Corporations continuously invest tremendous amounts of capital in intellectual creativity and marketing. As brand names become widely recognized, owners of famous trademarks aggressively take legal action to protect their rights. In recent years, small travel agencies have found themselves pitted in trademark battles brought by powerful corporations which offer no competing or related goods and services. Several such cases, discussed in greater detail below, illustrate the need for small businesses to exercise caution and due diligence before branding themselves with a trade name.

The Saul Zaentz Company D/B/A/ Tolkien Enterprises v. Wozniak Travel, Inc.
In 2006, Tolkien Enterprises sued Hobbit Travel in the U.S. District Court for the Northern District of California, accusing the company of wrongfully appropriating the word “hobbit,” the name coined by J.R.R.Tolkien and featured in his books “The Hobbit” and “The Lord of the Rings” to describe dwarf-like creatures who inhabit the mythical world of Middle Earth. The suit claimed that the travel agency, which has operated under that name since 1976, was confusing the public about its association with Tolkien and capitalizing on Tolkien's good will. On July 29, 2008, the Northern District of California granted summary judgment in favor of Hobbit Travel. The court dismissed the suit because Tolkien Enterprises waited an unreasonably long time to file suit, 18 years after the company became aware of Hobbit Travel's existence.

Intel Corp. v. Intellife Travel, Inc.
Few people would cognitively associate  a semi-conductor maker and a business that sells airline tickets but these distinct differences did not deter Intel Corp. from asserting a suit for trademark dilution and infringement against Intellife Travel Inc., a two-person travel agency based in Santa Clara, California. The 2008 suit claimed that the agency's name, which stands for "Intelligent International Lifestyle," causes "confusion that Intel is the source or sponsor of Intellife's services" and is a "dilution of the Intel trademark." The companies later resolved the dispute in an undisclosed settlement.

Trans-High Corp. v. High Times Travel, LLC
In the most recent case, a Seattle-based seller of vacation packages found itself in a similar predicament after it started a travel business that caters to cannabis enthusiasts, called High Times Travel, LLC.

In a sign that the marijuana industry has become mainstream, it took just nine days from the date the High Times Travel publicly launched on June 24, 2013 for Trans-High Corp., the parent company of High Times Magazine, to file a lawsuit against the "budding" travel agency. Although the magazine is not a seller of travel and has no travel related registrations in its trademark portfolio, it sponsors several cannabis-themed events and competitions which have been previously held in marijuana-friendly locations like San Francisco, Colorado, Amsterdam and Jamaica. To promote these events, the magazine signs contracts with a number of travel agencies and tour operators that help event-goers find transportation and lodging at various High Times gatherings.

In its complaint, Trans-High claimed that the travel agency's use of its marks is "likely to cause confusion and mistake in the minds" of consumers creating a false impression that the agency and its owner are "approved or sponsored by, or are in some way associated or connected with Plaintiff's products and services when, in fact, they are not." The travel agency never responded to the lawsuit. But the agency's quiet disappearance from the worldwide web likely influenced the magazine to drop the suit. 

Trademark Dilution
One lesson derived from these cases is that trademark protection can expansively extend beyond companies directly competing against each other. Direct competition is just one of several determining factors as to whether infringement has occurred but the existence of competition is not a necessary element to sustain a separate claim of trademark dilution.

The Federal Trademark Dilution Act (FTDA) provides that the owner of a famous mark is entitled to protection against a junior user's commercial use of a mark if the use begins after the mark has become famous and causes dilution of the distinctive quality of the mark. The Act defines dilution as "the lessening of capacity of a famous mark to identify and distinguish goods or services" regardless of whether the dual use would likely confuse consumers or involve competing goods and services.

So, even though there is very little likelihood of confusion created by a travel agency's use of the name "Intellife," Intel sued for dilution on the premise that the name "Intel" is a famous mark which was in danger of becoming less distinctive due to the junior user's incorporation of the term "Intel" in its name. Tolkien Enterprises employed a similar argument when it sued Hobbit Travel for dilution.

[Just to clarify - Trans-High Corp. did not accuse High Times Travel of dilution. Rather, it sued for trademark infringement based on the premise that its name causes confusion within the minds of the public since both firms are cannabis-themed businesses marketing products to the same customer base.]

While business owners should remain vigilant about lateral suits for infringement brought by competitors, such as the 2010 suit brought by Travel Dynamics International against the Travel Dynamics Group (now known as Cadence Travel Management), they should also avoid selecting a name that resembles a famous brand operating in an entirely different industry. Trademark dilution suits (even obscure ones) threaten the survival of small businesses. Owners of famous marks usually have plenty of money and resources to troll the internet for copycats and threaten them with litigation.  Therefore, when selecting a trade name you should carefully evaluate the risks of both infringement and dilution.

Duty to police trademarks
Trademark dilution remains an area of great controversy. And Intel found itself at the epicenter of controversy when it sued a tiny travel agency for dilution and infringement, claims which many analysts criticized for their questionable merits. But in many instances large corporations have few alternatives when it comes to defending the integrity of their marks.

Trademark holders are under an affirmative duty to actively police their trademarks. If they fail to do so they may suffer the consequence of a court subsequently finding that the trademark holder acquiesced to infringing uses or that the mark now lacks distinctiveness.   When truly infringing  or dilutive  conduct is discovered, the trademark holder must take aggressive action to assert its rights.

Therefore, the stakes for trademark holders have never been higher. The number of trademark suits filed each year continues to increase and unsuspecting entrepreneurs who name their businesses arbitrarily without first determining whether the mark is already in use could be at risk for trademark violations.

In the next blog article Daniel Zim will offer tips on avoiding trademark infringement and dilution.