Creating, Protecting and Defending Brand Equity

The use and protection of distinctive brands are integral steps in bringing a product or service to market, in differentiating that product from others, and in marketing, promoting and selling that product or service to local, regional and global customers. Brands create value, build and protect equity, and become core to the product’s definition and reputation in the market.

By claiming trademark rights, a brand holder asserts that an understanding exists between their brand and consumers, that their brand is distinctive and associated with a specific product or service in the market. A trademark can be seen as a form of contract between two parties, where one party uses a brand (a word, domain name, logo, even a color, scent, or sound) to identify and differentiate itsproduct or service from others.

The other party to the contract is the consumer. This contract can break down when the trademark is not sufficiently distinctive from others, or when a third-party attempts to deceive or confuse the buying public into thinking their own brand is either the same or related to another.

Trademark laws exist around the world to facilitate the use, registration, and protection of brand names. With the incredible growth of the internet and global commerce, the importance of having a recognizable brand that can be used and protected has grown. In tandem, the risk of infringement, the threat of someone else trading on or benefiting from someone else’s brand equity, has also grown. While it is easier than ever to promote a brand, the threats and challenges involved in protecting that brand have also grown.

One can see evidence of trademark disputes affecting commerce every day in the news. The issue of protecting brand equity is front of mind for major companies and brands worldwide, and should be at the forefront of any marketing strategy. Trademark disputes most often hinge on whether consumers will be confused, whether the use of a rival name will unfairly affect the “contract” a brand holder has built with the public.

Trademarks do not have to be identical to cause confusion. A local hot dog institution in New Jersey, Rutt’s Hut, is suing a rival hot dog restaurant that recently changed its name to Mutt’s Hut. The plaintiffs’ contention is that Mutt’s is trading on the long-term brand equity that Rutt’s has built with the public, and that consumers will assume the two restaurants have common ownership.

Disputes also arise over whether a certain term is generic or descriptive, whether it is too general for one company to claim exclusive rights. A recent case involves Apple Computer suing Amazon over the use of the term “App Store.” Apple has objected to Amazon’s planned launch of an “Appstore,” a rival service to sell applications for the Google Android operating system. (Interestingly, Microsoft has already disputed Apple’s trademark for “App Store” on grounds that it was too generic, and Apple has countered that “App Store” is no more generic than Windows, a Microsoft trademark (81 PTCJ 343, 1/21/11)).

Likelihood of confusion can be extremely subjective, and the real and perceived threat to brand equity can be challenging to assess. Facebook recently opposed a U.S trademark filing by Teachbook, claiming that Teachbook threatened the Facebook brand with a likelihood of confusion, deceptiveness and false suggestion of a connection; along with dilution of the Facebook name, citing the distinctive BOOK component of their brand, along with the fact that Teachbook was calling itself a “Facebook for Teachers.” While it is up to the courts to determine the validity of each specific trademark case, it is the strength of the bond between the brand and the product or service it identifies that determines how strong the brand’s “contract” is with the public and whether or not confusion could actually exist. Of course, every brand is different, so it’s almost impossible to determine what is overreaching and what vigilant brand protection is without examining each case individually.

Internet domain names have emerged as a major battleground for brand promotion and protection. While it is easier than ever to register and promote your name on the internet, it is also easier for others to trade on another brand’s equity. Online commerce and auction sites arguably make it easier for counterfeiters and producers of “knock off” goods to promote their own products at the expense of the established brand.

The use of keyword advertising with search engines to affect diversion (a searcher types out an insurance company name when they need to get car insurance, and the first link they see is a paid advertisement for another insurance broker) is another risk, as is the obvious risk that someone may claim, or even hijack, your brand as a domain name (i.e. you promote the brand YAH-BOO, and someone else registers the domain name).

It is the right of every brand holder to maintain, defend, and promote its own brand, unless that brand infringes on the rights of another. In the United States, one of the easiest and most obvious ways to defend your brand is to use it. The United States is a “first use” country, meaning that even if you don’t file for a trademark with the Patent and Trademark Office, you can still claim rights to a brand by using it in the marketplace. In fact, the first person or company to use a trademark will usually trump the first person to file the name with the PTO.

