When
selecting a travel agency name steer clear of famous trademarks
By Daniel R. Zim, Esq.
Corporations continuously invest tremendous
amounts of capital in intellectual creativity and marketing. As brand names become
widely recognized, owners of famous trademarks aggressively take legal action
to protect their rights. In recent years, small travel agencies have found
themselves pitted in trademark battles brought by powerful corporations which
offer no competing or related goods and services. Several such cases, discussed
in greater detail below, illustrate the need for small businesses to exercise
caution and due diligence before branding themselves with a trade name.
The
Saul Zaentz Company D/B/A/ Tolkien Enterprises v. Wozniak Travel, Inc.
In 2006, Tolkien Enterprises sued
Hobbit Travel in the U.S. District Court for the Northern District of
California, accusing the company of wrongfully appropriating the word “hobbit,”
the name coined by J.R.R. Tolkien
and featured in his books “The Hobbit” and “The Lord of the Rings” to describe
dwarf-like creatures who inhabit the mythical world of Middle Earth. The suit
claimed that the travel agency, which has operated under that name since 1976,
was confusing the public about its association with Tolkien and capitalizing on
Tolkien's good will. On July 29, 2008, the Northern District of California
granted summary judgment in favor of Hobbit Travel. The court dismissed the suit
because Tolkien Enterprises waited an unreasonably long time to file suit, 18
years after the company became aware of Hobbit Travel's existence.
Intel
Corp. v. Intellife Travel, Inc.
Few people would cognitively associate a semi-conductor maker and a business that
sells airline tickets but these distinct differences did not deter Intel Corp.
from asserting a suit
for trademark dilution and infringement against Intellife Travel Inc., a
two-person travel agency based in Santa Clara, California. The 2008 suit claimed
that the agency's name, which stands for "Intelligent International
Lifestyle," causes "confusion that Intel is the source or sponsor of
Intellife's services" and is a "dilution of the Intel
trademark." The companies later resolved the dispute in an undisclosed
settlement.
Trans-High
Corp. v. High Times Travel, LLC
In the most recent case, a Seattle-based
seller of vacation packages found itself in a similar predicament after it
started a travel business that caters to cannabis enthusiasts, called High
Times Travel, LLC.
In a sign that the marijuana industry
has become mainstream, it took just nine days from the date the High Times
Travel publicly
launched on June 24, 2013 for Trans-High Corp., the parent company of High
Times Magazine, to file
a lawsuit against the "budding" travel agency. Although the
magazine is not a seller of travel and has no travel related registrations in
its trademark portfolio, it sponsors several cannabis-themed events and
competitions which have been previously held in marijuana-friendly locations
like San Francisco, Colorado, Amsterdam and Jamaica. To promote these events,
the magazine signs contracts with a number of travel agencies and tour
operators that help event-goers find transportation and lodging at various High
Times gatherings.
In its complaint, Trans-High claimed
that the travel agency's use of its marks is "likely to cause confusion
and mistake in the minds" of consumers creating a false impression that
the agency and its owner are "approved or sponsored by, or are in some way
associated or connected with Plaintiff's products and services when, in fact,
they are not." The travel agency never responded to the lawsuit. But the
agency's quiet disappearance from the worldwide web likely influenced the
magazine to drop the suit.
Trademark
Dilution
One lesson derived from these cases is
that trademark protection can expansively extend beyond companies directly
competing against each other. Direct competition is just one of several
determining factors as to whether infringement has occurred but the
existence of competition is not a necessary element to sustain a separate claim
of trademark dilution.
The Federal Trademark Dilution Act
(FTDA) provides that the owner of a famous mark is entitled to protection
against a junior user's commercial use of a mark if the use begins after the
mark has become famous and causes dilution of the distinctive quality of the
mark. The Act defines dilution as "the lessening of capacity of a famous
mark to identify and distinguish goods or services" regardless of whether
the dual use would likely confuse consumers or involve competing goods and
services.
So, even though there is very little
likelihood of confusion created by a travel agency's use of the name
"Intellife," Intel sued for dilution on the premise that the name "Intel"
is a famous mark which was in danger of becoming less distinctive due to the
junior user's incorporation of the term "Intel" in its name. Tolkien
Enterprises employed a similar argument when it sued Hobbit Travel for
dilution.
[Just
to clarify - Trans-High Corp. did not accuse High Times Travel of dilution.
Rather, it sued for trademark infringement based on the premise that its name
causes confusion within the minds of the public since both firms are
cannabis-themed businesses marketing products to the same customer base.]
While business owners should remain
vigilant about lateral suits for infringement brought by competitors, such as
the 2010 suit brought by Travel Dynamics International against the Travel
Dynamics Group (now known as Cadence Travel Management), they should also avoid
selecting a name that resembles a famous brand operating in an entirely
different industry. Trademark dilution suits (even obscure ones) threaten the
survival of small businesses. Owners of famous marks usually have plenty of
money and resources to troll the internet for copycats and threaten them with
litigation. Therefore, when selecting a
trade name you should carefully evaluate the risks of both infringement and
dilution.
Duty
to police trademarks
Trademark dilution remains an area of
great controversy. And Intel found itself at the epicenter of controversy when
it sued a tiny travel agency for dilution and infringement, claims which many
analysts criticized for their questionable merits. But in many instances
large corporations have few alternatives when it comes to defending the
integrity of their marks.
Trademark holders are under an
affirmative duty to actively police their trademarks. If they fail to do so
they may suffer the consequence of a court subsequently finding that the trademark
holder acquiesced to infringing uses or that the mark now lacks
distinctiveness. When truly infringing or dilutive
conduct is discovered, the trademark holder must take aggressive action
to assert its rights.
Therefore, the stakes for trademark
holders have never been higher. The number of trademark suits filed each year
continues to increase and unsuspecting entrepreneurs who name their businesses
arbitrarily without first determining whether the mark is already in use could be
at risk for trademark violations.
In
the next newsletter article Daniel Zim will offer tips on avoiding trademark
infringement and dilution.
Photo credit: Ken Lund