INTRODUCTION TO TRADEMARKS

by Patrick D. Kelly, Patent Attorney, St. Louis, 314-828-8558, FAX: 314-828-8998
pkelly3@earthlink.net     America Online users: Patenter@aol.com
Copyright 2002, by Patrick Kelly. All rights reserved.

 

Patrick D. Kelly, received an engineering sciences degree from the University of Texas at Austin in 1974 and a juris doctor from Harvard Law School in 1980. He has practiced patent law since 1980 and specializes in biochemistry and medical technology.

Mr. Kelly worked for the EXXON Company in 1974-77 and the Monsanto Company in 1982-85. He has written a guide to trademarks and trademark law that was published in the Spring and Summer 1998 issues of THE BENT. In 1994, he was a nominee for the U.S. Congress. He can be reached at Patenter@aol.com

      Trademarks are property; just like computers, cars, and patents, they can be bought, sold, and handled in various other legal transactions. Like any other property, they can be damaged or destroyed if misused by an owner, and abuse of someone else's trademark can lead to threats, lawsuits, firing or reprimand of an employee, and other problems.

            There's also a huge set of potentials, lurking inside them; people who know how to use them in creative ways can sometimes figure out how to make money from them (including, sometimes, lots and lots of money). Indeed, although it's impossible to assign clear-cut values to trademarks, most patent attorneys probably would agree that the total value of all trademarks in force in America today probably outweighs the total value of all patents in force in America today, probably by a multiple, rather than an increment.

            Since there's so much value in trademarks, any professional in any company that uses them should know how to work with them, how to protect them, and how to recognize when they offer opportunities to grab and secure a higher market share. That's the goal of this article; it's intended to help readers, at any level and regardless of whether they work in R&D, marketing, finance, etc., add another set of skills to their collection.

 THE  ROLE  OF  TRADEMARKS

            Nearly any supplier of any product or service  has competition. Most people shop around until   they find a brand they are satisfied with, then they stay with that brand. For example, although "generic" groceries (with plain black and white labels) are cheaper than brand‑name groceries, the vast majority of purchasers buy more expensive branded items.

            Consider another example: the recipe for Coca‑Cola is a trade secret. If a competitor makes a soft drink so similar that most people can't tell them apart, that's fair competition; in its advertising, the competitor can even talk about how similar the two taste. But the competing company can not call the imitative soft drink "Coca‑Cola" or "Coke," since those are registered trademarks owned by the Coca‑Cola Company. Regardless of what the similar drink is called, most people will still prefer Coca‑Cola. It would take a huge and enormously expensive marketing effort to get people to even try the new brand. And, even if they try it, most people would decide that they still prefer Coke--even if they can't tell the difference, in blind tests. For better or worse, we're all creatures of habit; we want what we're comfortable with. As clearly demonstrated by the "New Coke" marketing flip‑flop, Coke's most valuable assets are its trademarks, rather than its recipes.

              Beyond familiarity and comfort, we also want safety and security, and we're willing to pay for it. We want to know that our food is processed in clean places, that our brake pads won't crumble after 2,000 miles, and that a warranty won't turn out to be worthless because a company folded. Those factors depend on company names and company reputations, which are represented and protected by trademarks. 

DEFINITIONS

            A trademark is any name, symbol or device used by a manufacturer or merchant to identify its goods and distinguish them from the goods manufactured or sold by others. Trademarks can take the form of words (e.g., Kodak), letters (NBC), numbers (Chanel No. 5), slogans (Only Her Hairdresser Knows For Sure), distinctive symbols (MacDonald's golden arches), container configurations (the shape of a Coca Cola bottle), 3‑dimensional items (mascots for sports teams), and even sounds (the 3‑note NBC chime).

            Service marks are similar, but they're used to identify services, rather than goods. Dry cleaners, moving companies, and insurance companies are examples of companies that use service marks more than trademarks. Certification marks represent an endorsement of goods and services by an independent reviewer, such as the Good Housekeeping "Seal of Approval." For the most part, service marks and certification marks are treated like trademarks they can be created and secured by certain actions, federally registered by other actions, and subsequently sold or licensed in various ways.

            Trade names are used to identify companies. A trade name may be used and registered as a trademark; for example, Kodak is both a trade name and a trademark. Trade names are not subject to federal registration, unless they are also used as trademarks. However, trade names are subject to state laws regarding registration of corporations, partnerships and proprietorships. Registration as a company name is no assurance that someone else's trademark is not being violated, so any person or company that wants to adopt a new trade name should have a trademark search done, to ensure that the proposed name is not preempted. 

