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Intel Goes Into Hyperdrive on Trademark Enforcement
The Recorder
November 07, 2008
Barry Hood is upset -- and kind of shocked.
That's because Intel, the world's biggest semiconductor company, had its lawyers hit his one-man business, Intellelectric, with a 108-page trademark-infringement lawsuit.
"I'm not very happy about this," the Southern California electrician said this week. "For what are they bothering me? I don't understand."
The suit is particularly galling to Hood because the name Intellelectric -- a combination of the words "intelligent" and "electric" -- was suggested six years ago by his son, Jake, who has since died in a car crash.
Trademark enforcement is not unusual for companies with famous marks like Intel. But the number of suits sets the Santa Clara, Calif.-based company apart. So far this year, it has sued 15 companies like Intellelectric with the word "intel" in their name in federal court for trademark infringement or dilution. McDonald's, known to pursue any fast-food restaurant with that Irish prefix, has filed one this year, as has eBay, another aggressive trademark enforcer.
Only some of Intel's targets are computer-related businesses, and few if any manufacture or sell microprocessors like the ones that made Intel so famous. In addition to Intellelectric, Intel has sued Intellife Travel, a two-person Santa Clara travel agency that garnered support from sympathetic bloggers and settled out of court with Intel this week. Two weeks ago, Intel sued a secretive investment advisory shop in Maryland called Insider Intel.
"I know that Intel is historically very vigilant in enforcing its trademarks," said Yano Rubinstein, a San Francisco lawyer representing an Ohio telecom company called Intelcom in a similar suit. He said the suit is unfair: "My client has been using 'Intelcom' for over 10 years -- if there was an issue, we would've expected Intel to contact us earlier."
Intel has always maintained that it has a valuable brand to protect. Their complaints -- usually handled by local lawyers from Fenwick & West, Howrey or Harvey Siskind -- often quote the Interbrand Global Brand Survey's valuation of the company's brand at $31 billion. That's one spot ahead of McDonald's golden arches.
The company usually makes two claims against defendants like Intellelectric: infringement and dilution. Infringement is when consumers would be confused by the similar marks. Dilution is when a famous mark is watered down by a similar mark being used even in an entirely different industry.
"The law says you must proactively take steps to enforce it, or you end up with something called dilution," said Chuck Mulloy, an Intel spokesman. "Our view is that if we don't do that, the brand loses value, and we're accountable to our shareholders to the loss of that value."
Intel normally files between five and 10 trademark suits a year. Mulloy said there's no explanation for this year's spike, except perhaps that fewer disputes have been able to be resolved before filing a lawsuit. Intel's in-house team hasn't increased its vigilance, he said.
Intellectual property lawyers advise their clients to be vigilant about trademarks, which must be enforced by the owner. But sometimes, they acknowledge, companies go too far.
Veteran trademark lawyer Neil Smith said that's the case with Intel and the travel agency, for example. It would be hard to make the argument that anyone would confuse tiny Intellife Travel and Intel the giant chip company, especially when the logos look nothing alike.
"That's pushing the envelope," said Smith, who's with Sheppard, Mullin, Richter & Hampton in San Francisco. "It's a different word with a different meaning, and it's different goods."
Smith also said that it's harder for Intel to make the dilution argument than, for example, the extremely distinctive Kodak, since the word intel, short for intelligence, is already in the modern parlance.
WHAT FIGHT?
Whether Intel has a good case is probably beside the point, though. Small-time defendants like Hood, who lives in Fallbrook, can't afford to fight.
In the lawsuit, which Hood describes as a "book" -- Intel claims that: "By using the identical and world-famous trademark Intel in its name and mark with the generic term ‘electric,' Intellelectric has caused and is likely to cause confusion that Intel is the source or sponsor of Intellelectric's services, or that there is an association between Intel and Intellelectric."
Intel claims infringement: Intellelectric is benefiting from the mark's goodwill "established at great labor and expense by Intel." It claims dilution: Intellelectric's acts "blur and whittle away at the distinctiveness and identity-evoking quality of the Intel mark."
Hood couldn't contest the charges in court. Unable to afford big-time lawyers, he had hoped to get help from Pre-Paid Legal Services, a company that promises legal services when you need them for a monthly fee. But after sending one letter to Intel, the legal services company informed him that the trademark dispute was a pre-existing condition and not covered by his plan.
The travel agency in Santa Clara also didn't have lawyers, but contested the lawsuit pro se, put a petition on its Web site seeking for Intel to drop the case, and got the attention of TechCrunch blogger Michael Arrington.
In the 114-page suit against the travel agency, as in all others, Intel lists its numerous trademark registrations, including No. 2,250,491 "for the mark Intel for use in connection with travel bags, luggage school bags, back packs, duffle bags, fanny packs and umbrellas."
After fighting back for about a month, said Jon Jiang, who works at Intellife Travel, his company had resolved the dispute out of court. The terms, he said, are confidential.
It's not the first time that Intel got press for its trademark enforcement. In 2002, the company went after Yoga Inside, which teaches yoga classes in schools, treatment facilities, shelters, prisons and underprivileged communities, for infringing on its Intel Inside trademark.
Jay Monahan, who used to head up eBay's trademark enforcement efforts, said that, in general, overly vigilant enforcement can backfire.
"It's sometimes difficult to know where to draw the line," said Monahan, who's now GC at Vuze. "It's not always just a legal thing -- it's really a matter of a point of where the consumer perception is that you're overreaching."
WHAT RESOLUTION?
Hood said he didn't have the money, time or nerve to fight Intel, especially with the threat of $50,000 in damages.
So, last week his accountant agreed with Intel's lawyers at Fenwick & West to a $3,500 payment to Hood in exchange for changing the Intellelectric name, he said. They originally offered $1,500.
The electrician said it's no windfall. He'll have to get a new name, re-register, change all his signs and advertisements. He imagines that with the money, he'll break even.
Hood hasn't set on his new name, and he still has a hard time believing the whole thing. His customers, he said, were of the same mind.
"I talked to my customers and asked them what they thought about it and they say, 'You've gotta be kidding me,'" he said. "Except for the ones that say they've never heard of Intel."
