Kara Sears
Laws are a set of rules that are created and enforced by social or governmental institutions to regulate behaviour. Brands do not create laws, but they are subject to them and can violate them. For example, several big brands have violated consumer protection laws, which ensure the fair treatment of consumers and promote a competitive marketplace. Trademark law is another area where brands can violate laws, as it protects a brand's identity, including names, titles, taglines, logos, and other distinctive features. While brands do not create laws, they can influence the legislative process through lobbying and other means.
| Characteristics | Values |
|---|---|
| Purpose | To protect consumers from unethical or unfair treatment and deceptive business practices |
| Focus areas | Marketing and advertising, identity and privacy protection, financial services regulation, deceitful business activities, anti-trust laws, etc. |
| Examples of violations | Over 100+ Consumer Protection Act violation lawsuits |
| Examples of violators | Western Union, Harley-Davidson, Dirt Devil, Geico |
| Protection methods | Trademark law, service marks, collective membership marks, certification marks, trade dress |
| Tests for infringement | Strength of the trademark, similarity of marks, evidence of consumer confusion, consumer care in comparing products, intent of the organization |
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What You'll Learn
Trademark law
In the United States, trademark law is mainly governed by the Lanham Act, which defines federal trademark protection and trademark registration rules. The Lanham Act grants the United States Patent and Trademark Office ("USPTO") administrative authority over trademark registration. Under the Lanham Act, both registered and unregistered trademarks are granted some degree of federal protection. However, marks registered with the USPTO are given a higher degree of protection in federal courts than unregistered marks.
Trademark rights come in two types: common law and federal registration. Common law trademark rights are acquired automatically when a business uses a name or logo in the normal course of commerce, and are enforceable in state courts. On the other hand, federal registration involves a trademark application process with the USPTO, which takes about 6 months and costs $275. Once the application is filed, it sits in a queue for a few months until a USPTO Trademark Examiner examines the application according to the rules of the Trademark Manual of Examining Procedure. If the Trademark Examiner identifies problems with the application, the applicant will be sent a "preliminary rejection" and will have 6 months to file a reply with arguments in favour of their trademark application. If the Trademark Examiner is persuaded by the reply arguments, the application will be granted registration; otherwise, a "final rejection" will be issued.
It is important to note that trademark law does not protect descriptive terms unless they achieve "secondary meaning" in the minds of consumers. This means that trademark rights accrue when the public comes to associate the descriptive term with a particular company rather than the product in general.
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Consumer protection laws
In the United States, consumer protection laws are a set of federal and state laws that safeguard purchasers of goods and services from defective products, deceptive or fraudulent business practices, and dangerous goods and services. These laws are designed to ensure ethical and fair treatment in the marketplace and promote competition for the benefit of the consumer. Consumer protection laws cover a range of topics, including ethical marketing and advertising, identity and privacy protection, financial services regulation, anti-trust laws, and more.
The history of consumer protection laws in the US can be traced back to the 19th century when public crises forced the government to create a body to oversee products and services offered to the public. Over time, laws evolved to protect consumers from large corporations and practices like adhesion contracts, which common law fraud did not address. The Federal Trade Commission (FTC), founded in 1914, is a key government body responsible for protecting consumers in the US from unethical or unfair treatment and deceptive business practices. The FTC works closely with policymakers, lawmakers, business owners, and the public to maintain a safe and fair marketplace.
Despite the existence of consumer protection laws, violations still occur and can have significant consequences for both consumers and businesses. Lawsuits arising from consumer protection violations can result in costly damages for businesses and a loss of trust from consumers. Increased awareness among consumers and lawyers may lead to more active employment of consumer protection laws, empowering individuals to take action against unethical practices.
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Brand identity
Trademarks serve as a powerful tool for brands to establish a unique identity and prevent consumer confusion. They act as a source identifier, ensuring that consumers can easily recognise and associate specific products or services with a particular brand. By registering trademarks at the state or federal level, brands gain additional legal protection and the ability to take infringers to federal court.
When creating a brand identity, it is essential to consider the distinctiveness and protectability of the brand name. Coined names, such as Kodak, Xerox, and Exxon, are unique and arbitrary, making them highly distinctive and relatively easier to protect legally. However, they may require more time and effort to build meaningful associations with consumers. On the other hand, suggestive marks like Coppertone, Duracell, and Lestoil strike a balance between suggestiveness and protectability, conveying a hint of the product's nature while still being eligible for legal protection.
