Many legal issues exist that can impact a company, especially a new entrepreneurial venture. One such legal issue pertains to the trademark and the less known trade dress. The power of the trademark is severely valuable to any business. The trademark is what establishes company identity and drives brand loyalty by consumers. The purpose of the trademark is to identify a product; and, certain regulations are in place in order to protect, not the product, but the words and symbols that identify the product. “Any word, symbol, slogan, logo, device, or product design that uniquely identifies a product can be a trademark,” (1).
Trademark protection resides in the regulations of certain aspects of law. In common law, a court will use a precedent case to determine the validity of trademark usage. Federal law provides the necessary methods of obtaining trademarks and what should be done in the event of infringement. There are state laws that further implement and interpret the regulation of federal law. The global economy makes it difficult to retain trademark protection once borders are crossed. Many foreign treaties are in place in order to provide international trademark protection.
Acquiring trademark protection is not extremely difficult. For any individual or company wishing to obtain the rights associated with protection, a trademark must be in active use or in a status of intent. In order for active use to be considered, it must be commercial, meaning actual business transactions must transpire. In addition, the trademark must be physically associated with the product, namely, imprinting a label. Token use, a display of a trademark without commercial transaction, is not enough to invoke the protection of the trademark. If, however, the individual or company truly intends to use the trademark at a future date, a specific application can be filed. This provides a six month allowance to retain the mark; if needed, additional six month increments may be requested for a total of up to three years.
The other aspect of trademark use has to do with trade dress. “Trade dress is the overall appearance of a product a common type of trade dress is product configuration,” (1). It has been established by the Supreme Court that the protection of trade dress resides in its nonfunctional, inherently distinctive nature. The noted case in recent American history, Two Pesos, Inc. v. Taco Cabana, Inc. 505 U.S. 763 (1992), set the precedent for the standards of trade dress protection. Another scenario of trade dress that comes to mind is the UPS package shipping company and the brown employee uniforms.
Similarities of trademark and trade dress may sometimes cause confusion. “If it is likely to cause deception or confusion as to: the source of the goods [or] the affiliation or connection with a company,” (1). A prime example of such a situation is the recent settlement between major conglomerate, The Scott’s Company, and the relatively new entrepreneurial venture, Terracycle. Infringement can be detrimental to any business, and potentially be a cause close company doors. This is the stand that the Scott’s Company took. The products in question were The Scott Company’s Miracle-Gro and Terracycle’s organic worm poop fertilizer. In this case, Scott Company accused Terracycle of infringing upon the trade dress of one of their primary fertilizer products, causing consumer confusion, and for potential reputation damage due to suggestive information of selling a superior product. Terracycle responded by initiating a website, SuedbyScotts.com, that attempted to use the case for publicity of their business-hindering “David and Goliath” situation. The site created a buzz and the media published many articles on the case. Although the publicity certainly worked in Terracycle’s favor, it was a huge financial burden. Litigation lasted for quite some time and distracted smooth business. In the end, a settlement was made between the two companies. The Terracycle company agreed to remove the website and change their product design in response to The Scott Company’s demand.
Whether or not Terracycle would have lost the case in court cannot entirely be known. However, the trade dress precedent that was set by the Two Pesos v. Taco Cabana case may very well have been on The Scott Company’s side. The company wanted to be sure that consumers would not confuse affiliation between the two companies. Still, green and yellow are significant colors in the gardening industry; not to mention, the Terracycle products specifically labeled their products to include words like, “worm poop”, which cannot be confused with a synthetic Miracle-Gro. It goes to show how easy it is to fall into the trap of infringement, intentional or not. As a new business venture, the legal process and potential battle can be quite crippling, financially. It is important to weigh the time and money needed to be put out in ongoing litigation against settling in the first place. In Terracycle’s case, publicity certainly balanced in their favor.
(1). Gilbert, Jill. The Entrepreneur’s Guide to Patents, Copyrights, Trademarks, Trade Secrets, and Licensing. The Berkley Publishing Group, New York. 2004