What new businesses need to know about intellectual property, part 1

Thought Leadership on Intellectual Property Protection presented by Nath, Goldberg & Meyer.

Like the rest of us in business, you spend every day, night and weekend wondering what your company needs to do differently and improve. Or, if you’re just starting your business, you have spent countless hours of lost sleep wondering what you need to do next and what you don’t know. One of the potential issues you should consider at these times, if you do not already, is what intellectual property issues you might already be facing, or might face in the future.

For those of you who don’t know, intellectual property refers to a collection of intangible assets that includes patents, trademarks, copyrights and trade secrets. When used properly, your intellectual property portfolio can be used to stop others from competing with you. Likewise, another party’s intellectual property can be used to prevent you from carrying out your anticipated business efforts.

While most people immediately think of patents when asked about intellectual property, trademark and copyright issues are equally important. Such intellectual property issues can affect any company, whether technologically driven or not. Thus, Part 1 of this series will address intellectual property concerns any company might have. Part 2 will address issues of concern for technology-based companies.

Intellectual property concerns for any company

Now that you’ve decided to go into business for yourself (or have been in business for some time), one of your first tasks is likely to settle on a name for your company, as well as for any products or services you might sell. Obviously, your company name is of critical importance. You will want something memorable, but not offensive — a name that will make your customers immediately think of your company when they are in need of your services.

Some less considered, but not necessarily less important, issues are:

1) Is another business using a similar name.
2) Can you stop someone else from using a similar company name in the future?

These are two different, but very closely related questions, as they both relate to what trademark protection is available for your company name.

For those of you who don’t know, a trademark is a word, phrase, symbol or design that identifies and distinguishes the goods and services of one party from those of others. Trademark protection can be obtained for a company name, product name, logo, symbol, brand, image, etc. to identify and distinguish the source of goods or services being sold. The essential function of a trademark is to exclusively identify the commercial source or origin of products or services, so a trademark indicates source or serves as a badge of origin. In other words, trademarks serve to identify a particular business as the source of goods or services. Trademarks are an essential part of your business. They represent your goodwill, your reputation, and they’re how people can tell the difference between the products and services that your business offers and what other businesses offer.

There is also a difference between a trademark and a business name. A business name is just that: the name under which you do business in a particular state or jurisdiction. A business name registration with your state does not grant you trademark rights. It merely means that a particular state allows you to do business under that name. Obviously, a business name can also be a trademark, but it all depends on how the name is used. So, if you use your business name to identify the source of your goods and services and distinguish them from the goods and services of another, that’s trademark use.

The first step is to conduct a “knockout” search using the U.S. Patent and Trademark Office’s online Trademark Electronic Search System (TESS), which can be easily accessed at tmsearch.uspto.gov. This will help you determine whether there might be any issues that need to be considered and avoided before you wind up in a protracted, expensive legal battle over the right to use your company name.

If there is a pre-existing business already using the same, or a similar name, there are several key questions to consider how this might impact your business. These include:

1) Is the other company selling similar products or services that would overlap with or are similar to my business?
2) How well known is the other business?
3) How litigious is the other business?
4) Has the other business registered anything else (website, etc.) in connection with the business?
5) Is the other business limited to a specific geographic region or area?

Why does this matter? The most common pitfall, is what is known as “likelihood of confusion.” This relates to a likelihood of confusion between, for example, your business name and a business name that has already been federally registered by another company. Assuming the other company has already registered a similar or the same business name as you are proposing the next most important question is whether the goods and services of the parties are related. That is, are the goods and services of the parties related in such a way that consumers would mistakenly believe that the goods and services coming from your company and the goods and services coming from the other company are all coming from one source?

A lot of people ask me, “Is federal registration of my trademark required?” The quick answer is “No.” But, federal registration will enhance your rights. If you are relying solely on use in commerce, rather than federal registration, this is known as “common-law” rights. Common-law rights, however, are limited, often to a particular geographic area. That means it might be hard for you to enforce those rights outside that limited scope and it might be hard for other people to know about your rights. So, federal registration is going to greatly enhance your rights.

Of critical importance, trademark rights accrue from the moment the name or other source identifier is first used in commerce, and will last as long as the mark is used in commerce. While no registration is necessary, it does convey several distinct advantages.

Specifically, registering your mark is going to give you the following benefits:

1) It creates a legal presumption that you are the owner of the mark. Otherwise, that’s something that you are going to have to prove if you wanted to enforce your registration either in or out of court.
2) It gives you a legal presumption of the exclusive right to use your mark nationwide with the goods and services that are identified in your registration, rather than in a limited geographic area.
3) It puts the public on notice that you are the owner of the mark.
4) Being listed in the TESS database means that others considering potential marks can find your marks when they search the database to see if their mark is available. In addition, being listed in the TESS database will make it easier for Examiners to assert your mark against another party’s application during examination.
5) You have the right to bring legal action concerning the registered mark in federal court and, in some cases, obtain treble (triple) damages and/or attorney fees.
6) A federal trademark registration means that you have the right to use the ® symbol when your mark is used for the goods and services listed in the registration. And that’s something you cannot do unless your mark is federally registered.
7) It provides a basis for registering your trademark in other countries.

So, as you can see, registration provides a lot of benefits.

We have helped numerous companies, start-ups, and individuals successfully navigate this process, and stand ready to help guide you as well. Please feel free to contact me to discuss any aspect of the trademark process in more detail.

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