Our Practice Areas: Publications

When and How to Search Trademarks and How to Interpret Search Results

Neil F. Martin
Gordon & Rees LLP

This outline assumes that a company is considering a mark that will be used in the U.S. market either exclusively, or as one of a number of significant markets. The U.S. is virtually alone in the world with its emphasis on rights acquired by adoption and use. This makes a search prior to committing substantial company funds a practical necessity where use in the U.S. market is important.

A comprehensive search, for purposes of this discussion, is a search conducted by one of the major independent search companies which looks at common law sources of information as well as state and federal registration information.

By the nature of the U.S. system, it is impossible to be 100% certain that a comprehensive search will turn up every potential basis for conflict with an adopted mark. A hypothetical illustrates the quandary.

On March 1, 2001, a specialty yellow pages publisher in the tri-city area began selling a CD program which incorporates the listing information from the yellow pages directory, but adds searching and cross-indexing tools that make it useful to a segment of the market for the printed yellow pages. The company adopts City Search as the trademark for the software and CD. The product is advertised only within the printed yellow pages and sold only within the two-state area in which the yellow pages is distributed.

On March 1, 2002, Forbes magazine decides to offer a search facility to companies who want to compare the facilities available in various cities around the country for purposes of marketing and/or for corporate office locations. The Forbes marketing department selects City Search as the mark and orders a comprehensive trademark search. Comprehensive trademark searches look at state and federal registrations; at company names; at listings in trade directories, compilations of common law marks, trademark listings and at the hits developed in a web search. None of these categories would include the common law City Search mark adopted a year earlier, so the mark is given a clean bill of health and registration applications filed for the software in International Class 9. (Scientific apparatus and computer programs).

Forbes does a national rollout of the product, supported by heavy advertising, including ads in the business section of local newspapers, attempting to attract customers. The image ads don't mention price. A substantial number of potential customers, having been exposed to the Forbes advertising, who subsequently notice the ad that was in the tri-city yellow pages for City Search make the assumption that the products are the same and order the City Search disk. The product doesn't meet the expectations that the customer had from the Forbes image ad. Having some influence in the tri-city area, the customer uses every opportunity to bad mouth the tri-city yellow pages and its City Search product and to suggest the Forbes product is the genuine City Search. In other words, the Forbes product launch and trademark usage have resulted in reverse actual confusion. (The purchase of a product from the wrong source due to the similarity of the trademarks).

In the year since the tri-city yellow pages launch of City Search, the product has enjoyed considerable popularity and the publisher has discovered that specialty yellow pages in other cities are interested in the product. Sales of City Search directories, incorporating local information, have now been licensed to eight cities, geographically dispersed across the United States. When the Forbes use is discovered Tri-city's yellow pages brings an action in federal district court in the Tri-cities, against Forbes, seeking damages and injunction and an Order to the Trademark Office to cancel Forbes' claim to City Search. Total damages and costs to Forbes exceed $15,000,000.

Our hypothetical shows that comprehensive should never be equated to conclusive. At the other end of the spectrum, there is a circumstance where a department within a company is eager to launch a product and has already fallen in love with the marketing committee's choice for a name. They intend to launch a series of seminars and training materials under the title Tax Axe which will sell publications and training services in minimizing tax liability. This scenario argues against a comprehensive search. The cost of the comprehensive search and the people time to investigate all of the "leads" can average $3,000 to $5,000. A newsletter doesn't justify that kind of expenditure. Worse, the committee has fallen in love with their mark and will push to adopt and use the mark unless there is conclusive evidence of trouble before they begin to spend money on the project. Lastly, the newsletter, is a toe in the water entry into the field, which may cause any common law users of the same or a similar mark to come forward before the company has to commit major funds to build the program materials and seminars. Quick action is mandatory. Of course, the Patent and Trademark Office database can be used to search for Tax Axe (www.uspto.gov/trademarks). But this will reveal only federal registrations and applications. A better resource is Trademarks.com which is run by the same organization that runs Micro Patent. This database has the registers of all 50 states, some common law sources and Canadian, Madrid Protocol and European (CTM) databases as well as domain names and domain page references (TLDs). The search tools include the ability to search for phonetic equivalents and, unlike the PTO database, this service allows you to preview records and then select records for inclusion into a report.

