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 Clearance: What Is It And Why It’s Not An Option In The Brand Name Process

Once a new brand name or names have been selected for consideration for a new product, the next step in the brand naming process is to ensure that the selected names are available for use and eligible for federal trademark registration. That step is known as “clearance.” The clearance step involves making sure that the selected names do not infringe third-party trademark rights and are distinctive, thus immediately protectable upon first use.

Clearing marks before product launch is a necessary step and expense. Under U.S. law, courts may find that a trademark owner “willfully” infringed a third party’s trademark rights absent proper clearance. Willful trademark infringement may subject the infringer to statutory damages and plaintiff’s attorneys’ fees. Also, the expense of clearing marks is certainly less expensive than re-branding a product. Believe me, re-branding under these circumstances is not pretty. I’ve witnessed the process…more than once.

In addition to the reasons mentioned above, here are five other reasons to clear marks:

1. Determines likelihood of product expansion under same trademark. Properly conducted clearance searches should determine the likelihood of product expansion under selected trademarks. In other words, should a trademark owner decide to add complementary product offerings in the future, would the selected mark likely be available for those new offerings or would such use infringe third-party rights?

2. Determines geographic regions in which selected trademark should not be used due to prior users of the same or confusingly similar marks. Trademark rights are geographic in nature. Meaning that trademark owners generally only secure trademark rights in those geographic regions in which marks are used (absent securing federal trademark protection). For example, if a clearance search discovered a user of a selected mark in Chicago (and that use was limited to the Chicago market only), the “newcomer” or “junior user” of that mark may launch a national product under the same or similar mark other than in the Chicago market. That holds true even if the “newcomer” secures a federal trademark registration. Use of the selected mark in the Chicago market by the “new comer” would subject the “new comer” to trademark infringement.

3. Determines whether selected trademarks are weak or strong. Clearance searches should determine whether selected marks are weak – meaning there are many other users of the same or similar marks or term(s) for similar products or the selected marks are descriptive or suggestive of the associated products. The “weaker” the selected mark, the narrower the scope of trademark rights and protection. Weak marks may limit future expansion within the trademark owner’s field of use and, in some instances, may not even be enforceable trademarks. How would you feel if your company spent tens – even hundreds – of thousands of dollars promoting a brand with a brand name that is not legally protectable and worse with a brand name that your competitors may freely use without infringement?

4. Determines whether selected marks have negative connotations in other languages and cultures. How would you like to launch a new product under a brand name that conveys a negative connotation in a foreign language? There have been countless stories of brand name gaffs due to foreign translation and meaning. For example, one of the more well-known branding blunder legends is that of the Chevrolet Nova. As the story goes, the word “no va” means “won’t go” in Spanish. And for that reason, Chevrolet apparently had difficulties, as one might expect, selling the Nova model in Latin America. True or not, the Nova legend amplifies the importance of clearance.

5. Determines whether corresponding domain name is available. One of the first tasks in the clearance process is to see if the selected trademark’s corresponding domain name is available. Or at least check to see what kind of website is used with the corresponding domain name. During a conversation with a client several years ago about a trademark infringement matter, my client asked that I take a look at her company’s web site. I proceeded by entering my client’s name in the URL window and pressing “enter.” To my surprise, my client did not own the .com generic top-level domain name for its name. Instead, it was being used for a pornographic web site. I instinctively said to my client, “well I guess you don’t own the .com domain name!” She said: “No! We’re at .net.” How many other customers and would-be customers went to wrong site? Don’t let that happen to your company. Don’t be that company.

In addition to the reasons discussed above, there are other reasons to properly clear marks before use. Before launching that next brand, be sure to undertake all necessary steps in the brand name process. What you don’t know may hurt you.

