Trademark Registration for the Small Business Owner

Owners of businesses of all sizes frequently are confused about the benefits of registering their trademark(s) and the difference between a trademark registration and the myriad of other registrations necessary to own and operate a business. This article provides a brief primer on what a trademark is, some best practices, and advice regarding when it is time to call an attorney.

What a Trademark Registration Is and What It Is Not

A trademark registration is a formal filing with either the state or the federal government specifically seeking to register words or an image as being associated with a particular source of goods or services. Often business names operate as trademarks, but the two concepts are not synonymous. Indeed, where the purpose of a business name is to create a legal entity for a business owner, the purpose of a trademark is entirely focused on helping consumers. Trademarks are designed to give consumers confidence that each product (or service) bearing a trademark will be the same as what they have come to expect with similarly branded products (or services). Often the brand recognition associated with trademarks is the biggest asset of a company. Would you spend $1,000 on an iPhone® if you were not sure the iPhone® you were purchasing was actually made by Apple? For Apple to become the world’s first trillion-dollar company, customers needed to be sure that an iPhone® is an iPhone®, regardless of whether it is purchased in Phoenix or Phuket. Trademarks make this possible.

Unfortunately, many business owners incorrectly believe that they have “registered” their business name for use as a trademark through common business filings with various administrative agencies. The process of forming a business entity, obtaining a tax ID number, registering with the SEC, etc. are all distinct administrative tasks—none of which have any bearing on or relation to trademark protection. Such confusion often arises because during many of these administrative processes agencies will perform what applicants see as a trademark-like search to see if any other businesses are registered which have the same name. It must be stressed, this is not the same as a trademark search (or registration) and usually is nothing more than an administrative function mandated by state law. (See e.g., Arizona Revised Statues § 10-401(B) (requiring a company’s name be distinguishable from already registered (or reserved) entity names).) Further complicating things is the fact that the registration of a trademark is not necessary to have some rights in the trademark (called “common law” rights). The combination of these two factors result in many business owners failing to register their trademarks, and, as a result, being woefully unprepared when they need to enforce or defend their trademarks.

Trademark Practice Best Practices

Prior to the adoption of any (re)branding—whether of a company name, product name or service name—companies should invest a modest amount of time and money to perform a thorough trademark search to ensure that there are no obvious trademark issues. At the end of the day, no one wants to be forced to spend thousands of dollars to change their business, product, or service name after the initial roll-out (or defend a trademark litigation lawsuit brought by a senior user of a trademark which is arguably similar).

In addition to an initial trademark search, companies should also consider registering trademarks before they are even used. United States trademark law allows for the registration of trademarks which are not currently being used in commerce but where a company intends to use the trademark in commerce. Filing a federal registration months prior to a roll-out will give a company a clearer picture of whether there will be any obstacles associated with the use of the chosen trademark. Even if a company decides not to file a federal registration, at a bare minimum, a state registration should be strongly considered. (Although, some states—like Arizona—only accommodate the filing of trademarks that are in actual use.) Frequently, such registrations are incredibly inexpensive ($15 or $25), can be secured in a matter of days, and provide some initial protection against trademark infringement or counterfeiting of a businesses’ goods.

While state registrations afford some protections, a federal registration is simply a must in today’s internet and e-commerce driven economy. It is called the “world” wide web for a reason and having only state and common law-based rights in your valuable intellectual property, severely limits a business’ ability to protect those rights. Unlike a state registration, a federal registration undergoes significant examination before it issues and commonly the process will take between 8 months and 2 years. A federal registration, however, provides numerous benefits over state registrations including:

• Recognized Ownership—A federal registration creates a legal presumption of nation-wide ownership on behalf of the trademark owner and provides notice of same to the world.
• National Recognition—Allows a trademark owner to side-step the jurisdictional headaches of trying to enforce a state-based trademark against an out-of-state infringer.
• Federal Jurisdiction—Allows a trademark owner to bring suit anywhere in the United States and, in certain cases, allows for recovery of attorney’s fees and/or treble damages.
• International Domain Name Advantages—When trying to shut down infringing websites, automatic/unexamined trademarks (such as typical state registrations) are not accorded the same deference as federal registrations and may not be sufficient to prove “rights in a mark” necessary for UDRP proceedings.
• Statutory Damages—In cases of counterfeiting, federal law allows for certain statutory damages, relieving a trademark owner of the need to prove actual losses.

Time to Call an Attorney

While filing (or “prosecuting”) a federal trademark application may be accomplished without an attorney, doing it yourself usually does not make much sense. On the continuum of legal fees, a trademark application is a relatively inexpensive process, which when done right the first time, can prevent expensive headaches down the road. Should you, however, decide to file a trademark application on your own, the United States Patent and Trademark Office (http://www.uspto.gov) does its best to walk business owners through the process. Follow those instructions and you are well on your way. (One word of advice—please do not abandon a trademark application just because you receive an office action rejecting the application. Rejections are exceedingly common and frequently overcome. Call an attorney and figure out your options for how best to proceed.)

Finally, if you get sued for trademark infringement (or see someone who is using your trademarks or a trademark confusingly similar to your trademarks), it is definitely time to reach out to a person who specializes in intellectual property litigation. Your options for defending or enforcing your rights will often depend on whether you have filed for a state or federal registration, the length of time you (and the other party) have been using the trademark, the scope of that use, and the similarity of the trademarks. An intellectual property litigation attorney can weigh these factors and provide guidance on how best to proceed.

When it comes to intellectual property matters—be they simple trademark applications, reviews of established intellectual property protection plans, or expansive federal litigation—I can help. Give me a call or email and find out how.