This blog describes approaches to take when selecting a new business or product name to avoid costly trademark infringement disputes down the road.
I. Introduction
Selecting a company or product name can be a daunting challenge because a “wrong” selection can result in lawsuits where the plaintiff alleges trademark/service mark infringement and unfair competition. Nor are lawsuits for trademark/service mark infringement are not limited to situations where the plaintiff has a registered trademark/service mark with the United States Patent and Trademark Office (“USPTO”). The law also protects common law (i.e., unregistered) marks.
Each trademark infringement case is different and involves a detailed inquiry of the facts behind the allegations. Most plaintiffs will initially seek a temporary injunction by the court ordering the defendant to stop using the mark. If a temporary injunction is granted, the plaintiff then will likely seek a permanent injunction and possibly even monetary damages.
II. Cease & Desist Letters
Most infringement lawsuits are preceded by a cease and desist letter to the business owner. The business owner at that point can take steps to quickly remedy the situation, e.g., by changing the name of the company and refraining from providing any services/products under the previous name. The business owner will also generally be asked to transfer any domain names which utilize the problematic mark.
Here it may be helpful to hire an attorney to negotiate terms with the sender of the cease and desist letter who will more likely than not be an attorney. For example, the email addresses of business employees who interact with customers/clients are often linked to the business’s website address (i.e., domain name). An attorney may be able to convince the cease and desist letter sender to allow a small business owner in particular the right to use the domain name solely to redirect clients/customers to the small business owner’s new website/new domain name for a specified period of time. Such redirecting is not intended to go on indefinitely and is intended solely to provide the small business owner with an interim time period for ensuring that its existing customer base will be able to “find” the small business owner in cyberspace.
It is important to also emphasize that cease and desist letters do not always accurately reflect the facts. The recipient should not panic but consider consulting with a trademark attorney who handles trademark disputes and not just trademark application filings. For example, prior users of a mark (“first-in-time users”) have significant protection under the Trademark Act and common law. Common law rights may trump any federal registration rights referred to in a cease and desist letter because of the doctrine of prior use. Prior use establishes a right of priority of common law marks over registered marks providing the date of first use in commerce of the common law mark was commenced before the first use date of the registered mark.
Indeed, all applications submitted to the USPTO for a registered mark must specify the date of first use anywhere and the date of first use in commerce. The two dates may be the same. Accordingly, if the recipient of a cease and desist letter can prove prior and on-going use of the mark specified in the cease and desist letter, the recipient may well prevail in any lawsuit.
III. Doing Your Homework
Even if a cease and desist letter results in an amicable resolution, i.e., no costly lawsuit, the business owner may still end up spending considerable time and money in rebranding itself with a new business name/product name. It should thus be the objective of any new business owner to minimize the risk of receiving a cease and desist letter and/or a lawsuit by taking upfront steps to select a suitable business/product name. These steps include the following:
- When selecting a company or product name, check the records of the USPTO for registered service marks and trademarks that incorporate all or a part of the proposed company or product name. The search should include applied-for marks and also include spelling variations. If similar names are found, err on the side of caution. For example, are you considering a business name that is similar to or encompasses a well-known, famous mark? If yes, understand that the owners of well-known marks in particular routinely monitor the unauthorized usage of their marks and you will be risking the receipt of a cease and desist letter down the road.
- Sometimes a business will obtain a trademark/service mark that covers only the state in which the business is located and conducting business. Therefore a trademark or service mark search should include a search of your state’s own records. For Florida, these records can be accessed at sunbiz.org.
- The business owner should also evaluate the state’s corporate name and fictitious name records to determine if there are already businesses with similar names operating in the state or in the same geographical area. These already-established businesses may have state common law trademark rights in their names. Florida also provides business owners with the right to bring lawsuits for unfair competition under common law and under Florida’s Deceptive and Unfair Trade Practices Act. Clearly, the operation of a competing business with a name similar to another business is an example of the type of unfair competition scenario the law is intended to protect.
IV. Will You Be Filing a Trademark Application?
Any searches as described above should also reflect the new business’s long term objectives. For example, if the new business is going for a national and even international presence, then any name should be selected with an eye towards obtaining registered marks in the U.S. and abroad. The new business owner may also wish to file an intent-to-use application with the proposed name (after doing a thorough search) to “reserve” the name with the USPTO while the business/product is being developed. Before filing any trademark or service mark application, a critical analysis should be done to assess the possibility of any of the following rejections by the USPTO:
- Is the mark likely to constitute a likelihood of confusion with an existing mark? Click here for a previous blog on a proposed mark that was rejected by the USPTO on likelihood of confusion grounds.
- Is the proposed mark generic or merely descriptive of the goods or services listed in the application? Click here for a previous blog on the merely descriptive factor where the USPTO rejected an application on merely descriptive grounds.
- Is a domain name incorporating the proposed mark available? Is a similar domain name owned by the owner of a registered trademark? Domain names may include trademark rights and that is why cease and desist letters often require the transfer of domain name rights.
V. Conclusion
The foregoing demonstrates that trademark law is complex because it is a hybrid of federal and state statutory law and common law. Business/product names as a result of their usage in commerce involve principles of trademark law. Be judicious in selecting a business/product name to avoid costly legal problems and to achieve your branding objectives whether at the local level or at the national and even international levels.
© 2017 by Troy & Schwartz, LLC
WE THANK YOU FOR READING THIS BLOG. HOWEVER, THE FOREGOING IS NOT LEGAL ADVICE AND IS PRESENTED FOR INFORMATIONAL PURPOSES ONLY. IF YOU ARE CONTEMPLATING ANY ACTION THAT MAY HAVE LEGAL CONSEQUENCES, YOU SHOULD CONSIDER CONSULTING WITH AN ATTORNEY OF YOUR CHOOSING.
