Advice To Immediately Trademark Kickstarter Projects Rests On Crowdfunding Not Being Commerce

from the hmmm dept

Because we talk a great deal about trademark law here at Techdirt, it occasionally leads us writers down interesting reading paths. One such path I recently traveled led me to a Gamasutra community post written by attorney Stephen McArthur, a lawyer who has built something of a specialty in video game industry law. The theme of the post is that anyone crowdfunding the production of a video game, via Kickstarter for example, should be registering the trademarks for their game during or before the crowdfunding process, rather than waiting until the production is funded successfully. Putting aside the heavy importance McArthur places on trademark registration, his argument is more of a PSA on the procedural timelines and what he considers to be a misunderstanding about both when common law trademark kicks in and when certain aspects of the trademark-ability of a product or service are initiated. For example:

Many of our clients fund and market their games using crowdfunding platforms like Kickstarter or Fig. They almost always have the same misconception: once they successfully fund a game on Kickstarter, then they would have superior rights to someone who comes along later and begins using the game title. This is based on the otherwise correct understanding that trademark law gives protection over a product name (here, a game title) to anyone who either (1) uses the name in commerce, or (2) files an application to register it as a trademark, even on an intent-to-use basis up to three years before any actual use.

Unfortunately, putting a game title on Kickstarter and successfully funding the project does not count as using the game title in commerce and thus gives you zero rights to the name. The law for what counts as “use in commerce” was not written with crowdfunding in mind, and this is simply another example of law not being caught up with technology.
Under his premise, McArthur's suggestions seem sound. But is the premise correct that crowdfunding campaigns do not count as commerce? This certainly doesn't seem to be settled law in the way one might infer from the post. 15 U.S. Code § 1127 defines "user in commerce" thusly:
The term “use in commerce” means the bona fide use of a mark in the ordinary course of trade, and not made merely to reserve a right in a mark. For purposes of this chapter, a mark shall be deemed to be in use in commerce—

(1) on goods when—

(A) it is placed in any manner on the goods or their containers or the displays associated therewith or on the tags or labels affixed thereto, or if the nature of the goods makes such placement impracticable, then on documents associated with the goods or their sale, and

(B) the goods are sold or transported in commerce, and

(2) on services when it is used or displayed in the sale or advertising of services and the services are rendered in commerce, or the services are rendered in more than one State or in the United States and a foreign country and the person rendering the services is engaged in commerce in connection with the services.
The problem with the above statute is, as McArthur rightly notes, it was constructed without such a thing as internet crowdfunding in mind. That said, the intention of the law seems fairly easy to translate. The idea is that someone looking to put forth a product or service should be protected by trademark law once the business of the enterprise has begun and is public. Raising money from individual investors for a video game that hasn't been publicly announced wouldn't qualify, but what if you're raising money directly from the end customers, or a subsection of the end customers, as part of the business model? If the crowdsource campaign contributors are indeed the end customers of a product or service, how is their payment via Kickstarter not a commercial exchange?

It certainly seems like it should be, doesn't it? After all, simply reversing the order of production and payment doesn't change the nature of the commerce in which both sides are engaged. And if that's indeed the case, then common law trademark rights ought to apply to Kickstarter projects once the fundraising has begun, rather than being delayed until the product or service, video games in this case, are being sold elsewhere or once they have been shipped/delivered.

As I noted, there is little certainty about this either way, as best as my research has turned up, meaning it will likely take court cases and rulings before anyone actually knows if crowdfunding counts as a use in commerce. Additionally, while we've been in the past loathe to see too much codifying of specifics done in trademark law, perhaps this is an exception. After all, if crowdfunding is going to be a normal way of doing business, as it seems increasingly to be, perhaps it's time the law caught up to the technology.

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Filed Under: crowdfunding, stephen mcarthur, trademark, use in commerce, video games


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  1. identicon
    Anonymous Coward, 6 May 2016 @ 6:31pm

    This could depend on how the related swag is handled.

    Most of these funding campaigns offer swag for donors. If the swag is bought, rather than gifted, then the trade name is in actual commerce.

    It might be appropriate for the kickstarter campaign to write a receipt designating that some small part of the donor funds are actually a purchase, and provide the receipt with the swag shipment. Pay the respective state sales tax, and you have a formal record of active trade.

    My understanding is that trademark registration only reserves the right to litigate, it doesn't actually give you any special rights. The registration is more of an evidenciary thing than a declaration or grant.

    In the early stages of a small company, it is cheaper to be flexible than it is to go to court. I would say plan ahead and call your product "The Foo Project" instead of "Foo Battles", and schedule a naming party just before the ship date. Maybe work the party into the swag package.

    I tend to disagree with the attorney quoted above. His approach is good for HIS business. But I doubt it is for any others. But that is typical. You find the same B.S. with registered agents and incorporation services. Essentially your talking about pimps who do nothing except file a few forms, and charge suckers > 100$/hr. for it.

    Just bob and weave. Eventually you will KNOW that you need an attorney not just wonder.

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