Is Federal Trademark Registration Really Worth The Money?
Updated: May 22
Written by: Nicole Gaither, Partner at Parlatore Law Group
As a small business owner, you know that it is important to protect your business’s assets. That’s why you took the time to form the LLC, C Corp, or other formal business entity. One of the most valuable assets in your business is its intellectual property. Many business owners spend hours selecting the perfect name and logo for their business. And for many businesses, it would be a serious backstep if another company started doing business under the same name or logo. It would be especially devastating if you had no way to stop another company from doing so.
You’ve read and heard that you should trademark (or the more correct, “register your trademark”). But you probably have not been told why you should register your trademark. Here are the primary benefits of registering your trademark with the USPTO.
Automatic Rights: Common Law Trademarks
Most people aren’t aware that trademark rights start the minute you use a trademark “in commerce” – that is, the first time you put your business name, logo, slogan, product name,
podcast name, course name, etc. in front of the public. These automatic rights are known as common law trademark rights, which means that your trademark rights are established through your use of the mark and not by any specific rule or statute. Common law trademark rights have been developed by case law (court decisions) and are governed by state law.
The best thing about common law trademark rights is that the rights are automatic. You do not need to register your trademark to establish these rights. As soon as you use your mark in commerce, you own the trademark and the common law rights associated with it, including the right to stop others from using your trademark… subject to the limits that I’m about to point out.
Now for the bad news. There are certain limits to your common law trademark rights. Your common law trademark rights are limited to the specific area where you use your trademark. So if you are a small business in Texas, then you cannot restrict the use of your trademark in California (or any other state other than Texas). But if a California company with the same name and logo (with similar products or services) tried to sell to customers in Texas, then you could sue to enforce your common law trademark rights in Texas. However, that same California business has the right to use the same name and logo to sell its products or services in California and you. can’t. stop. them. It becomes an even bigger problem for small businesses that market their goods or services online, since they are pretty much broadcasting their trademark to the global market.
There is no bright-line rule on whether your common law trademark rights go beyond the state where your business is located. Generally (and this is with a caveat), your common law trademark rights are only in those locations where you actually do business – for example, the locations where you can prove use of your mark by showing actual sales to customers or clients. If you were to sue the California business for using your trademark, you must prove that you have sales in California; otherwise, the California business might have more rights than you to the trademark.
It’s because of these limitations (and not to mention the uncertainty) that it is recommended that you register your trademarks at the federal level.
Registering your trademark with the USPTO
Filing a federal trademark registration application with the United States Patent and Trademark Office (USPTO) gives you a lot of benefits at an affordable price. One of the most important advantages to federal trademark registration is the amount of protection you have for your mark. Once your trademark is registered with the USPTO, you have the exclusive right to use your trademark all over the country. It’s like the federal government building a fence and a nice moat around your business so that you can stop other businesses in the US from getting close. You get this exclusive right to exclude others from using your trademarks anywhere in the US regardless of where you advertise and promote your business and where you actually use your trademark – as long as you market your products and services across state lines (interstate commerce).
Other benefits include: (1) the right to sue for trademark infringement in federal court; (2) the ability to recover monetary damages, lost profits, attorney fees, and costs that result from the infringement; and (3) the right to use the ® symbol, which puts the world on notice that your trademark is federally registered and may deter others from using your trademark. And having a federally registered trademark provides evidence of trademark ownership and use, which will help your claim against another company trying to use your mark.
Many small business owners say that they are not going to bother with registering their trademarks because they are concerned with the costs. It’s definitely a valid concern, but the good thing about registration is that it is affordable. The fee to file a trademark application online with the USPTO ranges between $225 - $275/per class. Registering your trademark upfront can save you thousands of dollars in re-branding expenses, damages, lost profits, legal fees, and court costs if you are required to defend your trademark rights or sue a competitor for using your trademarks in the future.
The long and short of it? Registering your trademarks with the USPTO will cost you a few hundred dollars (and just a few more if you use an attorney) but may save you thousands and thousands of dollars down the road. It’s a very simple step that you can take to protect your company’s valuable assets.
Nicole Gaither is a Partner with Parlatore Law Group and practices in the fields of copyright and trademark prosecution, in addition to tax law. She has demonstrated experience in prosecuting domestic trademark and copyright applications, providing brand protection through trademark monitoring, reviews of refusals, responses to refusals and assessing potential marks for use and availability. Ms. Gaither has a wealth of experience representing the interests of her clients as they work to build and financially protect their businesses. She can assist in creating a unique trademark that meets the requirements to be registrable, advise on how to establish its use in commerce, and facilitate the registration process.