BHL Bogen

BHL Bogen
BridgehouseLaw LLP - Your Business Law Firm

Tuesday, October 11, 2016

Trademark Enforcement

A trademark is a word, phrase, symbol or design, or a combination of words, phrases, symbols or designs, that identifies the source of goods of one party from those of another.

A service mark is the same as a trademark, except that it identifies and distinguishes the source of a service rather than a product. 

The term “trademark” is often used in a general sense to refer to both trademarks and service marks.

Trademark Enforcement.

Effective trademark protection is critical to maximizing and protecting the value of a company’s brand as trademarks are an important business asset built through goodwill and reputation.  However, trademarks can be subject to misuse through infringement, dilution, cybersquatting, unfair competition, false advertising, and tarnishment.  Even a vigilant trademark owner may not find all the possible misuses of a trademark by competitors and other members of the public.  However, a failure to enforce a trademark by monitoring the mark for misuses will result in a weakening of the mark and loss of distinctiveness, which can lead to a loss of the trademark.

In 2015, the U.S. Customs and Border Protection (CBP), a component of the Department of Homeland Security (DHS), seized 28,865 shipments containing counterfeit goods, which was a 25% increase from the year prior.  The purpose of the CBP is to secure the U.S. borders, which includes the protection of intellectual property rights, which in turn, guards against the infringement of U.S. patents, copyrights, and trademarks. 

So what authority does the CBP have to enforce trademark infringements?

At the border, the CBP, as an administrative agency with law enforcement powers, is authorized to exclude, detain, and/or seize imported merchandise that infringes federally registered and recorded trademarks and copyrights and/or is covered by an exclusion order issued by the U.S. International Trade Commission.  In this regard, the CBP recognizes three levels of infringement in its enforcement of trademarks: counterfeit marks, copying or simulating marks, and restricted gray market goods (i.e. parallel imports).

Counterfeit Marks.

Pursuant to Title 15 U.S.C. § 1127, a counterfeit mark is defined as a spurious mark that is identical with, or substantially indistinguishable from, a federally registered and recorded trademark.  Merchandise imported into the U.S. bearing marks “counterfeit” of a federally registered trademark recorded with CBP shall be seized and forfeiture proceeding instituted pursuant to § 526(e) of the Tariff At of 1930 (19 U.S.C. § 1526(e)), as implemented by 19 C.F.R. § 133.21.  Criminal remedies are referred to and prosecuted by the relevant U.S. Attorney who may seek the trademark’s owner’s cooperation to prosecute the criminal action, including to assist in the investigation, act as a witness, or file a victim impact or other statement in support of the allegations, with a request for punishment. 

Copying or Simulating Marks.

Pursuant to 15 U.S.C. § 1124, as implemented by 19 C.F.R. § 133.22, a copying or simulating mark or trade name is one that so resembles a recorded mark or name as to be likely to cause the public to associate the copying or simulating mark or name with the recorded mark or name. 

If CBP believes that goods bear a mark that copies or simulates a recorded mark, the goods are denied entry and detained for thirty (30) days, during which the importer can attempt to establish that the goods should be permitted entry.  After thirty (30) days, either entry is permitted if the objectionable mark is removed from t he goods, or the trademark owner consents to the importation of goods.  If the importer has not obtained release of the goods within the thirty (30) day detention period, the goods are seized by the CBP and forfeiture proceedings instituted.

Restricted Gray Market Goods.

Gray market goods are defined as foreign-manufactured goods bearing a genuine trademark or trade name identical with, or substantially indistinguishable from, one owned and recorded by a citizen of the U.S. or corporation or association created or organized within the U.S., which are imported into the U.S. without the authorization of the U.S. trademark owner.

The CBP provides limited protection to trademark owners against importation of certain gray market goods pursuant to 19 U.S.C. § 1526(a), as implemented by 19 C.F.R. § 133.23.  Only trademarks and trade names that are recorded with CBP are entitled to gray market protection.  The CBP detains and seizes gray market goods bearing a federally registered trademark if both: the trademark is recorded with the CBP and the foreign and U.S. trademark owners are not the same person or under common ownership (means individual or aggregate ownership of more than 50% of the business entity) or common control (means effective control in policy and operations and is not necessarily synonymous with common ownership).
The Exception to the Gray Market Regulations.

The Lever-rule creates an exception to the CBP’s enforcement limitations concerning gray market goods.  Pursuant to the Lever rule, gray market goods may be refused entry if they are physically or materially different from the goods authorized for sale in the U.S.  The purpose of the Lever rule is to protect trademarks recorded with the CBP, even if the owner is a foreign company, or a U.S. company and the goods are manufactured by a foreign affiliate.

When applying for Lever-rule protection for specific products, a trademark owner must (1) state the basis for this claim with particularity; (2) support the claim by competent evidence; and (3) provide CBP with summaries of the alleged physical and material differences that exist between the merchandise authorized for sale in the United States and those intended for other markets.

“Physical and material” differences between merchandise authorized for sale in the United States and those intended for other markets may include, but are not limited to:
  • The specific composition of both the authorized and gray market product(s) (including chemical composition);
  • Formulation, product construction, structure, or composite product components, of both the authorized and gray market product;
  • Performance and/or operational characteristics of both the authorized and gray market product;
  • Differences resulting from legal or regulatory requirements, certification, etc.;
  • Other distinguishing and explicitly defined factors that would likely result inconsumer deception or confusion as proscribed under applicable law.
Protection.

Most infringement actions begin with cease and desist letters sent to an infringer demanding that the infringer stop using the mark at issue.  Infringement lawsuits are expensive and many members of the public will stop infringing if they become aware that a mark’s owner is lawfully asserting their trademark rights. 

If an infringer persists, a lawsuit to stop the misuse may be filed.  If the mark is registered with the USPTO, a lawsuit can be filed in federal court.  If the mark is unregistered and the infringing mark is being used in the same state, the dispute may be resolved in state court.

Another option is to record a registered U.S. trademark with the CBP which places the registered trademark on the CBP’s watchlist.  Whenever goods proceed through Customs, those goods will be checked to verify they are not infringing any of the trademarks on their list.  Goods that may be offending will be pulled aside for review, and if trademark infringement is found, the seized goods will be destroyed. 

There is a $190.00 fee applied to each trademark recorded with the CBP, however the trademark is recorded for a term of 20 years.  The application may be filed electronically with the following information included:
  • The name
  • Complete business address
  • Citizenship of the trademark ownership
  • The place of manufacture of goods bearing the trademark to be recorded
  • The name and address of person or companies authorized to use the trademarking
  • The identity of any parent or subsidiary companies or other foreign companies under common ownership or control which uses the trademark abroad
  • A status copy of the certificate of registration certified by the USPTO showing title to be in the name of the applicant
For more information about obtaining or protecting a trademark, please contact BridgehouseLaw.

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