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Types of Trademarks

There are essentially four slightly different categories of trademark. The first, and perhaps most widely known, is simply a ‘trademark’, which includes any word, name, symbol, device, or combination thereof to be used, or intended to be used, in commerce to identify the goods, distinguish the goods of one manufacturer or seller from the goods of others, and to indicate the source of the goods. See 15 USC § 1127.

The next is a ‘service mark’, which is any word, name, symbol, device, or combination thereof used, or intended to be used, in commerce to identify and distinguish the services of one provider from services provided by others and to indicate the source of the services. See 15 USC § 1127.

Next, is a ‘certification mark’, which is any word, name, symbol, device, or combination thereof to be used, or intended to be used, in commerce with the owner's permission by someone other than its owner to certify regional or other geographic origin, material, mode of manufacture, quality, accuracy, or other characteristics of someone's goods or services. It can also certify that the work or labor on the goods or services was performed by members of a union or other organization. A certification mark is a mark that certifies that the goods and/or services of another meet certain very specific standards of quality. A good example of a certification mark is THE GOOD HOUSEKEEPING SEAL OF APPROVAL, which is placed on kitchen products. In order to obtain and maintain a certification mark, the certifier must set forth very specific standards that the products it certifies must meet, and it must provide that anyone who makes that category of product may apply for certification. Certification marks are unusual in that the certifier never uses the mark on any products of its own; it merely licenses others to do so.

Finally, a ‘collective mark’ is a trademark or service mark used, or intended to be used, in commerce by the members of a cooperative, an association, or other collective group or organization. This category includes marks which indicate membership in a union, association, or other organization, such as the ELKS (ELKS B.P.O.E.) or the UAW. Collective marks are different from ordinary trademarks because they are used by all of the members of a group rather than one specific company or individual. See 15 USC § 1127.

The terms ‘trademark’ and ‘mark’ can and are generically used to refer to trademarks, service marks, certification marks, and collective marks.

It is also important to keep in mind that a trademark is very different from a copyright or patent. A copyright protects an original artistic or literary work; a patent protects an invention. Both copyrights and patents find support for their existence in the US Constitution. As will be discussed shortly, though, trademarks do not enjoy protection based directly on a constitutional provision.

Trademarks - A Universal Phenomenon

Trademarks are a universal phenomenon in that the legal system of almost every nation in the world recognizes some form of identification of the source and quality of goods. Trademarks have been in existence for almost as long as trade itself. Indeed, identification symbols have been found on the goods that were traded in China, India, Persia, Egypt, Rome, and Greece dating back 4,000 years.

In free market economies, trademarks are legally recognized and protected as an inherent feature of the marketplace and consumer protection. Even in the formerly highly socialized economies of Eastern Europe and the USSR, trademarks were legally recognized as contributing to the improvement of quality in goods. A USSR economist was quoted as saying:

The trademark makes it possible for the consumer to select the goods which he likes. This forces other firms to undertake measures to improve the quality of their own products in harmony with the demands of the consumer. Thus, the trademark promotes the drive for raising the quality of production.

From an economic point of view, a trademark is merely a symbol that allows a purchaser to identify goods or services that have been acceptable in the past and reject goods or services that have failed to live up to the desired standards, which will vary from consumer to consumer. Microeconomic theory teaches that trademarks perform at least two important market functions: (1) they encourage the production of quality products; and (2) by allowing the consumer to easily and quickly identify between competing goods and services, they reduce the consumer's costs of shopping and making purchasing decisions.

Indeed, two leading economic theorists have concluded that "trademark law . . . can best be explained on the hypothesis that the law is trying to promote economic efficiency." In 1982, William F. Baxter, then Assistant Attorney General in charge of the Antitrust Division, stated that:

Trademarks play a crucial role in our free market economic system. By identifying the source of goods or services, marks help consumers to identify their expected quality and, hence, assist in identifying goods and services that meet the individual consumer's expectations. . . . [T]rademark counterfeiting . . . if freely permitted, . . . would eventually destroy the incentive of trademark owners to make the investments in quality control, promotion and other activities necessary to establishing strong marks and brand names. It is this result that would have severe anticompetitive consequences.

