Amar Bose was a successful inventor and entrepreneur.
If his name is familiar, it's because you've heard
of Bose speakers, which are high-end, high performance
speakers for sound systems.
After reporting on patented inventions for the last
couple of months, this month delves into trademarks,
and particularly well known trademarks. Bose Corporation
moved to stop another business from adopting an
encroaching trademark. While the tale offers insight
into how to acquire well known trademarks, and it
creates ambiguity in figuring out how to avoid them
when choosing a new mark for your products.
Amar Bose was an MIT electrical engineer who, in
the 1950's, bought a sound system. Disappointed
in the poor quality of the speakers, he began researching
how to emulate the sounds one heard in a concert
hall. He struck on the idea of delivering the sound
from not only the front side of the speaker, facing
the listener, as in conventional practice, but also
the back side, and achieved a richer sound. A sympathetic
MIT professor provided some seed money and Bose
Corporation was off and running.
In the 1980's and 1990's, Bose introduced complete
sound systems featuring not only its speakers, but
radios and CD players, selling them under the trademarks
ACOUSTIC WAVE and WAVE. The speakers and sound systems
have been a commercial success. Today, the company
remains privately held, with annual sales of several
hundred million dollars.
Bose of course isn't the only entrepreneurial company
in the sound business. QSC Audio of California had
its beginnings in one of the founder's garages.
It developed and manufactured power amplifiers for
use in sound systems. In 1994 QSC introduced a power
amplifier under the trademark POWERWAVE. When QSC
sought registration of its mark, Bose cried foul,
claiming POWERWAVE was too close to ACOUSTIC WAVE
and WAVE.
When looking to see how close is too close, trademark
lawyers consider a number of different factors such
as the marks themselves, the products and whether
the same avenues of sales are used. Another factor
considered is the fame of the mark. Famous trademarks
are entitled to greater protection than unfamous
ones. Some marks are so famous as to be beyond debate:
FORD, CHEVROLET, KELLOGG'S and so on. These marks
have been in use for decades and their owners have
spent large sums promoting the marks. With a famous
mark, the products don't have to be too close to
each other. For example, FRITO-LAY for snack food
was entitled to such broad protection as to encompass
FIDO LAY for dog snacks. Try slapping the FORD logo
on watches and see how fast Ford slaps you with
a lawsuit.
Bose told the court that its ACOUSTIC WAVE mark
was famous because for 17 years, annual sales had
been about $50 million, with annual advertising
of $5 million. Since 1993, Bose's sales of WAVE
products totaled $250 million, with total advertising
expenditures of $60 million. Based on these extensive
sales and promotions, as well as trade articles
discussing the products, the court found the marks
to be famous. Since the both companies incorporated
WAVE in their marks and sold sound equipment, the
rest of the closeness question was easy; the court
said POWERWAVE was too close. In lawyer terms: But
for the fame of its marks, Bose would have lost.
Unfortunately, the court's logic was sloppy. Much
of the fame of Bose's marks was acquired after QSC
began using it POWERWAVE. In fact, Bose began using
WAVE only a year before QSC adopted POWERWAVE. It's
tough to become exclusively famous after only a
year. The court also relied on reviews of Bose's
products to bolster the claim to fame, but such
reviews are typically nothing more than media hype.
There was even a reference to the "widely circulated
Northwest Airlines magazine" that showed a
photo of the ACOUSTIC WAVE product. Since when can
you buy airline magazines at the newsstand? It seems
the saving grace for Bose was that sales of ACOUSTIC
WAVE products totaled about $200-300 million before
QSC began using its mark.
So, what does it take to develop a famous mark?
A lot of sales and advertising, including reviews.
It no longer takes decades to achieve fame, only
a few years will do. Getting your product in one
of those airline magazines apparently helps too.
On the other side of the coin, when choosing a mark,
stay away from anything that has sales in the hundreds
of millions. The late comer is charged with exercising
caution in adopting a mark.
Therein lies the irony. Suppose QSC, as part of
its ordinary research into the availability of POWERWAVE,
called Bose and asked what its sales were. Incidentally,
QSC also sells speakers. How do you think the closely
held Bose would have responded?
Originally Published in the Fort Worth Businss Press |
