The legal framework under which trademark cases are decided within the United States Patent and Trademark Office (USPTO) is known as the “DuPont Factors.” The DuPont Factors are a set of 13 criteria which represent the “burden of proof” framework for intellectual property cases within the United States.
The DuPont Factors
The 13 criteria (derived from In re E.I. du Pont de Nemours & Co., 476 F.2d 1357 (1973) that make up the DuPont Factors are:
- Similarity or dissimilarity of marks: This factor considers how similar the two trademarks look, sound, and feel in appearance, sound, connotation, and commercial impression.
- Nature of the goods and services: The USPTO compares the products or services associated with the trademarks determining whether they are similar or dissimilar.
- Trade channels used: The third factor examines whether the trademarks are used in similar or different trade channels, such as retail stores, online platforms, or others.
- Purchasing conditions: This factor evaluates the conditions under which sales are made and if the buyers involved tend to make impulse purchases or carefully consider their options before buying.
- Fame of the existing mark: If the prior mark has a strong reputation or significant fame, it may be more susceptible to confusion with a newly proposed trademark.
- Similar marks with similar goods: This factor takes into account the number and nature of similar trademarks used with similar goods or services in the market.
- Actual confusion between the marks: The USPTO looks for any existing evidence of confusion between the two trademarks in question.
- Length and conditions of concurrent use without confusion: The office considers whether the two trademarks have been used simultaneously without causing confusion for an extended period.
- Variety of goods and services associated with the marks: The USPTO evaluates if the trademark is used or not used with a range of different products or services.
- Market interface: This factor assesses the interactions and competitive relationship between the applicant and the owner of the existing trademark.
- Applicant’s right to exclude others: This factor measures the extent to which the applicant has the right to prevent others from using the trademark on specific goods or services.
- Extent of potential confusion: The USPTO tries to gauge the possible level of confusion that could arise between the two trademarks.
- Other established facts: Any additional relevant information that could help determine the impact of trademark use is also considered.
I can attest that the DuPont Factors have offered me a superb foundation on which to analyze opportunities in relation to stoxdox’s case in front of the USPTO and in stoxdox, Inc.’s marketplace.
Whether one is an investor in the public or private markets, a business owner, or a legal mind fighting trademark infringement and unfair business practices, you will find the framework sheds much light on the realities of any given competitive landscape. As such, broadly speaking, it is a natural framework within which to analyze opportunities in and across markets.
For entrepreneurs, the DuPont Factors serve as an excellent approach to meeting a brand’s “burden of proof” in the marketplace. If the marketplace burden of proof is met, the entrepreneur will create valuable brand equity thus conveying value to intellectual property. Each of the 13 factors, in relation to competitors, are questions that must be answered and reviewed at all times if one is to be successful in regard to competitive positioning in the marketplace.
Analysts, Investors, and Operators
As an analyst, investor, and operator of a business, having just rediscovered the DuPont Factors, I have yet to formally use them outside of the stoxdox, Inc. case in front of the USPTO. The application to analyzing all companies and opportunities in the marketplace quickly becomes apparent. I will formally apply the DuPont Factors in a future analysis.
I received a seed of knowledge, planted long ago, reading a book about Warren Buffett’s ideas. My translation of the key idea presented is that brand equity is one of the most powerful forces underlying corporate valuations. As brand equity is an intangible asset, Buffett being a famed value investor, focusing on intangible values may seem counterintuitive. It is quite literally intellectual property.
In my experience as a 28-year professional, brand equity or intellectual property has in fact proved to be a primary driver of valuations for the largest and most successful companies. As the United States Patent and Trademark Office is the battlefield for such intellectual property, it is an obvious place to look for ideas as well as opportunities.
The DuPont Factors represent a logical framework within which to assess one’s competitive positioning and opportunity set in all manner of marketplaces. Keep in mind that in each company, situation, or opportunity, the factors will be weighed differently depending on applicability and importance.
Eyeing opportunities through the “DuPont Factors” lens offers an actionable scaffolding from which to view and execute within one’s entire opportunity set.