A trademark brings to mind a product's source. For example NIKE, a federally registered trademark, brings to mind the well known manufacturer of athletic shoes. Many purchasers will expect high quality and great design from any athletic shoe bearing this trademark. For well know trademarks, the value of this purchaser goodwill, an intangible, often exceeds that of the trademark owner's plant and equipment. This means that a buyer of the company would pay more for the company's trademark than for all the company's other assets combined.

Trademark owners have the exclusive right to use their mark in connection with particular goods and services sold in particular geographic areas. Where the trademark will be the subject of a federal registration, the mark owner has a choice of seeking registration prior to actual use of the mark (intent to use), or after the mark has been used (actual use).

Federal trademark registration provides unique benefits to the trademark owner. Not only is it possible to seek federal registration based on intent to use, a federal registration covers the whole of the United States irrespective of where the trademark owners' goods have been sold. Imagine, for example, the value of this U.S. wide coverage to a company like Starbucks whose first coffee shops were in the West. How disappointing it would have been to arrive in Memphis, TN only to find that a competitor began to use the name Starbucks a few months earlier.

Trademark Services

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• International trademark applications
  1. Madrid Protocol
  2. Other foreign

• Trademark licensing

• Trademark infringement opinions

• Intellectual property audits

• Intellectual property due diligence
  1. M&A
  2. Public Offering
     

Trademark Fundamentals

A trademark includes any word, name, symbol or device or any combination thereof. (15 U.S.C. 1127) Almost anything that is capable of operating as a source identifier will suffice for a trademark. Examples include Nike's word mark NIKE its design mark in the form of a swoosh and trade dress such as the shape of Coca Cola's glass bottle, and the pink color of Owens Corning's fiberglass insulation.

A trademark owner has the exclusive right to use its mark on particular products sold in particular geographic areas. Some trademark rights spring up merely because a mark has been used; these are often called the "common-law" trademark rights. For example, a hairdresser in Sacramento serving clientele in the city of Sacramento may use the unregistered mark "THE DO." Because first in time is generally first in right with trademark ownership, the hairdresser can prevent nearby competitors from using her mark. But, the hairdresser cannot prevent a business in Boston from using the mark even if the Bostonian provides an identical hairdressing service. Common law rights reach only to places where the mark has been used.

Federal trademarks are granted by the United States Patent and Trademark Office based on a formal application and payment of a fee. They do not "spring-up." Nor are they automatically granted. The questions federal registration most often turns on are 1) whether the applied for mark is inherently distinctive and 2) whether the applied for mark creates a likelihood of confusion in the marketplace.

Distinctiveness refers to the ability of a mark to operate as a source identifier. For example, consider two business owners who are evaluating use of the term "cherry" as a trademark. The first is an entrepreneur selling cherry flavored lipstick and the second is a manufacturer of plastic pipe. Because the word cherry is indicative of an ingredient of the entrepreneur's product, it is descriptive of the product and not distinctive. While distinctiveness may be acquired, the most common basis for showing this is five years of continuous use of the mark. In contrast, the manufacturer has chosen a term that bears no relationship to plastic pipe. Rather than a descriptive term, the manufacturer has chosen a term that is arbitrary when used in connection with plastic pipe. Arbitrary terms are immediately protectable as trademarks and are strong marks, entitling the mark holder to broad protection against similar marks used on similar products.

Confusion destroys trademark value by muddling what is intended to be a clear linkage between a product and its source. Because of this, preventing confusion resulting from the use of similar marks on similar products is a lynchpin of trademark law.

The law prevents confusion by granting to the first user of a mark (the senior user) the exclusive right to use of the mark in connection with particular goods and services. Whether a junior user of the same or a similar mark creates a "likelihood of confusion" in the marketplace is the most significant question to be answered in the context of both selecting a mark and determining the junior user's right to use the mark. Adoption of a senior user's mark may result in legal and other barriers to use of the junior mark. In cases, a junior user may be required to pay the senior user monetary damages for use of the senior user's mark. This explains the need for and value of performing a trademark search prior to adopting a new mark.

Federal trademark registration is available for marks used in interstate commerce (two states or one state plus one foreign country). Importantly, federal registration closes two large gaps associated with common-law trademarks. It allows a trademark application to be made before the mark is actually used. And, as the trademark application's filing date, it provides constructive notice of the applicant's claim to exclusive use of the mark throughout the United States. A business owner may therefore select a mark for future use, file a federal trademark application and pursue a business plan based on the applied for mark. Prudent owners will request a trademark search to obtain some comfort that the mark selected will likely be issued by the USPTO. When the mark is allowed by the USPTO, the owner's first use of the mark in interstate commerce will perfect her exclusive rights in the mark as of the application's filing date.

Unlike patents or copyrights, a trademark can be perpetually maintained by its owner. For example, the German owners of the LOWENBRAU mark for beer claim use since 1383; LOWENBRAU was federally registered in the U.S. in 1933. Like this mark, many trademarks are registered in a multitude of countries. To the extent a product is sold in international markets, it is common to use consistent branding across all of those markets, multiplying the effect of investments made to popularize the brand.

A U.S. trademark owner may apply for an international mark and in some cases may claim internationally the priority date of the U.S. filing. An international treaty known as the Madrid Protocol makes it possible to file for trademarks in most of the commercially important markets around the world. Where a mark is to be filed in a "non-Madrid" country, our foreign associates file the application in the foreign country.