(Written
for Minnesota Technology Magazine, Spring 2003)What's
in a Name?
How trademarks can
separate you from the pack
By: Greg
Irsfeld
Contributing Writer, Minnesota
Technology magazine
Undoubtedly some of you, upon
reading this story, will find it so chock full of trademarky
goodness that you'll want to share it. Perhaps you'll Xerox®
some copies for coworkers, then maybe Scotch®-tape the
original to the wall of the production room, perhaps in a
prominent spot above the Kleenex® box.
Notice a pattern here? The
above examples all feature a trademark-an item that has
become a hot topic of late in business circles. A trademark
is typically a name, explains Michael Bondi, attorney and
trademark group chair with Patterson, Thuente, Skaar &
Christensen, a Minneapolis intellectual property
firm-"something that distinguishes your product from someone
else's," he explains.
So what's in a name? And why
do you have to worry about it?
Value Matters
For starters, there's the issue of value. "A trademark
reduces customer resistance to your product," Bondi notes.
"Say you're driving down the street, and you see
'Neighborhood Hamburger Joint,' and 'McDonald's®.' You know
the Big Mac® is going to be the same whether you're in
Minneapolis, Chicago, or Florida."
A trademark develops "brand
cohesiveness," he adds. "Consider Gatorade®. The company
that makes Gatorade also makes energy bars. Throwing the
Gatorade trademark on them provides instant recognition. A
customer who might not take a chance on an energy bar sees
the Gatorade trademark, knows that Gatorade makes quality
products, and says, 'I'll give that a try.'
"A trademark leverages your
history and reputation," he adds. "It makes customers say,
'I've had this experience before, and it was positive.'"
That can equate to measurable
bottom-line impact. As an example, Bondi points to the
Wenger Corp., an Owatonna firm that makes choral risers,
music stands, and a variety of other music-related products.
The Wenger name, he adds, is so strong among music teachers
and band directors that when districts are procuring
equipment, schools often get pressure from teaching staffs
to specify Wenger-brand products. "Instead of specifying a
'music cabinet with metal doors,' the architects or school
district will specify a 'Wenger cabinet,'" Bondi says.
In essence, a favorable
marketplace perception can cause a customer to designate a
supplier's product-through its trademark-into the
procurement specification.
Strong trademarks also help
with banks and investors, particularly for early-stage
companies looking for ways to turn an idea into a viable
product or service. Without a proven track record, banks and
investors usually will be wary about loosening their purse
strings. By registering a federal trademark and an Internet
domain name, you can essentially create assets that a bank
can record as security interests.
"That's not to say you can go
into a bank and say, 'Here's my trademark, give me a million
dollars,'" explains Linda Byrne, senior partner with
Merchant & Gould, a Minneapolis-based law firm with offices
in Atlanta, Denver, and Seattle. Still, a trademark can be
used along with other intangibles-"the good will of your
company, know-how, trade secrets, and other intellectual
property," Byrne says-as collateral to help secure a line a
credit.
What Makes a Good
Trademark?
A strong trademark starts with a good name. Richard Berman,
head of the trademark group at Faegre & Benson, a
Minneapolis-based law firm, says that there are three types
of trademark names: coined, arbitrary, and suggestive.
"A coined name is one that
when you go to the dictionary, you can't find it," he
explains. "Kodak®," for example. An arbitrary name is one
that has no meaning in the context of the products being
sold-"for example, Camel®, for cigarettes."
In contrast, a suggestive name
suggests the nature of the product. Berman cites, Hamburger
Helper®, "as a wonderful suggestive trademark"-the public
identifies the product's use with the name, yet the name is
distinct enough to be a trademark.
Which outlines a chief
trademark naming challenge: balancing consumer recognition
with the ability to register the name. While more distinct
names might be easier to register as trademarks-there's less
chance that someone's already using them-they are also more
costly to establish in the marketplace. Says Berman: "A
coined name-Kodak-initially requires spending a lot more
money educating consumers about the name."
