Over a year ago, we wrote about the intersection between trademarks and bankruptcy. Specifically, we described a scenario in which a licensor files bankruptcy and chooses to ‘reject’ the license agreement. Under the Bankruptcy Code, the licensee may continue to exercise its rights (and carry out its corresponding duties) with respect to all intellectual property licensed to it under the agreement. But the Bankruptcy Code does not include trademarks within its definition of intellectual property. Courts have been left to address what happens if the license includes trademarks.
The debtor-licensor’s rejection of the executory contract is a breach of the contract. In at least one circuit, this means nothing more than that the licensor has breached the agreement. The licensee still retains its rights (including its right to use the licensor’s trademarks), just like it would outside of bankruptcy. Sunbeam Products, Inc. v. Chicago American Manufacturing, LLC, 686 F.3d 372 (7th Cir. 2012).
By contrast, the US Court of Appeals for the First Circuit recently treated rejection of the executory trademark license agreement as a termination of the contract, depriving the licensee of the right to use the licensed trademarks. Mission Prod. Holdings, Inc. v. Tempnology, LLC (In re Tempnology, LLC), 879 F.3d 389 (1st Cir. 2018). This latter approach follows the reasoning of Lubrizol Enterprises, Inc. v. Richmond Metal Finishers, Inc., 756 F.2d 1043 (4th Cir. 1985), which predated the amendments to the Bankruptcy Code allowing intellectual property licensees to retain the rights (and obligations) associated with licensed intellectual property rights once the debtor-licensor has rejected the executory contract. Lubrizol involved a technology (not trademark) license.
The court in Tempnology case reasoned that allowing the licensee to retain its rights under the trademark license would not allow the debtor-licensor to be free of performance obligations because the debtor-licensor would still have to monitor use of the mark. In asking the Supreme Court to hear the case, the licensee in Tempnology, Mission Products, argued (in part) that the right to monitor did not necessarily create the duty to monitor.
At least two organizations filed amicus briefs encouraging the Supreme Court to accept the case. The International Trademarks Association (INTA) encouraged the Supreme Court to adopt the Sunbeam reasoning because treating rejection as a breach, but not termination, best promotes the strength and stability of the trademark system. A group of law professors similarly urged the Supreme Court to accept the case, noting that the First Circuit’s interpretation of the omission of trademarks from the definition within the Bankruptcy Code goes too far. Rather than giving courts the opportunity to decide the implications of the debtor-licensor’s breach in each case pursuant to non-bankruptcy law, it effectively created a uniform rule that requires the same result (termination) in each case, thus undermining the policy reason for allowing courts to decide the issue on a case by case basis.
On October 26, 2018, the Supreme Court granted certiorari and agreed to hear the case. Argument has yet to be scheduled. But this case presents the opportunity for the Supreme Court to resolve a split between circuits and eliminate uncertainty in the marketplace at the intersection of trademarks and bankruptcy.
We recently looked at the idea of state universities claiming a (limited) monopoly on the right to use the name of their state on clothing and other items. At first blush it seems surprising that anyone can have the exclusive right to a state name, but trademark law allows it in the right circumstances, and with limitations.
This time we’ll look at another university case, but perhaps an even stranger attempt to claim exclusive use – and one that may or may not wind up being successful.
In this case, The Ohio State University is claiming exclusive rights to the letter “O,” or at least a particular look of the letter “O,” and on that basis is challenging an application by University of Oklahoma to register a mark that includes an arguably similar O.
First, a little background. Part of the trademark registration process involves notifying the public that an application has been preliminarily approved for registration and giving others a chance to oppose registration. An application may be opposed for various reasons, but probably the most common is that the opposer thinks the mark shown in the application would create a likelihood of confusion with the opposer’s mark. The opposition plays out before an arm of the USPTO called the Trademark Trial and Appeal Board. The Board considers a number of issues in determining whether the mark shown in the application would likely be confused with the opposer’s mark, but the most important are almost always the similarity of the marks and the similarity of the goods or services the marks are to be used with. If the Board determines that the opposer has prior rights in its claimed mark, and that the applicant’s mark would create a likelihood of confusion, it will not allow the applicant’s mark to be registered.
Ohio State has registered two different versions of the letter “O.” The version shown here
is registered twice – once in a 2003 registration covering “clothing, namely, jackets, sweaters, hats and T-shirts,” and later in a 2013 registration covering services including “providing college level sporting sport exhibition events and recreation programs.”
A slightly different version, like this
was registered in 1997 for use with “clothing, namely, hats, caps, tee shirts, sweat shirts, sweat pants, shorts and sweaters.”
