NOVEMBER 2003
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Trademark: The Ignored Asset
Part 2 of 3: Trademark Registration - How and Why
by William S. Wyler
Schwartz, Manes & Ruby
| In Part 1 of this series, we looked at the nature of what is a trademark or service mark. In Part 2, we will explore trademark registration and why it is valuable. In the final part of this series we will look at trademark infringement and some common misconceptions. The term "trademark" or "mark "will apply to both trademarks and service marks. |
How is a trademark protected? The easiest and most straightforward protection of a trademark is simply gained by using the mark. There seems to be a general belief that a trademark must be registered to actually be considered a trademark or to be protected. This is not true. In the United States, the date that the mark was first used is by far the single most important factor in determining who has rights to a trademark. Even a trademark which has been granted federal registration can not be used as a means to prevent someone from continuing to use an unregistered trademark, which was in use earlier than the date of first use of the registered trademark.
The law does not require any marking to designate an unregistered trademark. However, it is strongly recommended that an unregistered trademark be identified by the symbol "TM." An unregistered service mark is usually shown by the symbol "SM.," although, today many companies use the "TM" symbol to identify both unregistered trademarks and service marks. By putting one of these symbols next to the mark, the owner of the mark is telling the world that it claims the mark as a trademark. This may encourage a potential trademark infringer to choose to use another mark. Without the symbol to designate a claimed trademark, no one would know that a particular mark is being claimed as a trademark.
Considering the protection given to unregistered marks, why should anyone go to the trouble and expense of registering a trademark? First, in order to take full advantage of the trademark protections built into the United States Code, a party suing for trademark infringement must register the mark before filing their claim in the United States District Court. A suit on an unregistered mark is limited to an unfair competition claim that, while reasonably effective, does not grant all the protections granted by the U.S. Code.
Second, a registered trademark is strong evidence that the registering party is the owner of the mark and has a valid trademark. While this evidence of ownership may be overcome in a court, it gives the registered trademark owner a definite advantage. It also makes it easier to obtain an injunction to prohibit another party from using an infringing mark.
Third, a registered trademark owner can, in the appropriate circumstances, obtain attorney fees from the alleged infringer, if they prevail in court.
Fourth, the trademark will become "Incontestable" five years after registration, so long as the mark has been in continuous use during that time. An incontestable mark can not be set aside or have its registration cancelled, even when confronted by a mark which was actually used first. The only actions which can cause the loss of rights to an incontestable mark is the showing that the trademark owner committed a fraud on the Patent and Trademark office during the original application process (i.e. untrue statements in the trademark registration application); by showing that the owner has abandoned the mark with no intention to reuse it or by failing to renew the mark.
Finally, there is a type of protection which will be of limited value to most trademark owners. The owner of a registered mark can block the importation of goods using an infringing mark and may use the federal law to confiscate goods on which there is a counterfeit trademark. This occurs most often with clothing and jewelry. In recent years there have been several major raids on counterfeits, including Tommy Hilfiger shirts and Cartier watches.
One issue which is often misunderstood is the concept of the "ownership" of a trademark. There is really no "owner" of a trademark, even though the term "ownership" is often used. A valid trademark only gives the "owner" the exclusive right to use the trademark within that area of commerce in which the product or service identified by the trademark is marketed, for as long as the mark remains in use. "Shell" may identify a company which sells petroleum products. However, Shell Oil could not be able to stop another company from using the trademark "Shell" to identify its computer equipment or a restaurant. There is little likelihood that consumers are going to be confused into thinking that restaurant services or a computer are from the same company that sells the petroleum products. It is for that reason that there can be Delta for the name of an airline and Delta for a line of bathroom fixtures.
Further, "ownership" is only maintained while the mark is in use or if it can be demonstrated that any non-use is only temporary. A registered mark which has been abandoned can not be used to prevent another from adopting the same mark which would have been infringing if the registered mark had not been abandoned. Federal law presumes that a mark which has not been used for three or more years has been abandoned, although that presumption can be overcome by evidence that the "owner" intends to continue to use the mark in a reasonable time.
(Part 1: What is a trademark, and who cares?)
(Part 3: What is Trademark Infringement)
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