Don’t Fall In Love With Your First Idea

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October 31  |  Newsletter  |   christina

If your company wants to use a word as its trademark, a recent case  decided by a federal appellate court points out the need to consider carefully the word you select.  Although its application was initially denied, Freebies Publishing eventually succeeded in registering a stylized type version of the word “Freebies” as a federal trademark.  It also registered the domain name “freebies.com” which it used to provide information about free product offers.  Retail Services, Inc. provides point-of-sale incentive offers which print out with a retailer’s cash register receipt.  To facilitate a promotional contract it had with Blockbuster, Inc., Retail Services, Inc. registered the domain name “freebie.com” so that Blockbuster customers could manage the “Freebie Points” they accumulated by renting videos and DVDs.

Freebies Publishing demanded that Retail Services stop using the word “freebie” in connection with its business.  When it refused, Freebies Publishing brought a non-binding arbitration proceeding under the agreement pursuant to which domain names are registered seeking to prohibit Retail Services from using the domain name “Freebie.com.”  The arbitrator agreed with Freebies Publishing and ruled that Retail Services should transfer its domain name to Freebies Publishing.

At this point Freebies Publishing has a federally registered trademark and an arbitrator’s ruling in its favor regarding the domain name.  In what must have seemed to them an abrupt shift in their good fortune, what happened next is that Freebie Publishing not only had its trademark cancelled, but it also barely escaped from court without having to pay the attorney’s fees of the opposing party as permitted by statute  in “exceptional cases.”  Rather than comply with the arbitrator’s non-binding ruling, Retail Services responded by filing a declaratory judgment proceeding in federal court seeking to have the Freebies Publishing trademark declared invalid arguing that the word “freebies” is a generic term.  After reviewing the evidence which included over 1,600 websites that have the word “freebie” or “freebies” as part of their domain names, as well as Freebies Publishing using the word “freebies” in a generic sense in its own web site, the court ruled in favor of Retail Services by summary judgment and ordered the registered trademark of Freebies Publishing cancelled.

The mistake Freebies Publishing made with their trademark application is that they put too much effort into persuading the government’s trademark examining attorney that the word “Freebies” is not a generic word, but rather a descriptive word which had acquired secondary meaning.  Instead, they should have put their effort into selecting a better word to trademark in the first place.  Their mistake is a common one.  If not a generic word, many companies come up with a word or phrase which “describes” their product or service and want it trademarked.  That is also not a good idea.  It is more difficult to register a descriptive word, and even if registered on the Principal Register, it is entitled to less protection.

Trademarks identify and distinguish goods produced by one person from those manufactured and sold by others and indicate the source of the goods.   They are often analyzed based upon four general categories of distinctiveness:  (1) Fanciful, (2) Arbitrary, (3) Suggestive, and (4) Descriptive.  Fanciful, Arbitrary, and Suggestive marks may be registered.  A Descriptive mark is eligible to receive the protection of being registered on the Principal Register only if it has acquired “secondary meaning”.  It has been used in the market for a sufficient length of time that buyers have developed a “mental association” of the mark with the company that owns the mark.  Although “the concepts of ‘generic name’ and ‘trademark’ are mutually exclusive because a generic term can never function as a mark to identify and distinguish the products of only one seller” , it is useful to think of  “generic”  as a fifth category which is to be avoided.  Although trademarks are analyzed based upon these categories, the lines separating one from the next can be razor thin.

The Trademark Manual of Examining Procedure refers to a “Distinctiveness/Descriptiveness Continuum” with Fanciful marks the strongest, followed by Arbitrary marks, then Suggestive marks.  Descriptive marks are weak, and as Freebie Publishing learned, if the word you have trademarked can be construed as generic, or if it might later become generic, don’t spend money building an advertising campaign around it.  The mark may be canceled at any time.

Fanciful marks are terms that have been “coined” or invented for the sole purpose of functioning as a trademark.  Such marks comprise words that are either unknown in the language (PEPSI®, KODAK®, EXXON®), or are completely out of common usage.   Arbitrary marks consist of words that are in common linguistic use but, when used to identify particular goods or services, do not suggest or describe a significant ingredient, quality or characteristic of the goods or services (APPLE® for computers; OLD CROW® for whiskey).  Suggestive marks are those that, when applied to the goods or services at issue, require imagination, thought or perception to reach a conclusion as to the nature of those goods or services.  A suggestive term differs from a descriptive term, which immediately tells something about the goods or services.   A suggestive mark connotes, without describing, the product (COPPERTONE®, ORANGE CRUSH®) .

The lesson:  Don’t fall in love with your first idea about what would be a good word for your company to trademark.  Not only do you need to understand the differences between “strong” and “weak” marks, this is also the time to be creative.  If your background is administration, you’d probably better stay out of it altogether.  The purpose of a trademark is to help build brand identity so that over time, when a potential customer sees the mark, he or she will associate it with the source of origin – your company.  To have a strong mark, it must be necessary for the buyer to “exercise his imagination”  in order to make this association.  The solution for your company is to be creative and select a word which will require it.

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