Trademarks; Acquiring and Registering

How Do I Obtain Trademark Rights?

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.

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How Do I Choose 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 MarkLaw 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.

Ideally, there are two stages to searching for a prior rights in a mark that may preempt your own. The first stage is called a knock-off search, and consists of looking for exact matches of the proposed mark in such places as the U.S. Patent and Trademark Office database (http://www.USPTO.GOV/tmdb/index.html), and the Internet. This preliminary search can be conducted by you, or you can hire a professional search firm or attorney to conduct the search. (See Pliam Law Group, PA fees for this service). If you conduct this search yourself, you may want to also look at the Yellow Pages in your region and/or trade journals in your industry. Professional search firms vary widely in what they search for at this preliminary stage. All will probably look at a more current version of the USPTO database cited above. Some may look at the Internet, and some may even look at various databases of non-registered marks (or common law marks). Pliam Law Group, PA searches a subscription-only database that provides current USPTO data and Internet hits for the mark, and then searches a moderate-sized database of common law trademarks.

If the marks you have selected survive the knock-off search phase, then you can begin stage two: a full search of existing and pending trademark registrations, and of common law marks (ones that are not registered, but have preemptive rights because of prior use). A KNOCK-OFF SEARCH ALONE IS INADEQUATE to determine whether a mark is available for use. That is because the preliminary knock-off search only tells you whether someone is already using the exact version of your mark. Yet, as described above, it is not only the exact marks that can preempt your proposed mark, but also those that are confusingly similar. In short, marks that sound alike, look alike or have similar meanings are confusingly similar.

It is strongly advised that you hire a professional search firm to conduct a full search of your mark at this stage. Many such firms have software programs that systematically generate all conceivable search terms. For instance, if one of the words in your proposed mark is "SMART," then the program will generate searches that start with "s" and end in "t," or start with "s" and have "art" somewhere in the middle or end. The software program will also likely generate searches that include synonyms such as "INTELLIGENT" or "WISE" in place of smart. Thus, if the full mark is "SMART GRIP," the program will also generate searches for "WISE GRIP" and "INTELLIGENT GRIP." These are but minor examples of the painstaking combinations of search terms that a program can instantly generate and search. For a human to duplicate these combinations and perform the requisite searches is not only enormously time consuming, but risks human error.

The final step in determining whether or not a mark is available for use, is to interpret the search results. This sounds easier than it actually is. There is a complex body of law that defines what is confusingly similar. For this reason, you are well advised to hire an attorney to interpret search results. The legal opinion of an attorney can serve not only as immediate advice on the risks in adopting a given mark, but if the opinion is written, which most are, you may be able to deter companies owning marks analyzed within the opinion from suing for infringement by showing them that an attorney has already decided that the marks are not confusingly similar. Since legal opinions focus mostly on those marks that are likely to lead to claims of infringement or dilution, this second benefit of opinions is no small advantage. Of course, a legal opinion can never guarantee that you won't be sued, nor even that you will prevail in a lawsuit if you are sued, since there is so much subjectivity in trademark law. However, an opinion goes a long way toward helping you control the risk of future litigation.

Must I Search for Prior Rights in My Trademark?

The mere fact that you are reading this suggests you are well ahead of the game. All too often, business owners are misinformed and think that since the Secretary of State registered their corporate name, then the name is cleared for use as a trademark. How extensively you search, and indeed whether or not a search is necessary, depends entirely on the facts of each individual case (as discussed below). Most businesses should find that a full search is wise, if not prior to adopting the mark, then as soon as the business or product shows some promise of success. However, since clearing a mark for use costs upwards of $700, small startup businesses often ignore trademark issues altogether. That is a grave and potentially costly mistake. Trademark law is one area where doing even a little is a lot better than doing nothing at all. What's more, there are ways of keeping the costs on the lower end of the spectrum if you know what marks to select in the first place, as discussed below.

What is at stake if you don't perform a search is that your mark may infringe an existing mark. If this happens, you will most likely be forced to stop using your mark, and will probably have to destroy all packaging, advertising and other materials bearing the infringing mark. You may even have to pay monetary damages, court costs attorneys fees, and prejudgment interest. However, often the most damaging result of having to stop using a mark is the loss of customer recognition of your product or service, and the accompanying loss of business. Common sense dictates that if yours is a small service business in which customers find you by your location as well as your name, then you stand to lose much less than a nationwide manufacturer whose products are purchased primarily because of name recognition. Nevertheless, because of the potential expense of litigation, even small service businesses risk a significant monetary loss.