  • noreply@blogger.com'

    Roger Bora says:

    Dear Anonymous:

    I agree with you that most trademark disputes do not take place in a courtroom, since, in the U.S., only about 5% of cases actually go to trial. The other 95% are either dropped or settled. As far as what amounts to “serious consequences” that all depends. If “serious consequences” includes receiving a cease and desist letter, having to hire an attorney to defend that letter, having to change the name (sometimes years after adoption), having to spend tens of thousands or more to re-brand, having to destroy “infringing materials,” having to educate customers of a new name, potentially losing sales from the name change or even selecting brand names that are not legally protectable – then I have to respectfully disagree. There are simply too many nuisances of trademark law to get into here and of which you may not even be aware. Also, I agree that there is no reason why advertising firms and business owners are not capable of conducting initial trademark search screens. I recommend that in my practice. However, once the initial screen has been conducted, it is prudent to turn the analysis and further searching over to a legal professional with intellectual property experience. To say that the average business owner and even ad agency is equipped with the knowledge to understand the intricacies of trademark law and what constitutes a “likelihood” of confusion is naïve.

    03/17/2010 at 9:33 am
  • noreply@blogger.com'

    Megan L says:

    I have had the opportunity of working on both sides of the desk, as a brand manager on national brands, as well as a trade mark lawyer. From a business perspective, trade mark clearance certainly involves investment up front, but saves significant costs downstream: consider the costs of new packaging films, signage, point of sale materials, advertising… The possible “cost of doing business” if challenged by a third party whose rights one has infringed is enormous. For in and out products or short promotions, possibly a knockout search is all one requires. But for a national brand, or a company’s new identity, why would you save a few dollars in the short term to potentially spend thousands – or tens of thousands – if challenged? Not to mention the loss of goodwill if a firm is required to change a brand name or company name due to an infringement or passing off allegation.

    - Meg Langley Grainger

    03/17/2010 at 4:50 pm
  • noreply@blogger.com'

    Greg Pang says:

    @ Anonymous 09:47

    There’s an old adage when it comes to deciding on whether or not to retain professional services: pay now or pay a lot more later. I need not say anymore on this since Roger and Meg pretty much nailed it in their comments.

    As well, trademarks are intellectual property, and as a form of “property”, they have real value. Securing your rights via registration can build significant value into a business itself.

    03/17/2010 at 11:21 pm
  • noreply@blogger.com'

    rncfa2005 says:

    Having worked with advertising agencies and small and medium sized business clients for many years, I disagree with several points in the comment by Anonymous. Advising a customer or client to adopt a new brand without clearing the name is just plain bad advice. It’s true that many names are adopted without any due diligence or the assistance of a trademark attorney. But this is more often because the business owner is unsophisticated or unfamiliar with trademark laws and not a conscious decision to accept the risk as a cost of doing business. If a small business owner understood that the cost of “stepping on someone else’s toes” could mean changing the company name, rebranding its best-selling product, destroying all inventory and advertising materials, changing its website, domain names and email addresses, etc., not to mention the distraction and businesses disruption and the cost of hiring an attorney, most small and medium sized business would choose to do a trademark clearance search prior to adopting a new brand. Add an aggressive trademark owner and litigation to the mix and this is a recipe that can bankrupt a small business.

    Running a small or medium sized business from the perspective that a product will succeed or fail in the marketplace not in a courtroom, with a total disregard for trademark rights, is a naive and unrealistic position for a business owner to take in today’s marketplace. In the same way that the internet has become an important tool in the trademark clearance process, it’s also easier for trademark owners to find other businesses using infringing names or brands. These uses may have flown under the radar in the pre-internet days but no longer. If you’re infringing another company’s trademark, they will come out of the woodwork sooner or later and their attorneys will be sending a cease and desist letter.

    If a small or medium sized business believes that its product is fungible, doesn’t care about its name or brand or goodwill in the marketplace, and can bear the cost of occassional legal disputes, then Anonymous is correct: ignoring trademark rights may be without serious consequences. In my experience, however, most small and medium sized firms don’t take such a short-sighted approach to their businesses and would agree that trademark clearance is a sound business practice.

    03/18/2010 at 10:41 am

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