It’s about that time of year, when you may be thinking about tax season. Tax day is still a few months away, but you may already have received your W-2, or 1099, (or other various assortments of mysterious numbers and letters), which will determine how much you’ll owe Uncle Sam (or perhaps a nice refund is on the way?). You might also be thinking about the possibility of an audit. Depending on your particular business or personal income situation, the chances of an audit may be quite small, but it’s hard not to think about.

What you’re probably not thinking about, however, is an audit by the U.S. Patent and Trademark Office (USPTO), regarding any trademark registrations that you own. It can happen. Luckily, a trademark registration audit is not nearly as onerous or time-consuming as a tax audit. For any trademark owners or practitioners out there, who may receive an audit this year, here’s a quick overview and some tips.

In March of last year, following a two-year pilot program, the USPTO implemented new rules, establishing a random audit program for trademark registrations. The audit program is targeted at the required maintenance filings (“Declarations of Use”) for any registrations with more than one good or service per class. The goal of the audit program is to randomly request additional verification, that the registered mark is actually being used in commerce with the identified goods or services (which is required to maintain a valid trademark registration). Specifically, each year about 10% of all trademark registrations with recent maintenance filings will be randomly selected for an audit.

The rationale for the program is that under current rules, registration maintenance filings (every 5 years for the first 10 years, then every 10 years after that), only require the registrant to submit proof of use (a “specimen”) for one of the identified goods or services in each class, rather than all identified goods or services. Therefore, this can lead to invalid (or partially invalid) registrations sitting on the register for years (referred to as “deadwood” registrations), that identify goods or services for which the mark is no longer being used in commerce. The goal of the audit program, therefore, is to “to assess and promote the accuracy and integrity of the register” (Trademark Rule 2.161(h), as amended) by cleaning up the deadwood.

When a registration is randomly selected for an audit, the USPTO will issue a “Post-Registration Office Action,” stating, “Registration Selected for Audit.”  This Office Action will require the registrant to submit additional specimens for two goods or services, which are randomly selected among all the goods and services identified in the registration. Linked here is a sample of such an audit Office Action–this should look the same for everyone, other than the registration data.

The electronic response form is straightforward, which requires the registrant to submit acceptable specimens of use according to the applicable specimen rules (see TMEP §§ 904, 1301.04), and a verified statement of use. However, if it turns out that the registrant was not using the mark in commerce for the selected goods/services, the next step is to request deletion of those goods or services from the registration.  If deletion is requested, the USPTO, unfortunately, will then expand the audit to require specimens for all remaining goods or services identified in the registration.

Here are a few tips for dealing with the new audit system, for both trademark owners and practitioners:

  • Carefully Confirm Use for All Goods and Services; Amend Registration as Needed: When it comes time for filing the Declaration of Use, confirm use in commerce of the registered mark for all identified goods and services (even though only one specimen is required), and if use has ceased for any goods and services, they should be deleted from the registration. That way, there won’t be any hiccups when it comes time for an audit.
  • Get Ready for Expansion of the Audit if Deletion Is Requested: If you must delete any of the goods or services selected in the audit for non-use, the audit will expand to all goods or services identified.  Therefore, if any deletion is required, you should comb through all identified goods/services and make any necessary deletions at the same time–don’t just delete those currently selected in the audit. Otherwise, after the audit expands, it will further delay the process if you need to request more deletions.
  • File a Timely Response to the Post-Registration Audit, or Entire Registration will be Cancelled: There is a six-month deadline for responding to the audit issued in the Post-Registration Office Action. One might think that without a timely response, only the audited goods/services would be deleted by the USPTO. But unfortunately, the consequence is harsher than that–if a response is not submitted by the six-month deadline, the entire registration will be cancelled.

What do you think about the new audit process? Is it worth it having the deadwood registrations cleaned up, which can be beneficial from both a prosecution and enforcement perspective? Or are the benefits outweighed by the additional administrative time and cost associated with gathering more specimens and responding to these Office Actions? Perhaps that answer might depend on whether you fall within the audited 10% this year–so, good luck to all!

You know that feeling when you’ve nearly crossed the finish line? You have done the work, put in the time, and the only step left is to run through the tape.

