Choose your weapon: litigating trademarks US-style

Trademark owners seeking to enforce their rights in the United States have various options. The most common approach is to send a cease and desist letter and try to obtain compliance through negotiation and threats of litigation. However, when these fail, trademark owners have several alternatives remaining – although the pros and cons of each vary considerably.

One option is to file a civil lawsuit against the accused infringer in federal or state court. A lawsuit provides the broadest array of remedies but can be expensive, burdensome and challenging of the asserted trademark rights. In addition, a successful outcome often results in an injunction with no award of damages or attorneys’ fees.

Another option is to file an opposition or cancellation proceeding with the TTAB. However, such proceedings are limited to challenging the registration of a federal trademark, rather than providing injunctive relief to stop use of the trademark or other remedies. In cases involving infringing domain names, in lieu of a civil action the brand owner can file expedited proceedings through an arbitration service provider under the UDRP or URS. But once again, the remedies are limited to recovering or disabling the domain names at issue.

The best option involves considering multiple factors, including:

• the nature of the remedy (and, in some cases, its timing);
• the forum that is most likely to result in a favourable outcome;
• the time that it takes to reach a decision;
• the attorneys’ fees and costs;
• the risks associated with each option; and
• the burden of each option.

This article addresses the potential options based on what the trademark owner is seeking to accomplish through the enforcement action, which is often the primary driver of what course of action to pursue.

Stopping infringement

Short of an infringer’s voluntary compliance in response to a cease and desist letter or negotiated resolution, the only effective way to stop infringement is to file a civil action against the infringer.

In the United States, trademark owners can bring federal, state and common law trademark claims in either federal or state court, but the most common choice is to file in a federal court. The courts have broad power to enter orders enjoining the infringer from using the accused mark, including use of the accused mark abroad in some cases. The court can enter:

• a temporary injunction (known as a temporary restraining order) on an emergency basis that can last for 14 days (extendable to 28 days for good cause);
• a preliminary injunction that can last the duration of the lawsuit; and
• at the end of the case, a permanent injunction that can last in perpetuity.

The court can also enforce its judgment, for example, by holding the defendant in contempt of court or fining it for failure to comply with the injunction. The court can also enjoin other parties which are acting in concert with the infringer and have notice of the injunction to cease or take certain action. In contrast, the TTAB cannot enter an order enjoining the infringer from using an infringing mark. In fact, it has no authority to stop any infringing conduct. It can decide only whether to:

• allow registration of a trademark that has been opposed;
• cancel an existing registration; or
• allow concurrent use registrations.

Opposing or cancelling registration

If a trademark owner wants to oppose or seek the cancellation of a trademark registration but is not seeking damages or to enjoin the infringing activity, it can file an opposition or cancellation proceeding with the TTAB. As in many countries, there are strict time limits for opposing the registration of a trademark or seeking cancellation of the resulting registration. The trademark owner must file a notice of opposition with the TTAB within the time allowed for oppositions – which is 30 days after publication, unless timely extensions are sought for a maximum of 180 days. Alternatively, the trademark owner can seek to cancel the resulting registration within five years after the registration on any grounds. After a mark has been registered for five years, cancellation can be sought on limited grounds such as abandonment, fraud or the mark having become generic.

After complying with these deadlines, the trademark owner can pursue the opposition or cancellation before the TTAB or seek the same relief as part of a federal lawsuit for trademark infringement and dilution. Parties can conduct discovery in both TTAB and federal court actions. However, there is no live trial or right to a jury in a TTAB proceeding. The TTAB offers accelerated procedures but otherwise cases can take years to resolve, much like civil actions. Both the TTAB and federal court can decide whether the accused mark will be refused registration or the resulting registration will be cancelled, but only a court can award damages and attorneys’ fees and grant an injunction. Nevertheless, a TTAB action can be used to leverage settlements that involve payments of money, restrictions on the use of the accused mark and other terms.

