Thursday, February 9, 2012

“Great Scott!” - Balancing Brand Protection and Negative Consumer Perception in Trademark Policing Strategy

I have noticed a growing number of negative consumer responses to otherwise standard trademark policing actions, primarily cease and desist letters. In the past, consumers had little knowledge of trademark policing and it did not impact their perception of the brand aiming to protect its mark. Today, the Internet has developed tight-knit communities of like-minded consumers who are constantly informed of news relevant to their interests – including policing actions. As a result, attempts to protect a brand now have the potential to generate negative consumer perception of the brand and may require a trademark policing strategy that considers consumer perception.

At the outset, I stress that trademarks must be policed and policing strategies cannot be usurped by a mere possibility of negative consumer perception. Ownership of a mark entails an obligation to protect the goodwill and the public from deceit. Further, a failure to police entails a slew of possible negative outcomes including genericism and permitting the affirmative defenses of laches and acquiescence (see Anheuser-Busch, Inc. v. Du Bois Brewing Co., 175 F.2d 370 (1949.)) Thus, in many factual scenarios it remains necessary to take policing action and disregard negative consumer perception.

In scenarios where trademark infringement is not clear, I believe that counsel should factor negative consumer perception into the decision to undertake policing action. I see two questions determining whether negative consumer perception will result from a policing action:

1. Size of market and consumer knowledge?
a. The potential for negative consumer perception is greater in a small market with informed consumers.

       2. Size of enforcing party relative to allegedly infringing party?
a. The potential for negative consumer perception is greater in a David versus Goliath scenario.

The case of Scott Sport’s cease and desist letter sent to ON3P Skis illustrates the negative impact a questionable trademark policing action can have on brand perception.

Scott Sports is a large corporation that produces a variety of outdoor goods including skis, goggles, bicycles, clothing and more. ON3P Skis is an extremely small ski company that produces a small number of hand-built skis for the limited market of die hard skiers.

Scott Sports holds the trademark for “Scott” on skis. ON3P decided to produce a ski called the “Great Scott” that did not include any lettering on the ski referencing this name. The name had multiple origins: the name of one of ON3P’s owners, a common phrase, and the catchline of Christopher Loyd’s character, Dr. Emmett Brown, in the “Back to the Future” movie series. Scott sent ON3P a cease and desist letter and ON3P reluctantly complied, renaming the ski the “Cease and Desist.” I think Scott’s claim of trademark infringement was suspect, although it “won” anyway. But did Scott protect its brand through its conduct?

At the time Scott was attempting to expand its high-end ski division by hiring high-profile athletes to use its products and by producing skis appealing to the die hard skier. The die hard ski community is a small market and word quickly spread about the cease and desist order. The market Scott wanted to expand into was angered, to say the least, resulting in furious emails and pages of online hate expressed toward the brand. Scott did not need to protect its brand in this case. Scott accomplished “protection” of its brand but did so at the expense of its brand among the consumers it was actively trying to reach.

It is impossible to determine the actual impact Scott’s conduct had on its sales within the die hard skier market. Regardless, a company should avoid angering those consumers it is trying to reach. These consumers may forget Scott’s conduct over time but the Internet never forgets.

While policing trademarks is necessary, not all policing action is necessary. Companies should consider the impact questionable policing actions might have on their brand, balancing protection and consumer perception.

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