Saturday, February 9, 2013

Think you have a good business name?: On deceptive and deceptively misdescriptive trade names.

In the line of work in which I was able to gain business experience, it was not uncommon for me to see trade names ("marks") that misdescribed the goods or services ("goods") provided. I would most commonly see marks that misdescribed goods when proprietors would devise one suggesting a connection with an environmentally-friendly or "green" product. In the absence of legal action from another person or business for infringement, people can pretty much use whatever trade name they want. However, that does not entitle them to trademark protection under the Lanham Act.
Title 15 of the U.S. Code contains the Lanham Act, which is the federal statutory scheme for registering and protecting trademarks. In general, "inherently distinctive" marks can gain federal trademark protection via registration, and descriptive or generic marks cannot. As long as a mark is not "merely descriptive" of the goods or services provided, a descriptive mark can become protectable upon showing of "secondary meaning." Inherently distinctive marks are either suggestive of the goods provided, arbitrary or fanciful.
Suggestive marks require imagination, thought or perception to reach a conclusion as to the nature of the goods or services they identify. Trademark Manual of Examining Procedure (TMEP) § 1209.01(a) (October 2012). Arbitrary marks comprise existing words but when used to identify particular goods or services, they do not describe an ingredient, quality or characteristic of the goods or services, e.g., "Apple" for computers. Id. Fanciful marks comprise terms invented solely to function as a mark. Id.
A mark that has attained secondary meaning implies that the mark originally did not have significance in the minds of consumers, but use of the mark in commerce has cultivated a source identifying connection in consumers' minds. If a mark is originally descriptive, but several years later consumers immediately identify the mark with the markholder's products or services, it can be registered and receive federal trademark protection.
The caveats I initially identified are deceptive and deceptively misdescriptive. I commonly see deceptive or deceptively misdescriptive marks in commerce. Now, this will not normally cause an issue unless the proprietor tries to register the mark, but the markholder's decision to select a deceptive or deceptively misdescriptive trade name may have been changed if he or she had known that the trade name they were selecting cannot ever receive federal trademark protection.
When an individual starts a business, it is axiomatic that they will try as hard as they can to make the business as successful as they can. Apple, Microsoft or Coca-Cola were not started with the intention to only compete in a small geographic area. If they had selected a mark that was permanently unregistrable, and could not ever receive federal trademark protection, they would either have had to change their trade name or run the risk of competitors and "knock-offs" incessantly piggybacking off of the source identification or recognition that the trade name had generated in the market place. It is not a stretch to say that those companies may not have survived unless they changed the trade name.
Deceptive marks are permanently unregistrable. Deceptively misdescriptive marks are also unregistrable, but can be registered upon showing of secondary meaning. A "deceptively misdescriptive" mark immediately conveys a false idea of the goods or services it identifies. TMEP § 1209.04. It is not a death knell to a mark if it misdescribes goods or services it identifies. To be deceptively misdescriptive, consumers who encounter the mark on or in connection with the goods or services must be likely to believe the misrepresentation. Id. I commonly see this when proprietors want their business to be identified with the green revolution, and the goods or services they provide are not energy-efficient or "green" at all. Depending on how a prospective trademark examiner would decide a consumer's likelihood of believing the misrepresentation, the mark is either unregistrable or permanently unregistrable.

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