Trademark Litigation

Trademark Litigation

Ideally, trademark infringement is immediately stopped in its tracks by a well-timed cease and desist letter. Unfortunately, the filing of a lawsuit can become necessary if the parties can’t reach a reasonable agreement. Although thousands of trademark infringement lawsuits are filed a year, only a handful of those cases make it all the way through the trial process.

Still, it is important to understand all the possible stages of trademark litigation so you can be well-informed about the process should your case go to trial. At any point in the litigation, the parties can engage in settlement talks and hopefully prevent the lawsuit from going any further.

What is a Trademark?

A trademark is a word, phrase, symbol, or design that identifies the source and manufacturer of a company’s goods or services. Successfully registering your trademark with the United States Patent and Trademark Office (USPTO) may provide you with the exclusive right to use the trademark in connection with specified goods and services.

In order to register your trademark with the USPTO, you must complete an application and demonstrate that the trademark is currently being used in commerce. Once you receive notice that your trademark has been successfully registered, it becomes your responsibility to monitor its usage and act swiftly against any infringement.

The Elements of a Trademark Litigation Case

The two important elements that a plaintiff must prove are that they own the trademark in question and that the unauthorized use of the trademark is likely to cause consumer confusion. It should be noted that the contested trademark does not have to be federally registered for infringement to occur.  However, having a federally registered trademark gives you a strong legal advantage in the proceedings.

In order to prove ownership, the plaintiff must demonstrate that they were using the trademark in commerce before the infringing party. If the trademark is federally registered, the filing date from the trademark application can be used to demonstrate this. However, the plaintiff must also provide proof that the trademark is still currently being used in commerce, through evidence such as website records, advertisements, dated invoices to clients, and other marketing material.

Secondly, the plaintiff must prove that the misuse of the trademark is likely to cause confusion for consumers. In determining this issue, the courts will consider the similarities of the two trademarks, as well as the similarity of the types of goods or services being offered. If there is a heavy overlap between the audiences of the products being offered, the court is more likely to rule in favor of infringement since it’s more likely that customers will be confused about the source of the goods or services.

The Process of Trademark Litigation

Frequently the trademark owner’s first step upon infringement is to send a cease and desist letter.  Such a letter calls for a halt to all infringing activity and warns that further legal action will take place if the offending party does not comply. If a cease and desist letter is ignored, or the receiver of the letter refuses to stop infringement activity, the trademark owner will make the decision whether to move forward with a lawsuit. Keep in mind that cease and desist letters are less likely to be ignored if they are sent by a litigation trademark attorney, and not just the business owner or a lawyer that doesn’t typically litigate trademark cases.

The Filing of the Complaint

Trademark litigation begins when a complaint is filed by the plaintiff. This complaint will outline the plaintiff’s claim to the trademark, and will explain and demonstrate the alleged misuse of the trademark by the defendant. The claim will request an injunction to stop the infringement, and may also seek other damages, including the profits made through the unauthorized usage of the trademark.

In federal court the defendant will be served with the complaint, as well as a summons to appear in court, and will have 21 days to file a response or a motion to dismiss the case. If the defendant fails to respond by the deadline, the plaintiff is permitted to seek a default judgement. Most default judgements occur because the defendant does not file a responsive pleading by the deadline. Before a default judgement takes place, the opposing counsel is likely to reach out to the plaintiff to try to settle.

It is also during this stage that the defendant can dispute the claim on procedural grounds. A defendant might argue that the court does not have proper jurisdiction to rule on the case, or that the plaintiff’s claim was defective in some way.  The defendant can also file a motion to strike if some portion of the complaint is invalid such as the plaintiff seeking damages that are not available in trademark cases.

If the plaintiff is sustaining heavy damages because of the infringement, they may be able to obtain a preliminary injunction at the outset of the case, which would force the defendant to cease all infringing activities until a final decision is reached. In order to be granted a preliminary injunction the plaintiff must prove:

  • They are likely to win the lawsuit based on the merits of the case.
  • They are likely to suffer irreparable harm if the infringement does not cease immediately.
  • The balance of harms is in the plaintiff’s favor. This means that the plaintiff would need to prove the damage that would be done to their business if an injunction is not granted outweighs the harm an injunction would cause the defendant.
  • The granting of the injunction is in the public interest.

The Discovery Process

Once the defendant responds to the complaint, the discovery process begins. During this phase, the lawyers seek all the information they can about the case. They can request documents, issue interrogatories and requests for admissions, and depose relevant parties about the case. Given the breadth of information sought during this period, this process can last several months. At this point, critical facts will come to light that sway the direction of the lawsuit. Many trademark lawsuits end during this stage, as the parties opt to settle based on the information gleaned during this process.

If the discovery process is completed and neither party wishes to settle, either party can file a motion for summary judgement. This argues that there are no remaining questions of fact pertinent to the case. The case could end here if the motion for summary judgement is granted. If not, the case will move to the trial stage.

The Trial

Trademark trials typically last four to five days. Both parties will present their best evidence and question witnesses in an attempt to win their case. The opposing counsel has the opportunity to cross examine any witnesses presented by the other side and can interview experts about relevant issues pertaining to the case. The outcome is then decided by the judge or jury.

The main goal of a trademark litigation is often to seek an injunction against the infringing party and prevent any further unauthorized usage of the trademark in the future. Depending on the circumstances of your case, you may be eligible to seek monetary damages. These damages may include:

  • The profits earned through unauthorized usage of the trademark in question
  • The costs the plaintiff incurred from any corrective advertising needed to restore the value of the trademark
  • The costs of the trademark action
  • Royalties the defendant would have reasonably paid had the trademark been licensed
  • Any damages the plaintiff sustained as a result of a diluted trademark
  • Attorney’s fees in exceptional cases

Examples of Trademark Litigation

Below are examples of trademark infringement lawsuits from companies that refused to back down in court.

  • Monster Energy v. Thirsty Beasts: Monster Energy sued Thirsty Beasts for their use of the phrase “rehab the beast.” The company argued that consumers were likely to confuse the slogan with Monster Energy’s trademark, “unleash the beast” and think the beverages were coming from the same source. The court ruled in favor of Thirsty Beasts.
  • Walmart v. Variety Stores: $95.5 million in damages was awarded to Variety Stores after they sued Walmart for infringement. Variety Stores successfully demonstrated that Walmart had infringed on their trademark “The Backyard,” “Backyard,” and “Backyard BBQ” in advertising and marketing materials.

Common Defenses in Trademark Litigation

If the defendant can successfully mount one or more of these defenses, they may be able to justify the use of the trademark.

  • Fair Use: The fair use doctrine allows for the unauthorized use of trademarks in certain instances, such as truthful advertising comparisons, commentary, or parody.
  • Unclean Hands: This defense can be used if the plaintiff behaves poorly or dishonestly during the trademark litigation process. In such cases, the court may determine that punishing the defendant would be unwarranted.
  • Laches: If the plaintiff took an unreasonable amount of time to act on the infringement, the defendant can argue that the delay caused them prejudice, leading to a dismissal of the claim. This can also result in limits being placed on the claim.

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