark is registered, one should not use the federal registration notice ®, but by all means use ™ or ^SM anytime you can. These lay symbols for trademarks and service marks put the public on notice and bring instant recognition that a trademark is afoot.
• Go for the domain. We live in the Internet era, and a prudent trademark owner should never forget that. Reserve the domain names needed to extend your communications to the Web.
• Plan domestically, but think internationally. Business occurs across national borders as readily as across states. With scores of U.S. companies earning over $1 billion in foreign sales and thousands more receiving significant percentages of their revenues from international customers, no one should miss the opportunity to take one's product or services abroad if feasible. This means being alert to the various international implications of all trademark uses, from trademark registries in other nations, to translations of words that mean the same or confusingly similar things in English.
• Be alert to third-party mischief. Keep a watchful eye in your immediate marketplace and elsewhere for third-party uses that create confusion. Remember, even though copying is a sign of flattery, each unauthorized use that continues unimpeded in the marketplace dilutes the distinctiveness of a mark and can lead to loss of rights.
• Take action when necessary. Failure to stop known third-party infringements can result in the loss of rights vis-à-vis that entity and may, over time, seriously diminish all trademark rights. The law gives a monopoly to aid in the orderly working of the marketplace for the consumer and the business. If the business fails to protect its interest, the consumer may come to rely less on the marks as a sign of unique source identification. At that point, any trademark rights that might have been claimed could be lost forever.