In 2017, the University of Oklahoma applied to register this mark:
That application covers “entertainment, namely, live performances by musical bands,” and it’s obviously a stylized image of the drum major for the Pride of Oklahoma marching band. It does show an O on the drum major’s chest.
Ohio State called foul (or asked for an official review, or threw a flag; it seemed like a lame sports metaphor is called for here). Wait a minute, OSU says, we have used the “block O” mark since 1898, and it’s on lots of our products and used with our services, and it’s right in the middle of our football field (more on that below), and consumers recognize it as referring to Ohio State, and it points “uniquely” to Ohio State, and we have registrations for the “block O” trademark. So Ohio State argues that Oklahoma should not be able to register its stylized drum major mark, because right on that drum major’s chest is an O looking kind of like the OSU “block O.”
Ohio State also claims that the “O” on that drum major’s chest is the “dominant portion” of the mark Oklahoma is applying to register, which seems like it might be a bit of a stretch, and it also says that the “O” is the only indication of source in the drum major mark, which could be ignoring the fact that Oklahoma claims the entire drum major design as an indication of source. Perhaps a drum major in a distinctive stance could also be an indicator of source, unless that’s just how drum majors walk. (Also, don’t look now, OSU, but Oklahoma has another registered mark that somehow slipped through that has two O’s in it.)
The matter will likely boil down to whether the two marks – an O and a stylized drum major in a rather unusual posture with an O on the shirt – are confusingly similar. One of the rules when considering confusion is that you are not to “dissect” the marks. That has nothing to do with high school biology class; it means that you are to consider the marks as a whole rather than to focus on one little aspect. A big question will be whether Ohio State’s ownership of rights in the O are enough to prevent registration of a mark that has a lot going on apart from the O.
One thing that might come into play is how distinctive that Ohio State O really is, and how recognizable it is on the drum major logo. Oklahoma might point out that the University of Oregon also has a registration for a letter “O” that looks like this:
That registration also covers services including collegiate athletic events and various kinds of musical performances and bands, and is quite a lot older than the Ohio State registration covering athletic events.
As of this writing, the University of Oklahoma has not responded to Ohio State’s opposition. Unless the parties settle the matter, Oklahoma will file a document admitting or denying each of the allegations in Ohio State’s notice, and setting forth any defenses it might have. OU fans can attest that defense has not been a strength lately.
As for that O in the middle of The Ohio State University’s field, it may be that the OSU is a little more protective of their favorite letter after a 2017 incident in which Oklahoma quarterback Baker Mayfield celebrated a football victory on the O, a short clip of which you can see here.
A familiar adage teaches that one catches more flies with honey than with vinegar. Without in any way implying that infringers are flies, we can apply this lesson to the trademark context. It seems that trademark attorneys enforcing their clients’ rights have really taken this wisdom to heart in recent years. With increasing frequency, trademark cease and desist letters filled with humor and whimsy fill the news.
Most recently, In-N-Out Burger sent a cease and desist letter to Seven Stills Brewery, which had just announced a forthcoming new beer in a can bearing markings very similar to In-N-Out Burger’s logo and the name “In-and-Stout.” Seven Stills also tagged In-N-Out in the announcement.
In-N-Out’s letter was filled with beer puns. Seven Stills posted a copy of it on its Instagram accounts:
Though friendly (and playful) in tone, the letter clearly alerted Seven Stills to In-N-Out Burger’s trademark concerns and invited Seven Stills to work out an amicable resolution. It appears that happened because Seven Stills’ next post about the matter involved a video announcement that its new stout would not appear in a “knock off can you think you saw once” and that the first 100 customers buying the can at the brewery would receive a free In-N-Out burger.
In-N-Out Burger’s letter was witty (note the beer puns), friendly (clearly seeking an amicable resolution), and direct. The letter not only got Seven Stills’ attention, it received the attention of the consuming public. And it offered a pathway to resolution that allowed both parties to maintain their goodwill with the public.
This style of letter seems best suited to enforcing trademark rights against someone who appears to be a misguided but well-meaning fan (or friend) of the offended brand. The first letter I remember hearing about in this genre was from Jack Daniels Properties to Patrick Wensink, the author of a book entitled “Broken Piano for President” whose cover bore a striking resemblance to the Jack Daniels label:
Though it did not contain puns or witticisms, the letter from Jack Daniels Properties was gentle and friendly, acknowledging openly that the recipient was a fan of the brand and finding common ground in his interest in protecting his own intellectual property rights.
