During the Sharpie 500 at Bristol Motor Speedway, AT&T lost more than half a million dollars. AT&T is the primary sponsor of Jeff Burton, and an unresolved legal battle between AT&T and NASCAR has prevented the orange and black No. 31 Chevrolet from displaying the world famous AT&T globe trademark on the hood. As a result, AT&T has lost a significant part of its estimated $20 million investment that each sponsor must pay to have its logo prominently displayed on the hood of a Nextel Cup stock car for an entire racing season, and an opportunity to advertise to approximately 75 million NASCAR fans who watch each race. AT&T has complained in its lawsuit against NASCAR that its ability to “attract new customers and retain existing ones” is diminished as a result of the injunction.[1] Indeed, in The 200-MPH Billboard, Mark Yost provides four primary reasons that a company sponsors a NASCAR Nextel Cup race team: (1) marketing and advertising; (2) corporate hospitality; (3) team building; and (4) selling product. How does a company successfully utilize a race team to market, advertise, and sell a product? By developing, protecting, and utilizing trademarks. Thus, the recent legal battle between NASCAR and AT&T illustrates the importance and prominence of trademarks in the motorsports industry.
What is a trademark? A trademark is a “word, name, symbol, or device, or any combination thereof that is used or intended to be used in commerce to identify and distinguish” the source of goods or services from those sold by others. In other words, a trademark is a badge of origin that indicates the goods or services bearing the trademark originated from a particular source. A trademark must be used in commerce. A trademark identifies a source of goods and a service mark identifies a source of services.
What is the function of a trademark? Trademarks are important advertising tools for their owners. Trademarks aid consumers by informing them about the origin and quality of the goods or services associated with the trademark. Trademarks symbolize the good will, or the consumer expectation of the quality of the goods or services bearing the mark based on past experiences, that a company can develop for a product or service. Trademarks are exclusive rights; their use by others for similar goods or services without the permission of the owner is an infringement of the owner’s rights. Trademarks provide a company with legal protection for the investment in developing that good will. This good will is vital to a business and protecting this good will is critically important.
Why are trademarks important to the motorsport industry in particular? The motorsports industry relies almost entirely on trademarks to provide the main source of revenue to fund race teams. Operation of a competitive NASCAR Nextel Cup race team costs between $10-12 million a year. A successful race team requires the combined income of corporate sponsorship and licensing revenue in order to generate the financial resources necessary to be competitive. Sponsorship is a form of marketing in which companies attach their name, brand, or logo to an event for the purpose of achieving future revenue. Licensing revenue is derived from a licensing agreement between a trademark owner and a producer which allows the producer to sell items bearing the trademark, and also enable the owner to exercise control over the type and quality of those items.
How are trademarks used in the motorsports industry? In 2001, corporate sponsorships accounted for over $1.5 billion in revenue for the motorsport industry. Companies sponsor race teams because of the unique advertising opportunity that motorsports provide. Motorsports are among the most popular and fastest-growing spectator sports in the United States. Companies advertise their products on the cars as well as on the uniforms worn by the drivers and race teams. NASCAR is the most prominent Motorsports association. Generally, a sponsor can receive about four hours of airtime during a NASCAR race, and NASCAR fans are among the most loyal. Moreover, the sale of licensed sports merchandise, including souvenirs and merchandise licensed by the sponsors, race teams, driver, tracks, and sanctioning body, accounted for retail sales in the United States and Canada of more than $13.2 billion in 2005. For example, Wal-Mart sells more than $500 million worth of NASCAR licensed merchandise annually. Thus, it can be easily understood why trademarks are so important in the motorsports industry.
