Everything You Need to Know About Trademarks

Kleenex. Google. Band-Aid. Q-Tip. Coca-Cola.

These words are part of our lexicon and their images are branded in our brains where all things familiar reside. At this moment, you may be craving a burger or maybe a huge cup of caffeine. Unless you’ve been living under a rock, McDonald’s and Starbucks must have surely at least crossed your mind.

Say you’re having a bad morning – your ears feel waxy and you cut yourself shaving. Now if that happen before 1920, you might have asked for an adhesive bandage and a cotton swab. With the introduction of Band-Aid and Q-Tip brands, however, that all changed. But things get complicated from there. Those brands literally become so popular that they went from describing a specific brand to being generally used to describe the entire product category. When that happens, the trademark for those brands has become “genericized,” meaning that the product or service is used so much, it’s brand name becomes generic. Q-tips and Band-Aids are the perfect example, but Xerox, Kleenex and other brands that created a whole new product have also gone down a similar path. Rather than benefitting the creators of those brands, however, being genericized can actually be a bad thing.

Before we get there, let’s slow down and explain a few basics behind trademarks in general.

Trademark vs Logo

Often times, the terms “logo” and “trademark” are used interchangeably – think McDonald’s golden arches. Actually, the image of the golden arches is the McDonald’s trademarked logo and the name McDonald’s is their registered trademark (business name). A trademark is the mechanism by which the company name, logo, slogan, and/or design is protected from use by other businesses. The name McDonald’s and the golden arches logo are both individually trademarked.

A trademark simply identifies your company’s service or goods as you conduct business. That said, you can carry on using your logo and offering your products and services without ever trademarking them – it’s certainly not required. But do you really want to take that risk? You’ve worked hard, your business is wildly successful, and you’ve got a great reputation. Then one day, a business in a totally different space comes along, uses a slightly altered version of your logo, which single-handedly drives revenue to that business because of your hard work. Now, all of the sudden, you’re finding yourself paying for lawyers to file a trademark infringement suit against the newly thriving business – but your lawyers aren’t hopeful because your logo is not trademarked.

Hotel California

This is not just a hypothetical scenario. Are you familiar with the best-selling album and number one song, “Hotel California” by the Eagles? Dumb question, right? In 2017, the Eagles sued a hotel in Baja California, Mexico called Hotel California for trademark infringement. The basis of the lawsuit was that the hotel, by calling itself Hotel California, playing Eagles music in their lobby, selling “Hotel California” items in their gift shop, intentionally led customers to believe they were affiliated with the band. The Eagles have sold “Hotel California” merchandise for years, but evidently their application to register the trademark for “Hotel California” is still pending. The lawsuit with the hotel was settled, terms undisclosed, and the hotel was not ordered to change its name.

This wasn’t the first trademark related issue for the band. In a strange backstory twist in 1976, the “Hotel California” album cover featured the Beverly Hills Hotel. The hotel’s attorney served the album’s cover artist a cease and desist order, but it didn’t take long for the hotel to back down when it was informed that the number of reservation requests had tripled since the album’s release.

U.S. Patent and Trademark Office (USPTO)

The ultimate goal of every fledgling business is to have their product or service become so widespread, that it becomes a household name. But that’s never going to happen if you don’t protect your logo and business name from theft. You must register your trademark with the U.S. Patent and Trademark Office (USPTO), whose purpose is to foster creativity and innovation by protecting the ideas and investments that made them possible.

Before you submit your trademark application, you need to check the USPTO’s Trademark Electronic Search System (TESS) for images (logos) and text of registered and pending trademarks. Once you’ve successfully navigated TESS and determined that your text and images are not registered or pending, you’re ready to submit your own application, right? Not quite. Unfortunately, TESS’s database is not exhaustive for all trademarks. Common law trademarks do not appear in TESS. That’s where a good lawyer comes in handy.

Common Law Trademarks™

Unlike the USPTO, which is a federal entity, common law trademarks are regulated by each state. If your logo and text is totally original, then the common law trademark is effective as soon as you start conducting business. This common law provides protection and distinction by use of the ™ superscript while you are waiting for the registration process of your trademark.  However, should a competitor attempt to use or apply for registration of your trademark, it is your responsibility to take legal action – if you don’t, you run the risk of losing the protections of this law.

The common law trademark, however, does not extend beyond your geographic area, which is a significant disadvantage if your business is on the internet. Tricky scenarios abound when common law trademarks™ cross registered trademarks ®. For example, a local restaurant called Burger King (not the one we know) in Matoon, IL held the common law trademark for Burger King. After a drawn out court battle, Burger King (the one we know) was prohibited from opening a restaurant within 20 miles of Matoon.

