Jim Flynn

Jim Flynn, Money & the Law

Businesses use trademarks — in the form of names, symbols and slogans — to identify their goods or services and generate customer loyalty. On the name front, by way of example, we have Jell-O, Suburban, Big Mac. As for symbols, we have the Nike swoosh; the Mercedes Benz three-pointed star; the Michelin tire man (whom we may all resemble after working at home next to the refrigerator). Examples of slogans include “The ultimate driving machine;” “Ski country, USA;” “What’s in your wallet?”

The law dealing with trademarks is complicated (some would say muddled) and consists of a combination of state and federal statutes and decisions by courts. But the basic idea behind the law is clear — avoid consumer confusion and protect investments in advertising and customer goodwill. However, this is easier said than done.

As a starter, there are “strong” marks and “weak” marks. Strong marks receive more protection than weak ones. A weak mark is one that is commonplace and descriptive. For example, if you run a computer repair business and try to claim “We fix computers” as a trademark, you’ll be out of luck. A strong mark, by comparison, involves a made-up word or symbol, or the use of a commonplace word or symbol in an uncommon way. Xerox and Kodak are strong marks because they are made-up words. Apple is an example of a strong mark derived from a commonplace word used in an uncommon manner.

Adding to the complexity of trademark law is the fact that the same word or symbol can be used by more than one company so long as they are not engaged in the same industry. For example, we have Joy (a perfume and a dish detergent); Dove (personal hygiene products and chocolate); United (air transportation and moving and storage); and Tropicana (night clubs and orange juice).

The law of trademarks is further complicated because rights in a mark are derived from registration and usage. Federal registration creates rights that are national in scope. State registration creates rights within a state. Even without registration, a business using a mark before someone registers it will own the right to the mark in the business’s trade area. This can result in what appears to be an infringement of a well-known mark by a local mom and pop establishment. Most likely, mom and pop were there first and can use the mark. However, they won’t be able to use the mark in an expanded territory.

Ironically, a mark can sometimes be too successful and rights in it can be lost because it becomes generic — a part of our everyday language. The best known example of this is probably “aspirin,” which once was a Bayer-owned trademark for acetylsalicylic acid (or, for purists, CH3COOC6H4COOH). Google no doubt worries about this risk.

Trademark law is evolving. In June, the U.S. Supreme Court found itself dealing with a trademark dispute. In that case, the court ruled that Booking.com could be federally registered as a trademark. The U.S. Trademark and Patent Office had refused registration because it felt Booking.com was a generic term, meaning a term that merely identified a class of products or services and did not identify and distinguish a source of goods or services. Justice Breyer agreed with the Trademark and Patent Office and issued a dissent in the case, wherein he noted how the loosely regulated assignment of internet domain names has allowed businesses to prey on the goodwill of other businesses by changing a letter or two, or using a different extension (.com, .net, .org, .biz, .edu), in a domain name.

Jim Flynn is with the Colorado Springs firm of Flynn & Wright LLC. You can contact him at moneylaw@jtflynn.com.

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