There can be similar moments with trademark applications, too. Admittedly, it may not be as exciting for other people, but I certainly enjoy it. But one situation frequently arises where there is just one small thing to take care of. The attorney (or owner) will get a call or an e-mail from the Examining Attorney with a brief introduction and then, “Everything appears to be in order with the application, we just need you to enter a disclaimer of the term _______.”

That’s it! Just need to say “Okay” and your mark will be published and, if no third-party objects, you’re on the fast track to having a shiny new trademark registration.

After successfully navigating the application process, you may just want to say “Okay” so you can finally run through that tape. But before you do, make sure you understand the fine print.

Under Section 6 of the Lanham Act, the Trademark Office may require a disclaimer of any “unregistrable component” of an otherwise registrable mark. The disclaimer will appear on the Certificate of Registration. For example, if you’ve registered the mark BOONDOGGLE RESTAURANT for restaurant services, disclaiming RESTAURANT, the Certificate will state “No claim is made to the exclusive right to use ‘RESTAURANT’, apart from the mark as shown.” As a result, the owner makes a statement of public record that this portion of the mark is merely descriptive.

This can make it difficult to enforce rights in trademark against third-party marks who share that disclaimed term. If you attempt to enforce your trademark against a third-party, they’ll be able to quickly determine if you have disclaimed any portion of the mark. If you have, that may provide the third-party with a reasonable basis to kindly ask that you check the sturdiness of that sand over there.

While it is not impossible, there must be some other element of the mark that is similar to your mark. For example, Purina Dog Food (owned by Nestle S.A.)  successfully opposed registration of the mark WAGGIN’ STRIPS (disclaiming STRIPS) based upon their prior rights in the mark BEGGIN’ STRIPS (disclaiming STRIPS). In addition to sharing the disclaimed term STRIPS, the marks also shared a similar structure and similar sound and therefore the Board found a likelihood of confusion. (decision available here).

Disclaimer practice makes sense for our Boondoggle Restaurant. The term RESTAURANT has no source identifying function in relation to restaurant services; it is generic. In these situations, agreeing to the disclaimer is a simple and easy .

However, disclaimers are also required for descriptive terms. And, as we’ve discussed, there is a fine line dividing descriptive wording from suggestive wording. The determination is also very subjective. While a term may be descriptive to one Examining Attorney, a different Examining Attorney might consider the term suggestive without a second thought. Like all people, Examining Attorneys are not infallible. The Examining Attorney might misunderstand your goods or services, could be having an off day, or maybe they have a heightened opinion of what qualifies as a descriptive term. Regardless, once you enter that disclaimer, it is there in the public record and can’t be swept under the rug.

Accordingly, the next time you receive a disclaimer request, take a second before you run through the tape. Ask yourself whether the term really is descriptive. Would you be comfortable with your competitors using the term? Why did you choose it? Is there a reasonable basis to assert that the term is suggestive?

Rather than take the easy way out, it may be worthwhile to invest in the time to prepare a response to the office action, arguing against the disclaimer. While it may add some extra cost on the front end, failing to explore this option can harm the strength of your trademark, which you may regret down the road.

The energy drink businesses is big, big business. From Red Bull and Monster to that strange 35 ounce purple can that you saw in a gas station once, consumers love energy drinks. Along with Red Bull and Monster, 5-Hour Energy is one of the most successful and recognizable brands. Innovation Ventures, LLC, the owner of the 5-Hour Energy® brand of energy drinks, recently lost its attempt to register the mark “HOURS OF ENERGY NOW.” (Decision available here).

We’ve discussed the pros and cons of descriptive versus distinctive names before. The 5-Hour Energy® brand is a prominent example of how marketing, advertising, and commercial success can turn a bland, descriptive name into a strong, memorable brand. It also helps if your product is one of the first of its kind on the market. It’s hard to believe that the product has been around since 2004, making this year the tenth year anniversary (I’m crossing my fingers for a limited edition 10-Hour Energy anniversary product). Even though the 5-HOUR ENERGY mark is not inherently distinctive, Innovation Ventures was able to obtain a federal registration by claiming that it had acquired distinctiveness among the public based on its advertising, volume of sales, and commercial success.

Unfortunately for Innovation Ventures, though, it doesn’t matter how many bottles are sold, advertisements seen, or dollars made, if you are not using the name/term/phrase as a trademark, you won’t obtain a registration.  In this case, the Board ruled that the applied-for mark HOURS OF ENERGY NOW would not be perceived as a trademark, but instead merely an informational phrase. It appears that this isn’t the first time Innovation Ventures has run into specimen problems, having abandoned trademark applications based on specimen refusals for their FIX THE TIRED, TIRED SUCKS, BEAT THE 2:30 BLUES marks and not even submitting statements of use for their abandonded  NO 2:30 FEELING LATER. and NOT A DRINK JUST ENERGY marks.

The Lanham Act does not preclude slogans from registration, but the slogan must be used as a source identifier. The test is whether the public would perceive the term or phrase as a mark (as used on the goods). For example, JUST DO IT versus PROUDLY MADE IN THE USA. The public’s perception is determined by examining the specimens submitted with the application. Innovation Ventures submitted the three specimens below:

On the bottle and the carton, the phrase appears as part of a four bullet point list:

  • Hours of energy NOW
  • No crash later
  • Sugar free
  • 0 net carbs

The same “Hours of energy now. No crash later.” appears on the point-of-sale display as well.  Based on these specimens, the Board concluded that consumers would perceive the mark as merely informational, informing consumers that the products “will provide an immediate boost of energy upon consumption and that the increased levels of energy will last for several hours.” (based on their other filings, I wonder if Innovation will want to apply to register this phrase too?)

The situation is another in a long line of examples of a two important lessons be careful when submitting specimens of use. There are numerous refusals that could have been easily avoided had the applicant taken more time to select an appropriate specimen of use. The only thing worse than making a mistake is making an avoidable mistake.  In this case, it may have been difficult to fix.

The mark is so descriptive that it would have been tough to get around. However, Innovation Ventures dug itself a pretty big hole for their attorneys to attempt to scratch and claw their way out. The specimens do not capitalize any term other than the “Hours,” there is no use of a TM symbol, the phrase appears as part of a list of four other information phrases (I’m guessing not even Innovation Ventures attempted to register “O NET CARBS” as a mark….), and the text is displayed in the same font, size, and location as these other informational phrases. This brings us to the second lesson: get your attorney involved early. It doesn’t have to be extensive involvement. Ideally, the initial proposed packaging and advertisements would be shared with your attorney to review for red flags, but at a minimum get a quick review before finalizing packaging for production.

Working with a trademark attorney early on in the process can help you avoid costly (and unnecessary) legal fees, which in turn could help you avoid that 2:30 feeling when you receive the bill…

EPILOGUE: if anyone knows where I can buy a can of Surge, please let me know. I wouldn’t need 5-Hour Energy if I could my hands on some Surge. I’m not picky, any vintage will do, although I recall 1999 being an excellent year for Yellow-5 dye. Just make sure the can or bottle is still factory sealed.

Thanksgiving is, without a doubt, my favorite holiday.  It’s a day to reflect on our many fortunes and to spend time with family eating delicious turkey, potatoes, and pie (and maybe watching some football).  It seems that the Christmas trees, music and displays spring up at local retailers earlier and earlier each year, usually immediately after Halloween (if not before).  Just please, can we slow down and pause for Thanksgiving before rushing onto the next holiday?

Out of curiosity, I searched the Trademark Office records for “Thanksgiving.”  Sure there was the MACY’S THANKSGIVING DAY PARADE event, some THANKSGIVING FARM wine, HALLOWTHANKSMAS cards… but then there was this.  A registration for HAPPY THANKSGIVING, owned by Mattel for “toys, games and playthings, namely dolls, doll clothing and doll accessories.”   With my interest piqued,  I had to know what they were selling under this mark.  Was it Happy Thanksgiving Barbie(R) and accessories? I clicked on the specimen and it’s…well, I’ll let you comment with an appropriate adjective for it.

 

So Happy Thanksgiving everyone (in the non-trademarked use of the phrase, of course).  Safe travels to you all!