How to select a trademark? Trademarks can be words, names, symbols, combinations of words and designs, trade dress, sounds, scents or colors. Trademarks must be able to distinguish the origin of goods and services from others. The most distinctive marks are fanciful marks that are inherently distinctive and have no meaning other than as trademarks. Next, arbitrary marks can be words that have an actual meaning, but their meaning does not describe or suggest a quality or characteristic associated with the goods or services. Next, suggestive marks require the consumer to put forth some degree of thought in order to make the connection between the mark and a quality or characteristic of the goods or services. A trademark cannot be generic because the public may need them to refer to the goods or services, and a trademark cannot be primarily geographically descriptive or deceptively misdescriptive of the goods or services. A trademark also cannot be merely descriptive, unless it has acquired distinctiveness as indicia of origin, and cannot be confusingly similar to a trademark already in use.
A comprehensive search of all registered trademarks, trade directories, telephone directories, other publications and the internet for marks currently in use for similar products or services is recommended before choosing a mark. The trademark search will assist in determining the availability of the mark, the strength of the mark, and may reveal potentially conflicting marks. Further investigation of the mark may be warranted if conflicting marks are revealed.
How do you protect your trademark? Trademark rights can be acquired in the United States by using the trademark in commerce, under state common law of unfair competition, and/or federal law under the Lanham Act. State common law provides rights and remedies similar to those available under federal law. However, common law trademark rights are generally protected only within the geographical area of use, including a “zone of natural expansion.”
Federal registration confers additional benefits, including: (1) providing constructive notice nationwide of the registrant’s claim of ownership of the mark, and thus, a right of priority over all subsequent users or filers, as of the application filing date; (2) prevents acquisition of common law rights in the mark by another; (3) serves as prima facie evidence of the registrant’s ownership and exclusive right to use the mark and the validity of the mark’s registration; (4) the mark can become “incontestable” after five years; (5) permits the use of statutory designations or registration; (6) jurisdiction of federal courts may be invoked; (7) registration can be used as a basis for obtaining registration in foreign countries; and (8) registration may be filed with U.S. Customs Service to prevent importation of infringing foreign goods.
Trademark applications may be filed with the USPTO based either upon existing use or a bona fide “intent to use” the mark in commerce. If you have already started using the mark in commerce, you may file based on that use. You do not have to use the mark before you file your application. If you have not yet used the mark, but plan to do so in the future, you may file based on a good faith or bona fide intention to use the mark in commerce. If you file based on intent to use, you must begin actual use of the mark in commerce before the mark will be registered. In other words, after filing an application based on “intent to use,” you must use the mark in commerce and file a Statement of Use.
Is there any other possible filing basis? Yes, although not as common, you may base your application on international agreements. Under certain international agreements, if you qualify, you may file in the U.S. based on a foreign application or on a registration in your country of origin.
What happens after the application is filed with the USPTO? A government attorney at the USPTO examines trademark applications in the order in which they are received. If the examining attorney decides that a mark should not be registered, the examining attorney will issue an Office action explaining any substantive reasons for refusal, and any technical or procedural deficiencies in the application. For example, the application may be refused if the trademark is inherently incapable of identifying the origin of the goods or services. The application may also be refused if the trademark is likely to cause confusion among consumers when used in commerce because the trademark is similar to another trademark already in use. If the applicant cannot overcome all objections, the examining attorney will issue a final refusal. In response to a final refusal, the applicant may appeal to the Trademark Trial and Appeal Board, an administrative tribunal within the USPTO.
On the other hand, if the examining attorney raises no objections to registration, or if the applicant overcomes all objections, the examining attorney will approve the mark for publication in the Official Gazette, a weekly publication of the USPTO. The USPTO will send a Notice of Publication to the applicant stating the date of publication. Any party who believes it may be damaged by registration of the mark has thirty (30) days (extendable) from the publication date to file either an opposition to registration or a request to extend the time to oppose. An opposition is similar to a proceeding in a federal court, but is held before the Trademark Trial and Appeal Board, a USPTO administrative tribunal. If no opposition is filed or if the opposition is unsuccessful, the application enters the next stage of the registration process. A Certificate of Registration will issue for applications based on use, or a Notice of Allowance will issue for intent-to-use applications.
If the mark is published based upon the actual use of the mark in commerce, or on a foreign registration, and no party files an opposition or request to extend the time to oppose, the USPTO will normally register the mark and issue a registration certificate about twelve (12) weeks after the date the mark was published.
