Entrepreneurs are talented at doing many things, and they like to move fast. But sometimes when starting a new business, their eagerness and substantial appetite for risk can lead to costly errors when it comes to using, protecting, and enforcing a trademark.
In honor of Small Business Week April 29th-May 5th, below are five common trademark-related mistakes made by entrepreneurs and tips for how they could have avoided them.
1. We Love the Name, So We’ll Just Use It.
Strong brand names and taglines gain value as they avail themselves to consumers, customers, and the general public. But even the cleverest names and slogans — at inception — don’t have much value because, well, nobody knows about them yet.
So often we see entrepreneurs insist on using a name that is confusingly similar to an existing trademark because they can’t imagine that another name would sufficiently represent their product or service.
At inception, however, the cost to change a name is little to nothing: the company has likely spent very little to promote products or services using this newly developed brand name. Using a mark that you know may be infringing can present significant issues down the line; rebranding later could mean hefty fees to marketing firms and sleepless nights trying to figure out how you will retain customers who no longer will see your brand as the one they’re familiar with.
So, be smart: do a proper search through experienced trademark legal counsel, and if they tell you that your mark of choice has issues, scrap it, select something new, and move forward. This way, you have peace of mind knowing that you can freely operate, rather than waiting for that cease and desist to appear on your doorstep.
2. Add a Letter or Two and We’ll Be Fine.
Trademark infringement occurs when a mark is likely to cause confusion among consumers due to the existence of a pre-existing confusingly similar mark.
Sometimes entrepreneurs believe that they can eliminate any trademark liability simply by adding a letter or two to their mark (e.g. changing NIKE to NIKES, or selecting THE INSTANTGRAM PHOTO APP even when INSTAGRAM exists).
The law does not require that two marks be identical in order to substantiate a claim for trademark infringement. Rather, provided there is a likelihood of confusion between two marks, a claim for trademark infringement may exist.
How does a court figure out if there’s a likelihood of confusion between two marks? Judges consider a number of factors, but the most important are the similarity of the marks, the similarity of the goods and services, and whether the junior user had any intent to palm off the goodwill of the senior user.
Of course, if there’s any evidence of actual confusion among consumers in the marketplace, that’s very strong evidence in favor of infringement.
3. We Don’t Want to Go to All the Trouble.
Often times, entrepreneurs and their companies expend time, resources, and energy searching, clearing, and registering their marks, but don’t want to expend any time, resources, or energy policing those marks.
Well, that can be a problem. Trademark law is pretty clear that a trademark holder who fails to police its rights risks losing its rights altogether.
In other words, a company can’t decide not to enforce its mark against infringers for, say, 5 to 10 years, and one day low and behold sue a competitor for using a confusingly similar mark.
Of course, a company could take that route, but would risk having to explain why it decided to selectively enforce the trademark against this particular infringer, instead of consistently enforcing its mark over time.
If the mark holder can’t offer a good reason (and no, we didn’t feel like it or didn’t want to pay for it don’t suffice), they might lose their case for infringement.
4. If We Don’t Use It, We Won’t Lose It.
Failing to use your mark consistently over time is a surefire way to weaken or lose your trademark rights. This generally works in two ways:
- Brands must not stop using a mark to continue receiving protection over it
- And, that mark’s use must be consistent — in other words, sometimes using NIKE and other times using THE NIKE or THE NIKES weakens the overall impression of the mark, and could (over time) strip a company of its rights altogether.
This is why famous marks are almost always used in the same way, with similar or identical placement on products or services (even over long periods of time).
5. We’ll Just Do It Ourselves.
Almost anyone who can read and write can file a copyright registration with the Copyright Office. It really is that simple.
Trademark applications are markedly different and substantially more complex. The application requires the applicant to make certain selections based upon particular sections of the Lanham Act.
The class descriptions and statutory basis for the filings are not necessarily intuitive, and the penalties for making false statements on the trademark application (fraud claims and cancelation of the mark, to name a couple) are steep.
Registering trademarks through an experienced trademark lawyer is not expensive.
Put another way, if you don’t believe your brand is worth the $1,000-$1,500 it might take to properly prosecute your mark, then maybe you shouldn’t be using that mark in the first place.
Don’t be pennywise and pound foolish when it comes to filing trademark applications. Errors in the registration process could result in costly remedies down the line. Do it right, and do it early.