I am often asked by new business owners to describe the advantages of applying for federal trademark protection (and the risks associated with doing nothing). Despite the relatively low cost related to doing so, the majority of small businesses do not adequately clear and register their trademarks. Proper trademark planning and protection are essential for every business. Here are five reasons why.
- Presumption of Ownership.
Obtaining a federal trademark registration gives you the legal presumption that you’re the rightful owner of the mark with respect to your goods and services in the whole United States. In other words, having a trademark registration automatically gives you a legal advantage over anyone else in the country who adopts a confusingly similar mark to yours. This is obviously a significant benefit on its own, but the points below represent three distinct examples of this point.
- Deters Others from Using Similar Marks.
When you file a federal trademark application, your mark goes into a publicly searchable database at the United States Patent and Trademark Office. This has the effect of putting other parties who may be considering using a similar mark on notice that you likely have superior rights to the mark. This further acts as a deterrent to such parties because a trademark search would reveal your mark, and if an application is filed for a confusingly similar mark, it will be refused.
- Registration = Value.
The trademarks associated with your business potentially have tremendous value. Every recognizable brand was once unknown. As your business grows, so does the value of your trademarks. If you ever anticipate trying to attract investors to your company or someday selling your company, your trademarks may represent a significant asset in determining your company’s value. It is extremely unlikely that any investor or purchaser will be interested in acquiring your business if you have not properly registered and maintained your trademarks. Furthermore, your trademarks may also have value to third parties who might want to pay you to license your brand for use with their products or services. Typically, only registered trademarks become the subject of these types of license agreements.
- Common Law Rights Aren’t Enough.
It is true that as soon as you start using a mark in commerce, you establish certain common law rights. Common law rights are limited to the geographic area in which the mark is being used. It is also frequently necessary in trademark infringement cases (and other situations such as domain name disputes) to determine which party has valid trademark rights and when those rights arose. For these reasons, common law trademark rights are difficult to enforce and obtaining a federal trademark registration puts the trademark owner in a far superior position as compared to a party who must rely on common law rights. Accordingly, a cease and desist letter that cites one or more registered marks is usually taken seriously, whereas letters that rely only on common law rights are frequently ignored.
- Rebranding Can Cost You the Company.
At some point, you might face an attack from a third party over the rights to one or more of your trademarks. If you don’t take the necessary steps to clear and register your trademarks early in your company’s lifecycle, you might discover that you don’t have clear legal rights to your brand. For enterprises that have invested significant amounts of time, effort and dollars into building a business, the effect of having to rebrand can be fatal. The best way to gain comfort and certainty over your right to conduct business under your brand is to obtain a federal trademark registration.
Your company’s brand identity is one of its most valuable assets. The benefits of federal trademark registration are significant. Protecting your business’s name, logo(s) and tagline(s) are prudent steps that you should take to avoid potentially severe consequences in the future.
CLARK.LAW
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