SELECTING  A  TRADEMARK

            In selecting a trademark, keep in mind that the public must understand that the mark refers to goods from a certain source or origin. Therefore, the mark must be one which can be used by a supplier, to identify its own goods or services, without interfering with the rights of other suppliers to sell similar products under their own different trademarks. The mark must also be protectable against infringement by other suppliers, as discussed below.

            Any trademark being considered for adoption should be "searched" on computerized databases to determine whether some other company is already using that trademark, or one that resembles it. It is disastrous for a company to learn, after a major advertising campaign has been launched, that its trademark is "preempted" (already taken) by someone else. For example, Colgate‑Palmolive spent nearly three million dollars to introduce a new cleaning product named "Genie" before it learned that someone had been selling about $25.00 per month worth of "Jeenie" cleaner for 20 years. They might have bought the "Jeenie" mark cheaply, before the Genie advertising campaign began, but when the "Jeenie" owner realized what was at stake, he demanded a million dollars to settle. A lawsuit followed, and Colgate‑Palmolive was unable to proceed with its marketing plans for nearly a year. It eventually dropped the product, and lost millions of dollars in the affair.

            There are four general categories of trademarks:

1. Coined Marks

            These are combinations of letters that form words which were not previously found in dictionaries. For example, the words Xerox, Kodak, and Verizon meant nothing, until they were created and used to identify companies, goods, and services.           

2. Arbitrary Marks

            These are dictionary words that had no logical connection with a product, until they were adopted as trademarks, such as Comet cleanser, and Camel cigarettes.           

3. Suggestive Marks

            These do not directly describe a pro-duct, but they suggest a desirable property, such as Coppertone tanning oil, and Wrangler jeans. 

4. Descriptive Marks

            Terms such as Cotton‑tips and Extra‑dry are usually afforded the least protection. In general, they are not legally protected unless they acquire "secondary meaning", which occurs when consumers, after years of usage, come to identify certain phrases with particular products. Even if they acquire secondary meaning, they are always in jeopardy of becoming "generic" and entering the public domain. As one example, "Shredded Wheat" was once a trademark, but the courts decided that any company that wanted to sell similar products had to be allowed to use that phrase, to tell people what was in the box.

            From a strictly legal viewpoint, coined names and arbitrary marks receive the greatest legal protection. However, from a marketing viewpoint, suggestive trademarks might be preferable. For example, "Daisy" wrenches (an arbitrary trademark) might be easier to protect than "Brute" wrenches (a suggestive trademark). However, most people who use wrenches probably would buy tools with a tough‑guy image, before they would buy tools named after a flower.

            As another example, the first brewer that sold "Lite Beer" couldn't stop other brewers from selling "Light Beer." However, "Lite Beer" was a major success, because the name told quite a few beer drinkers what they wanted to hear, and made them want to try it. Months passed before any competitors could reach the marketplace with competing light beers. By then, the first light beer had established a substantial amount of brand loyalty.

            And, in the final analysis, the goal of any trademark, service mark, or trade name, is to give companies, and their customers, a way to establish, cultivate, and profit from brand loyalty. If you put out the best product in its class, people will come to know it, remember it, and ask for it by name. That name should either be, or include, a trademark. Making it easy for buyers to name your brand is a great way to sell more of your product, and that's what trademarks are for.

            In general, certain types of trademarks should be regarded with caution from a legal viewpoint:

            1. Laudatory words (e.g., tough, strong, shiny, transparent) and misspellings thereof. For example, a judge declared the words "Super glue" to be descriptive of any cyanoacrylate glue; that trademark was lost, and it became available for use by anyone.

            2. Deceptive terms will not be sustained as valid trademarks. For example, the following marks were invalidated as being deceptive or misdescriptive: "Old Country" soap, for soap manufactured in the United States; "Glass Wax" for a window cleaner without wax; "Bromo Quinine" for a medicine containing no bromine.

            3. Family names should be avoided, since other people with the same name may have the right to use it in connection with their products. For example, a man named Stetson might be allowed to sell inferior quality hats under a Stetson label, as long as his label somehow distinguished his hats from the famous Stetson brand. After all, you can't stop a man from using his own name.

