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.

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.

Avoiding “Another” Trademark Trap: “Don’t Sweat It” When it Comes to Trademark Selection

There are many reasons why trademark owners should carefully select and clear new product names, trademarks and even product slogans and phrases.  Some of which include selecting trademarks and slogans that are immediately eligible for trademark protection and do not infringe third party rights.  

Even when brand owners select trademarks and/or slogans that would likely not infringe third party trademark rights, it may still be prudent, in some cases, to choose another mark.  For example, selecting marks that would likely get lost in the marketplace noise with other similar trademarks is not advisable.  

Furthermore, it is not a good idea to select marks that would likely draw fire from a competitor that aggressively enforces its marks against uses of similar marks – even when consumer confusion is unlikely (we call those parties “Trademark Bullies”).  There may also be instances when the adoption of a mark – although likely not infringing – may still draw an objection from a competitor or another party in the trade – just because.     

Not until a trademark attorney understands the gray of trademark law – will s/he understand the gray of trademark law and recognize that selecting a different mark altogether is sometimes your best business option – even if that is not what you want to hear.  From time to time I need to remind clients that they do not hire me so that I can tell them what they want to hear – but rather what they need to hear.  As Robbie Robinson almost once said “You might hate me now, but you’ll learn to love me later.”  

There are instances when good business decisions (based on sound legal advice) are to simply consider different product names or slogans rather than spend hundreds of thousands of dollars (or more) defending a trademark dispute brought by an over-zealous plaintiff with a weak case.  You might win the legal battle, but at what business and economic costs?  

Companies should obviously steer clear of adopting infringing trademarks, product phrases and slogans and marks that would likely draw fire from a competitor.  In September of this year, Oakley, Inc. drew such fire when it was sued for trademark infringement for using the trademark / phrase “Sweat it Out” for sweatbands.  The plaintiff, Lontex Corp., is a manufacturer of athletic apparel and owner of several United States trademark registrations for the mark SWEAT IT OUT for athletic apparel, including sweatbands. 

The complaint alleges that Oakley’s use of SWEAT IT OUT for sweatbands constitutes counterfeiting and is likely to confuse or deceive consumers into believing that Oakley’s sweatbands originate with or are sponsored by Lontex in violation of the Lanham Act (Trademark Act). 

Lontex also alleges that Oakey’s misuse of the mark SWEAT IT OUT constitutes willful trademark infringement, thus Lontex is requesting that the court award triple damages, costs and reasonable attorneys’ fees.  

Brand owners should spend their time and resources on brand development and growth and not on defending unnecessary trademark infringement allegations over the use of product slogans or phrases, not to mention the possibly of spending thousands or hundreds of thousands on re-branding (and, yes, I said the “R” word). 

To read more about my views on trademark clearance and selection, read my blog posts here, here and here.