How Some Crummy T-Shirts & a College You Probably Never Heard of Might Inform Your Trademark Strategy

Let’s say you started your company up several years ago. You called it BLERGLE. Back then, your company was a software development shop. Because you’re you, you worked with a lawyer to apply for and obtain a federal registration of BLERGLE for “software development services.” Later, your company expanded naturally into web design, handling both front-end and back-end design and development. The thing is, you and your fellow founders aren’t really software folks. Deep down, you’re all hardware folks. And you all discover that, thanks to all the software development you’ve been doing, you can make a mobile game controller made specifically to play online browser games that don’t work well on smart phones.

There are scads and scads of t-shirts and sweatshirts for sale at Savannah College for Art & Design’s online bookstore. But SCAD might not have been first to use its own mark on apparel. Should that matter?

You start making and selling these BLERGLE mobile browser game controllers, and they’re a hit. Parents like them because they’re cheap, they can control what games their children can play, and their children will stop begging to play games on the parents’ smart phones. Also, the controllers are excellent for playing “slither.io.”

Alas, with success come competitors—almost immediately. Within a couple of months, one starts to sell a FLARGLE mobile browser game controller. This will not stand! You call up your company’s lawyer. Together you slap that certificate of trademark registration onto the back of a complaint and sue the FLARGLE folks, the bastards.

But wait, wait, wait. The registration is for “software development services,” not for “mobile browser game controllers.” Uh, oh. Are you screwed?

This is a fairly common scenario for startups. It is by no means unusual for a startup to start with one business model, but slide over time into a different business model (which is more lucrative, fits your corporate skill set better, or was just the result of an unforeseen opportunity or obstacle). It is also by no means unusual to work with attorneys on trademark strategy during the startup phase but then de-priortize it even as your company’s trademark registrations become less and less relevant.

Q: Are We Screwed? A: No, But Things Could Be a Lot Better

The answer is: “No, but things could be a lot better.” You’ll wish you had obtained a registration for “mobile browser game controllers,” but that’s not a fatal mistake. To understand why, we’ll need not only to understand some fundamentals of trademark law, but also understand the imperfect relationship between trademarks and trademark registrations.

You Don’t NEED Trademark Registrations (but You Probably WANT Them)

The main reason you’re not screwed is that you don’t need a trademark registration to have trademark rights. If you never got that registration of BLERGLE for “software development services,” you’d still have trademark rights in BLERGLE. What’s more, you’d have them for all three of your products: software development, website design and the mobile browser game controllers. This is because your company was the first to use BLERGLE with those products in a commercial way (i.e., in a way that causes consumers to associate BLERGLE with the product). When consumers want software developed, a website designed or to buy a game controller, you want them to think “BLERGLE!” In the case of the game controller, you probably have BLERGLE written prominently on the controllers, as well as their packaging, so that makes the association pretty obvious. Making the association with services is harder, but you probably have advertising (like a website) in which BLERGLE is prominently displayed with information describing your services (“Need software developed, or a website designed? Try BLERGLE! Now with extra JAVA!” OK, maybe not like that.)

But, of course, there was a reason you went to the trouble to get the registration, right? Sure, there was. Proving ownership of trademark rights in court—and hence, enforcing them—can be very difficult, rather expensive, and a bit chancy. Whether your putative trademark is valid, and whether you are its owner, are fairly complex factual questions, which will require attorney time to prove. And, at least in close cases, different courts might come to different conclusions. Registrations, however, are proof that your trademark is valid and you own it.1 In a way, by having your trademark examined by a federal bureaucrat, you are vetting the trademark, and when the registration issues, it’s like a government stamp of approval.2

So, at a minimum, you have trademark rights in BLERGLE for mobile browser game controllers. It just might be a pain to enforce them.3 Is there any way to get the registration to work for the mobile browser game controllers? The answer is: Maybe, but, Oh, Lord, is the analysis difficult.

Identification of Goods and Services in Your Registration Isn’t a HARD Limit

You already know that, when you got your registration for BLERGLE, you had to tell the USPTO what you were using BLERGLE for: “software development services.” In other words, the registration doesn’t cover every possible commercial4 use, just those related to “software development services.” That’s why we can have DELTA airlines, DELTA faucets and DENTAL dental: strong, identical trademarks for very different products.

