Trademark Edge

To own a trademark in the United States all you need to do is be the first to use it in trade and make continuous use of the mark thereafter. The manner of use required is (1) to use it in interstate commerce, and (2) in a way that permits consumers to distinguish your particular goods and services from those of another producer. Trademarks based solely upon first use are referred to as common law trademarks, and receive protection under the common law (i.e. court-made law). Trademarks that are registered with the state or federal government receive additional protection under state and federal statutes which provide benefits beyond the protection available under the common law. Thus, the purpose of registration is not to acquire trademarks, but rather to enhance the already existing rights associated with a common law trademark.

For more information, see:

Benefits of registration

What Makes a Good Trademark?

Choosing the right name or logo for a business or product is an art. Companies sometimes pay thousands of dollars to marketing and identity research firms to help them find the "perfect" name for a product or business. This is oftentimes money well spent, since the value of a name can repay those costs many times over, once consumers internalize the name and return to it for repeat business. A name can even become a status symbol of sorts, e.g. Nike, Ty, or Guess, allowing companies to charge well over the normal markup for the product. Whether you spend thousands on naming experts, or can only afford to pull a name out of a hat, the naming process is woefully incomplete without a legal analysis of a name's trademark potential.

Unfortunately there is no quick formula for choosing a good mark. However, As a general principle, you will want one that is (1) distinctive, and (2) not forbidden, and (3) not preempted by an existing trademark. Begin by selecting selecting several possible marks that are not forbidden, and are strong enough legally for your purposes. If you start with too few marks to begin with, you may find after searching for possible preemptive marks that all your choices have been taken.

Print out a checklist for selecting a good trademark at: Trademark Selection Checklist.

The Mark is Distinctive
Distinctiveness is a prerequisite to obtaining protection through the court system and for registration of a trademark on the Principal Register of the U.S. Patent and Trademark Office. The legal definition of distinctiveness is fairly obtuse, namely, the ability to communicate the source of goods or services to consumers immediately upon first use of a trademark. Thus, it may be more insightful to describe distinctiveness in terms of examples. A mark is "inherently distinctive" if it is:

Fanciful, or completely made up (e.g. EXXON, KODAK, or REEBOK);
Arbitrary with respect to the underlying goods or services (e.g. APPLE for computers, BLUE DIAMOND for nuts, or GREEN LEAF for insurance), or
Suggestive of the the qualities of the underlying goods or services (e.g. COPPERTONE for suntan oil, ROACH MOTEL for insect traps).

Some trademarks that are not fanciful, arbitrary or suggestive may become distinctive through extensive use and/or advertising. Where such use or advertising results in a trademark permeating the marketplace, and gaining a requisite level of market recognition among consumers, then the trademark is said to have acquired secondary meaning. As such, it is capable of receiving protection from the courts, and can be registered with the USPTO in the same manner as inherently distinctive marks. Marks that are capable of "acquiring distinctiveness" include:

Descriptive marks, which closely describe the qualities of the underlying goods or services (e.g. NATURE'S MEDICINE for food supplements, BUFFERIN for buffered aspirin, or WORLD BOOK for encyclopedias).
Words that are viewed primarily as surnames by consumers; or
Words that are viewed primarily as geographic terms by consumers.

Finally, generic marks (those consisting of the name or picture of the product itself) are never distinctive and cannot be protected, no matter how widely recognized they are by consumers. Examples of generic terms are DISCOUNT MUFFLERS for car muffler repair and replacement services, DOS for a computer operating system, and SHREDDED WHEAT for breakfast cereal.

Legal Strength
Marks that acquire their distinctiveness, as opposed to those that are inherently distinctive, generally receive less protection from the courts, and are said to be weaker than inherently distinctive marks. Furthermore, there is a continuum of legal strength even among inherently distinctive marks. Fanciful marks are the strongest legally, and receive the greatest amount of legal protection from the courts, while arbitrary marks are only slightly less strong, and suggestive marks even less strong. The difference between a mark that is legally strong versus one that is legally weak is that the weaker marks cannot exclude other uses as broadly. For instance, in order for there to be infringement of a weak mark, the infringing mark must be a lot more similar in look, sound or meaning than is necessary for infringement of a stronger mark. Also, where products are not exactly similar, but are closely related, the owner of the stronger mark will be able to exclude similar marks, while the owner of a weaker mark will not be able to do so.

