If you're like most people, choosing a name for your business was difficult. You probably spent days thinking about whether the name properly reflected the nature of your goods or services, and whether the name was catchy enough. If you're like most people, after all of that hard work, you breathed a sigh of relief and started advertising. And, unfortunately, if you're like most people, you did not research whether the name you selected was available to be used as a trademark—and it could be extremely costly to your business. The reasons why trademarks are fundamentally important to all businesses is answered by the responses to the following questions.

1. I just started a business, why should I start thinking about trademarks now?

When you started your business, you selected a name and logo because you believed that they distinguished your goods or services from those of others. Over time, your customers, and potential customers, will recognize the quality of your goods or services solely because of the business name and logo. Developing a quality reputation that is based solely upon a business name or logo takes valuable time. But, you may not realize that your business name, logo or product name may be unavailable to be used as a trademark. If so, you will spend years building "good will" in a business name, that, ultimately, you will have to forfeit. A future trademark problem could destroy a lucrative franchising or growth opportunity.

2. I thought that I would be protected if I filed for a fictitious name or incorporation. Isn't that right?

No. Remember that fictitious name filings and incorporations are performed at the state level only. Even if you could afford to maintain a yearly filing in every state, you would still not be immune from trademark problems. For example, consider the following situation: A company incorporates as PlumbingTech Service, Inc., and provides the service of computerizing home plumbing. Another company incorporates as AllTek Corp., and one of many services it offers is its PlumbingTech Service, which is also to computerize home plumbing. Clearly, the reputations of the two companies would be confused by the consuming public. Thus, even though both companies are properly doing business from the Corporation Bureau's perspective, there are obvious trademark problems.  This is the #1 mistake made by non-lawyers (including non-lawyer professionals) who try to perform legal work when they perform company setups.  We have been retained by far too many clients who thought they were protected because they were permitted to incorporate at the state level.  The best non-lawyer professionals will refer you to competent legal counsel.

3. Okay, it's starting to make sense. What should I think about in order to select a name or logo that can be used as a trademark?

There are two basic reasons why a name you select will not be available to be used as a trademark: either the name already has been used by another business, or it is generic.

As in so many areas of the law, first in time is first in right. If another business has already used a similar name for similar goods or services, then that business will have the exclusive right to use the trademark. Thus, in such cases, often the best advice for a new business is to choose a new name.

Even if the name has never been used by another business, not all names can be trademarks. For example, generic names are not available for trademark protection because they are generally the very name of the product or service itself. For example, a business could not trademark "spoon" for a shovel-like kitchen utensil. Also, names that describe the goods or services are generally not available to be trademarks. For example, "Best Computer Service" for a computer servicing company describes the services offered. The best and most valuable trademarks are arbitrary. For example, the term "Kodak" does not otherwise have any relation to photographic equipment.

4. After I select a name, how can I determine whether it is able to be used as a trademark?

The only way you can obtain some assurance that a name or logo has not previously been used is to perform a trademark search. Preliminary computerized research can be performed at your attorney's office for about $50 to $100. Additional research can be performed by a professional trademark research company for about $250 to $500. If that seems to be expensive, consider how much it costs to purchase advertising, stationery and signage, and then to find out that your name or logo must be changed to avoid a trademark infringement lawsuit.

5. If the name is not being used by another business and it is able to be used as a trademark, then what?

After you perform adequate research, you should then perform your state business filings such as an incorporation or fictitious name registration. If you have already performed your business filings, or selected logos or product or service names, then you should still perform the research as explained above. You are far better off performing the research after the fact, than to continue to use and develop a name or logo without knowing your legal rights.

6. When do I get a trademark? Don't I have to register it with the government?

No. There are two types of registrations: state and federal. You may not realize that you obtain rights in your trademark on the first date you actually use the trademark in commerce. For a state trademark, the first date you use the mark in that state is the date when you begin to develop trademark rights. For a federal trademark, the first date you use the mark in interstate commerce (between at least two states) is the date when you begin to develop federal trademark rights. Although you should, you do not have to register the trademark with the state or federal government to obtain trademark rights.

However, the scope of your rights will be limited to the market territory where you actually use the trademark. Therefore, without more, you would have to do business nationally, in every market, to obtain complete national trademark protection of an unregistered trademark.

Generally, you cannot obtain a trademark without first actually using the mark in commerce. However, pursuant to recent amendments in federal trademark law, you now have the ability to secure a federal registration filing date which precedes your actual use of the mark in interstate commerce. The type of filing, called an "intent-to-use application," is an extremely valuable way to secure rights in a mark without disclosing the mark prior to its actual use.

7. Well, I've already used my trademark in commerce. Why should I register it?

Whether a state or federal registration is advisable is a function of the costs and benefits of each registration. The benefits of a state registration vary with the law of each individual state. Most often, state laws do not provide any more protection than available without a state registration, i.e. protection in the actual market territories within the state. However, state registrations are usually entered into computer databases that are nationally available; thus, it may act as a deterrent to another business that is performing a trademark search.

If you federally register a trademark, you will have the following advantages, among others: expansion of your trademark rights from your actual market territory to include the entire United States, regardless of where you actually do business; you will be presumed to be the owner of the trademark; a registration will prevent similar marks from being registered; and you may receive triple damages and attorneys' fees if you are injured by infringement.

8. I've seen businesses use a "^TM" symbol and the ® symbol. Why are there different symbols, and which should I use?

There is also the ^"SM" symbol for a service mark. Most people use the term "trademark" generically. Actually, there are trademarks for products and service marks for services. Until you receive a federal registration of a mark, you should use the ^"TM" symbol (for products) or the ^"SM" symbol (for services) to alert the public that a mark is being claimed. While use of those symbols does not convey any rights, it is good practice--especially because it prevents an infringer from claiming that the infringement was innocent. After a federal registration of either a mark, you should use the ® symbol to signify that the mark is federally registered. The ® symbol should never be used prior to a federal registration.

In conclusion, the lesson is that choosing a name or logo for a business should be done with the proper advice, research and care. Building a business with a name and logo that are not available for trademark protection is like building a home on sand.

See also, Legal Links: Chain 1, Link 3, Introduction to Trademarks and Federal Trademark Process.