Top 5 Legal Considerations When Selecting a New Trademark

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Companies often leave decisions on the new company name or the name of a new product for “another day,” believing that finding the right word is just a matter of internal consensus building or exercising a relatively minor amount of creative thought. But choosing a new name can be a time-consuming, emotionally draining, and resource-intensive task that is rarely accomplished in short order.

Part of the complication with choosing names and trademarks derives from internal company issues. Choosing names involves understanding the mission and marketing plans of the company. Often these criteria are ill-defined or not agreed upon before the naming process begins. Another common misstep is that the task of naming is given to a business unit that works independently of or external to other management-level employees. This leads to the clearance and selection of names that another business unit or manager may dislike or refuse to accept.

A fundamental key to success in choosing names and trademarks is putting in place an internal process that involves agreement on who will be involved and how the name should be selected. In particular, if at all possible, company personnel should decide what the new name or mark is intended to communicate to consumers and how that message fits within the company’s overall marketing plan and/or the corporate mission. (Branding consultants are sometimes used to help manage and inform this process but are not essential.)

After such an intensive exercise, there is frequently enough investment and belief in the new brand that stakeholders want to know if they can register the new branding as a federal trademark.

Here are the top 5 considerations to bear in mind when selecting new branding to better position your organization to protect and defend your new name and trademark.

  1. Mark Must be “Distinctive” To Be Protectable. To acquire trademark rights, the selected mark must be adequately “distinctive.” Merely descriptive or generic words or phrases are not protectable as trademarks since they don’t act as source indicators for consumers.  In other words, a restaurant is never going to be able to claim exclusive trademark rights in the term “RESTAURANT” and prevent competitors from using that term. On the other hand, “EXXON” is an entirely made-up term devoid of ordinary meaning, so it is easily recognized as a source indicator or trademark. “EXXON” is protectable while “RESTAURANT” is not.
  2. The First User of a Mark ‘In Commerce’ ‘Wins’ Exclusive Rights. In general, the first to actually provide goods and services in the U.S. marketplace under a mark is entitled to the exclusive right to use that name or phrase as a trademark– at least in the geographic area in which the first user operates. The first user may exclude others from using confusingly similar marks on products or services identical to the first user’s products or services. But – see point 3 below for a major exception to this rule of “winning” exclusive rights by being the first user.
  3. Filing to Register a New Mark Should Be Considered. While registrability of a new mark need not be the most important consideration, registration should be considered as a way to notify the world of your claims to a new mark. An application can also be an advantage if the company’s use of the mark in commerce (see point 2, above) will not commence for some period of time. In the U.S., if you file an application to federally register a mark before someone else has started to “use,” then the first filer ‘wins’ the race to exclude others, even if the first filer is not USING at the time of filing. That is, a first user can still lose the right to exclude others IF someone files to protect the mark before said user begins to use its mark.
  4. You Must USE the Mark to Exclude Others and Maintain Rights. All rights in U.S. marks ultimately derive from using the mark in commerce. Again, this “use” requirement generally means actually providing goods and services in the U.S. marketplace under the mark. In fact, the U.S. Trademark Office will not issue a U.S. applicant trademark registration until use actually is made in connection with the sale, shipment of products and/or the promotion and rendering of claimed services.  Furthermore, if use ceases for an appreciable period of time (typically three years), then any trademark rights the owner may have owned may be lost.
  5. Identical Marks May Coexist As Long as There Is No Consumer Confusion or Dilution. Finally, marks that are identical or similar to one another may be used concurrently by different users, provided that such use does not cause a likelihood of confusion in the marketplace. A full discussion of what constitutes a “likelihood of confusion” and “trademark dilution” is beyond this short post. Still, generally, as long as consumers would not be confused as to whether the two users are related, then the marks may co-exist. Numerous examples of such marks exist (ex. DOVE for soap and for candy and ice cream; DELTA for an airline and for plumbing supplies, etc.)

Remaining mindful of these considerations can help safeguard against a disappointing determination that a newly selected brand cannot be protected as a trademark. Of course, many of these considerations require less-than-intuitive analysis (i.e. how relevant can a term be before it starts looking descriptive and non-distinctive?), so it is important to bring your legal team into the fold as early in the new brand selection process as possible.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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