Over the last few weeks, we’ve offered insights about how you can stay out of legal hot water by establishing good practices with regard to your company’s trademark portfolio (see Part 5 of our Trade Basics series here, which contains links at the end to the other parts of the series). Unfortunately, not all companies have followed such wisdom. With Halloween just around the corner, we thought you might appreciate some Tips and Tales from the Trademark Crypt!
To help you avoid becoming another trademark horror story, don’t forget to dial into our upcoming Trademark Basics webinar, November 15th at 1pm Eastern Time for a live overview of the many issues we have discussed in the last few weeks. Register here today!
- Searching Proposed Descriptive Marks. We have previously discussed how descriptive marks may become protectable as trademarks if they acquire what is known as “secondary meaning.” Just because a mark is descriptive doesn’t mean that you shouldn’t conduct a trademark search. In 1984, the manufacturer of GATORADE® beverages decided to use the slogan “Gatorade is Thirst Aid.” Its in-house counsel concluded that “Thirst Aid” was merely descriptive and therefore did not run a search before approving the slogan. A search would have revealed that the mark THIRST-AID® had been in use since 1921 and had been registered since 1950 in connection with soft drink products. The owner of the THIRST-AID® mark filed a trademark infringement claim and ultimately was awarded in excess of $10,000,000 in damages.
- Running Down All Potential Impediments. Due diligence means more than running a trademark search. It means taking appropriate action to run down possible impediments before proceeding. In one case, a company named “Big O” used the marks “Big O Big Foot 60” and “Big O Big Foot 70” for tires, but its application to register BIG FOOT as a trademark was denied. Subsequently, Goodyear began using BIG FOOT for snowmobile tracks and, later, for tires. It ran a trademark search and concluded that there were no conflicting marks. It is not clear, but, most likely, the person who reviewed the search saw Big O’s abandoned application, but may not have tried to determine whether the mark was still in use. (It should be noted, however, that in 1974, the ability to locate marks that were in use, but were not registered, was far more limited than today.) In any event, a jury awarded Big O $2.8 million in damages (which was reduced to $678,302 on appeal) and $16.8 million in punitive damages (which was reduced to approximately $4.1 million on appeal).
- Running Down All Potential Impediments – Part 2. Many companies translate their marks into Spanish for purposes of marketing to the Hispanic community. Even with a well-established trademark, a search should be conducted for the translated mark. Several months ago, a trademark infringement action was filed against Kentucky Fried Chicken for using “Para chuparse los dedos” on the basis that it is the Spanish-language translation of “Finger Lickin’ Good.” The plaintiff owns a restaurant in Southern California and has a registration for a logo that contains the identical phrase, “Para Chuparse Los Dedos,” which it says translates to “To Lick Your Fingers” in English. (We offer no comment on the possible outcome of this litigation, but mention it to illustrate the need for a thorough and competent trademark search before using almost any new mark.)
- Clearing Advertising Copy. Famed boxing announcer Michael Buffer has reportedly been involved with at least 100 legal actions over his famous catchphrase LET’S GET READY TO RUMBLE® and claims to have never lost a case. Unfortunately, many radio stations and other media outlets have used the phrase without authorization (presumably without first consulting counsel), with many not aware that the catchphrase is legally protected, and have ended up on the receiving end of a cease and desist letter from Buffer’s attorney. At least one station was brought to court and was held liable for $175,000 worth of damages, while other awards have ranged from four to six figures.
- The Potential Consequences of Skipping A Trademark Search: In the cases discussed above, the defendant had to pay significant damages to the plaintiff. Of course, not everyone can handle a large judgment. For example, in a case in New York earlier this year, a company launched a line of skincare products under the name KALLISTA without knowing that another company was already using the name KALLISTE for soap and skincare products. A trademark search would likely have revealed the existence of a federal registration for the pre-existing mark. Ultimately, the second user had to cease operations and reportedly lost $900,000 that had been invested in the business. The individual owner of the company had been a highly paid senior executive at a multinational consumer goods company, but gave up her job to work for the business. (Sadly, this situation apparently did not arise because the client chose not to have a search conducted. Rather, the company says that it had requested that its law firm conduct the search, which it allegedly did not do, and is now suing the law firm for malpractice.)
- Conducting Trademark Searches Should Be A Standard Business Practice: The failure to run a trademark search will not by itself prove that an infringer acted in bad faith, which then opens it up to an award of triple damages, punitive damages and attorneys’ fees. That said, in a case decided earlier this year, where a defendant was found liable for trademark infringement and an injunction was entered barring any further use of the infringing mark, the court made the following apt observation:
Defendant could easily have avoided the problem that arose from its adoption of marks already reserved by another user. Precisely for the purpose of giving notice of its mark to the world, Plaintiff had registered its mark with the PTO. Had Defendant exercised the precaution of running a previous trademark search before launching its marks, it would have learned that they were unavailable and would surely have had the good sense not to proceed with a logo so nearly identical to one for which trademark rights were already established.
These are but a few examples of horror stories resulting from the lack of proper due diligence or coordination with counsel. Take care with your trademarks – or risk ending up in your own horror story!