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Protecting Your Brand: To Sue or Not to Sue

A discussion of key considerations for determining whether to commence a trademark infringement action from Practical Law Intellectual Property & Technology.

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Feel_the_Squeeze_300x250A discussion of key considerations for determining whether to commence a trademark infringement action from Practical Law Intellectual Property & Technology.

Your client has identified an apparent infringement of one of its trademarks. Should it sue? While commencing a federal trademark action under the Lanham Act is a fairly straightforward process, whether to litigate infringement, dilution, or related claims should never be a quick decision. The trademark owner’s counsel should take time to weigh all of the issues that may impact the client’s case before filing suit. Some of the key considerations are discussed in the below article.

Evaluate the Client’s Claims

Counsel must investigate and understand the facts of the dispute to properly advise the client on how to address it. Specifically, counsel should:

  • Meet with the client to review the known facts and key documents, including:
    • ownership records for the client’s mark;
    • documents supporting the applicable likelihood of confusion factors;
    • documents showing the plaintiff’s policing and enforcement efforts for its mark; and
    • documents showing the nature and extent of the alleged infringer’s activities.
  • Consider conducting a formal investigation of the defendant’s activities to help determine:
    • the nature and size of the alleged infringer’s business;
    • the nature and extent of the alleged infringer’s use of the mark;
    • how long the alleged infringer has used the mark;
    • the alleged infringer’s future plans for the mark; and
    • the nature and location of the alleged infringer’s assets.
  • Consider conducting a trademark search to assess the nature and extent of third-party use and registration of similar marks.
  • Consider conducting a consumer survey, for example, on:
    • consumer confusion;
    • acquired distinctiveness;
    • fame; and
    • dilution.
  • Identify and assess all of the client’s potential claims against the alleged infringer, for example:
    • trademark infringement;
    • unfair competition;
    • dilution; and
    • potential state law claims.
  • Identify and assess the alleged infringer’s potential defenses and counterclaims, for example:
    • abandonment;
    • fair use; or
    • fraud.
  • Understand the relief the trademark owner would be seeking, including whether immediate injunctive relief is warranted.

Estimate the Cost of Litigation

Before the client decides whether to sue, it should be informed of the likely time and expense involved in litigating the case, including the estimated:

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  • Costs of any pre-suit investigations.
  • Costs of any pre-suit consumer survey.
  • Costs of any pre-suit trademark searches.
  • Costs of any pre-suit cease and desist letter.
  • Costs of seeking immediate relief.
  • Initial pleading costs.
  • Discovery costs.
  • Trial costs.
  • Costs related to the alleged infringer’s likely counterclaims.
  • Soft and collateral litigation costs, for example, time spent by business personnel gathering documents.

Since most trademark actions are resolved before a full trial on the merits, counsel should consider providing the client with cost estimates in stages. Counsel can formulate more accurate estimates of future stages of the lawsuit as they consider information obtained in the earlier stages.

Consider Whether to Send a Cease and Desist Letter

Before filing suit, counsel should discuss with the client whether to send a cease and desist letter to the alleged infringer. In making this determination, the client should consider:

  • The potential benefits of a cease and desist letter, including the possibility that it will resolve the matter without the need for litigation.
  • The potential risks of a cease and desist letter, including the possibility that the alleged infringer will file a declaratory judgment action in response to the letter, seeking a declaration of non-infringement or invalidity of the client’s mark.

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Counsel should also carefully evaluate the tone of any cease and desist letter. While an aggressive tone may be appropriate in cases where the alleged infringer’s activities are clearly willful and causing or about to cause significant harm to the client, in other cases a more restrained approach may be more likely to yield the desired results. For example, if the alleged infringer is a small company that it is not acting with willful intent, a letter that is more educational than threatening may be advisable. An overzealous trademark owner risks negative publicity and being labeled a “trademark bully”.

Evaluate Jurisdiction and Venue

Before filing suit counsel should ensure that:

  • The court has subject matter jurisdiction over the case.
  • The court has personal jurisdiction over the alleged infringer.
  • The venue is proper.

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