Building And Substantiating Trademark Goodwill And Secondary Meaning In The Digital Age

Brands can emerge as reputable entities with the advent of today's digital marketplace, with business names trending across social media, and thus finding themselves with large follower numbers and robust sales, in a very short time frame. However, the fact of being popular does not automatically create enforceable legal rights to use and enforce the use of a trademark. The most significant factor will be the existence of goodwill associated with that trademark; and in many cases, whether there has been sufficient evidence to demonstrate that any particular trademark has developed a secondary meaning.

Goodwill with respect to a trademark represents the reputation and commercial value ascribed to a trademark through usage over time; therefore, it embodies the trust and recognition that consumers attach to a trademark for continuous use based on the consistency of a product/service's quality, customer experience, and association. Consumers looking at well-established trademarks like Apple do not just see a name -- they see the brand as having direct relation to its source, standard and reputation. Therefore, there is a foundation of goodwill associated with the mark. Goodwill is not created solely by registering a trademark; it is based upon the continued usage and marketing of the trademark, including consistent branding, customer satisfaction, and continuous promotional efforts. Goodwill is also the basis for providing protection to a trademark in any passing off action or enforcement action relating to trademark usage.

When a mark is either descriptive or not inherently distinctive it may have a secondary meaning. A descriptive term will not constitute a trademark unless it starts to become associated with a particular business as opposed to just the product category as a whole. This association of consumer perception is referred to as secondary meaning. An example of this occurred in the case of Booking.com where the issue was whether the term "Booking" in conjunction with ".com" could act as a source identifier which is distinct. The issue was whether consumers saw "Booking" as identifying a specific entity or if the term simply was a description of what was being produced. Secondary meaning only exists when such a change in perception occurs.

Creating and developing strong trademarks goodwill requires consistency. Trademark needs to be used in the same way on your website, across all social media platforms, packaging, advertising and all forms of communication. Frequently changing a company's logo or style/branding presentation can reduce the trademark's overall distinctiveness or legal ability. It is equally important that adequate documentation is kept providing necessary support. Proof of advertising expenditures, digital advertising campaigns, influencer sponsorships, or promotions can demonstrate that the business took steps to create brand awareness. Testimonials, newspaper articles, awards, and online reviews can also provide additional support for the claim of goodwill. Digital analytics such as an increase in followers, engagement, geographic spread of followers and repeat customers can also help further support the evidence of developing distinctiveness.

Courts who evaluate for secondary meanings focus on things like how long and continuously the brand has been used, advertising, sales volume, how much attention the company has received in media, consumer awareness, intentional copying of the company's brand by competitors, etc. but when used digitally, courts would look at things like website screenshots, archived website pages, analytic reports, and large amounts of sales or purchases generated in the marketplace; companies must view and compile all this evidence (or material) as an organized "brand evidence file." Unfortunately, there are a number of businesses (either large or small) who spend enormous amounts of money marketing their products but do not have organized records to support their branded product's growth and visibility in their market. If a company does not have documented proof of their brand's existence, even if they have created a very successful brand, they may find it exceedingly difficult to prove they have any legal rights to that brand.

When dealing with descriptive trademarks, consumer surveys may be particularly helpful. In all cases, a properly conducted survey will ask consumers which name they associate with the appropriate type of business; if a majority of respondents provided a direct answer identifying one company, the evidence of secondary meaning may be more easily substantiated. Although conducting a survey may be expensive, it can hold a great deal of weight in the results of litigation involving high-value brands.

Businesses today make many mistakes that undermine their brand's strength. Examples may include believing that having many social media followers proves they have goodwill; using marks descriptively rather than as brand identifiers; not acting against infringers; failing to protect their domain names; allowing third parties to misuse their marks without challenging those actions; and failing to enforce their trademarks through a true sense of exclusivity. Enforcement, therefore, is not simply reactive; it creates and maintains exclusivity and gives trademark owners a stronger legal position.

In essence, goodwill reflects the reputation that consumers have for a particular product or service, and it is also an indication of a company's value based on the confidence level that consumers have in their purchasing decisions. The pace at which brands grow today creates an increased responsibility on the part of companies to document their brand's efforts using digital evidence (i.e., social media) and other means; therefore, those companies that successfully implement strategic planning and establish a chain-of-evidence system will have a greater likelihood of establishing their trademark rights in a dispute.

In the current business environment, a trademark represents much more than just a name or logo, it identifies the business with the customer. When asserting rights associated with a trademark or trade name, the business must demonstrate that a distinctive connection exists in the mind of the customer between the product or service and the trademark or trade name when claiming that the trademark or trade name has been infringed upon or that the trademark or trade name has been used in a way that violates the owner's exclusive rights. This requires presenting credible and well-documented evidence to the courts in order to establish that an identity exists in law. Popularity on the Internet is not a reliable source for proving that an identity exists.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.