Trademark & Copyright Law Blog : Intellectual Property Lawyers & Attorneys : Foley Hoag Law Firm : Washington D.C., Boston

A version of this article, which was co-authored by Anthony E. Rufo, was reprinted in the World Trademark Review.

How can the owners of famous trademarks enforce their rights without being given the dreaded “trademark bully” label? The answer lies in knowing where to draw the line, and in exercising diplomacy in letting people know when the line has been crossed.

Many brand owners tolerate minor third party uses of their marks, including unauthorized parodies, fan clubs and the like, which are undertaken in good faith. But brand owners must act to protect their rights when third parties go too far. Potential red flags include actual confusion, complaints from customers, impact on sales, and formal trademark filings by third parties. In these circumstances, a line has been crossed and trademark owners can and should consider taking action. To protect themselves from bullying accusations, however, trademark owners would do well to emphasize in all of their communications the specific “over the line” factors that drove them to action.

North Face’s 2009 lawsuit against the “South Butt” defendants illustrates these principles. The defendants claimed that their use of THE SOUTH BUTT name and “arc” logo on clothing was a parody of THE NORTH FACE. A parody defense can put brand owners in a difficult position, because no one wants to be perceived as not getting the joke. In fact, a savvy brand owner knows that embracing those in the marketplace who are poking a little fun can often make for excellent public relations. So why was filing suit the right thing for North Face to do? Because the defendants repeatedly tried to register THE SOUTH BUTT as a trademark for clothing, which could have potentially curtailed North Face’s own rights and made future policing efforts against third parties more difficult.

In contrast, the Coca-Cola fan site on Facebook did not cross any obvious lines - it was created by two guys who just happened to love Coke. So what did Coca-Cola do about these individuals representing its brand to millions of social media subscribers? It decided to make the Facebook fan page the “real thing” and sponsor its creators, inviting them to meet with Coca-Cola executives in Atlanta and collaborate on marketing initiatives. This was a brilliant (and popular) strategy because the Facebook page posed no commercial threat, and Coca-Cola was able to support its biggest fans rather than shut down their Facebook site.

So what can you learn from these examples as a brand owner? If an infringer crosses the line and you have to enforce your rights, try to stay ahead of the spin and make sure the public knows you were left with little choice. If no line is crossed, consider whether a marketing-driven approach might be preferable to legal action. While you may not be able to escape the “trademark bully” label in all situations, careful line-drawing and tailored communications can help you manage the risks and, hopefully, portray your brand enforcement efforts in a positive light.

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I am attending the INTA Annual Meeting in San Francisco, and a number of people are talking about the “trademark bully” report released a few weeks ago by the Department of Commerce. During these conversations, it became clear that a few people misconstrued some comments that I made to the press and in my prior blog post . I would like to clarify my views.

While I am not in favor of devoting scarce government resources to address the so-called trademark bullies issue, I have no problem with how the Department of Commerce conducted the study. In fact, I think the Department of Commerce did a good job carrying out the directive of Congress within the mandated one-year period. It is clear that the Department of Commerce, working with the PTO, reached out to a broad range of constituencies and made very significant efforts to obtain input from small businesses as well as trademark owners (which are often larger companies) and organizations representing intellectual property interests. Of the 79 comments received, nearly half were submitted by small business owners or their attorneys. I myself participated in the preparation and submission of comments on behalf of an organization.

In my view, the shortcomings of the “trademark bully” study have nothing to do with how it was carried out, but rather stem from the nature of the assignment itself. We didn’t need a study to tell us what we already know – that some people think “trademark bullying” is a problem and others do not. I certainly do not fault the Department of Commerce for concluding that “it is extremely difficult to determine the extent to which trademark owners may be purposefully overreaching when enforcing their rights, and doing so with sufficient regularity for it to qualify as a significant problem." I agree with that conclusion, and indeed believe that it was the predictable outcome of the study.

The Department of Commerce and PTO did a good job with a bad assignment. Now that the “trademark bully” report is behind us, hopefully their talents can be put to better use. 

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UPDATE:  More Thoughts on the "Trademark Bully" Report: The Department of Commerce did a Good Job with a Bad Assignment

Posted by: Julia Huston on 1:20PM, May 17, 2011 

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The long-awaited study of so-called trademark bullies was recently released by the Department of Commerce. As you may recall from our prior blog post, the study was the result of legislation filed by Senator Leahy of Vermont and signed into law by President Obama on March 17, 2010 (Pub. L. 111-146, Sec. 4). The legislation gave the Secretary of Commerce one year to “study and report to [Congress] the extent to which small businesses may be harmed by litigation tactics [by corporations] [the purpose of which is] attempting to enforce trademark rights beyond a reasonable interpretation of the scope of the rights granted to the trademark owner." (Subsequent to enactment, the words “of corporations” were stricken and replaced by "the purpose of which is" by Pub.L. 111-295, Sec. 6(h).)

