A trademark clearance search is an integral step in the trademark selection process that enables the trademark attorney to evaluate the availability and registrability of a proposed mark. The clearance search is an essential tool, because in the United States, trademark rights are acquired on a first to use basis. This means that an individual or an organization acquires trademark rights by being the first in a given market to use the mark. Once those rights have been acquired, the trademark owner, “senior user,” has the right to prevent a subsequent or “junior user” from using confusingly similar marks in any manner that is likely to cause confusion amongst consumers (i.e. trademark infringement).
Any business that launches a new product or service without first conducting the proper trademark search is flirting with disaster, because no risk assessment has been conducted to determine whether the proposed mark is infringing on a pre-existing mark. The clearance search helps the client to avoid: (1) adopting a weak mark which is unprotectable, (2) spending resources on building goodwill in a mark that the client is forced to abandon because of another party’s priority in the mark, and (3) exposure to damages and attorneys’ fees for claims or oppositions by senior owners. The trademark search serves as a precautionary measure to protect your business from unnecessary and avoidable trademark litigation. A trademark search is not foolproof, but it is definitely a worthwhile investment.
Read on to find a more detailed discussion about the (1) purpose and benefits of the trademark search process and (2) stages of the trademark search process.
PURPOSE AND BENEFITS OF
THE TRADEMARK SEARCH PROCESS
Assess Availability & Avoid Infringement
When adopting a new mark, a trademark search is necessary to determine whether the new mark is infringing (i.e. creates a likelihood of confusion) or, in limited circumstances, diluting any marks already existing in the marketplace.
Likelihood of confusion: Likelihood of confusion exists between trademarks when the marks are so similar and the goods and/or services for which they are used are so related that consumers would mistakenly believe they come from the same source.
Dilution: Trademark dilution exists when a third-party uses a mark or trade name in commerce that is sufficiently similar to a famous mark such that it harms or weakens consumer perception of the famous mark. Unlike trademark infringement, trademark dilution involves use of a mark in connection with goods or services that do not compete with those connected to the famous mark.
Avoid Trademark Infringement
If you fail to conduct a trademark clearance search and a senior user believes that your mark infringes or dilutes their mark, the senior user has several remedies available to them to stop your use continued use. They can obtain an injunction to prevent you from using the mark. Often, the senior user will send a cease and desist letter threatening litigation with the intent of forcing you to stop using the mark. It is likely that the senior user will want you to immediately cease use, which means that your inventory or print materials will have to be discarded. You will be forced to rebrand and start from the drawing board (i.e. possibly new business name, logos, marketing, inventory, etc.). If you are lucky, it will end here. However, for the unfortunate individuals or companies that find themselves in court, the senior user who successfully proves trademark infringement can seek (1) to recover your profits, (2) damages caused by the infringement (which may be tripled), (3) costs associated with bringing the action, and, in exceptional cases, (4) reasonable attorney’s fees. In addition, a court may order destruction of goods bearing the infringing mark. On the other hand, even if you are successful in defending yourself against trademark infringement, you will have expended thousands of dollars in legal fees to defend the case. To avoid this nightmare, it is best to clear the trademark before using it.
Brand Development: Set Yourself Apart
Your company’s trademark is one of its most valuable assets. If you are in the process of developing a new product or service, you should consider adopting a unique, creative, and distinctive mark. The trademark search will assist you in this process as it allows the trademark attorney to compare your proposed mark against the landscape of trademark use in your industry and determine whether it is distinctive in the particular industry. Since your trademark identifies your company as the brand owner of that particular product or service, the more distinctive the mark, the more effective the mark will be in identifying and differentiating your product or service from your competitors. A strong brand will engender feelings of reliability, trust, and loyalty in the mind of the consumer. The goodwill you acquire in your brand will attract and retain customer loyalty and increase the value of your business.