            4. Geographical words should be avoided, since other manufacturers might be allowed to use similar words that geographically describe their products or businesses. However, geographical words may be useful in arbitrary trademarks, such as "English Leather" toiletries.       

MULTIPLE  TRADEMARKS

            A company name or trade name may serve as that company's primary trademark or "house mark" (such as Xerox, Kodak, etc.). Alternately, a company may create a house mark to be used on a specific line of products, such as the "Betty Crocker" trademark owned by General Mills. Product trademarks may be used either in conjunction with, or independently of, house marks. For example, Kodak uses trademarks such as "Kodachrome" and "Kodacolor" to distinguish between different types of film; each product trademark resembles and is identified with the "Kodak" house mark. By contrast, each of Proctor and Gamble's trademarks (e.g., Tide detergent, Crest toothpaste) is largely independent of the Proctor and Gamble house name.

            If more than one trademark is used on a product, the marks should be used carefully, and only after thorough consideration of marketing strategy. In general, they should be kept separate and distinct, in case one of them is jeopardized. For example, the "Nabisco" trademark is an emblem on the upper left corner of a box of Ritz crackers; it is separate from the "Ritz" trademark in the center of the box. Any advertising text refers to "Ritz crackers, baked by Nabisco" rather than "Nabisco Ritz Crackers."

            The use of multiple trademarks can be useful when a new product comes out, but it can backfire if a product fails. If a familiar house mark is prominently displayed on the package, it can help a new product get a good start. But if the product falls flat and disappoints consumers, the extent of damage to the house mark will depend on how closely and strongly those two marks were tied to each other.

            Another marketing factor involves dilution of trademarks; several trademarks on a single package can confuse rather than assist consumers. Still another factor involves connotations of the house mark; for example, a company that sells industrial chemicals might want to set up a subsidiary, with a different company name, if it wants to market a new line of ladies' cosmetics.

            If a trademark is proposed for use in connection with an entirely new product, two names should be selected. One name serves as a trademark, and the other designates the type of product as a generic term. For example, the manufacturers of Cuisinart food processors designated their product as a "food processor." While they were the only supplier, that generic term helped protect the trademark "Cuisinart" from becoming generic.           

PROTECTING  A  TRADEMARK

            A trademark that is registered (described below) should be accompanied by the symbol

            A trademark that is not registered should be accompanied by the symbol TM (preferably placed in either subscript or superscript), or by an asterisk following the trademark, with an footnote reading, for example, "Trademark of ABC Company." It is not necessary to use these symbols every time a trademark is mentioned in a single ad or other publication; most trademark owners use them the first time a trademark is mentioned in an ad, and/or with bold‑type and prominent citations.

            A very strong trademark may be invalidated if it becomes "generic." The test for whether a mark is generic focuses upon what buyers understand by the word. The trademarks Aspirin, Linoleum, Nylon, Zipper, Cellophane, and Yo‑Yo all were lost (i.e., they entered the public domain, so any supplier could use them) because their owners used them to describe goods, rather than to describe itself as the source of that brand of goods.

            To help protect a trademark from becoming generic, several rules of usage and grammar should be followed:

            1. Adopt a standard format for the mark, and spell it identically and correctly at all times.

            2. When using it within a text, always capitalize the first letter. Preferably, the entire mark should be capitalized unless there's a strong reason not to.

            3. In general, always use a trademark as an adjective (e.g. "the Xerox photocopier"). Do not use a trademark as a noun (do not say, "the Xerox is reliable"), or as a verb (do not say "Xerox anything with our new copier"), or in the possessive tense (do not say "the Xerox's reliability").

            There are some exceptions to this rule #3. For example, when large and expensive items are involved, there may be little risk of confusion ("Have you driven a Ford lately?"). Even on certain small items, a trademark can sometimes be used as a noun, but only if the company aggressively protects its trademarks, which requires time, money, and effort. As an example, phrases such as "Have a Coke and a smile" have not caused the trademark "Coke" to go into the public domain, only because the Coca-Cola Company has spent many millions of dollars supporting and enforcing "Coke" as its trademark. In addition, there's no way to reliably predict what a court might decide in the future, especially since the different federal circuits are not bound by each others' decisions (California judges, in particular, have become famous for adopting their own trademark doctrines). Therefore, most companies should carefully avoid using trademarks as nouns.

