Trademark Litigation as Business Strategy!

by J.D. Houvener on May. 27, 2016

Intellectual Property Trademark 


Protecting and preserving intellectual property is paramount to any business desiring to capitalize on its hard work and creative product mix; it can be, in many ways, crucial for business success.  A trademark can be a very important piece of business strategy, and choosing when to litigate against infringers may prove to be a difficult task.  There are a number of considerations to analyze prior to initiating trademark litigation, and we address some of those concerns below in this post.
The first consideration is perhaps the most obvious one: determining whether to litigate, and when.  IP litigation often can be a very time-consuming, lengthy, and a costly endeavor, and trademark litigation is no different.  Choosing the right counsel for your needs can be a “make or break” decision, as business litigation in the modern era is not cheap.  Determining the strength of the mark owner’s claim is a part of this first step.  Much of this will depend on the facts and available evidence of any alleged infringing conduct.  The attorney, working with the mark owner, will want to evaluate the mark against any alleged infringing conduct in the marketplace and determine what claims may be available based on those facts.  Sometimes a consumer survey may be helpful in proving marketplace confusion, an element of one potential claim.  If there are agreements of any kind at play (i.e., license, franchise, distribution, consent), those will need to be evaluated with the attorney in light of the facts and alleged infringing conduct. 
Part of evaluating the evidence involves determining what witnesses are necessary to prove the case.  Many times this will involve employees of the business in one capacity or another.  At times, it may involve former employees, or involve non-employees.  Often in trademark litigation, affidavits or declarations are necessary to prove a specific point, and IP litigation almost always involves depositions if the case makes it past preliminary motion practice.  And if the case proceeds to trial, live trial testimony may also be necessary.  For those with no experience in litigation, this can be a stressful and harrowing experience.  All of these factors play into the cost of litigation.
“Alternative dispute resolution” is often described as a method of defraying or limiting the cost of traditional litigation.  This generally comes in the form of mediation or arbitration (a mediator helps the parties come to a mutual agreement; an arbitrator makes an independent decision after hearing both sides, similar to a judge).  However, mediation and arbitration are not without drawbacks—the “neutral” will need to be paid in addition to the attorneys, the costs split between the parties in some cases.  Furthermore, at least with respect to arbitration, the final decision can be very difficult to challenge or appeal if there becomes an issue with the award.  These forums are also closed to the public and as a result, may be viewed as problematic.  The business owner will need to determine whether they have an arbitration agreement in place with a potential litigant. 
Another part of determining whether to litigate involves evaluating the need for immediate relief.  In some cases, as in the case of where egregious and immediate harm may be present, a temporary restraining order is warranted—which, when successful, affects an instant stoppage of the infringing conduct.  In other cases, a preliminary injunction is often enough—or the conduct can wait until resolution of all claims where a permanent injunction is requested relief.  The Ninth Circuit now requires a showing of a likelihood of irreparable harm to prevail on a preliminary injunction motion and, for permanent injunctive relief, one must show actual irreparable harm.  
After evaluating the facts and potential claims, a trademark owner will sometimes have their attorney send a cease and desist letter.  These are letters that put the alleged infringer on notice of their conduct and can, if so desired, tell the alleged infringer what the mark owner intends to do if the conduct does not end.  However, if litigation is threatened in the letter, the alleged infringer may answer by filing a declaratory judgment action in a jurisdiction of its choosing—often wherever the alleged infringer resides.  In order to avoid an immediate lawsuit, if so desired, the mark owner may want to tone down such a letter and perhaps offer a license instead of threatening a lawsuit.  There are other variables to a cease and desist letter and you will want to evaluate those with your attorney based on the issues involved with your case. 
If a trademark owner decides to litigate, a primary consideration is the “where” question.  But deciding where to sue does not simply depend on location of the court, it also may involve a discussion of whether state or federal court is appropriate—or no court at all in the instance that alternative dispute resolution is desired, as discussed above.  There are a number of legal questions when determining whether state or federal court is appropriate, or which court has the power to address certain controversies. Those questions will need to be addressed with an attorney experienced in trademark litigation. 
While protecting a trademark is a very important business strategy, it also involves the analysis of a complex set considerations that will need to be addressed prior to engaging in any efforts to protect the mark.  This post is by no means an exhaustive discourse of all considerations involved in trademark litigation but we nevertheless hope that it can provide you with some important background to help with your very important decision. 

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