United States: Trademarks 101: Intangible Company Assets

Last Updated: January 5 2017
Article by Molly Crandall

Introduction

One challenge nearly all start-up businesses face is the selection and protection of trademarks – the brand names for their goods and services. Trademarks are used to distinguish a company's products from those of competitors, and they create lasting impressions in the minds of consumers. Trademarks are a powerful catalyst for customer identification and loyalty. Thus, effective, protectable trademarks can provide tremendous value to a new or existing business. While the competitive advantage offered by intangible company assets can be immeasurable, the budgets for protecting these assets can be limited. Therefore, it is important for businesses to understand the basics of selecting and protecting trademarks, and to seek counsel who will help guide them in developing the best strategies for selecting and protecting trademarks within a reasonable budget. This article provides a basic trademark overview and identifies several tips and common pitfalls for companies as they select trademarks.

Trademark vs. Service Mark

A trademark is a word, name, symbol or device that is used in trade with goods to indicate the source of goods and to distinguish them from the goods of others. Examples of trademarks include:

  • A word (e.g., NIKE)
  • A slogan (e.g., JUST DO IT)
  • A graphic design logo (e.g., the Lincoln "Star")
  • The design of a product or its packaging, under certain circumstances  (e.g., the Coca Cola bottle)
  • A sound (e.g., the NBC chimes)
  • A color (e.g., Owens-Corning's rights to the color pink for insulation)

A service mark is essentially the same as a trademark, but a service mark  distinguishes the source of services rather than goods. The terms "trademark" and "service mark" are often used interchangeably, or both are simply referred to as "trademarks."  There are several things to consider when deciding on a trademark. Some  businesses tend to select marks that are descriptive so that consumers know what the goods are simply by seeing the name. Unfortunately, descriptive names  are generally not registrable, are considered "weak" and can be difficult to  enforce against others. This is because descriptive names are considered  incapable of distinguishing the source of goods, and thus would not have  much value to the owners or to consumers. However, if a company has a large budget and is willing to fight subsequent uses of similarly descriptive names by third parties, then the mark might eventually acquire "secondary meaning" in consumers' minds. Challenging these uses can be tough because third parties may have a legitimate need to use the descriptive terms for their competing goods.

If "secondary meaning" is achieved, consumers begin to  associate the descriptive name with the company using it and not just with the type of goods or services. An example of a mark with "secondary  meaning" is the restaurant "California Pizza Kitchen." Generally, however,  selecting a stronger and more distinctive name tends to provide more value.  Trademarks on the stronger end of the spectrum are:

  • Coined or "fanciful" terms (a newly created word or phrase, e.g.,  NABISCO, KODAK, or REEBOK – NABISCO was created by combining the first  letters of each word of the company's original name "National Biscuit Co.")
  • Arbitrary terms (an existing word, but not typically connected to the goods and with no obvious reason behind it, e.g., CAMEL for cigarettes, GUESS for jeans, or APPLE for computers)  Suggestive terms (an existing word or phrase that suggests an idea, but does not go as far as to describe the goods, e.g., COPPERTONE for suntan oil)

While companies may see marketing benefits in choosing the  below types of names, a trademark should generally avoid including:

  • Someone else's name (e.g., "Brad Pitt" when you're not Brad Pitt)
  • The name of a geographic location (e.g., Detroit)
  • Wording with a descriptive meaning (e.g., "Premier Fruit" for a fruit stand, "All Bran Cereal" for cereal that is all bran)
  • Wording that is generic (e.g., "chocolate" for chocolate, "dog food" for  dog food)

The Importance of Trademark Clearance Searches

It is important to search a mark prior to use so that there is no inadvertent  infringement of third-party trademark rights. In addition to the expense  associated with changing a name, there is the risk of damages  arising from trademark infringement. So, before adopting and using a  trademark, a company should obtain a clearance search from a trademark  professional to assess the level of risk associated with using and/or registering  the name.

A proper trademark search will cover numerous databases to determine  whether another entity has prior rights to the trademark or to a mark that might be considered confusingly similar to that name. Marks do not have to be  identical to be confusingly similar. In a likelihood of confusion analysis, it is important to  consider, for example, the similarity of the marks in appearance, sound, and meaning, the similarity of the goods/services, the types of consumers, and the channels of trade.

