8150 / What is a trademark?

The term “trademark” should be distinguished from the term “trade name.” A trade name refers to the name of a business, and nothing more. Ownership rights of a trade name are governed strictly by common law or specific state statutes, based on adoption and actual use by the company. Even before such use has been established, the trade name can be registered at the state level. There is no federal registration of a trade name. Of course, some famous trade names are also used as trademarks and, if this occurs, then that name can be federally registered as a trademark.

The term “trademark” is used generically and will be used throughout this text to encompass an actual “trademark,” which is applied to goods as well as a “service mark,” which is used to identify services. Both are capable of being federally registered.

The essential purpose of a trademark is to identify all goods or services derived from a common source so that a purchaser, entering the marketplace after seeing an advertisement or returning to the marketplace after having already purchased certain goods or services, will be able to select and purchase the item seen in the advertisement or the same item as previously purchased. Quite often, the purchaser, when making the decision to purchase goods or services under a given trademark or service mark, does not actually know the name of the business. In fact, the purchaser is usually less concerned with the identity of the business than with the fact that the product or service being purchased is the same as seen in the advertisement or previously purchased.

Trademarks may take many different forms. The more conventional forms include words, phrases, or groups of letters (such as IBM). However, trademark coverage is far more extensive. For example, a federal trademark registration has been granted for the shapes of such items as the Jeep front grill, the Coca-Cola bottle, or even building designs such as the McDonald’s golden arches. Or trademarks can cover ornamental color or design such as the design on Nike tennis shoes, the black and gold combination on a Duracell battery, or even Levi’s small tag on the left side of the rear pocket of their blue jeans. Trademarks also include catchy phrases such as “You deserve a break today.” Still further, trademarks can cover a sound, such as the NBC chimes, or a smell, such as the aroma of knitting yarns (but not a smell that is the essence of the product, such as in the case of perfume).

Protection for famous trademarks is enhanced by the Federal Trademark Dilution Act, enacted
in 1996,¹ which, like numerous state trademark dilution acts (in approximately half of the states), allows the owner of a famous trademark to prevent others from using a similar mark, even in the absence of competition between the parties. This act allows the trademark owner to enjoin parties from using or even registering Internet domain names similar to a famous trademark of another.² In Moseley v. V Secret Catalogue, Inc.,³ the United States Supreme Court held that the Federal Trademark Dilution Act required a showing of actual dilution, not a likelihood of dilution. However, the Court also stated that a showing of actual dilution did not require a showing of the consequences of such dilution such as actual loss of sales or profits. This holding of the Supreme Court was specifically overturned by legislation in 2006, which explicitly stated that the owner of a famous mark need demonstrate only the likelihood of dilution, as opposed to actual dilution, in order to claim relief under the statute.⁴ The federal dilution statute was intended to allow owners of a federal trademark registration to assert that registration as a defense to a claim brought under a state dilution law. Because of a clerical error in the 2006 legislation, that defense was made possible in response to a dilution claim based not only on state dilution law, but also brought under the federal dilution law. That error was corrected in 2012 to limit that defense to only a dilution claim brought under state law, and not a dilution claim brought under federal dilution law.⁵

Under the Trademark Cyber Piracy Prevention Act included in 1999 intellectual property legislation, so-called “cybersquatters” are prohibited from registering the name of another in order to cause mischief or extract payment from the rightful owner of that mark.⁶

Federal trademark law also provides protection for “trade dress,” which is the distinctive appearance of an article, a package, or a place of business.⁷ Although such trade dress protection is provided under the federal trademark law, one does not generally apply for an actual federal trademark registration to cover trade dress. Rather, under the trademark law, protectable rights are based on the distinctive nature of the trade dress plus its use over time in the marketplace. The scope of trade dress protection was expanded by the United States Supreme Court in the case of Two Pesos, Inc. v. Taco Cabana International,⁸ which held that where trade dress is inherently distinctive and nonfunctional, it is protectable under the federal trademark law even without the establishment of a reputation (known as secondary meaning). Conversely, in Wal-Mart Stores v. Samara Brothers,⁹ the United States Supreme Court held that a product design trade address cannot be inherently distinctive so it is protectable only upon a showing of secondary meaning.