THE “R” WORD

A little knowledge can be a dangerous thing. News of the federal cancellation of the Washington Redskins trademark registration has resulted in repeated misinterpretations of the “whats and wherefores” of trademark law.  News commentators, deferring to their so called expert attorneys, sportscasters and social critics, have breathlessly charged up Mount Misunderstanding only to hurl their viewers even deeper into an already fiery volcano.  In one instance, a banner headline read, “Patent Office Cancels Redskins Trademark”.  Flip the channel and you heard a trusted CNBC financial analyst wonder aloud what would happen “now that the Redskins trademark has lost its patent”.

The origin of the confusion lies in failing to first correctly identify the type and then the purpose of the intellectual property involved. Trademarks and patents are as different as a hand is from a foot.  Even though both body parts serve us they do so in vastly dissimilar ways and for wholly different reasons. 

A patent identifies an innovation that either allows us to do something we were unable to do before its invention or in some way or another enhances our ability to accomplish a task. It has life only by virtue of a government license that, for a limited period, recognizes its utility.  In other words, it forbids would be competitors from making, using, or selling the product or process without the explicit permission of the inventor, e.g., a pill that instantly grows a thick and lustrous head of hair.  But a trademark is the name, logo or symbol that both identifies and distinguishes that product or service from all others (e.g.,HairBeBack). Unlike a patent, a mark is capable of being renewed until the end of time.  It better be; you’ll need it to promote your brand. Consequently, the US Patent & Trademark Office (USPTO) has two divergent functions. (A third form of intellectual property, copyrights, is handled by the Library of Congress.)

So what’s the big deal?  That NFL team in the District of Columbia officially lost its name and logo, right?  Wrong. The USPTO cannot and does not cancel trademarks; it can only cancel their federal registration.  Because the US is a common law nation, a trademark becomes legally protectable by its mere use  (e.g., selling HairBeBack across state lines).  There’s also the option of registering the mark with an individual state or even abroad. So contrary to the June 18 New Yorker (Magazine) News Desk, even though team owner Dan Snyder, will still be able to use the name “Redskin”, if you gleefully jumped down that live volcano and emerged with a thousand just printed t-shirts with the Redskins logo or decided to call your semi-professional beach volley team the Redskins or planned to open a chain of Redskins Auto-body shops, you’ll likely face the wrath of Snyder along with his legion of savvy trademark attorneys in court.  And you’ll lose. 

Then again, Snyder may also lose albeit in his case, in the court of public opinion aka the commercial marketplace.  Although the Redskins name and logo read exactly the same as before its registration’s cancellation, it nonetheless has undergone a dramatic alteration. Recall that in our previous visit, I not only described trademarks as identifiers but as magic wands with an immense power to shape both our perceptions and purchases despite the fact that we’re typically unconscious of their influence in shaping our feelings.

Despite Snyder’s mighty effort to maintain the mark’s status quo, the Redskins name and logo are no longer limited to identifying the NFL team that takes on the Dallas Cowboys at least once a season.  Depending on a person’s point of view, it’s either become a symbol of bigotry or one that illustrates the oppressive and unfair result of governmental tampering in the marketplace. With the nation’s increasing tolerance and respect for racial and ethnic differences, it’s reasonable to believe that not as many  folks — fans or otherwise — will be caught proudly wearing Redskins paraphernalia.  We may be witnessing a nationally known brand steadily losing its marketshare along with its shrinking value as a source of revenue for both Snyder and the NFL .  Consequently, no matter the outcome of the team’s formal appeal, the former glory and might of the “R” word may also and up being permanently lost in that raging inferno.

John Banks-Brooks, Associate

ZG Worldwide

June 2014
("Paying The Price," by John Bank-Brooks.)

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Downsizing - a Long-term Solution?

