Trademark Infringement

While the term trademark infringement is less than 140 characters, its implications could be costly to a ubiquitous online communications giant.

Twitter, the online news and social networking service, has been accused of trademark infringement and breach of contract by TWiT LLC.   The suit, TWiT LLC v. Twitter, Inc., (N.D. Cal. January 2018) alleges that Twitter has intentionally infringed on the Plaintiff’s TWiT trademark.  Since 2005, TWiT has been in the business of distributing video and audio content over the internet.   TWiT’s programming is available to the public by downloading or streaming from the internet, otherwise known as netcasts.  TWiT is also the owner of U.S. Trademark Registration No. 3,217,759 of TWiT which was registered in March 2007.   The parties are familiar to one another; in fact, one of Twitter’s founders, Evan Williams, appeared on TWiT’s netcast show the same month and year that TWiT received its trademark registration.

So why is the plaintiff chirping so loudly?   TwiT alleges that the parties had a coexistence agreement that Twitter would limit its activities under the TWITTER mark to a text-based blogging service.  Sometime in 2009, the Plaintiff had read that Twitter had plans to expand beyond microblogging and into video and audio streaming.  When TWiT voiced its concern, Twitter gave assurances that such reports of business expansion were inaccurate.  The twelve-count complaint goes on to allege that in or about May 2017, the Plaintiff became aware of Twitter’s intention to indeed offer video and audio streaming services, thereby creating the current controversy.  Twitter has yet to file an answer or otherwise respond to the allegations.

This case raises an interesting lesson on the interplay between trademark infringement and trademark coexistence agreements.   Quite often, competitors are quick to enter into such agreements.  This permits them to proceed with their business activities without interference from the other side, if and only if, the parties adhere to the contract terms.  Quite often, months or years can go by and the coexistence agreement is quickly forgotten.  It is only when one of the parties commits an alleged breach of the contract that the Agreement once again is revisited.  Since most coexistence agreements have penalty clauses, the impact on the breaching party could be severe.

It is vitally important for companies to record and track their coexistence agreements and other contracts that could impact their brand protection and marketing activities.  Brand owners should review these agreements on an annual basis and consider using contract management software to ensure compliance with third-party agreements.   These and other trademark best practices are part of an effective brand management strategy.

How prevalent is trademark infringement?  According to a recent Compumark Clarivate Analytics report, global brands fall victim to it at an alarming rate.

The report, The Trademark Ecosystem: Insights from Intellectual Property Professionals around the World, is a compelling read.  It is the result of a survey of more than 300 trademark professionals in the United States, UK, Germany, and France.   While there are many interesting findings on how companies manage and protect their brand portfolios, several are worth emphasizing here:

Trademark infringement is increasing.     Nearly three-quarters of respondents experienced trademark infringement in the past year.  One contributing factor may be the availability of inexpensive marketing tools. Digital marketing plays an important role in helping companies market their products and services to the general public. E-commerce, social media, and pay-per-click just some of the tactics that are available to the brand owners.  Unfortunately, the endless possibilities to harness the goodwill of a brand also makes it possible for infringers to utilize these same digital technologies to their advantage.

Trademark infringement results in real damage.    The respondents listed the impact of trademark infringement on their brands, including consumer confusion, loss of revenue, and reduced customer loyalty.  This is not entirely surprising.  The rise of private label brands is one reason for this phenomenon. Some private label brands seek to mimic the trade dress of many well-known consumer product brands.  This is found particularly in the food and over the counter pharmaceutical categories.

Trademark clearance is often neglected.   Even well-meaning companies with sophisticated brands are not immune to claims of trademark infringement.  In fact, the report revealed a surprisingly high number of instances where the respondents had to change the name of their own brands.  This once again reiterates the importance of conducting a full trademark search.  It is advisable to obtain a trademark clearance opinion letter prior to introducing a new brand into commerce.

