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12/03/2001 |
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E. Scott Johnson Appeared in Banker's Digest Banks have established valuable goodwill in well known names. Suntrust Banks Inc. for example, has federal registered more than 40 trademarks for banking-related products and services, including SUNTRUST®, SUNTRUST ATM BANKING®, TOTAL BUSINESS BANKING®, TOTAL BUSINESS BANKING® and VALUETRUE®. Product names, logos and slogans can become valuable assets, attracting purchasers who have come to rely on the quality of branded goods and services. Trademarks generally have little or no value initially, but can dramatically appreciate in value through successful use. Unlike copyrights and patents that eventually expire, trademark rights can last forever. Because trademarks are an appreciating asset with a potentially perpetual life, it is important to choose them carefully and protect them through federal registration and controlled licensing. What is a trademark? A trademark is any word, symbol, design, or a combination of words and design that identifies one seller’s goods from those of another. For example, the words COKE® and EXCEDRIN® are both trademarks, as are the Ralston Purina Checkerboard Square design and the hour glass-shaped Coca-Cola® bottle. A slogan like Nike’s JUST DO IT® can also be a trademark. When used to identify a service, the mark is called a service mark. McDONALD’S® is a service mark for restaurant services, as is the golden arches design. REACH OUT AND TOUCH SOMEONE® is a service mark for telephone services. Some marks function as both trademarks and service marks. LEXUS is both a trademark for automobiles and a service mark when used to advertise automobile repair services. Because trademark law is based on the idea that trademarks serve as badges of quality, legal protections exist both to protect the public from deception and confusion, and to protect the mark owner’s goodwill in the mark. Trademark Clearance Before distributing a product or advertising a service under a mark, or seeking to register a mark with the U.S. Patent Trademark Office (PTO), a trademark search should be undertaken. This will determine whether prior rights in the mark exist. Comparable in some respects to a real estate title search, the trademark search reveals prior users that could prevent registration of the mark or assert a claim of trademark infringement. Some business owners sometimes mistakenly believe that because the Corporations Division of the Secretary of State in their state accepted a corporate charter or trade name filing, the name can be used for any products or service the business promotes. Not so. Generally, state acceptance means only that no other entity within that state has incorporated or registered to do business under the same name. Getting Started Business owners should first conduct a low-cost, on-line search of PTO records followed by a full trademark search. The cost of a search generally ranges between $400 and $800. Full trademark searches are comprehensive and will reveal whether another user or registrant of the same or a similar mark has established superior rights in the relevant field of goods or services. Logo designs require different searching strategies. It is impossible to search designs as thoroughly as words. Typically, the search firm confines its review to a search of similar designs in the U.S. Patent & Trademark Office records. Establishing Rights in a Mark Trademark rights can be established simply by being the first to use a mark in commerce. Regardless of whether the mark is registered, the law generally affords the first to use a mark (senior user) legal protection against infringement within its trading area. Trademark rights are infringed when a junior user applies a confusingly similar mark to the same or related goods or services and creates the likelihood of confusion in the relevant marketplace. A trademark achieves the greatest legal protection throughout the United States when it is registered with the PTO. It is also possible and advisable, to reserve rights in a mark prior to its use by filing an intent-to-use application. Once it is determined that a trademark is available, the sooner actual use commences, or an intent-to-use application is filed, the better. The ultimate use required to secure federal registration is a “bona fide use of the mark, in interstate commerce, in the ordinary course of trade.” For purposes of establishing a date of first use and qualifying for registration of a trademark, trademarked goods must be shipped to an independent recipient in another state. The qualifying use in a national publication or a direct mailing that crosses state lines. Banking Industry Trademarks It is a good idea to use the symbol TM in superscript immediately adjacent to all uses of unregistered marks. This symbol provides notice of the user’s claim of proprietary rights and commonly is while waiting for the federal registration process. Even though certain legal rights apply based on prior use of a mark, federally registering a mark provides important enhancements of such common law rights, including: 1) access to federal courts; 2) the ability to recover profits, damages, and costs in an infringement action (including the possibility of treble damages and attorneys’ fees); 3) nationwide constructive notice of ownership of the trademark, eliminating a good faith defense for anyone adopting the mark subsequent to the registrant’s date of registration; 4) prima facie evidence of the validity of the registration and the facts asserted in the registration; and 5) the possibility of incontestability after five years. Domain Names Domain names may be federally registered as trademarks or service marks if they meet the statutory criteria and distinguish the products or services of one entity from another. Trademark searches should include a review of registered domain names; however, trademarks rights are not established or reserved by the registration of a domain name — such rights are established through actual use or reserved through an intent-to-use filing in the PTO. Unlike in the marketplace in which many companies sometimes concurrently use the same name on unrelated products, each domain name is unique. If 50 different companies offer a product under the name ABC, each in a different field or industry, only the first to register the abc.com domain name will be entitled to use it. Unlike copyrights and patents which provide a limited duration of protection, trademark rights can last indefinitely if the mark continues to perform a source-indicating function. The term of a federal trademark registration is ten years, indefinitely renewable for ten-year renewal terms. This article also appears in: Northwestern Financial Review ABA Banking Journal Mortgage Originator Mortgage Press Oklahoma Banker BankNews Mortgage Magazine Bank Marketing Compliance Alert New York Bankers Association HR Banker Newsletter |
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