Seattle Trademark Lawyer

Yet another trademark infringement story involving a Seattle microbrewery. (Previous STL posts here, here and here.)

This time, it’s Odin Brewing Company on the hot seat. Portland’s McMenamins Inc. recently told it that “Odin’s Gift Ruby Ale” infringes McMenamins’ federal registration for “Ruby.”

From Odin’s Web site: “We have an important announcement regarding one of our products… Odin’s Gift Ruby Ale. We were contacted this week by the management of McMenamins Corp. (Portland, OR) that they have a U.S. trademark on the term, ‘Ruby Ale.’ Therefore, we are in the unfortunate position of taking the words ‘Ruby Ale,’ off all of our assets from this day forward. This does not affect the availability of the beer itself. We will continue to produce and distribute Odin’s Gift and we thank you in advance for all of your support.”

Odin states it will be holding a contest to re-name the beer.

Washington Beer Blog post on the dispute here.

Not to sound like a broken record, but this thorn in Odin’s side was entirely avoidable. A trademark search — before Odin named its beer — would have uncovered McMenamins’ registration.

Changing brands is tough. It’s way, way better to avoid a problem on the front-end than abruptly having to change one’s brand in mid-stream.

It may seem like it, but this problem is by no means limited to Seattle microbreweries.

I spend a bunch of time each week advising clients how they can choose a trademark that will serve them well.

There are two main goals. First, is offensive. Well, it’s going on the offense. You want to make sure the mark serves your marketing goals. The mark needs to be memorable and will help your brand stand apart from your competitors; it should make your sales and marketing folks’ job as easy as possible. You also want to make sure you can grab as much brand “real estate” as possible with your mark, so it needs to be legally strong.

The second goal is defensive. A trademark owner doesn’t want to walk into a trademark infringement lawsuit that could be avoided by selecting a different mark. That’s an expensive setback that could result in having to hire litigators and abandon the newly-launched brand.

Here’s a checklist for your mark that will help achieve these goals.

• It’s memorable. I’m not an expert on this one. That’s more for marketing experts. But a brand that consumers can remember is half the battle. Think of the hundreds of different wine producers a customer comes across in a grocery store. There are dozens of “Chateau,” “Domaine,” “Villa,” “Valley,” “River” and “Cellar” brands. There also are brands that stand out: Stag’s Leap; Onyx; Fat Bastard; Turning Leaf. Trademarks are used to help consumers make a repeat purchase. It pays to help the consumer help you by choosing a brand they can remember. I’ve spent many a frustrating trip to the wine store trying to remember that bottle I liked a few weeks ago. Do a guy like me a favor and make your name, color scheme, and/or logo stand out. 
   
• It’s protectable. A protectable trademark starts with one that’s not generic. WINE brand vino can’t serve to distinguish your wine from your competitors because you’re all selling wine. For that reason, generic marks — words that denote the thing being sold — aren’t protectable. Anyone can use them.
  
  One rung up the protectability ladder are descriptive trademarks. They’re not protectable until longtime use (usually more than five years), lots of money spent on advertising, or big-time sales subvert the primary meaning — the description — to the “secondary” meaning — that the goods or services come from a particular source. Descriptive trademarks aren’t protectable until they achieve that secondary meaning. That means competitors can freely copy your new mark without liability during the often long ramp-up period toward gaining secondary meaning. Another problem with descriptive marks is even after your mark has become protectable, that doesn’t erase the word from the English language. Competitors can still use a descriptive mark to describe their product; they just can’t use it as a brand. So if you’re the Crispy Cracker Company, your competitors can still tell consumers their crackers are crispy (assuming that’s an accurate statement).
  
