The Truth About Trademark Bullies

By: Eileen McDermott

For media professionals, the topic of trademarks sometimes comes up in a negative context, most recently in the form of a phenomenon called “trademark bullying.” In this scenario, a large corporation is usually said to be abusing its power by unreasonably enforcing its trademark rights against a smaller business or individual. Notices from the larger company requesting that the smaller company cease use of the mark (known as cease and desist letters) are often published online and criticized. Questions such as, “Doesn’t this corporation have enough money already?” and “How can someone own a word?” abound. But what is often lost in all the understandably passionate debate is the truth about what trademarks really are and how they work.     

Trademarks represent the goodwill and reputation of a company. A trademark is not merely a physical attribute that helps consumers to distinguish a particular brand, but also an indicator to consumers that they can trust the brand in question based on their experience and the brand’s market reputation. Such reputation requires years of investment in providing quality goods and services and continuous use of a mark in commerce. Trademarks, along with other types of intellectual property (IP) such as patents and copyrights, also contribute greatly to a country’s economy. In a 2012 study, the U.S. Department of Commerce found that IP-intensive industries support at least 40 million jobs and contribute more than $5 trillion dollars to, or 34.8 percent of, U.S. gross domestic product (GDP).

In order to maintain rights in a registered U.S. trademark—and by extension, the reputation the brand acquired—owners have a duty to police the mark against improper third-party use. If many third parties are using the same or a similar trademark in commerce in connection with goods and/or services similar to the trademark owner’s after the trademark owner has already begun use, and the owner does little or nothing to police its trademark, the trademark is likely to lose some or all of its value as a source identifier in the marketplace. As a result, the trademark will become weaker, and in some cases it may lose its distinctiveness entirely.  This means that consumers will have trouble relying on the trademark and may be confused into purchasing products or services other than what they have come to expect.

To help avoid such adverse consequences, the trademark owner may police its mark by enforcing its trademark rights through various legal means, such as (a) sending demand letters, (b) proceeding with opposition and cancellation proceedings with administrative entities, (c) proceeding with litigation in the courts, and/or (d) entering into licensing and/or other agreements with third parties, as may be appropriate under the circumstances. While some courts have determined that trademark owners need not necessarily prosecute every infringing third-party use of the mark, such third-party uses can still affect the distinctiveness of the mark in the minds of the public. The optimal policing and enforcement efforts for particular marks may vary with the particular circumstances involved, such as the nature and importance of the mark, the nature of the trademark owner and the size of its legal budget, and the number and nature of the potential third-party trademark infringements.

It is important to note that this rule applies to all trademark owners—from individuals and small businesses to the largest multinational corporations. Thus, while it is true that the method chosen to police a mark should be carefully evaluated depending on the nature of the improper use and the individual circumstances, there is much more to “trademark bullying” than is usually reported.

 

Eileen McDermott is the managing editor, news and policy at the International Trademark Association (INTA) in New York City. INTA is a global association of trademark owners and professionals dedicated to supporting trademarks and related intellectual property in order to protect consumers and to promote fair and effective commerce. For more information, visit inta.org.