Financing & Expansion
As your company grows, you may seek out financing, investors, or even another company to acquire your business. When companies seek out these options or opportunities, a trademark search is conducted as an essential part of the due diligence review. The search permits the buyer or financier to determine with greater assurance whether record title to the mark(s) is in fact held in the seller’s or borrower’s name, and whether the trademarks are encumbered by security interests. Moreover, investors want to invest in well-vetted brands and buyers will not want to acquire a business or brand that is marred by or subject to unnecessary litigation that could have been avoided.
TRADEMARK SEARCH PROCESS
Often, we get clients in our office that relay to us some variation of the quote above. However, the majority of the time, we find that their search consisted of a search with the identical spelling of their desired mark and limited to the USPTO TESS database. Since trademark infringement not only includes identical marks, but also those which may dilute or cause a likelihood of confusion, the search conducted by the client is generally insufficient to clear the proposed mark for use.
A proper trademark search would take into consideration various other factors and other resources.
PRELIMINARY “KNOCK OUT” SEARCH
A preliminary search commonly referred to as a “knockout” search affords the trademark attorney the opportunity to eliminate obvious conflicts that may impact the availability of the proposed mark. This search uses a limited number of resources and queries that the searcher deems most likely to yield relevant marks with minimal effort. The preliminary search is not an attempt to reach a definitive answer about the availability of the mark. The goal is to quickly rule out marks that are unavailable. If an obvious conflict exists, it will be apparent that the mark is clearly unavailable; you will avoid the expense and time required for a more extensive search, and can move on to evaluate another potential mark.
COMPREHENSIVE “FULL” SEARCH
A comprehensive search includes the most current information available from state trademark databases as well as federal trademark applications and registrations. Since trademark rights are acquired based on use and no registration is required, common law uses (unregistered trademarks and business names) have a grave impact on the availability of a mark and must be searched. In addition to trademark registries, a comprehensive search will include, but is not limited to, domain name registries, social media, business directories, trade publications, and other Internet resources. Again, since the standard for infringement is not based solely upon the identical nature of the marks, the comprehensive search includes, but is not limited to, phonetic equivalents, foreign language equivalents, spelling variations, transliterations, inventive or irregular word construction, and if there is a graphic design component, the design elements as well. Search reports are designed to be comprehensive, but not exhaustive. So, even comprehensive searches are not full proof, there will always be some risk present when adopting or extending use of a trademark. Some risks which are always present include:
common law marks may not be included in a source agency record.
processing delays may cause recently filed applications not to appear in a database
applications filed on the basis of a foreign application or registration may obtain an effective filing date that is up to six or more months earlier than the actual filing date under certain international treaties
some relevant marks may not appear in a search report and the analysis often requires some level of subjectivity.
Although not foolproof, if the brand is important to you or the mark is intended for long-term use, a comprehensive search should be conducted to minimize the risk that another party has superior rights in your mark.
Finally, if the mark is going to be used outside the United States, an international search should be considered.
TRADEMARK LEGAL OPINION: WORTH ITS WEIGHT IN GOLD
Once the clearance search has been completed, the attorney will review and analyze the results and if requested provide a legal opinion of their findings. Depending on the client’s preference, the opinion may be given orally or in writing. The legal opinion is the attorney’s professional opinion on the strength of your proposed trademark based on their analysis of the search report and the likelihood that the mark will register. Typically, the attorney will compile the most relevant search results and provide you with an opinion regarding the availability of the proposed trademark for use and registrability. The legal opinion will give you insight into the challenges that may be before you and arm you with the information necessary to determine whether it is wise to move forward with registration or proceed with some other course of action. In the unfortunate event of litigation, a legal opinion may support a defense against a claim of bad faith or infringement.
In sum, your trademarks are extremely valuable assets for your business. Companies both large and small often devote considerable time and resources in creating and developing their marks. Unfortunately, many fail to consult with trademark counsel or consult them late in the process - when it is costly or too late to effectively address the risks. That doesn’t have to be the case for you and your company. Don’t cut corners and subject yourself to unnecessary risk.
If you need assistance clearing your trademark, schedule your consultation with Cooper Legal today.
This blawg is provided by the firm for informational purposes only and may not be relied on as legal advice. If you have any questions related to your specific business needs, schedule your legal consultation today.