Cute Designs and Catchy Phrases: The Risks and Rewards of Clever Branding and Creative Merchandising
Consumers are bombarded with brands, designs and advertising every day. With the rise of the online marketplace, products are more readily available to consumers, and competitors can more easily access a retailer’s or manufacturer’s products and advertising materials for “inspiration” for their own products. At the same time, even an innocent infringement of a third party’s intellectual property is more likely to be noticed, and more consumers are likely to purchase the infringing product, potentially increasing damages liability. Now more than ever, retailers and manufacturers need to take active steps to take stock of their intellectual property and determine what steps they need to take to protect that property from misuse while reducing their own risk of infringement.
Brand creation and protection
A trademark is a word, symbol or phrase that is used to identify a particular manufacturer’s or seller’s products or services and distinguish them from another’s. McDonald’s, the Apple logo, Just Do It—these are all examples of marks that consumers immediately recognize as identifying the source of particular goods or services.
In the United States, trademark rights can be based on either a federal or state registration of a mark or on use of the mark in commerce without registration. Although federal registration carries with it several important benefits, it is not necessary to own a federal (or state) registration of a mark to enforce those rights. Nevertheless, a federal registration is a good idea for house brands, umbrella brands and main product lines because it gives third parties nationwide notice of your rights in that mark. Federal registration can also make available certain additional monetary remedies in a suit for trademark infringement.
In order for a brand to develop strength and value, its use should be exclusive to the brand owner. So before adopting a new brand or mark, you should conduct what is called a “clearance search” to determine if any third parties own a confusingly similar mark for similar goods or services. Conducting a clearance search will help ensure (1) that you are not infringing the trademark rights of someone else, and (2) that your selected brand is exclusive to you and can serve as a potentially strong brand for your goods or services.
How different should your selected trademark be from someone else’s to avoid an infringement claim? As they say in law school, it depends. The standard for trademark infringement is a likelihood to cause consumer confusion in the marketplace. In other words, if the relevant consumer is likely to be confused by the source of the goods or services offered under the mark, then the mark may be infringing. This analysis pulls in a number of factors: the visual and/or phonetic similarity of the two marks, the meaning of the two marks, the similarity of the goods/services, the similarity in trade and advertising channels, and the number of third parties using similar marks for similar goods/services, to name a few. Before investing resources into launching a new brand, it’s a good idea to get the opinion of a trademark attorney to determine what risk (if any) the use or registration of that brand may carry.
Another potential pitfall for manufacturers and retailers is the mistaken belief that by placing a phrase, word or design on a shirt or other product, you own trademark rights or copyright in that design. First, in order to gain trademark rights in the use of a phrase, word or design, the consuming public must associate you (the manufacturer/retailer) with that phrase, word or design. If the t-shirt design (for example) is merely ornamental and does not serve to identify you as the source of the shirt, then it will be difficult to gain trademark rights in that design. One way around this is by placing your house brand directly on your clothing. This was a popular trend for brands in the late 90s and early 2000s (consider FUBU, Gap and Fila, for example).
If the phrase, word or design is not a trademark, could it be protectable under copyright? Although in some cases copyright does apply, short phrases and single words are typically not eligible for copyright protection. A visual design is more likely to be copyrightable, but it must be sufficiently original — in other words, the work must be independently created and have a “modicum” of creativity. This is not a particularly high bar to clear, but common phrases and simple or generic designs are unlikely to be eligible for copyright protection.
There is an increasing trend for retailers to commission third-party vendors to create the design to be featured on clothing, bags and other products. Although it may be an efficient business move, not being in control of your brand’s product design can have negative consequences in the intellectual property space. If the resulting design infringes the trademark rights or copyright of another, there is a risk that the retailer could be found vicariously liable — even if it was unaware of the infringement when it offered the goods for sale.
Again, conducting a search of the federal trademark register and online search engines for prominently featured phrases or designs should let you know whether or not that phrase or design may be owned by a third party. That kind of search can also indicate that a phrase or design is in the public domain and can be used by anyone, without anyone claiming exclusive rights. It’s a good idea to have a discussion about trademarks and copyrights with your vendors and employees, not only to educate them but also to determine what their “inspiration” might have been for a particular product’s design. If you know that your graphic designer was watching a lot of Game of Thrones when he came up with “Winter Is Coming” as the catchphrase for your new cold weather clothing line, then you have a good idea of where to start looking to see if there might be a trademark or copyright issue. Getting your vendors to indemnify you against claims of trademark and copyright infringement wherever possible can add another layer of protection if an infringement claim is made by a third party.
New technology will continue to make products and services more accessible to consumers, and retailers will need to stay one step ahead to take advantage of the developments and avoid the pitfalls. But with the right mindset and clearance procedures in place, product development and design teams can let those creative juices flow.