In some circumstances, the TTAB’s decision on the issues of likelihood of confusion and dilution will be binding on the federal court. In addition, a trademark owner may have a higher likelihood of success in a TTAB as opposed to a civil action, because the TTAB will determine likelihood of confusion or dilution based on the mark as applied for or registered (rather than how the mark is actually used in the marketplace) and the goods and services cited in the application or registration (rather than the actual goods and services offered in the marketplace). Accordingly, the particular circumstances of each case are important in determining the best option.

Obtaining damages award or recovering attorneys’ fees

If a trademark owner wants to pursue damages, it can obtain an award of damages only in court. Damages, attorneys’ fees and costs are not available in the TTAB or in UDRP or URS actions. However, an award of damages in a trademark action in court is the exception, rather than the rule. Subject to principles of equity, federal courts have the power to award damages to the trademark owner in the amount of its own damages and the infringer’s profits, provided that there is no double recovery. Yet there is a split in the courts as to whether a plaintiff must prove that the defendant’s infringement was wilful as a condition to obtaining an award of its profits.

Federal trademark law also provides for statutory damages for certain types of violation. For example, for ‘domain name cybersquatting’ (defined as the registration, use or trafficking in domain names with the bad-faith intent to profit therefrom), a court may award up to $150,000 in statutory damages. Similarly, for trademark counterfeiting, a court may award treble damages or statutory damages of up to $200,000 per counterfeit mark (or up to $2 million if the counterfeiting was wilful). The court also has the power to award attorneys’ fees to the prevailing party in exceptional cases. However, the most common outcome for trademark owners that prevail in trademark cases is an injunction with no award of damages or attorneys’ fees.

Recovering or stopping use of infringing domain names

If a trademark owner wants to recover a domain name that was registered or is being used in bad faith, it can either pursue a cybersquatting claim in a civil court or file a UDRP proceeding (or an analogous procedure depending on the particular gTLD).

A UDRP action can be effective because the cost is usually around $5,000 (depending on the number of arbitrators and domain names involved, as well as the provider), the cases are decided quickly (usually within a couple of months of filing) and trademark owners enjoy a high likelihood of success (on average, higher than 85%). However, there are limitations. UDRP actions are relatively easy to defend – the domain name owner need not hire a lawyer. The only remedies are the transfer or cancellation of the domain name at issue. Thus, the trademark owner cannot recover damages or attorneys’ fees or obtain an order preventing the domain name owner from registering other infringing domain names. Cases are decided by private arbitrators (either an individual or a panel) anywhere in the world, rather than federal judges. Finally, either party can challenge the decision or stop the proceeding at any time by filing a civil action.

In contrast, in a civil action, a trademark owner can recover the domain name, seek an award of damages and attorneys’ fees, and obtain an injunction preventing the domain name owner from registering additional infringing domain names.

If a trademark owner merely wants to stop a third party from using a domain name that was registered or is being used in bad faith, but does not care about recovering the domain name, initiating URS proceedings can also be an effective option. These are cheaper and faster than UDRP proceedings and civil actions. The burden of proof is higher in URS proceedings than in UDRP and civil actions – the trademark owner must establish by clear and convincing evidence, rather than a preponderance of the evidence, that the domain name owner registered or used the domain name in bad faith. In addition, for the trademark owner to prevail there cannot be any genuine issue of material fact. Thus, the URS is reserved for clear cases and for registered marks or marks that have been validated through a court proceeding.

Comment

Filing a civil action provides the broadest remedies for trademark owners, but a lawsuit is expensive and burdensome, discovery in federal lawsuits is fairly broad, cases can take years to resolve and lawsuits entail risks, including counterclaims and challenges to the trademark owners’ rights. While TTAB proceedings have limited remedies, they are generally less expensive than civil actions and may facilitate a broader settlement without the need for litigation. Where only domain names are at issue, UDRP and URS actions are often extremely cost effective and quick. While the arsenal of tools with which a trademark owner can address infringement requires careful consideration, the choice of remedies is the first place to start.