Why Protecting Your Trademarks Matters
Shoobx’s previous posts on trademarks (Part I; Part II) discussed the federal registration of trademarks and the conditions that must be met to register a trademark with the U.S. Patent and Trademark Office (USPTO). As a reminder, trademarks are the names, symbols or images, phrases or slogans, and sounds that distinguish your business, and they can be registered or remain unregistered. There are a number of pros that accompany registering a trademark, including the ability to more easily bring action against infringers, as well as constructive notice to others of your ownership of the mark. However, just because your company hasn’t federally registered your trademark with the USPTO does not mean that you can’t take steps to protect it under common law rights. In fact, trademark owners can bring action against infringers based on common law rights alone.
Before we dive into common law rights, however, we wanted to establish why protecting your trademarks is so important. Trademarks are often a company’s most valuable asset. If you don’t protect your trademarks, you may find yourself embroiled in a trademark conflict, and risk losing your trademark rights. Trademark conflicts can be very expensive, particularly for startups where every bit of capital counts as you’re working hard to grow your business. How expensive? In the U.S. alone, $2.64 billion is spent every year on trademark lawsuits (American Intellectual Property Lawyers Association Economic Survey, 2014). The overwhelming majority of trademark conflicts never reach litigation, and are settled out of court. Unfortunately, smaller brands frequently believe they must cave to threats from bigger companies even though they have a superior claim of ownership of a trademark, and this dynamic has even been given a name: “trademark bullying” (INTA, 2017). Untold millions are lost by companies each year in time, attorneys’ fees and settlements, and smaller companies are often the ones hurt most. Let’s say you lose a conflict related to your company’s name—a company renaming process can cost between $100,000 and $1 million for a well-established company, which is no small change (Inc., 2014). In total, global trademark infringement and counterfeit is a $1 trillion problem (World Trademark Review, 2017; subscription required).
How Do I Protect My Unregistered Trademarks?
An unregistered trademark has enforceable rights that you can rely on to help you protect it. Common law trademark rights are what you earn simply by using your trademarks in commerce in the U.S. for your company, even without registration. Of course, there are some additional conditions to this use: your common law trademark has to be “protectable”, meaning it’s not generic or infringing on another party’s rights. Unregistered trademarks can be distinguished with the ™ symbol, which notifies the public that you are using the name as your trademark (even though you haven’t registered it). Registered trademarks are denoted by the ® symbol.
In general, the first party to use the mark on its service or product has a superior right to use the mark for their business over any other party that has adopted the mark, or filed a trademark application at a later date. These rights are often referred to as “rights of first use.” You must also be able to prove use to enforce common law rights (more on that in the next section). For an unregistered trademark, common law trademark rights are limited to the geographic region in which you use the trademark, and might also include areas in which you may “naturally expand.” Federally registered trademarks, on the other hand, have protections that span the entire country.
Proof of Use for Trademarks
The United States Patent and Trademark Office (USPTO) has a list of specific requirements for a registered trademark to be considered in Use, which we discuss in our blog post Trademarks Part II: “Use” and “Confusingly Similar”. Common law rights for unregistered trademarks are generated via “actual use”, which occurs when you use your trademarks in connection with your goods or services (for more details on this, see Cognate’s detailed post discussing actual use). In short, U.S. Trademark Law 15 U.S.C. [section] 1127 holds that “The term ‘use in commerce’ means the bona fide use of a mark in the ordinary course of trade, and not made merely to reserve a right in a mark.”
In order to make trademark “use” on goods, you must meet the following two criteria:
1. Your mark must appear on the goods themselves, their tags or labels, on their containers, or in certain cases on the displays associated with the goods,
2. the goods are sold or transported in commerce.
In order to satisfy use requirements for services, the mark must either:
1. be used or displayed in the sale or advertising of the services and the services are rendered in commerce,
2. the services are rendered in more than one state or in the US and a foreign country.
By way of example, placement of your trademark on goods you are selling or their containers would qualify as “use” on goods, while for services an offer to perform a service can suffice, even before it has been accepted (for instance if you’re a web designer, using your mark on a proposal for a job or project is satisfactory, even if the client does not hire you).
Proof of use is required in many situations. As made clear by the USPTO guidelines, proof of use is needed when you’re filing an “in use” federal trademark registration (as opposed to an intent-to-use application), or renewing an existing registration. However, proof of use also applies to unregistered trademarks: it’s needed to prove common law rights, and to enforce and protect trademark rights (whether dealing with infringement claims, counterfeit, Uniform Domain Dispute Resolution Policy (UDRP) complaints, or any other potential trademark disputes).
How do Companies Traditionally Prove Trademark Use?
As discussed above, registering your trademark with the USPTO is one avenue for protecting it, and will give you the widest reaching enforceability rights and protection. However, registering your trademark at the state and federal level can be a slow and expensive process. According to the USPTO, initial application filing fees range from $225 to $400. There are also possible additional fees related to showing use on top of that ($100 and up) as well as upkeep fees after your trademark is registered (not to mention the expense of working with a trademark attorney). The USPTO has put together an overview of trademark fee information as well as a detailed schedule of fees for anyone who’s interested. Registering a trademark is also a long process: although you’ll likely receive an initial response within about three months of filing your application, the total time for applications to be processed can be complicated by a number of factors and can range from six months to a year or more. The USPTO recommends checking the status of your application every three to four months. This also doesn’t include time spent preparing your application.
Keeping physical records is another way to prove trademark use, although has its challenges. Traditionally, companies with “sophisticated” brand protection strategies have kept physical records showing trademark use. Though the existence of these records would put these companies ahead of their peers when it came to securing the future enforceability of their rights, there are some risks inherent to this type of record-keeping. Physical specimens can be lost, destroyed, altered or forged. Plus, physical records have no inherent timestamp, often making it difficult to tie these specimens to a specific date unless you certify their time of use via a notary.
Technology Solutions and Trademark Protection
Technology-enabled solutions are emerging in the area of trademark protection and making proof of use less expensive and easier to manage for unregistered trademarks. Cognate, for instance, has a common law trademark certification process where companies can upload proof of their trademark use (a “specimen”) and Cognate confirms that the mark is in use, and allows you to add your unregistered trademark to a searchable public registry. The registry leverages blockchain technology to let users record their proof of rights, creating a record of trademark that can’t be changed or altered.
For those of you who aren’t familiar with blockchain technology, a blockchain is a decentralized digital ledger of transactions that combines cryptography algorithms with a system of decentralized computing power. Each party within a blockchain-based system maintains a comprehensive set of records of every transaction that’s ever taken place within the system, and the computational protocols that underlie the system ensure that each party’s records are identical to the other parties in the system. The resulting records in blockchain ledgers are immutable and timestamped. In terms of its application to unregistered trademark protection, blockchain’s permanent record-keeping ability is used by Cognate to unequivocally record trademark information and proof of trademark use, helping businesses enforce, defend, and maintain trademark rights.
Whether you pursue a more traditional route to prove trademark use for your unregistered trademark with physical records, or you’re interested in leveraging a technology solution to do so, it’s important to have a system for documenting proof of use in case you ever need to prove common law rights for your trademark or enforce your trademark rights. And remember, it is always possible to register your trademark with the USPTO at a later date should the scale and geographic scope of your business outgrow the protections provided by common law rights.
Cognate is the world’s first trademark use recordal service powered by blockchain technology, and offers an affordable and efficient way for companies to protect their trademarks.