Trademarks
A trademark is any combination of words and symbols that a business uses to identify its products or
services and distinguish them from others.
Types of Marks
There are four types of legally-protected marks:
Trademarks are affixed to goods in interstate commerce, e.g. Coca-Cola, Nike.
Service marks are used to identify services, e.g. Burger King, Weight Watchers.
Certification marks are words or symbols to attest that products and services produced by others
meet certain standards, e.g. The Good Housekeeping Seal of Approval, UL (Underwriter’s
Laboratory) Approved.
Collective marks are used to identify members of an organization, e.g. the Girls Scouts of
America.
Ownership and Registration
Under common law, the first person to use a mark in trade owns it. Registration with the federal
government is not necessary, but has several advantages.
Valid Trademarks
To be valid, a trademark must be distinctive–that is, the mark must clearly distinguish one product from
another. There are five basic categories of distinctive marks:
Fanciful marks.
Arbitrary marks.
Suggestive marks.
Marks with secondary meaning cannot, by themselves, be trademarked unless they have been
used for so long that they are now associated with the product in the public’s mind.
Trade dress — the image and overall appearance of a business or product.
The following categories cannot be trademarked:
Similar to an existing mark.
Generic trademarks– an item’s ordinary name— “shoe” or “book,” for example. Descriptive
marks.
Names. However, a surname can be used as part of a longer title.
Deceptive marks.
Scandalous or immoral trademarks.
Infringement
To win an infringement suit, the trademark owner must show that the defendant’s trademark is likely to
deceive customers about who has made the goods or provided the services. In the event of infringement,
the rightful owner is entitled to (1) an injunction prohibiting further violations, (2) destruction of the
infringing material, (3) up to three times actual damages, (4) any profits the infringer earned on the
product, and (5) attorney’s fees.
You Be the Judge: Network Automation Inc. v. Advanced Systems
Concepts, Inc.1
Facts: Network Automation and Advanced Systems Concepts both sold job scheduling and management
software, and both advertised on the Internet. Network sold its software under the trademarked name
Auto-Mate, while Systems used the trademark ActiveBatch. Customers paid between $995 and $10,995
to use these software programs.
Google AdWords is a program that sells “keywords,” which are search terms that trigger the display of a
sponsor’s advertisement. When a user enters a keyword, Google displays the links generated by its own
algorithm in the main part of the page, along with advertisements in a separate “sponsored links” section
next to or above the objective results. Multiple advertisers can purchase the same keyword.
Although ActiveBatch was Systems’ trademark, Network purchased it as a keyword. This purchase meant
that anyone who googled “ActiveBatch” would see a web page where the top results were links to
Systems’ own website and various articles about the product. But in the “Sponsored Sites” section of the
page, users would see the following ad:
Job Scheduler
Windows Job Scheduling + Much More. Easy to Deploy, Scalable. D/L Trial
www.NetworkAutomation.com
Sometimes, they would also see an equivalent ad for Systems’ software – the real ActiveBatch.
Systems alleged that this use of ActiveBatch was a violation of its trademark in the word. The trial court
issued an injunction prohibiting Network’s purchase of the Google keyword. Network appealed.
You Be the Judge: Has Network violated Systems’ trademark by purchasing it as a Google keyword?
Argument for Systems: Network and Systems are direct competitors. Their two products — Auto-Mate
and ActiveBatch — perform the same functions and are both advertised on the Internet. Network is
deliberately confusing customers about whose product ActiveBatch really is.
When consumers use the Internet they tend not to read carefully, they just click away. Few customers
analyze the web address of an ad to make sure they are going to the right website. Indeed, customers may
not even be aware of who owns ActiveBatch. The Network ad certainly does not reveal that Systems
owns this software. Customers could easily assume that whatever web address comes up belongs to the
rightful owner.
When customers search for a generic term, they know that they will encounter links from a variety of
sources but when they look for a trade name their expectation is that they will only be linked to that
specific product. For this reason, the use of another company’s trade name can create tremendous
confusion.
Network has bought the right to use Systems’ trademark as a ruse to fool potential customers. This
subterfuge is exactly the sort of behavior that trademark laws are designed to prevent.
Argument for Network: Today, most consumers are sophisticated about the Internet. They skip from site
to site, ready to hit the back button whenever they are not satisfied with a site’s contents. They fully
expect to find some sites that are not what they imagine based on a glance at the domain name or search
engine summary. Consumers do not form any firm expectations about the sponsorship of a website until
they have seen the landing page — if then.
Even if Systems’ arguments were true for consumer purchases, the typical customer for this software is a
sophisticated businessperson buying an expensive product. These purchasers are likely to be very careful
and will not be confused by Google ads. Also, they will probably understand the mechanics of Internet
search engines and the nature of sponsored links.
