Bona Fide De Minimis - Michigan 7 2024

AFF---Bona Fide, De Minimis
File constructed by Santiago & Maguene
Notes
Definitions and key concepts
1] Trademark Protections (Background)
There are two standards that determine whether or not a trademark will be protected
Likelihood of Confusion
This just means that if the offending item who allegedly infringed on the trademark is competing directly with the trademarked item, then there would be confusion
If the two items are not competing, then there would be no confusion
Used In Commerce
This is the one that the AFF is focused on
2] Used in Commerce
This requirement necessitates a few crucial things
Advertising in more than one state
Interstate movement of goods in more than one state
Sale of goods in more than one state
However, the “used in commerce” standard, as determined by two crucial cases, cast some uncertainty, and undermined the protections granted by trademarks
3] Clorox Co. v. Salazar
The first case this is focused on is Clorox
Background
In 2013, a company wanted to register the term “Clorotec” and a design for electronic equipment relating to cleaning products. The opposition said that use of the Clorotec mark had not been made. The Board elected to block registration of the mark.
Significance
The evidence the applicant presented carries two major implications
First, they were unable to make sales within the United States, despite heavy online advertising
The Board ruled this was not “used in commerce” as there were no sales
Second, they were unable to make heavy sales due to them manufacturing custom made products where sales only occurred once a year, but brought in a lot of revenue due to being very expensive
The Board ruled this was not substantial enough to be considered being “used in commerce”
This court case is the reason behind the bona fide aspect of the plan, establishing that sales, so long as coupled with strong advertising, suffice for trademark
4] Gameologist Group, LLC v Sci. Games Int’l, Inc.
The second case this is focused on is Gameologist
Background
In 2013, the United States District Court for the Southern District of New York took a case where someone had a trademark registration for the mark “BLING BLING 2002” and it sought to establish protection. They sued for trademark infringement under the Lanham Act for the defendant’s use of the term “bling” in connection with the marketing of lottery tickets. The Court ruled for the defendant.
Significance
In order to sue for infringement, one of the elements that they ere required to prove was that its bling mark was a valid mark entitled to protection.
That required them to demonstrate it had made a use in commerce of the mark.
The court ruled that the minimal (de minimis) use of the trademark meant it did not meet the requirements under the Lanham Act to suffice for protection.
This court case is the reason behind the de minimis, aspect of the plan, establishing that minimal use still suffices for trademark protection
5] Continuous use
Continuous use is a term that the courts generally use to determine whether or not a trademark is being used in commerce
There isn’t a “brightline” of what is continuous, however the court generally errs on the side of shooting down trademarks that aren’t being consistently sold relatively often
Again, there isn’t a definition because the courts haven’t defined it in this context, but in terms of the AFF, continuous use is a metric frequently utilized against small businesses and industries that aren’t pumping out strong daily/weekly/monthly sales numbers
6] Minimal use
Minimal use is what the AFF establishes
Similar to continuous use, there isn’t a definition because the courts haven’t defined it in this context, but in terms of the AFF, establishing a minimal use standard, per the solvency advocate, alleviates pressure
Contextualize it to the AFF – an industry that puts out one, high-revenue sale like customs industries, now qualify
7] Bona Fide
Pronounced baw(like the sound in aww)-nuh-fie-dee OR baw(like the sound in aww)-nuh-fee-day
There are many arguments about how it should be pronounced, but these were the most common and you should be fine with either
It is a legal term (latin) used to denote sincerity or in good faith
Therefore, when the AFF implements a bona fide requirement, it means that so long as businesses are sincerely attempting to meet the requirement, or are acting to meet it in good faith, then that is sufficient to maintain the trademark
This means that even if a business is only having a few sales, debatably meeting the new “minimal use” requirement, if they are investing heavily in advertising and putting sincere efforts to raise their sales, then they maintain the trademark.
