What Is a Trademark and Why Do You Need One?

You’ve worked hard to build a good name and customer recognition for your business. Now it’s time to protect your reputation.

What Is a Trademark and Why Do You Need One?

Andrew Gonzalez

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Good branding and marketing weren’t invented yesterday. Consider the story of John K. Hogg of Frederick, Maryland, a manufacturer of soap. Mr. Hogg had a concept for a special soap, so he applied for a trademark for the name Star Soap and a star symbol to be “printed, stamped or impressed upon the outside of each piece of soap,” as he wrote in his application. Yes, Mr. Hogg exhibited sophisticated 21st century branding and marketing skills more than 100 years ago:

  • A simple, one-syllable name
  • A name to convey both his aspirations and the quality of his product
  • A striking physical symbol built right into the name

And the rest of the story? Mr. Hogg was the recipient of trademark No. 9. That’s right, one of the first trademarks ever issued by the U.S. government. The date of his registration was Oct. 25, 1870. Memorable names Colt (1889), Quaker (1895), Pepsi-Cola (1896) and Mercedes (1900) all followed the soap maker.

What is a trademark?

A trademark is defined by the United States Patent and Trademark Office as any word, slogan, shape, color, scent, taste or any combination of these used in commerce to identify and distinguish the goods of one manufacturer or seller from those of another and to indicate the source of the goods. A trademark is a mark that is applied to a product. For example, if you sell footwear, then the mark you apply to the shoe (the Nike swoosh, for example) is a trademark.

A service mark is used in the delivery of services. If your bank is offering a checking account service called “Smart Checking,” the term would be a service mark rather that a trademark, because it is used in the delivery of services rather than being applied to a physical product.

What are trademarks for?

Satisfied consumers are likely to buy or use the product or service again in the future. For this, they need to be able to distinguish easily between identical or similar products. The main function of a trademark is to enable consumers to identify a product or service of a particular company and distinguish it from competitors. You know what it’s like walking down the aisles of a grocery store. Somehow you find the product you want out of the hundreds on the shelf. That’s the power of a trademark.

By enabling companies to differentiate their products and services, trademarks play a powerful role in the branding and marketing strategies of companies. The image and reputation of a company helps create trust, the basis for establishing a loyal clientele and enhancing a company’s goodwill. Consumers develop an emotional attachment to certain trademarks based on desired qualities or features of the products or services they use.

The value of trademarks

A carefully selected and nurtured trademark is a valuable asset for your small business. For some, it may be the most valuable asset they own. Estimates of the value of some of the world’s most famous trademarks such as Coca-Cola or IBM exceed $70 billion each. This is because consumers value trademarks, their reputation, their image and the desired qualities they associate with the mark. Customers are willing to buy a product bearing a trademark they recognize. Therefore, the very ownership of a trademark with a good image and reputation provides a company with a competitive edge.

While most businesses realize the importance of using trademarks to differentiate their products or services from competitors, not all realize the importance of protecting them through registration.

Registration, under relevant U.S. trademark law, gives your company the exclusive right to prevent others from marketing identical or similar products or services under the same or a confusingly similar mark. Without trademark registration, your investments in marketing may be wasted as rival companies could adopt similar identities. If a competitor takes on a similar or identical trademark, your customers may be misled into buying the competitor’s product or service. This could not only decrease your company’s profits and confuse your customers, but it may also damage the reputation and image of your company, particularly if the rival product or service is of inferior quality.

Receiving a trademark cease-and-desist letter or infringement notice can be an unsettling event. There are many circumstances under which you may receive one, but they all have one common thread — if the allegations in the letter are true, they can be devastating for a business. Securing ownership of intellectual property serves as prima-facie evidence of the validity and exclusivity of the mark for the goods and services listed in the registration and serves as defense in a conflict matter.

Given the value of trademarks and the importance that a trademark may have in determining the success of your business, it is critical to make sure that it is registered in the relevant markets. In addition, a registered trademark may be licensed to other companies, thus providing an additional source of revenue for your company or may be the basis for a franchising agreement.

How can your company protect its trademarks and service marks?

Trademark protection can be obtained through registration and, in some cases, through use. Even where trademarks can be protected through use, you are well advised to register the trademark by filing the appropriate application. Registering a trademark will provide stronger protection, particularly in case of conflict with an identical or confusingly similar mark.


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