• Trademarks Overview

    Trademarks Overview

    Trademarks are a unique form of property used to identify the source of goods or services to consumers. Trademark law has evolved to further this purpose, both to protect consumers from confusion or deceit and to protect the reputation of the suppliers of goods or services. The source of trademark law is found in the laws of unfair competition and in the Lanham Act, the federal statute governing trademarks. These laws revolve around three distinct principles: the validity of the mark, the ownership of the mark, and the scope of rights associated with the mark. Together, these three principals determine whether a mark is protectable, who can use the mark, and what rights the user has against others who attempt to use (or misuse) the mark.

    Trademarks are a limited and unique form of property. A trademark is different from regular property, like a car or land, in that the property right to a trademark exists only in connection with the sale of goods or services. It is what is called an “appurtenant” property right. In other words, a person only has exclusive rights in a mark when the mark is affixed or associated with the sale of goods or services. If the mark is used outside the context of its associated goods or services then it is not protected. For instance, a business entity could have a trademark property right in the word “Ivory” in connection with the sale of soap, but they do not thereby have an exclusive right to the word “Ivory.” This can even extend to the sale of different goods and services. Continuing with the above example, another business entity could likely use “Ivory” in connection with the sale of computers and not run up against the rights of the business using “Ivory” for soap. There are, of course, limitations and caveats to this principle, but it is the general rule.

    The purpose behind these limited rights is to protect consumers and the producers of goods or services. Trademarks help to protect consumers by identifying the source, and thus quality, of the goods or services. Trademarks help to protect the reputation and good-will of the providers of goods or services. Trademarks thus derive value from the connection that consumers draw between the good-will and reputation of the producer represented by the mark and the goods or services to which the mark is affixed. Trademark law is attached to, advances, and protects the value of this connection.

    The manner in which trademark law operates is derived from the common law of unfair competition and the Lanham Act. Trademark is, in part, a subset of unfair competition, which encompasses other areas of law like trade secrets and rights of personality and publicity. While trademark law is grounded in the common law of unfair competition, it has been codified as a federal statute in the Lanham Act. The Act incorporates many of the core concepts from the common law, but it also provides many of its own rules such as the requirements and benefits of registration.

    Within trademark law are three distinct principles which govern what material can be trademarked, what established ownership in a trademark, and what exclusive rights a trademark owner may claim. These three principles can be called validity, ownership, and the scope of right. Together, they make up most, if not all, of trademark law.

    The principle of validity determines what subject matter or material can be trademarked. Only certain subject matter may be trademarked. Some common types of valid subject matter include words, logos, and product packaging. Invalid types of subject matter include functional features of objects, certain materials covered by copyrights or utility patents, and geographic terms. The subject matter is not always dispositive of validity, however. A valid trademark must also be distinctive, which is determined through various tests depending on the underlying subject matter.

    The principle of ownership determines who has the right to use a valid trademark. Ownership itself is determined by priority of appropriation, which means that the first person to use the mark is the presumptive owner. This seems fairly straight forward, but the analysis can be complicated because the conduct that constitutes use is not always clear. Even when temporal use is clear, trademark use is also constrained by geography (i.e. ownership is first in time and space). Furthermore, the first person to register a mark is also conferred certain rights, but the first person to register first may not always be the first person to actually use the mark. This scenario can seriously complicate the analysis of who has ownership rights in the mark, especially where two users have priority in their respective geographic regions.

    The principal of the scope of right determines what kind of conduct the owner of a valid mark may enjoin in respect to the use of their mark. A shorthand term for what kind of uses by others are actionable by a trademark owner is the word ‘infringement.’ Trademark infringement liability comes in two categories: confusion based liability and dilution. Confusion based liability arises when the defendant’s conduct would likely cause consumer confusion as to the source of the goods in question. In other words, an action for infringement arises if consumers are likely to think the defendant’s goods are those of the plaintiff. Dilution occurs when a defendant acts in such a way as to lessen the capacity of a famous mark to identify and distinguish the goods or services of the plaintiff. Dilution can occur with or without competition between the parties, or whether there is any likelihood of confusion.
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