Conversely, a use-oriented
name might be cheaper to advertise and establish, yet might
be more difficult-if not impossible-to register. For
example, companies wouldn't be able to register "Banking
Services" or "Breakfast Cereal."
"Marketing people are tempted
to use a trademark that refers to a feature of the product,"
Byrne relates. "That's problematic. That's what your
competition may be doing too. The most valuable trademark is
a made-up name, like Xerox®, where the company has invested
money and time to educate consumers about its meaning."
"Generally, the more
descriptive a name is of the nature of the product, the less
likely that it will be recognized as a trademark," says
Berman. "The ideal trademark from a business standpoint is
usually one that is distinct, not similar to names used by
other people, yet which suggests the nature of the product."
Using a Trademark
Bondi and Berman outline three types of trademark
designations:
COMMON LAW TRADEMARK. In order
to establish a common law trademark, you simply start using
it. To make sure people understand that it is your
trademark, attorneys recommend that you use the TM symbol
with the trademark. Say you have a St. Paul company, selling
a stamping machine in the Twin Cities with the name, "Best
Stamp." By using that name, Bondi notes, you'd have a common
law right to the trademark in the Twin Cities.
Expanding into additional markets makes things more
complicated. "Say you want to expand into St. Louis," he
notes. "You also would need to establish your brand there."
And if there's a St. Louis
company named "Best Manufacturing" that makes an unrelated
metal product, you may have to negotiate to see who would
could continue using the name in St. Louis.
Ultimately, common-law rights
can be determined by start dates. Say you started in St.
Paul in 1980-and your business to date has been limited to
Minnesota-and the St. Louis company started in 1999. The St.
Louis firm most likely would have priority in St. Louis. As
the newcomer, you probably would have to change your name in
St. Louis.
Hence the need to register
your trademark.
FEDERALLY REGISTERED
TRADEMARKS. Overseen by the United States Patent &
Trademark Office (USPTO), a federally registered trademark
grants nationwide rights. "If General Mills develops a new
cereal, it can rely on federal trademark registration to
allow you to sell your product using its trademark name
anywhere in the United States," says Bondi.
Individual states also offer
trademark registration. But as Berman points out, state
registrations apply only to the specific states; federal
registration applies nationwide. Consequently, trademark
attorneys generally recommend pursuing federal registration
as a first step.
Registering a federal
trademark begins with a trademark application to the USPTO.
While this doesn't necessarily require legal assistance,
attorneys say that experienced legal trademark advice up
front can allay problems-including wasted time and
expense-down the road.
"If you go to the USPTO Web
site [www.uspto.gov],
you could fill out a federal trademark application for your
business yourself," says Bondi. "The site will readily
collect the information and your filing fee [$325 per
trademark, per class]. In about six months you'll receive a
report from the USPTO outlining any problems with your
trademark application.
The danger, Bondi says, arises
if during those six months, you've developed product
advertising and packaging, only to discover your trademark
name has a problem. "Maybe it turns out there was a word,
not exactly the same, but perhaps with a slight variation,
that precludes you from registering your trademark. You'd
have to go back and start all over again."
That's where using a trademark
attorney-one who is experienced with how the system
works-can help. Such attorneys typically request two or
three name options at the start of the process, then
research state and federal trademarks for possible conflicts
even before completing an application. They can also
research similar company names, trade journals, and domain
names.
With the trademark application
filed, an examining attorney in the USPTO reviews it for
compliance with statute:
Is it likely to be confused
with another federally registered trademark designation?
Have you adequately described the goods and services with
which you're using the mark? Is the proposed trademark
descriptive?
Once processed, the
application is published for opposition. "Say you're
Medtronic, and St. Jude Medical decides the trademark for
which you're applying is too similar to a product trademark
of theirs," Bondi says. "They file an opposition, saying
they want your application denied." That would start
litigation-an administrative proceeding handled before the
USPTO, to determine the right to register.
