This article, written by attorney Emily Penaskovic, was originally published in the Union Leader and by the NH Tech Alliance and can be found here.
Startup founders work tirelessly to choose the perfect business name, establish a brand and build brand recognition among its target audience. As the business grows and improves, the value of the brand does as well.
The worst-case scenario? After investing significant time and resources, the startup receives a nasty-gram (more formally known as a cease and desist letter) from a more established company threatening legal action and bringing a screeching halt to the startup’s use of a brand asset that has become a core aspect of the company’s identity.
Or the startup realizes that because it failed to put proper protections in place, competitors have copied its business name, diluting its brand and harming its business. Going through the right analysis before selecting a brand and protecting trademarks from the outset can avoid those scenarios and maintain the value in the startup’s brand.
A trademark is a word, phrase, symbol or design that distinguishes a company’s goods or services from those of others. Popular examples include the word “Google” for an internet search engine, “Apple” for computers, and the image of a flying bluebird for an online social networking platform. Trademarks are used by consumers as a way of recognizing a company’s goods or services and distinguishing them from competitors. Ultimately, trademarks influence purchasing decisions and can lead to a competitive advantage.
Before choosing a company or product name or logo and investing in the brand by purchasing a domain or launching a marketing campaign, it is critical to analyze whether the proposed mark would be legally protectable. In skipping that step, the company risks having to completely rebrand after significant goodwill has already been built up. Consulting with a trademark attorney early in the process can help ensure that this analysis is done correctly.
Generally, the most common reason that a trademark is refused registration and is not eligible for protection is because the trademark could create a likelihood of confusion with a mark already in use. A trademark search conducted through the United States Patent and Trademark Office’s electronic database can help confirm whether any similar marks are already registered in connection with related goods or services. It is also recommended to search Google and the relevant secretary of state databases to find out if a similar mark may be in use in the relevant industry or region.
Additionally, in order to be protectable, a trademark must be somewhat distinct. Trademark law recognizes a spectrum of distinctiveness, where the most distinct and unique terms are most likely to be eligible for protection.
Generic terms (e.g. “Computer”) are not protectable. Because generic and descriptive marks may inherently refer to or describe competitors’ offerings as well, they are generally not eligible for exclusive trademark rights.
On the other hand, arbitrary marks that bear no resemblance to the goods (e.g. “Apple” used in connection with computers) and fanciful marks that consist of a made-up word (e.g. “Verizon”) warrant the strongest trademark protection. From a practical standpoint, a startup may be inclined to steer away from arbitrary or fanciful marks because they can present marketing challenges.
Initially, it is difficult for consumers to connect those marks to the goods or services being offered, and a significant marketing effort is typically required to help make the connection. When deciding on a name, those marketing challenges must be balanced with the issues that could result if a descriptive mark is used and the company is unable to prevent competitors from using similar terms.
Assuming the desired mark passes through this analysis without issue, it should be registered with the USPTO. While trademarks are eligible for certain protections as soon as they are used publicly, registration provides substantial advantages. For example, federal registration establishes exclusive rights throughout the country and is particularly valuable for companies seeking to expand into different markets nationwide or operating across state lines via online commerce.
Startup founders can even file an application for registration before the mark is used publicly, as long as there is an intent to use the mark commercially within six months. That mechanism allows the applicant to ensure the proposed mark is available for use and starts the USPTO’s (sometimes lengthy) application review process as early as possible.
Trademark protection can last perpetually, as long as the mark is continually used and registration renewals are filed with the USPTO periodically; however, it is important for the trademark owner to continually monitor whether it is being infringed upon and be proactive in stopping such infringement.
Carefully selecting a trademark is an investment in an asset that will continue to grow throughout the life of a business. Trademark management, including registration and continued monitoring, can lead to successful brand development and can greatly increase the value of a company or product.