Trademark law protects a company’s name and reputation

Registered symbol in gold (3d)

A logo can represent a company’s good name

A logo is often one of a company’s most valuable assets. A logo mark may represent the company, its image and reputation, or the reputation of its products or services. Many logos are protected by trademark registration. Many more benefit from trademark protection without registration. Because a mark may be such a valuable asset, many companies have branding guidelines in place to carefully control the use of company logos.

It’s a given that a company’s logo should appear prominently in its signage. But what should a sign maker do if a sign buyer orders sign work featuring logos that it does not own? Should sign companies act as trademark police and require proof of permission before they put a logo on a sign? Most do not. They simply produce the work in good faith, assuming that the sign customer is not infringing by displaying the logo, though many sign shops, when asked to place a national logo on sign work, make an effort to obtain branding guidelines from the sign buyer or the national chain.

Occasionally, a retailer will say, “We didn’t ask permission to use their logo, but we sell their product so it will be okay to use it.” The retailer reasons that he or she is giving their supplier free advertising—and who would object to that? In reality, the use of a protected logo without permission constitutes infringement. And rather than view the display of it as free advertising, the company owning the mark may be more concerned about how it might affect its name and reputation. Why so?

Here is a purely hypothetical example. A siding company believes it would be a selling point to put the Alcoa logo on their signs since they use Alcoa aluminum products. So they order signs with the Alcoa logo on them. Alcoa later contacts the siding company and tells them they are not allowed to display the logo on their signs and to remove it. They explain to the contractor that, while they appreciate his loyal business, his use of the logo without permission is trademark infringement.
Why does Alcoa not view this as free advertising in this fictitious scenario?

Trademark law protects a reputation by preventing confusion

Trademark protection is designed to prevent confusion among consumers. Alcoa may have no desire to be in the siding installation business, but the sign with Alcoa’s logo could give consumers the wrong impression.
And what if the siding company does shoddy work? The improper use of the logo on the sign could conceivably tarnish Alcoa’s reputation or the reputation of its products. It may have taken many years of aggressive marketing for Alcoa to develop a respected name in the aluminum products industry, and protecting this good image may be a high priority for the company. So trademark protection can serve to protect the good name of a brand. Further, if a siding customer is unhappy enough, they may decide to start a lawsuit, even naming Alcoa in the suit, since the Alcoa logo is on the sign.
Consequently, Alcoa avoids this whole bundle of problems by simply not allowing their logo to be used on siding company signs. They may feel that the small amount of advertising the sign gives them is not worth the potential problems.

fairly-good-siding-co05

It’s true that many people, including a well-intentioned siding contractor, may view this as a case of a large corporation using a ‘big stick’ unnecessarily. But that’s because most people don’t realize the potential danger to a trademark of allowing even small infringements to go unchecked. Trademark protection, for it to stay in force, requires watchful management. Trademark protection for a mark may live or die depending on how vigilant the trademark holder is in defending it. The government has put the responsibility for policing infractions squarely on the shoulders of the trademark owner. There are no ‘trademark police’ provided by the US Patent & Trademark Office (USPTO), or any other government agency.

Trademark attorney Erik Pelton, in a recent blog, gives this advice:

Deal with any potential infringements quickly. The more investments of time and money someone puts into using a name [illegally], the more attached to it they become and the more complicated getting them to stop is likely to be.

Erik M. Pelton, Dec 22 blog entry     Pelton is not only a patent and trademark lawyer, but also a former examiner for the USPTO.

Is trademark infringement really wrong?

When a company takes legal action over a perceived trademark infringement, it is sometimes accused of being a bully.

A pub in the St. Louis area began selling a drink with a name similar to a Starbucks drink name. So Starbucks sent a cease-and desist letter to the owner. In the world of intellectual property, a cease-and-desist letter is a routine first step in defending a trademark against infringement. These types of letters are sent all the time and are rarely newsworthy.

The sending of the Starbucks letter, however, was picked up by news media and the result was a little storm of bad publicity, with Starbucks being accused of heavy-handedly overreacting. Public sentiment favored the pub owner and the account read like a David and Goliath story.

My first reaction was, “but, trademark infringement is wrong, isn’t it?” My next thought was, “wait a minute, who is overreacting here?” A cease-and-desist letter is not heavy-handed. It’s a warning shot, the smallest warning shot possible, really. It is intended to stop an infringement at its earliest stage, to nip it in the bud, before costly litigation becomes necessary.

As I learned in intellectual property class at the community college, if a company does not vigorously defend its trademarks against even small infringements, it can have a harder time defending them later from more significant threats. Failure to defend a trademark in the early stages of infringement can weaken a trademark suit later in court.

But Americans love an underdog. A little guy is often perceived as the good guy and a big corporation is seen as the bad guy for no other reason than size. It’s a well-worn Hollywood stereotype: small is good, big is bad. The bigger, the badder.

On the other hand, might this little hoo-ha over a Starbucks trademark be more than just an example of the underdog effect at work? Could it also be an indication that many do not view intellectual property as legitimate property? And that infringement is not really wrong? I suspect so.

The truth is, intellectual property, be it a trademark or a copyright, is property in every sense of the word. It can be bought, sold or leased. It can be bequeathed, inherited, left in a will. In some cases it can have great value. It is worthy of protection, just like any piece of property that has value.

If someone broke into the offices of a large real estate company and stole a dozen “For Sale” signs, who would blame the company for prosecuting the thief? Would the company be accused of being a bully, of overreacting? Yet, to a company like ReMax Real Estate its trademarks are far more valuable than a few yard signs. That’s why it is known for aggressively pursuing infringers. A trademark may be one of a company’s most valuable assets. It has been estimated that the Coca-Cola logo is worth 70 billion dollars. Is it any wonder that a company would take measures to protect such a valuable asset?

I believe that many people do not fully appreciate that intellectual property really is property. A house or land, even a car is easier for them to think of as property, because you can see and touch these things. The loss of these is often difficult to recover from financially.

For a business, the loss of valued trademarks could inflict irreparable damage. It is no wonder that for certain types of willful trademark infringement in the US, the penalties can be in the millions of dollars.