Business is as competitive as it’s ever been, and trademarks can help a company get that extra edge. Trademarks promote a brand with which consumers can identify.
Companies that propose new trademarks must follow a certain process in order to eliminate or reduce the chances of litigation, says Tom Hodge, a shareholder in the Atlanta office of Baker Donelson who concentrates his practice in the areas of patent, trademark, copyright, trade secret and unfair competition law and related litigation.
Smart Business spoke with Hodge about the steps companies need to take in establishing a trademark and the potential consequences of not doing their homework.
A company comes to you with a proposed trademark. What happens next?
When a company wants to adopt and use a trademark in connection with certain goods or a service mark in connection with certain services and then register that trademark in the U.S Patent and Trademark Office, I often ask about the process the company used to select that trademark. That process may be important in regard to a willfulness claim in an action for trademark infringement.
A fundamental concept is that a trademark refers to or indicates the source of goods. While you may not know the specific source, the trademark functions to indicate the source.
A trademark is also an indicator of a level of quality for the goods produced under that trademark. For example, when you see the McDonald’s trademark, you have a good idea of the quality you are going to receive.
How can a company make sure no one else is using its proposed trademark?
We always recommend a full search before a company begins use of a trademark.
A first option is to use the U.S. Patent and Trademark Office Web site and do a limited computer search. That type of search is quick but limited and not reliable. However, that type of computer search may determine if your proposed trademark is already being used by others for their goods.
A second option is to have a full search conducted by a professional search firm it’s usually about $450 to $500 for the search itself. This is a more thorough search because it looks at many sources such as U.S. and state trademark databases, trade journals, domain names, telephone directories, etc. A professional search, however, is still not 100 percent.
The issue is whether the proposed trademark is likely to be confused with the trademark of another company for similar goods. A risk can be low, medium or high. For example, to use the Kodak trademark for any goods would be a high risk, which we would not recommend.
What is the filing procedure for registration of a trademark?
There are two types of applications for registration of a trademark in the U.S Patent and Trademark Office, both of which can be filed in paper form or online in electronic form.
The first type of application is the ‘use-based’ application, which states that the trademark is already in use in interstate commerce in connection with the goods.
The second type of application is the ‘intent-to-use’ application, which states that the applicant has a bona fide intention or good faith intention to use the trademark in the future in interstate commerce in connection with the goods.
Both types of applications are subject to examination at the U.S. Patent and Trademark Office and, if approved, are then published for opposition by other entities, which may allege that they will be ‘damaged’ by the registration. After the opposition period, or after any opposition is concluded in favor of the applicant, the registration is issued for the ‘use-based’ application. The registration for the ‘intent-to-use’ application will not issue until the trademark is used in interstate commerce in connection with the goods. There is a maximum period of three years after publication for use of the trademark in an ‘intent-to-use’ application. During that period of three years, the applicant must periodically inform the U.S. Patent and Trademark Office of the steps that are being taken to begin use of the mark. Without use in that three-year period, the application is deemed abandoned.
What are the penalties for misusing a trademark?
You can be sued for trademark infringement, unfair competition and for violation of other federal or state laws. Specifically, a lawsuit can seek damages and an injunction. The damages could be significant if any infringement is determined by a court to be willful and intentional. If granted by a court, an injunction could stop all manufacture and sales of the goods and could require a company to recall unsold goods.
In the U.S., generally, the first user of the trademark in connection with the same or similar goods has priority over the first applicant for registration of that trademark for use with the same or similar goods.
However, registration of a trademark provides certain rights that nonregistration or common law use does not. <<
TOM HODGE is a shareholder in the Atlanta office of Baker, Donelson, Bearman, Caldwell & Berkowitz. Reach him at (678) 406-8706.