Trademarks: What Entrepreneurs Need to Know about Securing and Protecting Trademarks

What is a Trademark?
The term “trademark” means any name, set of words, design logo or any combinations of logos and words used to identify a particular source of goods and to help distinguish your goods from those of other companies. Although one frequently hears the term “service mark” used in connection with services, , there is no practical difference between a trademark and a service mark and the term “trademark” is generally used to refer to both goods and services.

What is not a Trademark?
U.S. law (and most international laws) does not allow the protection of descriptive or generic marks. A descriptive mark is one which describes qualities or characteristics of the goods or services. Because descriptive marks do nothing more than describe or identify goods or services, they are entitled to registration only upon years (and sometimes decades) of proof that they have acquired “distinctiveness,” that is, that the producer has managed to establish some identification in the mind of the consuming public that the mark refers to a specific brand of goods or services (e.g., American Airlines). In contrast, a “generic” mark is one which has come to identify a type of product rather than a specific brand and can never gain trademark protection. If the mark was once a trademark (e.g., aspirin) it can also become generic for the goods or services and may no longer be enforceable. Because the public commonly associates generic marks with types of products, they are not entitled to any trademark protection under federal law.
Thus, in general, the preferable practice is to choose an imaginative, fanciful or arbitrary mark in order to achieve the broadest permissible protection under the trademark laws (i.e., Nike, Apple, Haagen-Dazs).

How are Rights in a Trademark Established?
A U.S. federal or state registration is not a prerequisite to creation of a trademark in the U.S. A trademark is created simply by virtue of its owner’s use of the mark in connection with a certain set of goods or services which results in “common law” rights in the mark. As a result, at all times prior to the registration of the trademark, the trademark owner may use the familiar superscript “TM” (TM), which is the generally accepted trademark designation for unregistered marks.

Should I File for a Trademark Registration?
Yes. Owning a trademark registration in the United States puts others on notice that you hold a particular mark out as a trademark and also provides presumptive rights in the event you need to enforce your mark(s) against others who may be infringing upon your trademark rights. A federal registration is achieved by filing a trademark application with the United States Patent and Trademark Office (“PTO”) and is available only when the mark is used in connection with goods or services in interstate commerce (i.e., across state lines). If you are using the mark in only a single state, a state trademark registration might be the only option.

Can I Ever Lose My Rights in My Trademarks?
Yes. It is possible for owners to unintentionally lose rights in their trademarks. Non-Profit and Social Business Start-Ups can be particularly vulnerable to the first of the three issues noted below:
Uncontrolled or “Naked” Licensing.
“Naked Licensing” means failing to exercise actual control over third parties (such as volunteers or other companies/organizations) who use your trademarks, logos, business name and slogans and failing to require third parties to enter into trademark license agreements with you containing quality control provisions. Non-Profits and social impact businesses are particularly vulnerable to losing their trademarks on these grounds due to a common reliance on volunteers and other organizations that offer free help or resources. For example, in one particular case, a non-profit in California established a program it called “Freecycle.” In its early stages the non-profit allowed individual volunteers and volunteer member groups to use the “Freecycle” name on their social media, websites, and other materials in order to establish “Freecycling” centers (where donated items find new homes). Later, as the program became more successful, the original non-profit tried to establish more specific standards and guidelines to be enforced on all its volunteer member groups, including guidelines on what was meant by its original rule: “free, legal and appropriate for all ages.” The non-profit attempted to stop member groups that did not follow the newly reinforced guidelines, but was blocked on the grounds that the term “freecycle” had become unprotectable (or generic) due to: (1) the non-profit’s failure in having any adequate trademark license agreements in place with its member volunteers; and (2) the non-profit’s failure in taking any actual steps to enforce its guidelines on its volunteers until much too late (i.e., it failed to show that it took any steps to conduct early audits of its volunteer’s adherence to its guidelines and terminate those in non-compliance).
Important Rule:
Prior to granting any third party (including volunteers) the right to use your marks, name or logo, always make sure: (1) a license or terms of use agreement is in place that contains a provision allowing you to terminate the third party’s use of your trademarks in the event they fail to adhere to your quality control requirements/guidelines, and (2) you have an active compliance program that monitors uses of your licensed marks by third parties, including a procedure to terminate those who fail to comply with your guidelines.
Failing to Use the Mark in a Consistent Manner with Goods and Services Listed in the Registration.
In order to maintain a US trademark registration, owners need to be able to show use of the mark in the identical form originally filed with the PTO (especially if the mark is filed in a stylized design or logo format). If the owners cannot show consistent and continuous use of a particular mark for the set of goods or services listed on its registration, the owner may lose rights in that particular registration and the PTO will not allow the mark to renew. Failing to use a mark for three consecutive years constitutes abandonment. Companies can sometimes inadvertently lose rights in a trademark due to inconsistent use of the mark. For example, if an owner files its mark in connection with a particular product, such as downloadable software, but fails to consistently use the mark on the software itself or the labels, packaging or point of sale displays for the software, the owner can potentially lose its rights in the mark, even if there is digital advertising of the product on social media or websites. The PTO consistently does not consider use of the mark on advertising or websites alone as “trademark use.” As a result, it is important to ensure that you have consistent use of your marks in connection with the actual product itself or service you offer.
Failure to Enforce Your Rights in Your Mark Against Third Parties.
Similar to Naked Licensing, failure to enforce your rights in your marks against third parties that use a same or similar mark in connection with similar or identical goods and services as yours can result in loss of your rights. The following section covers methods of enforcing your rights.

How do I Enforce My Rights in My Trademarks?
Enforcement of your mark against third party infringers is important in order to maintain exclusive rights in a particular mark for your relevant goods and services. That said, it is important to consult an attorney and/or conduct investigations prior to making any demands on a potential infringer to confirm that you are in fact the more senior user of the mark in time and to confirm that you have solid grounds of objection. Since trademark rights in the United States are based on who adopted and used the mark in commerce first in connection with a particular set of goods/services, an earlier trademark registration may not be enough to stop a third party who has “common law” usage rights that pre-date both your filing date and date of first use. Further, if the potential infringer’s goods and services are sufficiently different from yours, you may have no grounds to make an objection (e.g., Delta Air Lines peacefully coexists with Delta Faucet without confusion).

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