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WE LAW — Trademark basics for your company

BRIAN SMITH

BRIAN SMITH

Imagine that after years of work and preparation, your business is ready to expand.  While planning your company’s growth, you discover something unsettling. Another similar business with the same (or nearly the same) name is located in a nearby state.  Worse still, it claims to have a federally-registered trademark.  Your expansion plans may be on hold.

For most small businesses, registering a trademark is an afterthought.  Operating a business has considerable demands on one’s time, and consideration of a trademark usually occurs only after the company has had some success. McDonald’s operated for over a decade before filing for a trademark. More recently, Twitter was forced to engage in litigation to secure the trademark for the term “tweet” after it failed to promptly pursue registration.

Fortunately, registering a trademark can be relatively easy and inexpensive.

The Basics

Trademarks are often confused with other intellectual property rights such as copyrights and patents. Under federal law, a trademark is any word, name, symbol, device, or any combination thereof, used to identify the source of goods or services. A service mark is a type of trademark that identifies services rather than products. A trademark must be distinctive and not commonly used generally or within a particular trade. Generic names (for example, “baby oil”) are usually not entitled to trademark protection.

Copyrights, in contrast, provide protection to original works of authorship, such as literary works, sound recordings, paintings, sculptures, and architectural works.  Patents provide the exclusive right for inventors to make, use or sell their inventions for a set period of time if the invention is useful, novel and non-obvious.

Unlike copyrights and patents, almost every business uses (and potentially has rights to) at least one trademark.  Your favorite bank, restaurant, and even high school football team have identifiable marks, many of which adorn shirts, hats and signs.

Trademark Protections 

There are three sources of trademark rights – common law, state law and federal law – all of which provide varying degrees of protection.  Common law trademark rights are created in the geographic area where a person or business continuously uses a mark without any registration.  For example, if “McHotty’s Hot Dogs” operates in Madison County, the company may have obtained a common law trademark merely by doing business and using that name or a special logo.

State registration provides protection within the boundaries of a particular state.  Mississippi’s trademark law, significantly enhanced in 2009, is administered by the Mississippi Secretary of State.

Federal registration, administered by the U.S. Patent and Trademark Office, confers the exclusive nationwide right to use a mark regardless of the area of actual use at the time of registration (but subject to the rights already established by other users.

The Symbols:  TM, SM & ®

A common law trademark may be designated with the TM symbol.  A common law service mark may be designated by the SM symbol.  Use of the TM and SM symbols may be governed by local, state, or federal laws and can be used to identify the marks to which a party claims rights. The well-known ® symbol may only be used with federally-registered trademarks.  Even though an application is pending, the ® symbol may not be used until the mark has actually become registered.

Costs & Timing

State registration is easy and inexpensive.  The initial filing fee is $50 for Mississippi residents ($60 for non-residents) per each class of goods and/or services for which the mark is registered. Federal registration involves a more elaborate process and an initial fee of between $225 to $325 per each class of goods and/or services for which the mark is registered.  A business may apply for a federal trademark even before using a mark, thus allowing a business to lock in the trademark before investments are made to establish a new business, goods or services are branded, or a new product line is rolled out. While early registration is advisable, there is no statute of limitations on registration.  You can register even decades after a mark is first used.

The Down Side of Not Registering or Registering Late 

Failure to promptly register a trademark with the Patent and Trademark Office, though not required by law, can have serious consequences on a business’s ability to expand its existing brands into new markets.  Take the prior example of McHotty’s Hot Dogs. By failing to register its mark, the original Madison County user runs the risk that someone else will independently adopt the McHotty’s Hot Dogs mark somewhere outside of Madison County.  It might be another business in, say Nashville, that establishes common law trademark rights for continuous use in that area.  The business that registers first with the USPTO will obtain national rights to use the mark, subject to any pre-existing rights established by the other business.

Do I Need an Attorney?

A business doesn’t have to use an attorney to register trademarks, but there are good reasons to do so. The experienced attorney knows the forms, issues, and nuances – thus expediting the entire process.  The federal process is more complicated than state registration, and most federal applicants choose to engage private attorneys.

The federal application process requires numerous considerations such as the appropriate filing basis (in-use, intent-to-use, international), the class of goods and/or services for which the mark will be registered, the description of the goods or services within a particular classification, selection of appropriate specimens to submit to establish use in commerce, and consideration of whether to seek protection for the plain words that make up a mark and/or a stylized logo incorporating design elements along with the plain words.

A registered trademark can protect your business investment, facilitate future expansion, and become a valuable business asset. Registration can be easy, inexpensive and beneficial.  Don’t let your business’s goodwill go unprotected.

» Brian C. Smith is the Practice Leader of Watkins & Eager’s Intellectual Property Practice Group . He is a CPA and holds an AV rating from Martindale-Hubbell.   WE Law is a continuing legal series written exclusively for the Mississippi Business Journal by lawyers of Watkins & Eager PLLC.  

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