Trademark Enforcement Protection – The Do’s and Don’ts for Brand Protection

You’ve spent thousands creating, developing, and marketing your company brand only to find a competitor has copied all or a portion of your mark, perhaps in an effort to benefit from the goodwill associated with your mark or to control their own market-share—or both. Now what? Or maybe your marks are well-established but infringers located outside of the United States are flooding the market with counterfeit products bearing your marks. How do you ensure your brand is as strong as possible and what are the common pitfalls to protecting your marks?

In a market that is increasingly more global due to online sales, protecting your valuable intellectual property assets such as your trademark rights can prove vital to the success of your brand and your company. Investing in some basic trademark protections can help ensure your trademarks, and your brand, remain strong, unsullied, and productive.

1. Failure to apply for, obtain, and maintain federal registrations

A “trademark” is “any word, name, symbol, or device, or any combination thereof … used by a person, or which a person has a bona fide intention to use in commerce … to identify and distinguish his or her goods, including a unique product, from those manufactured or sold by others and to indicate the source of the goods, even if that source is unknown.” 15 U.S.C. § 1127. The federal Lanham Act provides remedies for the unfair and misleading use of trademarks. Under the Lanham Act, “[a]ny person who shall, without the consent of the registrant—

(a) use in commerce any reproduction, counterfeit, copy, or colorable imitation of a registered mark in connection with the sale, offering for sale, distribution, or advertising of any goods or services on or in connection with which such use is likely to cause confusion, or to cause mistake, or to deceive … shall be liable in a civil action by the registrant….” 15 U.S.C. § 1114(1)(a).

Thus, some of the best protections for your trademarks come from the federal Lanham Act. And while federal registration of your marks is not a pre-requisite to all Lanham Act protections, it is required for some claims and can streamline the process for all claims.

One of the initial hurdles to protecting and enforcing your brand in federal court or even in a proceeding with the United States Patent and Trademark Office (“USPTO”) is proving you own the marks and that your marks are valid and protectable. A mark that is federally registered with the USPTO is presumptively valid. In other words, filing and obtaining a federal trademark registration for your marks is evidence of the validity of the registered mark and of the registration of the mark, the registrant's ownership of the mark, and the registrant's exclusive right to use the registered mark in commerce on or in connection with the goods or services listed in the application. This is especially true of federally registered trademarks that have remained in continuous use in commerce for more than five years, i.e., incontestable marks. In short, the stronger the mark (through registration and/or long-term use) the stronger the evidence of the mark’s validity and protectability. Failing to register and maintain federal registration of your marks does not mean you do not own protectable trademarks. But it does mean it will cost you time and money to prove your standing to enforce the marks, validity of the marks, priority of the marks, and your proprietary rights in and to the marks—all of which are legally presumed if you hold federal registrations for the marks at issue.

Additionally, you should use the ™ symbol with all trademarks, including those not yet registered, to provide notice to third-parties of your claimed trademark rights in and to each mark. Once you have obtained federal registration, use of the ® designation alerts third parties to your federal registration and the potential risks associated with infringement and may be enough to deter at least some third-party use. Be sure to only use this designation with use that corresponds to the goods and services described in the actual Certificate of Registration for a mark.

2. Failure to Use the Mark

Obtaining and maintaining federal trademark registration is only part of the battle. In order to preserve the validity of a mark, you must continue to use that mark in connection with the sale of goods or services in commerce without interruption. The ultimate purpose of trademarks is to act as a source identifier—when people see the mark, they immediately identify it as the source its goods and services. If at any point a trademark owner stops using the mark in connection with the offering of goods or services, that mark may lose the ability to effectively identify the source of the goods or services such that it is no longer functioning as a trademark and could be deemed abandoned. And if a trademark registration covers more than one class of goods and services, use must continue for all of those classes, or partial abandonment can occur.

