Trademark Titan™ Blog

Information for in-house counsel, brand owners and entrepreneurs. Committed to international trademarks, copyrights, branding and other IP issues.

Trademark Titan™ Blog  - Information for in-house counsel, brand owners and entrepreneurs. Committed to international trademarks, copyrights, branding and other IP issues.

Trademark Application Denied Based on Likelihood of Confusion: What are “Confusingly Similar Trademarks?”

In the recent U.S. Trademark Trial and Appeal Board decision of In re Straight Up Southern, LLC, the Board once again sends a stinging message to a trademark applicant and upholds the Examining Attorney’s refusal to register the below depicted mark on the ground it is confusingly similar to the registered mark LILA GRACE: 

Lily Grace

Straight Up Southern sought registration of its mark for:

  • ‘short-sleeved or long-sleeved t-shirts; and tank tops,’ in International Class 25. 

The Examining Attorney refused registration under Section 2(d) of the Trademark Act on the ground Applicant’s mark is confusingly similar to the registered mark LILA GRACE for:

  • ‘bathrobes,’ in International Class 25.

In any likelihood of confusion analysis, the primary inquiry is whether consumers would be confused as to the source of the party’s respective goods. 

Common misconception clarified: The issue of “confusingly similar trademarks” is not whether consumers would mistakenly purchase a bathrobe when they intend to purchase a t-shirt; that is not the analysis for “consumer confusion.”  Rather, “consumer confusion” is based on whether consumers would reasonably believe that bathrobes and t-shirts would originate with the same source (i.e., Ralph Lauren brand of t-shirts and bathrobes).  

If consumers would make that reasonable assumption, and if the marks of the parties are similar in terms of sight, sound, meaning and/or connotation (i.e., LILY GRACE vs. LILA GRACE), then we have a potentially serious issue of consumer confusion as to the source of the goods and possible trademark infringement, which may subject the junior user to liability and rebranding.  

Another example of “What are Confusingly Similar Trademarks?” Would consumers reasonably believe that running shoes and running pants originate with the same source?  Of course, they would.  I am quite certain that during the early years of Nike that Nike would not have permitted another party to sell Nikey™ brand of running pants – or any athletic wear – on the basis consumers would be confused as to the source of the parties’ respective goods. 

It is the protection of consumers from being confused or deceived as to the source of goods and services that is the crux of trademark law.  Trademark law’s primary concern is not the trademark owner… it’s protecting consumers, period.

Therefore, when brand owners adopt names that are similar to registered trademarks (i.e., Ovation vs. Avasion) for related products (i.e., skin lotions vs. hair shampoo), there is a high probability that the registered mark will block an application for the new comer’s similar mark on the basis of likelihood of confusion as to the source of the goods.  

Important note: Unregistered, a/k/a common law, marks must also be considered because they may still present barriers to the use and registration of a new comer’s mark and may be used by their owners to block a new mark’s trademark application.  For that reason, searching the U.S. Patent and Trademark Office (“USPTO”) database alone is not enough.

Turning back to the LILY GRACE case, the Board correctly identified the primary principles for refusing registration of Applicant’s mark, including that:

  • when determining whether marks are confusingly similar, the test is not a side-by-side comparison, rather the test is based on the average recollection of marks by consumers;
  • because the registered mark was registered in standard character form, the registered mark is protected in all formats, including the stylization of Applicant’s mark; 
  • although Applicant’s mark contains a design element, the added design is not enough to avoid consumer confusion because consumers call for goods by the word portion of marks;
  • there is no correct pronunciation of a mark and consumers may pronounce a mark differently than intended by the brand owner; 
  • the marks of the parties convey connotations of female names (LILY GRACE vs. LILA GRACE) – thus they convey the same connotations;
  • all of the parties’ respective goods are common apparel and relatively informal and would travel in the same channels of trade; and
  • the Examiner’s introduction of third party online store webpages evidence that it’s common for the same parties to sell all of the parties’ goods under the same trademark.

