Trademark Protection on Promotional Products

By Diana Muller

Is it possible to obtain trademark rights from promotional products? Is it possible to protect the category of promotional products bearing a trademark if the products are unrelated to the core business of the trademark owner, and are given away for advertising and promotional purposes only?

The legal protection of trademarks on promotional products and merchandising has been quite controversial and has created a lot of questions relating to the issues of “use in commerce”, proper indication of source and quality control protection. Companies are always seeking to expand the visibility of their marks by creating promotional or for-sale items bearing their trademarks that their consumers, or fans, would appreciate, e.g. a towel bearing the logo of a team in a basketball game. Companies constantly ask their IP lawyers if they could or should obtain trademark registrations to cover items on which their trademarks or service marks are used as a way to promote and advertise their business. It is very common to see a display or array of products on the shelves of famous restaurants or stores that are not related to the restaurant or services.  It is also common to see waiters or waitress wearing basic T-shirts in bright colors displaying (quite proudly) the name and logo of the restaurant and advertising that these products are for sale. Various promotional products that bear trademarks for goods or services that are unrelated to the products or services sold or rendered by the trademark owner are sold or given away.

Although these products cover a wide variety of items (such as key chains, candies, bumper stickers, mouse pads, water bottles, etc.), any items such as T-shirts, sweatshirts or towels are often the most appropriate as a way to display a logo; image; likeness or team logo and are therefore more desirable as a virtual canvas or billboard that would qualify as a clear display of rights.

This was pretty obvious during the recent political campaign!

An important issue to be addressed is whether these promotional uses can establish trademark rights in regard to the promotional goods themselves (which most of the time are being manufactured by other companies). The answer is yes, it is possible to obtain trademark rights for the variety of the promotional items as long as the company (owner of the displayed trademark) has used and protected the same trademark for its primary core business. It is clear that with the economic growth and expansion found in the concept of “merchandising”, a party does not need to manufacture the goods to be able to own a trademark on these goods. The case law has become more accepting of this concept in several recent decisions. For example, the Trademark Trial & Appeal Board found that “consumers would see Amica Insurance Company as the source of AMICA promotional items such as pens, golf balls, etc” even though the goods were manufactured by an outside vendor. Moreover, these goods do not need to be sold to be accepted as “goods in commerce”. They are normally given away. It should also be noted that use on promotional goods cannot be interpreted as use in commerce with respect to the goods or services that a company is selling or must be selling. As a way of example, the owner of the trademark FERRARI for cars would not be able to rely on the sale or giving away of the ancillary line of promotional items as a defense against a cancellation action based on non-use of the FERRARI cars in the market place.

In many cases, the owners of famous trademarks may enlist a battery of licensees to promote their trademarks in connection with unrelated products and make money with it. This was the case regarding the mark PERRIER, whose proprietors adopted a merchandising concept that capitalized on consumers’ loyalty and affection for this mark for mineral water. These loyal consumers were interested in acquiring many goods bearing the mark PERRIER and logos for which the mark was not known such as clothing, patio umbrellas, jewelry, watches coasters, etc. More than 26 license agreements were entered into that permitted the licensees to affix the mark PERRIER to a variety of products. Some of these products were given away, and others sold, which helped to strengthen the position of the trademark PERRIER in the marketplace and obtain trademark registrations for many categories of products (as well as for the design of the famous bowling pin PERRIER bottle in the color green).

Moreover, trademarks used on promotional products are subject to trademark protection against consumer confusion, as found by the TTAB in a case involving McDonald’s that determined that the use of McTeddy for “teddy bears” was likely to cause consumer confusion with a McDonald’s promotional “teddy bear.”

Finally, not all the material placed on promotional items may qualify for trademark protection. This is the case with ornamental words and designs used on promotional items, because they do not serve as source indicators. There have been plenty of discussions on this issue and different legal opinions as to the meaning of  “ornamental”. The debate was clearly shown in connection with the Christian Louboutin S.A. v. Yves Saint Laurent lawsuit and the resultant Second Circuit decision – the defendant sought cancellation of the registration on the grounds that the red outsole of a shoe was merely ornamental. The Court decided to allow trademark protection “for the red lacquered outsole of a shoe that contrasts with the adjoining upper portion”. Some people viewed the red outsole as just ornamentation, while others found it to have trademark significance as a source identifier.

Ornamental words or phrases used on T-shirts or other products may be denied registration if the words or slogans are not source indicators and are not distinctive or they could be granted rights. See the cases below:

In Re Olin Corp., 181 U.S.P.Q. (BNA) ¶ 182 (T.T.A.B. Nov. 19, 1973).

  • “The “ornamentation” of a T-shirt can be of a special nature which inherently tells the purchasing public the source of the T-shirt, not the source of manufacture but the secondary source. Thus, the name “New York University” and an illustration of the Hall of Fame, albeit it will serve as ornamentation on a T-shirt will also advise the purchaser that the university is the secondary source of that shirt.”

Macy’s Inc. v. Strategic Marks, LLC, No. 11-CV-06198-EMC, 2016 WL 374147, at *3 (N.D. Cal. Feb. 1, 2016).

  • “Instead, the Patent Office Trademark Trial and Appeal Board has long held that ornamentation on apparel, including shirts manufactured by third parties, qualify as trademark use if the particular ornamentation serves as an indication of a secondary source of origin, e.g., the source of a shirt other than the direct manufacturer. For example, if a t-shirt with the stylized “Cal” logo was sold, Champion may be the direct manufacturer but the University of California, Berkeley, would be the secondary source that authorized Champion to produce and distribute the shirt bearing the school’s registered trademark.”

In Re Tee-Pak, Inc., 164 U.S.P.Q. (BNA) ¶ 88 (T.T.A.B. Oct. 22, 1969).

  • “The applicant indicates in the application that the mark is applied to containers. The original specimens indicate a stamping of “HOS-PAK” on a sheet of paper. It is immaterial that the applicant used a stamp to apply its mark to a container. The only consideration is whether the mark conveys to the purchasers knowledge of the origin or source of manufacture or merchandising of the goods. The applicant has shown how the mark is applied and this is sufficient for the purpose of registration.”

In summary, companies use promotional items as a way to advertise their trademarks, promote their business and increase brand visibility. Consumers enjoy purchasing these promotional products or just receiving same as “freebies” as a way to express their affection for their favorite brands, sports team, political figures, artist, products and services. A few legal issues have been identified in this article regarding the use and protection of promotional items and their brands and logos within a very broad spectrum of legal considerations. In order to obtain rights on promotional goods it is always important to understand the purpose of the trademark owners and find a balance between their expectations and the message they are trying to convey when using their marks on these products.