Greenville Business Magazine 2010 March issue : Page 10
››columns Preventing Valuable Trademarks from Becoming Lost Change in the Couch BY DOUGLAS L. LINEBERRY DORITY & MANNING, P.A. | PHOTOGRAPH BY COMMERCIAL IMAGING You may ask, “Okay, I know what a trademark is but why would I have or need a portfolio of marks?” An example is the best way to illustrate the possibilities inherent in trademark portfolios. Look at McDonald’s®. Almost everyone associates the name or the The Golden Arches® with McNuggets®, Big Mac®, McFlurry® and other associated food products. Some of you associate the name or symbol with the services provided by the Ronald McDonald House®. Simply put, all of these marks, collectively, help brand McDonald’s® and establish the inherent qualities consumers expect when purchasing items or using its associated services. Now you’re really scratching your head and saying “But I don’t have anything like that.” Not so fast. Have you taken a careful, thoughtful look at the paraphernalia of your business through a trademark audit? Take a step back and think about the advertising materials you used in the last few years. Did you repeat any particular phrases or use a symbol or image repeat- edly? These answers are not readily apparent without making a concerted audit of the materials you use to promote your business. You’re busy providing your goods and services to the public and probably don’t have time to stop and think “Have I created a trademark? Is this something I should use to brand my products? Do my customers associate this particular mark with my products or services?” Most businesses would be shocked to discover that they have C ompanies succeed and fail for numerous reasons. However, the underlying current to all business is the goodwill associated with a company’s products or services. Goodwill can, literally, mean the difference between land- ing that next big contract, losing that same contract to a competi- tor or making continued sales to an adoring public. Where does goodwill come from, you ask? How do you quantify it and what helps you gauge its effectiveness in business? Simple, look to your trademarks and servicemarks. These serve as the key identifiers for a business in commerce. They ultimately identify and distinguish your goods or services from all other providers. A business can function and profit without ever realizing the resources it possesses in its trademarks and servicemarks (herein- after collectively “trademarks” or “marks”). However, in this harsh economic climate, it is best to know exactly what resources are at your disposal to help weather this financial storm. At essence, trademarks are words, names, symbols, colors or even sounds that distinguish your goods and services from those of others. Unlike other forms of intellectual property protection such as patents, trademarks can be renewed perpetually as long as they are used in commerce. 10 GREENVILLEBUSINESSMAG.COM | MARCH 2010 potentially valuable trademarks lying in their business and advertis- ing materials, much like loose change lies hidden in a couch. However, trademarks can do a lot more than buy you coffee on the way to work. It is widely recognized that trademarks not only have inherent value but also add to the value of the business which owns them. Why leave that value hidden in your couch? It is imperative, given the value-added nature of trademarks, that companies conduct trademark audits of their advertising, promotional and business materials to determine if they have unrecognized and unappreciated trademarks residing therein. Granted, few wish to take the time to do so. However, failing to do so leaves valuable marks and well-established branding items, which your customers recognize and associate with your goods and services, subject to potential loss through non-use or misuse by third parties. A trademark audit allows you to identify potential or unrecognized trademarks, as well as determine the status of the marks currently in existence. In addition to finding unrecognized marks existing in your materials, an audit can also be used to identify marks that no longer agree with your business strategy. Such marks can be culled or licensed out to third parties in order to further increase profit. Critically, a large portfolio will require dedicated management to ensure it maintains its value. Maybe you know all of your marks and are instead looking for a change. Care should be taken to prevent losing valuable,
>>columns - Preventing Valuable Trademarks from Becoming Lost Change in the Couch
Douglas L. Lineberry
Companies succeed and fail for numerous reasons. However, the underlying current to all business is the goodwill associated with a company’s products or services. Goodwill can, literally, mean the difference between landing that next big contract, losing that same contract to a competitor or making continued sales to an adoring public. Where does goodwill come from, you ask? How do you quantify it and what helps you gauge its effectiveness in business? Simple, look to your trademarks and servicemarks. These serve as the key identifiers for a business in commerce. They ultimately identify and distinguish your goods or services from all other providers.
A business can function and profit without ever realizing the resources it possesses in its trademarks and servicemarks (hereinafter collectively “trademarks” or “marks”). However, in this harsh economic climate, it is best to know exactly what resources are at your disposal to help weather this financial storm. At essence, trademarks are words, names, symbols, colors or even sounds that distinguish your goods and services from those of others. Unlike other forms of intellectual property protection such as patents, trademarks can be renewed perpetually as long as they are used
in commerce.
You may ask, “Okay, I know what a trademark is but why would I have or need a portfolio of marks?” An example is the best way to illustrate the possibilities inherent in trademark portfolios. Look at McDonald’s®. Almost everyone associates the name or the The Golden Arches® with McNuggets®, Big Mac®, McFlurry® and other associated food products. Some of you associate the name or symbol with the services provided by the Ronald McDonald House®. Simply put, all of these marks, collectively, help brand McDonald’s® and establish the inherent qualities consumers expect when purchasing items or using its associated services.
