In brief, trademark infringement is the unauthorized use of a trademark or service mark (or a substantially similar mark) on competing or related goods and services.
A trademark is a symbol, logo, design, word, or phrase that represents a brand. Trademarks receive legal protection from use nationwide when they are registered. Trademarks protect business plans and brands from competitors.
IP Protection
Intellectual property owners can protect their ideas and creations with three different legal tools:
- Patent rights, managed by the United States Patent and Trademark Office (USPTO) are granted for an invention for a specific amount of time, in exchange for an application that publicly details the creation.
- Copyrights protect creations such as art, music, and literature, provided these works are tangible. These rights are granted and managed by the U.S. Copyright Office.
What Is Trademark Infringement?
Trademark infringement is a violation of the exclusive rights attached to a trademark without the authorization of the trademark owner or any licensees (provided that such authorization was within the scope of the license). It also applies to similar marks on competing or related goods and services. In other words, unauthorized use of a trademark is illegal. Deception can also play a role in trademark infringement as well.
If the respective marks and products or services are entirely dissimilar, trademark infringement may still be established if the registered mark is well known pursuant to the Paris Convention. In the United States, a cause of action for use of a mark for such dissimilar services is called trademark dilution. A cause of action for unauthorized use of a famous mark that is likely to cause dilution of the mark’s distinctiveness.
In some jurisdictions a party other than the owner (e.g., a licensee) may be able to pursue trademark infringement proceedings against an infringer if the owner fails to do so.
What is a Registered Trademark?
A registered trademark confers a bundle of exclusive rights upon the registered owner, including the right to exclusive use of the mark about the products or services for which it is registered if that mark is famous. The law in most jurisdictions also allows the owner of a registered trademark to prevent unauthorized use of the mark about products or services which are identical or “colorfully similar” to existing registered products or service, and in certain cases, prevent the use of entirely dissimilar ones.
What is Consumer Confusion?
Likelihood of confusion exists between trademarks when the marks are so similar and the goods and/or services for which they are used are so related that consumers would mistakenly believe they come from the same source.
Likelihood of confusion is not necessarily measured by actual consumer confusion if two products do not directly compete against each other but are in proximate markets. Then, to determine consumer confusion, a court may apply one of various factor tests. The primary test comes from Ninth Circuit Court of Appeals and is found in AMF, Inc v. Sleekcraft Boats, 599 F.2d 341 (C.A.9) 1979. The Court there announced eight specific elements to measure likelihood of confusion:
- Strength of the mark
- Proximity of the goods
- Similarity of the marks
- Evidence of actual confusion
- Marketing channels used
- Type of goods and the degree of care likely to be exercised by the purchaser
- Defendant’s intent in selecting the mark
- Likelihood of expansion of the product lines
For more information relating to registered trademarks and consumer confusion, refer to the article here.
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Examples of Trademark Infringement
Examples of trademark infringement cases include instances in which one company sues because it contends that another company is profiting from its trademark without approval. The first business that used the trademark for commerce, known as the senior user, must prove that the alleged infringer, the junior user, is using a similar trademark in a way that will likely cause marketplace confusion.
Following are two examples of trademark infringement cases.
The 3M Company
A lawsuit by the 3M company against Changzhou Huawei Advanced Material Co Ltd for the use of 3N resulted in a win from 3M and “significant damages” for 3M. It was ultimately ruled that, despite some dissimilarities in products and pricing, the notoriety of the 3M mark and the fact that the 3N had managed to acquire clients and market share by use of the similar mark, constituted infringement.
US: Starbucks v. Freddocino
In January 2016, Starbucks filed a lawsuit against the parent company of New York’s Coffee Culture Café for launching a drink called the “Freddocino”. The lawsuit’s documents allege that not only does the drink appear similar to the Frappucino, the structure of the name contains enough similarities to cause “confusion in the marketplace” and diminish “Starbuck’s brand equity.
Starbucks does own the trademark for the term Frappucino and additionally alleged that Coffee Culture has created deceptive packaging to make it appear the term “Freddocino” is trademarked when it is not. While Coffee Culture has changed the name of the drink to a “Freddo,” Starbucks is proceeding with the lawsuit.
For more examples of trademark infringement, refer here.
How to Avoid Violating a Trademark
Below are some ways to avoid violating a trademark:
- Thoroughly perform online searches and USPTO trademark searches to determine whether others use that mark, registered that mark, or applied for a registration, for what goods or services it used, and in which channels of trade to compare potential similarities to your proposed use. A relatively small investment of time at the outset using readily available search engines and databases may help avoid issues and save money down the road.
- Work with experienced trademark lawyers to help understand potential risks in adopting the potential mark, and options to minimize potential risks.
- If you decide to adopt a proposed trademark, but then obtain a cease-and-desist demand or threat of lawsuit, work with litigation counsel to understand litigation and potential damages risk.
- Changing a trademark many times can be less expensive than the potential damages in litigation – always consider this as a potential option.
- Maintain a strong record of your considerations and grounds in selecting your mark and have clarity on the decision as to why the third-party marks are distinguishable in the minds of consumers.
- The larger the revenues associated with your proposed or actual brand, the higher the danger that you will face significant damages liability.
Here is an article for more information on how to avoid violating a trademark.
Penalties for Trademark Infringement
Trademark infringement penalties can vary from case to case, depending on how extensively a trademark was violated.
The most common penalty for trademark infringement is an injunction or a cease-and-desist letter directing the infringer to stop using the trademarked material. It’s also possible for criminal or civil penalties to result from an intentional violation of trademark law, although this rare. Monetary damages may be awarded in trademark infringement cases. The USPTO does not enforce trademarks, and unfortunately, these marks also aren’t self-enforcing. However, the USPTO does have the authority to cancel or refuse registration of trademarks.
A trademark owner who wants to protect their rights must continuously monitor their mark to make sure it is not being used by third parties. If a trademark owner is not diligent about defending their intellectual property, the originality of their mark may be diluted, and they may lose exclusive rights to their mark.
When a trademark owner detects an unlawful usage of their trademark, they can respond by sending a cease-and-desist letter. These letters can be the first step toward negotiating an end of the unapproved usage of your trademark, which is preferable to litigation.
Trademark lawsuits are often very expensive, both in terms of attorney’s fees and court costs. If the decision favors the plaintiff, the court may require the defendant to pay for the plaintiff’s attorney and court costs. There are also several severe criminal and civil penalties that can result from a trademark violation, particularly if the infringer was using the mark to sell counterfeit items.
Is Trademark Infringement Illegal?
In a word, yes, trademark infringement is illegal. Trademark infringement is the unauthorized and illegal use of a trademark or service mark when such use could lead to confusion between the original trademark and a mark that is used later.
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