What Marketers Need to Know Before Launching Campaigns
(November 5, 2009) – The recent legal dispute between the maker of Monster energy drinks and a Vermont brewery that created “Vermonster” beer provides another reminder about the critical role of intellectual property in marketing and brand development. The best and most important time to start thinking about the intellectual property aspects of a brand is before the brand is introduced to market.
In the Monster trademark dispute, corporate giant Hansen Beverage Co. demanded that the small brewery stop selling, promoting and advertising their beer because of trademark issues. Specifically, Hansen Beverage claimed that the brewer’s use of “monster” as part of its trademark would confuse consumers into thinking their beer originated from or was somehow affiliated with Hansen Beverage. They also demanded payment of their attorneys fees. This situation is increasingly common as more companies aggressively protect their perceived intellectual property rights. The resulting high cost of legal battles can bankrupt a small company.
“We often see marketers and business owners who may not fully appreciate the intellectual property implications of the creative choices behind adopting and marketing their brand,” said Anthony Biller, a member of Coats and Bennett who leads the firm’s litigation practice. “Business owners can easily find themselves fending off brand bullies who want to challenge their right to use words, images and even colors in their marketing. In other cases, business owners walk face first into legitimate trademark infringement claims because they failed to take the necessary precautions up front. The cost of a clearance analysis is a small fraction of the cost of intellectual property rights litigation.” Mr. Biller also chairs the Trademark Litigation committee of the American Bar Association’s Intellectual Property law section.
The consequences of an intellectual property misstep can be grave, including handing over all profit associated with the brand, a permanent injunction against any further use of the brand and an order to pay the other side’s attorneys fees. If a creative expression is copied without an appropriate license, the offending party could be found liable for $150,000 per act of infringement. Liability attaches for all uses of an improper brand, to include all promotional uses. A permanent injunction means you can be forced to stop all use of your brand, to include all advertising and marketing of the brand. In such situations, it is not uncommon to have to pull products from distribution, cancel ad runs, and shut down websites.
When considering a new campaign or building a brand, there are some important questions you should consider:
- What to do at the concept stage? When you have developed strong initial concepts, it is time to begin the clearance process. Evaluate the marketplace to look for instances where you could potentially be infringing on existing brand identities. If you find none or find some that could potentially be related, retain a trademark attorney to conduct a formal trademark clearance. At the very least, the potential mark should be cleared against marks registered with the federal government. For the most security and to determine what the brand landscape looks like, a comprehensive brand clearance should be conducted where state and federal trademark registries are reviewed as well as common law, marketing, business and Internet databases. The review should encompass all marks that are the same or somewhat similar in all related areas of industry. The search should capture word variations, misspellings, phonetic and visual similarities, letter string similarities, and any other similar marks that consumers could potentially find confusingly similar to the new brand. If visual elements are used that are similar to third party works or that were authored by a third party, a copyright analysis might also be necessary. Make sure to tell the attorney of any third party brands or images that you think might be close or related to the new brand.
- Who really owns the content? Even if you incorporate properly licensed art in your advertising or brand, look “behind” the license. While you may have licensed the right to use an image from a particular author, does the image contain elements that the author has no rights to license for advertising? For example, if you license a photograph of a person driving a sports car for use in an advertisement, you are most likely only licensing the copyright in that picture. If the person or car is identifiable, has the person in the picture and the product owner licensed or otherwise agreed to the use of their images in your advertisement? Such imbedded images raise trademark and publicity rights, beyond the overall copyright.
- How strong is this brand? You want your brand marketing to stand apart from the competition. This is important so that your brand will stand out in the mind of the consumer and be memorable, and not blend into the advertising landscape. A distinctive brand will also make it less likely that you will infringe a senior brand owner. It will also give you stronger protection in the courts should another party infringe your rights. Once you’ve created a strong brand, you must diligently defend it to maintain the identity and reputation you worked so hard to create.
- How can I protect myself against brand bullies? Sometimes, despite taking the best precautions, a brand bully might still try to take your brand away. The above referenced Vermonster case is a good example. There was no solid claim of trademark infringement and a trademark attorney would likely have “cleared” the Vermonster brand for use. Nonetheless, the little brewery was picked on. The final precaution is to make sure your commercial general liability insurance (“CGLI”) indemnifies and provides a defense against claims for trademark, trade dress, and copyright infringement. Many if not most CGLI policies now provide coverage for advertising injury, but in the back pages under “exclusions,” they exempt claims for trademark and copyright infringement. Make sure you have appropriate coverage.
Ultimately, all copyrights, trademarks and images should be cleared in the final stage. It is prudent to work with an intellectual property attorney to review your brand marketing in all stages of the process before moving forward and introducing it to the public. Clearing your brand before launching the campaign can save you from a disastrous legal situation down the road.
In the end, the small Vermont brewery was able to keep its Vermonster brand. Knowing it could not afford to win its trademark case in a court of law against a corporate giant, the brewery focused on the courts of public opinion. They broadcast the injustice of Hansen Beverage’s demands across the Internet via YouTube, brewery blogs and ultimately received television news coverage. As a result, a storm of bad PR was brewed for Hansen Beverage. Consumers and stores began boycotting the Monster drink. A settlement agreement was quickly reached. Even though the Vermont brewery had to pay its own legal fees, this was a remarkable victory for the little guy. The vast majority of infringement disputes are resolved through expensive litigation and not through publicity trials. The cost of avoiding those fights at the initial stage of brand formation is a fraction of what it costs to resolve a charge of infringement.
About Coats and Bennett
Coats and Bennett, PLLC, is one of the most established intellectual property law boutiques in the Southeast located in Cary, North Carolina. The firm provides a comprehensive range of intellectual property legal services including patents, trademarks, copyrights, licensing, trade secrets, and related litigation to clients throughout the U.S. and worldwide. With a reputation as a trusted, experienced and effective resource for businesses and individuals in need of IP counsel, Coats and Bennett delivers quality work to small clients and Fortune 500 companies alike. For more information, visit www.coatsandbennett.com.
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