Trademarks can be words or symbols used to distinguish goods and services of one company or of one individual business entity from another. They can be maintained in the form of text, graphics, and sound. Trademarks provide rights to the exclusive use of the mark as a representation of the company or individual with prior registration. Trademarks have no inherent value in themselves but derive protection on the basis of their ability to represent the value in the intangible quality of a company’s or individual’s goodwill. Goodwill comprises reputation, length of effective dealings with the public, good record of service or product support, or other ongoing positive associations with the public. Although goodwill is an intangible entity, it is treated as a tangible asset for purposes of accounting in tax law, contract for sale, and valuation for stock purposes. Trademarks serve to protect the trademark owner against others who might take advantage of the company’s goodwill (represented by the trademark) by marketing similar products with confusingly similar names. They also help the consumer choose products on the basis of the reputation represented by the trademark. The core issue is that one competitor is not allowed to capitalize on the goodwill of another.
The Federal Trademark Act of 1946, Lanham Act § 45, 15 U.S.C. §§ 1051-1127 ( 1946), commonly known as the Lanham Act, governs the law of trademarks, the registration of trademarks, and remedies for the infringement of registered trademarks. Many common law principles governing this area have also been incorporated into the act. The Lanham Act was passed to “simplify trademark practice, secure trademark owners in their goodwill which they have built up, and to protect the public from imposition by the use of counterfeit and imitated marks and false descriptions.” The Lanham Act’s definition of “trademark” was distilled from, and is consistent with, definitions appearing in court decisions both under prior trademark laws and common law. A trademark is defined in the federal Lanham Act as “any word, name, symbol, or device or any combination thereof adopted and used by a manufacturer or merchant to identify his goods and distinguish them from those manufactured or sold by others.” Trademarks refer to goods and can be distinguished from service marks and collective marks. The Lanham Act defines a service mark as “a mark used in the sale or advertising of services to identify the services of one person and distinguish them from the services of others.” While a trademark identifies and distinguishes the source and quality of a tangible product, a service mark identifies and distinguishes the source and quality of an intangible service.
Registration creates notice against those who would import materials with a duplicate trademark, and after five years of registration, the trademark becomes “incontestable, ” providing procedural advantages in case of legal action. Federal registration also allows trademark owners to use a protected mark in a national arena whether or not they have immediate intentions to use them beyond state borders. Where two parties contend ownership in a trademark, the earlier registration also contributes to an assumption that the first registered party has rights in the mark.
When a business adopts a trademark, it should make a search to be sure that no other similar marks already exist or that the intended trademark is itself protectable. Some intended trademarks too closely describe a product that is created by more than one company and therefore cannot be used. For instance, the name “word processor” cannot be used as a trademark because it describes the characteristics of the product itself, produced by many companies; the trademark WordPerfect, however, distinguishes one kind of word-processing software from all others. Not only should a trademark be a distinctive identifier for a company or product, the chosen mark should not be substantially similar to a trademark that is already registered. The trademark should be registered early, before developing goodwill, and it should be used nationally as soon as possible to further establish the claim in its use. Remedies for violation of trademark registration can range from injunction to monetary damages for harm to a company’s goodwill.
Consult with an experienced business lawyer for advice on how to protect your business trademarks.