February, 2011Imagine you are the director of a national nonprofit organization based in Santa Ana called “Jobs for the Needy.” Your organization has provided job assistance to the homeless for twenty years and has earned a reputation for being an effective organization that uses its donations efficiently.
While surfing the web, you come across another organization called “Jobs for Those in Need” that provides similar services to your organization. It is based in Los Angeles and appears to have launched in the past year. The new organization has set up a website to collect online donations. After a little investigating, you discover through your staff that loyal donors who once contributed annually to your organization are now making the mistake of contributing online to the new, less established organization. Significant sums of money that were supposed to support your organization are now being diverted into the coffers of another. What do you do? As the director, it is time to take control and assert your organization’s trademark rights.
What Is A Trademark?
If you are an established organization, you already have trademark rights at a minimum in your organization’s name. A trademark or “mark” is a word, symbol, or phrase used to identify and distinguish the goods or services of one provider from those of another. Examples of marks used by nonprofits include the SAVE THE CHILDREN® name, the Red Cross design owned by the American Red Cross, and the LIVE STRONG® slogan used by the Lance Armstrong Foundation.
As A Trademark Owner, What Kind Of Rights Do I Have?
In general, trademark law gives a trademark owner the exclusive right to use a particular mark on specific category of goods or services. The primary purpose of trademark law is to guard against public confusion in connection with providers of similar products and services.
There are two ways to acquire trademark rights in the United States. First, one may acquire state common law rights just by being the first to use the mark in commerce. Second, one may acquire federal statutory trademark rights by being the first to register the mark with the U.S. Patent and Trademark Office (PTO). State common law rights endure perpetually so long as a mark is in use. These rights, however, are limited to the specific geographic areas where the mark is being used. Federal rights are also perpetual, so long as the mark is in use and the maintenance fees are paid. The advantage of federal protection, however, is that it is not limited by geography. Instead, rights extend throughout the entire United States.
Because of the advantage of federal rights over state common law rights, many established nonprofit organizations have filed and obtained federal protection. Note that the three trademarks listed above, namely SAVE THE CHILDREN, the American Red Cross logo, and LIVE STRONG, have all been federally registered by their respective owners and, hence, may bear the ® symbol.
How Can I Prevent Others From Using My Trademark?
In the example given at the beginning of this article, the established organization “Jobs for the Needy” would have a strong case of trademark infringement against the startup organization “Jobs for Those in Need.” The marks are similar and the services are identical. Even if the older organization does not own a federal registration, it could rely on its state common law rights since Santa Ana and Los Angeles are in the same Southern California region. Any person or business that uses a mark in a way that is likely to result in customer confusion is potentially liable for trademark infringement.
An important tool in the trademark owners’ arsenal is the “cease and desist” letter. Sent from the organization or a trademark attorney, the letter generally includes an outline of the trademark owner’s case for infringement and a demand that the infringer “cease and desist” all use of the infringing mark. Frequently, these letters avoid costly litigation and are the preliminary steps toward negotiating a settlement agreement. If the infringer fails to respond or refuses to comply, however, you should contact an attorney, if you have not already, and consider filing a lawsuit.
Is There A Downside To Asserting My Trademark Rights?
Before sending a “cease and desist letter,” a nonprofit organization should consider possible negative consequences of its actions. Other than the obvious burden of legal costs, nonprofit organizations, in particular, may garner unintended publicity by the threatening of legal action against another nonprofit. In addition, some donors may be less inclined to contribute to an organization in which the donations may be supporting a court battle. You may wish to take preemptive action by informing your donor base of the business reasons for filing the case.
Another way to combat negative publicity would be to seek out pro bono representation from a law firm. Many law firms are willing to waive their legal fees for nonprofit organizations and charge only the actual costs of the case. In such a situation, you could reassure your donors that their contributions are going primarily to charitable services, rather than legal fees.
Conversely, there is a downside to not asserting your trademark rights. In addition to possible lost revenue from confused donors, the infringer could later claim that you consented to its use of a similar name by taking no action. Hence, an organization needs to weigh the costs and benefits of each action.
How Do I Make Sure I Am Not A Trademark Infringer?
No one wants to be at the receiving end of a lawsuit. Hence, when developing a new campaign or event, your organization should conduct a trademark clearance search on the potential mark. This is the process of searching for pre-existing trademarks and analyzing the search results to determine whether the proposed mark is safe to use.
An initial clearance search may be conducted inexpensively by searching the Internet for similar marks currently in use. In addition, the U.S. Patent and Trademark Office website has a free searchable database of federal trademark applications and registrations, located at http://www.uspto.gov/main/trademarks.htm. This is an excellent starting point to conduct an initial clearance search.
A trademark lawyer can provide an organization with a much more thorough clearance search and legal assessment. Since such searches can be costly, consider inquiring if a firm offers pro bono trademark services.
Trademark law exists to protect the goodwill of your organization. A strong trademark is closely tied to a strong reputation; both are vital to a successful nonprofit organization.
Tirzah Abé Lowe specializes in Trademark Law and has been an attorney at Knobbe, Martens, Olson & Bear, LLP since 1998. Gregory Tse is currently a third year law student at University of California, Hastings College of Law. This article was first published in Nonprofit Matters, a newsletter of the Public Law Center.
Texas Nonprofits® is a registered, trademarked nonprofit organization.