Why You Need To Protect Your Trademark [Podcast]
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What is a Trademark?
Matt: Enrico, we hear about the United States becoming an idea company so to speak. Intellectual property seems to be more important in this day and age than ever and one type of intellectual property is, of course, trademarks. What is a trademark?
Enrico: A trademark is intellectual property that identifies your company, your product or your service to consumers. It’s the brand or logo or slogan that you use as a business to tell consumers who you are. An obvious examples is Nike as a trademark. So when someone is looking for shoes, goes to a store, and goes to the section with the Nike shoes, sees the Nike shoes swoosh, sees the word “Nike” and knows he or she is buying goods and services from Nike. Your trademark is very important because it is effectively your name, your brand, your goodwill.
The Value of Trademarks
Matt: Does a trademark have value?
Enrico: Yes, trademarks, like all other intellectual property, can have value and in many instances can have a tremendous asset value to your company. We are becoming an idea economy. As the United States rolls into this next era, we’re seeing that the power of ideas can be translated into small companies, which grow into medium companies, which can grow into larger companies, which then can get bought out, which then can use manufacturing resources from around the world.
Keep in mind that as a company, 50 percent of Apple’s total market value is attributed to its trademarks, iTunes, iPod, iPhone, Macbook Pro, and of course, Apple. Even though the trademarks that Apple owns are intangible property, meaning I can’t pick it up and set it down on the desk, it has as much or more value than the physical assets of Apple as a company.
The lesson here is that small and medium-sized companies need to do more to protect and increase the value of their trademarks. That’s because when they get to the point where someone is going to value their company, the evaluations will include questions such as: What does your trademark portfolio look like? Have the trademarks been registered with the USPTO and perhaps with trademark offices around the world? Has the company done things to protect its trademark from infringement? How much do consumers identify the trademark with the goodwill of the company? You can actually build a portfolio, build a file around the intellectual property that you have, including trademarks, and when a due diligence occurs on your company’s value, it will drastically increase the value attributed to goodwill or attributed to your trademark.
So, you need to treat your trademarks and your other intellectual property like you would any other asset of the company. If you’re building software, and you’re investing in that software and you’re hiring coders, that’s all obvious and easy. If you’re designing a website and you’ve paid tens or hundreds of thousands of dollars to develop that website over time, it’s easy to see how you’re building that asset. What you need to realize is that your trademark is perhaps an even more important asset, and you need to invest in it.
How to Protect Your Trademark
Matt: How does somebody protect his or her trademark?
Enrico: That’s a great question because it’s not necessarily obvious or easy. It requires you to make a decision as a business person and as a company that you value your trademarks and you’re going to keep tabs on them. The first thing that we always encourage companies to do is an audit to find out what their trademarks are. A trademark can be their domain name. It can be their company name. It can be slogans that they use on the website. The trademark could be the words themselves. It could be the design, like the Nike swoosh. So, do an inventory to find out what trademarks you possibly have already created and which ones make sense to register in which countries.
By registering your trademark with, for instance the United States Patent Trademark Office, you drastically increase the value of that asset, it’s the easiest return on investment that any company can make because it’ll cost you something between $1,500 and $2,000 dollars including the filing fee to get your trademark registered, and by registration you’re going to immediately bump up the asset value.
The next thing you need to do after registration, is protect your mark by monitoring other uses. There’s software. Good trademark attorneys will understand how to put a monitoring program in place to be able to see whether or not someone else is registering domain names or using your trademark on the Internet in a way that is potentially infringing your mark. Keep in mind more than just your literal mark is being protected. Anything that might be confusingly similar needs to be monitored.
The third thing is if you see that someone else is using a domain name or using something that is similar to your trademark in the similar categories of goods and services, you need to get your trademark attorney to contact that person and either send a trademark infringement notice letter or trademark infringement threat letter, or get the other side’s attorneys involved. See if you can work out an accommodation where you end up protecting your trademark, maybe transitioning them into another mark. Sometimes you have to be more threatening than other times.
Those are the things that you need to do to protect your trademark. Typically you’re going to need either an in-house attorney or a good outside attorney who understands trademark law and whom you trust. The attorney can help you design these programs, get the monitoring in place and send the enforcement letters where needed.
Actions If Someone Violates Your Trademark
Matt: What can you do if you see someone use your trademark without your permission?
Enrico: If you do catch someone who’s using a similar mark that might be confusingly similar without your permission, you need to do an assessment of that. There are lots of different circumstances where people might select something that’s similar to your mark without intentionally infringing your mark. They may not know you exist. They may not understand trademark law. They may have picked something that’s similar but they don’t think it’s that similar. You need to figure out, is this someone who’s making a direct attack on your business that’s intentional and willful, or is this someone who is, through happenstance, ended up using a brand or a name that is just too close to yours?
Once you figure that out, you’re usually going to engage that person by letter, get the other person’s attorney involved and see if you can either demand that they immediately cease and desist. You can file a trademark visual lawsuit filed against the offender. That’s pretty aggressive. On the other side of the spectrum, a good trademark lawyer will advise you on the appropriate circumstances to send a much lighter, perhaps even a business to business letter to engage the other side in a conversation, which will hopefully spark a discussion about their transitioning out of the similar mark and into something new that they own.
Why It Matters
Matt: Finally, how important is a trademarked company, both big and small?
Enrico: They’re really important and they’re becoming more important every single day. The reason is this: It used to be that the little corner store on Front Street in your town used to do business on Front Street; now that little corner store has a website and is a global business. Everyone’s a global business. Brick and mortar companies are as much on the Internet as they are on the street.
That has caused a major traffic jam on the use of words, designs, logos and slogans. Now all of a sudden everyone is bumping up against each other statewide, nationally, regionally and globally. There’s a shortage of words in the world. That, on the one hand, makes the trademark more valuable because you’ve got something that’s got a much higher demand that occurred before the Internet age before websites revolutionized commerce, so that is incredibly important.
The other thing that’s important is you could end up betting the farm on your trademark and it happens all the time. Let me tell you how. Sometimes we’ll get calls from perspective clients and who say, “Hey, I’ve got a trademark infringement letter from a lawyer. We’ve been doing business for three years. We’re earning several million dollars of revenue per year off our website but this company says that our domain name is too close to their registered trademark.” Sometimes I will tell those folks, “You are in deep trouble. The big corporation that sent that had the lawyer send you this trademark infringement letter has a very strong case. You need to rebrand.”
If its a domain name, rebranding could mean that you have to completely shut down your website and start from scratch. They’ll tell me, “But Enrico, that means that I’m out of business. I can’t let go of my domain name and start a new website with a brand new SCL all over again.” But that’s where they find themselves, because they didn’t do a trademark availability assessment before they started using the domain name as a brand. They are confusingly similar with another brand, often times with a large corporation, and two or four years into their business, they’re having to shut down a very successful business because they have to give up their domain name.
Matt: Join us next time on Lawyers.com radio. I’m Matt Plessner. Today’s show has been brought to you by the Traverse Legal Office of Traverse City, Michigan.
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