Trademark Protection & Registration: Everything You Need to Know

TRADEMARK: "Everything You Need to Know about Trademark Protection and Registration"

In my experience, trademark protection and enforcement is one of the most often neglected areas by small business owners and management. Unfortunately, failure to take some simple steps can be a crucial mistake and can have devastating consequences to a business of any size. I have seen too many situations where a terrorizing attorney has sent the ever-feared “cease and desist” letter to the unsuspecting business. These businesses are then faced with a “catch 22” decision: either 1) change their name or product mark after investing substantial funds over time building goodwill in a mark; or 2) litigate the issues of trademark rights at a substantial cost and with no guarantee of successful results.

The costs of changing a name to a business can be enormous, and often can’t even be quantified. For example, imagine that a fast food chain with 500 restaurants was forced to change its name. If the average cost to change the signs on each restaurant was $10000, this would amount to 5 million dollars. This does not even begin to account for all of the other items that would need to be replaced, such as uniforms, to-go bags, menus, letterhead, and business cards. In addition, the damage in the nature of lost goodwill in that had been generated over time may not be clearly quantifiable. In some cases a change of name may even effectively mean the end of a business.

I have represented clients that prior to my representation have been in existence for over ten or fifteen years without even considering trademark issues. I suspect that there are many reasons for this, including lack of advice from counsel, lack of knowledge or information, a misunderstanding of the procedures, costs, or perhaps a misalignment of priorities. However, a simple understanding of trademark issues may help a small business owner to curtail the devastating potential involved with the failure of a business to take these simple measures.

Essentially, the owner of a company providing goods or services by using a name and/or logo should first consult a trademark attorney to get a search and opinion. This search will be comprehensive, and will lend insight to others using a similar mark with respect to similar products or services or in the same or related industries. This immediately will lend further insight as to what rights the business currently has or could have in the mark, and what chances the owner might have of another company challenging the mark during the registration process or in the future. In addition, some marks are not registerable because they do not meet the definition of trademark or otherwise comply with federal trademark law. An attorney’s opinion will address these issues as well if applicable.

Next, if the search and opinion are favorable, the informed business owner should apply for state and federal trademark registration. Federal trademark registration is a crucial element in a business’s IP protection strategy, accomplishing many goals. For example, a registered owner is presumed to have exclusive nationwide rights to use any mark that is confusingly similar to their mark. This allows the user to enforce its right against other businesses that are trying to pass of similar goods and services as that of the registered user’s. In addition, after a period of five years from the date of registration, a registrant has the right to declare the mark “incontestable”, adding further protecting the user against attacks from unknown users. Because even the application process is complicated, it is generally wise to allow an attorney to prepare, file and prosecute the application on your behalf.

In general, a search and registration can be relatively inexpensive. Our current fees and expenses range from about $500-$1000 for a search and opinion, and start at about $1000.00 for a registration, although in some circumstances this can increase. However, for the business owner that has not taken the time to make these efforts and later finds themselves faced with a dispute, fees could easily exceed $10,000 or even $20,000.00. Therefore, it is wise to explore these issues now and at least seek basic consultation from a trademark attorney.

A trademark, or "mark," must be used in business, and must be used to identify the source of the goods or services being provided. Specifically, a trademark is any word, phrase, symbol, design, sound, smell, color, product configuration, group of letters or numbers, or combination of these, adopted and used by a company to identify its products or services, and distinguish them from products and services made, sold, or provided by others.

A copyright, on the other hand, protects original works of expression, such as novels, fine and graphic arts, music, photography, software, video, cinema and choreography by preventing people from copying or commercially exploiting them without the copyright owner's permission. But, copyright laws specifically do not protect names, titles or short phrases. That's where trademark law comes in.

There are, however, areas where both trademark and copyright law may be used to protect different aspects of the same product. For example, copyright laws may protect the artistic aspects of a graphic or logo used by a business to identify its goods or services, while trademark may protect the graphic or logo from use by others in a confusing manner in the marketplace. Similarly, trademark laws are often used in conjunction with copyright laws to protect advertising copy. The trademark laws protect the product or service name and any slogans used in the advertising, while the copyright laws protect the additional creative written expression contained in the ad.

The primary purpose of a trademark is to prevent consumers from becoming confused about the source or origin of a product or service. Marks help consumers answer the questions: "Who makes this product?" and, "Who provides this service?" Trademarks make it easier for consumers to quickly identify the source of a given good. Instead of reading the fine print on a can of cola, consumers can look for the Coca-Cola trademark. Instead of asking a store clerk who made a certain athletic shoe, consumers can look for particular identifying symbols, such as a swoosh or a unique pattern of stripes. By making goods easier to identify, trademarks also give manufacturers an incentive to invest in the quality of their goods. After all, if a consumer tries a can of Coca-Cola and finds the quality lacking, it will be easy for the consumer to avoid Coca-Cola in the future and instead buy another brand. Trademark law furthers these goals by regulating the proper use of trademarks.

