Bad News Crumpled Paper - Sized for SiteThe mail comes and you notice a letter from a law firm you don’t recognize. 
 You open the letter hoping for the best but fearing the worst.  The letter begins “We represent the ABC Company in the protection of their intellectual property rights.  It has recently come to our client’s attention that you are using a trademark in violation of our client’s established rights.”

You continue reading, your heart now racing.  A law firm is demanding that your company immediately stop use of its trademark, its brand, its very identity.  Moreover, they want damages, money for what they perceive to be payback for your company having used their company’s “good will” for all of these years.

Anger, frustration, and denial set in.  Everything in the letter must be wrong.  Your trademark is spelled differently from the other trademark.  Moreover your company’s products are not identical to those provided by this other company.  You start to formulate your response before you reach the end of the letter.

Allowing your emotions to take control, you decide to pick up the phone and call the lawyer who wrote the letter to explain how there is simply no infringement here.  Evaluating it further, you decide to make it more official by putting it in writing so you begin typing a responsive yet somewhat emotionally-fueled email. 

Sound familiar?

Before you do anything stop, don’t do anything rash, take a few deep breaths and make sure you understand a few basic principles about the situation your company is now facing before writing that email or making that call.  At this point, rational thought and a well thought out reply may make the difference between keeping and losing your company’s trademark.

Understand Trademark Law 101

First, understand the basics of trademark law.

A trademark includes any word, name, symbol, or device, or any combination, used, or intended to be used, in commerce to identify and distinguish the goods or services of one manufacturer or seller from the goods or services manufactured or sold by others, and to indicate the source of the goods. In short, a trademark is your brand name.

Of note, a federal registration, although highly recommended, is not required to establish rights in a trademark. Common law rights arise from actual use of a trademark in interstate commerce. Generally, the first individual or company to either use a trademark in interstate commerce or file an intent to use application with the U.S. Patent and Trademark Office will have what is known as priority of use for that and similar trademarks.

Who Has Priority of Use?

With this basic understanding of trademarks in hand, one of the initial steps in evaluating any cease and desist letter is to determine who has priority of use (i.e., who used their trademark first) as between the respective trademarks at issue.   This is an extremely effective defense to an allegation of infringement insofar as if you can establish that you or your company actually used your trademark before the other’s first use of their trademark it is the other party that may be infringing upon your rights and not the other way around as they allege.

Surprisingly law firms issuing cease and desist letters often fail to accurately establish the priority of use of their clients’ trademark rights before sending out cease and desist letters.  Often this is understandable in that even with the Internet, available corporate databases, and other methods, determining when a business truly first began use of a trademark, especially where the business does not have a federal registration, is often a function of the law firm’s best guess as to priority of use based upon all available information it can gather. So never assume just because you receive such a letter the other party retains priority of use.

The cease and desist letter you received typically lists the earliest date of priority of use the opposing side can claim for its trademark.  This critical component is usually phrased to the effect  “Our client has been continuing using their trademark since as early as ….”  In this regard, rather than conducting initial research on the use of the other party’s trademark you are instantly presented with the date they will most likely rely upon for their priority date should the matter progress further (i.e., into litigation).  Of note, this should always be independently verified.

Note the legal wiggle room “since as early as” which is almost always the way dates of first use are referred to in cease and desist letters.  Through experience lawyers know to use this language so that if you respond with an earlier priority of use date they have not locked themselves into one date for their client but rather can fall back and amend their original alleged priority date since the original one listed in their letter was only “as early as”. 

With this in mind, you should evaluate whether you began use of your trademark prior to the opposing party’s first use of its mark.  In other words can you beat their date of first use?

Often the answer to this question is simple.  If you recently opened your business and the other party has been using its mark for 70 years they, more likely than not, retain priority.   On the other hand, perhaps you have been using your mark in the New York tri-state area for 20 years but have never registered the trademark.  The other party sends you a cease and desist letter alleging a date of first use in 2008.  Who has priority?  You do, more likely than not.

But beware, the issue of priority is often a far more complex question.  Let’s say the other party has been using their trademark for four years, has a federal registration for their trademark, and now wants you to cease using your mark.  You are a California-based business but have never taken the time to register your trademark on a federal level.  You have also been using your trademark for four years in Southern California and  for almost that entire time the goods you offer have been and continue to be advertised in California, Arizona and even in Northern Mexico.  In this case the legal definition of “use in commerce” and “use in interstate commerce” sufficient to grant federal and/or state trademark rights becomes very significant.  In this scenario you may actually have priority of use.  You may not.  More complex legal analysis would most likely need to be performed.

As such, if there is a clear answer to the priority of use issue and you have priority of use that would, more likely than not, be the strongest argument in defense of a cease and desist letter.  If priority of use is unclear or if you do not have priority of use have heart and continue to the next step of the evaluation: whether your trademark infringes upon the other’s pre-established rights.

Is Your Trademark Truly Infringing Upon the Other’s Use of Their Trademark?

The next part of the analysis focuses on the traditional elements of infringement.  While  the various U.S. Circuit Courts of Appeals may differ slightly in their interpretations of the elements for infringement, universally the inquiries ask (1) whether  the marks are similar in appearance, connotation, or otherwise; (2) whether  the goods and services with which the marks are used are identical, similar, and/or otherwise related; (3) whether  the goods and services of the parties travel in similar channels of trade; (4) whether  the marks are marketed in similar manners; (5) whether consumers of the respective goods and services are sophisticated; and (6) if there are any instances of actual confusion among consumers as between the marks.

To determine the validity of the accuser’s allegations you must determine whether the factors support you or the other party in their allegations.