In the end, Network’s intent was not to confuse consumers, but rather to allow them to compare its
product to ActiveBatch. That goal is a completely appropriate use of a trademark.
1 2011 U.S. App. LEXIS 4488,United States Court Of Appeals For The Ninth Circuit, 2011.
NOTE: The court ruled for Network, holding that the sophisticated business people making this
purchase would not be confused. If you Google ActiveBatch in class, you can demonstrate that Network’s
ad still appears.
Question: What did the court say that a party claiming trademark infringement must prove?
Answer: Writing for the Ninth Circuit, Judge Wardlaw explained that under § 1114, a party claiming
trademark infringement “must prove: (1) that it has a protectable ownership interest in the mark; and
(2) that the defendant’s use of the mark is likely to cause consumer confusion.” With no dispute over
Question: Who benefited from this decision?
Current Focus
Companies complain that finding names for new products has become increasingly difficult, especially if
the name must work in other languages and also requires a corresponding Internet address. The classic
example is the Chevrolet Nova, which might have been fine in the United States but did not work in Latin
America, because “No va” means “Doesn’t go” in Spanish. Panasonic cancelled the campaign slogan for
its Japanese web browser that featured Woody Woodpecker: “Touch Woody–The Internet Pecker.”
General Magic couldn’t use “Regatta” or “Springboard” as a name for its digital assistant after
discovering that the web names were not available. The company ultimately went with “Portico.” Big Sky
Brewing Company named its ale “Whistle Pig Red,” but then found out that two Whistling Pig micro-
brews were already on the market. (What an obvious name for a beer!) Big Sky then went with Moose
Drool, only to be informed that another company owned the Moose family of names. No wonder that
advertising agencies often turn over the job of developing names to specialized consulting firms.
If students performed the trademark name research assignment, ask them now to share the results of
their search. Could they find names that were not already taken?
Example
Suppose that you are a Warner Bros. executive. The company is about to make a movie called Eraser that
stars Arnold Schwarzenegger as an elite federal agent who “erases” the past lives of informers and
relocates them to anonymous safety.
Question: Would you be worried about trademark issues?
Answer: In the script, a villainous computer company named Cyrex Corp. tries to kill Eraser. Warner
Question: The trademark search revealed no similar names, so Warner was safe, right?
Answer: Wrong. Cyrix Corp., a Richardson, Texas maker of microprocessors, filed suit, alleging
Question: What can Warner Bros. do now?
Answer: It changed the name to Cyrec Corp. and ordered that 1,793 frames of the film–about two
Federal Trademark Dilution Act of 1995
A claim of trademark infringement requires proof that the defendant’s use of the mark is likely to cause
confusion among users or consumers of the plaintiff’s products. Trademark dilution is a broader concept
that prevents others from using a trademark in a way that dilutes its value, even though consumers are not
confused about the origin of the product.
Domain Names
Cybersquatting is the bad faith registration, use, and resale of a domain name, or the use of a domain
name in violation of the rights of another to that name. The Anti-Cybersquatting Consumer Protection Act
(ACPA) provides a remedy for trademark owners and famous people who have been victimized by
cybersquatting. Disputes over domain names can be decided by arbitration under the Internet Corporation
for Assigned Names and Numbers (ICANN)’s Uniform Domain Name Dispute Resolution Policy
(UDRP) rather than by litigation under the ACPA.
Trademarking a Domain Name
The PTO will not trademark a domain name that is merely an address and does not identify the service
provided.
International Trademark Treaties
Under the Paris Convention, if someone registers a trademark in one country, then he has a grace period
of six months, during which he can file in any other country using the same original filing date. Under the
Madrid Agreement, any trademark registered with the international registry is valid in all signatory
countries. (The United States is a signatory.) The Trademark Law Treaty simplifies and harmonizes the
process of applying for trademarks around the world.
Trade Secrets
A trade secret is a formula, device, process, method, or compilation of information that, when used in
business, gives the owner an advantage over competitors who do not know it. Most states have adopted
the Uniform Trade Secrets Act (UTSA). Anyone who misappropriates a trade secret is liable to the
owner for (1) actual damages, (2) unjust enrichment, or (3) a reasonable royalty. If the misappropriation
was willful or malicious, the court may award attorney’s fees and double damages.
Case: Pollack v. Skinsmart Dermatology and Aesthetic Center P.C.2
Facts: Dr. Andrew Pollack owned the Philadelphia Institute of Dermatology (PID), a dermatology
practice. Drs. Toby Shawe and Samy Badawy worked for PID as independent contractors, receiving a
certain percentage of the revenues from each patient they treated. Natalie Wilson was Dr. Pollack’s
medical assistant.
