Trademark Research and Trademark Clearance – A Primer

We previously discussed trademarks in general and how they are used by businesses to distinguish their brand of product or service.  In this post, we will discuss the trademark clearance process, and the trademark registration process with the US Patent and Trademark Office.

Trademark Clearance

Trademark clearance is the process of evaluating potential brand names against existing brand names or designs that are in use in commerce.  Trademark clearance is important for two main reasons.  First, it is of no use to a new brand to overlap with the brand name of another business that is already being used in commerce.  This will tend to lead to consumer confusion about who makes your product.  Second, if another business is already using a particular mark, you run the risk of nasty letters from that business’ attorney, and potentially a lawsuit for infringement and/or dilution of that mark.  If you have already committed substantial money to develop and market a particular brand name, then discover that your mark is already in use by another in the same market area, not only will you lose the money invested in your marketing, but you could be sued.

You should always talk with an attorney licensed in your state before making decisions about your brand or design mark.

Market Research

Generally, a person starting out in business should conduct some research on similar or competing businesses that are already established in the market place.  For example, if you wanted to start a new information technology company that virtualizes physical servers, you would want to find out if there are other businesses with that kind of technology.  VMWare and Microsoft are major players in this market.  You would then want to take a look at the brand names that these companies use to distinguish their software for virtualization.  For example, Microsoft uses a brand name, “Hyper-V” or “Hyper-V Server” for this product offering.  VMWare uses a number of individual brand names for its suite of products.  You will note, however, that each one of these names begins with a lower case “v.”  This business also uses “VMWare” itself as a brand name when you peruse their marketing materials.

From this preliminary research, you would likely rule out a product name that included “Hyper-V” or “VM” or “VMWare” in your name.  You will also note that a lot of the literature on virtualization uses the marketing concept of “cloud” or “cloud computing.”  It is possible that there are companies that develop virtualization software that include the word “cloud” or “cloud computing” in their brand name.  For example, a google search for “cloud computing” turns up a paid ad for Oracle, HP, and a link to IBM’s web site.  So, “cloud” may also not make sense to be a part of your software’s brand name or identity.  You might also rule out starting out your product branding with the lower case letter “v,” as VMWare may enjoy “family of marks” protection.

Knowing what’s in use in the market can help you start thinking about how to describe your product, and how you want to distinguish your software from the existing companies that make this kind of software.  Understanding the words that are commonly used by customers or businesses that offer similar services to your new business will help you to get into the mindset for branding your company’s product or service.

Potential Brand Names

From here, you would want to work on developing a list of potential brand names for your product.  As you may be aware, the law recognizes varying degrees of protection for marks on a sliding scale.  Brands or marks that are merely descriptive of a product or service generally cannot be registered, except under specific circumstances (that the brand has been used in commerce for long enough to develop a secondary meaning).  Also, marks that are generic, which is, that tend to represent a category of goods (think “Thermos” which about 100 years ago was a trademark that became so effective that everyone called their hot drink carrier a thermos) cannot be registered.  These two groupings of marks will generally condemn the mark to little or no protection should another start using that mark with his or her goods.  (For a general discussion of trademark protection, take a look at the case of Abercrombie & Fitch v. Hunting World, Inc., 537 F.2d 4 (1976)).

However, a mark that is “suggestive” or is “arbitrary and fanciful,” which is a fancy way of saying that the mark is distinctive, will receive more protection from infringers.  For example, “Coke” or “Coca-Cola” are trademarks for a very well known brand of soft drink.  The word “coke” literally means a fuel that is derived from coal.  I doubt that one would say that this word would, in a literal way, have much of anything to do with a carbonated soft drink, but you could see why this might be suggestive – the caffeine in this soft drink powers many a late night programmer (along with pizza) to hack out some code for a morning deadline!

Clearance

Coming up with a list of potential names is a challenge for many businesses.  However, after you get the creative juices flowing and have a list, the next step is to work with a Trademark attorney to review your list to help narrow the field.  An attorney can help you to identify “generic” or merely descriptive proposed marks that are unlikely to be accepted for registration.  In addition, an attorney can perform a preliminary search to see if there are existing marks already registered that are the same or very similar to a proposed mark.  These steps will reduce your list of potential marks.

After this hurdle, you can identify what potential marks you want to pursue.  If appropriate, an attorney can order a more comprehensive search from a trademark search business to identify, more broadly, those marks already in use in commerce that may overlap with the proposed mark.  The attorney can then help you understand your chances at a successful registration of a proposed mark.

 

Note: Marks mentioned in this article are the property of their respective owners.  Use of these marks is not meant to imply endorsement of this article.

