Photo by Patrik Michalicka on Unsplash
Every client, at some point, has issues with branding and trademark. My hope is that this post will prevent these difficulties for my present and future clients. This post is academic and a bit “boring” – but consider it educational! (Won’t that be fun?!?)
Let’s start by discussing “branding.” Branding, according to the American Marketing Dictionary, is the “name, term, design, symbol, or any other feature that identifies one seller’s product distinct from those of other sellers‘.” Most business owners understand “branding” includes the business name, logo, labels and tags, store design, stationery and letterhead, website design, jingle, tag line, uniforms and color choices. These ideas are also called the company’s “identity.”
Branding is what marks your product or service as yours – and not a competitor’s. Historically, it was the actual brand burned into cattle to designate it as owned by one person versus another person. In the present, “branding” covers many aspects of presentation of the character of a company and its products or services.
The purpose of a brand is to solidify customer loyalty and trust, ensuring your customers return. Over time these aspects translate into a customer’s ability to recall the brand and associate it by memory. For instance, if Mrs. Jones loves Ford cars and has had great experiences with them in the past she is likely to buy another. Labeling the car a “Ford” – immediately lets Mrs. Jones know she can trust that car will have the same characteristics as the others in her experience. Therefore, “brands” not only benefit sellers, but protect customers by giving them a sign that this product or service is associated with others of that brand.
Most companies strengthen branding through Trademarks and Service Marks. Trademark protection is obtained as soon as a distinctive mark is affixed to a product (trademark) or service (service mark). Unlike copyrights and patents, trademarks are NOT specifically mentioned in the United States Constitution – however, Congress did codify the common law in the Lanham Act to clearly protect trade and service mark owners.
The association of a symbol, unique name, or phrase with a product or service is meant to provide consumers with an indication of quality or origin. A mark must be distinctive and associated with the product or service and can be fanciful (“Nike”), arbitrary (“Apple” for computers), or suggestive (“Orange Crush” for the soda). Colors and symbols can also be part of the trademark – but they must be distinctive and not related to the function. Generic terms are not protected if related to the item with which they are typically associated and are, therefore, not fanciful (“soap”). Trademarks can be a standard character mark (typed, just the letters or words with no design element) or stylized (with a design element; a logo).
Trademarks run along a four point scale – with marks that cannot be protected to marks that are superior. Generic marks (or obscene or deceptive marks) cannot be protected. You cannot, for example, trademark “soda.” You cannot trademark a descriptive mark, like “refreshing” or “solid” – as these do not differentiate your product from another. However, you can trademark a description if it has secondary meaning – like “SuperMoist” (Betty Crocker cake).
Descriptive terms are not as strong as suggestive marks. One of my favorites is “Greyhound Bus.” The bus is not a dog – but it does hint at the quality of service being “fast.” Crayola is another favorite – for crayons. Very clever and hard to duplicate.
Also, you can see, as the trademarks get stronger, it will be more difficult for a competitor to align itself to the mark. Anyone can trademark “UltiMoist” for cake – but “Greyhound Bus” is plainly infringing.
The BEST marks are those that are fanciful and arbitrary – like “Xerox” (meaningless term other than the company) or Apple Computers (the word has ordinary meaning but nothing to do with computers). These marks are highly protected and protectable. They are also the most likely to receive registration without question.
Trademark does not require registration as creating and using one is a common-law property right. Any mark may be notated with “TM” or “SM” to indicate intention to retain property rights over same.
To register a trademark with the United States (or internationally) as provided through the US Constitution requires the seller or service provider to be involved in interstate commerce. (Although each state has a trademark registration process, the filing of same is of questionable benefit as another will not be able to enter the “state” but could obtain a federal trademark that could trump a state trademark registration. The analysis of such a situation is a legal analysis – and an economic one.)
A holder of a trade or service mark may file an initial application with the federal government stating that he or she “intends” to enter interstate commerce. This registration, if approved, will permit the registrant time (a year plus extensions, typically) to actually file an “in use” application and receive federal trademark registration. At only that time can a mark be labeled with “®.”
Use provides the owner superior rights to registration. If two owners of an identical mark are competing – one registered not using the mark and one unregistered using the mark, the one using it will win in an infringement action. This is the essence of trademark – the use in the market to allow consumers’ association. In fact, the intention of trademark is to protect the consumer – technically not to protect the producer or servicer. Reviewing the history of trademark – which was once “guild” marks – gives an idea of what the purpose is. When a consumer goes to buy a Ford, they should not end up with a Nissan marked “Ford.” This is a simple concept. If a client is seeking to create a trade or service mark, they should be doing so to differentiate the product or service in the market – with the intention to cause customers to associate the mark with that particular product or service.
Trade/Service marks must be constantly used, consistently used, and affixed to the product or service. Trade/Service marks not so used are considered abandoned – whether registered or not.
Trademarks and Service marks must also be policed. Whether registered or unregistered, the owner must constantly watch the market to ensure related competitors and even those in unrelated industries are not wrongfully using (infringing) on the mark. Policing must be based on consumer confusion: That a buyer will likely confuse two companies with similar marks – typically in similar or related industries.
The need to file a trademark registration application depends upon several factors – most of these factors are legal determinations and require legal analysis, including investigation of case law, statutory law, and the regulations thereunder. However, business decisions can be made on the basic concepts and protections provided through the common and statutory law.
A trademark application is based upon the number of classes of goods or services for which the mark is used. Each “class” requires a separate application fee ($275 per class of goods or services). International protection, which is logically wise in this time of internet commerce and trade, requires an additional $100 filing fee per class. The trade or service mark should be researched prior to design or use so the new mark does not infringe on either a registered or unregistered mark. The analysis of this search requires a legal determination whether or not the new mark will infringe on another.
Even more importantly, before branding your company and creating its trade or service marks (and spending money on a website and labels and tags, etc), contact a business attorney to research the proposed brand. Remember: Trademarks and branding do not need to be registered to be granted legal status. Often clients merely do a quick internet search on the name they want to use – and, either do not find anything similar – or think what they do find “does not matter.”
One of my dearest friends formed a company about twenty years ago and opened her beautiful retail store in a major city. (I loved her store.) She sold high-end home goods, apparel, jewelry, and similar items using a company name and tag line. Her brand was clearly elite – classy, high-end. She bought a beautiful sign for the front of her store (to the tune of several thousands of dollars) and had tags and bags – and invoices and stationary – printed with her logo, name and tag line.
She had done an online search and no other company appeared to be using her chosen company name – so she had no reason to worry.
Three years into operating her business she received a cease and desist letter from a company in California who owned – and was using – the same name she was using. That company also owned the Federal Registration for the name (which a competent attorney would have discovered long before the client had spent all that money on establishing her brand). The client, misunderstanding trademark law thought a California company would not worry about her store in another state – but she had to comply with that cease and desist – and the expense to change her store brand – its identity – forced her to close her doors.
That’s when I met her. As my client, we researched and created a new brand that would be her trademark – and hers alone. However, the expense and time her doors were closed were a painful lesson.
Retaining competent business counsel before spending the time and money to develop a brand – or investing for years in what you may find cannot be trademarked and protected – is the most sound advice.