But you don’t offer only software development services any longer. Ideally, you would have applied for additional trademark registrations of BLERGLE for the new goods and services your company started to offer. You were also really busy. You all were developing new products, new marketing strategies to go with them and—knowingly or unknowingly—remaking your company. You knew talking to your company’s lawyer was important; in fact, it was easily more than the 100th most important thing you had to do.

Here’s some good, if complicated, news. “Software development services” isn’t a hard limit on the registration. The scope of your registration extends out to any use that would infringe on BLERGLE for “software development services.” Under this analysis, you would look at how closely related the products in question are to “software development services,” how similar the other trademark is to BLERGLE, and how “strong” BLERGLE is as a trademark for “software development services.” Simplified somewhat, you can kind of think of the similarity of the products and the of the trademarks as sliding scale (only with other, smaller sliding scales all around): the more similar one is, the less similar the other had to be. So, if a competitor was using BLERGLE for website design, you could probably use your registration to enforce BLERGLE against that competitor. The trademarks are exactly the same, and software development is pretty closely related to website design. If the competitor had used FLARGLE, it’d be a closer question, but you’d still have a good case.

OK, but that wasn’t the problem. The problem was for those mobile browser game controllers under the FLARGLE brand. If only the competitor had used BLERGLE! Wait, no—that’d make your case stronger, but not in a good way! One problem you might have is that we’re now comparing services with goods, and some courts think this is a huge difference.

Encoding Strength

(FLARGLE vs. BLERGLE) + (“mobile browser game controllers” vs. “software development services”) might not be enough. But relatedness of products and similarity of trademarks aren’t the only factors—not by a long shot. What about “strength of the trademark”? Commercial strength measures how far and how deeply a trademark has penetrated the consuming public. Strong trademarks get more scope because consumers are already familiar with them and are more likely to ascribe an identical or similar trademark to the strong trademark. If BLERGLE were as strong as DELTA, say, a consumer might really think: “FLARGLE? I feel like I’ve heard that before. Are they the same as those software developers?”

Alas, commercial strength isn’t encoded into the registration. There isn’t a section in the registration that measures the trademark’s strength (“Mark strength: 5 out of 10”). Even if there were, trademark strength will change over time. I mean, you sure hope it does (i.e., in the “stronger” direction)!

There is another kind of strength that is encoded into a registration, because it’s evident from trademark itself (in conjunction with the goods and services): conceptual strength. Meaningless (“fanciful” in trademark parlance) marks like BLERGLE are accorded high strength. Not only do they tend to be more memorable (KODAK, anyone?), but there can be external reason for the mark.5 The odds of someone coincidentally coming up with a similar mark for similar products are really small. You can imagine two people independently coming up with GREYHOUND for transportation, but BLERGLE? That makes FLARGLE kind of suspect.

Is this conceptual strength enough? I don’t know! I deliberately picked an hypothetical problem with no clear answer (probably because I used to teach at law school). But, don’t we kind of need to know? Can you or can’t you take advantage of your registration? Who determines, and when? The jury, at the end of the end of the case? The judge? Can you get the judge to tell you early on, so you can determine whether you need to prove validity and ownership at trial? Maybe! Maybe not!

Goods vs. Services: A Distinction Without a Difference?

One potentially6 big problem (which I breezed past above) is that some courts believe that “goods” (i.e., stuff, e.g., the mobile browser game controls) are never related to “services” (e.g., “software development services”) with respect to registrations. Consider this recent opinion out of the 11th Circuit7: Defendant sells apparel and related goods with a variety of designs on them. One of those designs on offer used the words SAVANNAH COLLEGE OF ART AND DESIGN,“ which is the name of (guess what) an art-and-design college. The college has been using that name for a very long time, and it even had federal registrations for it (and for designs that incorporated the words). BUT, the registrations were for ”education services,” with nary a word about apparel or any kind of goods.

