Can you be sued for thanking your customers?

Intellectual Property Abuse

Here at Law 4 Small Business, we love intellectual property.  We love helping businesses that develop and protect their ideas.  And we think that America’s intellectual property laws have played a significant role in making our economy the world’s largest.  But while strong intellectual property laws promote economic growth, they also have the potential for abuse.

No Thank You?

A trademark infringement lawsuit filed by Citigroup against AT&T last week gives us a peek into what happens when intellectual property law goes too far.  Over the years, Citigroup has obtained a number of trademarks on the word “thankyou”. Yes, Citigroup is trademarking good manners. Citigroup uses this phrase in connection with customer loyalty programs.  Most of these marks are “word marks,” meaning Citigroup effectively has a legally enforceable monopoly on the use of “thankyou” to identify it as the source of rewards programs.  And that is exactly what Citigroup has done, filing petitions at the USPTO to keep others from using any phrases similar to “thank you” and now suing AT&T for using “thanks” in connection with their customer appreciation programs.

To anyone who does not regularly work with trademarks, this lawsuit probably appears ridiculous.  After all, businesses and people say “thank you” every day and nobody associates this phrase with Citigroup.  And it defies common sense that anyone could have a monopoly over thanking customers, whether for their loyalty or otherwise. Right?

But how does this case look to trademark attorneys? According to the USPTO’s statistics, 70% of applications receive an initial rejection. Many applications are rejected because the mark they are trying to register is too generic or descriptive. In other words, a mark is considered merely descriptive if it describes an ingredient, quality, characteristic, function, feature, purpose, or use of the specified goods or services.

Isn’t “thankyou” generic for customer rewards or loyalty programs?  The USPTO didn’t think so.  Many of Citigroup’s “thankyou” marks were granted without so much as an office action–in other words, the USPTO saw nothing wrong with them. Based on trademark law, it would seem that a “thankyou” trademark for a loyalty program that exists to thank customers should have been rejected or subject to a disclaimer.

Seriously, No Thank You

The bigger problem here is that allowing a registration of “thankyou” for customer loyalty restricts other business’s ability to use a generic phrase- “thank you”- (or any of its variants) to thank customers.  Businesses who wish to thank customers now do so at their own risk. In fact, they may be exposing themselves to a lawsuit from Citigroup.  This does not accomplish any rational policy goal of a well-designed intellectual property system. If anything, it diminishes the public’s respect for the trademark system.

Sadly such overreaching is not uncommon.  Businesses that heavily invest in intellectual property understandably want to protect it.  But Citigroup’s lawsuit (and many others) highlight the need for careful evaluation prior to sending that cease and desist letter or filing a lawsuit.  Citigroup may win its lawsuit and keep its trademarks.  But by suing over the use of “thank you”, it  may have already lost the very goodwill it sought to protect in the first place.

In Conclusion

Trademark registration is only one piece of the puzzle when it comes to protecting your business’s intellectual property.  Law 4 Small Business can help you with registration, licensing, and enforcement, and can advise on appropriate ways to use your protection to increase the power of your brand.  Give us a call if you are ready to learn more– you will thanks us later.

Law 4 Small Business, P.C. (L4SB). A little law now can save a lot later.