Mad, bad and dangerous trademarks

“Nice to meet you, where you been?”

Presumably, unless you are an avid fan of Taylor Swift, an immediate association is unlikely between the above text and Swift or her album 1989.

Nevertheless, those lyrics together with others including “this sick beat” and “could show you incredible things” are some of the latest trademark applications filed by Swift. By turning into trademarks lyrics from her popular album, the singer probably intends to discourage businesses from profiting from unauthorised merchandise by appealing to fans of the album.

Unlike Swift or Katy Perry, however, most business owners cannot afford the legal hassle and expense of securing trademark rights over descriptive words for their businesses and offerings.

Read on if you have limited resources but seek to build a powerful brand.

Is it sensible to adopt a descriptive word as a brand?

Many issues arise when a descriptive name is used in a brand, domain name, company name, business name, trading name, label or trademark (collectively, “trademarks”). This is evident from six considerations or perspectives:

• marketing;
• legal;
• economics;
• psychology;
• style; and
• online presence management.

Marketing considerations for brands

Nowadays many businesses have an online presence for their marketing. Online presence can be generated by creating a website and blog, publishing an electronic newsletter and maintaining social media accounts. According to the Business Characteristics Survey 2012-2013, half of all Australian businesses have a web presence and over a quarter have a social media presence.

Descriptive words are perceived as ideal to use to get to people unfamiliar with a unique trademark. This belief has enriched Google and many in search engine optimisation.  Wikipedia provides this definition of SEO: “the process of affecting the visibility of a website or a web page in a search engine’s ‘natural’ or un-paid (‘organic’) search results.”

Certainly, as the Australian Department of Communication says, “The frequency and location of keywords matters.”

But should businesses feel compelled to compete using merely descriptive words in their trademarks? The management on both sides of the coffee wars said “yes” to that question.

But was their trademark dispute avoidable? If marketing is about getting noticed then it is inevitable that a descriptive word engages competition whereas a unique or original word can more easily repel competition. This is evident more clearly when we consider the law.

Legal considerations for brands

To be easily registered, the Australian Trade Marks Act requires that a trademark should be “inherently adapted to distinguish any designated goods or services” from the goods and services of other businesses.

In law, a trademark (remember we are including a whole bunch of name types in that shorthand) will not be inherently adapted to distinguish if it is a word which other traders in the same industry are likely to want to use in relation to their goods or services.

It follows that from a law perspective a trademark should ideally be unique or inventive and not a word that other businesses in the same industry are likely to want to use.

As the accompanying graphic illustrates, a very clear taxonomy is evident in a range of laws internationally relating to trademarks. The red zone is unregistrable. Green is registrable and highly protectable providing a quality level of legal trademark monopoly.

However, it is possible on certain grounds to obtain registration for a trademark that fits into the red zone. We do it when a client insists or when it is the least undesirable alternative.

But as the next few considerations illustrate, winning a registration battle (i.e. getting registration for a descriptive trademark) does not equate to winning the whole-of-life trademark war.

Economics considerations for brands                                 

In the context of business logic, the weakness of descriptive marks registers when economics and costs considerations are noted.

Registration costs:The trademark registration process that takes at least a year for a typical descriptive mark tends to involve more objections by trademark examiners. The result is higher legal costs due to more letters to examiners, statutory declarations recording a wealth of detail, potential hearings before the Trade Marks Office and even court cases aiming to overcome the objections.

Demand letter costs: Even if the money for specialist practitioners is well spent, and trademark registration finally takes place, the spending on descriptive brands does not necessarily end there. With descriptive trademarks it is common for others in the same or related industries to use the same words often completely innocently. Still, costs then arise in writing demand letters to knock them out as claimed trademark infringers.

Defence costs: Owners of registered descriptive trademarks are also susceptible to attacks from others who believe they have a monopoly or better legal right. They may be prior, concurrent or subsequent users. This means more action by legal practitioners to side-step claims and so more legal costs.

What we have just covered is a pile of hidden costs which accumulate more with descriptive trademarks than non-descriptive marks. They may be costs some can afford. For example, Cantarella Bros, a family business claiming annual revenues of $200 million, reportedly spent $1 million in legal fees in the court battles against Modena Trading to retain its ‘Oro’ and ‘Stelle’ trademarks.

But it is not usually a clever game for smaller-scale businesses and especially startups with fewer personnel, no specialist marketing people and even less of a budget for legal action.

Psychology considerations for brands

Apart from economics, especially for startups, impressing potential customers is an important consideration in trademark selection. From a psychology perspective, a unique name can register well with customers. This was the case for Kodak, Sony, Google and Nike. It can mean that using an invented word is a far more effective strategy for developing a memorable and distinctive brand.

Style considerations for brands

And then there is the question of style. Ventures trade on being “designer” or “exclusive”. It is exactly this factor for which many first world customers are very happy to pay a premium.

Perhaps one could argue that using a mark that incorporates a foreign word like Oro helps create an exotic or mysterious brand.

Nevertheless, in this era of globalisation and high internet connectivity, international markets are more easily reached with e-commerce. Where a word may seem exotic and stylish in one language due to its foreignness, it may just be an ordinary and dull word in another language.

For example, some non-French speakers may associate the language with class and sophistication. Hence a Chinese florist may opt for the word “fleur” (French for flower) as a trademark presuming it to be a posh brand among Chinese speakers. But if the brand expands to France, would a French speaker find a florist named “flower” stylish or chic?

Online presence management

The benefit of non-descriptive names is considerable for online presence management. This is evident for example in sentiment analysis. Businesses and public organisations use sentiment analysis software tools to monitor online trends. Some tools specifically monitor social media data (e.g. Socialmention, Trackur and SAP HANA). Others deal with general data (e.g. Converseon, Luminoso and Survey Analytics).

The usefulness of these tools is compromised or made more expensive when a business uses descriptive names. Irrelevant hits in collected data have to be extracted. This adds to the time, effort and costs involved.

To illustrate, consider the names of two oil companies, Shell and Caltex. A search on Socialmention for the descriptive word Shell results in irrelevant data (e.g. a photo with an actual shell on the beach). In comparison, search results for Caltex on Socialmention will be more immediately relevant as Caltex is original.

Takeaway: legal design for trademark

Brainstorming a trademark is a balancing act. Clearly legal and business logic make descriptive marks rarely suitable. The high cost to legally secure and then protect them usually vastly exceeds the benefits.

The best approach is to find creative friends and professionals to brainstorm and assess whether a new name or mark is truly inventive. The team should include people with legal knowledge who can apply “legal design”. This involves integrating legal and creative knowledge to avoid mad, bad and dangerous trademarks.

Rosana She is a lawyer with Dilanchian Lawyers & Consultants and specialises in trade with China, intellectual property, information technology and general business law.