Lesson: Startup IP with Jack Russo

Step #5 Trademarks: Aim for arbitrary

Trademarks is some of the more well settled IP law. It's usually not gray it can get gray if the trademark is too descriptive, too generic. A cup is a generic word for an object that holds typically, liquid and might be paper or might be ceramic but you can imagine that you can have a cup that has a brand that is not generic. You wouldn't use the word cup. You might use the word Pixie. Pixie has nothing to do with cup, except it is actually a famous brand for a Pixie Cup but pixie means something completely different.

The story I like to tell about this is that when Fenwick declined to take stock at Apple. When they asked a corporate senior partner, "Well, how did you vote against this?" because he was not very supportive of, yeah these guys are great. He said, "The three things that I most disliked is number one, they both smelled awful." I thought, you know, that's a really positive thing. They're working really hard, they're wearing their dirty jeans and dirty t-shirt that has gray matter under the arms because their working 24 hours a day. He said, "They smelled awful, number two, they were completely unkempt, unshaved with hair all over the place, partial beards, just not beautiful looking, just smelly and bad looking. Then three, they had a goofy name for a company. Apple? For a computer company? It's a fruit! What does that have to do with a computer company?"

He was trying to advise them to go with something like APL or ACS. Some three letter acronym, like IBM, because that's a computer company. IBM, you know? You'll be ACS and Jobs said, "No way, we love this name. It has nothing to do with computer. That's the point! We're going to be the friendly company. We're going to be the friendly computer."

Tim Todd, who was the corporate partner he has since retired. Last I heard he was teaching in some law school. I don't know if he is still there. He forced them to file, as their corporate name, Apple Computer, Inc., three things. Jobs, before he died, got a shareholder vote to force the name to return to just "Apple.” So when you see the company name, even just on a store up the street, all the stores it just says Apple. It doesn't say computer. It doesn't say Inc. His view of life was, "I just want to be associated with a brand we created from the get go." That's the strongest form of trademark. That's considered completely arbitrary name. Those are the strongest brands. Generics are not brands at all. Descriptive are very weak brands. Descriptive is just something that merely describes.

In between descriptive and arbitrary there is something called suggestive. Suggestive is that is suggests what you're talking about, but it doesn't just describe it. That is one area that things can get gray because a lot of people come in and say, "Well, I want to protect this brand." You say, "What’s the brand?" And they say "Well, it's Watch Easy." What's Watch Easy? "Well, you watch the screen in an easier way.” Well, is that descriptive of what you're talking about? Is that really suggestive because it's spelled differently?

Trademarks are very much about screening. You're screening for, you can't have a generic, which means the basic English wording, cup, camera, and table. You have to have something that is not generic. It shouldn't be merely descriptive either. It should either be suggestive or ideally, arbitrary. Arbitrary would be the strongest. You can then reserve by using this intent to use approach. You can buy the domain names, which tends to be how people start. They brainstorm and then they go to the web and see what's available and see what's not available and try to come up with some good names.

It's interesting, names are pretty important. I've seen VCs get very turned off by the wrong names. I've seen angel investors get very turned off like, hey if you can't come up with a good name, you're probably not a very good entrepreneur. Yet, in some ways, it's a name that shouldn't mean anything because you build a strong name behind it. The trademark represents a place to symbolize the good will. The stronger the mark, the larger the potential symbolism is and if the brand becomes something that symbolizes a lot of good will, it can carry a lot more intangible value than a descriptive name.

Google is pretty arbitrary. You might say it's somewhat suggestive of doing something with a computer system but that brand has become exceptionally powerful. It can store a lot more intangible value because of that. If Google was called The Search Company, it would probably be confused with a lot of other search companies. Therefore, the brand would not be as valuable.

They might create some secondary meaning. You would say, "General Motors.” Two descriptive words, General and Motors, but put together it creates a brand that has some meaning. So when I say, "General Motors,” you don't think, "well, a motor that is general" you think of the company that is in Detroit that has come out of bankruptcy and is now a new public company all over again.

Brands are pretty important. On the Internet, because there's so much happening on the Internet, it's amazing how many companies are there. Without a good brand, you just get lost. You don't know where to go. There's no easy way to say, "Well, I'll find exactly what I want," without having some ability to have that brand emerge from all the noise.