Monthly Archives: April 2015

FCC Chair Approves Strong Net Neutrality Rules

On February 4, 2015, Federal Communications Commission Chair Tom Wheeler unveiled his plan to ensure net neutrality in a Wired magazine op-ed.  On February 26, 2015, the FCC voted to approve the strong net neutrality rules.

Wheeler agreed with President Obama’s proposal to regulate Internet traffic as a public utility, but he went a step further. He proposed utilizing the FCC’s Title II powers under the Telecommunications Act to “ban paid prioritization, and the blocking and throttling of lawful content and services (and)… to fully apply-for the first time ever-those bright-line rules to mobile broadband.”

Wheeler’s plan would also “for the first time give the F.C.C. enforcement powers to police practices in the marketplace for the handling of data before it enters the gateway network into people’s homes – the so-called interconnect market. For good measure, he added a ‘future conduct’ standard to cover unforeseen problems.”

Although the FCC’s ruling comes as a victory in maintaining the openness and level playing field in providing Internet services, it remains to be seen whether this ruling will be challenged in court, or whether new legislation will be introduced in an attempt to ‘gut’ the FCC’s ruling.
In a related matter, on February 20, a bi-partisan bill was introduced to the Senate that would permanently ban taxes on high-speed Internet service to American customers. A similar bill passed the House of Representatives last year.

Anna Vradenburgh is a well-respected, business-minded expert in intellectual property issues. As a patent attorney licensed to practice before the United States Patent and Trademark Office, Anna assists clients in patent and trademark prosecution, and represents clients in trademark opposition matters, domain name dispute matters, and patent and trademark litigation. Anna can also assist your company in all manner of intellectual property protection. For more information, visit her website, or contact Anna at (818) 946-2300. This article is for educational purposes only and nothing in this article is intended to be, nor should be considered legal advice.

Trademark vs. Mass Exposure: The Sriracha King Takes a Bold Position

Vietnamese immigrant David Tran began selling his Asian chili “sriracha sauce” under the Huy Fong Foods brand in 1980. Recently, that sauce has become a hot property among foodies, with Bon Appetit magazine once naming it the ingredient of the year. The apparent popularity of this ingredient has not gone unnoticed as numerous other food companies have been capitalizing on the sriracha sauce trend by adding it to their products, notably Frito-Lay, Heinz, and Subway.

While most companies with successful products fiercely protect their trademarks, Tran opted to forego seeking trademark protection for the sriracha name, choosing instead to only seek trademark protection for the unique green topped bottle and the rooster logo. To some marketing executives, the choice is a fundamental misstep, but Tran stands behind his decision citing mass exposure and “free advertising” as a key to his brand’s success. The numbers seem to favor Tran’s argument, with sriracha sales increasing from $60 million to $80 million in the last two years.

Either way, the ship appears to have sailed for Tran on the trademark issue, and actually may have in 1990 when Tran’s ‘rooster logo application’ was filed. In that application, the word SRIRACHA was disclaimed, meaning it was found to be a merely descriptive or generic term in relation to the goods identified in the application. While the history of the rooster logo application prior to registration is not accessible online, the fate of this word may have been sealed in that application, which identified the goods as ‘hot chili sauce; namely, Sriracha Hot Chili Sauce’. This description likely provoked the disclaimer requirement, which has been continued in future applications.

Currently, there are over 24 trademark applications for marks that include the term SRIRACHA, most in association with food or food related services. Of the few that have registered, each was required to disclaim the term SRIRACHA, meaning the Trademark Office is of the opinion that the term is merely descriptive or generic in association with identified goods. Assuming the term ‘sriracha’ was protectable at one point in time, had Tran filed a trademark application for “sriracha” earlier, he may have been able to protect it as a brand of chili sauce, thereby giving him the ability to prevent its use by third parties.

Although Tran seems to be benefitting from the current third party use, Tran may have reason to worry. While there are a number of companies currently selling sriracha style sauce, the makers of Tabasco®, sauce giant McIlhenny Co., is entering the sriracha market, with a vast advertising budget and superior distribution outlets. Should McIlhenny flood the market with its own ‘sriracha’ product, Tran may find that his strategy backfired in decreased profits and market shares. For the time being, McIlhenny admits Tran “got an awful big head start.”

If history is any indicator of the future, it is likely that the term “sriracha” will eventually cease to function as any form of advertising for Mr. Tran exclusively, but will instead, likely be viewed simply as a type of delicious chili sauce. The term is likely to go the way of other terms like “escalator” and “aspirin” that have ceased to be associated exclusively with a single company. Indeed, by allowing numerous other companies to create and market a sriracha sauce, Mr. Tran has all but insured that his original sriracha sauce will soon be but one among many in a vast ocean of sriracha sauces. The sad result of Mr. Tran’s failure to protect his brand may be that the substantial competitive advantage he once possessed may soon be thoroughly neutralized and overshadowed by other companies more intent on building and protecting the brands associated with their products.

Ultimately, the test of Tran’s choice will pass to the consumers. Will sriracha customers remain loyal to Tran and his Huy Fong product that invented the flavor profile and caused the sensation, or will they bow to McIlhenny’s accessibility and name recognition?

Anna Vradenburgh is a well-respected, business-minded expert in intellectual property issues. As a patent attorney licensed to practice before the United States Patent and Trademark Office, Anna assists clients in patent and trademark prosecution, and represents clients in trademark opposition matters, domain name dispute matters, and patent and trademark litigation. Anna can also assist your company in all manner of intellectual property protection. For more information, visit her website, or contact Anna at (818) 946-2300. This article is for educational purposes only and nothing in this article is intended to be, nor should be considered legal advice.