By Steve Bauer
Most people don’t think twice about the familiar trademark and copyright symbols on products they use in every facet of daily life. Yet, these tiny, but powerful tools are the best defense for businesses wanting to protect their company name, products and services.
Trademarking or copyrighting is a simple task that many powersports companies choose to ignore, which has lead to expensive legal battles that in many cases have forced companies to completely rebrand themselves.
“Businesses face that very real danger every day by failing to register for trademarks and copyrights on their goods and services, and in most cases it’s either not wanting to spend the money upfront, or they simply ignore the fact that there could be severe consequences down the road,” said T. Earl Levere, a partner in the Columbus, Ohio, based law firm of Schottenstein, Zox and Dunn Co., LPA. Levere specializes in intellectual property rights and has been involved with the subject for 14 years as an attorney, and for several years before then while working in the music industry.
Trademarks: they're everywhere
By legal definition, a trademark is anything that designates the origin, source, sponsorship or affiliation for a particular good or service. Trademarks also include service marks, which are basically the same, except they designate the origin of a service. Between the two, in the world of business nearly anything is able to be trade or service marked — and usually is.
“It’s usually words or a symbol, or both, but it doesn’t have to be. It can be other things,” Levere said. “For example, if you’re a movie lover, at the beginning of every MGM film you see the lion that roars. That roar is a registered trademark. The Peabody Hotel is famous for having ducks march through the lobby of its hotel, that’s a trademark. People and companies can trademark just about anything, from a sound to a color to even smells.”
Other examples of trademarks include the color brown for UPS and even the smell associated with Cinnabon cinnamon rolls.
Companies, especially larger ones, will attempt to trademark nearly everything they feel can be associated with the company name. Levere says one company that has a long history of fiercely protecting its brand name is Harley-Davidson, although courts have ruled that not all things V-twin can be attributed to H-D.
“One thing that is not a registered trademark despite herculean efforts by Harley-Davidson is the sound of a V-twin motorcycle, the word ‘hog’ or the phrase ‘potato, potato, potato,’” Levere said. “The court denied Harley’s request to trademark them because the company was unable to show that those are uniquely associated with its products and services. In simple terms, if you don’t immediately think of Harley when someone says the word hog, then it’s not something that’s clearly associated with Harley.”
So how do you know if you’ve had your product or service infringed upon, or if you’re breaking the law against another company? The answer varies, but generally speaking if an established logo or other symbol is used to confuse consumers that the products are linked to the same company, an infringement law has been broken. Levere says the practice is referred to as “nomitive fair use.” Simply put, you can’t use a logo or symbol to suggest your product originated from a particular company or person if you know that’s not the case.
“If you are a manufacturer and you put a Harley-Davidson logo next to apparel that isn’t produced by them, it could be a problem,” he said. “Or if you’re a manufacturer and you make floorboards for Victory, and you take a picture of your floorboards on a motorcycle and somewhere in this picture of the floorboard on the motorcycle is the Victory logo, you’re likely going to hear from a lawyer at some point. The question is whether the defendant’s use of its trademark or some other mark is likely to cause confusion to the source, origin or sponsorship of a particular good or service.”
Levere says bootlegged T-shirts or other apparel are examples of brazen copyright infringement. For example, if somebody is making and selling Honda racing T-shirts and the manufacturer doesn’t have Honda’s express written permission to produce the shirts, that’s obvious infringement. It could also be other apparel, or even an entire bike.
Two roads to trademarks
Getting rights to a trademark can be accomplished two ways, one of which is simple but can lead to a world of trouble down the road. The other requires research, monetary investment and a formal government application, but gives you solid protection from knock-offs for the life of the brand.
“You can get your rights to a trademark by simply using a particular mark,” Levere said. “So if you decide you’re going to be John Doe Engineering and begin manufacturing your products, once you start using your mark you get the rights to it.”
