However, some businesses are much more likely to cause you problems than others. Evaluating the nature of the other users is key to determining the risk of litigation or other conflicts. Here are some guidelines for evaluating users of similar marks.

1) Big Companies are Litigious

Big companies know the value of brands and of trademarks. They are paying attention to who is using what trademarks and to what trademarks are being registered with the United States Patent and Trademark Office (PTO). If you try to register a trademark similar to theirs, you can bet they will find out.

PTO records are for the most part a matter of public record. They do not have crystal balls, but if your business grows large or your product becomes popular, they will most likely find out if you are using a similar trademark, even if you choose not to register it.

And once they find out, they will come after you. They are perfectly willing to oppose or petition to cancel your trademark application or registration, or to file a lawsuit for trademark infringement. If you are  willing to agree to limitations on your use of the mark, you may be able to continue using it- on the other hand, you may have to change the mark. And if you do not want to comply, they are perfectly willing to spend tens of thousands of dollars fighting you.

So if the conflict is with a Fortune 500 company, you should usually just forget it. There is no point in inflicting the cost of a complete name change and marketing redeux on yourself, not to mention the concomitant legal fees. Find a new name.

2) Small Businesses Are Oblivious

On the flip side, for much smaller businesses with a more local or regional clientele, trademark issues are not as important. Few are willing to pay for the cost of trademark monitoring to make sure no confusingly similar trademarks are being registered. Many very small businesses do not even register their trademarks or have a basic understanding of trademark law.

They are, in general, very unlikely to discover your use of a similar trademark or to understand their options if they do. The only way you are likely to get into trouble is if your business gets huge and suddenly people start thinking about ways to get into your deep pockets. But by that time, your trademark may be incontestable, making it difficult for anyone yo cancel your registration.

When a smaller business gets in a trademark conflict with a really big company, it is often because the smaller business is blindsided by an accusation of trademark similarity that it never saw coming. Large corporations will go after trademarks that are even slightly similar. Small business usually will not.

3) Close Competitors are Unforgiving

The closer a competitor another user is to you, the more likely they will discover your use of the mark and make it an issue. Being in the same industry or the same geographic region and marketing to the same end-users or through the same stores or distribution methods are all factors contributing to closeness between competititors.

Businesses are more familiar with the companies and brands in their industry and geographic region. When business share distributors or end-users, confusion is more likely, and any similarity between marks is more likely to be brought to their attention.

On the flip side, companies that are not direct competitors are less likely to discover or care about your similar mark, and working out an agreement is easier if a conflict does arise.

Look in the Mirror

Finally, consider some characteristics of your own business that could make your trademarks more or less vulnerable to challenge.

Size/Growth -Size works both ways. A bigger company leaves a bigger footprint and its trademarks are more likely to be noticed. Size can deter weak challenges from medium or large firms looking for a quick and inexpensive trademark enforcement action.

However, size can also sometimes encourage conflicts, especially when infringement is clear, because the potential damage to the other party is greater and because there is the potential for a payoff.

If your company is small but growing fast, a conflict may be unlikely now but foreseeable and damaging in the future. Growing companies may also get more publicity and spend more on advertising, increasing awareness of your trademarks.

Web Presence – Web presence can function as a proxy for size. A relatively small business can have a very big impact online. That means that, like a big business, its trademarks are more likely to be found and to confuse consumers.

However, a web presence does not carry the benefit of deterrence. Your strong Internet presence can be a liability when it comes to avoiding trademark conflicts.

Conclusion

These are just some of the factors that affect the likelihood of a conflict between your business and another business that uses a similar trademark. A trademark attorney can help you to evaluate the risks. Is there anything important that I have left out? Any related stories you have to share? Any questions? Leave them in the comments.

What should you do? Do you have to drop the name? Change it? Contact First User? Or can you just go ahead with your registration and marketing plans as if nothing had changed? There are a few factors you must weight when making that decision:

1. What First User can do to you if they find out you are using a similar trademark
2. How likely First User is to find out or decide to go after you
3. Just how good the name you came up with is

The first factor is the potential cost to you of using the trademark, the second is the probability of incurring that cost, and the third factor is the benefit from using that trademark. You can then make the classic calculation: is the potential cost multiplied by the probability of incurring that cost greater than the expected benefit to you?

1) Penalties for Trademark Infringement

If you decide to begin using a trademark (business name, logo, brand name, etc.) that is confusingly similar to the trademark of another business in the U.S., that other business can cause you a lot of problems. It can stop you from registering your trademark and it may be able to stop you from using the trademark.

• Preventing You From Registering Your Trademark

Trademark Examining Attorney Refusal to Register

The Trademark Office will not register a trademark if it is confusingly similar to another registered trademark. Therefore, if First User has registered their trademark, it may be difficult for you to get your application allowed by the PTO. The Trademark Examining Attorney assigned to your application is likely to refuse registration of your mark.

