Before a business can establish commercial relations with customers and other businesses, it must create an identity for itself, as well as for its goods and services. Economic competition is based on the premise that consumers can intelligently distinguish between products offered in the marketplace. Competition is made difficult when rival products become easily mistaken for each other, since one business may profit from the sale of a product to consumers who believe they are buying a rival’s product. Part of a business’s identity is the good will it has established with customers, while part of a product’s identity is the reputation it has earned for quality and value. As a result, businesses spend tremendous amounts of resources identifying their goods, distinguishing their products, and cultivating good will.
The four principal devices businesses use to distinguish themselves are trademarks, service marks, trade names, and trade dress. Trademarks consist of words, logos, symbols, slogans, and other devices that are affixed to goods for the purpose of signifying their origin and authenticity to the public. The circular black, blue, and white emblem attached to the rear end of motor vehicles manufactured by Bavarian Motor Works (BMW) is a familiar trademark that has come to signify meticulous craftsmanship to many consumers. Whereas trademarks are physically attached to the goods they represent, service marks are generally displayed through advertising. “Orkin” is the service mark for a well-known pest-control company.
Trade names are used to identify corporations, partnerships, sole proprietorships, and other business entities. A trade name may be the actual name of a business that is registered with the government, or it may be an assumed name under which a business operates and holds itself out to the public. For example, a husband and wife might register their business as “Sam and Betty’s Bar and Grill,” while doing business as “The Corner Tavern.” Both names are considered trade names under the law of unfair competition.
Trade dress refers to a product’s physical appearance, including its size, shape, texture, and design. Trade dress can also include the manner in which a product is packaged, wrapped, presented, or promoted. In certain circumstances particular color combinations may serve as trade dress. For example, the trade dress of Chevron Chemical Company includes the red and yellow color scheme found on many of its agricultural products. Chevron Chemical Co., v. Voluntary Purchasing Groups, Inc., 659 F.2d 695 (5th Cir. 1981).
When a business uses a trademark, service mark, trade name, or trade dress that is deceptively similar to competitor’s, a cause of action for infringement of those intellectual property interests may exist. The law of unfair competition forbids companies from confusing customers by using identifying trade devices that make their businesses, products, or services difficult to distinguish from others in the market. Actual confusion need not be demonstrated to establish a claim for infringement, so long as there is a likelihood that consumers will be confused by similar identifying trade devices. Greater latitude is given to companies that share similar identifying trade devices in unrelated fields of business or in different geographic markets. A court would be more likely to allow two businesses to use the identifying trade device “Hot Handguns,” when one business sells firearms downtown and the other business runs a country western dance hall in the suburbs.
Claims for infringement of an identifying trade device are cognizable under both state and federal law. At the federal level, infringement claims may be brought under the Lanham Trademark Act. 15 U.S.C.A. sections 1051 et seq. At the state level, claims for infringement may be brought under analogous intellectual property statutes and miscellaneous common-law doctrines. Claims for infringement can be strengthened through registration of the identifying trade device. For example, most states require that businesses register their trade names with the government and provide protection against infringement to the business that registers its trade name first.