Why you must monitor for conflicting brands

March 26, 2015
Nicholas D. Wells
InsideCounsel

Trademark rights in the U.S. are based on use—on actually selling goods and services in connection with a trademark. However, most businesses understand that obtaining a federal trademark registration at the U.S. Patent and Trademark Office (USPTO) provides a much stronger legal position to defend those trademark rights. For example, a court will presume that your registered trademark is valid; the owner of an unregistered trademark has to start by establishing the validity of its trademark rights during an adversarial proceeding.

Many businesses stop with a registration, however, and assume that once this step is completed, their brand is secure. Unfortunately, that is not the case.

The breadth or strength of trademark rights can expand or contract based on several factors, including how you use the trademark (are you using the same logo design that you registered?) and whether you “police” your trademark. Policing your trademark involves keeping an eye out for unauthorized uses of your trademark and for uses of trademarks that may be confusingly similar to your mark.

If you fail to police your brand, your ability to police it in the future is diminished.

An example will demonstrate how this works. Suppose you have registered the trademark DYLANS for “ketchup” and are selling ketchup in stores nationwide.

Now suppose that a company in another state starts selling chili sauce under the brand DILLONS. If that company has applied for a trademark registration, the trademark examiner will very likely refuse their application because the mark and the goods are confusingly similar to your trademark. But what if the trademark examiner does not refuse registration of the DILLONS trademark?

You have the option of filing a Notice of Opposition at the USPTO to block registration of the DILLONS trademark. If you do that, your rights in your own DYLANS mark are enhanced. If you fail to oppose the DILLONS trademark for chili sauce, then your rights in your DYLANS mark are diminished.

How so?

Let’s further suppose that you choose not to oppose the DILLONS trademark. The next year, the same company starts selling ketchup under the DILLONS brand. Now you’re really concerned. But if you take legal action, the other company can assert that you allowed the DILLONS brand to co-exist in the market (for chili sauce) and that this is evidence that DYLANS and DILLONS are not confusingly similar. Thus, they will say, there is no trademark infringement if DILLONS is also used to sell ketchup.

This is a simplified example. Often the marks are not this similar and the goods or services are not this closely related. The principle, however, is critical: If you fail to stop others who are using arguably similar trademarks for arguably related goods, then your ability to stop others will diminish over time. As a result, your trademark rights continue to “shrink” in scope.

The same result can occur if another company sells goods or services using an unregistered trademark. In those cases, your burden of policing is somewhat less because you are not automatically deemed to be aware of such uses. Conversely, you are deemed to be on notice of any marks on the federal trademark register.

Policing trademarks can be taken to excess. As part of a legitimate effort to maintain the value of their brand, some companies will become “trademark bullies,” sending cease & desist letters to individuals who are making fair use of a trademark or to companies where it requires a stretch of the imagination to see a valid basis for trademark infringement. Such excesses can typically be dealt with through negotiation using an experienced trademark attorney who recognizes when demands have merit and when they are merely unjustified attempts to broaden the sender’s trademark rights.

Policing your trademark in other countries can also be critical, but for different reasons. In the European Union, use of a trademark in commerce is not as important under the law as in the United States. However, trademark applications filed for the European Union are not refused because of similar, conflicting trademarks. Thus, if you own a European trademark and another company files for a mark that is almost identical to yours, it will be permitted to register unless you oppose it. You have the burden to act.

How can you monitor a world of trademark applications to protect your brands? It is not overly difficult or expensive.

Several service providers offer a “trademark watch service” that compares your trademark against new applications and sends you a notice of any potentially conflicting marks. You can then review the details and decide whether to take action. The two best-known providers are Saegis (part of Thomson-Compumark) and Corsearch (part of Wolters-Kluwer). You can set up a watch service for one or multiple trademarks, define which countries are monitored, which goods and services are monitored, and other options. The annual cost per trademark is typically between $300 and $800. If you work with a trademark attorney, he or she will often monitor the watch notices for you and offer advice on which ones are worth pursuing, based on your particular brand strategy and market concerns.

Failure to police your brand lessens its value over time. Investing now in a little pro-active monitoring and enforcement will increase the value of your brand and your ability to stop more serious problems in the future.