The Central Oregon economy is experiencing its strongest growth in years, with Bend-Redmond ranked as the best performing small city in the nation for the last two years. However, despite the recent economic prosperity, proactive businesses are evaluating their corporate assets, both tangible and intangible, in advance of the next economic downturn. Trademarks, and other forms of intellectual property, offer a practical and low cost means for local businesses to capitalize on consumer goodwill, distinguish themselves from their competitors, and expand into new markets.
It is critical for Central Oregon businesses to acquire a baseline understanding of trademarks so that, when the next economic downturn arrives, they can leverage their brands to avoid the boom-bust cycle characterized by the Great Recession.
Strong Trademarks Protect and Grow Businesses
First, what is a trademark? By definition, a trademark is any word, name, symbol or device that identifies the source of one’s goods or services from those manufactured, sold or rendered by others. While a trademark (referred to as a “service mark” when used with services) typically takes the form of a combination of words and/or symbols, the definition is expansive in nature and can include, for example, colors, scents, sounds, motions and shapes. Simply put, a trademark is anything that conveys to consumers the source of your goods or services and serves to distinguish them from others in the marketplace.
Although trademarks come in a variety of forms, not all trademarks are created equal; strong marks have a greater scope of protection than weak marks. The strength attributable to a trademark is best visualized as a sliding scale with strong marks being fanciful (KODAK for film) and arbitrary (APPLE for computers) on one side and descriptive/laudatory (BEND PRINTING CO.) and generic marks (APPLE for apples) on the other. The investment a business makes into using and protecting a mark can also contribute to its strength. For example, Google, Coca-Cola and Nike are strong marks not only because of the nature of the mark, but also because of the extensive resources that each company has invested into the marketing, advertisement and enforcement of their trademark rights.
How to Acquire Trademark Rights
There are two routes by which a party can obtain trademark rights in the United States. First, a party acquires “common law rights” simply by using a mark in conjunction with goods and/or services in the marketplace. The good news is that no fee or formal registration is required to obtain enforceable common law trademark rights. However, the bad news is that trademark rights acquired under common law are limited to the geographic areas where the business has distributed goods or rendered services under a particular mark. As a consequence, a Bend-based business relying on common law rights may not be able to enforce its trademark against subsequent users outside of Central Oregon and may be prohibited from expanding into new markets if a similar mark is already being used in that area.
The second, and far more preferable, route to obtain rights in a mark or design is to file a federal trademark application with the United States Patent and Trademark Office (USPTO). Here is a non-exhaustive list of the benefits that federal registration provides:
• Nationwide Rights. A federal registration grants a trademark holder the presumptive right to use and enforce its mark anywhere in the United States for the designated goods and/or services as of the filing date of the application.
• Constructive Notice. Federal registrations are publically available on the USPTO website and provide constructive notice of ownership in a mark and alert potential infringers of the liability associated with using the same or similar mark.
• Federal Jurisdiction. A federal trademark owner can enforce its rights in federal court where judges are often more familiar with trademark matters and, if successful, may recover (1) any damages sustained, (2) the infringer’s profits and (3) the costs of the action.
• Transferable Property. A federal registration is a tangible asset that may be bought, sold, licensed, used as collateral and shown to prospective investors.
• Incontestability Status. A federal trademark becomes “incontestable” upon reaching its fifth anniversary of registration and conclusively establishes ownership in the name of the trademark holder. Therefore, an entity with prior common law rights will be barred from challenging an incontestable federal registration based on its prior usage, and its business expansion will be frozen in the geographic area of use as of filing date of the underlying application.
The ability to obtain a federal trademark registration will depend on a number of factors and those interested should contact an attorney familiar with trademark law to determine whether federal protection is available.
As the Central Oregon economy continues to thrive, successful businesses will be those that adopt a distinctive mark and those that are proactive in protecting their trademark rights. Trademark registration offers an effective means to capitalize on consumer goodwill and should be leveraged by any business looking to expand into new markets, whether across the street or across the country.
Drew Smith is an attorney at Holley & Menker, P.A., an intellectual property firm in Bend, Oregon specializing in all aspects of trademark representation including brand counseling, clearance, prosecution and enforcement.
This article and its contents are for informational purposes only and do not constitute legal or professional advice.