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Frequently Asked Questions About Trademarks

By John Alspaugh

TRADEMARK BASICS

What is a trademark?

A trademark is any word, phrase, symbol, or device that distinguishes one company’s goods or services from those of its competitors. A trademark is often referred to as a “brand name.”

Examples of well-known trademarks are the word WINDOWS for Microsoft’s software, the SWOOSH Design for Nike’s athletic gear, and the phrase “HAVE IT YOUR WAY” for Burger King’s fast food services. Some more unusual trademarks are the COLOR PINK for Dow-Corning’s fiberglass insulation, the SCENT OF PLUMARIA for Clarke’s sewing thread and embroidery yarn, the architectural feature of the GOLDEN ARCHES for McDonald’s fast food services, and the sound of the MUSICAL NOTES G, E, C for NBC’s broadcasting services. Even the design of signature golf holes and the exhaust sound of a motorcycle have been registered as trademarks. The fundamental requirement is that a trademark must distinguish your company’s product or services from your competitors’ products or services. For this reason, a trademark cannot be a generic term that your competitors need to use to describe their goods or services, like “computers” for computers or “food” for fast food. (Both of these words, however, could be valid trademarks for completely unrelated products such as shoes or hairdryers.)

 

What is the difference between a trademark, a patent, and a copyright?

A trademark protects brand names. A patent protects an invention or process. A copyright protects an original creative, artistic, or literary work. Specifically, a trademark identifies the source of a product or service, as well as distinguishing one manufacturer’s or merchant’s products or services from other products or services. A patent is a document issued by the United States Patent and Trademark Office (“USPTO”) that grants a monopoly for a limited period of time on the use and sale of an invention or process that has qualified for protection. Finally, a copyright is a bundle of rights held by the author or creator of an original work of authorship or creative work.

 

What other types of intellectual property protection are available?

CUSTOMS RECORDATIONS: In many countries, if you have a copyright or trademark registration, you can record it with a customs agency; the customs agency will then be on guard for infringing goods being imported at the border crossings and ports.

TRADE DRESS: Trade dress is the “look and feel” of the nonfunctional features of a product, like the shape of a bottle or color of a keyboard. These features can sometimes be protected by a trademark registration, and can also be protected under the common law.

TRADE SECRETS: Any information about a product or service or how the product or service is made or rendered or sold that “derives independent economic value” from being kept secret can be protected as a trade secret. No one other than the owner of the trade secret can lawfully use the trade secret information. In order to have trade secret protection, the owner must make reasonable efforts to keep the information secret.

 

What is the difference between a trademark and a service mark?

A service mark is a type of trademark that is used to refer specifically to the services offered by a company. Trademarks that refer to goods sold by a company are not service marks. Goods are anything that people can use or consume, such as shoes, paper, or books. Services, on the other hand, are things that someone else does for you, such as giving a haircut or providing financial services. Sometimes a mark serves as both a trademark and a service mark. For example, SEARS serves as both a trademark for a variety of products (i.e., SEARS washers and dryers), and also as a service mark for SEARS retail store services. It is correct to use the term “trademark” to refer to both trademarks and service marks.

 

What do people mean when they say they want to “patent” their trademark? Can I copyright my trademark?

This is usually a misstatement. Trademarks and patents are two different kinds of intellectual property. Trademarks are words or symbols used to identify the source of a product or service. Trademarks can be “registered” with the USPTO. The USPTO also issues patents, but the subject matter of a patent is not a word or symbol—it is an invention, design, or process or a way of making something. The proper terminology is that trademarks are “registered” and inventions are “patented.” The only time a trademark can be “patented” is when the trademark is in the form of trade dress as discussed above. Trade dress is the non-functional design or configuration of a product that serves to identify its source. Trade dress can in some circumstances be registered as a trademark and may also be patented under a special category of patent called a “design” patent. Additionally, you may be able to obtain copyright protection for creative logo trademarks or for the unique, non-functional design of a trademark or trade dress.

 

APPLICATIONS AND REGISTRATIONS

How should we select our trademark?

The first step in selecting a trademark is to consider marks that convey an appropriate image for your business and are protectable under trademark law. The strongest trademarks, and those given the most protection under trademark law, are marks that are distinctive rather than descriptive. Marks that are made-up words are termed “fanciful” marks and are considered the most distinctive. Examples of fanciful marks are CLOROX for bleach, CUTEX for fingernail polish remover, and KODAK for photographic supplies. In spite of the heightened protection these marks are given under the law, many companies choose not to employ fanciful marks because fanciful marks don’t “sell” the product by telling the consumer something about the product.

