Trademark infringement penalties are real!
Just the same way human civilization has been plagued by turmoil and unrest, the business world has also been in a heated battle in what has been called the trademark wars.
To get a complete picture, you must understand that trademarking isn’t entirely new. In 1266, the first known legislation concerning trademarks was passed. And it might surprise you to learn that even in the time of the Roman Empire, trademarks were quite popular with the blacksmiths.
Trademark remains a solution to an eternal problem faced by people and businesses; uniqueness. And the pursuit for uniqueness is why people bear different names and why it is always confusing whenever we meet people with similar names.
In our era, where businesses now control massive assets like no other time in human history, it is pretty expected that the pursuit and protection of a brand’s trademarks could easily take a darker turn, or rather, a more expensive one.
And this is why every entrepreneur like you needs to arm themself with the knowledge on how to avoid trademark conflicts before brainstorming or contacting a naming agency to find a solid brand name for their business. It is easy for a company to get into a trademark battle but difficult to come out unscathed.
To help you on this journey, we’d be exploring:
- A quick look at trademarks and trademark infringement?
- Factors that guarantee a trademark protection
- What can be classified as a trademark infringement?
- How to avoid trademark infringement?
- Consequences of trademark infringement (trademark infringement penalties)
The path to arming yourself with accurate trademark knowledge begins with:
A Quick Look at Trademarks and Trademark Infringement?
A trademark is legal protection for intellectual property. It covers unique names, logos, images, designs, words, or phrases that serve as a peculiar identity for a product, service, or business.
A trademark protects its bearer from predatory brands seeking to use another brand’s identity. Trademarks give businesses the right to stop anyone from using similar elements of their business’s identity. This way, the trademark holder can prevent market confusion, loss of revenue, and damage to their brand’s goodwill.
Here are some examples of trademarks:
- Logo: Apple’s famous logo
- URL: Domain names like facebook.com
- Slogan: Think Nike’s ‘Just do it’ slogan
Now, trademark infringement occurs when a business uses the unique trademarked properties of another brand. Usually, trademark infringements are settled out of court, but if they go to court, and the bearer of the trademark can prove that their trademarks had been breached, then the brand breaching the trademark can be fined massive sums of money.
And even though the process can be lengthy and costly, especially when it involves two markets behemoths like Adidas and Shoe Branding Europe BVBA, the damages could go beyond cash and hurt a business’s goodwill, reputation, and trust; some brands don’t even survive after such battles.
Why Trademarks are Critical
For any industry to function and prosper, it needs regulation, or else it’ll be chaos. The rule is simple whatever you protect is encouraged to grow, and whatever you don’t, simply wither and die.
And this is why patents were designed to protect inventions; copyright was intended to protect intellectual property image rights and trade secrets, while trademarks were designed to protect brands.
Having such protections encourages businesses to invest in their brands cause it is a unique identity that no one can take from them.
But this hasn’t stopped businesses from infringing on the trademarks of others. Trademark infringement happens all the time; it is almost like watching an entertaining wrestling match between two brands.
And that’s what we saw with Iceland (the country) vs. Iceland (the supermarket), Facebook, Inc. vs. Power Ventures, Inc., and Rescuecom Corp. vs. Google Inc. But one of the most memorable trademark lawsuits remains Apple Corps vs. Apple Computers. Let’s give it a look.
Apple’s Trademark Infringement Example
Before Steve Jobs named his company Apple Computers, there was already another company called Apple Corps. Apple Corps, founded by the Beatles, was the brand responsible for managing the biggest boy band globally, the Beatles.
In 1978, Apple Computers was the victim of a lawsuit from Apple Corps, and in 1981, to settle the suit, Apple Computers paid $80,000 to Apple Corps and signed an agreement not to venture into the music business.
But in 1989, Apple Corps sued Apple Computers for breaching the 1981 agreement and venturing into the music ecosystem. Apple computers paid a fine of $25 million.
Having a trademark isn’t enough; you also need to ensure your trademark is eligible for protection.
Factors that Guarantee Trademark Protection
The following conditions must be met if you want your trademark to be protected.
- Your trademark must be valid. And to be valid, your trademark must be properly registered under the common law (federal law).
- You must use your trademark regularly.
- Your trademark must be used ‘in commerce’ or connected distribution, advertisement, and sales.
We’ve helped over 30,000 entrepreneurs find solid names that don’t infringe on any brand’s trademark, and one thing these founders are eager to find out is what exactly can be regarded as a trademark infringement?
And if you are wondering the same thing, here is a quick summary of a few conditions that can be classified as trademark infringements.
What can be Classified as Trademark Infringement?
1. Consumer Confusion
This happens when another business’s trademark is identical to or similar to the registered trademark of another brand offering the same products and services like yours.
The court considers the appearance, pronunciation, meaning, and brand image to determine if two trademarks are similar or not.
The South Korean fried chicken restaurant, Louis Vuitton Dak, had a similar trademark to Louis Vuitton, the fashion brand. And with how similar both names are, it is easy to see how customers assumed that Louis Vuitton was venturing into the restaurant industry.
The restaurant even went as far as using the company name, logo, imagery, and packaging style that was very similar to the fashion brand.
And sure enough, Louis Vuitton defended its trademark in court, and the restaurant wasn’t just asked to change its name; it was also fined $14.5 million. In the end, the restaurant eventually changed its name to LouisVui TonDak.
2. Trademark Dilution
Trademark dilution happens when one brand’s actions infringe on the trademarks of another brand and weakens its identity and uniqueness.
