Trademarks: Delay can cost you …

Trademarks are very important to businesses for two primary reasons: First and foremost, they help identify and distinguish your goods or services to your customers. Second, they make it more difficult for competitors to pass their goods or services off as yours.

Unfortunately, trademarks and the supporting law are often misunderstood by business leaders, and as a consequence, serve as an outstanding example of why business leaders should invest in a little law now to save a lot later.

What is a trademark?

A “mark,” in the context of “trademark” law, refers to “any word, name, symbol, or device, or any combination thereof,” used in commerce, to identify and distinguish particular goods or services, and/or the source of goods or services. 15 U.S.C. § 1127. Some marks rise to the level of trademarks, when they meet specific legal criteria, and as a consequence, enable the trademark holder to limit the use of the same mark by others, within certain geographical boundaries or markets.

When a trademark concerns services, it’s called a service mark. We’ll treat trademarks and service marks as the same thing in this article.

The first requirement a mark needs to meet, in order to become a trademark, is to be the first to use the mark in commerce. There are exceptions to this, but in general, if you’re the first to use a particular mark in commerce, you have a leg up on all others.

Another requirement a mark needs to meet, in order to become a trademark, is to be distinctive with respect to the underlying good or service. The courts use four categories, when determining the distinctiveness of a trademark (as it relates to the underlying good or service): (1) arbitrary or fanciful, (2) suggestive, (3) descriptive, or (4) generic. This is sometimes viewed as the strength of a mark, and the amount of legal protection available will depend on the category with which a particular mark falls within.

An arbitrary of fanciful mark is one that bears no logical relationship to the underlying good or service. A fanciful mark is one that is made up, with no previous meaning before becoming a mark. Examples include Kodak, Google, and Verizon. An arbitrary mark is a common word that has no meaning or relationship with respect to the underling good or service. Examples include Yahoo, Amazon and Apple.

If you weren’t familiar with the mark and its underline good or service, you wouldn’t be able to figure out what the good or service was, just by seeing the mark.

A suggestive mark is one that evokes or suggests something about the underling good or service. Examples of suggestive marks include Playboy for a men’s magazine, Coppertone for suntan oil, 7-eleven for a store open from 7am to 11pm, and Greyhound for a bus company.

A descriptive mark directly describes something about the underlying good or service. Examples include ComputerLand, Nationwide Vision and All-Bran.

A generic mark describes the general category for which the good or service belongs. Examples include, “elevator,” “inline skate,” and “cell phone.”

To be considered distinctive, a mark must be arbitrary, fanciful or suggestive. Descriptive and generic marks cannot obtain trademark protection, with one exception: Descriptive marks may become protected trademarks, provided they achieve a level of “secondary meaning” with the consuming public. This means, the intended consumers of the underlying good or service associates the mark with a particular producer or provider (i.e. source), rather than the underlying good or service itself.

Proving secondary meaning is risky and very costly, and for small business owners, generally out of reach. Therefore, it’s important to get creative and clever when naming your business, product or service, so that you can leverage a mark that can be considered arbitrary, fanciful or suggestive.

Protecting a trademark

Protecting your mark, as a trademark, means you must be the first to use in commerce (at least in geographic region of your intended market), and your mark must be distinctive.

A common misconception by many business owners, is that registering a trademark is the only thing needed to protect a trademark. While there are a number of benefits to registering a trademark, actually obtaining protection for your trademark is not one of them. To protect your trademark, you must:

• Ensure your mark is strong, and therefore distinctive;
• Be the first in commerce with your trademark;
• Strictly enforce your trademark against all imitators;
• Use your trademark consistently;
• If you allow others to use your trademark (i.e. through licensing), establish strict quality control and supervision measures, and enforce religiously;
• Avoid using your trademark as a verb (i.e. don’t allow it to become generic, where a substantial portion of the public views the mark as descriptive of the general category for which the underlying good or service belongs); and
• If you want to the right to use your trademark against all others nationwide, then put everyone on notice by registering your trademark with the US Patent and Trademark Office.

Putting it all together: Advice for small business owners

What this all means is two things. First, if you haven’t established a brand (i.e. created a trademark for your good or service), do so immediately. Second, if you already have a trademark, take immediate action to ensure you’re protecting your trademark. Ask yourself:

• Am I the first using this trademark, for my geographic region or market?
  • Yes. Good, continue through the list of questions.
  • No. You may need to consider selecting a different mark. Considering hiring an attorney to help evaluate the risks.
• Is my trademark distinctive (i.e. arbitrary, distinctive or suggestive)?
  • Yes. Are you sure? If you’re sure, that’s good. Continue through the list of questions.
  • No. You must consider selecting a different mark. If you’re determined to keep your mark, consult an experienced trademark attorney to evaluate your situation, and give you an honest assessment of your options and risks.
• Have I been enforcing my trademark, so that no one else has been using my trademark?
  • Yes. If others haven NOT been using your trademark, that’s good. Continue through the list of questions.
  • No. Depending on the length of time in use by others, your ability to enforce your mark could be impacted. You will need to consult with a trademark attorney to evaluate your options and the situation.
• Have I been consistent in how I use, show and enforce my trademark?
  • Yes. That’s good.
  • No. Become consistent immediately. Don’t use different versions of your trademark. Enforce how it’s used, and when, religiously. Consult with a trademark attorney to give you further advice on what to do.

If you’ve answered YES to all the question above, good work. You are taking the right steps to protect your trademark.

If you’ve answered NO to one or more of the questions above, you should evaluate your situation immediately and take action as appropriate to enforce your brand and identity (i.e. with your trademark(s)). Of course, L4SB can help. Some helpful tips for you to consider include:

• Try googling your trademark. If it consists of two or more words, place your mark within quotes when you do your search. For example, “national vision center”. If results only pertain to your business, good work. If you receive many, many results, it’s possible your mark is too descriptive. If you receive only a few results, but they refer to another business, you have a problem. Investigate.
• Search for your trademark at the U.S. Patent & Trademark Office, and select their Search Marks link under the Trademarks heading. Here is tricky. You’re looking for similar marks, within your “industry classification.” Read the individual trademarks that come up, as well as their status, and you should get a basic idea if you have any issues.
• Having difficulty coming up with a clever mark? Consider hiring an expert to help. It’s well worth the investment, when you consider how important a clever name can be to your business. One recommendation I have is CommonGround, run by an outstanding marketing/advertising expert.
• If you are considering a new mark, aside from googling it and checking with the USPTO as I described above, I strongly recommend that (1) you verify the domain name exists, (2) it’s easy to spell and remember, and (3) it’s simple. You can check to see if a domain name is available, by going to a WHOIS service, such as GoDaddy.

Why should you care about a trademarks?

It seems like such a hassle, when all you care about is your customers and meeting payroll.

A trademark, as I mentioned at the very beginning of this article, can help you distinguish your goods and services, as well as help keep competitors from trading off your goodwill.

However, a trademark does much more than that. A trademark also builds value in your business. It creates an identity with your customers, the public and potential acquirers. A solid book of business, with revenues and/or profits, helps build a company’s valuation. However, a strong brand (represented with one or more trademarks) really helps maximize the value of your business. And a brand, unlike just about everything else in business, can’t be taken away from you.

Provided you treat your brand with respect, and you do not delay in taking action to enforce your trademark(s).