But But But . . . I Came Up With That Trademark
Back to back blog posts inspired by clients’ FAQs. Sounds like a new blog category or tag is in order.
Last week, I got a call from a potential client. The issue is one that I’m asked about at least 10 times a year. The potential client was going to start a business with a friend of his (former friend now). Things went south. The friend started his own company and is using a trademark that the potential client had come up with. The potential client never filed a trademark application, never used the trademark, and had no agreement in place with the friend regarding the trademark. The potential client wants to sue the former friend for stealing the trademark and using it. Of course, there are different variations on this set of facts but, in all scenarios, the common component is that the client wrongly believes that he or she owns the trademark because he or she invented the trademark. The client’s belief is misplaced.
Rights to a Trademark Arise From Use, Not Conception
A very basic tenet of trademark law is that one acquires legal rights to a trademark by using the trademark in commerce. In other words, it does not matter who came up with the trademark because conception of a mark is insufficient to confer trademark rights. Colon-Lorenzana v. South American Restaurants Corp., 2014 U.S. Dist. LEXIS 63047, *15 (D.P.R. 2014) (“trademark rights do not derive from discovery or invention of the mark”); Arredondo v. Arredondo, 2010 U.S. Dist. LEXIS 125760, *20-21 (D. Conn. 2010) (“conception of the mark is alone insufficient to confer trademark rights”); Schussler v. Webster, 2009 U.S. Dist. LEXIS 19530, *25 (S.D. Cal. 2009) (“Even though it is a disputed issue of fact whether plaintiffs stole defendant’s general idea, it is not disputed that plaintiffs stole defendant’s trademark rights, because as a matter of law defendant has no trademark rights.”); Carpenteri v. Marini, 2006 U.S. Dist. LEXIS 60538, *16 n.4 (D. Conn. 2006) (“Carpenteri’s assertion that he ‘came up with the idea for the HIGH SCHOOL SPECIAL meal’ [ ] does not establish that he owned the mark. Invention itself does not give rise to trademark rights.”); Cafe Cola, Inc. v. Somojo, Inc., 1996 U.S. Dist. LEXIS 12205, *7 (E.D. La. 1996) (“neither conception of the mark . . . nor advertising alone establishes trademark rights); Energy Jet, Inc. v. Forex Corp., 589 F. Supp. 1110, 1117 (E.D. Mich. 1984) (“The mere conception of a trademark does not give rise to ownership rights. The trademark must be used on, or in connection with, the sale or distribution of goods.”); Combined Oil Industries, Ltd. v. Oil Master, Inc., 1980 U.S. Dist. LEXIS 9692, *16 (N.D. Ill. 1980) (“There is no dispute that Correlated invented the ‘Oil-Master’ mark. However, the originator of a mark does not thereby gain the exclusive right to use it.”); Wilson v. Hecht, 1915 U.S. App. LEXIS 2669, *6 (D.C. Cir. 1915) (“No trademark rights grow out of the mere invention or discovery of the word or symbol, but out of its use as such.”).
Therefore, if you conceive of a trademark that you want to own, you can’t just rely on the fact that you invented the mark. You will have to take steps to ensure that you own the rights to the trademark under trademark law.
Steps to Prevent Someone From Stealing Your Trademark
1. File an Intent-to-Use Trademark Application ASAP
This seems obvious, but judging by the number of times this issue comes up, it clearly isn’t. If you have come up with a trademark that you just love more than life itself, do yourself a solid and file a federal trademark application based on an intent-to-use the mark in commerce. And file it before you tell anyone who might rip off your trademark. The U.S. Patent and Trademark Office (“USPTO”) will give you plenty of time to make use of the mark and perfect registration. It’s
funny sad that people don’t want to spend a relatively modest sum on filing a federal trademark application, but then are suddenly willing to spend a small fortune litigating the trademark dispute after their friend, business partner, or archenemy has filed his or her own trademark application or started to acquire trademark rights by actually using the mark in commerce. (FYI – archenemies live to rip off trademarks.)
2. Use Your Trademark in Commerce
This blog post is premised on the mark not being in use yet. Otherwise, you would already have acquired rights in that trademark. Even though trademark rights are acquired by using a trademark in commerce, you should first file your intent-to-use trademark application (step 1 above).
The reason that I suggest filing an intent-to-use trademark application before using your trademark is because, while using your mark will confer trademark rights, the extent of those rights might be limited in nature—either geographically or with regard to the goods or services provided under the mark (the extent of rights acquired through actual use is a subject that is beyond the scope of this particular blog post). In contrast, if you file a federal intent-to-use trademark, you can include all the goods or services that you intend to provide under your mark and acquire nationwide rights once you eventually use your mark and your application registers.