8] De Minimis
Pronounced day-me-nee-mees OR duh-mih-nuh-mus
There are arguments for many pronunciations, again, but these are the most common and you’ll be fine with either one
This is another legal term (latin) use to denote minimal things
Thus, when the AFF implements their de minimis requirement, it means that businesses do not have to sell the currently required large amount of sales to qualify their trademark, but rather need to only meet a minimal, small amount of sales to keep the mark
9] Lanham Act
This isn’t something super necessary to know for the AFF, but cards will reference it a lot, so it is good to have an understanding of what it is
The Lanham Trademark Act was passed in 1946, and provides federal cause of action for trademark infringement of registered trademarks
This means that the plan is an amendment to the Lanham Act
Tips and Tricks
If people stand up in cross and ask you what the brightline for continuous and minimal use is, make it clear this is not a good question
The courts don’t define it, but cases and ruling decisions prove that small businesses and specialized industries are crowded out under the reason that “minimal use” does not meet “continuous use” – therefore a brightline doesn’t matter because insofar as the AFF is passed, it ensures solvency as these businesses can now obtain trademarks.
Same thing for how much do they need to invest in sales to be bona fide?
Explain it like above – through every enforcement of law, the courts interpret what meets the standard, but obviously putting $1 into sales versus $100k is very different and when the AFF is passed, it ensures that companies investing heavily in advertisement, per 1AC evidence, can obtain trademarks
You have two internal links (actually a little more) to why trademarks are crucial to startups
First is VC funding
However, there is strong evidence that VC funding isn’t the biggest source of financing for startups
Which is why you have the second internal link: A massive correlative study
This is the second Block evidence
Utilize the copious amounts of warrants in this evidence
You don’t need to win both internal links to win that trademarks help startups
Those are two ways they do, and winning either one means that the AFF access solvency as it increases trademark-ability for startups
Most of your impacts circumvent traditional impact defense – think about the ILs
ie. The tech race scenario is not about heg, but rather that the U.S. would re-balance because of perceived loss of heg due to the tech race – you don’t defend whether it is good or bad, but just that the plan needs to be implemented, otherwise the risk the U.S. does something dumb is high.
This AFF honestly does not link to a single generic DA (like Econ, Politics, Elections) but I’ve cut and placed some link turn evidence that is true for each of the DAs, in case you get hit with the super generic “strengthening IPR causes ‘X’”
Small Businesses legislation is so popular among legislators and the population, so the AFF is probably popular
Small businesses are generally perceived as being good for the economy, so the AFF is probably good for the economy
There is no literature to grant specific link or link turns so this is the best the AFF has is going to be the small business/startups angle + nobody cares about IPR (for election/politics)
Questions: spaul25@brophybroncos.org
1AC---Startups
Startups Advantage
Advantage one is Startups:
Clorox-Gameologist cemented a rigid, common use requirement for trademarks that is unforgiving to startups.
McDowall 15 – Krystil McDowall (New York Attorney, specializing in Intellectual Property Law), Spring 2015, "A Critical Look at ‘Use’ Under the Landham Act," New York University Journal of Intellectual Property and Entertainment Law, https://jipel.law.nyu.edu/wp-content/uploads/2015/05/NYU_JIPEL_Vol-4-No-2-2_McDowall_UseUnderLanhamAct.pdf /$antiP/
The Clorox decision demonstrates that, when interpreting the use requirement to prove the validity of a federal registration, the courts follow a literal interpretation of the Act, which mandates a “sale” or “transportation” of the goods bearing the mark. It is this note’s contention that the stringent interpretation of the open and notorious public use aspect of the sale or transportation requirement is inequitable, as it makes it more difficult for trademark owners who operate in industries with high barriers to entry to prove use. In Clorox, the manner in which the sale or transportation requirement was interpreted required the Board to disregard evidence of bona fide use relating to both the applicant’s internet advertising, via its website, and an interstate shipment of parts of the applicant’s products bearing the mark. The shipment of parts of the applicant’s products from Utah to Mexico would have posed no difficulty satisfying the jurisdictional prerequisite that the use in question have an effect on commerce with foreign nations. Thus, inequity follows where the Act requires invalidation of a federal registration in circumstances where an applicant is making a bona fide use of a mark, and significantly investing in its brand, in order to obtain an initial sale. If sales are typically infrequent in a given industry, a sale is going to be unquestionably harder to make in that industry. It logically follows that a trademark owners’ ability to satisfy the sale or transportation requirement of the Act is more burdensome where the standard of use dictates a sale must be made, but the trademark owner’s evidence of its open and public use of the mark in connection with obtaining a sale (which would likely be building some public association between the mark and the good) is disregarded. Consequently, the use requirement is unequal in its application as the sale or transportation requirement does not factor in that sales are more difficult to attain in certain industries.
