With Boom Bust: Trademark Squatting

trademark attorney

Brent:  The owner of the NFL’s Washington Redskins has found himself in a series of fights lately and one of them surrounds something called “trademark squatting.” In the case of the Redskins, who have finally agreed to change their name, it turns out that a number of possible names are already being held by a man named Martin McCauley who calls himself, and get this, “the trademark hog.” McCauley says that he has offered to give the names to the NFL for free but does want the NFL franchise to donate to organizations of his choosing including those exclusive to Native Americans. Macaulay holds the rights to several notable trademark names including MONUMENTS, AMERICAN VETERANS, RED-TAILED HAWKS, and FEDERALS. The NFL issue aside, this actually raised our interest because what exactly does it mean for someone to trademark squat?  And, how prevalent is this?

Joining us now to discuss is trademark and copyright attorney Preston Frischknecht and Boom-Bust Co-host and investigative journalist Ben Swan. Thank you both for joining us today. Preston, I wanted to start with you. You being an expert in this field, how much of an issue is trademark squatting? And, help our audience to understand exactly what that is.

Preston: Trademark squatting is the concept of acquiring and sitting on trademark rights that someone else might be more interested in with the hope of precipitating a transaction or getting them to somehow purchase your rights. As far as how prevalent of an issue it is, there will always be a race to the various intellectual property offices to try to perfect rights in a particular name or an invention or something like that. But squatting itself, the occurrence varies over the world and some countries are better protected and better equipped to deal with the situation others. Ironically the United States has some of the best protections, I’d argue, in the world to avoid the problem.

Brent: Now, in the situation of the Redskins, now this gentleman who has all these trademarks, he doesn’t exactly have any vested interest in the football team besides maybe being a fan. So, would a good trademark lawyer for the NFL or for the franchise be able to get those trademarks taken out because he’s not actually using them in a sports related purpose?

Preston: I think they have a pretty good chance. The United States system requires an applicant at a certain point to prove that they’re using the mark that they’re trying to perfect rights in. And so in this particular case, this trademark hog, this gentleman, he may have perfected some rights for some trinkets, for example cups or mugs or apparel, but it’s a longer shot for him to prove that he’s actually using these marks for a professional football team. So, in that sense, it’s probably going to be an uphill road for him to have solid rights in these particular marks.

Brent: And now, Ben, this is an especially big issue for companies that launch in one country and then attempt to move overseas, as Preston actually just mentioned. Yeah, tell us a little bit about that.

Ben: Yeah, I think he’s making a really good point when he says the United States has a different standard than a lot of the rest of the world. And what we find is that this is really a huge problem for American businesses. Setting football in the NFL aside, a big issue for businesses that try to, you know, they create products in the United States. They trademark those products and then they try to expand to a global business, and what they find is that they move their those products overseas and the trademark is already owned by someone else there. And, it could be an exact replica of what they’ve created, it can be the exact product that they’ve created. And, what we find, is that a recent survey actually was done by the US Trademark Office. It found only 15% of small businesses doing business overseas know that a U.S. trademark of course is regional, and it only applies to the United States. And so a lot of business owners think if they go to the trademark office they get a trademark that it extends all around the world, and it does not.

Brent: Now Preston, in what has become an increasingly global marketplace, something we talk about every day here on Boom-Bust, are we seeing more cooperation between nations to prevent trademark squatting?

Preston: I think there’s been some meaningful progress in this area, but there are still a lot of gaps. And so China is one of the countries of focus in this particular area and, they’ve made a lot of improvement.  They’ve actually addressed a lot of bad faith filers and are willing to sort of undo trademark rights if people inside their country have attempted to perfect names from overseas companies. They’ve shown a willingness there. There are also some treaty mechanisms that allow companies to use trademark registration in one country as a platform to acquire it in another. But, the fact remains that most of the countries in the world don’t require an applicant to prove use, and that remains a big problem because, as was mentioned earlier, in a lot of these countries people will apply for the marks and then just sit on them knowing that someone interested in them is going to be coming after them.  I believe several years ago one of the more newsworthy happenings in this area was when Apple paid tens of millions of dollars to a Chinese trademark registrant for the name IPHONE.

Brent: And, as Preston mentions, China has been working on this and they just issued a ruling that helps prevent trademark squatting in their country. Tell us a little bit more about this ruling.

Ben: Yeah, it doesn’t full out prevent it, but it certainly makes it easier. And what that ruling found is that, essentially, if there is a registrant who goes in there and has a disputed trademark, they have to show the existence of that applicant’s trademark, and they reasonably avoided applying for another’s mark, essentially meaning that you have to show that you did not know that IPHONE was on its way to China before you went and registered for IPHONE, and that you did so in an actual innocent way, as opposed to you went out found a company that you knew was eventually coming this way and you sat on that trademark. So, China is trying to make some efforts in this area we’ll see how all of it pans out based on the discussion you guys at the beginning of the show between US-China relations right now.

Brent: Well absolutely. I was just going to mention mention that as I mean, when you look at all the intellectual property issues, some of which is the government says is at the center of this dispute between China and the US, there’s a lot there. Preston Frischknecht, copyright attorney and trademark attorney as well, thank you for joining us, Ben Swan as well, Boom-Bust.