Everyone is familiar with Trademarks. We are literally surrounded by them. Trademarks are the words, logos, packaging and other devices that we use to differentiate goods and services from each other and are how we can differentiate our favorite coffee in the morning from the terrible stuff that tastes like warm dirty water. They are how we distinguish the shoes that gave us blisters from the ones that made us run faster (or at least made us think we did). Without even realizing it, we often encounter and make decisions based on trademarks multiple times each day.
Despite the commonality of trademarks, or perhaps because of it, there are a number of misconceptions about what trademarks are, how they are protected and what rights a trademark conveys. This may be okay if you are just trying to buy that first cup of coffee in the morning, but if you are the business trying to sell the coffee, trademarks can be critical. Four common misconceptions I encounter when talking about trademarks with business owners are:
“My mark isn’t registered so I don’t have any rights yet.”
Applying to register a trademark provides many benefits, but trademark rights actually arise based on use of the mark. As soon as a business uses a mark in connection with the sale or advertisement of its goods or services, it starts to acquire certain rights in the mark often called common law trademark rights. Common law trademark rights generally only extend to the geographic areas in which the mark has already been used. If you are using the mark across North Carolina or in the Pacific Northwest, for example, you will be able to stop others from using a similar mark in connection with similar goods in that area. If someone else uses the same mark in a different geographic area, and you are relying solely on common law rights, they may actually prevent you from using your mark in that area. This is one of the reasons a federal registration may be a good idea. Registration provides its owner with nationwide priority to the mark from the date the application is filed, even in geographic areas in which the owner has not yet used it.
"I did a search of the USPTO’s website and no one has my identical mark, so I can use it.”
This is actually two misconceptions rolled into one. First, it is possible that someone is using the same mark but has not applied to register it. As discussed above, this unregistered use may prevent you from using the mark in certain areas. Second, the Trademark Office (and the courts when considering infringement) will not look to see whether you are using an identical mark. Rather, they look at whether your mark is sufficiently similar to someone else’s mark in sight, sound, meaning and commercial impression such that when used with similar goods or services it is likely to cause consumer confusion. What this means in practice is that you will need to look beyond merely identical marks, including looking at other marks that have similar meanings, are spelled differently but may be pronounced the same (including intentional misspellings – DEALS and DEALZ), feature a common element, share a prefix or suffix, etc.
“I own the XYZ mark, so no one else can use it” or on the other side “Someone is using an identical mark, so I guess I am out of luck.”
Generally, the exclusive rights in a trademark are inextricably linked to the goods and services with which the mark is used. Except in rare circumstances, a trademark is not a monopoly that allows its owner to prevent others from using the same word(s) in all circumstances. Rather, a trademark gives its owner an exclusive right to use the mark in connection with specific goods or services and to prevent others from using a similar mark in connection with similar or related goods or services in a way that is likely to cause consumer confusion. Although there are many factors that go into this analysis, one of the main factors is whether the goods (or services) are sufficiently similar or related that consumers are likely to believe that a single manufacturer has produced both types. As consumers, we know what types of goods usually go together and what type are unrelated. For instance, if I have a registration for the XYZ mark for use with legal services, my rights in the mark are not sufficient to prevent someone from using the XYZ mark to sell ballet shoes. Not many consumers are likely to believe that a law office has taken to selling shoes. Consumers are going to believe the marks refer to different companies and both will be able to claim an exclusive right to use the mark with their goods/services.
“I have registered a domain name and [or] formed an entity with the Secretary of State, so I’m all set using the mark.”
Rights in a trademark are based on use, and identifying the date a mark was first used is important. But, registering a domain name or filing formation documents with a secretary of state’s office is not a “use” of the mark. The “use” required for creating trademark rights according to statute is a “bona fide use of the mark in the ordinary course of trade.” That’s not particularly helpful. For goods, you generally will have had to place the mark on the goods or the packaging associated with the goods and sold or shipped the goods to someone outside of the company for trademark rights to arise. For services, the mark has to be used while the services are being provided or in advertising and the services need to be currently available to customers. Registering a domain name or creating an entity does not meet any of these requirements. Now, if you put up a website at the registered domain, and the mark appears on the website and promotes the services you provide, that’s a use. Similarly, if you create an entity, put the entity name on a box and sell goods in that box to customers, that’s a use and additional rights arise.