The ultimate value of a trademark to its owner is dependent upon a number of factors, including its market appeal, the availability of the mark for use, its registrability, and how easy it is to enforce against others in the marketplace. A well-planned trademark portfolio adds value to a company’s bottom line, provides leverage during negotiations, and keeps competitors at bay. But, what are protectible trademarks and how does your company secure such rights?
A trademark is anything — including a word, symbol, color or even a sound — that serves to identify a particular good or service with its source. Trademark rights arise automatically in the U.S. under the common-law upon use of a mark in commerce. However, these common law rights are limited in scope to the geographical area where actually used, plus a reasonable zone of expansion around that area. Federal and state trademark registrations provide greater protection to a trademark owner, including greater geographical rights — the entire U.S. for federal registrations and the entire state for a state registration. Federal registrations have a term of ten years, but can be renewed indefinitely, so long as the mark is still being used. Common-law trademark rights do not expire at any particular time. Instead, they are perpetual rights that last for as long as a trademark owner is using and protecting the mark.
When a federal trademark application is filed, the U.S. Patent and Trademark Office (“PTO”) will examine the application to determine if the mark is registrable. The PTO may refuse registration of a mark for a variety of reasons, such as: (a) if it is likely to be confused with another pending or federally registered mark, (b) it is generic, or (c) it is descriptive of the goods or services it is used with. The more arbitrary a mark, the more likely it is to achieve registration. Nonetheless, sometimes more descriptive, unregistrable terms have greater market appeal than arbitrary marks, such as California Pizza Kitchen. Thus, there may be times when a company forgoes trademark registration protection in order to promote its products or services.
In choosing trademarks, a company should consider whether a trademark is sufficiently distinctive from other trademarks and trade names that it will generate recognition amongst consumers of the source of the goods or services sold with the mark. Ideally, a company’s customer base will develop strong recognition between a trademark and the company as the source of the goods or services at issue. The value of a trademark ultimately depends largely on such customer recognition. A distinctive trademark meets another important goal; i.e., it is a stronger mark and is easier to enforce against infringers.
To reduce risk in the trademark selection process, a company should conduct trademark availability searches before investing company resources in a new mark. The goal is to determine, to the extent possible, whether other parties have superior rights to the same or a substantially similar mark for similar products or services. If another company appears to have superior rights in a mark, then a trademark owner that uses a similar mark may be at risk of infringing the prior owner’s rights. Trademark availability searches can be conducted on the Internet and through trademark professionals.
Companies that develop reputations associated with their brand names will benefit from protecting their trademarks internationally too. Once a U.S. trademark application is filed, “priority” applications may be filed in other countries that claim the benefit of the U.S. application filing date. After that date, a company may still file foreign applications for the trademark, but the applications will receive their application filing date rather than the earlier date of the U.S. application. Delay in foreign filing creates risk that another company may acquire foreign trademark rights in a mark before the U.S. trademark owner. A European Community trademark application may be of interest to a company with international business, since it provides coverage for the entire European Community -- about 28 countries of the European Union.
Another cost-effective approach is to file a Madrid Protocol international application. Such an application provides the option of protecting a mark in about 72 countries, one of which is the European Community by filing one application with the World Intellectual Property Office (“WIPO”), in one language, with one set of fees, and in one currency. An international trademark application is transmitted by WIPO to the national trademark offices that are members of the Madrid Protocol. Each country examines the application, and if the trademark office of a designated country does not refuse protection within an eighteen month time period, trademark protection is automatic in that country with no additional fees. Thus, a Madrid Protocol application provides a streamlined and cost effective means for international protection.
With planning, a valuable trademark registration portfolio can be developed for your company to protect its branding. Such a portfolio provides a company with both offensive and defensive benefits in today’s competitive market.