Now you’re really scratching your head and saying “But I don’t have anything like that.” Not so fast. Have you taken a careful, thoughtful look at the paraphernalia of your business through a trademark audit? Take a step back and think about the advertising materials you used in the last few years. Did you repeat any particular phrases or use a symbol or image repeatedly? These answers are not readily apparent without making a concerted audit of the materials you use to promote your business. You’re busy providing your goods and services to the public and probably don’t have time to stop and think “Have I created a trademark? Is this something I should use to brand my products? Do my customers associate this particular mark with my products or services?”
Most businesses would be shocked to discover that they have potentially valuable trademarks lying in their business and advertising materials, much like loose change lies hidden in a couch. However, trademarks can do a lot more than buy you coffee on the way to work. It is widely recognized that trademarks not only have inherent value but also add to the value of the business which owns them. Why leave that value hidden in your couch?
It is imperative, given the value-added nature of trademarks, that companies conduct trademark audits of their advertising, promotional and business materials to determine if they have unrecognized and unappreciated trademarks residing therein. Granted, few wish to take the time to do so. However, failing to do so leaves valuable marks and well-established branding items, which your customers recognize and associate with your goods and services, subject to potential loss through non-use or misuse by third parties. A trademark audit allows you to identify potential or unrecognized trademarks, as well as determine the status of the marks currently in existence. In addition to finding unrecognized marks existing in your materials, an audit can also be used to identify marks that no longer agree with your business strategy. Such marks can be culled or licensed out to third parties in order to further increase profit. Critically, a large portfolio will require dedicated management to ensure it maintains its value.
Maybe you know all of your marks and are instead looking for a change. Care should be taken to prevent losing valuable, established marks by revising advertising, promotional or business materials via unstructured or sporadic changes. A simple guideline is that trademarks should have a static but not stagnant nature. One should be remiss to change a mark simply for the sake of doing something different. Obviously, rebranding campaigns are sometimes a business necessity for new product lines, changes in control or other shifts in company direction. However, be mindful of change simply for the sake of change. Once you cease using a mark in commerce, you lose your rights in the mark regardless of how long you previously used it. A trademark audit is invaluable in guarding against these situations.
Once you have established your mark or a portfolio of marks, it is mandatory that you protect it. A structured policing program ensures not only continued use of the marks but guards against actions by third parties that infringe or are confusingly similar to your marks. Foremost, when using your marks, be sure to label them as trademarks by using TM (trademark), SM (servicemark) or ®. Recall, however, the ® symbol can only be used after a mark has been registered at the United States Patent and Trademark Office. Additionally, be certain that you have a docketing mechanism in place for your registered trademarks that reminds you when to pay your trademark renewal fees. Failure to do so can result in the registration expiring.
Obviously, you keep an eye on your competitors. It’s a good business practice. Trademark owners also need to monitor competitors’ and third parties’ advertisements and marketing campaigns as well as their trademark oppositions. This includes monitoring marks that publish in the United States Patent and Trademark Office Official Gazette with an eye for published marks which could be confusingly similar to your mark, i.e., the consuming public could confuse the source of the goods or products by misunderstanding who provides them. The discovery of confusingly similar third party marks may necessitate filing oppositions at the Trademark Trial and Appeal Board. Policing could further require cease and desist letters or legal action, depending on the circumstances.
In addition, a conscientious trademark owner will want to conduct periodic searches of the Internet for use and possible misuse of the owner’s marks. This includes looking for not only misuse of your marks or confusingly similar marks in website content but also searching for conflicting domain names, for example, if one of your marks is SuddenStrengthSteel, you would want to take action against someone not associated with your company using this phrase in an internet address domain name.
One must be careful with respect to how you allow your mark to be used by third parties. Naked licensing results when a trademark owner provides third parties with unsupervised licenses to use its mark, i.e., the third party can use the mark on any quality or type of good or service the third party chooses. Typically, the mark owner enters into a license where a third party pays the owner royalties for using the mark in association with the third parties’ goods and services. Part of your obligation as a trademark owner is that you must ensure quality supervision when you allow third parties to use your marks.
A trademark owner must supervise the third parties’ use of the marks and police the licensee. Failure to do so can result in cancellation of the mark or provide defenses to third parties against your claims of infringement or likelihood of confusion. The principal behind this is that of consumer protection. Consumers have come to associate a particular quality of goods or services with your mark. Allowing a third party to submit sub-par goods under the mark results in dissatisfied customers, thus eroding goodwill, as well as placing inferior merchandise on the market.
Naked licensing can also result in a mark owner discovering that its mark has been applied to goods that don’t necessarily comport with its product lines or services. For instance, an action figure manufacturer would not likely wish to allow someone to use their mark for potentially dangerous tools. Nor would a florist likely be pleased to see their mark used in association with a line of chainsaws. Yet, if naked licensing occurs, an owner’s mark can be used on products which vary greatly from those which generated the goodwill in the mark.
Ultimately, you as a trademark owner have two essential obligations: identifying and establishing your marks, and ensuring they are used in a consistent manner that preserves the goodwill of your business. Failing to do this can be likened to identity theft where a third party uses your marks on goods and services in ways that not only would you not allow but also would tarnish your company’s goodwill with your customers, crippling the essence of any company’s success. These results can be guarded against by conducting a thorough trademark audit and ensuring that appropriate protective mechanisms are in place to protect your trademark portfolio and business interests.
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