Building a strong brand is crucial for the success of any business. In the early stages of a startup, founders can start the brand-building process by protecting their intellectual property, particularly the business’s trademarks. Trademarks not only serve as the face of the company but also play a crucial role in building a strong brand identity and reputation. A well-protected trademark fosters trust and familiarity among consumers, which leads to brand loyalty. It helps distinguish the startup from competitors and creates a unique moniker that resonates with customers.
Here, we’ll explore the importance of intellectual property protection, the steps founders should take to ensure brand protection, and, specifically, the benefits of (and practical steps involved in) trademark registration and enforcement for startups.
Intellectual property protection generally
Intellectual property (sometimes referred to as “IP”) is always a central concern in building a business – founders must ensure that all relevant intellectual property developed for the business is owned by the business (meaning, it must be assigned – even by the founder – to the entity). Moreover, the founder needs to understand how to protect different types of intellectual property. Depending on the nature of their business, founders may have inventions, software, or creative works that warrant patent or copyright protection.
Consulting with intellectual property professionals can help determine the appropriate protection strategies. Patents require proactive filing, while copyright provides automatic protection, though federal copyright registration is necessary prior to pursuing legal action against infringers. Trademarks are protected through both common law rights, which attach automatically upon use in commerce (but are limited to where and how used), and federal trademark registration with the United States Patent and Trademark Office, which requires proactive filing and provides nationwide protection.
What is a trademark?
A trademark can be a word, phrase, symbol, logo, design, or combination thereof that identifies and distinguishes your goods and services from those of others. Trademarks identify the source of your goods and services and help customers recognize your brand and associate your products with your business. Trademarks also provide legal protection for your brand and help you guard against unauthorized use, imitation, and infringement. Your trademarks can help your business establish its unique identity in the marketplace.
Some well-known examples of trademarks include McDonald’s golden arches, the Nike swoosh and “Just Do It” slogan, and Apple’s bitten apple logo. The names of these companies are also examples of trademarks — McDonald’s, Nike, Apple.
It is important to note that not everything can be considered a trademark. To function as a trademark, the mark must identify the source of the goods or services. For that reason, generic names for your products are not acceptable as trademarks.
Why register your trademark?
Once a founder identifies/develops a trademark that it is associating with the business, a founder should take steps to protect that trademark. Founders have rights in their trademark as soon as they begin using it, called “common law rights”; however, these rights are limited, and there are offensive and defensive reasons to register a trademark.
From a “defensive” perspective, by securing trademark registrations, founders can use their marks freely to build their brand with significantly decreased risk of receiving cease and desist letters. From an “offensive” perspective, early protection allows founders to enforce their rights and prevent others from infringing upon their brand. As the business grows and becomes more successful, the risk of others attempting to unlawfully benefit from the goodwill of your business increases, making trademark protection an important tool in your tool-belt for protecting your IP.
Failing to register a trademark exposes startups to various risks. Without registration, the protection of the mark is limited, leaving the business vulnerable to infringement. Infringers can use a similar or identical mark, leading to customer confusion, reputational damage, and potential legal disputes. Registering a trademark provides legal remedies and acts as a deterrent against unauthorized use.
While trademark registration alone does not directly facilitate commercial growth, it is a valuable asset for startups expanding into new markets or offering new products or services. Registering trademarks in relevant classes of goods and services ensures comprehensive protection as the startup expands. The value trademark registrations add to an emerging company cannot be overstated. A strong trademark can attract both investors and potential acquirers, enhancing the startup’s value and growth potential.
Key initial steps for brand protection through trademarks
Trademarks play a central role in brand-building — as such, founders should be strategic in selecting a “strong” trademark. But how does one choose a “strong” trademark?
When selecting a trademark, startup founders should consider its distinctiveness. The spectrum of trademark distinctiveness ranges from generic to fanciful, with the strongest protection given to arbitrary or fanciful marks. Founders should avoid choosing generic or descriptive terms, such as “Shoes” for a shoe company or “Creamy” for an ice cream company, which can be challenging to protect. Founders should focus on being creative when establishing a name for their business. Consider both how the trademark is spelled and how it is pronounced. Seeking input from friends or, if feasible, hiring a branding company can provide valuable insights. Additionally, trademarks cannot be misleading, offensive, or infringe upon existing marks.
Conducting a comprehensive trademark search before use and filing is helpful for identifying any conflicting marks. Being proactive in this clearance search is vital. Once an application is filed with the USPTO, the examination process takes time. One of the most common reasons a trademark application may be rejected is a likelihood of confusing with another mark that is already registered. It is essential that startups are confident that the mark is available and distinct from the time they begin using it. If, after waiting many months for examination, the USPTO determines that the mark is not registerable, the business may need to reevaluate and alter its branding (which can be quite frustrating – and expensive!).
The trademark application itself includes the mark, the goods and services associated with the mark, and the entity that will own the trademark. If possible, the business entity should be formed by this point, as it is preferable for the trademark owner to be a company, rather than an individual. Engaging a law firm experienced in intellectual property law is the best way for founders to ensure they are covering all of their bases throughout the trademark registration process. However, if legal counsel is not available or affordable, startup founders can visit the USPTO website to learn more about navigating the trademark application process.
Enforcing trademark protections against infringers
Once trademarks are registered with the USPTO, founders should proactively monitor and enforce their marks. Failure to police your registered mark can result in a loss of trademark rights and protections. Regularly searching the internet, monitoring trademark databases, and staying vigilant for potential infringement are key. Additionally, staying updated on the USPTO website and utilizing the resources available on that site can aid in monitoring and enforcement efforts.
In the digital age, startups face unique challenges in protecting their trademarks online. For example, it is essential for founders to secure relevant domain names early to prevent cybersquatting and unauthorized use (indeed trademarks can be embedded in those handles and domain names). Similarly, monitoring and actively managing social media handles and online platforms can help prevent brand dilution and infringement. Developing a comprehensive online brand protection strategy, including regular monitoring and enforcement measures, is important for startups. Monitoring may include setting up a watch notice service to review trademark applications, monitoring the USPTO’s TESS Database for new applications, setting up a Google Alert to search for your trademark online, and generally searching the internet, social media, and mobile apps for unauthorized use of your trademark.
If startup founders encounter trademark infringement or unauthorized use of their brand, they can “enforce” their rights by taking legal actions to protect their rights. For example, a founder can file an opposition or cancellation proceeding, send the infringer a cease and desist letter, initiate litigation, or pursue alternative dispute resolution methods. Founders should take swift action against infringers. Consulting with an intellectual property attorney experienced in trademark infringement cases is advisable to determine the most appropriate course of action.
The bottom line
Trademark protection and brand building are critical components of startup success. By understanding the importance of intellectual property protection, founders can take the necessary steps to safeguard their brand. From conducting trademark searches to registering trademarks and actively monitoring for infringement, proactive measures are key. Establishing and protecting a strong brand identity allows startups to cultivate a positive reputation, build customer loyalty, and unlock growth opportunities in the market.
Kim’s Korner is a series of articles by Ballard Spahr’s emerging company and venture capital attorneys. The column is not legal advice. The substance of the column is derived from our experience working with founders and details many of the current critical issues facing startups.
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