Downsizing is an often used method for a company to increase profits or react to a deteriorating financial situation. If a company is faced with a major decline in business and bankruptcy is being discussed, this may save the company. If a company is just looking for ways to lower operating costs, downsizing will immediately lower the costs of human capital but could set off an unanticipated downward spiral. The corporate leaders need to think about the potential long-term consequences of doing this, particularly if the firm is doing well financially. There are public relations consequences to consider. Do they want to appear greedy and mean-spirited?  Will downsizing set off an exodus of highly-skilled and valuable workers who fear they are next to lose their jobs?   Will customers be afraid to buy a product for fear of not being able to purchase parts and go to a competitor?  A business consulting company like ZG Worldwide can assist in such decision-making by doing a thorough analysis of the situation and providing other alternatives to make the company more efficient. 

My Company May Need a Checkup

Many companies have highly competent MBAs, CPAs, engineers, human resources staff, etc., but business is kind of slow or things can be run more efficiently.  The gut feeling is that something is not quite right, but no one can pinpoint the problems and how to resolve them. Perhaps your people have been too close to what they have been doing and are missing something that a independent consultant can provide.  Medical doctors typically visit another doctor for their own health care issues to ensure they are pursuing the right course of action. It is no different for a company.

Resistance Is Futile

Try to solve this riddle by the end of the first paragraph: What are the things of which we’re seldom aware yet surround us on a daily basis?  What are the things that, from time to time, may cause us and our loved ones to blindly rely on them for our very lives?  What are the things that will tempt individuals to pursue their personal cravings while others will scramble away? What are the things that can make us sniff their promise or, conversely, stink to high heaven? What can make us enthusiastically blow our savings  but within a few weeks make us regret doing so?  Exactly what are those things that can make some of us swear undying allegiance to them while simultaneously make our spouses turn up their nose at the very thought?

They’re called trademarks.  And without them there can be no branding.  And without branding, the terms, “market segment” and “profit maximization” carry little meaning.    

This aspect of intellectual property — too often confused with patents and copyrights — is among the most valuable item a business, association or other organization possesses.  Nonetheless, the overwhelming potency of trademarks in influencing both our perceptions and purchases is frequently taken for granted.  Even more weird, we’re usually unconscious of their immediate power in shaping our lives.

A trademark (or trade name in the case of the mark’s owner ) is a symbol, word, phrase, logo, sound or combination that identifies and distinguishes an entity, product or service.  It’s so critical to companies and their customers as well as to other organizations and their members that other would-be competitors that infringe or otherwise attempt to get a “free ride” on another’s mark can be sued.

Think BMW, the Nike Swoosh, Xerox, Apple, the Golden Arches, Caterpillar, Google, Amtrak, the Marlboro Man, John Deere, Bud Light, ZG Worldwide, Delta (Airlines and Faucets).  The list is not only endless, it’s constantly changing.  Moreover, just as the stock valuations of the Fortune 500 regularly change their financial worth so do marks which are judged, fairly or not, on a company’s perceived marketability whether it’s to the fast food crowd or equally ravenous NFL fans.

In general, newborn trademarks receive their legitimacy in one of three ways: via interstate commerce, formal registration and/or a combination of the two.  In common law countries such as the US, merely carrying the product across state lines makes the mark legally protectable.  However, the vast majority of sovereign nations require the mark to be registered before it becomes enforceable.  Nonetheless, even in the good ole’ USA, registration with either the entity’s home state (e.g., the Alabama Secretary of State) or the USPTO is strongly recommended to put potential users of the same (or confusingly similar) mark on notice.  And no, a registered domain name does not count as a trademark.

Even with state, national and international registration and subsequent use there can be a battle royale over the true ownership or permissible use of a mark by competing corporate behemoths.  Additionally, trademark owners must be on constant guard to ensure that their intellectual property doesn’t lose its distinctiveness, become generic (“Please xerox that for me right away.”) or otherwise lose its near magic power to make us rely, to buy and consume, to make us dream and/or to arouse us to gamely pursue our material and emotional desires.  How that extraordinary power can lose its invisible but very real control over us can be even more fascinating than their initial creation and subsequent use.  Stay tuned.

John Banks-Brooks, Associate

ZG Worldwide

June 2014