Business Legal Tips

Business Legal Tips

Reasons For a Registered Trademark

Mark Bross November 7, 2019 Tags: , , , No comments
featured image

Does your business use a logo?  A distinctive name?  Is it a registered trademark (or service mark)?  It should be.

Trademarks and Service Marks

The first and most important question is :  What is a trademark?  Simply put, it’s  a brand name for a particular product.   For example, GATORADE is trademark (brand name for sports drinks); as is JEEP (brand name for a particular type of SUV and automobiles).  Service marks are brand names for a service, such as FIDELITY INVESTMENTS (brand name for mutual funds, brokerage services, and investment education).  For simplicity, going forward I will refer to trademarks and service marks as trademarks.

Trademarks are not only limited to brand names, but are a wide variety of words, symbols, shapes and sounds:

  • Logos and Designs –A logo or design, such as the Nike swoosh can be a trademark.    
  • A product shape.  The shape your product, such as the shape of the COCA-COLA bottle,  can be a trademark.  Be forewarned, however, shapes are increasingly difficult to register as trademarks.
  • Numbers.   A number can be marks such as 747 for Boeing air planes
  • A slogan.   Slogans can be trademarks too, such as “YOU’RE IN GOOD HANDS” for Allstate insurance. 
  • Smells.  Although not common, small can be a trademark such as the smell of Play-doh.

All of these trademarks are distinctive and used by a business to identify and distinguish its products or services from its competitors.

FUNCTION OF A TRADEMARK OR SERVICE MARK

Trademarks are part of the intellectual property of your business, which can also include, patents, copyrights, or trade secrets. Each type of intellectual property services a different purpose and protects your intellectual property in different ways.  Trademarks serve 3 main purposes:

1. Identify Origin of Goods/Services

The first, and perhaps most important purpose,  is “to identify the origin or ownership of the article to which it is affixed.”  See Hanover Star Milling Co. v. Metcalf, 240 U.S. 403, 412 (1916); see also Venture Tape Corp. v. McGills Glass Warehouse, 540 F.3d 56,60 (1st Cir. 2008) (“The purpose of a trademark is to identify and distinguish the goods of one party from those of another”).   For example, the Jeep trademark indicates that the vehicle to which it is attached comes the same source, which is currently Fiat Chrysler Automobiles. This purpose is codified in the Lanham Act and the Massachusetts Registration and Protection of Trademarks statute (“Massachusetts Trademark Statute”) as part of the definition of ‘trademark’ and ‘servicemark’. See 15 USC §1127 (defining ‘trademark’ and ‘service mark’ to mean “any word, name, symbol or device or any combination, thereof  . . . to identify or distinguish”  goods or services); M.G.L. c. 110H, § 1 (same).

2. Quality Assurance

The second purpose of a trademark is to serve as a symbol of quality. See Venture Tape Corp, 540 F.3d at 60 (“To the purchasing public, a trademark signifies that. . . all goods bearing the trademark are of an equal level of quality”)  (citations omitted).  For example, the  iPHONE trademark on a smart-phone assures the consumer that he/she is getting a well-made smart-phone with all of the features the consumer expects.  Other than the specific model, such as an iPhone 11, it does not matter which particular iPhone the consumer buys. He/she expects that all of them will be the same and have a certain level of quality. 

Consumer quality assurance expectation cuts both ways and creates obligations for trademark owners to maintain consistent quality standards.  For example,  Apple must maintain consistent quality standards on its iPhones so that the consumer gets what he/she expects:

 

A trademark also may induce the supplier of goods to make higher quality products and to adhere to a consistent level of quality. The trademark is a valuable asset, part of the “goodwill”  of a business. If the seller provides an inconsistent level of quality, or reduces quality below what consumers expect from earlier experience, that reduces the value of the trademark. The value of a trademark is in a sense a “hostage” of consumers; if the seller disappoints the consumers, they respond by devaluing the trademark. The existence of this hostage gives the seller another incentive to afford consumers the quality of goods they prefer and expect.