If the trademark survives the
opposition period, the USPTO will register it. "Once you
obtain the registration certificate," Bondi says, "you can
use the circle-R (® registered trademark) designation to
indicate to the world that you have obtained the rights
associated with this registration."
INTERNATIONALLY REGISTERED
TRADEMARKS. While a U.S. federal trademark registration
grants rights in the United States, what happens if you want
to sell your products in another country? That's where
matters can get complicated. Each country has separate
trademark laws; for international trademark rights,
companies need to register their trademarks individually, in
each country they plan to go into.
What's more, while trademark
rights in the United States are based on "actual use,"
trademark rights in most foreign countries are based upon
registration, Berman says. Actual use in most foreign
counties is not required to get a registration. (A
qualifier, Berman notes: In the United States you can seek
to register a trademark on the basis of "intent to use." In
such cases, trademark rights based on the application won't
"perfect" until you make use of the mark and the
registration issues.) If someone overseas registers the mark
in their country before you, in a country where rights are
based on registration, his or her rights usually take
precedence over yours.
You can file a foreign
application to register a trademark at any time. If you're
still not sure about what foreign countries you'll be going
into when you file your U.S. application, Berman says you
can wait up to six months to decide which countries to file
in, and still get the benefit-in most foreign countries-of
the important U.S. filing date. The foreign filing date
becomes retroactive to the U.S. filing date.
International filing is
important, Berman says, so that someone doesn't somehow spot
your early success and register the name for themselves
overseas. Here again, trademark attorneys can provide
guidance.
Protecting a Trademark
Ensuring that value requires policing. And the place to
start is with your own use. "Try and make sure, in your own
literature and promotion materials, that your name is used
properly," Berman advises. "You want the public to
understand that they're dealing with a trademark."
Proper use means using your official trademark name with the
registered trademark symbol (the circle-R designation).
You also want to ensure that the public doesn't misuse your
trademark-a challenge the Internet is exacerbating. While
the Web might have increased opportunities to advertise a
trademarked name, it has likewise made it more difficult to
track how it's being used-or misused.
Gary Brisbin, lead attorney
and division general counsel with McQuay International, a
Plymouth-based international manufacturer of heating,
ventilating, and air conditioning equipment, can attest to
that. His firm recently discovered that two European
companies were using the McQuay logo online without
permission. McQuay-which employs a person to regularly surf
the Web for trademark misuse-discovered the Web sites, and
responded with letters. "We said, 'You're misusing our logo,
and holding yourself out as an authorized rep,'" Brisbin
notes. The letters asked the companies to stop, and they
complied-without contention. One of the companies eventually
became a McQuay representative in Europe.
Byrne agrees that the Net has
complicated trademark matters. "When it comes to domain
names, the conventional wisdom has been to register dot-com
and as many country codes as you can." This can result in
hundreds of domain name registrations, which can be a
maintenance nightmare-especially if you want to establish
and maintain a business presence inside foreign countries
that require a defined business presence to register a
domain.
When Internet domain name
conflicts arise, Byrne explains, there is a procedure in
place to resolve them. "Say someone else has registered your
important trademark as a domain name. You can use an
administrative proceeding to get the trademark domain
transferred back to you."
Most trademark misuse, Berman
adds, occurs by accident, because people don't know or don't
understand trademark rights. "When you find a situation
where it's misused, send polite letters, reminding the
public that this is your trademark and should be used
properly," he notes.
Byrne agrees: "I would say a
good portion of infringements are accidental. It's amazing,
really, the coincidences that occur. Still, there are less
ethical people out there wanting to trade off the good will
of someone else's company."
The point, experts agree, is
that a trademark is a valuable and effective asset-one worth
developing and protecting.
—Greg
Irsfeld is a Twin Cities-based freelance writer
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