Given the influence trademarks have on consumer decisions, proactive strategies by consumer product companies can yield short- and long-term gains. Trademarks influence consumers by connecting a product to a company—a simple means to increase recognition and boost sales. But, ignoring competitor’s rights could lead to legal consequences, marketing limitations, and even seizure of infringing goods.
What is a trademark?
A trademark is any word, name, symbol, or device used in commerce to indicate a product’s source. Trademark owners have the presumptive exclusive right to use—and prevent others from using—the mark.
In practice, a trademark is any design or feature that could cause a consumer to connect a product with a company. Some well-known (and disputed) marks include:
- Goldfish crackers’ shape;
- Louboutin’s red-soled heels;
- PLAY-DOH’s scent; and
- Taco Cabana’s restaurant design.
Word marks, which are the most common, fall into one of five categories in the United States. Marks that typically cannot serve as trademarks include those that are:
- Generic common name used for a product (g., “Apple” for an apple); or
- Descriptive: describe an ingredient, quality, characteristic, function, feature, purpose, or use of the specified goods (g., “Sun Block” for sunscreen).
Marks that may be considered a trademark include those that are:
- Suggestive: indicate a product’s nature, quality, or characteristic without describing the product (g., “Airbus” for airplanes);
- Arbitrary: common words used in a meaningless context (g., “Camel” for cigarettes); or
- Fanciful: words with no meaning prior to use (g., “Xerox”).
Marks can sometimes move between categories depending on changes in public perception.
How to obtain a trademark for consumer products
Before launching a new brand, companies should determine whether another person or company is using the same mark or a confusingly similar. Trademark counsel can perform clearance searches to determine the risk of infringing another’s rights. Companies can obtain common law trademark rights through using a mark in association with a product. The owner can preserve those rights so long as the mark is continually used in commerce. Without a registration, these common law trademark rights are limited to the geographic area in which the product is used or sold.
In addition to relying on common law rights, trademark owners can register a mark they are using or plan to use with the United States Patent and Trademark Office (USPTO), or the equivalent in other jurisdictions. Rights can continue indefinitely, provided the mark remains in use and periodic maintenance filings are submitted. Once a mark is registered, the owner acquires a nationwide right of priority except as to geographic areas where competitors have common law rights established prior to registration.
Trademark enforcement: protecting consumer products
An owner has an obligation to police its mark. If unpoliced, a mark could lose distinctiveness and enforceable rights. Similar to design and utility patents, trademark owners can enforce or benefit from rights through litigation or licensing. Owners can also bring claims for trademark infringement. Infringement occurs when the use of a mark would likely confuse a consumer as to the product’s origin. To be successful, the owner must show:
- A valid and enforceable trademark exists;
- The company owns the mark; and
- The competitor’s use likely causes confusion.
Most commonly, owners can bring infringement claims in federal court under the Lanham Act. If successful, a court may award:
- Disgorgement and lost profits (which can be trebled “when appropriate”);
- Attorney’s fees in exceptional cases; and
- Litigation costs.
Takeaway: how consumer product companies can benefit from trademarks
Trademarks pose an exceptional opportunity: influencing customers while simultaneously excluding competitors. This provides financial opportunities through licensing while limiting competitors’ abilities to impose on the owner’s goodwill. However, failing to properly police marks could lead to the loss of rights and costly competitor litigation.