In May, a subsidiary of the multi-million dollar burger haven Shake Shack filed a trademark application for the term "Chicken Shack." Not surprisingly, the requested trademark pertains to a restaurant that serves chicken sandwiches, much to the excitement of Danny Meyer acolytes everywhere. (Meyer and his camp claim that no separate Chicken Shack restaurant is planned, but as expected, unleashed a chicken sandwich upon the masses in early July.)
But if the trademark application is granted, the term "Chicken Shack" could potentially be transformed from valueless generic words to a billion-dollar proprietary logo. This raises a few questions: What can trademarks actually accomplish for restaurants? How do restaurants obtain trademarks? And what about all the other Chicken Shacks that already exist, such as those in New York, Michigan, Tennessee, and Louisiana?
Trademarks are badges of origin; they identify and distinguish products or services of one source from those of another. Commonly referred to as "marks," "logos," and "brands," trademarks can take the form of any word, name, symbol, design, or any combination thereof. A mark that identifies a service rather than a product is called a service mark. For example, "Shake Shack" is both a trademark (to the extent it identifies fast food products) and a service mark (to the extent it identifies the restaurant's fast-food service).
We constantly encounter trademarks in our everyday lives. The Eater logo at the top of your screen is a perfect example — it's a name and design used to identify and distinguish this food news service from other food news services. And unsurprisingly, trademark bombardment is particularly acute in the restaurant world. At Shake Shack, the sign on the outside of the building, the menu design, the logo on the shake cups, the design on the staff's screenprinted shirts — these are all likely trademarks, whether they've been officially registered with the United States Patent and Trademark Office or not.
There are two different types of trademarks: registered trademarks and common law, or unregistered, trademarks. Common law trademarks are denoted by the TM symbol (or ℠ symbol, in the case of a service mark), and in the United States, anyone can append the common law symbols to their logos. Unlike most other countries, a trademark can exist and serve as the basis of an infringement action in the United States without ever being officially registered. For example, while Shake Shack has a registered trademark covering its name and burger symbol, it has not registered a trademark covering the graphic design on its shake cups — but that doesn't mean it doesn't have a trademark covering the graphic. If Shake Shack was the first to use the graphic, it likely has a common law trademark covering it. The determinative factor with all common law trademarks is first use. The first person to use a trademark — not the first person to register it — has priority in a competition for ownership of the mark. But trademark holders need to keep location in mind: Common law trademark protection extends only to the geographic area in which the mark is used or recognized.
A trademark can serve as the basis of an infringement action in the U.S. without ever being officially registered.
A federally registered trademark, such as "Shake Shack" or "Cronut," is one that has been approved by the US Patent and Trademark Office (USPTO), and is often denoted by the ® symbol. For restaurants looking to register a trademark, the first step is submitting an application to the USPTO, where an examining attorney determines whether the mark is eligible for registration. If the application survives the initial review, it will be "published for opposition." This provides a 30-day period during which challengers can file an "opposition proceeding" to prevent the mark from being registered. Problems arise if, during the initial review or the publication stage, the USPTO finds that another business already uses a mark similar to the one applied for. If the similarity between the two marks is likely to cause consumer confusion, the USPTO will not register the applicant's trademark.
After a trademark is registered, a party can always challenge a trademark and claim infringement. But after registration, it's much harder to succeed on that challenge (a party claiming superior ownership of the mark must prove that it used the mark first, which can be difficult to establish). Furthermore, registration provides nation-wide protection that becomes "incontestable" after five years, which is why NYC chef/restaurateur Tom Colicchio has been able to prevent restaurants all around the country from using the word Craft.
Trademarks are ubiquitous because they provide much-needed protection for business owners. Trademark protection hinges on public perception. If people associate a restaurant's name with that restaurant's product — as opposed to just that product in general — then the name is likely trademarked. While "Sally's Ice Cream Shop" could be trademarked, "Ice Cream Store," even if it were an actual business, could not be because it's too generic to distinguish one source of ice cream from others.
Likewise, infringement turns on the potential for consumer confusion. Suppose a restaurant opens under the name Shake Shack and starts selling hamburgers. If the business did not belong to the real Shake Shack, its owner would almost certainly be liable for infringement because its use of the Shake Shack name would lead consumers to believe they were buying Danny Meyer's burgers. However, if the burger restaurant opened under a different name — like in the case of Oklahoma City's Ice House — but used a logo similar to Shake Shack's, the infringement question is a closer call. From a court's standpoint, whether or not "consumer confusion" exists hinges on a variety of fact-intensive factors, such as the similarity of the marks, the similarity of the goods or services the mark is used to identify, the means of selling the goods or services, evidence of actual consumer confusion, and the fame of the mark. If the trademark holder is successful in court, he can end the illegal use of his mark, resulting in the recovery of damages.
Notwithstanding the heightened protection and benefits provided by federal registration, most restaurants do not register their trademarks: It likely seems unnecessary to some restaurants to register a trademark they already own through first use. But the restaurant may end up spending more on a legal battle if their ownership of the mark is later contested.
And that brings us back to all those other Chicken Shacks. Since Shake Shack apparently has not yet used the Chicken Shack trademark, all the other Chicken Shacks already doing business will probably argue they have superior claims to the trademark. Indeed, the Michigan Chicken Shack has even successfully registered the trademark with the USPTO. This may present some significant obstacles to Shake Shack's new venture. Time will tell.