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WHAT’S IN A NAME? SELECTING A TRADEMARK CAN MAKE OR BREAK A BUSINESS

Imagine this nightmare scenario. After throwing around several possibilities, you’ve selected a catchy slogan for your beverage product. You go into production and begin distributing your product with the new slogan throughout the country. People are responding to the expensive marketing campaign you’ve launched and sales are increasing. Several months pass and all of sudden, out of the blue you receive a demand followed by a lawsuit from someone who claims you're infringing their trademark. You’ve never heard of them or their product before, but they obtain a court order requiring you to stop using the slogan and a monetary award equal to your profits. Unfortunately, this nightmare scenario could be a reality if you haven’t carefully managed the trademark selection, clearance and protection process with an attorney experienced in trademark law.

And if you think this scenario is just a made-up hypothetical, something very similar actually happened. In Sands, Taylor & Wood Company v. The Quaker Oats Company, a company that owned a trademark registration for THIRST-AID, a mark that it used only on a limited basis, was granted an injunction stopping Quaker Oats from using its slogan “Gatorade is Thirst Aid” and was awarded what was then the largest ever trademark infringement damages award – over $42 million. One of the factors the court took into account in awarding such a large amount to the plaintiff was Quaker’s failure to conduct a basic trademark search until it was too late to halt its advertising campaign featuring the infringing slogan.[1]

U.S. Trademark Law in a Nutshell – In the U.S., trademark rights derive from commercial use of distinctive designs, words or logos (and, in certain limited cases, sounds, smells, colors and shapes) on or in connection with goods or services to identify the source of those goods or services. For example, when consumers buy a brand name product, they know it comes from a certain source even if they may not know the name of that source, and they may have come to expect a certain quality associated with that brand. If another party later begins using a similar name for similar goods, consumers could be confused as to the source of the product or whether the source of the brand name they like may sponsor or somehow be affiliated or connected with this other similarly named product. Since the purpose of trademark law is to prevent such confusion, the first party could sue the second party for trademark infringement.

Federal registration is not required to have valid rights in a mark because a party can acquire such rights through commercial use of the mark. However, federal registration offers a number of additional legal benefits and advantages, particularly for parties who have not yet used but have already chosen a proposed trademark and parties who plan to use the trademark on a widespread basis.

Selecting a Trademark – In choosing a name for your product, the more unique and distinctive the name, the stronger the mark will be, entitling it to a greater degree of legal protection. Marketing and business people tend to pick names which describe a product to immediately alert the consumer as to the nature of the product (e.g., “Lemon Lime Soda"). While that may provide a benefit in the short run, in the long run you probably won't be able to distinguish your beverage from others or protect the name. More distinctive marks like Monster, which is an arbitrary word when applied to energy drinks, or Snapple, a coined word used as an iced tea brand, are inherently strong marks which consumers would not otherwise use to refer to those goods. Sierra Mist for lemon-lime soda is also inherently strong and is considered a “suggestive” mark because it doesn’t describe the product, but conveys the idea that it's refreshing. Marks like these are easier to protect and enforce and are thus more likely to be valuable brands down the road. The other advantage to choosing a more unique and distinctive mark is that it is less likely to already be taken.

Clearing a Trademark – Once you have selected a potential trademark for your product, in order to avoid the debacle described in the opening paragraph of this article, it is imperative that a trademark owner engage experienced trademark counsel to assist in the clearance of the mark before it is adopted and used. This normally entails conducting a “knock-out” clearance search, and if the mark appears preliminarily available, ordering more comprehensive research from a company that specializes in finding potentially conflicting references from different databases and sources of information. The trademark attorney will then review the research and deliver an opinion to the client as to the availability of the proposed mark. As we have seen from the case mentioned above and others like it, foregoing a comprehensive trademark clearance search to save a few dollars in the short run could cost you dearly later on in litigation, including, possibly having to stop using your brand.

Once you’ve cleared a proposed mark, a trademark attorney can advise you on how best to protect and enforce your rights in that mark, including probably filing to register the mark with the United States Patent and Trademark Office, as well as exploiting the brand value of the mark as the business develops through marketing, licensing, franchising and other avenues.

[1] Sands, Taylor & Wood Company v. The Quaker Oats Company, 978 F.2d 947 (7th Cir. 1992)