Dr. Pollack tentatively agreed to sell the practice to Drs. Shawe and Badawy. Instead of buying his
practice, the two doctors decided to start their own, which they called Skinsmart. They executed a lease
for the Skinsmart office space, offered Ms. Wilson a job, and instructed PID staff members to make
copies of their appointment books and printouts of the patient list. Then they abruptly resigned from PID.
2 2004 Pa. Dist. & Cnty. Dec. LEXIS 214, 68 Pa. D. & C.4th 417, Common Pleas Court of Philadelphia Country,
Pennsylvania, 2004
Ms. Wilson called patients to reschedule procedures at PID. The two doctors also called patients and sent
out a mailing to patients and referring physicians to tell them about Skinsmart.
Dr. Pollack filed suit, alleging that the two doctors had misappropriated trade secrets.
Issue: Did Drs. Shawe and Badawy misappropriate trade secrets from PID?
Holding: Judgment for Pollack. A patient list is a trade secret, worthy of protection. Pollack spent a great
deal of time and money compiling and protecting his patient list.
Question: What did the defendants take from PID?
Question: Can a list of patients be a trade secret?
Question: What did Pollack have to do to qualify his patient list as a trade secret?
Question: Had Pollack done this?
Additional Example
Lest students think that stealing trade secrets is not a serious matter, consider this example. Petr Taborsky,
a former student research assistant at the University of South Florida, served seven months in prison,
including two months on a chain gang, for stealing trade secrets. Taborsky was an undergraduate in
chemistry and biology, working as a laboratory assistant at the College of Engineering when he took part
in a research project to make sewage treatment cheaper and more efficient. The research was sponsored
by Florida Progress, a utility holding company, which claimed that it had all rights to the research.
Taborsky discovered a way to turn a clay-like compound similar to cat litter into a reusable cleanser
of sewage, a process that has potentially valuable applications. The project leader maintains that Taborsky
was part of a research team that made the discovery but the student claims he made the discovery on his
own after the project had ended. A jury convicted Taborsky of grand theft of trade secrets. He was
sentenced to a year’s house arrest, a suspended prison term of 3½ years, and probation for 11½ years, as
well as 500 hours of community service. However, he was sent to prison when he violated the terms of his
probation by obtaining three patents related to the research.3
Additional Question Update
Students sometimes ask about the plot of the story, My Mother Is the Most Beautiful Woman in the World,
in Essay Question 3. This is the story:
A little girl is separated from her parents. Meeting a group of villagers unfamiliar to her, she describes
her mother as the most beautiful woman in the world. The village leader sends boys to bring back all
the likely candidates; none, of course, is the mother. Finally, a homely woman, in fact the girl’s
mother, approaches the crowd and is joyfully reunited with her child. The village leader presents the
moral of the story: “We do not love people because they are beautiful, but they seem beautiful to us
because we love them.”
Multiple Choice Questions
1. Thomas’s English muffins wanted to protect the method by which it makes muffins with air
pockets – what it calls “nooks and crannies.” What would be the best way to achieve this goal?
(a) Patent
(b) Copyright
(c) Trademark
3“Former Student in Patent Fight Leaves Prison,” New York Times, June 14, 1996, p. A14.
(d) Trade secret
(e) This method cannot be protected.
2. VitaminWater has become such a success that other companies are also now selling similar (but
not identical) flavored colored water. Some competitors bottle their drinks in a similar bell-shaped
bottle with a two-toned label that has a horizontal color band. What is the best infringement claim
for VitaminWater to make against these competitors?
(a) Patent
(b) Copyright
(c) Trademark
(d) Trade secret
(e) There is no good claim
3. Faber-Castell began manufacturing pencils in 1761. Although pencils and erasers had both existed
for some time, not until the 1870s, did the company began putting erasers on the end of its
pencils. The company was sued by an inventor who had previously patented this idea. The case
went to the Supreme Court. Who won the case?
(a) The patent holder because no one had ever put an eraser on a pencil before.
(b) The patent holder because the PTO had approved his patent.
(c) Faber-Castell because the pencil with an eraser was not novel.
(d) Faber-Castell because the pencil with an eraser was not useful.
4. If you buy a DVD, you have the legal right to:
(a) Watch it as many times as you want and then give it away
(b) Copy it to your computer and then give it to a friend
(c) Copy it to your computer and sell it on eBay
(d) All of the above.
(e) a and b only.
5. A couple thought up a clever name for an automobile. They wanted to protect this name so that
they could ultimately sell it to a car manufacturer. What would be the best method to obtain this
goal?
(a) Patent
(b) Copyright
(c) Trademark
(d) Trade secret
(e) This name cannot be protected.