  To avoid such a competitive disadvantage, select a mark that’s immediately protectable: one that’s suggestive, arbitrary, or fanciful. A suggestive mark doesn’t convey any immediate information about the good or service, like CHICKEN OF THE SEA. It requires the consumer to use a little imagination before figuring out the message being sent (“Ok, chicken don’t live in the sea, so what’s being sold is a fish the seller’s saying is like chicken — inexpensive, tasty, and healthy. I get it: tuna.”). An arbitrary mark is a familiar word used in an unfamiliar setting, like APPLE as a brand for computers. A fanciful mark is a “coined” or made-up word like EXXON or POLAROID. It’s considered the strongest type of trademark because its only meaning is as an indicator of source.
  
  One last consideration in determining a mark’s protectability. Courts give strong marks more protection that weak marks. So if you’re EXXON and you’re suing a new gas station with the name EXXXON, the court will give you wide berth because the only rational reason your competitor chose a mark so close to your was to profit from consumer confusion. Not so if there are a bunch of other producers in your industry with brands similar to yours (think “Chateau,” “Domaine,” and “Valley” for wine). Marks in a “crowded field” get limited rights because courts assume consumers have gotten used to distinguishing between producers with common names. 
   
• It’s marketable. This means the mark isn’t already taken by someone else. The domain name is available. (And by all means, register the domain name before applying to register the trademark. You don’t want to make it any easier for cybersquatters than you have to!) The mark should be registrable, meaning it’s not barred by one of the “Section 2” bars, the most common of which are it’s likely to cause confusion with a prior registrant’s or applicant’s mark, and it’s merely descriptive. The mark also isn’t primarily a surname; it’s not functional; it’s not deceptively misdescriptive; it’s not immoral or scandalous; and it serves as a brand rather than as a decoration. There are other bars, but those cover most of them.
      
• It doesn’t step on anyone else’s rights. This one’s a biggie. A mark that’s likely to confuse consumers will prevent the mark from being registered; it is grounds for a registration to be cancelled; and the later-adopter is susceptible to being sued for trademark infringement and to being ordered by the court to stop using the mark. Not a good place to be. So how does one avoid this trap? By searching for prior uses. Start with TESS, the Patent and Trademark Office’s database. But don’t stop there. Hit Google and analyze at least 25 screens looking for third party use. And remember you’re not just looking for direct hits, i.e., identical uses of the mark. You need to look for “confusingly similar” uses as well (meaning look-alikes, sound-alikes, and synonyms). That gets tricky, which is why trademark searches can get complicated. If you’re about to invest big bucks in your brand, trademark clearance can be a high-stakes endeavor. One last thing. You need to stay far away from famous marks even if your use wouldn’t be likely to confuse anyone. That means MICROSOFT is a bad brand to market your used-car lot. You could expect to hear from the folks in Redmond — with good reason. That use is called “dilutive” use. It waters down their famous brand. That means you need to steer clear of nationally-known brands when adopting your own.

So is that all? Nope. There are other plenty of other pitfalls. But mostly they are subsets of what I’ve described above. I’d recommend you do as much due diligence as you can, and then pass the baton to a trademark attorney. (Spoken like a trademark attorney, I know.) But why take on all the risk yourself? Let an experienced professional sweat the details, identify the risks, and plot a strategy that will maximize your chance of selecting a mark that will accomplish your business goals.

In the United States, trademarks owners get automatic rights simply by using a mark. They can enhance those rights by registering their mark with a state authority or the U.S. Patent and Trademark Office. But to do so, one still has to prove it has put its mark to use.

So what does “use” of a trademark mean?

For a good, it means physically affixing the mark to the good, like the word “Nike” or the “Swoosh” logo on the front of a shirt. Or on a label. Or on product packaging, like a hang tag, box, or other container.

For a service, it means displaying the mark near the place where customers pay. Or on the trademark owner’s Web site.

But what’s needed with the mark itself? Well, it needs to stand out. This is your brand; your signal to customers that the good or service they’re purchasing comes from you. So it needs prominent placement. Bold letters. Front and center. Bigger font than the rest of the text. Use of a TM symbol (for unregistered marks). By doing these things, you’re telling consumers that your word or logo is special. It’s not part of the product description or design. It’s not saying where the product was made or what ingredients or methods were used. That’s fine information to convey, but the mark is more important than that. It’s the customer’s assurance of consistent quality. That’s the message you need to highlight.