3. Failure to Address Infringement

Another common pitfall to trademark enforcement is a history of failing to address and remedy third-party infringement. Failing to enforce marks against third-party infringers will result in a weakening of the mark and a loss of distinctiveness. One of the hallmarks of a protectable trademark is the distinctive nature of the mark in relation to the owner’s goods and services. If the owner of a mark allows third parties to use the mark, especially competitors or others within the same industry, it is more likely the mark will come to be seen as an “industry term” or a term necessary for the description of goods and services in that industry, in general. Such third-party use eliminates the distinctive nature of the marks as to the owner’s specific goods and services and can result in the mark being deemed “weak” and entitled to less protection, or the owner losing the mark altogether. This does not mean that a trademark owner must sue or bring formal action against every single infringer of a mark; in fact, district courts currently vary on how much protection is necessary to protect one’s marks. However, the failure to take action in the face of widespread infringement can significantly impact a trademark owner’s rights.

4. Waiting Too Long to Address Infringement

The same is also true for waiting too long to enforce marks. In trademark law, the old adage is true: “you snooze, you lose.” One problem with waiting to pursue an infringer is the applicable statute of limitations. As there is no federal limitations period for trademark infringement, state law determines how long you have to bring a claim of infringement. In the case of ongoing infringement, this could mean that when you finally seek to enforce your mark, you may be limited to recovering for only a few years’ worth of infringement (depending on your state’s limitation period) rather than the full length of time the infringement has been ongoing. Separately, allowing third-party infringement to continue for extended periods of time could subject you to the defenses of laches and unclean hands, meaning (1) you were complicit in allowing the use to continue; and (2) the use went on for so long that the balance of equities means you have forfeited your claim.

For example, in Abraham v. Alpha Chi Omega, the Fifth Circuit Court of Appeals heard a case involving a failure to enforce trademarks for more than 40 years. There, Thomas Keith Abraham was the world’s largest manufacture of decorative fraternity and sorority paddles and had been advertised and sold products bearing the names of fraternities and sororities since 1961. In 1990, after almost 30 years in the market, representatives of 32 fraternities and sororities contacted Abraham, claiming infringement of their trademarks and requesting he enter into licensing agreements or face a federal suit for trademark infringement. Abraham declined to become a licensee, and after another 17 years of inaction, in 2007, the parties’ dispute escalated into litigation.

Although liability was clear, the district court declined to award any monetary damages to the fraternities and sororities and enjoined him from selling almost all of his infringing products (which generated less than 2.44% of his sales) and allowed him to continue selling one type of infringing product that drove his sales of non-infringing products, based on his showing that he would suffer substantial prejudice if enjoined from selling that product.

On appeal, the Fifth Circuit affirmed the prior decision, noting in particular that the balance of the equities supported the district court’s decision as the fraternities and sororities had failed to enforce their marks despite several milestones in Abraham’s development of his business, including the development of his website in 1997 and the commencement of sales online in 2001, causing substantial prejudice to Abraham, who would not have invested millions in his business had he known the plaintiffs would sue him to enforce their trademarks many years later. The moral of the story here, as discussed in greater detail below, is that trademark owners must monitor third-party infringement and must take at least some action to protect and enforce their marks.

5. Failure to Monitor Third-Party Use

Protecting marks from the infringing use of others necessarily requires that the trademark owner, or someone on its behalf, must monitor third-party use. This is especially important for house marks or tradenames. Trademark owners should consider instituting monitoring services which can range in sophistication (and cost) from nominal monitoring (for a nominal fee) to more complex (and expensive) searches that can be used to track the trademark use of competitors and may even cover the initial cease and desist letter to infringers. The bottom line is this: in order to enforce third-party infringers, one needs to know they exist. Whether trademark owners handle the monitoring themselves or use a service, they must stay on top of infringement activity.

