When one speaks about trademarks, the familiar adage “use it or lose it” comes to mind. But there is another important principal that can equally endanger your trademark rights: You must police the market, monitor the trademark register and take action to stop infringements, or you may find yourself without a trademark to enforce. Two recent cases demonstrate the importance of this latter principle.
LUSH is the trademark for a global brand of “hand made” cosmetic, fragrance and bath products sold by Cosmetic Warriors Limited (“CWL”), a company founded in England in the mid-1990’s. CWL opened its first Canadian retail store in 1996 and expanded to the United States in 2002. It now operates in excess of 940 stores in 49 countries, including 250 stores in North America, 200 of which are located in the United States. In 2002, it registered the LUSH trademark for use on t-shirts in Canada, but never filed a US registration for apparel. Pinkette Clothing Co. is a California company that, since 2003, has sold women’s clothing under the LUSH mark to retailers in the US and Canada, principally Nordstrom. Pinkette secured a US registration for the LUSH trademark for apparel in 2010. CWL did not oppose the issuance of registration for the mark, although its outside counsel apparently was notified through a trademark watch service of the application’s publication for opposition. In December 2014, CWL applied to register the trademark LUSH in the United States for clothing. When its application was rejected due to Pinkette’s pre-existing registration, it filed an application to cancel Pinkette’s mark. Instead of defending in the cancellation proceeding before the Trademark Trial and Appeal Board, Pinkette commenced a court action seeking a declaration that it did not infringe CWL’s trademark or, alternatively, that CWL’s failure to oppose Pinkette’s application in 2010 and its subsequent delay in seeking to cancel Pinkette’s registration barred CWL from enforcing its trademark rights against Pinkette. CWL counterclaimed for trademark infringement and to cancel Pinkette’s LUSH trademark registration. After trial, a jury found that Pinkette had infringed CWL’s LUSH trademark and that Pinkette’s registration should be canceled, but it also found that CWL had unreasonably delayed in asserting its claims. The court held that the delay barred CWL’s action and dismissed its claims. On appeal by CWL from the dismissal of its claims, the U.S. Court of Appeals for the Ninth Circuit held that CWL should have known of Pinkette’s usage as early as 2010, when Pinkette’s application for registration was published for opposition, that CWL had not been diligent in asserting its rights, and that Pinkette had been harmed by the delay because, in the interim, it had expended time and resources to develop its LUSH business. As a matter of equity, therefore, CWL would not be permitted to assert its claim either for trademark infringement or for cancellation of the Pinkette mark.
The second case demonstrates what can happen when many uses of a trademark for competitive goods are tolerated by the trademark owner for an extended period. The essential function of a trademark is to identify the source of the goods to which it is applied. Trade dress in the form of the design of a product or its packaging can also serve to identify a source and can serve as a trademark when it does. But if the design does not have a source-identifying function, referred to as “secondary meaning,” the design is not registrable for trade dress protection. When other third parties are permitted to use the design in the market for similar goods, the design cannot achieve the required secondary meaning.
Converse learned that lesson the hard way. In 2013, Converse registered a trademark for the “midsole” design of its Chuck Taylor All Star sneakers, consisting of the toe cap, textured toe bumper and two thin stripes along the side of the sole of the shoe. It claimed common-law trademark rights in the design based upon decades of its use prior to securing its registration. It subsequently filed a complaint with the International Trade Commission against Walmart, Skechers, Highline and New Balance seeking to bar the importation of sneakers it claimed infringed its registered midsole trademark and its common law trademark rights in the design. The International Trade Commission found that there was a likelihood of confusion between the Converse sneakers and the competitors’ sneakers. But the Commission also found that there had been a proliferation of competitors using the same design, on the same goods, sold to the same class of consumers over many years. As a result, the Commission concluded that the design could not be said to identify Converse as the source of the goods and, therefore, its trademark registration was invalid.
The lesson of these cases is clear. Adopting and registering a trademark is only the beginning of your work. To preserve and protect the trademark, you must police the market and assert your rights on a timely basis when you discover infringement by others. If you fail to do so, you may find that your investment in the trademark has been lost.
