protecting brands and identity trademark trademark implication
1. Protecting Brands and Identity &
Trademark Protection and Infringement &
Business Issues and Implications
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Protecting Brands and Identity
Moving on from Patent and Copyright, and
the protection of software and creative works,
we now will look at protecting brands and
images
Company brands and images are often worth
many times more than anything created in
product and process patents or in copyright
Protecting brand value (e.g. Watsons Water)
is very important to large successful firms
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Trademark and Brand Importance
Often, patents and copyright may give a firm
TIME to build up a strong brand in the market,
with that brand value more important
eventually than other innovation the firm has
Disney BRAND is worth more than just copyrights
IBM & Xerox BRANDS worth more than patents
Other barriers to copying innovation may give
firms TIME to build up strong brands
Premium from brand often most valued asset
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Challenges of Protecting Brands
One of the most intangible aspects of
innovation protection, and yet, very valuable
Patent protects an invention, which is clearly
valuable to society in some way
Copyright protects a work of art, which is valuable
Trademark protects a company’s image and
brand, which may be less clear in value to society
Trademark idea originated in desire to protect
craftsmen and avoid confusion to customers
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Trademark Law
Protects brands, corporate names or slogans
“It’s the real thing: Coke”
Significant source of litigation in Cyberspace
Same name of firm in different states, who has
right to use the name in Cyberspace?
Domain name squaters? Legalized blackmail?
New cyberspace domains created – confusion?
Can not be generic or functional (Xerox)
Strongest defense for fabricated names
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Protecting Brands and Identity
“Identity”, including Brand , is protected by
TRADEMARK
TRADEMARK LAW is VERY LOCATION SPECIFIC
No international agreement regarding trademarks.
Requirements to establish differ by country.
TRADEMARKS MUST BE REGISTERED
NO AUTOMATIC TRADEMARK registration
Detailed and specific registration process
Similar to the process of setting up new company
TRADEMARKS not absolute protection
Registration priority exist, but not absolute
Like Copyright or Patent, gives you the right to sue
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Trademarks: Jurisdiction & Industry
Company can NOT even use its own name in
another country if some other firm has that
Trademark.
Standard Brands
Merck
Standard Oil
Trademarks can be issued for same name but for
different products
Consider degree of overlap in names, products, and markets
Consider degree to which name is unique versus common
Park N Shop and Wellcome are relatively common as names
Xerox is very unique name, so well protected
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Trademark Issues
Usage versus intent and token usage
The details and application of US trademark law is not
global in the way this has been adopted in other countries
Distinctive, Arbitrary, Descriptive, Suggestive,
Generic
Nature of the words used determines strength of Trademark
Foreign words – translation issues, and mistakes
Functionality
Secondary meaning
Evidentiary issues
Disclaimers
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Trademark, Service Mark, etc
Trademark is BOTH a generic and broad term, and
A precise description of a mark which identifies goods
Service mark is used in connection with services
Is a service mark also a trademark?
Certification mark is signal about something
E.g., ISO 9000, CFA, Chartered Accountant, QC
Collective mark is used by members of an
association
E.g., part of the Dairy Farm group
E.g., Lasik Eye Care center (franchise operations)
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Common Law Trademarks
Before 1988, there was no national USA trademark
formal “registration” process
Trademarks were only issued based on actual usage
Many other developed countries preceded USA in
requiring registration or followed soon thereafter
Hong Kong has relatively Strong protections for
Brand names associated with domain name usage
Formal registration of name required to get domain name
However, this only applies to names ending in *.hk
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Trademark Usage and Registration
Registration of Trademark in USA now can be
based on “intent to use” or “actual usage”
Departure from “common law” trademark origins
May not be available in other countries
Requirement of “good faith” in “intent to use”
UK and EC law also accepts good faith intention to use
Ghost application not permitted
Registration of NERIT to protect brand MERIT
Overly-wide usage applications challenged
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Local versus Global Registration
Trademark is not generally international in
nature, and is highly focused on STATE laws
within the USA unless commerce is interstate
Federal registration requires interstate commerce
State’s rights in US may trump federal registration
International trademarks limited in scope
Only available in EU countries, but growing there
EU registration and EU laws and courts
recognized
UK and European laws harmonized to EU laws
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Cyberspace Trademark Problems
Same name registered in different states; markets don’t
overlap
one firm goes online, and takes other firm’s customers
E-Commerce is global in reach –who has jurisdiction?
National registration of Trademarks in USA
Interstate commerce regulation clause of constitution
Might not overrule states rights for “local” brand issues
Domain names and Trademark issues
Cyber Squatting and Cyberspace Blackmail
Increasing importance of National Trademark
registration, and potentially international issues
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Loss of Trademark Rights
Non-usage and abandonment
Non-use may or may not suggest abandonment
UK considered non-use and non-objecting to
others usage for five years to be abandonment
US allows presumption of intent to abandon if not
used for three years, absent contrary evidence
Usage only required in one small market context
Trademark becomes generic
Trademark has become deceptive
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Trademark Priority – First in USE
Trademark registration is presumed to provide
evidence of priority of intent to use
However, ACTUAL USAGE prior to registration can be used
to contest registration and get trademark revoked
Priority of USAGE based on actual market sales
Requirement for IN TRADE and IN COMMERCE usage
Advertising alone not enough, must have some sales
Internal sales or trade channel sales alone not enough
Token sales – when is a sale to one customer enough?
