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TRADEMARK ISSUES FOR NEW BUSINESSES

Author: Attorney Paul Nowak

Many times, a new business will be based on a new idea for a product or a service.  Trademarking that product or service is the most important aspect of its marketing.  The purpose of a trademark is to identify the source of the product or service and to protect the originator’s idea against unfair competition.  The most obvious examples are a label or a brand name.  A trademark can be created in a number of ways:

A “common law” trademark is created whenever the product or service is created, and whatever name is given to the product or service is a trademark for the creator.  As the term “common law” suggests, the creator has the legal right to sue someone who uses the same or similar name to sell the same or a similar product.  However, that trademark will only protect the creator in the states where the product or service is marketed, and the creator would have to go to every state where the trademarked name is being used to sue to protect the idea.  In addition, a creator will have to prove that (a) it was the first to use the trademark in commerce, (b) the use of the trademark by the other person caused confusion in the marketplace as to the originator of the product or service, and (c) the creator has lost business or will lose business if the other person is allowed to use that trademark.    

Each state has its own trademark registration system, by which a creator can establish the priority of its trademark, and protect his idea against unfair competition within the state.  In Tennessee, for example, a creator can establish its trademark by filing an application with the Secretary of State, along with a “specimen,” showing how the mark is used in commerce, and paying a $20.00 filing fee.  The state-issued trademark must then be renewed every five years.

In order to establish national protection for the trademark, a trademark application must be filed with the U.S. Patent and Trademark Office.  This is done by filing an online application, which will include a specimen and other documentation.  Then the specialist who is assigned the application will determine whether the trademark is or is not confusing with an existing trademark, and whether or not the trademark is unique enough to qualify to be registered as a trademark.  The fees for the application vary depending on the type of application submitted and the number of international classes of goods and services which are utilized.  If the application is denied the fee is not refunded.  Even a single class application can require fees of several hundred dollars.  Also, since it could take up to year for a federal application to be processed, denial could result in a loss of valuable time and marketing efforts.

Before applying anywhere for trademark registration, a creator must do preliminary research to see if the mark chosen is available and whether it will qualify for registration.  In Tennessee and most other states, the Secretary of State’s website will include a search feature.  In addition, an internet search should be conducted to see if the same, or a similar, trademark is already being used.  The U.S. Patent and Trademark Office (“USPTO”) website also has a search feature, which can be used to determine if the same, or similar, trademark is already in use.  Due to the complex nature of determining whether a trademark is available, many trademark lawyers recommend that a trademark clearance search be done.  This search is done by professional firms which do exhaustive research regarding the use, near-use, or possible use of the trademark throughout the United States.  These searches often produce reports of several hundred pages, which must then be reviewed by the lawyer to determine the validity of the proposed trademark.  Reputable search firms, such as Thomson Reuters, generally charge $1,000.00 or more to do the clearance report.  Even then, there is no guarantee that the trademark will be accepted, since it is possible that the USPTO could register a trademark and then another party using the same or similar mark could legally challenge the registration.  There are a number of online sites which purport to do “cheap” searches, which are only as dependable as the “cheap” nature promises.  In many cases, the preliminary research will determine whether it would be useful for a startup company to incur the cost of a clearance report.

As already mentioned, to be registered, a trademark must be so distinctive or unique as to not be confused with other names and other products or services.  It is this uniqueness requirement which poses problems for marketing the product or service.  There are different “strengths” of trademarks which determine the uniqueness of the mark.

Let’s use an example of a company that manufactures and markets the “better mousetrap,” which uses a chemical to attract, trap and dispose of the rodents.  The strongest trademark would be an arbitrary, made-up or fanciful name that really has nothing to do with the product or its use.  Examples are CLOROX for bleach, VIRGIN for an airline and DIAL for soap.  In our example, using a word like PRYSOMAT for the mouse trap would likely be unique, but it would present a marketing problem because the public would have no way to identify the name with a mousetrap. 

Other types of trademarks are suggestive (“Greyhound” bus suggests speed) and descriptive (“Thin Skin” for topical skin treatment).  Although these are not a strong as arbitrary marks, they can be recognized as being distinctive enough to merit trademark protection.

Please contact Paul Nowak for further information.

This document has been provided for informational purposes only and is not intended and should not be construed to constitute legal advice. Please consult your attorneys in connection with any fact-specific situation under federal law and the applicable state or local laws that may impose additional obligations on you and your company. © 2014 Yost Robertson Nowak PLLC