For many startup founders and business owners, your brand name will likely become a key asset of your business. However, entrepreneurs like to move rapidly. Cash is burning, and getting a product to market is of utmost importance. Although running an early-stage startup is exhilarating, do not let your brand name protection be swallowed up by all the excitement. Neglecting to properly secure a trademark for your company and products can lead to expensive consequences in the future, such as being forced to rebrand just as you’re gaining traction or being unable to stop infringers from using your brand name. Below are 5 of the most common mistakes businesses make with trademarks and what you can do to avoid them.
Mistake #1: Picking a Bad Business/Brand Name
Your brand name can be an extremely valuable asset to your business. Your brand name forms the commercial identity of your goods and services. As history has taught us, the strongest marks and best brands are “inherently distinctive.” Think “Apple,” “Google,” “Nike,” and “Haagen-Dazs.” These company names do not simply describe the goods and services they offer, but instead, because of genius marketing strategies, people all around the world associate Apple with computers, Google with a search engine, Nike with shoes, and Haagen-Dazs with ice cream. That’s the power of a distinctive brand name.
We frequently see business owners pick generic, descriptive names that get rejected by the USPTO. Instead of picking BEST COMPUTER COMPANY for a company name, Steve Jobs selected APPLE. The word “Apple” has nothing inherently to do with computers, but today, when we hear “Apple,” most of us associate that word with Mac computers and iPhones.
Avoid overly descriptive terms of the goods and services you are offering, and avoid terms that are in common use either in general language or in your trade. Instead, consider inventing a “fanciful” word. Fanciful marks are invented words with no dictionary listing or other known meaning (e.g., Exxon, Xerox, Kodak). Fanciful marks are strong choices for trademark registration.
Descriptive marks are weak. If the USPTO determines that a mark is “merely descriptive,” then it cannot be registered unless it acquires distinctive secondary meaning through use in commerce for a significant period of time. Instead of struggling to prove this “acquired distinctiveness” over several years, save yourself a headache, and pick an inherently distinctive name from the start.
Mistake #2: Failing to Conduct a Proper Search
All too often we see entrepreneurs launch companies and products with a brand name before properly investigating the name. After investing time and money into creating signage, letterhead, advertising, and promotional materials, the last thing you want to find on your desk is a cease and desist letter demanding that you stop using your newly launched company or product name.
Before settling on a brand name, conduct a proper search or have an experienced trademark attorney conduct one for you (usually under $1,000). A good place to start is with the trademark filing database, the Trademark Electronic Search System (TESS). Through TESS, you can conduct a basic search to see if anyone else has already registered your name or something similar.
After searching TESS, you should also search domain names through ICANN’s WHOIS Lookup tool. Don’t just search your exact name. Search for variations and other similar sounding or looking terms because even if your exact name is technically available for registration, the USPTO may still refuse your mark if it is “confusingly similar” with an already-registered mark.
Although searching TESS and ICANN is a good first step, it is still not a substitute for a fully comprehensive search by an experienced trademark attorney. For example, many marks are not registered federally, but are still protectable under common law. These common law marks are usually only discovered through searching various proprietary business databases and state registrations, which are typically examined by a trademark attorney during a comprehensive search.
Mistake #3: Neglecting Website Domains and Social Media Handles
Another common mistake we see business owners make is failing to secure the proper website domains and social media handles for their brand. Implementing a strong online marketing and sales strategy is imperative for business success in the digital age. Before settling on a brand name, ensure the @name is available on all of the major social media channels – Twitter, Facebook, Instagram, LinkedIn, YouTube, etc. Failing to secure the proper social media handles and domain names could derail your marketing and sales plan, especially if you’re planning to implement a content marketing strategy to drive traffic to your website and social media pages.
Sometimes we see the opposite, too. An enthusiastic entrepreneur will conduct a quick search on ICANN and on the major social media platforms, find that the brand name is not reserved, and set up accounts accordingly. Unfortunately, if the entrepreneur fails to check TESS or have a trademark attorney conduct a comprehensive search (see Mistake #2), then the entrepreneur risks having an infringement issue emerge from the shadows later down the road. Avoid these problems by not only checking ICANN and the major social media platforms, but also TESS and other trademark databases.
Mistake #4: Filing Too Early
A “trademark” is a designation used to “identify and distinguish” the source of goods and services of a person or company. But if you are not selling goods or services – or do not even have a company created yet – then filing a trademark might not be the right move.
The United States Patent and Trademark Office (USPTO) offers businesses two ways to file a trademark application – an “actual use” application or an “intent to use” application. If you are actually using your mark in commerce (i.e., selling things now), then you can file an “actual use” application. If you intend to use your mark in commerce (e.g., selling things in 6 months), then you can file an “intent-to-use” application. However, an “intent-to-use” application is more expensive, and your mark will not become a bona fide federal trademark until you start using the mark in commerce. Furthermore, if your mark is legally weak – for example, it includes generic or descriptive terms (see Mistake #1) – you might find yourself in a situation where you need to either immediately start using the mark in commerce (i.e., start selling goods and services now) or be forced to abandon the mark altogether, leaving it available for other businesses to use in the market. As a result, if you file an “intent-to-use” application, you should ensure that your mark is legally strong (i.e., distinctive) and that you are prepared to start selling your goods and services within six months after filing the application.
As a general rule of thumb for startups and business owners, focus on creating and developing a great product and go-to-market strategy first before filing a trademark. Get your startup off the ground. Gain some market traction. Then, contact a trademark attorney. Remember, trademark rights arise from actual use in commerce, and the USPTO generally requires evidence of such use before a mark can be federally registered. Don’t get caught filing prematurely, especially if you are not planning to sell any goods or services for a while.
Mistake #5: Not Hiring a Trademark Attorney
Filing a trademark yourself is a low-cost, high-risk option. A shrewd attorney once told me that it’s like changing your oil – most people have an experienced mechanic do it for them, but some DIY-ers elect to do it themselves. You can do it yourself, but you likely won’t know if you messed up until you’re thousands of miles down the road. Same goes for filing a trademark.
Filing yourself is low cost because your upfront costs are limited to just the filing fee ($225-$275). However, filing yourself is also high-risk because you might improperly narrow your goods and services description, submit an overly broad goods and services description (which exposes your mark to a challenger filing a cancellation proceeding to invalidate your mark), or select the wrong class of goods and services altogether (which would force you to completely refile with a new set of filing fees).
Sure, you might save a few bucks upfront by filing yourself, but you might make mistakes that could cost you several thousand dollars down the road. In other words, if you don’t believe your brand is worth the $2,500-$5,000 it will likely cost to properly file and prosecute a trademark, then perhaps, you should reconsider your brand name altogether.
Of course, the complexities of trademarks are vast, and these are only a few of the most common mistakes businesses make with trademarks. However, understanding and appreciating these mistakes and how to avoid them will help secure your company’s brand and put you on the straight and narrow path to business success.