Trademark Law Rights: What Does the Circled “R” Get You?

The basic legal right you have in your trademark is to prevent others from using the same or a confusingly similar mark to identify the source of their goods or services where this would cause confusion in the mind of consumers.  Acquiring trademark rights is relatively simple: all you must do is begin using your mark in commerce.  This makes sense because trademark law protects those marks that identify the source of the goods or services in the mind of consumers.  The mark must be used in commerce in order for consumers to be aware of it and to make the connection between the mark and your goods or services.

The first user of a mark is usually given priority of rights.  For instance, if you federally register your mark and your competitor did not, your competitor might still be able to sue you for trademark infringement if your competitor began using the mark first.  If, however, a foreign company is the first to use a mark exclusively outside the U.S., our trademark law will generally not give that company trademark rights over a later user of a similar mark in the U.S.

A) State Law

Trademark law consists of both state law (often comprised of “common law”) and federal law.  Under state law, use of a mark confers trademark rights.  These rights extend to the geographic area where the mark is used and where the reputation of the mark extends.  Some states extend the geographic reach of trademark protection under the “Zone of Expansion” doctrine, which recognizes that a business will likely enter into broader geographic areas in the future, and thereby presently extends trademark protection to such areas.

You can enforce your trademark rights using your state’s unfair competition laws.  These laws give you the right to sue for infringement (or “passing off”) or dilution.  Infringement occurs when a competitor uses a mark that will likely cause confusion in the mind of the consumers as to the source of the goods or services.  For example, if you began selling “Crestor” brand toothpaste, this would infringe on the trademark for “Crest” brand toothpaste because such a similar name would cause confusion in the minds of the consumers.

Dilution, on the other hand, takes on two forms: blurring and tarnishment.  For either form, a dilution action is only available for those marks that have become sufficiently “famous.”

Blurring occurs when a competitor’s mark weakens the association in the mind of the consumers between your mark and the source of your goods or services.  For example, if someone began selling “Viagra” brand tennis rackets, the association between “Viagra” and the little, blue pill would become weakened in the minds of the consumers.

Tarnishment occurs when a competitor’s mark creates a negative association in the minds of the consumers between your mark and the source of your goods or services.  For example, if someone began selling “Sony” brand personal enemas, a negative association would form in the minds of consumers regarding the mark “Sony.”

Based on the examples above, you can see that dilution usually occurs when the two products in question are very different.  The crucial thing to remember is that with dilution, consumers are not confused about the source of the goods or services, like with infringement.  For instance, consumers would not be confused into thinking that Pfizer started making “Viagra” brand tennis shoes.  Instead, the quick association of a famous mark with its product is attenuated.  Another difference between dilution and infringement is that a dilution claim usually requires proof of the actual impact on the mind of consumers; whereas, an infringement claim usually requires proof of mere likelihood of confusion.

B) Federal Law

Federal trademark law is codified in the Lanham Act at 15 USC §§ 1051–1128.  Much like state law, federal law gives you the right to prevent competitors from using your mark or a similar mark, so long as you can prove that their mark is likely to cause confusion in the mind of the consumers.  Because these cases turn on “likelihood of confusion,” federal case law has established several areas of inquiry that will aid a court’s analysis of this issue:

1) The similarity of marks;

2) The respective “channels of trade” of the parties;

3) The similarity of the goods or services;

4) The sophistication of the relevant consumers;

5) Evidence of actual confusion;

6) The alleged infringer’s intent; and

7) The strength of the plaintiff’s mark.

See AMF, Inc. v. Sleekcraft Boats, 599 F.2d 341 (9th Cir. 1979).

Like state law, federal law also gives trademark holders the right to pursue a dilution action.  See the Federal Trademark Dilution Revision Act at 15 USC § 1125(c).  A plaintiff in a federal dilution action must prove that 1) the plaintiff’s mark is “famous,” 2) the defendant used its mark in commerce after the plaintiff’s mark became famous, and 3) the defendant’s use of its mark has caused dilution by blurring or tarnishment.  Federal dilution protection extends only to “famous” marks, which makes sense because only well-known marks have the potential to be diluted in the mind of the consumers.  Federal law also provides an injunction remedy.

For more information on your state and federal trademark rights, please contact my law offices at info@chicolawfirm.com!

Recent Employment Law Change — Unemployment Benefits and COBRA Subsidies

On April 15 of this year, President Obama signed into law the Continuing Extension Act of 2010.  This new law extends many of the unemployment benefits and programs that were to sunset at the end of March.

For more information about this extremely recent change, you can read the text of the bill here and read an article about the changes here.   You can also contact the Law Offices of Aaron J. Stewart with any questions about how this change affects your business at info@chicolawfirm.com!

Trademark Law – How Strong is Your Mark?

A mark’s strength—which means its ability to attain and retain trademark protection—depends on the nature and content of the mark, and the relationship between the mark and the goods or services it markets.

In trademark law, marks fall somewhere along a “spectrum of distinctiveness.” The general rule of thumb is that the more distinctive a mark, the more likely it will merit trademark protection. This is because the more distinctive a mark, the more likely it will identify the source of your goods or services in the minds of your consumers. A general sketch of the spectrum follows:

1) Generic Marks:

A generic mark is one that is synonymous with what the product is. A mark that is generic cannot be trademarked. This is because generic terms identify the product itself, and not the source of the product. For instance, “Desk” brand desks would be generic.

