Sharon Urias, Esq.
Similar to their patent or copyright troll counterparts, “trademark trolls” are unscrupulous characters that exploit intellectual property laws for financial gain. Although some may characterize “trademark bullies” (i.e. companies that aggressively threaten litigation to enforce trademark rights more broadly than they should) as trolls, this blog post only addresses opportunistic trademark registrants.
The opportunistic trademark registrant is a person or entity that registers a trademark without any intent to lawfully use that mark. Once obtaining the registration, the trademark troll will seek out “infringers,” i.e. persons using a similar mark, and demand licensing fees, upon threat of a lawsuit. Or, the trademark troll will offer to sell the mark for a profit.
This situation comes up in a variety of contexts. For example, the trademark troll registers a mark belonging to another company in another country, waits for the company to expand and then files a lawsuit (or seeks licensing fees) from the company. This occurred in the famous case of French winemaker, Castel Frères SAS, owner of the CASTEL trademark. A Chinese company, Li Dao Zhi, registered the transliteration of CASTEL (“Ka Si Te”) and successfully blocked Castel Frères’ use of CASTEL in China, even though Castel Frères developed the CASTEL mark several decades earlier. Castel Frères was ordered to pay a $5 million fine and ultimately had to obtain a license from the Chinese company to continue using its trademark in China. It appears that case is now being considered by the Chinese Supreme Court, which suspended payment of the fine.
Another context, which this author recently encountered, occurs when the trademark troll seizes upon a pop culture word or phrase, registers it as a trademark and then sends “cease and desist letters” to the myriad individuals and companies using the “mark” on the Internet. The troll demands payment of royalties, threatens litigation and/or offers a licensing agreement for use of the “mark.” And, unless the “infringer” decides to challenge the registration, the path of least resistance is to pay the troll’s demand.
Yet another instance recently encountered by this author was a distributor that surreptitiously registered a U.S. manufacturer’s trademark in the distributor’s country (Mexico) and then sought to prevent the manufacturer from using its own trademark in Mexico after the manufacturer terminated the distribution agreement for cause. In that situation, the former distributor offered to “sell” the trademark to the manufacturer, whose only recourse was a cancelation proceeding in Mexico.
So, how can you avoid becoming the victim of a trademark troll? Most importantly, have a comprehensive trademark strategy in place. Make sure to file trademark applications, not only in the country (or countries) where you currently conduct business, but in all countries in which you intend to expand in the foreseeable future. Police your marks to identify potential trolls (including ones that use transliterations of your mark). Also, it is important to ensure you have trustworthy, reliable partners overseas that do not seek to “steal” your mark, such as the former distributor described in the example above.
If you find that someone has “trolled” your trademark, you may want to consider opposing or seeking cancelation of the troll’s registration, based on seniority of use and likelihood of confusion. If you have fallen prey to a trademark troll and/or if you need assistance creating a comprehensive strategy for your trademark, it is important to contact a trademark attorney.
*The information in this article is provided for general informational purposes only, and may not reflect the current law in your jurisdiction. No information contained in this post should be construed as legal advice from Greenspoon Marder LLP or the individual author(s), nor is it intended to be a substitute for legal counsel on any subject matter. No reader of this post should act or refrain from acting on the basis of any information included in, or accessible through, this Post without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from a lawyer licensed in the recipient’s state, country or other appropriate licensing jurisdiction.