Imagine this scenario: you’ve been granted United States federal trademark protection for your business’s name, thereby granting you exclusive use of the name, brand, or logo nationwide. No one else can use your unique brand henceforth by law, and everyone can identify you by your mark…
But then you find out that there is another business with a confusingly similar or same name in existence that is protected by a state’s trademark laws. It happens more often than one thinks. So who prevails?
As recently as 2015 in North Carolina, the locally known and loved “Toast Cafe” was looking to expand into several franchises across the state. The owners would get calls from people in other states thanking them for inspiring them to open up their own “Toast Cafe,” as the owners had not registered for a state or federal trademark. Not only that, but “Toast Cafe” was too generic a name and they found several restaurants of the same or similar name all across the U.S. Soon enough, they encountered legal difficulties in the restaurant’s expansion and they had to change the restaurant’s name to what it’s now known as: “The Famous Toastery.” The federal trademarking process took three long years before they were approved, and it was not until then that they could expand the franchise. The lesson? Trademarking is a long and difficult process, so the sooner your business applies for federal or state protection, the better. If you are looking to expand your business beyond state borders, federal trademarking is an important step.
The Basics of Trademark Protection
A trademark is a word, name, phrase, image, logo, symbol, or combination thereof that identifies your business and your goods/services in the flow of commerce. You are not required by law to register your name, because in common law, an enforceable trademark can exist just by using the name. Registration does not create the enforceable trademark, mark-usage does, according to The Lanham Trademark Act which governs this field. Conversely, if you do not use the mark or brand in commerce or in sale of goods or services, you may lose your rights to it.
That being said, an unregistered brand is limited to only its actual geographic trading area. If you try to expand your business, you will more than likely run into the legal consequences of not registering your brand. You may encounter other businesses that have similar or even the same name, and when that happens, whoever registered the brand first wins.
The Lanham Act provides the somewhat loose standard of “confusingly similar” to determine whether there is a conflict in granting trademark protection. Aside from a brand being close to the same, you cannot have a brand that sounds, looks, or is similar enough that it runs the risk of being confused with another brand. This standard is called the “likelihood of confusion.” The trademark will not be granted if a court finds this, and you may be sued for trademark infringement. Therefore, it is always best to be careful and to call the Tran Law Firm for assistance and guidance for your business’s needs.
Federal Trademark vs. State Trademark
The Supremacy Clause of the U.S. Constitution guarantees that a federally registered brand defeats subsequent state as well as federal claims to the brand or anything similar after the date of the filing. The registration provides constructive notice to other businesses who may use the brand in the future, including prior users who may seek to do the same. Therefore, in order to get a clean bill for a “go ahead,” an experienced attorney must look thoroughly through the state and federal trademark registers.
THE EXCEPTION: Prior to the date of filing and granting of a federal trademark, any similar or prior unregistered users of the brand may have superior rights, but they are effectively frozen into the territory/geographical area where they do business, and cannot expand further or they will risk being sued for trademark infringement. This may include what’s called the “natural zone of expansion” for that business, but that depends on each situation. These cases vary and require close examination of complex laws and facts.
The protection afforded by state trademarks are limited to the state, and each state has a different treatment of trademark laws. While state trademark registration is cheaper and faster than its federal counterpart, it provides less protection. As a business owner, you have to consider whether or not your business will reach outside of the state, and that includes commerce conducted over the internet.
After five continuous years of using the registered trademark, a registrant can file an affidavit proving that there has not been any legal conflict or adverse decisions against using the brand and that there are no pending lawsuits. The trademark then becomes “incontestable,” which means that in a court of law, there is “conclusive evidence” and a prima facie presumption that you have the exclusive right to use of the brand. It is important to note that federal incontestable status will not defeat a prior user or state trademark if the prior user can show it was using the brand and selling goods under it before the date of registration. It just means the prior user is frozen within their territory and possibly their zone of natural expansion.
What Can I do? What Happens Next?
If you are infringing on another business’s territory, you may receive a “cease and desist” letter from their attorney. Or if your business is being infringed upon, you may have a legal cause of action. Another possible action may be to file an injunction against that business. Do not panic, and the Tran Law Firm if this ever happens.
Typically, the best course of action is for your business to contact an experienced attorney at the Tran Law Firm for any trademarking questions and concerns. At a minimum, do your own thorough research first. An internet search engine is a powerful tool in looking for conflicting brands. You may employ an agency that conducts federal and state trademark searches for you, but ultimately, a law firm with skilled and experienced attorneys is your best bet. An attorney will not only conduct the search, but also advise you on your path to trademarking, and see you through the legal twists and turns of the process. It is the most cost-efficient method.
It is always in your best interest to consult an attorney when starting a business, or thinking about registering for state or federal trademark protection for your brand. Here at the Tran Law Firm, we offer expert advice and guidance for your business to successfully navigate the complex minefield of trademark law. Call us at (980) 355-9798 for a consultation.
Drafted by Sylene Cortez