6. Inadvertent Licensing and Counterfeit Goods in Online Platforms

An often unknown consequence of selling goods on some online platforms, like Amazon, is that by doing so one agrees to allow others to use the photos and content (which may or may not include the owner’s marks) used in the initial listing, so long as they are selling the same product. In other words, the third party did not create the listing—the brand owner did—but third parties are selling the same product under the brand owner’s listing. This is Amazon’s means of spurring on competition and is included in the agreement a seller enters into when uploading their images into a listing. In the trademark context, this causes problems when (1) the goods offered by the third party are genuine but “gray-market” goods, meaning they have come from a distribution channel not authorized by the trademark owner; or (2) the goods are counterfeit. In this situation, you cannot object to the use of your images and content from your original listing (even if they include your registered trademarks on the product or on product packaging) because you have agreed to that use. You can, however, submit a trademark infringement claim to Amazon requesting removal of the third-party listing if the goods are counterfeit.

Another tool useful in dealing with counterfeit goods is enrolling in Amazon Brand Registry. Amazon Brand Registry was first launched as a means of dealing with the substantial number of counterfeit goods offered through Amazon. If you already have federal trademark registrations, you can apply for Amazon Brand Registry, which essentially takes note of your federal registrations up front, allowing you to expedite the process of removing counterfeit goods from Amazon. As an added bonus, Amazon will dispose of any counterfeit inventory if the seller is using “fulfilled by Amazon.” Overall, enrolling in Brand Registry cannot eliminate all problems related to counterfeit goods, but it will make it easier to identify and remove those goods from the marketplace.

Gray-market goods are a more difficult problem to solve. The best way of dealing with gray market goods is controlling distribution, as discussed below.

7. Weak Internal Policies Regarding Distribution Which Lead to Gray Market Goods

Products known as “gray market goods” are authentic products that have entered the market through unauthorized channels; usually, through a licensed distributor who is selling to third-parties outside of his or her distribution agreement or former distributors who are no longer licensed and are offloading inventory. The damage caused by gray markets ranges from lost margins to price erosion, and even increased liability. For example, what if a product recall must be issued? Those who purchased authentic goods through the gray market will not receive such notices, placing the manufacturer at risk of liability. Issues likewise arise when a customer learns they did not purchase their authentic product through authorized channels and are not entitled to warranty or technical support. So what can be done? As an initial matter, under Sections 32, 42, and 43 of the Lanham Act, both trademark owners and their licensees may stop unauthorized resellers from selling gray-market goods upon showing a material difference—physical or non-physical—between the authorized and unauthorized goods. For example, when gray market goods are sold without including the manufacturer’s warranty, courts have deemed those products illegal and actionable. In conducting this analysis, courts have applied a low threshold, requiring no more than a showing that consumers would be likely to consider the differences between the products to be significant when purchasing the product, which is sufficient to erode the goodwill of brand. The differences must also be present in “all or substantially all” of the authorized goods.

Tightening your supply chain and enforcing strict MAP policies can also help minimize the existence of the gray market for your goods by ensuring sellers abide by your rules – this can include options like price matching and product financing that make buying direct from the brand more attractive. Still further, taking legal action against sellers and marketplaces who have signed your MAP policy and then breached the agreement can prove to be a significant deterrent to gray market sales. This includes reporting counterfeiters or rogue distributors to marketplace administrators, but also informing authorities for criminal prosecution (where applicable) and asserting formal claims for breach of contract.

Trademark rights can be a valuable business asset. Registering and maintaining your trademark registrations with the USPTO, ensuring continuous use of your marks in commerce, identifying and timely and efficiently dealing with infringement, exercising caution in utilizing online platforms, and creating and enforcing tight distribution policies are the basic building blocks for protecting your company’s trademarks and the value of your business assets.

Key Takeaways for Trademark Enforcement Protection

Brand owners should protect their trademarks by following some basic rules of protection, including:

• Trademark registration to both provide public notice of rights and eventually obtain incontestability status and stronger rights against third-parties;

• Continuous monitoring and policing for third-party infringing use; and

• Enforcement of rights through cease and desist letters, takedowns, and litigation if necessary.

For more information about trademark enforcement, see our Trademark Services and Industry Focused Legal Solutions pages.

This article has been provided for informational purposes only and is not intended and should not be construed to constitute legal advice. Please consult your attorneys in connection with any fact-specific situation under federal law and the applicable state or local laws that may impose additional obligations on you and your company. © 2023 Klemchuk PLLC