Tuesday, January 8, 2013

Trademarks take on new importance in internet era

The value of simple, easily understood brand names has escalated in the internet era because consumers are more likely to find such products while doing searches on the web

As a serial snack-food entrepreneur, Warren Wilson is no stranger to the challenges of running a business. In the early days of his first enterprise, selling funnel cakes at fairs, there was the time when, tired of losing money on inclement days, he bought weather insurance – and proceeded to lose even more money than he had when it rained. In the 1990s, he and his wife and business partner, Sara, once had to mortgage their house and sell off investments to make their company’s payroll.

But it still came as a bit of a shock when the Wilsons made what they thought was a routine move to register the trademark of their hot product – a flat pretzel snack called Pretzel Crisps – and it was contested by none other than Frito-Lay, the behemoth of the snack food market owned by PepsiCo.

“This is so different from anything else we’ve faced because we’re not fighting a product in the supermarket, we’re not fighting against an institution like a bank, we’re not dealing with an act of nature,” said Wilson. “This fight is about a big company that wants to dominate the snack food category by crushing a little company like ours rather than by competing with us.” Frito-Lay, whose Rold Gold pretzel products and Stacy’s Pita Chips compete with Pretzel Crisps, declined to discuss the case, citing the pending dispute with the Wilsons’ company, Princeton Vanguard.

But in its filings with the US Patent & Trademark Office, Frito-Lay contends that Pretzel Crisps cannot be registered as a trademark because it is a generic term. “Like ‘milk chocolate bar,’ the combination of ‘pretzel’ and ‘crisp’ gains no meaning as a phrase over and above the generic meaning of its constituent terms,” the company wrote in a 2010 motion. The dispute is still pending with the trademark office’s trial board.

Trademarks, which are names or symbols associated with a specific company or product, can be tremendously valuable to companies building a brand. Think of Kimberly-Clark’s Kleenex facial tissues or Nike’s swoosh logo. Brand experts and trademark lawyers say the value of simple, easily understood brand names has escalated in the Internet era because consumers are more likely to find such products while doing searches on the Web. “You’d rather have a name like Moviefone than one like Fandango because that’s what someone is going to plug into a search engine, but without a doubt, you are going to be challenged,” said Allen P. Adamson, MD of Landor Associates, a brand design firm.

With so much at stake, companies are much more likely to fight over trademark rights. For example, Apple, Microsoft and Amazon are embroiled in a dispute over the term “app store,” for software applications, which Apple moved to trademark in 2008. For small companies, the cost of fighting a trademark battle can go beyond dollars and cents. “The big companies will do this to rough up their competitors,” said Barton Beebe, a Professor at the New York University Law School who specialises in intellectual property law. “If they can’t win in the marketplace, they try to soften them up with legal fees and distract them. Even if they lose the case, it’s a Pyrrhic victory because the small company has wasted so many resources.”


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
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