The Act’s legislative history expresses the desire of Congress to interpret use in commerce flexibly, and to accommodate use that is typical in a particular industry. However, Congress’ desire for a flexible interpretation focuses on use of a mark made after an initial sale or transportation of the good bearing that mark. The need for a flexible interpretation of use equally applies to uses that may be made of a mark before an initial sale or transportation of the good has been made. Trademark owners would receive greater protection and certainty if the Act stipulated a more flexible commercial standard of use that incorporated open and public pre-sales use of a mark (that is, use occurring before an initial sale or transportation takes place) as sufficient. This is especially important where applicants, like the applicant in Clorox, operate in an industry where products are high-end, custom made goods and therefore sales are, by their inherent nature, more infrequent and difficult to obtain. As the system currently stands, injustice results to the extent that the law requires businesses to invest in a mark to secure a sale, only to have a registration invalidated at a later date merely because the trademark owner had not actually attained any sales.
B. The Continuous Use Threshold Disadvantages Small Businesses and New Market Entrants
The Gameologist decision, and the litany of cases before it litigating the use issue, indicate that, in order to maintain a valid registration, more than minimal use of a trademark is required.98 In this note’s view, the continuous approach to use is undesirable as courts are essentially required to make a ruling regarding whether a brand is growing fast enough. In Gameologist, the requirement for more than de minimis use compelled the court to disregard documented bona fide evidence of actual sales of the plaintiff’s products bearing the mark, with the court holding, “de minimis sales such as these are insufficient to demonstrate use in commerce.” In simple terms, the court effectively said that the plaintiff’s use of its mark was not good enough. Thus, Gameologist highlights the difficulty trademark owners face when attempting to determine whether use of the mark crosses the threshold from minimal to sufficient, as there is no bright line test to answer this question.1
Many start-up and small businesses have sporadic initial sales patterns for a number of justifiable reasons, including a lack of resources or expertise (if the mark owner is new to the industry) or lack of capital (which may prevent the mark owner from obtaining legal counsel). It follows, then, that the continuous use standard is prejudiced in favor of those brands that are already strong, or have sufficient capital, over those that are starting out. In this way, the continuous use standard under the Act is unequal in its application as the standard is biased in favor of the strong. Where de minimis use is in issue, the law says “might is legally right,” or at least, “legally better.” As a result, the continuous use standard deprives some new or startup businesses from growing a burgeoning brand into a thriving core asset.
Currently denied trademarks are necessary for startups – two warrants.
1] Signaling – critical for employment, commercialization, and growth – consensus of studies votes AFF.
Hirschmann & Block 22 – Mirko Hirschmann & Joern Block (Dr. Mirko Hirschmann – Research Associate at EINT, Ph.D in Business Administration from Trier University, specializes in social innovation, intellectual property rights and hybrid growth of new ventures; Dr. Joern Block – Professor in Management at Trier University, Ph.D in Applied Economics from Trier University, specializes in entrepreneurship and innovation management), 11-20-2023, "Trademarks and how they relate to the sustainability and economic outcomes of social startups " Journal of Cleaner Production, https://pure.eur.nl/ws/portalfiles/portal/94101879/1_s2.0_S0959652622038926_main.pdf /$antiP/
Our results demonstrate that IPRs in the form of trademarks relate to social startup development. As such, we find similarities to prior research on traditional startup development (e.g., Helmers and Rogers, 2010; Srinivasan et al., 2008). However, we find that there are particularities in trademarks for the development of hybrid outcomes of social startups.