Some Key Take-A-Ways

  • The parties’ marks and goods/services need not be identical to find trademark infringement
  • Trademark searches must consider “confusingly similar trademarks” and relatedness of products
  • The issue is whether consumers would be confused as to the source of the products – not whether they mistakenly purchase the wrong product (I purchased beer by mistake… I meant to purchase wine!)

USPTO Trademark Search Challenge

Search the USPTO database using the below sample search queries for Applicant’s mark LILY GRACE and see if they find the cited mark LILA GRACE and, more importantly, would have found it on the USPTO database prior to the LILY GRACE name launch and filing (it was already there…).

Click here to access the USPTO search page and then:

  • Scroll down and click: ‘Trademark Electronic Search System (TESS)’
  • Click:Word and/or Design Mark Search (Free Form)
  • Copy and paste each search strategy (one search at a time) in the search window, hit “Submit Query” and then review the results

*lily*[bi,ti] and *grace*[bi,ti] and 025[ic]

*l{“iy”}l*[bi,ti] and *gra{“sc”}*[bi,ti] and 025[ic]

How did they do?  

Podcast Episode 2: How are International Trademark Rights Created? Ensuring a Smooth Global Brand Launch

This episode summarizes the ways in which trademark rights are created internationally, which addresses the following:

  • Many brand owners fail to recognize that the trademark rights they have created in the United States, and possibly elsewhere, do not extend automatically into other countries, which can result in infringing third party rights, being sued for trademark infringement, seizure of products at Customs and costly rebranding exercises
  • Brand owners must understand how trademark rights are created internationally and then create strategic business plans setting forth a course that seeks to minimize risks and costs, while maximizing brand rights and protection
  • Failure to secure trademark registration protection typically means that a company does not own any trademark rights – or think of it as a “government-issued business license” – to sell branded products in the majority of countries
  • Brand owners that fail to implement a coherent and consistent global filing trademark strategy will likely find that they have failed to maximize brand protection, possess inadequate trademark protection and rights for key brands and products in key markets, have not minimized business and infringement risks, have lost rights in key markets and consistently run over budget

Special thanks go out to Jelsonic and Jeremy Wray for the fabulous music contained in my podcasts titled “The Returning.”  

Music: “The Returning” by Jelsonic (www.jelsonic.com)

The music is licensed under creative commons attribution license available on the Free Music Archive.

Trademark Titan Blog Podcast 1: Securing Chinese Trademark Registration and Chinese Trademark Rights; Battling Trademark Piracy

This podcast summarizes securing Chinese trademark registration and Chinese trademark rights, including the following:
  • Overview of Chinese trademark registration system and scope of protection
  • Best practices for securing trademark registration protection in China
  • Best practices for preventing loss of trademark rights in China
  • Best practices for battling trademark piracy in China
Music: “The Returning” by Jelsonic (www.jelsonic.com). The music is licensed under creative commons attribution license available on the Free Music Archive.

Chinese Trademark Rights and Battling Trademark Pirates

Unlike the United States, which is a “first to use” trademark system, many countries, including China, follow a “first to file” trademark system.  Meaning whoever files a Chinese trademark application first for a particular trademark and goods/services, which ultimately matures into a trademark registration, is generally considered the legal owner of the registered mark – even if that party had never used the mark in China (or elsewhere).  An exception to that rule is if the subject mark is well-known or famous in China; a standard most trademarks cannot satisfy.  For that reason, securing trademark registration in China is highly recommended.

IMG_2012Many cases of third parties registering a company’s trademark in China are the result of trademark pirates, those parties seeking to hold the trademarks of others for ransom and, in some cases, third parties planning to actually sell product under the company’s mark.

Even if a company secures Chinese trademark registrations for its relevant marks and goods, the company may still be vulnerable to piracy if it has not adequately protected all categories of goods in a certain international class or category.     

Unlike the U.S., for example, the Chinese registration system not only categorizes goods and services in certain international classes (e.g., Class 3 covers cosmetics, Class 12 covers various automotive products and Class 25 covers clothing), China further categorizes goods and services into subclasses (think of it as “buckets” of different but potentially related products). For example, International Class 12 covers 12 different subclasses of goods.  Should brand owners register their marks for automotive products A, B, C and D and should those goods fall within only 2 of the 12 subclasses, these brand owners are vulnerable to pirates (and competitors) who may register their marks in the “open” subclasses potentially causing consumer confusion in the marketplace and certainly causing senior management trepidation.

