Facebook's January 30 launch of its "Paper" app prompted FiftyThree and Paper Communications to apply for trademark registrations on their respective "Paper" marks.
Facebook’s January 30 launch of its “Paper” app prompted FiftyThree and Paper Communications to apply for trademark registrations on their respective “Paper” marks.

This post continues our series on the looming trademark disputes over Facebook’s “Paper” app.  As previously reported, on the same day that Facebook launched its Paper app, FiftyThree, Inc. filed an application for federal trademark registration for its use of the term “Paper” in connection with computer application software enabling writing on tablets (paraphrased).  On the very next day, Paper Communications, Inc. owner of the publisher of Paper Magazine, filed its own application for federal registration on the use of “Paper” with online and traditional magazines.

In this post we will discuss the standard for determining whether Facebook’s use of “paper” infringes on anyone’s prior rights in that mark.

What is the Standard for Trademark Infringement?  The most common way for a mark to infringe the trademark rights of another is for the later user’s mark to cause a “likelihood of customer confusion” as to the source of the goods.  In other words, assuming FiftyThree or Paper Communications have prior trademark rights in the “Paper” mark, Facebook’s use of that mark will constitute trademark infringement if it is likely to cause customers to be confused as to the source of the underlying goods.

When does a likelihood of consumer confusion exist?  Courts use a variety of factors in determining whether a likelihood of customer confusion exists.  These factors typically include:

(1) the similarity of the marks;

(2) the similarity of the underlying goods or services;

(3) the strength of the plaintiff’s (e.g., prior user’s) mark;

(4) any evidence of actual confusion by customers;

(5) the junior user’s intent in adopting the mark;

(6) the distribution channels for the products;

(7) the typical customer’s degree of care and/or sophistication; and

(8) the likelihood that the product lines will expand to overlap.

The “Domino” Example – One famous example of a court applying the above factors is the case between Amstar (the maker of Domino Sugar) and Domino’s Pizza.

In 1975, Amstar (maker of Domino Sugar) sued Domino's Pizza for infringing Amstar's trademark rights in the "Domino" brand.
In 1975, Amstar (maker of Domino Sugar) sued Domino’s Pizza for infringing Amstar’s trademark rights in the “Domino” brand.

The district court ruled in favor of Amstar, finding that Domino’s Pizza infringed Amstar’s rights in the “Domino” mark.  The court of appeals ruled for Domino’s Pizza, finding that its use of the “Domino” mark with pizza was not likely to cause customer confusion with Amstar’s use of the “Domino” mark with sugar.  In analyzing the likelihood of confusion factors, the court ruled that:

(1) the marks were stylistically and typographically distinguishable;

(2) while the underlying goods were both edible, they had little else in common;

(3) Amstar’s “Domino” mark was not considered a strong mark because numerous other uses of that work exist (including as a common name for people);

(4) there was limited evidence of actual confusion;

(5) Domino’s Pizza never tired to “pass off” its product as deriving from Amstar;

(6) the distribution and advertising channels were distinct because Amstar’s sugar was sold in grocery stores and Domino’s Pizza was delivered from the restaurant to consumer’s homes;

Advice for Entrepreneurs – While the above factors give room to creatively find differences in how consumers would view similar marks, when selecting a product or company name at the outset of a venture, entrepreneurs would be wise to avoid any risk of a trademark dispute.  The cost (in terms of money and time) of dealing with a cease and desist letter from a prior user can derail a new venture.  If forced to change one’s brand, one will not only incur the cost of rebranding but lose its established good-will associated with its brand.  At the very least, entrepreneurs should perform a preliminary clearance of their potential brand.  This checklist will rule out most obvious conflicts.  If you find yourself spending more than a few minutes analyzing the likelihood of confusion factors with respect to a similar existing mark, do your company a favor and simply pick another brand.  While much of the risk of launching a venture is unavoidable, one can avoid much of the risk of future trademark disputes by clearing a potential company or brand name.