Is Federal Trademark Registration Really Worth the Hassle?

As a small business owner, you know the importance of protecting your business’ assets. One of the most valuable assets for many small businesses is its intellectual property. Many business owners spend countless hours deciding on the perfect name and logo for their business. And for many businesses, it’ d be a serious setback if another company started doing business under the same name or logo. It’d be especially devastating if you had no way to keep another company from doing so. You’ve probably read numerous articles that tell you that you should  “register your trademarks.” But you probably haven’t been told why you should register your trademarks. Today, I’m going to explain the primary benefits of registering your trademark with the USPTO.

Automatic Rights: Common Law Trademarks
Most people aren’t aware that trademark rights exist the minute you use a trademark “in commerce”—basically the first time you put your business’ name, logo, slogan, etc. in front of the public. These automatic rights are considered common law trademark rights, which means that the trademark rights are developed through use and are not governed specifically by any rule or statute. Common law trademark rights have been developed under the judicial system (i.e. the courtroom) and are governed by state law.

The best thing about common law rights is that they are automatic; you don’t need to register your trademark to establish these rights. Once you use your mark in commerce, you own the trademark and the common law rights associated with it, including the ability to exclude others from using your trademark–subject to the limitations that I’m about to highlight.

The downside is that there are certain limitations to your common law rights. Common law trademark rights are limited to the specific area where you use your trademark. For example, if you are a small business in Washington state, you’re marketing your business under a specific name or logo in Washington, then you cannot restrict the use of your trademark in Colorado (or any other state other than Washington). So if a Colorado company with the same name and logo tried to sell to customers in Washington, then you could sue to enforce your common law trademark rights in Washington. However, that same Colorado business can use the same name and logo to market its products or services in Colorado and you can’t stop it. Where it becomes more problematic is for small businesses that market their goods or services through the internet, since they are technically broadcasting their trademark to the world. There’s no bright-line rule on whether your common law trademark rights extend beyond the state where your business is located. However, generally your common law trademark rights extend only to those locations where you actually do business–for example, the locations where you can substantiate use of your mark by showing actual sales to customers or clients.

It is because of these limitations that we recommend that small businesses should register their trademarks at the federal level.

Registering Your Trademark with the USPTO
Filing a federal trademark application with the United States Patent and Trademark Office (USPTO) offers numerous benefits to a trademark owner at an affordable price. One of the most important advantages to registering your trademark federally is the scope of protection for your mark. Once your trademark is registered with the USPTO, you have the exclusive right to use your trademark across the entire Shield and Swordcountry. It’s like the federal government handing you a shield and a sword to use against all other businesses in the U.S. You receive this exclusive right to exclude others from using your trademarks anywhere in the U.S. regardless of where you market your business and where you actually use your trademark–as long as your trademarks are used in interstate commerce, i.e. you market your products and services across state lines.

Other benefits include: (i) the right to sue for trademark infringement in federal court; (ii) the ability to recover damages, lost profits, attorney fees and costs that result from the trademark infringement; and (iii) the right to use the ® (registered) symbol, which puts the world on notice that your trademark is federally registered and may deter using your trademarks. Further, having a federally registered trademark provides substantial evidence of trademark ownership and use, which will help you substantiate your claim against another company trying to use your marks..

Many small businesses owners avoid hassling with registering their trademarks because they are concerned with the costs. It’s certainly a valid concern, but the nice thing about registering your trademarks is that it is affordable. You can file the trademark application online with the USPTO for a small filing fee of $275/per class. It’s important to note that registering your trademark upfront can save you thousands of dollars in legal fees and court costs if you are required to defend your trademark rights or sue a competitor for using your trademarks in the future.

The bottom line: registering your trademarks with the USPTO will cost you a few hundred dollars, but may save you thousands and thousands of dollars down the road. It’s a simple step you can take to protect your small business’ valuable assets.

Photo: Arbyreed | Flickr

If you’d like to learn more about registering your trademarks or the trademark application process in general, please feel free to contact me.

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