DECEMBER 2003
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Trademark: The Ignored Asset
Part 3 of 3: What is Trademark Infringement?
by William S. Wyler
Schwartz, Manes & Ruby
| In Part 1 of this series, we looked at the nature of what is a trademark or service mark. In Part 2 we explored trademark registration and why it is valuable. In the final part of this series we will look at trademark infringement and some common misconceptions. As is Part 2, the term trademark will apply to both trademarks and service marks. |
Imagine opening the newspaper one morning and finding an advertisement for a competing product or service which is using the same trademark or at least a confusingly similar trademark to the name used on your own products or by your services. You do not have to be a genius to know that would be a major problem. The trademark is the only way to identify for the consumer what you are offering for sale and differentiate it from the goods or services that others are offering.
Imagine a shelf of canned peaches in the supermarket, all the labels removed from all of the cans. It would be impossible to tell which can came from which fruit packer. The trademarks printed on the labels are the only way to tell one can of peaches from another. Over time the trademark "Del Monte" has become associated with a high standard of quality. Yet, with the labels removed, it is impossible to know which is the "Del Monte" product. In the same vein, imagine the same store shelf of peaches, with cans of peaches from three manufacturers, which are labeled "Del Monte", "Del Mont" and "De Monte." All three use essentially the same color scheme and generally same shapes and designs on their labels. Is there a likelihood that consumers of those peaches are going to be confused as to which cans contain the peaches they wish to purchase? Clearly there would be.
The basic test for trademark infringement is whether there is a reasonable likelihood that the consumers of the goods and services will be confused by the infringing trademark as it is used on the competing goods or services. The use of an identical trademark is not a requirement for trademark infringement. The law only requires that it is sufficiently close to the original trademark to "cause a likelihood of confusion."
This concept has become very important in the Internet world and the granting and use of Internet domain names. Domain names are the addresses granted by authorized registrars to web sites. They are the web site names which typically end in .com (for commercial), .org (for an organization, often non-profit), .edu (for educational institutions, .gov (for governmental bodies) or .net (for network operators). There are now several other authorized endings, but the ones listed are still the most prominent. When the Internet was just starting to sweep across the country, a number of shoddy entrepreneurs quickly registered domain names using popular trademarks, such as P&G.com, P&G.net and P&G.org, intending to sell the names back to P&G. While the tactic worked for a short time, it did not last for long. Both the courts, using traditional legal reasoning and a series of new laws made it easier to go after a "cybersquatter," as they cane to be called.
In granting domain names, the only issue for the registrar is whether any other domain has been given the identical address. If Delta Airlines has a domain name of "Delta.com" another company could obtain the domain name "Delta.org," without any consideration as to whether there was a likelihood of confusion. A "Likelihood of confusion" is a trademark concept which is not relevant in granting domain names. A few of the new domain registrars, in order to increase business, have even used advertisements which essentially tell people how to get a domain name which is confusingly similar to other domain names. What they do not say, is that while they may get the domain name, the may also be infringing a trademark.. A small commuter airline, using the domain name "Delta.org" would quickly find itself in court for trademark infringement, even though an authorized domain name registrar granted them the exclusive right to use the domain name.
However, all domain names and all corporate names do not constitute trademarks. In order to be considered a trademark, the mark must be used to help identify the goods or services and help people identify the source of the goods or services. For instance, Nexium is a well recognized medication to prevent heartburn. It clearly is a trademark. Yet, AstraZeneca, the manufacturer is all but unknown. The corporate name AstraZeneca is not being used as a trademark for consumer information, but merely as an address to provide location information. As such, AstraZeneca would have a difficult time preventing a company in a the same or a related field from using AstraZeneca.com as a domain name.
Damages for infringement can be extensive, although in instances where the infringement is not intentional, an agreement to stop using the infringing mark is usually sufficient. In a case where attempts to achieve a voluntary agreement to stop using the mark fails, the first step in defending trademark rights is usually to obtain an temporary restraining order or preliminary injunction, which can immediately prevent further use of the infringing mark. If injunctive relief is granted, the next issue is to calculate damages, which can include a combination of the lost profits by the owner of the mark and the profits made by the infringing party. In appropriate cases the infringer can also be made to pay the attorney fees of the infringed party.
Trademarks really are the keys which unlock commerce. A good mark is worth its weight in gold, literally. It is worth caring for and protecting. Small and medium sized businesses must start paying attention to their trademarks, from selection to protection . Failing to actively care for company trademarks is no different than failing to market the company.
(Part 1: What is a trademark, and who cares?)
(Part 2: Trademark Registration - How and Why)
(Part 3: What is Trademark Infringement)
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