Credit: Helene M. Freeman
Recently, the New Balance footwear company won a landmark $1.5 million trademark decision in the Suzhou Intermediate People’s Court, near Shanghai, China. Daniel McKinnon, the New Balance senior counsel for intellectual property, told the New York Times: “If the China marketplace can be thought of as a schoolyard, New Balance wants to make it abundantly clear we are the wrong kid to pick on.”
The schoolyard brawl all started when New Balance alleged that three Chinese brands infringed upon its well-known New Balance “N” trademark. The three Chinese shoemakers, New Boom, New Barlun, and New Bunren, saw fit not only to use similar brand names, but also to trade off of New Balance’s international acclaim by mimicking its slanted “N” design on their shoes. A Suzhou Court cited the defendants’ free-riding, consumer confusion, and market harm as the basis for its ruling in favor of New Balance.
What makes this case important is not only that New Balance was prepared to fight for its rights in China—often a challenging thing to do—but also that it was willing to do so over a single-letter trademark.
A trademark is a source indicator that can convey a range of messages about your brand such as quality, price, taste and reputation—the sometimes obvious and sometimes mysterious factors that, in total, are the goodwill of the brand.
Brand owners often reflect upon the value and protectability of words, names, logotypes, slogans and even colors as trademarks. The victory by New Balance in a famously tough territory tells us that a lot can ride on who is found to own and have the rights to exploit a single letter.
Minimalism is as much a factor in trademark recognition as anywhere else in the broad field of visual expression. Mercedes Benz has made a simple three-pointed star one of the most recognizable marks on earth. In the USA, Louboutin owns the color red for the soles of shoes, and Federal Express owns the truncated version of its mark popularized by the public: FedEx. Take it down even further, and you get marks with one or two letters: PayPal is recognized by two cerulean stylized “P’s” and Facebook by a solitary but consequential byzantine blue lower-case “f”. Uber upgraded its former “U” mark to a modernized “U” enclosed by emerald green.
In fashion, designers have been using single-letter marks for decades. Hermès uses its elegant “H”; and of course, New Balance is using its slanted “N”. A few logos have doubled letters: Gucci has made the twin “G” into a brand; as with the seemingly reflective Tory Burch “T”, the mirrored Fendi “F”, and the interlocking “Cs” of Chanel.
Single-letter marks can be significant in fashion because a single letter can serve not only as a logo, but also as a design that can be emblazoned on clothing, handbags, shoes, etc. Meanwhile, the boom in online retail—where a mark may be only barely visible—has been the basis for the further simplification of marks. The large British online retailer Asos recently abbreviated its trademark to the letter “a,” the better to identify the brand on its mobile app.
Credit: Candace R. Arrington
Candace Arrington provides research support as a law clerk to our corporate and business law, intellectual property law and entertainment law practices.
A young lawyer walked by while working late, waving the striped tie he had just removed, announcing that, after 9:00 p.m., business casual was mandatory. European-born, my colleague’s tie had blue, white and green stripes angled downward from left to right (as seen by the wearer), in the classic British (and predominantly European) tradition. In Britain, the convention developed that, just as each clan in Scotland has its own tartan, each regiment, club and school would likely have its own, distinctive, diagonally striped tie.
On not quite as classic but by now traditional American ties, however, diagonal stripes run in the opposite direction, from right to left. There are various stories about why that is so. As with anything you can find on the Internet, you can discover much that is of interest, some of which might even prove to be true. You may learn, for instance, that the reason the ties slant in different directions is that European infantrymen shouldered their weapons differently from Americans and that their rifles ejected spent casings in an opposite direction. Those explanations are not only fogged by inaccuracy but bear little evidence of good fashion sense.
More credible is the claim by Brooks Brothers that it invented the American right to left downward slide on what it calls a Repp tie (freely admitting that an early spelling error caused it to get wrong the name of the French Rep ribbed silk fabric it used to make the ties). The idea was to bring American “roguish charm” to British tradition–an act that, as is often the case when Americans reference British traditions–acts as both homage and gentle satire. The British officers and gentlemen men who earned the right to wear regimental colors around their necks sometimes being quite sensitive about having earned the exclusive right to that privilege, Brooks Brothers reversed the direction of the stripe in an effort to soothe warrior sensitivities.
