Trademark permission provides a business or individual the legal right to use a trademark that is owned by another business or individual. This permission is also referred to as licensing. Though, what happens when someone uses a trademark without permission?
By providing permission to use a specific trademark, the user receives the benefit of marketing off of the specific trademark and the good will and awareness that may accompany that specific trademark. The trademark owner, in turn, can receive benefits for providing this permission through receiving profits or flat fees from the trademark user.
Some trademark owners may grant others permission to use a trademark without requiring any type of payment. This is why it can be helpful to seek permission from the owner for use, as you may be able to agree on some type of favorable arrangement.
What Happens if You Use a Trademark Without Permission?
When you use a registered trademark without permission, you are violating the trademark owners legal rights. This means the trademark owner has the ability to pursue legal action against you to stop you from this use when it causes a likelihood of confusion for actual or potential consumers.
It also means you may be required to pay the owner for any damage you may have caused the owner.
It also means you may have to hire an attorney to represent you in the course of any legal proceedings that may be filed against you. At the very least, you will want to thoughtfully respond to any legal or other business actions that may be taken against you.
Below are the details surrounding a few potentials that may occur if you use a trademark without permission.
Cease and Desist Letter
One of the first steps that a trademark owner may take when it discovers someone is using their trademark without their permission is to send a cease and desist letter. A cease and desist letter is a letter requesting that an individual or business stop a specific action and refrain from doing it in the future.
The letter also contains a threat of legal action if the recipient fails to comply with the letter’s demands.
If you receive a cease and desist letter, you will want to study it closely, including any legal precedent cited and the facts that are described within the letter. It can be helpful to consult an intellectual property attorney to develop and strategize the best response.
Alternative Dispute Resolution
Alternative Dispute Resolution (ADR) is an alternative way to settle disputes between parties outside of the courtroom. ADR includes things such as negotiation, mediation, arbitration. Pursuing litigation can be a costly and lengthy endeavor.
Turning to these ADR options can provide both parties with a more cost-effective and quicker way to try and come to an agreement over the ultimate trademark rights and potential damages as a result.
Trademark Lawsuit and Litigation
A trademark owner may also choose to file a trademark infringement lawsuit against any individual or business they believe to be infringing their trademarked phrases or slogans; including if you are using their trademark without permission.
This can be filed in either state or federal court, depending on the specific laws the trademark owner wishes to pursue. This process can involve costly discovery, motions, and ultimately result in a trial.
Damages for Trademark Infringement
If you have used a trademark without permission, and this use has caused harm to the trademark owner, you may be liable to the owner for damages. Damages for trademark infringement can take a few forms:
- Actual damages
- Any monetary damages the trademark owner actually sustains as a result of the infringer.
- Disgorgement of Profits
- The profits the infringer has earned as a result of wrongfully suing the trademark.
- Attorney’s Fees and Costs
- Attorney’s fees and costs of litigation are sometimes awarded in a trademark infringement case.
In court, there is wide discretion in determining the appropriate amount of damages and which type. For actual damages and disgorgement, the trademark owner will need to provide these damages with clear evidence.
When Unauthorized Use Is Not Trademark Infringement
There can be instances where you can use a trademark without actual infringement on the trademark. This is when the use is not actually trademark use.
One instance of trademark use that is not infringement is called “fair use.” Fair use allows trademark use when the courts or Congress has determined such use is protected by legal rights such as the First Amendment and is used for things such as news reporting or parody.
There are two types of fair use:
- Nominative fair use; and
- Descriptive fair use.
Nominative Fair Use
Nominative fair use is typically permissible as long as:
- The product or service in question is not readily identifiable without use of the trademark;
- The mark is only used as much as is reasonably necessary to identify the mark; and
- Use of the mark does not suggest that the trademark owner sponsored or endorsed such use.
Descriptive Fair Use
Descriptive fair use allows others to use a trademark to describe the user’s goods or services rather than using it as a trademark to indicate the source of the goods or services. This typically takes place when the underlying trademark has a descriptive meaning in addition to its secondary meaning as a trademark.
Another way in which you can use a trademark without infringement is using a competitor’s trademark to carry some type of comparative advertising. The trademark use must be accurate and non-deceptive. The use should also not imply any affiliation or sponsorship by the competitor.
The functional use doctrine prevents trademark owners from protecting a specific element or feature of a product through trademark law that does something useful or functional. This doctrine is in place to allow for competition so that competitors can make a competitive product that includes features required or desired by the consumer.
Collateral use is another type of trademark use that can be considered non-infringing. Collateral use occurs when the user uses a trademarked item as one component of a larger or more complex product. The collateral use doctrine allows that user to identify the trademarked item without the larger product by its trademarked name.