First, our findings reveal that trademark registrations within the first three years of a social startup’s existence relate to their economic outcomes. Thus, we find that in addition to the receipt of grants and the experience of a social entrepreneur (Lall and Park, 2020; Rey-Martí et al., 2016), IPRs relate to the employment growth of social startups. Social startups seem to benefit from a signaling and appropriation value that has been identified by prior trademark research on traditional startups (e.g., Flikkema et al., 2014; Hsu et al., 2021; Malmberg, 2005). The signaling value of trademarks can help startups obtain access to external financial and nonfinancial support (e.g., Yang et al., 2020); also, trademarks enable them to have stronger commercialization of their products and services (Hsu et al., 2021). Furthermore, the signaling effect of trademarks can serve as a valuable sign for the growth ambitions of a social startup, which in the next step can lead to higher realized growth (e.g., Delmar and Wiklund, 2008). In turn, trademark registrations foster the economic development of social startups. However, our further analysis indicates that the number of registered trademarks is important to indicate top economic outcomes of social startups. This finding is in line with Block et al. (2014), who show that the number of trademarks affects startup valuations by venture capitalists.
2] VC investment – trademarks present credible signs for investors that are more reliable than anything else – that’s critical for success.
Block et al. 14 – Joern Block (Dr. Joern Block – Professor in Management at Trier University, Ph.D in Applied Economics from Trier University, specializes in entrepreneurship and innovation management), Geertjan De Vries, Jan H. Schumann, Philipp Sandner, July 2014, " Trademarks and venture capital valuation," Journal of Business Venturing, https://www.sciencedirect.com/science/article/abs/pii/S0883902613000724?via%3Dihub /$antiP/
Our findings contribute to research on the role of entrepreneurial marketing and IP assets in VC valuation (Baum and Silverman, 2004; Douglas and Shepherd, 2002; Gruber, 2004; Haeussler et al., 2009; Hellman and Puri, 2000, 2002; Hills, 1984; Hisrich, 1989; Hsu and Ziedonis, 2008; Miloud et al., 2012; Wortman et al., 1989) and research on the value of trademarks (Greenhalgh and Rogers, 2006a,b; Sandner and Block, 2011) in at least four ways.
First, we contribute to the literature on the role of IP in VC financing by showing that the number and breadth of trademark applications in start-ups are positively related to VC valuation. Previous studies on VC valuation provide evidence for the criteria by which VCs evaluate start-ups, such as the quality of the start-up's business plan, venture team, patents, and network as well as alliance capital (e.g., Baum and Silverman, 2004; Franke et al., 2006; Haeussler et al., 2009; Hall and Hofer, 1993; Hsu and Ziedonis, 2008; Macmillan et al., 1985). Our finding extends this literature by demonstrating the impact of trademark activity on VC valuation. This finding also supports and adds to the research on the value of trademarks. Sandner and Block (2011) and Greenhalgh and Rogers (2006a,b) demonstrate that trademarks have a positive effect on the market valuations of large publicly listed technology firms. Our study shows that trademarks are associated with not only the market valuations of large firms but also VCs' financial valuations of start-ups. Furthermore, our findings on the effects of trademarks add to the research on entrepreneurial marketing and its effect on VC evaluations. The literature has repeatedly highlighted the relevance of the market orientations of start-ups for VC financing and valuation decisions. Both Hisrich (1989) and Wortman et al. (1989) note that VCs consistently rate marketing management as an important success factor. Failure rates of start-ups could be greatly reduced through improved analysis of the target market (see also Hills and LaForge, 1992; Hills et al., 2008). More recent research on this topic analyzes the marketing readiness of start-ups as one of the primary dimensions on which VCs base their investment decisions (Douglas and Shepherd, 2002). VCs are more willing to finance start-ups with high marketing readiness because they appear to be more credible and ‘investor ready’ (Wright et al., 2004). Whereas these arguments already indicated the importance of market orientation for VC financing, to the best of our knowledge, we are the first to show that a start-up's advancement in marketing activities as reflected by its trademark activity is a relevant characteristic that is valued by VCs.
Documenting the link between marketing efforts and start-up valuation contributes to not only the entrepreneurial marketing research but also research on the marketing–finance interface in general. There is already an established strand of research on the marketing–finance interface that provid

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