Last updated on July 27th, 2020
In this post, you’ll learn the purpose of trademark and why most T-shirt slogans don’t qualify.
Frivolous Trademarks: Gaming the System
Do you have a favorite book?
I’ve got lots.
Another is a book-length Iowa Law Review article by a law school professor and my hero, Dr. Alexandra J. Roberts, entitled Failure to Function. Again, fascinating!
And guess what? They’re both FREE online THIS WEEK! Who knows when they’ll start charging for ’em, so make time to read them now!
(Is my “scarcity” pitch working? Wink wink!)
Purpose of the Trademark Act (The Lanham Act): To Register Trademarks
I know you’re busy, so here are some of my favorite quotes from these oughta-be-a-best-sellers:
First, Dr. Roberts points out a standard principle of trademark law:
The Trademark Act is not an act to register mere words, but rather to register trademarks. Before there can be registration, there must be a trademark, and unless words have been so used they cannot qualify. Thus, it is essential for registration that words first become a trademark.Alexandra J. Roberts, Failure to Function, 104 Iowa L. Rev. 1977 (2019) [at Footnote 42] citing In re Bose Corp., 546 F.2d 893, 896 (C.C.P.A. 1976) (emphasis added) (citing In re Standard Oil Co., 275 F.2d 945, 947 (C.C.P.A. 1960)
And here are some highlights from the TMEP:
Terms and expressions that merely convey an informational message are not registrable…
the phrase I ♥ DC on apparel and other souvenirs… would be not be perceived by as a trademark but rather as “an expression of enthusiasm…”
ONCE A MARINE, ALWAYS A MARINE would not be perceived as a trademark but rather as an informational slogan…
Use of a widely-used informational message in a traditionally source-identifying manner does not overcome the informational nature of the wording itself…
The critical inquiry in determining whether a designation functions as a mark is how the designation would be perceived by the relevant public.Trademark Manual for Examining Procedure, 1202.04 Merely Informational
That’s a lotta words to say, The Trademark Act was not written so you could register every combination of words under the sun for “your” trademarked slogans. It’s for registering trademarks.
And, if you followed the link to Sherinian Law’s Brief History of Trademarks, you learned the purpose of a trademark is basically to guarantee the source or producer of some service or product.
Novelty Producers are Gaming the System
The practice of registering T-shirt slogans as trademarks has become commonplace. Several US owners have secured 20-100 questionable trademarks each, and one UK/Australian company owns at least 80.
This is not the purpose of trademark registration.
That’s not to say that all these T-shirt slogan trademarks are registered by trolls. Some owners are like “Fearful Frank,” trying to safeguard their right to sell a profitable design. Others are bullies trying to corner the market for the phrases on their best-selling products.
And then there are companies who license phrases to others (Life Guard Licensing Corp., for example).
Trademark registration is not intended to be a means of creating passive income via licensing fees, as the Stealth case shows. Yet this is what’s happening in the novelty industry.
And the loopholes that allow it are pretty scary. Here’s an example:
A Scary, CLASSY, Licensing Story
CLASSY Preface: Here’s another case that illustrates issues in our current system. My year with Trademark Watch Dawgs convinced me, most trademark overreach by small business owners is done in good faith, with no ill intent, and is caused by misapplication and misunderstanding of trademark law.
CLASSY, a valuable keyword for novelty products, was registered in 2009 (SN 78966345, canceled March 6, 2020). (Keyword: A word or phrase used by consumers to search for products. Examples: “ Stainless steel“ for garlic presses, “funny“ or “dog” for T-shirts.)
In 2018, the owner issued a takedown of a limited number of infringing products on Amazon. According to the owner, Amazon went beyond their request by removing products from scores (or hundreds?) of non-infringing sellers.
One Trademark Watch Dawgs member lost 200 products overnight. It’s no exaggeration to say that thousands of products disappeared from the Amazon platform in response to this one IP infringement claim.
“CLASSY” Petition to Cancel
In response, the TWD group banded together to file a Petition to Cancel. But there was a problem. A Petition to Cancel can only be filed by someone whose business is directly affected by the registration in question.
The reason this is a problem is that the attorney representing the petitioner is ethically bound to seek the best outcome for their client. In this case, the best outcome was not to pursue cancellation at all costs. It was to get 200 products back online immediately.
Further complicating matters was the fact that the registration was over five years old. If the owner hired a decent attorney and convinced TTAB this was all just an honest mistake, it’s unlikely their incontestable registration would have been canceled.
It’s understandable why the petitioner’s attorney sought an out-of-court settlement with the trademark owner. The alternative was to wait six months for cancellation while risking a failed confrontation in front of TTAB. Meanwhile, the petitioner’s products would be unavailable to buyers.
Reaching an agreement with the owner was the fastest way to restore the petitioner’s 200 products to Amazon’s catalog.
But it’s what happened next that is so scary about the CLASSY case. As part of the settlement agreement, the owner offered to license the term to other sellers.
Legit Licensing Vs. Trademark Abuse
“Licensing” CLASSY didn’t mean what it’s supposed to mean. (This is NOT the fault of the owner, who was not represented by legal counsel.)
Licensing a valid registration like “Nike” means that I pay a fee to Nike so I can put the Nike name or logo on
- Nike party favors
- Nike sleeping bags
- Nike athletic accessories
- Nike swimsuits
You get the idea.
