Relationships. Commitment. Results.

icon Careers

Category: Trademarks, Domain Names & Copyrights

Don’t Leave Yourself Exposed with a Naked Trademark License

and
September 24, 2019

Kevin SoucekJamie Pingor

Clothing your trademark license with certain contractual provisions can possibly cover an otherwise uncomfortably bare exposure.

An owner of a trademark has a duty to ensure the consistency of its trademarks, as well as the good(s) and/or service(s) under which its trademarks are used. If a trademark owner enters into a license agreement and fails to include adequate quality controls over a licensee’s use of its licensed trademark, this trademark owner could lose its trademark rights due to a legal doctrine referred to as the “Naked Licensing Doctrine.”

Naked licensing can lead to situations where the public is deceived or misled, due to a separation between the trademark and the expected quality of good(s) and/or service(s). In other words, once a trademark no longer functions as a source identifier (i.e., functioning as a symbol of a known quality of the good(s) and/or service(s)), the trademark effectively loses its significance as a source identifier.  Even if the goods and/or services are of similar quality, the lack of provisions controlling such quality can lead to problems. Oftentimes in these situations, once this significance is lost, the trademark can be deemed to have been abandoned under trademark law.

One example of naked licensing involves Freecycle, an Arizona non-profit dedicated to facilitating the re-use of unwanted items of others. The Ninth Circuit Court, in this instance, considered whether the trademark owner (i.e., Freecycle) had adequately controlled its licensees’ use of marks so as to prevent naked licensing. In this case, Freecycle allowed its licensees to use its trademarks without written licenses. Freecycle argued, in part, that it exercised control over its licensees through guidelines and policies published online. The Court rejected Freecycle’s argument and not only found that Freecycle failed to retain contractual control over the quality control provisions, but that Freecycle did not have actual control over the quality control provisions. In turn, the Court concluded that Freecycle engaged in naked licensing.

To comply with the current state of trademark laws, there are a number of legal provisions for addressing and/or monitoring the quality of goods produced and/or services provided under a trademark that must be incorporated in a trademark license agreement to prevent naked licensing. An example of such a provision generally includes an agreement where the licensee will agree to use the licensed trademark in accordance with such quality standards as may be reasonably established by the licensor. Nevertheless, including these provisions in a trademark license does not by itself protect the trademark. Even if these provisions are encompassed in a trademark license agreement, the trademark owner should make sure to also monitor, and if necessary, enforce the quality control provisions throughout the term of the license in order to preserve the inherent value of the licensed trademark. Any failure to enforce could also be considered an abandonment of the trademark.

Naked licensing is also a risk that should be assessed prior to any potential merger or acquisition. Prospective buyers and sellers should be aware of the potential detriments that a naked trademark license arrangement can pose relative to the strength and viability of a licensed trademark.

Therefore, it is prudent to seek out meaningful counsel and contact an experienced trademark attorney to discuss such potential licensing issues. Walter | Haverfield’s trademark attorneys regularly counsel clients in such licensing matters.

Kevin Soucek is an attorney at Walter | Haverfield who focuses his practice on intellectual property. He can be reached at ksoucek@walterhav.com or at 216-619-7885.

 Jamie Pingor is a partner at Walter | Haverfield and chair of the Intellectual Property team. He can be reached at jpingor@walterhav.com or at 216-928-2984.

*This article also appears in Crain’s Cleveland Business.

 

 

 

 

The Sweet Smell of Differentiation: Protecting Brand Intangibles as Trademarks


July 30, 2019

Jamie Pingor

In the never-ending quest to prove to consumers that a product is truly unique, manufacturers in recent years have begun to seek trademark protection on intangible brand qualities, such as scent. In 2014, Verizon registered a “flowery musk scent” as a trademark to pump into their larger retail stores in order to distinguish itself from other communications and consumer electronics retailers. In 2007, dental care product manufacturer Lactona produced toothbrushes infused with a trademark-registered strawberry scent.

What seems like a promising source of competitive advantage can prove quite difficult to achieve―and not yet a viable alternative to conventional trademarks―as evidenced by the fact that only around a dozen scents are currently registered as trademarks in the U.S. This figure, which stands in sharp contrast to the millions of conventional logos, phrases and designs currently registered with the United States Patent and Trademark Office (USPTO), is largely attributable to the fact that non-conventional trademarks are extraordinarily difficult to both secure and protect as registrations.