Marketing and Advertising alone as Actual Usage
Grey area – may be allowed or disallowed
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Trademark Inventory Strategy
In Patou case (1974), Patou had registered
the trademark name SNOB for a perfume
Never made a serious effort to merchandise
Only sold through a few channels in small volume
Court found that purpose was to reserve
brand name in inventory for future use as part
of a “trademark maintenance program”
Sufficient to gain registration, but not enough
support claim of lasting ownership of name
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Infringement of Trademark
Similarity of Marks
Physical design, sounds, color, style
Elements are interrelated and taken overall
Individual elements or total effect both sufficient to
show that infringement has occurred
Homonyms of words and other similarities
Similar sounds with different meanings
Styleomatic versus Dialomatic
Similarity of Goods or Services
Combined effect of marks and goods considered
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Infringement of Trademark
(continued)
Character and Similarity of Market
Based on consumer and context analysis
Supermarket goods close together and consumer
attention low, so easily confused if moderately similar
Purchaser of car less likely to be confused
Channels of trade important consideration
Wholesale product not same as retail product
Furniture made for trade not same as retail brand
Evidence of Likelihood of Confusion
Proof of ACTUAL confusion by customers
powerful
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Trademark Defenses
Fair and Collateral Usage
Fair comment (e.g., use in advertisements)
Requires usage for purpose normally not used for
trademark owner (e.g., as component allowed)
Can not create confusion as to maker of product
Fair Use allows comparison of products
May be used to inform consumers about
equivalent or substitute product
Parody or Satire (similar to copyright usage)
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Grey-Market Goods
Valid trademarks, but NOT intentionally
permitted to be sold in this market
Coca-cola made in Indonesia sold in Hong Kong
Trademark law does not give rights to
exclude the sale of grey-market goods
However, if the usage of the mark would be
confusing to consumers as it does not represent
the same product as is sold locally, rights exist
Contract laws MIGHT apply, but not
trademark
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Remedies under Trademark Law
Injunction
Accounting for profits
Damages, including potential treble damages
Attorney’s fees (in exceptional cases)
Court costs
All of above are cumulative, so can get BOTH
profits AND damages from lost sales & other harm
Claim all possible remedies; let judge limit claims
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International Trademark Issues
The only international Trademark laws that
exist are EU laws related to EU trademarks
Similar in some ways to US federal trademarks
Requirements for trademark registration are
not the same from country to country
Protections under trademark differ as well
Overlap with copyright laws, which are
internationally recognized (to protect brand)
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Passing Off – UK and EU Laws
UK has no law of “unfair competition” as does
the USA, but law of passing off is similar to
USA law of unfair competition in some ways
Designed to protect goodwill and reputation, as
well as to prevent misrepresentation
“no person is entitled to represent his goods as
another’s” forms basis of common law rights
Name or brand misused and causes some
harm to reputation or goodwill.
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Confusion versus Deception
The existence of likelihood of confusion is not
sufficient to show passing off
Must also show intention of deceive
Similar names not sufficient, but presumptive
Confusion allowed in evidence of damages
Special aspects of products and customers
may be considered in misrepresentation and
in determination of expected damages
Intent to deceive presumed to be successful
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Dilution of Goodwill / Reputation
Tort lawsuits based on dilution of goodwill or
of reputation based on usage of brands
overlap trademark restrictions and remedies
Lawsuits allowed for more than one offense
Sue for every claim you can make, one might work
when others do not apply for some reason
Can be used when trademark does not apply
Manufacturers of champagne sued to restrain
introduction of English elderflower champagne
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Character Merchandising
Fictional Characters have been protected in various
legal jurisdictions (countries) as:
Trademarks (but, limited to specific laws of countries)
Copyrights (extending an important area of global rights)
Passing Off and Harm to Goodwill (UK law)
Interference with business relations (US law)
Defamation (to prevent libel harm to person)
Appropriation of personality (not allowed in UK law)
Rights of fictional characters slow to be recognized
under international law
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Trademark Law Policies and Intent
Part of law preventing “unfair” competition
Protection of consumer against “fraud”
Stop competitor attempts to confuse customers
In common law, trademark could not exist
without actual usage, as had no meaning
otherwise since there was nothing to protect
Adoption without product usage meaningless
No reason to protect consumers from confusion
Only enforced in areas with commercial activity
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Trademark and Passing Off Laws
The protections provided by Trademark Laws
and Laws related to “Passing Off” or unfair
competition harming consumers are powerful
Similar protections to copyright in some ways
“Fair Use” exceptions less broad under Trademark
Damages easier to show, and harm to customer
as well as harm to companies powerful in getting
courts to take actions to limit competitive harms
Less controversial in policy than copyright
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Trademarks LAST FOREVER
There is no limitation on the life of a brand
Copyright can expire eventually
Patents expire relatively quickly
Trademark lasts as long as the mark is in use
Investments in Brand can be longer lasting
than investments in buildings or technology
Marketing investments often viewed as expenses,
but can have lasting value for firms over decades
“Brand equity” provides majority of stock value
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Purpose, Duration, and other issues
Why do we need Trademark Law anyway?
Purpose?
Benefits?
Costs?
How long does or should a Trademark last?
Why is Trademark duration different from Copyright?
Requirement of Registration and Continuous Use
Why can’t we protect a Brand that is no longer used?
How can we protect a product Brand that is coming out
within a few years, but which is not yet in the market?
What is a Token use, and why is this not permitted?
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Leverage Copyrights and Patents
Copyrights and Patents give a limited term
monopoly on some products or processes
Provides TIME to build BRAND recognition
Provides TIME to develop initial positive cash
flows
Provides RESOURCES to invest in
BRAND/IMAGE
Long term, successful businesses must
develop strong loyalty and identity of brand
and company to sustain superior profits
Continuous innovation alone is not enough