January 4, 2018

It's a "Brand" New Year for Nonprofits

5 min

Now is a perfect time for nonprofit organizations to make a few New Year's resolutions regarding their brands (aka trademarks). Here are five important ones:

1. We will not engage in 'naked licensing.'

Naked licensing occurs when a trademark owner allows another party to use its brand without sufficient control. This can result in abandonment of the trademark and loss of rights. Often a nonprofit wants to allow its members and chapters to use the nonprofit's primary logo as a sign of membership or chapter status, though without engaging in burdensome control through a certification program (like that of Underwriters Laboratories) or individual trademark licenses with each party. In that case, the nonprofit should take three steps.

  • First, ensure the mark does not make the impression of a certification mark or traditional trademark, but instead makes the impression of a membership mark. An easy way to do this is to add the word "MEMBER" (for members) or "CHAPTER" (for chapters) to the mark and then apply to register the mark as a collective membership mark with the U.S. Patent and Trademark Office (USPTO).
  • Second, change the nonprofit's bylaws and/or policy manual in such a way that licenses the mark to members and chapters for use as a sign of membership, and automatically bind them to easy controls for use of the mark.
  • Third, enforce the trademark terms of the bylaws and/or policy manual.

2. We will not treat our credentialing marks as 'certification marks.'

Many nonprofit organizations operate what they call "certification" programs, where they administer a testing program and award credentials to individuals who pass tests and meet other criteria. Many lawyers reflexively treat these brands as "certification marks," which is a term of art in trademark law and actually has a different meaning in this context. This results in nonprofit trademark applications being improperly filed and registered in Class B, where certification marks reside. In fact, a "certification" mark is a mark a third party uses in an attention-getting manner to brand its goods/services, often in the form of a logo (e.g., the UL logo); it also happens to have additional requirements that make it more burdensome and costly to manage.

By contrast, an acronym that designates a nonprofit credential is used after a person's name, like a title or degree (e.g., Andrew Price, ABCD). They are regular service marks, not certification marks, in most cases. They should generally be registered in Class 42, bearing in mind that the USPTO has been inconsistent about whether the marks should fall in Class 35 (the general business class) or 42 (where quality testing is found). In any event, they should not fall in Class B. So, to the extent nonprofits own registrations for the acronyms in Class B, they should be refiled in the proper class.

3. We will break the right rules.

Nonprofits hear a mantra from many trademark lawyers that their brands must be used as adjectives and in a consistent manner. For-profit brand owners like Google have demonstrated, however, that it can be okay in some cases to use marks as verbs and deliberately disrupt logos. Indeed, strong brands can be flexible, fluid, and living—for for-profits and nonprofits alike. In the case of disrupting logos, Google has conditioned the world to accept ever-changing logos with its daily "doodle" versions of its main logo. Nonprofits can follow this lead by taking a few steps.

  • First, make sure the subject logo is strong, with substantial goodwill.
  • Second, gauge how much to play with the logo based on the relative strength of the mark (e.g., famous marks can be changed the most).
  • Third, change only the design or stylization of the logo, not the corresponding word mark. And make sure that the essence of the logo is retained (e.g., the stylization of the word mark Google is readily discernible).
  • Fourth, continue regular trademark use of the original logo.
  • Fifth, maintain trademark registrations for the original logo and underlying word mark standing alone.

Taking these steps can be a creative and forward-thinking way for nonprofits to increase chapter and member engagement—without the risk that trademark lawyers have traditionally warned against.

4. We will avoid the Madrid Protocol.

This International system for the registration of trademarks can be a siren song. It's seductive to think of the initial cost savings enjoyed by filing for trademark protection outside of the U.S. through the Madrid Protocol, where one is able to cover multiple countries in a single filing rather than through individual national applications. This can be deceptive, however, as initial savings tend to be eaten up during the process of "prosecuting" the application through to registration—and there are other disadvantages.

Notably, filing under this system creates vulnerability in the first five years, where others can engage in what is called "central attack" by challenging the U.S. application/registration on which the Madrid registration is based. This can result in a "house of cards" effect, where the Madrid registration falls and needs to be transformed into national applications, at great cost and delay. Suffice it to say it is not worth using this system unless the brand at issue is very strong and is the subject of an incontestable U.S. registration, and the nonprofit wants to cover a large number of countries. Even then, it is worth carefully considering the disadvantages, just a few of which are mentioned here. Foreign trademark registrations are important, especially in first-to-file countries like China—and it is just as important to avoid obtaining them in a way that creates vulnerability.

5. We will place a high value on trademark registrations.

There are many contributors to brand value: the uniqueness of the brand; the quality of the goods or services associated with it; and the policing and control the owner exercises over the brand. The most important contributor, however, is the trademark registration. This is "Exhibit A" in every trademark dispute. When a dispute starts, either you have the right registration or you don't. There can be a tendency to recognize that the registration is important and yet discount the importance of getting the right registration and invoking it in the right way.

So much goes into a successful nonprofit organization—and the nonprofit's brands represent that success in a simple, memorable form. Now is a perfect time to build a trademark portfolio that reflects the importance of the nonprofit's brands and positions it most effectively to deal with expected threats to brand value. No one could have predicted what 2017 would hold for any of us—and the same is true for 2018.