That Indefinable Something Can Be Difficult to Define

In a 2015 article published in The Wall Street Journal, it was noted, “In the U.S., you have to show that a fragrance serves no important practical function other than to help identify and distinguish a brand.” This means that products whose primary function is scent, such as perfumes and air fresheners, are not eligible for protection.

In 2018, a case involving Hasbro’s efforts to register the scent of its iconic children’s PLAY-DOH® brand modeling compound as a trademark reignited the conversation around non-traditional trademarks. Described in the USPTO trademarks register as a ‘sweet, slightly musky, vanilla fragrance, with slight overtones of cherry, combined with the smell of a salted, wheat-based dough,’ the scent received trademark protection from the USPTO. This was a win for Hasbro, but does this open the door for others seeking similar protection of the intangible properties of their products?

The bar remains high. The U.S. Supreme Court holds that the features of any product are not inherently distinctive.  What this means for manufacturers who wish to secure a non-traditional trademark is that they must unequivocally demonstrate that a scent, taste or sound is distinctly unique and clearly serves as a source-identifier through secondary meaning.  This is not an impossible task, but applicants should be aware that the time and costs associated with meeting the Supreme Court’s high and exacting standards can be onerous.

Sniffing Out a Solution

 As the law continues to evolve in response to changing consumer perceptions, intellectual property offices are simultaneously creating new technologies to allow manufacturers to protect non-conventional trademarks associated with their products. Despite this progress, there is still a long way to go before scent, taste and sound are afforded the same protections as tangible product designs and attributes. In the near term, it is recommended that potential applicants continue to secure protection of their intellectual property via traditional routes such as word, logo and design trademarks.

Given the complexity of these and all matters concerning intellectual property, companies would be well advised to seek the counsel of a trademark attorney familiar with the nuances of protecting non-traditional trademarks before submitting applications for trademark registration with the USPTO.

Jamie Pingor is a partner at Walter | Haverfield and chair of the Intellectual Property team. He can be reached at jpingor@walterhav.com or at 216-928-2984.

*This article also appears in Crain’s Cleveland Business.

 

USPTO Now Requiring U.S. Representation for All Foreign Trademark Applicants, Registrants, or Parties

and
July 22, 2019

Kevin Soucek

Jamie Pingor

Effective August 3, 2019, the United States Patent and Trademark Office (USPTO) will require all applicants, registrants, or parties (including Canadian attorneys) not domiciled in the United States to be represented by a U.S. attorney before the USPTO.  This new requirement is in response to a recent surge in filings from foreign applicants, in an effort to combat the growing problem of foreign individuals, entities, and applicants from failing to comply with U.S. law.

In the past, Canadian attorneys could represent clients before the USPTO without having to be represented by a U.S. attorney.  In addition to other foreign applicants and entities, this new rule now also applies to Canadian applicants, registrants, or parties.  Nevertheless, Canadian trademark attorneys and agents will continue, if eligible, to be recognized as additionally appointed practitioners who can represent their Canadian clients, although the USPTO will correspond only with the appointed U.S.-licensed attorney.

Once implemented, any foreign applicants who file a trademark application with a filing basis under section 1, section 44 or section 66(a) will be informed in an Office Action that an appointment of a qualified U.S. attorney is required.  The applicant will have the usual period of six months to respond to an Office Action, and failure to comply will result in abandonment of the application.

The USPTO anticipates that the requirement will have the benefit of generally reducing costs to applicants, registrants, or other parties. It will also provide greater value to consumers who rely on registered marks. Further, the USPTO expects that the requirement will not only aid the USPTO in its efforts to improve and preserve the integrity of the U.S. trademark register, but will also ensure that foreign applicants, registrants, or other parties are assisted only by authorized practitioners who are subject to the USPTO’s disciplinary rules.

Walter | Haverfield’s Intellectual Property group regularly counsels foreign associates worldwide in extensively handling various trademark matters before the USPTO. Please contact us should you need assistance.

Kevin Soucek is an attorney at Walter | Haverfield who focuses his practice on intellectual property. He can be reached at ksoucek@walterhav.com or at 216-619-7885.

Jamie Pingor is a partner at Walter | Haverfield and chair of the Intellectual Property team. He can be reached at jpingor@walterhav.com or at 216-928-2984.