One of the most valuable assets a business has is the trade name and trademarks (service and product name) through which the brand recognition and goodwill are built. However, most business owners are unaware that this valuable asset may not be fully protected by incorporation with the Secretary of State, state trademark registration or even filing a assumed name registration. Federal trademark registration (Lanham Act 15 U.S.C. 1072) is constructive notice the right to the use of a name and if you fail to check the federal register prior to adoption, then your business is at risk for infringing a federal trademark registration.
Under Federal Trademark law, a federal trademark registration will usually take precedent over the state laws if an infringement arises as a result of two businesses using the same or similar trade name or trademark. But if you start a business which utilizes a trademarked name, you will likely face litigation or have to pay significant damages and cease from the use of the protected name, even if you have made a substantial investment in your business. Conducting a federal trademark search prior to incorporating or using a name on a product will avoid the expense of litigation as well as the expense involved in changing your name and trademark.
Even if you start out using a name before someone else, if they later trademark the name, they can come to you and limit or prevent your future use of the name. So before adopting a business name or trademark, a business, whether it is a sole proprietorship, partnership or corporation, should take the following steps in order to avoid creating a potential infringement.
- Review available literature to see what trademarks or business names are being used in the area in which the business owner is doing business. Review the Yellow Pages and the business section of the White Pages as well as local newspaper advertisements.
- Do an internet search to eliminate trademarks that are already being used, then do a screening search at the Patent & Trademark Office’s web site to eliminate names that are being registered.
- Search the Secretary of State’s web site for corporate records, assumed name registrations and state trademark records, if any, for the name chosen.
- Seek out a qualified attorney to help you pursue and finalize your trademark.
A business builds its reputation under a chosen trade name and/or trademarks. If you lose the right to use that trade name or trademark, you will have to re-establish your reputation under a new name. So, take the steps necessary to protect the investment you are making to establish a profitable business.