Overview of trademarks.

Here are the trademark basics with which you need to be familiar as you delve into intellectual property issues.

As noted in last month's column, recent developments in both association management and the law have made it important for most association executives to be familiar with "intellectual property" concepts, particularly in the copyright and trademark arenas. Arrangements with member-service providers, operation of Web sites, and many other endeavors are predicated on the use and exploitation of intellectual property. Having focused on copyright basics last month, Rob Wynbrandt now turns his attention to trademarks.

- Jerald A. Jacobs, ASAE General Counsel

The Chicago Tribune recently ran an interesting Associated Press story regarding a legal dispute that has arisen in connection with the 30th anniversary of the "Summer of Love" in San Francisco. For some, the article was of interest because of the inherent irony in a nasty legal battle over the ownership of a term that once connoted peace, love, and flowers in your hair. For intellectual property types, however, this article also was noteworthy due to its repeated and erroneous reference to Summer of Love as a copyrighted term. As noted in last month's column, copyright law protects "original works of authorship," such as books, movies, songs, and computer software; trademark law protects "any word, name, symbol, or device, or any combination thereof," such as Summer of Love, that is used to identify the source of particular goods or services.

Four kinds of marks. Although the term trademark commonly is used, there actually are four distinct kinds of marks:

1. trademarks - which signify the sources of goods;

2. service marks - which signify the sources of services;

3. collective membership marks - used by members of an organization or group to indicate affiliation; and

4. certification marks - used to signify that certain characteristics of the relevant goods or services meet the standards of an independent third party.

The marks most commonly owned by an association - its name, logo, and initials - often function in three of these four capacities: as a trademark for goods such as magazines and other printed materials; as a service mark for trade show, educational, and promotional services related to the association's industry or profession; and as a collective membership mark for use by association members to signify, their affiliation. While many associations also are owners of certification marks, technical requirements of trademark law usually compel associations to adopt certification marks that are distinguishable from their other marks.

Trademark ownership. As in the copyright context, some association executives operate under the misconception that a government filing or approval is required before a name, logo, or other "source identifier" may be protected under trademark law. The good news here is that under United States law, trademark rights accrue simply through the use of a mark in commerce. Of course, the association's mark should not be confusingly similar to another party's mark so as to infringe upon the other party's rights.

Registration. Also as in the copyright context, federal registration of an association's trademark is not mandatory but does yield certain important benefits. Most notably, those benefits make it much easier and less expensive for the association to enforce its trademark rights against infringers.

Decisions as to whether an association should seek federal registration of a name, a logo, initials, or other valuable marks call for an informed cost-benefit analysis, taking into account whether the mark is registrable. For example, many associations are surprised to learn that the U.S. Patent and Trademark Office will not register their names due to descriptiveness concerns that may or may not be overcome. The "Widget Manufacturers Association," for instance, perfectly describes a group of widget manufacturers and likely would be denied registration by the Patent and Trademark Office absent unusual facts.

Unfortunately, the trademark registration process bears little resemblance to copyright registration. The government filing fee is not $20, but rather $245 per "class" under an international classification system in which every conceivable use of a mark falls into one or more of the 42 classes for trademarks and service marks, the class for collective membership marks, and the 2 classes for certification marks. In addition, whereas association staff typically can handle the copyright registration process without extensive background knowledge, the trademark registration process often involves technical legal issues that require the services of experienced legal counsel. Finally, whereas copyright registrations typically are secured within a matter of a few months (and are effective retroactively as of the filing date), federal trademark registrations, under the best of circumstances, usually are not issued for at least eight or nine months after the application is filed. The application must first be approved by a Patent and Trademark Office examining attorney and then by the public through notice and a 30-day comment process that may result in the filing of opposition. It is not uncommon for applicants to wait up to two years or longer before their applications mature into federal registrations.

Notice. Again, as in the copyright context, associations are not legally required to use trademark symbols adjacent to their marks, but there are good reasons to do so. It is imperative that the association understand the distinction between the federal trademark registration symbol ([R]) and the common law trademark symbols used in conjunction with unregistered marks (TM or SM). With respect to federally registered marks, the penalty for failing to use the registration symbol can be severe. The federal Trademark Act specifically provides that, in any trademark infringement suit by "a registrant failing to give ... notice of registration [for example, via use of the [R] symbol], no profits and no damages shall be recovered ... unless the defendant had actual notice of the registration." With respect to unregistered marks, the TM and SM symbols are of no real legal significance, but they do often serve as effective scarecrows that inform the public of the owner's seriousness regarding trademark protection. It also is important that the owner of an unregistered mark refrain from using the [R] symbol prematurely, so as to avoid any defense by the alleged infringer that the owner has acted unethically and therefore should not be allowed to prevail on the infringement claim.

International protection. In general, U.S. trademark owners cannot assume that their marks will be protected in other countries without extensive use and/or registration in each of the relevant countries. This area of the law is evolving, however, and there has been some recent progress in international trademark protection. For example, as of April 1, 1996, a single registration is available to cover the 15 member countries of the European Union, and Congress is considering legislation that would allow for a single, multinational application for trademark registration.

Licensing. One of the most common legal arrangements for an association is a trademark license (although the licensing document often is given a title such as "Royalty Agreement" or "Affiliation Agreement"). At its core, the arrangement involves the association's permission for another entity to use the association's name, logo, or other mark under certain terms and conditions. For example, in a royalty agreement, a third party might be permitted to use the association's name and logo in conjunction with the sale of goods or services. to association members; in exchange, the association might receive a percentage of gross revenues. Similarly, an association might allow affiliated organizations such as chapters to use its name and logo as long as the chapters meet the specified criteria.

Properly structured trademark licensing arrangements can generate nondues revenues for associations and strengthen association relations with their constituencies and the public. Improperly structured trademark licensing arrangements can create unnecessary tax problems, weaken an association's image, or, at worst, result in the association's loss of its trademark rights (under a provocative-sounding but deadly legal concept called "naked licensing"). As in other association business contexts, peace, love, and a flower in your hair will only get you so far; a knowledgeable lawyer might come in handy.

Robert A. Wynbrandt is a partner at Jenner & Block, Chicago, and Jerald A. Jacobs is a partner at Jenner & Block, Washington, D.C. Jacobs edits this column.