This is more than marketing; it’s the law. If your brand blends in with your text describing what you sell, the PTO will reject it as an example of your trademark use. That can mean a denied application for registration; a later first-use date than you otherwise would be able to claim; and the added cost of redesigning and manufacturing new labels, boxes, and Web pages.

Trademark owners can avoid those headaches if they simply use the mark the way it was intended.

Seattle yarn distributor Cascade Yarns, Inc., brought a false advertising case against its New York rival, Kitting Fever, Inc. (KFI). It alleges KFI falsely labels its yarns as containing “milk protein fiber” and that its use of the word “milk” deceives consumers into believing that KFI’s fiber is natural when it is not. (Statement from Cascade describing the dispute here).

Cascade moved for a preliminary injunction to enjoin KFI from such conduct.

On Aug. 8, Western District Judge Ricardo Martinez denied the motion because it wasn’t sufficiently clear that Cascade was likely to prevail on the merits.

In the court’s words: “The parties’ moving papers and arguments reveal disputes of fact that preclude the Court from determining whether Cascade is likely to prevail on the merits of a Lanham Act false advertising claim. First, the parties offer expert declarations providing contrary opinions on the fiber content of the subject yarns. Second, the experts contest the appropriate testing method in determining fiber content.” The court declined to decide the “falsity” element based on the limited record presented to it.

The court also found that Cascade had not carried its burden of establishing that consumers had been deceived by KFI’s use of “milk” on its labels.

“Cascade argues that labeling the fiber ‘Milk’ is not accurate because the proper name is either ‘Azlon’ or ‘Polylactide’. Cascade further maintains that using the word ‘Milk’ is deceptive because it ‘implies [that] the milk protein fiber is a natural product’ although it is not natural. KFI counters by arguing that Cascade provided no support for its contention. The Court agrees with KFI. Cascade has failed to meet its burden of demonstrating that a significant portion of consumers have been misled by the word ‘Milk.’ Accordingly, Cascade is not entitled to a preliminary injunction on this basis of consumer deception.”

The case cite is Cascade Yarns, Inc. v. Knitting Fever, Inc., No. 10-861 (W.D. Wash. Aug. 8, 2011) (Martinez, J.).

One thing many trademark owners forget about, or don’t know about, is they don’t need a federal trademark registration to expand the automatic rights they acquire by using their mark.

They can get a state trademark registration.

State registration can be a good alternative to getting a federal registration. Here’s why:

• It’s cheaper. In Washington, it costs $55 to apply for state registration, compared with $275 or more to apply for federal registration. (These are the government filing fees only.)
• It’s quicker. You can expect your registration to issue in a few weeks instead of nine months or more.
• It’s easier. I think California is the only state that employs examiners to review applications for state trademark registration. By contrast, every application for federal registration is examined by an attorney. Hint: if you can’t get a federal registration, you probably still can get a state registration.
• You may have a better shot at attorney’s fees. In Washington, it’s within the court’s discretion to award attorney’s fees to a state registrant that succeeds in an action to enforce its trademark rights. In federal court, it’s a higher standard: courts only award attorney’s fees in “exceptional” cases. That means it’s rare. I tell clients not to expect such an award even if they’re proved right.
• You may qualify for protection against dilution. If your mark is famous within a state — or perhaps even in a niche market within a state — a state anti-dilution statute may protect against use that blurs or tarnishes a mark even if such use isn’t likely to confuse consumers. Not so on the federal level, where a mark needs to be “widely recognized by the general consuming public of the United States,” meaning a nationally-known household word. That’s a tough standard to meet.
• You can combine state registrations for regional protection. Only do business in Alaska, Washington, and Oregon? For the reasons stated above, you might do better forgoing a federal registration and simply get state registrations in Alaska, Washington, and Oregon.

The moral of the story is that trademark owners should think beyond the PTO when looking to expand their rights. It’s not always the best option. But sometimes state trademark registration provides a better fit.