Think of your favorite fast food restaurant, clothing line, soft drink or laundry detergent. Each one is identified by its brand name (for example, McDonald’s, Dockers, Coca Cola and Tide). Each brand name is a trademark created and advertised to increase your ability to readily identify the product and to influence your buying decisions. Now imagine if your business had the opportunity to make its product or service stand out from your competitors. You would want to pursue that edge, wouldn’t you?
A Business Asset
Just as a trade name or commercial name distinguishes and identifies a business, so does a trademark. A trademark defines the quality, consistency and value of the goods or services offered and influences the consumer’s perception of the business. By creating an association between the mark and the product in consumer’s minds, trademarks serve to establish consumer good will and are often the most important asset of an established business. As the company’s reputation and client base grows, so does the value of the trademark.
What is a Trademark?
Trademarks help consumers seek out (or avoid) particular sources of goods or services. A trademark is a distinctive word, phrase, logo, domain name, graphic symbol, slogan, or other device that indicates the source or ownership of a product or service (also known as a “mark”). The purpose of trademarks is to avoid consumer confusion. Likelihood of confusion occurs when consumers are likely to be confused or misled about marks being used by two parties. Generally, trademark law gives legal protection to marks that are “distinctive” – memorable, evocative, creative, unique or somehow surprising enough to help customers recognize a particular product or service. Some trademark examples are Microsoft, Q-Tip, Yahoo, Coca-Cola’s bottle shape and wavy design, McDonald’s golden arches, and Nike with its “swoosh” symbol. A strong trademark is sufficiently distinctive that it sticks out in the consumer’s mind.
Should a local business care if another business is using the same mark in another state?
Yes. The internet has expanded the marketplace by giving “Mom and Pop” businesses the ability to solicit customers worldwide. Therefore, regardless of the other company’s location, the potential for competition and trademark confusion exists which requires businesses to screen their proposed mark to avoid potential infringement. If two companies use similar trademarks for different products or services, there may not be a trademark conflict, particularly if the businesses serve only local markets and are several states apart. But what if you plan to expand the use of this mark to other products? What if your business sells a specific product in the tri-county area around Portland only, but another business with a similar mark is trying to sell the same products to your customers over the internet? What is the likelihood that your customers would be able to tell you apart?
Establishing Trademark Rights
Trademark rights are established through use. Trademark law prohibits a competing company from using, or infringing upon, another company’s mark. The trademark owner may challenge any use of the mark that infringes upon its rights. A trademark does not need to be registered to obtain legal rights at common law, although registration at the federal (or at least state) level is preferred. Federal registration affords the most remedies, the primary benefit being that it grants nationwide protection and puts potential users on notice of the owner’s right. Potential claims include infringement, false representation, dilution, injury to business reputation, and unfair competition.
Businesses work hard to earn customer loyalty and a share of the marketplace. Consumers rely on trademarks to make informed buying decisions. Trademarks allow companies to create a brand identity and assist consumers to identify and distinguish a business and its products from others. Businesses should seek out distinctive marks, search for other users that may already be using the mark to avoid infringement, and seek registration to protect against subsequent users.