Trademark Issues for Start-Up Companies

Getting Started the Right Way

Forbes lists failing to secure trademark rights as a top 10 legal mistake of small businesses.[i] Failing to properly check or secure trademark rights has led to a rise in litigation in South Carolina. [ii] Learning some trademark basics can help companies avoid early mistakes, develop a strong mark and enforceable mark, while increasing the value of your trademark asset.

Q: Why do a trademark search?

Trademark searches are an effective way for businesses to evaluate the registrability and strength of a mark, as well as help avoid trademark infringement issues. A federal trademark search discovers pending applications or existing registrations and helps you determine whether any are “confusingly similar” to your trademark. This type of search is by far the most important for startups, new ventures, and middle-market companies.

“A knowledgeable and trustworthy trademark attorney can provide you with a legal opinion that can outline the risks associated with using and registering your trademark.”[iii]

Understanding Trademarks

Q: What is a trademark or service mark?

Trademarks are property rights directed to protecting a word, name, phrase, or symbol that identifies a source of goods and distinguishes the source of goods from those of a competitor. A service mark is primarily different in that it identifies and distinguishes the source of a service rather than a product.

Q: What does a trademark protect?

Trademark rights can be used to prevent others from using a mark likely to create confusion among customers.

Q: What makes for a strong trademark?

Descriptive and generic terms that merely describe the services, goods, or component should be avoided as potentially ineligible for trademark protection, while suggestive and fanciful terms make for preferred trademarks. The more unique, the stronger the mark is likely to be.

Q: How long does a trademark last?

Trademark rights can last indefinitely so long as the mark is continuously being used in association with specific goods and/or services and appropriate steps are taken to police the mark against infringement.

Establishing Trademark Rights

Trademark rights are established through the use of a mark, not from registration. Even if the mark is not registered, the owner can establish substantial common law trademark rights in the geographic area in which the mark is being used. Business owners can enhance and extend their trademark protection with federal trademark registrations in appropriate cases. Federal trademark registration provides various legal advantages for protection, enforcement and damages in the event of infringement.

Understanding Trademark Limitations

Without a federal registration, trademark rights are only in the market area where you can show that you are using the mark. This means that other companies outside your market area can also use your mark on the same or similar goods, even when you adopted the mark first in your area.

Conflicts arise when markets begin to overlap. Legal action may then be required to determine who is entitled to the trademark rights in a given area. Federal registration can help companies better position themselves in litigation to determine who has superior rights when companies are expanding their markets.

KEYS to Reducing Risk

Perform a federal trademark search.

Understand the relationship with trademarks and your business.

Understand any geographic limitations with trademark rights.

Select a strong mark.

Consult with an experienced trademark attorney.

 

[i] https://www.forbes.com/sites/aileron/2014/07/02/top-10-legal-mistakes-small-businesses-make/#438ed9c2242f

[ii] https://upstatebusinessjournal.com/2017-shows-south-carolina-businesses-experience-upward-trend-trademark-litigation/

[iii] Id.