Trademarks 101

What are trademarks?

Trademarks are a word or words, an image, or other similar marking that identify the source of a product or service.  Historically, trademarks were used in various aspects of commerce, including marking goods that were shipped so that, in the event of a shipwreck, the owner of the goods could claim them instead of the goods escheating to the crown.  In the age of guilds, individual craftsmen would have a mark they would apply to goods they individually made so that the guild would be able to trace a product back to its individual maker in the event that the good did not meet the standards of the guild.  Trademarks have even been found on ancient goods in the Roman empire.[1]  Marks have been around for a long time and serve an important purpose.

Today, there are numerous trademarks that are almost universally recognized: Coke, Pepsi, McDonald’s, Cisco, IBM, HP, Ford, Facebook.[2]  All of these words signify a particular maker of a product or service – Coke and Pepsi represent their respective soft drink products; McDonald’s represents a certain brand of fast food (as distinguishable from Checker’s, Red Robin, Wendy’s, Burger King, and many others); Cisco, IBM, and HP are all respective computer and software makers; Ford for cars; Facebook for a web site that introduced the world to social media.

Why should I register a mark?

Intellectual Property, of which trademarks are one kind, presents specific challenges for those that want to own and protect it from use by others.  Unlike physical property, which you can touch (and potentially can protect by a lock, fence, or gate), intellectual property is intangible.  As a result, securing IP requires a different action to protect it from infringement or dilution by others.  Prosecuting and securing a registration is an important way to mark out the boundaries of your intellectual property.  The research required prior to registration of a mark helps a prospective trademark owner determine if a proposed mark is already in use, and if so, for what product or service.

This research is important to help a prospective trademark owner from using a mark that infringes on someone else’s intellectual property, thereby avoiding unnecessary litigation.  In addition, a “cleared” mark is more likely to be distinctive as a brand for its associated product or service, which of course is the whole point of having a brand name in the first place – to distinguish your product in the market place.

Registration of a trademark that is in use in commerce also helps a mark owner to protect that mark from use by others without authorization, as the registration itself represents constructive notice to a would be mark user to not use the mark.[3]  In addition, a mark registration helps simplify a trademark owner’s infringement law suit against unlicensed users, as a registered mark carries with it the presumption of validity as to the mark (and five years after registration, the registration itself becomes conclusive evidence of ownership as to the registered mark).[4]  Moreover, registration provides an owner with more remedies than an unregistered mark owner under federal law.[5]

So while registration is not mandatory, there are strong incentives for a trademark owner to register his mark, particularly if you plan to be in business for the longer term with a particular product or service.

In addition, a substantial portion of the value of businesses today comes from a business’ intellectual property, including the brand names used to distinguish its products and services in the market.  In fact, as we move further into an “information economy,” I would conservatively estimate that a majority of a business’ value comes from its intellectual property.  Identifying and protecting a brand name is a key step in the business planning process for any business.  Also, because of the widespread adoption and use of the internet globally, protecting one’s brand name from infringement is more important than it ever has been for business.


[1] See Francis, Collins, “Patent Law,” 5th Edition at page 983 and footnote a that provides further reading material for the history of trademarks.

[2] Marks referenced above are the property of their respective owners.  None of the mark owners are affiliated or suggested to endorse the statements of the author of this article.

[3] See 15 U.S.C. § 1072.

[4] See 15 U.S.C. §§ 1065, 1115(b).

[5] See, for example, 15 U.S.C. § 1111.

Cloud Computing Primer for Attorneys

The following is my presentation file from the annual Maryland State Bar Association meeting.  I was a panelist on the topic of Cloud Computing: Fact or Fiction on June 15, 2012.  My presentation discussed some of the basic issues about cloud computing, such as what it is, the cost savings that may be possible by moving to the cloud, some of the security issues with computing, and some of the ethics issues that practicing attorneys face when making decisions about computing systems.

If you have any questions about this presentation, please feel free to email or call me to discuss them.  Thanks.

Cloud Computing Fact or Fiction

Meaningful Use Overview for Maryland MGMA

On March 13, 2012, I presented to the membership of the Maryland MGMA on the topic of “Meaningful Use,” in light of the recent publication of the Stage 2 interim regulations by CMS.  Below, please find a link to the presentation file.

Meaningful Use Overview

Members had questions related to meaningful use, which I will make an effort to respond to under separate cover.

Don’t Be Fooled (Domain Name Registration)

One of my clients forwarded to me an email he received regarding the renewal of his domain name.  The email had the appearance of an invoice for the renewal.  The problem?  The invoice was not from my client’s domain name registrar, but from a vendor that wants my client to transfer his domain away from his existing registrar.