Real words that have nothing to do with the product category are called “arbitrary” marks and are considered the second-most distinctive marks. Examples of arbitrary marks are APPLE for computers, ARROW for shirts, and FOX for television broadcasting services. The third-strongest marks are “suggestive” marks that give a hint about the product, but do not directly describe it. Examples are BUFFERIN for buffered aspirin, RAISIN-BRAN for a cereal containing raisins and bran, and TINTZ for a hair tint. In contrast, descriptive marks are not considered to be inherently distinctive and are the weakest trademarks in the legal sense. From a marketing standpoint, however, descriptive marks are often the most popular choice because they tell the consumer something about the product. A rust remover named RUST AWAY would fall into this category.

If your company plans to establish a brand name and stick with it over time, a fanciful or arbitrary mark should be chosen. Consumers will come to recognize that name and associate it with the features and quality of your company’s goods or services. If, however, there is rapid turnover of your company’s products and they are all short-lived, you may be able to justify choosing weaker suggestive marks.

Finally, if your company is involved in e-commerce and plans to do a considerable amount of business on the Internet, you should choose a trademark for which the domain name is available. A good trademark-screening search will include information about the availability of domain names.

 

When should we select a trademark?

Trademark rights in the United States are acquired on a “first-to-use” basis. The first to use the mark in a particular geographic location becomes the owner in that location; however, national rights are awarded to the “first to register” with the United States Patent and Trademark Office. Therefore, the earlier the mark is chosen and registered, the better. As soon as there is a concept of the product or service to be offered, several trademarks should be chosen and screened. By the time initial discussions regarding advertising, packaging, and marketing begin to take place, an application should be on file for the chosen mark.

 

Why should we register our trademarks?

Unregistered trademarks technically can be licensed, transferred, or otherwise pledged; however, there are several advantages to federal registration. One of the primary benefits of registration is the acquisition of nationwide rights in the mark. Registration will also strengthen your brand and increase the value of your company, particularly the goodwill of the business. The real value added can be calculated by accountants, who can measure the value the trademarks contribute to the overall value of the business.

Another reason to register your trademark is to make it easier to stop infringers. There are several advantages courts give owners of registered marks that are not available to owners of unregistered marks. A registration also provides your company a defense if it is sued for infringement or if someone tries to take your domain name. While a company is not required to register a trademark, the expense of registration is minimal compared to the increased value one obtains in exchange. Federal registration allows the company to use the ® symbol, informing the public of your strong registered rights in the mark. Registration also puts subsequent database searchers on notice of your rights. Simply put, with all the benefits that come with registration, it’s always a good idea to consider obtaining this protection.

 

Once our company is incorporated, don’t we “own” the name?

No, trademarks should not be confused with corporate or trade names. Registration of a corporate, LLC, or other entity name does not confer any trademark rights in the name. A corporate name is simply the legal name of a business, and only prevents others from using that name for a corporation in that state. This registration does not prevent others from using the name as a trademark. A corporate or entity name that meets the requirements for trademark protection, i.e., a name that is used in commerce to distinguish the company’s goods or services, can also become a trademark and should be registered as such. Trademark registration is a different process than entity name registration.

 

What are the advantages of registering a trademark?

There are several practical business advantages to registration and also important legal advantages. One of the business advantages is that trademark registrations can be used as negotiating tools in business deals. Trademark registrations greatly facilitate licensing, franchising, and transfer of ownership. As a practical matter, unregistered marks can be “deal killers” when negotiating with third parties. Without the benefits of registration, a buyer cannot be sure they are obtaining a strong and protectable brand.

Another important business advantage of trademark registration is that it can actually increase the dollar value of a business for potential investors, lenders, and public offerings. This is because registration makes a company’s trademarks quantifiable assets of the business. A registration enables the owner to show, as part of the value of his or her business, the goodwill resulting from advertising and promotional expenditures. Accountants can help to quantify the goodwill of a trademark resulting from its use and promotion. For this reason, expenses associated with advertising and promoting a mark translate not only into increased sales, but also into increased worth of the company—all for the minimal investment in the cost of filing a trademark application and obtaining a registration. A registered trademark can also serve as security for financial transactions. Registered marks are recognized as valid security and may be mortgaged, pledged, or hypothecated.

