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What to do when you receive a trademark infringement letter

Posted by ipelton on: October 4th, 2016

In this brief video, I discuss some of the initial considerations for small business recipients of trademark infringement ‘cease and desist’ letters.

Related posts:

Trademark ‘Cease and Desist’ letter considerations

Posted by ipelton on: August 2nd, 2016

In a new video, I discuss some of the considerations brand owners should think about before sending a “cease and desist” letter in potential trademark infringement situations:

Only one trademark question matters for businesses. Most small business owners look into trademark protection and consider whether they can afford the costs of protecting their trademarks? Yet this is not the correct question.

The real question that small business owners should ask is: Can they afford not to protect their trademarks?

Potential Costs Resulting From Unprotected Brands:

  • Greater chance of being copied inadvertently since the trademarks are not listed in the USPTO database
  • Greater chance of being copies intentionally since the ® cannot be used
  • Greater costs (lawyers, court fees, and more) when going after copycats and infringers in general
  • Greater risks and stress when going after copycats and infringers in general
  • More company time drained when going after copycats and infringers in general
  • Failure to show consumers the importance of your brand
  • Less valuable brand assets to monetize in a sale of the business
  • More challenges to license or franchise the brand
  • Reduced brand credibility
  • Potentially missing opportunities for protection by US Customs
  • Missed opportunities to stop cybersquatters
  • Missed opportunities to reclaim social media usernames registered by others

Yes, trademark protection is an expense. But there is nothing you can do for your brand that provides more protection – and insurance – than obtaining a trademark registration from the USPTO.

Yesterday, the Supreme Court heard a trademark case for the first time in several years. The issues in the case (B&B Hardware, Inc. v. Hargis Industries, Inc.) are not straightforward, and the procedural history is quite complex as the two parties involved have been engaged in various forms of trademark disputes with each other for more than a decade. For more details and the parties’ briefs, see SCOTUS blog here.

I anticipated the hearing on Tuesday would focus more on administrative law principles and the complex history in the case. I was wrong, the oral arguments and questions from the judges involved many fundamental trademark law issues. At its core, the argument came down to whether a TTAB proceeding is akin to full court dispute, and whether the issues and evidence available in an inter partes dispute at the TTAB are different from the issues and evidence available in an infringement action in District Court.

It was my first time ever inside the Supreme Court, and it did not dissappoint. Elegant, formal, and enormous. The building and the aura are impressive.

At its core, the discussion centered around whether a TTAB proceeding and a District Court infringement proceeding are similar enough such that if the TTAB has ruled regarding two marks used in commerce, should another action regarding the same marks and good/services in federal court be precluded?

While they are not identical proceedings, the differences are not huge, in my opinion. There really are no limitations in a TTAB proceeding other than no live testimony before the judges. And a TTAB litigant could remove the case to District Court if they believe infringement is an issue and the procedures or other aspects of the TTAB case harm the party’s potential to make their case. Furthermore, a TTAB case can be reviewed de novo on appeal, with new evidence, by a District Court. This point was reiterated by several of the judges on the Supreme Court multiple times.

A central issue that came up in the arguments repeatedly is whether, or how, the TTAB considers the circumstances of use. Despite some differences in the statutory language, most of the judges appeared ready to conclude that of course the TTAB considers the context of use on the goods or services. The Board often does consider those issues, in my experience. And a party that believe those issues are relevant can certainly introduce evidence about the issues. Furthermore, a party that believes that clarification of a description of goods at the USPTO would have a bearing on the proceeding may move, under Section 18 of the Trademark Act and/or a counterclaim, to restrict the registration or application at issue (although this was not raised by either of the parties or any of the judges). For example, a party in a Board proceeding could move for “shirts” to become “fireproof shirts sold for industrial purposes,”  or for “electronic publications in the field of healthcare” to become “electronic publications in the field of healthcare, namely, newsletters for cardiologists in the field of cardiology.” While it was not raised in the hearing before the Court, the availability of Section 18 means that the manner of use or the details of how a mark is used with the goods can be made at issue before a Board proceeding by any party if it properly raises the issue.

My Prediction:

After the hearing today, I believe it is likely that the Supreme Court will find preclusion, while allowing for standard exceptions.

Why? Because while the TTAB and infringement proceedings are not identical they are similar enough such that: (A) the TTAB always suspends its proceedings if there is a separate District Court action between the parties, and (B) I am not aware of any case in which the TTAB did not follow the same findings and outcome of  District Court decision. In other words, I’m not aware of any time when a District Court – while considering all the conditions of sale and marketplace factors – has ever reached an outcome that the TTAB did not follow, even thou the scope of the issues on the table at the TTAB relating to “four corners” of the application or registration were not precisely the same.

If the Supreme Court does find preclusion, how might that changes trademark practice and the types of proceedings before the TTAB? If my predicted outcome is correct, will it lead to more TTAB litigation or less in the future? I believe it could lead to more, because TTAB cases are more manageable and more predictable and less expensive. TTAB disputes fit better into the budgets and plans of corporations. I think that using Section 18 to limit the scope of marks involved in proceedings – so that on paper they match the circumstances in the marketplace – will certainly continue to grow as a option used by parties.

A few other notes from the hearing:

The Solicitor General’s office pronounced TTAB as “T-T-A-B.” Counsel for both parties used “T-Tab.”

Counsel for both parties and the Solicitor’s office all did a terrific job addressing the many questions from the Court.

Below is a photo if me on a cold wet morning in front of the mighty steps of the highest court in the land.

 

IMG_5206

A trademark dispute can take years to resolve before the courts and/or the USPTO. But public opinion can move much quicker. And rapidly moving pressure from public opinion can wreak havoc on the normally slow moving trademark dispute process.

Such was the case just yesterday as news online exploded about a dispute between West Sixth Brewing and Magic Hat Brewing over logos that Magic Hat believes are likely to be confused. [The news reports, of course, misreported many aspects of the matter – but that is another issue for another day.]

West Sixth generated and received some favorable news and social media coverage early in the day on Tuesday (see for example: http://www.aceweekly.com/2013/05/lexingtons-west-sixth-brewing-responds-to-magic-hat-lawsuit/) including a petition with more than 6,000 signatures already, Facebook posts, and a domain name www.nomoremagichat.com that forwards to its webpage on the topic. Many comments were posted on both company’s Facebook pages about the trademark trademark issue.

Last night, Magic Hat responded online. They released their side of the story. including letters from counsel for West Sixth that purport to show that West Sixth had already agreed to change the logo at issue. See documents below.

While I don’t know how this dispute will be resolved, I do know that this type of social media and public reaction is more and more likely to be a part of future trademark disputes. Brands are, at their core, about customers. And customers, directly or indirectly, help the businesses at issue come to the decisions they must make about their brands. And social media fuels these types of reactions and makes the potential for a loud and large public reaction easier and faster than ever.*

* I first noted this trend more than 2 years ago in January 2011. See slide 14 here.

Magic Hat Brewing and West Sixth Brewing by Mary Beth Popp