Failure to properly protect your trademarks in China can result in loss of rights, loss of market opportunity and/or many years of costly litigation (4-6+ years) over trademark rights. 

Best practices for securing and enforcing trademark rights in China, and seeking to reduce overall future enforcement actions and costs, include the following:

  • Audit your trademark portfolio for gaps in protection
  • Conduct trademark searches in all classes and subclasses relevant to your business for any barriers to registration based upon third party filings
  • Register marks in all available sub-classes, even if the marks are not used for many of the covered goods, to prevent future piracy.  Such strategy also preserves rights for future product expansion and licensing (revenue) opportunities.
  • Register marks even if 100% of Chinese manufactured products are produced for export, as the registrations permit authorized “use” of marks for manufacture and should avoid pirates from seizing products at customs based upon registering the company’s marks
  • File oppositions and cancellations, as necessary, and/or seek purchase of third party filings, to clear out pirates
  • Register your brand names early in English, Chinese phonetics and Chinese characters
  • Identify products you sell now and which products you plan to sell in 2-5+ years
  • Identify economic zones within which company has focused on growth and where majority of sales are derived, which will assist with prioritizing spend concerning trademark infringements and counterfeits
  • Set up a trademark watch service and surveillance program
  • Secure and gather evidence of use of trademarks for use in enforcement actions

Trademark theft and piracy is an industry in China.  Even with the new laws enacted in 2014 to assist Western companies against trademark theft, trademark piracy is, simply put, “running rampant.”  

Companies that ignore China and their Chinese trademark rights for whatever reason, perhaps they don’t have plans to move there any time soon, should still be thinking about the future prospect of Chinese business and seek to secure their rights today… before pirates do it for them…

Alice Corp. Pty. Decision Kills Software Patents: In the Wake of Alice, Many Software Companies Will Need to Bring Their Brands and Trademarks to Life

ThAlice Softwaree recent Supreme Court case of Alice Corp. Pty. v. CLS Bank International, has shaken, but certainly not stirred, the software industry.  Under the Alice decision, software patents that claim abstract ideas and nothing more, including business methods, are likely not valid.  The patents at issue in Alice cover software applications that disclose a scheme for mitigating “settlement risk” by facilitating the exchange of financial obligations between two parties by using a computer system as a third-party intermediary (a/k/a “an escrow agent”).

The court concluded that “the method claims, which merely require generic computer implementation, fail to transform that abstract idea into a patent-eligible invention.”  Accordingly, the Court held that since the claims are drawn to a patent-ineligible abstract idea (e.g., software that carries out the function of an escrow agent), they are not patent eligible under 35 U.S.C. §101 of the Patent Act.

Determining software and other patent eligibility requires a two-step analysis. Step one: identify whether the claims are directed to a patent ineligible concept, such as an abstract idea.  Step two: determine whether the claims contain an inventive step sufficient to transform the abstract idea into something significantly more.  If your software patents or applications do not pass this test, they are likely dead.

The decision in Alice should end the practice of taking abstract ideas from the public domain and simply embedding them within computer software applications and connecting them with generic computer implementation, which has created monopolies where they simply do not belong.  This decision should have the effect of eliminating poorly drafted and poor quality software patents that do not contain inventive steps sufficient to transform abstract ideas.

Alice and other recent decisions rendered by the Supreme Court regarding patent eligibility are likely only the tip of the iceberg.  We will likely see more Supreme Court decisions in the coming years that further limit patent eligibility subject matter and aim to promote free market principles rather than stifle marketplace competition.  Those decisions will also likely continue to erode the rights of and create higher financial barriers for patent trolls.