American schools have their Repp variations. My American university’s thick-striped tie, in navy blue and burgundy, is guaranteed to dull down almost any suit that goes with it.
The striped tie having now been commonplace for over a century, uncountable combinations of alternating stripe widths and colors have been used. A designer looking to protect his or her intellectual property rights in the patterns of ties may theoretically create a novel combination of colors and widths running in either direction–just enough to warrant a claim for copyright protection. Given the multiplicity of existing designs, that protection, if granted, would likely be a “thin copyright,” but in theory it could happen. The larger question is: why bother? Individual styles rarely last more than one season, after all. Would you really sue to protect the design, hoping the defendant does not dig into neckwear history to find something similar warn by officers of a British regiment since before it fought in the Battle of the Somme?
Each of those regimental, school and club ties identifies a source of origin–raising the possibility that a particular pattern of stripes can be protected as a trademark. As a practical matter, unless a stripe acquires such distinctiveness that the market accepts that it designates a specific source and so is not merely decorative, it is probably not protectable as a trademark. It is possible, again in theory, that a particular pattern of stripes could gain “secondary meaning.” That is, they now serve, through usage, advertising and the passage of time, as branding and devices not merely as pleasing patterns. If that should happen, is it indeed enough of a difference to prevent a claim of infringement to run the same pattern in the opposite direction, just as Brooks Brothers and other American makers did in order to distinguish their patterns from those British ties from which they freely borrowed both conventions and patterns? Much could depend on survey evidence of consumer habits and consumer awareness of the differences. That is another way of saying: if you did not know about all that before reading this post, the difference in the direction of the stripes probably is of no consequence to you; your response to the survey would therefore likely aid the plaintiff in a claim that simply changing the direction of the stripes did not make the defendant’s pattern less likely to cause infringing confusion.
That would support the generally held view that, when it comes to neckties, diagonal stripes, in whatever direction they run, are, in nearly all situations, open territory for designers. Within the quite narrow sartorial conventions of male business attire, however, there is not really all that much new that can likely be done with diagonal stripes in neckties. So, let us all celebrate an ongoing tradition and try not to worry too much about all this. A good striped tie will not necessarily be the one that a lawyer attempts to protect as intellectual property. It will, however, always be one that will work for him just about anywhere.
We would like to thank Stephen Sidkin of Fox Williams LLP, London, UK, for providing the inspiration and background for this post.
Credit: Alan Behr
When licensing a brand, a fashion licensee naturally wants to know not only that the licensor owns the trademarks that identify the brand to the public and the trade but that the licensee will be able to use the marks without having to contend with adverse claims from third parties. The last thing that a licensee wants is to have many thousands of units manufactured and, just as they arrive in ports and warehouses, get hit with an action for trademark infringement, alone or together with trade dress, copyright or design patent infringement. Indeed, an infringement action could contain any of those claims in combination, resulting in a rather complicated federal lawsuit. And if that is not quickly fixed, there goes the spring/summer season, and all those units, made at the licensee’s cost, might just as well never have been produced. As sub-optimal results go, that is about as low as they come for a new fashion collection.
To help protect against that from happening, counsel for the licensee will typically ask for a warranty of non-infringement. In the practical world of transactional law, there are no prizes for originality in draftsmanship, so all non-infringement clauses are like bees in a hive—they all look pretty much alike:
Fashion Company represents and warrants that the Licensed Manufacturer’s use of the Licensed Marks referenced in Exhibit A as contemplated under this agreement shall not infringe upon or violate the intellectual property rights or other rights of any third party in the Territory.
Of course, if things were that simple, licensees would not need lawyers. (Spoiler alert to licensors and licensees reading this series: Do not rely on what you read here as a substitute for legal representation. Please do not attempt to conclude a complex fashion license without benefit of counsel.)