At the time this was news (about six years ago), I recall the letter being described as the “most polite” cease and desist letter ever written. In my experience, most trademark lawyers are polite. What makes this letter stand out is how it draws on empathy, both in understanding that the author’s actions stemmed from a love of the brand, and in asking the author to understand Jack Daniels Properties’ need to enforce its trademark rights to preserve the strength of the beloved brand.
Perhaps the fame of the Jack Daniels Properties letter gave some attorneys the idea that getting published could mean more than a journal article (or a blog post). Young lawyers are often cautioned to write cease and desist letters that they wouldn’t mind seeing attached to a pleading filed in court. But did the Jack Daniels Properties letter inspire lawyers to write cease and desist letters they would like to see posted on social media?
After the Jack Daniels Properties letter, we saw cease and desist letters that upped the ante from friendly to witty. Last year, a lawyer from NetFlix sent a cease and desist letter to Emporium Arcade, which had launched a six week pop up bar with a “Stranger Things” theme. As you might anticipate, the letter made many allusions to the ‘80s (and to the show itself):
Again, the letter treats the recipients as the fans they are, trying to coax compliance in a friendly way by keeping them on the brand’s side.
Often when there’s a trademark issue, the marketing department calls the lawyers. Not to shortchange the lawyers on creativity, but in the case of some of these cease and desist letters, I wonder if the lawyer called the marketing department in anticipation that the letter could be a public relations event.
These letters are good illustrations of the old adage quoted above. By remaining friendly in tone, reminding the recipient of their admiration for the brand and enlisting them as an ally in protecting the brand, by injecting levity through puns or humor, these letters may get more cooperation (and more friendly publicity) than the traditional cease and desist and may avoid alienating a brand fan in the process.
Trademarks are everywhere! From the Delta® faucet you use every day, to your favorite Starbucks® treat, and even your favorite G2® ink pen at work (I mean – is there any other acceptable pen?!). Everyone encounters hundreds, if not thousands, of trademarks each and every day! In a boiled down sense, trademarks are just another way of referring to brands. We all have brands that we know and love, but have you ever stopped to think about how those brands came to be?
One of my favorite new podcasts (which is not new, just new to me) is How I Built This®, hosted by Guy Raz and produced by National Public Radio (NPR). The weekly podcast is all about innovators, entrepreneurs, idealists, and the stories behind the movements they built. Since 2016, Guy Raz has had the pleasure of interviewing some big names, such as Mark Cuban, Kendra Scott, Michael Dell, Steven Madden, and L.A. Reid, and has told the stories of how some of Americas’ favorite brands came to be, including Spanx®, Instagram®, Southwest Airlines®, and Starbucks®.
During my binge-listening of the podcast, a consistent theme has emerged: trademarks can really make or break a business and the “trademarkability” of certain words or phrases are how strong brands are built.
For example, I recently listened to the How I Built This® episode featuring Lara Merriken, the creator of LÄRABAR, which Merriken herself describes as a portable and convenient energy bar made of fruit, nuts, and spices, just pure simple real foods that somehow taste indulgent like you shouldn’t be eating them. Nowadays, you can find these healthy and yummy LÄRABARs at almost any grocery or convenience store. However, it’s crazy to think that LÄRABARs almost weren’t LÄRABARs.
As it turns out, Merriken originally planned to name her bars MANABAR because “mana” refers to your vital energy or your chi. However, right before the product launch in 2002, Merriken’s trademark attorney found a problem. There was already a MANNA BREAD trademark registration and, due to both products being in the food industry, Merriken’s attorney thought there may be a likelihood of confusion and recommended that Merriken change the name.
As Merriken was coming to terms with the fact that she had to completely scratch her original idea, a friend said “you know, why you don’t call them Larabars? You make them, they are your bars, and it sounds good and has a ring.” Merriken originally thought no way. However, after thinking about it for a couple of weeks, Merriken finally thought “LARABAR . . . I guess that could work”. And boy did it work. By year two, LÄRABAR had made between $5-7 Million and big companies were taking notice. Merriken was approached numerous times by companies who wanted to acquire LÄRABAR. Then, in 2007, when Merriken was 39, LÄRABAR was finally sold to General Mills (for an estimated $56+ Million).
Merriken’s story is just one of many that shows how naming is one of the hardest and most important things when starting a business and/or launching a product. Working with a trademark attorney to vet a name on the front end can save a lot of money and heartbreak on the back end. If an entrepreneur selects a name that is already in use, common, or descriptive, they run the risk of having their trademark application(s) denied, litigation, having to rebrand, and/or perhaps being limited to a very small geographic scope (which most certainly would affect growth potential). Therefore, to all the existing companies and budding entrepreneurs out there, give us a call and let us help ensure the brands you built are built on a strong foundation.
