Trademark Selection and Federal Registration

A trademark is a word, symbol, logo, or phrase that a company or individual has adopted to identify their goods or services to the purchasing public. A trademark serves as a source identifier for the purchasing public. For example, you know that when you go in to a shoe store and see a shoe with the Nike Swoosh symbol on it that the shoe is manufactured by the Nike shoe company and therefore carries with it certain standards of quality. Nike has worked very hard and spent millions of dollars ($100 Million on the endorsement of Tiger Woods alone over the last 7 years) to create the connection in the minds of consumers that the Swoosh symbol means the product comes from Nike.

Now a business owner does not have to be as big and well known as Nike to have trademarks or to be concerned about their trademark protection. Quite the opposite, I would argue that small and medium sized businesses should be even more worried about their trademarks because, unlike Nike, a typical small or medium sized business cannot afford to make a mistake like spending years of effort and tens of thousands of dollars building a company brand only to be forced to abandon the brand because an unknown competitor has a prior use of a similar mark.

To avoid this unfortunate result, business owners need to be thoughtful and deliberate in the selection, use, and protection of their trademarks.

Selection of Trademarks

Thoughtful analysis of potential trademarks is an important step that is often overlooked by business owners when selecting a new trademark for a new product or service. Trademarks come in a variety of strengths which depends on the level of distinctiveness. The distinctiveness of trademarks is measured along a spectrum, of increasing distinctiveness: (1) Generic, (2) Merely Descriptive, (3) Suggestive, (4) Arbitrary, and (5) Fanciful.

Generic marks are marks that are generally accepted word for the item described. For example, water, coffee, computer, and automobile are all generic words for what they describe. Generic words are not protectable under trademark law because allowing exclusive use of generic words would confer an unfair advantage on the first companies to arrive in an industry. Just imagine if Company A got received rights to exclusive use of the word “water” for selling bottled water. Obviously, this would be unfair to Company B who also sells bottled water.

On the other side of the spectrum are fanciful marks, which are marks that are invented words which have no meaning outside of the mark. Some of the most famous trademarks in the world are fanciful, for example, Google, Starbucks, and Clorox. These words did not exist and had no meaning before these companies choose them as their trademarks. Because they are not generally used in normal English language fanciful marks become easily recognizable and become strong easily protectable trademarks.

A category that will often cause problems for trademark applicants is the merely descriptive marks. Descriptive marks are on the weak side spectrum and, unlike generic marks, can obtain federal registration but only under certain circumstances. A mark is considered merely descriptive if it describes an ingredient, quality, characteristic, function, feature, purpose, or use of the specified goods or services. Examples of merely descriptive marks include, SMARTTOWER merely descriptive of highly automated cooling towers (In re Tower Tech, Inc., 64 USPQ2d 1314, 1317-18 (TTAB 2002)), E FASHION merely descriptive of electronic retailing services (In re Styleclick.com Inc., 57 USPQ2d 1445 (TTAB 2000)), and REDUCER is generic for flow meters for measuring flow through pipes (In re Rosemount Inc.,86 USPQ2d 1436 (TTAB 2008)).

Business owners love choosing descriptive marks because descriptive marks immediately convey to a potential customer what the product or service does. While this may be true, descriptive marks are not as strong as other types of trademarks and they come with the strong risk that the United States Patent and Trademark Office (USPTO) will refuse the registration. This refusal can sometimes be overcome by a showing of “secondary meaning” which is showing that the general public has learned to associate a mark with a certain source (i.e. showing the connection that Nike has created). This requires some effort and success is not assured, so descriptive trademarks should be avoided in favor or fanciful or arbitrary trademarks.

Once a business owner has selected a strong trademark it is highly advisable to seek federal registration of that trademark. There is no requirement to obtain registration but there are many benefits.

Benefits of Federal Trademark Registration

National Protection

When a business owner uses their trademark in commerce the owner accrues exclusive rights to use the trademark in the areas of actual operations. However, without federal registration, a competitor is free to use as similar mark in an area of the state where the business owner has not yet begun operations. If instead the business owner obtains Federal registration of the trademark with the USPTO, upon registration, the business owner immediately obtains trademark rights nationwide regardless of where the trademark owner’s actual operations are.

Use of ® symbol

Once a business owner has registered trademark with the USPTO the business owner is free to use the ® next to the trademark. This is valuable for a couple of reasons first, it puts customers and competitors on notice that the business owner is claiming exclusive rights in the trademark, second, it makes the trademark and business owner’s brand look more professional.

Increases the value of your business

A trademark registration is an asset of the business just like a piece of equipment. Trademarks can appreciate in value as the business grows. A trademark registration can also be sold as part of the business assets which potentially makes the business more valuable to potential purchasers.

Advantages in Litigation

Federal registration also gives a trademark owner an advantage in potential infringement lawsuits. Federal registration allows trademark owners to file lawsuits in Federal court without concern about satisfying other jurisdictional requirements. Furthermore, Federal registrants get to take advantage of several statutory presumptions 1) that the trademark is valid, 2) that the registrant is the owner of the trademark, and 3) that the registrant has the exclusive right to use the registered trademark. These presumptions are valuable in proving infringement by a competitor.

With all of the valuable benefits Federal trademark registration provides there is no reason not to seek Federal trademark registration. With a little bit of thoughtful planning every business owner can protect their company brand and build valuable trademark assets.