This is Part II of my two-part series on trademarks. Be sure to check out Part I.
What Makes a Strong Trademark?
Not all trademarks are created equal. A trademark is considered “strong” if it allows the owner of the mark to easily prevent third parties from using the mark. There are four categories of marks, listed in ascending order, which roughly reflects their eligibility to obtain trademark status and the degree of protection that they are afforded: (1) generic, (2) descriptive, (3) suggestive, and (4) arbitrary or fanciful.
- Generic—A generic term is one that refers, or has come to be understood as referring, to the genus of which the particular product is a species. Translation: a car is car and you can’t stop others from using ‘car’ to describe a car. An aspirin is an aspirin. Generic terms are not entitled to trademark protection.
- Descriptive—A term is descriptive if it conveys an immediate idea of the ingredients, qualities, or characteristics of the goods. Although you can’t protect a trademark that is “merely descriptive,” that mark may become protectable if it is used extensively enough to acquire so-called “secondary meaning.” This means the mark has been used over time in such a way that customers begin to associate that mark with the particular goods or services offered by that business (a.k.a. acquired distinctiveness). Famous examples include General Electric and International Business Machines (IBM).
- Suggestive—A term is suggestive if it indirectly describes the product or service it identifies and requires imagination, thought, and perception to reach a conclusion as to the nature of goods (e.g., GREYHOUND for buses – suggesting fast transportation).
- Arbitrary or Fanciful—A mark is arbitrary if it has a meaning, but does not describe the product or service it identifies or any of its characteristics. Fanciful marks, by contract, convey no meaning at all, other than their trademark meaning. (Think APPLE for computers or AMAZON for e-commerce). These are inherently distinctive and have the greatest degree of protection.
Why Protect Your Trademark?
Though it may not be the first thing that comes to mind, a trademark can often be your business’s most valuable asset. Here are a few reasons why:
- As long as you’re using your trademark, your rights never expire. Once you have obtained ownership of a mark, if you use it appropriately in connection with your goods or services, you never lose those rights. Although federal trademark registrations expire, if you continually use and enforce your trademark rights, your rights themselves never expire – regardless of registration status.
- It is an easy way for customers to locate your business and the goods/services that you offer.
- It is an effective way for you to communicate to customers what your business is about and what goods/services you offer.
- Trademarks can be used for all of your branding efforts and serve as a great way to grow your business through both online and offline efforts.
Options for Protecting Your Mark
Traditionally, business owners have had two options for trademark registration and brand protection: federal or state trademark registration.
- Federal trademark registration through the U.S. Patent and Trademark Office: Allows the public to find a federally registered name or trademark, and makes a public record of the fact that a business claims rights to that name. Federal registrations also benefit from certain statutory rights, like the right to use the ® symbol in association with your trademark (anyone with common law trademark rights can use the ™ symbol, but ® is reserved for federally registered marks). If you file online and without a lawyer, application fees start at $225/mark, per class of goods.
- State trademark registration: Each state maintains separate trademark databases. Each state may grant certain special rights to marks registered in that state. Since state-registered trademarks enjoy relatively few statutory rights, but still involve fees, state registrations are becoming increasingly less common. Additionally, more and more companies are conducting businesses in multiple states, meaning they’d require federal or common law protection. (As a reminder, common law rights extend to the geographic region in which a company conducts business.) .
Obligation to Monitor or “Police” Your Trademark
No matter which option you choose for documenting your trademark rights, you must monitor or “police” your trademark to prevent other parties from infringing on your rights.
“Must” isn’t a throwaway imperative I’m using to prove a point. If you don’t “police” your trademark, you risk losing the right to use it altogether. The goal of protecting trademark rights is to avoid consumer confusion, so it is important that you, as the owner of a trademark, show that you are serious about protecting your rights.
If you aren’t vigilant in stopping confusing uses of your mark (infringement), a court might presume that you aren’t bothered by such use. The court assumes that if the other party’s use were damaging your rights, you would act against it. If you don’t take steps to show that you’re protecting your name, others may think that they can use your mark with impunity as well.
The more steps you take to protect your rights, the stronger your position to argue (should you ever have to) that your trademark is important to you and you have taken proactive steps to protect your rights.
Financial Implications of Failing to Monitor Your Trademark
Aside from the legal requirement, monitoring your trademark makes financial sense. If another party starts using your trademark without your consent, customers may get confused and patronize your infringer when they think they’re buying from you.
This could hurt your bottom line in two ways: 1) Money that was intended for you is ending up in the infringer’s pocket. 2) If the infringer’s product, service, or customer experience is inferior to yours, your customer is going to associate that bad experience with your business, making it difficult to win them back.
Monitoring your trademark can also help avoid the worst-case scenario when it comes to infringement – litigation. Companies lost over $2.64 billion last year thanks to trademark lawsuits.