            4. If a trademark is very strong, it might need to be offset from the product name by the word "brand". For example, "Scotch brand tape" is safer than "Scotch tape".

            A trademark owner might need to take action to protect its trademark from infringement or misuse by others. Infringement usually involves similarity; for example, "Coka‑Cola" infringes "Coca‑Cola," even though the two are spelled differently. There is no rigid formula to determine what infringes and what doesn't; in general, the test is whether two competing trademarks are so similar that they would create a "likelihood of confusion" among consumers. If a company detects possible infringement, it should obtain the advice of an experienced trademark attorney before contacting the infringer.

            However, a competitor can legally use another company's trademark, for purposes such as comparative advertising, so long as such use is truthful and does not jeopardize the distinctiveness of the mark. For example, "knock‑off" perfumes can claim that they smell similar to Chanel No. 5 or other famous perfumes, so long as they do not misuse the trademarks of the famous perfumes.

            Misuse of a trademark is often called "trademark dilution." This can occur in various situations that do not involve direct competition between two products; for example, the rules for proper trademark usage might be violated in a newspaper or magazine article that mentions a trademarked product, or on the label for a second product that interacts with a trademarked product. If a company which owns a trademark detects that type of misuse, the company should have a lawyer send a letter to the misuser, politely thanking it for the publicity and pointing out how the trademark should be properly used. Copies of such letters should be retained in the company files. In general, a trademark owner cannot be held responsible for the actions of others; however, if a trademark is in danger of becoming generic, evidence of a conscientious effort to prevent misuse, and to correct the errors of other companies, can help save and protect the mark.

            Companies should explain the rules of trademark infringement and misuse to (1) any employee who might provide information to anyone outside the company, and (2) anyone who is in a position to notice the products and marketing efforts of competitors. Such employees include managers, sales representatives, marketing staffs, public relations staffs, employees of distributors and retailers, researchers who might submit a manuscript to a scientific or trade journal, etc. All personnel should be instructed to obtain a sample or copy of any article that misuses, infringes, or dilutes a company trademark, with any surrounding information (such as the name of the magazine or newspaper where the misuse occurred, the date, and the page number where it appeared). That information should be forwarded to management or the legal department.

TRADEMARK RIGHTS AND REGISTRATION

            The federal trademark law was completely rewritten by Congress in 1946. It is sometimes called "The Lanham Act" after one of its sponsors. It's codified in Title 15 of the United States Code.

            In general, trademark rights are not created by a grant from the federal government. Instead, trademark rights arise as a result of actually using a mark in commerce, to identify the source of goods or services. The federal role is limited to (1) allowing trademark owners to federally register their trademarks, and (2) allowing owners of registered trademarks to sue infringers in federal court, and file complaints before agencies such as the Federal Trade Commission or the International Trade Commission.

            It is a fairly simple matter to file a trademark registration application; indeed, it can be done online, by anyone with a credit card, using the "TEAS" (Trademark Electronic Application System) system that can be found on the U.S. Patent and Trademark Office's website (www.uspto.gov). The application process will require a number of blanks to be filled in, but the questions are not misleading, and if the intended product and the desired name are both reasonably straightforward, it's not an especially perilous system, and if a mistake was made, a trademark examiner will give the applicant a fair chance to correct it.

            However, this is not meant to imply that it should be done lightly, or without good legal guidance, in case any questions or potential risks or complications are likely to arise, either now or later. In addition, it also should be noted that trademark applications are public information, and the data (including the requested mark, the name of the applicant, the class of goods or services requested, etc.) are published in the PTO's electronic database within a few weeks after filing, and can be located and downloaded by anyone. This is completely different from patent applications, which are kept strictly secret for at least 18 months.

            In 1989, Congress adopted a major revision of the trademark law, allowing trademarks to be registered based on an "intent to use". This allows companies to have a trademark candidate evaluated and formally approved by the Patent and Trademark Office, before a company commits itself to substantial expenses that will depend on a hoped‑for mark.

            Any trademark will be limited to one or more commercial areas, such as food products, clothing, toys, etc. Any categories for which registration is sought must be listed in a trademark application, and the registration fee is $325 per class. After registration, the coverage of a mark is limited to the registered classes. For example, a trademark used on clothing ordinarily would not infringe on a trademark used for electronics or heavy machinery, even if the marks are identical. Both marks could be registered and used by different owners, on different types of products.

