Protecting Your Business's Most Valuable Asset

Berglund Authority Level 4

by Leonard D. DuBoff © 2007
We wrote the book on small business law.

Several years ago, the then-president of Nike, Inc., Phillip Knight, stated at the annual shareholder's meeting that the most valuable asset that the Beaverton, Oregon corporation had was its famous trademark.

Businesses often invest a great deal of time, money and energy in promoting their trademarks because they recognize the importance of these forms of consumer identifiers. Unfortunately, some businesses go too far, jeopardizing the protectability of their trademarks by making their marks such household names that these valuable assets may be converted into unprotectable generic terms.

Companies owning the marks Escalator, YoYo, Thermos and Aspirin learned this costly lesson. These were all protected trademarks until they lost their protection by misuse, each becoming the name of the item itself rather than an identifier of the source of the item. These marks are said to be generic, and generic terms are not protectable at all.

Many trademark savvy companies have recognized this problem and have taken steps to prevent their marks from losing protection. Thus, the Chrysler Corporation, owner of the Jeep trademark, reminds the consuming public of the fact that Jeep is a registered trademark belonging to the Daimler Chrysler Corporation. The Xerox Corporation reminds misusers of their protected mark that Xerox is a registered trademark and that you cannot "Xerox" anything—rather, you photocopy using a Xerox machine.

Recently, Google learned that its protected mark had the questionable privilege of being included as a verb in both the MerriamWebster Dictionary and the Oxford English Dictionary. This means that Google is in jeopardy of becoming generic. The company's attorneys are sensitive to the problem and are actively attempting to change the use of their protected mark. (See for example www.google.com/permissions/guidelines.html.)

Trademark lawyers are often aggressive in trying to protect their clients' trademarks, especially when a mark is in danger of being lost. As a result, public relations problems can and do occur. For instance, when threatening letters are sent to trademark misusers, bloggers may post the letter and poke fun at the company responsible for the letter.

In addition to poking fun at companies that demand retractions or cessation of use, some recipients may actually turn the tables on the trademark owner. If the letter threatens litigation, the recipient may file an action for a declaratory judgment in order to determine whether the mark is still protected and whether the recipient is actually infringing. The trademark owner is then put to the expense of defending its mark in what may be a far-off jurisdiction.

It is for these reasons that many trademark owners have adopted a gentler approach. Many companies are trying to prevent their protected marks from becoming generic by educating the public with respect to the protectability and proper use of their marks. It has also become common for companies to write softer and friendlier letters noting that their word mark is still protected and that it should never be used as a noun or verb, but only as the brand name of a product or service.

Another concern for trademark owners, especially with the advent of the Internet, is international trademark protection. If a U.S. trademark is federally registered, then the owner may, by use of a relatively inexpensive procedure, obtain the assistance of the U.S. Customs and Border Protection office in preventing infringing items from being imported into the United States. The trademark owner may allow seized items to be brought back offshore, require that the infringing items be destroyed, or, if appropriate arrangements have been made with the trademark owner, allow the items to enter the United States.

Whether the use of a trademark protected in the United States is improper may be difficult to ascertain, however, since trademark laws are national, and a protected U.S. mark may be owned by one party while a foreign registration of the same or a confusingly similar mark may be owned by another. The rights may very well clash.

Unfortunately, as of the date of this writing, there is no multinational treaty to which the United States is a party that provides international protection for trademarks. The United States is a party to the Madrid Protocol, which provides U.S. trademark owners with the ability to apply for registration in numerous countries throughout the world through the U.S. Patent and Trademark Office. This means that U.S. trademark owners may be able to obtain trademark protection in many foreign countries without having to hire a foreign attorney for purposes of prosecuting the registration.

The most prominent multinational arrangement for trademark protection is available in Europe. A trademark owner may apply for a community mark throughout the EEOC countries by applying for registration in any one of the member countries.

It is not uncommon for U.S. trademark owners to license offshore businesses to use a protected mark within specified territories. Items produced in those territories but ultimately resold in the United States are not necessarily infringing, but the U.S. trademark owner's rights are certainly being interfered with. These so-called grey market goods can negatively affect the U.S. trademark owner's market, and steps should be taken through contract provisions to protect trademark owners from grey market activities.

High energy advertising and recognitions, such as inclusion in a dictionary, may be an advertising agency's dream but are a trademark lawyer's nightmare. Care must be taken when dealing with protected marks so that they do not become part of the common speech and lose their protection. Companies must also be sure to obtain appropriate international registrations and enlist the assistance of the U.S. Customs and Border Protection department when infringing goods are imported into the United States. A company's most valuable assets, namely, its trademarks, can become worthless if they are not properly cared for.