Marketing Strength Versus Legal Strength
It is worth noting that oftentimes names have a strong marketing appeal, but are weak legally. It is a lawyer's unfortunate job in this world to dwell on the risks of choosing a legally weak mark. However, there often are good marketing reasons to select a mark that isn't the strongest from a legal point of view. For instance, a mark that describes the underlying product itself is useful from a marketing perspective because it immediately conveys to the consumer what it is that the business or product does. Arguably, this requires less initial investment in advertising since potential customers can find businesses or products with descriptive marks more readily. However, the short-term marketing potential of a descriptive mark may not outweigh the long term advantage of having stronger legal rights in a mark. Only you can make the decision as to which of these two ends of the spectrum, marketing potential versus trademark potential, is more important for your business.

For more information on this topic, visit the TrademarkEdge web page entitled, Legal Strength of Trademarks.

The Mark is not Forbidden
In addition to generic marks, several other categories of marks never receive legal protection. If you adopt one of these marks, anybody can copy your mark without consequence. These are sometimes referred to as prohibited or forbidden trademarks, and include:

(1) Immoral, or scandalous marks;
(2) Marks which disparage any person, institution, belief or national symbol;
(3) Marks consisting of a living person's name, portrait or signature, unless written permission has been granted;
(4) Deceptive marks (i.e. those that are either used intentionally to deceive or in fact cause consumers to rely upon the deceptive aspect when making purchasing decisions).
(5) Marks consisting of a deceased President's name, portrait or signature unless that President's spouse has granted written permission or is no longer alive;
(6) Marks consisting of a flag, coat of arms or other national insignia; and
(7) Marks which are primarily functional (i.e. those where the feature for which protection is sought has a primarily utilitarian purpose to improve the salability of the product).

The Mark is not Preempted by a Prior Trademark
Marks that are already being used have prior rights, and their owners can stop you from using that same mark. It is not only exact versions of the mark that may preempt your proposed marks, but also any mark that is confusingly similar. If you adopt a mark that is confusingly similar to an existing mark, then you may be liable for trademark infringement, with the possible consequences ranging from having to give up all use of your mark, to having to pay treble damages, attorneys fees, court costs, and prejudgment interest.

To avoid these consequences, you should conduct a reasonable search of existing marks in the region in which you intend to promote your goods or services. No search guarantees that you will find all existing marks. Thus, there is always some uncertainty and risk involved in using trademarks. However, conducting a search reduces those risks profoundly. In sum, if you fail to conduct a reasonable search of existing marks, you stand a much greater chance of (1) infringing someone else's mark, and (2) having to pay monetary damages in the event you are sued for your infringement.

See also:

Availability of Your Mark.

Searching for prior rights in your mark, or "clearing" a mark, is necessary in every instance, even if you do not register. Clearing is the process of searching for prior uses of the mark you propose to adopt, and analyzing whether or not marks found in the search should prohibit you from adopting your proposed mark. If you fail to clear a mark, your application could be rejected due to the existence of a prior right, in which case you will lose all fees paid.

Incidentally, there is a temptation to skip the clearance process, since the Trademark Office does its own search of prior rights during its examination of your mark. This temptation should be resisted, however, since the Trademark Office does not do as thorough of a search as you will want to protect your own interests.

Likelihood of International Use

If you are planning international expansion, but are not yet ready to establish your presence in a foreign country, a US registration may be helpful when it comes time to register your trademark in a foreign country. Specifically, the Paris Treaty requires that its member countries let you use the date you filed an application in one member country as the date you can claim in their own trademark registration system. However, you must file in the foreign nation within six months of filing in the US.

Cost-Benefits of Registering Your Mark

The basic application for registration costs $325 in government fees. However, depending on the circumstances, it is not uncommon for fees alone to run $500-$1000, not to mention your investment in time and/or attorney fees for filing the application. What's more, complications can arise that will cost you even more if you have to defend your application for registration. When you are first starting a business, such funds may be hard to come by, and depending on your situation, may not be a priority.

Many of the benefits conferred with federal registration only come into play when you have to defend your mark in a lawsuit, or sue another company for infringing your mark. The cost savings of these advantages should not be overlooked. However, the value of those benefits depend largely on circumstances. For instance, certain startup businesses, particularly small service businesses with no plans for expansion, may have little to lose if they are willing to give up their name immediately upon the demand of a challenger. Typically only willful infringers are slapped with monetary damages in a lawsuit, and thus if you have cleared the mark, and are willing to give it up when challenged, you should not find yourself in any serious legal trouble if you have not registered your mark. However, you will also not receive the many advantages of registration, which depending on your circumstances may be worth many thousands of dollars.

A word of caution is warranted here; you don't always know how you will react when faced with giving up your name, until it actually happens. Only you can answer what it would mean if you had to give up your business or product name. Will it mean thousands in reprinting costs? What about the loss of name recognition you worked hard to establish? If you have a small service business obtaining 90% of your customers from the yellow pages, you have much less to lose in giving up your name down the road than a nation-wide manufacturer or retailer with 60% of your sales coming from repeat customers.