Trademark Application Process

You have a distinctive, fictitious name for your business and your logo looks like no other.

  1. Visit the Trademark Electronic Search System to review existing and pending registered trademarks.
  2. Apply online to the U.S. Patent and Trademark Office. Application fees range from $225 to $400 per class of goods/services.
  3. Complete and sign the application declaration, which is a series of statements attesting to your ownership and use of the trademark. A licensed U.S. attorney is probably a great resource to ensure you’ve done everything correctly and has the authority to complete the application on your behalf.
  4. Within 14 days of filing, you can check on the status of your application at Trademark Status and Document Retrieval System.

Processing of your trademark application can take anywhere from 6-16 months.

 Registered Trademark Protections

  1. Interestingly enough, the majority of trademark infringements are about the words and not the design. Words are powerful, and your trademarked words will be protected.
  2. Once you’re registered, your business name and/or design will be protected – think about those instantly recognizable brands like Nike, Starbucks, and Google. That would be impossible without a trademark.
  3. You will be able to use the coveted registered trademark symbol ®.
  4. Having the ® symbol not only means that you can file a lawsuit against any person or business that infringes on your trademark, but you also have a presumption of ownership, which is very hard for an infringer to overcome. Moreover, if you can prove that the infringement was done intentionally, you may even be entitled to receive treble (triple) damages, as well as get reimbursed for your legal fees.
  5. When you register your trademark in the U.S., registering in many other countries also becomes easier.
  6. Your trademarked designs and words give you the sole right of use.
  7. Your trademark will reside in the TESS database, potentially preventing others from using your design and words.

Best Practices

These are common sense practices to best leverage your registered trademark and minimize potential infringements.

  1. Every five or ten years, make sure to pay renewal fees for you trademark, so use can continue to use it on a consistent basis.
  2. Be certain you’re using the correct trademark symbol – ® is for marks registered with the USPTO and ™ is only for common law trademarks.
  3. Use the ® on all marketing material, packaging, and websites. But you don’t have to indicate it every time you use the company name – corporations only use the ® about half the time.

To Register or Not to Register

Failing to register your trademark has costly consequences, while a registered trademark keeps your business protected, provides an air of legitimacy, and is a value-added marketing tool. On the other hand, doing business with an unregistered mark runs the risk of another business using the same mark, which could land you in a trademark infringement lawsuit. You may want to consider the average cost of a trademark lawsuit runs between $120,000 to $750,000. Trademark infringement is not cheap.

A Valuable Intangible

David Haigh, Founder of Brand Finance, probably stated it best when he said “the single largest source of intangible value in a company is its trademark.” Consider Nike’s swoosh logo. In 1995, Nike had so much faith in their logo, that they completely removed “Nike” from their products and left the swoosh logo to do the job. Today, the Nike brand is worth $13 billion.

Pitfalls

The advantages to registering your trademark are very straightforward – unfortunately your path to registration once you’ve applied is not. Once you’ve submitted the application, an examining attorney reviews it and quite often issues an “office action,” which requires a specific, timely response.

Once the examining attorney clears your application, an opposition period begins, and this is when your application can be refused or an opposition raised. If your response does not meet the opposition criteria or you don’t respond at all, your application’s status changes to “abandoned.” If you seek an attorney’s help at this point, it will be more expensive and more time-consuming than if you used an attorney from the start.

Help is Here

An attorney will know whether you should file a “use in commerce” application or an “intent to use” application. You will be advised which Classes are appropriate to ensure you don’t exclude a market or pay for a Class you don’t need. For example, Class 25 is clothing and Class 18 is leather goods. Are you going to miss out if you don’t file for Class 18? For each Class, you must show how your trademark will be used. If the verbiage is wrong or your description is too broad, your trademark registration may be cancelled.

In 2013, the Wall Street Journal published an article about a study looking at the correlation between attorney involvement in the trademark registration process and successful outcomes. This was no small sample, as the study examined 25 years of data that the USPTO released in 2012. The results were stunning. Use an attorney for the registration process and your chances of approval increase by 50% over non-represented applicants.

Here at, Eskander Loshak, LLP, we’re passionate about helping business owners succeed. Intellectual Property is one of our areas of expertise and we can help navigate the difficult terrain of trademark registration. Do what you do best – run your business. Let us take care of the rest.

 

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