Lanham Act and Why it’s Important for Your New Business

By January 22, 2019 January 21st, 2020 Business Law

What is The Lanham Act?

The Lanham Act is United States federal law that deals with trademarks, service marks and unfair business practices. It was passed in 1946 and is also known as the Trademark Act of 1946.

The law regulates the registration and use of trademarks throughout the United States. It has helped to protect trademarks in the business market and to minimize consumer confusion over the business they are engaging or the product they are purchasing. In short, the Lanham Act is critical to the practice and understanding of trademark law.

The only protection trademarks had prior to the Lanham Act was in state-level common law. Subsequent federal laws proved to be ineffective and even caused confusion. The laws failed to protect marks effectively, and trademarks did not expire even if they were never used. The Lanham Act was a long-time coming to help truly regulate the creation and use of trademarks that protects both the owners of the trademark registration and consumers.

The Lanham Act Subchapters Breakdown

There are four subchapters to the Lanham Act. The fourth subchapter was added after the first three were adopted in 1946.

Of these four subchapters, the first two relate to the regulation of trademark registration. The first deals with the Principal Register and the second covers the Supplemental Register. Topics include the trademark registration process and the qualifications for a trademark registration.

For instance, the mark must be unique. It cannot resemble an existing trademark and the mark cannot be so generic that there is nothing that distinguishes it from another trademark.

The third chapter deals with trademark infringement and the legal remedies available in cases of infringement.

The fourth part, the Madrid Protocol, involves international registration of marks.

Lanham Act

Passing the Lanham Act Test

The key to having an eligible mark is that it distinguishes your company, product, or service from that of your competitors. Therefore, a mark that has already been registered or is too similar to one already registered is ineligible.

The other half of this equation is that your mark is unique. This can be a little tricky, but luckily the USPTO has come up with different categories of marks to help determine whether it passes the Lanham Act requirements. In order of the strongest mark to the weakest mark, they are as follows:

  • Fanciful marks: marks that are completely outside of everyday, generic use. These market your company, product, or service exclusively (e.g., Kleenex or Xerox).
  • Arbitrary marks: marks with common names or items that are not commonly ascribed to that product or service. (e.g., Apple computers or Camel cigarettes)
  • Suggestive marks: marks that suggest what the product may be but don’t completely describe the product. (e.g., Greyhound buses or Q-tip cotton swabs.)
  • Descriptive marks: marks that simply suggest what the product or service is or does. An example would be Quick Bus for a bus service. These are not likely to pass the Lanham Act requirements.

The Difference Between Trademark Infringement and Trademark Dilution

The Lanham Act covers trademark infringement, or the use of your business’s name, tagline, logo, or other distinguishable properties that by your competitors. This protection is available to all trademarks.

For example, if another shoe company decides to put the Nike “Swoosh” logo on its collection of shoes, it is basically stealing the famous Nike logo for their own use, and probably causing confusion in the business market and for consumers.

Most consumers throughout the world recognize the Nike “Swoosh” as belonging to Nike and have an idea of what to expect from that brand. Another shoe with that logo on it will benefit from all the time Nike has spent building its name. It will also confuse consumers. A consumer who thinks she is getting a Nike-quality product might get a poorly-made knock-off shoe that will fall apart in a few days. Trademark infringement, therefore, can harm both consumers and the trademark’s rightful owners.

Trademark dilution occurs when any company that is not a competitor to the trademark holder uses or tarnishes the name of a reputable brand and therefore, as the name suggests, weakens it. In such a case, the law protects the product’s true manufacturer. This form of trademark protection is only available to trademarks that are famous, meaning there is widespread public recognition of the trademark in question.

Tarnishing and Blurring

An example of dilution by tarnishing a trademark would be if a video production company features a Nike “Just Do It” tagline alongside sexually explicit or morally offensive content. In such a circumstance, Nike has the rights to sue the video company for attempting to use its brand negatively.

The other form of trademark dilution is blurring. This occurs when a company from a different sector uses a trademark for an unrelated product. For instance, if a soda company used the Nike “Swoosh” logo on its can or the “Just Do It” tagline in its marketing. A consumer isn’t likely to confuse it and think that the Nike apparel company is making soda. Associating the famous trademark with an unrelated product, however, could diminish the former’s impact.

The Lanham Act “Likelihood of Confusion” Standard

One of the key components of a trademark infringement claim under the Lanham Act is that there is a “likelihood of confusion.” As this is a critical standard, court cases have defined the factors that must be present to satisfy the likelihood of confusion standard. These standards include:

  • The strength of the senior mark
  • Similarities between the two marks in question
  • The similarity of the businesses or products of each respective mark
  • The likelihood of similarity between the business or products of each respective mark
  • Intent involved in adopting the similar trademark (e.g., bad faith)
  • Evidence of actual confusion among consumers
  • The quality of the businesses or products in question

The Lanham Act is the major body of law governing trademarks, but as is the reality with any kind of law, there are also many cases that have created legal standards that must be followed. These cases have interpreted the Lanham Act and in doing so have created an additional body of law to follow.

Trademark law is complicated, but understanding it is crucial to protecting your valuable intellectual property. A solid trademark lawyer can assist you will all of the steps of trademark law and help you best preserve the worth of your business.

Ismail Amin

Author Ismail Amin

Ismail’s legal experience encompasses serving Fortune 500 companies, mid-sized privately held companies, and entrepreneurs. He presently serves as Corporate and Litigation Counsel to large and mid-sized businesses throughout California, Nevada, and Texas, as well as General and Personal Counsel to high-profile hospitality operators in California and Nevada. Ismail’s practice emphasizes Business and Intellectual Property matters, with a focus on healthcare, biopharmaceuticals, biotechnology, and hospitality. Ismail has counseled the firm’s healthcare provider clients in acquiring or selling assets while maximizing return and minimizing risk. He has helped clients acquire or sell over $1 billion worth of healthcare-related assets, including hospitals.

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