2) Descriptive Marks:

A descriptive mark is one that describes an attribute of the product or services. A descriptive mark can be trademarked only if it has gained secondary meaning. The reason for this rule is that competitors are allowed to market similar products using similar terms because those terms describe what the product is. For instance, “Wooden” brand desks would be descriptive.

3) Suggestive Marks:

Suggestive marks are those marks that exist somewhere between descriptive marks and arbitrary and fanciful marks (described below). A suggestive mark alludes to some characteristic of the product or service, but does not specifically describe that characteristic. The contours of this category are usually somewhat hazy. For instance, “Hardwork” brand desk could be considered suggestive.

4) Arbitrary and Fanciful Marks:

Arbitrary and Fanciful marks are the strongest marks, and generally merit trademark protection. A mark is arbitrary and fanciful if it neither describes nor suggests anything about the product or service. Often times these are called “coined” marks because they are made only in reference to the source of the goods or services identified, and have no other meaning. “Kodak” is a classic example.

For continued research about marks that can be registered federally, you can review 15 USC § 1052. If you need a legal opinion as to the strength of your mark and whether it can be federally registered, please contact the Law Offices of Aaron J. Stewart at info@chicolawfirm.com!

Types of Business Entities – Which Form of Ownership is Right for Your Business?

Types of Business Entities – Which Form of Ownership is Right for Your Business?
One of the first decisions to be made when starting any new business is what type of entity is appropriate for your business. There are five common forms of business entities, each of which has its own legal and tax treatment.
Sole Proprietorship – The simplest form of business ownership, a sole proprietorship, is simply the alter-ego business entity of an individual, or in some cases, a married couple. With a sole proprietorship, the owner is legally inseparable from the business for tax and liability purposes. Starting a business as a sole proprietor is easy and inexpensive.
Partnership – A general partnership is also a relatively simple form of business ownership that is created when two or more individuals (other than a married couple conducting business as a sole proprietorship) choose to begin a business together. When forming a partnership, it is imperative to have a valid written agreement that clearly provides for all contingencies, including death or disability of the partners and dissolution of the business. Each partner is responsible for his or her own taxes, but each partner is liable for any and all of the partnership’s debts and obligations.
C Corporation – A special form of business ownership, the C Corporation is an entity where the owners are shareholders, but is run by officers and a board of directors. A C Corporation can be set up as either a nonprofit or a for profit venture. Although complex and with higher startup costs than some other entities, the owners and managers usually enjoy limited liability. C Corporations are generally subject to more regulation than other business entities and the profits are taxed doubly: at both the corporate and shareholder levels.
S Corporation – An S Corporation is structured like a C Corporation but is taxed like a partnership. Rather that the S Corporation paying taxes doubly, only the individual shareholders pay taxes at their level.
Limited Liability Company (LLC) – An LLC, like an S Corporation, can be a highly advantageous entity for a small business as it limits personal liability while retaining the tax advantages enjoyed by partnerships. Nor is an LLC bound by the formalities that govern corporate structure.
As choosing a business structure has significant legal and tax ramifications, it is essential to consider all variables prior to starting any business venture. We recommend that you consult an attorney to determine which structure is best. The Law Offices of Aaron J. Stewart would be happy to discuss your various options with you.

One of the first decisions to be made when starting any new business is what type of entity is appropriate for your business. There are five common forms of business entities, each of which has its own legal and tax treatment.

Sole Proprietorship – The simplest form of business ownership, a sole proprietorship, is simply the alter-ego business entity of an individual, or in some cases, a married couple. With a sole proprietorship, the owner is legally inseparable from the business for tax and liability purposes. Starting a business as a sole proprietor is easy and inexpensive.

Partnership – A general partnership is also a relatively simple form of business ownership that is created when two or more individuals (other than a married couple conducting business as a sole proprietorship) choose to begin a business together. When forming a partnership, it is imperative to have a valid written agreement that clearly provides for all contingencies, including death or disability of the partners and dissolution of the business. Each partner is responsible for his or her own taxes, but each partner is liable for any and all of the partnership’s debts and obligations.

C Corporation – A special form of business ownership, the C Corporation is an entity where the owners are shareholders, but is run by officers and a board of directors. A C Corporation can be set up as either a nonprofit or a for profit venture. Although complex and with higher startup costs than some other entities, the owners and managers usually enjoy limited liability. C Corporations are generally subject to more regulation than other business entities and the profits are taxed doubly: at both the corporate and shareholder levels.

S Corporation – An S Corporation is structured like a C Corporation but is taxed like a partnership. Rather that the S Corporation paying taxes doubly, only the individual shareholders pay taxes at their level.

Limited Liability Company (LLC) – An LLC, like an S Corporation, can be a highly advantageous entity for a small business as it limits personal liability while retaining the tax advantages enjoyed by partnerships. Nor is an LLC bound by the formalities that govern corporate structure.

As choosing a business structure has significant legal and tax ramifications, it is essential to consider all variables prior to starting any business venture. We recommend that you consult an attorney to determine which structure is best. The Law Offices of Aaron J. Stewart would be happy to discuss your various options with you.  Please contact us at info@chicolawfirm.com!