Here the owner of a famous trademark has the authority to forbid any potential user from using their trademark, especially in any way that will lessen their brand’s uniqueness.
A famous example was Starbucks vs. Wolfe Borough Coffee Inc. Starbucks had sued the company for having the ‘Charbucks Blend’ and ‘Mr. Charbucks,’ two products that diluted Starbucks trademark. But even though Starbucks held that Charbucks was similar to Starbucks and diluted their famous brand, the court disagreed, and Charbucks was allowed to continue.
3. Likelihood of Confusion
The ‘Likelihood of Confusion’ isn’t the same as ‘Confusion.’ Here, the court uses the digits of confusion to determine the possibility of confusion happening.
Here is a quick look at what the digits of confusion consider:
- Strength of the trademark or trademark classification.
- Similarities between the two trademarks.
- Similarities between the goods and services produced.
- Type of retailer and target demography.
- Brand identity in advertising.
- The intent of the trademark offender.
- The trademark offender’s goods and services.
- Evidence of genuine customer uncertainty.
The dispute between Perry vs. H.J. Heinz Company Brands, LLC, popularly known as the ‘Metchup’ case, had started because although Perry had the trademark to ‘Metchup,’ Heinz used the term in their promotion of Heinz Mayochup.
The case was determined using the principle of ‘likelihood of confusion,’ and in the end, the court decided against the likelihood of confusion.
How to Avoid Trademark Infringement
1. Search and Compare Trademarks
Before settling for a potential brand name or trademark, check the USPTO database for similar trademarks and confirm if it is already been taken by another brand. And even if you must use a name that’s already trademarked, ensure your brands are operating in two different industries that have nothing in common.
2. Research Industry Trademark
As we’ve seen here, a trademark isn’t only the name of a brand but other elements of its brand identity, like logos, unique colours, imagery, words, and phrases. So ensure you thoroughly research these to know what exactly you should avoid.
In 2016, Starbucks sued the Obsidian group for selling a drink called Freddocino at their Coffee Culture Cafés. The court ruled in favour of Starbucks because Freddocino was too similar to Starbucks’ Frappucino.
The Café has since changed the name of its drink to Freddo. But all these could’ve been easily avoided if the company had spent a little time understanding trademarks.
3. Check Trademark Strength
Understand that even though trademarks are powerful and give exclusive rights of use to their owners, not all trademarks are created equal. The strength of a trademark determines how much protection it gets when other businesses try to use it.
Here’s a quick breakdown of trademark strengths.
- Generic words – Weak trademarks
- Suggestive words – Neutral trademarks
- Arbitrary words – Strong trademarks
4. Check for any Possibility of Customer Confusion
The customer is almost always right, even when they are wrong. And if there is any confusing element in your brand, ensure it is straightened out early on because it could give rise to a trademark lawsuit, especially if your competitor feels your trademark is misleading their customers.
5. Hire a Trademark Attorney
The trademark process is long and tedious; every step of the way is confusing, time-consuming, and filled with legal jargon. That is why every founder must get professional help from a trademark attorney or someone familiar with the process.
Their expertise will save you from the pains of handling the process yourself and the possible lawsuits that may arise if you’d made a trademark mistake.
6. Register Your Trademark
The best way to protect your brand identity is to ensure you get them trademarked as soon as possible. Registering your trademark gives you the exclusive and non-contestable right to the trademark.
7. Enforce Your Trademark
Do your best to protect your trademark from predatory brands. Customers trust your brand’s product or service quality, and not every one of them can tell the difference between your products and a fake one that perfectly copies your business’s branding assets.
And although pursuing the matter in court can be pretty expensive and time-consuming, it is the best way to save your brand’s reputation and future growth prospects if the erring brand ignores your cease and desist letter.
8. One Word Could be Decisive
Sometimes, just one word can change a registered trademark to a newly available trademark. So, don’t get discouraged if a trademark you desired is already taken. Just one word can do the trick.
For example, instead of RedBull, you can go with GoodBull. Instead of Microsoft, you could settle for Softtouch. This piece won’t be complete if we don’t show you the consequences that trademark infringement can have on your business.
Consequences of Trademark Infringement (Trademark Infringement Penalties)
Trademarks can cause a lot of damage to young businesses, and some of these damages are:
1. Cease and Desist Letter
The lawful owner of a trademark can issue a ‘cease and desist letter’ to an infringer, and it can serve as a warning before legal actions.
2. Sanctioned Injunction Letter
The owner of a trademark can ask the court for an injunction letter to stop using their trademark in all forms.
3. Order to Pay Attorney’s Fees
The court can ask the infringer to pay the cost of the legal proceedings on behalf of the trademark bearer.
4. Order to Pay Back Monetary Damages
The court can ask the infringer to pay monetary compensation for the illegal usage of the trademark.
5. Damage to Business Reputation
The infringer brand can suffer a significant blow to its reputation.
Now that you understand what trademarks are, the factors that guarantee trademark protection, what is classified as trademark infringement, how to avoid trademark conflicts, and the consequences of trademark violation (trademark infringement penalties), ensure you do your best to avoid getting tangled in the trademark wars.
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Grant Polachek is the Director of Marketing at Inc 500 company Squadhelp.com, the worlds #1 naming platform, with nearly 20,000 customers from the smallest startups across the globe to the largest corporations including Nestle, Philips, Hilton, Pepsi, and AutoNation.