Personal factors must also be weighed. If you are not tolerant of risk generally, then you may want to register your mark just to know that you have done everything you could to protect your business. You can also not underestimate the strong emotional attachment most people have with their business names --sometimes unbeknownst to them until the name is taken away.

In sum, you should not make this decision lightly, and you should revisit the decision frequently, as business success should change the analysis.

What Issues Affect the Timing of Registration?

Deciding when to invest in a trademark registration can be a delicate timing issue. Depending on the strength of your trademark, the size of your budget, the importance of the trademark for your business, and your plans for international expansion, you may decide to file an early application (called an Intent to Use application) or delay registering your mark until a more opportune time.

Quite often, large corporations file Intent to Use applications in order to secure their use of a mark prior to investing in printing and marketing costs. That way they can test a marketing idea and secure the rights in the trademark without investing in a national roll-out of the marketing plan. If the marketing strategy works, everything is in place to secure their rights in the trademark. If the strategy fails, they abandon the application for registration and move on to the next plan and the next trademark.

If you file for registration before using your new trademark, you will have to file as an Intent to Use applicant. The disadvantage of an Intent to Use application is that you may want to change the description of goods or services after you launch your new product or business, and you will have to file a new application in order to add any new goods or services. This is important because the filing date of Intent to Use applications secures your priority against others who later use your trademark. Thus, it can happen that before you file the new application, another company -- one perhaps motivated by your very own advertising campaign --files their own Intent to Use before you, and steals your mark out from under you. Another disadvantage of using the Intent to Use application are that the fees are slightly higher than for regular, Actual Use, applications. However, in the bigger scheme of things, the difference is negligible - probably a couple hundred dollars, depending on how many extensions you file.

By contrast to the practice of large corporations, a small business may use their mark for years prior to investing in a registration. Often, this failure of small businesses is due to ignorance about trademark law. However, it may also be that the smaller business doesn't have the resources to secure strong trademark protection. In fact, these problems feed off each other. A small business owner cannot afford to pay for an attorney to guide them in name selection. Lacking legal guidance, the small business owner chooses a name that is legally weak, such as a descriptive trademark. Because these trademarks receive weak protection, registering them is more expensive than other kinds of marks, because the applicant must overcome an initial rejection from the Trademark Office.

The Trademark Office rejects all descriptive marks from registration on the Principal Register unless the owner can meet their burden of proving secondary meaning. Fortunately, the law presumes that secondary meaning exists if you use your trademark continuously for five years. Thus, if your trademark is descriptive, you may want to wait five years, meanwhile registering your mark on the Supplemental Register. After the five years is up, you can apply to transfer your registration to the Principal Register. In the meantime, you will derive at least some of the benefits of registration by being on the Supplemental Register. Or if money is very tight, put in your five years without a Supplemental Register registration, and apply for the first time when you have a better chance of defeating a rejection based on descriptiveness. (Incidentally, you don't have to wait five years to claim secondary meaning, but you will have to prove that you've used your mark widely enough to have gained appreciable recognition by consumers -- not an easy thing to prove).

If you don't anticipate a rejection from the Trademark Office, on the basis of descriptiveness or otherwise, the cost-benefit of registration moves strongly in favor of obtaining the registration immediately rather than waiting. That's because the advantages of registration in terms of favorable court presumptions mean you will have lower attorneys fees and litigation costs if you ever have to defend your trademark in court. That alone is worth thousands of dollars.

International Expansion
Early registration can be critical to businesses that operate internationally. This is because most countries besides the United States grant trademark rights only after filing for a registration. And if you're the first to file, you have priority over all later-filed applications. By contrast, in the U.S. business owners who are the first to use a mark in commerce have the superior right to the mark, even without a registration.

Thus, it can be very important if you're planning international expansion, to be the first to register in countries who grant priority on first-to-file applicants. Treaties exist that can help you secure the earlier filing date in those countries. Specifically, if you file in a country that has signed onto the Paris Convention Treaty, that country give you the benefit of the filing date on your US application, even if your application in that country is later. However, you must file the application in the other country within six months of having filed your US application.

Furthermore, if you have plans of securing a trademark right in a foreign country, but you're not ready to roll out your product line in that other country yet, you may decide that it is wise to delay filing your US trademark application until you are within six months of being ready to file for trademark registrations in those countries into which you wish to expand.

In sum, unless your mark is such that you can anticipate a rejection by the Trademark Office, or money is unavailable, or you have a plan for international expansion, there is really no reason delay registering your trademark, even using an Intent to Use application if need be.