Legal Matters

Legal Matters: The Name Game

Choosing and protecting a trademark is serious business - almost as serious as the business itself.

Choosing and protecting a trademark is serious business - almost as serious as the business itself. By Shawn Carter

Monday, June 17, 2013

Shakespeare once said, "What's in a name? That which we call a rose, by any other name would smell as sweet."  
While Shakespeare's point is well taken, most people would agree that there is much value in a name.

Businesses use various marks (i.e., trademarks, service marks and trade names) to set themselves, their products and their services apart from the rest. Trademarks are often associated with a company's reputation or goodwill, and consumers often make purchasing decisions based solely on the name of the company providing the products and services.

Since its inception, trademark law has worked to protect consumers from inferior counterfeits or substitutes. At the same time, trademark law has enabled businesses to protect their reputations by prohibiting competitors from using proprietary trademarks to sell inferior products and services. Whereas trademarks and service marks distinguish a company's goods and services, trade names identify the company itself.

Because the purpose of a trademark (service mark) is to help identify a company's products and services, it does not become valid until it is used by the company to identify those particular goods and services. While registration of a mark is certainly important, ownership of a mark is acquired by use and the mark must be continuously used in association with those specific products or services. That's right, use it or lose it.

In addition, the mark must be distinctive of the company's products and services, either by being inherently distinctive (as in the case of arbitrary or fanciful marks like Kodak and Exxon) or by having acquired distinctiveness through secondary meaning.

Moreover, to protect their rights, companies must "police" their mark - i.e., sue infringers. Companies must also be careful not to let their marks fall victim to genericide, which occurs when the public no longer associates the trademark as an indicator of source, but instead perceives it as a description of the product itself or with the class of products. Classic examples of generecide include aspirin, thermos and elevator.

Generic marks are considered to be in the public domain and not susceptible to appropriation for exclusive use. Therefore, to avoid trademark infringement, a conservative coffee vendor might play it safe and utilize a generic mark such as "The Coffee Shop." However, it is hard to build a business with a name like that if there are 25 other coffee shops in town. So, to stand out, a business owner might want to distinguish herself by including her own name in the company name. In fact, this is a common practice particularly among professionals and tradesmen who make their living on their personal reputation for quality service.

However, if you think using your own name will always protect you, think again. You may remember John Stossel's story (which aired on 20/20 in 2005) about Sam Buck Lundberg, an Oregon native who opened a coffee shop in her home town called, "Sambuck's Coffee." As the story goes, Starbucks convinced a court to enjoin Sam from using her own name because it violated Starbucks' trademark rights. While the "Sambuck's Coffee" litigation turned on a special set of facts, the bottom line (at least in the court's eyes) was that her use of the name created consumer confusion.

Federal and Louisiana law prohibit the use or misleading representation of any mark in a way that is likely to deceive or cause confusion or mistake in the consuming public. Confusion occurs when consumers make an incorrect mental association between the products and services at issue and the company that provides them.

It is conceivable that two separate companies (unbeknownst to each other) might use the same or similar marks to identify their products or services. In fact, if the two companies are small enough and operate in separate markets, the chances are good that they will never create any consumer confusion within their local markets. No harm, no foul, right? Maybe not. With the emergence of e-commerce, a local company can now have a national or international presence through the World Wide Web.

Louisiana has had its fair share of intriguing tradename disputes. Although trademark litigation reaches all industries and business sectors of Louisiana's economy, it seems appropriate, at least for this Louisiana publication, to wax on about food and culture. For example, in the infamous "Who Dat" litigation, the NFL, New Orleans Saints and some New Orleans vendors fought over the right to sell "Who Dat" T-shirts and other apparel. Like the "Who Dat" litigation, many trademark cases settle, and life goes on.

In 2009, Walker & Sons, a Ville Platte company that makes a brand of seasoning called "Slap Ya Mama," sued Houma native Kirby Falcon, a competing entrepreneur who launched his own seasoning line under the name "Punch Ya Daddy." Walker & Sons alleged that the name and package design too closely imitated its brand and violated its trademark rights. A federal judge agreed and ordered "Punch Ya Daddy" to change its labeling and packaging.

In 2012, an alleged trademark violation hit closer to home, but this story has a happier ending. Dean-O's owner, Tim Metcalf, managed to transform a cease and desist letter into a successful grassroots rebranding campaign. Pastime Restaurant in Baton Rouge apparently trademarked the name "Boudin Pizza" at a time when no one else in the area was making it. Rather than litigating the right to use the name, Metcalf solicited new names from his patrons. Dean-O's now proudly offers Lafayette diners the "Cajun Violation" and boasts that "this pizza is so good, they tried to outlaw it!"

At least for Dean-O's, an established business with a loyal customer base, changing the name of one product was not that detrimental because, apparently, a boudin pizza by any other name is just as sweet. Renaming a pizza is one thing, but renaming an entire business, particularly an established one, is no laughing matter.

Although it does not happen too often, a well-known and established company may all of a sudden change its name without any rhyme or reason. While this may be a byproduct of an ownership change or a rebranding campaign, this trade name transformation may have been preceded by a cease and desist letter. From a bystander's perspective it seems pretty harmless, but to the business owner it adds up to business interruption, loss of goodwill, wasted advertising dollars and (oh yes) legal fees.

If you are thinking of starting up a new business, don't just pick a name and run with it. Spend some time researching names of competitors in your industry. Perform a search on the Louisiana Secretary of State database and the U.S. trademark database. And if the investment is worth the added costs, consult a lawyer who can guide you through the process of selecting a name that will not land you a front page spot in the 15th JDC Daily Legal News.

Shawn Carter is a member of Randazzo, Giglio & Bailey where he maintains an active practice in multiple areas including general business and energy law, intellectual property and real estate law, environmental law, business and commercial law, professional liability, and other general civil and litigation matters.