Trademarks are designed to protect consumers from being taken advantage of or misled into thinking they are buying products and services from one business when in fact they are buying from another. The name of a business, its logo, slogans and other branding images are used to identify a particular business in the marketplace. It’s the way consumers identify businesses and distinguish them from others.
When more than one business uses the same name, logo or images, it creates a potential for confusion for the customer.
Therefore, trademark laws are created from the perspective of protecting consumers and not necessarily protecting business owners.
From that perspective, it is easy to understand that businesses in different industries are not prevented from using similar names, logos and images. After all, a consumer purchasing from a furniture company is not going to be confused and think she is buying from a medical supply company. So, businesses in different industries are allowed to have similar names, logos and images because there is no need to protect consumers from confusion. Again, the rules are not to protect businesses, but rather to protect consumers.
Nonetheless, trademark laws do protect businesses within their own industry. For example, a restaurant can have protection from another restaurant opening with a similar name, logo and/or images. As we’ll discuss below, the distance between the restaurants sometimes is a factor and for certain types of trademarks, restaurants that are some distance away would be allowed to have similar names.
From a business perspective, trademarks are very useful and valuable. They protect your brand within your industry. Businesses spend a large percentage of their budgets on branding and marketing, so it is easy to see how protecting that brand with a trademark is valuable.
What are the different types of Trademarks?
There are four different types of trademarks. Each of them protects a different size of geographic area.
1. Common Law Trademark – This type of trademark automatically exists as soon as you start using your name, logo and/or images in the marketplace. It exists only in the geographic area where you actually do business and only for the length of time that you are using it. The downsides to this type of trademark are many. It is a challenge to prove ownership, use and geographic area if you ever need to enforce your rights (it’s a harder procedure in court). In addition, the internet has made this type of trademark protection inconsistent. The basis of this trademark is specific geographic location and the internet disrupts that analysis. After all, some businesses are virtual and have no specific geographic location! When you see this symbol ™ it means that someone is claiming a common law trademark.
2. State Trademark – A state trademark must be registered in the state or states where you do business. State trademarks only apply within the borders of that state. For businesses who are truly local (and don’t cross state lines), a state trademark may be appropriate. However, very few businesses meet this criteria because most businesses have websites that reach across the globe. State trademarks also sometimes use the ™ symbol.
3. Federal Trademark – Federal trademarks are national. They protect throughout the United States, its territories and possessions. For businesses who conduct online sales or who market to consumers in multiple states or areas, this is the trademark that usually gives the best protection. The application process is complicated, expensive and takes many months, but once a business has a federal trademark it can add significant value. When you see this symbol ® it means the trademark has been federally registered.
4. International Trademark – For those businesses that conduct business internationally, there is an additional step that can help protect their trademark beyond the borders of the United States. After obtaining a federal trademark, you can file to protect the trademark in additional countries through a treaty called the Madrid Protocol. This is an international effort to standardize and streamline the trademark protection process on an international level. It is a strategic process and not always easy.
To get more in-depth answers on “What can and can’t be trademarked?” and “What is the process to apply for a Federal Trademark?” request our Legal Report on Trademarks here. Our Legal Reports are free to small service-based businesses.