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The erosion of ‘OBX’ and the importance of distinctive trademarks

Ward and Smith, P.A.

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By E. Bradley Evans, Ward and Smith, P.A.

Editor’s Note: E. Bradley Evans is a member of the Appellate, Litigation, Intellectual Property, Business Litigation, and Technology Practice Groups at Ward and Smith, P.A.

The History of OBX

By now, you likely know that "OBX" is commonly understood to refer to the Outer Banks of North Carolina, and that the placement of the oval black on white OBX sticker on a vehicle suggests that its owner vacations on the Outer Banks, once visited the Outer Banks, dreams of visiting the Outer Banks, or just likes to sport the image of the Outer Banks. And perhaps, noticing how many people have these stickers or other items bearing the OBX emblem, you found yourself thinking, "I wish I owned that trademark." But its story is not without a painful lesson for all trademark owners.

In 1994, the OBX abbreviation was first coined as a designation for the Outer Banks by the gentleman who became the principal of OBX Stock, Inc. ("OBX-Stock"). Beginning in 1998, OBX Stock began its efforts to register "OBX" with the Patent and Trademark Office ("PTO") as a trademark. OBX Stock's applications were rejected on multiple occasions. However, OBX Stock enlisted the assistance of North Carolina's congressional delegation, and the PTO subsequently issued registrations for the "OBX" trademark. Through the persistence and acumen of the principal of OBX-Stock, the abbreviation became extremely popular and, by 2004, OBX Stock had an annual revenue exceeding $1 million.

In around 2003, OBX Stock became concerned that a company by the name of Bicast, Inc. ("Bicast") was infringing on the OBX trademark by selling stickers with the text "OB Xtreme." As a result, OBX Stock sued Bicast in federal court for trademark infringement, and the fortunes of OBX-Stock began to turn.

The Bicast Lawsuit

When OBX Stock sued Bicast for trademark infringement, Bicast fought back by claiming that the OBX trademark was not valid. To the chagrin of OBX Stock, the federal trial court and the United States Court of Appeals for the Fourth Circuit agreed with Bicast. The courts' rulings were based on evidence that established, in the courts' determination, that "OBX" was not sufficiently "distinctive" to justify federal trademark protection. Although the "OBX" trademark registrations were issued in connection with several classes of products (including stickers, clothing, tourist sundries, and events), the principal of OBX Stock repeatedly testified in the lawsuit that the "OBX" trademark was intended simply to "signify a geographic location."

As it turns out, this concession was fatal to the OBX mark. As the Court of Appeals noted, trademark law generally is intended to protect the goodwill represented by certain trademarks "enabling consumers readily to recognize products and their source and to prevent consumer confusion between products and between sources of products." However, trademark law excludes from its protection marks that do not identify particular products or product sources, but instead are used for their common meaning or meanings not associated with particular products or sources.

The degree to which a particular trademark is associated with particular products and sources is referred to as its "distinctiveness." The Court of Appeals pointed out that trademarks are often placed within one of four categories of distinctiveness:

• Arbitrary or Fanciful Marks: Arbitrary marks include words that are used in ways unconnected with their common meaning, such as "Apple" computers or "Shell" gasoline. Fanciful marks typically are invented terms used to identify a product, such as "Kodak" film. Arbitrary and fanciful marks are inherently distinctive and valid trademarks.

• Suggestive Marks: Suggestive marks generally connote, without describing, some aspect of the product with which they are associated, such as "Glass Doctor" window repair. While perhaps not as strong as arbitrary or fanciful marks, suggestive marks are considered inherently distinctive and valid.

• Descriptive Marks: Descriptive marks merely describe a function or other characteristic of the product, such as "Yellow Pages" phone directories. Descriptive marks include those that are geographically descriptive. They are not sufficiently distinctive to give rise to a valid mark in the absence of evidence that they have obtained a "secondary meaning" – that the public no longer associates the mark with the geographical location, but instead associates it with the product in question or its source. Thus, "Kentucky" fried chicken and "Pinehurst" golf resorts are valid marks.

• Generic Words: Generic words are simply the common name of a product, such as "Lite Beer," and can never be valid trademarks.

The Court of Appeals agreed with the trial court that the "OBX" mark, being geographical in nature, fell into the category of descriptive marks and, therefore, required evidence of "secondary meaning" to be valid. Because the principal of OBX-Stock admitted that "OBX," from the beginning, was intended merely to represent a geographical area as opposed to a particular type or manufacturer of t shirt, key ring, or sticker, it was beyond dispute that the mark did not have secondary meaning. It followed, therefore, that the mark was not sufficiently distinctive to garner federal trademark protection. Perhaps ironically, OBX Stock was a victim of its own success in marketing the "OBX" mark – the mark became so universally associated with a geographic location that it lost any association with the originator of the mark or the products to which it was affixed.

The OBX Lesson for Trademark Owners

The lesson for trademark owners or potential trademark owners is clear: your mark should be as distinctive as possible, not only in terms of the mark itself, but also in terms of the products and business with which it is associated. Descriptive marks, such as those using the name of the geographic location, are more prone to be caught up in the swirling tide of everyday parlance and, therefore, less likely to be entitled to trademark protection. Trademark owners should keep these lessons in mind both in establishing their trademarks and in marketing them.

© 2009, Ward and Smith, P.A.

Ward and Smith, P.A. provides a multi-specialty approach to the representation of technology companies and their officers, directors, employees, and investors. E. Bradley Evans practices in the firm's Appellate, Litigation, Intellectual Property, Business Litigation, and Technology Practice Groups where he focuses primarily on business matters related to technology-based companies. Comments or questions may be sent to ebe@wardandsmith.com.

This article is not intended to give, and should not be relied upon for, legal advice in any particular circumstance or fact situation. No action should be taken in reliance upon the information contained in this article without obtaining the advice of an attorney.

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