Using the phonetic feature, you discover that most users use the spelling AX rather than Axe. The report shows the current owner with an assignment history, if any. The two registrants shown in the report (Exhibit A), Ax the Tax Dragon and Ax Your Tax should be contacted. [ Note: At this point, the hypothetical becomes pure fiction.]

You have a non-attorney call the registrants and ask innocent questions about the Ax the Tax Dragon radio program. You discover that the radio program hasn't been broadcast in over three years. Using the same approach, you contact the Ax the Tax people and discover that the registrant has no working telephone number. (As a follow-up, you could send an empty envelope to the registrant at the indicated address and mark the envelope "Address Correction Requested." If it comes back "No Forwarding Address," you have some inexpensive confirmation that that registrant may not be in a position to raise an issue to your company's projected product line, and that you may be able to obtain cancellation of the registration by filing a petition for cancellation which may not reach the registrant and therefore make it possible for you to obtain judgment by default.

Having cleared the issues raised from the database search, you proceed to a Google or other search engine for web-based uses of tax and ax. This takes you to a site denominated The Tax Ax (Exhibit B). This site appears to be posted by an author and speaker who proceeds from the premise that paying taxes is voluntary.

[Again, from this point on, the hypothetical is pure fiction.] You have your anonymous caller contact the owner of the site, stating a desire to start a publication aimed at lowering taxes and identified as Tax Axe. The owner indicates that he has invested his life's work in the site, and considers Tax Axe to be a direct infringement of The Tax Ax. He claims to have attended 18 months of law school and handles all of his own legal matters. He has successfully defended his exclusive right to Tax Ax in two federal court litigations in which he obtained substantial sums in settlement, and an agreement by the infringers to discontinue all use. You download the pleading indexes from those two cases. It seems to check out.

Within a day, you have enough information to go to the committee and persuade them that their newsletter will almost certainly get the company sued, so it's back to the drawing board. This time you offer to participate (with Internet access) in their brainstorming session for marks so that they don't fall in love with another mark that is clearly not available.

The above examples suggest that a comprehensive search doesn't always reveal all of the potential problems, and that a database search can often reveal problems that make it unnecessary to proceed to a comprehensive search.

We find that it is important to give a numeric estimate of the confidence factor for each type of search. Our experience suggests that a database search of the type described reveals all of the potential for conflict about 80% of the time. If a company's exposure is low, and the ability to retract and change over to a different product name doesn't involve major marketing consequences, then maybe a one chance in five risk is acceptable. More often, the database search is used in the negative. If the database search reveals a blocking registration or use, you use it to force the choice of another mark at an early stage until a mark is selected which passes the 80% filter, and then proceed to a comprehensive search on the final selection.

In our experience, a comprehensive search competently investigated reveals all of the potential conflicts with approximately a 95% confidence factor. We find it much more effective to cite these percentage figures (while clearly indicating they are based solely on our experience and our estimates) rather than to say a search has a high degree of confidence, leaving it to the listener to decide whether that means 50% or 100%. A 95% confidence factor still leaves 1 in 20 risk that there will be a problem with a mark, and it is usually not practical to significantly further that risk. In effect, every company launching a product or a service, takes that 1 in 20 risk because of the U.S. system.

The cost of a comprehensive trademark search through one of the principal vendors (Thompson & Thompson in this example) is $600 with a 48-hour turnaround. The real expense is the time associated with evaluating the search results and investigating the leads from the search.

A recent search for a three-letter mark is typical. The Thompson & Thompson 48-hour report arrived in 7 days (without an explanation or offer of refund) and contained 212 pages. In addition to the fact that the report is more comprehensive, it is generated by people who create search strategies for a living, day-in and day-out, and will typically find more relevant marks, even in the same databases. In this case, the Trademarks.com search for the three-letter mark produced 50 relevant listings in the federal database. The Thompson & Thompson search produced 103. However, both searches revealed an identical mark in the same industry that could have been a knockout. Phone calls to the registrant's address and telephone company inquiries led to a determination that there were no current listings. The Secretary of State's records for that state were online, so we were able to determine that the company had been acquired and then made appropriate inquiries of the acquiring company. The acquiring company had been providing the same products and services as those under the desired mark prior to the acquisition. Subsequent to the acquisition they merged the facilities and product line into theirs, but no longer used the three-letter term.