As consumers become familiar with particular marks, and the goods or services they represent, marks can acquire a "secondary meaning," as indicators of quality. Thus, established marks help consumers answer another question: "Is this product or service a good one to purchase?" For this reason, the well-known marks of reputable companies are valuable business assets, worthy of nurturing and protection.

The basic rules for resolving disputes over who is entitled to use a trademark come from decisions by federal and state courts (called "common law"). These rules usually favor the business that first used the mark where the second use would be likely to cause customer confusion.

A number of additional legal principles used to protect owners against improper use of their trademarks derive from federal statutes known collectively as the Lanham Act (Title 15 U.S.C. §§1051 to 1127).

All states have statutes that govern the use and protection of marks within the state's boundaries. In addition to laws that specifically protect trademark owners, all states have laws that protect one business against unfair competition by another business, including the use by one business of a name already used by another business in a context that's likely to confuse customers.

IV. Are there terms that can't be protected under the trademark laws?

There are five common situations in which there is no trademark protection. In any of these situations, the intended trademark cannot be registered and the owner has no right to stop others from using a similar mark.

Assuming that a trademark qualifies for protection, rights to a trademark can be acquired in one of two ways: (1) by being the first to use the mark in commerce; or (2) by being the first to register the mark with the U.S. Patent and Trademark Office ("PTO"). 15 U.S.C. § 1127(a).

(1) The use of a mark generally means the actual sale of a product to the public with the mark attached. Thus, if I am the first to sell "Lucky" brand bubble-gum to the public, I have acquired priority to use that mark in connection with the sale of bubble-gum (assuming that the mark otherwise qualifies for trademark protection). This priority is limited, however, to the geographic area in which I sell the bubble gum, along with any areas I would be expected to expand into or any areas where the reputation of the mark has been established. So, for example, if I sell pizza in Boston under the name "Broadway Pizza," I will probably be able to prevent late-comers from opening up a "Broadway Pizza" within my geographic market. But I will not be able to prevent someone else from opening a "Broadway Pizza" in Los Angeles .

(2) The other way to acquire priority is to register the mark with the PTO with a bona fide intention to use the mark in commerce. Unlike use of a mark in commerce, registration of a mark with the PTO gives a party the right to use the mark nationwide, even if actual sales are limited to only a limited area. This right is limited, however, to the extent that the mark is already being used by others within a specific geographic area. If that is the case, then the prior user of the mark retains the right to use that mark within that geographic area; the party registering the mark gets the right to use it everywhere else. So, for example, if I register the mark "Broadway" in connection with the sale of pizza, the existing "Broadway Pizza" in Boston retains the right to use the name in Boston , but I get the right to use it everywhere else.

Trademark rights are protected through registration, maintenance, watching, and enforcement. These precautions and proper use help preserve the ability of marks to indicate the source of a product or service to consumers.

International registrations provide similar advantages to trademark owners abroad. International registrations are subject to similar, periodic, "proof of use" requirements. Some countries also require the payment of "taxes," or fees, to maintain registration rights.

If a registered mark is used and maintained properly, trademark registration can last "forever." U.S. registrations may be renewed indefinitely for successive ten year terms. In other countries, terms of registration vary; however, most allow indefinite, successive renewals, where the underlying mark is used properly, and the registration is maintained.

· Maintenance

Just as registrations must be maintained, through affidavits, fees, and renewal applications, marks must be maintained, through proper use and due diligence. The key to trademark maintenance lies in the source identification function of marks -- remember, marks identify the source or origin of products and services. If, and when, a mark no longer performs this function, it no longer is a mark; it becomes a generic term. Generic terms designate a type of product or service, without calling to mind any specific manufacturer or provider.

A generic term cannot be a mark. Generic terms are in the public domain, and may be used freely by anyone. The terms, "escalator," "shredded wheat," "kerosene," "aspirin," "yo-yo," "zipper," and "trampoline," all began as marks. Through lack of proper use, and/or enforcement, these marks became generic. Today, any company may use them to describe certain types of products.

Marks generally lose their source-identifying function through abandonment. As the term suggests, an abandoned mark is one which has been "thrown away." Intentional abandonment occurs when an owner fails to use a mark for a specified period, and does not intend to resume use. Marks also may be abandoned unintentionally, through improper use.

