How do trademarks protect my business?

Business

Why I decided to trademark my business nameTM

A few years ago, I took a specialty business course at LaGuardia College in Queens, NY. It was a specialty course, designed to give small business owners an overview of how to manage each aspect of their business. Over the course of the semester, I learned the importance of Trademarks.

A Business Loses their Name

At the course, I met a woman. For the purpose of this story, let’s call her Jenny. Jenny has a small business selling speciality clothing that she designs. Jenny arrived in class one morning looking particularly shaken. She received a letter the previous day, notifying her that she could no longer use her business name “Special Clothes.” Another business already trademarked the name. Jenny was devastated. She loved her company, and the name had both sentimental and monetary value to her. It never even occurred to her that there would be any issues with her business name.

A Lesson Learned

Jenny’s story was a wakeup call for me. I immediately called a lawyer and Trademarked my small business, Prospect Gymnastics. Funny enough, just a short while later a local small business decided to imitate our name and call themselves Prospect Fitness. I didn’t see any reason to cause trouble to my neighbors. However, I was certainly happy to know that I had trademarked my name. Knowing that my business name is legally protected and belongs to me, definitely sets my mind at ease.

I had a wonderful lawyer help me with my trademark. His name is David Bloch. David was kind enough to write up for us an article on trademark basics. I hope that you will take the time to read this article. More importantly, I hope you will take the time to protect your business name and entity by trademarking your business name.

Trademark Basics

Guest Post by David S. Bloch

A trademark is a word or symbol that a business uses to identify the products or services it sells.  It is a way for a business to communicate with its customers and distinguish themselves from their competitors. Trademarks are important to all business. It is especially important for small businesses. Big conglomerates  and monopolies are growing. In an increasingly crowded, loud world, a small business must find a way to set themselves apart. They need a unique name and symbol to identify their business.

In this article, we first discuss how to protect a trademark. We then talk about the limitations on trademarks.

How to protect a trademark

There are three ways to protect a trademark: common law, state law, and federal law.

Common law trademarks.  

The simplest way to protect a trademark is by common law.  All a business needs to do to protect a common law trademark is to use the mark in commerce.  When the business advertises using the trademark, consumers become aware of the trademark and its source. If enough customers start to associate the trademark with that particular business, the name is considered property of that business. The business can sue to prevent others from using the same or similar marks.  

A common law trademark requires very little. The company can just start using the ™ symbol to show that they view their business name as a trademark.  Using the ™ symbol is one of the few things in life that is really free.  

Enforcing Common law trademarks.  

Just because a business uses the ™ mark does not necessarily mean that the business will always be able to enforce its rights.  Another business could have adopted the same mark before them. Or the business might not be able to prove that the public really associates the trademark with their business. However, the common law trademark can be quite valuable. All the small business needs to do is tell the world that a particular word should be treated as their property.  State and federal law protects that business brand identity as property. Copying a common law trademark is considered a form of unfair competition and illegal. 

State law trademarks.  

A business can register its trademarks and business name under state law.  The state law trademark provides protection for registrants doing business in a given state. It prevents other businesses from registering the same or similar marks in that state.  

In New York, state trademarks are registered for renewable 10-year term. The applicant pays a fee of $50 and completes an application form. New York State trademarks are administered by the Department of State’s Division of Corporations, State Records & UCC.  State trademarks can be enforced in state court against other businesses within the state. Most states have similar procedures. Though the costs and duration of state law trademarks varies.

Federal trademarks.  

A business can register its trademark with United States Patent & Trademark Office.  The registration process is more complicated and more expensive. It costs $225 to file a federal trademark application. The applicant must provide specific evidence about when and how it started using the mark. The business needs to include samples and proof of using the trademark. The Trademark Examiner, an attorney employed by the Trademark Office will evaluate the trademark application.

The business must persuade the Trademark Examiner will need to ensure that the mark is different from all other registered and unregistered trademarks.  The Trademark Examiner only gives the business exclusive rights to the trademark if it will not result in consumer confusion anywhere in the United States.  A federally registered trademark can be enforced nationwide.  If a business continues to use a federally registered mark for 5 years the mark becomes “incontestable”.  That mean a copycat cannot challenge the trademark’s validity or ownership.

The trademark protects the business’s brand and identity. Once a trademark is federally registered, the owner has the right to use the ® mark. The ® mark shows that this name or logo belongs exclusively to the business. 

Limitations on trademarks

Fair use.  

Trademarks are a form of intellectual property.  But they are not “property” in the same way as patents and copyrights.  Trademarks identify particular goods and services. Therefore, it is perfectly acceptable to use another business’s trademark to criticism them or for comparative advertising.  Neither trademark law nor unfair competition law prevents competing companies from saying nasty things about each other. As long as those nasty things can be arguably true and non-misleading!) Anyone can use your business trademark to describe your business. It is only necessary that they accurately describe your business. Even if they criticize you, it is considered “fair use.”

Trademark law does not get in the way of the First Amendment.  If an unhappy customer dislikes your products, they can post scathing reviews online.  They can even register a “sucks” website whose very name incorporates the offending trademark.  For example the website, paypalsucks.com. Customers registered the website paypalsucks.com to criticize PayPal. This is perfectly legal. (A problem only emerges if PayPal itself registers paypalsucks.com and uses it as a platform to criticize its rivals under false pretenses.) Trademarks do not protect you against customer complains.

Genericide

It is possible for a business to lose their registered trademark. Even if they registered it legally with the Federal government. Other forms of intellectual property, such as patents or copyrights, have less outside variables. But a trademark’s legality depends on more than just the business.  Consumer behavior also defines the right you have to your trademark. Sometimes customers decide to stop identifying a particular trademark or brand name with a particular company’s product. When that happens, that trademark becomes generic.  

A company cannot recover a trademark once it has suffered “genericide”.  Some popular examples of companies that lost their trademark are: Aspirin, trampoline, cellophane, and dry ice. Aspirin was the name of a trademarked company once. But then people started using he word aspirin to describe any medicine that reduces mild pan and fever. Once the word became a popular enough household term, the company that trademarked the name could no longer legally hold the word aspirin as their own. Sometimes a trademark becomes a generic words in the public domain. When that happens, the business loses its trademark patent. And advertising investments made by the companies that owned them are for naught.

To Summarize

A trademark is a powerful and valuable tool to protect your business brand identity. It ensures that others cannot take advantage of your brand. Others cannot use your business name or logo to advertise a different brand that is not associated with you.  However, your ownership of a trademark is subject to the right of “fair use”. “Fair use” is a broad term that allows customers and other businesses to use your mark in many ways. Also, customers can stop identifying your business with your brand. When that happens you lose your rights to your trademark. 

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David S. Bloch

Partner and Attorney at Winston & Strawn LLP

David S. Bloch is a partner with Winston & Strawn LLP in San Francisco and Menlo Park. He focuses his practice on complex intellectual property litigation.  He is also the author of IP and Technology in Government Contracts and some 50 published articles. A biography and publication list are available online at www.winston.com/dbloch

Looking for other ways to protect your business? Check out this article on employment law.

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