Trademark Value Determined by Both Conceptual and Commercial Strength
Third-party Evidence before the USPTO and TTAB as applied in In re J. Spagnuolo & Associates, P.C. (J. Goodman, March 31, 2022)
In recent years, trademark registration at the United States Patent and Trademark Office has become more difficult. This comes as no surprise, considering a dramatic increase in both foreign and domestic trademark applications, as well as a surge in e-commerce following the COVID-19 pandemic. The swell of trademark applications has naturally resulted in longer waiting periods for applications to be reviewed. However, the glut of applications has also caused a saturation of marks in markets where trademarks once enjoyed broader scope.
The registrability of any new trademark is determined based on its likelihood of confusion with currently registered marks, and a saturated market means that applicants face an even steeper battle than ever before.
When determining whether there is a likelihood of confusion, the USPTO looks at many factors. One key factor is called strength of the mark, where a legally strong mark is distinct within the relevant marketplace. This “strength” of a mark can further be broken down into two categories: conceptual strength and commercial strength. Conceptual strength tells us how distinct the meaning of the mark is relative to its goods and services. For example, Pepsi® is considered a strong conceptual mark because it has almost no meaning other than as a brand identifier. On the other hand, American Airlines® lacks conceptual strength because the words “American” and “airlines” very nearly describe the goods and services marketed under that brand. Another way to look at it is that commercial strength tells us how consumers recognize and use the mark.
Maintaining distinctiveness from other marks is paramount to building trademark value. When faced with a Section 2(d) refusal based on similarity to one or more currently registered marks, applicants can overcome the refusal by demonstrating the weakness of the cited mark(s). In a recent Trademark Trial and Appeal Board (TTAB) decision, In re J. Spagnuolo & Associates, P.C., Judge Goodman laid out two paths available for applicants to challenge the strength of a cited mark, either by attacking the conceptual strength or the commercial strength.
On conceptual strength, terms used prolifically in an industry may lose their strength. In other words, if a term once considered unique and distinguishing for a specific market is adopted by many competitors, the market becomes oversaturated, and the term loses its value as a source indicator. To overcome a Section 2(d) refusal, applicants may introduce evidence showing that a number of other registrations from the Principal Register contain the same term. This ‘third-party registration’ evidence goes only as far as to demonstrate conceptual strength (or weakness) of a mark.
Providing third-party registration evidence of conceptual weakness can affect the outcome of a likelihood of confusion analysis, but the threshold to reach a showing of conceptual weakness is quite high. Over time, the TTAB seems to have applied a standard that anything less than ten third-party registrations is insignificant evidence and insufficient to overturn a likelihood of confusion for conceptual weakness. However, applicants may further bolster their case by citing evidence of actual use in the marketplace, and indeed, an applicant may be required to make such a showing of commercial weakness. Although there is a relatively well-understood standard for the amount of third-party evidence required to show conceptual weakness, the precedent for additional evidence of use for showing commercial weakness is still evolving.
In this case, because the applicant only submitted evidence of registration, but failed to submit evidence of third-party use in the marketplace, there was an inadequate showing of commercial weakness.
Looking back to a 1965 decision in J.C. Hall Co. v. Hallmark Cards, Inc., the Court of Customs and Patent Appeals (CCPA) held that “a certificate of registration constitutes prima facie evidence of ownership and ownership imparts prima facie evidence of use even though there be no evidence of record relative to such use.” Therefore, the ‘evidence of use’ in J. Spagnuolo should be understood to constitute more than the initial minimal showing of use required by the USPTO. The minimal showing of use during trademark prosecution is not indicative of whether consumers recognize the mark, but whether the mark is present in the marketplace. Thus, the language of the court in J. Spagnuolo, and the precedent it sets, should more closely resemble that of the CCPA in AMF Inc. v. American Leisure Prods., where it elaborated on its 1965 decision, stating, “the existence of [third party] registrations is not evidence of what happens in the market place or that customers are familiar with them.”
In summary, applicants may overcome a 2(d) refusal for likelihood of confusion by showing that the cited registration is weak, but the third-party evidence should show both conceptual weakness and commercial weakness.