Trademarks are some of the most misunderstood forms of company property, but when nurtured properly, they can become some of a company’s most valuable property. A solid trademark strategy is important for every business, regardless of age or industry.
What is a Trademark?
Unlike all other property rights under American law, trademark rights are intended for the primary benefit of the public, not the owner of any given trademark. A trademark, also known as a mark, is a shorthand reference that links a particular good or service with a company in the consumer’s mind. Marks associated with goods are called “trademarks,” and marks associated with services are called “servicemarks” – although “trademark” is often used as a generic term for both kinds of marks.
When a consumer sees a product or service being sold under a given mark, the consumer can rely upon their past experience with the company to whom the mark belongs in deciding whether to make a purchase. For instance, when consumers see a film or product released under the Disney mark, they can presume that it will likely be family-friendly and of high quality. By giving owners the right to defend their marks and therefore preserve an accurate link between the mark and the products and services associated with them, the government is protecting the public from being duped by an imposter selling subpar work and merchandise by trading on the actual mark owner’s good name.
For this reason, preserving the integrity of their marks is a top priority for many companies. Disney, for instance, once made the controversial decision to demand the removal of murals depicting a number of its trademarked characters from the walls of three preschools in Florida. While this course of action may seem harsh, ensuring that a company’s trademarks are only applied to products and services that a company has approved is essential in ensuring that the connection between a mark and the items sold in connection therewith remains strong and within the owner’s control.
Why Should I Register my Trademark?
Some companies are surprised to learn that the government does not hand out trademarks themselves. Rather, a mark comes into existence and begins accruing value from the time that a company first begins using the mark in connection with its goods and services. At this point, the mark is a “common law mark,” and the owner’s right to use the mark is protected to a certain extent under state and federal law.
A company can enhance its rights to a major extent, however, by registering its marks at the federal level. Federal registration, which is overseen by the United States Patent and Trademark Office (USPTO), gives an owner multiple benefits, including a legal presumption that the owner does indeed own the mark at issue and has the right to use it nationwide, a right to sue in federal court for trademark infringement and (in some cases) obtain statutory damages and attorneys’ fees, inclusion in the USPTO’s public database (which lowers the potential that other businesses will begin using the same or a similar mark in connection with their own business), and an owner’s ability to record a mark with the United States Customs and Border Protection, which can block imports of counterfeits or infringing items.
Many companies also register their marks to ensure that others do not attempt to register the same or substantially similar marks later in time, which can have major consequences. When a company (the “junior user”) obtains federal registration for a mark that another company (the “senior user”) is already using, but has not registered, the senior user’s ability to use the mark is frozen within the geographical area in which they were making sales prior to the junior user’s registration. Thus, if a company began selling meals under the mark “Bobby’s Finest BBQ” in 1901, but never registered the mark and only made sales within the State of North Carolina, they would be prevented from selling meals outside of North Carolina if another company obtained federal registration for the same mark in 2021 – although the junior user would also be prevented from entering the North Carolina market due to the senior user’s common law trademark rights.
When is the Right Time to Apply for Federal Registration?
Generally, it is best to begin considering federal registration as soon as possible. Doing so allows you to vet the marks you are considering by determining whether there are already companies using the same or similar marks in your industry. Identifying other, potentially problematic marks up front can save a tremendous amount of headache down the road. In multiple instances, companies that did not prescreen their marks have received cease and desist letters from the owners of federally registered marks and have had to go through the painful process of rebranding – which not only includes the hassle and expense of replacing things like business cards, signage, websites, and promotional material, but also requires companies to forfeit the goodwill already established in the marketplace and retrain new and existing customers to recognize the quality of a company’s goods and services under a new mark.
While at least one interstate sale is necessary to obtain federal registration, a company can still apply for a mark on an “intent-to-use” basis. To do so, the company must certify that – while it has not made an interstate sale yet – it has a good faith intent to begin making sales in the near future. If the USPTO finds no conflicting marks or other issues with its application, the company will receive a “notice of allowance,” and will then have six months to make a supplemental filing certifying that it has made its first interstate sale – which six-month period can be extended up to five times upon payment of additional fees, giving the company up to three years to make that first sale.
Since the fees associated with an application for federal registration are fairly minimal (the Lipp Law Firm, for instance, offers a flat fee for trademark registrations), even brand-new businesses can normally afford to initiate the process. Due to the major benefits (and the time necessary for the application process to run its course – usually eight to ten months), getting a head start is often wise.
What Kinds of Marks Can I Register?
The most common types of marks are words, images, or combinations of the two. When you register a mark for words alone and do not claim any particular font or color, your mark will cover all uses of those words in any color or font. When words appear together with images, however, only the specific design included with your application are covered. For this reason, a mark that includes words alone (called a “standard character mark”) tends to be more versatile and provide more protection. This said, when a logo is an important part of a company’s branding (e.g. the McDonald’s golden arches or the Nike swoosh), it is often a good idea to file a separate application to register the logo as well.
While they are less common, it is also possible to register sounds and scents as trademarks (e.g. the three-note NBC jingle or the scent of Hasbro’s Play-Doh).
How Do I Choose a Strong Trademark?
There are two criteria for choosing a strong mark: 1) pick something that no one is currently using, and 2) pick something that no one is likely to start using in the future – whether with or without knowledge of your mark.
With these principles in mind, US lawyers divide trademarks into four categories:
In sum, when choosing a mark for your company, consider the order of preference, with fanciful and arbitrary marks at the top, suggestive marks in the middle, and descriptive marks at the bottom.
What Can a Trademark Lawyer Do For Me?
A lawyer with a good knowledge of trademark law can be of great use to a company, irrespective of what stage the company has reached in the business life cycle. For businesses that are just starting out, a lawyer can advise on whether and when to file for federal registration, which marks to register and on which bases, and what information to include in the trademark application. A lawyer can also help if there are hitches in the registration process or if the USPTO examiner has questions about the applications. For companies that already have marks registered, a lawyer can advise on how best to protect them and keep them up to date (marks require renewal after six years, and again after that every ten years). For companies that are looking to sell or transition, a lawyer can advise on the marks’ value, and ensure that they are appropriately identified and addressed during the transaction process.
Ryen Rasmus is an Attorney with The Lipp Law Firm specializing in transactional law and intellectual property. He can be contacted at Ryen@LippLawFirm.com.
Are you a business owner or executive in the DMV area (DC, Maryland, Virginia)?
Or maybe you just want to hear our Lipp Law updates (thanks for your support! 🙏)?
If so, you should check out Lipp Law's Employment Law Newsletter. Expect regular updates about employment law and the team here at Lipp Law, focused on serving you - the backbone of our DMV business community.
If you like to keep your business compliant with employment law changes, subscribe below!