How Does This Work?

If you have a web site, your web site has a registered domain name.  That name (ending with a .com, .net, or another .something) has to be registered with an authorized domain name registrar, like Network Solutions or GoDaddy.  There is an international body, ICANN, that is responsible for approving registrars for the “top level domain names.”  ICANN acts as a coordinator to make sure that a particular domain name is controlled by one responsible registrar, who is the host for translating the domain name into an IP address, which your computer needs to find each internet site that you are trying to reach.  Without such a coordination, the internet would likely stop functioning in that you would be unable to consistently find a web site when you went to visit it.

Underneath the covers, each time you go to visit a web site, your computer asks what the IP (internet protocol) address the domain name you’ve asked for translate to.  For example, my domain, faithatlaw.com, has an IP address of 63.147.127.12.  My computer finds this IP address by asking a domain name server close to it (usually on the same local area network as my computer).  This local domain name server, in turn, asks itself whether it is an “authoritative” server for the domain name, and if not, asks a domain name server above it who is the authoritative server to tell it what the IP address for this domain name is.  Most DNS servers have a list programmed into them of “root hint” or upstream servers to ask when the local server does not know.  Ultimately, (and usually within a few seconds, which is kind of incredible, given that there are billions of computers on the worldwide internet), the local domain name server finds the address and tells my computer, 63.147.127.12.  My computer, in turn, uses this information to point my web browser to where I was trying to go.

This architecture only works if there is one authoritative domain name server out on the internet.  If there were many authoritative servers, each might have a different IP address for the same name, which would mean my question of where to go might be answered differently each time I asked it.  Talk about mass confusion.  So, if you own a domain, you registered it with a registrar.  You pay a fee to have a registration.  Usually you need to pay this fee annually.

The Problem

The problem is that for many business owners, the registration is handled by a web developer, or was done years ago (because you can purchase a web site registration for several years at a time).  It is easy, then, to forget about who you registered with when it comes time to renew your domain name.  And then, it is even easier to be fooled into sending your credit card information to “Domain Services” (the originator of the spam that spurred this posting).  One way to solve this is to setup your domain names to automatically renew with your current registrar.  You can also determine who is your current registrar by performing a “WhoIs” query on your domain name.  You can use this information to determine when your domain name is due to renew.

Be careful – the internet is a wild place.  This is but one way to get into trouble!

The Struggle Over Privacy Online

More and more data is being collected and stored in more and more data centers all over the world as the use and functionality of the internet expands.  Sites like Facebook now have in excess of 800 million users, half of which are active in any particular day.  An almost countless amount of information and data is shared with the public internet on a daily and hourly basis.  In addition, many businesses are using cloud-based services (like Google’s gmail or Google Apps, Salesforce.com, Amazon marketplace, and a host of other solutions) to provide services and products to customers and manage their businesses.  As a result, we keep inventing names for the units of measure to calculate how much data is available throughout the world wide web (I mean, how many people do you know that use the term “exabyte” in conversation, really?).  The problem posed is what in the world all of this data is really being used for.

To answer that question is not simple.  A fair amount of what governs the protection, use and backup of data on the internet are private agreements between the service provider and the person or business who is putting data online.  When’s the last time you stopped and read one of those online “click-through” agreements?  I can’t say most are much fun to review (with an exception for the Sharebuilder user agreement, which took smoke breaks periodically and made entertaining chatter in between paragraphs of heavy-duty legal writing).  Commonly, these agreements (for services designed for consumers) severely limit the site operator’s liability, disclaim any and all warranties regarding the service, and few offer that many protections for your data or your privacy.  (See, for example, Second Life’s Privacy Policy which provides some limitations on data provided to the service, but your ability as a user to control access to your information is relatively limited in comparison to what Second Life may do with information about you.  Google’s Privacy Policy is somewhat more limiting on what Google might do with your data, but you will notice that there is some variation in policies based on the specific product you might be using).

There are also governmental regulations that may govern your privacy.  Facebook recently entered into a consent order with the Federal Trade Commission because of allegations of privacy invasions by Facebook.  Presumably, other nations or international bodies may have jurisdiction over some of the larger companies that operate on the internet.  And, just like other international intellectual property rights may vary by country, privacy regulation also is likely to vary (with some nations like Germany with more data protections than others, for example).  Ultimately, our privacy interests in part have taken a back seat to having “free” applications available to us all the time.  Google’s original product, web search, has historically been free to use by anyone connected to the internet, but only because advertisers have been willing to pay for click-through advertising.  As google continues to dominate the web search market, so has it also benefited from the many advertisers that are able to cost-effectively run ads alongside the web search engine’s results.  These ads are effective because they usually attempt to match up what a user is searching for with a product or service that might be relevant to the keywords.