The state registration section didn't produce any additional conflicts. There were 16 references in the state section. This is a typical ratio of state to federal. Even though there are 50 states that have trademark systems, these systems are no longer frequently used. There are two reasons for the decline in state registrations, the first being the fact that there are no longer virtually any local products or services and second, state trademark registrations are no longer necessary in most cases to avail the registrant of anti-piracy provisions, or anti-counterfeiting statutes peculiar to the state. Also, the federal anti-piracy, anti-counterfeiting statutes serve for most purposes. For these reasons, if you don't search state registrations, you won't substantially increase the risk of adopting a problematic mark. On the other hand, the easy availability of state registrations on Trademarks.com suggests that any mark worth adopting is worth checking out through that or another resource which includes the state registrations.

The common law section of a comprehensive search includes hits from online databases, newspapers and publications and specific industry resources. For example, searching for a clothing mark will include searches in various publication specific to that industry, such as The Athletic Footwear Association Trademark Directory. In our example this section produced approximately 20 hits. When you consider the huge number of actual common law sources of information, you get a sense of how incomplete this section is.

The domain name section typically includes a printout of the index page from the website corresponding to the domain name (if any). This is very useful for quickly determining whether a usage is likely to conflict. However, it is not a substitute for doing your own web search using every available search engine.

A new aspect of the report is the Madrid Protocol section. This section lists marks that have requested extension to the United States. In other words, marks filed in another country by companies or individuals who have an interest in exploiting their marks in the U.S. This section will become very valuable after the Madrid Protocol has been in effect in the U.S. for a few years.

International Searches. Okay, the mark appears to be available in the U.S. and you file a U.S. registration application at the earliest opportunity (based on intent-to-use if the company has not as yet started actual use). What about an international search? Here, the options are much more limited, less complete and potentially far more expensive. There are countries where the first-to-file rule prevails, but the Trademark Office records are essentially unavailable to the public. If Europe is the primary target for the U.S. origin product, then searches can be made in the CTM system. This system has been in effect for a number of years, and most serious trademark users in Europe will use the CTM system to reduce the cost of obtaining protection throughout the European system. You can search the European system online.

Europe

Other countries with online databases include the following:

Canada
Australia
USPTO Web Page Listing of Foreign IP Offices
Japan

If the online resources don't knock-out your chosen mark, you can make a WISS search through Compu-Mark. This will produce results for identical marks that have been published by the Trademark Office of any of the 100+ countries included.

The total cost in time and fees for this approach to international search may be $2,000 to $3,000 and will leave gaping holes in the results. Perhaps a 50% confidence factor.

Companies that can't afford that level of risk have to proceed with country-by-country, on-the-ground investigations. When you hear about the million dollar plus trademark clearance search, such as the one made by EXXON7 before adopting that name, it's this country-by-country approach (a different approach for each country) that ups the ante.

One way of looking at the Madrid Protocol is as an alternative to searching. If you can get the company to commit to a name long before they market the product, you can be well along in the registration process in enough countries that, effectively, the foreign trademark offices will do your searching for you.

The following is a checklist of some of the strategies that you can use to investigate potential claimants to the same or similar marks. The range of options are the greatest for federal registrations. First, you should classify any apparent conflicts as to whether the federal registration has been obtained and has become incontestable. (incontestability requires that a declaration be filed between the fifth and sixth years after registration, stating that the mark is still in use and that the use is substantially exclusive). Not only are incontestable registrations more difficult to cancel, but the declaration is at least some evidence that the applicant not only adopted and obtained a registration for the mark, but has continued to use it for an extended period. A single incontestable registration for the same mark on the same or similar goods or services may be reason enough to adopt a different mark.

In the event that you can't let go of a mark despite an incontestable registration, there are a couple of desperation strategies that you may be able to use. First, if you know that your company's goods are sold in different channels of trade and, as a practical matter, are unlikely to be confused with the registrant's goods, then you can attempt to protect your mark in a different class. For example, if you have a full-on conflict in computer software, but the company's product is one that requires active support, you can attempt to register the mark in the service classes. The description of services might be "Consulting and providing advice regarding meeting planning." Your corresponding software might be for record keeping and scheduling meetings. This would also be a good time to consider filing for a composite mark where the words and design are integrated and form a single impression (which is different from the impression of the words, per se, in the competing mark).