The process might sound simple enough, but there’s a catch: You only get rights in the areas you’re actually using your mark, and where no one else has used it first.
“Let’s say you’re based in Chicago and you get fairly well known in that area, and then someone in New York decides they want to be John Doe Engineering,” Levere said. “If you don’t have a registered trademark and somebody else starts using the John Doe name, you won’t be able to stop them because your use of that specific trademark hasn’t reached the New York market yet.”
Levere goes on to note that if you’ve filed for a federal registration of your trademark, even if it hasn’t been approved yet, then you have full power to stop anyone anywhere in the U.S. from using a similar mark.
“If you envision your business in your city as a little light bulb, and you turn that light bulb on, wherever that light shines represents where your name has gotten out and your mark is recognized as being used there,” he said. “In the dark areas, somebody else can come along and use the exact same name and mark. What the registration does is it shines a light on the whole country, and prevents anybody else from coming up later and using a confusingly similar trademark or service mark.”
Levere says the reason federal registration is so important, especially considering how much the Internet is used for buying and selling product, is that you’re likely selling it to locations outside of where you’re based. This is especially relevant to retailers that might have an interest in expanding into other parts of the country as they grow larger.
With all its benefits, Levere cautions that there is one risk with obtaining federal registration.
“If you start up your company tomorrow and decide to get your federal registration, if there was somebody else of a similar name already in place somewhere else, even if they don’t have a registered trademark, they can continue to use that name,” he said. “And in some cases if that other person or company’s use was significant or widespread enough, that can actually prevent you from registering your trademark.”
Research before registering
The best way to avoid conflicts of interest with other parties is to research your intended trademark before filing the application. The process can be spendy depending on how detailed you want to get, but even the smallest companies can cover their bases to a good degree by using affordable commercial services.
“Big companies will go through the whole trademark analysis before they even roll out a new product,” Levere said. “If a company like Honda is about to introduce a product, they’ll do an exhaustive search not only in the U.S., but anywhere else they think they’ll want to market a product to make sure there isn’t something that could prevent them down the road.”
Levere says his law firm recommends small companies should do at least some initial searching to see what’s already in use, and that there are resources out there that can help do some searches for free, and even commercial companies that will conduct a relatively thorough search for $400-$700.
Another tactic smaller companies can take advantage of is the ability to apply for a trademark on a mark they’re not yet using, which is called an “intent to use” application.
“As long as you give the Patent and Trademark Office evidence that you’re using the mark, and that can be extended out to a few years if you need more time and fill out the proper paperwork,” Levere said. “It’s an effective tool for smaller companies to use to buy themselves time if they’d like to do more research but don’t have the funds readily available.”
Once you have the results in hand, Levere recommends having an expert, preferably a lawyer that specializes in intellectual property, interpret the results and give you what is called a “clearance opinion” or a “right-to-use opinion.” These documents will give you a good idea of whether you should pursue a trademark application or continue using one you already have.
Worth the expense
While application fees, research costs and legal bills might seem too much for a company already pinched to make a profit, Levere notes the potential costs associated with an infringement trial can be devastating to a business.
“If you get brought to court, you could end up paying for the other side’s legal fees and be forced to do corrective advertising to clear up any confusion you might have created in the marketplace, not to mention the cost to rebrand yourself. It’s a lot cheaper to do it on the front end.”
Levere says typical upfront costs include the government filing fee, which is $325 for each international class of business registered for. Although most trademarks fall within one or two classes of business, in some cases they could total four or more. As for legal fees, Levere’s law firm bills its clients a flat fee of $1,500 plus the filing fee for what would be considered a straightforward trademark application, and fees increase for more complicated cases. And for any company hedging on spending money to research a trademark, Levere points to a current client that has hit several snags trying to get a product lineup trademarked.
“He had five or six names picked out he thought were really unique and was certain weren’t in use, but it turns out that after we helped him research it they were all trademarked,” he said. “The money he spent up front saved him from a lot of hassle if he has a lot of commercial success with his company.”
