Does Your Business Need a Trademark?

A guest post by Kathryn Goldman My typical conversation with a new client usually begins like this: “I have a great idea for a business and I need to trademark it before anyone else takes it.” This one seemingly simple sentence is full of excitement, unlimited potential, and, unfortunately, misunderstanding—at least from a lawyer’s perspective. Let’s take this opening line apart piece by piece and separate the unlimited potential from the misunderstanding to capture the excitement of a new business.

“I have a great idea . . .”

Ideas are just that – ideas. Ideas cannot be trademarked, but in some cases they can and need to be protected.

There are essentially two ways to protect an idea. The first way is to keep it a secret, like the formulas for Coca-Cola or Crayola crayons. The second way to protect an idea is with a contract, usually a non-disclosure agreement.

Entrepreneurs are constantly coming up with great ideas. It’s what they do. If it truly is a great idea for a business and not a secret formula or methodology, you really can’t keep it secret very long. To be successful, you have to roll the idea out and get the business going.

They may be great ideas, but they won’t be profitable ideas until they are turned into thriving businesses.

“. . . for a business . . .”

These three words suggest that the business hasn’t started yet which means there have been no sales. Is trying to protect the business idea a worthwhile investment at startup?

While non-disclosure agreements are effective and inexpensive, trademark registration as a method of protection can be costly.

Generally, start-up monies are better invested in basic business infrastructure, product development, planning, and marketing.

“. . . I need to trademark it . . .”

A trademark is a symbol or a word or phrase that identifies the source of a product or service. It may be that your great business idea is actually a very cool design or word that would be used to identify a product or service. It’s not an idea in the sense of something that hasn’t been done yet. It’s an idea in the sense of connecting a design or word to a product or service in a new way to make the business resonate with customers.

As far as you know, no one has thought of using this word, phrase, or perfect design to sell this product or service. If that’s the case it’s not the business idea you’re looking to protect, it’s the ingenious word or design that you want to protect.

Trademark registration is the appropriate method of protection for this kind of idea.

Filing a trademark registration application is a relatively expensive proposition. Before an application can be prepared, a search of the mark is required. Trademark searches are necessary because when you sign the application you agree under penalty of perjury that no one else is using the mark to identify the same goods and services for which you are using it. Without a thorough search, you can’t know that.

In the US, professional trademark search services cost as much as $700 for a word mark search. Running a search yourself on the USPTO database is not considered sufficient by lawyerly standards because the database does not pick up common law trademarks, state trademark filings or business names that might be in use in different parts of the country. The trademark application fee is currently $325 per international class.

Each product or service on which you intend to use the mark would require a filing fee in each class.

So right out of the box, before you even obtain professional help with your trademark, you are investing $1000. Startups don’t often have an extra $1000 in their budget. When is the proper time to file for a trademark registration?

“. . . before anyone else takes it.”

There’s a beautiful aspect to trademark law that is just perfect for startup businesses and entrepreneurs. If you use a trademark you begin to create protection for that mark. Trademark is like a game of possession, or use. In order to win the game, you need to have possession of the ball and use it to hit the back of the net or cross the goal line.

When you start using a trademark to identify your product or service you are beginning to establish your common law right to that mark in the geographic area where you use it. Even if you don’t have the money to file for trademark registration when you start your business you can begin to protect your mark just by using it.

There is some risk involved in using a mark for which you have not filed an application. It may turn out that someone else is already using it. If you’ve invested time, energy, and money promoting your brand under the new mark you may have to rebrand your product or service. It’s a matter of weighing the risk going forward—spend money you don’t have now, or move forward with your mark and possibly have to spend money later (once the cash is flowing) to rebrand.

If someone else files a trademark application for a mark that you are already using you will be considered the senior user in the geographic area in which you have used the mark. You will be in a position to challenge anyone else’s use of the mark in that area. That is the protection you will have created under common law by starting to use the mark even without a registration.

Let the Business Begin

Don’t let the high cost of trademark registration stop you from moving forward with your great new idea. Engage in some preliminary sleuthing to see if you can discover whether your trademark is being used by someone else. If not, grab the ball and aim for the goal line, start your business and let your common law trademark protections begin to build. Once you’ve started scoring, invest in your business with a trademark registration. Kathryn Goldman is a lawyer who protects writers, artists, and businesses from having their work and art ripped off. She is interested in making legal information useful, actionable and affordable. Since she’s a lawyer, she has to mention that she’s not *your* lawyer (so this article isn’t technically legal advice, only educational information), but you’re still invited to download her Digital Artists Rip-Off Protection Report.