Businesses - Branding and Trademarks

There are at least a couple of different schools of thought regarding branding, much of it divorced from the question of trademark protection.  For example, there are several sources that advise business owners to consider naming or labeling a product with a descriptive title (e.g., "Discount Furniture"), but this ignores the trouble lurking for the business down-the-road. In the hierarchy of trademark protection, fanciful (coined/invented) marks enjoy the greatest strength and protection against conflicting use(s) and/or attack, followed by arbitrary (no connection between term and product), and suggestive (suggestive of a characteristic without overtly describing the product).  Any term/phrase falling within these three categories are considered strong marks.

On the opposite end of the hierarchy are generic terms - words/phrases that defines the good (or service), such as escalator or elevator.

And then there is the category of descriptive marks.  Not quite generic and not quite suggestive.  Descriptive marks are not inherently distinctive and require extensive use for some period of time before acquired distinctiveness (secondary meaning) builds that allows the former descriptive mark to be eligible for federal registration.

While the temptation is strong to label a product or service in a descriptive way, since most consumers would understand the use of the term with the product in this way, this approach is wrong-headed and a bit reckless with a business that one is using to generate profit.  Failing to devise a word/term/phrase that is at least suggestive runs the risk of being unable to federally register the mark, making enforcement of such a mark problematic, along with not realizing the full-breadth of protections and advantages that registration allows under federal law.

Alternatively, with sufficient time, thought, and consideration, a mark that is at least suggestive will open up all the doors to the entrepreneur: utilizing an identifiable and memorable brand;  using a mark that is capable of federal registration; and possessing a mark that is poised to grow and obtain increasing goodwill from consumers that adds value to the business as an on-going venture and as a potential target for sell, acquisition, or strategic alliance.

The Earnhardt Squabble - Family Names & Trademark Usage

One of the more interesting aspects of observing trademark disputes is the sometimes thorny issues that arise regarding the use of the family name (surname) as a trademark and the bad feelings that tend to ensue from one member of the family trying to exclude use(s) by other family members.  Equally as fascinating is the public's reaction to such action(s) and the often misunderstood nature of trademarks and trademark usage, esp. of surnames.  Take for example the most recent case involving a well-known surname - the surviving family of former NASCAR champion Dale Earnhardt (Sr.). Dale Earnhardt's widow (Teresa) is the CEO of Dale Earnhardt, Inc. (aka "DEI"), formerly a motor racing company, and as of now the owner of all name, image, likeness, and general trademarks (registered and unregistered) of Dale Earnhardt.  This includes six federal registrations for variants of "DALE EARNHARDT", "E", and "THE DALE EARNHARDT FOUNDATION". 

Teresa Earnhardt is the step-mother to:  oldest Earnhardt son, Kerry and younger Earnhardt son, Dale, Jr. (with Kerry and Dale, Jr. being half-brothers).  As former and current members of the NASCAR racing profession, both Kerry and Dale, Jr. have separately registered trademarks on their names ("KERRY EARNHARDT" and "DALE EARNHARDT, JR.").  Each set of marks are separately owned by the respective businesses that each half-brother owns.

But in his post-racing ventures,  Kerry has upset the apple-cart.  First, Kerry filed an intent-to-use (ITU) application for the mark "EARNHARDT OUTDOORS" in connection with his appearances on outdoor related television and video-recorded programming.  This mark successfully cleared opposition, and was converted to an in-use application for registration about two years after filing.  Next, Kerry filed an ITU application for "EARNHARDT COLLECTION" related to home building and home decor.  This mark did not clear opposition - Teresa Earnhardt and DEI filed a notice of opposition to prevent the registration of this mark primarily on the grounds that it was likely to cause confusion with the several registered and unregistered marks related to Dale Earnhardt and owned/used by DEI.  Thereafter, T.E. and DEI filed a notice of cancellation against "EARNHARDT OUTDOORS" on similar grounds.  The separate opposition and cancellation proceedings were consolidated.

The Trademark Trial and Appeal Board (TTAB) determined that although the marks are clearly similar in sight, sound, and connotation, there is no likelihood of confusion because the primary goods/services of the respective sets of marks were directed to (a) racing memorabilia (for DEI's marks) and (b) custom home construction and home decor (for Kerry Earnhardt's marks), with no likelihood of overlap or bridging the gap.

