Understanding Trademarks & Protecting Business Names

January 10, 2007 | By | Reply More

The business name is the most important intellectual property asset, yet many small and home-based entrepreneurs fail to take steps to protect their business names.

We interviewed Shannon Moore, the General Manager for TradeMark Express to shed light on the importance of protecting your business name as well as the process and cost of getting your name trademarked. Ms. Moore has worked extensively on trademark application, including doing comprehensive research, application preparation, attorney referrals and trademark consultation.

PowerHomeBiz.com: Small businesses are often resource-strapped, and many do not think about protecting their own business name. Why should a small business protect their business name?

Shannon Moore: Regardless of the size of a business, the name is the “face” of the business. The name is the focal point of all the benefits and features that relate to your products and/or services. It’s how customers come to know you and, perhaps more importantly, remember you. Protecting a business name ensures that when customers look for you, they find you and not your competitor with the same or similar name.

What are the steps needed to protect a business name?

The first step is to ensure that the business name is legally available. No matter the size of a business, it’s the owner’s responsibility to ensure that the name they’re using is legally available. If it is clear and if you want to, filing for a trademark is the second step. Now I say if you want to because it’s not mandatory or even necessary for all businesses to file for a trademark. In fact, most businesses in the US do not have a registered trademark. However, there are several important advantages in owning a trademark on your business name, which I’ll explain in detail in a bit.

What are the expenses associated with protecting a business name?

Like I mentioned, the first step is to ensure that the business name is legally available. This involves having comprehensive research conducted. Comprehensive research consists of looking for marks that are similar in sound, appearance or meaning in the pending & registered Federal and State trademark files as well as the US National Common-Law files.

To access these thousands of databases, the cost is typically $1-$5 a minute wholesale, which means that you should expect to pay anywhere from $300-$500 for a comprehensive search. This information should tell you what databases were searched, how your business name was searched and what it all means.

The fees for a trademark are dependent on what type of trademark you need, Federal or State. A Federal trademark is $325 per International Classification. State trademarks vary from state to state but they run anywhere from $10 to $125 per International Classification.

I should explain quickly what International Classifications (IC hereafter) are — all products and services are categorized according to class. There are 45 classes total and each type of product/service has its own class. For instance, clothing is in IC 25, marketing & advertising is in IC 35, etc. The International simply means that this is the classification system used by trademark offices the world over; it does not denote international protection.

Do you really need to file with the USPTO to protect your business name, or will putting a TM sufficient enough? What does a TM really do?

The ™ or SM symbol is to be used for marks that either have a pending trademark application OR for marks that are simply claiming the rights to the mark. Every business should use the TM symbol in that it asserts your claims to the mark. However, it does not provide any significant protection.

Every business has Common-Law rights to the name, provided that no other business has prior trademark or Common-Law rights. This means that as long as you were the first to use the name then, typically, no one can take those rights away from you. However, the hitch with Common-Law rights is that it’s restricted by trade area. This means that your rights to the name extend only to the areas in which you’ve made actual sales.

This is a big reason many business owners opt to trademark their name on a national level. Again, it’s not mandatory to file for a Federal trademark but there are several advantages that are relevant to the small business owner:

  • The right to use the ® symbol to demonstrate Federally registered ownership of your name
  • A legal presumption to the name as well as nationwide exclusive rights to the name as it’s used to identify your products and/or services
  • Establishing brand identity, which is an asset for every business

At what point should small businesses take steps to start thinking about getting their name trademarked? Should they do it during the startup phase while they are registering their business? Or should they do it when they already know that the business works and income is starting to come in?

This varies from business to business. Here are a couple of key questions to consider when making that decision:

  • How important is your business name to you? Now, I know I stressed earlier how the business name is the focal point of your business but in terms of filing for a trademark, the stature of the name can vary from business to business. The importance of brand recognition weighs differently from industry to industry. For instance, the personality of a clothing line is heavily dependent upon the name and therefore, brand recognition and name protection are going to be very important.
  • How big is your business going to be? Of course, everyone says, “well, as big as it can possibly be,” right? While you can never be 100% sure of the eventual size of your business, you no doubt have plans in mind. Are you considering franchising? Do you intend to sell to multiple states? What about outside of the US? Will you be selling online?
  • Is your name unique & distinctive? Or is it generic & descriptive? Typically, names that are generic, descriptive or geographic do not qualify for trademark protection.
    • Names that are descriptive of their industries – SHOE STORE for a shoe store
    • Names that are generic – aspirin, bikini & escalator all used to be trademarks…now they’re just generic terms
    • Names that are geographic – CALIFORNIA DAYCARE for a daycare located in California

READ PART 2: Understanding Trademarks and Protecting Business Names

Isabel Isidro is the co-founder of PowerHomeBiz.com. A mom of three boys, avid vintage postcard collector, frustrated scrapbooker, she also manages Women Home Business, Starting Up Tips and Learning from Big Boys. Connect with her in Google +.

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Category: Intellectual Property

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