Building brand recognition and distinction is the best way to cement the brand contract with the public. Registering a domain name and promoting the brand on that site is an excellent step, as is establishing and proving sales. Once this is established, and the brand is distinctive from others, a de facto level of trademark protection will automatically be conferred in the United States.

Filing for a trademark with the PTO is another way to provide constructive notice that you attempt to use and defend the name. This can be coupled with a TM or circle-R symbol placed near your name (the circle-R can only be used if you actually have a registered trademark).

Having your trademark accepted and registered with the PTO is a sure way to establish rights. Before registration, the PTO will conduct an examination to determine if they feel you have a sufficiently distinctive and valid trademark. Your registration becomes a matter of public record and your trademark can be defended in federal court.

If your brand is perceived to infringe on another, you can expect a challenge. If you face a legal challenge, state and federal district courts can be used to defend your brand. A direct challenge to your filed or registered trademark with the PTO can also be defended through the Trademark Trial and Appeal Board branch of the PTO.

In the case of domain names, you can also use the Uniform Dispute Resolution Policy, administered by the Internet Corporation for Assigned Names and Numbers, or ICANN, to either challenge another or defend a challenge to the use of a domain name. To prevail in a UDRP proceeding, a trademark owner must prove that: (1) the domain name is identical or confusingly similar to a trademark or service mark in which the complainant has rights; (2) the registrant does not have any rights or legitimate interests in the domain name; and (3) the registrant registered the domain name and is using it in “bad faith.”

The AntiCybersquatting Consumer Protection Act (1999) also allows U.S. domain holders to challenge domains that are confusingly similar to a famous mark, or domains registered in bad faith (i.e., registering an incorrect spelling or mistyping of a popular domain name like gooogle.com or to hold a domain for ransom from the proper brand holder). While the fame and distinctiveness of the mark is certainly a factor in whether or not a website might be confused with another, these resources are available for all brand holders.

Proactive searching and policing of your brand is a prudent step in making sure your name is protectable. This is an advisable first step in naming a product or service. Several patent and trademark offices around the world have free websites for screening active trademarks, and professional search firms allow you to screen upwards of 50 countries and domain extensions around the world.

Professional search firms can also conduct more detailed searches for you, including brands appearing in common law, websites, domain names and company names. The search firm will be skilled in searching not only the trademark registrations within the geographic locations you are interested in, they are also well versed in searching common law use of the name including websites, company names, domain names etc. They maintain proprietary collections of common law databases and search algorithms that allow them to be extremely proficient in searching for “confusingly similar” names that may not be uncovered by a lay person who conducts trademark research on their own.

These searches will let you know if a valid trademark exists somewhere, filed or otherwise, that could pose a problem to your domain or brand name. Searches can be tailored to your budget and are almost always cheaper than facing a legal challenge later on.

Once you establish your brand, you can monitor or “watch” trademark and domain filings around the world to make sure no one files something too similar to your own trademark or brand. This can allow you to catch a problem before it becomes too big or creates a challenge to your own brand.

Most countries, including the United States, will publish all filed trademark applications on a regular basis in a publication called the Official Gazette, allowing existing brand holders to identify and challenge new brands if they feel they infringe on theirs prior to the PTO granting rights (each country maintains its policy and procedure in this regard). Watching services can monitor these gazettes on a global basis, alerting trademark owners of potentially infringing trademark applications.

Another important step is to manage your domain portfolio, working to register and maintain your domain names. It can be easy to lose track of your domains and actually lose the name when the renewal is due. Another common challenge is to maintain your dotcom, but have competitors or challengers lay claim to similar ccTLDs (i.e., you may register blammmo.com, but find that another individual is trading on your good name at blammmo.cn).

As mentioned earlier, the best way to protect a trademark is to start out ensuring that your mark is clear by conducting a trademark search. This is the most reliable way to ensure you will not receive a cease and desist letter after you’ve invested in the launch of your product or service. As in so many areas, an ounce of prevention is worth a pound of cure.

Next, put the mark to use in a way that can be proven as common law use and register it with the PTO. The registration and use of a domain name is clearly a great step to show that usage. As long as you register your domain in good faith, and maintain the site, the registration will offer a level of common law rights in the United States.