INFORMATION & TECHNOLOGY LAW
Tracking Advertising Expenditures Can
Help Protect Your Trade Name
February 2004
By Susan M. Richey*
A trade name is the name by which a business entity holds itself out to the public and represents, in the case of most small businesses, the entity’s most valuable intangible asset. Business owners can prevent direct competitors operating in the same geographic area from copying their trade names by relying on state unfair competition laws and the federal trademark laws. These laws prohibit competitors from adopting a name that is identical to or deceptively similar to an already-established business because it is likely to confuse consumers as to the entity with whom they are dealing. In order to take advantage of these protections, however, a trade name owner first must prove the existence of secondary meaning in the name. In other words, the owner must prove that consumers understand the name as something more than a mere description of the business conducted by the entity, that they recognize the name as representing that specific entity.
Evidence of advertising — expenditures, type, and volume — remains a useful and important method of proving secondary meaning. Courts interpret such evidence as creating an inference of secondary meaning: they reason that the more extensive a business’ advertising, the more consumers are exposed to the trade name, and, consequently, the more likely consumers are to associate the trade name with one particular business entity. Proving that a business has advertised extensively does not guarantee that a court will find secondary meaning in the trade name; some courts also require evidence linking the advertising with an assurance that the public is making the relevant mental connection, such as subsequent increased sales.
Fifty years ago, Esso Standard Oil Co. successfully protected its trade name in New Hampshire against a defendant who had registered the following trade names with the New Hampshire Secretary of State: Standard Oil of New England, Standard Oil Company of New England, and Standard Oil of New Hampshire. Esso submitted evidence that it had spent over $50,000 on radio advertising in New Hampshire alone in the space of a decade and that, one year prior, the company had advertised itself on 39 billboards located on public thoroughfares throughout the state. Esso also pointed out that each of the half million cans of motor oil that it sold annually in New Hampshire displayed its trade name prominently on the label. The federal district court accepted the evidence as proof that the public understood the trade name “Standard Oil” to refer specifically to the Esso Standard Oil Co. and enjoined the defendant from using trade names that were likely to confuse the motoring public.
Advertising methods have come a long way since the advent of radio and billboard advertising, including advances such as infomercials, telemarketing, and various types of online advertising. Not all advertising is created equal and some advertising techniques may be particularly ineffective when it comes to establishing secondary meaning. For example, conflicting opinions exist as to the effectiveness of internet banner advertising in terms of solidifying brand awareness among consumers. Nevertheless, the right advertising in the right place at the right time can be enormously effective. Business owners need only take note of the 2 to 3 million dollars some companies are willing to spend for 30 seconds of commercial time during the SuperBowl football game.
As a matter of course, business owners should take care to document their advertising efforts. A complete record of advertising dollars spent over the years that the business has been in existence, coupled with an indication of how and where those dollars were spent may prove to be invaluable documentation when it comes to protecting a company’s public face — its trade name.
* Susan Richey, Of Counsel, is admitted in California.
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