LIV Golf's recent disputes highlight how important it is for businesses to conduct trademark due diligence when launching new brands. There are several steps companies can take to avoid costly infringement claims and protect their investments in branding, advertising and customer goodwill.
LIV Golf took the professional golf world by storm, offering huge, guaranteed paydays to entice many of the biggest names in golf to leave the PGA Tour. In its second season, LIV now includes Bryson DeChambeau, Jon Rahm, Phil Mickelson and Brooks Koepka. LIV also entered a "framework" for a partnership with the PGA Tour that, when finalized, could change the public's conceptions of professional golf.
LIV's struggles in getting its new trademarks off the ground show the importance of pre-filing trademark clearances, the benefits of applying for registration before using them, and the need for new businesses to be flexible in adopting marks.
LIV moved many big players to its roster but is still building its fan base. Part of its plan is to provide more fan-friendly golf than that offered by the PGA Tour. One of the ways LIV differentiates itself from the PGA Tour is by including a team element. Two of those teams recently found themselves in difficult trademark situations.
Phil Mickelson's team, HyFlyers GC, found itself in a trademark dispute with the skate company, Cool Brands Supply. Cool Brands Supply sent LIV a cease-and-desist letter claiming its federally registered mark was essentially identical to the HyFlyers GC mark. LIV did not stop using the mark. Then, in a federal lawsuit filed in New Jersey, Cool Brands Supply wrote that the "defendants' adoption and use of their knockoff logo nearly twenty years after Plaintiff commenced use and in the face of Plaintiff's federal trademark registration is not just reckless and inexplicable -- it is willful infringement and unfair competition."
In a trademark infringement case, not only can a registered mark be cancelled, but the infringing user can be ordered to pay damages. Trademark damages can include:
- Disgorgement of the defendant's profits
- Actual damages
- A reasonable royalty
- Attorney fees, in exceptional cases
- Costs
Willful trademark infringement damages also can be recovered directly from the managing shareholder of the infringing company, in some circumstances. Because trademark damages can be difficult to calculate, sometimes courts use disgorgement of all profits as a proxy for actual damages. In practice, this means an infringer might take on all the work and risk of running a business and lose 100% of their profits for the period in which the business infringed another's mark. Even a successful defense of an infringement claim can result in paying hundreds of thousands of dollars in legal fees. Not much is known about the outcome of this case, since the parties settled based on undisclosed terms. That said, the LIV HyFlyers GC team adopted a modified logo.
Dustin Johnson's team, the 4Aces GC, also finds itself in a trademark dispute. 4Aces GC applied to register its mark. The United States Patent and Trademark Office (USPTO) published the mark for opposition. The University of Alabama then filed an opposition, claiming the mark is confusingly similar to Alabama's "script 'A.'" Alabama's opposition may result in essentially a mini-administrative trial to determine whether the 4Aces GC mark can be federally registered. If Alabama prevails, the Johnson team's 4Aces GC mark will not be registered. While such a decision would not necessarily prevent the 4Aces GC team from using its mark, it would greatly increase the risk of a future trademark infringement suit brought by the University of Alabama. Some courts have even admitted evidence that the USPTO did not allow registration to prove the willfulness of an infringement.
In the area of non-team LIV trademarks, Adidas is challenging the registration of LIV's primary logo, contending that its four stripes are confusingly similar to the three-striped mark used by the shoemaker. As with the University of Alabama, Adidas is seeking to prevent the registration of LIV's mark in an opposition proceeding.
This is the second opposition that LIV faced regarding registration of its primary logo. Previously, a Miami nightclub called LIV objected to the registration. That dispute was apparently resolved and the details of the resolution were not disclosed.
Why Care About Trademarks?
A trademark gives the owner the right to exclude others from using a confusingly similar mark to sell similar goods or services. Trademarks are a symbol of a company's goodwill. Consumers recognize trademarks and often make buying decisions based on their beliefs about the product or service based on their history with the mark. Trademarks also serve to differentiate competitors and to ensure customers buy the goods or services from the source they desire. Failure to conduct due diligence prior to adoption of a trademark can result in exposure to trademark infringement allegations and oppositions against registration of the adopted mark. In the worst-case scenarios, an injunction against future use and damages can be awarded by a court, and the infringer can be forced to rebrand, washing away prior investments in branding, advertising and accumulated goodwill.
What Is a Federal Trademark Registration?
A federal trademark registration puts others on notice of your brand within the United States. A registration creates a legal presumption that the registrant owns the mark. It creates the right to use the ® symbol with the mark. It also creates constructive notice that generally provides nationwide protection against junior (later in time) users and filers. Generally, registration prevents others from registering confusingly similar marks, as the office's examiners will search for confusingly similar marks even before an opposition has to be filed.
Is Registration Required?
No. Trademarks do not have to be registered to be protectable. Common law rights are established by using a trademark in commerce and can be enforced without registration. However, those rights are limited. For instance, common law rights only exist in the geographic area where the goods or services are actually provided. With a registration, there is a rebuttable presumption of the validity of the trademark and the right to exclude others from using something confusingly similar, nationwide.
How LIV Could Have Avoided Finding the Rough
Apply Before Using
To have a protectable trademark, that mark must be in use in commerce. However, the USPTO allows for "intent to use" applications. This means a company can file a trademark application before it is actually using the trademark. Taking this step provides several benefits. Most importantly, it provides a constructive, nationwide date of use as of the day the application is filed, whether the mark is in actual use or not. It also allows flexibility in the launch of goods or services. If the application is not approved or the mark is otherwise unregistrable, if the applicant delays launch of its commercial product or service, it gives the company time to adopt a mark that can be protected by federal registration before spending the time, money and effort to build goodwill in the unregistrable mark.
Search Before Filing
Before filing to register a trademark, either based on actual use of the mark, or an intent to use the mark, in commerce, it may be wise to conduct a search of potentially confusingly similar trademarks. This search should cover federal, state and common law sources of trademark information to be sufficiently thorough and is important in avoiding potential trademark conflicts. When an appropriate search is done prior to filing an application, companies can avoid the year-long process necessary to obtain a registration in cases where that process is not likely to be successful. A proper search also decreases the risk of facing a trademark infringement suit. Once an application is filed, the information in the application becomes public. If a company is using an infringing mark, filing an application may alert the senior user to the use and result in expensive litigation or opposition proceedings.
Be Open to Change
Trademarks are source signifiers. In almost all instances, choosing a mark is not make-or-break for companies. Instead, the power of trademarks builds over time as consumers come to see that mark as a representation of a company's goodwill. For example, there is no inherent value in naming a computer company Apple. However, decades of innovation and consumer-friendly products built incredible goodwill in the Apple brand. Being open to changing planned trademarks is the easiest way to avoid legal complications and fees. No matter which mark a company chooses, the value in the mark will come from the company's performance, not from the name itself.
Trademark rights protect a company's goodwill. Trademarks tell customers that the goods or services they are going to receive are of a certain quality and from a certain source. For many businesses, trademarks are their most valuable piece of property.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.