Or, what’s more common in the print-on-demand industry, an artist might create original graphics and license their work to selected sellers. The artist focuses on creating more art while licensed sellers
- resize art for different applications (T-shirts, mugs, shower curtains)
- upload the art to print-on-demand suppliers/drop-shippers
- write product descriptions and sales pages
- run ads
- handle customer service
- monitor the web for IP infringement
- create and market more products
The Point of Licensing
In either case, the purpose of licensing is to expand the product line of the brand/artist to include products that would otherwise be cost-prohibitive or inconvenient to produce. In other words, the way licensing is supposed to work is that a brand builds the reputation, and licenses its IP/trademark to expand its product line.
But that purpose falls apart when USPTO registers common descriptive terms and widely-used phrases as trademarks in typical novelty classes of goods. ( Classes 009, 016, 021, 025, and 035 are only the beginning; print-on-demand has expanded to other classes including shower curtains, leather goods, neon signs, temporary tattoos, and more). Especially because of widely-held misconceptions in the industry.
Here’s the problem with the CLASSY licensing offer: it wasn’t a license to create “Classy” party favors. It was a license to use “Classy”
- as part of a brand name (“The Classy Shirt Co.”)
- in product titles (“Classy Women’s 50th Birthday Shirt”)
- in product descriptions (“Great gift for your classy friend”)
- in T-shirt slogans (“Often Sassy, Always Classy”)
Let’s assume the owner’s offer to license their trademark was made in good faith to protect other sellers from future accidental loss due to Amazon’s IP rules. After all, how else could they maintain the right to go after actual copycats of their designs without accidentally taking down innocent competitors?
Under Amazon’s IP rules, if I sold products using a “Classy Lady“ brand (or a T-shirt with “Classy Lady” as the slogan across the chest), the only way to guarantee immunity from future takedowns would be for me to provide Amazon with proof I had permission from the trademark owner to use their mark. I’d have to provide a licensing contract and pay the CLASSY owner a licensing fee/royalty fee for every shirt or product sold.
And every licensing contract further strengthens the incontestibility of the mark.
How CLASSY Illustrates Loopholes
Is this what the CLASSY owner was after? It doesn’t matter.
Trademark stakeholders should find this story disturbing. Because the CLASSY case reveals how certain loopholes can be exploited by trademark trolls. It’s easy to see, one strategy for creating virtual monopolies on demand is to
- Register a common term or phrase
- Set up an Etsy shop and arrange drop shipping of products for free (proof of proper use)
- Run a few ads to generate sales (proof of sales)
- Wait five years for incontestibility status
- Begin enforcing trademark rights
- Offer licensing fees for passive income
Understand, I’m not saying that’s what the CLASSY owner did. I’m only pointing out how cheap and easy it would be to do.
And what makes this worse is, the real trolls are getting sneakier. See, USPTO has made some strategic changes to help catch ineligible applications and faulty registrations. (Specialized training, mock-up specimen reports, and random audits will be discussed in Part 6.)
Newest Tactic: “Seed” Trademarks
Trolls are figuring out, hangtag specimens don’t work as well as they used to. So some of them are switching to a new tactic: seed their trademark empire by starting with an application to register in an “easier” class. Then add clothing later.
A Trademark “Stamp” given in one trademark classAt the Beach: A Cautionary Trademark Tale, Part 3
Makes getting swords easy, you just have to ask.
A trademark may be perfectly registrable in class 009 (computers) and perfectly ineligible in class 025 (clothing). But, once it’s registered the first time, it’s a lot easier to add another registration.
After all, “This term has already been registered as a trademark, which proves it functions as a trademark.” In Part 10 I’ll show you some real-life, glaring examples that prove this is false.
A Typical Seed Trademark Progression
The progression may look like this:
- Application 1: IC 009 – app for mobile phones
- Application 2: IC 009 – PopSockets
- Application 3: IC 025 – T-shirts
The more registrations an owner has for a single term, the more the system leans toward saying “Yes” to as many more as they want. The examples in Part 10 will show why this is very bad.
The motive doesn’t matter. The outcome is the same. The novelty gifts and apparel industry is becoming a bloody game of who can be first to register the latest slogan or user-identifying label.
Never mind consumer perception or how these registrations eliminate legitimate competition and hinder free markets.
There’s money to be made, and they are making it.
Failure to Function: No Easy Answers
Further complicating matters, some user-identifying labels do function as trademarks.
As Dr. Alexandra Roberts points out in Failure to Function, the question of a mark’s validity must be answered based on both descriptiveness and use as a trademark.
My print-on-demand friends will be sad that – due to necessarily-strict IP policies at Amazon and Etsy – they can’t use this term on a “Gift Shirt for Yaya Grandma.” That’s an issue that can’t be solved at present, and it’s not the focus of this series.
The specimens for this mark (YAYA, SN 86504608) show proper trademark use and show it is distinctive in the context of clothing brands. Here is one of the seventeen specimens submitted:
This is a rather brilliant example of how examiners might easily judge proper trademark use: with multiple specimens, rather than a single t-shirt with a tag attached. In fact, this is the standard listed in USPTO’s program of random trademark audits. So, progress is being made. 🙂
This is Part 3 of a 12-part series about the threat and impact of questionable trademarks. The next post is Part 4a. Or see below for a complete list: