Many start-ups and small businesses are vaguely aware that they’re supposed to register their trademarks, but they’re not sure what exactly a trademark registration gets them.
First, in the interests of not overselling, let’s acknowledge that trademarks are more important to some businesses than to others. Branding plays a different role in different industries. A trademark registration might be an essential, invaluable asset to one company, while another company might thrive perfectly well without one. However, there are a number of ways that a trademark registration protects a business and helps it to grow, some of which may loom larger than others depending on the business.
Consolidating and proving ownership of trademark rights
Trademark rights arise from use of a mark in commerce. In other words, if you’re selling something, you probably already have a trademark. Registering your trademark documents that fact.
A trademark registration takes an amorphous and slippery asset—the customer goodwill that adheres to a business’s goods or services—and embodies it in a documented legal title that can be readily sold or licensed or transferred to successors.
A federal registration provides a presumption throughout the United States that the registered trademark belongs to the registered owner. Without it, trademark ownership must be proved with facts and evidence showing whom consumers are likely to believe is associated with a particular mark. This can be cumbersome and, in many situations, subject to dispute.
When business partners fall out and vie for control of a business, more often than not what they’re fighting over is the business’s trademarks and the goodwill embodied therein. A trademark registration makes it far easier to determine who’s entitled to hold themselves out as the legitimate representative of an enterprise.
Trademark registrations can be easily transferred, assuring purchasers and other successors to a business that are assuming ownership. They can also be monetized through licensing and thus become free-standing sources of value. Rights to unregistered trademarks can be transferred or licensed as well, but a registration provides a less nebulous asset, a legal title with specific metes and bounds, that is presumptively vested with its registered owner.
The most blatant forms of counterfeiting tend to afflict certain types of consumer goods in particular: apparel, electronics, jewelry, cosmetics, and so on. But there are different types and degrees of knock-off products, and imitators find all sorts of ways to knowingly appropriate the positive associations created by a successful brand.
A registration gives a trademark owner the ability to sue infringers in federal court. In cases of outright counterfeiting, a trademark owner can usually also seek substantial monetary remedies, including treble damages, statutory damages (i.e. damages that need not be proved), and attorney fees. By serving as presumptive evidence of ownership and validity, it also makes infringement easier to prove. A registration can also be recorded with U.S. Customs and Border Protection which will then act on its own to prevent importation of counterfeit goods.
Maintaining a trademark registration can help a business prevent counterfeiters from swindling consumers with deceptively labeled and inferior imitation products, as well as prevent competitors from unfairly free-riding off investments in its brand.
Keeping your brand distinctive
Even if you’re not concerned about counterfeiters, however, there may be value in keeping your brand recognizable and distinctive. When competitors adopt similar-sounding or similar-looking marks, even if they aren’t intentionally trying to appropriate your goodwill, it makes it harder for your goods or services to stand out.
A trademark registration prevents later applicants from registering their own confusingly similar marks. Since it constitutes legal notice, it also prevents other businesses from claiming they infringed your marks by mistake. It allows you to use the ® symbol in your marketing materials, demonstrating that you’re serious about protecting the mark and maintaining a brand that consumers can rely on. It provides a clear basis to demand that others change their brands to something less similar, and, again, if necessary, to sue for infringement in federal court.
Securing a national market
Unfortunately, a federal registration doesn’t provide what many new business owners are hoping for, which is certainty that they themselves won’t be sued for trademark infringement. While the preliminary search that many attorneys conduct prior to filing a trademark application can help you identify potential risks, registrations are not bulletproof wards against assertions of infringement. Indeed, they are generally more useful as a sword than a shield.
However, trademark registrations are invaluable defensively in one respect. They provide priority rights to the mark throughout the United States, usually dating from the filing date of the application. “Priority” refers to which business’s rights are superior with respect to competing trademark claims. Without a registration, your rights only extend to geographic areas where you’ve used or where consumers recognize your mark.
It’s therefore not uncommon for businesses to begin using similar marks in geographically distinct markets and then later come into conflict with one another when one or both expand. Even if you had the mark first, it’s possible for a similarly-branded competitor from another state to freeze your expansion. If they obtain a registration for their mark, they may even be able to force you to cede any new markets you acquired after their filing date or else be accused of trademark infringement.
Knowmad Law’s fixed-fee trademark application packages start at $675 and include a complimentary search report and analysis of your mark’s chances of successful registration. Learn more about trademarks on our FAQ page. Or schedule a trademark consultation or request an engagement letter to get started on your trademark application right away.