Brand enforcement efforts differ by country.   Legal action against infringers took place more in European countries than in the United States.  This reality may be in part due to the fact that U.S. trademark litigation can be very expensive.  As a result, trademark owners are forced, at times, to limit their enforcement efforts.  Therefore, it is advisable that companies protect and enforce their brands based on priority of importance.  Be sure to rate specific marketplace activities that could impact the value of your brand from greatest to least.

U.S. trademark filings are on the rise.   In the United States, trademark applications increased 9.4 percent during the first three quarters of 2017 compared to the same period in 2016.   This trend is continuing as the U.S. economy posts stronger gains and the importance of trademark filing becomes evident.  Small businesses, who still make up the majority of trademark filers, remain a potent contributor to these statistics.

Practice Note for Brand Owners:   The importance of a comprehensive trademark protection and enforcement strategy cannot be overlooked.  While many companies are quick to apply for a trademark, not all conduct a full trademark search to fully assess the risk of adopting a chosen brand name.  While time and budgetary constraints continue to present a challenge to companies, it is still possible to mitigate the risk of trademark infringement and maximize trademark enforcement efforts.   This begins with a proactive brand management and enforcement plan.

A recent survey of global companies found that trademark infringement is on the rise.   The survey was conducted by Compumark, a leader in trademark research and brand protection solutions.   Despite the fact that 80 percent of the executives polled believe that trademark infringement is a growing problem, only fifty percent admitted to having comprehensive trademark watch services in place.

Highlights of the survey include the following:

  • 53 percent of respondents reported taking trademark enforcement actions against third-parties
  • 34 percent of respondents indicated that their company had to change a name due to possible trademark infringement issues
  • Numerous problems have arisen from trademark infringement, including loss of revenue (26 percent) and damage to brand reputation (21 percent)

Trademark Infringement Monitoring

Trademark enforcement strategies begin with best practices.  Brand owners and inhouse trademark counsel are advised to incorporate some or all of these tactics into their brand enforcement programs.

Trademark watch.   A trademark watch service is a great investment that monitors the USPTO and other national trademark registrars for confusingly similar applications.

Marketplace monitoring.    Companies such as Net Names offer brand owners comprehensive brand monitoring tools to notify brand owners when counterfeiters or unauthorized sellers are using a company’s trademarks without permission.

Trademark Opposition.  When a third-party applies for an application that is confusingly similar to a company’s brand name, a trademark opposition or cancellation proceeding may be instituted.

Rapid enforcement.    Agile enforcement mechanisms such as cease and desist letters, and Amazon or Google takedown notices, can be cost-effective means to stop the unauthorized use of trademarks without the need of filing a trademark infringement lawsuit.

Companies with effective trademark enforcement programs have well-developed plans in place, and constantly review them to ensure that the company’s business priorities are aligned with its brand enforcement budgets and goals.

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In business, there are some secrets worth sharing – particularly if they can help maximize profits and mitigate risks.  And while many innovative ideas are not necessarily original, merely bringing oft-neglected ones into the light can do a lot of good for companies that wish to use them to their competitive advantage.  So with this in mind, let’s start the New Year with a provocative statement: your company’s most valuable assets most likely are not insured against theft, damage, or loss to a competitor.

Yes, that’s right — your intellectual property is showing.

Got IP Insurance?

It is now a well-accepted business valuation maxim that intangible assets such as brands, copyrights, patents, and trade secrets are often valued greater than tangible assets consisting of buildings, inventory, and equipment.  Despite this, a vast majority of businesses fail to carry stand-alone intellectual property insurance coverage.  Why the disconnect?  It begins with a lack of awareness and education of the need for intellectual property insurance products.  For example, in recent articles by Forbes and Entrepreneur that discussed over 10 types of business insurance coverage a company should carry, not one of them was intellectual property insurance.

Yet, consider the following trademark protection and litigation cost facts:

  • In 2012, over 243,000 new trademark applications were filed with the United States Patent and Trademark Office
  • According to the American Intellectual Property Association, the average cost of trademark litigation through trial for cases with the amount in controversy of $1 million or less is $373,000.  Where the amount in controversy is $1M to $10M, the average cost of litigation through trial is $710,000.

