When many people think about trademarks, they think of those belonging to large businesses. Trademarks like Nike, McDonald’s, Coca-Cola, and Mercedes-Benz are owned by corporations that spend tens of millions just on their brands. But all businesses can and should take proactive steps to protect their brands and avoid the more expensive, nearly inevitable, alternative.
At the most basic level, a trademark refers to any word, name, symbol, or device, or any combination used to identify and distinguish your goods from those manufactured or sold by others and to indicate the source of your goods. Because their purpose is to tell consumers where a product or service comes from, trademarks are extremely valuable even to smaller businesses. They represent the hard work you put into building a good reputation.
Still, in view of the huge sums of money that large businesses spend on their branding, you may feel that an investment into your brand trademark is not realistic. Or you may feel that with so much on your plate you don’t have time to start. Let’s take a deep breath. While you could spend millions like McDonald’s, Nike, or Disney, that kind of investment is probably not necessary at your stage. Moreover, with the right plan in place, effectively protecting your brand doesn’t have to consume your time. The following three simple tips are affordable to implement, will improve the strength and security of your brand, and will help you avoid large, unnecessary, legal expenses in the future.
1. Choose a good trademark. One of the most common challenges in trademark registration and litigation is trying to protect a mark that does not effectively distinguish the desired products or services. In trademark law there are five categories of trademark strength. The first and strongest category is “fanciful.” Fanciful marks are made-up terms or words. Because these marks consist of made-up words, they can be associated exclusively with your products. The second category is “arbitrary.” Arbitrary marks are not made-up words, but because they have no inherent relationship to the products or services for which they are used, they can have great strength in causing consumers to identify the source of those products or services. The third category is “suggestive.” Suggestive marks, as the name implies, give consumers an idea of the product or service, but fall short of making it obvious. Suggestive marks can still be registered and protected trademarks, but are not as strong as fanciful or arbitrary marks. The fourth category is “descriptive.” Trademarks in the descriptive category, are considered weak, and can only be registered and/or protected with proof that consumers associate the mark with your products. As the fourth category is weak, adopting descriptive marks is discouraged. The last category is generic. Generic terms can never be registered as trademark. For example, you would register term “grass” as a trademark for a business selling grass. Generic terms are reserved for all businesses to use.
With a brief explanation of each category, it seems obvious that a fanciful or arbitrary mark is the ideal choice for a business. Frequently, however, business owners want to suggest or even describe to consumers what they are offering. As a result, they often choose weak marks that are more difficult to protect. The underlying policy that makes descriptive and sometimes suggestive marks difficult to protect is that businesses should not be able to monopolize terms that competitors would reasonably need to use to sell their products or services. The best way to avoid the challenges of a weak mark is to understand the difference and make the right choice at the start.
Once you have identified several possible trademarks for your business, it is wise to research whether any other businesses are already using the mark in commerce. A trademark search will likely cost anywhere from $500 to $5,000, depending on the breadth and depth of the search you want. Investing in a search, however, will ensure that your mark is not doomed before you adopt it. Discovering a senior user before you begin using your trademark will give you the opportunity to choose an alternative trademark instead of paying hundreds of thousands of dollars, or more, fighting in court.
If you have not already committed to a trademark, carefully select one that will be strong, and is not being used by another business. If you are already using a trademark for your business, investing in a search will make you aware of other businesses that have earlier rights in the same, or a confusingly similar trademark. Being aware of senior users will enable you to mitigate your risk.
2. Register your trademark with the United States Patent and Trademark Office. While you do get limited geographic trademark rights without registering your trademark, registration is a low-cost step that can be the difference between life and death for your business. The reason is that registration extends your trademark rights across the entire nation, rather than only where you are doing business. Without a federal registration you can get trapped into one geographic area when competitors take your mark and use it in other states or cities.
Trademark registration generally costs anywhere from $1000 to $5000, depending on the strength of your trademark, how many different types of goods and services you attach your mark, and which attorney you hire. This step, however, will put you in a prime position to protect the hard work you put into your business and keep competitors from stealing it.
Litigating common law trademark rights (rights independent of registration) will cost you hundreds of thousands (if not millions) of dollars for a court to determine city by city who used the mark first. In contrast, because a registration gives you a presumption of priority across the entire nation, registering your mark serves as a deterrent for your competitors, and gives you a major advantage if litigation becomes necessary.
3. Have a strategic monitoring and enforcement plan. Owning a registration for a strong mark is a great position for your business. This will enable you to protect your brand from competitors and other potential infringers. After you have obtained a valid registration, if not before, you should put a plan in place to monitor and prevent third-party use of your mark or confusingly similar marks. This plan should include a regularly occurring search of federal and state trademark applications, monitoring the internet for evidence of third-party use, and, when necessary, demanding that identified infringers discontinue their behavior.
Depending on the frequency of your monitoring and enforcement system, this plan may be a few hundred dollars per year or several thousand per month. However, investing in a monitoring and enforcement plan will send a clear message to your competitors that your brand and business are important to you. This will play a large part in deterring would-be infringers, and be valuable evidence of your diligence if a dispute does require litigation.
Cost is an understandable and predictable concern for all businesses (especially small ones). It is important to keep expenses at a minimum. As a result, many small business choose not to invest in their brands early and end up paying dearly later. Sometimes, however, the cost of unnecessary litigation on a small business forces it to close its doors. It doesn’t have to be this way! Proactive investment when things are going well reduces the risk of later disputes by securing your rights early. This kind of foresight is vital for the success of your business.
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