When Do I Need a Trademark?

If trademarks aren’t required by law, does your company even need one? The trademarking process consumes both time and money, so many companies might think they can avoid it altogether. In many cases, this is perfectly true. Not every business truly needs a trademark.

To decide if you need a trademark you must first understand why trademarks are important. Consider the following example. Dave Schmidt starts selling computers out his garage. He calls the company, and products, Crafty Computers. But, since he’s a small operation, he doesn’t bother to trademark the name.

At one point he notices that two competitors have started using the same name, Crafty Computers, to sell computers. One is from a neighboring town, while one is from a neighboring state. Dave will have quite different cases against each.

As long as Dave can prove that he was using the name Crafty Computers before his competitor from the neighboring town, he has rights to the name. This is considered a “use in commerce” or common-law trademark. Some businesses can get by with just this minimal level of protection.

The difference comes with the competitor from another state. As it turns out, that competitor filed a federal trademark application for the name Crafty Computers, and the United States Patent and Trademark Office (USPTO) approved it.

Dave still has local rights to use his mark, as long as he was using it in commerce before the out-of-state competitor. But if Dave wants to expand into interstate commerce, he’ll have to find another name. Because a competitor beat him to the federal trademark filing, he lost significant rights to use the name Crafty Computers on a nationwide basis.

Read more on common law trademarks

What benefits would Dave have gained by filing a federal trademark application for Crafty Computers? The federal trademark registration would have:

  • Provided him with full ownership of the mark nationwide
  • Created a public record of his ownership rights
  • Allowed him to take cases of infringement to federal court
  • Allowed him to police the use of the mark by other companies
  • Protected him from trademark trolls
  • Prevented other competitors from using similar marks.

Registering your trademark would provide you with these benefits, helping avoid the hypothetical peril Dave faces.

Read more on the benefits to trademark registration

But I’ve already registered my company

Filing your company name is not the same as registering a trademark on that name. Every company has to file a company name, also known as a trade name, with the proper state authorities. The bar for registration is typically low. State agencies will check to make sure that the name isn’t the same as another already registered, and that it doesn’t misrepresent the business.

Filing for a company name does not afford a company trademark rights. A state might approve a business name even if a business from another state has the same name. That’s because a business name filing offers limited rights, such as the use of the name on taxes and invoices. A registered company can still be sued for trademark infringement, if they inappropriately use a federal trademark.

So when do I need a trademark?

Answering that question will depend on the amount of time you have as well as your ambition. If you are only going to be running the business for a few years and you have no plans of expanding beyond your town, then a trademark may not be necessary. However, if you own a business that offers goods or services, and you are in it for the long term and wish to stand out from the crowd, then registering a trademark is practically essential.

Having a strong trademark gives you an edge over your competitors. You can prevent them from using your name against you. Since you have exclusive usage rights, no other company can use your mark to horn in on your market. It also ensures that you control the messages associated with your brand.

Business is all about protecting and optimizing your assets. A strong trademark is one of the most important assets a business can have.

Should you register at the start?

Registering your trademark might be important, but not every company registers its marks from the start. It may be because the company is still in the process of developing the brand, or they simply have not considered the option. More pertinent is the fact that not every company actually has a trademark. Millions of companies, particularly small and medium enterprises, actually operate without a trademark. So how do you make the decision? Again, it boils down to the individual or company.

In order to make the right decision, you need to gauge where you currently are as a business against your plans. It goes without saying that the need to register a trademark is higher if you own a successful business that attends to hundreds of clients, than if you are still in the early stages of forming the company. However, considering that the cost of registering a trademark is so affordable, it makes little sense to delay the process.

Registering a Trademark

Registering a trademark is not difficult; that is the good news. You do not even have to leave your home. Instead of registering by mail, you can register your trademark online. It is faster and more convenient than an application by mail, and gives you an effective way of monitoring the status of your application.

The bad news is that securing a trademark can be a lengthy process, often taking longer than a year. You will need to pass through different phases, and a problem at any one of them could set you back for months. To ensure that your application goes through smoothly, a firm understanding of the U.S. trademark laws will be required. This is why the USPTO encourages companies to work with trademark attorneys.

Do I need a trademark attorney?

Statistics show that the odds of having your trademark application approved increases by 100 percent when a skilled and licensed attorney handles it. That said, trademark attorneys are essentially professional guides. They can ensure that your mark has the greatest chance at approval, helping you avoid potential pitfalls that can lead the USPTO to reject your application. If you’re a small business owner asking yourself “Do I need a trademark attorney?“, find out why it could be helpful to your business in our full article.

Read more: What’s the process of working with a trademark attorney?

Xavier Morales, Esq.

About the Author:

Xavier Morales, Esq.

Mr. Morales founded this trademark law practice in January 2007 with the goal of providing intellectual property expertise to entrepreneurs and businesses around the country. Since then, he has filed more than 6,000 trademarks with the USPTO. You can learn more about Xavier here.

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