Trademarks and Community Associations: Maintaining Your Community's Brand

Your community association ("Association") probably invests substantial resources in protecting and maintaining its green spaces, facilities, and other common elements.

But what about its good name?  If your community is of any substantial size, then it probably has a name that distinguishes it from the surrounding area.  Over time, your community name may do more than simply describe the location of its members' properties.  It may come to symbolize the community's culture and reputation and, in turn, communicate something to potential purchasers about its members' property values.  Your community's name can become its brand. 

Can your Association take steps to protect the value of its brand?  How would the members of your exclusive golf community feel if a developer adopted a similar name for his new apartment complex just down the road?  What if a real estate broker opened a sales office just outside your community's gates under the same name?  Would your Association be able to stop these people from exploiting your community's brand for their own benefit, and perhaps tarnishing that brand in the process? 

A major component of brand protection involves the registration and/or enforcement of trademark rights.  Your Association may be able to take steps to protect the community's name, logo, or other elements of its branding.

Trademarks Generally


Trademarks typically consist of words, phrases, symbols, designs, or any combination thereof, that identify and distinguish the source of the goods or services of one party from the goods or services of another.  Trademarks can include all of the elements that constitute a brand. 

Technically, a "trademark" is a mark used for goods, while a "service mark" is a mark used for services.  A "trade name" is a mark that describes the company or other organization providing the goods or services.  Trademarks, service marks, trade names are very similar, and the terms are often used interchangeably as simply "trademarks."      

Trademarks are important to brand protection because the trademark owner typically has the right to the exclusive use of the trademark and the ability to prevent others from using confusingly similar trademarks for the same or similar goods or services.  Although registration of a trademark is not required, the principal benefits of being a trademark owner will be limited without the appropriate registration.  Registration of a trademark can be sought on a state or federal level depending on the scope of your Association's services and its goals. 

Community Names and the Limits of Trademark Protection


Many factors have a bearing on the existence, scope, and enforceability of trademark rights.  In the context of a planned community, your Association's trademark rights in the community's name are most likely to depend on priority of use, whether the name has geographical significance and the Association's range of services. 

First, unless the developer of your community obtained a trademark registration for the community name and your Association qualifies as a successor-in-interest to those rights, the Association's trademark rights may have been established, if at all, when either the developer or the Association became the first to use the name in commerce in your geographical territory.  If that is the case, then your Association may own trademark rights in the name so long as no third parties had pre-existing trademark rights in a confusingly similar name under a state or federal registration for similar services.

Second, whether your community name is geographical in nature is a significant factor in whether your Association has trademark rights.  In general, names that are recognized as "geographically descriptive" are not capable of exclusive protection as trademarks because, in theory, other service providers in that area should have the right to use such terms to describe the geographical origin of their own services.  Further, trademark theory holds that consumers initially view such terms as describing the geography where goods or services originate, rather than describing a single provider of goods or services.

If your community name was an arbitrary or fanciful designation, conjured up by a developer with no regard to the community's actual geographical location, then the chances are good that the name may be one capable of trademark protection.  However, your Association's trademark rights may be very limited if the community name, or a portion thereof, is also the name of a nearby geographical place or feature, such as an area of town, a lake, or a mountain.  An exception to this general rule may apply if your planned community has a geographically descriptive name that, through long-term and substantially exclusive use, has become associated with only your planned community the mind of the public.

Third, the scope of your Association's trademark rights in the community name, if any, will depend on the scope of its services.  Your Association's primary services likely include the maintenance of the community's common elements, enforcement of its covenants and restrictions, and promotion of the community to prospective new residents.  But your Association's services might also include, depending on its size and amenities, the management of a golf course, the leasing of commercial space, the publication of a community newspaper, or other types of services common to large planned communities.  Because a trademark owner can only prevent others from using confusingly similar marks for goods or services that are identical, complementary, or closely related to the trademark owner's own services, the scope of the Association's exclusivity in the community name will depend on the scope of its own services.

If your Association takes appropriate steps to protect its community name and other trademarks by registering and enforcing them, its ownership of its trademarks and the benefits your community receives from that ownership can be enjoyed perpetually.

Real-Life Examples


The trademark concepts discussed above have been applied by courts in a number of legal cases.  Here are a few illustrative examples: 

Tortoise Island Homeowners Association, Inc. vs. Tortoise Island Realty

In this notable Florida case, a real estate agent opened an office just outside the gates of an exclusive residential community known as "Tortoise Island."  They adopted the substantially identical name, "Tortoise Island Realty," for their company.  They also adopted a tortoise logo very similar to the one used by the community.  As a result, people looking to purchase homes in the community were often confused into believing that the real estate company was owned by, or was somehow affiliated with, the community's association.  Some even thought that the company was the exclusive agent for that community.  The community's association sued the real estate company to enjoin their use of the name and logo. 

The real estate company argued that "Tortoise Island" was geographically descriptive of the island where the community was located and, therefore, not subject to exclusive trademark protection.  But the Florida District Court of Appeal hearing the case disagreed.  It ruled in favor of the association, holding that "Tortoise Island," having been a name created by the community's developer, rather than the original name of the island, was not geographically descriptive and, therefore, it was capable of trademark protection.  Because the real estate company's services were related or complementary to the community association's property management services, resulting in actual confusion among prospective purchasers about a relationship between the two, the real estate company's use of the name could be trademark infringement. 

Dominion Federal Savings and Loan Association vs. Ridge Development Corp. 

In contrast, this Virginia case is an example of third-party use of a community name that is not trademark infringement.  In this case, a development company had created a very large planned community called "Lake Ridge," that included residential and commercial buildings, recreational areas, and even schools and other public buildings.  The community had all the services and amenities of a town and, like a town, was referenced on the nearby interstate exit sign as a destination.  A bank – Dominion Federal Savings and Loan – opened a local branch outside the gates of the community and used the "Lake Ridge" name for the branch.  The development company, which had ownership of the trademark rights at the time, sued the bank to prevent their use of the community name. 

The District Court for the Eastern District of Virginia held that the bank was not infringing the Lake Ridge trademark.  The bank was using the community name, in addition to its own name, to indicate the location of that particular branch.  The development company had already allowed numerous other businesses within the boundaries of the community to use the Lake Ridge name in a very similar manner.  Because the bank's services were not similar or related to the services offered by the development company, there was no likelihood of consumer confusion as to a relationship between the bank and development company.  Further, there was no evidence that the bank was trying to exploit the reputation of the Lake Ridge community.  Consequently, the court held that the bank's use of the name in this way was not trademark infringement.

Conclusion


Your Association may have trademark rights in your community's name.  If so, the protection and enforcement of these rights should not be overlooked.  It may be critical to protecting your community's brand from exploitation or degradation by third parties.  In the long run, attention to your community's trademarks can contribute to the preservation of the culture and reputation that its members bought into when making their decision to call your community home. 

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© 2019 Ward and Smith, P.A. For further information regarding the issues described above, please contact Norman J. Leonard.

This article is not intended to give, and should not be relied upon for, legal advice in any particular circumstance or fact situation. No action should be taken in reliance upon the information contained in this article without obtaining the advice of an attorney.

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