The legal benefits of a federal registration are substantial. A federal registration provides prima facie evidence of ownership and the exclusive right to use the mark throughout the United States. The registration allows the company to pursue infringers in federal court even if none of the other jurisdictional requirements are met. Federal courts are generally the preferred courts; however, in any court a federal registration creates a presumption that the registrant owns the mark and has exclusive rights to use it. This puts the registrant in strong position by placing a heavy burden on the other party to overcome the presumption. This presumption is not available to owners of unregistered marks.

A federal registration can enable the owner to recover attorney’s fees and damages from infringers; it also expands the geographic scope of protection of the trademark rights. Without a federal registration, trademark rights extend only to the areas in which a company has established a market presence by making sufficient sales under the mark. Federal registration provides a presumption of exclusive rights throughout the entire United States.

 

How many years does trademark registration last?

Trademarks are registered by the USPTO for a period of ten years. The registration can be renewed for successive ten-year periods for as long as the trademark continues to be used in commerce.

 

Do I need to use my trademark in order to register it?

Yes. However, an application may be filed with the USPTO based on an intent to use the mark in commerce. Once use is established and all other requirements have been met, the registration will issue. We encourage filing based on intent to use, so that you will know the trademark is available to you once you are ready to commence use in commerce.

What are the different classes of goods or services?

For a detailed list, please visit the USPTO website: http://www.uspto.gov/web/offices/tac/tmfaq.htm#Application015

 

What is the difference between the symbols TM, SM, and ®?

The difference between a trademark symbol (™), a service mark symbol (SM), and the registered trademark symbol (®) is simple. TM is used to indicate that the trademark is used with the sale of goods or products, and SM is used if your trademark is used with the sale of services. ™ and SM are used with marks which have not been registered. In order to use the ® symbol, you must first get a trademark registration certificate from the USPTO. After receiving the trademark registration certificate, you can use the ® symbol to notify the public that your product or company name or brand is protected by an actively registered federal trademark.

 

What are descriptiveness and likelihood of confusion?

Descriptiveness and likelihood of confusion are two bases on which applications for registration might be refused. Descriptiveness refers to a mark that merely describes the goods or services, rather than indicating the source of the goods or services. Likelihood of confusion refers to the probability that the applied-for mark will be confused with another similar mark.

 

PROTECTION AND ENFORCEMENT

What do I need to do to protect my trademark?

Trademark owners must take “reasonable steps” to protect their marks against misuse and infringement. While your company does not have to pursue every infringer, you must take reasonable steps to insure that the mark is not misused or infringed by others, or you risk losing all rights in the trademark. Misuse of a mark includes third party use of the mark as a noun or verb rather than as an adjective. For example, saying that you are going to “xerox” something is a misuse of the trademark XEROX as a verb. Correct use of the mark as an adjective would be to say that you are going to photocopy something on a XEROX machine. Many companies (like Xerox) use a large portion of their advertising budget to educate consumers regarding how their marks should be correctly used. Trademark owners also must take reasonable steps to police against infringement. Failure to stop knock-offs and third party use of your trademark can lead to loss of rights in the mark. Examples of marks that were not sufficiently protected by their owners and whose trademark registrations were revoked are ASPIRIN, FORMICA, KEROSENE, STYROFOAM, DRY ICE, MAGIC MARKER, TRAMPOLINE, DUMPSTER, NYLON, ESCALATOR, PING-PONG and YO-YO.

What do I need to do to protect my trademark internationally?

The protection of registration with the USPTO is limited to the United States; a trademark must be registered in each country in which the owner seeks protection. Registration in numerous foreign nations can become an expensive process. However, there are ways in which a trademark owner can register in multiple countries. The two major group applications are the European Community Trademark (CTM) application and the Madrid Protocol/WIPO application. Failure to secure rights in foreign nations can present a serious problem as your business expands to new areas. You may not be able to use your trademark in a particular nation if it has already been registered in that nation by someone else.

 

Should I register my company’s domain name?

Yes, it is important to register the domain name as a trademark. As a domain owner, you should be aware of whether or not the same domain exists in other countries. If someone else owns a trademark registration for the domain name your company chooses, the other party may sue you for trademark infringement, or may be able to take the domain name from you. The best way to prevent this from happening is to obtain a trademark registration. If your company’s domain name is used to indicate the source of its goods or services, then the domain name may be registered as a trademark.

January 1st, 2014  |  Categories: The Trademark Group®