Why Trademark

Trademark law is a useful area of law that can be cost-effective in a number of ways. While not quite as easy as copyright law to obtain, and while not quite as effective as patent law in excluding others from your area of business, trademark law provides a kind of middle ground, in which companies can get a bit of both worlds without breaking the bank. Trademark rights arise naturally under state law, allowing for a company to prevent other companies from using a particular name in a particular geographic area. Thus, choosing a catchy name for a product may make it more difficult for other competitors to break into that area of business. Furthermore, because the standard for trademark infringement is a “likelihood of confusion,” even names used by competitors that are not identical to the name you have trademark rights in can potentially be blocked. The only question is whether the potential infringer’s mark is “confusing,” i.e. whether a consumer that sees the infringing mark would mistakenly believe that you made this product. Thus, trademark rights can be a fairly powerful tool in the hands of a small company that knows how to use them.

Trademarks can also provide a kind of geographic fiefdom into which other bigger competitors cannot trounce. For example, if a company grows its business in one particular state, and becomes very well known and does a lot of business in that state, but never expands into other states and never obtains a federal registration, it may give rise to a “limited area exception.” This means that the business operating in a single state will be able to prevent the larger company from pushing its way into their market and using their mark, and instead would require that the bigger company work in areas other than the geographic area in question.

Federal registration also has a number of crucial benefits including nationwide priority over marks later used in commerce, a presumption of validity, it puts would-be infringers on notice, and it allows U.S. Customs to seize infringing goods at the border. These are all but necessary aspects of business development as a company expands, and failure to obtain such rights could lead to a number of headaches down the road, when huge amounts of capital have been invested in the use of a particular name or brand for which another person owns the federal registration, and will only hand it over for an astronomical fee. For example, Apple, which was once a tech start-up, never properly secured its trademark rights in China for iPad, and had to pay dearly for its trademark rights because another company got there first. Though the Chinese system is different, there are important similarities; namely, the rent-seeking behavior that should be avoided at all costs.

Finally, note that trademarks can last in perpetuity, provided the mark is used in commerce throughout. This is true even if the federal registration is lost due to a lack of maintenance, failing to submit the necessary affidavits and documentation, or failing to pay the requisite fees for maintenance because trademark rights persist in state common law. In this sense, trademarks are the most powerful of IP rights.