The contributions of trademarks to effective competition are much greater than any "monopolistic" effects. Identification of product source and quality is the essence of competition. If there are competing sellers, there must be some system of symbols that allows the buying public to discriminate. In reporting the bill that became the Federal Trademark Act of 1946 (Lanham Act), the Senate Committee on Patents pointed out the fundamental basis for trademark protection:

Trademarks, indeed, are the essence of competition, because they make possible a choice between competing articles by enabling the buyer to distinguish one from the other. Trademarks encourage the maintenance of quality by securing to the producer the benefit of the good reputation which excellence creates. To protect trademarks, therefore, is to protect the public from deceit, to foster fair competition, and to secure to the business community the advantages of reputation and good will by preventing their diversion from those who have created them to those who have not. This is the end to which this bill is directed.

In pointing out that no inconsistency exists between enforcement of free competition by the antitrust laws and enforcement of fair competition by trademark infringement laws, the Fifth Circuit stated:

The antitrust laws require competition, not piracy. The essence of competition is the ability of competing products to obtain public recognition based on their own individual merit. A product has not won on its own merit if the real reason the public purchases it is that the public believes it is obtaining the product of another company. There is not now, nor has there ever been, a conflict between the antitrust laws and trademark laws or the law of unfair competition.

Limited Right To Exclude

Undoubtedly, a trademark confers a defined "right to exclude," but it is a limited exclusive right. In the sense of an "exclusive right", trademarks can be categorized as a form of property. "The right to use a trademark is recognized as a kind of property, of which the owner is entitled to the exclusive enjoyment to the extent that it has been actually used." Justice Douglas referred to trademarks as "valuable business assets" and noted the "policy of the law to protect them as assets of a business." Justice Scalia observed that trademarks are the "'property' of the owner because he can exclude others from using them." Similarly, Justice Pitney stated:

Common law trademarks and the right to their exclusive use are of course to be classed among property rights ... but only in the sense that a man's right to the continued enjoyment of his trade reputation and the goodwill that flows from it, free from unwarranted interference by others, is a property right, for the protection of which a trademark is an instrumentality.

While a trademark can be categorized as a kind of "property" right, such a characterization often creates more confusion than clarity. This is because the "property" parameters of a trademark are defined very differently from any other kind of "property." In most cases, the exclusive "property" right of a trademark is defined by customer perception. In the United States, both the creation of rights in marks and the test of invasion of those rights is determined by the perceptions and associations that exist in the minds of the relevant buying public. Therefore, any "property" in trademarks is created and defined by the mental state of customers. Trademark law has many presumptions, assumptions, and a few overriding public policies, but the central key is customer perception. Analogies to other forms of "property", from real estate to patents and copyrights, falter on the basic definition of scope of trademark "property".

The "property" in a trademark is the right to prevent confusion. As one court has explained:

A "trademark" is not that which is infringed. What is infringed is the right of the public to be free of confusion and the synonymous right of a trademark owner to control his product's reputation. . . . The trademark laws exist not to "protect" trademarks, but, as above indicated, to protect the consuming public from confusion, concomitantly protecting the trademark owner's right to a non-confused public.

Remarking on the tort law origins of trademark and unfair competition law, Justice O'Connor remarked:

The law of unfair competition has its roots in the common-law tort of deceit: its general concern is with protecting consumers from confusion as to source. While that concern may result in the creation of "quasi-property rights" in communicative symbols, the focus is on the protection of consumers, not the protection of producers as an incentive to product innovation.

Generally speaking, "[a] trademark owner has a property right only insofar as is necessary to prevent customer confusion as to who produced the goods and to facilitate differentiation of the trademark owner's goods."

Nevertheless, as a form of "property", trademarks can be alienated like any piece of property. Trademarks can be bought, sold, and licensed; however, because they are merely symbols of good will, trademarks must be transferred very carefully, lest the symbol and its good go separate ways. Notwithstanding the fragile nature of trademarks, businesspeople rightly regard them as valuable assets and are willing to pay large sums to buy or license a well-known mark. In speaking of the value of trademark rights, one court said that "theoretically and perhaps practically as well, this hard-earned right is as important as money in the bank."

While a trademark is undoubtedly a significant business asset, particularly in today's world, it is important to remember that simply obtaining a trademark does not entitle the trademark owner to take the trademarked word or phrase out of the world's lexicon. To be sure, particularly in the United States where we hold the First Amendment above reproach by any laws, there are many legitimate and legal uses of a trademark.