Trademark Essentials for Start-up Businesses

One of the most important issues faced by business start-ups is choosing a name for the business that isn’t confusingly similar to another company’s name. The same is true for the names that are chosen for the start-up’s products and services. Infringing on another company’s trademarks can force you to change the names you have chosen, forfeit the goodwill you may have built up in those names, and possibly pay money damages.

A trademark is any word, phrase, logo, or other device used to identify products or services in the marketplace. It can be a brand name (Kleenex brand tissues), a slogan (“Got Milk?” owned by the California Milk Processor Board), a symbol (the famous Nike swoosh logo) or the name of a business itself (McDonald’s, Microsoft).

In many jurisdictions around the world, trademark rights exist only after a registration has been granted by the government to recognize those rights. China is the best example of this sort of trademark jurisdiction. In the United States, however, trademark rights arise from the date a mark is first used in commerce. No registration is required for the rights to attach. In other words, a business has legally enforceable rights in its trademarks as soon as it begins to sell products or services using those marks. These rights are referred to as “common law rights.”

Because the party who first uses a mark is generally in a stronger position in any later dispute, it is part of the due diligence of any start-up to conduct preliminary “knock-out” searches and more comprehensive clearance searches of all existing marks and URLs before it starts using any of its proposed marks. Failure to complete this step can result in cease and desist letters from other companies complaining of infringement, and the rejection of your trademark registration applications by the United States Patent and Trademark Office (“USPTO”).

Although common law rights alone are enforceable against later users, registering your trademark on the USPTO Principal Register will enhance your ability to enforce your trademarks in court. The registration also puts the rest of the country on notice that your mark is taken as to a particular class of goods or services. Registered marks and certain well-known marks widely recognized by the general public as a designation of source for certain goods or services (referred to as “famous” marks) provide their owners with more brand protection and have much greater significance in court than common law rights. Examples of famous marks include Google for internet search services and Walmart for retail services.

A trademark owner can sue in federal court to stop another business from using the same or similar trademark if the owner’s mark is famous, or if the use by the other business would cause potential customers to confuse one business or product with another. If the court finds that one business deliberately used a famous or distinctive mark belonging to another business, the infringer can be ordered to pay substantial money damages to the trademark owner. The court will usually find that a mark was deliberately copied if the mark was listed on the USPTO Principal Register at the time it was copied.

One should bear in mind that while trademark law is the primary body of law governing the use of product and service names in the economy, other laws and rules come into play. Unfair competition law may also prevent a business from using a name that is confusingly similar or which creates a false impression as to the origin of a product or service. Your state’s corporation office will also disallow any business entity name that is too similar to one already being used by another corporation or LLC in the state.

In conclusion, start-up businesses should take sufficient time to carefully review all existing trademarks and URLs before using any proposed trademark. If the business has plans to distribute its goods and services broadly, pursuing federal trademark registrations to protect your brands is the best approach.

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  • About the Author

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    Joseph Robinette

    Joseph Robinette’s practice focuses on corporate transactions, commercial agreements, antitrust counseling, intellectual property (IP) law and licensing, and unfair competition law. Before joining Wood + Lamping, Joseph served for many years as General Counsel to the United States Playing Card Company, the manufacturer of the well-known Bicycle® brand. He was also a member of the team of attorneys who wrote the winning motion for summary judgment in the significant antitrust case, Medical Center at Elizabeth Place v. Premier Health Partners, case 3:12–cv.26, Southern District of Ohio (2014).

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