Intellectual Property. Russell L. Parr

rates are being paid even in an industry known for low profit margins. This may be a sign of desperation as industry participants attempt to reshape their companies and address new and fundamental shifts in the marketplace.

      The data presented in this new section is then compared to royalty rates indicated from application of the 25% rule.

NOTE

      1 1 137 S. Ct. 1744 (June 19, 2017).

CHAPTER 2A SCANDALOUS TRADEMARKS

      As previously discussed in the main text on page 29, a trademark is used to identify the source of a product or service and to distinguish that product or service from those coming from other sources. As defined in the Trademark Act of 1946 (the Lanham Act), a trademark is “any word, name, symbol or device, or any combination thereof, used by someone to identify and distinguish his goods, including a unique product, from those manufactured or sold by others and to indicate the source of the goods…” A trademark also serves as an assurance of quality—the consumer comes to associate a level of quality with the goods or services bearing a given trademark. Trademarks have been described as the embodiment of goodwill. They convey product characteristics such as quality, value, safety, and prestige.

      Not every word or symbol is acceptable as a trademark. Geographic names or surnames generally cannot be registered, and the same is true of commonly used words for an object or good, such as “knife,” “cotton,” or “cup.” Marks that would be misleading (vis-à-vis the intended goods or services), or those in poor taste are not registrable. Trademarks are categorized as follows:

       Fanciful Marks. These are words that are made up and have no built-in meaning, such as XFINITY, VERIZON, LEXUS, and CHEERIOS.

       Arbitrary Marks. These are existing words with no relation to the goods or services with which they are associated, such as APPLE (computers), SHELL (petroleum products), WINDOWS (software), or NIKE (sportswear).

       Suggestive Marks. These are words that suggest some attribute of or benefit from the goods or services, but do not describe the goods themselves, such as COPPERTONE (tanning lotion), CATERPILLAR (tractors), or WHIRLPOOL (washers).

       Descriptive Marks. These describe the goods or services or a characteristic of them. They cannot be protected until they have achieved distinctiveness through use and advertising, which is called acquiring “secondary meaning.” Examples are CAR-FRESHENER for an auto deodorizer, RICH 'N CHIPS for chocolate chip cookies, or the descriptor GOLD MEDAL for flour or BLUE RIBBON for beer.

       Generic Marks. These are the weakest types of “marks” (and cannot even qualify as “marks” in the legal sense) and are never registrable or enforceable against third parties. Because generic words are the common, everyday name for goods and services and everyone has the right to use such terms to refer to their goods and services, they are not protectable. An example would be to try to register the mark BICYCLE to use in the bicycle business.

      Trademarks are used to identify goods. Many common trademarks are some form of the owning company's name, usually in a distinctive type style, or a logo. Examples are IBM, GM, GE, GOODYEAR, and AT&T.

LANHAM ACT DISPARAGEMENT CLAUSE IS STRUCK DOWN

Section 2(a) of the Lanham Act says that the USPTO may refuse to register any trademark that “consists of or comprises immoral, deceptive, or scandalous matter; or matter which may disparage or falsely suggest a connection with persons—living or dead, institutions, beliefs, or national symbols, or bring them into contempt or disrepute.” Recently, the U.S. Supreme Court struck down the Lanham Act's disparagement clause as unconstitutional in Matal v. Tam, 137 S. Ct. 1744 (June 19, 2017). The case involved an Asian-American dance-rock band named The Slants, who sought to register their band name as a trademark. The U.S. Patent and Trademark Office rejected the band's application to register its name under Section 2(a) of the Lanham Act. The case made its way to the Supreme Court, which struck down the disparagement clause as viewpoint discrimination in violation of the First Amendment's free speech clause.

      Since this decision, the Washington Redskins football team and the D*kes on Bikes Women's Motorcycle Contingent have prevailed in their federal trademark registration disputes. Another trademark application deemed questionable was recently approved for CH*NKY MINKY FRIENDS FOREVER. Another win was recorded by SLANT'D, the name of a magazine that celebrates Asian American identity on July 10, 2018.

SOME IMMORAL AND SCANDALOUS TRADEMARKS STILL FIGHT FOR REGISTRATION

Eric Brunetti founded FUCT in 1990, and the brand's clothing is distributed by stores like Urban Outfitters. In 2011, Brunetti sought to register the FUCT mark with the USPTO. The USPTO rejected the application. FUCT was looked at as the past tense of the verb “f*ck,” and was deemed vulgar. Brunetti's case eventually made its way to the U.S. Court of Appeals for the Federal Circuit. The Federal Circuit in the Brunetti case wrote, “independent of whether the immoral or scandalous provision is viewpoint discriminatory, we conclude the provision impermissibly discriminates based on the content in violation of the First Amendment.”¹ The next step is the U.S. Supreme Court. Meanwhile, the USPTO continues to receive applications for questionable trademarks. Such applications are pending, including: Applications to register several other variations of the word “f*ck” have been suspended, such as AMERICAN AS F*CK, TEAM F*CK YOU, and JUST F*CK IT.

Also awaiting a Supreme Court decision in Brunetti are applications to register variations of the word “c*nt” including two related to campaigns to prevent texting and driving (C*NT: CAN U NOT TEXT and IF YOU TEXT AND DRIVE YOU'RE A C*NT).

OUTSTANDING CONSTITUTIONAL SCRUTINY AND STATUTORY INTERPRETATION QUESTIONS

      Are trademarks considered “commercial speech?” If so, laws relating to trademarks might be subject to relaxed scrutiny for constitutional compliance rather than strict scrutiny.

      While Matal v. Tam adds another category to the list of trademarks, we are not likely going to see a rush on the USPTO for the registration of scandalous trademarks. Most companies are trying to attract the attention of a wide-ranging audience and any trademark that might offend the politically correct marketplace would not be desirable.

NOTE

      1 1 Brian Iverson, “Disparaging, Immoral, and Scandalous Trademarks Since Matal v. Tam,” IPWatchdog, August 11, 2018, http://www.ipwatchdog.com/2018/08/11/disparaging-immoral-scandalous-trademarks-matal-tam/id=100179/.

CHAPTER 3A ASSEMBLED WORKFORCES ARE VALUABLE BUT MAYBE NOT THE CHIEF EXECUTIVE OFFICER

      An assembled workforce is the existing collection of employees that permits a company to operate at peak efficiency. Without a well trained and knowledgeable collection of employees, all of the assets of a company sit idle. Without employees, no one is manning the computers in accounts receivable to make sure customers are making timely payments. Manufacturing equipment may be humming with electrical energy, but no one is making sure that raw materials, sub assemblies, and final products are zooming through the manufacturing facility. No one is inventing new products, developing marketing campaigns, calling on new customers, or handling human resources questions. Without an assembled workforce, nothing happens. No profits. No investment rate of return.

      When