Most business owners can agree on one thing: the importance of a business plan. Most business owners, however, often overlook the importance of incorporating trademark protection into a business plan. Whether your company is a start-up or a business that has been in existence for years, incorporating adequate trademark protection into your business plan can serve to protect your brand and help shield your company from potential lawsuits for trademark infringement.
What is a Trademark?
A trademark is a word, slogan or symbol that identifies the source of goods or services and distinguishes those goods or services from those of another party. The term “trademark” is sometimes confused with the term “copyright.” A copyright protects literary, artistic or musical works (e.g., a book, song, play or software program), whereas a trademark protects your “brand.”
What Can I Trademark?
Only words, slogans or symbols that are “distinctive” are eligible for trademark protection. The distinctiveness of a mark will generally fall into one of five categories: (1) fanciful; (2) arbitrary; (3) suggestive; (4) descriptive; or (5) generic.
- “Fanciful” marks are the strongest marks and have been created for the sole purpose of functioning as a trademark. For example, the word “Xerox” was created for the sole purpose of functioning as a brand for copiers. The word “Xerox” otherwise has no meaning in the English language.
- “Arbitrary” marks are also considered strong marks and have no relation to the goods or products sold under that name (e.g., “Apple” for computers).
- “Suggestive” marks hint at the nature of the goods or services being sold under the mark, without actually describing the goods or services. “Suggestive” marks are eligible for trademark protection. An example of a suggestive mark is “Mustang” for high-powered sports cars.
- “Descriptive” marks are considered weak marks and are generally not eligible for trademark protection. For example, “Bob’s Auto Body Shop” would be considered a descriptive mark for an auto body shop owned by a person name Bob.
- “Generic” marks are the weakest marks and are therefore incapable of functioning as a trademark (e.g. “Smartphones” for cell phones with internet access).
Common Law Rights vs. Federal Registration
A common misconception is that one must register a mark with the United States Patent and Trademark Office to obtain trademark protection. On the contrary, trademark rights are created in the United States from the actual use of a mark, not through registration of a mark. Thus, if a product or service is sold under a brand name, common law trademark rights have been created.
Although federal registration is not required, it is certainly the preferred method of protecting your brand. Common law trademarks only confer rights in the geographic areas where the mark is actually being used in commerce. For example, if a business owner sells goods in Jacksonville using a trademark, the trademark will likely only be entitled to protection in Jacksonville. This means the business owner will likely not be able to prevent others from selling goods under that same mark anywhere outside of Jacksonville.
Federal registration, on the other hand, confers nationwide protection for a mark (with the exception of prior common law marks). In addition to nationwide protection, federal registration:
- grants the trademark owner the ability to recover attorneys’ fees in infringement actions;
- grants the trademark incontestable status after five (5) years of registration on the Principal Register;
- grants the owner the right to sue for infringement in federal courts;
- grants the owner the right to use the registered trademark symbol: ®;
- allows the trademark owner to enforce its rights against subsequent users; and
- acts as a bar to the registration of another confusingly similar mark.
When developing your business plan, it is worthwhile to invest on the front-end to ensure you adequately protect your brand. This may serve to prevent costly trademark infringement lawsuits in the future. If you have not yet incorporated trademark protection into your business plan, consult with your lawyer to ensure the necessary safeguards are in place to protect your company and its trademarks.
1 Please note that the geographic protection given to common law trademarks may be expanded outside of the geographic area where the goods are physically sold if the owner of the common law trademark is shipping goods out of state or using the internet to market its goods and/or services.