Facebook (and other social media technologies) have, as well, informed our cultural disinterest in privacy, by providing a forum to post all sorts of the mundane, outrageous, or controversial information and graphics, and quickly disseminate this information to “friends” or the general public.  However, there has not yet emerged a “facebook” for health data (though, perhaps, the rise of health information exchanges and online personal health records may result in such an application).  Lawyers and accountants don’t (at least not intentionally) publish their client’s secrets online.  Our government has in recent years labeled many more documents as secret (and therefore, not as easy to obtain) following 9/11.  There remain islands of privacy in the sea of unfettered information access that is the internet.  If you value your privacy, you may need to pay more to preserve it, or be more discerning in the products and services you contract to purchase.

 

Unauthorized Practice of Law & LegalZoom

LegalZoom is a national provider of online legal forms that markets to the general public.  You may have seen an advertisement with the famous attorney Robert Shapiro (a founder of the company) telling you that LegalZoom can help you form a company or write a will at a relatively low flat rate.  LegalZoom is controversial.  At least it is controversial for some bar associations in the United States who allege that LegalZoom is engaging in the unauthorized practice of law.

The unauthorized practice of law is where a person holds himself out to be licensed in a state to provide legal services.   Each state in the U.S. regulates the lawyers that practice within that state.  Therefore, each state has defined what constitutes the “practice of law.”  A class action suit was brought by citizens of Missouri against LegalZoom on the grounds that the document preparation that LegalZoom provided was a legal service, but LegalZoom itself is not an attorney admitted to practice in Missouri (here’s a blog post on lawyerist.com with links to more about this case; here is also a stub on the ABA Journal).

There are at least two sides to this story.  The one side is that lawyers, trained in their state’s laws, are more likely to be competent in drafting a document that is legally sufficient in their state.  Furthermore, lawyers are susceptible to suit for malpractice, and are usually pretty easy to find to be served, and generally carry insurance.  An out of state web system that is not staffed by lawyers admitted to practice in a particular state are therefore less likely to competently draft legally sufficient documents, and also less susceptible to claims of malpractice (or breach of contract).  Therefore, preventing the unauthorized practice of law is an important service within a state to protect its citizens from untrained attorneys screwing up their legal issues, leaving them without recourse for their legal problem and without the means to sue the service provider.

Another side is that lawyers are expensive, and the unauthorized practice of law statutes are designed to reduce the supply of available attorneys, thereby artificially increasing the cost of legal services.  And, there are a lot of ordinary people in the world who cannot afford to pay an attorney $600 per hour to write a “simple will” or help them to file their incorporation papers for their new business.  There is, therefore, an under-served marketplace of clients that need an attorney’s help but can’t obtain assistance from an attorney in their state.

LegalZoom recently obtained around $100 million in venture capital, and may one day have an initial public offering.  More than a few people are betting that LegalZoom can get around the unauthorized practice of law, and that there is a substantial market for the services they are providing.  I have had at least one client recently tell me that they started a business using LegalZoom.  Would I have done a better job forming their LLC, just because I am a Maryland attorney?  I would probably say, no.  But I think customers miss out on interacting with an attorney and establishing a relationship with one.  Down the road a person that starts a new business may need legal help to review other issues, write contracts, help add a new owner or sell the business to another entity.  The business could end up being sued.  LegalZoom does not, and could not, provide litigation services, because that service would clearly be unauthorized practice of law unless they referred you to a Maryland attorney to handle the case.

Besides, the State Department of Assessments and Taxation provides many of the forms required to be filed in order to form a particular entity in Maryland.  Providing blank legal forms and general instructions is not the unauthorized practice of law, and this information is sufficient for some to properly get a business registered.  Our practice at Faith At Law takes a middle ground between blank legal documents and services like LegalZoom, and having a client go to a full-service law firm.  We offer legal document preparation services online that include limited legal consultation (with yours truly) provided to Maryland businesses and individuals by a Maryland-licensed attorney.  No, you won’t likely see ads for Faith At Law on television in California, but Marylanders can obtain flat rate legal services for certain documents from us.  And there are other attorneys providing similar kinds of limited legal services now in a number of states in the U.S.  My hope is that we can help meet a market need while also not leaving clients with a shabby legal service.  I’ll let you know when I’m ready for my IPO!