Essay Questions
1. In the documentary movie, Expelled: No Intelligence Allowed, there was a 15-second clip of
“Imagine,” a song by John Lennon. The purpose of the scene was to criticize the song’s message. His
wife and sons, who held the copyright, sued to block this use of the song. Under what theory did the
movie makers argue that they had the right to use this music? Did they win?
Answer: Lennon’s wife and sons originally won a preliminary injunction prohibiting further
distribution of the movie. However, that decision was overturned. The court held that the movie
2. ETHICS After Edward Miller left his job as a salesperson at the New England Insurance Agency,
Inc., he took some of his New England customers to his new employer. At New England, the
customer lists had been kept in file cabinets. Although the company did not restrict access to these
files, it claimed there was a “You do not peruse my files and I do not peruse yours” understanding.
The lists were not marked “confidential” or “not to be disclosed.” Did Miller steal New England’s
trade secrets? Whether or not he violated the law, was it ethical for him to use this information at his
new job? What is your Life Principle?
Answer: Answers will vary. The court held that these customer lists were not trade secrets because
3. Rebecca Reyher wrote (and copyrighted) a children’s book entitled My Mother Is the Most Beautiful
Woman in the World. The story was based on a Russian folktale told to her by her own mother. Years
later, the children’s TV show Sesame Street televised a skit entitled “The Most Beautiful Woman in
the World.” The Sesame Street version took place in a different locale and had fewer frills, but the
sequence of events in both stories was identical. Has Sesame Street infringed Reyher’s copyright?
Answer: The court held that Sesame Street had not infringed Reyher’s copyright because Reyher
4. Roger Schlafly applied for a patent for two prime numbers. (A prime number cannot be evenly
divided by any number other than itself and 1. For example: 2, 3, 5, 7, 11, 13.) Schlafly’s numbers are
a bit longer—one is 150 digits, the other is 300. His numbers, when used together, can help perform
the type of mathematical operation necessary for exchanging coded messages by computer. Should
the PTO issue this patent?
Answer: The PTO patented these numbers because they were useful, they had never been used before
5. Frank B. McMahon wrote one of the first psychology textbooks to feature a light and easily readable
style. He also included many colloquialisms and examples that appealed to a youthful student market.
Charles G. Morris wrote a psychology textbook that copied McMahon’s style. Has Morris infringed
McMahon’s copyright?
6. Victoria’s Secret, a well-known lingerie company, found out that a man named Victor Moseley was
running a small store in Kentucky named “Victor’s Little Secret.” Moseley’s shop sold clocks,
patches, temporary tattoos, stuffed animals, coffee mugs, leather biker wallets, Zippo lighters, diet
formula, jigsaw puzzles, handcuffs, hosiery, greeting cards, incense burners, car air fresheners,
sunglasses, jewelry, candles, and adult novelties. Women’s lingerie represented about 5 percent of its
sales. Does Victoria’s Secret have a valid intellectual property claim?
Discussion Questions
1. ETHICS Virtually any TV show, movie, or song can be downloaded for free on the Internet.
Most of this material is copyrighted and was very expensive to produce. Most of it is also
available for a fee through such legitimate sites as iTunes. What is your ethical obligation?
Should you pay $1.99 to download an episode of American Idol from iTunes or take it for free
from an illegal site? What is your Life Principle?
2. For much of history, the copyright term was limited to 28 years. Now it is as long as 120 years.
What is a fair copyright term? Some commentators argue that, because so much intellectual
property is stolen, owners need longer protection. Do you agree with this argument?
3. Do you agree with the court that the band Furious George violated the copyright of Curious
George?
Answer: Answers will vary.
4. Should Amazon be able to patent the one-click method of ordering? What about Facebook’s
patent on a process that “dynamically provides a news feed about a user of a social network?”
Were these inventions really novel and nonobvious? What should the standard be for business
method patents?
5. Fredrik Colting wrote a book entitled 60 Years Later: Coming Through the Rye, a riff on J. D.
Salinger’s famous Catcher in the Rye. Colting’s book imagined how Salinger’s protagonist,
Holden Caulfield would view life as a 76-year old. Alice Randall wrote a novel entitled The Wind
Done Gone, which retells the civil war story Gone with the Wind from the perspective of Scarlett
O’Hara’s (imagined) black half-sister. Both Colting and Randall were sued and both alleged fair
use. Will they win?
Answer: The court ruled that Colting’s book was not fair use because it was not parody or
6. The Susan G. Komen breast cancer charity trademarked the term “for the cure.” It has brought
suit against other charities that use the term, as in “run for the cure, or “kites for the cure.” It also
sues charities that use the same shade of pink that it has long used on its ribbons. Should Komen
be able to trademark “for the cure” and the color pink?
7. Should a wildflower garden be eligible for intellectual property protection?
Answer: Answers will vary. The 7th Circuit ruled that a garden is not eligible for copyright