Trademarking VS Not Trademarking
Huy Fong Foods was never was trademarked, and its core competitors were using its famous Sriracha sauce. This further resulted in free advertising for Huy Fong and increase in the popularity of the sauce.
Not Trademarking & Free Advertising
- The first approach of not trademarking a business and relying on free advertising was brought in by the founder of Huy Fong Foods, David Tram. The brand was never trademarked, and its core competitors were using its famous Sriracha sauce.
- However, there was a silver lining to this; the competitors relied on heavy marketing and advertising of the Sriracha sauce, which further resulted in free advertising for Huy Fong and increase in the popularity of the sauce.
- Given that the company had on record registered a trademark for the "signature rooster design, logo, and green-capped bottle," they were able to maintain their existing audiences. Additionally, USPTO has already issued several decisions stating that the single word "sriracha" on its own is now too generic for any of HF foods' competitors to trademark for themselves.
Advantages & Disadvantages
- Not having a trademark registered for business has one basic advantage, and that is that though the intellectual property rights law does not protect the business, there is still some sort of protection available to the business owner under the common law regime. These are basically state-based laws that deal with unfair competition.
- These state-based laws provide limited protection and rights to the owner of the business.
- The approach also has another decided disadvantage, which is related to the fact that advertising and marketing are not controlled by the owner of the business and is entirely dependent upon the competitors, which means that the competitors can design their advertising initiatives in a way to provide exclusive benefits to the competitors themselves. In the case of Huy Fong Foods, the settings proved fruitful for the company, and the competitors provided free advertising for the company for years, but this may not be the scene for all non-trademarked businesses.
- Another disadvantage is concerned with the fact that this approach will only be fruitful if the business has a significant amount of consumer goodwill, and if the products of the non-trademarked business are easily distinguishable and have some sort of uniqueness. This is the reason why Huy Fong Foods was successful without having a trademark; they had trademarked their unique rooster look.
- Additionally, though it may see a valid option not to have a trademark registered and to enjoy free advertising for life, it may not be practical. The case of Huy Fong Foods involved a generic name "Sriracha," which can not be trademarked by its competitors, but in other cases, if a generic name is not involved, there are chances that other competitors could register a trademark for the same product of a non-trademarked business.
- Earning revenue from the licensing of the unique rooster look is a huge advantage in the given situation, and the fact that no other competitors' brands can incorporate the same look also proved advantageous for Huy Fong Foods.
- Trademarking has several benefits for the owner of the business, including infringement protection, licensing options, and several others.
- Advertising becomes easy in cases where a product or brand is trademarked since there are no chances of infringing the rights of any other brand or product, and the brand is free to promote its products in a fair manner.
- The brand is entitled to receive damages in cases of infringement, and advertising or marketing campaigns from infringes can be provided with an order of "cease and desist if their campaign is infringing the trademark rights of a brand in question." However, this can only be possible if the brand is trademarked.
The Trademarking & Paying for Marketing and Advertising Approach
- This approach was used by the competitors of Huy Fong Foods, including McIlhenny Company of Avery Island. The competitors introduced their own versions of Sriracha sauce, which was selling first at their own website and then at the Target store across the nation.
- "Trader Joe’s also sells a Sriracha sauce, and several other food brands have introduced Sriracha-flavored products, including Subway."
- Since the actual Sriracha sauce from Huy Fung Foods was not trademarked and was declared too generic from the USPTO, none of the other competitors could get it trademarked as well.
- One of the decided disadvantages of the situation was that just like Huy Fong Foods, the competitors too had limited protection over these Sriracha sauce products.
- Competitors of these sauces were generally the biggest market shareholders of the hot sauce market; these players had a huge audience for marketing similar Sriracha sauce products in their own creative ways.
- Logically, paying for a marketing campaign that is for a product that will not provide exclusive profit for the company does not sound feasible and is more of a disadvantage.
- Loosing on licensing revenue is also a major disadvantage.
The Final Word
- While both of these approaches may seem feasible and profitable, they have their own pros and cons. Additionally, the approaches may only be practical in a given situation where the trademark falls in the category of generic trademarks and so cannot be trademarked.
- The Huy Fong approach of utilizing free advertising was a valuable one, but it was only possible because the USPTO had declared Sriracha as too generic.
In order to provide a thorough analysis of both approaches, we combed through industry publications, competitor channels, new releases, interviews from the company executives, and other resources. We have included some archived sources as well to provide a clear and accurate view of the situation and the approaches used by Huy Fong and its competitors. For trademark related information, legal portals have been used.