Business Law Newsletter

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• Overview of the Delaware Series LLC
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• Ousted WeWork cofounder Adam Neumann is reportedly nearing a settlement in his dispute with SoftBank. He could get $500 million and remain a major shareholder.
• IHOP Challenges USPTO’s Rejection of Federal ‘Flip’d’ Trademark
• A dispute over a federal tax break for businesses could cost Virginia $101 million
• Tim Cook will have to sit for a 7-hour deposition, the latest development in the heated lawsuit between Apple and ‘Fortnite’ maker Epic
• New York lawsuit seeking NRA’s dissolution can go forward, judge rules

Cease and Desist Letters to Enforce Trademark in a Business Name

Trademark owners generally have exclusive rights to use their mark to label or identify their goods and/or services. Accordingly, trademark rights in a business name give the mark owner the right to use the name for commercial purposes, and to prevent competitors from using a “confusingly similar” mark.

Protecting trademarks benefits mark owners and consumers, by discouraging imitators from labeling knock-off goods with an established trademark. One of the most common preliminary methods that businesses use to protect trademark rights in a business name is to send “cease and desist” (C&D) letters to infringing competitors.

Tone and Content

Both the tone and the content of a C&D letter are important factors for a mark owner to consider when reacting to the improper use of a trademarked business name. Depending on the discretion of the writer, the tone of a C&D letter should function to put an infringer on notice that the mark owner’s claim is serious. As such, a C&D letter can frequently take on an aggressive tone.

The content of a C&D letter can also be an effective way for a mark owner to notify an infringing competitor of the validity of their claim for improper use. Specifically, citing relevant cases and/or statutes that support the merit of a mark owner’s claim allows the wrongdoer to investigate the claim (by researching the cited legal authority), and informs the wrongdoer of prospective liability.

The following provisions of the federal Lanham Act provide federal remedies for infringement to the owner of a trademarked business name. Codified in Title 15 of the U.S. Code, these may be useful provisions to cite in a C&D letter.

Trademark Infringement of Registered Marks

First, a C&D letter might cite Section 1114 of the Lanham Act, which allows registered owners of a right infringed to bring a civil action against an infringer. Although a trademark does not have to be registered with the U.S. Patent & Trademark Office (PTO) in order to be valid, the Lanham Act specifically prohibits marketplace competitors from using a mark in commerce that imitates a registered mark. Under this provision, using a mark in commerce that is “likely to cause confusion” is grounds for civil liability.

False Designation of Origin

If a trademark is not registered, a C&D letter might cite Section 1125(a) of the Lanham Act, which provides civil liability for using a mark in commerce that is “likely to cause confusion” as to the affiliation or connection of the mark with another trademark, or as to the origin or sponsorship of the mark by another person. Liability under this provision does not require that any of the marks be registered.

Federal Trademark Dilution Act

The owners of famous trademarks might cite Section 1125(c) of the Lanham Act, known as the Federal Trademark Dilution Act. This provision basically provides federal remedies for the “dilution” of famous marks, and entitles the owner of a famous mark “to an injunction against another person’s commercial use in commerce of a mark or trade name.” Dilution of a famous trademark occurs when another person uses the famous mark in a way that dilutes its uniqueness or distinctive quality.

Domain Names and Protection Against “Cybersquatting”

Modernly, trademark owners often use Internet “domain names” to represent Internet addresses. In this case, trademark owners must also be cautious of people who register domain names that are “confusingly similar” to, and infringe upon, the trademark.

Section 1125(d) of the Lanham Act protects trademarked business names that are also registered as domain names against “cybersquatting.” Known as the Anti-Cybersquatting Consumer Protection Act (ACPA), this provision provides name owners with a civil claim against infringing domain name holders. Under the ACPA, the trademark owner can recover:

1. The domain holder’s profits from use of the mark;
2. The trademark owner’s damages resulting from harm to the value of the mark; and
3. Court costs.

Given the aforementioned protections afforded by the Lanham Act, C&D letters that cite relevant federal law in response to the improper use of a trademarked business name may be highly effective.

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