Trademark Opposition / Cancellation

Even if the PTO allows your trademark application, First User can oppose your registration, regardless of whether it has a registration and regardless of where in the U.S. it is located. A trademark opposition is an administrative proceeding before the Trademark Trial and Appeal Board (TTAB) and is essentially a mini-trial.

To go all the way through an opposition you can expect to spend $50,000 to $100,000, depending on what law firm you use. If First User can prove that your mark is confusingly similar to theirs and that it began using the mark in commerce before you, it is likely to succeed in preventing your registration.

Even if your mark is successfully registered without an opposition, First User can come back and petition to cancel your registration up to five years later. A cancellation proceeding is very similar to an opposition in expense, etc.

• Preventing You From Using Your Trademark

Although registering your trademark is very important, the right to use your trademark is even more important. If First User has registered their trademark, they have exclusive rights to that mark nationwide. Regardless of whether you are operating in the same geographic area, your use of a confusingly similar mark in the United States constitutes trademark infringement.

In that case, First User can sue you and, if it can prove confusing similarity, force you to stop using your trademark. You would then have to redo your marketing materials and marketing campaign and devote a lot of money to rebranding.

As you are probably beginning to understand, it is generally a bad idea to use a trademark that seriously conflicts with an existing registered trademark. More frequently, you will have to make a decision regarding a trademark that is used by another business, but not registered. In that case, you can only be sued for trademark infringement if you do business in the same geographic area as First User, and only in state court. First User will have to prove confusing similarity and first use.

Defending a trademark infringement lawsuit can easily run six figures. Monetary damages could also be awarded against you, although they are uncommon.

2) Likelihood That Trademark Infringement Will Be Discovered or Prosecuted

Whether First User is likely to discover your use of a similar mark or pursue you if they do depends on a number of factors, including:

• Is First User big or small?
• Is First User brand-focused?
• How close are the marks / how strong is First User’s legal position?
• Does First User do business in your geographic area?
• Do you have a significant web presence?
• Is First User a direct competitor?
• How big will your business become, and how fast?

These factors will be discussed in more depth in a subsequent post. Generally, large corporations are very likely to find out about trademark infringement and take action, whereas very small businesses are very unlikely to.

If you are able to register your trademark and keep that registration for five years, your registration will become incontestable, meaning that First User will no longer be able to cancel it for confusing similarity to their own mark. Your registration will also allow you to prevent First User from expanding beyond their geographic area.

3) How Important Is It To Keep Your Trademark?

Finally, you should consider the importance of the trademark you have selected. Are you wedded to it? Would you be open to tweaking it in order to differentiate it from First User’s trademark? If there are good alternatives and you have nto spent much money on putting together your branding materials, often it is better to avoid potential conflicts by choosing a new trademark.

On the other hand, if you have a really good and meaningful trademark that you have spent money to develop and build a marketing campaign around, it may be worth taking the risk of going ahead with it. This is particularly true when the risk is low, for example if First User is a small business that is not a direct competitor and is unlikely to discover the similarity.

]]> http://patents101.com/2010/01/trademark-business-name-in-use/feed/ 0 http://patents101.com/2009/02/is-my-trademark-being-infringed-am-i-infringing-someone-elses-trademark/ http://patents101.com/2009/02/is-my-trademark-being-infringed-am-i-infringing-someone-elses-trademark/#comments Fri, 13 Feb 2009 17:03:32 +0000 Clifford D. Hyra http://patents101.com/?p=190 What is trademark infringement?  Without knowing that, you cannot evaluate whether you may be infringing on someone else’s mark or whether someone may be infringing on yours.  Once you have a registered trademark, the question of what constitutes trademark infringement becomes of greater concern.

You have put some time and money into coming up with your trademark, registering it, perhaps designing an advertising campaign around it and placing it on your packaging.  Now, you want to defend it against infringers and you want to avoid having to change it due to the infringement allegations of another.  Because a mark cannot be registered if it infringes on another registered mark, infringement may be a grounds for someone seeking to prevent or cancel your registration using a notice of opposition or petition for cancellation.

Confusing Similarity

The test for whether one mark infringes on another is whether the marks are confusingly similar.  A major purpose of trademark law is consumer protection.  If two marks are confusingly similar, a consumer may be confused into believing that two different products or services are provided by the same business, when in fact they are provided by different businesses. Thus, the consumer may expect a certain quality previously experienced with regard to the products of one business, only to be disappointed to find it lacking.  This may lead to a loss of goodwill for the business the consumer believes (erroneously) to be producing the disappointing product.