Scandia Down Corp. v. Euroquilt, Inc., 772 F.2d 1423, 1430 (7th Cir. 1985) (Easterbrook, J.).  Otherwise, the mark might lose its value with the consumer and the trademark owner might be deemed to have abandoned its trademark.   This occasionally occurs when the trademark owner licenses the use of the trademark without having reasonable control over the nature and quality of the quality of the goods.  See, e.g. Boathouse Group, Inc. v. Tigerlogic Corp., 777 F. Supp. 2d 243, 250 (D. Mass. 2011)  (“To be a valid license, the licensor must adequately control the quality of the goods and services provided by the licensee under the mark”

3. Symbol of Goodwill

The third purpose  is to serve as a symbol of the business goodwill and reputation.  See Pereyara v. Sedky, 148. F.Supp. 3d 134, 142 (D. Mass. 2015)  (“A trade or service mark  is merely a symbol of goodwill and has no independent significance apart from the goodwill that it symbolizes”) (citations and quotations omitted).  This is especially true for trademarks that have been used in connection with heavy successful advertising for a while.   Think of the Nike Swoosh or the Target bullseye.  Both trademarks symbolize the goodwill and reputation associated with these businesses and have been featured in heavy marketing campaigns.    

Acquiring a Trademark and Relevant Laws

Acquiring a trademark is deceptively simple:  Be the first to use a distinctive logo or words in commerce in connection with a particular class of goods or services.  See e.g. Volkswagenwerk Aktiengellschaft v. Wheeler, 814 F.2d 812, 816 (1st Cir. 1987) (“The right to trademark and service mark rights is based on prior use, or the one who first uses the marks in connection with a peculiar line of business”).  As with anything legal, there are numerous caveats and exceptions, which will not be delved into here.   But the general idea is that if your business is first to use a distinctive logo or brand name in commerce then you have a trademark! This trademark comes with rights protected by law and you could sue a competitor to prevent the trademark’s unauthorized use in connection with their good or services.

Trademark rights in Massachusetts are governed by a web of state and federal laws:

These laws are not mutually exclusive and, in the event of an infringement, a Massachusetts trademark owner likely has rights under all of them. But the nature and scope of these rights depend on many factors.  

One important factor is whether the trademark is registered with the United States Patent and Trademark Office (“PTO”) and/or the Secretary of the Commonwealth of Massachusetts (“Secretary”).  If a trademark is not registered with either, however, the owner only has common law rights. Common law trademark rights have a limited geographic scope and only extend to the narrow geographic area where the business uses the mark to sell its goods/services.   See Dorpan, S.L. v. Hotel Melia, Inc. 728 F.3d 55, 64 (1st Cir. 2013) (unregistered trademark holder entitled to exclusive use of the mark in the “geographic area where an unregistered trademark is in use”) (citations and quotations omitted).   By registering with the Secretary, these rights extend through the Commonwealth of Massachusetts.  And by registering with the PTO, these rights extend nationwide.  Other significant benefits of a registered trademark are discussed below.

Benefits of a Registered Trademark

In addition to expanding the geographic reach of your trademark, some other significant benefits of a registered trademark with the PTO (and a lesser extent with the Secretary) are the following:

Notice to Third Parties

A registered trademark provides constructive notice to third parties that a business is claiming ownership of the trademark.  See 15 U.S.C. § 1072; M.G.L. c.110H, §5(b).  So, an individual is deemed to be aware of the registered trademark in any court action, regardless of whether the individual actually was aware.  A registered trademark also discourages others from using similar trademarks in the first place!  Conducting a trademark availability search is common practice before starting to use a new trademark.  If your trademark is registered, a good search will turn it up and a third-party competitor should decline to start using it. Nobody wants a lawsuit over their new brand name!

