Trademark Basics

I was reading an article the other day about a small business owner who says she lost the use of her name when she took on partners for her company.  In the article, she said that she did not register her trademark (her name).  According to the article, she lost the ability to use her name when the company dissolved.  She says that she should have registered the trademark and licensed it to the company.  This would be a sound policy, but a trademark can exist without a registration. 

Trademark law is a subset of the law of unfair competition.  “Unfair competition” is not easily defined.  Indeed, it is purposely broad in order to allow courts to fashion relief to entirely new, possibly unheard of situations created by the ingenious, yet unscrupulous competitors.  In California, the unfair competition statute starts with Business and Professions Code section 17200.  That statute defines “unfair competition” as and including “any unlawful, unfair, or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising.”  Trademark infringement (i.e. violating the rights of the owner of a trademark) is a form of unfair competition.  A claim for unfair competition at common law is an equitable doctrine that protected against the inequitable pirating of the fruits of another=s labor, and then either Apalming off@ or Apassing off@ those benefits as one=s own or gaining unearned economic benefit from them.  Palming off was defined as passing off or attempting to pass off one person=s goods or services as the goods or services of another.  Essentially, common law unfair competition is a cause of action for trademark infringement. The Federal Trademark Act, known as the Lanham Act, also has an unfair competition component. 

A person or entity may obtain common law trademark rights simply by using the mark as a trademark.  This begs the question as to what exactly is a trademark and what is a trademark’s purpose.  A trademark is any word, name, symbol, or other designation used to identify and distinguish one’s goods from others.  In other words, it must identify the source of the goods of one person and distinguish that source from its competitors.  Accordingly, the function of a trademark is four-fold:  (1) to identify one seller’s goods and distinguish them from others; (2) to signify that all goods bearing the trademark come from or are controlled by a single source; (3) to signify that all goods bearing the trademark are of an equal level of quality; and as a prime instrument in advertising and selling the goods.  For example, a consumer who bought a pair of Nike shoes and had a good experience with those shoes (e.g. they were of high quality, lasted a long time, etc.) sees the Nike name or Swoosh on items of apparel will expect the same high quality as from the shoes because the apparel items are from the same source as the shoes.  Thus, simply by using a name or symbol in this way, you can obtain common law trademark rights.  However, protection for a common law trademark can be limited.  Common law trademarks are only protected pursuant to the law of unfair competition.  Thus, if you have a trademark that you use only in San Francisco (e.g. “ABC Gizmos”), you may not be able to prohibit the use of the same or similar mark in Los Angeles.  Common law trademarks are only protected to the extent that they are recognized as trademarks. 

Now, if you registered your mark “ABC Gizmos” with the State of California, then you would have statewide protection, subject to some limitations that are outside the scope of this article.  The California trademark law starts at Business and Professions Code section 14200.   Oftentimes a company or person will register their mark with their state while awaiting federal registration.  Nevertheless, a trademark that is registered with the state generally has broader protection than a common law trademark. 

Of course, the broadest protection available is national protection afforded by registering your trademark with the United States Patent and Trademark Office (“USPTO”)—there are avenues for international protection, but that is beyond the scope of this article.  Federal registration is more expensive than state registration and can take longer to obtain, but once registered it can garner you or your company nationwide protection.  Also, unlike its state and common law counterparts, you can file what is called an “intent to use” (“ITU”) application with the USPTO. This is an effective way to “save” the name or symbol until you or your company actually begins using the mark in association with your goods/services in commerce.  In essence, an ITU application goes through the same process as a conventional application except that the USPTO will not issue the registration until the mark is used in commerce. 

In sum, there are three ways to obtain trademark rights.  Each of these ways has its benefits and risks.  If you are thinking about obtaining a trademark or want to protect your trademark, it would be wise to contact an attorney to discuss the details of each.  This article is a brief overview of the types of protections and there are other issues which may arise to not allow you to register or assert your trademark rights.