Acquisition of Trademark Rights Under United States and Georgia Law

• Publication year: 2001
• Pages: 0002

Georgia Bar Journal Volume 7.

GSB Vol. 7, No. 1, Pg. 2. Acquisition of Trademark Rights Under United States and Georgia Law

Georgia State Bar Journal
Vol. 7, No. 1, August 2001

"Acquisition of Trademark Rights Under United States and Georgia Law"

By Virginia S. Taylor and Theodore H. Davis Jr.

The United States, like virtually all industrialized countries, is increasingly becoming a branded society Although Georgia and federal unfair competition law originally protected trade- marks and service marks against passing off, brand names and symbols no longer merely indicate the origin of their associated goods and services but instead have themselves become commodities.1 For example because of their drawing power, brand names are often at the heart of corporate acquisition strategies.2 They are routinely offered as collateral to secure loans, qualify for capital gains treatment,3 and are property of the estate under the U.S. bankruptcy code.4 Indeed, the importance of distinctive brand names and logos is such that a strong brand portfolio can be among a company's most valuable assets.5 The owners of powerful trademarks such as the BUDWEISER(R) COCA-COLA(R), and MARLBORO(R) marks did not, however, come to enjoy their assets as accidental windfalls. Rather, the strength of such marks reflects careful selection and maintenance by their owners. Undertaken properly, such strategies can often yield returns far exceeding those attributable to other forms of capital investment. This article briefly summarizes the most important aspects of the law of trademarks, service marks, collective marks and certification marks in the United States.6 This article first provides a brief introduction to U.S. and Georgia unfair competition law. Next, the article examines the acquisition of rights to marks in the federal system of state and national government. The article then sets forth steps that may be taken by U.S. mark owners to protect the goodwill represented by their marks. Finally, the article suggests precautions properly adopted by companies considering the selection of marks to ensure that their marks do not conflict with the rights of other mark owners and that those marks will be entitled to a significant degree of protection.