Gate-Keeper to Prevent Registration of Similar Marks

After registration with the PTO or the Secretary, both government agencies act as gate-keepers to prevent others from using a confusingly similar trademark.  The PTO and the Secretary examine every application to determine whether the proposed trademark is confusingly similar to an already registered trademark that is already registered.  See 15 USC § 1052 (d); M.G.L. c. 110H §4.  The process at the PTO is more thorough and time consuming than the Secretary’s, which makes sense given the nationwide protection of a federally registered trademark.  There is no guarantee, of course, that either will catch every potentially infringing mark. But each offers a first-line defense to protect your trademark and saves on the cost of a potential lawsuit!

Evidence of Ownership and Exclusive Use

Registration with the PTO or the Secretary provides prima facie evidence and a presumption that your business owns a valid trademark and has the exclusive right to use it in connection with the specified goods or services.   See15 U.S.C. §1057(b); M.G.L. c. 110H § 5(b).  If your business continues to use the trademark for five (5) years after registering with the PTO, and files the required affidavit, you will receive heightened protection and your registration will become “incontestable.”  15 U.S.C. §1065.  But registration with the Secretary Massachusetts trademark registrations do not receive this heightened protection, but need to be renewed every five years.  See M.G.L. c. 110H §6.

Two important things to keep in mind.  First, evidence of ownership and exclusive use is only nationwide if you register with the PTO.  Registering with the Secretary only provides evidence and a presumption for exclusive use in Massachusetts, and there is no similar doctrine of an “incontestable” registration. 

Second, registration only counts as evidence against any future users of the trademark.  If a prior user is already using the trademark before your registration, that person has common law rights to continue using the trademark in the geographic area where it is currently being used.  The registration of your trademark will prevent any future expansion of their trademark rights, but their limited rights will continue.

Counterfeiting Statutory Remedies

Registration with the PTO also provides statutory damages for use of counterfeited marks that do not require the trademark owner to prove damages.  See  15 USC § 1117(c).   These statutory damages are not less than $1,000 per counterfeit mark or more than $200,000, unless the use was willful, in which case the statutory damages can be up $2,000,000.00!  Id.  That’s a lot of potential damages if anyone ever counterfeits your trademark! Unfortunately, if a trademark is only registered with the Secretary, these counterfeiting statutory damages are unavailable. But other statutory remedies are available, as discussed below.  See 15 USC §§ 11161117;  M.G.L. c. 110H §14.

Alternative Statutory Remedies

Additionally or alternatively, registered trademark owners can obtain remedies such as injunctive relief, infringer’s profits, trademark owner’s damages, costs, and possibly treble damages or attorney’s fees in certain situations. Id.  at §§ 11161117.    Similar remedies are available by registering in Massachusetts with the Secretary and under 93A.  See M.G.L. c. 110H §13, M.G.L. c. 93A, § 11.

U.S. Custom Protection

Registering with the PTO also provides the capability to bar importation of goods bearing infringing trademarks. 15 U.S.C. §1124.  To obtain this protection, deposit and record the PTO registration with US Customs and Border Protection (“Customs’). Customs be in your corner to help prevent infringement of your mark!  Unfortunately, registration with the Secretary does not provide this benefit.

Registered Trademark Symbol

If your trademark is registered with the PTO, you can use the registered trademark symbol:  ®.  See 15 USC § 1111.  But if your business only registers its trademark with the Secretary or leaves it unregistered, you can only use TM or SM, depending on whether it’s a trademark or service mark.  For many businesses, the use of the  ® mark is extremely important and provides valuable protection. Also, to obtain statutory damages under the Lanham Act, the registered trademark symbol must be prominently displayed.

Based on the foregoing, every business should consider registering their trademark with the Secretary or, preferably the PTO.  The filing costs are fairly reasonable (between $225 – $400 per class  of goods/services for the PTO and $50 per class with the Secretary) + attorney’s fees.   If you want to discuss whether it makes sense to register your mark, contact Bross Law, LLC today.

Add your comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.