1. Protecting Brands and Identity &
Trademark Protection and Infringement &
Business Issues and Implications

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Protecting Brands and Identity
 Moving on from Patent and Copyright, and
the protection of software and creative works,
we now will look at protecting brands and
images
 Company brands and images are often worth
many times more than anything created in
product and process patents or in copyright
 Protecting brand value (e.g. Watsons Water)
is very important to large successful firms

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Trademark and Brand Importance
 Often, patents and copyright may give a firm
TIME to build up a strong brand in the market,
with that brand value more important
eventually than other innovation the firm has
 Disney BRAND is worth more than just copyrights
 IBM & Xerox BRANDS worth more than patents
 Other barriers to copying innovation may give
firms TIME to build up strong brands
 Premium from brand often most valued asset

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Challenges of Protecting Brands
 One of the most intangible aspects of
innovation protection, and yet, very valuable
 Patent protects an invention, which is clearly
valuable to society in some way
 Copyright protects a work of art, which is valuable
 Trademark protects a company’s image and
brand, which may be less clear in value to society
 Trademark idea originated in desire to protect
craftsmen and avoid confusion to customers

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Trademark Law
 Protects brands, corporate names or slogans
 “It’s the real thing: Coke”
 Significant source of litigation in Cyberspace
 Same name of firm in different states, who has
right to use the name in Cyberspace?
 Domain name squaters? Legalized blackmail?
 New cyberspace domains created – confusion?
 Can not be generic or functional (Xerox)
 Strongest defense for fabricated names

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Protecting Brands and Identity
 “Identity”, including Brand , is protected by
TRADEMARK
 TRADEMARK LAW is VERY LOCATION SPECIFIC
 No international agreement regarding trademarks.
 Requirements to establish differ by country.
 TRADEMARKS MUST BE REGISTERED
 NO AUTOMATIC TRADEMARK registration
 Detailed and specific registration process
 Similar to the process of setting up new company
 TRADEMARKS not absolute protection
 Registration priority exist, but not absolute
 Like Copyright or Patent, gives you the right to sue

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Trademarks: Jurisdiction & Industry
 Company can NOT even use its own name in
another country if some other firm has that
Trademark.
 Standard Brands
 Merck
 Standard Oil
 Trademarks can be issued for same name but for
different products
 Consider degree of overlap in names, products, and markets
 Consider degree to which name is unique versus common

Park N Shop and Wellcome are relatively common as names

Xerox is very unique name, so well protected

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Trademark Issues
 Usage versus intent and token usage
 The details and application of US trademark law is not
global in the way this has been adopted in other countries
 Distinctive, Arbitrary, Descriptive, Suggestive,
Generic
 Nature of the words used determines strength of Trademark
 Foreign words – translation issues, and mistakes
 Functionality
 Secondary meaning
 Evidentiary issues
 Disclaimers

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Trademark, Service Mark, etc
 Trademark is BOTH a generic and broad term, and
 A precise description of a mark which identifies goods
 Service mark is used in connection with services
 Is a service mark also a trademark?
 Certification mark is signal about something
 E.g., ISO 9000, CFA, Chartered Accountant, QC
 Collective mark is used by members of an
association
 E.g., part of the Dairy Farm group
 E.g., Lasik Eye Care center (franchise operations)

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Common Law Trademarks
 Before 1988, there was no national USA trademark
formal “registration” process
 Trademarks were only issued based on actual usage
 Many other developed countries preceded USA in
requiring registration or followed soon thereafter
 Hong Kong has relatively Strong protections for
Brand names associated with domain name usage
 Formal registration of name required to get domain name
 However, this only applies to names ending in *.hk

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Trademark Usage and Registration
 Registration of Trademark in USA now can be
based on “intent to use” or “actual usage”
 Departure from “common law” trademark origins
 May not be available in other countries
 Requirement of “good faith” in “intent to use”