            In some situations, an active licensing program can expand the coverage of a trademark. For example, the Olin Corporation licenses its "Winchester" trademark for a variety of goods that stretch far beyond guns and ammunition (such as leather goods, and men's cologne) where subtle suggestions of ruggedness and the frontier spirit can be valuable. Even if the Winchester trademark doesn't currently cover a particular type of product, Olin can show that its trademark is used on a variety of goods other than just guns and ammunition. By taking a heads‑up, active, even aggressive approach to guarding and protecting its trademarks, it discourages potential competitors who might be tempted to use the Winchester name on goods that Olin doesn't sell. What responsible company would want to invest a lot of money trying to create a new line of "Winchester" products, knowing that a team of attorneys for Olin would probably file suit against it, cost it a lot of money, and have a fair chance of beating it in court? It's easier, less expensive, and less of a drain on management time and attention, to just choose a different mark.

            Federal registration does not create rights in a trademark, nor does it authorize a trademark owner to infringe the rights of others who had already started using the mark, independently of the new owner, before the new registrant began using that trademark on its products or services. However, federal registration results in several very important advantages.

            First, by officially placing your trademark (and your company name, as the owner of that mark) in the most important, most widely-consulted list of officially-recognized trademarks that exists anywhere in the world, registration has several direct effects. First, it warns any and all potential infringers that your trademark is already taken. Nearly all reputable businesses (this excludes obvious rip-off companies, that only want to make a fast buck and then disappear with the profits as soon as challenged) genuinely want to avoid trademark battles, which lead to expenses, distractions, and legal uncertainties. Therefore, a simple notice that a certain trademark is already federally registered is usually all it takes to ward off any reputable competitor.

            But that's not all. Federal registration serves as "constructive notice" against anyone and everyone who is doing business in America. Even if a competitor claims it was not aware of a certain trademark, a court will hold that they should have known of the mark, if it was federally registered.

            For both of these reasons, federal registration offers a powerful and highly effective way to reserve a certain trademark for nationwide expansion and unlimited nationwide use. It helps block and cut off any competing usage anywhere in America, both by established companies, and by new companies that don't even exist yet.

            In addition, the federal trademark law preempts and takes precedence over state trademark laws. If a conflict arises between a federally registered trademark, and a trademark that was registered in the business registry office of a specific state, the federally registered trademark probably will win that battle.

            In addition, federal registration can lead to an "incontestable" right to use the mark. As noted below, a Section 15 affidavit can be filed after several years of using a particular trademark. If accepted and entered into the record by the Trademark Office, that affidavit creates a legally binding conclusion that the owner of that mark is indeed the owner of that mark, and that issue can never again be raised as a battling point in any court challenge.

            And finally, federal registration opens up a variety of potential business deals. It is virtually impossible to franchise or otherwise license a trademark that has not yet been federally registered. For example, if a company says, "We've got a valuable trademark we want to sell you, along with this set of patents," the company that is thinking about buying or licensing those patents should immediately ask, "Is that trademark registered yet? If not, get it registered first, then we'll talk about it."

            In general, federal registration is powerful evidence of an exclusive right to use a trademark. It can greatly improve the holder's position in any business dealings or negotiations, and it can greatly reduce the cost of litigation if infringement occurs.

PROCEDURES  FOR  FEDERAL REGISTRATION

            When an applicant applies for federal registration of a trademark, the first response by the Trademark Office is likely to be one of two things. In one option, it can be a notice that the mark was searched, and nothing similar was discovered in that field of commerce, so the examiner will conclude that the mark is entitled to registration.

            In the other option, the examiner will issue a rejection, accompanied by one or more similar trademarks that are already registered in that filed or an overlapping field. This does not mean the mark is dead; however, it does put the burden on the applicant, to keep going. The applicant must respond, in writing, within 6 months, and persuade the examiner that confusion between the existing trademark(s) and the proposed trademark is not likely. This process is called "prosecution." It can become complex, it is filled with traps for the unwary and inexperienced, and it should be handled by an experienced professional.

            If and when the examiner is satisfied that a proposed mark is registerable, that fact is noted on the PTO database, and the mark is also published in a weekly journal called the Trademark Gazette, which is published by the U.S. Patent and Trademark Office. This publication gives companies that own similar trademarks a chance to oppose the registration of the proposed trademark. Most patent and trademark attorneys have the trademark database monitored, automatically, and will bring similar marks to the attention of their clients. If an aggrieved party misses the opportunity to oppose a registration, it can subsequently start a cancellation proceeding. However, it is much more difficult to have a registered mark cancelled, than to oppose it and prevent registration in the first place.