A mark may be abandoned "unintentionally," when the trademark owner fails to use it properly, or fails to monitor its use by others. "Improper use" is use which places the mark in danger of becoming generic. Thus, marks should be used consistently, and distinctively, to enhance their source-identifying function.

· Watching

Many trademark owners list their most important marks with a trademark "watching service." Watching services notify trademark counsel of attempts to register conflicting marks, so that timely oppositions to adverse applications may be filed. These services are particularly helpful in civil law countries, where trademark rights are secured through registration, rather than use. Too often, a trademark owner seeking to expand its business abroad, discovers that its flagship mark already has been registered in a target country -- perhaps even by a local "trademark pirate." In such cases, the rightful owner may have no choice but to purchase the mark from the thief. If the owner does not submit to this extortion, it may have to select another mark, or face a lawsuit for using the mark it created! This outcome might have been avoided if a trademark watch were in place.

Watching services are available in many countries, including the U.S. Trademark watches can be customized to meet the needs of a particular business. A watch may cover one country, several, or the entire computerized world. However, watches are unavailable, or more limited, in countries without publicly-searchable, computerized, trademark databases.

Watching services are not expensive, given the level of information provided. Pursuing the leads watch notices produce can be costly, however, depending upon the mark, and the level of adverse activity. In any event, trademark watching is an invaluable practice that can help a trademark owner protect the source-identifying function of its products or services.

· Enforcment

Trademark enforcement consists of pursuing adverse users. An adverse user is one who is not authorized to use a mark, but uses it anyway, or who is authorized to use the mark, but uses it improperly.In most instances, adverse users may be stopped without litigation, by a friendly contact from the trademark owner, or a "cease and desist" letter from the owner's attorney. Most adverse users would rather select a different mark for their products or services, than defend against a trademark infringement claim. Yet, where an adverse user is not convinced that infringement has occurred, and has invested substantially in the allegedly infringing mark, an amicable solution may not be possible. Sometimes, a trademark owner will offer to reimburse the adverse user for the cost of changing marks, to avoid the higher cost of trademark litigation. In other circumstances, particularly where willful and large-scale infringement has occurred, trademark litigation, or arbitration, may be the only tenable approach.The monetary remedies available in trademark infringement actions are based on the actual damages suffered by a trademark owner. These damages may include profits lost to the infringing activity, and may be trebled where the infringement is proved to have been intentional. Injunctive relief also is available, to restrain the infringer from further unlawful activity, and impound, and destroy, infringing goods. Litigation should be avoided whenever possible. Nonetheless, trademark rights should be enforced when adverse uses are confirmed.

VII . What are the remedies for trademark infringement?

Successful plaintiffs are entitled to a wide range of remedies under federal law. Such plaintiffs are routinely awarded injunctions against further infringing or diluting use of the trademark. 15 U.S.C. § 1116(a). In trademark infringement suits, monetary relief may also be available, including: (1) defendant's profits, (2) damages sustained by the plaintiff, and (3) the costs of the action. 15 U.S.C. § 1117(a). Damages may be trebled upon showing of bad faith. In trademark dilution suits, however, damages are available only if the defendant willfully traded on the plaintiff's goodwill in using the mark. Otherwise, plaintiffs in a dilution action are limited to injunctive relief. 15 U.S.C. § 1125(c).

Whether the owner of a trademark can stop others from using it depends on such factors as:

whether the trademark is being used on competing goods or services (goods or services compete if the sale of one is likely to affect the sale of the other)
whether consumers would likely be confused by the dual use of the trademark, and
whether the trademark is being used in the same part of the country or is being used on related goods (goods that will likely be noticed by the same customers, even if they don't compete with each other).

VIII. What are the advantages of conducting a trademark search? =

To determine whether another business is already using a trademark that's identical or similar to the one you want to use and to ensure that you won't violate someone else's trademark rights. Searching minimizes investments in marks that cannot be used, while preventing the inadvertent infringement of marks held by others. A mark should not be adopted, or used, if the search indicates it is likely to become confused with a mark adopted by someone else.The consequences of failing to conduct a reasonably thorough trademark search may be severe, depending on how widely you intend to use the trademark and how much it would cost you to change it if a conflict later develops. If the trademark you want to use has been federally registered by someone else, you will be precluded from using the trademark in any context where customers might become confused as to the source of your products or services. Also, a court will presume that you knew about the trademark registration -- even if you did not. This means that, if you do use the trademark improperly, you will be cast in the role of a "willful infringer." Willful infringers can be held liable for large damages and payment of the registered owner's attorney fees; they can also be forced to stop using the trademark altogether.If the search reveals a mark to be available, the mark may be adopted, and use of the mark may commence.