Incidentally, it does no good to argue that the class of customers or the channels of trade are different from the registered goods because, typically, a registration is not limited to channels or to the nature of the goods beyond what is required by the Trademark Office's commonly accepted descriptions. For example, time management software may be sufficient for a description of goods, and the actual product being sold may be a $49.95 personal organizer. However, there is nothing in the description time management software which would make it inapplicable to corporate process management software costing many thousands of dollars. The arguments as to the class of customers and to the channels of trade are useful in trademark infringement actions, but not in obtaining your registration over prior registrations with broad descriptions of goods.

Second, an incontestable registration that doesn't admit of a strategy for differentiating the company mark by the process just described is still worth an investigation to determine the nature of actual use. We estimate that at least 20% of the Section 8 and 15 affidavits that are filed are actually based on facts insufficient to obtain incontestability. Perhaps harking back to the days when token use was sufficient to support a registration application, some companies will file a Section 8 and 15 declaration where the use is nothing more than slapping a mailing label on a few packages of product otherwise marked with completely different trademarks.

You may discover a basis for a petition to cancel, or even sufficient evidence to cause the potential defendant to withdraw the fraudulently renewed registration when the actual facts are drawn to their attention. You can learn an amazing amount about a product and its associated trademark from the receptionist or the marketing department who will often volunteer "Oh, we don't sell that any more. " or "That product has been replaced by the product we call [the new trademark]."

While on the subject of petitions to cancel trademarks, it is worth remembering that even an incontestable registration can be cancelled if the registered mark is an infringement of the company's trademark. This can arise where your company has been using a mark for more years than are claimed by the trademark registrant and the marks and goods or services are so close that when the registrant adopted the mark, it was an infringement of your company mark. With these facts, a successful petition to cancel may clear the way for your mark. File your application immediately so that you have the priority application when the competing mark is cancelled.

If you can't avoid or cancel an incontestable registration on a near-identical mark, the sole remaining option is to buy it. Assuming that the budget for protecting the trademark is limited, of course you can only buy the trademark if it can be obtained for a nominal amount. We have found it surprising how often an incontestable registration can be obtained for an affordable amount. This arises where the registrants use may have been continuous but is so small scale, and perhaps is utilized on a secondarily-branded product that the purchase price may be affordable. For example this may be the situation where a restaurant, Hambuerguesa, has a menu item for Mr. Goodburger. Your company wants to open a chain of Mr. Goodburger restaurants. The value of the name as a menu item is relatively small. We have found it possible to buy incontestable registrations for as little as $10,000 to $15,000. If the registrant balks at assigning the mark outright, you can always license the registrant back to use the mark (in the example, as a menu item at their current restaurant location). The restaurant doesn't have to change anything, so the $15,000 is all profit. Don't forget to include a quality control requirement in such an agreement so that the enforceability of the mark is not compromised.

For any acquisition of a name, if the registrant or business is unwilling to sell the name outright or with a license-back, you can consider a consent agreement. A consent agreement will almost always satisfy the Trademark Office even if the registration about which the consent is obtained would otherwise be cited against and used as a basis for refusing registration of your company's application. The Trademark Office seems to require only that companies state that they have carefully considered the products and services being offered by each party under the mark and that they determined that the products and services are sufficiently different, the class of customers are sufficiently different and/or the goods are sufficiently different that there is no likelihood of confusion. The Trademark Office considers the parties closest to the situation to be the most knowledgeable about the potential effects of the joint use of the mark (and besides it disposes of a problem with which the Examiner would otherwise have to wrestle). The consent agreement will typically incorporate provisions as to how the parties will avoid expanding into each other's markets in a way to cause confusion, and can provide near-perfect insulation from a subsequent lawsuit. The obvious problem is that the consent agreement will be used by a third-party infringer of either company in an attempt to show that the marks are being inadequately policed, that there is no common guarantee of quality and, therefore, the consent agreement amounts to a mutual naked license leading to both companies' marks becoming unprotectable. However, you must measure this obvious ploy by defendant with the fact that the courts favor settlements, and will typically interpret the settlement in a way to carry into effect the parties' intention without destroying the value of the property (trademark) that they share. In these agreements, we recommend that the latecomer agree to quality standards at least to conform to generally accepted industry practices, and that the parties have an arrangement as to who will take responsibility for enforcement of particular infringing categories of product. With reasonable precautions like these, it's been our experience that the court will normally attempt to make the consent work, without destroying the enforceability of the trademark.