Many businesses think they will simply stop using the allegedly infringing mark if it ever becomes a problem. This is very short-sighted since you may be sued before you have the chance to stop using the mark. There are three good reasons a business may sue instead of issuing an ultimatum to stop your use of a mark. First, they may want to foreclose your opportunity to have a court judge the matter in a location convenient to you in the event you sue for a declaratory judgment to determine whether or not you are in fact infringing. The second reason is that the owner of a mark may believe you should pay them monetary damages, and may not want to let you off the hook by simply halting use of the mark. The final reason for suing before issuing an ultimatum is to intimidate, which gives the company a superior settlement posture. It is true that not all business owners care to get involved in litigation. However, you will never know for certain which businesses are likely to be aggressive and which will be more reasonable, until it is too late.

When a search is not necessary
One circumstance in which you may reasonably contemplate not searching existing trademarks before adopting your mark is if the cost of changing marks down the road is not significant, and if you have a general liability insurance policy that covers trademark infringement litigation. Some general liability policies cover advertising injuries, of which trademark infringement is included. However, not all policies that include advertising injuries include trademark infringement, and some insurers may deem your failure to search for prior rights in a mark as the kind of willful or grossly negligent conduct that is not covered. Get a commitment in writing from your insurer specifically about trademark infringement before you purposefully refuse to conduct a full trademark search. In any event, you will save yourself much grief if you at least conduct a minimal search on your own.

Another situation in which you may reasonably contemplate not searching for prior rights in a mark is if your mark is generic, since nobody with a generic mark can stop your use of the mark. However, there are a couple problems with this approach; namely, you may be wrong about whether or not a mark is generic, and even if you are right that the mark is generic, the owner of the mark may not be readily convinced without a long and costly lawsuit.

Avoiding marks that are more expensive to clear for use
You can reduce seach costs significantly if you avoid selecting certain kinds of trademarks. Fanciful marks that are entirely made up not only receive stronger legal protection, as discussed above, but they can also be cheaper on the whole to clear for use. This is best explained with a hypothetical example. Let's say Barbara wants to use the mark "LEXIGO" for her paper products, while Pete wants to use the mark "PERFECT PAPER" for the same products. They both conduct a knock-off search, and neither of them find an exact match of their proposed mark. Because Barbara's mark is unique, she can be much more confident that a full search and legal opinion will not reveal a serious conflict. That is because she already knows that there are no marks with the word "LEXIGO" in them. Meanwhile, Pete's full search and legal opinion are likely to reveal several marks that use the words "perfect" and "paper" in different combinations, such as in the phrase, "PAPER PERFECT" or "GOLDY'S PAPER, PERFECT FOR ALL OCCASIONS." If these trademarks are in the paper products industry, which is highly likely since Pete has choosen descriptive words, his attorney is likely to opine that "PERFECT PAPER." is confusingly similar to these existing marks.

It is important to note, however, that Barbara's mark is not immune to finding a conflict just because there were no exact matches in the knock-off search. Her mark, LEXIGO, may be confusingly similar in pronunciation or look to an existing mark, even if not identical. In that regard, Barbara is actually at a disadvantage with her unique mark. Unique marks receive very broad protection, and even very remote variations from LEXIGO may be confusingly similar, such as "PEXEGO" or "LECKSEGO."

The one advantage Pete has in his chosen name is that since there are many varients of "paper" and "perfect" in this industry, he might be able to join the crowd since these marks are all very weak, and don not provide much protection. By contrast, Barbara will have to worry about even remote variations of "LEXIGO."

In sum, searching for existing trademarks prior to adopting your mark is almost always the only way to go. However, if you have a small, start-up business that simply cannot afford to clear a mark for use, by all means, do as much as you can do to search for prior rights in your proposed mark. Take advantage of the information on this web site to help you determine for yourself whether a prior mark is a problem. While clearing a mark on your own is more risky than paying a professional search firm and an attorney, and should only be done when there is absolutely no money available, by doing at least this much, you will be much better off than ignoring the issue altogether. Finally, if you do conduct your own search, make sure to print out your search results and document your search strategy as well as the dates you conducted the search in the event you are challenged down the road for failing to conduct a reasonable trademark search. You may even consider notarizing the search documents to further verify that you conducted your search prior to using the mark.

For information on conducting a search, click here.

Benefits of Registerting a Trademark

Among the greatest advantages of owning a federal trademark registration is that you will enjoy greatly expanded rights geographically, and you will deter others from using your mark, thus avoiding expensive litigation. A registration also gives you certain advantages in court, including the ability to seek triple the amount of your actual damages. For United States businesses planning to expand internationally in the future, an early registration is crucial for preserving your trademark rights in treaty nations.