When Should You Apply For Trademark?

I get this question about trademarks a lot from entrepreneurs who are just starting up.

The answer, as is often true, involves partly legal requirements and partly business decision making.

The Legal Part

Think of the name of your company as if it were any other idea. Ideas are free for everyone to use until you take steps to transform an idea into one of the forms of intellectual property. In this case, the name of a company or product could be protected by obtaining a Trademark on the name. Trademark is a form of intellectual property.

Certain rights accrue to the owner of a name that has trademark protection, the most valuable of which is the right to exclude others from using that name for the same or similar services in the geographical area where the trademark is valid. So before you can even ask whether you should obtain a trademark, you need to ask whether someone else owns that name. You learn this by doing a trademark search, which is the topic of a different article.

Let’s say that your search does not turn up any conflicting marks that are registered to someone else. Then you can start using that name (at least in a confined geographic area), and from the date you first start using that name to sell some good or service, you obtain common law trademark status. You can apply the common law trademark symbol like this: Name^TM. Also after that date of your first use you can apply for a more extensive form of trademark by registering your name at the state level or at the federal level.

Common law trademark rights accrue to the first entity to use the mark in commerce and does not require registration, but it applies only to the immediate geographic area where you sell your goods or services. Registration extends ownership rights to either the entire state in which you register, or to the entire USA. In either case it is important to remember that these rights do not apply until you actually use the mark in commerce, i.e. you market or sell a good or service using the name.

But what if you are just starting out, and your product is not done or you don’t have a website to advertise your services? Effectively, you haven’t yet started using the mark in commerce yet. Well in that case, at least at the federal level, you can file an application stating that you “intend to use” the mark in commerce. You must have such a good faith intent, and you can reserve that name only for a period of time (initially 6 months, but some extensions are allowed). If you ultimately obtain a registered trademark for that name, your protection extends back to the date you applied for the mark with the “intent to use” it.

The Business Decision Part

There are several considerations to inform your business decision. Of course it costs money to apply for a registered mark, both filing fees and probably some attorneys fees. To avoid those expenditures, maybe you’d be content with having only the unregistered common law mark. But then someone else can register a mark that may block you from expanding the geographical area where you can use that name. If you don’t mind that, then you might not care to register your name.

If you have not started using the mark, you are in a more precarious situation. If you do not apply for trademark with the intent to use it, then someone else could start using the mark or himself apply for a registered mark at the federal level with the intent to use it. Either way, you may well become blocked from using that name anywhere in the USA.

So if you are particularly proud of the name you have chosen, and you have some thought that another entity could start using it while you are waiting to start using it yourself, it might be a good business decision to pay the slight additional fees and apply for the registered mark with the intent to use it.

If you have been using the name for a while, and no one else has tried to take that name in your local jurisdiction, should you bother to apply to register that name?

I would. There are a lot of reasons why I would apply for a registered trademark even on a name that has been used under common law trademark for a long time. But I will give you just one reason here:

If you ever plan to sell your company, the buyer might consider expanding it, and without broader geographical protection of the goodwill you have created in your local area, the valuation of your company cold well be negatively impacted.

Bottom Line

Trademark is a form of intellectual property. Like all forms of property, trademark has some intrinsic value, but most importantly, owning this form of property allows you to expand its value by confidently expanding the reach of your brand. So protect your idea of a great name for your company, goods or services by applying to register it as a state or federal trademark as soon as you come up with the idea.

Argent Place Law, PLLC serves entrepreneurs and entrepreneurial organizations in matters of business and contract law, intellectual property law, and succession planning, including estate planning with wills and trusts. Your business success is so important that Argent Place Law won’t let you go it alone.