Cancelled Registrations or Abandoned Applications. These should be treated as an indication that the applicant/registrant either didn't attach sufficient significance to maintaining federal protection, or that federal protection was denied for some reason. You should not assume that the mark is not in use merely because the application registration is no longer valid. Again, this is the time for an anonymous inquiry, especially if the application or registration would have completely barred your company's application for their desired mark.

The common law section presents the biggest challenges in eliminating names that appear to be a conflict. The only clue that you have to the actual nature of the products or services is the SIC code description. For example, if the SIC code is for insurance agents, and your client's product is selling plumbing hardware, you can safely ignore that listing. But if the listing is for a company with an SIC code that includes injection molding of products, and your company sells plumbing hardware, then you may need to make a phone call to find out whether any of the injected molded parts are plumbing related. If it's not practical to call every company listed, use the sales volume estimate to exclude companies with a single location. Pay more attention to listings for companies that have been in the directory for many years. (80% of all new companies will fail in the first five years of their operation).

Even more so than in the case of federal registrations, common law listings may be an opportunity for compromise with the company listed. If the company's inclination is to go ahead with the mark despite the listing, and what the investigation reveals, then you don't want to alert the business to your company's intentions. This would be an ideal circumstance for using an intermediary. You can use an attorney in another part of the country with no connection to your company and, perhaps not even identify your company to the intermediary. He or she can bargain for purchase of the name outright or purchase of the name and a license back to the business to use that name at their current location. When bargaining for a common law mark, proof of first use and continuous use should be obtained.

Conspicuously absent from this description of search report evaluation is a comprehensive treatment of the most fundamental of the skills necessary to evaluate a search report. That is, determining when is a mark likely to be confused with another. A full treatment of this issue is beyond the scope of this report. Every trademark treatise spends volumes on what is, and what isn't, confusing. We commend to your attention a book that deals exclusively with likelihood of confusion. The title is Likelihood of Confusion in Trademark Law by Kirkpatrick, and is published by Practicing Law Institute. This book, and others, contain lists of marks held to be confusingly similar and lists of marks held not to be confusingly similar. It's not exactly a parlor game, but if you put the two lists together and ask even the best trademark attorneys to guess the outcome, they'll be wrong much of the time. The courts have just as much trouble with the determination of infringement. However, you must make an assessment of the likelihood of confusion to evaluate the risk in adopting the mark . For a starting point, it is worth noting that every federal circuit has a favorite "multiple factor test." For the Ninth Circuit, the factors considered in determining likelihood of confusion are:

1. Strength of the mark;



2. Proximity of the goods;



3. Similarity of the mark (visual, sound, meaning);



4. Evidence of actual confusion (if any);



5. The marketing channels used;



6. The type of goods (e.g., capital equipment or impulse purchase consumer goods) and the degree of care likely to be exercised by the purchaser;



7. Defendant's intent in selecting the mark;



8. The likely expansion of the product lines (bridging the gap).

Keeping these factors in mind will bring some rationality to your assessment of whether a particular mark needs further investigation. In addition, it is always important to remember the caveat that the mark should be considered in its entirety. Don't dissect a mark and attempt to distinguish each word, but rather judge how the mark will be perceived visually, in meaning and/or sound, in its entirety.

Conclusion. Trademark searching is an art, and the analysis of trademark search results is an arcane art, but making the effort is critical. A well thought-out search and analysis will limit the risk that a company's product marketing will be disrupted, and the company treasury raided, because the company approached too closely the mark of a competitor with priority rights.

Telling a company they cannot adopt a mark doesn't make you popular, but telling them they have to stop using a mark they've already invested in makes them question your competence.