Is Registering a Trademark Mandatory?

January 13th, 2011 John Alumit No comments

Registering a trademark with the United States Patent and Trademark Office is not mandatory.  However, there are several advantages to registering a trademark.

Firstly, consumers often purchase products or services based on a trademark because they have heard the trademark mentioned by others or because they have seen advertising for the goods or services.  In the event a competitor uses the same or similar trademark, confusion among consumers may result, and the trademark owner with subordinate rights may be forced to change his trademark.  Years of investing in advertising and the goodwill associated with the trademark may be lost.

Registering the trademark with the U.S. Patent and Trademark Office confers upon the trademark owner a legal presumption of the trademark owner’s exclusive right to use the trademark nationwide on or in connection with the goods and/or services identified in a trademark registration.  This legal presumption means that the law already recognizes the registered trademark owner as the rightful owner, unless others can prove otherwise.

Secondly, registering a trademark with the U.S. Patent and Trademark Office serves to discourage others from adopting the same or similar trademark.  Many persons conduct a preliminary trademark search of the U.S. Patent and Trademark Office database before adopting a trademark.  If they discover that a trademark is already filed or registered, they may opt to choose another trademark that is not confusingly similar to one that is already filed or registered.  This could save a trademark owner hundreds of thousands in potential legal fees by minimizing the risk of a future law suit resulting from two owners using the same trademark.

Thirdly, a trademark registration may be recorded with the U.S. Customs Office to prevent importers from selling goods under the same or similar trademark.

Fourthly, a registered trademark provides a trademark owner with the ability to bring legal action in federal court as trademark registered with the U.S. Patent and Trademark Office are governed by the U.S. Trademark Act (“Lanham Act”).

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The Real Cost of Saving Money

December 8th, 2010 John Alumit No comments

An IP Attorney’s Critique of LegalZoom and other Low Cost IP Filing Companies.

Since their inception in 2003, LegalZoom has become a massive force in the online legal filing industry.  In the IP realm, Legal Zoom offers such services as Copyright registration, Trademark registration, and provisional Patent applications.  Their allure is their competitive filing costs (note I don’t say legal fees), which attracts numerous customers who find the initial costs associated with these various filings to be too steep when handled by a law firm.
But are these customers truly saving money?  When compared to the costs of hiring even a boutique IP firm such as my own, it appears at first glance that LegalZoom is a great cost saving alternative.  However, when one looks closer at the realities and intricacies behind Intellectual Law protection, it is clear that when dealing with LegalZoom, one risks not only substantial unforeseen costs, but also the very real possibility of losing protection of one’s intellectual property.

In the realm of trademark law, the application process can be very simple or complex depending on the mark, industry, and competition.  An important part of trademark application process is conducting a search for preexisting marks that may conflict with the one you intend to register.  At LegalZoom, one can order a simple Federal search (one much like the one you can do for free on the USPTO website) or a comprehensive search (one that includes potential conflicts though searches of state TM directories and national business directories).  The problem comes when a customer gets their search results.  If you have never seen a TM report, they can be quite daunting, sometimes numbering over 100 pages.  Even to an experienced IP attorney, an analysis of these results requires a scrutinizing look at whether a true conflict exists with another mark.  But because LegalZoom cannot, by law, give legal advice, these search results leave the customer to make these complicated legal determinations on their own.  This is where the added costs of LegalZoom begin, but far from where they stop.

Below are several ways LegalZoom may end up costing a TM Applicant more money than an average IP firm:

1.  Not being able to understand the search results on their own, clients sometimes have to seek the advice of an attorney to conduct a consultation. (per hour Attorney’s fees)

2.  By not recognizing a potential conflict from their comprehensive search, LegalZoom clients face opposition and cancelation proceedings in which they will face the following costs:

a. Attorney’s fees for an Answer, Discovery, and TTAB (Trade Trial and Appeal Board) Proceeding. (can cost between $1,000 and $30,000).

b. In the event of a successful cancellation, a client will incur the costs associated with repackaging and relabeling their products and services. This could include hiring a graphic design company, a web designer, in addition to the loss of ones ability to sell their existing product. (depending on the business, this can cost in the $1,000s)

c. In the event of a successful cancelation or opposition, a client will have to pay for the costs associated with developing a new mark and registering this mark (for the search and registration fees this can cost over $1,000)

3. In the event that another party determines that your mark has caused their business to suffer monetary damages, a client could face Federal Litigation expenses. (again, this process, depending on the duration, can cost between $1,000 and $50,000)

4.  In the event that you lose protection of your mark through the above highlighted proceedings, one may face the intangible costs of losing brand recognition, time spent to defend your mark and develop a new mark, and the loss of value your mark will have in the event that you sell your company or assign your mark.
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