IX. What does a trademark search look like?

A trademark search report consists of several sections. One section contains information from the USPTO (U.S. Patent and Trademark Office). This portion of the report consists of similar federally registered marks, pending marks and marks that have been canceled or abandoned. Another portion of the report is a survey of state registrations. Included are similar marks that are registered under state trademark law. A third portion of the report consists of common law information. It is in this area that trademark search reports are especially helpful. The search companies examine numerous sources to locate unregistered users of similar marks, brand names and even trade names (the names of businesses, rather than those of products or services).Search reports contain raw data concerning the use and/or registration of similar marks, culled from yellow page listings, trade directories, the Patent and Trademark Office, state trademark registers, and various public and private databases. The reports do not include opinions regarding trademark availability. Reputable firms that provide on-line information about their trademark searching services are listed in our trademark links. However, "likelihood of confusion" determinations are not for the layperson; they should always be made by qualified trademark counsel.

X. What role does an Attorney have in the process?

If a client consults with an attorney when acquiring the trademark search, he/she will also get a legal opinion as to whether your proposed mark is legally safe to use in light of existing registered and unregistered marks. Obtaining a legal opinion may provide important protection down the road if someone later sues you for using the mark.

Some courts have held that the failure to follow the advice of counsel by not conducting a full trademark search can weigh as evidence of bad faith. "Such willful ignorance should not provide a means by which [defendant] can evade its obligations under trademark law." International Star Class Yacht Racing Ass'n v. Tommy Hilfiger, U.S.A., Inc., 80 F.3d 749, 38 U.S.P.Q.2d 1369 (2d Cir. 1996)

XI. Can a trademark become “incontestible”?

Yes. Five years after a mark has been registered, the registrant may apply to have the mark declared “incontestable.” 15 U.S.C.A § 1065 (1992). Possession of an incontestable mark is conclusive evidence of the registrant’s exclusive right to use that mark on the type of goods in question, subject only to certain defenses that are itemized in the statute. 15 U.S.C.A § 1115(b) (1992). Thus, incontestability has two practical implications. First, it immunizes the registrant from certain claims that that the mark is invalid when a third party seeks to have the mark cancelled. Second, when the holder of federal registration files suit for infringement, incontestability will also preclude the infringing Defendant from asserting certain defects in the mark as defenses. Park n Fly, Inc. v. Dollar Park and Fly, Inc. 469 U.S. 189, 105 S.Ct. 658 (1985). The two most prevalent challenges that are cut off by incontestability are (1) that the registrant is not the senior user of the mark, and (2) that the mark itself is merely descriptive and lacks secondary meaning.Thus, incontestability narrows, but does not eliminate, the grounds upon which the trademark's validity may be called into question by a defendant. These incontestability provisions allow a "registrant to quiet title in the ownership of his mark. The opportunity to obtain incontestable status by satisfying the requirements of § [1065] thus encourages producers to cultivate the goodwill associated with a particular mark."

XII. What are the defenses to an incontestable mark?

Under 15 U.S.C.A § 1115(b), there are seven (7) defenses to an incontestable mark. These are:

"(1) That the registration or the incontestable right to use the mark was obtained fraudulently; or"(2) That the mark has been abandoned by the registrant; or"(3) That the registered mark is being used, by or with the permission of the registrant or a person in privity with the registrant, so as to misrepresent the source of the goods or services in connection with which the mark is used; or"(4) That the use of the name, term, or device charged to be an infringement is a use, otherwise than as a trade or service mark, of the party's individual name in his own business, or of the individual name of anyone in privity with such party, or of a term or device which is descriptive of and used fairly and in good faith only to describe to users the goods or services of such party, or their geographic origin; or"(5) That the mark whose use by a party is charged as an infringement was adopted without knowledge of the registrant's prior use and has been continuously used by such party or those in privity with him from a date prior to registration of the mark under this chapter or publication of the registered mark under subsection (c) of section 1062 of this title: Provided, however, That this defense or defect shall apply only for the area in which such continuous prior use is proved; or"(6) That the mark whose use is charged as an infringement was registered and used prior to the registration under this chapter or publication under subsection (c) of section 1062 of this title of the registered mark of the registrant, and not abandoned: Provided, however, That this defense or defect shall apply only for the area in which the mark was used prior to such registration or such publication of the registrant's mark; or

"(7) That the mark has been or is being used to violate the antitrust laws of the United States ."

Leon Bass is an attorney in the Central Ohio area who practices entertainment law. This article could not been written without the generous assistance of Jason Hayward, a former law student at The Ohio State University College of Law and a former law clerk in Lee’s office.

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