legal review

Trademark Protection

By Robert A. Cravens, Esq.

You take and invest in measures to protect your business property. The doors are lockedwhen you close up shop at night, important documents are kept in a safe, securitypersonnel and systems are in place and you carry a vast array of insurance. But are youtaking adequate steps to protect what might be your business's most valuablepossessions--its trademarks?

Almost all businesses, large and small, use trademarks, but they often do notappreciate their worth. A trademark (often a "brand name,") can be a business'smost valuable asset. The Coca-Cola, McDonald's, Xerox, and Kodak trademarks, among manyother famous and highly visible trademarks, have each been valued at several milliondollars.

Because these are the kinds of trademarks that everyone recognizes, many businesspeople mistakenly believe that only large corporations need trademark protectionstrategies, and that it is not necessary or worthwhile for a little guy to invest inthings such as trademark searches or trademark registrations. In fact, any company,regardless of size, that relies on consumer recognition of its trademarks to generatebusiness should be concerned about protecting them.

This truism takes on a renewed meaning with the ever increasing number of newly createdproducts and formulations in the rapidly growing multibillion dollar supplement andnatural foods industry. As new companies and new products seek an identity of their own,the use of trademarks to establish and preserve product and brand name recognition becomesan essential element of any marketing plan.

Before going on, let's briefly examine what a trademark is and what it represents toits owner. A trademark is any word, name, symbol or device used by a business to identifyits goods and distinguish them from those of others. Kleenex and Vaseline are trademarks.But the concept of trademark is broader than brand name. Acronyms like IBM, RCA, and GEare trademarks, as are names, real or fictional, such as: Calvin Klein, Tommy (Hilfiger)and Sara Lee. Logos, colors and sounds also can qualify as trademarks. Essentially, almostanything that serves to "identify and distinguish" function can be a trademarkand eligible for legal protection.

A commercially successful trademark symbolizes goodwill for its owner. Goodwill is avaluable business asset that represents the trademark's reputation among consumers foridentifying quality products. It is, as one trademark commentator said long ago,"that which makes tomorrow's business more than an accident ... [and] the reasonableexpectation of future patronage based on past satisfactory dealings." Buildinggoodwill takes investment and effort (research and development, advertising and promotion,etc.) on the part of the trademark holder. Once goodwill is established, it representscontinued income from sales of the trademarked products. However, if one of yourcompetitors starts using a trademark that is identical or similar to yours, customers maybe buying that competitor's products when they mean to buy yours. This is a trespass onyour goodwill and a loss of income to you. Just as a business protects its tangibleassets, it should also protect the goodwill symbolized by its trademarks. This means thetrademarks must be protected.

But how can this be done? Obtaining U.S. trademark registrations from the Patent andTrademark Office (PTO) is by far the best thing a business can do to protect itstrademarks. While it is fundamental in the United States that one's rights are based onuse of a trademark and that use is a prerequisite for registration to be granted (thoughone can apply for a trademark without having used it, as is noted below), a registrationserves to solidify and strengthen one's rights and also opens the door to using andprotecting the registered mark anywhere in the nation. This is a crucial concern for anybusiness looking to expand and grow.

There are several important benefits that come with owning a U.S. registration for atrademark. First of all, you are entitled to use the ® symbol next to your trademark.(The other trademark symbol, ™ , really has no legal effect; it is just aself-serving way of claiming trademark rights.) ® tells the public that your trademark isfederally registered and probably bolsters consumer perception of the trademark. Even ifyour customers don't know what ® stands for, they know it means something; it elicitsrespect and probably gives the trademark a certain cachet. Also, the ® symbol shouldserve to discourage your competitors from trespassing on your rights by adoptingtrademarks too similar to yours and thereby trying to trade on your goodwill. That youhave gone to the trouble of securing a registration tells them you mean business aboutprotecting your trademark and the goodwill it represents.

In addition to these psychological benefits, a U.S. trademark registration confers someimportant legal advantages if you ever have to sue someone to protect and enforce yourrights. Trademark registration:

1) Automatically opens the door to the federal courts, which have much greaterexpertise about trademark controversies than state courts;

2) Serves as strong evidence of your exclusive right to use the trademark, yourownership of the trademark and the validity of the trademark. (A registration more thanfive years old may achieve "incontestable" status, in which case it serves asirrebuttable evidence of your exclusive rights to use the trademark;)

3) Puts your competitors on nationwide notice of your registered trademark, therebypreventing them from successfully claiming in court that they "innocently"adopted a confusingly similar trademark;

4) May entitle you to significant monetary relief, including treble damages, profits,attorneys' fees, and costs; and

5) May allow you to bar importation into the U.S. of goods bearing an identical orconfusingly similar trademark.

What happens if you're using a trademark but haven't registered it? Most significantly,your rights exist only where the trademark is used or known.

Unless you have a very small, completely local business that never extends outside itsstate's borders in any fashion, you should consider seeking U.S. registrations for yourtrademarks. (If your business is completely local, consider seeking trademarkregistrations in your state; while state registrations do not offer the same benefits asU.S. registrations, they are usually inexpensive and straightforward and put others onnotice of your trademarks.) A U.S. business, whether it has three employees or threethousand, can file a trademark application with the PTO on one of two bases: it has beenusing the trademark in commerce (a "use based application"); or it has a bonafide intention to use the trademark in commerce (an "ITU application").

Common to both bases is the "in commerce" requirement, which essentially andtypically calls for sale or shipment of the trademarked goods across state lines or to aforeign country. The "in commerce" requirement is usually met if a businessattracts customers from outside its state.

It is almost always a good idea to have a trademark attorney handle your PTOapplications. Obtaining a trademark registration is relatively inexpensive (compared to,say, obtaining a patent), but the process is somewhat lengthy (count on at least a year)and often involves legal technicalities. The PTO examines each application to see thatcertain requirements are met. Most applications initially elicit objections, some of whichraise legal issues, and a trademark attorney will know how to navigate the trademark lawsand PTO rules and regulations so as to maximize your prospects of successfully addressingthe objections and proceeding to registration.

It is usually a good idea to have your trademark attorney do some searching beforefiling an application with the PTO. You want to make sure the trademark you are using orthinking of using is available and does not violate anyone else's prior trademark rights.Many people do not realize that the question is not whether your trademark is identicalbut whether it is confusingly similar to someone else's, such that there would be alikelihood of confusion among consumers.

If a search shows your trademark to be available, you should file an application withthe PTO as promptly as possible. Hundreds of applications are submitted to the PTO eachday, and a trademark that is clear today might be unavailable next week if someone beatsyou to the punch by applying for an identical or confusingly similar trademark.

Consider whether trademark protection is appropriate for your business. Ask yourselfthe following question: What is there about my business that I consider my"commercial signature" (names, logos, appearance of products or product labels,etc.)? That is, what tells customers and potential customers they are dealing with myproducts and business, not someone else's? Once you have answered this question, askyourself whether you would be angry or upset if someone else, especially one of yourcompetitors, started using the same or similar names, logos, etc. If the answer is yes,then developing a trademark protection strategy should be made a priority.

Robert Cravens is associated with New York-based Bass & Ullman, which has beenpracticing in the area of Food and Drug Law and related areas of practice for nearly 50years. Mr. Cravens' practice concentrates on all aspects of trademark and copyright law,with a particular emphasis on domestic and foreign trademark protection programs.