July 01, 2014

Trademarks: A Few Things Every Business Lawyer Should Know

Andrew Stockment

Brand names and logos are often among the most valuable assets a company owns because they allow the business to develop brand reputation and goodwill associated with its products or services. Trademark rights are created through use, not registration, and such use establishes a business’s common law rights in the mark. Those common law rights protect the owner’s use of the mark in the geographic area where it is used and for those goods and services associated with the mark. Such unregistered marks are also protected under some state statutes and under the federal Lanham Act (15 U.S.C. §§ 1051 et seq.).

Although unregistered trademarks receive some protection, federal registration provides substantial additional benefits. In order for a mark to be eligible for federal registration, it must be distinctive—that is, it must be capable of identifying the source of particular goods or services. Trademarks that are more distinctive receive a wider scope of protection and are, therefore, stronger marks. The distinctiveness of trademarks is measured along a spectrum, of increasing distinctiveness: generic, merely descriptive, suggestive, and arbitrary or fanciful.

A generic term is the common name of a type of good or service, such as software (for computer software) and consulting (for consulting services), and is ineligible for trademark protection. A merely descriptive mark immediately identifies or brings to mind the characteristics, qualities, ingredients, composition, functions, purpose, attribute, use, or other features of a product or service. Examples include VISION CENTER (for an eye care facility), FANTRIP (for travel agency services for fan-themed destinations), and THE BREATHABLE MATTRESS (for beds, mattresses, box springs, and pillows). Such marks receive less protection than marks that are not descriptive.

Suggestive marks are words that evoke or suggest some characteristic or attribute of the underlying goods or services but do not describe them. Unlike a merely descriptive mark, a suggestive mark requires the exercise of imagination to associate the word with the underlying product. Examples include STRONGHOLD (for nails), COPPERTONE (for tanning products), and MICROSOFT (for computer software). An arbitrary mark is a word that has no logical relationship to the underlying product, such as APPLE (for consumer electronics). A fanciful mark is an invented word created solely for the purpose of functioning as a trademark, including EXXON and STARBUCKS.

Because trademark rights are tied to particular goods and services, it is possible for different companies to have registrations for an identical mark for use in connection with unrelated goods or services. For example: DOVE (for soap and beauty products) and DOVE (for chocolate candy); and DELL (for books), DELL (for dolls), DELL (for furniture), and DELL (for computers).

An applicant obtains a federal registration by filing an application with the U.S. Patent and Trademark Office. Federal trademark registration can be on one of two registers—the Principal Register or the Supplemental Register. The Supplemental Register is for registration of potential marks that are capable of distinguishing the applicant’s goods or services but are not inherently distinctive and have not yet acquired a “secondary meaning” in the minds of consumers as an identifier of the specific provider of goods or services.

Registration on either register several benefits, including: (i) it grants the right to use the registered trademark symbol: ®; (ii) it grants the right to file a trademark infringement lawsuit in federal court and to obtain monetary remedies, including infringer’s profits, damages, costs, and, in some cases, treble damages and attorney fees; (iii) it acts as a bar to the registration of another confusingly similar mark; and (iv) it may serve as the basis for an international trademark application.

Registration on the Principal Register provides additional benefits, including: (i) a statutory presumption that (a) the mark is valid, (b) the registrant is the owner of the mark, and (c) the registrant has the exclusive right to use the registered mark; (ii) the registration is proof that the mark has acquired secondary meaning; (iii) the registration serves as constructive notice of a claim of ownership, eliminating any justification or defense of good faith adoption and use made by a third party after the registration date; (iv) the registrant is entitled to nationwide priority based on the filing date; and (v) the registration becomes incontestable after five years on the Principal Register, creating conclusive evidence of the registrant’s exclusive right to use the mark, subject to certain statutory defenses.

Because trademark rights are established by first use, before developing a brand or filing a trademark application, a business should conduct a comprehensive trademark search. Doing so protects the business from investing substantial resources into developing a brand that is the same as or confusingly similar to a mark that is already in use by another business. In addition, companies should resist the temptation to choose a name that describes their business. Choosing a descriptive name may bring the short-term benefit of easier marketing, but doing so will substantially weaken the value of the brand the business develops.

Andrew Stockment

Andrew Stockment is a business and intellectual property attorney with Lenhart Pettit in Charlottesville, Virginia. He advises clients on a variety of matters, with a concentration in intellectual property, technology, and securities and private equity. Andrew’s additional articles are available at www.andrewstockment.com. You can follow Andrew on Twitter at @AndrewStockment.