State vs. Federal Trademarks, Which is Right for Your Business?

Trademarks are not only for those companies that are trying to dominate the world.  Trademarks can be a significant asset for any business, even a small business. But what type of trademark do you want to obtain, a federal trademark registration or a state trademark registration?

Filing a trademark application is an excellent step to take to protect your name, slogan or logo. It is, however, important to understand that not all trademarks are created equal. While every state allows you to obtain a trademark registration, a federal trademark registration provides the greatest rights. This is because when you obtain a United States federal trademark your rights will exist throughout the country, and not just in one particular geographic locality.  With a state trademark you obtain rights to your immediate geographical area only, not the entire state, which is an important consideration.

For example, if you get a trademark in California and use the mark in commerce only in Newport Beach, California, and subsequently another party files for a federal registration on the same mark, you are prevented from using your mark outside of Newport Beach! Moreover, a state registration does not even entitle you to rights throughout the entire state. Notice in the previous example that I said that if someone were to obtain a federal registration on the same mark for which you had a California state registration you would only be able to use the mark in your geographic area, not throughout the state. So if you use the mark in commerce in Newport Beach, and someone acquires a federal registration, they can use the mark in San Diego, Los Angeles, San Francisco and everywhere in between. You would be limited to using your trademark in Newport Beach because a state trademark is trumped by federal trademarks.

This does not, however, mean that state trademarks are useless. It does mean that you should not only obtain a state trademark.

Over the years I have always recommended a federal trademark registration and cautioned against state trademark registrations. Recently my view has become more nuanced. While a federal trademark registration is, in my opinion, an absolute prerequisite because it locks in your rights nationwide, state trademarks are cheaper, easier to obtain and should not be avoided. In fact, state trademarks can be quite useful in certain circumstances.

State trademarks do not give protection for the entire state of registration and they do not allow you to use the familiar trademark symbol (R in a circle). With a state trademark registration you get limited protection only where you are actually using the trademark (as already explained), but if you have a product that could be counterfeited you really should seek a state trademark registration. There are advantages to having state registrations when fighting counterfeiters, which is a growing concern for all brand owners. States have concurrent jurisdiction with the federal government in trademark disputes, and while it might be very difficult to get federal government assistance in a fight against counterfeiters it might be much easier to get state and local authorities to help if you have a state trademark. The laws will vary from state to state, so if you do have a product that may be counterfeited speaking with a knowledgeable trademark professional about both federal and state trademarks is well worth your while.

Trademarks serve multiple purposes, but there are two primary purposes. First, trademarks identify and distinguish either the goods or services of one manufacturer or seller from goods or services manufactured or sold by others. Second, trademarks indicate the source of the goods or services. In short, a trademark is a brand name that you will use in commerce.

If you elect to move forward with obtaining a federal trademark registration, which is strongly recommended, the first step to acquiring federal trademark rights requires use in commerce. Namely, you either (1) start using the slogan, name or logo in commerce (i.e., some kind of commercial use) and then subsequently file a trademark application; or (2) file an intent to use application, which will lock in your filing date but does not require immediate use. The intent to use application is essentially a reservation of the mark for a limited period of time. You will eventually have to start using the trademark in commerce, but if you are not yet using the mark in commerce this is the way to go. Additionally, the use in commerce will need to be interstate commerce (i.e., commerce across state lines), but that is not typically a problem today given the way business is conducted for virtually all businesses – between buying, selling and the Internet business is increasingly global.

With respect to actually filing a trademark application there are essentially two options. First, you can do it yourself. Second, you can hire an attorney. Filing a trademark application is not as easy as it might seem due to the fact that it can be difficult, if not impossible, to amend an application if you make a mistake at the time of filing. Indeed, in many situations when filing mistakes are made the cheapest solution will be to simply file a second application properly, but that creates a delay in acquiring rights. That being the case, and the relatively inexpensive cost of hiring an attorney to do it right from the start, I generally recommend hiring an attorney.

TO BE CONTINUED… Up next is discussion of the importance of contemplating your brand as a single identity and picking a name suitable for social media platforms.