“I’m just a small business owner. I don’t need trademark protection!”
I hear this all the time. Sometimes it’s spot on – the majority of small businesses fail within the first few years, and in that case owning the rights to a registered trademark is worthless. If your business succeeds, however, a registered trademark can be a defensive shield to protect marketing investments, a valuable non-tangible business asset, and an offensive weapon to be used against competitors.
“How so?” you might ask.
In the most simple terms, a trademark gives the person who owns it the right to use whatever he/she has trademarked. If you trademark your company’s name, for instance, only you have the right to use that name.
There are limitations on this, but those limitations mostly affect who you can prevent from using your mark.
How can this be used as a defensive shield to protect your company’s marketing efforts? Simple. If someone else starts using your business’s name, you can stop them. Every small business owner knows how important marketing is, as well as how expensive it can be.
What’s the result of a successful marketing campaign?
People knowing who your company is and what your company does.
How can they do that? By recognizing your company’s name. That’s why you’ve probably put a lot of thought into your name, and why you make sure it appears in every one of your marketing efforts.
Now imagine you’ve had an extremely successful marketing campaign, and every person across the country is now familiar with your brad. Jealous, a less successful competitor decides to make a few quick bucks by ripping off your name and tricking your customers into buying his goods instead of yours.
That would suck, huh? Well, it would suck a lot less if you had registered a trademark for the name your competitor had ripped off. Had you done so, you could be entitled not only to recover damages for use of your name, but also any profits your competitor made through the wrongful use of your name.
“Okay, great,” you may now be saying. “But a valuable intangible business asset? How so, and what does that even mean?”
Well, chances are you know what I’m saying and just don’t understand the technical jargon. All that is meant by “a valuable intangible business asset” is something that increases the value of your business for reasons that are hard to put a finger on.
Think about the most famous shoe company you know.
That’s the value of a trademark. You have no real reason to believe that company’s shoes are any better than some random pair from the thrift shop, but you know that to be the case based on the work this company has done in the past. There is your value.
“Okay, I see where you’re going,” you likely now reply. “Having a trademark prevents others from ripping off my ideas. But how can I use a trademark as an offensive weapon? Surely, you are insane.”
Insane like a fox. Trademarks are used offensively all the time.
Imagine this. You’ve just started a new computer manufacturing business – Fruity Computers, LLC. On day one, you receive in the mail a cease and desist letter from Orange, Inc. – a Nasdaq indexed international computer manufacturing company. Orange, Inc. tells you in its letter that it is of the position that you have infringed its trademark, and that unless you dissolve your company, it plans to initiate legal action. What do you do?
Exactly. You dissolve. Why? Because the cost of fighting Orange, Inc.’s lawsuit will be absolutely insane, and it would be much cheaper for you to just call yourself something different. Re-incorporating and starting from scratch isn’t cheap, however, and even if your business has the funds to do so, money has been diverted from advertising and other more productive uses.
So that’s the rundown. As you can see, trademarks aren’t necessarily just for the titans of industry. If you’ve put your heart and soul into launching your small business and truly believe it will be a success, it may benefit you in the long run to file a trademark early on.
By Christopher J. Mutchler, Esq.
Chris Mutchler is a licensed Connecticut attorney whose practice is based in Wethersfield, Connecticut. You can check out his firm’s website at the link below: