INTELLECTUAL PROPERTY   STARTING A NONPROFIT

What’s in a Name? (Continued)

Last week, we discussed the benefits of trademark registration in “What’s in a Name? Lessons learned from current trademark battles.” Equally important, though, is the discussion about potential reasons not to register a trademark. Choosing to forgo registration is not an invitation to avoid due diligence nor engage in trademark violations. Rather, it should be an informed decision, for example, that common law protection is sufficient or that such marks are ineligible for federal trademark registration.

Short-lived use

Applying for a trademark is a timely process and may not be the right choice for a mark that is being used only for a short period of time. According to the United States Patent and Trademark Office (USPTO), even the smoothest application process takes almost a year at a minimum from the date of filing before a certification of registration is issued. Furthermore, as Nolo writes in its publication “Frequently Asked Questions about Trademarks”: “Few applications sail through completely unscathed.” The USPTO can raise objections on both technical and substantive grounds, and interested parties have a 30-day window for objections that can potentially be extended for an additional 90 days – all of which requires prompt response from the applicant and will delay the overall process. Consequently, the application timeline is difficult to predict and may take up to several years, well beyond the actual life of the mark.

Costs to protect are disproportionate to the protection needed

The decision to register a trademark is a decision to contribute assets now as well as later to police and maintain that right. The basic paper filing for a trademark registration costs $375.  During the application process, the USPTO publishes the mark to allow for interested parties to object. Responding to such objections means more costs for the nonprofit in time and money, for example, in seeking assistance from an attorney.

Furthermore, significant costs will likely continue after registration. A nonprofit may incur additional costs in determining whether an infringement has occurred, writing a cease and desist letter, engaging in negotiations with the alleged violator, or pursuing litigation. A smaller nonprofit may lack the resources to successfully enforce its trademark rights and as a result, lack the necessary leverage to benefit from the protections of federal trademark registration.

Finally, trademark registration is not indefinite. This costly process is cyclical as certificates of registration must be renewed every 10 years for continued protection.

There can be many reasons why the costs outweigh a nonprofit’s concern about trademark protection. For example, a nonprofit may feel its actual good or service creates the consumer loyalty rather than name or phrase. Another example may be a lack of printed materials associated with the good or service and therefore, the fear of re-printing costs (ads, etc.) is low. If the overall concern about protection is low, then spending $375 plus other fees to register and maintain a trademark may do more harm than good to the nonprofit by taking away monies that could go toward a more pressing issue.

Ineligible marks for federal trademark registration

Sometimes, the mark is simply not eligible for trademark registration. A common example is a generic term. Generic terms are not afforded trademark protection. The International Trademark Association defines “generic” to mean “common words or terms, often found in the dictionary, that identify products and services and are not specific to any particular source.” For example, “coffee” is ineligible for trademark registration while “Peet’s Coffee & Tea” is a registered trademark.

Another issue is whether the mark is used within the type of commerce that the United States Congress can regulate, such as interstate commerce. For example, the United States Trademark Manual of Examining Procedure (TMEP) states that “Purely intrastate use does not provide a basis for federal regulation”; only intrastate use that “directly affects a type of commerce that Congress may regulate” is within the ambit of federal regulation. See TMEP Section 901.03. Therefore, a potential applicant may discover that the mark does not even qualify for federal trademark registration.

In the end, both sides of coin reveal the types of concerns a nonprofit
should address regardless of which path it ultimately chooses.

Two paths decision

The Pro Bono Partnership publication, “Frequently Asked Questions About Trademarks and Service Marks For Nonprofit Organizations,” is available here.

Nolo’s “Frequently Asked Questions about Trademarks” is available here.

The International Trademark Association’s article “Trademarks v. Generic Terms” is available here.

INTELLECTUAL PROPERTY   STARTING A NONPROFIT

What’s in a Name? Lessons learned from current trademark battles

Nonprofits are not immune to the trademark battles that are more commonly associated with for-profit corporations. Nonprofits, like other corporations, benefit from strong branding and may be just as protective of their trademarks. Last week, Clifford Marks’ article "Charity Brawl, Nonprofits Aren’t So Generous When a Name’s at Stake" in the Wall Street Journal wrote about the current legal battles of breast-cancer charity, Susan G. Komen For the Cure, against a number of organizations that have incorporated “for the cure” into their slogan or used its signature pink ribbons. For Komen, it is a matter of responsible stewardship of donor funds. Organizations that have been on the receiving end of similar trademark battles have not always agreed with that argument. Some organizations have been amenable to making the requested changes while other organizations have felt bullied and continue to push back against such requests.

