Another Poor Name Choice (Only The Lawyers Won)

March 30, 2009 | No Comments
Posted by Kurt E. Anderson

The moral of this story is simple. Choosing a trademark is a business decision. It’s about managing risk and making money. When choosing a new trademark, there is no good business reason to choose a mark that is in use by others. Not only is it likely to provoke unnecessary and costly legal battles, but also it fails to effectively distinguish your goods/services from others and may result in committing to a name that is not protectable. This case is the classic example.

On December 9, 2008, the New Jersey District Court ruled in favor of plaintiff Heritage Community Bank in a trademark infringement action against defendant Heritage Bank, N.A. Heritage Community Bank v. Heritage Bank, N.A., 2008 WL 5170190. This is a case that never should have happened.

Plaintiff owned a federal trademark registration for “Heritage” for banking services. Defendant ran a trademark search and found several other users of “Heritage.” According to the court, there were five other users of the word “Heritage” in the banking industry nationwide and none of them were in the New Jersey area. Nonetheless, the defendant apparently concluded that the banking industry was a crowded field as to the use of word “Heritage.”

The crowded field theory is not easily quantifiable. Generally, though, the theory is that if there are several similar marks already in use (i.e., a “crowded field”), then courts will tend to construe the scope of rights very narrowly. That is, for marks in a crowded field to be found confusingly similar, they generally have to be exactly (or almost exactly) the same and for very similar goods.

It is often difficult to effectively evaluate the impact of the crowded field on the rights of the parties to use the mark. For this reason, this theory is typically used as a shield not a sword. That is, it is typically a defense used by a business which has already committed to a name and finds itself in the middle of a dispute.

In the Heritage case, it is hard to understand why the defendant would have relied on this legal theory in committing to a new mark. Even if it were successful, the theory would necessarily have resulted in the defendant’s inability to perfect trademark rights (i.e., the right to stop others from using the name). If the defendant won, the court would likely have decided that the word “Heritage” was so weak that the plaintiff’s had no ability to stop the defendant from using the “Heritage” name other than in the exact same manner. The corollary to this is, of course, that the defendant would then have no right to stop others from using the “Heritage” mark.

Once the search was run and the plaintiff’s registered trademark was discovered, it is hard to understand why the defendant would have chosen to commit to the Heritage name. At this stage, the defendant would have had nothing invested in the Heritage name and could have easily chosen another name.

Second, defendant received a cease and desist letter from plaintiff before starting business. Again, knowing that the plaintiff (holder of the federal trademark registration) objected to the use of the Heritage name, why did the defendant provoke this fight by continuing to use the name? Clearly, the less costly alternative would have been to choose a different name.

Finally, once the case was filed, it must have seemed very unlikely that the defendant would have succeeded in this case. This should have settled.

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