What Every Business Should Know About Trademarks and Registration
Unfamiliarity with intellectual property, often coupled with the daily pressures of running a business, can sometimes cause one to overlook the importance of protecting intellectual property. In short, intellectual property can be summarized into four categories or types: patents, copyrights, trademarks, and trade secrets. Of the four, trademark is the type that impacts virtually every business. This is because every business has a name which it wants consumers to associate with quality goods or services from that particular business.
A trademark is any word, phrase, logo, or design that is consistently used in commerce in connection with goods or services. The trademark acts as an immediate “source identifier” of the goods or services. When consumers see “Nike” or the swoosh, Nike hopes they will immediately associate both with quality sports equipment and clothing from Nike.
Every business has a name, so every business has at least one potential trademark. The question becomes whether that name—or any other word, phrase, logo, or design the company is using for its goods or services—is being used properly in order to treat it as a trademark and, even more importantly, to protect it as one.
Why is trademark protection important? Confusion (or at least the likely potential for confusion). Trademark law specifically protects against the “likelihood of confusion,” preventing one company from using a trademark that is likely to be confused with an already existing trademark used by someone else. For example, if a new business starts selling athletic apparel with a “check mark” logo on it, Nike may need to take notice. A trademark owner, like Nike, wants to avoid similar trademarks potentially confusing consumers. Because trademarks serve as a way to quickly identify the source of goods or services, confusion could cause a loss of sales as consumers purchase goods or services from the wrong company. Confusion could also cause inferior goods from a trademark infringer to dilute the reputation of another company’s goods or services. If consumers mistakenly believe that the “check mark” gear is somehow affiliated with Nike, they may start to have a diminished view of Nike if the “check mark” gear is not as high in quality as true Nike-branded gear.
One of this author’s favorite trademark examples is the moving company “Two Men and a Truck.” What if a new company enters the market as “Three Guys and a Van?” Would consumers think this is company is affiliated with Two Men and a Truck? Would consumers use Three Guys and a Van believing in some affiliation, thereby creating lost sales? Would consumers blame Two Men and a Truck and think less of the company if the consumer had a bad experience with Three Guys and a Van? Trademark law seeks to prevent these concerns and realities.
Businesses need to do very little to create a trademark. Simply use it in commerce in connection with the sale of goods or services. However, businesses need to put in a little more effort to protect a trademark.
First, businesses need to pick a “strong” trademark. The law sub-categorizes trademarks into five categories (from weak to strong): generic, descriptive, suggestive, arbitrary, and fanciful. The higher the classification, the stronger (and therefore more protected) the trademark will be. Businesses are best advised to consult an attorney to properly develop a trademark within the strongest classification possible. Also, part of a creating a strong trademark is ensuring that a new trademark is not confusingly similarly to an already existing trademark, particularly within the same industry or category of goods. This step is too frequently skipped for cost reasons and can have expensive and disastrous consequences. An experienced trademark attorney can assist in the appropriate trademark search.
Second, a business must use its trademark consistently. Remember, trademarks are supposed to be immediate source identifiers, so if the trademark is used inconsistently or changed, then this connection is diluted or broken. Changes in color, font, size, and placement can—individually or collectively—interfere with the protection of a trademark. Details of the trademark should be fixed and then consistently used across all mediums.
Third, a business must “police” its trademarks. This means it must watch the market and reach out to those who use the same or confusingly similar trademarks. Again, an experienced trademark lawyer can help if a potentially confusing trademark is found.
Trademarks can also be registered at the state and federal levels. Registration is, unfortunately, commonly misunderstood. Unlike patents and copyrights, registration is not required to create or to protect a trademark. Registration is also not required to file suit against someone infringing another’s trademark. Registration also does not guaranty someone will not infringe a registered trademark. However, registration helps in a least two primary ways and is usually worth the cost.
First, registration is government-endorsed evidence that a particular company has a trademark for particular goods or services since at least a particular date beginning at least as early as when the registration was granted. This evidence can be critical because the first in time to use a trademark usually wins a competing trademark fight.
Second, at the federal level, a trademark is searched among all prior registrations and granted only if it is found it does not infringe (be confusingly similar to) an already existing mark. In this way, a trademark registration prevents others from subsequently using a confusing trademark, and registration is evidence that the registered trademark does not infringe any trademark registered prior in time. Furthermore, federal registration provides a presumption of exclusive use of the registered trademark nationwide. While there are some exceptions to this presumption, federal registration can be a powerful tool to protect a trademark.
Registration at both the state and federal level is generally unnecessary, but state level registration has its place too. Businesses with a generally local scope of services or distribution may find the ease and lower cost of state registration to be right for their company. State registration offers the same government-endorsed evidence as well as the ability to check other trademarks registered in the same state. For local businesses with a primarily local scope of business, state registration can be helpful and preferred over federal registration. A trademark lawyer can help a business understand and wield these differences to maximize the benefit while minimizing costs as much as possible.
A business does not have to be as big as Nike to care about trademarks. If the business cares about its “brand” and “reputation,” then the business needs to protect its trademark. Please let us know if Koley Jessen can help your business do so.