Trademarks for Startups
In this post, I’d like to discuss what startup founders need to know about trademarks. When discussing intellectual property rights, most advice focuses patents and copyrights. Although both of those are important, trademark rights are often overlooked. As a startup gets off the ground, you might have a team of a few engineers, and perhaps a few marketing or sales personnel. I highly recommend getting some advice from a trademark attorney before you launch your product or service, rather than leaving it up to a salesperson.
Hulk Smash! (or why strong names are important)
Names are important. Coming up with a good name for your business or product line is arguably just as important as the product itself. The New York Times reported on a study that showed the performance of an IPO was often correlated to how easily people could pronounce the name of the company.
Coming up with a strong trademark out of the gate lets you avoid wasting money on a weak trademark, potentially limiting your expansion ability, and having to rebrand yourself down the line.
In the US, there are five categories of marks, in decreasing order of strength: Fanciful, Arbitrary, Suggestive, Descriptive, and Generic. The strength of a trademark is how enforceable it is — the more arbitrary it is, the stronger, and the more generic it is, the weaker. See my previous post here (LINK) for a more in-depth discussion of trademark strength.
What’s My Name Again?
Once you’ve got a few ideas, make sure that no one’s using it already! The most important thing to figure out is if someone is using your potential name for the same products or services you’d like to offer. A very in-depth worldwide trademark search sometimes can cost quite a bit of money, but a basic search should cover at least the trademark office, Google, and relevant domain names.
Most people reading this blog will be familiar with the music streaming service Pandora. Pandora owns a number of trademarks for “Computer software for streaming, broadcasting, transmitting and reproducing music.” This Pandora, however, doesn’t have rights to the Pandora name across everything, only for computer software. There are a number of other “Pandora” marks for lighting ballasts (Registration №4782014), jewelry (Serial №87128336, now abandoned), bedroom and bathroom furniture (Serial №86517518, now abandoned), and more.
If there is a foreign business, or business that is in a different industry, there’s a possibility for co-existence. You should also keep geography in mind: if you’re only operating in the US, a search of the US trademark database should be enough. If you’re planning on expanding worldwide, it might be prudent to do a search of the trademark databases in your most relevant foreign markets.
So the mark you like is available. Should you register it?
Although you do have rights in your mark simply for using it, it’s much easier to prevail in a legal battle if your mark is registered with the United State Patent and Trademark Office. At first, the only trademark might be your business name. As you come up with more products, ideally you should trademark each product or service name. For a look at the benefits that registration gives you, check out my previous article here. (link)
Once you get a trademark, make sure to use it! A registered mark gives you the right to use the ® symbol after your trademark. If you are forced to sue another company in the future, you still have the rights granted to you even if you don’t use the ® symbol. However, failure to use the ® could severely limit the money damages you could be owed. (see 15 USC 1111)
Yeah, Yeah, I’ll Get To It Tomorrow…
You probably didn’t get into the startup game to fight legal battles. Trademarks are one of the easiest forms of IP to check for before launch, but they consistently trip up even experienced companies. Checking for already existing trademarks lets you avoid having a black eye, extra costs, and a pitched PR battle because you didn’t do a quick search.
On the offensive side, without any trademark rights, another brand is free to copy your entire brand. Trademark rights, similar to other IP protections, give you a right to exclude others. It is not a right to use. Enforcement of your trademark rights rests exclusively with your company. If you come up with a brand, someone else uses it, and you don’t enforce your rights, the other company might be entitled to rights itself. If that company follows legal best practices and registers their trademark first, you might be forced to change the name of your own company or product, even if you came up with idea first.
While trademark enforcement protects your own revenue stream, it also protects consumers. If you are in the business of manufacturing goods, trademark rights will give you the ability to shut down fakes that aren’t manufactured to the quality of your products. Consumers purchasing fraudulent goods could not only get a bad taste in their mouth from purchasing a sub-par product, but could potentially dissuade other consumers from purchasing your products in the future.