4 Business Trademark Mistakes That Can Cost You Big Bucks

By Josh Gerben

A trademark is one of your company’s most valuable assets. It touches every customer that purchases your products, uses your services, or accesses your website. Protecting this asset should be a priority before your business even opens its doors.

Unfortunately, many business owners are caught flat-footed because they do not invest in properly vetting and protecting their trademarks. Here are four common trademark mistakes that I see made on almost a weekly basis:

Mistake #1: Not conducting a proper trademark search

As a trademark attorney, I get the same calls from prospective clients several times a week: a cease and desist letter has been received because the name of the product or service they are offering uses a name that is similar to a competitor. My first question is whether or not the prospective client ever conducted a trademark search prior to using the name at issue; a large percentage of these callers have never even conducted such a search.

Many business owners fail to realize that using a name, slogan, or logo should never happen without first conducting a trademark search. It is extremely costly to purchase signage, invest in logo design, and purchase printed materials, only to have to change it all.

A proper trademark search can cost $350 to $700, and is an investment that should be made over and over again. You’re investing a lot of time, both financially and in labor, to build equity in a brand. It should not be something you do without conducting the proper due diligence.

Hiring an attorney to conduct a trademark search can be a smart first step as trademark attorneys may be aware of unknown pitfalls. One well-documented example is Monster Energy’s attempt to enforce its trademark against just about anyone that tries to use the word "Monster" in their trademark. The company has recently opposed trademark applications for MONSTER MASH for a brand of wine, MONSTER MOBILE for a brand of air hoses, and MONSTER KONG NACHOS for a brand of appetizers.

It is unlikely that an entrepreneur conducting a trademark search for a brand of air hoses would think that one of the world’s largest beverage companies would oppose the trademark. That being said, a trademark attorney who is paying attention to industry news should be able to forewarn their client.

Mistake #2: Not filing for federal protection of a trademark

The other type of call I commonly receive is from someone claiming another party is using their trademark and they want to send a cease and desist letter. Again, you would be surprised how many of these business owners have not filed for federal protection of their trademark. This can make enforcing any rights they do have with a trademark to be very difficult.

For example, the first "Burger King" restaurant opened in 1957 in the small town of Mattoon, Illinois. The restaurant is owned by Gene and Betty Hoots, and they never federally registered the trademark for "Burger King." Then, along came a national company called Burger King that did register their trademark.

While the Hootses did try to sue the national chain because it did not have a federal trademark registration, the Hootses could only prevent the national chain from opening a store within 20 miles of their location. That was it. Moreover, if the Hootses ever wanted to open up a second location they would have had to find a different name. This is a famous case which limits the rights of unregistered trademarks.

Moreover, in today’s online marketplace, getting an infringing listing taken down from sites like Amazon, eBay, Etsy, or any other platform will not likely happen without a court order unless you have a federal trademark registration. These large online companies rely on the federal trademark database to determine if a company should be able to list products on their websites.

Mistake #3: Not hiring a trademark attorney

Many “legal” websites make it seem so easy. Fill out a form online, and poof, you have a federal trademark registration. While admittedly sometimes this does happen, failure to hire an attorney can lead to problems in getting the trademark registered, or worse yet, can lead to you receiving a registration that is completely invalid--the invalidity of which you may not discover for years to come.

In fact, a recent study from the University of North Carolina reports that only 57 percent of people who filed for a trademark without an attorney were granted government approval, whereas 83 percent of those who did hire an attorney were granted approval. Simply put, the odds are stacked in your favor if you engage an attorney to assist you with the process.

Mistake #4: Not policing and properly renewing a trademark registration

The final major mistake that I see business owners make is thinking that once that beautiful registration certificate arrives from the USPTO, their job is done. Owning a trademark is much like having a child; it is a lifelong commitment, and you always will have some financial obligation involved.

The first item any trademark owner should consider is a trademark monitoring service. U.S. trademark law requires that the owner of a trademark police the marketplace to ensure infringing activity is not occurring. If you simply allow others to infringe on your trademark then you will lose the right to enforce the trademark over time. A proper monitoring service can alert you to similar trademark filings that are made and even use of similar trademarks in the marketplace.

The second important issue to be aware of is that periodic renewals are due on trademark registrations. Because these renewals are infrequent, oftentimes they are forgotten and trademark registrations are cancelled by the USPTO.

Here are the key dates you need to know:

• The first renewal filing takes place five years from the anniversary date–or the date of initial registration.
• The second renewal filing takes place nine years from the anniversary date–or the date of initial registration.
• The third renewal filing, and every filing thereafter takes place every ten years after the second renewal filing.

As I always explain to my clients, a little preventive work on your trademark--such as conducting a search and making a federal filing--can save you tens of thousands of dollars down the road. The companies that spend the most money on legal fees are the ones that react to problems rather than working to prevent them.