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The Business Upside to Trademark Registration ®

| Dec 30, 2013 | Business Planning

In a previous blog post (What’s In A Name?), we briefly discussed some risks facing a business owner when he or she fails to adequately vet and protect a tradename or logo that is critical to his or her business. In short, the impact of such an oversight can be devastating to an otherwise successful and profitable business. One of the principal ways to guard against the infringement risks is to proactively register your proprietary tradename or logo with the United States Patent and Trademark Office (“USPTO”).  The trademark registration can be an invaluable means of protecting one’s business, and includes the following benefits:

1.  Nationwide Protection and Priority. Nationwide priority is an exception to the common law rule that the first person to use a mark in a trade area has priority within that given area.  A federal trademark registration through the USPTO allows whomever is first to register a mark to have priority over others in any territory in which the mark is not already being used. Without federal registration with the USPTO (and the nationwide priority that accompanies it), a trademark owner can be the first to use a mark in one particular area of the country, but a secondary user will be free to use the original owner’s mark in a different area of the country.  What’s more, the secondary user can stop the original owner from expanding his/her business into any area where the secondary user is already using the mark.  If, however, the original user had obtained a federal trademark registration through the USPTO, he/she could stop the secondary user from such use. Failing to register the mark means the secondary user can seek registration, and then become the beneficiary of nationwide priority, thereby allowing the secondary owner to keep the original owner from expanding anywhere in the nation, except the small area in which the original owner is using the mark, or in some cases, within the original owner’s zone of natural expansion.

2.  Incontestability. After five (5) years of continuously using a federally registered mark in commerce, a registered trademark owner can apply for incontestability status with the USPTO. If incontestability status is granted, the owner of the federal trademark can eliminate most of the difficult and expensive-to-defend challenges to its mark.  For instance, if a mark is incontestable, an adverse claimant will not be able to successfully argue in a lawsuit or administrative hearing that the registered mark is “confusingly similar” to another mark, that it is merely functional (and thus not able to be registered), or that it lacks secondary meaning (and thus cannot be registered).

3.  Monetary Damages. With a federal trademark registration, it is possible for the owner to recover an infringement award for triple the amount of his/her actual damages, plus attorney’s fees, in the event that someone infringes on a registered mark.  That said, practically speaking, such an award is not routine, and requires a showing of willful trademark infringement.  Nevertheless, it is precisely in these most serious and obvious abuses that a trademark owner would like to have the power to recover maximum damages, and doing so is only possible with a registration through the USPTO.

The prospect of significant money damages can act as a compelling point of leverage for the owner of the mark during any infringement dispute with another party who is allegedly infringing on a mark.  The looming specter of treble damages against an infringing party is a powerful disincentive to those considering the use of a name or logo that is the same, or confusingly similar, to a mark that has been previously registered with the USPTO.

register-mark

4.  Trademark Symbol & Deterrence.  Only those with valid federal registrations issued by the USPTO are allowed to use the  symbol.  Using this symbol provides constructive notice to the world that the mark in question is claimed as an exclusive right. As such, no defendant can claim innocent infringement, and thereby avoid monetary damages.  Consistent use of the register-mark symbol by the mark owner also implicitly tells the world that the mark owner has invested significant resources into the mark and will protect its intellectual property rights and the sizeable investment related thereto.

Deterrence against infringement occurs in two ways.  First, the USPTO will refuse to register any identical or confusingly similar marks within the same trademark classification.  Second, a registered mark will appear on trademark clearance/due diligence searches when businesses contemplate adopting a given name or logo.  Since the vast majority of legitimate businesses would rather avoid a lawsuit, simply having them know a registered trademark owner is out there could save tens of thousands in litigation costs.  Without such advance knowledge and notice that comes via federal registration, the competing claimant may have already invested heavily in marketing materials, web sites, advertising campaigns and have created substantial goodwill in the mark, and thus they may feel as if they have so much invested that they have no choice but to attempt to challenge the registered trademark owner (at great time, expense, and distraction to all parties).

5.   Prima Facie Evidence. A federal registration allows any registered trademark owner a valuable shortcut in court should he/she ever need to enforce his or her trademark rights.  More specifically, a trademark registration is prima facie evidence that automatically shifts the burden of proof to the other party in a trademark infringement suit.  This means that the owner of the registered mark doesn’t have to affirmatively prove that his or her mark is valid, that he or she is in fact the owner, or that he or she has continuously used the mark in interstate commerce.

Without a federal trademark registration, the purported trademark owner would bear the burden of proving all of the above.  If the owner of a mark could not show each of these things to the court, the case for trademark infringement may be dismissed at the outset.  What’s more, it can be costly for the purported owner of the mark to prove that he or she is the true owner, that he or she hasn’t abandoned the mark (e.g. demonstrating continuous use in interstate commerce), or that the mark is valid (e.g. proving the mark is not generic, descriptive, or confusingly similar).  With a trademark registration in hand issued by the USPTO, the court deems the trademark registration owner to have adequately proven all of the above, and thereby immediately shifts the burden of proof to the other party to put forth evidence as to why a claim should for infringement should not prevail.  At that point, it becomes necessary for the other party to incur the time and expense associated with putting forth evidence of why the preexisting federal registration should not prevent their intended competing use of the same or similar name or logo.

If you have any questions about how to protect something as valuable as a company name or logo (and the goodwill related thereto), please contact one of the attorneys in our Firm so that we can provide you with an analysis of your particular situation.