            The opposition period, which follows publication in the Official Gazette, is limited to 30 days; however, a request for an extension of time can be filed within that period. If no opposition arises, the mark is usually registered about four or five months after the publication.

            While a mark is in force, the major legal action that needs to be taken by the owner occurs during the sixth year, when a "Section 8" affidavit must be submitted stating that the trademark is still in use. At the same time or any time thereafter, a "Section 15" affidavit can be submitted if the trademark has been used for a continuous five‑year period; if that affidavit is accepted, the registration becomes "incontestable," as mentioned above.

            Trademark rights do not expire after a specific period of time. Unlike patents and copyrights, both of which expire after fixed periods of time, a trademark will remain valid and enforceable as long as the owner continues to sell the product while using its trademark properly. Some trademarks that are active and enforceable today have been used for more than a hundred years. However, trademark registrations do expire, unless they are renewed. Under the old law, a registration was valid for 20 years. Under the revised law, which is designed to remove some of the deadwood from the "Principle Register," any trademark registered after November 16, 1989 is effective for 10 years (which assumes that the proper affidavits are filed during the sixth year). When a registration is about to expire, an application for renewal can be submitted if the trademark is still active.

            In addition to the "Principle Register" which is the main listing of federally registered trademarks, there is also a "Supplemental Register" for trademarks that have been rejected by a trademark examiner on the ground that they are too descriptive, or suffer from other problems. After five years on the Supplemental Register, a trademark owner can file a request stating that the trademark has attained "secondary meaning" and deserves to be listed in the Principle Register.

STATE  AND  FOREIGN TRADEMARKS

            State governments also register trademarks for people and companies. Although state protection is not as extensive as federal registration, there are some important advantages to state registration, particularly for small businesses and start‑up companies. It is quick and relatively inexpensive; a phone call to the Secretary of State's office in the state capitol will usually be adequate to obtain the necessary forms, and they can usually be filled out and filed by a business owner, without requiring an attorney's help. Once the name is approved by the state, it is put on a computerized database that effectively gives notice to potential competitors that the name is already taken.

            State registration may be adequate for a sole proprietor or a small company that does not intend to do business outside the state; and, even if federal protection is refused or limited, a state court might be willing to offer protection to the owner of a state-registered trademark. This will not shield a trademark owner who is knowingly infringing someone else's trademark; however, it can stop other companies from subsequently infringing the state trademark within that particular state.

            Neither state nor federal registration offer any protection in foreign countries. In some countries, pirates and counterfeiters often make quick profits by trading under famous trademarks that they do not own. Except in high‑technology industries, those problems usually do not arise until a company becomes large enough to be a multinational force which can protect its interests. To minimize such problems, any company that is growing to the point where it needs to begin considering overseas markets (or overseas manufacturers) should consider registering its trademarks in foreign countries in which it may eventually do business. 

LICENSING  AND  FRANCHISING

            As mentioned above, trademarks can be licensed so that other manufacturers and distributors can use them. For example, most fast food companies offer franchises that allow licensees to use their trademarks. In order to obtain a franchise, which provides a local owner with an arrangement where he will be the only franchisee within a designated area, the local owner will have to pay an up‑front amount of money, and must also make a substantial investment in building, buying, or leasing a restaurant, and either buying supplies from the franchising company, or paying percentage fees based on sales.

            Franchising and trademark licensing are complex areas of law, and they are beyond the scope of this article. However, anyone who is contemplating a trademark license of any sort should be aware of a fundamental principle: since the main goal of trademarks is to assure customers of consistent and reliable quality (as backed by the reputation and financial resources of a known company), a trademark license must‑‑absolutely must‑‑ensure that quality control standards are met by the licensee. A trademark license that does not contain quality control requirements will be treated as a fraud on the public.

TRADE  DRESS  AND  UNFAIR COMPETITION

            Two related areas of law involve trade dress and unfair competition.

            Trade dress involves the physical appearance of a product, such as the shape and color of a container or other packaging material. Common examples include (1) the shape and color of a pill, and (2) the shape and color of a bottle which holds perfume, cologne, or some other type of liquid.

