In the age of social media, most new business owners quickly become experts at branding. Savvy marketers know how to develop a unique name, logo, and style that can direct customers towards their brand. Significant resources are used to establish a social media following across more and more platforms including Facebook, Instagram, and Snapchat. Despite launching carefully planned and costly marketing campaigns, many new business owners delay registering their trademarks, which leaves their new ventures vulnerable to losses and less valuable to investors in many ways. Here are five reasons why entrepreneurs should register their trademarks with the United States Patent and Trademark Office (“USPTO”) as soon as possible.
1. KNOW YOU ARE NOT INFRINGING ANOTHER'S MARK
When you file a trademark application, the USPTO vigorously examines it. The USPTO has unbelievable access to information. I'm often told by potential clients that they've already done a search, only to learn that they have no idea that the standard for trademark infringement is confusingly "similar," not the "same." That means that you need to search for marks in different languages, similar sounding marks, similar prefixes/suffixes, alternative spellings, oddball abbreviation, word/number substitutions, combined terms, etc. Good trademark searches are quite involved. If the USPTO issues your trademark registration, you can safely assume (and there's a legal presumption) that your use of the trademark won't' infringe another's right to that mark. There is also a 6-month publication period after issuance wherein those that believe they have rights to the mark could oppose it. Getting through the opposition period, as well as the examination serves as good evidence that your use of the trademark is both legal and non-infringing. Without this stamp of approval, you are taking a gamble that you have rights to the trademark. If you are right, great. If you are wrong, you'll have to spend money defending yourself against the rightful trademark owner, and you'll have to spend lots of money rebranding, which ultimately confuses your customer base, which had associated you with your trademark. Also, you'll likely be ordered to give up all profits earned by the use of the unregistered mark; and pay other damages, including punitive damages, fines, and attorney's' fees. For that reason, investors are less likely to invest in companies that don't hold registered trademarks.
2. PROTECTION FROM CYBERSQUATTING
Cybersquatting occurs when a company or individual registers a trademark or a domain name with no real intention of using it. When squatters get wind of your great new product or business, they register your URL, and in some cases, register the trademark, placing you in a position of having to buy the URL or license use of that trademark from them at an unreasonable rate. What's even worse, is that the good will you've developed is diminished because would-be consumers are being pulled away to websites and companies that are not affiliated with you or your product. Can you get your URL and trademark back? Possibly (there is a procedure available through the Uniform Domain Name Dispute Resolution Policy (“UDRP”)). But, you'll have to spend money and waste a lot of time to do so. Possession is nine-tenths of the law. And, the procedures for doing this could take up to nine months. While you are dealing with the troll/cybersquatter, your customers are looking elsewhere. While there are procedures in place to prevent the practice under the UDRP, as well as the registration of domain names using a trademark owned by others, even in the absence of trademark registration, trademark owners are required to prove legal rights to the trademark. Trademark registration serves as strong proof of the trademark owner's rights. Without registration, the trademark owner carries a much more severe burden of evidence, to the point that the failure to have registered the mark often results in a loss of the UDRP case. In such instances, it is up to the trademark owner to show that consumers understand that the domain name is associated in the minds of the consumers as referring to the source of that mark, meaning the trademark owner and its products or services. This standard is pretty high and often is impossible to prove.
3. TRADEMARKS ARE VALUABLE ASSETS
Registered trademarks are assets. They can be bought, sold, licensed, and used a security for a debt. For a new business, trademarks can be the most valuable assets, as they help to establish the goodwill that is the cornerstone of a successful start-up. Further, like most assets, registered trademarks may appreciate over time, becoming increasingly valuable as the business continues to grow. Just think of how valuable these trademarks have become over the years: Walt Disney, Apple, Nike Swoosh, Michael Jordan.
4. REGISTRATION IS NECESSARY FOR ENFORCEMENT
It's true that the mere use of a trademark provides its owner's limited common law trademark protection. However, to enforce your trademark in a federal court of law, registration of the trademark is necessary. Litigating federal trademark cases in federal court assures oversight by judges that are more familiar with trademark matters than those in the state courts. Also, having a federally registered trademark provides the advantage of a legal presumption that you are the owner of the trademark, that the trademark is valid, and that you have the exclusive right to use the trademark nationally. The federal registration certificate provides a “stamp of approval” in the mind of a judge or jury that you are the rightful owner of the trademark.
5. REGISTRATION PREVENTS OTHERS FROM USING YOUR MARK FOREVER
Registering your trademark give you the right to stop all others from using your trademark and any other trademark that is confusingly similar to it for as long as the mark is being used and maintenance fees are being paid. By registering your trademarks federally, you preserve the right to expand your business into geographic regions of the country where you have not previously conducted business. If you do not have a federal registration and you have only used your trademark in, for example, Illinois and North Carolina, another person that later files an application for federal registration of the same trademark -- even after you had started use thereof -- can prevent your use of the trademark in any other state. Moreover, five years after federal registration, trademarks become incontestable, which provides an abundance of protection during trademark infringement litigation. Further, trademark registration is inexpensive. The application fee can be as low as $225 per class, and most reputable attorneys charge under $1,000 to take care of the filing for you. And, unlike copyrights and patents, they never expire so long as you use them.
Ahaji Amos is an intellectual property attorney with almost two decades of experience practicing patent, copyright, trademark, and trade secret law. More information can be found at www.ahajiamos.com.