U.S. Trademark Rights - An Introduction

Trademarks can take many forms, including words, numbers, letters, symbols, slogans, colors, characters, graphic designs, smells, configurations, trade dress, sounds, and any combinations of these items.7 State and federal law protect not only trade- marks, but also service marks, collective marks and certification marks. A service mark is the counterpart of a trademark, but identifies services rather than goods.8 A collective mark is owned by a cooperative, association, or other collective group and distinguishes the goods or services of the members from those others.9 A collective mark also can indicate membership in the collective group or organization.10 A certification mark represents a certification by the owner of the mark that the goods or services of others meet its standards.11 Those standards can be quality, method of manufacture, regional origin or some other characteristic. The owner of a certification mark (e.g., an entity formed to certify goods as made of HARRIS TWEED or ICELANDIC WOOL) cannot itself be the source of goods or services under the mark or rights to the mark will be lost.12 A principal requirement for trademark protection is that the mark must be distinctive, or capable of distinguishing the products of the owner.13 Trademarks vary in distinctiveness, and a mark may be either inherently distinctive or, alternatively, may acquire distinctiveness as a result of recognition by the relevant public.14 The degree of inherent or acquired distinctiveness of a mark is relevant to the scope of protection to which it is entitled. highly distinctive and famous mark is considered .strong. and will be protectable against use even on unrelated goods (e.g., KODAK cigars or candy).15 On the other hand, a non-distinctive and .weak. mark may be entitled to only limited protection against use of the same or similar marks on identical or closely related goods (e.g., GOLD MEDAL for food, athletic equipment and a variety of other products).16 In determining the strength of particular marks, U.S. courts frequently refer to a .spectrum. of distinctiveness, according to which marks are classified as coined, arbitrary, suggestive, descriptive and generic.17 The most distinctive and protectable marks are unique, coined terms having no inherent linguistic meaning. Examples of coined marks include the invented words EXXON(R), KODAK(R), and XEROX(R).18 Such terms receive a wide scope of protection because prohibiting their use by others does not deprive competitors or the public of any freedom of speech.19 Arbitrary marks, which are next in order of distinctiveness, are words having a common meaning but no connotation in association with the user's goods. Consequently, even if it is in common use, a mark may nevertheless be considered arbitrary if it is applied to a product or service unrelated to its meaning, so that the word neither describes nor suggests the product or service..20 Examples of arbitrary marks include CAMEL(R) cigarettes, AR- ROW(R) shirts, and APPLE(R) computers. Like coined terms, these marks typically are entitled to a broad scope of protection because they do not deprive competitors of the ability to describe their own products freely. The third category of distinctiveness includes suggestive marks, which, as the name indicates, suggest some of the qualities of the user's product or service but do not directly describe them: .A term is suggestive if it requires imagination, thought and perception to reach a conclusion as to the nature of [the] goods..21 Examples of suggestive marks are WORD(R) and WORDPERFECT(R) for word processing software. Suggestive marks are considered inherently distinctive and capable of protection against use of similar marks upon their adoption.22 They typically do not, however, receive as broad protection as coined or arbitrary marks. In general, suggestive marks that have not acquired a high degree of fame are likely to beprotected only against use of similar marks for related goods and services.23 The fourth category of marks consists of descriptive terms, including surnames, geographical marks and laudatory marks, as well as those directly describing the characteristics, functions or qualities of the user's products or services.24 Descriptive marks are protectable only after they have acquired .secondary meaning. or, in other words, public recognition of the term as not simply referring to the nature of the user's products in a descriptive sense, but also as a designation of the source or sponsorship of the goods or services.25 In keeping with the concept of a continuous spectrum of distinctiveness, however, some terms are only slightly descriptive, and need only a minimum level of usage to acquire secondary meaning, while others may be highly descriptive and need substantial evidence of public recognition to establish secondary meaning.26 Significantly, the U.S. Supreme Court has held that product shapes may be considered descriptive marks at best, and therefore always require a showing of secondary meaning for protection.27 It is possible for a descriptive mark to acquire a high degree of secondary meaning and even become extremely famous. When that happens, the mark is entitled to a broad scope of protection. For example, COCA-COLA(R) and INTERNATIONAL BUSINESS MACHINES(R) are marks that were originally descriptive, but have become well known as designations of origin and are therefore entitled to substantial trademark protection.28 In the absence of such a high degree of fame, descriptive marks, even if they have acquired sufficient secondary meaning to be protectable as trademarks, generally are entitled to protection only against use of identical marks for closely related goods. The final category is composed of generic terms, which in fact are not marks at all. A generic term is the common descriptive name for a product or service, such as .software. for computer programs, .car. for automobiles or .shoe. for footwear.29 A generic term also may be a mark that has fallen into common usage as a general term for a category of products and, therefore, has lost its distinctiveness as an indicator of origin. Examples of such former marks include .linoleum,. .kerosene,. .yo-yo,. .escalator,. .cellophane,. .aspirin. and .shredded wheat.. A generic term cannot be exclusively appropriated and may not be protected as a mark.30 For this reason, producers of new products often provide generic terms to identify their products while preserving their trademarks as designations of the products. source (e.g., TYLENOL(R) acetaminophen). Where nonverbal designations such as product shapes are concerned, courts typically use the term .functionality. when determining whether the designation is necessary to competition in an industry and therefore unprotectable.31

Establishing Trademark Rights in a Federal System

Unlike the situation found in most civil law jurisdictions where rights are created by registration, common law trademark rights in the United States historically have been established through use of the mark in commerce: Rights can be acquired in a designation only when the designation has been actually used as a trademark . . . or when an applicable statutory provision recognizes a protectable interest in the designation prior to actual use. A designation is .used. as a trademark . . . when the designation is displayed or otherwise made known to prospective purchasers in the ordinary course of...