If the mark is published based upon the applicant’s bona fide intention to use the mark in commerce, the USPTO will issue a Notice of Allowance about twelve (12) weeks after the date the mark was published, if no party files either an opposition or request to extend the time to oppose. The applicant then has six (6) months from the date of the Notice of Allowance to either use the mark in commerce and submit a Statement of use or request a six-month extension of time to file a statement of use. If the statement of use is filed and approved, the USPTO will issue the registration certificate.
How long does it take for a mark to be registered? The total time for an application to be processed may be anywhere from almost a year to several years, depending on the basis for filing, and the legal issues which may arise in the examination of the application.
What is the term of a trademark? For a trademark registration to remain valid, an Affidavit of Use must be filed, showing continued use of the trademark, between the fifth and sixth year following registration and within the year before the end of every ten-year period after the date of registration. The registrant must also file a §9 renewal application within the year before the expiration date of a registration, or within a grace period of six months immediately after the expiration date, with payment of an additional fee. If the §9 renewal application is not filed before the grace period ends, the registration will expire.
Assuming that an affidavit of use is timely filed, rights in a federally-registered trademark can last indefinitely if the owner continues to use the mark on or in connection with the goods and/or services in the registration and files all necessary documentation in the USPTO at the appropriate times.
After you receive federal registration, you should give notice that the mark is registered by displaying with the mark as used with the words “Registered in U.S. Patent and Trademark Office”, or “Reg. U.S. Pat. and Tm. Off.”, or, not commonly, with the ® symbol. If your trademark is not federally registered, you can use “TM” for goods and “SM” for services to indicate a claim of trademark rights in the word or symbol. You may not use any words or symbols indicating that the mark is “registered” if the mark is in fact not registered.
How do you properly use a trademark in commerce? Generally, acceptable use for goods include using the mark on the goods, the container for the goods, or displays associated with the goods, and selling or transporting the goods in commerce. Acceptable use for services include using or displaying the mark in the sale or advertising of the services, and the services must be rendered in commerce. In the case of both goods and services, early use of the mark on goods or in connection with services should be well documented in the business records. Copies of the trademark as used, along with invoices showing the dates of sales in interstate commerce of goods bearing the mark, can be important evidence in establishing trademark rights. If trademarks are expanded to cover new goods or services, the early use of the marks in connection with such new goods and services should also be documented in the business records
A proper and consistent form of the trademark should be used so that consistent recognition of the mark is made by the purchasing public. Variations in form of the trademark will only confuse and may dilute the value of the trademark in having buyers recognize the trademark as a source of quality products and services. Once a trademark is adopted, the form of the mark should be well documented and business policies implemented which ensure that only the proper form of the mark is used in all types of media. Extended misuse of a trademark can result in the public considering the trademark to be the generic name for the product sold. When this occurs, all trademark rights can be lost to the owner. Therefore it is important to always ensure that the trademark is used only in the proper way.
Trademark rights Trademark rights can be lost (1) by abandonment of the mark, i.e., discontinuance of use with intent not to resume; (2) a failure to prosecute infringers; (3) licensing without adequate quality control; and (4) genericization of the mark.
This article provides only a broad overview of trademark rights and registration in the United States, and it is not intended to be a comprehensive explanation of how to select and register trademarks. Although it is possible for anyone to choose and register a trademark without a lawyer, some rules and application requirements are often misunderstood or misinterpreted by persons who are untrained or unfamiliar with trademark law and practice. Accordingly, it is recommended that a trademark attorney be retained to conduct a trademark search and apply for any trademark registrations. Therefore, protect your trademark = protect your ability to license = protect your ability to generate revenue from merchandising.
*NASCAR, Bristol Motor Speedway, AT&T, Nextel, Sharpie, and Wal-Mart are registered trademarks.
[1] http://sports.espn.go.com/rpm/news/story?seriesId=2&id=2813457.