Oh and if you were wondering where the umlaut (Ä) in LÄRABAR comes from or what it means, well, it doesn’t mean anything at all. Merriken just thought it looked pretty cool!
I have fond memories¹ of drowning my pancakes in all the flavored syrups on the table rack at IHOP. But, on June 4, the International House of Pancakes announced that though it had been IHOP for 60 years, it would be “flippin” its name to “IHOb” in a week:
This was enough to cause some IHOP patrons to flip out:
IHOP’s Twitter account had fun teasing the public, but remained serious about the trademark issues:
Note the change from ® to “sm” as the “p” changes to “B” above.
A week after the initial announcement, IHOP revealed that the “B” stood for “burgers.”
IHOP filed an application seeking to register for use with restaurant services three days later (claiming use and submitting this image as a specimen):
Finally, last week, IHOP confirmed that it was not in fact changing its name and that on July 17, 2018, its 60th anniversary, it would be celebrating by selling short stacks of pancakes for $0.60:
This came as some relief to many of IHOP’s fans. Part of the reason consumers reacted so strongly to IHOP’s ostensible rebranding is because of the goodwill associated with “IHOP.” Usually there has to be a very good reason to risk the goodwill associated with a particular mark or brand that has a strong connection with consumers by changing it.
Sometimes there are good reasons for doing this. Companies may rebrand to start building goodwill from scratch and distance themselves from an undesired association or connotation. Merging with another company, divesting part of the business, or making major changes to the product or service offerings could also warrant a new identity. One example of a rebranding occurred when American International Group rebranded its property and casualty insurance unit after the bailout it received in 2008 to become:
IHOP did not seem to be facing any particular triggering event, so its apparent decision to rebrand was surprising. And many people predicted that the announcement was the prank IHOP later revealed it to be. But then, maybe IHOP’s mini double rebranding (from IHOP to IHOB and back again) is not entirely unique. In 2012, after repaying most of its government loans, American International Group rebranded the property and casualty insurance segment back to AIG and adopted this logo:
Undergoing a rebranding (let alone reverting to a previous brand) is relatively unusual because of the expense involved and the effort required to ‘teach’ consumers to embrace the new identity. Of course many companies update their logos and refresh the look of their promotional materials from time to time. But a complete overhaul can be an expensive, risky process, so it does not happen frequently.
Rather than seeing IHOP’s marketing stunt as a rebranding, perhaps an alternative way to perceive it is as dabbling with a ‘fluid’ mark. Although the conventional wisdom is that marks should always be displayed consistently to facilitate consumer recognition (and attachment), there are some marks that have gained such market strength they can withstand (and perhaps benefit from) some occasional variation in presentation.
For example, Google, Inc. frequently converts its logo as it appears on its search engine page into a design that celebrates a person or event. Last weekend, the “Google doodle” celebrating the final match of the 2018 FIFA World Cup appeared on the search engine’s landing page. Because Google’s logo is so familiar and frequently seen, it can tolerate the variation in presentation, and such variation may help keep the consumers’ attention in a way that strengthens the mark. Perhaps IHOP will occasionally flip the “p” into a “b” in its logo when it wants to promote its burgers.
IHOP has redirected those attempting to follow its new Twitter account @IHOB back to its @IHOP Twitter account. It has confirmed that the campaign was a marketing effort to draw attention to its new burgers, not an actual rebranding. And hopefully those who needed to see the brand in person to be assured of its stability were able to enjoy a $0.60 short stack of pancakes at the same time.
¹Some from childhood; some more recent.
Friday the 13th is once again upon us. The fear of Friday the 13th – paraskevidekatriaphobia – is derived from the Greek paraskevi (Friday), triskaideka (thirteen), and phobia (fear). It has been said that fear of Friday the 13th is the most widespread superstition in the United States today and it has been estimated that as many as 21 million Americans are afflicted with some level of the phobia.
This particular phobia appears to be a product of western culture and there have many theories advanced as to how we have come fear the combination of Friday and the number 13. Interestingly, other cultures have a different take. In Spanish speaking cultures, Tuesday the 13th is considered an especially unlucky day, as it is in Greece. In Italy, it is Friday the 17th that is feared.
How has paraskevidekatriaphobia impacted trademark registrations? Well, in the United States, only one brave company claims FRIDAY THE 13TH as its mark.
You guessed it. The mark inspired by the fictional character, Jason Voorhees, who drowned as a boy at summer camp and came back with a vengeance and a hockey mask, is currently owned by New Line Cinema:
Talk about having a strong mark in an uncrowded field! Congratulations to Jason and New Line Cinema.