Intro to Trademark Law

While trademarks are governed at both the federal and state level, federal law serves as the primary source of trademark protection and regulation. The Lanham Act, enacted in 1946 and recently amended in 1996, is the primary federal trademark statute. The Act prohibits activities such as trademark infringement or false advertising, among others. The Act also set up remedies that can be sought when trademark violation, such as infringement, occurs.

1. What is a trademark?

A trademark is a word, symbol or phrase that is used to identify a manufacturer’s products. or services For instance, the Nike swoosh or McDonald’s gold arches are common trademarks that distinguish and represent the products these companies sell.

A trademark is a word, symbol, or phrase used to identify a product or service.

According to the SDPTO, trademarks, patents and copyrights protect different types of intellectual property. Typically, a trademark is used to protect brand names or logos that are used on goods or services. Therefore, a franchisor usually uses a trademark to protect their business’ names or logos. When the franchisor strikes a Franchise Agreement with a franchisee, the franchisee’s rights to use the trademark are outlined in the Franchise Disclosure Document.

2. What are trademark prerequisites?

When the franchisor considers federally registering their trademark, there are several factors to consider, ensuring the registration process runs smoothly. The most common reason the USPTO may reject a trademark is a “likelihood of confusion.” In other words, the chosen mark too closely resembles another that is already registered. So, the USPTO weighs the visual and substantive similarity between the trademarks. Similarly, the goods or services being represented are also called into question. If the trademark conflicts with another and the two sell similar services or goods, the trademark in question is likely to be rejected.

Consider how similar your trademark may be to others in the industry.

It is in the franchisor’s best interest to choose a mark that is unique or “strong” in a legal sense. A strong mark is fanciful or arbitrary and therefore inherently unique. In other words, a mark that doesn’t strongly relate to the products being sold is considered arbitrary. A calendar company named XX is an example of an arbitrary mark. XX doesn’t allude to the product being sold in any way. However, a suggestive mark is another option the franchisor may consider, which alludes to the product in a very general sense.

On the other hand, a descriptive trade mark is considered legally “weaker.” Trademarks that describe the goods or services being sold are more difficult to protect from third party users in the future. Descriptive trademarks typically lose distinctiveness and are therefore easier to copy or mimic. Although a descriptive trademark may seem cheaper to market, it may end up costing more money in the long term due to enforcement efforts.

This will ensure approval and prevent third-party use of the mark, the franchisor should make their trademark unique and distinct from others that promote similar goods or services.

3. Is my trademark being used?

Before submitting an application to register a trademark, a franchisor should do some research on the competition. It is possible that their desired trademark is already being used. It is also possible that trademarks of a similar nature already exist. If this is the case, the lengthy registration process can be delayed even further and result in confusion.

The Trademark Electronic Search System (TESS) is a USPTO search system that is available 24 hours, seven days a week. This database allows franchisors to search through registered and pending applications to see whether any preexisting marks may cause rejection of their own.

It is important for franchisors to know that the USPTO’s search engine is limited. The TESS contains only trademarks federally registered. However, other companies may have trademark rights but no federal registration. These are common law rights and may be stronger than those obtained through registration. Therefore, alongside searching the TESS, a franchisor should use the Internet to do additional research or consider hiring a trademark attorney for assistance.

4. How do I get trademark rights?

If the trademark meets criteria for protection, the franchisor can go about acquiring the rights to the mark. There are two methods in which this can be done:

  1. Being the first to use the trademark in commerce
  2. Being the first to register the mark with the USPTO

Within the first method, the mark must be used in an actual sale of a product or service with the name attached. This route has shortcomings however, as it only applies to the direct location wherein the product is sold. Therefore, a third party in a different location may use the trademark without penalty.

Registering a trademark with the USPTO is a more surefire method of protecting the mark. Registration gives the franchisor the right to use the mark throughout the nation and prohibits third parties from using the mark, regardless of location. Furthermore, after five years, registered trademarks reach “incontestable” status, which gives the franchisor the exclusive right to use the mark.

5. Why is a Trademark an Advantage?

Many new business owners decide to go the franchise route (as opposed to opening an independent business) because much of the grunt work has already been done. Brand recognition is among the primary aspects behind the long term success of a business. However, developing solid and wide recognition of a trademark takes a long time and a lot of marketing.

A strong trademark often provides customers with a sense of security. If they can recognize your trademark, and therefore the goods or services your business provides, they are more likely to choose your business over another that may be unfamiliar. In other words, a trademark is almost like a reputation. The more widely recognized (and associated with positive experience), the more business you can grow.

Callens Capital


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