How you brand and subsequently market your business is critical to its success, but you already know that. It’s why you started brainstorming business names long before you signed the paperwork to establish your entity. The name, slogan and/or logos that you use for your business are the foundation of its identity, which is why if you suddenly find yourself charged with trademark infringement, it can feel like a big blow and, ultimately, a threat to the future of your business.
One of the first steps – next to calling an attorney – is to learn more about what trademark infringement means, how it can be avoided and how it can be resolved.
How do I know if I’m infringing?
According to the United States Patent and Trademark Office (USPTO), trademark infringement is “the unauthorized use of a trademark or service mark on or in connection with goods and/or services in a manner that is likely to cause confusion, deception or mistake about the source of the goods and/or services.”
There are, of course, cases in which it seems obvious that the defendant would have known their branding was infringing on another company’s, like, for example, this case from South Korea: Louis Vuitton v. Louis Vuiton Dak. But far more common is the case where a new business owner named and branded his/her business without doing a thorough enough trademark search.
The latter case here might seem unfair – that you could infringe without even knowing it and having thought you did your due diligence – but the law doesn’t require proof of intent for a trademark infringement case to be valid, instead the requirement is to prove that the use of the trademark – whether a brand name, slogan or logo – is similar enough to the senior trademark (the one that existed first) to cause confusion for the consumer.
What are the penalties for trademark infringement?
The owner of the infringing trademark may receive a cease and desist letter from the owner of the senior trademark’s attorney. From there, litigation may be avoided if the two parties are able to negotiate an agreement. Additionally, the owner of the infringing trademark may be able to avoid penalties if he/she agrees to change his/her business’ name or branding to avoid consumer confusion.
If the owner of the senior trademark had previously registered the trademark with the USPTO, then he/she can bring a lawsuit requesting the penalty of court order (injunction) against the person in violation of the trademark (the defendant). The injunction can also order that the defendant stop using the accused mark or stop doing business, or that any items – goods or collateral – featuring the infringing mark be ceased and destroyed.
Penalties in the form of fees may also apply; a defendant could be ordered to pay monetary relief to the plaintiff (the owner of the senior trademark), including, according to the USPTO, the “defendant’s profits, any damages sustained by the plaintiff, and the costs of the action.” Actual damages can vary considerably, from lost profits to impaired goodwill and corrective advertising. If the court finds the trademark violation was intentional, then the fees could be three times the amount of the actual lost profits.
The defendant could also be ordered to pay the plaintiff’s attorneys’ fees.
What are examples of defenses used in trademark infringement cases?
In some cases, the individual charged with infringement may choose to fight the charges. While the defense in those instances will, of course, depend on the unique circumstances surrounding that specific case, following are a few examples of defenses commonly used in trademark infringement cases.
Different locations or industries
The defense may argue that the use of the trademark does not cause confusion. Again, trademark infringement doesn’t necessarily mean a trademark has been copied verbatim, just that the infringing mark is similar enough to the senior mark to cause confusion among consumers. As a result, in some cases, the defense will focus on proving that use of the second trademark does not cause confusion, usually due to the two marks being used in different geographical locations or in different industries.
Not enough similarities
Along those same lines, another defense commonly used in trademark infringement cases is that the allegedly infringing trademark is not similar enough to the senior mark to cause confusion.
You may have heard of this case from a few years ago, which involved the outdoor clothing company The North Face and another outdoor clothing company called The South Butt. The North Face filed a lawsuit against The South Butt, alleging trademark infringement. The South Butt’s defense was that they were a parody of The North Face and, therefore, not infringing.
The story follows a long and winding road from there and involves a settlement and then, a couple of years later, a court order to The South Butt (which by then had rebranded itself as The Butt Face) to shut down operations, hand over all merchandise and pay $65,000 to The North Face.
While the parody defense, in the end, was not effective for The South Butt, the case illustrates the circumstances in which it may be used. In a nutshell, trademark parody is when someone appropriates another’s well-known mark and then builds on it for humorous effect or social commentary. As The South Butt case illustrates, though, there’s a fine line between entertainment and infringement in these cases.
Not all uses of another businesses’ trademark are prohibited. Fair use comes into play as a defense in trademark infringement cases where the defendant has used a portion of copyrighted or trademarked material without permission of the owner. There are different types of fair use, including:
Descriptive fair use: This means that a common word doesn’t become off-limits to everyone else just because it’s been trademarked by one company. For example, just because there’s a computer company named Apple, it doesn’t mean a farmer can’t use the word apple when marketing and selling his/her apples.
Nominative fair use: This means that a person can use a trademark for the purposes of reporting, commentary or comparative advertising. For example, a company may use a competing company’s trademark to compare their product to the competition’s in an advertisement. Courts will always consider the possibility of confusion in analyzing whether a use is fair or not. Hence, the general rule for fair use is that no more of the trademark should be used than necessary for the legitimate purpose; use of a word mark is preferable over a logo, or use of a word mark in the same style of type as surrounding text is preferable over one that is in its trademark-distinctive type.
It’s important to note that fair use is a defense and not a right; it’s advisable to exhaust all efforts to first gain permission of the business whose trademark you wish to use before doing so.
How can I avoid trademark infringement?
Search, search and search some more. And don’t forget to enlist the help of an attorney.
You can start your search by plugging in as many variations of the name you’d like to use into a search engine like Google. From there, run a search through the USPTO’s database. Finally, consult with an attorney who has experience in trademark law; he/she can flag any similarities between you’re proposed business name and that of an existing business that you may have overlooked.
If, in the end, all your best efforts fail you and you end up the recipient of a cease and desist letter or served with a court order for trademark infringement, the first thing you should do is call an attorney. An attorney can advise you on next steps, build evidence that supports your case and represent you in mediation or, if necessary, in court.
Contact us now to request a free consultation with one of our litigation attorneys.