Common Law Trademark Rights
Common law trademark rights are acquired simply by using the trademark in business. The difference between a common law, or unregistered trademark and a federally registered trademark lies in the amount and geographic reach of protection. Common law trademark rights automatically attach to the business that uses the trademark first in business. Common law trademarks are generally limited to the geographic area where the trademark is first used.
For example, if a business sells furniture under a brand name only in Los Angeles, a common law trademark will prohibit another business from selling furniture under a similar name in Los Angeles. However, such protection does not extend to prohibit a competitor from opening a similarly named business in Seattle. Furthermore, if that competitor is the first to use the trademark in Seattle, it’s common law trademark rights would prevent the LA business from expanding into the Seattle market.
There is a distinct benefit to common law trademark even if there is a subsequently registered USPTO trademark of the same name. As the first user of the trademark, common law rights may preserve a business’ right to continue to use the trademark in the geographic area, even if another business gets a nationwide federal registration for the same mark. However, common law trademark rights can be hard to enforce because there is no public record of common law trademarks to prove when use of the trademark began.
Federally Registered Trademark Rights
Registering a trademark with the USPTO is especially critical if the business is participating in e-commerce because it extends beyond the borders of the local geographic area, presumably throughout the world. The ubiquitous reach of the Internet makes it almost essential for a business to register a trademark with the USPTO. Most importantly, registering a trademark provides the following benefits:
- Makes the trademark easy to find in a competing business’ trademark availability search, thus preventing conflicts before they begin.
- Protects against registration of confusingly similar trademarks.
- Provides nationwide notice of ownership of the trademark as of the registration date, thus preventing others from claiming their subsequent use of the mark was in “good faith.”
- Grants the right to use the ® symbol (unregistered marks can only use “TM”), which gives products more marketing cachet and puts competitors on notice.
- Grants the right to sue in federal court and, in certain cases, recover treble damages and attorney fees.
- Provides for statutory damages in the case of counterfeiting.
- Provides a basis for foreign trademark registrations, thus extending protection of the trademark worldwide.
- Empowers US Customs and Border Protection to block imports that infringe the trademark or are counterfeits.
Conflicting Business Names
Encountering another business with the same or similar name is not that unusual (e.g., Delta Airlines and Delta Faucets). How such a conflict is resolved could depend on many factors, including: (1) whether the other business is in the same industry; (2) whether the other business is in the same geographical market; (3) which business was using the name first; (4) who registered the trademark first with the USPTO; and (5) whether either business name is considered “famous.”
It is entirely possible for two businesses to operate under the same or similar names. The guiding principle under US trademark law is consumer confusion. If the two names identify different products and operate in different markets, consumers are not likely to be confused in choosing between the businesses.
In the US, the first to use the name in business secures certain rights, even if another business ultimately registers that name with the USPTO. If one business starts using the name first, but the other business registered with the USPTO first, the first business still has the right to use the name, but only in the market it was operating in at the time the other business registered the name. Thus, there is basically no right to expand the market beyond that initial market. The business who registered the name with the USPTO has priority everywhere else and can prevent anyone from using the mark in new areas.
Intent to Use Trademark Filing
In some situations a business may have selected the perfect name for its business, but isn’t quite ready to begin business operations. Remember that in order to file with the USPTO, the business must be using the name in business. The USPTO provides an option called the “intent to use” trademark application which is used essentially as a placeholder for the business name.
It may be a good idea in some situations to file an “intent to use” application with the USPTO. If an “intent to use” application is filed and someone else begins to use the same or similar business name, the rights of the “intent to use” filing business are protected. Thus, “intent to use” applications are an important part of putting together a viable business plan and protecting interests during the process.
There is significant value in registering a business name with the USPTO. First, the due diligence conducted prior to registration will ensure that the business name will not infringe upon existing business names that have been registered. Second, registration with the USPTO provides a business with significant and substantial legal protections. Third, formal intellectual property protection only strengthens the value of the business name, thus increasing the value of the business itself. Any business serious on protecting itself should register the business name and/or logo with the USPTO.