Without question, marks used by a business to identify either its services (service marks) or its goods (trademarks) can be among its most valuable assets.
Ironically, like goodwill, a value is seldom listed on the balance sheet of a business in connection with its marks. Nevertheless, the service marks and trademarks of a business are very much an integral part of its going concern value. One need only reflect upon the fact that a bottle of designer water with a prestigious brand name sells for substantially more than a generic container of water, even if they came from the same faucet, to realize the value of a trademark.
Also, consider the fact that independent retailers are willing to give up 6 percent to 8 percent of their gross revenues for the privilege of brand name identity that franchisers offer.
So how does a retailer go about protecting the name of the business? First, let me preface my suggestions by reminding readers that this column is not intended to be viewed as rendering legal advice or service, and that readers should not act upon this information without seeking professional counsel.
That said, the first step is in choosing the correct name. Not only does the retailer need to select an attractive name that would help market his services, but it also must be a name that does not infringe upon the trademark rights of others.
A trademark search should be conducted. At a minimum, the records of the U.S. Patent and Trademark Office should be searched. A federal trademark search can now be done by anyone online. The Web address is http://www.uspto.gov/web/menu/tm.html. It is equally important for the retailer to have a search done in each state where he intends to conduct business under that name. Typically, state trademark records are also accessible by Internet through the Office of the Secretary of State of that state. There is no charge for online federal trademark searches and usually no charge for state searches, either.
Once the trademark is selected, the next step is to protect it through registration. If the service mark is only going to be used within one state, then registration that state is all that is needed. If the mark is to be used in several states, then a federal registration should be considered.
There are two ways a service mark can be registered. At a minimum, it should be registered as a word mark, meaning that just the words, without any accompanying design or logo, would be registered. That way, those words will be protected regardless of any changes in the logo the owner may make from time to time.
The second way of registering the service mark would be to include the stylized logo. A design mark registration would preclude a competitor from changing the words of the mark but using the same type of logo. If the logo is an important aspect of the service mark, then both types of registrations are recommended.
Trademarks are like muscles. The more they are used, the stronger they get. Common law recognizes that marks have rights of protection, even if they are never registered.
The next step in protecting a service mark is to prevent others from using or registering marks that could be confusingly similar. This can be done through a monitoring service. It can also be done on a less expensive basis by repeating the search process outlined above from time to time to see if there have been any new registrations filed that could pose a problem.
Just as the prudent businessman maintains liability and casualty insurance, so will the prudent retailer take the necessary steps to select and protect the heart and sole of the business — its name.