And it certainly is not an either or situation. You can file your intent-to-use application and begin using your mark at the same time or file your application and then begin your use immediately or shortly thereafter. This will also allow you to establish your trademark rights in the event that the USPTO does not approve your trademark application.
But if you are unable to file an application (perhaps because of cost), you should begin using your mark as soon as possible so you start acquiring trademark rights.
3. Put a Contract in Place Addressing Use and Ownership of the Trademark
If you are going to disclose your yet-to-be-used trademark to a potential business partner (or anyone) before you’ve locked up your trademark rights through a federal trademark application and/or use, consider putting a contract in place. Sure, federal trademark law might not provide you with any trademark rights if you haven’t used your mark yet, but private contracts can be a way to create rights and obligations that would not otherwise exist. You could draft and execute a contract that prevents the other person from applying for or using the trademark in exchange for you disclosing the trademark. You could draft and execute a contract—whether a buy-sell agreement, partnership agreement, or some other agreement—that specifies what happens to the ownership of the trademarks in the event that you form a business together and one of you is terminated or leaves the business or if the business is otherwise dissolved. In fact, it is a good idea to have such a contract in place even if you have applied for the trademark or started using it (since it will probably be the business using the mark in that situation). Trying to put such an agreement in place after the fact can be difficult because the parties may not agree on terms at that point. See, e.g., Signcad Technology Corp. v. Signcad Systems, Inc., 2003 U.S. Dist. LEXIS 2651 (D. Minn. 2003) (parties contemplated joint use of marks but, despite several drafts, never finalized buy-sell agreement).
4. Include a Design Component in Your Trademark That Qualifies for Copyright Protection
Words, titles, and short phrases do not qualify for copyright protection. See Copyright Office’s Circular 34. This means that a standard character word mark is not going to be protected by copyright. However, if you include a design element in your trademark that is sufficiently original to merit copyright protection, then you can own the copyright to that design even if you haven’t started to use the trademark yet. Of course, you will want to make sure that you take the proper steps to ensure that you own the copyright, such as having an appropriate work-for-hire agreement in place if you hire someone to create the design for you. You’ll also want to file a copyright application—they’re cheap and they’re rubber-stamped by the Copyright Office.
There’s a couple of things to be aware of here. First, the copyright will protect the design, not the word(s). So this is not a way to prevent someone from ripping off the word component of a composite mark that includes both words and a design. But if someone rips off the design component, then you have a claim for copyright infringement. Second, if the person who rips off your design mark changes the design enough, they may be able to argue that there is no substantial similarity and hence no copyright infringement. At least, you’ll be able to prevent your archenemy from using your exact design mark.
For example, in New Look Party Ltd. v. Louise Paris Ltd., the Southern District of New York found that the plaintiff was likely to succeed on its claim of copyright infringement of its New Look logo:
Plaintiff is likely to succeed on its claim of copyright infringement under 17 U.S.C. § 501(a) if it can show “(1) ownership of a valid copyright, and (2) copying of constituent elements of the work that are original.” Kwan v. Schlein, 634 F.3d 224, 229 (2d Cir. 2011) (quoting Feist Publ’ns, Inc. v. Rural Telephone Serv. Co., 499 U.S. 340, 361, 111 S. Ct. 1282, 113 L. Ed. 2d 358 (1991)). It is beyond peradventure that LPL has copied the “NEW LOOK” design in its entirety, coloration excluded. The only question for the Court, then, is whether plaintiff owns a valid copyright in the logo.
Defendants contend that plaintiff has not shown that it owns the “NEW LOOK” logo. Plaintiff has submitted a 2002 contract between itself and Tandem Design (“Tandem”), a design firm, assigning “all vested contingent and future rights of copyright and all other rights in the nature of copyright” to logos created in connection with the contract to plaintiff. (Decl. of Alastair Miller, Ex. A, ¶ 1.) While it is true that the contract does not reference the precise design at issue here, or indeed any specific design, plaintiff has also provided a letter describing the design mark as commissioned by plaintiff and created by Tandem, and signed by the same signator as signed the contract. This evidence is more than sufficient for the purposes of this motion.
The Court is also satisfied that there exists a valid copyright in the “NEW LOOK” logo. The Copyright Act protects all pictorial or graphic works, see 17 U.S.C. § 102(a)(5), which can include logos, see Twentieth Century Fox Corp. v. Marvel Enters., 220 F. Supp. 2d 289, 298 (S.D.N.Y. 2002) (upholding the copyright registration of logos). . . . We find that plaintiff is likely to succeed on its claim of copyright infringement.
New Look Party Ltd. v. Louise Paris Ltd., 2012 U.S. Dist. LEXIS 9539, *30-32 (S.D.N.Y. 2012).
Prevention is better than the cure. That’s what this really comes down to. And by the way, when we’re talking about trademark rights, there may be no cure if someone else stole your trademark and acquired rights before you.