First, ask whether your mark is generally similar in appearance, meaning, or connotation to that of the party alleging infringement.  In this regard, the less similar the marks are the less likely infringement will be found.  In most instances the marks are not identical.  As such, in large part there is usually a bit of subjectivity involved in the evaluation of this element.   If both marks are WIDGET they are definitely similar, in fact they are identical.  But what if your mark is WIDGET and theirs is WIDGET MAX?  Are they similar?  Similar enough to create confusion?  Perhaps.  But as stated before there is a great amount of subjectivity involved in this element as well as sub-rules too numerous to mention and analyze in the context of this article.

Second, consider the similarity of the goods and services.  If your goods are shoes and the party alleging infringement also makes shoes that is pretty much dead on hit.  But what about if you make shoes and the other party has a shoe store?  Are the shoe store services sufficiently related to shoes such that confusion may arise among the relevant consumers of your respective goods and services?  Possibly.  So when analyzing this element always but yourself in the position of the average consumer and ask: Would I be confused between the two?  Would I think that the same people who make the shoes run the store that sells shoes?   Again, as above, the less similar the goods and/or services are the less likely infringement will be found.

Third, ask whether the goods and/or services of the parties travel in similar channels of trade.  In other words, how do the goods or services reach the end consumer.  If you sell your goods exclusively through the Internet and so too does the other party they travel in the same channels of trade.  If the channels of trade are diverse, this favors you.  If they overlap, this favors the accuser.

Fourth, how are the respective trademarks marketed?  If you both advertise exclusively through major television campaigns this factor will favor the opposing party’s case.  In the alternative, if the opposing party uses television and major magazine advertisements to promote their goods yet yours are sold exclusively by door-to-door salespersons then the factor will favor you.  So if the marketing channels are similar, that favors infringement.  If they are not, that favors your position of non-infringement.

Fifth, are the consumers for the respective goods or services sophisticated?  The best way to determine this is to ask whether purchasers of the goods or services are discerning in regard to their purchasing decisions.  For example, traditional “impulse” buys in a super market checkout line would not be considered discerning as consumers are less likely to pay significant attention to the manufacturer of goods which cost under $1.00.  In the alternative, in purchasing decisions which involve more substantial capital resources, such as the purchase of a new luxury automobile, consumers would be deemed more sophisticated insofar as it is presumed that consumers of such luxury goods are more likely to have conducted research and be educated in regard to such a purchase.  In this regard, the more sophisticated the consumers are who purchase your respective goods and services the less likely infringement will be found.

Sixth, are there any instances of actual consumer confusion between your goods and services using the disputed mark and those of the accuser?  If there are, that is strong evidence of confusion in the marketplace which would favor a finding of infringement.  Actual confusion may manifest itself in emails intended for one party but submitted to another in an attempt to reach the other.  It could also be in the form of complaints received by one party concerning the quality of products of the other.

In conclusion, how many of the elements above favor a finding of infringement?  Correspondingly, how many do not?  The more that can be said to favor a finding of infringement the more likely you are to be infringing upon another’s trademark.  Of course, the alternative is also true. 

Did They Wait Too Long to Enforce Their Rights?

Another defense that should always be considered is whether the other party waited too long to enforce their rights.  The Doctrine of Laches provides that an accuser may not enforce its trademark rights against another if it has waited an unreasonably long period of time to do so.  This inquiry involves (1) understanding when the accuser knew, or should have known, about your use of the trademark at issue; (2) how long they took to initiate action against you to cease use of your trademark; and (3) whether this delay imposes any undue hardship upon you for their failure to more timely enforce their trademark rights (i.e., you invested significant sums of revenue in a new advertising campaign for the trademark after they knew about your use thereof but before they issued the cease and desist letter notifying you of their objection to your continued use of the trademark).

When considering your defense options the Doctrine of Laches must be one of the factors you consider.

Remember, Everything You Say May Be Used Against You

Finally, we all have heard the famous Miranda charge in television shows and movies: “You have the right to remain silent.  Anything you say may be used against you in a court of law.”

While this derives from criminal law there is a civil law component every trademark owner should know: Everything you say, be it well-intentioned or not, can be used against you in a subsequent court action under a Federal Rule of Evidence concerning admissions against your own interests.

You may not set out to sabotage your case, but if you are not savvy to all of the ins-and-outs of trademark law responding to a cease and desist letter without assistance of seasoned counsel can be rife with peril.

For instance, you receive a cease and desist letter and are of the opinion that there is no likelihood of confusion between the marks.  You call the lawyer for the accuser convinced you will be able to make this just go away.  During the conversation you innocently state the following: “I know the marks are similar but your client makes t-shirts – we make pants. How could there be any problem?”

In this conversation you have just made two critical admissions.  First, that the marks are similar.  Second, that the goods are both clothing and, by nature, similar.  How damaging is this?  You have just proved 2 of the 6 elements of infringement above for your accuser.  Congratulations.  Do you think you should continue the conversation now?

So be careful and, if at all possible, seek professional assistance from an experienced trademark lawyer.  Not only will they be able to determine your rights and liabilities in the matter, but counsel can also discuss the matter with opposing counsel without the same being used as admissions against your interests.

Summary

In conclusion, if you receive a cease and desist letter demanding that you cease use of a trademark do not, under any circumstance, call the accuser or their counsel while still dealing with the emotions the allegations have evoked.

Rather, take time to analyze the situation so that you can more objectively consider a planned response to the allegations.

Next, try and determine who has priority of use.  If you do, fantastic.  If not, there is still hope.

Next review the infringement factors listed above.  Who do they favor?

Are any other defenses available?

As always, if you have any questions regarding this or any related topics Contact Us at TTC Business Solutions.