Lecture 31: Benefits of Establishing Trademark Protection

[Music] What rights do owners of unregistered trademarks
have? As with copyrights, trademarks do not necessarily
have to be registered. Owners of unregistered trademarks have the
exclusive right to use the mark in the geographic area where the mark is used. Unregistered trademark holders also have the
right to bring civil action against infringers and are protected against false advertising. Unregistered trademarks are usually identified
by the “TM” symbol. What are the benefits of registering a trademark? Additional benefits received by trademarks
formally registered with the USPTO include: A legal presumption of ownership of the mark
and exclusive right to use the mark nationwide on or in connection with the goods and services
listed in the registration, public notice of claim of ownership of the mark, the ability
to bring an action concerning the mark in federal court, the use of the U.S. registration
as a basis to obtain registration in foreign countries, the ability to record the U.S.
registration with the U.S. Customs and Border Protection Service to prevent importation
of infringing foreign goods, the right to use the federal registration symbol listing
in the United States Patent and Trademark Office’s online databases. Because registration costs money, many small
businesses choose to rely upon the common law protections afforded trademarks. Google, for example, used an unregistered
trademark for its first six years in operation. The company formally applied for a registered
trademark for “Google” in 2006, which was granted in 2012. But trademark protection can be vital to a
small business, as one recent case demonstrates. In 2007, Payam Tabibian first registered the
1950s-style red, white, and yellow logo for his start-up, the Z-Burger chain, a few months
before he opened his first restaurant. As the New York Times reported, “his first
restaurant was an immediate hit, attracting students from nearby American University. The place [later] drew public praise when
it gave free food to federal workers who were furloughed from their jobs during government
budget cutbacks.” But Mr. Tabibian eventually fell out with
his partners, who then tried to stop him from continuing to use his Z-Burger brand with
his expanding chain of restaurants; they also demanded he transfer the trademarks to them. But because Mr. Tabibian had taken the time
to properly register his trademarks, a federal judge ruled in August of 2015 that he was
the legitimate owner of the trademarks and could continue to use them. How do you register a trademark? In order for your trademark to be eligible
for registration with the USPTO, you must actually use it in conjunction with commercial
activity or be about to use it within six months. When applying for trademark registration,
the applicant must file an affidavit attesting to the date the mark was first used in commerce
as well as a specimen showing how the mark was first used, whether in advertising or
on the product in a store setting. It is imperative that the applicant identify
the earliest provable date of first use in commerce, to lessen the likelihood that another
party can claim prior use of that mark and invalidate the trademark. The USPTO also offers an “intent-to-use”
application, which allows an entity to apply for a trademark that is not yet used in commerce. “If you have not yet used the mark but plan
to do so in the future, you may file based on a good faith or bona fide intent to use
the mark in commerce. A bona fide intent to use the mark is more
than an idea, [but] less than market ready. For example, having a business plan, creating
sample products, or performing other initial business activities may reflect a bona fide
intent to use the mark.” The mark must be put into use within six months
of receiving a “notice of allowance” from the USPTO or the applicant risks having to
pay extension fees or losing the mark entirely. If the trademark is still in commercial use
five years after registration, the owner is eligible to receive an additional protection
known as “incontestability,” protecting it from challenges to validity, ownership,
registration, and descriptiveness. How else can trademark value be derived? A trademark can be assigned to others in the
event of purchase or acquisition by another entity. There are other reasons why an owner might
assign trademarks to another party, including a business name change, a security agreement,
a license, a lien, as collateral for a loan, or because as a result of a bankruptcy procedure. Ford Motor Company, for example, used its
trademarks as collateral for a $23.5 billion loan. Ford was still able to use its trademarks,
but if the company had defaulted on the loan, the trademarks would have been assigned to
the lender. Trademarks can also be licensed to others. In 2012, licensed trademarks generated $5.45
billion for North American owners, reported the Licensing Industry Merchandisers’ Association. That same year, the top 150 global brand licensors
earned $230 billion in sales of trademarked products. Abandonment of a mark results in loss of ownership
and the associated rights of the mark. For a mark to be considered abandoned, it
must be discontinued from active use in commerce with no intent to resume the commercial use
of the mark. Evidence of nonuse for three consecutive years
is usually considered to be sufficient proof of abandonment. Upon abandonment, the trademark owner loses
the right to prevent others from infringing the mark.

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