Further, the clearance process is not as simple as searching the U.S. Patent and Trademark Office ("USPTO") website (www.uspto.gov). Trademark rights can be based upon use or an application to register the mark, and a registration is  not a prerequisite to using a name. These are called "common law" rights, and they provide some limited protection that can sometimes form the basis of a  claim of infringement and can also block registration of another's mark. It is important that the scope of the search covers common law rights as well as  registered rights.

CAVEAT: Not all marks are registered and no search is guaranteed to uncover all possible common law (unregistered) uses. The goal of searching is to identify and address potential third party risks. If a search reveals potential obstacles, it is important to assess the level of risk, and either select an alternate mark, pursue a coexistence agreement with the third party, or sometimes purchase the mark.

Once a word or phrase is "cleared" to use as a trademark, a company should  consider its business goals and marketing initiatives. It might not be cost-effective  to register all marks/slogans in a company's portfolio. The business must  determine which marks are the most important to the business and provide the  biggest competitive advantage and start by protecting those marks. Keep in mind, marks (once cleared) may be used without  registration and a company can acquire limited "common law"  trademark rights. This may be a strategy for marks intended for short-term use.

Registering Trademarks

Registration of trademarks is available on both the federal and state levels. A federal application can be filed as soon as a company has an intent-to-use the trademark in interstate commerce. In Michigan and most U.S. states, a state  application can only be filed once use of the trademark has commenced.

Registering a trademark with the USPTO has several advantages, including:

  • The mark can be displayed with a ® (the ® can only be used with registered trademarks; owners of non-registered marks can use " to stake their claim)
  • Registration puts others on notice of the trademark claim
  • Registration carries a presumption of validity
  • Registration gives nationwide rights to the mark
  • Registration in the U.S. can be used as a basis for obtaining foreign registration(s)
  • Registration permits possible statutory/enhanced damages in certain cases of trademark infringement

Many factors can affect how long it takes to register a trademark. Depending on the legal issues involved, the process can take anywhere from just under one year to several years (with an average of about 18 months). Provided the mark remains in use, a registration lasts for ten years and can be renewed for subsequent ten year periods for as long as the mark remains in use. This is a stark contrast with patents, which have an expiration date. Importantly, the USPTO requires registrants to prove the mark is still in use  between the 5th and 6th year after registration or the USPTO will cancel it.

Once a company obtains trademark rights in a name, it must police and enforce those rights or risk losing or weakening them. For example,  trademark rights to "escalator" and "yo-yo" were not adequately policed or enforced and have, consequently, lost their strength, distinctiveness, and protectability as trademarks. As a result, the former owners cannot assert any exclusive claim and the marks are available for descriptive use by all.

Trademark Points And Pitfalls

Trademark owners should also keep in mind the following points and pitfalls:

  • Registration of a business name or domain name does not, by itself, convey trademark rights
  • Another party's famous mark can prevent the use and registration of a similar mark on unrelated goods and services
  • Failure to properly "use" a mark can impede the ability to obtain and/or keep a registration, and can also result in a mark becoming generic or descriptive
  • Search prior to use - - misuse of a trademark belonging to a third party can result in serious consequences or charges of infringement
  • Check your geographic market - - failure to register trademarks in certain countries of manufacture (e.g., China) can under certain circumstances  prohibit the ability to manufacture there
  • Keep records of trademark use, including the first use of every company  trademark - - this will help to support your priority dates against third parties
  • Make sure a license agreement is in place whenever authorization to use company trademarks is granted to a third-party

Business entrepreneurs should consider the strategies, intricacies and costs  involved in trademark selection and protection early in the process and well before use commences. Part of this, of course, is considering the risks  associated with use of a name, slogan or design without proper clearance, the benefits conferred by registration, and whether the business anticipates  expansion geographically (both in the US and/or internationally) or into  other markets. Given the tremendous value and goodwill brand names can  produce, and the potential for costly ill-advised plans, it is important to plan  ahead to ensure company trademarks help the company achieve success in  the marketplace.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.