In the wake of Alice, many owners of software patents are wondering if their patents are valid.  Many of those owners, and owners of pending software patent applications, might be contemplating whether copyright or trade secret protection should be considered if their patented ideas have fallen back into the public domain.  Unfortunately, however, copyright does not protect the functionality of software, thus competitors may simply “draft around” the code, and trade secrets would likely prove difficult to maintain as “secrets” for software.  So what is a company facing this dilemma to do?  Well, if it has not already done so, and if there is no room for substantial improvement eligible for patent protection, it should immediately start building its brand and portfolio of trademarks as it may be only a matter of time before competition creeps into the marketplace with better branding, better trademarks and better management all of which would likely spell doom for the once holder of monopoly power.

Building a powerful brand and trademark portfolio requires thoughtful analysis and consideration and involves many factors, including the following:

I.  Brand and product name selection need not be difficult. Proper consideration of brand names does take time and thought-provoking analysis, however.  Not considering the following four brand name factors could potentially prove fatal for a company’s new product launch.

  • Distinctiveness – Is the name legally protectable?

Terms/names that are considered to be generic for products are never protectable as trademarks. For example, the term CloudSoftware.com for providing online software services should never receive trademark protection. Selecting a generic term as a trademark is brand suicide.

Further, names that merely describe certain attributes of a product will not receive trademark protection upon first use and may never receive trademark protection. Although descriptive terms may become eligible for trademark protection once the “mark” has been put to continuous and substantially exclusive use – that can take years and potentially millions of advertising dollars.

Tip: Select brand names that are legally protectable upon first use.

  • Distinguishable – Is the mark distinguishable from the competition?

Why select a mark that is not distinguishable from the competition? Although a selected mark may be “legally” distinguishable from competitors’ marks, it may still become lost in a noisy marketplace of similar trademarks.

Companies that use marks similar to their competitors’ marks run the risk of losing sales and potentially developing bad reputations that belong to their competitors. For example, if a competitor’s product with an overall similar name receives bad press or even worse kills someone – that publicity may inevitably rub off on those companies with products with similar names. Why take that risk?

Tip: Only select names that are legally protectable and sufficiently distinguishable from the competition.

  • Da Position – Does the company have a positioning strategy?

A brand name should communicate a product’s positioning strategy. Select a name that begins the positioning process. For example, which products have the slogans “Melts in Your Mouth Not in Your Hand” and “The Uncola?” Those slogans positioned their products at the top in their respective categories. Also consider whether a slogan can re-position the competition. Think about how Procter and Gamble re-positioned Listerine with the simple slogan “Medicine Breath.” Re-positioning a competitor with a slogan is one way of gaining market share.

Tip: Select a mark or slogan that will capture the position or niche and then don’t let it go!

  • Da Attributes – What are prospective purchasers looking for?

Selecting a mark that suggests an advantage of a product or a result that consumers want from a product can be a game changer. Rather than look at how a company perceives its own product, a company should look at how consumers already perceive it, then look for the solution in the mind of consumers. Then select a name that reinforces consumers’ perceptions. What do consumers want from car batteries, for example? Of course, they want a long-lasting dependable battery. That’s why the mark “Die Hard” has been a huge success.

Tip: Select marks that convey attributes desired by consumers.

II.  Building Global Trademark Portfolios.  Many factors come into play when launching global brands and brand names. Just ask those that do it for a living!  As for the brand name itself, I’ve listed below some of the factors brand owners should consider well in advance of product launch.  And, yes, I do meanBlog Alice Magnet image well in advance of product launch. Do I need to say that one more time? I know that I do, but I won’t.

Below are eight aspects brand owners should bear in mind when planning a global brand name launch:

1. Does the name have language barrier issues? There have been many stories – some of which may be nothing more than folklore but are nonetheless fun to talk about – of companies launching new brand names to later learn – much to their chagrin – that they convey negative connotations in other languages and cultures. Take, for example, the well-known story of the Chevy Nova. As the story goes, the term NOVA in Spanish means, “won’t go.” Probably not the best name for a vehicle would you say? As the story continues, maybe it was the name itself that explains why the Nova didn’t do so hot in the Spanish-speaking markets.

Companies must also know whether new brand names would have distasteful connotations in other languages and cultures. Another example is the story of PepsiCo launching the slogan “Come Alive with the Pepsi Generation” in China. The story goes that the meaning of the slogan was terribly lost in Chinese translation. Chinese speaking folks translated the slogan to: “Pepsi Brings Your Ancestors Back from the Grave.” Houston, we have a problem.

