Regardless of where you are at in your company’s life cycle, it is prudent to protect your brand by obtaining state or federal registration for your mark or company name. State or federal registration helps ensure that your business and reputation are not tarnished, or that you do not lose clients as a result of others encroaching upon your area by using a name or mark that is confusingly similar to yours.
“There exists common-law rights that take effect from the moment you start your business, but to enhance your protection it is best to obtain federal or state registration for your brand to better enforce your right of ownership,” says Timothy Jordan, a shareholder at Garan Lucow Miller PC. “Registration establishes that you own the mark and anything confusingly similar can be barred from entering the market.”
Smart Business spoke with Jordan about registering a trademark and the consequences of not doing so.
What are common-law rights and what protections do they offer?
As soon as a company uses a name or mark, it’s developing common-law rights of use. However, the protection of that mark under such rights is limited.
Say you have been using your name in the Detroit area for six years without obtaining federal or state registration. Suddenly a businessman from California, independent of you, comes up with the same or similar name and applies for and obtains federal registration. That registration can provide for the blanket use of that name throughout the United States. Your competitor may now be able to stop you from expanding the use of your mark outside of the geographic area in which you are currently operating, if the business appears related. You can still use your name and continue to do business in your geographic area, but you cannot expand your business beyond that point.
In a similar scenario, another company in the same field and state obtains a state registration after you have been using your mark. That company can prevent you from expanding into the other company’s territory within the state.
When should you apply for state and/or federal registration?
A state registration is relatively inexpensive and fairly easy to obtain. If you are a startup that has any realistic hopes of getting your business out of your garage, spend the money to obtain a state registration. If things are taking off within the first year apply for federal registration, a process which can take between eight months to a year and a half.
But first, find out if the name you would like to use is already registered or in use. You do not want to spend the money on a website, materials and advertising only to find out there is another business with the same or similar name doing similar work or selling a similar product.
How do you search for a name?
There is a federal database maintained by the U.S. Patent and Trademark Office that you can access and search to determine if the word or phrase you would like is ‘live,’ in other words is in use as a trademark. You can navigate the site as you would most any Internet search engine.
Trademarks are valid for 10 years but require a notice of renewal be filed in the fifth year to maintain it, and again between the ninth and 10th years for each additional 10 years of protection. If you do not file for renewal after five years, the mark can become part of the public domain and will eventually expire, which means someone else can use that name.
How do you protect a slogan or phrase associated with your business prior to registration?
Companies that have tag lines or a slogan that accompanies their mark often put the initials ‘TM’ or ‘SM’ at the end of it. By doing so the company is using the phrase as if it were a trademark or service mark. While there is no registration in place, the company is putting the world on notice that the phrase is viewed as a trademark or service mark.
The phrase attached to your company name has to develop secondary meaning before registration is possible. Once the word or slogan conjures up a meaning different than the literal words or slogan, such as Levi’s® representing jeans, then your mark has developed secondary meaning and you can seek registration.
Make a note of when your phrase or tag line was posted to your website or used on some other material viewed by the public because it will help establish the date of your initial use, which will be noted by the trademark office.
When is it appropriate to seek registration for a new product or line?
If you are a large, existing business and you are going to expand into a new product line, from the get-go it is worth the time and money to obtain registration on the new product name. It may cost you a few thousand dollars, but it will save you more down the road. However, if you’re only making $10,000 annually, it might be more prudent to use the TM designation because that is free.
You have to look at your market, your perception of your future success and your resources. If you work only in Michigan, and not all over the country, a state registration may be sufficient. If your product takes off, then you have to decide when it is right for you to invest the money to obtain a federal registration. It’s a personal decision to determine when you are successful enough to need to protect your name.
Timothy Jordan is a shareholder at Garan Lucow Miller PC. Reach him at (313) 446-5531 or [email protected].
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