Trademark Insurance: Your New Year’s Resolution

Quite often, commercial general liability (CGL) policies specifically exclude claims for trademark infringement.  Now is the time to consider trademark insurance coverage to protect against the costs and expenses of trademark infringement and/or to mitigate the costs of trademark enforcement.  Specialty trademark insurance coverage may be found through insurers such as Intellectual Property Insurance Services Corporation, one of the pioneers in intellectual property insurance coverage in the United States.  Trademark protection insurance polices include coverage for trademark defense (including trademark infringement), abatement insurance, and multi-peril policies.

By having trademark insurance, companies can be confident that they are protecting their valuable brands in a sensible and cost-effective manner.

What’s wrong with trademark litigation today?  Well, in a word, economics.

A national law firm is hired to represent a consumer brand company in a trademark infringement matter and wants to show both the client and the opposing party that it means business.  A flurry of motion practice ensues, aggressive discovery tactics become the norm, and the law firm proudly establishes its very own “war room” to determine what part of the kitchen sink it intends to hurl over the ramparts next. Welcome to Legal Gladiators – Trademark Litigation Edition.

Trademark litigation is an expensive undertaking for trademark owners.  According to a recent survey by the American Intellectual Property Law Association (“AIPLA”), the average legal fees and costs for a case with the amount in controversy under $1 million is $202,000 through the end of discovery and $375,000 through trial.  Coupled with the fact that less than 5% of cases actually proceed to trial, it would seem to make economic sense for trademark attorneys to counsel their clients to consider settlement options as part of an overall trademark dispute strategy.

Continue Reading What Clients Really Want When Hiring a Trademark Law Firm for Litigation Matters

As a trademark opposition attorney, I have first-hand knowledge of trademark bullying tactics that are designed to outspend and harass small business trademark applicants into abandoning their trademark application. The practice also spills into federal court actions for trademark infringement, cyberquatting, and other related matters.  This phenonemnon is very real.

As part of the Trademark Technical and Conforming Amendment Act of 2010, Congress instructed the United States Patent and Trademark Office to take the unusual step to address this issue by sending out a trademark bullying survey to trademark attorneys, small business owners, and interested parties to determine whether they had been the victims of trademark bullying. The survey invited respondents to share their experiences with trademark litigation tactics, “especially those that may involve an attempt to enforce trademark rights beyond a reasonable interpretation of the scope of the rights granted to trademark owners.”  Solicited examples of trademark litigation bullying tactics included abuses of:

  • trademark cease and desist letters
  • domain name cease and desist letters
  • trademark opposition proceedings
  • trademark cancellation proceedings

and other trademark-related matters that have adversely impacted the respondents, their clients, and/or business.

The resulting Report to Congress, Trademark Litigation Tactics and Federal Government Services to Protect Trademark and Prevent Counterfeiting, included the following highlights:

  • approximately 60% of respondents viewed trademark bullying as a real problem
  • a majority of respondents opined that Congress has a responsibility to discourage or prevent aggressive trademark litigation tactics
  • many respondents encouraged the Trademark Trial and Appeal Board to amend its rules to create and enforce tough sanctions against such behavior in trademark opposition proceedings

The subject of abusive trademark lawyer and litigation tactics subject is worthy of further discussion and commentary as there exist several strategies to combat such actions by deep-pocketed trademark litigants. If you or your company is involved in a trademark opposition or other trademark dispute, it is recommended that you speak with a qualified trademark attorney to determine how to best approach the case in a cost-effective and vigilant manner.

I am a trademark opposition lawyer that charges a flat-fee for my services.  Charging one, flat fee for a trademark opposition case is advantageous to my clients for the following reasons:

  • the total cost to the client is fixed and predictable
  • the fee agreement between the client and me is transparent and unambiguous
  • there are no surprises when the bill arrives

Conversely, billing the client hourly for trademark attorney services creates a host of problems for the client.  Such challenges include the following issues that may arise during the course of representing a company in a trademark opposition case:

  • open-ended hourly billing
  • potential to create more billable hours within the case
  • lack of incentives for early case settlement
  • potential for fee disputes

In my opinion, it is always in the trademark owner’s best interest to negotiate a flat-fee agreement for representing them in trademark opposition cases before the Trademark Trial and Appeal Board.