These battles may start and end with a cease and desist letter. However, it can also go much farther than that. Take for example the suit filed in June this year by the Alzheimer’s Foundation of America against the Alzheimer’s Association. Ameet Sachdev reported in his article, "Alzheimer's charities fight over money" in the Chicago Tribune, this dispute actually began back in 2007 when the Foundation alleged that funds from a Virginia woman’s estate intended for the Foundation were mistakenly being sent to and deposited by Association. Superficially, the error may seem minimal to some given that both organizations serve Alzheimer purposes. However, the Foundation’s “mission is to provide care and services to people with dementia and their caregivers” while the Association is “focused on research for a cure.” This could make all the difference when a donor decides where to give.

Additionally, the conflict is not always between nonprofits. Earlier this year, the Star Tribune reported that toymaker LEGO Group sued a Minneapolis nonprofit, Project Lego (Leadership, Empowerment, Growth, Opportunity and Sustainability), alleging trademark violations.

Registered TM

Regardless of which side a party finds itself, everyone seems to lose. Monies that could have gone towards charitable purposes are being used towards legal battles or re-creating an organization to comply with requests; and donors’ loyalty to either organization may be shaken by distracting and costly legal problems or feelings of deceitfulness due to misleading similarities. Thus, trademark confusion can be costly both in dollars and in donors to both organizations.

Public Council explains in its publication, "Trademark Basics for Nonprofits," that a trademark can be a word, a design, both words and a design, or even a scent, color, or sound. This post focuses on word trademarks. The current events surrounding nonprofit trademark battles teach us something about how trademarks are protected and illuminate steps to help avoid donor confusion or legal surprises down the road.

Readily accessible preventative steps in naming or creating a phrase for a nonprofit include:

  • Checking the potential words(s) against available databases
  • The Secretary of State of each of the states in which the organization is organized and/or operating may provide an online business search.
  • The State’s Attorney General may provide an online search of its registered charities database (e.g., in California, the Attorney General’s Registry of Charitable Trusts provides an online registry search of charities).
  • The U.S. Patent and Trademark Office provides an online search of registered trademarks.
  • Looking up the potential word(s) using a search engine (e.g., Google) – This may help uncover nonregistered trademarks and can also educate the organization on how the name or phrase is otherwise being used by others.
  • Checking for domain name availability – If the name is not available, it may be a clue that another entity is using the name while also exposing a potential future roadblock (e.g., should the organization decide to have internet presence through its name or phrase).

Once an organization feels comfortable moving forward with a name or phrase, it raises the question whether to register it as a trademark. Under common law, generally speaking, the first user of a name or phrase within a geographic area is the “owner” of the mark in that area for the particular line of business in which it is being used even without registering it as a trademark. State laws allow for registration for lower costs but fewer protections and rights than federal registration. A registered trademark with the U.S. Patent and Trademark Office broadens the ownership to a nationwide right, and offers more protection and available remedies. Therefore, registration may be an important consideration if the mark is a key ingredient to the organization’s identity or confusion is likely. “As is frequently the case… possession can be nine-tenths of the law when it comes to trademark protection,” DK Holland writes on the Foundation Center website.

Additionally, reaching out to a trademark lawyer may be worth considering. Lori Lesser, a partner with Simpson Thacher & Bartlett LLP, explains in Holland’s article that a lawyer can assist in navigating the many trademark resources as well as legal judgments when the trademarks are similar but not exact. Thus, Lesser states, “Consulting a lawyer at the outset will help organizations avoid spending time and money to develop a trademark — such as by buying domain names, hiring a design firm or creating letterhead — and finding out later that it must be changed."
 

A follow-up post, "What's in a Name? (Continued)," discusses potential reasons not to register a trademark and is available here.

Information from the Secretary of State about the California trademark application process is available here.

DK Holland’s article “Storytelling and the Brand: A Thousand Words. . . . and Loads of Pictures” on the Foundation Center website also discusses how to build a successful nonprofit brand and can be found here.

Kenneth E. Liu’s article, “Why Should Nonprofits Care About Trademarks?” discusses additional trademark considerations unique to the nonprofit sector and is available here.