Trademarks: Taking a Startup Computer Company and Turning it into Apple®

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This is the third of a three-part series discussing legal steps an entrepreneur, business owner or professional should take when starting and growing a business.

Having a great product is simply not enough in today’s world; getting your name out in the market is what counts. Look at Apple®: a brand that everyone recognizes for quality, ease, and the statement that its name carries. And look at one of its competitors, Real Networks. The point stands.

But hey, you have this great idea. You’ll market this computer repair service and call it, “Apple Repairs: An apple a day keeps the computer doctor away!” There is a fundamental flaw in this business strategy: a registered trademark held by
Apple, Inc. A US trademark registration protects your ability to sell your product in the US without a company coming along later and creating a product with a name that is confusingly similar to yours. Of course businesses can sell the same products or services. The issue is whether the name or logo confuses the consumer, such that the consumer isn’t sure whose company is selling what product. The standard for judging whether another company’s name may be confusingly similar is based on a multi-factor test including not only the similarities of the name, but also the relatedness of the goods or services, the channels of trade for the product, the number of similar marks in use on similar goods, and whether buyers are “impulse” or “sophisticated” buyers. This test to determine “likelihood of confusion” can go a long way toward protecting your product or service name and marketing. The fictional computer repair service would have failed many of the factors in that test, and would have been smart to look into a trademark for its name before it marketed its product.

Whether you are a sole proprietor, an LLC, or a corporation, you should consider obtaining a trademark for your business or product name. Often people will do a Google search or obtain a domain name and assume that the name is available. They may have also filed articles for their company with the Secretary of State, or filed a DBA in their county. However,
none of these is a substitute for a comprehensive trademark search BEFORE you invest the time, money and emotions that comes with marketing your business. For example, after all the effort of coming up with a great name, investing in marketing and a website, and stamping the “Lou’s Ruse Panty Hose” decal onto 5,000 panty hose packages, it would be a real shame to get a letter from “Rue’s Loose Panty Hose” telling you to halt all production and sale of your product. This situation called a “cease and desist” letter, is a very real possibility if someone already has a registered trademark similar to your name. If a company does have a registered trademark, they can insist that you destroy all product packaging, cease your use of your domain and the use of the name in all your marketing. The holder of that registration also has the right to seek damages if they believe you reaped profits from the use of “their” name. And even if Rue’s Loose doesn’t send you a letter, do you want your consumers to be confused by the similar product line that is already an established business?

While many people try to handle the trademark themselves, or use a self-service legal service, utilizing the expertise and advice of an attorney at the beginning can save you, not only the time, expense and heartache of destroying products and marketing materials, but also hundreds of dollars in filing fees, months of waiting for a response from the US Patent and
Trademark Office, and generally the time and effort put into a trademark that is unlikely to succeed in proving its own individuality.

Doing a trademark search and filling out an application may appear to be deceptively simple. However, a search must look for names that sound alike, but may be spelled differently. It is not just identical marks that can stop your use of a name. There is also the question of the “class” of goods or services that is the most appropriate for your mark. Each
class entails a significant filing fee and your mark is only protected in the particular class you choose. Therefore, it is vitally important to file the application in the correct classes, with the best descriptions of your products or services.

The application process can also be confusing in determining whether you are filing an application as “actual use” or “intent to use.” An actual use application means that you are presently using the mark in commerce, i.e., you have your website up and running and you’re selling your product or service. Even if you are not yet ready to launch your service or product, you can file an intent to use application. This type of application goes through the same rigorous review process as an actual use application. However, once your application has been approved, you will need to either prove actual use in commerce, or request an extension.

Specimens proving use for goods show the actual product with the trademark on the product, whereas specimens for services may be a screenshot of your website, for example. Filing the intent to use application before you are actually using the trademark in commerce allows you to protect your mark while you are preparing to market your product or service. Waiting until you are ready to launch after you have spent significant money marketing may be too late.

Working with a lawyer can help you to build a brand that will last. A lawyer can provide the needed advice and guidance to provide an extensive search and analysis for your trademark and assist in determining the appropriate descriptions and the classes needed to protect your trademark. Also important, your lawyer will be there for you when the trademark examiner
calls or emails with a question about your application, including a potential conflicting trademark.

Protect the originality of your company and product idea, and consider obtaining a trademark before you spend time and money on an idea that may already have been done before. As soon as you do decide on a name, use the symbol ™ to show the world you consider that name your trademark. Be careful, however, that you do not use the symbol ® before your
trademark application is registered with the USPTO. Only registered marks can use that symbol. If your logo or name is original, you will want to protect your investment from future similar competitors. Don’t make the mistake of the fictional Apple Repair company. Create a unique brand, and reap the Apple seeds that you, yourself, have sown.