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When To Search and How To Search, These Are the Questions

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When To Search and How To Search, These Are the Questions

By Jonathan Hudis

A crucial first step in adopting a mark for a product or service should be to find out whether others have previously used the same or a similar mark. Yet, this part of the process is often ignored or done improperly.

If a proper search and an evaluation of that search are not done before a new product mark or service mark is launched, the results of poor searching can be disastrous. Consumers in the marketplace could be confused by different companies' similar or related products or services being marketed and sold under the same or similar marks. As a result, competitors may claim harm to their already established trademark equities, and sue for infringement and unfair competition.

WHEN TO SEARCH

Asserting that two marks of different companies are "likely to be confused" is the touchstone of a claim for trademark infringement. New West Corp. v. NYM Co., 595 F.2d 1194, 1201 (9th Cir. 1979) ("Whether we call the violation infringement, unfair competition, or false designation of origin, the test is identical-is there a 'likelihood of confusion?'"). The owner of a senior mark need not prove that the junior mark has actually caused confusion. A showing of likelihood of confusion is sufficient to support a claim for infringement. Restatement (Third) of Unfair Competition §23, cmt. b (1995); Shell Oil Co. v. Commercial Petroleum, Inc., 928 F.2d 104, 108 (4th Cir. 1991).

Failure To Search: Bad Faith?

One of the likelihood of confusion factors is the intent of the second comer. "Good intent" can be proved by showing that the accused infringer properly relied upon the advice of counsel, based upon a trademark search and a reasoned opinion therefrom. Recently, courts have been probing the opposite side of this coin: Is the failure to conduct a proper search, or the failure to follow up on the search results, evidence of bad faith? Does this failure to act properly and prudently compel a finding of infringement? A trademark infringement defendant can be taken to task for not searching or following up on the references found in the search results. The consequences can include an award of money damages, an enhancement of the damages award, and the payment of the trademark owner's attorneys' fees.

Searches Avoid Lawsuits!

In the trial court, the defendant in Secura comm Consulting Inc. v. Securacom Inc., 166 F.3d 182 (3d Cir. 1999) was found to have committed willful infringement, in part by failing to conduct a trademark search for conflicting marks before adopting its corporate name. By a stroke of good fortune, the defendant obtained a reversal of the trial court's infringement finding on appeal. However, a proper trademark search and knowledgeable opinion from counsel may have avoided the lawsuit in the first place.

Of course, the whole purpose of a proper trademark search and opinion is to avoid a lawsuit in the first place. This is why proper trademark searches and opinions rendered by knowledgeable trademark professionals, early in the creative process of selecting marks, are so important. Valuable lessons can be learned from the experience of others' successes and mistakes in their adoption, clearance, and use of their trademarks.

Get an Expert To Help!

Conducting and evaluating a trademark search on your own, if you are not a trademark attorney, is unwise. You risk crafting too narrow a search strategy, and you may not have the necessary resources to uncover a conflicting prior mark. Rely on the services of knowledgeable trademark counsel, who will order a search from a reputable search company that maintains vast databases to uncover potential conflicts located in a variety of sources.

This is why, during the initial stages of a company's marketing plans, it is so important to involve trademark counsel early in the process. She can guide you, from a legal perspective, in narrowing the field of possible marks so that your selection process is efficient and productive. Be sure to inform trademark counsel of the full scope and nature of the goods and services that will be used with the mark, now and in the foreseeable future. This explanation should include the contemplated uses of the products and services, as well as your potential customer base and distribution channels.

If in Doubt, Choose Another Name

Once a potential conflict is discovered, one would be well advised to choose another mark. Failing to recognize the significance of a senior owner's trademark can result in an embarrassing and costly ruling by a court. The defendant found itself in this position in Dreamwerks Production Group, Inc. v. SKG Studio, 142 F.3d 1127 (9th Cir. 1998). Here, the court found that the defendant acted in bad faith--adopting its mark and name with knowing indifference to the trademark rights of the plaintiff, regardless of the consequences.

