Even experienced business owners have misunderstandings about trademark rights. Some of the most common misconceptions about trademark ownership are summarized below.
1. I was able to register my business name with the state, and so there must not be any problems with the name!
Just because you registered your business name with the state does not mean that you own the trademark to that name or that you have the right to use that name. Many state agencies allow business filings without searching for potentially confusing marks. So, although you may be able to register your business name with your state, use of the name you have chosen may still be violating someone’s trademark rights. Trademark rights are territorial, and the first to use a mark owns the mark in its geographic area of use, and so registration is not necessary in order to secure prior rights to a mark. However, the owner of a federal trademark registration has nationwide trademark rights for the mark in connection with the goods and services specified in the registration, and may pursue action against anyone using a confusingly similar mark. So, a comprehensive search of the records of the United States Patent and Trademark Office and of territorial marks that may be in use but not yet registered is the only way to know whether or not a name is clear and available for use.
2. All I need to do to keep my federal trademark registration alive is to file the required paperwork every few years.
Although it is necessary to file all required paperwork with the USPTO, a trademark must also be continuously and consistently used in order to keep a registration alive. This generally means that a mark must be used without a period of nonuse lasting longer than six months. For special-form or logo marks, the mark you use must be the same as it is in your registration, and material changes to the mark could be considered nonuse. If there is a period of unexcused nonuse, the trademark registration is vulnerable to cancellation through abandonment. Moreover, if you are not identifying and stopping potential infringements of your mark, you may lose your right to protect your mark. Unmonitored use of confusingly similar trademarks dilutes the meaning of your mark, which can result in diminishment of a trademark’s value and the eventual abandonment of the mark entirely. Neither the USPTO nor state agencies monitor potentially conflicting trademark uses, thus, trademark owners must monitor and address infringements.
3. I can give broad permission to others to use my trademark without jeopardizing my rights.
If not handled correctly, licensing can result in the loss of trademark rights. Companies that license their marks should be aware that licensed trademarks may be declared abandoned and unenforceable if they fail to exercise adequate quality control over the licensee’s use of the licensed mark. Courts have routinely held that a license agreement that fails to place any quality control requirements on use of the mark amounts to “naked licensing,” which justifies a finding that the mark has been abandoned and can therefore not be enforced against third-party users. It is wise to document all licenses in writing, and the license document must include language regarding quality control.