Beverly A. Berneman
Google avoided the ignominious fate of losing its trademark due to genericide. Trademark protection extinguishes when the trademark becomes interchangeable with the name of the product or service. This process is called “genericide”. Some famous examples of genericide are aspirin for pain reliever, cellophane for plastic wrap and thermos for a vacuum flask. Two people filed a proceeding with the Trademark Trial and Appeal Board (TTAB) to cancel the Google trademark due to it having become a generic word for searching on the Internet. The TTAB denied the cancellation and the plaintiffs appealed to the Ninth Circuit Court of Appeals. The Court affirmed the TTAB. The Court’s opinion stated that even though the public might use the term as a verb, the Google mark could still serve as a source identifier.
WHY YOU SHOULD KNOW THIS. When developing a brand, a company should set a policy for how a trademark will be used. Companies like Xerox and Kimberly-Clark zealously protect their brand names from genericide. Xerox’s policy requires references to “Xerox brand copiers”. Kimberly-Clark requires references to “Kleenex brand tissues”. Brand usage policies can also dictate consistent use of the color, size or content to make sure the brand sends a consistent message. No matter the size of the company or the fame of the brand, it’s never too early to set a branding policy.
Andrew S. Williams
You’re a successful business owner and you’d like to plan ahead. Professionals are urging you to prepare a “succession plan” – but you look at it as a retirement plan. Getting out of the daily grind might be nice, but giving up your life’s work and your legacy business? Maybe not so nice. No matter how they sugar coat it, “succession planning” looks like you’re calling it quits.
Whether they call it a succession plan, an exit plan or a retirement plan, it usually amounts to a transaction where you cash in your chips and your legacy business goes away. And, as soon as you sign that transaction document, you may no longer have any input in the conduct of your own business.
Is there another way? Can you cash your chips, continue your legacy business and still have a hands-on role? Can you have your cake and eat it too? The answer for you very well may be “yes!”
An employee stock ownership plan (“ESOP”) may allow you to sell your business to your employees in a non-adversarial, tax-advantaged transaction and continue to manage operations by electing directors of your choosing. You can participate in the business as much or as little as you would like. Want to taper off over the next ten years or so? No problem!
In this way, ESOPs can treat the two major non-financial issues facing business owners “in transition”: the end of the business involvement of a lifetime, and the likely loss of the legacy business itself.
The Takeaway: If a business transition is in your future, make sure an ESOP purchase is on your short list.
Beverly A. Berneman
Dan Aykroyd’s Crystal Head Vodka gets to keep its dress. Crystal Head Vodka’s maker, Globefull, Inc. brought a trade dress suit against Elements Spirits Inc. for copying its distinctive Day of the Dead inspired packaging on Element’s Kah Tequila. And then the 7 year odyssey began. Globefull lost the first jury trial. It appealed the denial of its motion for a new trial. The Ninth Circuit agreed that the trial was unfair because defense counsel had referenced similar litigation in Mexico in closing argument. Back in district court, Globefull lost its motion for preliminary injunction. But Globefull persevered. During the second trial, the owner of the elements was caught in a lie. At the previous trial, she testified she never heard of Crystal Head Vodka when she was developing Kah Tequila. In the second trial, the testimony of other witnesses contradicted that statement. The jury found in favor of Globefull on liability. The amount of damages will be set at a later date.
WHY YOU SHOULD KNOW THIS. Sometimes, litigation can feel like a never ending spiral of defeat. But, a party who is secure in its position and is willing to fight for it can win the day. Position security arises from preparation and follow through. For the preparation side, due diligence is a must so you don’t encounter unexpected surprises. On the follow through side, perseverance can win the day.
Beverly A. Berneman
A repaired Rolex may not be a Rolex. In Trademark Law, the “First Sale Doctrine” allows a consumer who buys a trademarked item to resell it without having to pay a license fee. But there are limits. In Rolex Watch USA, Inc. v. Krishan Agarwal, the defendant refurbished Rolex watches and then resold under the trademarked name. When Rolex sued him for trademark infringement, Agarwal asserted the affirmative defense of the First Sale Doctrine. The court rejected the argument. The court examined the impact of the modifications on the original product. If the modifications create a new product, it can no longer be sold using the trademark. In this case, Agarwal replaced dials and bracelets that weren’t authentic Rolex items. Agarwal offered to include a disclaimer. But the court held that the disclaimer would be confusing because the refurbished watch was really a new product.
WHY YOU SHOULD KNOW THIS. A business can thrive on providing aftermarket enhancements, refurbishments or changes. However, when dealing with branded goods, the changes can go too far and then resale can result in exposure to liability.