At trial, the court threw out the college’s case on summary judgment because (1) the registration couldn’t be used as evidence of validity of SAVANNAH COLLEGE OF ART AND DESIGN for apparel because the registrations were for services, not goods; and (2) the college didn’t prove its use of the trademark for apparel. I think we can surmise that the college was surprised by this turn of events, or else it would have developed proof of its actual use of the trademark for apparel.8 And I don’t think we can blame them. The result the trial court reached was absurd: an unaffiliated website might be the true owner of SAVANNAH COLLEGE OF ART AND DESIGN for apparel.9

But absurd results didn’t make the trial court’s decision legally incorrect. Alas, sometimes that happens. In this case, the trial court was following the reasoning of a number of other U.S. Circuits that the federal law governing trademarks (known as the “Lanham Act”) makes a distinction between goods and services. The Lanham Act actually distinguishes between “trademarks” for goods and “service marks” for services.10

I think we can all agree that it is common and normal for colleges to sell apparel bearing their trademarks, er, service marks. Further, I think we can all agree that, when used on apparel, the trademark isn’t really selling clothing, but advertising the education services provided by the institution. HARVARD might be a fine educational institution11, but a HARVARD sweatshirt isn’t necessarily of particularly high quality. And yet, many courts would look at this relationship and say that a formal distinction found in the Lanham Act presents an insurmountable barrier between HARVARD sweatshirts and HARVARD educational services.

Fortunately, the 11th Circuit reversed, but boy was it reluctant to do so. It found precedent from the 70’s12 holding that a registration for services can be used in an infringement case involving goods. That case involved a hockey team, whose registrations were for different types of services, and the defendant was selling replicas of the hockey team’s trademarks, er, services marks.13 The precedent had little trouble finding that the registration could be used to enforce the trademark against the defendant. As the 11th Circuit complained, the precedent didn’t explain itself. I’m guessing it didn’t explain itself because it saw no reason to. It was obvious that sports services and sports apparel are related products.

Are Trademarks Even “Intellectual Property”?

At a minimum, we see clearly that registrations are not a perfect fit with trademark rights. Right off the bat, you know they can’t take into account commercial strength, which is significant. They also rarely take into account lots of other factors, such as the sophistication of the target consumer (the more sophisticated, the less likely the confusion).

Registrations represent an approximation of the scope of trademark rights. In some ways, they give what is really a business tort a kind of “IP sheen.” Trademark law is, at heart, just a highly visible form of unfair competition, the roots of which stretch all the way back to Medieval times: you can’t use deception to gain an unfair advantage.14 To be sure, the rights have expanded, so that we are now concerned about trademark usage that is likely to cause confusion (but doesn’t necessarily actually cause confusion), but the expansion was to protect consumers. Consumers should be able to make purchasing decisions without fear of confusion: they know what they are buying.

The scope of trademark rights is pretty much co-extensive with the set of all infringing uses, and that analysis requires weighing of multiple factors, which will vary from use to use and over time. By contrast, a patent’s scope is set forth tremendous detail, plus a fuzzy border area (for the doctrine of equivalents), and a court actually has to resolve any ambiguities with that scope (“claim construction”) before a jury can determine infringement. Copyright is more complex, since it involves different levels of abstraction and concepts like “thin” protection, but its scope is still tethered to the expression being copied. Trade secrets are difficult to identify, but once identified, their scope is pretty clear. Trademark, by contrast to other forms of “intellectual property,”15 looks at the complex interaction of a consumer and his or her purchasing decision. Its scope will vary on the immediate context.

While it might hopeless to reduce all of trademark law’s complexity to a neat registration, it’s not a worthless exercise, either. We are put on notice about approximate scope of different trademarks, so we’re less likely to bump into each other’s trademarks. Registration also tests the strength of trademarks and receive a government “stamp of approval” that makes enforcing trademarks easier. And it makes buying and selling trademarks a little easier (if only for psychological reasons16.)

The Moral of the Story: Keep Your Trademark Registrations FRESH

For all that, there is a pretty easy take-away lesson here: when your business changes direction, or expands its offerings, it’s a really good idea to update your trademark registrations. In our hypothetical, you can try to rely on the registration of BLERGLE for “software development services,” but you can’t be so confident that you won’t also, in parallel, be developing proof of validity and ownership. Of course, when your business is veering in unexpected directions and you’re doing everything you can to hold everything together probably isn’t the most convenient time to worry about trademark strategy. So, instead, you might just have your lawyer regularly review your company’s offerings to see if new trademark registrations are a good idea (within your company’s budget17).

Thanks for reading!