            If a company markets a highly successful product that is not covered by a patent (such as a drug that was formerly covered by patents that have now expired), competing companies will be eager to make buyers recognize that they are selling a similar product. The younger competitors often try to do this by making their containers or other packaging look as similar as possible to the product they're copying, and by positioning their product on the same shelf, right next to the better-known item it is competing against.

            An analysis of whether a specific act of trade dress competition is legal or illegal requires sorting through all relevant facts, including the nature of the competing items, and the nature of the consuming segments of the public. On one hand, companies are free to point out similarities between their products and other products. Indeed, sellers of generic products can openly advertise that their products are extremely similar or even identical to the branded products they are imitating; such advertisements can be found in any drugstore, in the perfume and cologne sections, and in aisles that contain pain-killers and other toiletries.

            However, if the "trade dress" (i.e., the physical color, shape, and appearance of an item, which includes its packaging, labelling, and advertising) is so similar that it may generate confusion among potential buyers, then that type of potentially-confusing competition can usually be stopped. In other words, it is legal to claim that "Cheapo Premium Perfume" smells a lot like Chanel Number 5, so long as their boxes and bottles clearly and obviously look different from each other. However, it is not legal to sell "Cheapo Premium Perfume" in a bottle or box that looks so much like the Chanel Number 5 bottle and box, that some buyers might not realize they are buying a cheap knock-off, rather than the actual perfume made by Chanel.

            Businessmen should also be aware of a particular section of the federal trademark law, section 43(a) of the Lanham Act, codified in 15 USC 1125(a). This section created what is often called "the federal law of unfair competition". It states that anyone who uses "a false designation of origin, or any false description or representation, including words or other symbols tending falsely to describe or represent the same" can be held liable, in court, by any person or company damaged by the falsehood.

            This law gave people and companies, if damaged by any form of trade‑related misrepresentation, a right to go to federal court to challenge the misrepresentation. Nearly any lawsuit that accuses someone of trademark infringement will also include claims of unfair competition, because that additional claim gives the plaintiff more leverage and a better negotiating position, for settlement. In addition, the unfair competition clause in the trademark law is a major source of litigation in its own right, since it can be used even when the formalities of trademark law are not met (such as in battles over trade dress). In addition to the federal law, most states also have state laws against unfair competition.

            So . . . there you have it. A lot of things have been written about patents and patent law, for engineers, but not very much has been written about trademarks. The main reason, apparently, is that trademark law is relatively simple and straightforward, for most owners and users.

            However, since trademarks can be enormously valuable, and since they can be absolutely crucial to the success of a company, every engineer should be obliged to spend an hour or two, at some time during his or her career, learning the basics of how trademarks work, and how and why trademarks work so well, when people know how to use them effectively.

            Perhaps more than any other area of law, trademark law is an area of law where logic, reality, and common sense hold the upper hand over mere rhetoric and arguments. That's even more reason why engineers should understand and appreciate the beauty of how, and why, trademarks work so well, and why they can be so valuable.

            It's worth emphasizing that the trademarks that are in force throughout America today are, in the aggregate, worth a great deal more than all the patents that in force in America today. That is not meant to belittle patents, in any way; patents are absolutely crucial to new products. But for better or worse, patents expire, after a fixed period of time.

            Rather than pitting patents against trademarks, in a competitive way, people should realize how both forms of protection can work together, each one contributing its own type of value. Patents act like fences, to fend off competitors during the vulnerable early stages of a product. They're good for getting started, and for drumming up the funds that will be needed to support investments in a product that isn't yet being sold.

            But once a product reaches the marketplace, most buyers don't know, and don't care, what kind of patent protection it has. What they know, instead, is what it's called--because that's what they see in the advertisements. That's how they learned about it. That's how they know it; that's how they think about it, when they think about it.

            So, patents can help get a new product started, and trademarks can help it sell. Trademarks are an essential tool that businesses use to get a new product known, to make a name for it, build up momentum for it, establish a good reputation for it, and keep sales going strong for it, even after the patents expire. Patents and trademarks can work together, in perfect harmony and coordination, without any conflict. That's why they work so well together, for people who know how to use them.

ABOUT THE AUTHOR

            Pat Kelly received an Engineering Sciences degree from the University of Texas at Austin (1974), and a Juris Doctor from Harvard Law School (1980). He has practiced patent law since 1980, and specializes in biochemistry and medical technology. He is also an inventor in his own right.