Senator Leahy apparently requested the study because he was frustrated that Vermonster, a local brewery of beers and ales in his home state, was being targeted by Hansen Beverage Company, the producer of Monster Energy Drink. The legislation was quickly passed by the House and Senate, before anyone in the intellectual property community had a chance to react or submit comments.

This unfortunate legislation is an example of what lawyers call "bad facts make bad law." Many people questioned the wisdom of commissioning an expensive study of trademark issues during a severe national budget crisis, especially given the other priorities facing the nation. Others felt that so-called trademark bullying did not deserve any more attention than patent bullying or any other kind of litigation-related bullying.

The Department of Commerce dutifully undertook the required study, and publicly released the results on April 27, 2011. Ultimately the study did not tell us anything that we did not already know. The study revealed that some people think that over-aggressive trademark enforcement is a problem, and some do not. The views expressed to the Department of Commerce were largely drawn from the respondents' own anecdotal experiences rather than any consensus among similarly situated constituents. The Department of Commerce ultimately could not answer the question that Congress had posed, and acknowledged that, "Given the limited data available, it is extremely difficult to determine the extent to which trademark owners may be purposefully overreaching when enforcing their rights, and doing so with sufficient regularity for it to qualify as a significant problem."

The Department of Commerce did not recommend any radical changes in trademark law or practice, but instead suggested exploring ways to educate potential trademark litigants and make pro bono counsel available to parties who cannot afford attorneys. While these ideas are certainly uncontroversial, they are also not likely to make a significant difference in the way that trademarks are enforced and defended in the United States.

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Nobody likes a bully, and I think we can all agree that the world would be a better place without bullying. Yet bullying in the schoolyard is not the same as bullying in the courtroom, and the issues can be complex. Is it fair to apply the bully label to any intellectual property owner who seeks to enforce its rights against a smaller company or who ultimately loses the case? If not, how can one tell the difference between legitimate enforcement and so-called bullying? These tricky issues are raised in a recent trademark bill signed into law earlier this month.

On January 28, 2010, Senator Leahy of Vermont introduced the Trademark Technical and Conforming Amendment Act of 2010 (Senate Bill 2968). The primary purpose of the bill was to harmonize the procedures governing trademark registration with respect to applications filed in the U.S. directly and pursuant to the Madrid Protocol, such as to make the grace periods following missed deadlines consistent.These provisions were uncontroversial enough, and were indeed received favorably in the trademark community. But Senator Leahy tacked on a statement at the end of the bill requiring the Secretary of Commerce to “study and report to” Congress The extent to which small businesses may be harmed by litigation tactics [by corporations] attempting to enforce trademark rights beyond a reasonable interpretation of the scope of the rights granted to the trademark owner." S. 2968, Sec. 4(a)(1).

This section became known as the “trademark bullies” provision. It was reported that Senator Leahy included this provision because he was frustrated that Vermonster, a local brewery of beers and ales in his home state, was being targeted by Hansen Beverage Company, the producer of Monster Energy Drink. (Senator Leahy later agreed to remove the words “of corporations,” but the remainder of the language remains intact.)

The legislation was quickly passed by the House and Senate, and was signed into law by President Obama on March 17, 2010 (Pub. L. 111-146).

The notion of conducting a study to determine whether and to what extent brand owners are “attempting to enforce trademark rights beyond a reasonable interpretation of the scope of the rights granted to the trademark owner” is a controversial one. Unfortunately, the bill moved through the legislative process so quickly that the intellectual property community did not have time to comment.

In my view, the fundamental premise of the proposed study is deeply flawed. Trademark owners are entitled to enforce their rights, and doing so does not make them “bullies” even if they are ultimately unsuccessful or the defendants are small companies. It is the role of the courts to weed out unmeritorious cases pursuant to well-established legal standards. In appropriate cases, courts may exercise their discretion to award attorneys’ fees to the prevailing party under 15 U.S.C. §1117(a) or Rule 11 of the Federal Rules of Civil Procedure. The Legislature should not second-guess whether the courts are doing their job. It is the role of the Legislature to make the law, not apply it.

In addition, the proposed “trademark bullies” study raises a host of practical questions and challenges. Who will conduct this study? What will its scope be? Most importantly, what standards will be applied to determine whether a particular litigant has crossed the line and gone “beyond a reasonable interpretation” of the trademark laws?

Finally, who will pay for this study and is it worth the cost? Americans on both sides of the aisle are concerned about the federal government’s budget deficit, and this does not seem to be a good time to “pile on” by commissioning a study of questionable value.

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