As often happens, T.E. and DEI have appealed the administrative (TTAB) ruling to the federal courts for review.  THIS is the action that caught the attention of journos, racing fans, and lay-people.  DEI is well-within its right to appeal the decision, esp. if there is a good-faith basis for believing that the TTAB committed an error on the evidence or on the law.  Based on the paper-record available, DEI is unlikely to win on appeal largely based on the dissimilarity in the goods/services provided.  Stated more to the lay-person's understanding:  it is unlikely that the consuming public is going to confuse Dale Earnhardt racing memorabilia with home decor and home construction of the "Earnhardt Collection".

However, it is interesting to note the reporting, the public reaction, and today's reported on-record reaction from Dale, Jr (in support of half-brother Kerry).  The reports have generally come within the vein of:  Teresa is trying to stop Kerry from using his (last) name.  

That's only somewhat true - DEI is trying to stop the federal registration of someone incorporating "Earnhardt" into a different mark.  Preventing the registration is only part of the process in stopping the actual trademark use.  Much like the misconception that if the Washington Redskins ultimately lose their federal registrations then the organization will lose the right to use the marks in commerce, even if Kerry Earnhardt's registration is blocked by the USPTO, DEI will have to sue for infringement and/or dilution and get injunctive relief to stop Kerry's usage of "EARNHARDT COLLECTION".

This "family" squabble is one of several over the years.  A relatively recent family squabble arose between members of the rock-band "Van Halen" and one of the ex-wives of drummer Alex Van Halen (Kelly).

ELVH, Inc. is the band-owned company that owns the intellectual property related to the rock band "Van Halen" (ELVH is the initials of guitarist Edward (Lodewijk) Van Halen), including the registered and unregistered marks for the name "VAN HALEN".  After Alex and Kelly Van Halen divorced in 1996, the former Mrs. Van Halen retained her married name and started an interior design and construction company under her former married name "Kelly Van Halen".   As one might expect, litigation ensued.

In Oct. 2013, ELVH, Inc. sued Kelly Van Halen for trademark infringement.  In Jan. 2015, the parties settled their dispute, with Kelly Van Halen able to continue using this name along with additional qualification (e.g., "Design Originals by Kelly Van Halen").  Had that matter continued to trial, it was destined for a similar result as the opposition/cancellation pursued by DEI - no likelihood of confusion based on entirely different goods/services offered.  Fortunately, cooler heads finally prevailed.  We'll see if the same ultimately holds for the Earnhardt's squabble.

Washington Redskins Legal Position Bolstered

As many readers have noticed, this blog has taken several opportunities to provide commentary on the continuing sage of the registered trademarks of the Washington Redskins professional football organization.  Just last month, this blog noted a similar alleged-disparagement case ("THE SLANTS") winding its way through the appeals process with a pending writ of certiorari filed with SCOTUS.  Today, the Washington Post published a new poll it conducted revealing that a significant majority of self-identifying Native Americans do not find the use of "Washington Redskins" or "Redskins" disparaging to the group.  Although this is an internally-commissioned poll by WaPo, the significance of the results could signal the final tolls of the bell for this decades-long trademark challenge. Recall, in 1992, Susan Harjo filed a petition with the USPTO to cancel six registered trademarks owned by the Washington Redskins football organization.  After multiple appeals within and without the administrative agency, the original challenge was nixed based on the legal theory that laches (waiting too long) prohibited the challengers from continuing with the cancellation proceeding in 2005, and mercifully buried by SCOTUS denying to hear the appeal in 2009.  Yet, as the Harjo petition was pending before SCOTUS, a new round of challenges to the same six registrations (on behalf of Amanda Blackhorse and five other individuals).  The Blackhorse challenge will reach its first-decade if it lasts until August 2016.

What threatens the viability of the Blackhorse challenge is the newly published WaPo poll, which reveals that of the 504 respondents self-identifying as Native Americans, 90% are not bothered by the use of "Redskins" by the Washington football organization, 1% offered no opinion, while the remaining 9% find the usage "offensive".  Recall the standard for appropriately holding that a term is "disparaging" is that it is deemed disparaging of a "substantial composite" of the identified group.  While there are no bright-line formulas for determining what is or is not a "substantial composite", a total of 9% finding the term(s) and/or uses "offensive" hardly seems to rise to the level of "substantial composite".