–Sharon Armstrong, Attorney

We at DuetsBlog like nothing more than to be trend-spotters and, dare I say it, predictors of things to come.  Okay, maybe I’m just talking about me.

But I think it’s fair to say that a lot of us saw the concern about the treatment of so-called “green” trademarks at the United States Patent and Trademark Office coming. A recent article on TriplePundit revealed that the PTO has developed and started enforcing “a new prosecution policy that requires federal applications for marks that include the word ‘green’ for selected products or services to contain a statement of ‘environmental friendliness’ in the description of goods or services.”

We’ve blogged about this trend here and here.  Don’t say we didn’t we didn’t warn you.

We’ve spilled a lot of digital ink discussing the trademark bullying topic, going all the way back to my original blog post from 2010: “The Mark of a Real Trademark Bully.”

Within the last several days, there has been quite a bit of online media coverage about Trademarkia’s new features that tout an ability to “Find a Trademark Bully” or rank the “Biggest Bullies“.

Maybe I’m missing something, but it appears that the only investigative skill required to apply the label is one’s ability to count the total number of oppositions filed by a trademark owner.

So, nevermind the size of a trademark owner’s portfolio, nevermind the strength or possible fame of the trademarks within a trademark owner’s portfolio, nevermind the number of conflicting applications filed by third parties who don’t search or aren’t well-advised about likely conflicts, nevermind the reasonableness of the trademark owner in working to resolve and settle those concerns, nevermind the trademark owner’s appropriate litigation conduct during the opposition proceeding, and perhaps most importantly, nevermind a qualitative analysis of the actual facts and claims asserted by the trademark owner — ignoring all this, we’re led to believe that if a brand owner files a lot of trademark oppositions, it automatically earns the pejorative label “Biggest Bullies”.

If all it takes to make Trademarkia’s Top Ten Biggest Trademark Bullies Listing is filing more trademark oppositions than anyone else, does it really have any value for the stated purpose?

The last time I checked, every week of every year the USPTO issues scores and scores of Section 2(d) refusals (based on a perceived likelihood of confusion) (hat tip to Towergate Software) — refusals that are eventually withdrawn and resolved through the USPTO’s consideration of apparently valid argument, evidence, and/or amendment (or a combination of these).

Does that make the USPTO a surrogate trademark bully because it issues a lot of registration refusals and throws up a lot of registration road blocks based on likelihood of confusion, especially since many of the refusals end up being withdrawn upon further consideration, after hearing only one side of the argument — the Applicant’s side (and without any required notification of the trademark owner whose registrations were cited)?

When those initial USPTO refusals are withdrawn based on a one-sided limited record, is there no surprise that oppositions will be filed? Is there no surprise that oppositions will be filed when the USPTO doesn’t see a valid conflict for whatever reason? That’s why serious trademark owners watch their marks — the process doesn’t purport to be perfect. Afterall, the purpose of an opposition is to provide a second backstop before registration, so that the USPTO can consider both sides, on a more complete record, making it an essential part of keeping the federal trademark register intact.

From my perspective, boiling the question down to a numbers game might gain headlines, spark some drama, fan the flame, generate more web traffic, but it doesn’t add to the conversation.

In the end, I’m left wondering whether Trademarkia has purchased insurance coverage for “advertising injury” claims, and I’m also left wondering how long it will take for a brand owner on the infamous list to take issue with the labels as false and/or misleading.

What do you think about the labels Trademarkia is applying to brand owners?

"Just because you can," is rarely a good reason to support a decision that really matters. This principle is no less true in the trademark world than it is elsewhere.

So, relying on your own navigation of the U.S. Patent and Trademark Office’s (USPTO) online search database without also seeking a trademark attorney’s competent analysis of the search results, can be a dangerous plan, even though you can go it alone. Likewise, just because you can file a trademark application yourself doesn’t make it a smart business decision to avoid engaging a professional with day-to-day working knowledge of all the USPTO nuances and pitfalls.