UK and EC law also accepts good faith intention to use
 Ghost application not permitted
 Registration of NERIT to protect brand MERIT
 Overly-wide usage applications challenged

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Local versus Global Registration
 Trademark is not generally international in
nature, and is highly focused on STATE laws
within the USA unless commerce is interstate
 Federal registration requires interstate commerce
 State’s rights in US may trump federal registration
 International trademarks limited in scope
 Only available in EU countries, but growing there
 EU registration and EU laws and courts
recognized
 UK and European laws harmonized to EU laws

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Cyberspace Trademark Problems
 Same name registered in different states; markets don’t
overlap
 one firm goes online, and takes other firm’s customers
 E-Commerce is global in reach –who has jurisdiction?
 National registration of Trademarks in USA
 Interstate commerce regulation clause of constitution
 Might not overrule states rights for “local” brand issues
 Domain names and Trademark issues
 Cyber Squatting and Cyberspace Blackmail
 Increasing importance of National Trademark
registration, and potentially international issues

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Loss of Trademark Rights
 Non-usage and abandonment
 Non-use may or may not suggest abandonment
 UK considered non-use and non-objecting to
others usage for five years to be abandonment
 US allows presumption of intent to abandon if not
used for three years, absent contrary evidence
 Usage only required in one small market context
 Trademark becomes generic
 Trademark has become deceptive

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Trademark Priority – First in USE
 Trademark registration is presumed to provide
evidence of priority of intent to use
 However, ACTUAL USAGE prior to registration can be used
to contest registration and get trademark revoked
 Priority of USAGE based on actual market sales

Requirement for IN TRADE and IN COMMERCE usage

Advertising alone not enough, must have some sales

Internal sales or trade channel sales alone not enough
 Token sales – when is a sale to one customer enough?
 Marketing and Advertising alone as Actual Usage
 Grey area – may be allowed or disallowed

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Trademark Inventory Strategy
 In Patou case (1974), Patou had registered
the trademark name SNOB for a perfume
 Never made a serious effort to merchandise
 Only sold through a few channels in small volume
 Court found that purpose was to reserve
brand name in inventory for future use as part
of a “trademark maintenance program”
 Sufficient to gain registration, but not enough
support claim of lasting ownership of name

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Infringement of Trademark
 Similarity of Marks
 Physical design, sounds, color, style
 Elements are interrelated and taken overall
 Individual elements or total effect both sufficient to
show that infringement has occurred
 Homonyms of words and other similarities
 Similar sounds with different meanings

Styleomatic versus Dialomatic
 Similarity of Goods or Services
 Combined effect of marks and goods considered

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Infringement of Trademark
(continued)
 Character and Similarity of Market
 Based on consumer and context analysis

Supermarket goods close together and consumer
attention low, so easily confused if moderately similar
 Purchaser of car less likely to be confused
 Channels of trade important consideration

Wholesale product not same as retail product

Furniture made for trade not same as retail brand
 Evidence of Likelihood of Confusion
 Proof of ACTUAL confusion by customers
powerful

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Trademark Defenses
 Fair and Collateral Usage
 Fair comment (e.g., use in advertisements)
 Requires usage for purpose normally not used for
trademark owner (e.g., as component allowed)
 Can not create confusion as to maker of product
 Fair Use allows comparison of products
 May be used to inform consumers about
equivalent or substitute product
 Parody or Satire (similar to copyright usage)

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Grey-Market Goods
 Valid trademarks, but NOT intentionally
permitted to be sold in this market
 Coca-cola made in Indonesia sold in Hong Kong
 Trademark law does not give rights to
exclude the sale of grey-market goods
 However, if the usage of the mark would be
confusing to consumers as it does not represent
the same product as is sold locally, rights exist
 Contract laws MIGHT apply, but not
trademark

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Remedies under Trademark Law
 Injunction
 Accounting for profits
 Damages, including potential treble damages
 Attorney’s fees (in exceptional cases)
 Court costs
 All of above are cumulative, so can get BOTH
profits AND damages from lost sales & other harm
 Claim all possible remedies; let judge limit claims

