Confusingly Similar Trademarks

Confused snail

If a proposed trademark looks or sounds too similar to another mark, and the proposed trademark is in a related area of commerce, it can be rejected as being confusingly similar.

Trademark applicants often think that if their proposed trademark is not identical to an existing mark, then it will be approved. This is not the case.

The law, in general, is all about human mental states and intentions. Trademark law is no exception. Here trademark law acts to protect us (as consumers) from accidentally purchasing the wrong thing. Trademark law also protects us (as sellers) from having unscrupulous competitors mislead our customers. For trademarks, a key issue is: would trademark “A” confuse the customers of trademark “B”?

For complicated “confusingly similar” cases, the courts can consider up to 13 distinct “Dupont factors”  (from In re E. I. du Pont de Nemours & Co. 476 F.2d 1357, 177 USPQ 563, 1973).  However, we can simplify. For most cases, the two biggest issues are Dupont factors 1 and 2:

Dupont factor 1:The similarity or dissimilarity of the marks in their entireties (to a human, who may not be paying careful attention) as to appearance, sound, connotation and commercial impression.

If a trademark examiner, judge or jury considers all of the elements of the marks and thinks that the marks are similar, this is bad. If there is actual real-world evidence that customers are being confused, this is also bad. There is some good news, however.  If similar-looking trademarks are for very different products or services, then the chance of confusion is much less. So this can be a way to escape this problem.

For example, back in the day, a customer looking to purchase music might not be confused by similarly named computer products. So originally, trademarks for Apple records and Apple computers could coexist. (Now not so much, and deals had to be made — which is OK under Dupont factor 10.) This brings us to:

Dupont factor 2:The similarity or dissimilarity of and nature of the goods or services as described in an application or registration or in connection with which a prior mark is in use.” (Here there are various trademark classes, and products and services in different trademark classes are usually considered to be dissimilar.)

USPTO trademark examiners will often just initially consider factors 1 and 2. However, if you get a “confusingly similar” rejection, or someone else raises this issue, it is time to start considering the other Dupont factors.

In defense, arguments might be made that the suppliers use different trade channels (factor 3); that the buyers are sophisticated buyers that are not easily confused (factor 4); or that multiple suppliers use a similar type of mark to sell similar goods or services (factor 6).

Another good option to consider is revisiting factor 2. See if you can narrow the scope of goods or services covered by your mark. If so, perhaps you can avoid overlapping with the goods and services covered by the other mark.

Selling patents

Selling patents is a bit like selling a house

For selling patents, try to create a family of commercially useful patents that are hard to design around and legally strong.  Know your market!

Although patents are best used to help inventors and startups attract funding and protect their products from copycats, sometimes the barriers to commercialization are just too high. Thus occasionally, alternative patent monetization approaches, such as sales, licensing, or litigation; may be a potential alternative. Here I discuss selling patents in a non-litigation context. Licensing and litigation will be discussed in later articles.

Your patents need to have good commercial potential, or else the game stops right here. The considerations include potential market size, market share, and value added by the patents.  The patents have to be “strong” (e.g. not easily invalidated on the basis of prior art, and not have a lot of loopholes).

To understand selling patents, consider the subject from the standpoint of a potential corporate purchaser. With the exception of “blocking patents” (which are relatively rare), for any given single patent, the corporate technologists will usually say “no problem, we can design around it”, and the corporate legal counsel will usually say, “no problem, we will come up with non-infringement/invalidity arguments”. Given this “no problem” input, if there is only one patent, the corporate decision maker will often decide to “risk it”, and if so, there will be no sale.

By contrast, when the corporate purchaser considers multiple patents, the assurances of the technologists and legal counsel decrease.  Technologist assurances that “we can design around it” become more guarded. Legal counsel, realizing that it may have to challenge multiple patents, will add up the potential costs and risks of multiple potential court cases, and also be less reassuring.  This is why, even for the strongest patents, most patent sales take place in the context of a family of related patents.

Patent valuation, and comparables: Although you may be tempted to put your pinky in your mouth and say “one hundred billion dollars”, market realities should be considered.  Just as there are real estate “comps” (average selling prices of houses in a neighborhood) and real estate valuation schemes, so there are “patent comps” and various techniques to measure patent valuation. Corporate purchasers have to justify their expenses to their upper management or their board of directors.  This justification becomes harder as the patent price moves outside of typical comps and valuation schemes. So it is important to be aware of these comps and valuation schemes, and set your expectations and negotiating strategies accordingly.

Selling methods: There are various methods of selling patents, including direct corporate deals (the traditional method), online auction sales, sales using brokers, and sales to NPE (non-practicing entities – formerly big, lately less active). As in any financial transaction, it is helpful to try to position yourself to negotiate from a position of strength (e.g. have financial means to walk away from bad deals) and to approach the transaction in an informed manner.

Patent demand letters

Frustrated patent troll
Frustrated patent troll

Patent demand letters are stressful.  Before responding or ignoring, evaluate infringement, patent prosecution history, ownership, and litigation history.

Has your startup received a “demand” letter asserting that you are infringing on a patent?  Although real infringement of valid patents does occur, and some of these letters are legitimate, many demand letters are sent in less than 100% good faith. The sender may be betting that the startup will settle quickly to avoid litigation costs, regardless of the actual merits of the situation.

Don’t immediately contact the sender, and don’t ignore the letter either.  Instead, calm down and evaluate the facts, preferably with the help of a patent attorney.  Is there a plausible infringement problem or not?  How to tell the difference?  A few common methods are discussed below.

To start, get: 1) a copy of the issued patents discussed in the demand letter, 2) the USPTO prosecution history of these patents, and 3) information about the allegedly infringing product.  If the letter doesn’t provide actual issued patent numbers, or if the letter only cites patent application numbers, the probability that the letter is bogus becomes higher.

Look at the independent claims for each patent (claim 1 is not always the broadest claim), and see if your allegedly infringing product infringes the entire wording of any independent claim. If so, look at the relevant dependent claims for more detail. If the letter argues contributory infringement, combine your product with the other accused product for this analysis, and check if your marketing literature is promoting this combination.

The patent prosecution history for the patents in question, usually downloadable from the USPTO, can be very relevant. This history will often reference if the patent has been used in litigation before; if the patent has been reevaluated by either reexamination or the Patent Trial and Appeal Board (PTAB); and if the patent applicant had to make significant concessions during the patent prosecution history.

The patent’s USPTO assignment records can be used to better understand the relationship between the sender and the actual patent owner of record. This is often obfuscated. What is this relationship, and is the purported patent owner the real patent owner?

If there is a history of litigation, check it out. Patent litigation usually takes place in Federal Courts.  This is usually available through PACER (Public Access to Court Electronic Records) and a number of other sources. Has the patent owner been filing a lot of lawsuits and then settling before the court reaches a decision, or does the patent owner usually win?

There are many other issues that can be explored as well, but this type of information can help you and your attorney better evaluate what your next steps should be.