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I have a trademark. Now what?

You have a new product or service and a great name that customers are remembering and using to refer others to you.  Congratulations!  You have a trademark (or service mark).  Now you need to make sure to protect that valuable business asset.

Maintenance

A good trademark registration policy has two separate and distinct facets.  First, you must obtain and maintain your trademark registrations.  Upon registration, one must maintain the registration through regular filings with the USPTO proving that the mark is still being used by the organization for the claimed services.

The first filing is due on the five (5) year anniversary of the registration date.  After that, you must file proof of use on each ten (10) year anniversary.  Although law firms often docket the deadlines to assist in maintenance, it is ultimately the organization’s responsibility to ensure the mark is maintained.  Therefore, it is recommended that this is put on your long-term planning calendar. 

Enforcement

The other facet is protecting your trademark whether or not the mark is registered.   The first step is being proactive and letting people know that you claim certain things as your trademarks.  You should mark any words, phrases or logos that you believe are your trademarks with the proper symbols to show your claim.  To determine if something is a trademark, I would ask two questions:  1) Would a customer think the product or service either comes from your organization or that your organization endorses the product or service?  2) Will your organization lose money or reputation because of the third party’s use of words, phrases or logos?  If they answer to either of these is “yes,” then it is a trademark.  If it is not registered with the USPTO, then you should use a TM.  That is usually placed either on the top right or bottom right of a trademark.  For example, Fromagination, LLC recognizes that its unique name and slogan are important, but they haven’t registered either with the USPTO.  Therefore, they use the TM to show their claims with FROMAGINATIONTM and Artisanal cheeses and perfect companionsTM.  Once a mark is registered with the USPTO, you can use the ® symbol.  For example, Econoprint, Inc. registered ECONOPRINT for printing services and so can show: ECONOPRINT ®.  If you registered for a word mark, not a logo, you can use the ® regardless of the font or design you use for the registered words.  If you register for a design or logo, then the ® must only be on the registered logo.  Many businesses are hesitant to put the symbols on their mark.  That is until they start paying attention to the world around them.  Spending just two days really looking at the things you interact with on a daily basis will show you just how prevalent these two symbols are.

Another way to do so is a proactive warning letter.  This should a nice letter that you can send to people that you think either may try to use your trademarks without your permission.  This is not always practical, but if you have something like a festival or community event, it can be a great way to set out expectations. 

The second step is to identify infringers and inform them of their errant ways.  This letter does not have to be mean.  It can be cordial and informative much like your initial letter.  However, it does have to make it clear that they are infringing your rights and harming your organization.  Sometimes, trademark owners choose to do two cease and desist letters with the second letter being much more hardline regarding the need for the other party to stop using the marks without permission.  Others choose to be aggressive at this stage to head off any back-and-forth.  One thing that is a concern in the social media age is that these letters often end up online.  When this occurs, sometimes the trademark owner comes out looking good.  For example, Jack Daniels’ cease and desist letter to an author about his book cover was deemed “what has to be the nicest cease-and-desist order of all time.”  In comparison, the dispute between Magic Hat IP, LLC and West Sixth Brewing Company, LLC also went online to much worse effect.  West Sixth was so incensed that they started a petition, a Facebook campaign, and even a website called www.nomoremagichat.com, which now contains a statement regarding the settlement of the claims.  Starbucks wasn’t immune, either.  Therefore, when contemplating a cease and desist letter, you should remember that the recipient might not be the only one who reads the letter.

If the other party continues to use the mark, then you need to seriously consider filing a lawsuit against them for trademark infringement.  One reason why you might register a mark with the USPTO is that it helps make such a lawsuit just a little easier.  The mark is assumed to be owned by your organization; you can file in federal court, which tends to move faster and know more about trademarks than state court; and you can ask for things like any awards for damages to be tripled. 

If you do not file a lawsuit when another party is using your marks without permission, you risk the court stating that you have lost the right to stop that person from using the mark.  In extreme cases, they may say that you have lost all rights to the mark due to lack of protection and widespread use by others.  This inability to assert your rights due to delay is called the doctrine of laches.   To establish laches, a defendant must prove that the plaintiff unreasonably delayed in enforcing its rights and the delay caused prejudice to the defendant.  In other words, you should have enforced your rights sooner and did not; because of that delay, the other party is now harmed because of your assertion now. 

The doctrine of laches can be a very valuable defense for an infringer because although the trademark owner might have a strong case, it can be barred from relief because it waited too long to sue.  Often the quote used is “equity aids the vigilant, not those who slumber on their rights.”  The answer to the question of “How long is too long?” depends on the facts of the case.  Trademark cases are very fact-specific in nature.   That means that there is no specific time period that can be said to too long or not long enough.   It depends on the case.  For some cases, a few months might be too long to wait if you want a preliminary injunction.  Other cases need years before all damages are precluded.  The more damage that another party is causing you the faster you will need to act. 

Relationships with Other Entities

When other entities are attempting to use your marks on products, a trademark owner generally has three options: 1) Refuse any sales by third parties with the mark; 2) Provide the product with the mark for them to sell; and 3) License the mark.  Refusing any use by third parties is a common approach that many, many trademark owners use.  No one says you have to share your mark.  However, allowing others to use the mark can provide a revenue stream and prevent others from using the mark in a way that you don’t like.  It gives them a chance to do it right. 

I believe that the second option is fairly straight forward. You produce a product and get paid for your sale to the other party and they can make a profit by selling it for more.  Clearly, this is how many products get to the marketplace.  One issue that comes up is if you sell the identical product and you sell it for the same price that you offer the third party to purchase, the other party often gets disgruntled as they can no longer make much profit, if any.   

With licensing, you would have an interested party sign a license agreement giving them limited permission to use the marks.  The license agreement can detail which marks they can use, which products they can sell, when and where they can sell, and any almost any other limitations that you want to provide.  You would include quality controls and the right to terminate the license and the agreement if they do not live up to the quality controls or any other obligation in the agreement including but not limited to the acting within the limitations.  In exchange for them being able to use the mark, you receive something in return, usually money.  This can be a percentage of the sales; for example, you receive five percent (5%) of their net receipts.  The license agreement would include the obligation for the third party to provide you with sales numbers and a right to audit at their expense so you could double-check their payments.   Another alternative is to ask for flat fees; for example, you receive five hundred dollars ($500.00) per year.  This eliminates the hassle of confirming sales, but you likely will not be paid as much as with royalties.

Conclusion

Ultimately, you have to determine what makes sense for your business both now and in the future.  As logos, products, services, marketing, and channels of trade change, trademark strategies should, too. 

 

DISCLAIMER: The information provided is for general informational purposes only. This post is not updated to account for changes in the law and should not be considered tax or legal advice. This article is not intended to create an attorney-client relationship. You should consult with legal and/or financial advisors for legal and tax advice tailored to your specific circumstances.

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