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Springfield Business Journal Articles
Sarah Delano Pavlik and Tom Pavlik write a monthly column on legal and business issues for the Springfield Business Journal.


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Having read this series of articles, you’ve made sure to start and run your business properly so as not take maximum advantage of the entity you’ve selected, you’ve addressed issues between co-owners, and you’ve raised capital to actually begin operations. You’ve come up with the perfect name for your business, product or service. Perhaps you’ve even come up with a logo.

No matter your industry, this type of branding dictates how your customers remember and recognize you or your product. Because you are likely to invest considerable time and money in your brand name, it’s crucial that you assess the relevant legal risks and requirements in addition to applying marketing principles.

Trademark law is at the heart of the legal aspect of branding. A trademark (used for products) or a service mark (used for services) is a word, phrase, symbol or design, or combination thereof, that identifies and distinguishes the source of goods or services. Examples include “Intel,” “Fly the Friendly Skies,” or the Nike “swoosh.” For the purposes of this article, I’ll use the generic phrase “trademark” or “mark.”

People often incorrectly assume that trademark protection may be obtained only by registering with the United States Patent & Trademark Office (“USPTO”). You can still have legal rights to a trademark that arise from your actual use of a trademark in commerce. However, registering your trademark with the federal government can confer several distinct advantages, including a nationwide presumption of trademark ownership, the exclusive right to use that trademark throughout the United States, and presumed notice to the public that you own the trademark.

An unregistered trademark is usually associated with the ™ or ℠ symbol. Such common law trademarks are limited to the geographic area in which the mark is used. For example, if your sell your product exclusively in Illinois under the name “Crusher” you would have trademark protection only in Illinois. If someone else sold a similar product under the same name in Florida there would be no trademark infringement. Likewise, if you then expanded your market nationwide, you would not be able to use the Crusher name in Florida.

Registered trademarks are usually indicated by the ® symbol. In fact, it’s illegal to use the ® symbol with an unregistered mark. The registration process is started with an application that includes a drawing of the mark and an actual sample. The entire registration process is not cheap, and can take several years to complete. Applicants would be well advised to use legal counsel experienced in the field.

In addition, although it is not required, the well-advised applicant conducts a trademark search. Failure to do so may lead to two risks: (1) your application being rejected because of marks with which you might not be familiar; and (2) another party asserting prior use of the mark, which may give that party superior rights, including the right to stop your use. Cursory searches can be done in the USPTO’s database at www.uspto.gov. However, this search will not disclose unregistered trademarks. A professional search is the safest course. It usually costs at least $500 or more, and includes a review of telephone books, newspapers, the internet, state registrations and other sources.

If you don’t register with the USPTO, protection is also available by registering your mark with the Illinois Secretary of State. The process is much simpler, and cheaper, than federal registration. As long as you continue to use the mark in Illinois, it’s protected for ten years and may be renewed thereafter. Note that simply registering an assumed or corporate name does not guarantee trademark protection.

Should legal considerations influence your choice of a mark? Yes, without a doubt. There are three types of marks. “Arbitrary” or “fanciful” marks are the easiest to register and protect, and consist of made-up words that have no association with a good or service. “Yahoo” is one example. The next easiest mark to register and protect is the “suggestive mark” that suggests, but does not describe, a good or service. “Greyhound Bus” is one example – it suggests fast service. Finally there is the “descriptive” mark such as “Tom’s Plumbing.” This is the least desirable mark because the law tends to disfavor granting protection to words necessary for use by the general public to describe a good or service.

Assume, then, that you have a registered trademark or rights in a trademark created by actual use in commerce. What does this get you? Trademark rights allow you to prevent others from using a same, or similar, mark in conjunction with similar products or services.

If you discover a competitor infringing on our mark you may bring a trademark infringement case. When deciding such cases, courts consider which company used the mark first, the geographical use of the mark, and the degree of consumer confusion.

Courts will also consider your use of the mark in terms of licensing and whether you have diligently policed unauthorized use. Perhaps you have heard stories of Disney suing grade schools over unlicensed use of Disney trademarks in murals or wall paintings? Disney isn’t being petty. To the contrary, it’s insulating itself from a claim that its registration is invalid due to acquiescence.

Although technically not a “brand,” the smart business owner should also think about how to protect trade secrets – things such as customer lists or business models. In brief, you should (1) have your employees execute confidentiality agreements, (2) be wary of disclosing confidential information with outsiders, but if you must, have them absent confidentiality agreements, and (3) take steps to maintain the secrecy of your confidential information (computer passwords, etc). Failure to meet the reasonable precautions requirement may mean that your confidential information is public fodder. Even with a confidentiality agreement, a court may find that the failure to take other reasonable precautions means that the confidentiality agreement is an impermissible restriction on free speech. In that event, you are left with no protection.

In short, if you already have a mark, talk to your legal counsel about taking steps to protect it. If you are just starting out, make sure to consider these legal issues before selecting your mark.

by Thomas C. Pavlik, Jr.
Posted in: September, 2010
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