Trademark Selection Rules & Reasons
04/19/12
By Curtis L. Harrington

TRADEMARKS

With regard to trademarks, my charge is typically $1100 per trademark per class for which protection is sought. Each application requires three specimens showing the use of the mark in conjunction with the goods. When first adopting a trademark it is highly advisable to have a full search performed at a separate charge of about $2000 depending upon depth and demanded turn-around time. Information required includes the date of first use, the date of first use in interstate commerce (across a state boundary in the United States, either to another state or overseas), a description of all of the goods to which the mark is to be applied, and the identity of the owner of the trademark.

SELECTION CRITERIA (5 Golden rules)

1. Name should not be descriptive of the goods or services provided under the mark. (See A, B, C, E, & F below)

2. Name should not contain any geographical designations. (See C, E & F, below)

3. Name should not be found in any dictionary (See B & F below)

4. Name should be no person’s last name.(See D, & F below)

5. Name should not be scandalous or vulgar (against public policy).

Why? Because there are 5 ways you can bleed (perhaps even into bankruptcy), including (1) Advertising to help your competitors, (2) picking a common non-trademark type descriptive name which attracts trademark litigation from others doing the same backwards thing, (3) narrowing your mark with the use of disclaimed geographic and descriptive elements to cripple it and reduce its eventual value, (4) selecting a name too close to a human which will reduce company value on death, and will customize the company to the point that it becomes worthless to others, (5) failing to pick a non-dictionary name which will enable someone to pay you top dollar for your business 30 years from now.

A. Further, confused customers use your advertising dollars to locate and do business with your competitors. This occurs when the name is descriptive and people are looking for names "of" the product, AND you can’t stop others from using the descriptive name or variants. Your lawsuit monies are wasted.

B. Because a trademark has an infinite life, monies spent on litigation cannot be deducted. Thus, after you make $1,000,000 before tax profit, and then pay your trademark attorneys $1,000,000 in legal fees to defend your mark, you didn’t break even. You have to borrow $350,000 to pay the taxes on the $1,000,000 you earned and paid to before profit

C. All geographical designations are either rejected or required to be disclaimed because a product is either associated with the geographic designation and denied because it is descriptive, or it is not association with the geographic designation and is rejected as being mis-descriptive. All geographic and disclaimed designations in a mark reduce the trademark’s strength and reduce the company’s value

D. Last names cause a rejection at the PTO (I even had a strange sounding hispanic name rejected because the Examiner found "5" people in the U.S. with that name. Where others entering into the market either change their name or obtain an endorsement from someone with the same name, there is nothing you can do but crank up a large lawsuit, possibly lose, and then borrow money to pay Uncle Sam.

E. Future Value LOST. Who wants to buy either a trademark & goodwill or business which is enmeshed in litigation, controversy, and can’t control exclusively the customers perception of HIS/HER/COMPANY’S identity of SOURCE of the goods and services it provides? TRADEMARK is a wonderful ONE-WAY street toward capital gains. Once the goodwill is held more than one year, the sale of the asset attracts CAPITAL GAINS which are currently at a 15% federal rate level. The idea is to provide a clean set of goods and services so that when you leave the business, your stock is high or your business value is high.

What about SECONDARY MEANING? This rule enables a descriptive mark to be obtained once enough advertising is done to "smash" the name in the heads of the customers, such that a SURVEY would cause a high percentage of the customers/public to associate anotherwise undesireable name (last name or descriptive name, for example) with the SOURCE of the goods rather than its descriptive meaning. So, you spend $1 billion advertising during the super bowl, and then 50 million per year until you get the desired public level of association. But in doing so you have built your company into an "advertising drug habit" which requires the expenditure of millions per year to keep the trademark out of the public domain. This isn’t just "value loss" its "value suicide" similar to buy high (all your advertising) to protect a word which was publicly descriptive anyway. You need a healthy litigation program to go with it, and between ad losses, litigation losses and loss of value in the going concern, its suicide.