Another sector of intellectual property law that can be confusing to companies is the area of trade dress. Trade dress is similar to a trademark except it’s judged by the overall look and feel of an article that indicates where it came from, as opposed to a trademark that focuses on specifics.
“One example would be the inside of a McDonald’s restaurant,” Levere said. “If someone blindfolded you and took you to McDonald’s and then took the blindfold off, you’d instantly know where you were. Trade dresses are a lot harder to deal with and prove, because any competing company can come in to court and say, ‘What company A is doing isn’t unique to them, you can find that overall atmosphere any number of places.’ It’s certainly a way to protect your business, but you have to have a rock-solid case to do it.”
Levere says trade dress can apply to specific products, like a particular motorcycle model might have certain overall features or a look that clearly indicates who manufacturers it. One area that isn’t covered by trade dress is licensed dealerships, even with a large brand name attached to them.
“With a Harley dealership, for example, you can definitely get the feel for a V-twin shop, but if you go into a big Harley store vs. a large Big Dog store, there probably isn’t that much difference aside from the specific trademarks,” he said. “And remember that for trade dress, you don’t include specific logos or symbols, you’re talking about the overall feel of an item, store, etc. You can kind of feel when you’re in a V-twin shop, but you wouldn’t necessarily know it’s a Harley shop. And that doesn’t just go for Harley, it applies to metric and European dealerships as well.”
The question of copyrights
Another commonly overlooked area of intellectual property that manufacturers and dealers should become familiar with are copyrights. A copyright protects the expression of an idea, but not the idea itself. Copyrights can protect many forms of creative expression, ranging from music or words to images, sculptures and buildings.
And though it might seem unlikely a copyright infringement would occur in the powersports industry, Levere says that’s not the case.
“If I’m an aftermarket company that makes a product for BMW and to advertise my product I take a stock photo of the bike from BMW and use that photo in my advertisement, I’ve just committed copyright infringement,” he said. “Instead of going out and finding that specific model bike and snapping a photo of it myself, taking it directly from BMW without permission is a clear violation of the law.”
Levere says copyright can get even trickier when it comes to artwork on bikes or ATVs, or even using background music in a promotional video.
“If you make parts for custom bikes, for example, and you want to market your parts by taking a picture of them on a bike that has a custom mural on its gas tank, believe it or not, the person who painted that mural would generally own the rights for the image on the tank. Or if you’re filming a promotional video for your product, and you use background music without getting permission from the artist, again that’s possible copyright infringement.”
Levere’s advice for copyrights is to always get written permission from the original artist before using their work for your marketing purposes, saving you from possible legal trouble.
Investing in your future
Regardless of which type of intellectual property you choose, Levere says in today’s litigious society, the more protection the better.
“Of course every company is a case-by-case basis, I’ve got a client that’s been using its mark for five years on a particular product line, and now another enormous company is rolling out the same product line and they haven’t registered,” he said. “They’re not completely sunk, but they would have been much better off if they would have registered already, and frankly we were shocked to find out they never bothered to research the trademark. So it’s not just the little guys that have to pay attention.”
Levere says at a minimum, companies should always register their names, and as far as products it’s up to a company to decide whether a particular product will be a featured part of its lineup for years to come and is worth the investment. When in doubt, however, Levere urges to take the route that will offer you the most long-term protection.
“One of the benefits of registering your marks is it puts a clear stake in the ground as to when you started using it,” he said. “The filing shows the world exactly when you started using this mark, and that’s really important because the person who starts using the mark first gets the right to it. And once a mark has been registered for five years, it becomes incontestable, so it’s good to start that clock ticking as soon as you can.”
For questions or concerns regarding intellectual property matters, call T. Earl LeVere at 614/462-1095, or e-mail him at email@example.com.
Copyright 2008 Powersports Business