Many small businesses think that registering their trademark or service mark is a luxury that they cannot afford. The filing fee at the U.S. Patent and Trademark Office is $325 for each mark in each class and if an attorney is used, as is usually the case, there are legal fees as well. If the business is small, and plans to stay small, the owner reasons that filing an application to obtain a Federal registration is something that will never benefit his business. In many cases, that reasoning is faulty.
For many businesses, even some very small businesses, a trademark or service mark is a valuable business asset. There are many reasons why a business should consider registering its U.S. trademarks and service marks at the Federal level. Here are five good reasons to get the protection of a Federal registration:
Some day you may want to expand your business to another location.
The owner of a federal registered trademark has all rights to the trademark throughout the United States, excepting only previously existing "common law rights." Your common law right to your marks extends only to the area that your marks were being used at the time someone else filed his application. In other words, if someone applies for and receives a trademark registration for your unregistered mark, from that point on your use is limited to what you were doing as of the effective date of the registered mark. You are fenced in.
Trademarks and service marks are often key drivers to the valuation of a business. For that reason, many buyers look at the seller's trademark protection when conducting their due diligence. If the potential buyer values your trademark or service mark as a key component of your business' goodwill, your lack of a registration may reduce the value of your business because it increases the buyer's risk that a competing mark will limit his plans for the business.
You may need to respond to a cease & desist letter
If an owner of an identical or similar mark sends you a cease and desist letter claiming that your mark infringes on his, you will need to respond. If your mark is registered, pointing out that fact is often sufficient to make the claim of infringement disappear. While proof of your common law rights may also refute the claim, maintaining such proof requires good planning and good record keeping. A registered mark only requires directing the complaining owner to the USPTO website.
You want to protect your trademark as a domain name
The ICANN domain name dispute resolution process establishes a mandatory administrative proceeding to settle most claims relating to rights to use a domain name. In order to require the owner of the offending domain to submit to the mandatory proceeding, the complaining party must first show that he has trademark or service mark rights in the name. Proving a registered mark is easy; simply cite the registration number of the mark. Proving common law rights can be very difficult and may prevent you from making use of the dispute resolution process.
Your mark is relatively costly to replace
If you can easily replace your trademark or service mark by simply repainting a sign or two and replacing a graphic file of your website, the cost of protecting your trademark may outweigh the cost to replace it if it is ever contested. Caving in can be cheap and easy if the mark has no significant value and is used only in a few places. On the other hand, if a new mark means that you will need to replace all your letterhead, envelopes and invoices, reprint your marketing materials, repaint your delivery trucks and toss out all those coffee mugs and baseball caps that have your trademark imprinted on them, then spending a little money to get a registered trademark may not be a bad idea.
If none of these reasons applies to your business, then cutting out the cost of registering your trademark or service mark may make sense. Of course, you should also keep your fingers crossed because these are not the only reasons why getting a trademark is a good idea.
David K. Staub is a business attorney who writes and lectures frequently on various business, legal and tax topics. He represents entrepreneurs and family owned businesses on a variety of matters including corporate law, corporate finance, technology law, mergers and acquisitions, joint ventures, tax law and employment issues.
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