STARTUPS AND TRADEMARKS: THE CONFUSION AROUND LIKELIHOOD OF CONFUSION

By: Gabriella Falcone

One of the first steps in forming a business is filing a trademark application to protect the company name.  For many, the trademark is registered with no complications.  Others, however, will receive what is called a USPTO Office Action, with one of the most dreaded Office Actions being for “likelihood of confusion.”  [1] In this instance, thoughts of panic race through the mind of the entrepreneur: “What does this mean?  Do I need to come up with a new business name?”  The good news is, not necessarily.

Likelihood of Confusion Simplified

Trademark registration is governed by the Lanham Act, which bars trademark registration of applied-for-marks if such registration would confuse or deceive a consumer as to the source of the goods or services offered by the applicant of the mark.  [2] The reason the USPTO may reject a trademark application for likelihood of confusion stems down to the fact that they believe the applied-for-mark may cause confusion to consumers with a trademark that is already registered to another owner.  The confusion issue does not relate to the trademarks themselves, rather it relates to confusion about goods or services because of the trademarks placed on them.  [3] Stated simply, the USPTO wants to prevent consumers from being tricked into thinking that they are purchasing a good or service from an established, registered trademark holding brand when they are in reality making a purchase from a completely unrelated party.  This is a valid concern and also happens to be the core policy rationale surrounding trademark law, but when taken into consideration with how many registered trademarks exist, one may find it seemingly impossible to come up with a trademark idea that is not at least moderately similar to someone else’s.  It becomes even more frustrating when trying to find the fine line at which this similarity will be considered potentially confusing.

The Analysis

When analyzing likelihood of confusion between two trademarks, the USPTO and courts apply a multi-factor test.  In the litigation scenario, factors relevant to the likelihood of confusion analysis will differ depending on which state and court is conducting the analysis.  However, in the trademark application process, the leading case for likelihood of confusion established thirteen factors relevant to a likelihood of confusion analysis.  [4] Factors relevant to this inquiry include:

1.      Similarity of the marks

2.      Similarity of the goods or services in connection with the marks

3.      Similarity of trade channels used

4.      Care used by buyers when purchasing

5.      Fame of the registered mark

6.      Number and nature of similar marks in use on similar goods

7.      Nature and extent of actual confusion

8.      Length of time during which the marks have been concurrently used without evidence of actual confusion

9.      Variety of goods on which a mark is used

10.  Market interface between the applicant’s mark and the registered mark

11.  Extent to which the applicant has a right to exclude others from use of its mark

12.  Extent of potential confusion

13.  Any other facts probative of the effect of use

The most determinative of each of the factors are (1) the similarity in the marks in their sight, sound, and commercial meaning; and (2) the relatedness of the goods or services described in the marks.  [5] For example, consider the hypothetical scenario in which Starwood, a major hotel chain has a registered trademark in their name, and a lumber and building company called Star Wood applies for their own trademark.  Applying the two major factors, the two marks look similar in their spelling, and only differ by the space in between the two words.  They also sound the same, because they are in fact identical words.  However, as to the second factor, the goods and services offered by the two companies are completely unrelated, as Starwood offers hotel stays and related goods and services, and Star Wood offers lumber and building services.  Even though the names themselves are essentially identical, the fact that the goods and services offered by the two companies are not at all related could weigh in favor of Star Wood registering their trademark. 

How to Overcome a Likelihood of Confusion Rejection

The easiest way for a startup to avoid a likelihood of confusion rejection is to prevent the rejection altogether.  Startups can, with or without legal counsel, conduct trademark searches on the Internet and USPTO database to trace registered trademarks that have the potential to be confusingly similar to their idea.  Doing so creates assurance and peace of mind that, before investing valuable time and financial resources into the trademark registration process, it is actually possible and likely that the trademark can be registered in the first place.  This, however, is easier said than done, and a trademark search does not always reveal every potential confusingly similar culprit. 

In the instance where a trademark search does not reveal a similar mark, yet the USPTO rejects the trademark application anyway, it does not necessarily mean that the trademark can never be registered.  It just means that the applicant will have to do some additional research and work in convincing the USPTO Examining Attorney that the marks are actually different from one another.  To do so, a startup’s best option is to hire an attorney that will submit a convincing argument to the USPTO stating the various reasons why the two marks are, in reality, not likely to be confused with each other.  This can be done by applying the relevant factors, with a particular emphasis on the two most important factors of the marks’ similarity, and the relatedness of the goods and services they cover.  This requires extensive research of the opposing owner’s business, and the products and/or services that they offer.  It is crucial to understand who they are and what they offer in order to make effective and accurate arguments against confusion with the mark that they own.  Additionally, it is equally as important for the applicant to clearly articulate the details of their own business and the products and services that they offer.

Conclusion

Startups have many legal issues to worry about when getting their businesses off the ground, the most daunting being doing everything possible to choose and protect their name with minimal funds.  A likelihood of confusion trademark rejection is intimidating, and certainly does not help ease the startup tension.  It is important to realize, however, that even if a mark is initially rejected, it does not mean the end of the road for that name is approaching.  In many cases, there are options and ways to overcome the rejection; startups just have to know how to do so.