One of the most critical assets for any organization is its name. A business name is the backbone of a solid and successful brand. When you see or hear Google, Coca-Cola, or McDonald’s, you can immediately identify these brands and distinguish them from others. As a consumer, you likely associate each of these names with a certain quality or reputation. This is the essence of a trademark.
A “trademark” (commonly shortened to “mark”) is any word, name, symbol, device, or any combination of these things used by a person to identify and distinguish their goods from others and to indicate the source of the goods. 15 U.S.C. § 1127. Similarly, a “service mark” identifies and distinguishes someone’s services and indicates their source. Service marks are commonly referred to as trademarks because they have essentially the same legal requirements, rights, and protections.
Benefits of Federal Trademark Registration
There is no denying the importance of protecting your business name through federal trademark registration. Filing a federal trademark registration with the United States Patent and Trademark Office (USPTO) has several benefits for any business:
- Exclusive Rights: A registered mark provides your business with the exclusive right to use the mark in commerce for the goods or services specified in your trademark registration. In other words, your rights generally prevent others from using the same or confusingly similar name or logo on similar goods or services.
- Nationwide Protection: Federal registration provides you with protectable rights throughout the U.S. and its territories. These rights are critical for any Michigan business planning to grow to other states and become a strong nationwide brand.
- Recovery of Profits and Damages: If someone willfully violates your trademark rights, you generally are allowed to recover (1) their profits, (2) any damages to you, and (3) the cost of the action. 15 U.S.C. § 1117(a).
- Counterfeiting Protection: If someone intentionally sells, offers to sell, or distributes goods and services with a counterfeit of your mark, you generally can recover 3x profits or damages + attorney’s fee. 15 U.S.C. § 1117(b).
- Barring Imports: U.S. Customs and Border Protection can stop someone from importing goods that infringe your trademark.
- Legal Presumption: In court, (1) you are assumed to be the true owner of the trademark and have the exclusive right to use the mark, and (2) your trademark is assumed to be valid. After 5 years of registration, these presumptions may become incontestable and deemed conclusive evidence of your rights. These legal presumptions are important assets to your business if you ever need to pursue the benefits listed above.
Do You Need to Register a Business Name as a Trademark?
You are not legally required to register your business name as a trademark. Technically, you acquire common law trademark rights by being the first to actually use the mark in the sale of goods or services. However, common law trademark rights are limited to the geographical location where you continuously use the mark and can establish market penetration.
A wise business owner should not rely on common law trademark rights. If another business successfully registers the trademark you use, your business is now frozen to the geographical location where you can establish market penetration as of the date of your competitor’s trademark registration. See All Video, Inc. v. Hollywood Entertainment Corp., 929 F. Supp. 262, 265 (E.D. Mich 1996). For example, suppose you own a booming business in Ann Arbor, then another business successfully registers your business name or a confusingly similar name for the same class of goods or services you provide. The other company’s trademark registration will prevent you from using your name to expand to other markets, such as Detroit or Grand Rapids. Businesses use their names everywhere – bank accounts, credit cards, business cards, websites, invoices, receipts, advertisements, social media, etc. This nightmare scenario means you either must completely rebrand or accept the now geographically limited business opportunity. Federal trademark registration could prevent this, saving you time and money while creating nationwide rights in your trademark.
Copyright vs. Trademark Protection
Businesses can have both copyright and trademark rights, which are different but valuable intellectual property (IP) rights. Below is a quick comparison of what each IP right protects, examples of each, and what is an infringement or violation of those rights.
|What Does it Protect?|
|What is Infringement?||Any of the following without the author’s permission: |
LLC Name or Corporation Name vs. Trademark
Forming an LLC or a corporation does not provide any trademark rights to the business name filed with the State of Michigan. Forming an LLC or corporation only means that another business cannot register the same name in Michigan. However, even if you successfully form an LLC or corporation, it could still be possible that your Michigan business name infringes a federal trademark registration. The Michigan Department of Licensing and Regulatory Affairs does not perform a trademark clearance search to see if your business name is the same or confusingly similar to a registered federal trademark. It is the business owner’s responsibility to perform this search.
Many Michigan LLCs and corporations forget that a Certificate of Assumed Name (commonly known as a DBA or Doing Business As) is required whenever the business uses a name other than the entire company legal name. For example, if a Michigan LLC registered as “XYZ LLC” ever does business as “XYZ” (omitting “LLC”), that business must file a Certificate of Assumed Name.
Choosing a Strong Trademark as a Business Name
When choosing a business name, your primary goal should be to create something unique and distinctive. The more distinctive your trademark is, the stronger it will be, which will make it easier to enforce your trademark rights. Trademarks are classified on a distinctiveness/descriptiveness continuum – (1) Fanciful, (2) Arbitrary, (3) Suggestive, and (4) Descriptive. See TMEP § 1209.01.
Fanciful Trademarks: Try inventing a new word if you can. Invented words are known as “Fanciful” trademarks, which are the strongest and are typically the easiest to register with the USPTO. However, even if you invent a word, avoid a word that arguably describes your goods or services. EXXON, PEPSI, and KODAK are some of the most famous examples of fanciful trademarks.
Arbitrary Trademarks: Your business name can include real words, even words that are commonly used in day-to-day conversations. “Arbitrary” trademarks comprise words that do not suggest or describe an ingredient, quality, or characteristic of your goods or services. The words are unrelated to your goods are services. Arbitrary trademarks are distinctive but less distinctive than fanciful trademarks. APPLE for computers, OMEGA for watches, and VICTORIA’S SECRET for lingerie are common examples of arbitrary trademarks.
Suggestive Trademarks: Words that suggest but do not directly describe your goods or services are “Suggestive” trademarks. Suggestive trademarks hint at the goods or services but require imagination to understand the trademark’s relationship to a good or service. Although trademark law considers suggestive trademarks inherently distinctive, there is often a fine line between suggestive trademarks and merely “descriptive” trademarks, which are generally unacceptable for federal registration. Fanciful and arbitrary marks are stronger for a business owner. CITIBANK for banking services, COPPERTONE for tanning oil, and WET ONES for pre-moistened wet wipes are examples of suggestive trademarks.
Descriptive Trademarks: If someone can immediately tell what goods or services you sell based on your name, it is most likely a “Descriptive” trademark. Words that describe the ingredients, qualities, or characteristics of your goods or services generally cannot be federally registered as trademarks. Registration is possible only if you can show acquired distinctiveness, which requires years of extensive use and evidence that the market associates that word with your business. Thus, if you are looking to build a strong brand, avoid using descriptive words. QUIK-PRINT for printing services and 5-HOUR ENERGY for energy drinks are examples of descriptive marks.
Before moving forward with a business name, at a minimum, search:
- Michigan Business Entity Search
- USPTO Trademark Electronic Search System (TESS)
- Social Media, including Facebook, Instagram, Twitter, LinkedIn, etc.
Then, it is wise to discuss these results and your business goals with a business and trademark attorney to help determine whether you should move forward with your business name.
This content is for general informational purposes only as of the date of this post, is not intended to convey legal or ethics advice, and does not establish an attorney-client relationship. Future legal developments may impact the validity or effectiveness of this content. Always consult with an attorney licensed in your state about your specific situation before relying on information found online, including this website.