 

 

 

 

As a trademark lawyer that handles trademark opposition and trademark cancellation cases, I have a simple philosophy in dealing with the business and legal challenges that my clients face as a result of being involved in litigation proceedings before the Trademark Trial and Appeal Board.

1.  Listen to the Client

It is often difficult for people to truly listen to the other person while having a conversation.  This is doubly true when it comes to a trademark attorney listening to his or her client.  What are the client’s needs?  What is their preferred outcome?  What are their cost constraints?  These and many other questions need to be answered prior to engaging in the attorney/client relationship.

2.  Be Respectful of Your Client’s Money

Many trademark attorneys operate under a scorched-earth policy, where they believe that the best way to service their client’s needs is to be highly aggressive, both in dealing with opposing counsel and the amount of paper that they generate as part of the case.  It it my experience that part of this aggression is economic in nature:  if a trademark attorney is charging hourly for his services, then it is in his or her interest to generate as many billable hours as possible as part of the trademark opposition case.  Yes, you heard me right!  Is this the rule?  Certalnly not.  But you should be mindful of hiring attorneys who will not discuss with you a flat-fee option or at the very least, a cap on their fees for the case.

3. Be Respectful of Opposing Counsel

Having a pleasant and respectul working relationship with the attorney for the other side is essential to best serving the needs of your client. Why?  Because by doing so, this often saves the client money in attorney’s fees.  If I am able to cooperate with opposing counsel during the case, many potential disputes regarding the discovery process can be avoided, leading to less time (and billable hours) spent on fighting and more time on seeking an amicable resolution that is in the best interests of my client.

There are many fine trademark attorneys who adhere to the above tenets of professional collegiality.  They are the ones who are a pleasure to deal with and who quite often best serve the interests of their clients.

 

In discussing how a trademark opposition works, it is helpful to go over the basics of what a trademark opposition is, and what to expect as the case proceeds.

A trademark opposition is when one party elects to oppose the existing trademark application of another party due to one of several grounds, such as the pending trademark application is confusingly similar to the complaining party’s existing trademark registration.  The complainant in a trademark opposition is called the Opposer.  The trademark application owner whose trademark application is being opposed is called the Applicant.

Trademark Oppositions are filed and heard before the Trademark Trial and Appeal Board of the United States Patent and Trademark Office. Like other cases in civil courts throughout the country, a trademark opposition has several procedural and substantive phases to the case, including:

  • Complaint and Answer
  • Discovery (including interrogatories, request for production of documents, request for admissions, and depositions)
  • Trial Testimony and Submissions (including Notice or Reliance)

In addition to the above, a trademark opposition can involve several motions of law that either trademark opposition attorney may file on behalf of his/her client, such as a motion to dismiss, motion to compel, or motion for summary judgment.  What is the longest phase of a trademark opposition case that has the potential to be the most expensive?  In most instances, the discovery phase is what takes the most time and the costs the most in terms of attorney’s fees.

In subsequent postings, I will discuss how you can possibly save money in trademark opposition proceedings through effective dispute resolution techniques. 

 

What comes first?  A trademark registration or use of the trademark in commerce by the owner who is seeking registration?  In other words, can one obtain a federal trademark registration without first using the mark in commerce?  The answer is no!

Trademark use is always a prerequisite to registration in the United States Patent and Trademark Office, with minor exceptions.  Note that although registration is not a requirement for use, owning a trademark registration has several advantages, including the following:

  • constructive notice to the public that you are the owner of the trademark in question
  • a legal presumption that you are the owner and have all rights associated with ownership, including the right to prevent third-parties from using or registering confusingly similar trademarks
  • Heightened damages in certain case

Before applying for a trademark registration, always consult with a trademark lawyer to determine whether the trademark is available for use and/or registration.  By taking this simple step, you will save you and your company time, aggravation, and potential legal liability down the road.