WHAT TO SEARCH

Your trademark search should not be limited to the records of the U.S. Patent and Trademark Office ("PTO"), unless you already have been using your mark for a long time, pervasively and without incident. Even then, evaluating the results of a search limited to the PTO comes with risk. Such a search only speaks to the right to federal registration of a mark, not the right to use the mark in the marketplace. The defendant was repeatedly criticized for failing to conduct a full Federal and Common Law trademark search notwithstanding the advice of its trademark counsel in International Star Class Yacht Racing Association v. Tommy Hilfiger, U.S.A., Inc., 80 F.3d 749 (2d Cir. 1996) ("Hilfiger I") and International Star Class Yacht Racing Association v. Tommy Hilfiger, U.S.A., Inc., 146 F.3d 66 (2d Cir. 1998) ("Hilfiger II").

Investigate the Names Disclosed in the Search Report

One should investigate marks and names disclosed in the search report that clearly could present a problem. Is the identified mark or name still in use? Are the goods or services associated with the mark promoted and sold to a different customer base, or in different trade channels from your mark under consideration? Will the owner of the problematic mark or name grant you a consent to use or register? Investigations and follow-up of this type are highly recommended, particularly regarding web sites behind the domain names disclosed by the search results. In Zazu Designs v. L'Oreal, S.A., 979 F.2d 499 (7th Cir. 1992), the defendant was commended, and avoided on appeal an ultimate finding of trademark infringement, for conducting a follow up investigation after a full trademark search revealed potential conflicts.

WHAT TO DO AFTER YOU GET THE SEARCH REPORT AND OPINION

The conclusions reached in trademark counsel's search opinion should be supported by a reasoned analysis of the search results. Also, in the case of your adoption of a brand new mark, counsel's search report and opinion should be issued before you begin to use the mark. Such a course of action shows that the mark was adopted in good faith and not with the intention to trade upon the goodwill of a prior owner's mark.

Use and File for Registration of the Mark Promptly

If, in the opinion of trademark counsel, the mark searched is available for use and registration, the mark should be adopted and used, and an application should be filed with the PTO, very soon after the opinion is rendered. Otherwise, you could be relying upon stale information and legal reasoning.

Don't Overestimate the Report and Opinion

Finally, realize the limitations of a search report and opinion. The results of a trademark search reflect a snapshot of one moment in time. As good as they are, there can be gaps in a search company's database(s). Nevertheless, a trademark report and a reasoned opinion therefrom can be a valuable tool as part of your company's overall process in the selection and implementation of trademarks and service marks.

CONCLUSION

As anyone in business knows, trademarks and service marks can be valuable assets. But as anyone who does intellectual property litigation can tell you, the efforts spent developing a marketing plan can be wasted if someone else has prior trademark rights. The best course is first to search thoroughly, and then to act prudently.

Your client has a lot at stake in its choice of a mark for a service or product. Doing a thorough search can avert costly and disruptive litigation.

Why should the client have the search done?

Liability for infringement turns on the likelihood of confusion between two marks. The client can seek to avoid liability by showing that it relied on a thorough search and opinion before using the mark. The search is thus a prudent business strategy.

When should your client conduct the search?

Whenever it plans to use a new trademark or service mark, the client should authorize a search and opinion early in the planning process.

Who should conduct the search?

Leave the search to a trademark professional. Even a careful lawyer who is not familiar with trademark law or the search and opinion process can conduct a search and render legal advice that is too narrow in scope.

What should the searcher look for?

Searching only the records of the U.S. Trademark and Patent Office comes with risk. This search will only determine whether the mark can be registered. An additional common law trademark search also is recommended, and the searcher should authorize an investigation of marks and names that could be particularly troublesome.

Reprinted with permission from The Practical Lawyer, Volume 46, No. 1, January 2000, pages 15-18, published by the American Law Institute-American Bar Association.

Reprinted with permission