Trademark Basics Every Brand Owner Should Know

Trademark and branding go together like peanut butter and jelly.

More than just your mark on the world, your trademark is the cornerstone of your brand and business.  There’s much more to trademarks than just protecting your brand name or logo.  If you play your cards right, your trademark can provide you with passive income and expand your brand and business in ways you probably can’t even imagine.

What is a trademark?

The broad category of intellectual property (IP) consists of four different categories: copyright, patent, trademark and trade secrets.  Each of these categories protect different things and function in different ways. The best way to think about it is like this: Intellectual property itself is like a tool box – trademark is the hammer, copyright is the saw, patent is the wrench, and trade secrets is the screwdriver.  While all of them function differently, they all can help you build something of value.

According to the United States Patent and Trademark Office (USPTO), a trademark is:

a word, phrase, symbol and/or design that identifies and distinguishes the source of the goods of one party from those of others.

Of equal important is a service mark, which is:

a word, phrase or symbol and/or design that identifies and distinguishes the source of a service rather than goods.

Some notable trademarks:

Apple trademark

Beats by Dre Trademark

So…the purpose of a trademark (or service mark – the term “trademark” can be used generally for both a trademark and service mark) is to identify your goods/services from others.  Just like you have a first and last name that help to identify and distinguish you from other people, your business/brand has the same thing, and it’s called a trademark.

Trademark law in the U.S. is governed by the Lanham Act, which is a federal statute (set of laws) that describes what a trademark is/isn’t, what rights you have in a trademark and how you can obtain one.

How do you obtain a trademark?

There are two ways to obtain a trademark: 1) By actually selling goods/services in commerce under a trade name (business name) – this is known as common law trademark; and 2) Federal registration of your trademark with the USPTO.

Common Law Trademark Rights

“Common law” refers to the actual use of the mark in a particular geographic area over time.  Common law trademark rights are not governed by statue and are subject to state law.  What does this mean in plain English?

Let’s say you live in New York and you have a line of widgets that you are selling under the brand name, Widgety Wack.  Once you start selling your widgets to consumers in New York, you will have obtained the common law trademark rights to the name Widgety Wack.  If someone else in New York started selling widgets under the same name, you could sue them.

Keep in mind though – you will only have the common law rights to the name in New York.  If you start selling the widgets in other states, your trademark won’t be protected in those other states.  Additionally, because you only have common law trademark rights in the name Widgety Wack, someone in California could use the same name to sell their widgets there.

The advantages of common law trademark rights?  It’s free.  Once you start using your mark in commerce, you will have obtained the common law trademark rights in it.  The disadvantages?  You are only protected in your state and if you want to expand your brand/business beyond your state, you risk infringing on someone’s right in the name.  This could seriously hamper your business development.

Federal Registration

Federal registration is the optimal avenue for obtaining a trademark because it allows your mark to be registered nationwide.  Additionally, a federally registered trademark is subject to statute (as opposed to common law trademark rights).  This means that your trademark would be governed by and protected under the Lanham Act.  In essence, federal registration provides a suit of armor for your trademark – impenetrable protection and strong defense against any would-be infringers.

In order to obtain federal registration, you will need to file a trademark application with the USPTO.  Along with the application, you need to provide a specimen of the mark as it is being used and evidence of how you have been using the mark in commerce.

This process sounds simple, but there are many legal nuances to what constitutes a trademark.  Additionally, before filing the application, an extensive search of the federal database and the Internet for identical or similar marks must be conducted. It’s best to consult with an attorney before filing.

The advantages of federal registration?  It gives your trademark protection nationwide and is the prerequisite for some of the other wonderful things you can do with your trademark. The disadvantage?  It’s expensive, relatively speaking.  But, it takes money to make money so if you are serious about your business, you won’t consider it a disadvantage.

What can you do with a trademark?

You’ve got a trademark – now what do you do with it?  Generally speaking, there are three things you can do with it: 1) Conduct business under the trademark/service mark; 2) License the use of the trademark/service mark to someone else; and/or 3) Assign the trademark to someone else.

Conduct Business Under the Mark

This is pretty self-explanatory.  Once you have obtained the trademark, you can use it to conduct business.  By doing so, along with enforcing your trademark against would-be infringers, you are enhancing your trademark’s inherent value (otherwise known as “goodwill”).

License the Use of Your Trademark

Licensing your trademark is a great (and very lucrative) way to expand your business and your brand.  Intellectual property (trademark, copyright and patent) is like real property – it’s an asset that you can leverage in order to gain income, both passively and actively.

What exactly is a license? A license is a contract giving written permission, for a limited time, to someone to exploit an invention, creative work or trademark. Basically, it’s permission to use someone else’s validly owned trademark for a limited period of time, and usually in a limited way.

A trademark ties a particular category of product or service with a particular word, phrase, symbol or design. So, if you own the trademark to the phrase Widgety Wack for your widgets, you wouldn’t own the trademark to Widgety Wack for any other product or service.  You would have to use the mark in commerce on another product or service (to get the common law trademark rights) or file another trademark application with the USPTO for another product or service category.

Suppose you wanted to now offer a widget repair service under the name Widgety Wack. You already own the trademark for Widgety Wack for the product (the widgets), but your company doesn’t have the resources for the repair business.  Solution? You can outsource the widget repair business to an outside company.  In doing so, you would license the use of Widgety Wack to the outside company in connection with the repair business.

This means that the company has the right to use the trademark Widgety Wack in connection with their widget repair service. Keep in mind that the license should be of limited duration and, as the owner of Widgety Wack, you will need to keep a close eye and tight leash on the outside company – you have to preserve the goodwill of your trademark.

Assign Your Trademark

Assigning your trademark is when you transfer ownership of your trademark to another person or entity.  In other words, you sell your trademark to someone else, and in doing so you relinquish your rights to it.  You may do this as a part of your overall business strategy – such as in the case of a merger or acquisition.  Assigning your trademark may be a sweet reward after many years of adding value to your mark and brand.

Now What?

Looking to trademark your brand name or logo?  Be sure to visit Bernier Legal for more information and to schedule a consultation.

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Melissa Bernier

Principal and Managing Attorney at Bernier Legal, LLC
New York City-based entertainment, fashion and business attorney with over ten years of experience.Talent manager, entrepreneur and public speaker.
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