Common words or phrases can also be trademarked as long as they are not used descriptively. For instance, brands like Amazon, Twitter, and Apple have trademarked common words by infusing them with unique and distinctive associations. Descriptive marks, such as Weight Watchers, Rollerblade, or Wite-out, can be protected if the brand establishes a secondary meaning for the word. However, generic marks like Shredded Wheat or Super Glue are generally not protectable due to their widespread use and lack of distinctiveness.
To strengthen brand identity and protect it from infringement, businesses should widely advertise and distribute their trademarked products over an extended period. This helps to build consumer familiarity and makes it more challenging for competitors to emulate or neutralise the brand's unique identity. Additionally, brands can create strong trade dress, encompassing the overall image and commercial impression of the product, to further distinguish themselves in the market.
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Consumer trust
In the context of brands and consumer trust, it is essential to consider the role of consumer protection laws and how they shape the relationship between businesses and their customers. These laws aim to ensure the ethical and fair treatment of consumers, promoting a competitive marketplace that benefits buyers.
Consumer protection laws have evolved to cover various aspects of business conduct, including ethical marketing and advertising, identity and privacy protection, financial services regulation, and anti-trust legislation. They safeguard consumers from deceptive and unfair practices, fostering trust in the marketplace.
Trademark law is another critical aspect of consumer trust. It protects a brand's identity, including names, taglines, logos, product shapes, colours, and other distinctive features. By securing these trademarks, brands build recognition and establish a unique presence in the market. This legal protection helps consumers identify and trust specific products or services, knowing they originate from a reliable source.
Additionally, brands can build consumer trust by creating strong trade dress, which involves consistently using distinctive packaging, colours, and designs across their product lines. Over time, consumers become familiar with these visual cues, making it easier to identify and trust the brand. This long-term strategy helps establish a solid reputation and loyalty among customers.
While brands focus on building consumer trust, it is equally important to avoid violations that can break this trust. Consumer protection violations can lead to costly lawsuits and damage the market's perception of a company. Regaining consumer trust after such incidents can be challenging, underscoring the importance of ethical and transparent business practices.
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Federal Trade Commission
The Federal Trade Commission (FTC) is an independent agency of the United States government, established in 1914 by President Woodrow Wilson. The FTC was created to protect US consumers from unfair, deceptive, and unethical business practices, and to prevent monopolies and promote consumer protection. The FTC has three main goals: protecting consumers from fraud, maintaining competition by preventing anti-competitive practices, and advancing individual and collective organisational performance.
The FTC works with people from various sectors, including policymakers, lawmakers, business owners, and the public. It provides research and advice to national and international government agencies to help shape rules that maintain a safe and fair marketplace. The FTC has rulemaking powers to address industry-wide practices, and these rules are known as Trade Rules.
The FTC investigates companies for potential violations of consumer protection and antitrust laws. For example, in 2004, the FTC alleged that Gateway engaged in unfair and deceptive trade practices by making retroactive changes to its privacy policy and selling customer information. Gateway settled the complaint with the FTC, agreeing to surrender some profits and adhere to restrictions for 20 years.
More recently, in July 2023, the FTC launched an investigation into OpenAI, the creator of ChatGPT, over concerns about data security, privacy practices, and the publication of false and defamatory information. The FTC passed an omnibus resolution to increase its ability to investigate companies adding AI to their products.
The FTC also hosts workshops and livestreams to educate consumers about unfair or deceptive trade practices, disaster-related scams, reputable charities, and more.
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Frequently asked questions
The FTC, or Federal Trade Commission, is a government body founded by President Woodrow Wilson in 1914. The FTC works to protect consumers in the US from unethical or unfair treatment and deceptive business practices.
The FTC has three main goals: protecting consumers by preventing fraud, deception, and unfair business practices in the marketplace; maintaining competition by preventing anti-competitive business practices; and advancing individual and collective organizational performance. The FTC works with people from all sectors, from policymakers to business owners to the general public.
Brands can protect themselves legally through trademark law, which protects a brand's identity, including names, titles, taglines, logos, colours, and other distinctive features.
