The Value Of Enforcing Trademarks

Early in my career, I worked with large companies, including a Hollywood studio and major automotive brand who spent millions of dollars annually to enforce their trademark rights. Since I began practicing law, that budget has only increased. As trademark owners with considerable investment in their brands, these companies clearly understood their obligation to stop third parties from using marks identical, or substantially similar, to their own mark. Otherwise, there was (and is) a risk that trademark rights may be diluted or completely lost.

For smaller businesses, the investment in trademark enforcement can seem out of balance. While a large beer producer can easily justify the value of an action against any third party that tries to use or register a mark even remotely close to theirs, smaller microbrewers may find that same endeavor to be a considerable expense against their bottom line. Larger companies have more resources, and therefore can easily scare off any smaller business with the threat of time-consuming and costly litigation. And even though a smaller company’s mark may not be likely to cause confusion, a big company is likely to take action anyway.

Clearing The Deck

The strategy used by these larger companies can be described as ‘clearing the deck.’ Essentially, the brand owner is making sure that the federal trademark register includes no current registrations that are even remotely close to their marks. In this way, it becomes easier to enforce its rights. If the big company is the only one with a mark that includes a particular term, the argument is that any third party mark using that term is necessarily going to cause confusion.  

In a way, this creates a self-fulfilling cycle. By scaring away potential smaller companies, the large companies can keep the record clear. Then, if there is a challenge by another, similar-sized competitor, it’s easier for the brand owner to claim they are the only ones using that mark, or any similar mark. Finally, it leaves little opportunity for smaller companies with fewer resources to argue a lack of confusion.

Why Smaller Companies Must Consider Enforcement as Part of Brand Investment

To the smaller business, “clearing the deck” for their own brand, or defending their brand against a larger company who is aggressively protecting  its brand,  seems excessive. However, companies with the resources to enforce their strategy have calculated enforcement as part of  the overall investment in its marks. 

The value of a brand depends on a number of factors, including the distinctiveness of the mark, how widely recognized the mark is, the sales volume the mark draws in, and the number of similar marks in the marketplace for similar goods and services. In the end, that calculation determines the dollar amount that a large company is willing to invest to protect their brand. 

Even when it’s obvious that no one would confuse the brands, some brand owners seem to take on the role of the big bully. The smaller businesses is free to defend their position.  And in many cases, they might be exactly right – there is no potential confusion or infringement. 

However, in such a case, being right is simply not enough. A small business must have a strategy for the defense of its mark, and the resources to pursue that course of action. Unfortunately, every situation is different and there are no easy answers. 

If you have a question about your brand, including enforcement strategies, contact an experienced trademark attorney who understands the tactics of the larger companies.