Texas revises its trademark act − should you apply for a Texas-registered trademark?
A Texas-registered trademark can protect your company’s name, logo or slogan from use by another business in Texas. Texas trademark registration generally offers a simpler, faster and less expensive alternative to federal trademark registration for businesses that operate solely within Texas and do not plan to expand outside of the state.
However, the revised Texas Trademark Act, which took effect on September 1, 2012, may undercut some of these advantages by bringing Texas trademark law more closely in line with federal trademark law.
Changes in the Revised Act impact both the trademark application process and trademark litigation considerations. Applicants now face higher hurdles in obtaining Texas-registered trademarks and will receive a shorter term of protection for their efforts, but issued marks may benefit from a perception of increased strength, and adjudged infringers could incur more expensive penalties for their actions.
It remains to be seen whether these tradeoffs ultimately will make state trademark registration a more or less attractive option for Texas-based businesses going forward.
The following are key changes to keep in mind if your business is considering whether to apply for a Texas-registered trademark:
Additional documentation now is required for new applications and renewals. In Texas, a mark must be “in use” before the application for its registration is filed. The Revised Act now requires that applicants notarize their applications and submit three specimens of the mark as actually used. Under the prior law, the applicant’s signature and two specimens of the mark sufficed. Acceptable specimens of a trademark in use include actual labels or tags affixed to goods or materials. Renewal applications also now require a notarized signature, as well as a specimen showing that the mark remains in use.
The Texas Secretary of State’s “likelihood of confusion” review now encompasses federal trademarks. Under prior law, the Texas SOS could not issue a certificate of registration if the applicant’s trademark was likely to cause confusion with any existing Texas trademark. The Revised Act significantly expands this “likelihood of confusion” review by requiring the Texas SOS to review an applicant’s trademark against both Texas registered marks and all unabandoned marks registered with the United States Patent and Trademark Office (USPTO) to determine whether any likelihood of confusion exists before issuance. This revision most likely will lengthen the application process and could significantly increase the number of rejections issued by the Texas SOS going forward.
Registration and renewal terms have been reduced to five years. Previously, a registered trademark expired on the tenth anniversary of its registration. The Revised Act reduces the registration term to five years. In this respect, the Revised Act diverges from federal trademark law under the Lanham Act, which provides for a ten-year term of registration, but brings Texas in line with other states such as California and Massachusetts, where the trend has been to reduce registration terms in order to remove “deadwood” (i.e., marks no longer in use) from the trademark register. Under the Revised Act, trademarks also must be renewed at five-year intervals.
A trademark dilution claim now may have more teeth. Under prior Texas law, the owner of a distinctive trademark could assert a claim against another party for dilution of the mark (i.e., diminishing the distinctiveness or reputation of a trademark). Dilution cases typically arise where a trademark is being used by another party on products that do not compete with (and have no relationship to) the trademark owner’s products.
The Revised Act limits trademark dilution actions to those marks that are famous and distinctive, a higher threshold for a trademark owner to meet and one now in line with the federal requirements for a trademark dilution claim. The Revised Act also contains clear definitions of “dilution by blurring” and “dilution by tarnishment,” in accord with federal law. In practice, this revision should ultimately benefit trademark owners. Texas trademark attorneys have frequently noted that the former dilution provisions were too vaguely drafted and thus courts rarely enforced them. With the enactment of the revised law, a Texas trademark owner now may have a greater likelihood of success proceeding against a party who is blurring or tarnishing its registered mark.
The owner of a Texas-registered trademark now may recover additional monetary damages. For a Texas trademark owner, the most welcome change in the Revised Act should be the expanded monetary rewards now available in litigation against an infringer. Under prior law, for monetary recovery, a Texas-registered trademark owner had to prove its actual damages (i.e. the cost of sales diverted by the defendant due to the infringement), which was difficult to establish because it required showing the amount of sales actually lost due to the confusion created by the infringer. The Revised Act now allows the trademark owner to receive the infringer’s profits derived from violation of the trademark − an easier showing in litigation. In addition, under the Revised Act, when a court finds the infringer acted with actual knowledge of the trademark or in bad faith, the infringer now may be required to pay triple the amount of damages awarded, as well as the trademark owner’s attorneys’ fees.