– Draeke H. Weseman, Weseman Law Office, PLLC
68,929 Backers. $10,266,845 Pledged. 10,266% Funded.
The stat line above describes “Pebble,” a project to build blue-tooth enabled watches with e-paper screens that display information from synchronized mobile phones. The project is the highest funded project in the history of Kickstarter, a crowd-funding platform started in 2009. Kickstarter was formed after one of its founding partners tried to organize a concert in his hometown, but realized he had no way to present the idea to a potential audience or collect the funds from interested individuals. Kickstarter, and other crowd-funding platforms like RocketHub and indiegogo, solve that problem by allowing project creators to use their website platforms to present ideas to the public and then leverage the financial resources of a community of supporters. Project creators, usually through a video pitch, present their project and ask for pledges toward a 30-day fundraising goal. In exchange for the supporter’s pledge, the project creator offers incentives. For example, incentives range from a public thank you on Twitter to a CD of music to an executive producer credit on a film – or in the case of Pebble, a not-yet-manufactured watch. If the project fails to meet its fundraising goal, then the supporters’ pledges are not processed and the project dies. This wasn’t a problem for Pebble – the startup exceeded its goal of $100,000 by 10,000%. For entrepreneurs like the creators of Pebble, crowd-funding appears to be a dream come true.
For trademark attorneys, though, a project launched on Kickstarter without considering the project’s trademark has the potential to be a nightmare. As I often do, mostly out of curiosity, I search interesting Kickstarter projects in the trademark database at the United States Patent and Trademark Office (USPTO) to see if project creators have registered a trademark for their project. Perhaps not surprisingly, many do not. Even worse, many appear not to have even considered the availability of the name for their project before setting down the path of raising money and launching a business. For example, I give you Pebble.
Pebble does not have a currently pending trademark application (I don’t know whether Pebble conducted any type of clearance search before launching the company or the Kickstarter campaign, but it doesn’t appear that way). Searching for “Pebble” in the USPTO database, I found more than 100 live pending or registered trademarks that incorporate a mark or a pseudo mark matching “Pebble.” This alone is not necessarily a problem because most of those 100 entries have no relation to watches. But what about the following registered trademark:
PEBL, in International Class 009, for “… CELLULAR TELEPHONES … … COMPUTER SOFTWARE AND PROGRAMS FOR MANAGEMENT AND OPERATION OF WIRELESS TELECOMMUNICATIONS DEVICES … COMPUTER SOFTWARE FOR THE DISTRIBUTION OF INFORMATION AND INTERACTIVE MULTIMEDIA CONTENT CONTAINING TEXT, IMAGES, VIDEO AND SOUND TO USERS IN THE FIELD OF COMMUNICATIONS … COMPUTER SOFTWARE FOR SENDING AND RECEIVING SHORT MESSAGES AND ELECTRONIC MAIL AND FOR FILTERING NON-TEXT INFORMATION FROM THE DATA …” and owned by Motorola Trademark Holdings, LLC.
That’s right, PEBL is a Motorola trademark for a cellphone and its related communication software. If you look again at the Pebble Kickstarter page, you’ll see the following: “Pebble connects to iPhone and Android smartphones using Bluetooth, alerting you with a silent vibration to incoming calls, emails and messages.” This is the point where most trademark attorneys would pick up the phone, call the client, and say “Houston, we have a problem.” (Only if the client’s name is actually Houston, otherwise this would just be cheesy.) The problem is that even though watches and cellphones aren’t related by coordinated classes, i.e. they are not generally considered similar goods, this particular watch is built to communicate with a cellphone and probably requires computer software to operate, either on the watch itself, in the form of an app on the synchronized phone, or both. This creates a possibility that the USPTO could refuse to register Pebble under Section 2(d) for “likelihood of confusion” with PEBL and the possibility that Motorola could sue for trademark infringement.
Whether this actually happens is anybody’s guess. Regardless, it puts Pebble in a tough spot: do they attempt to register the trademark and face possible refusal or opposition proceedings, which will incur significant legal fees? Do they keep using the mark and face a possible infringement action, putting profits at stake and incurring even more legal fees? Do they tell 68,000 backers they are now changing the name?
Pebble could have avoided being in this precarious situation in the first place. The USPTO has long offered the opportunity to file a trademark application for trademarks not yet in use. Called an “intent-to-use” application, if approved, it creates a nationwide right to use a trademark against any subsequent user of the same or confusingly similar mark. Once the trademark is used by the applicant, it becomes eligible for registration. Had Pebble considered this route and hired a trademark attorney to conduct a clearance search for an intent-to-use application for Pebble, Pebble would have known about the PEBL trademark before launching its Kickstarter campaign. Pebble could then have evaluated the risks of proceeding with a device that might not be available for federal registration and might infringe a Motorola trademark.
If Pebble felt that the risks were too great, it could have privately changed its name to something distinctive and available as a federal trademark. With a trademark cleared and an application filed, the newly-named company could move forward with its Kickstarter campaign in confidence, kickstarting not only a project, but also a trademark portfolio.