Something that gets a bit lost in the noise of these challenges is that this is the same problem that Harjo had.  Neither Harjo (nor apparently Blackhorse) can marshal the evidence that demonstrates a "substantial composite" of the group find the term offensive.  As noted in an ESPN article, it seems the average person finds the terms more offensive than members of the targeted-group - which is probably a bigger comment on the psychological/sociological issues within our progressively PC society.  Yet, even that evidence has historically favored the Washington organization, as the vast majority of people associate "Washington Redskins" and "Redskins" as identifying the NFL team, with hardly any data indicating such uses are of actual people/persons.

Between the publication of the WaPo poll, the trend in "THE SLANTS" case, as well as general first amendment and trademark examination principles, it appears the "Redskins" matter may reach a finality in favor of the club and its registrations.  Although I never underestimate the federal judiciary to surprise (esp. the intellectual property challenged members of SCOTUS).

30 Years Ago - Coca-Cola's New Coke "Fail"

Yesterday marked the 30th anniversary of Coca-Cola's public admission that "New" Coke was a commercial failure.  As the linked article reminds, in April 1985, Coca-Cola, Inc. announced that it would abandon the original Coca-Cola formula and switch to a "new" formula that resulted in a slightly sweeter taste similar to Pepsi.  Yet, a mere 79 days after its launch, Coca-Cola announced on July 11, 1985 that it would resurrect the original formula in the re-branded "Coca-Cola Classic" (or "Coke Classic") while maintaining the "New" Coke product as well. Whether this was a massive failure in understanding one's product and it's market, or a cleverly designed scheme to shelve the original formula for a short-time to drive up publicity and demand for that product, the return of the original formula ("Classic") to shelves resulted in improved sales and better competitive footing with Pepsi (which would later endure a similar "misstep" with Crystal Pepsi in 1992 - coincidentally, also set for a revival soon).

While the public tends to have a basic understanding of trade secret protection, many know that the original Coca-Cola formula is perhaps the most famous trade secret in business history.  It is one of the great examples of the value of a trade secret.  It also represents the leading alternative to the patent process.

With any new/improved technology, process, or technique, the innovator(s) is faced with the dilemma of whether to patent the improvement or protect the innovation by trade secret.  While there are instances where both forms of protection may be utilized to protect different aspects of the overall improvement, each separate aspect of the new/improved innovation must be held in secrecy (trade secret) or disclosed (patent).  The two (different) forms of protection compel the different approaches, since these forms of protection are the opposite sides of the same innovation coin, in several legal and practical ways.

Trade secret laws are based in common law, and have since been codified at the state level and/or through interstate compacts (e.g., UTSA, the  Uniform Trade Secret Act).  Despite adoption in all states and in uniform acts, most versions are virtually identical in form.  Something of value must be held in secrecy and protected using reasonable means to guard against public accessibility.

Notably, one does not "apply" for a trade secret or await "approval" from a governmental agency.  Thus, there is no governmental cost to obtaining a trade secret; the only costs are business and legal.  One simply holds the technology, process, technique, information, or data in secret (well, more simply stated than simply accomplished).  If the tech/info is pilfered by another, then "misappropriation" of a trade secret has occurred and is actionable.  And unlike patent law, trade secret law has both a civil penalty and a criminal penalty aspect (exemplified by the unlikely team of Coca-Cola and Pepsico assisting the FBI in prosecuting three individuals for the theft and attempted sale of Coca-Cola info to Pepsico).

Conversely, patent laws are based in the U.S. Constitution (as are copyright laws).  To obtain a patent, one must file an application with the U.S. Patent and Trademark Office (USPTO or PTO).  The application must include at least one written claim defining the scope (the metes and bounds like the written description of a property deed), as well as an inventor's declaration, and the appropriate filing fees.

The application will often endure a 2-4 year road through examination, hopefully with issuance of at least one claim and a patent resulting thereafter.  In exchange for the limited monopoly of the granted patent, measured as a 20-year term from the filing date, the inventor/applicant must disclose all information necessary to practice the invention.

Thus, the flip-sides of the coin:  secrecy and potential protection into perpetuity (trade secret), or public disclosure and limited monopoly (patent).  Sometimes the dilemma is easy to resolve; other times, it is the decision that determines the livelihood of the business going forward.  If you have such a dilemma, do not hesitate to contact York Law LLC to determine which path is the best for your business.