There are, however, limits on what outside trademark attorneys should do for their trademark owner clients. For example, another decision in the trademark world that really matters, but doesn’t get enough attention, is who should sign verified statements filed with the U.S. Patent and Trademark Office (USPTO). The Trademark Rules liberally permit certain attorneys, among more obviously appropriate persons, to sign such statements on behalf of the trademark owner:

(i) A person with legal authority to bind the owner (e.g., a corporate officer or general partner of a partnership);

(ii) A person with firsthand knowledge of the facts and actual or implied authority to act on behalf of the owner; or

(iii) An attorney as defined in Section 11.1 of this chapter who has an actual written or verbal power of attorney or an implied power of attorney from the owner.

But, again, just because a trademark attorney can sign verified statements with the USPTO on behalf of the trademark owner doesn’t make it a good idea. In fact, it should be a last resort for a trademark owner to have its outside trademark counsel sign verified statements with the USPTO.

As a result, I continue to be amazed how many outside trademark counsel continue to make it a regular practice of signing verified statements on behalf of their trademark owner clients. While I fully recognize it may provide a convenience to have outside trademark counsel sign such statements, and there may well be times when the urgency of a looming deadline requires it, the frequency of validity and fraud challenges in trademark oppositions, cancellations, and district court litigation, should be enough to encourage trademark owners to first consider these risks:

  • The person signing the verified statements becomes a potential fact witness;
  • If outside trademark counsel becomes a witness, he/she may be disqualified and precluded from representing the trademark owner in a dispute involving the filing;
  • Concerning the factual accuracy of the statements made to the USPTO, outside trademark counsel will rarely have firsthand knowledge and never be closest to the true facts;
  • Trademark owners are unlikely to successfully defend any false statements made by their trademark counsel that are based on legal misunderstanding (i.e., "bona fide intent to use," "use in commerce," "interstate commerce," "substantially exclusive" use, and misuse of the federal registration symbol); and
  • The TTAB appears inclined to adopt "reckless disregard" as sufficient culpability to justify an inference of intent to deceive the USPTO in trademark fraud challenges.

So, can you think of and share any additional reasons not to have outside trademark counsel signing verified statements with the USPTO? Where do you stand on the issue with in-house trademark counsel? How about in-house corporate counsel who lacks trademark expertise?

And, what about the reasons in favor of outside trademark counsel signing such documents, are there any beyond convenience and deadline urgency? Finally, do you agree that outside trademark counsel should be the one designated to sign verified statements only as a last resort?

Trademark types frequently encounter brand owners and managers with substantial misunderstanding and confusion about when use of the federal registration notice symbol is lawful. Most of the time a misuse or technical violation results from an honest mistake, but sometimes the misuse is, and starts out intentional, or perhaps the misuse begins to look intentional if it isn’t promptly fixed or corrected upon learning of the misuse.

Section 906 of the U.S. Patent and Trademark Office’s Trademark Manual of Examining Procedure (TMEP) answers some of the most common questions regarding misuse with this guidance:

  • The federal registration symbol should be used only on or in connection with the goods or services that are listed in the federal registration.

  • The federal registration symbol may not be used with marks that are not actually registered in the USPTO.

  • Even if an application is pending, the federal registration symbol may not be used until the mark is registered.

  • Registration in a state of the United States does not entitle a person to use the federal registration notice.

  • A party may use terms such as “trademark,” “trademark applied for,” “TM” and “SM” regardless of whether a mark is registered. These are not official or statutory symbols of federal registration.

This information and guidance, however, begs the question of whether misuse is a serious violation and the possible consequences of misusing the registration symbol? As you may recall, we’ve talked a bit before about possible false advertising claims against the trademark owner who misuses the symbol and a possible unclean hands defense in favor of the trademark owner’s enforcement target, especially when the misuse is accompanied by a bad faith intent to deceive.

As it turns out, we really need to add another important potential consequence to the list, one that I fear will be abused and used for pure tactical advantage in trademark enforcement efforts, namely, assertions of trademark fraud, despite the current heightened standard of fraud, with the Court of Appeals for the Federal Circuit now requiring a specific intent to deceive the Trademark Office. Actually, registration symbol misuse is not really a new ground of trademark fraud, but it has been rather uncommonly and infrequently alleged, at least in recent years.