If the marks are confusingly similar, the mark with priority (earliest use) is being infringed.  To determine whether two marks are confusingly similar, the courts have developed a multi-factor test.  Not all courts use the exact same factors, but the factors are generally very similar.  The test used at the Federal Circuit has 13 factors (known as the DuPont factors):

1. The similarity or dissimilarity of the marks in their entirety as to appearance, sound, connotation, and commercial impression.
2. The similarity or dissimilarity and nature of the goods . . . described in an application or registration or in connection with which a prior mark is in use.
3. The similarity or dissimilarity of established, likely-to-continue trade channels.
4. The conditions under which and buyers to whom sales are made, i.e. “impulse” vs. careful, sophisticated purchasing.
5. The fame of the prior mark
6. The number and nature of similar marks in use on similar goods.
7. The nature and extent of any actual confusion.
8. The length of time during and the conditions under which there has been concurrent use without evidence of actual confusion.
9. The variety of goods on which a mark is or is not used . . . .
10. The market interface between the applicant and the owner of a prior mark . . .
11. The extent to which applicant has a right to exclude others from use of its mark on its goods.
12. The extent of potential confusion . . . .
13. Any other established fact probative of the effect of use.

These factors are taken together and considered as a whole.  They are not given equal weight and any one factor may dominate in a given case.

Similarity In Appearance, Sound, Connotation, and Commercial Impression

The first DuPont factor is the most important.  If the marks are not similar in any way, none of the other factors are going to matter.  A court will look at how long or short the marks are and how many syllables they have, whether they contain the same words with the same meanings, how they would be pronounced, etc.

Similarity of the Goods

The second, and probably next most important factor, is the similarity of the goods or services on which each mark is used.  The key question is whether consumers are likely to be confused by the similarity of the marks.  If the types of goods on which each mark is used vary dramatically, confusion is less likely.  A consumer would not expect a tire manufacturer, for example, to also make cosmetics.  So if there were two similar marks, but one was used on tires and one on face cream, that might not be confusing to a consumer.

Similarity of Trade Channels

How are the goods or services associated with each mark sold and distributed?  If both sets of goods are sold in the same types of stores to the same types of people, confusion is more likely.

Sophistication of Buyers and Conditions Under Which Sales Are Made

Although sophistication could cut both ways, generally it is considered to make confusion less likely.  If the goods are industrial equipment and the purchasers are experts in such equipment who carefully evaluate the goods before purchase, it is less likely they will be confused by a similarity between two marks.  They have taken the time to evaluate who is selling the goods and what the goods are.

In contrast, retail sales to the general public may be “impulse” purchases, made without careful consideration.  Such buyers may have little knowledge of the goods they are buying and may be easily confused by two similar marks, which they do not consider carefully.

Fame of Prior Mark

This could also cut both ways (a customer might be very familiar with a very famous mark and might be unlikely to confuse it with a small shop, etc.) but is generally considered to make confusion more likely.  Consumers are more likely to be aware of a famous mark and to expect to see it and to have certain expectations about products with that mark.

Number and Nature of Similar Marks

If the industry is “crowded” with many similar marks for similar products, confusion is less likely.  A consumer will be used to seeing different similar marks for similar products and will not necessarily make the connection that two different but similar marks must come from the same source.

Actual Confusion

Any instances of actual confusion by consumers will suggest that the marks are confusingly similar.  If consumers are complaining to the wrong business about the quality of the product, or calling the wrong business for technical support, or contacting the wrong business to ask if they are the source of a product, based on the trademark, those are instances of actual confusion.

Length of Concurrent Use Without Actual Confusion

If two marks have been in use at  the same time over an extended period and there have been no instances of actual consumer confusion, that is an indication that the marks are not in fact confusingly similar.

The Variety of Goods On Which a Mark is Used

If a mark is only used on one type of goods, for example only tires, it is less likely that a consumer will believe that a different type of goods is made by the same business, even if the trademark is similar (think about my earlier tires/cosmetic example).  In contrast, if a mark is used on a wide variety of goods, confusion may be more likely, as a consumer will more readily believe that a different type of product is made by the same company.  For example, if the mark were used on both tires, and toys and accessories, maybe use of the mark on cosmetics would be a little less unbelievable.

Market Interface Between Applicant and Owner of Prior Mark

This factor looks at how the two mark holders have interacted in the marketplace.  Has the prior owner consented to the use of the other mark owner?  This may suggest a lack of confusion.  Have they agreed to take steps to minimize the potential confusion for consumers, for example by agreeing to continue using each mark only for certain goods, or in certain areas, or with certain marketing limitations?  This may help to avoid confusion, but it could also indicate the possibility for such confusion.  Has the prior owner failed to take steps to prevent the other owner from registering or using the mark?  That may indicate a lack of confusion.

Right of Applicant to Exclude Others

Does the applicant have a long-standing and well-known trademark associated with a specific type of goods?  This may weigh in favor of finding no confusion and allowing registration of the application, to avoid the confusion that would result from others taking advantage of the applicant’s goodwill and inability to protect their trademark.

Extent of Potential Confusion

Is any confusion likely to me “de minimus”, or minor and unimportant?  Or will there be substantial confusion that can cause real problems?  Will consumers believe they will be getting one thing but instead get another?  Will they be calling the wrong company for technical support, etc.?