A business has been using a trademark in relation to its goods or services for years, but has never bothered to obtain a federal registration for it. Another business starts using a similar trademark and moves to federally register the trademark. How are the rights of the first business impacted?
It is an all too common occurrence and question we receive. A business has been using a trademark in its business for years but, due to varying reasons, it has not taken the appropriate steps to properly protect the mark. All of the sudden, when it decides to pursue registration of the mark (or, worse yet, when the business receives a cease and desist letter from a third party), the business realizes that it may have lost its chance to use the trademark in question or, at least is not able to expand use of the trademark. How can that be?
At the most basic level, a "trademark" can be a word (or words), logo design, or slogan that identifies and distinguishes the source of goods of one party from those of another (technically, a "service mark" distinguishes services instead of "goods," but the term "trademark" is commonly used interchangeably with the term "service mark" and is so used in this article).
Trademarks are different from other forms of intellectual property such as patents (which protect inventions) and copyrights (which protect works of authorship).
Varying forms of trademark protection consist of:
- Common law trademarks: A business can automatically acquire common law rights in a trademark just by using the mark in relation to its goods or services. A business is entitled to use the "TM" symbol on a common law trademark (or "SM" symbol on a common law service mark), but common law trademarks typically have geographic limitations on where rights in the mark can be enforced against others. These geographic limitations of enforcement are typically only in the "local" geographic area of sales (i.e., the local area where customers reside).
- State registered trademarks: A trademark can be registered at the state level (typically with the state’s Department of the Secretary of State), and this will provide protection of the mark within the borders of that state (i.e., broader protection than common law trademarks, but less protection than federal registration).
- Federally registered trademarks: A trademark can also be federally registered with the United States Patent and Trademark Office ("USPTO"). There are many advantages to federally registering a mark including the legal presumption of ownership and exclusive right to use the mark on a nationwide basis, the ability to provide public notice of the trademark ownership claim, the use of the "®" symbol (as opposed to the "TM" or "SM" symbols that can be used by common law or state trademark owners), the ability to enforce rights to the trademark in federal court, and the ability to use the United States registration as a basis for registration in foreign countries.
As mentioned above, if you choose to federally register your mark, you will have a presumption of ownership of the mark over others who have not federally registered their similar mark. Even if others have been using the same or similar trademark longer on a common law basis, or even under a state registration, your subsequent federal registration of the mark can work to "encapsulate" the use of the mark by such prior users so that they will not be able to expand use of the trademark outside of those common law or state jurisdictional areas.
In other words, a business may be a "senior user" of a trademark in time, but if it has not federally registered its mark and you, as a later-timed "junior user" apply for and receive federal registration, you can then operate to encapsulate the use the senior user can make of the mark, thereby, in essence, stifling the senior user's ability to expand use of the trademark in association with its business. It is the presumptive nationwide ownership aspect and ability to "encapsulate" the use of senior non-federal users that make federal registration most attractive and, on the downside, sometimes can result in a user being usurped and feeling that someone "stole" the user's trademark.
So, now that it is understood that federal registration is almost always in your best interest as a trademark owner, particularly if you expect to engage in interstate commerce, there are typical steps you must take to federally register your trademark.
The first step is identification of your trademark and determination of the depiction of the mark for registration. Trademarks may contain words, logo design elements, or a combination of the two. Your mark can be filed with the USPTO as either a "word mark" or a "logo design mark" and, quite often, both types of marks will be filed. It is always recommended that you select trademarks that are more fanciful and arbitrary (for example, EXXON® for "automobile service station services" or APPLE® for "computers"), rather than terms that are generic or descriptive of your goods or services (for example, LIGHT BEER for "light beer" or CRUNCHY for "peanut butter").
The second step is identification of the goods and/or services that are covered by your trademark. You should apply for federal registration on goods/services for which your mark is actually being used (an "actual use" basis application), or when you have a bona-fide intent to use the mark (an "intent to use" basis application). Concise descriptions of the goods/services are typically broken down into various classifications, and there is a separate USPTO filing fee for each class of goods/services selected. Once filed, your trademark application cannot be broadened by the addition of additional goods/services. While courts may apply coverage to additional goods within a "natural zone of expansion" of your business in infringement actions, you will be wise to file additional trademark applications for future expansion of your goods/services that will be covered by a particular mark.
Once your mark and desired goods/services are determined, your third step will be to conduct a search of at least the USPTO database to determine whether there are any senior users of the mark that have already filed for federal protection and which may impact your ability to register a similar mark for similar goods/services. A trademark search is certainly not required prior to filing your application, but it is a recommended due diligence step to uncover any potential conflicts prior to incurring unnecessary expenses getting down the path of registration.
It should be noted that a search within the USPTO database may be good for registration determination purposes, but may not be as comprehensive as a full-blown "freedom-to-operate" trademark search that will typically cover not only federal marks, but also state and common law uses of a mark. The latter search may be important and advisable for you if you are entering into a litigious industry or planning to invest a great deal of effort and monetary resources into a branding campaign.
Once filed, your trademark application must be "prosecuted" before the USPTO, a process that typically runs eight to 16 months before a trademark registration is issued. Upon issuance, your trademark will not have an expiration date and can be used perpetually (think of Coca-Cola®); however, certain continued use and renewal documents must be filed in order to maintain the trademark registration.
Additionally, it will be imperative that you police your mark and enforce your trademark rights against others who are infringing on your trademark. There are no "trademark police" and, except for some limited actions that can be initiated with the assistance of U.S. Customs and Border Protection (such as actions to halt importation of infringing goods), you will be on your own to monitor the marketplace and pursue enforcement actions where needed. "Policing" your mark can be uncomfortable at times (you probably recall reading news articles about Coca-Cola® "harassing" small diners who serve Pepsi® to customers who ask for a Coke®, because the diner only serves the former), but it is a necessary allegation of a trademark owner who wants to maintain its mark.
A trademark can be the lifeblood of your business, as it will distinguish and set your business apart from others in the marketplace. However, timing and registration are crucial to priority in trademark rights and you should consider filing for federal trademark protection as early as practical.
It is very well possible, and we see it way too often, that even if your business has used a certain trademark for many years, you could be "encapsulated" in your use of your trademark and ability to expand by another party who decides to start using a similar trademark and properly applies for federal registration of the trademark. Don't let another party "steal" your brand that you have worked hard to create – register those trademarks today!
© 2017 Ward and Smith, P.A.
This article is not intended to give, and should not be relied upon for, legal advice in any particular circumstance or fact situation. No action should be taken in reliance upon the information contained in this article without obtaining the advice of an attorney.