Why should these companies consider seeking federal registration?
Your trademark is your company and product identity. You may not realize it but as soon as you use your trademark, it's yours. In the United States, trademark rights are based on use - not registration. This means that the first person to use a mark on a product or a service is considered the owner of the mark for those goods and services. These are ‘common law' rights, and they are geographically limited to where you are actually selling or offering products and services under the mark.
Let's say that you lead a startup company based in Northeast Ohio that produces and sells rain gauges in the Great Lakes region. With record-breaking rainfall, your company grows quickly and two years down the road you decide that expanding to the Pacific Northwest might be a good idea. But unbeknownst to you, an Oregon company has been using the same mark as yours in the region for the last year. If you had filed for a federal trademark registration two years previously, you would have been able to stop the Oregon company from using the mark. Instead, you are now entering into costly negotiations to work out a deal surrounding using the mark and selling your product in this new geographic region, or, even worse, re-branding.
So, even though trademark rights spring from use, by spending a relatively small amount of money and federally registering your mark with the U.S. Patent and Trademark Office you can obtain the nationwide right to the mark to the exclusion of later users of the same or similar mark for the same or similar products and services, even if you are not using the mark in every state. Federal registration also grants you other rights including the right to use the registered symbol, ®, next to your mark, which tends to deter others from copying your mark.
How can a company protect the mark it intends to use before actually using it?
As the leader of a startup you might wonder how thinking about federal registration affects you when you haven't even brought a product to market. You've come up with this wonderful idea, kicked it around and it's beginning to get some traction. But you haven't used your mark yet. How can you protect yourself going forward against the company in Oregon (or someone right down the street) using your mark before you get a chance to use it?
That is where the ‘intent-to-use' application comes into play. United States trademark law allows you to file an application to register a mark before you've used it. That way, you effectively reserve the mark for those products and services for which you intend to use the mark.
You must still put the mark into use on those products or services before the registration will issue, but the beauty of the intent-to-use application is that the date you file the application will be deemed to be the date you first used the mark. Upon issuance of your registration, the Oregon company that started using the mark one year after you filed your application will be precluded from using the same or a similar mark on rain gauges.
What are the risks of not filing for a federal trademark registration?
Some companies will still say, ‘I have common law rights to use this trademark. I'm not going to bother.' And they do, but as I mentioned earlier those rights are geographically limited. The ‘great water gauge idea' has been funded by your family, friends, or personal savings. When the idea blossoms with this infusion of capital and the product is commercialized, the pace at which business moves becomes quite quick. Now imagine that after investing all that time and money, you discover that someone other than the Oregon company has a federal trademark registration for what you thought was your mark and has been using the mark for ten years. That is a financial and timing nightmare that you don't want to have to deal with. There you are, just about to launch, and all of a sudden you have no name for your product.
What steps can companies take to ensure a trademark is safe to use?
When you've had the ‘shower idea,' and your plan to take that idea and create a company surrounding it is in its infancy, but it looks like it's going to happen - that's when you should start thinking about branding.
Think about the brand name - the mark - for your products or services, and the reasonable breadth of products and services on which you plan to use that brand name. You may start off with rain gauges, but plan to move from rain gauges for Northeast Ohio and the Pacific Northwest to smoke detectors in Texas under the same brand name. You should cover all those potential ventures in your intent-to-use application.
Before you file the application though, you still need to be certain that someone else has not already used and/or registered the same or similar mark for similar products. A trademark availability search will determine if there are prior state or federal trademark registrations or common law uses which would impede the use and/or registration of your proposed mark. Once you have determined that the mark is available, if you decide to seek federal registration, you can start the application process and move toward having your federally registered trademark soon after your product goes to market. The application process is fairly straightforward. From application through registration (excluding the availability search) it generally will take from nine to 18 months.