INFOTECH AND THE LAW

Avoiding Infringement of Third-Party Trademark Rights

A trademark protects the market value of a company's reputation and goodwill, as well as protecting investments in advertising and other promotional activities that develop goodwill. Under the law, a competitor is prevented from capitalizing on a trademark owner's reputation and goodwill by passing off its goods as those made or sponsored by the trademark owner. A competitor also can't mislead consumers about a product's sponsorship. However, a competitor's trademark does not prevent independent development of technology or even copying the technology so long as the public isn't confused about the source of the product.

There is no litmus test for determining whether a proposed trademark is "confusingly similar" to another trademark. However, here are some criteria:

1.Do the marks look alike?

2.Do the marks sounds alike?

3.Do the marks have the same meaning or suggest the same thing?

Other factors include:

-Similarities and dissimilarities of the goods and services

-The manner of marketing the goods (Do they move in the same channels of trade? Are they sold in the same type of store?)

-The nature of the prospective consumers (Are the goods bought by the same people? What degree of care would be exercised by the purchasers?)

Trademarks, when used on products purchased by relatively sophisticated purchasers, are less likely to cause confusion about the source of goods, than when used on goods typically sold to unsophisticated buyers. Whether marks are confusingly similar is the cumulative effect of the differences and similarities in the marks and in the goods or services.

It is important to realize that the ability to register a corporate name or state trademark does not prevent infringement of another trademark. Most states have minimal examination of marks as a prerequisite to registration. Unless a substantially identical mark or corporate name is already registered with the state, a registration will be granted.

Potential trademark infringements can be avoided by investigating before adopting a trademark. Online databases, such as Dialog, provide access to trademark databases, including TrademarkScan and Compu-Mark. Trademark databases also are available on CD-ROM.

More complete searches can be obtained from professional search organizations such as Thomson and Thomson, and Corsearch Inc. in New York that maintain their own databases, and from various firms in and around Washington, D.C., that use the Patent and Trademark Office files.

Information is available not only on federally registered marks and applications but also on state registrations and common law usage (trade names and telephone listings).Worldwide searches are also available. Consult an experienced intellectual property attorney to evaluate the results of the search when using marks with a high volume or core product or any mark that your company plans to invest significant sums of money promoting.

The scope of a trademark search should be a function of the company's plans and commitment to the mark. Sometimes you can know too much. Generally, the first to use a mark in connection with particular goods in a particular geographical area obtains the "common law" rights to the mark for use with those goods in that area. However, if someone is unaware of the mark's prior use, "common law" rights don't extend beyond the area where the mark is being used.

Federal registration of the mark gives nationwide constructive notice of the use of the mark, and expands the geographic scope of the rights. Also, when an application for trademark registration based on an intent to use is granted, it is as if use of the mark on a nationwide basis began on the date of the application. This means that federally registered marks and applications for federal registration should always be reviewed before making any substantial use of a mark. Registration gives constructive notice of the mark.

However, you may not want to know about prior use of an unregistered mark because it may preclude use of the mark in that geographical area. Accordingly, if a company plans to use the mark nationally, it should be aware of the prior use and either chose a different mark or reach an accommodation with the prior user before committing substantial resources to the mark.

However, if the mark will be used in a limited geographical area, the company is actually better off being unaware of the prior use. In the absence of knowledge, the company obtains the rights to mark in those areas where it is the first to use the mark. On the other hand, the company is subject to the prior use if it is aware of the use when it adopts the mark.

Anything that distinguishes the goods or services of one company from those of another can be a trademark or service mark. A competitor can acquire trademark rights not only in logos and brands names but also in such things as user interface design, trade dress (e.g. package design), arbitrary color schemes, and in some cases, even the smell of a product. Potential issues also can be avoided by making a conscious effort to use distinctive packaging. The less resemblance to a competitor's packaging, the less likely an issue of trade dress infringement will arise.

Michael A. Lechter, a member of the international law firm of Squire, Sanders & Dempsey in Phoenix, Ariz., has specialized in intellectual property law for more than 20 years. He can be reached via E-mail at 04820@cle00.ssd.com


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