One of the reasons for my concern of abuse stems from a recent TTAB decision permitting this rather conclusory and bare bones trademark fraud claim to survive a motion to dismiss:

Applicant knowingly and willfully used the ® symbol in connection with the term … in an attempt to deceive or mislead consumers or others in the trade into believing that the mark was registered.

A pdf of the TTAB’s decision with scant analysis — from about six weeks ago — in North Atlantic Operating Co., Inc. et al v. DRL Enterprises, Inc. Opposition No. 91158276), is linked here.

Relying only on the above-quoted allegation, the TTAB decided: "We find that the allegation set forth above includes the necessary pleading of intent, and specifies that applicant’s misuse was knowing and willful, and an attempt to deceive or mislead consumers."

In contrast to most trademark fraud cases where various false and misleading statements — relied upon by the Trademark Office — are the focus of the fraud challenge, in North Atlantic Operating Co.,  the focus was on an alleged intent to deceive the public, as opposed to the USPTO.

The Federal Circuit has held: "The improper use of a registration notice in connection with an unregistered mark, if done with intent to deceive the purchasing public or others in the trade into believing that the mark is registered, is a ground for denying the registration of an otherwise registrable mark." Copelands’ Enterprises Inc. v. CNV Inc., 945 F.2d 1563, 20 USPQ2d 1295 (Fed. Cir. 1991). Presumably, the same conduct would sustain a petition to cancel as well. Although, the statutory support for the broader focus is unclear, it appears that an intent to deceive the USPTO is not required, so long as there is an intent to deceive the relevant public regarding registration.

Another reason for my concern stems from the apparently satisfactory yet conclusory fraud allegation. There are simply no details regarding the who, what, where, why, and when, of the alleged trademark fraud, and this failure appears to contradict recent TTAB case law confirming that fraud must be pled with particularity under Fed. R. Civ. P. 9(b). Indeed, our friend John Welch over at the TTABlog has reported multiple times on the TTAB tightening up the pleading requirements for trademark fraud claims, following the Federal Circuit’s landmark decision in In re Bosehere, here, and here.

Finally, the Federal Circuit’s Copelands’ Enterprises decision makes clear that how quickly a trademark owner corrects a misuse of the registration notice symbol after learning of the misuse, will impact the determination of whether the trademark owner is charged with an intention to deceive the public. If we couple that guidance with the current uncertainty of whether the requisite intent may be established with a reckless disregard for the truth, trademark types and the brand owners and managers they represent, are all well-advised to pay more attention to what many previously have written off as honest mistakes and technical violations with no real or significant consequences.

Only time will tell whether the registration notice symbol misuse type of trademark fraud claim will remain uncommon or gain traction in our Post-Bose world.

Aaron Keller was busy yesterday making weighty predictions about the basis for our next economy: The Designed Economy.

As I prepare to provide attendees at the Midwest IP Institute tomorrow with a trademark fraud update — today, I thought I’d provide a preview — and even go out on a small limb — making a couple of predictions of my own, relating to the far more scintillating topic of trademark fraud before the United States Patent and Trademark Office (USPTO).

As you may recall last year, I wrote about the Court of Appeals for the Federal Circuit’s (CAFC) groundbreaking decision In re Bose, here, here, here, and here, in which the CAFC rejected the Trademark Trial and Appeal Board’s (TTAB) less stringent "knew or should have known" negligence standard of fraud, instead coming down in favor of a much more stringent — and difficult to prove standard — subjective intent to deceive the USPTO.

Over the last year, much attention has been given to the fact that the CAFC left open and chose not to decide, in In re Bose, the question of whether a "reckless disregard for the truth" may suffice in proving the necessary subjective intent to deceive. Many argue that "reckless disregard" should suffice in proving fraud for the sake of the integrity of the U.S. trademark system, to ensure that trademark owners and their counsel are kept honest and/or don’t become lazy or complacent about the solemnity of the oath in their trademark filings.

Reading the tea leaves, I’m predicting that the TTAB will not wait for the CAFC to decide the issue and the TTAB will rule that "reckless disregard" constitutes a sufficient level of culpability to infer a specific intent to deceive. If so, what does that mean? What kind of trademark conduct might satisfy a "reckless disregard" standard?

Continue Reading Trademark Fraud = Reckless Disregard For The Truth?