The name of any business and its products are valuable assets. But what happens if you discover that another business is using a similar name or if you are threatened by another business claiming to own the rights to a similar name?
Many businesses discover a perceived threat and immediately send a cease and desist letter or cave into demands to discontinue use of a particular mark. However, there are a number of factors to consider when evaluating whether a potential trademark dispute is credible.
Likelihood of Confusion
At the heart of any trademark dispute is whether any likelihood of confusion exists. Likelihood of confusion is evaluated by courts according to many factors, but the issue primarily comes down to similarities of the marks and similarities of the goods or services. If two parties use a similar mark but on entirely different goods, confusion is less likely. The more similar the goods or services, the less similarity required between the marks. The more similar the marks, the less similarity required between the goods or services. Therefore, the first consideration is almost always whether any consumer confusion is likely between the two marks used with their respective goods or services.
Strength of the Mark
Parties to a trademark dispute should also consider the strength of the mark being contested, and whether the word or phrase is even capable of functioning as a trademark. The strength of a trademark falls along a continuum ranging from fanciful to generic. A mark is typically stronger when it does not describe or characterize the goods or services used with the mark, and is therefore distinctive.
Occasionally a party will claim rights to a word or phrase that is either descriptive or commonly used in the industry. That party may even have been able to obtain a registration of the mark. However, if that mark is merely descriptive or generic for the goods or services offered by that party, it is unlikely that the party will own broad rights to the mark. Further, minor differences in the marks become significant when those marks are less distinctive.
An important consideration in deciding whether to pursue a trademark dispute is priority – that is, who used the mark first? Priority of use of a mark will typically insulate a potential infringer of another party’s trademark.
For example, suppose a business owns a trademark registration and discovers another party using the same mark. Even though that business owns a federal trademark registration, if the other party made actual use of their mark first, that party may have its own rights to the mark that supersede those of the registration owner. If the registration owner’s mark has been registered for less than five years, that registration could be exposed to potential cancellation by the other party based on that party’s priority.
In some cases, if both parties used the mark without registration concurrently in different geographic locations, both parties could end up owning rights to the mark in their respective geographic areas.
If a business owns a registration or claims rights to a mark, that business should always conduct at least some initial due diligence to determine whether it has priority of use of the mark before demanding that another party discontinue its use of the mark.
When faced with a potential trademark dispute, a business should always consider at least whether a likelihood of confusion exists and who has priority to the mark. Businesses should also consider retaining trademark counsel, who may be able to evaluate other issues prior to engaging another business in a trademark dispute.