Basic Trademark Questions

What is a Trademark?

A trademark is any "thing" that helps a consumer distinguish between one company's products and another company's products. The "thing" may be a word or other device such as a phrase, logo, sound, or package design, as long as it is used as a way of identifying for the consumer that one brand is different from another. It is not necessary that the consumer be able to identify the specific manufacturer. Rather, the mark need merely to communicate to consumers that the goods or services bearing the mark come from a unique source, distinguishable from all the other sources for those goods or services.

Rights given to trademark owners:
Trademarks are essentially limited monopolies over the use of symbols in business. The government grants trademark owners the right to exclude all other businesses from using a similar mark on related goods or services. For instance, nobody in the computer industry is allowed to use the name "apple" as a way of identifying themselves, except for Apple Computers, Inc., who was the first to use that symbol to sell computers. If someone selling computers uses "apple," Apple Computers, Inc. has the right to sue immediately in court and force that company to stop using the mark immediately, and without compensation. In fact, they may even be able to make the other party pay monetary compensation for their losses, and have them pay attorneys fees as well..

one when selling related goods or products. Because the government can enforce this exclusivity, trademarks are considered assets of a business, and thus can be licensed or even mortgaged as collateral.

What a trademark does:
Trademarks benefit both businesses and individuals. They allow businesses to build an identity and reputation with customers, and thereby grow or expand. Trademarks also allow individuals to be better consumers. In fact, Trademark law is the original consumer protection statute. It ensures that consumers can repeat their positive buying experiences by searching out familiar brand names, and avoid bad buying experiences by steering clear of brands they didn't like.

Service marks distinguished:
A service mark is essentially the same thing as a trademark, only a service mark is used in the sale of services, whereas trademarks are used in the sale of goods. It appears to be common usage to refer to service marks as either trademarks or service marks. However, the reverse is not true; and you cannot refer to a mark affixed to goods as a service mark.

Trade names distinguished:
A trade name is a company name. Some trade names are also used in a way that makes them trademarks as well. For example, ACME Inc. may use the mark, "Widgets R Us" or "ACME Widgets." If they use the former, then ACME remains a trade name only. If they use the latter, then ACME is both a trade name, because ACME it is the name to identify their company, and a trademark, because they identify the source of their products with the word, "ACME."

Trademarks compared with Patents and Copyrights:
The words "trademark," "copyright," and "patent," are often used interchangeably and incorrectly by people. They are all intangible property that can be bought, sold, or licensed, however they each protect completely different interests.

Patents protect new inventions, discoveries and designs, while copyrights protect original works of authorship such as paintings, computer programs, sculpture and architectural designs. Trademarks do not protect creation or inventiveness at all. In fact, a trademarks can be acquired with no creative or innovative input from the owner whatsoever. For instance, when the public spontaneously began referring to "Coca Cola" as "Coke," the new term became a source identifier for the product, and thus automatically a trademark.

Terminology:
People commonly use the term, "trademarking" as a verb (long before verbing nouns became the fashion); for example, "I'm trademarking my name." What they usually mean is that they are registering their name or logo with the U.S. Patent and Trademark Office.

Must I Deal with Trademarks?

There exists no business that is unaffected by trademarks. How involved one must get with trademarks, however, is very case dependent. There are four situations which business owners cannot ignore:

1. Choosing a business or product name
Unless you have conducted a reasonable trademark search, you have no way of knowing whether your business or product name is infringing someone else's. If you are in fact infringing another business' trademark, you may be forced to give up your name after years of investing in it. That investment includes not only letterhead and other labeling, but more importantly, the goodwill you have generated that keeps consumers coming back to you when they see your name or logo. Recent case law also suggests that you may be liable for triple monetary damages if you end up infringing another company's trademark because you failed to conduct a trademark search prior to adopting a mark.

2. Keeping copy cats from luring away your customers
Success is always copied. When a business is successful, others will imitate not only their ideas, and market strategy, but very often they will also imitate the trademarks used by the successful company. Start-up companies without a vision often think that being successful enough to be the target of copying is a problem they would like to have. However, few are ready for the competitive challenges they face when they get there. One such challenge is that you can face the abandonment of your mark if you allow copy-cats to flourish, and yet stopping them can be very difficult and expensive, particularly if you have not registered your mark. Thus, to maximize your ability to succeed in future lawsuits, in fact, deter lawsuits altogether, you will want to register your trademark.

3. Contemplating international expansion.
Since the United States is a member of the Paris Convention, an international treaty protecting trademarks and other intellectual property rights, you have an opportunity to receive advantageous trademark treatment in other Paris Convention member countries. The date you register your trademark in the United States carries over to registrations in other countries in the future. In most other countries, the registration date is vital to sorting out who gets to use a mark when two there is conflict over the same mark.

What's more, trademark pirating is a real problem in some countries, and can be avoided by early registration in the United States. Trademark pirates watch for successful U.S. companies, and then register their trademarks in their own countries, hoping one day for expansion of the company to their country. If you did not register your trademark in the U.S. or the new country before the pirate registered it in his own country, then you will have to pay the pirate in order to use your own trademark in that country.

In sum, if you have an inclination toward future international expansion, you are a good candidate for investing more time and money into your trademarks now.

4. Protecting an Internet domain name.
Internic (the entity that oversees registration of most domain names in the United States) has a dispute policy which allows in some instances the inactivation of domain names upon the request of those who own federal trademark registrations. If you are using a domain name, and you don't own a federal trademark registration for that exact domain name, you risk the possibility that someone else with a trademark registration in the U.S. or any other country may already have a trademark registration for your exact domain name (without the top level domain, i.e. ".com" or ".org"). If so, they can ask Internic to stop you from using the domain name until a court decides the matter. While you can search the United States Patent and Trademark Office database (http://www.USPTO.GOV/tmdb/index.html) to see if your exact domain name is already registered, it is impractical to search trademark databases around the world. Instead, if you register your mark prior to receiving notice that a trademark registration holder challenges your use of the domain name, then the owner is generally prevented from requesting Internic to shut down your domain name under the domain dispute policy.

For more on the benefits of registration, click here.

What do "TM," "SM" & "®" Mean?

The symbols ®, ^TM and ^SM provide notice to the world that you are claiming trademark rights in any mark using these symbols. You may use the ^TM on marks identifying goods, and the ^SM on marks identifying services. You need not have a federal or state registration to use the ^{TM
or SM} symbols. However, the ® symbol, which provides "statutory notice" can only be used if your mark is federally registered on either the Principal or Supplemental Registers maintained by the United States Patent and Trademark Office (USPTO).

You do not need to use the ® symbol in order to provide notice of your trademark rights. You may also use the phrase, "Reg. U.S. Pat. & Tm. Off." or "Registered in the U.S. Patent and Trademark Office." Or, you may place the phrase at the bottom of a page when using an asterisk next to the mark that refers the reader to the phrase at the bottom. Thus the NutraSweet Company could put an asterisk next to their red & white swirl logo, and a phrase at the bottom or side of a page that read: "Reg. U.S. Pat. & Tm. Off." or "NutraSweet is a registered trademark of NutraSweet Co."

Advantages providing notice:
There is no requirement that you use any of the symbols, however there are two important advantages to using them. First, the symbols provide notice to the world that you are claiming the symbols as trademarks, and this will deter others from attempting to use the name for their own business. Second, if you ever find yourself in a lawsuit for infringement of your mark, and you haven't used the statutory notice (i.e. the ® symbol), then you won't be able to sue for damages or profits unless you can prove that the infringer had actual notice of your trademark rights.

Unauthorized use of the ® symbol
Unauthorized use of the ® can result in penalties, unless you can show that the unauthorized use was a good-faith mistake. Inadvertent unauthorized use can occur when the USPTO cancels your mark without your knowledge. It is quite likely that your labels and materials will still display the ® when the cancellation issues, thereby leaving you vulnerable to an attack that you were acting in bad faith and should be penalized for unauthorized use.

Federal Versus State and Common Law Marks

A trademark can be protected by state, federal and common law simultaneously. State and federal marks are always common law marks, because common law trademarks originate immediately upon using a symbol in connection with the sale of goods or services. Protection provided under common law is limited, however, and many companies will benefit from registering their marks with the state or federal government. The benefits of registering a mark federally are far greater than those offered under state registrations. However, the process for registering a mark federally is more extensive, rigorous and time-consuming than it is for state registrations. Some companies that can't afford federal trademark protection, and may find they are sufficiently served with a state trademark registration if they operate solely within one state and have no plans for expansion. With the growth of the Internet and the rise in nationwide commerce, many businesses find they are better off with federal, as opposed to state, trademark registrations. However, you should speak with an attorney licensed to practice law in your individual state to determine whether or not a state trademark registration makes sense for your particular business.

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