May 2, 2011
The Department of Commerce recently released a report to Congress—commonly known as the “trademark bullies” report—studying the issue of whether or not trademark owners are using their trademark rights in an overly aggressive enforcement effort. The report, Trademark Litigation Tactics and Federal Government Services to Protect Trademarks and Prevent Counterfeiting, can be found at the U.S. Patent and Trademark Office website here. The primary focus of the report was to study the effect of abusive trademark litigation tactics on small businesses.
The report itself begins with a good general overview of fundamental trademark law enforceability issues. In doing so, it acknowledges the obligation of a trademark owner to police its infringements of its mark. In this policing activity, the report recognized not just standard infringement, but also dilution claims, cyber-squatting claims, and false advertising claims. It then follows with an assessment of fairly standard settlement considerations. Failing to reach early settlement, enforcement through litigation is often the likely recourse. It is recognized expressly in the report that in this litigation, aggressive enforcement of one's trademark rights do not automatically equate to abuse or bullying. Similarly, many purported infringers are not acting in bad faith.
The magnitude of the issue was not related to litigation through trial since it is reported that only 1.5% of filed trademark cases ever reach trial. Thus, regarding abusive practices, the primary focus is on pre-litigation or pre-trial enforcement activities for which statistics are not readily available to the public. As a result, the Department of Commerce conducted the study that resulted in the report. Of the 79 parties that made public submissions for the study, few actually identified they had any firsthand experience with any trademark enforcement bullies. However, many comments expressed that even the threat of litigation created a imbalance of resources, noting that small businesses may find litigation too expensive and time-consuming to be a realistic alternative. The report then considers the resources provided by the federal government concerning trademark infringement issues. Most of these, however, relate to the enforcement of trademark rights rather than responding to overly aggressive enforcement. These include the stopfakes.gov website, the 1-866-999-HALT hotline, and others.
Ultimately, it was unclear whether small businesses were disproportionally harmed by unreasonably aggressive trademark enforcement activities. Furthermore, existing litigation measures protect against most of the unreasonable activities. Nonetheless, the Department of Commerce concluded that it should take certain action. This includes working with bar associations and others to establish low-cost or pro bono legal services for small businesses to respond to frivolous charges. That may include expanding the existing Law School Clinical Certification Program beyond trademark prosecution services by law school clinics to also include response to frivolous infringement claims. Another recommendation is to increase the continuing legal education programs to focus on trademark policing measures and tactics. Lastly, the report recommends expanding the education resources available from the federal government to small business owners regarding trademark enforcement, both domestically and abroad.
If you have any questions on this report, please contact Joseph T. Nabor, the author of this alert.