Registering your trademarks with the U.S. Patent & Trademark Office should be one of the first steps for all new companies (that’s of course, after conducting a comprehensive trademark search). However, allocating the necessary funds to adequately protect its trademarks may be a tricky endeavor for a new startup company. Frequently, companies with limited budgets only have enough money file a single trademark and thus, must decide whether it is best for them to file a trademark application for their business name or logo. Before making a decision, it is extremely important to consult a trademark attorney since every mark is different and requires its own legal analysis. However, there are a few general factors that should be considered in the decision-making process.
1) Trademarks Receive Common Law Rights When First Used in Commerce
There is a misconception in the business community that a brand name, logo, or slogan needs to be registered in order to receive trademark rights. Though registering your trademark with the USPTO does have several advantages, your mark will receive common law protection just by being used in commerce; therefore, you may already be able to prevent similar trademarks from being used in locations you are currently selling your product/service. Therefore, depending on your business’ short and long term goals, you may be able to wait a bit before filing a second trademark application if you currently have a limited budget.
2) The United States has a First to Use Trademark System
Unlike many other countries, the United States has what is called a first-to-use trademark system. That means that the first entity to use the mark within a territory acquires a right of priority to use that mark over all subsequent users in that location. Even if a subsequent junior mark user submits a federal trademark application to the USPTO for an identical or similar mark, the prior senior user still has exclusive priority to use the mark in its territory. Additionally, there are legal mechanisms, such as a trademark opposition and a trademark cancellation process, where the prior user can assert his rights and also, may be able to limit or even cancel the junior user’s federal trademark rights. Therefore, though waiting to file a trademark application may not be ideal, there are legal mechanisms in place to protect your right of priority.
3) Your Business Name Is Probably Your Strongest Mark
Usually, a company’s name is the most important trademark to protect, as it is usually the first thing that comes to mind for customers or potential customers when referring to your company. By filing a trademark application for your business name as a “standard character mark”, it will be given the broadest protection possible. This means that your business name will be protected against third parties using a similar name even it if is incorporated within a design/logo. Unfortunately, by solely registering your business name, you are unable to protect your logo beyond the common law rights it is provided.
4) You Can File an Application for a Composite Mark
If your logo incorporates your business name, it is possible to file for a composite mark. According to the Trademark Manual of Examining Procedure, a composite mark is one that “may consist of a word or words combined with a design or designs”. Therefore, a composite mark may be able to protect both your logo and business name. Unfortunately, this approach may provide weakened protection for your business name. For example, a third party attempting to register a similar business may be able to successfully argue that because of the design differences between his applied-for mark and your federally registered mark, confusion would be unlikely. If this occurs, your business name may become significantly weakened.
Another disadvantage is that if you decide to change or update the company logo in the future, your registered mark may be considered abandoned requiring you to re-file with the new updated logo. If this occurs, you may lose the initial registration’s priority date. This would not occur if you registered the business name by itself since a standard character mark’s appearance and design may be changed without adversely affecting its federal registration.
In summary, even though there are disadvantages to this approach, filing for a composite mark may be a sound legal strategy in the short term for companies trying to save money, especially if the business name is a prominent feature of the logo.
Conclusion
An ideal legal strategy offering a company maximum protection of its marks would be to file three applications, a standard character wordmark for the business name, a design mark for the logo and a composite mark for logo incorporating the name. However, limited budgets sometimes prevent companies from filing all three. Therefore, it is usually recommended to initially file a trademark application for the business name. It is, of course, strongly advised that you consult with a trademark attorney before making any decision.
There is a misconception in the business community that a brand name, logo, or slogan needs to be registered in order to receive trademark rights. Though registering your trademark with the USPTO does have several advantages, your mark will receive common law protection just by being used in commerce; therefore, you may already be able to prevent similar trademarks from being used in locations you are currently selling your product/service. Therefore, depending on your business’ short and long term goals, you may be able to wait a bit before filing a second trademark application if you currently have a limited budget.
2) The United States has a First to Use Trademark System
Unlike many other countries, the United States has what is called a first-to-use trademark system. That means that the first entity to use the mark within a territory acquires a right of priority to use that mark over all subsequent users in that location. Even if a subsequent junior mark user submits a federal trademark application to the USPTO for an identical or similar mark, the prior senior user still has exclusive priority to use the mark in its territory. Additionally, there are legal mechanisms, such as a trademark opposition and a trademark cancellation process, where the prior user can assert his rights and also, may be able to limit or even cancel the junior user’s federal trademark rights. Therefore, though waiting to file a trademark application may not be ideal, there are legal mechanisms in place to protect your right of priority.
3) Your Business Name Is Probably Your Strongest Mark
Usually, a company’s name is the most important trademark to protect, as it is usually the first thing that comes to mind for customers or potential customers when referring to your company. By filing a trademark application for your business name as a “standard character mark”, it will be given the broadest protection possible. This means that your business name will be protected against third parties using a similar name even it if is incorporated within a design/logo. Unfortunately, by solely registering your business name, you are unable to protect your logo beyond the common law rights it is provided.
4) You Can File an Application for a Composite Mark
If your logo incorporates your business name, it is possible to file for a composite mark. According to the Trademark Manual of Examining Procedure, a composite mark is one that “may consist of a word or words combined with a design or designs”. Therefore, a composite mark may be able to protect both your logo and business name. Unfortunately, this approach may provide weakened protection for your business name. For example, a third party attempting to register a similar business may be able to successfully argue that because of the design differences between his applied-for mark and your federally registered mark, confusion would be unlikely. If this occurs, your business name may become significantly weakened.
Another disadvantage is that if you decide to change or update the company logo in the future, your registered mark may be considered abandoned requiring you to re-file with the new updated logo. If this occurs, you may lose the initial registration’s priority date. This would not occur if you registered the business name by itself since a standard character mark’s appearance and design may be changed without adversely affecting its federal registration.
In summary, even though there are disadvantages to this approach, filing for a composite mark may be a sound legal strategy in the short term for companies trying to save money, especially if the business name is a prominent feature of the logo.
Conclusion
An ideal legal strategy offering a company maximum protection of its marks would be to file three applications, a standard character wordmark for the business name, a design mark for the logo and a composite mark for logo incorporating the name. However, limited budgets sometimes prevent companies from filing all three. Therefore, it is usually recommended to initially file a trademark application for the business name. It is, of course, strongly advised that you consult with a trademark attorney before making any decision.
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