The true value of a trademark may not show up on a company's balance sheet, but in the real world, it can mean everything. Trademarks protect a company's name and products, the building blocks of potentially powerful brands. The more our consumer products become commoditized, the more important brands become in sustaining pricing power and securing customer loyalty. Without brands and trademarks, a Starbucks (Nasdaq: SBUX) venti mochaccino is just another cup of joe. That's why a new lawsuit from Hershey (NYSE: HSY) comes as no surprise.
The chocolate company claims that a new book has violated its trademark rights. It wants a federal court to stop the publication of Hershey: Milton S. Hershey's Extraordinary Life of Wealth, Empire and Utopian Dreams.
The problem? Well, if you check out the book's cover on Amazon.com (Nasdaq: AMZN), you'll see that it's basically a Hershey bar, with the distinctive flag from a Hershey's Kiss wrapper worked in. True, it's very creative. Unfortunately for the publisher, it may also be trademarked. Hershey's key contention is that the book's use of Hershey wrappers and product imagery will trick consumers into thinking it is "authorized, sponsored or approved" by the company.
That reasoning seems a bit hard to swallow. The book's initial print run is 18,000 copies -- a very limited market. Will readers truly believe that the book is Hershey-approved? Will it truly detract from the Hershey brand?
Joy R. Butler, the author of ThePermission Seeker's Guide Through the Legal Jungle, believes that Hershey will have a tough case, pointing to several major cases regarding similar conficts. Caterpillar (NYSE: CAT) sued Disney (NYSE: DIS) for using its branded trucks in George of the Jungle 2; Disney prevailed. Fox sued Al Franken for his book Lies and the Lying Liars Who Tell Them: A Fair and Balanced Look at the Right; Franken won.
Betty Morgan, an intellectual property attorney at Hunton & Williams LLP, also thinks Hershey is on shaky ground. "Typically, the First Amendment protects publication of even unauthorized biographies," Morgan said. "It would seem to follow, then, that the law would allow use of an image of a product in a book about the product, assuming that is in fact is part of the story."
The publisher's defense in this case will probably concern the doctrine of fair use, which allows an author limited use of someone else's trademarks or copyrighted material. For example, if a journalist writing about the new Hershey book wanted to print an excerpt from its copyrighted text as part of a review, she'd be allowed to do so under fair use.
As an investor, it's good to see companies like Hershey vigilantly protecting their valuable brands. Nonetheless, the most likely outcomes of this case are higher sales for the Hershey book, and perhaps a bit more national publicity for Hershey itself.
Fool contributor Tom Taulli does not own shares mentioned in this article. Amazon.com is a
Motley Fool Stock Advisor
pick. The Fool has a disclosure policy.
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