Business Counseling

Trademarks

Although trademark law has not changed significantly over the years, attorneys and their clients have focused more on the value of trademarks. (There are several companies that do nothing than maintain their ownership rights in marks and simply license the marks out to others to use and the Licensor collects a royalty for that.) (See Licensing Matters.)

Trademark registration is normally thought of as federal trademark registration, although it is possible to register a mark at the state level. The registration process in and of itself is fairly simple and generally not overly expensive. The attorney, with the assistance of the client, completes the trademark application, the filing fee is paid (currently $350 per class), objections (referred to as Office Action Letters) are responded to as received from the U.S. Patent and Trademark Office and, if successful, the mark is registered. The entire process generally takes approximately 18 months. Once a mark is registered, the registered owner is entitled to use the ® symbol. Prior to federal registration, an owner may us the ™ designation.

Having said that, the registration process is not overly complicated.  It is important to understand that the entire trademark/name area is incredibly complicated for the following reasons: Although one may choose to obtain a federal trademark, there is no requirement to do so and one may have rights in a name/mark merely based on being the first to use the mark in a given geographic area. In summary, one can acquire rights in a mark as follows:

Common law rights: As indicated above, one can acquire rights in a mark simply by being the first to use the mark in a given geographic area. Generally, the law requires that, if you are using a name that is other than your own name in the operation of a business, then you need to file a fictitious business name statement within the county in which you are operating. However, other than that, there is no registration requirement.

State registration: One can, in essence, register a mark through forming a corporation, limited liability company, limited partnership, or state registration of a trademark. By filing with the state, even if the person is only operating in San Diego County, that would give them a geographical operating area of the entire State of California.

Federal registration: As indicated above, one can register a mark through the U.S. Patent and Trademark Office. If the registration of that mark is successful, then, even if the person is only operating in San Diego County, they would have protection throughout the United States.

The difficulty here is defining what “protection” means. Let me explain it by way of example. Let us assume that I start a company in San Diego in 1995 called “Widgets R Us” and I seek and obtain a federal trademark registration. Sometime thereafter, I expand my business over to Arizona only to find out that someone in Arizona is incorporated and operates their business under the name “Widgets R Us” and that they started their business in 1990. Assuming that the public might be confused between my Widgets R Us and the Arizona Widgets R Us, then the Arizona Widgets R Us might be able to prevent me from operating in Arizona since they were the first to use that mark in that geographic area. I may be able to prevent the Arizona Widgets R Us from operating outside of Arizona, but they can prevent me from operating inside Arizona.

Therefore, the key is the following: If you are operating a business in which you believe you will expand and/or utilize a mark over a wide geographic area, then it is important to spend the time and money to perform a thorough search throughout the United States to see if that mark is currently being used by others and, if it is being used by others, whether it is being used in a competitive manner. By way of example, if I wanted to establish Safeway Driving School, and if I performed a search on that mark, I would find that there was Safeway Grocery Stores. However, it is not likely that people would confuse Safeway Driving School with Safeway Grocery Stores. However, let us assume that I wanted to establish Coca Cola Driving School. The mark “Coca Cola” has become so well known that, even though they are not competitive with each other, Coca Cola would be able to prevent me from using Coca Cola in connection with driving school. (See, I told you it was complicated.)

To add to the complication is the following. Let us assume that you have expended the time and money to register a mark. Now there is the added complication of policing the mark and enforcing your rights relative to the mark. If I own Widgets R Us and I become aware that there are others using the mark, and I do not prevent them from using it, then, over a period of time, it might be determined that I have abandoned my rights to the ownership. Meaning that, even though I may continue to use the mark, I cannot prevent others from using the mark. Therefore, one not only needs to go through the cost and expense of obtaining the mark, but then they need to go through the cost and expense of protecting the mark. This can be a fairly expensive proposition in the long run but, as we all know from our daily observances, given the right set of circumstances, these marks can be extremely valuable.

For additional information, please contact Ross Schwartz.