Repeat after me: getting an awesome URL for your startup does not mean you now have a trademark strategy. For those in the know, this statement will make them go “duh.” But, I can’t begin to tell you how many entrepreneurs tell me that they don’t need to discuss their trademark strategy when they engage me to help them create and maximize the value of their startup using IP. Given this common misconception, it makes sense that we spend at couple of blog posts talking about why having a trademark strategy can greatly influence the fortunes of your startup.
First, some background is needed. Unlike a patent that generally covers products (or ways to make a product), a trademark is something that indicates what company makes the product. It follows that a trademark also serves to distinguish your company’s products from those of other companies. Service marks similarly designate and distinguish the source of a service. In non-lawyer circles, the term “trademark” is used to cover both trademarks and service marks, and we will do so here.
A trademark is granted by the US Trademark Office, part of the USPTO, after someone applies for a trademark. While one can apply for a trademark themselves, broader and more strategic coverage can often be obtained when an experienced trademark practitioner—who usually is an attorney—files and works with the Trademark Office to obtain your trademark for you. The good news is that trademarks are much less expensive than patents, often costing $2000 or less to acquire with attorney help (although many attorneys will charge you more because they can).
It is very important that you conduct a search on both the internet AND in the Trademark Office search database before the application is filed to ensure that the proposed trademark is not close to that of another company in the same business area. If the name you choose is deemed too close by the trademark examiner, your trademark application will be rejected and your attorney will have to argue that the mark is, in fact, legally allowable. Of course, any argument required by an attorney will result in more time and cost obtain the trademark, which reinforces the value of conducting a search up front. Even if the trademark examiner allows your application, it is still possible that another party may object to your trademark and “oppose” your attempted registration of the mark. This means that you will be required to argue to the Trademark Office that your mark does not give rise to a “likelihood of confusion” as to the source of products between the two companies. Again, this additional time and cost, as well as the possibility of losing your trademark, puts a premium on the upfront search.
The importance of trademark searching brings us back to the confusion that many entrepreneurs have about URLs and trademarks. A URL (or uniform resource locator) is the location or address of something on the internet. URLs are assigned by ICANN (International Corporation for Assigned Names and Numbers). ICANN works independently of the US Trademark Office (or any other national trademark office). For this reason alone, obtaining an awesome URL has no bearing whatsoever on your ability to be granted an enforceable trademark. The URL may be wide open for you to grab, but the corresponding trademark may be locked up by another company. The trademark owner can send you a nasty “cease and desist” letter because your URL (and likely the underlying website content) infringes their previously existing trademark. The cost and time required to address an otherwise avoidable legal issue is an unnecessary distraction that most startups should seek to avoid. This reason alone should provide reason for entrepreneurs to do more than grab the URL that will serve as the online address for their startup.
Besides the benefits of reducing potential issues with either the Trademark Office or another company when selecting a trademark, there is another very important reason for entrepreneurs to spend time generating a robust trademark at an early stage: for many companies, a strong mark—that is, brand–serves as a primary source of corporate value both in the marketplace and, often, on exit. Or, as I illustrated in a previous blog post, trademarks are one of the several “tools in the toolbox” of startup value creation. It then follows that failure to focus on this critical source of value at an early stage likely means that you will leave considerable money on the table.
In subsequent blog posts, I will provide some tools and techniques for selecting a trademark that will serve your startup well over the long term. For those who wish to read ahead, check out my IP Asset Maximizer Blog, where I have posted several articles on trademark strategy over the years (search “startup IP strategy”). You can also contact me at jhutter@leanlegalteam.com if you have questions specific to your own venture.