2. Consider adopting an international icon or logo. One great way of avoiding the language barrier issue is to adopt an international logo design. That way if the name has negative connotations in certain languages or cultures, the brand owner can either drop the name altogether or change the name but still use the universal design logo, which may become recognized across all languages and cultures. Think of the Good Humor® icon.

3. A term that is legally protectable in one country may not be protectable in another. A term or mark that is protectable in the U.S., for example, may not be protectable in the European Union or China. Although U.S. trademark law may render a mark suggestive, thus legally protectable upon first use in the U.S., EU or Chinese trademark laws may render the same term or mark as being non-distinctive, thus unprotectable. If there are any doubts as to a selected mark’s distinctiveness in a certain jurisdiction, an inquiry as to the mark’s distinctiveness should be made with foreign counsel. If it’s too late, and the mark has already been launched, one way to avoid the non-distinctiveness refusal in certain countries is to simply add a design element to the word mark.

4. Budget. Budget. Budget. Consider the costs of clearing and protecting selected marks in certain jurisdictions and countries. Although the cost to clear marks in all selected countries and jurisdictions may be cost prohibitive, it still makes sense to clear marks in those top priority countries/jurisdictions. Those top” countries/jurisdictions are those that are expected to result in the majority of sales. Also, the costs to secure trademark registration protection on a global basis add up quickly. The best strategy is to know the marketing strategy and only seek protection in those jurisdictions that correspond with that strategy. If money is not an issue, and the brand owner fears that competitors might register the name in certain countries where the mark will not be used, seeking defensive registrations may be part of the strategy.

5. Clearing and registering a mark in the U.S. does not mean the mark is clear to use in Canada, Mexico or any other country. Remember that trademark laws are country specific. A U.S. trademark registration does not generally grant the right to use the mark in any other country.

6. Does the brand owner want/need to reserve country code top-level domain (“ccTLD”) names? If a company wants to use ccTLDs (i.e., .CN for China or .JP for Japan), it should ensure that the domain names are available during the clearance stage and, if they are, reserve them immediately.

7. Where should trademark registration be sought? Deciding where to seek registration is an important aspect of the protection process. Due to cost barriers, companies should consider protecting marks in stages, which may mean over a certain number of years. Start with the top priority jurisdictions, including those jurisdictions where the majority of sales are expected to take place, customers are located, licensees are located, advertising is planned and manufacturing and distribution will take place. The lower priority countries are those of which sales are not expected to be of any significance for a few years. Protecting the name in the lower priority countries can simply be staged over coming years in an effort to spread out costs. Companies should be mindful of the brand expansion strategy, which could mean rolling out the product in certain countries over a 2, 3 or even 5 year period. It’s generally highly recommended that the trademark filings stay ahead of the product rollout strategy.

8. Trademark application filing strategy: National registrations, Community Trademark, International Registration? How about a combination of all three? There are a number of factors to consider when planning a filing strategy. Considerations should include national filings and their prosecution costs, vulnerability of home country applications or registrations on which International Applications are filed via the Madrid Protocol, the number of jurisdictions in which protection is sought, which countries or jurisdictions belong to the Madrid Protocol, first-to-file countries, distinctiveness of marks and potential for oppositions to registration in certain jurisdictions. There is not a “one plan fits all” strategy. Strategies should be considered on a case-by-case basis. Whether to use the Madrid Protocol and/or Community Trademark filing mechanisms or other jurisdictional filing mechanisms or a national application filing strategy or a combination of those options should be fully considered well in advance of product launch.

I cannot stress more that sufficient time should be allotted for planning a global filing strategy. In some instances, the time needed to clear marks for a global launch can take weeks and possibly months. And that’s if the first choice is available. So take some time out of your busy day of planning the branding strategy and give ample time to the planning of the brand name protection strategy – you will probably need it. Trust me.

Now that Alice has placed many software patent holders (and applicants) on notice that their software patents are invalid, it is time for those parties to build, if they have not already done so, strong and valuable national and/or global brands.