The other day I was meeting with a business owner who was interested in selling his business. During the meeting, he mentioned that he had trademarked the name of his business. That’s good news; trademarks are considered “intellectual property,” and any intellectual property owned by a business increases the value of the business. Then the owner added that he had done the trademarking work himself, without the assistance of an attorney.
Upon later investigation, I discovered that while a trademark did exist for that business, it was registered as a “stylized” mark. In layman’s terms, what that means is the business owner had effectively registered the business logo, not the business name. As a result, someone in a different geographic location could operate an identical business under the same name, as long as it didn’t use a similar logo. I’m pretty sure that’s not the result my guy intended.
I don’t really blame him. He is a very smart man, who started and grew a successful business. However, he was also very frugal, and attempted to handle all of his legal affairs himself, rather than seek the advice of (and pay) a qualified business attorney. As a result, he fell victim to a very common trap when it comes to trademark law and trademark registration: it looks easy, but they are in fact extremely complicated. If you don’t know what you are doing, you may not get what you thought you were getting, or what you wanted. So, let’s look at trademarks for a minute.
I should point out here that trademarks are typically obtained for products, and servicemarks are typically obtained for services. The legalities are the same for both, so for our purposes I’m simply going to use the word “trademark” to refer to both trademarks and servicemarks.
The first thing you should know about trademarks is that they are not conferred by the government. Common law trademark rights spring into existence the minute you create something, i.e. a name, a logo, a slogan, etc. that you intend to represent your business (assuming nobody else has already established a prior trademark right to that name, logo, etc.). So, for example, if I create a business building and selling lightsabers, and I intend to call my business “Awesome Blades Corporation,” then the minute I start doing business as Awesome Blades Corporation, I already have trademark rights to that name. If I choose to shorten my name to “ABC,” and begin doing business under that name, then I likewise obtain trademark rights to “ABC.” These trademark rights (and protections) get stronger and more defensible with time and use. So, if I’ve used ABC for 10 months, I have pretty weak trademark rights; if I’ve used ABC for 10 years, I have pretty strong trademark rights. Therefore, once you have settled on a name and/or logo for your business, you can immediately start attaching the trademark symbol (™) to it, to begin establishing your trademark rights by letting people know that you are claiming that name/logo as a trademark.
The thing about common law trademark rights are that they are usually only effective for a limited geographical area, depending on where the business is located and transacts its business. Also, it can be difficult to discover if somebody else is using the same trademark you are using, and may have the same (or stronger!) trademark rights than you do. So, assuming my business, ABC, is manufacturing and selling lightsabers in Birmingham, Alabama, my common law trademark rights probably only extend to a portion of Alabama — maybe only the northern and/or central portions of the state, possibly the whole state, almost certainly not beyond the state borders. As a result, someone in Bozeman, Montana could also start manufacturing and selling lightsabers under the name “Awesome Blades Corporation” and/or “ABC” without infringing my trademark. My common law rights simply don’t extend that far, and my Montana competitor couldn’t reasonably be expected to know that I’m already doing the same thing under the same name here in Alabama. That’s why the law provides mechanisms to register your trademark: to give people notice of your trademark, and to extend its temporal and geographic protection.
We will look at the trademark registration process next week.