Brand Protection Today Article 4: You Found a Problem, Now What Do You Do? (Part 1)

Brand Protection Today – A Series from InfoLawGroup

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Brand Protection Today

Article 4: You Found a Problem, Now What Do You Do? (Part 1)

by Rosanne Yang and Sara Skinner Chubb

Previously we discussed steps for choosing your brand in Article 1: Choose Wisely of our series and considerations for implementing a brand protection program in Article 2: Monitoring – Why, Where and How? and in Article 3: Managing Your Brand Protection Program that fits the needs of your business. The program’s goal, of course, is to protect your brand by identifying possible infringement or other threats. So what happens when your program identifies an issue? Today we discuss important considerations to decide whether and how to enforce your rights. Let’s walk through each in more detail.

Does Their Use Predate Yours?

The first step in evaluating whether and how to enforce your rights is to determine whether the third party you have identified has superior rights. In the United States, trademark rights are created through use, meaning the first to use a mark is considered the senior user. (In other countries, priority is typically based on the first to file for a trademark, but other legal claims may apply based on use, such as unfair competition or “passing-off,” so it still matters to establish a timeline.) Subject to considerations as to the relatedness of the goods and services and the geographic area in which the use occurs, a senior user can stop later, “junior” uses of confusingly similar marks. Before taking aim at a competitor you’ve just discovered selling products using your new tagline, you need to have a legal basis to demand they stop, and that will require you to have started using the mark first.

So how do you figure out whether their rights predate yours? Begin by checking to see if the offending party owns a trademark registration for the mark at issue and, if so, what the mark’s date of priority is. In most cases, you would have uncovered conflicting registrations during your initial clearance process. However, it is important to check prior to taking any enforcement action to get a fuller understanding of the other party’s rights, if any.

You can also check state business registrations to determine how long the company has existed. If the offending use is a company or brand name, determining that the company was formed subsequent to the launch of your brand is a pretty good indication that you have senior rights. States maintain publicly searchable databases of business registrations that identify when the entity was formed. To help narrow your search, a business is often formed in the state where its primary place of business is located or in Delaware. Beyond that, a thorough review of the company’s website and social media pages may uncover details about when the company launched a product or rolled out an advertising campaign.

If your research efforts do not uncover certainty on the issue of priority, you may also consider hiring an investigator to compile information on the company on an anonymous basis. There are companies that specialize in intellectual property investigations and can determine details of the identified entity’s business activities and can even assist in IP acquisitions if you determine that strategy makes sense for your business.

The prior rights analysis can be nuanced, especially if the rights at issue exist at common law with no federal trademark registration, so it is important to consult with legal counsel when undertaking your review. It is unfortunately all too common for a company to fire off a cease and desist letter to a competitor only to learn that the competitor started using a product name or tagline long before the company did. This is a bell that cannot be un-rung and puts the other company on notice of your – now admitted – infringing use!

How Strong Are Your Rights?

If your brand tends toward being more descriptive of your goods or services, or if it is fairly diluted (meaning that there are a number of other brands out there that are close in name or share common elements), you may have a harder time. That may mean you need more evidence of a problem, such as confused customers, to establish your claim, or it could mean a longer path toward resolution. In contrast, infringement of a very unique and fanciful mark may be more obvious on its face.

Also consider how widely known your brand is within the relevant markets. Newer companies may have a harder time swinging wide, for instance, than a decades-old household brand with lots of licensing for related or affinity products.

Is the Use a Fair Use?

There are a variety of uses by others that are allowable by law, and if the issue of concern arguably falls into one of these categories, that will signal at least the possibility of a more difficult path to resolution and possibly a loss of the fight. These types of fair uses fall into two general categories:

Nominative fair use, which is what happens when they use your brand to refer (lawfully) to you. These types of uses are generally parody, satire, comparative advertising, compatibility advertising, or other uses where your brand must be identified to make a fair communication. Examples of this include: “We are located next to the [your brand] store.” or “Compatible with [your brand] version X.” or “Made with [your brand] cookies.”
Descriptive fair use, which is what happens when your brand is so descriptive of goods or services that the other party is using it for its descriptive meaning rather than as an identifier of source (e.g., “Apple products here” on a corner fruit stand, used to describe the pies and other apple treats available for sale, rather than computing products).

These evaluations are highly nuanced, and lots of companies get it wrong, so be sure to consult with an experienced professional before deciding to pursue – or to not pursue – a use like this.

Do You Have an Unprotected Flank?

It is always a good idea to make sure that you understand your own potential exposures before throwing that first punch, because sometimes the punch back is worse than the one you threw. So, do an honest evaluation of how many times and in what ways you have “borrowed” from the party you want to accuse of infringement – and don’t limit that evaluation to like kinds of infringement. Imagine, for instance, sending a trademark cease and desist letter and getting back a patent infringement claim.

Also consider whether you are really the earliest user. What if there is another third party out there with earlier rights than either you or the party you are considering taking action against? Could your opponent acquire those third party rights and turn the tables on you? Should you shore up your rights by acquiring those other rights ahead of making the accusation?

What Is Your End Game?

You’ve determined you have a legal basis for a challenge. Before you decide on a form of action it is important to take a step back and consider your end game. What would you consider to be a successful outcome? This will depend upon the strength of your legal position and business considerations like available budget and PR. For example, if both parties’ rights exist under common law only and neither has a truly national presence, it may not be a realistic outcome to completely stop the other party’s offending use. However, there may be an opportunity to enter into a coexistence agreement with the other party that preserves your ability to keep promoting your brand in your current market area, while at the same time limiting the other party’s activities to its established market.

Conversely, consider what your exit strategy will be if things don’t go exactly as planned. Sure we’d all like to have the other side tuck tail and run, but are you ready for the action if they fight you? What happens if the other side ignores your cease and desist or responds and tells you to go pound sand? Business stakeholders can collaborate with legal to identify which of your demands are most important if compromise is necessary and consider creative options to settle a case. Everyone knows litigation is expensive and there may be trade-offs you can live with if it means saving tens of thousands of dollars on litigation that will tie up company resources for years.

After considering all the factors above, you may finally be in a position to determine that you want to proceed with enforcement. The next question is: what does that look like? Our next article will explore the various options available to you.

Originally published by InfoLawGroup LLP. If you would like to receive regular emails from us, in which we share updates and our take on current legal news, please subscribe to InfoLawGroup’s Insights HERE.