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International Trademark Issues
 The only international Trademark laws that
exist are EU laws related to EU trademarks
 Similar in some ways to US federal trademarks
 Requirements for trademark registration are
not the same from country to country
 Protections under trademark differ as well
 Overlap with copyright laws, which are
internationally recognized (to protect brand)

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Passing Off – UK and EU Laws
 UK has no law of “unfair competition” as does
the USA, but law of passing off is similar to
USA law of unfair competition in some ways
 Designed to protect goodwill and reputation, as
well as to prevent misrepresentation
 “no person is entitled to represent his goods as
another’s” forms basis of common law rights
 Name or brand misused and causes some
harm to reputation or goodwill.

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Confusion versus Deception
 The existence of likelihood of confusion is not
sufficient to show passing off
 Must also show intention of deceive
 Similar names not sufficient, but presumptive
 Confusion allowed in evidence of damages
 Special aspects of products and customers
may be considered in misrepresentation and
in determination of expected damages
 Intent to deceive presumed to be successful

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Dilution of Goodwill / Reputation
 Tort lawsuits based on dilution of goodwill or
of reputation based on usage of brands
overlap trademark restrictions and remedies
 Lawsuits allowed for more than one offense
 Sue for every claim you can make, one might work
when others do not apply for some reason
 Can be used when trademark does not apply
 Manufacturers of champagne sued to restrain
introduction of English elderflower champagne

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Character Merchandising
 Fictional Characters have been protected in various
legal jurisdictions (countries) as:
 Trademarks (but, limited to specific laws of countries)
 Copyrights (extending an important area of global rights)
 Passing Off and Harm to Goodwill (UK law)
 Interference with business relations (US law)
 Defamation (to prevent libel harm to person)
 Appropriation of personality (not allowed in UK law)
 Rights of fictional characters slow to be recognized
under international law

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Trademark Law Policies and Intent
 Part of law preventing “unfair” competition
 Protection of consumer against “fraud”
 Stop competitor attempts to confuse customers
 In common law, trademark could not exist
without actual usage, as had no meaning
otherwise since there was nothing to protect
 Adoption without product usage meaningless
 No reason to protect consumers from confusion
 Only enforced in areas with commercial activity

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and Implications of
Trademarks
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Trademark and Passing Off Laws
 The protections provided by Trademark Laws
and Laws related to “Passing Off” or unfair
competition harming consumers are powerful
 Similar protections to copyright in some ways
 “Fair Use” exceptions less broad under Trademark
 Damages easier to show, and harm to customer
as well as harm to companies powerful in getting
courts to take actions to limit competitive harms
 Less controversial in policy than copyright

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Trademarks LAST FOREVER
 There is no limitation on the life of a brand
 Copyright can expire eventually
 Patents expire relatively quickly
 Trademark lasts as long as the mark is in use
 Investments in Brand can be longer lasting
than investments in buildings or technology
 Marketing investments often viewed as expenses,
but can have lasting value for firms over decades
 “Brand equity” provides majority of stock value

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Purpose, Duration, and other issues
 Why do we need Trademark Law anyway?
 Purpose?
 Benefits?
 Costs?
 How long does or should a Trademark last?
 Why is Trademark duration different from Copyright?
 Requirement of Registration and Continuous Use
 Why can’t we protect a Brand that is no longer used?
 How can we protect a product Brand that is coming out
within a few years, but which is not yet in the market?
 What is a Token use, and why is this not permitted?

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Leverage Copyrights and Patents
 Copyrights and Patents give a limited term
monopoly on some products or processes
 Provides TIME to build BRAND recognition
 Provides TIME to develop initial positive cash
flows
 Provides RESOURCES to invest in
BRAND/IMAGE
 Long term, successful businesses must
develop strong loyalty and identity of brand
and company to sustain superior profits
 Continuous innovation alone is not enough