F. Stay out of the dictionary. If you can’t look the mark up in either English, or any other language, the Examiner (who is trying to prevent your getting the mark) can’t look it up either. A mark which appears nowhere, and which can’t be split into words found in the dictionary, has the ability to CAPTURE ALL of its GOODWILL and become a "coined mark". This status means that the mark has recognized protection OUTSIDE its normal stream of commerce. Think EXXON as an example. Because this phrase is coined, it cannot be used on shotguns, even though Exxon Corporation doesn’t make shotguns. It is simply TOO POWERFUL as an indicator of source and has extreme impact outside the normal channels of goods and services. Ever though about how thick Exxon’s trademark litigation files are? I’ll bet it is extremely small. What is the EXXON mark worth EVEN if it were sold with no gas stations and no oil reserves? BILLIONS

 

POINTS TO REMEMBER

Remember that a trademark should not be a geographical name, should not be descriptive of the goods and services they represent, and should similarly not be mis-descriptive of those goods. The mark selected should be far different from other marks which are used to describe goods in the same classification. Remember also that separate application may be made for a trademark name, logo, and name in combination with a logo. Often several are sought to provide maximum protection since competitors may try to copy or closely approximate the name without the logo, and perhaps the logo without the name. Marks having the name and logo are narrower in scope than either a logo mark or a word mark, and this narrowness will usually encourage application for the word mark alone and the logo mark alone.

The application process requires about a year for the case to be taken up by the U.S. Patent & Trademark Office. The government attorney performs a search and makes a ruling on the registrability of the case. Thereafter, the mark is published to give the public an opportunity to see if they would be damaged by it. Once the period for a member of the public to make a written opposition has passed, the mark is registered. After 6 years continuous use, the owner can file a renewal. At this time, the owner can also file to make the mark incontestable, which is highly recommended.

The Trademark Treaty

The useage of the treaty in the U.S. enables those who have filed an Intent To Use (ITU) trademark application in the U.S.(or other home country) the right to file a corresponding application in another country with a filing priority based upon the filing date in the U.S., so long as the foreign ITU is filed within 6 months of the filing date of the U.S. ITU. The same does not hold for REGULAR U.S. filings which are based upon having previously used the trademark in the U.S. There is the possibility, however, of filing an ITU and then later on amending the form of the application to a REGULAR status, but given that the increased cost of conversion, most U.S. filers who have previously used the mark simply elect to have a regular filing.

In practicality, the treaty is not used much except in cases where a new product trademark is to be secured months in advance of actual introduction of the product. One reason the treaty may be so popular in most other countries is that many of their trademark applications must orignate as ITU applications, usually with requirements to use the trademark over a much later time frame. In other words, most countries don’t care whenther you have initially used it in their country or not, so long as it is ultimately used within their applicable period, typically about 5 years. This type of format eliminates the necessity to use the mark before it is registered and therefore during a time when litigation might follow if the use is impermissible or if the trademark is owned by someone else.

European Union Trademark (EU Trademark)

The European Union has adopted a delay system to enable a single community mark to be obtained. It combines a time limited search to be carried out by the member countries, after which they must either object to the mark or accept the mark. Countries who delay their own search, either through lack of funding or simple administrative overload, and who cannot or fail to object to a mark, have the EU mark imposed upon them by way of supremecy.

The advantage of this method is its low expense, and the disadvantage is the necessity to pivot off of the EU filing to then file in each non-objecting country at a high expense. Another disadvantage is the slowness and lack of detail of the searches which are executed by the member countries.

When you examine the possibility of searching each country in Europe at about $2800 each, especially now that the EU has 25 members, the cost is extreme. The cost of filing separately in each country at about $2200 per country is also extreme. The EU application has a filing phase which, combined with my fee for filing (about $600) comes to $2800. There is a registration fee which combined with my fee for handling ($380) comes to about $3200.