Indeed, contractual law is about nothing if not the hidden complexity found in words and phrases. As signified by its capitalization, the word Territory should be a defined term. If the license is for a Territory defined as the “United States, its territories and possessions, and Canada,” the non-infringement warranty would cover claims made within those specific jurisdictions. Consulting the United States Patent and Trademark Office database to be sure that the licensor’s trademarks are registered and that there are no pending challenges to those registrations is good self-help for the licensee and a prudent caution for the licensor. But if the licensed Territory is defined more broadly—covering all of the Americas, Europe or even the entire world—the licensor may seek to limit the warranty of non-infringement to those portions of the Territory in which it is reasonably confident that it has protected its licensed rights.
And that is how licensees can find themselves with a predicament that is endemic but the fault of no one: there may be parts of the Territory where the licensor cannot be sure claims of infringement will not be made—as anyone who has seen, to his shock, that his trademark has been registered in another country by someone else for use on the same goods.
The solution? There are various methods that can be used here, but key is for the parties to identify the likely most important countries into which the licensed goods will be delivered (and where they will be manufactured—also an important consideration); they should work together to refine the warranty into something that is reasonable and fair under the circumstances. If that is done, the license should also provide a mechanism for the parties to cooperate in the event that the licensee will seek to introduce its products into areas in the Territory for which the warranty would not apply on execution.
The bottom line: It is a big world. Rights and remedies regarding licensed intellectual property can be very different from one nation to another. Care must always be taken to match the business plan for a license with the realities not only of the market but of the law. In the end, it is in the best interest of both parties to see that works out successfully. That proves again why all licenses are, if nothing else, documents of cooperation for the common good of the parties involved.
Credit: Alan Behr
See previously published related posts:
- “I Own It — I Mean, Really, I Do!“
- “I Hereby Promise That You Are My one and Only-ish“
- “I Promise, Therefore I Am“
- “No Guarantees In Life But Plenty in Contracts“
Luxury, being the thematic opposite of necessity, must be at least as much about what you desire as what you need. Building a brand to fill that role requires both diligence and self-restraint.
A luxury brand and its products should be readily identifiable as superior to both existing and aspirational customers. That is not to say that that non-luxury brands and their products do not require legal protection; we are simply recognizing that the luxury premium adds a new class to the market—those aspirational customers—whose perceptions and desires are vital to the future of brands in the luxury sector. For that reason, and many others, it is particularly important for luxury brands to work with counsel to identify and protect all the important proprietary elements that are capable of being protected. That includes protection, where appropriate, by trademark (and trade dress) registration, design patent registration, and—something rather unique to the United States—copyright registration.
With few exceptions, it is generally better to err on the side of more rather than less when it comes to registrations. Styles and style names that will only be in the catalog for a season or two are usually not worth the trouble, but anything of medium to long-term consequence to the bottom line and brand value almost certainly is. In these posts, we will go into more detail about various forms of legal protection, but a key guideline is this: once each season, have a look at what engages the public with your brand and your products and how that engagement might lead you to adjust your legal protection program. There is probably no more important work that marketers and counsel can undertake together in order to make your protection program both thorough and cost-effective.
This year, the International Trademark Association held its annual meeting in Hong Kong, giving the world’s intellectual property lawyers the opportunity to congregate in an important commercial city where branding is all. Once a playground for bargain hunters for, consumer electronics and rapidly cut and stitched men’s suits, Hong Kong has become a destination for consumers of luxury goods. Indeed, I cannot remember seeing another city in which almost any international luxury brand I can think of had more than one boutique. What was particularly interesting this time is that, for various reasons, visitors from the mainland were uncommonly absent, with the result that, in every store in which I had a look, the sales floors were empty of patrons. That may be a temporary problem, but it raises a bigger question: as surely as luxury is about something greater than necessity, it is also about relative inaccessibility; it is an experience over and above the ordinary that is made all the more desirable by its very lack of ubiquity. When luxury is everywhere, can it start to look commonplace? The risk is that new entrants will have a chance to succeed (in no small part due to their newness and limited production) in poaching customers sated by what has become too familiar. That may be healthy for the marketplace but not for you if you have a valuable brand.
There are no perfect formulas, of course, but here is a general reflection that might well apply when protecting a luxury brand and its products: under law, more is better; when preserving the reputation of a luxury brand and its products in a business sense, less may sometimes indeed be more.
Credit: Alan Behr