Insight Exercise Due Diligence When Selecting New Trademarks

It is a common misconception to think that one must “trademark” something in order to have proprietary rights in it. But “trademark” is not a verb. It is a noun. In the United States, trademark rights accrue through use, not through registration. This means that when a word or logo is affixed to goods that are sold in interstate commerce, or used in interstate commerce to advertise services, a trademark right arises (generally speaking) in that word or logo. This is called a “common-law” trademark, and such are often designated with a superscript “TM” symbol. Trademarks may also be registered with the United States Patent and Trademark Office (USPTO) and with foreign governments. Registration with the USPTO permits the mark owner to append the superscript Circle R (®) registered trademark symbol to the mark.

Many people also believe that registering a domain name, reserving a name with the Idaho Secretary of State, or filing a new LLC or corporation gives them proprietary rights in that name. But trademark law teaches that these acts alone give the person making the filings no exclusive rights to the name. Exclusivity comes only through trademark principles, which means using the name as a trademark and, if appropriate, registering the name with a Trademark Office: state, federal or foreign.

“Trademark use” is a critical concept. There is no trademark without such use, at least not in the United States. By definition, a trademark must perform a source-identification function. For example, when I say, “Big Mac,” you think of McDonald’s as the source of that hamburger. When I say, “swoosh” in the context of shoes, you think of Nike as the source of the shoes. When I ask you to imagine the sound of a lion roaring in the context of motion picture film production, of whom do you think?  MGM. And so on, and thus voila, MGM has trademark rights in the sound of a roaring lion for film production services, Nike has trademark rights in the swoosh on its sneakers and McDonald’s has trademark rights in “Big Mac.” These rights arise because the owner of each mark has used it as a trademark to perform a source identification function. Each of these companies has also gone on to register these marks with the USPTO and various foreign governments.

It has been my experience that too few people perform adequate due diligence before selecting a new trademark. I typically get two or three calls a month from persons who have received a cease and desist letter from someone who claims that their new trademark is infringing an older established, or perhaps registered, trademark. And, unfortunately, many of these people who call me have used an advertising agency to help them select their new brand. It is incorrect to conclude that a mark is available, and thus the best mark for your launch, if all you do is surf your web browser over to USPTO.gov and run a quick screening search. That is not enough, at least not now in the internet age, and this is why I recommend that clients procure a pre-launch trademark use and registrability search that contemplates four questions:

1. It is capable of functioning as a trademark? Generic or descriptive words or phrases are very difficult to claim trademark rights in. If you make and sell potato peelers and you choose “Potato Peeler Pro” as your trademark, that will be hard to enforce against infringers and almost impossible to register. You could put “TM” on it, like this: Potato Peeler Pro™, but that would not change its core characteristic as a weak, descriptive mark.
2. Can you can use it without getting sued–and losing? Remember that trademark rights arise through use, not registration. If someone out there has been using a similar mark in connection with related goods or services since before your launch date, even it is not a registered trademark, they might sue you. And it’s not even so much getting sued—everybody gets sued. You need to know your odds of winning that lawsuit. Some companies pick a mark even if they think they will get sued if there’s a good chance they will win that lawsuit.
3. Can you can register it with USPTO? Registration does not create a trademark right in the U.S., but registration is important if (a) you also wish to seek international registration; (b) you ever intend to sell your company or seek investor money since registration is seen in those contexts as adding value; or (c) you will ever need to enforce your trademark online. It is very difficult to seek redress for online trademark infringement or domain name cybersquatting without a registered trademark.
4. Can you obtain all the domain names, app names in the Apple and Google Play stores, and social media identifiers that will support the launch? If you cannot get, e.g., “facebook.com/[your trademark],” you might want to reconsider your trademark choice.

Please scrutinize your new trademarks and brands in accordance with these four principles, and please ask your advertising or marketing agency to be cognizant of these principles when they help you select a new mark or brand or logo. Attention to these issues will increase the likelihood that you will have a strong protectable brand and lessen the likelihood of your receiving a cease and desist letter after you launch.

Brad Frazer is a partner at Hawley Troxell where he practices cybersecurity and intellectual property  law. He is a published novelist (search for “Bradlee Frazer” at www.diversionbooks.com), frequent speaker and regular author of internet content. He may be reached at bfrazer@hawleytroxell.com.