Trademarks and Copyrights: Do you own what you think you own?

***This article was created for education/informational purposes and should not be considered legal advice. For specific legal questions concerning yourself or your business you should contact an attorney.

One of the challenges many small business owners face is understanding when and how to use Copyrights and Trademarks to protect their intellectual property. Many people do not even understand the difference between a Copyright and a Trademark. In this article we will dive into the world of copyrights and trademarks, how to set them up, and how to use them in order to protect your business and intellectual property.

What Exactly are Copyrights and Trademarks?

Copyrights and Trademarks are often confused because they both are used to protect intellectual property. In addition, once they are properly set up, they essentially prevent others from using the copyrighted or trademarked materials. The biggest difference between copyrights and trademarks are which types of intellectual property they apply to.

Copyrights apply to books, movies, music, software, choreography, architectural works and other tangible things. Copyrights do not protect facts, ideas, systems or methods of operations. Trademarks are the primary tools for protecting your brand. Trademarks are available for anything that signals to the public/customers what or whom the source of a product is. Trademarks are most commonly used to protect brand names, logos, and slogans. Trademarks are meant to protect consumers from being taken advantage of by imposter brands.

Setting Up Your Intellectual Property Protection

Many people already know that the instant you create an original work a copyright automatically attaches to that work. In a perfect world, nothing else would need to be done, and your work would be completely protected. However, this simply is not the case. For the best available protection to apply to your original work you must federally register your copyright through the United States Copyright Office.

While federally registering your copyright takes extra work and typically requires the assistance of an attorney, it provides substantial benefits which more than make up for the hassle. These benefits include:

1)    Allows you to receive statutory damages from those who infringe on your copyright, including attorney’s fees

2)    Makes it easier to determine who the true copyright owner in the case of a dispute, as the registration creates a paper trail

In contrast from copyrights, trademarks do not automatically attach to brand names, logos and/or slogans. The first step is to make a “use in commerce” of the desired trademark. This means using the mark in the ordinary course of business such as advertising materials, on packaging, or on a website. Once the mark has been used on commerce you may submit a trademark application to the United States Patent and Trademark Office to have the mark federally registered. Similar to copyrights, federally registering a trademark offers several advantages:

1)    Gives the trademark user national priority

2)    Provides evidence of ownership during disputes and/or litigation

3)    Provides enhanced remedies such as triple damages and attorney’s fees

How to determine who owns a copyright if more than one person contributed to a work?

 One of the biggest misconception businesses make is that they automatically own the copyright to every work created under the business, or by someone hired by the business to create the work. These works include advertising copy, photographs, website content or any other work that is subject to copyright laws.

On the one hand, any work created for the business by an EMPLOYEE of that business is owned by the business. Thus, the business will own all copyrights for that work. However, issues can arise when business contract with third parties to create works for the business. In this instance the default rule is that whoever created the work owns the copyright. Therefore, if a business hires an independent contract to create advertising materials, then the independent contractor will own the copyrights to the advertising materials.

If you wish to own the work, then you must have an agreement in writing which identifies who will own the copyright to the work. The agreement must specifically state that the business, and not the independent contractor, will own the copyrights to the work. In this case the independent contractor will be considered work-for-hire. Again, this agreement must be in writing and signed by all parties.

The Limits on What You Can Trademark

There are five different levels of trademarks. The top level is the strongest while the bottom level consists of words/phrases that cannot be trademarked at all. You should consider these levels when deciding on a brand name or slogan as some names will be able to obtain stronger trademarks than others.

1)    Fanciful Trademarks (Strongest) – This consists of newly coined terms that are completely original. Examples include Google, Hulu, Spotify.

2)    Arbitrary Trademarks – This consists of dictionary words that are being used in an original way. Examples include Apple, Amazon, Penguin Books

3)    Suggestive Trademarks - this consists of dictionary words being used to suggest something about the product. Examples include Playboy (brand in general), Greyhound (bus), Jaguar (car)

4)    Descriptive Trademarks – These are dictionary words that describe something about the products attributes. Examples include Toys “R” Us, or a slogan that describes ice cream as “cold and creamy”

a.     **It must be noted here that in order to be protectable, a descriptive trademark must achieve “secondary meaning”. This occurs when consumers believe a descriptive term refers to only one product in the marketplace.

5)    Generic Terms – These are completely generic words that cover an entire class of products and in no way could be trademarked to just one product. An example would be using “salt” to refer to sodium chloride

What Constitutes Copyright Infringement?

Copyright infringement generally requires that two conditions be met. The first condition is that the person you are claiming committed the infringement had access to the protectable work. The second condition is that the work that is claimed to be infringing on the copyrighted work must be “substantially similar” to the copyrighted work. This essentially means that a normal, reasonable person, would believe that the work was copied.

There are certain circumstances where a copyrighted work may be used without fear of an infringement claim. These situations include when the copyrighted work is used for education, criticism, news reporting, commentary or scholarship. This is known as “fair use”.

In addition, the FTC has generally supported the use of copyrighted works for the purposes of comparative advertising. However, the line between comparative advertising and copyright infringement is not completely clear and you should consult an attorney who specializes in this area if you intend to go down this path.

What Constitutes Trademark Infringement

Trademark infringement occurs when one person/company uses the trademark of another in the course of commerce, therefore creating the likelihood of consumer confusion. Essentially, mentioning another’s trademark in your ad copy will almost certainly be considered use in commerce.

Just as with copyrights, there are certain instances where you may use the trademark of another without it being considered infringement. You may use another’s descriptive trademark to describe your own product. This is known is descriptive fair use. For example, if a frozen yogurt company used the trademarked slogan “Tastes Like Ice Cream, Feels Like Healthy”, a competitor would still be able to run an advertisement that stated “Our frozen yogurt is just as tasty as ice cream, but it will leave you feeling healthy”.

There are also certain circumstances where you may use another’s trademark for comparative advertising, just like with copyrights. In this instance, Company A (or person A) uses Company B’s trademark in order to refer to Company B or its products. Again, if you are considering using another’s trademark you should consult with an attorney with expertise in this area.

Ambush Marketing

During highly publicized events (such as the Super Bowl), the event coordinators will create and then sell advertising opportunities to sponsors. These opportunities allow the sponsors to take advantage of the media coverage of the event. Commonly, these sponsors will be labeled the “Official Sponsor of the Super Bowl” or the “Official Beer of the World Cup”.

Ambush marketing occurs when advertisers try to take advantage of the publicity of the event without paying the premium for the “Official” designation. An example of this may be a sports drink company running advertisements leading up to the Super Bowl. The ads would depict football players but make no direct reference to the Super Bowl of the National Football League. Some more aggressive marketers may even have a slogan stating “The official sponsor of the ‘big game’” of “the official sponsor of you-know-what”.

For the most part, Ambush Marketing is not illegal so long as it does not use the trademarks or make explicit reference to the publicized event. However, if an ad toes the line these large companies may decide to make legal claims against the advertiser, even if no law was actually broken.

Registering a Domain Name Containing Some Else’s Trademark

Merely registering a domain name which contains the trademark of another does not generally amount to trademark infringement. However, doing anything else with the domain will open up liability such as publishing a website or even putting the name up for sale. Essentially, these acts amount to “use in commerce” and that is what triggers trademark infringement.

 Use of Trademarks in Keyword Advertising

As this method of advertising is relatively new, the law has not yet fully evolved in making an official determination.

The issue here is when competitors bid on keywords that contain the trademarks of another.  While courts are still exploring this subject, the general direction seems to be that it is very difficult to win a trademark infringement case against a competitor for using their trademark for the purposes of keyword advertising.